As filed with the Securities and Exchange Commission on November 10, 1997
Registration Nos. 333-34835 and 333-34835-01
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
PRE-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
<TABLE>
<CAPTION>
<S> <C>
JP REALTY, INC. PRICE DEVELOPMENT COMPANY,
(Exact name of Registrant as specified in its LIMITED PARTNERSHIP
charter) (Exact name of Registrant as specified in its
charter)
MARYLAND MARYLAND
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
87-0515088 87-0516235
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
</TABLE>
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115
(801) 486-3911
(Address, including zip code, and telephone number,
including area code, of Registrants' principal executive offices)
----------------------
JOHN PRICE
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
JP REALTY, INC.
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115
(801) 486-3911
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------
COPIES TO:
JAY L. BERNSTEIN, ESQ.
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time or at one time after the effective date of the Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. <square>
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. <checked-box>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. <square> ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. <square> ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. <square>
----------------------
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
constituting a part of this Registration Statement is a combined prospectus and
relates to securities of JP Realty, Inc. registered pursuant to a Registration
Statement on Form S-3 (Registration No. 33-93752).
----------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
===============================================================================
<PAGE>
Subject to Completion
Preliminary Prospectus Dated November 7, 1997
PROSPECTUS
$400,000,000
JP REALTY, INC.
COMMON STOCK, PREFERRED STOCK, COMMON STOCK WARRANTS,
DEPOSITARY SHARES AND GUARANTEES
PRICE DEVELOPMENT COMPANY,
LIMITED PARTNERSHIP
DEBT SECURITIES
JP Realty, Inc., a Maryland corporation (the "Company"), may from time to
time offer in one or more series (i) shares of its common stock, par value
$.0001 per share (the "Common Stock"); (ii) shares or fractional shares of its
preferred stock, par value $.0001 per share (the "Preferred Stock"), which may
be issued in the form of depositary shares (the "Depositary Shares") evidenced
by depositary receipts; or (iii) warrants to purchase Common Stock (the "Common
Stock Warrants"), with an aggregate public offering price of up to
$200,000,000. Price Development Company, Limited Partnership, a Maryland
limited partnership and a majority-owned subsidiary of the Company (the
"Operating Partnership"), may from time to time offer in one or more series
unsecured non-convertible investment grade debt securities or other non-
convertible debt securities which will be fully and unconditionally guaranteed
by the Company (any such debt securities being referred to herein as "Debt
Securities" and any such guarantees being referred to herein as "Guarantees"),
with an aggregate public offering price of up to $200,000,000. The Common
Stock, Preferred Stock, Common Stock Warrants, Depositary Shares, Debt
Securities and Guarantees (collectively, the "Offered Securities") may be
offered separately or together, in separate series, in amounts, at prices and
on terms to be determined at the time of offering and set forth in one or more
supplements to this Prospectus (each, a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Common Stock,
any public offering price; (ii) in the case of Preferred Stock, the specific
title and stated value, any distribution, liquidation, redemption, conversion,
voting and other rights and any initial public offering price; (iii) in the
case of Common Stock Warrants, the duration, offering price, exercise price and
detachability features; (iv) in the case of Depositary Shares, the fractional
share of Preferred Stock represented by each such Depositary Share; and (v) in
the case of Debt Securities, the title, aggregate principal amount,
denominations, maturity, rate, if any (which may be fixed or variable), or
method of calculation thereof, time of payment of any interest, any terms for
redemption at the option of the Operating Partnership or the holder, any terms
for sinking fund payments, rank, any conversion or exchange rights, any
Guarantees, and the initial public offering price and any other terms in
connection with the offering and sale of such Debt Securities. In addition,
such specific terms may include limitations on direct or beneficial ownership
and restrictions on transfer of the Offered Securities, in each case as may be
appropriate to preserve the status of the Company as a real estate investment
trust ("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about all material federal income tax considerations relating to,
and any listing on a securities exchange of, the Offered Securities covered by
such Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Company or the Operating Partnership, or to or through
underwriters or dealers. If any agents or underwriters are involved in the
sale of any of the Offered Securities, their names, and any applicable purchase
price, fee, commission or discount arrangement between or among them, will be
set forth, or will be calculable from the information set forth, in the
applicable Prospectus Supplement. See "Plan of Distribution." No Offered
Securities may be sold without delivery of the applicable Prospectus Supplement
describing the method and terms of the offering of such series of Offered
Securities.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is , 1997
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE OPERATING PARTNERSHIP OR ANY
UNDERWRITERS, AGENTS OR DEALERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY AND ITS SUBSIDIARIES OR THE OPERATING PARTNERSHIP SINCE
THE DATE HEREOF OR THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Following the
sale of any Debt Securities hereunder by the Operating Partnership, the
Operating Partnership may become subject to the informational requirements of
the Exchange Act and, if so subject, will be required to file reports and other
information with the Commission. The Company's and the Operating Partnership's
Registration Statement on Form S-3 (the "Registration Statement"), the exhibits
and schedules forming a part thereof and the reports, proxy statements and
other information filed by the Company or the Operating Partnership can be
inspected and copied, at the prescribed rates, at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Seven World
Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. Electronic filings of the
Company made through the Electronic Data Gathering, Analysis and Retrieval
System are publicly available through the Commission's web site
(http://www.sec.gov). The Company's Common Stock is listed on the New York
Stock Exchange (the "NYSE") and similar information concerning the Company may
be inspected and copied at the offices of the NYSE at 20 Broad Street, New
York, New York 10005.
This Prospectus constitutes a part of the Registration Statement filed by
the Company and the Operating Partnership with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain of the information contained in the Registration Statement and
the exhibits and schedules thereto, in accordance with the rules and
regulations of the Commission. For further information concerning the Company,
the Operating Partnership and the Offered Securities, reference is hereby made
to the Registration Statement and the exhibits and schedules filed therewith,
which may be inspected without charge at the office of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and copies of which may be obtained
from the Commission at prescribed rates. Any statements contained herein
concerning the provisions of any document are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
FORWARD-LOOKING INFORMATION
Certain information both included and incorporated by reference herein
may contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act, and as such may involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company or the Operating
Partnership to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. Forward-
looking statements, which are based on certain assumptions and describe future
plans, strategies and expectations of the Company or the Operating Partnership,
are generally identifiable by use of the words "may," "will," "should,"
"expect," "anticipate," estimate," "believe," "intend" or "project" or the
negative thereof or other variations thereon or comparable terminology.
Factors which could have a material adverse effect on the operations and future
2
<PAGE>
prospects of the Company or the Operating Partnership include, but are not
limited to, changes in: economic conditions generally and the real estate
market specifically, legislative/regulatory changes (including changes to laws
governing the taxation of REITs), availability of capital, interest rates,
competition, supply and demand for properties in current and proposed market
areas of the Company and the Operating Partnership and general accounting
principles, policies and guidelines applicable to REITs. These risks and
uncertainties should be considered in evaluating any forward-looking statements
contained herein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company (Commission File No. 1-12560)
which have been filed with the Commission are hereby incorporated by reference
to this Prospectus.
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997;
4. The Company's Current Report on Form 8-K, dated January 22, 1997;
5. The Company's Current Report on Form 8-K, dated June 30, 1997;
6. The Company's Current Report on Form 8-K, dated September 11, 1997;
and
7. The Company's Registration Statement on Form 8-A, dated November
15, 1993, which contains a description of the Common Stock, including any
amendment or report filed for the purpose of updating such description.
All documents filed by the Company or the Operating Partnership pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering of the Offered
Securities shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the respective dates of filing such documents.
Any statement or information contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed modified or
superseded for the purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company and the Operating Partnership hereby undertake to provide
without charge to each person to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (not including any exhibits to the information
that is incorporated by reference unless such exhibits are specifically
incorporated by reference to the information that this Prospectus
incorporates). Requests should be directed to: JP Realty, Inc., 35 Century
Park-Way, Salt Lake City, Utah 84115, Attn.: M. Scott Collins, Vice President -
Chief Financial Officer and Treasurer, telephone number (801) 486-3911.
3
<PAGE>
THE COMPANY AND THE OPERATING PARTNERSHIP
JP Realty, Inc., a Maryland corporation (the "Company"), is a fully
integrated, self-administered and self-managed real estate investment trust
("REIT") primarily engaged in the ownership, leasing, management, operation,
development, redevelopment and acquisition of retail properties in Utah, Idaho,
Colorado, Arizona, Nevada, New Mexico and Wyoming (the "Intermountain Region")
as well as in Oregon, Washington and California. The Company was formed on
September 8, 1993 to continue and expand the business, commenced in 1957, of
certain companies affiliated with John Price, Chairman of the Board and Chief
Executive Officer of the Company. Based on total gross leasable area, the
Company owns and operates the largest retail property portfolio in the states
of Utah, Idaho and Wyoming, and one of the largest in the Intermountain Region.
As of November 1, 1997, the Company's portfolio was comprised of 46
retail properties (the "Properties"), including 14 enclosed regional malls, 24
community centers and two free-standing retail properties located in ten states
and six mixed-use commercial properties located primarily in the Salt Lake
City, Utah metropolitan area. As of that date, the Properties contained an
aggregate of approximately 11.6 million square feet of total gross leasable
area, of which approximately 9.7 million square feet was Company owned.
All of the Properties or interests therein are held by, and all of the
Company's business operations are conducted through, Price Development Company,
Limited Partnership, a Maryland limited partnership (the "Operating
Partnership"). As of November 1, 1997, the Company owned an approximate 83%
controlling general partner interest in the Operating Partnership. As general
partner of the Operating Partnership, the Company has unilateral control and
complete responsibility for the management of the Operating Partnership and
over each of the Properties. The Company's Common Stock is listed on the NYSE
under the Symbol "JPR."
The Company's management has an average of 23 years of experience in the
ownership, leasing, management, operation, development, redevelopment and
acquisition of regional malls, community shopping centers and other commercial
properties. As of November 1, 1997, the Company had 448 employees, including a
corporate staff of 77 individuals including senior management, and 371 property
management personnel. The Company's and the Operating Partnership's executive
offices are located at 35 Century Park-Way, Salt Lake City, Utah 84115, and
their telephone number is (801) 486-3911.
USE OF PROCEEDS
Except as otherwise provided in the applicable Prospectus Supplement,
proceeds to the Company from the sale of the Offered Securities will be
added to the working capital of the Company and will be available for the
repayment of indebtedness, the financing of capital commitments, possible
future acquisitions associated with the continued expansion of the Company's
business and general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for (i) the six months
ended June 30, 1997 was 4.3x and (ii) the fiscal years ended December 31, 1996
and 1995, the year ended December 31, 1994 (which includes results of
operations of the Company's predecessors, which consisted of a group of
affiliated companies owned and controlled by John Price (the "Predecessor
Companies"), for the period of January 1, 1994 through January 20, 1994) and
the years ended December 31, 1993 and 1992 (which are based on the results of
operations of the Predecessor Companies) was 3.65x, 3.61x, 3.20x, 1.19x and
1.09x, respectively. To date, the Company has not issued any Preferred Stock;
therefore, the ratios of earnings to combined fixed charges and Preferred Stock
distributions are the same as the ratios of earnings to fixed charges.
The ratios of earnings to fixed charges presented above were computed by
dividing the Company's earnings by fixed charges. For this purpose, earnings
have been calculated by adding fixed charges (excluding capitalized interest)
to income before extraordinary item and minority interest of holders of units
of limited partner interests in the Operating Partnership (the "OP Units").
4
<PAGE>
Fixed charges consist of interest costs, whether expensed or capitalized, the
interest component of rental expense, if any, and amortization of deferred
financing costs (including amounts capitalized).
Prior to the completion of the Company's initial public offering on
January 21, 1994 (the "IPO"), the Predecessor Companies operated in a highly
leveraged manner utilizing traditional single-asset mortgage loans and
construction loans as their principal source of outside capital. In connection
with completion of the IPO, the Company reorganized the Predecessor Companies
into a single consolidated entity and substantially deleveraged their asset
base, resulting in a significantly improved ratio of earnings to fixed charges.
DESCRIPTION OF COMMON STOCK
GENERAL
Under the Company's Amended and Restated Articles of Incorporation (the
"Charter"), the Company has authority to issue 200,000,000 shares of capital
stock, par value $.0001 per share, with 124,800,000 of such shares designated
as Common Stock. At November 1, 1997, the Company had outstanding 17,389,827
shares of Common Stock. In addition, the Company has reserved for issuance (i)
3,678,390 shares of Common Stock upon exchange of the OP Units; and (ii)
1,013,793 shares of Common Stock upon exercise of stock options that have been,
or are available to be, granted under the Company's 1993 Stock Option Plan.
Under Maryland law, stockholders generally are not responsible for a
corporation's debts or obligations. The following descriptions do not purport
to be complete and are subject to, and qualified in their entirety by reference
to, the more complete descriptions thereof set forth in the following
documents: (i) the Charter and (ii) the Company's Amended and Restated By-Laws
(the "By-Laws"), which documents are exhibits to this Registration Statement.
TERMS
Subject to the preferential rights of any other shares or series of
capital stock, including, without limitation, the Company's Price Group Stock,
par value $.0001 per share (the "Price Group Stock"), and to the provisions of
the Charter regarding excess stock, par value $.0001 per share ("Excess
Stock"), holders of shares of Common Stock will be entitled to receive
distributions on shares of Common Stock if, as and when authorized and declared
by the Board of Directors out of assets legally available therefor and to share
ratably in the assets of the Company legally available for distribution to its
stockholders in the event of its liquidation, dissolution or winding up after
payment of, or adequate provision for, all known debts and liabilities of the
Company. Under the Charter, holders of shares of Price Group Stock are
entitled to receive distributions at a rate per share equal to 80% of any
distributions declared by the Board of Directors, out of assets legally
available therefor, in respect of the Common Stock.
Subject to the preferential rights of the Price Group Stock with respect
to the election of directors and to the provisions of the Charter regarding
Excess Stock, each outstanding share of Common Stock entitles the holder to one
vote on all matters submitted to a vote of stockholders. No cumulative voting
rights for the election of directors will attach to shares of Common Stock or
Price Group Stock. For the period that John Price, his spouse and children,
any lineal descendants of any of the foregoing, any estates of any of the
foregoing, any trusts now or hereafter established for the benefit of any of
the foregoing and any other entity now or hereafter controlled by any of the
foregoing (collectively, the "Price Group") continues to hold a combined 10% or
greater direct or indirect economic interest in the Operating Partnership, the
holders of the Price Group Stock will elect two of the seven members of the
Board of Directors and the holders of the Common Stock and Price Group Stock,
voting together as a single class, will elect the remaining five members of the
Board of Directors. After the combined direct or indirect economic interest
held by the Price Group in the Operating Partnership falls below 10%, the
holders of the Price Group Stock will not, as a class, be entitled to elect any
of the members of the Board of Directors, but will vote together with the
Common Stock, as a single class, to elect all seven members of the Board of
Directors. In addition, any change in the size of the Board of Directors must
be approved by a majority of the outstanding shares of the Price Group Stock.
5
<PAGE>
Holders of Common Stock have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any securities of the Company.
The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm.
Pursuant to the Maryland General Corporation Law ("MGCL"), a corporation
generally cannot dissolve, amend its Charter, merge, sell all or substantially
all of its assets, engage in a share exchange or engage in similar transactions
outside the ordinary course of business unless approved by the affirmative vote
of stockholders holding at least two-thirds of the shares entitled to vote on
the matter unless a lesser percentage (but not less than a majority of all of
the votes to be cast on the matter) is set forth in the corporation's Articles
of Incorporation. The Charter provides that such transactions, with the
exception of an amendment of the Charter (i) affecting certain changes relating
to the Board of Directors or the terms of the Price Group Stock or (ii) to
limit stockholder proposals and nominations, can be affected by a vote of a
majority of the shares entitled to vote on such matters. With respect to the
matters set forth in items (i) and (ii) above, the Charter provides that it may
only be amended upon the affirmative vote of not less than 80% of the aggregate
votes entitled to vote thereon.
Provisions of the Charter described below under "Restrictions on
Transfers of Capital Stock," together with other provisions of the Charter and
the MGCL, may discourage a takeover or other transaction in which holders of
some, or a majority, of shares of Common Stock might receive a premium for
their shares over the then-prevailing market price or which such holders might
believe to be otherwise in their best interest.
RESTRICTIONS ON TRANSFER AND OWNERSHIP
For the Company to qualify as a REIT under the Internal Revenue Code of
1986, as amended (the "Code"), not more than 50% in value of its outstanding
Common Stock, Preferred Stock or Price Group Stock (collectively, the "Equity
Stock") may be owned, directly or indirectly, by five or fewer individuals (as
defined in the Code to include certain entities) during the last half of a
taxable year. To assist the Company in meeting this requirement, the Charter
contains certain provisions restricting certain transfers of shares of Equity
Stock and limiting the beneficial ownership, directly or indirectly, of the
Company's outstanding Equity Stock. See "Restrictions on Transfers of Capital
Stock."
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.
DESCRIPTION OF PREFERRED STOCK
GENERAL
Under the Charter, the Company has authority to issue 200 million shares
of capital stock, par value $.0001 per share, of which 124,800,000 shares have
been designated as Common Stock, 200,000 of which have been designated as Price
Group Stock and 75,000,000 of which have been designated as Excess Stock. As
of the date hereof, none of the shares of capital stock has been designated as
Preferred Stock. Under the Charter, shares of Common Stock or Excess Stock may
be redesignated by the Board of Directors as Preferred Stock and, following
such redesignation, may be issued from time to time, in one or more series of
Preferred Stock, as authorized by the Board of Directors. Prior to issuance of
shares of each series, the Board of Directors is required by the MGCL and the
Charter to fix for each series, subject to the provisions of the Charter
regarding Price Group Stock, the terms, preferences, conversion or other
rights, voting powers, restrictions, limitations as to distributions or other
distributions, qualifications and terms or conditions of redemption, as are
permitted by Maryland law. The Preferred Stock will, when issued, be fully
paid and nonassessable and will have no preemptive rights. The Board of
Directors could authorize the issuance of shares of Preferred Stock with terms
and conditions that could have the effect of discouraging a takeover or other
transaction that holders of Common Stock might believe to be in their best
6
<PAGE>
interests or in which holders of some, or a majority, of the shares of Common
Stock might receive a premium for their shares over the then market price of
such shares of Common Stock.
TERMS
The following description of the Preferred Stock sets forth certain
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement may relate. The statements below describing the Preferred Stock are
in all respects subject to and qualified in their entirety by reference to the
applicable provisions of the Charter and the By-Laws and any articles
supplementary to the Charter designating terms of a series of Preferred Stock
(the "Articles Supplementary").
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including:
(1) the title and stated value of such Preferred Stock;
(2) the number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(3) the distribution rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Stock;
(4) the date from which distributions on such Preferred Stock shall
accumulate, if applicable;
(5) the provision for a sinking fund, if any, for such Preferred Stock;
(6) the provision for redemption, if applicable, of such Preferred
Stock;
(7) any listing of such Preferred Stock on any securities exchange;
(8) the terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock, including the
conversion price or rate (or manner of calculation thereof);
(9) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(10) a discussion of federal income tax considerations applicable to
such Preferred Stock;
(11) the relative ranking and preference of such Preferred Stock as to
distribution rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company;
(12) any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred
Stock as to distribution rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; and
(13) any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the
status of the Company as a REIT.
RANK
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will, with respect to distribution rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of Common Stock or Price Group Stock of the Company and to
all equity securities ranking junior to such Preferred Stock with respect to
distribution rights or rights upon liquidation, dissolution or winding up of
the Company; (ii) on a parity with all equity securities issued by the Company,
the terms of which specifically provide that such equity securities rank on a
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<PAGE>
parity with the Preferred Stock with respect to distribution rights or rights
upon liquidation, dissolution or winding up of the Company; and (iii) junior to
all equity securities issued by the Company, the terms of which specifically
provide that such equity securities rank senior to the Preferred Stock with
respect to distribution rights or rights upon liquidation, dissolution or
winding up of the Company.
DISTRIBUTIONS
Holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors, out of assets of
the Company legally available for payment, cash distributions at such rates and
on such dates as will be set forth in the applicable Prospectus Supplement.
Each such distribution shall be payable to holders of record as they appear on
the share transfer books of the Company on such record dates as shall be fixed
by the Board of Directors.
Distributions on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement.
Distributions, if cumulative, will be cumulative from and after the date set
forth in the applicable Prospectus Supplement. If the Board of Directors fails
to declare a distribution payable on a distribution payment date on any series
of the Preferred Stock for which distributions are noncumulative, then the
holders of such series of the Preferred Stock will have no right to receive a
distribution in respect of the distribution period ending on such distribution
payment date, and the Company will have no obligation to pay the distribution
accrued for such period, whether or not distributions on such series are
declared payable on any future distribution payment date.
If Preferred Stock of any series is outstanding, no distributions will be
declared or paid or set apart for payment on any capital stock of the Company
of any other series ranking, as to distributions, on a parity with or junior to
the Preferred Stock of such series for any period, unless (i) if such series of
Preferred Stock has a cumulative distribution, full cumulative distributions
have been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof is set apart for such payment on the
Preferred Stock of such series for all past distribution periods and the then
current distribution period, or (ii) if such series of Preferred Stock does not
have a cumulative distribution, full distributions for the then current
distribution period have been or contemporaneously are declared and paid, or
declared and a sum sufficient for the payment thereof is set apart for such
payment on the Preferred Stock of such series. When distributions are not paid
in full (or a sum sufficient for such full payment is not so set apart) upon
Preferred Stock of any series and the shares of any other series of Preferred
Stock ranking on a parity as to distributions with the Preferred Stock of such
series, all distributions declared upon Preferred Stock of such series and any
other series of Preferred Stock ranking on a parity as to distributions with
such Preferred Stock shall be declared pro rata so that the amount of
distributions declared per share of Preferred Stock of such series and such
other series of Preferred Stock shall in all cases bear to each other the same
ratio that accrued distributions per share on the Preferred Stock of such
series (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such Preferred Stock does not
have a cumulative distribution) and such other series of Preferred Stock bear
to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any distribution payment or payments on Preferred Stock
of such series that may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative distribution, full cumulative
distributions on the Preferred Stock of such series have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof is set apart for payment for all past distribution periods
and the then current distribution period, or (ii) if such series of Preferred
Stock does not have a cumulative distribution, full distributions on the
Preferred Stock of such series have been or contemporaneously are declared and
paid, or declared and a sum sufficient for the payment thereof is set apart for
payment for the then current distribution period, no distributions (other than
in shares of Common Stock, Price Group Stock or other shares of capital stock
ranking junior to the Preferred Stock of such series as to distributions and
upon liquidation) shall be declared or paid or set aside for payment nor shall
any other distribution be declared or made upon the Common Stock, Price Group
Stock or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock of such series as to distributions or upon
liquidation, nor shall any shares of Common Stock, or any other shares of
capital stock of the Company ranking junior to or on a parity with the
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Preferred Stock of such series as to distributions or upon liquidation, be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any such
shares) by the Company (except by conversion into or exchange for other capital
stock of the Company ranking junior to the Preferred Stock of such series as to
distributions and upon liquidation).
Any distribution payment made on shares of a series of Preferred Stock
shall first be credited against the earliest accrued but unpaid distribution
due with respect to shares of such series that remain payable.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred
Stock will be subject to mandatory redemption or redemption at the option of
the Company, as a whole or in part, in each case upon the terms, at the times
and at the redemption prices set forth in such Prospectus Supplement.
The applicable Prospectus Supplement relating to a series of Preferred
Stock that is subject to mandatory redemption will specify the number of shares
of such Preferred Stock that shall be redeemed by the Company in each year
commencing after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to all accrued and unpaid
distributions thereon (which shall not, if such Preferred Stock does not have a
cumulative distribution, include any accumulation in respect of unpaid
distributions for prior distribution periods) to the date of redemption. The
redemption price may be payable in cash or other property, as specified in the
applicable Prospectus Supplement. If the redemption price for Preferred Stock
of any series is payable only from the net proceeds of the issuance of shares
of capital stock of the Company, the terms of such Preferred Stock may provide
that if no such shares of capital stock shall have been issued, or to the
extent the net proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, such Preferred Stock shall automatically
and mandatorily be converted into the applicable shares of capital stock of the
Company pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of Preferred Stock
has a cumulative distribution, full cumulative distributions on all shares of
such series of Preferred Stock shall have been or contemporaneously are
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for payment for all past distribution periods and the then current
distribution period, or (ii) if a series of Preferred Stock does not have a
cumulative distribution, full distributions on all shares of the Preferred
Stock of such series have been or contemporaneously are declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment for
the then current distribution period, no shares of such series of Preferred
Stock shall be redeemed unless all outstanding shares of Preferred Stock of
such series are simultaneously redeemed; PROVIDED, HOWEVER, that the foregoing
shall not prevent the purchase or acquisition of Preferred Stock of such series
to preserve the REIT status of the Company or pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Preferred Stock of such series. In addition, unless (i) if such series of
Preferred Stock has a cumulative distribution, full cumulative distributions on
all outstanding shares of such series of Preferred Stock have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof set apart for payment for all past distribution periods and
the then current distribution period, or (ii) if such series of Preferred Stock
does not have a cumulative distribution, full distributions on the Preferred
Stock of such series have been or contemporaneously are declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment for
the then current distribution period, the Company shall not purchase or
otherwise acquire directly or indirectly any shares of such series of Preferred
Stock (except by conversion into or exchange for capital shares of the Company
ranking junior to the Preferred Stock of such series as to distributions and
upon liquidation); PROVIDED, HOWEVER, that the foregoing shall not prevent the
purchase or acquisition of shares of Preferred Stock of such series to preserve
the REIT status of the Company or pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding shares of Preferred Stock of
such series.
If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares
held or for which redemption is requested by such holder (with adjustments to
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avoid redemption of fractional shares) or by any other equitable manner
determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such
Preferred Stock are to be surrendered for payment of the redemption price; (v)
that distributions on the shares to be redeemed will cease to accrue on such
redemption date; and (vi) the date upon which the holder's conversion rights,
if any, as to such shares shall terminate. If fewer than all the shares of
Preferred Stock of any series are to be redeemed, the notice mailed to each
such holder thereof shall also specify the number of shares of Preferred Stock
to be redeemed from each such holder. If notice of redemption of any Preferred
Stock has been given and if the funds necessary for such redemption have been
set aside by the Company in trust for the benefit of the holders of any
Preferred Stock so called for redemption, then from and after the redemption
date distributions will cease to accrue on such Preferred Stock, and all rights
of the holders of such shares will terminate, except the right to receive the
redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Company, then, before any distribution or payment shall
be made to the holders of any Common Stock, Price Group Stock, Excess Stock or
any other class or series of capital stock of the Company ranking junior to the
Preferred Stock in the distribution of assets upon any liquidation, dissolution
or winding up of the Company, the holders of each series of Preferred Stock
shall be entitled to receive out of assets of the Company legally available for
distribution to stockholders liquidating distributions in the amount of the
liquidation preference per share, if any, set forth in the applicable
Prospectus Supplement, plus an amount equal to all distributions accrued and
unpaid thereon (which shall not include any accumulation in respect of unpaid
noncumulative distributions for prior distribution periods). After payment of
the full amount of the liquidating distributions to which they are entitled,
the holders of Preferred Stock will have no right or claim to any of the
remaining assets of the Company. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of the
Company are insufficient to pay the amount of the liquidating distributions on
all outstanding shares of Preferred Stock and the corresponding amounts payable
on all shares of other classes or series of capital stock of the Company
ranking on a parity with the Preferred Stock in the distribution of assets,
then the holders of the Preferred Stock and all other such classes or series of
capital stock ranking on parity with the Preferred Stock shall share ratably in
any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders
of Preferred Stock, the remaining assets of the Company shall be distributed
among the holders of any other classes or series of capital stock ranking
junior to the Preferred Stock upon liquidation, dissolution or winding up,
according to their respective rights and preferences and in each case according
to their respective number of shares. For such purposes, the consolidation or
merger of the Company with or into any other corporation, trust or entity, or
the sale, lease or conveyance of all or substantially all of the property or
business of the Company, shall not be deemed to constitute a liquidation,
dissolution or winding up of the Company.
VOTING RIGHTS
Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Stock, so long as
any shares of Preferred Stock of a series remain outstanding, the Company will
not, without the affirmative vote or consent of the holders of at least a
majority of the shares of such series of Preferred Stock outstanding at the
time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of capital stock ranking
prior to such series of Preferred Stock with respect to payment of
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distributions or the distribution of assets upon liquidation, dissolution or
winding up or reclassify any authorized capital stock of the Company into such
shares, or create, authorize or issue any obligation or security convertible
into or evidencing the right to purchase any such shares, or (ii) amend, alter
or repeal the provisions of the Charter or the Articles Supplementary for such
series of Preferred Stock, whether by merger, consolidation or otherwise (an
"Event"), so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Preferred Stock or the holders
thereof; PROVIDED, HOWEVER, with respect to the occurrence of any Event set
forth in (ii) above, so long as the Preferred Stock remains outstanding with
the terms thereof materially unchanged, taking into account that upon the
occurrence of an Event the Company may not be the surviving entity, the
occurrence of any such Event shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting power of holders of
Preferred Stock; and PROVIDED FURTHER that (a) any increase in the amount of
the authorized Preferred Stock or the creation or issuance of any other series
of Preferred Stock or (b) any increase in the amount of authorized shares of
such series or any other series of Preferred Stock, in each case ranking on a
parity with or junior to the Preferred Stock of such series with respect to
payment of distributions or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of such series of Preferred Stock
shall have been redeemed or called for redemption and sufficient funds shall
have been deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred
Stock is convertible into Common Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Common Stock into which the shares of Preferred Stock are
convertible, the conversion price or rate (or manner of calculation thereof),
the conversion period, provisions as to whether conversion will be at the
option of the holders of the Preferred Stock or the Company, the events
requiring an adjustment of the conversion price and the provisions affecting
conversion in the event of the redemption of such series of Preferred Stock.
RESTRICTIONS ON TRANSFER AND OWNERSHIP
The provisions contained in the Company's Charter restricting certain
transfers of shares of Equity Stock and limiting the beneficial ownership,
directly or indirectly, of the Company's outstanding Equity Stock will effect
any shares of Preferred Stock that may from time to time be issued by the
Company. See "Restrictions on Transfers of Capital Stock."
TRANSFER AGENT
The transfer agent and registrar for the Preferred Stock will be set
forth in the applicable Prospectus Supplement.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Stock. Common Stock Warrants may be issued independently or together with any
other Offered Securities offered by any Prospectus Supplement and may be
attached to or separate from such Offered Securities. Each series of Common
Stock Warrants will be issued under a separate warrant agreement (each, a
"Warrant Agreement") to be entered into between the Company and a warrant agent
specified in the applicable Prospectus Supplement (the "Warrant Agent"). The
Warrant Agent will act solely as an agent of the Company in connection with the
Common Stock Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners of
Common Stock Warrants. The following description of the Common Stock Warrants
sets forth certain general terms and provisions of the Common Stock Warrants to
which any Prospectus Supplement may relate. The statements below describing
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the Common Stock Warrants and the applicable Warrant Agreements are in all
respects subject to and qualified in their entirety by any further terms and
provisions that may be set forth in any applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the
Common Stock Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following:
(1) the title of such Common Stock Warrants;
(2) the aggregate number of such Common Stock Warrants;
(3) the price or prices at which such Common Stock Warrants will be
issued;
(4) the designation, number and terms of the shares of Common Stock
purchasable upon exercise of such Common Stock Warrants;
(5) the designation and terms of the other Offered Securities with
which such Common Stock Warrants are issued and the number of such
Common Stock Warrants issued with each such Offered Security;
(6) the date, if any, on and after which such Common Stock Warrants and
the related Common Stock will be separately transferable;
(7) the price at which each share of Common Stock purchasable upon
exercise of such Common Stock Warrants may be purchased;
(8) the date on which the right to exercise such Common Stock Warrants
shall commence and the date on which such right shall expire;
(9) the minimum or maximum amount of such Common Stock Warrants which
may be exercised at any one time;
(10) information with respect to book-entry procedures, if any;
(11) a discussion of certain federal income tax considerations; and
(12) any other terms of such Common Stock Warrants, including terms,
procedures and limitations relating to the exchange and exercise of
such Common Stock Warrants.
Each Common Stock Warrant will entitle the holder thereof to purchase
such number of shares of Common Stock, as the case may be, at such exercise
price as shall, in each case, be set forth in, or calculable from, the
applicable Prospectus Supplement relating to the offered Common Stock Warrants.
Prior to the exercise of any Common Stock Warrants, holders of such Common
Stock Warrants will not have any rights of holders of Common Stock, including
the right to receive payments of distributions, if any, on such Common Stock,
or to exercise any applicable right to vote. After the close of business on
the expiration date of any series of Common Stock Warrants (or such later date
to which such expiration date may be extended by the Company), unexercised
Common Stock Warrants will become void.
Common Stock Warrants may be exercised by delivering to the Warrant Agent
payment, as provided in the applicable Prospectus Supplement, of the amount
required to purchase the Common Stock purchasable upon such exercise and
otherwise by following the procedures specified in such Prospectus Supplement.
The Warrant Agreements may be amended or supplemented without the consent
of the holders of the Common Stock Warrants issued thereunder to effect changes
that are not inconsistent with the provisions of the Common Stock Warrants and
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that do not adversely affect the interests of the holders of the Common Stock
Warrants.
Reference is made to the section captioned "Description of Common Stock"
for a general description of the Common Stock to be acquired upon the exercise
of the Common Stock Warrants, including a description of certain restrictions
on the ownership of Common Stock.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable Prospectus
Supplement. Shares of Preferred Stock of each series represented by Depositary
Shares will be deposited under a separate deposit agreement (each, a "Deposit
Agreement") among the Company, the depositary named therein (a "Preferred Stock
Depositary") and the holders from time to time of the Depositary Receipts.
Subject to the terms of the applicable Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest
of a share of a particular series of Preferred Stock represented by the
Depositary Shares evidenced by such Depositary Receipt, to all the rights and
preferences of the Preferred Stock represented by such Depositary Shares
(including distribution, voting, conversion, redemption and liquidation
rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Stock by the Company to a Preferred
Stock Depositary, the Company will cause such Preferred Stock Depositary to
issue, on behalf of the Company, the Depositary Receipts. Copies of the
applicable form of Deposit Agreement and Depositary Receipt may be obtained
from the Company upon request, and the statements made hereunder relating to
Deposit Agreements and the Depositary Receipts to be issued thereunder are
summaries of certain anticipated provisions thereof and do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all of the provisions of the applicable Deposit Agreement and related
Depositary Receipts.
DISTRIBUTIONS
A Preferred Stock Depositary will be required to distribute all cash
distributions received in respect of the applicable Preferred Stock to the
record holders of Depositary Receipts evidencing the related Depositary Shares
in proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to such Preferred
Stock Depositary.
In the event of a distribution other than in cash, a Preferred Stock
Depositary will be required to distribute property received by it to the record
holders of Depositary Receipts entitled thereto, subject to certain obligations
of holders to file proofs, certificates and other information and to pay
certain charges and expenses to such Preferred Stock Depositary, unless such
Preferred Stock Depositary determines that it is not feasible to make such
distribution, in which case such Preferred Stock Depositary may, with the
approval of the Company, sell such property and distribute the net proceeds
from such sale to such holders.
No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock which has been converted or
exchanged.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office
of the applicable Preferred Stock Depositary (unless the related Depositary
Shares have previously been called for redemption or converted), the holders
thereof will be entitled to delivery at such office, to or upon each such
holder's order, of the number of whole or fractional shares of the applicable
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Preferred Stock and any money or other property represented by the Depositary
Shares evidenced by such Depositary Receipts. Holders of Depositary Receipts
will be entitled to receive whole or fractional shares of the related Preferred
Stock on the basis of the proportion of Preferred Stock represented by each
Depositary Share as specified in the applicable Prospectus Supplement, but
holders of such shares of Preferred Stock will not thereafter be entitled to
receive Depositary Shares therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of shares of Preferred Stock to be
withdrawn, the applicable Preferred Stock Depositary will be required to
deliver to such holder at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by a
Preferred Stock Depositary, such Preferred Stock Depositary will be required to
redeem as of the same redemption date the number of Depositary Shares
representing shares of the Preferred Stock so redeemed, PROVIDED the Company
shall have paid in full to such Preferred Stock Depositary the redemption price
of the Preferred Stock to be redeemed plus an amount equal to any accrued and
unpaid distributions thereon to the date fixed for redemption. The redemption
price per Depositary Share will be equal to the redemption price and any other
amounts per share payable with respect to the Preferred Stock. If fewer than
all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected pro rata (as nearly as may be practicable without
creating fractional Depositary Shares) or by any other equitable method
determined by the Company that preserves the REIT status of the Company.
From and after the date fixed for redemption, all distributions in
respect of the shares of Preferred Stock so called for redemption will cease to
accrue, the Depositary Shares so called for redemption will no longer be deemed
to be outstanding and all rights of the holders of the Depositary Receipts
evidencing the Depositary Shares so called for redemption will cease, except
the right to receive any moneys payable upon such redemption and any money or
other property to which the holders of such Depositary Receipts were entitled
upon such redemption upon surrender thereof to the applicable Preferred Stock
Depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
applicable Preferred Stock are entitled to vote, a Preferred Stock Depositary
will be required to mail the information contained in such notice of meeting to
the record holders of the Depositary Receipts evidencing the Depositary Shares
which represent such Preferred Stock. Each record holder of Depositary
Receipts evidencing Depositary Shares on the record date (which will be the
same date as the record date for the Preferred Stock) will be entitled to
instruct such Preferred Stock Depositary as to the exercise of the voting
rights pertaining to the amount of Preferred Stock represented by such holder's
Depositary Shares. Such Preferred Stock Depositary will be required to vote
the amount of Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by such Preferred Stock
Depositary in order to enable such Preferred Stock Depositary to do so. Such
Preferred Stock Depositary will be required to abstain from voting the amount
of Preferred Stock represented by such Depositary Shares to the extent it does
not receive specific instructions from the holders of Depositary Receipts
evidencing such Depositary Shares. A Preferred Stock Depositary will not be
responsible for any failure to carry out any instruction to vote, or for the
manner or effect of any such vote made, as long as such action or non-action is
in good faith and does not result from negligence or willful misconduct of such
Preferred Stock Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of each Depositary
Receipt will be entitled to the fraction of the liquidation preference accorded
each share of Preferred Stock represented by the Depositary Share evidenced by
such Depositary Receipt, as set forth in the applicable Prospectus Supplement.
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CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, will not be convertible into Common Stock
or any other securities or property of the Company. Nevertheless, if so
specified in the applicable Prospectus Supplement relating to an offering of
Depositary Shares, the Depositary Receipts may be surrendered by holders
thereof to the applicable Preferred Stock Depositary with written instructions
to such Preferred Stock Depositary to instruct the Company to cause conversion
of the Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of Common Stock, other shares of
Preferred Stock of the Company or other shares of stock, and the Company will
agree that upon receipt of such instructions and any amounts payable in respect
thereof, it will cause the conversion thereof utilizing the same procedures as
those provided for delivery of Preferred Stock to effect such conversion. If
the Depositary Shares evidenced by a Depositary Receipt are to be converted in
part only, a new Depositary Receipt or Depositary Receipts will be issued for
any Depositary Shares not to be converted. No fractional shares of Common
Stock will be issued upon conversion, and if such conversion will result in a
fractional share being issued, an amount will be paid in cash by the Company
equal to the value of the fractional interest based upon the closing price of
the Common Stock on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
Any form of Depositary Receipt evidencing Depositary Shares which will
represent Preferred Stock and any provision of a Deposit Agreement will be
permitted at any time to be amended by agreement between the Company and the
applicable Preferred Stock Depositary. However, any amendment that materially
and adversely alters the rights of the holders of Depositary Receipts or that
would be materially and adversely inconsistent with the rights granted to the
holders of the related Preferred Stock will not be effective unless such
amendment has been approved by the existing holders of at least two-thirds of
the applicable Depositary Shares evidenced by the applicable Depositary
Receipts then outstanding. No amendment shall impair the right, subject to
certain anticipated exceptions in the Deposit Agreements, of any holders of
Depositary Receipts to surrender any Depositary Receipt with instructions to
deliver to the holder the related Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with any
applicable law. Every holder of an outstanding Depositary Receipt at the time
any such amendment becomes effective shall be deemed, by continuing to hold
such Depositary Receipt, to consent and agree to such amendment and to be bound
by the applicable Deposit Agreement as amended thereby.
A Deposit Agreement will be permitted to be terminated by the Company
upon not less than 30 days' prior written notice to the applicable Preferred
Stock Depositary if (i) such termination is necessary to preserve the Company's
status as a REIT or (ii) a majority of each series of Preferred Stock affected
by such termination consents to such termination, whereupon such Preferred
Stock Depositary will be required to deliver or make available to each holder
of Depositary Receipts, upon surrender of the Depositary Receipts held by such
holder, such number of whole or fractional shares of Preferred Stock as are
represented by the Depositary Shares evidenced by such Depositary Receipts
together with any other property held by such Preferred Stock Depositary with
receipts to such Depositary Receipts. The Company will agree that if a Deposit
Agreement is terminated to preserve the Company's status as a REIT, then the
Company will use its best efforts to list the Preferred Stock issued upon
surrender of the related Depositary Shares on a national securities exchange.
In addition, a Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares thereunder shall have been redeemed; (ii) there
shall have been a final distribution in respect of the related Preferred Stock
in connection with any liquidation, dissolution or winding up of the Company
and such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such Preferred Stock; or
(iii) each share of the related Preferred Stock shall have been converted into
stock of the Company not so represented by Depositary Shares.
CHARGES OF A PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of a Deposit Agreement. In addition,
the Company will pay the fees and expenses of a Preferred Stock Depositary in
connection with the performance of its duties under a Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of a
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Preferred Stock Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the applicable
Deposit Agreement.
RESIGNATION AND REMOVAL OF A PREFERRED STOCK DEPOSITARY
A Preferred Stock Depositary will be permitted to resign at any time by
delivering to the Company notice of its election to do so, and the Company will
be permitted at any time to remove a Preferred Stock Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Preferred Stock Depositary. A successor Preferred Stock Depositary will be
required to be appointed within 60 days after delivery of the notice of
resignation or removal and will be required to be a bank or trust company
having its principal office in the United States and having a combined capital
and surplus of at least $50 million.
MISCELLANEOUS
A Preferred Stock Depositary will be required to forward to holders of
Depositary Receipts any reports and communications from the Company which are
received by such Preferred Stock Depositary with respect to the related
Preferred Stock.
Neither a Preferred Stock Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under a Deposit Agreement. The obligations
of the Company and a Preferred Stock Depositary under a Deposit Agreement will
be limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of Preferred
Stock represented by the applicable Depositary Shares), gross negligence or
willful misconduct, and neither the Company nor any applicable Preferred Stock
Depositary will be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Receipts, Depositary Shares or shares of Preferred
Stock represented thereby unless satisfactory indemnity is furnished. The
Company and any Preferred Stock Depositary will be permitted to rely on written
advice of counsel or accountants, or information provided by persons presenting
shares of Preferred Stock represented thereby for deposit, holders of
Depositary Receipts or other persons believed in good faith to be competent to
give such information, and on documents believed in good faith to be genuine
and signed by a proper party.
In the event a Preferred Stock Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on
the one hand, and the Company, on the other hand, such Preferred Stock
Depositary shall be entitled to act on such claims, requests or instructions
received from the Company.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued by the Operating Partnership. The Debt
Securities will be either (i) non-convertible investment grade Debt Securities
or (ii) non-convertible Debt Securities that are fully and unconditionally
guaranteed by, and are accompanied by Guarantees of, the Company. The Debt
Securities will be issued pursuant to an indenture (the "Indenture"), between
the Operating Partnership and a trustee (a "Trustee"). The form of Indenture
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, subject to such amendments or supplements as may be
adopted from time to time and is available for inspection as described above
under "Available Information." The Indenture will be dated as of a date prior
to the issuance of the Debt Securities to which it relates. The Indenture is
subject to, and governed by, the Trust Indenture Act of 1939, as amended. The
statements made hereunder relating to the Indenture and the Debt Securities to
be issued thereunder are summaries of certain provisions thereof, do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indenture and such Debt Securities.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Operating Partnership and, unless subordinated (see "-Subordination" below),
will rank pari passu with all other unsecured and unsubordinated indebtedness
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of the Operating Partnership. The Debt Securities may be issued without limit
as to aggregate principal amount, in one or more series, in each case as
established from time to time, in or pursuant to authority granted by a
resolution of the Board of Directors of the Company (the "Board of Directors")
on behalf of the Operating Partnership or as established in one or more
indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided in the
Indenture, a series may be reopened, without the consent of the holders of the
Debt Securities of such series, for issuances of additional Debt Securities of
such series.
The Indenture provides that the Operating Partnership may, but need not,
designate more than one Trustee thereunder, each with respect to one or more
series of Debt Securities. Any Trustee under the Indenture may resign or be
removed with respect to one or more series of Debt Securities, and a successor
Trustee may be appointed to act with respect to such series. In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a trustee of a trust under the
Indenture separate and apart from the trust administered by any other Trustee,
and, except as otherwise indicated herein, any action described herein to be
taken by the Trustee may be taken by each such Trustee with respect to, and
only with respect to, the one or more series of Debt Securities for which it is
Trustee under the Indenture.
The following summaries set forth certain general terms and provisions of
the Indenture and the Debt Securities. The Prospectus Supplement relating to
the series of Debt Securities being offered will contain further terms thereof
and of the Guarantees, if any, relating to such Debt Securities, including,
where applicable, the following:
(1) the title of such Debt Securities, whether such are senior Debt
Securities or subordinated Debt Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of the maturity thereof;
(4) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(5) the rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) the date or dates, or the method for determining such date or
dates, from which any interest will accrue, the dates on which any
such interest will be payable, the record dates for such interest
payment dates, or the method by which any such date shall be
determined, and the basis upon which interest shall be calculated
if other than that of a 360-day year of 12 months consisting of 30
days each;
(7) the place or places where the principal of (and premium, if any)
and interest, if any, on such Debt Securities will be payable, such
Debt Securities may be surrendered for registration of transfer or
exchange and notices or demands to or upon the Operating
Partnership in respect of such Debt Securities, any applicable
Guarantees and the Indenture may be served;
(8) the period or periods within which, the price or prices at which
and the terms and conditions upon which such Debt Securities may be
redeemed, as a whole or in part, at the option of the Operating
Partnership, if the Operating Partnership is to have such an
option;
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(9) the obligation, if any, of the Operating Partnership to redeem,
repay or purchase such Debt Securities pursuant to any sinking fund
or analogous provision or at the option of a holder thereof, and
the period or periods within which, the price or prices at which
and the terms and conditions upon which such Debt Securities will
be redeemed, repaid or purchased, as a whole or in part, pursuant
to such obligation;
(10) if other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a
foreign currency or units of two or more foreign currencies or a
composite currency or currencies, and the terms and conditions
relating thereto;
(11) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Debt Securities may be determined
with reference to an index, formula or other method (which index,
formula or method may, but need not be, based on a currency,
currencies, currency unit or units or composite currency or
currencies) and the manner in which such amounts shall be
determined;
(12) the events of default or covenants of such Debt Securities, to the
extent different from or in addition to those described herein;
(13) whether such Debt Securities will be issued in certificated and/or
book-entry form;
(14) whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than
$1,000 and any integral multiple thereof and, if in bearer form,
the denominations thereof if other than $5,000 and terms and
conditions relating thereto;
(15) the applicability, if any, of the defeasance and covenant
defeasance provisions described herein or any modification thereof;
(16) if such Debt Securities are to be issued upon the exercise of debt
warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
(17) the terms and conditions, if any, upon which such Debt Securities
may be subordinated to other indebtedness of the Operating
Partnership;
(18) whether and under what circumstances the Operating Partnership will
pay additional amounts on such Debt Securities in respect of any
tax, assessment or governmental charge and, if so, whether the
Operating Partnership will have the option to redeem such Debt
Securities in lieu of making such payment;
(19) with respect to any Debt Securities that provide for optional
redemption or prepayment upon the occurrence of certain events
(such as a change of control of the Operating Partnership), (i) the
possible effects of such provisions on the market price of the
Operating Partnership's or the Company's securities or in deterring
certain mergers, tender offers or other takeover attempts, and the
intention of the Operating Partnership to comply with the
requirements of Rule 14e-1 under the Exchange Act; (ii) whether the
occurrence of the specified events may give rise to cross-defaults
on other indebtedness such that payment on such Debt Securities may
be effectively subordinated; and (iii) the existence of any
limitation on the Operating Partnership's financial or legal
ability to repurchase such Debt Securities upon the occurrence of
such an event (including, if true, the lack of assurance that such
a repurchase can be effected) and the impact, if any, under the
Indenture of such a failure, including whether and under what
circumstances such a failure may constitute an Event of Default;
and
(20) any other terms of such Debt Securities or of any Guarantees issued
concurrently with such Debt Securities not inconsistent with the
provisions of the Indenture.
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The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). If material or applicable, the federal
income tax, accounting and other considerations applicable to Original Issue
Discount Securities will be described in the applicable Prospectus Supplement.
Except as described under "-Merger, Consolidation or Sale" or as may be
set forth in any Prospectus Supplement, the Indenture does not contain any
other provisions that would limit the ability of the Operating Partnership to
incur indebtedness or that would afford holders of the Debt Securities
protection in the event of (i) a highly leveraged or similar transaction
involving the Operating Partnership, the management of the Operating
Partnership or any affiliate of any such party, (ii) a change of control or
(iii) a reorganization, restructuring, merger or similar transaction involving
the Operating Partnership that may adversely affect the holders of the Debt
Securities. In addition, subject to the limitations set forth under "-Merger,
Consolidation or Sale," the Operating Partnership may, in the future, enter
into certain transactions, such as the sale of all or substantially all of its
assets or the merger or consolidation of the Operating Partnership that would
increase the amount of the Operating Partnership's indebtedness or
substantially reduce or eliminate the Operating Partnership's assets, which may
have an adverse effect on the Operating Partnership's ability to service its
indebtedness, including the Debt Securities. In addition, restrictions on
ownership and transfers of the Company's capital stock are designed to preserve
its status as a REIT and, therefore, may act to prevent or hinder a change of
control. See "Description of Common Stock" and "Description of Preferred
Stock." Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions
to the events of default or covenants that are described below, including any
addition of a covenant or other provisions providing event risk or similar
protection.
Reference is made to "-Certain Covenants" below and to the description of
any additional covenants with respect to a series of Debt Securities in the
applicable Prospectus Supplement. Except as otherwise described in the
applicable Prospectus Supplement, compliance with such covenants generally may
not be waived with respect to a series of Debt Securities by the Board of
Directors on behalf of the Operating Partnership or by the Trustee unless the
holders of at least a majority in principal amount of all outstanding Debt
Securities of such series consent to such waiver, except to the extent that the
defeasance and covenant defeasance provisions of the Indenture described under
"-Discharge, Defeasance and Covenant Defeasance" below apply to such series of
Debt Securities. See "-Modification of the Indenture."
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series which are registered securities, other than
registered securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $1,000 and any integral multiple thereof
and the Debt Securities which are bearer securities, other than bearer
securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $5,000.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest, if any, on any series of Debt
Securities will be payable at the corporate trust office of the Trustee,
initially at the address which will be set forth in the applicable Prospectus
Supplement, PROVIDED that, at the option of the Operating Partnership payment
of interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register or by wire transfer of funds
to such person at an account maintained within the United States.
Any interest not punctually paid or duly provided for on any interest
payment date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
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Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Trustee. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer thereof at the corporate trust office of the
applicable Trustee. Every Debt Security surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer. No service charge will be made for any registration of
transfer or exchange of any Debt Securities, but the Trustee or the Operating
Partnership may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. If the applicable
Prospectus Supplement refers to any transfer agent (in addition to the Trustee)
initially designated by the Operating Partnership with respect to any series of
Debt Securities, the Operating Partnership may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Operating
Partnership will be required to maintain a transfer agent in each place of
payment for such series. The Operating Partnership may at any time designate
additional transfer agents with respect to any series of Debt Securities.
Neither the Operating Partnership nor any Trustee shall be required (i)
to issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before any
selection of Debt Securities of that series to be redeemed and ending at the
close of business on (a) if such Debt Securities are issuable only as
registered securities, the day of the mailing of the relevant notice of
redemption and (b) if such Debt Securities are issuable as bearer securities,
the day of the first publication of the relevant notice of redemption or, if
such Debt Securities are also issuable as registered securities and there is no
publication, the day of the mailing of the relevant notice of redemption,
(ii) to register the transfer or exchange of any registered security to be
redeemed in whole or in part, except, in the case of any registered security to
be redeemed in part, the portion thereof not to be redeemed, (iii) to exchange
any bearer security so selected for redemption except that such a bearer
security may be exchanged for a registered security of that series and like
tenor, PROVIDED that such registered security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Debt Security which has been surrendered for repayment at the
option of the holder, except the portion, if any, of such Debt Security not to
be so repaid.
MERGER, CONSOLIDATION OR SALE
The Operating Partnership may consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into, any other
entity, PROVIDED that (i) either the Operating Partnership shall be the
continuing entity or the successor entity (if other than the Operating
Partnership) formed by or resulting from any such consolidation or merger or
which shall have received the transfer of such assets shall expressly assume
payment of the principal of (and premium, if any) and interest, if any, on all
of the Debt Securities and the due and punctual performance and observance of
all of the covenants and conditions contained in the Indenture;
(ii) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Operating Partnership or any
subsidiary as a result thereof as having been incurred by the Operating
Partnership or such subsidiary at the time of such transaction, no Event of
Default under the Indenture, and no event which, after notice or the lapse of
time, or both, would become such an Event of Default, shall have occurred and
be continuing; and (iii) an officer's certificate and legal opinion covering
such conditions shall be delivered to the Trustee.
CERTAIN COVENANTS
EXISTENCE. Except as permitted under "-Merger, Consolidation or Sale,"
the Operating Partnership will be required to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
and franchises; PROVIDED, HOWEVER, that the Operating Partnership shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
holders of the Debt Securities.
PAYMENT OF TAXES AND OTHER CLAIMS. The Operating Partnership is required
to pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges levied
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or imposed upon it or any subsidiary or upon the income, profits or property of
the Operating Partnership or any subsidiary and (ii) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien upon
the property of the Operating Partnership or any subsidiary; PROVIDED, HOWEVER,
that the Operating Partnership shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
ADDITIONAL COVENANTS. Any additional or different covenants of the
Operating Partnership with respect to any series of Debt Securities will be set
forth in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (i) default
for 30 days in the payment of any installment of interest on any Debt Security
of such series; (ii) default in the payment of the principal of (or premium, if
any, on) any Debt Security of such series at its maturity; (iii) default in
making any sinking fund payment as required for any Debt Security of such
series; (iv) default in the performance of any other covenant of the Operating
Partnership contained in the Indenture (other than a covenant added to such
Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), such default having continued for 60 days
after written notice as provided in such Indenture; (v) default in the payment
of an aggregate principal amount exceeding a specified dollar amount of any
evidence of recourse indebtedness of the Operating Partnership or any mortgage,
indenture or other instrument under which such indebtedness is issued or by
which such indebtedness is secured, such default having occurred after the
expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such
indebtedness is not discharged or such acceleration is not rescinded or
annulled; (vi) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the Operating
Partnership or any Significant Subsidiary (as hereinafter defined) or any of
their respective property; and (vii) any other Event of Default provided with
respect to a particular series of Debt Securities. The term "Significant
Subsidiary" means each significant subsidiary (as defined in Regulation S-X
promulgated under the Securities Act) of the Operating Partnership.
If an Event of Default under the Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the applicable Trustee or the holders of not less than 25%
in principal amount of the outstanding Debt Securities of that series may
declare the principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof) of all of the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Operating Partnership (and to the applicable Trustee if given by
the holders). However, at any time after such a declaration of acceleration
with respect to Debt Securities of such series (or of all Debt Securities then
outstanding under the Indenture, as the case may be) has been made, but before
a judgment or decree for payment of the money due has been obtained by the
applicable Trustee, the holders of not less than a majority in principal amount
of outstanding Debt Securities of such series (or of all Debt Securities then
outstanding under the Indenture, as the case may be) may rescind and annul such
declaration and its consequences if (i) the Operating Partnership shall have
deposited with the applicable Trustee all required payments of the principal of
(and premium, if any) and interest, if any, on the Debt Securities of such
series (or of all Debt Securities then outstanding under the Indenture, as the
case may be), plus certain fees, expenses, disbursements and advances of the
applicable Trustee and (ii) all events of default, other than the non-payment
of accelerated principal (or specified portion thereof), or premium (if any) or
interest on the Debt Securities of such series (or of all Debt Securities then
outstanding under the Indenture, as the case may be) have been cured or waived
as provided in the Indenture. The Indenture also provides that the holders of
not less than a majority in principal amount of the outstanding Debt Securities
of any series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default (i) in the payment of the
principal of (or premium, if any) or interest, if any, on any Debt Security of
such series or (ii) in respect of a covenant or provision contained in the
Indenture that cannot be modified or amended without the consent of the holder
of each outstanding Debt Security affected thereby.
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The Trustee will be required to give notice to the holders of Debt
Securities within 90 days of a default under the Indenture unless such default
has been cured or waived; PROVIDED, HOWEVER, that such Trustee may withhold
notice to the holders of any series of Debt Securities of any default with
respect to such series (except a default in the payment of the principal of (or
premium, if any) or interest, if any, on any Debt Security of such series or in
the payment of any sinking fund installment in respect of any Debt Security of
such series) if specified responsible officers of such Trustee consider such
withholding to be in the interest of such holders.
The Indenture provides that no holders of Debt Securities of any series
may institute any proceedings, judicial or otherwise, with respect to such
Indenture or for any remedy thereunder, except in the case of failure of the
applicable Trustee, for 60 days, to act after it has received a written request
to institute proceedings in respect of an Event of Default from the holders of
not less than 25% in principal amount of the outstanding Debt Securities of
such series, as well as an offer of indemnity reasonably satisfactory to it.
This provision will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest, if any, on such Debt Securities at the
respective due dates thereof.
Subject to provisions in the Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights
or powers under the Indenture at the request or direction of any holders of any
series of Debt Securities then outstanding under such Indenture, unless such
holders shall have offered to the Trustee reasonable security or indemnity.
The holders of not less than a majority in principal amount of the outstanding
Debt Securities of any series (or of all Debt Securities then outstanding under
the Indenture, as the case may be) shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
applicable Trustee, or of exercising any trust or power conferred upon such
Trustee. However, a Trustee may refuse to follow any direction which is in
conflict with any law or the Indenture, which may involve such Trustee in
personal liability or which may be unduly prejudicial to the holders of Debt
Securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to deliver to each Trustee a certificate, signed
by one of several specified officers of the Company, stating whether or not
such officer has knowledge of any default under the Indenture and, if so,
specifying each such default and the nature and status thereof.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be permitted to be
made only with the consent of the holders of not less than a majority in
principal amount of all outstanding Debt Securities or series of outstanding
Debt Securities which are affected by such modification or amendment; PROVIDED,
HOWEVER, that no such modification or amendment may, without the consent of the
holder of each such Debt Security affected thereby, (i) change the stated
maturity of the principal of, or any installment of interest (or premium, if
any) on, any such Debt Security; (ii) reduce the principal amount of, or the
rate or amount of interest on, or any premium payable on redemption of, any
such Debt Security, or reduce the amount of principal of an Original Issue
Discount Security that would be due and payable upon declaration of
acceleration of the maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the holder of any such Debt
Security; (iii) change the place of payment, or the coin or currency, for
payment of principal of, premium, if any, or interest on any such Debt
Security; (iv) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security; (v) reduce the above-
stated percentage of outstanding Debt Securities of any series necessary to
modify or amend the Indenture, to waive compliance with certain provisions
thereof or certain defaults and consequences thereunder or to reduce the quorum
or voting requirements set forth in such Indenture; or (vi) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the holder of such Debt Security.
The Indenture provides that the holders of not less than a majority in
principal amount of a series of outstanding Debt Securities have the right to
waive compliance by the Operating Partnership with certain covenants relating
to such series of Debt Securities in the Indenture.
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Modifications and amendments of the Indenture will be permitted to be
made by the Operating Partnership and the respective Trustee thereunder without
the consent of any holder of Debt Securities for any of the following purposes:
(i) to evidence the succession of another person to the Operating Partnership
as obligor under such Indenture; (ii) to add to the covenants of the Operating
Partnership for the benefit of the holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Operating
Partnership in such Indenture; (iii) to add events of default for the benefit
of the holders of all or any series of Debt Securities; (iv) to add or change
any provisions of such Indenture to facilitate the issuance of Debt Securities
in uncertificated form, PROVIDED that such action shall not adversely affect
the interests of the holders of the Debt Securities in any material respect;
(v) to change or eliminate any provisions of such Indenture, PROVIDED that any
such change or elimination shall become effective only when there are no Debt
Securities outstanding of any series created prior thereto which are entitled
to the benefit of such provision; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series; (viii) to provide
for the acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under such Indenture by more than one Trustee;
(ix) to cure any ambiguity, defect or inconsistency in such Indenture, PROVIDED
that such action shall not adversely affect the interests of holders of Debt
Securities of any series in any material respect; or (x) to supplement any of
the provisions of such Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities or of
any applicable Guarantees, PROVIDED that such action shall not adversely affect
the interests of the holders of the Debt Securities of any series in any
material respect.
The Indenture provides that in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed
outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above), (iii) the
principal amount of an indexed security that shall be deemed outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security pursuant to
such Indenture, and (iv) Debt Securities owned by the Operating Partnership or
any other obligor upon the Debt Securities or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded.
The Indenture contains provisions for convening meetings of the holders
of Debt Securities of a series. A meeting will be permitted to be called at
any time by a Trustee, and also, upon request, by the Operating Partnership or
the holders of at least 10% in principal amount of the outstanding Debt
Securities of such series, in any such case, upon notice given as provided in
such Indenture. Except for any consent that must be given by the holder of
each Debt Security affected by certain modifications and amendments of the
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; PROVIDED, HOWEVER, that, except as referred to
above, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the holders of a specified percentage, which is less than a majority,
in principal amount of the outstanding Debt Securities of a series may be
adopted at a meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of the holders of such specified percentage in
principal amount of the outstanding Debt Securities for that series. Any
resolution passed or decision taken at any meeting of holders of Debt
Securities of any series duly held in accordance with the Indenture will be
binding on all holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
outstanding Debt Securities of a series; PROVIDED, HOWEVER, that if any action
is to be taken at such meeting with respect to a consent or waiver which may be
given by the holders of not less than a specified percentage in principal
amount of the outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
Debt Securities of such series will constitute a quorum.
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Notwithstanding the foregoing provisions, the Indenture provides that if
any action is to be taken at a meeting of holders of Debt Securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver or other action that such Indenture expressly provides may be
made, given or taken by the holders of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the outstanding Debt Securities of such series
that vote in favor of such request, demand, authorization, direction, notice,
consent, waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice, consent, waiver
or other action has been made, given or taken under such Indenture.
SUBORDINATION
The terms and conditions, if any, upon which the Debt Securities are
subordinated to other indebtedness of the Operating Partnership will be set
forth in the applicable Prospectus Supplement relating thereto. Such terms
will include a description of the indebtedness ranking senior to the Debt
Securities, the restrictions on payments to the holders of such Debt Securities
while default with respect to such senior indebtedness is continuing, the
restrictions, if any, on payments to the holders of such Debt Securities
following an Event of Default, and provisions requiring holders of such Debt
Securities to remit certain payments to holders of senior indebtedness. If
this Prospectus is being delivered in connection with a series of Debt
Securities, which by its terms are subordinated to other indebtedness of the
Operating Partnership, the applicable Prospectus Supplement or the information
incorporated herein by reference will set forth the approximate amount of such
other indebtedness outstanding at the end of the Operating Partnership's most
recent fiscal quarter. If the applicable Prospectus Supplement relates to Debt
Securities that are guaranteed by the Company, the terms and conditions, if
any, upon which such guarantee may be subordinated to other indebtedness of the
Company will also be set forth.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership may discharge certain obligations to holders of
any series of Debt Securities that have not already been delivered to the
applicable Trustee for cancellation and that either have become due and payable
or will become due and payable within one year (or scheduled for redemption
within one year) by irrevocably depositing with such Trustee, in trust, funds
in such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal
(and premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or redemption
date, as the case may be.
The Indenture provides that, if certain provisions thereof are made
applicable to the Debt Securities of or within a series pursuant to such
Indenture, the Operating Partnership may elect either (i) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay additional amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") or (ii) to be released from its obligations with respect
to such Debt Securities under certain sections of such Indenture (including the
restrictions described under "-Certain Covenants") and, if provided pursuant to
such Indenture, its obligations with respect to any other covenant, and any
omission to comply with such obligations shall not constitute a default or an
Event of Default with respect to such Debt Securities ("covenant defeasance"),
in either case upon the irrevocable deposit by the Operating Partnership with
the applicable Trustee, in trust, of an amount, in such currency or currencies,
currency unit or units of composite currency or currencies in which such Debt
Securities are payable at stated maturity, or Government Obligations (as
defined below), or both, applicable to such Debt Securities which through the
scheduled payment of principal and interest in accordance with their terms will
provide money in an amount sufficient to pay the principal of (and premium, if
any) and interest on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled dates therefor.
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Such a trust will only be permitted to be established if, among other
things, the Operating Partnership has delivered to the Trustee an opinion of
counsel (as specified in the Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such opinion of counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service ("IRS") or a change in applicable federal income tax law occurring
after the date of the Indenture.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or
(ii) obligations of a person controlled or supervised by and acting as an
agency or instrumentality of the United States of America or such government
which issued the foreign currency in which the Debt Securities of a particular
series are payable, the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America or such other
government, which, in either case, are not callable or redeemable at the option
of the issuer thereof, and shall also include a depository receipt issued by a
bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of any such
Government Obligation held by such custodian for the account of the holder of a
depository receipt, PROVIDED that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Obligations or the specific payment of interest on or principal
of the Government Obligations evidenced by such depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Operating Partnership has deposited funds and/or Government
Obligations to effect defeasance or covenant defeasance with respect to Debt
Securities of any series, (i) the holder of a Debt Security of such series is
entitled to, and does, elect pursuant to the Indenture or the terms of such
Debt Security to receive payment in a currency, currency unit or composite
currency other than that in which such deposit has been made in respect of such
Debt Security, or (ii) a Conversion Event (as defined below) occurs in respect
of the currency, currency unit or composite currency in which such deposit has
been made, the indebtedness represented by such Debt Security shall be deemed
to have been, and will be, fully discharged and satisfied through the payment
of the principal of (and premium, if any) and interest, if any, on such Debt
Security as they become due out of the proceeds yielded by converting the
amount so deposited in respect of such Debt Security into the currency,
currency unit or composite currency in which such Debt Security becomes payable
as a result of such election or such Conversion Event based on the applicable
market exchange rate. "Conversion Event" means the cessation of use of (i) a
currency, currency unit or composite currency both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international
banking community, (ii) the European Currency Unit (the "ECU") both within the
European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities or (iii) any currency unit
or composite currency other than the ECU for the purposes for which it was
established. Unless otherwise provided in the applicable Prospectus
Supplement, all payments of principal of (and premium, if any) and interest, if
any, on any Debt Security that is payable in a foreign currency that ceases to
be used by its government of issuance shall be made in U.S. dollars.
In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (iv) under "-Events of Default, Notice and
Waiver" with respect to certain sections of the Indenture (which sections would
no longer be applicable to such Debt Securities) or described in clause (vii)
under "-Events of Default, Notice and Waiver" with respect to any other
covenant as to which there has been covenant defeasance, the amount in such
currency, currency unit or composite currency in which such Debt Securities are
payable, and Government Obligations on deposit with the applicable Trustee,
will be sufficient to pay amounts due on such Debt Securities at the time of
their stated maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of
Default. However, the Operating Partnership would remain liable to make
payment of such amounts due at the time of acceleration.
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The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
GUARANTEES
If the Operating Partnership issues any Debt Securities that are rated
below investment grade at the time of issuance, the Company will fully and
unconditionally guarantee, on a senior or subordinated basis, the due and
punctual payment of principal of or premium, if any, and interest on such Debt
Securities, and the due and punctual payment of any sinking fund payments
thereon, when and as the same shall become due and payable, whether at a
maturity date, by declaration of acceleration, call for redemption or
otherwise. See "-Subordination." The applicability and terms of any such
Guarantees relating to a series of Debt Securities will be set forth in the
Prospectus Supplement relating to such Debt Securities.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for individual
certificates evidencing Debt Securities in definitive form represented thereby,
a Global Security may not be transferred except as a whole by a depositary for
such Global Security to a nominee of such depositary or by a nominee of such
depositary to such depositary or another nominee of such depositary or by such
depositary or any such nominee to a successor of such depositary or a nominee
of such successor.
The specific terms of the depositary arrangement with respect to a series
of Global Securities, and certain limitations and restrictions relating to a
series of bearer Global Securities, will be described in the applicable
Prospectus Supplement relating to such series.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding Equity Stock may be owned,
directly or indirectly, by five or fewer individuals (defined in the Code to
include certain entities) during the last half of a taxable year (other than
the first year), and such Equity Stock must be beneficially owned by 100 or
more persons during at least 335 days of a taxable year of 12 months (other
than the first year) or during a proportionate part of a shorter taxable year.
The Charter provides that, subject to certain exceptions specified in the
Charter, no stockholder may own, or be deemed to own by virtue of the
attribution provisions of the Code (or by virtue of being deemed part of a
"group" within the meaning of Section 13(d)(3) of the Exchange Act), more than
5% of the number or value of the issued and outstanding shares of the Company
(the "Ownership Limit"). The Board of Directors may waive the Ownership Limit
if evidence satisfactory to the Board of Directors is presented that such
Ownership Limit will not jeopardize the Company's status as a REIT. As a
condition to such waiver, the Board of Directors may require opinions of
counsel satisfactory to it and undertakings from the applicant with respect to
preserving the REIT status of the Company. The Ownership Limit will not apply
if the Board of Directors and the stockholders of the Company determine that it
is no longer in the best interests of the Company to attempt to qualify, or to
continue to qualify, as a REIT.
If shares of Equity Stock in excess of the Ownership Limit, or shares
which would cause the Company to be beneficially owned by fewer than 100
persons or cause the Company to become "closely held" under Section 856(h) of
the Code, are issued or transferred to any person, such issuance or transfer
shall be null and void and the intended transferee will acquire no rights to
the Equity Stock. Shares issued or transferred that would cause any
stockholder to own more than the Ownership Limit or cause the Company to become
"closely held" under Section 856(h) of the Code will be exchanged automatically
for shares of Excess Stock. All Excess Stock will be transferred, without
action by the stockholder, to the Company as trustee of a trust for the
exclusive benefit of the transferee or transferees to whom the Excess Stock is
ultimately transferred. While the Excess Stock is held in trust, it will not
be entitled to vote, it will not be considered for purposes of any stockholder
vote or the determination of a quorum for such vote and it will not be entitled
to participate in any distributions made by the Company, except upon
liquidation. The intended transferee (provided he does not make a profit from
the transfer) may, at any time the Excess Stock is held by the Company in
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trust, transfer the Excess Stock to any individual whose ownership of such
Excess Stock would be permitted under the Ownership Limit provision and would
not cause the Company to be beneficially owned by fewer than 100 persons or
cause the Company to become to become "closely held" under Section 856(h) of
the Code, at which time the Excess Stock would automatically be exchanged for
Common Stock. In addition, the Company has the right, for a period of 90 days,
beginning on the later of the date of the transfer that caused the exchange for
Excess Stock and the date the Board has knowledge of the transfer, to purchase
all or any portion of the Excess Stock from the intended transferee at the
lesser of the price paid for the Equity Stock by the intended transferee and
the closing market price for the Equity Stock on the date the Company exercises
its option to purchase.
The Charter provides that these restrictions will not preclude the
settlement of transactions entered into through the facilities of the NYSE.
Each stockholder who owns, directly or by virtue of the attribution
provisions of the Code, more than 5% of the outstanding Equity Stock (or 1% if
there are fewer than 2,000 stockholders) must give written notice to the
Company containing the information specified in the Charter within 30 days
after January 1 of each year. In addition, each stockholder shall, upon
demand, be required to disclose to the Company in writing such information with
respect to the direct, indirect and constructive ownership of beneficial
interests as the Board of Directors deems necessary to comply with the
provisions of the Code applicable to REITs, to comply with the requirements of
any taxing authority or governmental agency or to determine any such
compliance.
The Charter excludes from the Ownership Limit the Price Group, which
would exceed the Ownership Limit as a result of the exchange of its OP Units
for Common Stock. Some members of the Price Group may also acquire additional
shares of Common Stock through the Company's 1993 Stock Option Plan, but in no
event will such persons be entitled to acquire additional shares such that the
five largest beneficial owners of the Company's shares of Equity Stock hold
more than 50% of the total outstanding shares of Equity Stock.
In addition to preserving the Company's status as a REIT, the Ownership
Limit may have the effect of precluding an acquisition of control of the
Company without the approval of the Board of Directors.
PLAN OF DISTRIBUTION
The Company and/or the Operating Partnership, as the case may be, may
sell the Offered Securities through underwriters or dealers, directly to one or
more purchasers (including executive officers of the Company or other persons
that may be deemed affiliates of the Company), through agents or through a
combination of any such methods of sale. Any underwriter involved in the offer
and sale of the Offered Securities will be named in the applicable Prospectus
Supplement.
The distribution of the Common Stock by the Company may be effected from
time to time in one or more transactions (which may involve block transactions)
on the NYSE or otherwise pursuant to and in accordance with the applicable
rules of the NYSE, in the over-the-counter market, in negotiated transactions,
through the writing of Common Stock Warrants or through the issuance of
Preferred Stock convertible into Common Stock (whether such Common Stock
Warrants or Preferred Stock is listed on a securities exchange or otherwise),
or a combination of such methods of distribution, at market prices prevailing
at the time of the sale, at prices related to such prevailing market prices or
at negotiated prices.
In connection with the sale of the Offered Securities, underwriters or
agents may receive compensation from the Company or the Operating Partnership
or from purchasers of the Offered Securities, for whom they may act as agents
in the form of discounts, concessions or commissions. Underwriters may sell
the Offered Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution
of the Offered Securities may be deemed to be underwriters under the Securities
Act, and any discounts or commissions they receive from the Company or the
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Operating Partnership and any profit on the resale of the Offered Securities
they realize may be deemed to be underwriting discounts and commissions under
the Securities Act. Any such underwriter or agent will be identified, and any
such compensation received from the Company or the Operating Partnership will
be described, in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, each
series of the Offered Securities will be a new issue with no established
trading market, other than the Common Stock which is listed on the NYSE. Any
shares of Common Stock sold pursuant to a Prospectus Supplement will be listed
on the NYSE, subject to official notice of issuance. The Company or the
Operating Partnership, as the case may be, may elect to list any series of
Preferred Stock on an exchange, but is not obligated to do so. It is possible
that one or more underwriters may make a market in a series of the Offered
Securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. Therefore, no assurance can be given as to
the liquidity of, or the trading market for, the Offered Securities.
Under agreements into which the Company or the Operating Partnership may
enter, underwriters, dealers and agents who participate in the distribution of
the Offered Securities may be entitled to indemnification by the Company or the
Operating Partnership against certain liabilities, including liabilities under
the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be tenants of, the Company or the Operating
Partnership in the ordinary course of business.
In order to comply with the securities laws of certain states, if
applicable, the Offered Securities will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the Offered Securities may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Offered Securities may not simultaneously
engage in market making activities with respect to the Offered Securities for a
period of two business days prior to the commencement of such distribution.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF THE OPERATING PARTNERSHIP
OVERVIEW
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Operating Partnership and the Notes
thereto appearing elsewhere herein.
The Operating Partnership is primarily engaged in the ownership, leasing,
management, operation, development, redevelopment and acquisition of retail
properties in the Intermountain Region, as well as in Oregon, Washington and
California. At June 30, the Operating Partnership's portfolio consists of 45
Properties, including 13 enclosed regional malls, 24 community centers, two
freestanding retail properties and six mixed-use commercial properties. The
Operating Partnership's financial condition and results of operations were
positively impacted by the Operating Partnership's June 1, 1997 acquisition of
Silver Lake Mall, the 1996 acquisition of the Grand Teton Mall, the 1995
acquisition of two regional malls, Eastridge Mall and Animas Valley Mall, and
one community center, Cottonwood Square. The Operating Partnership's
acquisition and development activities added a combined 2,574,000 square feet
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of Gross Leasable Area ("GLA") to the retail portfolio and 302,000 squarefeet
of GLA to the commercial portfolio during 1995, 1996 and through June 30, 1997.
The Company is a fully integrated, self-administered and self-managed
REIT. The Company completed an additional public offering in August 1995,
raising approximately $56.4 million in gross proceeds through the sale of
2,750,000 shares of its Common Stock. An additional public offering was
completed in January 1997, raising approximately $40.7 million in gross
proceeds through the sale of 1,500,000 shares of Common Stock. The Company
purchased units of limited partner interest in the Operating
Partnership with the proceeds from these offerings. The Operating Partnership
issued 2,750,000 OP Units in 1995 and 1,500,000 OP Units in 1997 from these
transactions.
During 1995, the Operating Partnership obtained a $50 million credit
facility (the "1995 Credit Facility") to fund working capital and property
acquisition, expansion and development activities. On January 22, 1996, the
Operating Partnership obtained an additional $25 million credit facility (the
"1996 Credit Facility," together with the 1995 Credit Facility, the "Credit
Facilities"). In October 1997, the operating partnership replaced the Credit
Facilities with a new $150 million credit facility (the "1997 Credit Facility").
RESULTS OF OPERATIONS
The financial statement results presented for the period January 21, 1994
through December 31, 1994 reflect a 345 day period and are not indicative of
the Operating Partnership's performance on an annual basis. In order to show
annualized results, the Operating Partnership has combined its 1994 operations
with the 20 day period from January 1, 1994 to January 20, 1994 operations of
its Predecessor Companies to compare it to the full year ended December 31,
1995. The Operating Partnership believes presentation in this manner provides
a more meaningful discussion of year-to-year results.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 TO SIX MONTHS
ENDED JUNE 30, 1996
Total revenues for the six months ended June 30, 1997 increased
$1,642,000, or 5%, to $36,992,000 as compared to $35,350,000 in 1996. This
increase is primarily attributable to a $1,059,000, or 4%, increase in minimum
rents to $26,448,000 as compared to $25,389,000 in 1996. Additionally,
percentage and overage rents decreased $170,000, or 8%, to $1,992,000 as
compared to $2,162,000 in 1996. The increase in minimum rents was primarily
due to the April 1996 acquisition of the Grand Teton Mall and the June 1997
acquisition of Silver Lake Mall offset somewhat by certain unexpected
vacancies in the retail and commercial properties.
Recoveries from tenants increased $719,000, or 10%, to $8,053,000 as
compared to $7,334,000 in 1996. Operating and maintenance which increased
$86,000, or 2%, and real estate taxes and insurance decreased $19,000. This
increase is mainly due to the 1996 Grand Teton Mall property acquisition and
the June 1997 acquisition of Silver Lake Mall. Grand Teton Mall tenant
recoveries and operating expenses were $339,000 and $415,000, respectively.
Recoveries from tenants as a percentage of property operating expenses for the
six-months ended June 30, 1997 were 76% compared to 78% in 1996.
Depreciation and amortization increased $229,000, or 4%, to $6,091,000 as
compared to $5,862,000 in 1996. This increase is primarily due to the
acquisitions of Grand Teton Mall and Silver Lake Mall and the increase
in newly developed GLA.
Interest expense decreased $396,000, or 11%, to $3,166,000 as compared to
$3,562,000 in 1996. This decrease was primarily a result of paying down
borrowings with proceeds from a public offering.
Net income increased $1,856,000, or 16%, to $13,182,000 as compared to
$11,326,000 in 1996. The increase is mainly due to the items discussed above
namely the acquisitions of Grand Teton Mall, Silver Lake Mall and the reduction
in interest cost from the payment down of debt with proceeds from the January
1997 stock offering. Additionally, net income was increased by the gain on
sales of real estate (Arctic Circle Granger) at a gain of $339,000 as compared
to gain on sales of real estate in 1996 of $94,000.
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COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED
DECEMBER 31, 1995
For the year ended December 31, 1996, net income increased $5,769,000, or
25%, when compared to the year ended December 31, 1995. The improvement in
operations was primarily attributable to the following factors: an increase in
minimum rents of $8,807,000; an increase in percentage and overage rents of
$596,000; and an increase in recoveries from tenants of $3,305,000. These
increases were offset by a decrease in interest and other income of $709,000;
an increase in operating expenses of $3,801,000; an increase in general and
administrative expense of $215,000; and an increase in interest expense of
$1,153,000. These were also offset by an increase in depreciation and
amortization of $451,000.
Total revenues for the year ended December 31, 1996 increased
$11,999,000, or 20%, to $72,949,000 as compared to $60,950,000 in 1995. This
increase is primarily attributable to an $8,807,000, or 20%, increase in
minimum rents to $52,447,000 as compared to $43,640,000 in 1995. Additionally,
percentage and overage rents increased $596,000, or 17%, to $4,061,000 as
compared to $3,465,000 in 1995.
The April 1996 acquisition of the Grand Teton Mall, the June 1995
acquisitions of the Eastridge Mall and the Animas Valley Mall and the December
1995 acquisition of Cottonwood Square contributed a combined $6,915,000 to the
minimum rent increase and $459,000 to the percentage and overage rent increase
in 1996.
Recoveries from tenants increased $3,305,000, or 27%, to $15,557,000 as
compared to $12,252,000 in 1995. Property operating expenses, including
operating and maintenance and real estate taxes and insurance increased
$3,014,000, or 35%, and $787,000, or 11%, respectively. These increases are
mainly due to the 1995 and 1996 property acquisitions. Recoveries from tenants
as a percentage of property operating expenses were 80% in 1996, compared to
79% in 1995.
Interest expense increase $1,153,000, or 17%, to $7,776,000 as compared
to $6,623,000 in 1995. This increase resulted from additional borrowings used
to acquire the Grand Teton Mall in April 1996.
Depreciation increased $620,000, or 6%, to $10,230,000 as compared to
$9,610,000 in 1995. This increase is primarily due to the 1995 and 1996
property acquisitions and the development of additional GLA at the Properties.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO COMBINED YEAR
ENDED DECEMBER 31, 1994
For the year ended December 31, 1995, income before extraordinary item
increased by $4,288,000, or 23%, when compared to the year ended December 31,
1994. The improvement in operations was primarily attributable to the
following factors: an increase in minimum rents of $5,949,000; an increase in
percentage and overage rents of $709,000; an increase in recoveries from
tenants of $1,854,000; a decrease in interest income of $168,000; an increase
in operating and maintenance expenses of $2,406,000; and a decrease in interest
expense of $76,000. These amounts were offset by an increase in depreciation
and amortization of $2,364,000.
Minimum rents increased in 1995 by $5,949,000, or 16%. The increase was
primarily attributable to leasing of existing vacant spaces, higher minimum
rents on lease renewals and the acquisition of the Woodlands Village Shopping
Center on October 19, 1994, and Eastridge Mall and Animas Valley Mall on June
30, 1995, which acquisitions contributed minimum rents of $3,996,000.
Percentage and overage rents increased in 1995 by $709,000, or 26%.
The increase was primarily attributable to increased sales by tenants paying
percentage rents and additional percentage rents paid by tenants of Eastridge
Mall and Animas Valley Mall.
Recoveries from tenants increased in 1995 by $1,854,000, or 18%, while
operating and maintenance expenses in 1995 increased by $2,406,000, or 13%.
Property operating expenses that are incurred by the Operating Partnership
are generally passed through to the tenants of each Property in the form of
common area charges.
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Interest expense decreased in 1995 by $76,000, or 1%. This decrease was
primarily attributable to the retirement of debt during 1995 with proceeds from
the August 1995 additional public offering and other existing cash balances.
Depreciation and amortization expense increased in 1995 by $2,364,000, or
26%, due primarily to the amortization of capitalized costs associated with
the 1995 Credit Facility, additional depreciation related to the acquisition
of Eastridge Mall and Animas Valley Mall and the write-off of capitalized
tenant allowances for vacating tenants.
LIQUIDITY AND CAPITAL RESOURCES
The Operating Partnership's principal uses of its liquidity and capital
resources have historically been for distributions, property development,
expansion and renovation programs and debt repayment. The Operating Partnership
declared quarterly distributions aggregating $1.695 per OP Unit in 1996 and
aggregating $0.87 for the first two quarters of 1997.
Future distributions will be determined based on actual results of operations
and cash available for distribution.
The Operating Partnership's principal source of liquidity is its cash
flow from operations generated from its real estate investments. As of
June 30, 1997, the Operating Partnership's cash and restricted cash
amounted to approximately $2.8 million. In addition to its cash and restricted
cash, unused capacity under its $50.0 million and $25.0 million Credit
Facilities totaled $16.9 million as of June 30, 1997. The 1997 Credit Facility
increased the Company's unused capacity to $65.0 million. On January 28, 1997,
the Company completed an additional public offering of 1,500,000 shares of
common stock, raising approximately $40.7 million in gross proceeds. The net
proceeds of approximately $38.8 million were contributed to the Operating
Partnership in exchange for OP Units and used to pay costs of the offering
and to reduce outstanding borrowings under the Credit Facilities by
approximately $38.6 million.
The Operating Partnership's principal long-term liquidity
requirements will be the repayment of principal on the $95 million mortgage
debt, which matures in 2001 and which may require principal payments in an
amount necessary to reduce the debt to $83.1 million as of January 21, 2000,
and to retire outstanding balances under the 1997 Credit Facility which is
due in 2000.
On July 30, 1996, Spokane Mall Development Company, a consolidated
partnership, of which the Operating Partnership is the General Partner, entered
into a $50.0 million construction facility to fund the development and
construction of the Spokane Valley Mall. The construction loan has a
three-year term with an optional two-year extension and is secured by the
Spokane Valley Mall and guaranteed by the Operating Partnership. There are
various interest rates used to calculate interest which vary given the amount
of borrowing outstanding. The various interest rates ranged from 6.88 to 8.25
percent during 1996. Borrowings outstanding at June 30, 1997 on this loan were
$32.4 million.
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Washington. The loan is for a term of three years with an option, under
certain conditions, to extend the loan for an additional two years. An
additional long-term liquidity requirement will be the refinancing or repayment
of this loan when it matures in 1999 or at the extended maturity date.
The Operating Partnership is also developing an enclosed regional mall in
Provo, Utah. The Provo project will also represent a future long-term capital
need for the Operating Partnership. The Operating Partnership expects to fund
this project through advances under the 1997 Credit Facility in combination
with construction financing. The availability of financing and the status of
other projects will influence the Operating Partnership's decision to proceed
with, and the pace of, the Provo development.
The Operating Partnership is also contemplating the expansion and
renovation of several of its existing properties and additional development
projects and acquisitions as a means to expand its portfolio. Exclusive of
construction and development, capital expenditures (both revenue and non-
revenue enhancing) for the existing Properties are budgeted in 1997 to
be approximately $4,200,000. The Operating Partnership does not expect to
generate sufficient funds from operations to meet these long-term capital
needs and intends to finance these costs primarily through advances under the
1997 Credit Facility, together with alternative funding sources, including
public and private offerings of equity and debt.
The Operating Partnership intends to incur additional borrowings in the
future in a manner consistent with its policy of maintaining a ratio of debt-
to-total market capitalization of less than 50%. The Operating Partnership's
ratio of debt to total market capitalization was approximately 26% at June 30,
1997.
INFLATION
Inflation has remained relatively low during the past three years and
has had minimal impact on the operating performance of the Properties.
Nonetheless, 93% of the retail tenants' leases contain provisions designed
to protect the Operating Partnership from the impact of inflation. Such
provisions include clauses enabling the Operating Partnership to receive
percentage rents based on tenants' gross sales, which generally increase as
prices rise, and/or escalation clauses, which generally increase rents during
the terms of the leases. In addition, many of the leases are for terms less
than ten years, which may enable the Operating Partnership to replace existing
leases with new leases at higher base and/or percentage rentals if rents of the
existing leases are below then-existing market rates. Substantially all of
the leases, other than those for anchors, require the tenants to pay a
proportionate share of operating expenses, including common area maintenance,
real estate taxes and insurance, thereby reducing the Operating Partnership's
exposure to increases in costs and operating expenses resulting from inflation.
However, inflation may have a negative impact on some of the Operating
Partnership's other operating items. Interest and general and administrative
expenses may be adversely affected by inflation as these specified costs could
increase at a rate higher than rents. Also, for tenant leases with specified
rent increases, inflation may have a negative effect as the specified rent
increases in these leases could be lower than the increase in the inflation
rate at any given time.
FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following summary of material federal income tax considerations
relevant to the Company is based on current law, and is not intended as tax
advice. The following discussion, which is not exhaustive of all possible tax
considerations, does not include a detailed discussion of any state, local or
foreign tax considerations. Nor does it discuss all of the aspects of federal
income taxation that may be relevant to a prospective holder of Offered
Securities in light of his or her particular circumstances or to certain types
of stockholders (including insurance companies, tax-exempt entities, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) who are subject to special
treatment under the federal income tax laws. The tax treatment of a holder of
any Offered Securities will also vary depending upon the terms of the specific
securities acquired by such holder. Additional federal income tax
considerations relevant to holders of the Offered Securities other than Common
Stock may be provided in the applicable Prospectus Supplement relating thereto.
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EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS ADVISED TO CONSULT WITH HIS
OR HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF
THE PURCHASE, OWNERSHIP AND SALE OF COMMON STOCK IN AN ENTITY ELECTING TO BE
TAXED AS A REIT, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION, AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
GENERAL. The Company elected to be taxed as a REIT under Sections 856
through 860 of the Code, effective for its taxable year ended December 31,
1994. The Company believes that it was organized and has operated in such a
manner so as to qualify for taxation as a REIT under the Code, and the Company
intends to continue to operate in such a manner. No assurance, however, can be
given that the Company has operated in a manner so as to qualify, or will
continue to operate in a manner so as to qualify, as a REIT. Qualification and
taxation as a REIT depend upon the Company's ability to meet, on a continuing
basis, through actual annual operating results, distribution levels, diversity
of stock ownership, and the various other qualification tests imposed under the
Code on REITs, some of which are summarized below. While the Company intends
to operate so that it will qualify as a REIT, given the highly complex nature
of the rules governing REITs, the ongoing importance of factual determinations
and the possibility of future changes in circumstances of the Company, no
assurance can be given that the Company has qualified or will so qualify for
any particular year. See "-Failure to Qualify."
Prior to the issuance of any of the Offered Securities, Rogers & Wells,
counsel to the Company ("Counsel"), will render an opinion to the effect that
commencing with its taxable year ended December 31, 1994, the Company was
organized in conformity with the requirements for qualification as a REIT under
the Code, and the proposed method of operation of the Company, the Operating
Partnership and its financing subsidiary (the "Financing Partnership") will
enable the Company to continue to so qualify. It must be emphasized that
Counsel's opinion is based on various assumptions and is conditioned upon
certain representations made by the Company, the Operating Partnership and
Financing Partnership as to factual matters. In addition, Counsel's opinion is
based upon factual representations of the Company concerning its business and
properties, and the business and properties of the Operating Partnership and
the Financing Partnership. Unlike a tax ruling, an opinion of counsel is not
binding upon the Internal Revenue Service ("IRS") and no assurance can be given
that the IRS will not challenge the status of the Company as a REIT. Moreover,
such qualification and taxation as a REIT depend upon the Company's ability to
meet, through actual annual operating results, distribution levels, diversity
of stock ownership and various other qualification tests imposed under the Code
discussed below, the results of which will not be reviewed by Counsel.
Accordingly, no assurance can be given that the actual results of the Company's
operation for any one taxable year will satisfy such requirements. See
"-Failure to Qualify."
As a REIT, the Company generally is not subject to federal corporate
income taxes on net income that it distributes currently to stockholders.
However, the Company will be subject to federal income or excise tax as
follows: (i) the Company will be taxed at regular corporate rates on any
undistributed REIT taxable income and undistributed net capital gains; (ii)
under certain circumstances, the Company may be subject to the "alternative
minimum tax" on its items of tax preference, if any; (iii) if the Company has
(1) net income from the sale or other disposition of "foreclosure property"
(generally, property acquired by reason of a foreclosure or otherwise on
default of a loan secured by the property) that is held primarily for sale to
customers in the ordinary course of business or (2) other nonqualifying net
income from foreclosure property, it will be subject to tax at the highest
corporate rate on such income; (iv) if the Company has net income from
prohibited transactions (which are, in general, certain sales or other
dispositions of property (other than dispositions of foreclosure property, and,
as a result of the Taxpayer Relief Act of 1997, enacted August 5, 1997 (the
"Taxpayer Relief Act"), effective for the Company's taxable year ending
December 31, 1998, dispositions of property that occur due to involuntary
conversion) held primarily for sale to customers in the ordinary course of
business), such income will be subject to a 100% tax; (v) if the Company should
fail to satisfy the 75% gross income test or the 95% gross income test (as
discussed below), and has nonetheless maintained its qualification as a REIT
because certain other requirements have been met, it will be subject to a 100%
tax on the net income attributable to the greater of the amount by which the
Company fails the 75% or 95% test, multiplied by a fraction intended to reflect
the Company's profitability; (vi) if the Company should fail to distribute with
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respect to each calendar year at least the sum of (1) 85% of its REIT ordinary
income for such year, (2) 95% of its REIT capital gain net income for such
year, and (3) any undistributed taxable income from prior years, the Company
would be subject to a 4% excise tax on the excess of such required distribution
over the amounts actually distributed; (vii) if the Company acquires any asset
from a C corporation (I.E., generally a corporation subject to full corporate-
level tax) in a transaction in which the basis of the asset in the Company's
hands is determined by reference to the basis of the asset (or any other
property) in the hands of the C corporation and the Company subsequently
recognizes gain on the disposition of such asset during the 10-year period (the
"Recognition Period") beginning on the date on which the asset was acquired by
the Company (or the Company first qualified as a REIT), then the excess of (1)
the fair market value of the asset as of the beginning of the applicable
Recognition Period, over (2) the REIT's adjusted basis in such asset as of the
beginning of such Recognition Period will be subject to tax at the highest
regular corporate rate (pursuant to Treasury Regulations issued by the IRS
which have not yet been promulgated).
The following is a general summary of the Code provisions that govern the
federal income tax treatment of a REIT and its stockholders. These provisions
of the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, Treasury Regulations and
administrative and judicial interpretations thereof.
REQUIREMENTS FOR QUALIFICATION. The Code defines a REIT as a
corporation, trust or association (1) that is managed by one or more trustees
or directors; (2) the beneficial ownership of which is evidenced by
transferable common stock, or by transferable certificates of beneficial
interest; (3) that would be taxable as a domestic corporation but for Sections
856 through 859 of the Code; (4) that is neither a financial institution nor an
insurance company subject to certain provisions of the Code; (5) that has the
calendar year as its taxable year; (6) the beneficial ownership of which is
held by 100 or more persons; (7) during the last half of each taxable year not
more than 50% in value of the outstanding stock of which is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities); and (8) that meets certain other tests, described below,
regarding the nature of its income and assets. The Company believes that it
currently satisfies requirements (1) through (7). In addition, the Charter
includes restrictions regarding the transfer of the Company's Common Stock that
are intended to assist the Company in continuing to satisfy the share ownership
requirements described in (6) and (7) above. See "Restrictions on Transfers of
Capital Stock."
In addition, the Company intends to continue to comply with the Treasury
Regulations requiring it to ascertain the actual ownership of its shares. The
Taxpayer Relief Act eliminates the rule that a failure to comply with these
Regulations will result in a loss of REIT status. Instead, a failure to comply
with these regulations will result in a fine. This provision will be effective
for the Company's taxable year ending December 31, 1998.
The Company currently has one "qualified REIT subsidiary." A corporation
that is a "qualified REIT subsidiary" is not treated as a separate corporation
for federal income tax purposes, and all assets, liabilities and items of
income, deduction and credit of a "qualified REIT subsidiary" are treated as
assets, liabilities and items of the REIT. In applying the requirements
described herein, the Company's "qualified REIT subsidiary" will be ignored,
and all assets, liabilities and items of income, deduction and credit of such
subsidiary will be treated as assets, liabilities and items of the Company.
The Company's "qualified REIT subsidiary" will therefore not be subject to
federal corporate income taxation, although it may be subject to state or local
taxation.
In the case of a REIT that is a partner in a partnership, the REIT is
deemed to own its proportionate share of the assets of the partnership and is
deemed to receive the income of the partnership attributable to such share. In
addition, the character of the assets and gross income of the partnership shall
retain the same character in the hands of the REIT. Thus, the Company's
proportionate share of the assets, liabilities and items of income of the
Operating Partnership and the Financing Partnership, are treated as assets,
liabilities and items of income of the Company for purposes of applying the
requirements described herein, provided that the Operating Partnership and the
Financing Partnership are treated as partnerships for federal income tax
purposes. See "-Other Tax Considerations-Effect of Tax Status of the Operating
Partnership and the Financing Partnership on REIT Qualification."
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INCOME TESTS. In order to qualify as a REIT, there are three gross
income requirements that must be satisfied annually. First, at least 75% of
the REIT's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types
of temporary investments. Second, at least 95% of the REIT's gross income
(excluding gross income from prohibited transactions) for each taxable year
must be derived from the same items which qualify under the 75% gross income
test, and from dividends, interest and gain from the sale or disposition of
stock or securities, or from any combination of the foregoing. Third, short-
term gain from the sale or other disposition of stock or securities, gain from
prohibited transactions and gain on the sale or other disposition of real
property held for less than four years (apart from involuntary conversions and
sales of foreclosure property) must represent less than 30% of the REIT's gross
income (including gross income from prohibited transactions) for each taxable
year. The Taxpayer Relief Act repeals the 30% gross income test for taxable
years beginning after its enactment. Thus, the 30% gross income test will no
longer apply after the Company's taxable year ending December 31, 1997.
Rents received by the Company will qualify as "rents from real property"
in satisfying the gross income requirements for a REIT described above only if
several conditions (related to the identity of the tenant, the computation of
the rent payable and the nature of the property leased) are met. The Company
does not anticipate receiving rents in excess of a DE MINIMIS amount of gross
annual revenue that fail to meet these conditions. Finally, for rents received
to qualify as "rents from real property," the Company generally must not
operate or manage the property or furnish or render services to tenants, other
than through an "independent contractor" from whom the Company derives no
revenue. The "independent contractor" requirement, however, does not apply to
the extent the services provided by the Company are "usually or customarily
rendered" in connection with the rental of space for occupancy only and are not
otherwise considered "rendered to the occupant." The Taxpayer Relief Act
provides a DE MINIMIS rule for non-customary services which is effective for
taxable years beginning after August 5, 1997. If the value of the non-
customary service income with respect to a property (valued at no less than
150% of the Company's direct cost of performing such services) is 1% or less of
the gross income derived from the property, then all rental income except the
non-customary service income will qualify as "rents from real property." This
provision will be effective for the Company's taxable year ending December 31,
1998.
The Company provides certain services with respect to the Properties
through the Operating Partnership, which is not an "independent contractor."
However, the Company believes all of the services provided by the Company
through the Operating Partnership are considered "usually or customarily
rendered" in connection with the rental of retail and other space for
occupancy. If the Company contemplates providing services in the future that
may be reasonably expected not to meet the "usual or customary" standard, it
will arrange to have such services provided by an independent contractor from
which the Company and the Operating Partnership will receive no income.
The Company will receive some income that is not qualifying income for
purposes of the 75% and 95% gross income tests. Such income includes
management and leasing fee income from the management by the Operating
Partnership of retail properties not wholly owned by the Operating Partnership
and certain parking income. Such income is not expected to exceed 1% to 2% of
the Operating Partnership's gross income and, therefore, will not cause the
Company to fail to satisfy the 75% or 95% gross income test.
If the Company fails to satisfy one or both of the 75% or the 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code. It
is not possible, however, to state whether in all circumstances the Company
would be entitled to the benefit of these relief provisions. Even if these
relief provisions were to apply, a tax would be imposed on certain excess net
income.
ASSET TESTS. The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets:
(i) at least 75% of the value of the Company's total assets must be represented
by "real estate assets," cash, cash items and government securities; (ii) not
more than 25% of the Company's total assets may be represented by securities
other than those in the 75% asset class; and (iii) of the investments included
in the 25% asset class, the value of any one issuer's securities (other than an
interest in a partnership or shares of a "qualified REIT subsidiary" or another
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REIT) owned by the Company may not exceed 5% of the value of the Company's
total assets, and the Company may not own more than 10% of any one issuer's
outstanding voting securities (other than an interest in a partnership or
securities of a "qualified REIT subsidiary" or another REIT).
After initially meeting the assets tests at the close of any quarter, the
Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset
values. If the failure to satisfy the asset tests results from an acquisition
of securities or other property during a quarter, the failure can be cured by
disposition of sufficient nonqualifying assets within 30 days after the close
of that quarter. The Company maintains adequate records of the value of its
assets to ensure compliance with the asset tests and plans to take such other
action within 30 days after the close of any quarter as may be required to cure
any noncompliance. However, there can be no assurance that such other action
will always be successful.
ANNUAL DISTRIBUTION REQUIREMENTS. To qualify as a REIT, the Company
generally must distribute to its stockholders at least 95% of its income each
year. In addition, the Company will be subject to regular capital gains and
ordinary corporate tax rates on undistributed income, and also may be subject
to a 4% excise tax on undistributed income in certain events. The Company
believes that it has made, and intends to continue to make, timely
distributions sufficient to satisfy the annual distribution requirements. It
is possible, however, that the Company, from time to time, may not have
sufficient cash or other liquid assets to meet the distribution requirements.
In that event, the Company may cause the Operating Partnership to arrange for
short-term, or possibly long-term, borrowing to permit the payments of required
dividends.
Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement for a year by paying a "deficiency
dividend" (plus applicable penalties and interest) within a specified period.
FAILURE TO QUALIFY. If the Company fails to qualify for taxation as a
REIT in any taxable year and special relief provisions do not apply, the
Company will be subject to tax (including any applicable alternative minimum
tax) on its taxable income at regular corporate rates. Distributions to
stockholders in any year in which the Company fails to qualify as a REIT will
not be deductible, nor will they be required to be made. In such event, to the
extent of current and accumulated earnings and profits, all distributions to
stockholders will be taxable as ordinary income and, subject to certain
limitations in the Code, corporate distributees may be eligible for the
"dividends received deduction." Unless entitled to relief under specific
statutory provisions, the Company also will be disqualified from taxation as a
REIT for the four taxable years following the year during which qualification
was lost. It is not possible to state whether in all circumstances the Company
would be entitled to such statutory relief.
TAXATION OF STOCKHOLDERS
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS. As long as the Company
qualifies as a REIT, distributions made to the Company's taxable domestic
stockholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income, and corporate stockholders will not be eligible for the
dividends received deduction as to such amounts. Distributions that are
designated as capital gain dividends will be taxed as long-term capital gains
(to the extent they do not exceed the Company's actual net capital gain for the
taxable year) without regard to the period for which the stockholder has held
its stock. However, corporate stockholders may be required to treat up to 20%
of certain capital gain dividends as ordinary income. The Taxpayer Relief Act
provides that, beginning with the Company's taxable year ending December 31,
1998, if the Company elects to retain and pay income tax on any net long-term
capital gain, domestic stockholders of the Company would include in their
income as long-term capital gain their proportionate share of such net long-
term capital gain. A domestic stockholder would also receive a refundable tax
credit for such stockholder's proportionate share of the tax paid by the
Company on such retained capital gains and an increase in its basis in the
stock of the Company in an amount equal to the difference between the
undistributed long-term capital gains and the amount of tax paid by the
Company. Distributions in excess of current and accumulated earnings and
profits will not be taxable to a stockholder to the extent that they do not
exceed the adjusted basis of the stockholder's Common Stock, but rather will
reduce the adjusted basis of such Common Stock. To the extent that such
distributions exceed the adjusted basis of a stockholder's Common Stock, they
will be included in income as long-term capital gain (or short-term capital
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gain if the Common Stock has been held for one year or less), assuming the
Common Stock is a capital asset in the hands of the stockholder. In addition,
any dividend declared by the Company in October, November or December of any
year and payable to a stockholder of record on a specific date in any such
month shall be treated as both paid by the Company and received by the
stockholder on December 31 of such year, provided that the dividend is actually
paid by the Company during January of the following calendar year.
Stockholders may not include in their individual income tax returns any net
operating losses or capital losses of the Company.
In general, a domestic stockholder will realize capital gain or loss on
the disposition of Common Stock equal to the difference between (i) the amount
of cash and the fair market value of any property received on such disposition,
and (ii) the stockholder's adjusted basis of such Common Stock. Such gain or
loss generally will constitute long-term capital gain or loss if the
stockholder has held such shares for more than one year. Under the Taxpayer
Relief Act, an individual, trust or estate that holds shares of Common Stock
for more than 18 months will be subject to a maximum tax of 20% on gains from
the sale or disposition of such shares. See "-Recent Legislation" below. Loss
upon a sale or exchange of Common Stock by a stockholder who has held such
Common Stock for six months or less (after applying certain holding period
rules) will be treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such stockholder as
long-term capital gain.
Under certain circumstances, domestic stockholders may be subject to
backup withholding at the rate of 31% with respect to dividends paid.
TAXATION OF TAX-EXEMPT STOCKHOLDERS. Distributions by the Company to a
stockholder that is a tax-exempt entity will not constitute "unrelated business
taxable income" ("UBTI"), provided that the tax-exempt entity has not financed
the acquisition of its Common Stock with "acquisition indebtedness" within the
meaning of the Code and the Common Stock is not otherwise used in an unrelated
trade or business of the tax-exempt entity. In addition, under certain
circumstances, qualified trusts that own more than 10% (by value) of the
Company's shares may be required to treat a certain percentage of dividends as
UBTI. This requirement will only apply if the Company is a "pension-held
REIT." The restrictions on ownership in the Company's Charter should prevent
the Company from being treated as a pension-held REIT.
TAXATION OF NON-U.S. STOCKHOLDERS. The rules governing U.S. federal
income taxation of Non-U.S. Stockholders (persons other than (i) citizens or
residents of the United States; (ii) corporations, partnerships or other
entities created or organized in the United States or any political
subdivisions thereof; or (iii) estates or trusts the income of which is subject
to U.S. federal income taxation regardless of its source) are complex, and no
attempt will be made herein to provide more than a very limited summary of such
rules. Prospective Non-U.S. Stockholders should consult with their own tax
advisors to determine the impact of U.S. federal, state and local income tax
laws with regard to an investment in Common Stock, including any reporting
requirements.
Distributions that are not attributable to gain from sales or exchanges
by the Company of U.S. real property interests and not designated by the
Company as capital gain dividends will be treated as dividends and taxed as
ordinary income to the extent that they are made out of current or accumulated
earnings and profits of the Company. Such distributions are, generally,
subject to a withholding tax equal to 30% of the gross amount of the
distribution, unless an applicable tax treaty reduces that tax. Distributions
in excess of current and accumulated earnings and profits of the Company will
not be taxable to a Non-U.S. Stockholder to the extent that they do not exceed
the adjusted basis of the Non-U.S. Stockholder's Common Stock, but rather will
reduce the adjusted basis of such Common Stock. To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Stockholder's Common
Stock, they will give rise to tax liability if the Non-U.S. Stockholder
otherwise would be subject to tax on any gain from the sale or disposition of
his Common Stock as described below (in which case they also may be subject to
a 30% branch profits tax if the stockholder is a foreign corporation). If it
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the distribution will be subject to withholding tax at the rate applicable to
dividends. However, the Non-U.S. Stockholder may seek a refund of such amounts
from the IRS if it is subsequently determined that such distribution was, in
fact, in excess of current and accumulated earnings and profits of the Company.
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For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real
property interests will be taxed to a Non-U.S. Stockholder under the provisions
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") at the
normal capital gain rates applicable to U.S. stockholders (subject to
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals). Also, distributions subject to FIRPTA
may be subject to a 30% branch profits tax in the hands of a corporate Non-U.S.
Stockholder not entitled to treaty relief or exemption. The Company is
required by the Code to withhold 35% of any distribution that could be
designated by the Company as a capital gain dividend. This amount is
creditable against the Non-U.S. Stockholder's FIRPTA tax liability.
Gain recognized by a Non-U.S. Stockholder upon a sale of Common Stock
will generally not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which, at all times during a
specified testing period, less than 50% in value of the stock was held directly
or indirectly by foreign persons. The Company believes that it is a
"domestically controlled REIT" and, therefore, the sale of Common Stock will
not be subject to taxation under FIRPTA. If the gain on the sale of Common
Stock were to be subject to tax under FIRPTA, the Non-U.S. Stockholder would be
subject to the same treatment as U.S. stockholders with respect to such gain
(subject to applicable alternative minimum tax, possible withholding tax and a
special alternative minimum tax in the case of nonresident alien individuals),
and the purchaser of the Common Shares would be required to withhold and remit
to the IRS 10% of the purchase price.
OTHER TAX CONSIDERATIONS
EFFECT OF TAX STATUS OF THE OPERATING PARTNERSHIP AND THE FINANCING
PARTNERSHIP ON REIT QUALIFICATION. All of the Company's investments are through
the Operating Partnership and the Financing Partnership. The Company believes
that the Operating Partnership and the Financing Partnership are properly
treated as partnerships for tax purposes (and not as associations taxable as
corporations). If, however, the Operating Partnership or the Financing
Partnership were treated as an association taxable as a corporation, the
Company would cease to qualify as a REIT. Furthermore, in such a situation,
any partnership treated as a corporation would be subject to corporate income
taxes. Also, in such a situation, the Company would not be able to deduct its
share of any losses generated by any such partnership in computing its taxable
income.
TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES. The Operating
Partnership was formed by way of contributions of appreciated property
(including certain of the Properties). When property is contributed to a
partnership in exchange for an interest in the partnership, the partnership
generally takes a carryover basis in that property for tax purposes equal to
the adjusted basis of the contributing partner in the property, rather than a
basis equal to the fair market value of the property at the time of
contribution (this difference is referred to as a "Book-Tax Difference"). The
partnership agreement of the Operating Partnership and the Financing
Partnership require allocations of income, gain, loss and deduction with
respect to contributed Property to be made in a manner consistent with the
special rules in Section 704(c) of the Code, and the regulations thereunder,
which tend to eliminate the Book-Tax Differences with respect to the
contributed Properties over the life of the Operating Partnership. However,
because of certain technical limitations, the special allocation rules of
Section 704(c) may not always entirely eliminate the Book-Tax Difference on an
annual basis or with respect to a specific taxable transaction such as a sale.
Thus, the carryover basis of the contributed Properties in the hands of the
Operating Partnership could cause the Company to be allocated lower amounts of
depreciation and other deductions for tax purposes than would be allocated to
the Company if all Properties were to have a tax basis equal to their fair
market value at the time of acquisition. The foregoing principles also apply
in determining the earnings and profits of the Company for purposes of
determining the portion of distributions taxable as dividend income. The
application of these rules over time may result in a higher portion of
distributions being taxed as dividends than would have occurred had the Company
purchased its interests in the Properties at their agreed value.
STATE AND LOCAL TAXES. The Company and its stockholders may be subject
to state or local taxation in various state or local jurisdictions, including
those in which it or they transact business or reside. The state and local tax
treatment of the Company and its stockholders may not conform to the federal
income tax consequences discussed above. Consequently, prospective
38
<PAGE>
stockholders should consult with their own tax advisors regarding the effect of
state, local and other tax laws of any investment in the Common Stock of the
Company.
RECENT LEGISLATION
In addition to changes to the requirements for qualification and taxation
as a REIT discussed above, the Taxpayer Relief Act also contains significant
changes to the taxation of capital gains of individuals, trusts and estates.
For gains realized after July 28, 1997, and subject to certain exceptions, the
maximum rate of tax on net capital gains of individuals, trusts and estates
from the sale or exchange of capital assets held for more than 18 months has
been reduced to 20%, and the maximum rate is reduced to 18% for assets acquired
after December 31, 2000 and held for more than five years. The maximum rate
for net capital gains attributable to the sale of depreciable real property
held for more than 18 months is 25% to the extent of the deductions for
depreciation with respect to such property. Long term capital gain allocated
to a stockholder by the Company will be subject to the 25% rate to the extent
that the gain does not exceed depreciation on real property sold by the
Company. The maximum rate of capital gains tax for capital assets held for
more than one year but not more than 18 months remains at 28%. The taxation of
capital gains of corporations was not changed by the Taxpayer Relief Act.
LEGAL MATTERS
The validity of the Offered Securities issued hereunder, as well as
certain legal matters described under "Federal Income Tax Considerations," will
be passed upon for the Company by Rogers & Wells, New York, New York, and
certain legal matters will be passed upon for any underwriters, dealers or
agents by the counsel named in the applicable Prospectus Supplement. Rogers &
Wells will rely as to certain matters of Maryland law on the opinion of Piper &
Marbury L.L.P., Baltimore, Maryland.
EXPERTS
The financial statements of Price Development Company, Limited Part-
nership as of December 31, 1996 and 1995 and for each of the two years in the
period ended December 31, 1996 and the period January 21, 1994 to December 31,
1994 included in this Prospectus and the financial statements incorporated in
this Prospectus by reference to JP Realty, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1996, and the audited historical financial
statements included on page F-2 of JP Realty, Inc.'s Current Report on Form
8-K, dated June 30, 1997 have been so incorporated in reliance on the reports
of Price Waterhouse LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
39
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS Page
----
Report of Independent Accountants . . . . . . . . . . . . . . F-2
Consolidated Balance Sheet as of June 30, 1997,
December 31, 1996 and 1995 . . . . . . . . . . . . . . . F-3
Consolidated Statement of Operations for the six-month
periods ended June 30, 1997 and 1996 and for the
years ended December 31, 1996, 1995 and for the
period January 21, 1994 to December 31, 1994 . . . . . . F-4
Consolidated Statement of Partners' Capital for the period
ended June 30, 1997 and for the years ended December
31, 1996, 1995 and for the period January 21, 1994
to December 31, 1994 . . . . . . . . . . . . . . . . . . F-5
Consolidated Statement of Cash Flows for the six-month
periods ended June 30, 1997 and 1996 and for the
years ended December 31, 1996, 1995, and for the
period January 21, 1994 to December 31, 1994 . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . F-7
Schedule II - Valuation and Qualifying Accounts . . . . . . . F-15
Schedule III - Real Estate and Accumulated Depreciation . . . F-16
OTHER INFORMATION
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the year ended December 31, 1996
and for the six-month period ended June 30, 1997 . . . . F-19
Selected Financial and Other Data . . . . . . . . . . . . . . F-23
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Price Development Company, Limited Partnership
In our opinion, the consolidated financial statements of Price
Development Company, Limited Partnership listed in the accompanying
index, present fairly, in all material aspects, the financial
position of Price Development Company, Limited Partnership and
affiliated partnerships at December 31, 1996 and 1995 and the
results of their operations and their cash flows for the years then
ended and the period January 21, 1994 through December 31, 1994,
all in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the management
of Price Development Company, Limited Partnership; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Salt Lake City, Utah
January 29, 1997
F-2
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED
---------
JUNE 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Real Estate Assets
Land . . . . . . $ 97,161 $ 69,714 $ 63,754
Buildings. . . . 404,118 353,500 320,757
------------ ------------ ------------
501,279 423,214 384,511
Less: Accumulated
Depreciation. . (92,278) (87,318) (77,462)
------------ ------------ ------------
Operating Real
Estate Assets . 409,001 335,896 307,049
Real Estate Under
Development . . 46,463 30,027 3,694
------------ ------------ ------------
Net Real Estate
Assets. . . . . 455,464 365,923 310,743
Cash . . . . . . . 777 1,750 1,827
Restricted Cash. . 2,063 2,372 2,464
Accounts and Notes
Receivable, Net . 4,095 4,081 3,295
Deferred Charges,
Net . . . . . . . 6,985 6,512 7,874
Other Assets . . . 1,161 722 858
------------ ------------ ------------
$ 470,545 $ 381,360 $ 327,061
============ ============ ============
LIABILITIES AND
PARTNERS' CAPITAL
Borrowings . . . . $ 203,654 $ 162,375 $ 106,406
Accounts Payable and
Accrued Expenses. 12,662 11,611 7,837
Distributions Payable 9,233 -- --
Accumulated Losses
in Excess of
Equity
Investment. . . . -- 1,555 1,555
Other Liabilities. 531 485 923
------------ ------------ ------------
226,080 176,026 116,721
------------ ------------ ------------
Minority Interests 1,769 668 598
------------ ------------ ------------
Commitment and
Contingencies -- -- --
PARTNERS' CAPITAL
General Partner. . 208,930 172,286 175,604
Limited Partners . 33,766 32,380 34,138
------------ ------------ ------------
242,696 204,666 209,742
------------ ------------ ------------
$ 470,545 $ 381,360 $ 327,061
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS - EXCEPT PARTNERSHIP UNIT AMOUNTS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR FOR THE PERIOD
ENDED JUNE 30, ENDED DECEMBER 31, JANUARY 21,
---------------------- --------------------- 1994 TO
UNAUDITED DECEMBER 31,
1997 1996 1996 1995 1994
-------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES
Minimum Rents. . . . . . . . . . . $ 26,448 $ 25,389 $ 52,447 $ 43,640 $ 35,775
Percentage and Overage Rents . . . 1,992 2,162 4,061 3,465 2,632
Recoveries from Tenants. . . . . . 8,053 7,334 15,557 12,252 9,903
Interest . . . . . . . . . . . . . 317 306 549 1,231 1,387
Other. . . . . . . . . . . . . . . 182 159 335 362 374
---------- ---------- --------- ---------- -----------
36,992 35,350 72,949 60,950 50,071
---------- ---------- --------- ---------- -----------
EXPENSES
Operating and Maintenance. . . . . 5,539 5,243 11,240 8,288 6,874
Real Estate Taxes and Insurance. . 3,932 3,951 7,679 6,892 6,116
Advertising and Promotions . . . . 205 215 426 364 299
General and Administrative . . . . 2,368 2,590 5,060 4,845 3,801
Depreciation . . . . . . . . . . . 5,289 4,943 10,230 9,610 7,588
Amortization of Deferred
Financing Costs. . . . . . . . . 486 556 1,085 1,256 538
Amortization of Deferred
Leasing Costs. . . . . . . . . . 316 363 664 662 608
Interest . . . . . . . . . . . . . 3,166 3,562 7,776 6,623 5,873
---------- ---------- --------- ---------- -----------
21,301 21,423 44,160 38,540 31,697
---------- ---------- --------- ---------- -----------
15,691 13,927 28,789 22,410 18,374
Minority Interest in Income of
Consolidated Partnerships . . . . (206) (205) (389) (421) (277)
Equity in Net Loss of Partnership
Interest -- -- -- (184) (82)
Gain on Sales of Real Estate . . . 339 94 94 918 --
---------- ---------- --------- ---------- -----------
Income Before Extraordinary Item . 15,824 13,816 28,494 22,723 18,015
Extraordinary Item-Loss on
Extinguishment of Debt . . . . . -- -- -- -- (6,670)
---------- ---------- --------- ---------- -----------
Net Income . . . . . . . . . . . . $ 15,824 $ 13,816 $ 28,494 $ 22,723 $ 11,345
========== ========== ========= ========== ===========
Earnings Per Partnership Unit
Income Before Extraordinary Item . $ .75 $ .70 $ 1.45 $ 1.26 $ 1.06
Extraordinary Item . . . . . . . . -- -- -- -- (.39)
---------- ---------- --------- ---------- -----------
Net Income . . . . . . . . . . . . $ .75 $ .70 $ 1.45 $ 1.26 $ .67
========== ========== ========= ========== ===========
Weighted Average Number of
Partnership Units Outstanding. . 20,969,047 19,662,966 19,667,865 18,037,429 16,922,809
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF PARTNERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
---------- ---------- ----------
<S> <C> <C> <C>
Commencement of Operation
on January 21, 1994
Basis Adjustments and
acquisitions of Limited
Partners' Interests . . $ (67,402) $ 38,679 $ (28,723)
Units Issued for Proceeds
From Initial Public
Offering. . . . . . . . 206,198 -- 206,198
Distributions. . . . . . (20,116) (5,631) (25,747)
Net Income . . . . . . . 8,870 2,475 11,345
---------- ---------- ----------
Partners' Capital at
December 31, 1994 127,550 35,523 163,073
Units Issued for Proceeds
from Sale of Common
Stock . . . . . . . . . 52,888 -- 52,888
Units Issued Upon
Exercise of Stock
Options . . . . . . . . 976 -- 976
Distributions. . . . . . (23,881) (6,037) (29,918)
Net Income . . . . . . . 18,071 4,652 22,723
---------- ---------- ----------
Partners' Capital at
December 31, 1995 175,604 34,138 209,742
Units Issued Upon
Exercise of Stock
Options . . . . . . . . 407 -- 407
Conversion of Limited
Partners' Interests . . 164 (164) --
Distributions. . . . . . (27,139) (6,838) (33,977)
Net Income . . . . . . . 23,250 5,244 28,494
---------- ---------- ----------
Partners' Capital at
December 31, 1996 172,286 32,380 204,666
* Units Issued for
Proceeds from Sale
of Common Stock . . . 38,632 -- 38,632
* Units Issued Upon
Exercise of Stock
Options . . . . . . . 145 -- 145
* Conversion of Limited
Partners' Interests . 39 (39) --
* Units Issued for
Acquisition . . . . . -- 1,863 1,863
* Distributions. . . . . (15,265) (3,169) (18,434)
* Net Income . . . . . . 13,093 2,731 15,824
---------- ---------- ----------
* Partners' Capital at
June 30, 1997 $ 208,930 $ 33,766 $ 242,696
========== ========== ==========
* Unaudited
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR FOR THE PERIOD
ENDED JUNE 30, ENDED DECEMBER 31, JANUARY 21,
---------------------- --------------------- 1994 TO
UNAUDITED DECEMBER 31,
1997 1996 1996 1995 1994
-------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income . . . . . . . . . . . . $ 15,824 $ 13,816 $ 28,494 $ 22,723 $ 11,345
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Depreciation . . . . . . . . . . 5,289 4,943 10,230 9,610 7,588
Amortization . . . . . . . . . . 802 919 1,749 1,918 1,146
Minority Interest in Income of
Consolidated Partnerships . . . 206 205 389 421 277
Equity in Net Loss of
Partnership Interest. . . . . . -- -- -- 184 82
Gain on Sales of Real Estate . . (339) (94) (94) (918) --
Increase in Accounts and
Notes Receivable. . . . . . . . (14) (40) (786) (540) (1,726)
(Increase) Decrease in Deferred
Charges . . . . . . . . . . . . (869) (275) (387) (1,428) 640
Increase in Accounts Payable and
Accrued Expenses. . . . . . . . 1,051 1,453 3,774 887 1,324
Decrease (Increase) in Other . . 93 (233) (295) (138) 164
---------- ---------- ---------- --------- ----------
Net Cash Provided by Operating
Activities. . . . . . . . . . . 22,043 20,694 43,074 32,719 20,840
---------- ---------- ---------- --------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Real Estate Assets, Developed or
Acquired. . . . . . . . . . . . . (69,907) (39,714) (65,323) (69,300) (16,514)
Proceeds from Sales of Real
Estate. . . . . . . . . . . . . . -- -- -- 1,281 --
Decrease (Increase) in
Restricted Cash. . . . . . . . . 309 (578) 92 636 855
---------- ---------- ---------- --------- ----------
Net Cash Used in Investing
Activities . . . . . . . . . . (69,598) (40,292) (65,231) (67,383) (15,659)
---------- ---------- ---------- --------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from Borrowings . . . . . 72,487 44,300 65,442 47,009 104,021
Repayment of Borrowings. . . . . . (55,962) (9,367) (9,473) (49,344) (203,231)
Deferred Financing Costs . . . . . (406) -- -- -- (4,162)
Net Proceeds from Sale of
Partnership Units. . . . . . . . 38,777 87 407 53,850 206,198
Distributions to Partners. . . . . (9,201) (9,141) (33,977) (29,918) (25,747)
Distributions to Minority
Interests. . . . . . . . . . . . (113) -- (319) (258) (175)
Capital Contributions by
Minority Interests . . . . . . . 1,000 -- -- -- --
Decrease in Due to Affiliates. . . -- -- -- -- (23,005)
Buyout of Joint Venture Partner . . -- -- -- -- (44,376)
---------- ---------- ---------- --------- ----------
Net Cash Provided by Financing
Activities . . . . . . . . . . 46,582 25,879 22,080 21,339 9,523
---------- ---------- ---------- --------- ----------
Net (Decrease) Increase in Cash. . (973) 6,281 (77) (13,325) 14,704
Cash, Beginning of Period. . . . . 1,750 1,827 1,827 15,152 448
---------- ---------- ---------- --------- ----------
Cash, End of Period. . . . . . . . $ 777 $ 8,108 $ 1,750 $ 1,827 $ 15,152
========== ========== ========== ========= ==========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS -
EXCEPT PER SHARE AND PARTNERSHIP UNIT AMOUNTS)
1. ORGANIZATION AND BASIS PRESENTATION
Price Development Company, Limited Partnership (the "Operating Partnership")
was formed on September 13, 1993 under the Limited Partnership Law of
Maryland and commenced operations on January 21, 1994 when JP
Realty, Inc. (the "Company") completed an initial public offering
("IPO") and issued 13,029,500 Shares of common stock at $17.50 per
share. Net proceeds of $206,198 were used to purchase an
approximate 78.18 percent general partnership interest in the
Operating Partnership. The Company is a real estate investment trust (REIT)
as defined by the Internal Revenue Code. Concurrent with the IPO, the
partners and owners of the Predecessor Companies contributed their
properties to the Operating Partnership, in exchange for limited partnership
interests in the Operating Partnership which became exchangeable after one
year from the date of the IPO, at the option of the holders of such
interests, for common stock in the Company. The predecessor
companies are not a single legal entity but rather a combination of
real estate properties of a number of affiliated partnerships,
joint ventures and certain properties carved-out of an S-
Corporation, all having varying ownership interests in common.
Concurrent with the closing of the IPO, a majority owned financing
partnership of the Operating Partnership borrowed $95,000 through a private
placement and the Operating Partnership borrowed $9,000 from a bank. The net
proceeds from the IPO and the borrowings were used primarily to
repay indebtedness, acquire a 75% interest in a mall, pay certain
expenses, and held as cash on hand for operations and future
acquisitions. The extraordinary item recognized in the period
January 21, 1994 to December 31, 1994 resulted from mortgage
prepayment penalties ($5,874) and the write-off of deferred
financing costs ($796) on the mortgage debt satisfied with the
proceeds from the IPO.
On August 7, 1995, the Company sold 2,750,000 shares of common stock
in an underwritten public offering at $20.50 per share. Net
proceeds of $52,887 were contributed to the Operating Partnership in exchange
for additional partnership units and were principally used to repay
indebtedness incurred by the Operating Partnership to fund acquisition
activities.
On January 28, 1997, the Company sold 1,500,000 shares of common
stock in an underwritten public offering at $27.13 per share. Net
proceeds of $38,600 were contributed to the Operating Partnership in exchange
for additional partnership units. The Operating Partnership used the proceeds
to repay borrowings under the $50,000 credit facility.
As a result of the aforementioned stock offerings and contribution of
capital to the Operating Partnership by the Company, it owned approximately
82.89 (unaudited), 81.66 and 81.28 percent general partnership
interest of the Operating Partnership as of June 30, 1997, December 31, 1996
and 1995, respectively.
The Operating Partnership is primarily engaged in the business of owning,
leasing, managing, operating, developing and redeveloping malls,
community centers and other commercial properties. The tenant base
includes primarily national retail chains and local retail
companies. Consequently, the Operating Partnership's credit risk is
concentrated in the retail industry.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The accompanying consolidated financial statements include the accounts
of the Operating Partnership and all partnerships in which the Operating
Partnership has a majority interest. All significant intercompany accounts
and transactions have been eliminated in the consolidation.
The Operating Partnership's 30 percent limited partnership interest in Silver
Lake Mall is accounted for using the equity method. Commencing in
1996, the Operating Partnership discontinued recording its proportionate
interest in the loss generated by this partnership as the Operating Partnership
is not required to fund such losses. On June 1, 1997, the Operating
Partnership acquired the remaining 70 percent interest in Silver Lake Mall
and it is now consolidated in the financial statements.
REVENUE RECOGNITION
Certain minimum rents are recognized monthly based upon amounts
which are currently due from tenants, when such amounts are not
materially different than recognizing the fixed cash flow over the
initial term of the lease using the straight-line method. All
other minimum rents are recognized using the straight-line method.
Percentage rents are recognized monthly on an accrual basis based
on estimated annual amounts.
F-7
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS -
EXCEPT PER SHARE AND PARTNERSHIP UNIT AMOUNTS)
REAL ESTATE ASSETS
Real estate assets are stated at cost. At each balance sheet date,
the Operating Partnership reviews for possible impairment to the recorded
book values of real estate assets based upon expectations of future
nondiscounted cash flows (excluding interest) from each property.
Depreciation is computed on a straight-line basis generally over 40
years for buildings and four to ten years for equipment and
fixtures. Tenant improvements are capitalized and depreciated on
a straight-line basis over the life of the related lease.
Expenditures for maintenance and repairs are charged to operations
as incurred. Major replacements and betterments which improve or
extend the life of the asset are capitalized and depreciated over
their estimated useful lives.
INCOME TAXES
Income taxes have not been provided in the accompanying financial
statements as the tax effects of the Operating Partnership's operations
accrue directly to the partners.
RESTRICTED CASH
Restricted cash reflects cash restricted under terms of a loan
agreement to be used for certain capital expenditures and funds
held in reserve by a trustee for interest payments on borrowings.
INTEREST AND REAL ESTATE TAXES
Interest and real estate taxes incurred during the construction
period are capitalized and depreciated over the lives of the
constructed assets.
DEFERRED CHARGES
Third party costs incurred in obtaining long-term financing and
initial tenant leases are included in deferred charges in the
accompanying consolidated balance sheet and are amortized on a
straight-line basis over the terms of the related debt and lease
agreements, as applicable.
PER UNIT DATA
Earnings per unit for income before extraordinary item, and net
income was computed for each period by dividing the respective
amounts by the weighted average number of units outstanding.
USE OF ESTIMATES
The preparation of these financial statements in conformity with
generally accepted accounting principles required 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.
RECENT ACCOUNTING PRONOUNCEMENT
In October 1995, the Financial Accounting Standards Board issued
SFAS 123 "Accounting for Stock-based Compensation." The statement
allows an entity to elect either the fair value based method of
accounting for employee stock options or the intrinsic value based
method prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees." The new pronouncement was adopted beginning
January 1, 1996. The Operating Partnership has elected to continue valuing
stock-based compensation under the intrinsic value based method but
has included proforma disclosure in Note 11 showing the impact on
net income and earnings per partnership unit had the fair value
based method prescribed by SFAS 123 been utilized for financial
reporting.
The Operating Partnership is required to adopt the Statement of Accounting
Standard No. 128 ("SFAS 128") as of December 31, 1997; earlier
application is not permitted. SFAS 128 specifies the computation,
presentation, and disclosure requirements for earnings per
partnership unit. The Operating Partnership does not believe that the
adoption of SFAS 128 will have a material effect on the Operating Partnership's
method of calculation or display of earnings per partnership unit.
F-8
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS -
EXCEPT PER SHARE AND PARTNERSHIP UNIT AMOUNTS)
INTERIM FINANCIAL DATA
The interim financial data for the six months ended June 30, 1996
and 1997 is unaudited; however, in the opinion of the Operating Partnership,
the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results
for the interim periods.
3. ACQUISITIONS
On June 30, 1995 the Operating Partnership acquired the Eastridge Mall located
in Casper, Wyoming and the Animas Valley Mall located in Farmington,
New Mexico for approximately $51,875. The acquisition was financed
utilizing borrowings on a $50,000 line of credit.
On April 4, 1996, the Operating Partnership acquired the Grand Teton Mall
located in Idaho Falls, Idaho for approximately $34,400. The acquisition
was financed utilizing borrowings on a $50,000 line of credit.
The following unaudited pro forma financial information for the
year ended December 31, 1996, is presented as if the acquisition of
the Grand Teton Mall had occurred on January 1, 1996. The
unaudited pro forma financial information for the year ended
December 31, 1995 is presented as if the acquisition of the
Eastridge Mall and Animas Valley Mall, the August 7, 1995 issuance
of partnership units to the Company and the acquisition of the Grand
Teton Mall had occurred on January 1, 1995.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
Pro forma revenues . . . . . . . . . . $ 74,100 $ 70,746
Pro forma net income . . . . . . . . . 28,534 26,089
Pro forma earnings per partnership
unit . . . . . . . . . . . . . . . . $ 1.45 $ 1.33
</TABLE>
On June 1, 1997, the Operating Partnership acquired the remaining 70% interest
in Silver Lake Mall located in Coeur D'Alene, Idaho by issuing 72,000
partnership units and assuming $24,755 in debt (unaudited). On
June 30, 1997, the Operating Partnership acquired Visalia Mall located in
Visalia, California for $38,000 paying $1,000 from operations and
$37,000 from borrowings (unaudited).
Reference is made to the unaudited pro forma financial information,
reflecting the 1997 acquisitions, included elsewhere herein.
4. ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable in the consolidated balance sheet are
expected to be collected within one year and are net of estimated
unrecoverable amounts of approximately $489 and $504 at December
31, 1996 and 1995, respectively.
5. DEFERRED CHARGES
Deferred charges consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
Financing costs. . . . . . . . . . . . $ 4,695 $ 5,043
Leasing costs. . . . . . . . . . . . . 7,881 8,505
---------- ---------
12,576 13,548
Less accumulated amortization. . . . . (6,064) (5,674)
---------- ---------
$ 6,512 $ 7,874
========== =========
</TABLE>
F-9
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS -
EXCEPT PER SHARE AND PARTNERSHIP UNIT AMOUNTS)
6. BORROWINGS
Borrowings consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
Notes, secured by real estate; interest
at 6.37 percent; interest only is
payable quarterly through January 21,
2001 at which time the principal
balance is due. . . . . . . . . . . . $ 95,000 $ 95,000
Credit facility, secured by real estate;
interest at 115 basis points over AAA
commercial paper. . . . . . . . . . . 44,000 --
Construction loan, secured by real
estate. . . . . . . . . . . . . . . . 16,943 --
Credit facility, unsecured; interest
at 175 basis points over LIBOR. . . . 4,200 --
Mortgage payable, secured by real
estate; interest at 9.38 percent;
due in 2001 . . . . . . . . . . . . . 2,072 2,205
Note payable, interest at 7.8 percent;
due in 2000 . . . . . . . . . . . . . 160 201
Note payable, secured by real estate;
interest at LIBOR plus 200 basis
points (maximum interest rate of 6.5
percent); due January 21, 1996. . . . -- 9,000
---------- ----------
$ 162,375 $ 106,406
========== ==========
On March 8, 1995, the Operating Partnership entered into a $50,000 credit
facility agreement which provides for a two year commitment ending in March
1997 with an option to extend for an additional year (which option was
exercised on January 22, 1997). Borrowings under this agreement are
collateralized by approximately $79,000 of the Operating Partnership's assets
at net book value. The credit facility bears interest at a floating rate
equal to 115 basis points over the established rate of AAA commercial paper and
is guaranteed by the Company. The facility also provides for commitment fees
equal to .25% on the unused line of credit amount. For the year ended
December 31, 1996 and 1995, the Operating Partnership paid commitment fees
totaling $200 and $90, respectively. Borrowings outstanding at June 30, 1997
(unaudited) and December 31, 1996 under this facility were $33,100 and $44,000,
respectively.
On January 22, 1996, the Operating Partnership entered into a $25,000 unsecured
credit facility agreement. This credit facility bears interest at a floating
rate equal to 175 basis points over LIBOR, and provides a two-year credit line
with an options to extend for an optional year (which option was exercised on
January 24, 1997). The facility also provides for commitment fees equal to
.375% on the unused credit amount. For the year ended December 31, 1996, the
Operating Partnership paid commitment fees totaling $67. Borrowings
outstanding at June 30, 1997 (unaudited) and December 31, 1996 under this
facility were $25,000 and $4,200, respectively.
On July 30, 1996, Spokane Mall Development Company, a consolidated
partnership, of which the Operating Partnership is the General Partner, entered
into a $50,000 construction facility. The construction facility will be used
to fund the development and construction of the Spokane Valley Mall in Spokane,
Washington. The construction loan has a three-year term with an optional
two-year extension and is secured by the Spokane Valley Mall and guaranteed
by the Operating Partnership. There are various interest rates used to calculate interest
which vary given the amount of borrowing outstanding. The various interest
rates ranged from 6.88 to 8.25 percent during 1996. Borrowings outstanding
at June 30, 1997 (unaudited) and December 31, 1996 on this loan were $32,430
and $16,943, respectively.
As part of the June 1, 1997 acquisition (Note 3), the Operating Partnership
assumed a loan which had a balance of $12,964 at June 30, 1997 (unaudited).
The following summarizes the scheduled maturities of borrowings at December
31, 1996 (reflecting the Operating Partnership's exercise of options to extend
both the $50,000 and $25,000 credit facilities in January 1997):
F-10
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS -
EXCEPT PER SHARE AND PARTNERSHIP UNIT AMOUNTS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Year Total
---- ----------
1997 . . . . . . . . . . . . . . . . $ 183
1998 . . . . . . . . . . . . . . . . 44,199
1999 . . . . . . . . . . . . . . . . 21,345
2000 . . . . . . . . . . . . . . . . 69
2001 . . . . . . . . . . . . . . . . 96,579
----------
$ 162,375
==========
</TABLE>
7. RENTAL INCOME
Substantially all real estate held for investment is leased to retail and
commercial tenants under arrangements which generally require the tenants to
pay property taxes, insurance and maintenance charges. These operating
leases generally range from 1 to 25 years and provide for minimum monthly
rents and in certain instances percentage rents based on tenants' sales.
All non-cancelable leases, assuming no new or renegotiated leases or option
extensions, in effect at December 31, 1996 provide for the following minimum
future rental income:
<TABLE>
<CAPTION>
<S> <C>
Year Total
---- ----------
1997 . . . . . . . . . . . . . . . . $ 47,787
1998 . . . . . . . . . . . . . . . . 42,773
1999 . . . . . . . . . . . . . . . . 37,030
2000 . . . . . . . . . . . . . . . . 32,397
2001 . . . . . . . . . . . . . . . . 26,235
Thereafter . . . . . . . . . . . . . 143,006
----------
$ 329,228
==========
</TABLE>
8. COMMITMENTS AND CONTINGENCIES
Future minimum rental payments under the terms of all non-cancelable
operating leases under which the Operating Partnership is the lessee,
principally for ground leases, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year Total
---- ----------
1997 . . . . . . . . . . . . . . . . $ 550
1998 . . . . . . . . . . . . . . . . 544
1999 . . . . . . . . . . . . . . . . 541
2000 . . . . . . . . . . . . . . . . 541
2001 . . . . . . . . . . . . . . . . 538
Thereafter . . . . . . . . . . . . . 20,038
----------
$ 22,752
==========
</TABLE>
The Operating Partnership is a defendant in certain litigation relating to
its business activities. Management does not believe that the resolution
of these matters will have a materially adverse effect upon the Operating
Partnership.
9. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
During the years ended December 31, 1996 and 1995, non-cash investing and
financing transactions included the write-off of capitalized tenant
allowances of $159 and $1,281, respectively. Also, during 1996, the holders
of limited partnership units elected to convert 16,000 units having a
recorded value of $164 into shares of common stock of the Company. At June
30, 1997 distributions accrued but not paid totaled $9,263 (unaudited).
F-11
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS -
EXCEPT PER SHARE AND PARTNERSHIP UNIT AMOUNTS)
For the period January 21, 1994 to December 31, 1994, the following non-cash
investing and financing transactions occurred:
<TABLE>
<CAPTION>
<S> <C>
Step up in Real Estate Assets for Cottonwood Mall Equity
Buyout . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,324
Exchange of Debt due to an affiliated entity for 200,000
Shares of Price Group Stock and partnership units. . . . . . 5,664
Exchange of Borrowings by Various Partners for partnership
units. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,174
Restricted Cash Used to Pay Off Debt. . . . . . . . . . . . . 1,851
Reclassification of owners'/shareholders' deficit to
partners' capital. . . . . . . . . . . . . . . . . . . . . . 7,307
Issuance of Note Payable in connection with Land Purchase . . 2,113
Buildings and Improvements Reclassified to Property,
Furniture and Fixtures . . . . . . . . . . . . . . . . . . . 181
Distribution of Property for Buyout of Minority Interest
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 202
</TABLE>
Interest paid (net of capitalized amounts of $1,261, $788 and $656 for the
year ended December 31, 1996, 1995 and for the period January 21, 1994 to
December 31, 1994, respectively) aggregated $7,707, $6,597 and $6,566 for the
year ended December 31, 1996 and 1995 and for the period January 21, 1994 to
December 31, 1994, respectively.
10. RELATED PARTY TRANSACTIONS
The Operating Partnership and Predecessor Companies lease computer services
from Alta Computer Services, Inc. ("Alta"). Alta is majority owned by three
directors of the Company. The Operating Partnership paid $194, $196 and
$208 in 1996, 1995 and 1994, respectively, for such services.
The Operating Partnership has entered into a management agreement under which
the Operating Partnership performs certain accounting and management
functions on behalf of a related entity whose majority owner is the Chairman
of the Board of Directors of the Company. Management fees collected by the
Operating Partnership under this agreement aggregated $72, $72 and $68 in 1996,
1995 and 1994, respectively.
11. STOCK OPTION PLAN
On October 26, 1993, the Company adopted a plan (the "1993 Stock Option Plan")
which authorizes the discretionary grant by the Executive Compensation
Committee, of options intended to qualify as "incentive stock options" within
the meaning of Section 422 of the Internal Revenue Code, to key employees of
the Company and the discretionary grant of nonqualified stock
options to key employees, directors and consultants. The maximum number of
shares of common stock of the Company subject to option under the 1993 Stock
Option Plan is 1,100,000. The proceeds received by the Company upon exercise
of options are contributed to the Operating Partnership in exchange for the
issuance of an equivalent number of partnership units. No stock options may
be granted after ten years from the date of adoption and options must be
granted at a price generally not less than the fair market value of the
Company's common stock at the date of grant. These options vest over a
period of one to five years.
A summary of the 1993 Stock Option Plan activity is set forth below:
<TABLE>
<CAPTION>
Number of Option Price
Shares per Share
------------ --------------
<S> <C> <C>
Outstanding at
December 31, 1993 . . . . . . . . . . -- --
Granted. . . . . . . . . . . . . . . . 550,000 $ 17.50-20.38
Exercised. . . . . . . . . . . . . . . -- --
Forfeited. . . . . . . . . . . . . . . -- --
------------ -------------
Outstanding at
December 31, 1994 . . . . . . . . . . 550,000 17.50
Granted. . . . . . . . . . . . . . . . 7,000 19.13
Exercised. . . . . . . . . . . . . . . (55,000) 17.50
Forfeited. . . . . . . . . . . . . . . (8,000) 17.50
------------ -------------
F-12
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS -
EXCEPT PER SHARE AND PARTNERSHIP UNIT AMOUNTS)
Outstanding at
December 31, 1995 . . . . . . . . . . 494,000 17.50-20.38
Granted. . . . . . . . . . . . . . . . 107,000 20.00-20.25
Exercised. . . . . . . . . . . . . . . (22,000) 17.50-19.13
Forfeited. . . . . . . . . . . . . . . (21,000) 17.50-20.00
------------ -------------
Outstanding at
December 31, 1996 . . . . . . . . . . 558,000 $ 17.50-20.38
============ =============
</TABLE>
At December 31, 1996, 178,000 options are fully vested and exercisable.
The fair value of options granted during 1996 and 1995 were determined using
the following assumptions in the valuation method prescribed by SFAS 123.
The weighted average assumptions for 1996 and 1995, respectively: risk-free
interest rate ranged from 5.50% to 6.68% in 1996 and 6.96% in 1995, expected
life of 10 years, dividend yield of 7%, and expected
volatility range of 16% to 17% in 1996 and 20% for 1995. The fair values of
options granted during 1996 and 1995 using the above assumptions are $43,
and $16, respectively. Had the Operating Partnership recorded the options at
their fair value, net income and earnings per unit for the years ended December
31, 1996 and 1995 would have been as follows:
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
1996 1995
------------ ------------
<S> <C> <C>
Net Income . . . . . . . . . . . . . . $ 28,451 $ 22,707
============ ============
Earnings Per Unit. . . . . . . . . . . $ 1.45 $ 1.26
============ ============
</TABLE>
12. EMPLOYEE BENEFIT PLANS
401(k) PLAN
During 1994, the Company adopted a 401(k) defined contribution
plan covering substantially all of the officers and employees of the Company
and subsidiaries which permits participants to defer up to a
maximum of 15% of their compensation. The Company will match
50% of the employee's contribution up to a maximum of $1 per year. Employees
who have completed at least one year of service, working full-time, and have
attained the age of 21 are eligible to participate in the plan. The employees'
contributions, together with contributions from the Company are
immediately vested. The Company's contribution to the plan for
the years ended December 31, 1996, 1995 and 1994 (which were reimbursed by the
Operating Partnership) were $40, $40 and $22,
respectively. The 401(k) plan is fully funded at December 31, 1996.
RETIREMENT PLAN
During 1995, the Company adopted a retirement plan covering
substantially all of the officers and employees of the Company,
wherein the Company contributes 3% of the participant's base
compensation. Employees working a minimum of 1,000 hours per year and who have
attained the age of 21 are eligible to participate in the plan. The Company's
contribution vests 20% per year. Once an employee has been with
the Company five years, all contributions are fully vested.
Years of service include service with Predecessor Companies. The Company's
contribution to the plan for the years ended December 31, 1996
and 1995 (which were reimbursed by the Operating Partnership)
were $150 and $119, respectively. The retirement plan is fully
funded at December 31, 1996.
13. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by
management using available market information. Considerable judgment is
necessary to interpret market data and develop estimated fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Operating Partnership could realize on disposition of the
financial instruments. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair
value amounts.
F-13
<PAGE>
Accounts and notes receivable, accounts payable, accrued expenses and due to
affiliates at December 31, 1996 and 1995 are carried at amounts which
reasonably approximate their fair values.
Borrowings with an aggregate carrying value of $162,375 and $106,406 have an
estimated aggregate fair value of $158,287 and $105,362 at December 31, 1996
and 1995, respectively. Estimated fair value is based on interest rates
currently available to the Operating Partnership for issuance of borrowings
with similar terms and remaining maturities.
14. DISTRIBUTIONS PER UNIT
Distributions paid per unit for the year ended December 31, 1996 and 1995,
are summarized as follows:
DISTRIBUTIONS:
<TABLE>
<CAPTION>
Date
1996 Paid Total
---------- ---------- ----------
<S> <C> <C>
1st Quarter 4/23/96 $ .420
2nd Quarter 7/23/96 .420
3rd Quarter 10/22/96 .420
4th Quarter 12/30/96 .435
----------
$ 1.695
==========
Date
1995 Paid Total
---------- ---------- ----------
1st Quarter 4/18/95 $ .405
2nd Quarter 7/18/95 .405
3rd Quarter 10/24/95 .405
4th Quarter 12/28/95 .420
----------
$ 1.635
</TABLE>
15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Financial information for each of the quarters in the year ended December 31,
1996 and 1995 are as follows:
<TABLE>
<CAPTION>
First Second Third Fourth
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1996:
Revenues. . . . . . . . $ 16,942 $ 18,407 $ 18,497 $ 19,103
Income Before Minority
Interest, Equity in Net
Loss of Partnership
Interest and Gain on
Sale of Real Estate. . 6,693 7,234 7,088 7,774
Net Income. . . . . . . 6,696 7,068 7,059 7,671
Net Income per
Partnership Unit . . . .34 .36 .36 .39
1995:
Revenues. . . . . . . . $ 13,568 $ 13,905 $ 15,620 $ 17,857
Income Before Minority
Interest, Equity in Net
Loss of Partnership
Interest and Gain on
Sale of Real Estate . . 5,193 5,102 5,765 6,350
Net Income. . . . . . . 5,066 4,968 5,636 7,053
Net Income per
Partnership Unit. . . .30 .30 .30 .36
</TABLE>
F-14
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
SCHEDULE II
VALUATIONS AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING CHARGED TO BALANCE AT
OF YEAR EXPENSE DEDUCTIONS END OF YEAR
----------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Year ended December
31, 1996
Allowance for
uncollectible
accounts. . . . . $ 504 $ 340 $ 355 $ 489
Year ended December
31, 1995
Allowance for
uncollectible
accounts . . . . 437 258 191 504
Year ended December
31, 1994
Allowance for
uncollectible
accounts 564 212 339 437
</TABLE>
F-15
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH CARRIED
INITIAL COSTS CAPITALIZED AT CLOSE OF PERIOD
DEPRE-
------------------- SUBSEQUENT -----------------------------
CIABLE
RELATED BUILDING & TO BLDG. ACCUMULATED DATE OF
DATE LIVES-
ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND IMPROV. TOTAL(1) DEPRECIATION
CONSTRUCTION ACQUIRED YEARS
------------ ---- ------------ ----------- ------ -------- -------- ------------
- ------------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
DESCRIPTION
- -----------
MALLS:
Animas Valley Mall,
Farmington, NM $ 15,098 $3,902 $ 24,059 $ 20 $ 3,902 $24,079 $ 27,981 $ 908 --
1995 40
Boise Towne Square,
Boise, ID 32,475 6,512 -- 37,347 6,512 37,347 43,859 11,316 1987-88
1985-86 5-40
Cache Valley Mall,
Logan, UT 5,781 909 -- 8,382 909 8,382 9,291 4,029 1975-76
1973-75 10-40
Cottonwood Mall,
Salt Lake City, UT 19,857 7,514 20,776 30,544 7,514 51,320 58,834 16,382 1981-87
1980 4-40
Eastridge Mall,
Casper, WY 13,237 4,300 19,896 315 4,300 20,211 24,511 774 --
1995 40
Grand Teton Mall,
Idaho Falls, ID -- 5,802 28,614 -- 5,802 28,614 34,416 531 --
1996 40
North Plains Mall,
Clovis, NM 5,472 1,592 -- 10,784 1,592 10,784 12,376 3,121 1984-85
1979-84 10-40
Pine Ridge Mall,
Pocatello, ID 10,019 1,883 -- 21,468 1,883 21,468 23,351 7,352 1979-81
1979 10-40
Red Cliffs Mall,
St. George, UT 6,299 903 -- 12,586 903 12,586 13,489 2,493 1989-90
1989 3-40
Three Rivers Mall,
Kelso, WA 10,174 1,977 -- 20,088 1,977 20,088 22,065 4,416 1986-87
1984 10-40
White Mountain Mall,
Rock Springs, WY 5,083 1,120 -- 15,640 1,120 15,640 16,760 5,553 1977-78
1977 40
COMMUNITY CENTERS &
FREE-STANDING RETAIL:
Alameda Plaza,
Pocatello, ID 1,178 500 -- 3,365 500 3,365 3,865 1,752 1973
1973 40
Anaheim Plaza,
Anaheim, CA -- -- -- 54 -- 54 54 27 1980-81
1979 40
Arctic Circle Granger,
West Valley City, UT -- 48 -- 50 48 50 98 30 1973
1971 40
Austin Bluffs Plaza,
Colorado Springs, CO -- 1,488 -- 1,943 1,488 1,943 3,431 537 1985
1979 3-40
Bailey Hills Plaza,
Eugene, OR -- 157 -- 317 157 317 474 39 1988-89
1988 40
Bank One,
Nephi, UT -- 17 183 -- 17 183 200 135 --
1976 40
Baskin Robbins 17th St.,
Idaho Falls, ID -- 8 66 8 8 74 82 16 --
1988 40
Boise Plaza,
Boise, ID -- 322 -- 1,382 322 1,382 1,704 866 1970-71
1970 40
Cottonwood Square,
Salt Lake City, UT -- 1,926 3,535 -- 1,926 3,535 5,461 88 --
1995 40
Division Crossing,
Portland, OR 3,468 2,429 -- 4,484 2,429 4,484 6,913 694 1990-91
1990 20-40
Twin Falls Crossing,
Twin Falls, ID -- 125 -- 776 125 776 901 387 1976
1975 40
Fort Union Plaza,
Salt Lake City, UT -- 21 -- 1,668 21 1,668 1,689 586 1979-84
-- 40
Fremont Plaza,
Las Vegas, NV -- -- -- 2,254 -- 2,254 2,254 1,075 1976-80
-- 40
Fry's Shopping Plaza,
Glendale, AZ 1,950 353 -- 4,579 1,253 3,679 4,932 1,437 1980-81
1980 40
Gateway Crossing,
Bountiful, UT -- 3,644 -- 8,480 3,644 8,480 12,124 827 1990-92
1990 40
Halsey Crossing,
Gresham, OR -- -- -- 2,302 -- 2,302 2,302 416 1989-91
-- 4-40
North Temple Shops,
Salt Lake City, UT -- 60 -- 177 60 177 237 76 1970
1970 40
(continued)
F-16
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
GROSS AMOUNT AT WHICH CARRIED
INITIAL COSTS CAPITALIZED AT CLOSE OF PERIOD
DEPRE-
------------------- SUBSEQUENT -----------------------------
CIABLE
RELATED BUILDING & TO BLDG. ACCUMULATED DATE OF
DATE LIVES-
ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION LAND IMPROV. TOTAL(1) DEPRECIATION
CONSTRUCTION ACQUIRED YEARS
------------ ---- ------------ ----------- ------ -------- -------- ------------
- ------------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
DESCRIPTION
- -----------
Orem Plaza Center Street,
Orem, UT -- 371 330 1,091 344 1,448 1,792 531 1976-87
1973 10-40
Orem Plaza State Street,
Orem, UT -- 126 -- 627 126 627 753 326 1975
1973 29-40
Plaza 800,
Reno, NV -- 33 2,969 8 33 2,977 3,010 1,592 1974
-- 40
Plaza 9400,
Sandy, UT 1,517 -- -- 4,555 -- 4,555 4,555 1,835 1976-84
-- 10-40
Red Cliffs Plaza,
St. George, UT -- -- 2,403 -- -- 2,403 2,403 135 1994-95
1994-95 40
River Pointe Plaza,
West Jordan, UT 1,762 1,130 -- 2,670 1,130 2,670 3,800 640 1987-88
1986-87 5-40
Riverside Plaza,
Provo, UT -- 427 1,886 1,206 427 3,092 3,519 1,379 1978-81
1977 40
University Crossing,
Orem, UT 1,710 230 -- 4,411 230 4,411 4,641 1,575 1971-92
1971 40
Woodlands Village,
Flagstaff, AZ 4,080 2,068 5,329 228 2,068 5,557 7,625 308 --
1994 40
Yellowstone Square,
Idaho Falls, ID -- 355 -- 4,552 355 4,552 4,907 2,422 1972-77
1972 40
COMMERCIAL:
First Security Place,
Boise, ID -- 301 -- 3,248 300 3,249 3,549 1,388 1978-80
1978 10-40
Price Business Center-
Pioneer Square,
Salt Lake City, UT -- 658 -- 10,165 658 10,165 10,823 3,006 1974-92
1973 3-40
Price Business Center-
South Main,
Salt Lake City, UT -- 317 -- 2,640 317 2,640 2,957 1,302 1967-82
1966-81 3-40
Price Business Center-
Timesquare,
Salt Lake City, UT -- 581 -- 8,723 581 8,723 9,304 3,275 1974-80
1972-80 5-40
Sears-Eastbay,
Provo, UT 2,072 275 -- 2,097 275 2,097 2,372 423 1989-90
1989 40
Price Business Center,
Commerce Park,
West Valley City, UT -- 415 2,109 8,153 1,147 9,530 10,677 1,109 1980
1973-95 40
OTHER REAL ESTATE:
Spokane Valley Center,
Spokane, WA 16,943 6,708 -- 28,054 6,708 28,054 34,762 --
1990-96(2) 1990 40
Miscellaneous Real
Estate -- 6,601 67 1,470 6,603 1,535 8,138 209 --
1980-95 40
------------- -------- --------- --------- -------- ------- --------- ----------
TOTAL $ 158,175 $ 68,108 $ 112,222 $ 272,911 $ 69,714 $383,527 $453,241 $ 87,318
============= ======== ======== ========= ======== ========= ========= ==========
- ---------------------
(1)The aggregate cost for Federal Income Tax purposes was approximately $459,179 at December 31, 1996.
(2)Construction in progress as of December 31, 1996.
</TABLE>
(continued)
F-17
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
A summary of activity for real estate investments and accumulated depreciation
is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Real Estate Investments:
Balance at Beginning
of Year . . . . . . . . . $ 388,205 $ 321,242 $ 286,719
Acquisitions . . . . . . . 37,055 59,081 7,723
Improvements . . . . . . . 28,268 9,903 27,459
Disposition of Property. . (287) (2,021) (659)
---------- ---------- ----------
Balance at End of Year. . . $ 453,241 $ 388,205 $ 321,242
========== ========== ==========
Accumulated Depreciation:
Balance at Beginning
of Year. . . . . . . . . . $ 77,462 $ 69,660 $ 62,105
Depreciation . . . . . . . 10,015 9,386 7,768
Depreciation of Disposed
Property. . . . . . . . . (159) (1,584) (213)
---------- ---------- ----------
Balance at End of Year. . . $ 87,318 $ 77,462 $ 69,660
========== ========== ==========
</TABLE>
F-18
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1997
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
On April 4, 1996, the Operating Partnership acquired the Grand Teton Mall
located in Idaho Falls, Idaho for approximately $34,400. The acquisition
was financed utilizing borrowings on the $50,000 credit facility. On
January 28, 1997, the Company sold 1,500,000 shares of common stock in an
underwritten public offering at an offering price of $27.125 per share.
Net proceeds of $38,600 were contributed to the Operating Partnership in
exchange for additional partnership units. The Operating Partnership used the
net proceeds to repay borrowings under the $50,000 Credit Facility. On June
1, 1997, the Operating Partnership acquired the remaining 70% interest in
Silver Lake Mall by issuing 72,000 partnership units and assuming $24,755 in
debt. On June 30, 1997, the Operating Partnership acquired Visalia Mall for
$38,000 paying $1,000 from operations and $37,000 from borrowings.
The following unaudited pro forma condensed consolidated statement of operations
for the six month period ended June 30, 1997 is presented as if the offering
of common stock purchasing additional partnership units and the acquisition
of the properties purchased on June 1, 1997 and June 30, 1997 had occurred on
January 1, 1997. The unaudited pro forma condensed statement of operations for
the year ended December 31, 1996 is presented as if the public offering of
common stock purchasing additional partnership units and the acquisition of
the properties purchased on April 4, 1996, June 1, 1997 and June 30, 1997 had
occurred on January 1, 1996.
Pro forma information is based upon the historical consolidated results of
operations of the Operating Partnership for the six-month period ended June 30,
1997 and for the year ended December 31, 1996, giving effect to the
transactions described above. The pro forma condensed consolidated statement
of operations should be read in conjunction with the historical financial
statements and notes thereto of the Operating Partnership included elsewhere
herein.
The unaudited pro forma condensed consolidated statement of operations is not
necessarily indicative of what the actual results of operations of the
Operating Partnership would have been assuming the transactions had been
completed as set forth above, nor does it purport to represent the Operating
Partnership's results of operations for future periods.
F-19
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1997
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS - EXCEPT PER PARTNERSHIP UNIT AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Acquired
Operating Properties and Operating
Partnership Partnership Units Partnership
Historical(A) Issued(B) Pro Forma
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES
Minimum Rents. . . $ 26,44 $ 3,222 $ 29,670
Percentage and
Overage Rents. . 1,992 64 2,056
Recoveries from
Tenants. . . . . 8,053 1,444 9,497
Interest and
Other Income . . 499 (104)(C) 395
------------- ------------- -------------
36,992 4,626 41,618
EXPENSES
Operating Expenses
Before Depreciation
and Interest . . 12,044 1,718 13,762
Interest . . . . . 3,166 1,659(D) 4,825
Depreciation and
Amortization . . 6,091 660(E) 6,751
------------- ------------- -------------
Net Operating
Income . . . . 15,691 589 16,280
Minority Interests
in Income of
Consolidated
Partnerships . . (206) -- (206)
Gain of Sale of
Real Estate. . . 339 -- 339
------------- ------------- -------------
Net Income . . . . $ 15,824 $ 589 $ 16,413
============= ============= =============
Net Income Per
Partnership
Unit . . . . . . $ .75 $ .77
============= =============
Weighted Average
Number of
Partnership Units
Outstanding 20,969,047 21,261,555
============= =============
</TABLE>
(A) Reflects the Operating Partnership's historical consolidated
statement of operations for the period January 1, 1997 to June 30, 1997.
(B) Reflects revenues and certain expenses of the properties
acquired on June 1, 1997 and June 30, 1997 for the five months
ended May 31, 1997 and the six months ended June 30, 1997,
respectively, and the partnership units issued as a result of
the common stock offering on January 28, 1997 of the Company, as
if consummated on January 1, 1997.
(C) Reflects a reduction in outside management fees for the
Operating Partnership received for management services of Silver Lake
Mall prior to the acquisition.
(D) Reflects interest expense on borrowings outstanding under the
revolving Credit Facilities, drawn for purposes of the
acquisition of the properties, at a rate equal to the average
interest rate incurred under the Credit Facilities, and
interest on assumed debt at 8.5% fixed rate. A change in the
interest rate of 1/8% on the Credit Facility used to finance
the acquisition of the properties would result in $29 interest
expense increase or decrease for the six-month period ended
June 30, 1997.
Interest expense is reduced for the period January 1, 1997
through February 11, 1997 by $289, reflecting the $38,600 in
net proceeds from the partnership units issued as a result of
the January 28, 1997 common stock offering of the Company.
The proceeds were used to retire borrowings outstanding on the
Operating Partnership's $50,000 Credit Facility.
(E) Reflects depreciation on the purchase price allocated to
buildings over a 40-year useful life.
F-20
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS - EXCEPT PER PARTNERSHIP UNIT AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Acquired
Operating Properties and Operating
Partnership Partnership Units Partnership
Historical(A) Issued(B) Pro Forma
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES
Minimum Rents . . $ 52,447 $ 7,650 $ 60,097
Percentage and
Overage Rents. . 4,061 338 4,399
Recoveries from
Tenants. . . . . 15,557 3,094 18,651
Interest and
Other Income . . 884 (148)(C) 736
------------- ------------- -------------
72,949 10,934 83,883
EXPENSES
Operating Expenses
Before Depreciation
and Interest . . 24,405 3,885 28,290
Interest. . . . . 7,776 2,667(D) 10,443
Depreciation and
Amortization . . 11,979 1,500(E) 13,479
------------- ------------- -------------
Net Operating
Income . . . . 28,789 2,882 31,671
Minority Interests
in Income of
Consolidated
Partnerships . . (389) -- (389)
Gain on Sale of
Real Estate. . . 94 -- 94
------------- ------------- -------------
Net Income. . . $ 28,494 $ 2,882 $ 31,376
============= ============= =============
Net Income Per
Partnership
Unit . . . . . . $ 1.45 $ 1.50
============= =============
Weighted Average
Number of
Partnership
Units
Outstanding . . 19,667,865 20,962,028
============= =============
</TABLE>
(UNAUDITED)
(A) Reflects the Operating Partnership's historical consolidated statement
of operations for the period January 1, 1996 to December 31, 1996.
(B) Reflects revenues and expenses of the properties acquired on
April 4, 1996, June 1, 1997 and June 30, 1997, and the
partnership units issued as a result of the common stock
offering on January 28, 1997 of the Company, as if consummated
on January 1, 1996.
(C) Adjustment reflects a reduction in outside management fees for
the Operating Partnership received for management services of Silver
Lake Mall prior to the acquisition.
(D) Reflects interest expense on borrowings outstanding under the
revolving Credit Facilities, drawn for purposes of the
acquisition of the properties, at a rate equal to the average
interest rate incurred under the Credit Facilities, and
interest on assumed debt at 8.5% fixed rate. A change in the
interest rate of 1/8% on the Credit Facility used to finance
the acquisition of the properties would result in $58 interest
expense increase or decrease.
Interest expense is reduced by using the $38,600 in net
proceeds from issuing units from the January 28, 1997 common
stock offering. The proceeds were used to retire borrowings
outstanding on the Operating Partnership's $50,000 Credit
Facility. Prior to April 4, 1996, only $10,000 was outstanding
on this Credit Facility. As a result, the interest expense
reduction is computed based on that amount during the period
January 1, 1996 to April 4, 1996.
(E) Reflects depreciation on the purchase price allocated to
buildings, over a 40-year useful life.
F-21
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
SELECTED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS - EXCEPT PER PARTNERSHIP UNIT AMOUNTS)
<TABLE>
<CAPTION>
OPERATING PARTNERSHIP HISTORICAL Predecessor
Companies
--------------------------------------------------------
- --------------------------------
JANUARY 1, JANUARY 1, JANUARY 21, HISTORICAL
HISTORICAL
1997 1996 YEAR YEAR 1994 JANUARY 1, 1994 YEAR
ENDED
TO JUNE 30, TO JUNE 30, ENDED ENDED TO DECEMBER 31, TO JANUARY 20,
DECEMBER 31,
1997 1996 1996 1995 1994 1994 1993
1992
-------- -------- ------- ------- -------- -------- -------
-------
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
REVENUES . . . . . . . . . . . $ 36,992 $ 35,350 $ 72,949 $ 60,950 $ 50,071 $ 2,578 $ 47,728
$ 45,610
-------- -------- -------- -------- -------- -------- ---------
- ---------
EXPENSES
Operating Expenses before
Interest, Depreciation
and Amortization . . . . . . 12,044 11,999 24,405 20,389 17,090 893 17,226
17,012
Interest . . . . . . . . . . . 3,166 3,562 7,776 6,623 5,873 826 18,482
18,852
Depreciation and
Amortization . . . . . . . . 6,091 5,862 11,979 11,528 8,734 430 8,530
7,882
-------- -------- -------- -------- ------- ------- --------
--------
Total . . . . . . . . . . . 21,301 21,423 44,160 38,540 31,697 2,149 44,238
43,746
-------- -------- -------- -------- ------- ------- --------
--------
15,691 13,927 28,789 22,410 18,374 429 3,490
1,864
Minority Interests in Income
of Consolidated
Partnerships (206) (205) (389) (421) (277) -- (251)
(254)
Equity in Net Loss of
Partnership Interest . . . . -- -- -- (184) (82) 7 (238)
(238)
Gain (Loss) of Sales of
Real Estate. . . . . . . . . 339 94 94 918 -- -- 607
531
-------- -------- -------- -------- -------- -------- --------
--------
Income Before Extraordinary
Item . . . . . . . . . . . . 15,824 13,816 28,494 22,723 18,015 436 3,608
1,903
Extraordinary Item-Loss on
Extinguishment of Debt . . . -- -- -- -- (6,670) --
- -- --
-------- -------- -------- -------- -------- -------- --------
--------
Net Income . . . . . . . . . $ 15,824 $ 13,816 $ 28,494 $ 22,723 $ 11,345 $ 436 $ 3,608
$ 1,903
======== ======== ======== ======== ======== ======== ========
========
Income Before Extraordinary
Item. . . . . . . . . . . . $ .75 $ .70 $ 1.45 $ 1.26 $ 1.06
Extraordinary Item . . . . . . -- -- -- -- (39)
-------- -------- -------- -------- --------
Net Income per Partnership
Unit (1). . . . . . . . . . $ .75 $ .70 $ 1.45 $ 1.26 $ .67
======== ======== ======== ======== ========
Distribution per
Partnership Unit. . . . . . $ .87 $ .84 $ 1.695 $ 1.635 $ 1.525
======== ======== ======== ======== ========
</TABLE>
___________
(1) Based on 20,969,047, 19,667,865, 18,037,429 and 16,922,809 weighted average
number of partnership units outstanding for the period June 30, 1997
and the years ended December 31, 1996, 1995 and 1994, respectively.
F-22
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
SELECTED FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
OPERATING PARTNERSHIP HISTORICAL Predecessor
Companies
--------------------------------------------------------
- --------------------------------
JANUARY 1, JANUARY 21, HISTORICAL
HISTORICAL
1997 YEAR YEAR 1994 TO JANUARY 1, 1994 YEAR
ENDED
TO JUNE 30, ENDED ENDED DECEMBER 31, TO JANUARY 20,
DECEMBER 31,
1997 1996 1995 1994 1994 1993
1992
-------- -------- -------- ----------- ----------- ---------
---------
<S> <C> <C> <C> <C> <C> <C>
<C>
BALANCE SHEET DATA
Real Estate, before Accumulated
Depreciation . . . . . . . . . $ 547,742 $ 453,241 $ 388,205 $ 321,242 N/A $ 286,719
$ 280,911
Total Assets . . . . . . . . . . 470,545 381,360 327,061 281,696 N/A 236,482
237,867
Total Debt . . . . . . . . . . . 203,654 162,375 106,406 108,741 N/A 235,799
232,195
Partners' Capital (Deficit). . . 242,696 204,666 209,742 163,073 N/A (6,951)
(1,721)
</TABLE>
<TABLE>
<CAPTION>
Number of Properties/Total GLA
- ----------------------------------------------------------------------------------------
June 30, December 31,
------------
- ---------------------------------------------------------------------
1997 1996 1995 1994 1993
1992
------------ ------------ ------------ ------------ ------------
- ------------
<S> <C> <C> <C> <C> <C> <C>
Number of Properties at
Year End. . . . . . . . . . . 45 44 43 40 38
38
============ ============ ============ ============ ============
============
Total GLA in square feet at
Year End:
Malls . . . . . . . . . . . . . 6,324,000 5,553,000 5,020,000 3,898,000 3,855,000
3,849,000
Community Centers and Free-Standing
Retail Properties . . . . . . 3,089,000 3,091,000 3,091,000 2,997,000 2,742,000
2,720,000
Commercial Properties . . . . . 1,418,000 1,418,000 1,394,000 1,113,000 1,113,000
1,108,000
------------ ------------ ------------ ------------ ------------
- ------------
Total. . . . . . . . . . . . 10,831,000 10,062,000 9,505,000 8,008,000 7,710,000
7,677,000
============ ============ ============ ============ ============
============
</TABLE>
F-23
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses (not including
underwriting commissions and fees) in connection with the issuance and
distribution of the securities being registered hereunder. Except for the
Securities and Exchange Commission registration fee, all amounts are estimates.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission
registration fee.................................................................. $105,171
NYSE filing fees.................................................................... _______*
Accounting fees and expenses........................................................ _______*
Attorneys' fees and expenses........................................................ _______*
Miscellaneous expenses.............................................................. _______*
Total......................................................................... $_______*
<FN>
_____________________
* To be filed by amendment or by a current report on Form 8-K pursuant to the Securities
Exchange Act of 1934, as appropriate.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Maryland General Corporation Law (the "MGCL"), the
Company's Charter obligates the Company to indemnify its present and former
directors and officers and to pay or reimburse expenses for these individuals
in advance of the final disposition of a proceeding to the maximum extent
permitted from time to time by Maryland law. The Company's By-Laws obligate
the Company to indemnify and advance expenses to present and former directors
and officers to the maximum extent permitted by Maryland law. The MGCL permits
a corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by them in connection with any proceeding to which
they may be made a party by reason of their service in those or other
capacities, unless it is established that (a) the act or omission of the
director or officer was material to the matter giving rise to the proceeding
and (i) was committed in bad faith, or (ii) was the result of active and
deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful.
The MGCL permits the Articles of Incorporation of a Maryland corporation
to include a provision limiting the liability of its directors and officers to
the corporation and its stockholders for money damages, except to the extent
that (1) it is provided that the person actually received an improper benefit
or profit in money, property or services or (2) a judgment or other final
adjudication is entered in a proceeding based on a finding that the person's
action, or failure to act, was the result of active and deliberate dishonesty
and was material to the cause of action adjudicated in the proceeding. The
Company's Charter contains a provision providing for elimination of the
liability of its directors or officers to the Company or its stockholders for
money damages to the maximum extent permitted by Maryland law from time to
time.
ITEM 16. EXHIBITS.
1.1 Form of Underwriting Agreement (for Common Stock)*
1.2 Form of Underwriting Agreement (for Preferred Stock)*
1.3 Form of Underwriting Agreement (for Common Stock Warrants)*
II-1
<PAGE>
1.4 Form of Underwriting Agreement (for Debt Securities)*
3.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) to the Company's
Registration Statement on Form S-11 (File No. 33-68844))
3.2 Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3(b) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997 (File No. 1-12560))
3.3 Form of Articles Supplementary of the Company*
3.4 Amended and Restated Agreement of Limited Partnership of the
Operating Partnership (incorporated by reference to Exhibit 10(a)
to the Company's Registration Statement on Form S-11 (File No. 33-
68844))
4.1 Specimen of Common Stock Certificate (incorporated by reference to
Exhibit 4 to the Company's Registration Statement on Form S-11
(File No. 33-68844))
4.2 Form of Preferred Stock Certificate*
4.3 Form of Common Stock Warrant Agreement*
4.4 Form of Deposit Agreement (for Preferred Stock)*
4.5 Form of Indenture
4.6 Form of Debt Security*
4.7 Form of Guarantee*
5.1 Opinion of Rogers & Wells
5.2 Opinion of Piper & Marbury L.L.P.
8 Opinion of Rogers & Wells re: tax matters*
12 Calculation of Ratios of Earnings to Fixed Charges*
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Rogers & Wells (contained in its opinions filed as
Exhibits 5.1 and 8)
23.3 Consent of Piper & Marbury L.L.P. (contained in its opinion filed
as Exhibit 5.2)
24 Powers of Attorney**
27 Financial Data Schedule***
_____________________________
* To be filed by amendment or by a Current Report on Form 8-K
pursuant to the Securities Exchange Act of 1934, as appropriate.
** Previously filed with the Company's and the Operating
Partnership's Registration Statement on Form S-3 filed
September 2, 1997.
*** Previously filed with the Company's and the Operating Partnership's
Pre-Effective Amendment to their Registration Statement on Form S-3
filed on September 26, 1997.
ITEM 17. UNDERTAKINGS.
(a) Each of the undersigned Registrants hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that subparagraphs (i) and (ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
II-2
<PAGE>
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial BONA FIDE offering thereof.
(c) The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If
any public offering by the underwriters is to be made on terms differing from
those set forth on the cover page of the prospectus, a post-effective amendment
will be filed to set forth the terms of such offering.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by them is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(e) The undersigned registrants hereby undertake to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants certify that they have reasonable grounds to believe that they meet
all of the requirements for filing on Form S-3 and have duly caused this
Pre-Effective Amendment No. 2 to the Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of
Salt Lake City, State of Utah, on November 7, 1997.
JP REALTY, INC.
By: /S/G. REX FRAZIER
----------------------------------
G. Rex Frazier
Chairman of the Board of Directors
and Chief Executive Officer
PRICE DEVELOPMENT COMPANY,
LIMITED PARTNERSHIP
By: JP Realty, Inc., as general partner
By: /S/G. REX FRAZIER
---------------------------------
G. Rex Frazier
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration Statement has been signed by
the following persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
/S/JOHN PRICE* Chairman of the Board of Directors November 7, 1997
JOHN PRICE and Chief Executive Officer
(Principal Executive Officer)
/S/G. REX FRAZIER President and Chief Operating November 7, 1997
G. REX FRAZIER Officer and Director
/S/M. SCOTT COLLINS Vice President - Chief Financial November 7, 1997
M. SCOTT COLLINS Officer and Treasurer (Principal
Financial and Accounting Officer)
/S/WARREN P. KING* Director November 7, 1997
WARREN P. KING
/S/ALLEN P. MARTINDALE* Director November 7, 1997
ALLEN P. MARTINDALE
/S/JAMES A. ANDERSON* Director November 7, 1997
JAMES A. ANDERSON
/S/SAM W. SOUVALL* Director November 7, 1997
SAM W. SOUVALL
/S/ALBERT SUSSMAN* Director November 7, 1997
ALBERT SUSSMAN
*By: /S/G. REX FRAZIER
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
<S> <C> <C>
1.1 Form of Underwriting Agreement (for Common Stock)*
1.2 Form of Underwriting Agreement (for Preferred Stock)*
1.3 Form of Underwriting Agreement (for Common Stock Warrants)*
1.4 Form of Underwriting Agreement (for Debt Securities)*
3.1 Amended and Restated Articles of Incorporation for the Company
(incorporated by reference to Exhibit 3(a) to the Company's Registration
Statement on Form S-11 (File No. 33-68844))
3.2 Amended and Restated By-Laws of the Company (incorporated by reference
to Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 (File No. 1-12560))
3.3 Form of Articles Supplementary of the Company*
3.4 Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (incorporated by reference to Exhibit 10(a) to the Company's
Registration Statement on Form S-11 (File No. 33-68844))
4.1 Specimen of Common Stock Certificate (incorporated by reference to
Exhibit 4 to the Company's Registration Statement on Form S-11 (File No.
33-68844))
4.2 Form of Preferred Stock Certificate*
4.3 Form of Common Stock Warrant Agreement*
4.4 Form of Deposit Agreement (for Preferred Stock)*
4.5 Form of Indenture
4.6 Form of Debt Security*
4.7 Form of Guarantee*
5.1 Opinion of Rogers & Wells
5.2 Opinion of Piper & Marbury L.L.P.
8 Opinion of Rogers & Wells re: tax matters*
12 Calculation of Ratios of Earnings to Fixed Charges*
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Rogers & Wells (contained in its opinions filed as Exhibits
5.1 and 8)
23.3 Consent of Piper & Marbury L.L.P. (contained in its opinion filed as
Exhibit 5.2)
24 Powers of Attorney**
27 Financial Data Schedule***
<FN>
______________________
* To be filed by amendment or by a Current Report on Form 8-K pursuant to the Securities Exchange Act
of 1934, as appropriate.
** Previously filed with the Company's and the Operating Partnership's
Registration Statement on Form S-3 filed September 2, 1997.
*** Previously filed with the Company's and the Operating Partnership's Pre-Effective
Amendment to their Registration Statement on Form S-3 filed on September 26, 1997.
</TABLE>
II-5
<PAGE>
INDENTURE, dated as of ______________, 199__, between Price
Development Company, Limited Partnership, a Delaware Limited Partnership
(the "ISSUER"), having its principal offices at 35 Century Park-Way, Salt
Lake City, Utah 84115 and [TRUSTEE], a _______________ organized under the
laws of ______________, as Trustee hereunder (the "TRUSTEE"), having its
Corporate Trust Office at [ADDRESS].
RECITALS OF THE ISSUER
The Issuer deems it necessary to issue from time to time for its
lawful purposes debt securities (hereinafter called the "SECURITIES")
evidencing its unsecured indebtedness, and has duly authorized the
execution and delivery of this Indenture to provide for the issuance from
time to time of the Securities, unlimited as to principal amount, to bear
interest at the rates or formulas, to mature at such times and to have such
other provisions as shall be fixed as hereinafter provided.
This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended ("TIA"), that are deemed to be incorporated into this
Indenture and shall, to the extent applicable, be governed by such
provisions.
All things necessary to make this Indenture a valid agreement of the
Issuer, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the holders thereof (the "Holders"), it is mutually
covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise
requires:
(i) the terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the
singular;
(ii) all other terms used herein which are defined in the TIA,
either directly or by reference therein, have the meanings assigned to
them therein;
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(iii) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
(iv) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Amounts" means any additional amounts which are required
by a Security or by or pursuant to a Board Resolution, under circumstances
specified therein, to be paid by the Issuer in respect of certain taxes
imposed on certain Holders and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Annual Service Charge" as of any date means the amount which is
expensed in any 12-month period for interest on Debt.
"Authenticating Agent" means any authenticating agent appointed by the
Trustee pursuant to Section 611.
"Authorized Newspaper" means a newspaper, printed in the English
language or in an official language of the country of publication,
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in each place in
connection with which the term is used or in the financial community of
each such place. Whenever successive publications are required to be made
in Authorized Newspapers, the successive publications may be made in the
same or in different Authorized Newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.
"Bankruptcy Law" has the meaning specified in Section 501.
"Bearer Security" means any Security established pursuant to Section
201 which is payable to bearer.
"Board of Directors" means the board of directors of the General
Partner or any committee of such board of directors duly authorized to act
hereunder.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the General Partner to have been
duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification, and delivered to the Trustee.
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"Business Day," when used with respect to any Place of Payment or any
other particular location referred to in this Indenture or in the
Securities, means, unless otherwise specified with respect to any
Securities pursuant to Section 301, any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking
institutions in that Place of Payment or particular location are authorized
or required by law, regulation or executive order to close.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A., or
its successor.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of
1934, or, if at anytime after execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the TIA,
then the body performing such duties on such date.
"Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country which issued such currency
and for the settlement of transactions by a central bank or other public
institutions of or within the international banking community, (ii) the ECU
both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities
or (iii) any currency unit (or composite currency) other than the ECU for
the purposes for which it was established.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at [ADDRESS].
"corporation" includes corporations, associations, partnerships,
companies and business trusts.
"coupon" means any interest coupon appertaining to a Bearer Security.
"Custodian" has the meaning specified in Section 501.
"Debt" of the Issuer or any Subsidiary means any indebtedness of the
Issuer or any Subsidiary, whether or not contingent, in respect of (i)
borrowed money or indebtedness evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness secured by any mortgage, pledge,
lien, charge, encumbrance or any security interest existing on property
owned by the Issuer or any Subsidiary, (iii) the reimbursement obligations,
contingent or otherwise, in connection with any letters of credit actually
issued or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) any lease of property by the
Issuer or any Subsidiary as lessee which is reflected on the Issuer's
consolidated balance sheet as a capitalized lease in accordance with GAAP,
in the case of items of indebtedness under (i) through (iii) above to the
extent that any such items (other than letters of credit) would appear as a
liability on the Issuer's consolidated balance sheet in accordance with
GAAP, and also includes, to the extent not otherwise included, any
obligation by the Issuer or any Subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in
the ordinary course of business), indebtedness of another person (other
than the Issuer or any Subsidiary) (it being
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<PAGE>
understood that Debt shall bedeemed to be incurred by the Issuer and its
Subsidiaries on a consolidated basis whenever the Issuer and its
Subsidiaries on a consolidated basis shall create, assume, guarantee
or otherwise become liable in respect thereof).
"Defaulted Interest" has the meaning specified in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States of America as at the time shall be legal
tender for the payment of public and private debts.
"DTC" means The Depository Trust Company.
"ECU" means the European Currency Unit as defined and revised from
time to time by the Council of the European Communities.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic Community, the
European Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the
European Communities.
"Event of Default" has the meaning specified in Section 501.
"Foreign Currency" means any currency, currency unit or composite
currency, including, without limitation, the ECU, issued by the government
of one or more countries other than the United States of America or by any
recognized confederation or association of such governments.
"GAAP" means generally accepted accounting principles, as in effect
from time to time, as used in the United States applied on a consistent
basis.
"General Partner" means JP Realty, Inc., as sole general partner of
the Issuer.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued
the Foreign Currency in which the Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or
(ii) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America or such
government which issued the foreign currency in which the Securities of
such series are payable, the payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States of America or
such other government, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest
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<PAGE>
on or principal of any such Government Obligation held by such custodian
for the account of the holder of a depository receipt; PROVIDED that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by such depository receipt.
"Holder" means, in the case of a Registered Security, the Person in
whose name a Security is registered in the Security Register and, in the
case of a Bearer Security, the bearer thereof and, when used with respect
to any coupon, shall mean the bearer thereof.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof, and shall include the terms of particular series of Securities
established as contemplated by Section 301; PROVIDED, HOWEVER, that, if at
any time more than one Person is acting as Trustee under this instrument,
"Indenture" shall mean, with respect to any one or more series of
Securities for which such Person is Trustee, this instrument as originally
executed or as it may from time to time be supplemented or amended by one
or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of the or those
particular series of Securities for which such Person is Trustee
established as contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of Securities for
which such Person is not Trustee, regardless of when such terms or
provisions were adopted, and exclusive of any provisions or terms adopted
by means of one or more indentures supplemental hereto executed and
delivered after such Person had become such Trustee but to which such
Person, as such Trustee, was not a party.
"Indexed Security" means a Security the terms of which provide that
the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"Interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, shall mean
interest payable after Maturity, and, when used with respect to a Security
which provides for the payment of Additional Amounts pursuant to Section
1008, includes such Additional Amounts.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Issuer" means the Person named as the "Issuer" in the first paragraph
of this Indenture until a successor shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Issuer" shall mean
such successor.
"Issuer Request" and "Issuer Order" mean, respectively, a written
request or order signed in the name of the Issuer by the General Partner's
Chairman of the Board, the President or a Vice President, and by the
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<PAGE>
General Partner's Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the General
Partner's Chairman of the Board of Directors, the President or a Vice
President and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Issuer or who may be an employee of or other counsel for
the Issuer and who shall be satisfactory to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment,
redemption or repayment at the option of the Holder money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Issuer) in trust or set aside and
segregated in trust by the Issuer (if the Issuer shall act as its own
Paying Agent) for the Holders of such Securities and any coupons
appertaining thereto; PROVIDED, that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has
been made;
(iii) Securities, except to the extent provided in Sections
1402 and 1403, with respect to which the Issuer has effected
defeasance and/or covenant defeasance as provided in Article Fourteen;
and
(iv) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Issuer;
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<PAGE>
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or
are present at a meeting of Holders for quorum purposes, and for the
purpose of making the calculations required by Section 313 of the TIA, (i)
the principal amount of an Original Issue Discount Security that may be
counted in making such determination or calculation and that shall be
deemed to be Outstanding for such purpose shall be equal to the amount of
principal thereof that would be (or shall have been declared to be) due and
payable, at the time of such determination, upon a declaration of
acceleration of the maturity thereof pursuant to Section 502, (ii) the
principal amount of any Security denominated in a Foreign Currency that may
be counted in making such determination or calculation and that shall be
deemed Outstanding for such purpose shall be equal to the Dollar
equivalent, determined pursuant to Section 301 as of the date such Security
is originally issued by the Issuer, of the principal amount (or, in the
case of an Original Issue Discount Security, the Dollar equivalent as of
such date of original issuance of the amount determined as provided in
clause (i) above) of such Security, (iii) the principal amount of any
Indexed Security that may be counted in making such determination or
calculation and that shall be deemed Outstanding for such purpose shall be
equal to the principal face amount of such Indexed Security at original
issuance, unless otherwise provided with respect to such Security pursuant
to Section 301, and (iv) Securities owned by the Issuer or any other
obligor upon the Securities or any Affiliate of the Issuer or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that,
in determining whether the Trustee shall be protected in making such
calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee
knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Issuer or any other obligor upon the Securities or any Affiliate of the
Issuer or of such other obligor.
"Paying Agent" means any Person authorized by the Issuer to pay the
principal of (and premium, if any) or interest, if any, on any Securities
or coupons on behalf of the Issuer.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment," when used with respect to the Securities of or
within any series, means the place or places where the principal of (and
premium, if any) and interest, if any, on such Securities are payable as
specified as contemplated by Sections 301 and 1002.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security or a Security to
which a mutilated, destroyed, lost or stolen coupon appertains shall be
deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security or the Security to which the mutilated, destroyed, lost or
stolen coupon appertains.
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"Redemption Date," when used with respect to any Security to be
redeemed, in whole or in part, means the date fixed for such redemption by
or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" shall mean any Security which is registered in
the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Registered Securities of or within any series means the date
specified for that purpose as contemplated by Section 301, whether or not a
Business Day.
"Repayment Date" means, when used with respect to any Security to be
repaid at the option of the Holder, the date fixed for such repayment by or
pursuant to this Indenture.
"Repayment Price" means, when used with respect to any Security to be
repaid at the option of the Holder, the price at which it is to be repaid
by or pursuant to this Indenture.
"Responsible Officer," when used with respect to the Trustee, means
the chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president (whether or not designated by a number or a
word or words added before or after the title "vice president"), the
secretary, any assistant secretary, the treasurer, any assistant treasurer,
the cashier, any assistant cashier, any trust officer or assistant trust
officer, the controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of
such officer's knowledge and familiarity with the particular subject.
"Security" has the meaning stated in the first recital of this
Indenture and, more particularly, means any Security or Securities
authenticated and delivered under this Indenture; PROVIDED, HOWEVER, that,
if at any time there is more than one Person acting as Trustee under this
Indenture, "Securities" with respect to the Indenture as to which such
Person is Trustee shall have the meaning stated in the first recital of
this Indenture and shall more particularly mean Securities authenticated
and delivered under this Indenture, exclusive, however, of Securities of
any series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" (as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated under the Securities Act of 1933, as amended) of the Issuer.
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"Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of or within any series means a date fixed by the
Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date
specified in such Security or a coupon representing such installment of
interest as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.
"Subsidiary" means a corporation, 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 voting power for the election of directors, or
trustees, as the case may be, whether at all times or only so long as no
senior class of stock has such voting power by reason of any contingency.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended and as in force at the date as of which this Indenture was
executed, except as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean or include each Person who is then a
Trustee hereunder; PROVIDED, HOWEVER, that, if at any time there is more
than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean only the Trustee with respect to Securities of that
series.
"United States" means, unless otherwise specified with respect to any
Securities pursuant to Section 301, the United States of America (including
the states and the District of Columbia), its territories, its possessions
and other areas subject to its jurisdiction.
"Unsecured Debt" means Debt of the Issuer or any Subsidiary which is
not secured by any mortgage, lien, charge, pledge or security interest of
any kind upon any of the properties owned by the Issuer or any of its
Subsidiaries.
"Yield to Maturity" means the yield to maturity, computed at the time
of issuance of a Security (or, if applicable, at the most recent
redetermination of interest on such Security) and as set forth in such
Security in accordance with generally accepted United States bond yield
computation principles.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Issuer to the Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been complied
with, except that in the case of any such application or request as to
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<PAGE>
which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including
certificates delivered pursuant to Section 1007) shall include:
(i) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such
condition or covenant has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case
where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such
Person may certify or give an opinion as to some matters and one or more
other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the General Partner may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel,
or a certificate or representations by counsel, unless such officer knows,
or in the exercise of reasonable care should know, that the opinion,
certificate or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such Opinion of Counsel
or certificate or representations may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the General Partner stating that the information
as to such factual matters is in the possession of the Issuer, unless such
counsel knows that the certificate or opinion or representations as to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
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SECTION 104. ACTS OF HOLDERS. (A) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be given or taken by Holders of the Outstanding
Securities of all series or one or more series, as the case may be, may be
embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by agents duly appointed
in writing. If Securities of a series are issuable as Bearer Securities,
any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by Holders
Of Securities of such series may, alternatively, be embodied in and
evidenced by the record of Holders of Securities of such series voting in
favor thereof, either in person or by proxies duly appointed in writing,
at any meeting of Holders of Securities of such series duly called and held
in accordance with the provisions of Article Fifteen, or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments or record or both are delivered to the Trustee and, where it
is hereby expressly required, to the Issuer. Such instrument or
instruments and any such record (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments or so voting at any
such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any Person of a Security,
shall be sufficient for any purpose of this Indenture. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 1506.
(B) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of
the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable
manner which the Trustee deems sufficient.
(C) The ownership of Registered Securities shall be proved by the
Security Register.
(D) The ownership of Bearer Securities may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary,
wherever situated, if such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned such Person had on
deposit with such depositary, or exhibited to it, the Bearer Securities
therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such certificate
or affidavit is deemed by the Trustee to be satisfactory. The Trustee and
the Issuer may assume that such ownership of any Bearer Security continues
until (i) another certificate or affidavit bearing a later date issued in
respect of the same Bearer Security is produced, (ii) such Bearer Security
is produced to the Trustee by some other Person, (iii) such Bearer Security
is surrendered in exchange for a Registered Security or (iv) such Bearer
Security is no longer Outstanding. The ownership of Bearer Securities may
also be proved in any other manner which the Trustee deems sufficient.
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(E) If the Issuer shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Issuer may, at its option, in or pursuant to a
Board Resolution, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Issuer shall have no
obligation to do so. Notwithstanding Section 316(c) of the TIA, such
record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior
to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record
date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such record date,
but only the Holders of record at the close of business on such record date
shall be deemed to be Holders for the purposes of determining whether
Holders of the requisite proportion of Outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
Outstanding Securities shall be computed as of such record date; PROVIDED
that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months
after the record date.
(F) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee, any Security Registrar, any Paying Agent, any Authenticating Agent
or the Issuer in reliance thereon, whether or not notation of such action
is made upon such Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND ISSUER. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders
or other document provided or permitted by this Indenture to be made upon,
given or furnished to, or filed with:
(i) the Trustee by any Holder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at [ADDRESS]; Attention:
[__________]; and
(ii) the Issuer by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage
prepaid, to the Issuer addressed to it at the address of its principal
office specified in the first paragraph of this Indenture or at any
other address previously furnished in writing to the Trustee by the
Issuer.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice of any event to Holders of Registered Securities by the
Issuer or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each such Holder affected by such event, at his address
as it appears in the Security Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders of Registered Securities is
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given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect the sufficiency
of such notice with respect to other Holders of Registered Securities or
the sufficiency of any notice to Holders of Bearer Securities given as
provided herein. Any notice mailed to a Holder in the manner herein
prescribed shall be conclusively deemed to have been received by such
Holder, whether or not such Holder actually receives such notice.
If by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause it shall be impracticable to give
such notice by mail, then such notification to Holders of Registered
Securities as shall be made with the approval of the Trustee shall
constitute a sufficient notification to such Holders for every purpose
hereunder.
Except as otherwise expressly provided herein or otherwise specified
with respect to any Securities pursuant to Section 301, where this
Indenture provides for notice to Holders of Bearer Securities of any event,
such notice shall be sufficiently given if published in an Authorized
Newspaper in New York City and in such other city or cities as may be
specified in such Securities on a Business Day, such publication to be not
later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. Any such notice shall be deemed
to have been given on the date of such publication or, if published more
than once, on the date of the first such publication.
If by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall
be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither the failure to
give notice by publication to any particular Holder of Bearer Securities as
provided above, nor any defect in any notice so published, shall affect the
sufficiency of such notice with respect to other Holders of Bearer
Securities or the sufficiency of any notice to Holders of Registered
Securities given as provided herein.
Any request, demand, authorization, direction, notice, consent, waiver
or other action required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience
only and shall not affect the construction hereof.
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SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Indenture by the Issuer shall bind its successors and assigns,
whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE. In case any provision in this
Indenture or in any Security or coupon shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Securities or coupons, express or implied, shall give to any Person,
other than the parties hereto, any Security Registrar, any Paying Agent,
any Authenticating Agent and their successors hereunder and the Holders any
benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 111. GOVERNING LAW. This Indenture and the Securities and
coupons shall be governed by and construed in accordance with the laws of
the State of New York. This Indenture is subject to the provisions of the
TIA that are required to be part of this Indenture and shall, to the extent
applicable, be governed by such provisions.
SECTION 112. LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Security shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this
Indenture or any Security or coupon other than a provision in the
Securities of any series which specifically states that such provision
shall apply in lieu hereof), payment of interest or any Additional Amounts
or principal (and premium, if any) need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day
at such Place of Payment with the same force and effect as if made on the
Interest Payment Date, Redemption Date, Repayment Date or sinking fund
payment date, or at the Stated Maturity or Maturity; PROVIDED that no
interest shall accrue on the amount so payable for the period from and
after such Interest Payment Date, Redemption Date, Repayment Date, sinking
fund payment date, Stated Maturity or Maturity, as the case may be.
ARTICLE TWO
SECURITIES FORMS
SECTION 201. FORMS OF SECURITIES. The Registered Securities, if
any, of each series and the Bearer Securities, if any, of each series and
related coupons, and the form of any guarantee shall be in substantially
the forms as shall be established in one or more indentures supplemental
hereto or approved from time to time by or pursuant to a Board Resolution
in accordance with Section 301, shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted
by this Indenture or any indenture supplemental hereto, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements placed thereon as the Issuer may deem appropriate
and as are not inconsistent with the provisions of this Indenture, or as
may be required to comply with any law or with any rule or regulation made
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pursuant thereto or with any rule or regulation of any stock exchange on
which the Securities may be listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301, Bearer
Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed, lithographed
or engraved or produced by any combination of these methods on a steel
engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers executing such Securities or
coupons, as evidenced by their execution of such Securities or coupons.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Subject to Section 611, the Trustee's certificate of authentication shall
be in substantially the following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
[TRUSTEE]
as Trustee
By_______________________
Authorized Signatory
SECTION 203. SECURITIES ISSUABLE IN GLOBAL FORM. If Securities of
or within a series are issuable in global form, as specified as
contemplated by Section 301, then, notwithstanding clause (ix) of Section
301 and the provisions of Section 302, any such Security shall represent
such of the Outstanding Securities of such series as shall be specified
therein and may provide that it shall represent the aggregate amount of
Outstanding Securities of such series from time to time endorsed thereon
and that the aggregate amount of Outstanding Securities of such series
represented thereby may from time to time be increased or decreased to
reflect exchanges. Any endorsement of a Security in global form to reflect
the amount, or any increase or decrease in the amount, of Outstanding
Securities represented thereby shall be made by the Trustee in such manner
and upon instructions given by such Person or Persons as shall be specified
therein or in the Issuer Order to be delivered to the Trustee pursuant to
Section 303 or 304. Subject to the provisions of Section 303 and, if
applicable, Section 304, the Trustee shall deliver and redeliver any
Security in permanent global form in the manner and upon instructions given
by the Person or Persons specified therein or in the applicable Issuer
Order. If an Issuer Order pursuant to Section 303 or 304 has been, or
simultaneously is, delivered, any instructions by the Issuer with respect
to endorsement or delivery or redelivery of a Security in global form shall
be in writing but need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply to any
Security represented by a Security in global form if such Security was
never issued and sold by the Issuer and the Issuer delivers to the Trustee
the Security in global form together with written instructions (which need
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not comply with Section 102 and need not be accompanied by an Opinion of
Counsel) with regard to the reduction in the principal amount of Securities
represented thereby, together with the written statement contemplated by
the last sentence of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of and any
premium and interest on any Security in permanent global form shall be made
to the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided
in the preceding paragraph, the Issuer, the Trustee and any agent of the
Issuer and the Trustee shall treat as the Holder of such principal amount
of Outstanding Securities represented by a permanent global Security (i) in
the case of a permanent global Security in registered form, the Holder of
such permanent global Security in registered form, or (ii) in the case of a
permanent global Security in bearer form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate
principal amount of Securities which may be authenticated and delivered
under this Indenture is unlimited. Any Securities issued hereunder may be
unconditionally guaranteed by a guarantor to be named in an indenture
supplemental hereto as to payment of principal, premium, if any, and
interest.
The Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority
granted by one or more Board Resolutions and, subject to Section 303, set
forth, or determined in the manner provided, in an Officers' Certificate,
or established in one or more indentures supplemental hereto, prior to the
issuance of Securities of any series, any or all of the following, as
applicable, each of which, if so provided, may be determined from time to
time by the Issuer with respect to unissued Securities of the series when
issued from time to time:
(i) the title of the Securities of the series (which shall
distinguish the Securities of such series from all other series of
Securities);
(ii) the aggregate principal amount and any limit upon the
aggregate principal amount of the Securities of the series that may be
authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer
of, in exchange for, or in lieu of, other Securities of the series
pursuant to Section 304, 305, 306, 906, 1107 or 1305);
(iii) the percentage of the principal amount at which the
Securities of the series will be issued and, if other than the
principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of Maturity thereof;
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(iv) the date or dates, or the method by which such date or
dates will be determined, on which the principal of the Securities of
the series shall be payable;
(v) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method by which such rate or rates
shall be determined, the date or dates from which such interest shall
accrue or the method by which such date or dates shall be determined,
the Interest Payment Dates on which such interest will be payable and
the Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date, or the method by
which such date shall be determined, and the basis upon which interest
shall be calculated if other than that of a 360-day year of twelve
30-day months;
(vi) the Place of Payment, if any, other than or in addition to
the Borough of Manhattan, New York City, where the principal of (and
premium, if any), interest, if any, on, and Additional Amounts, if
any, payable in respect of, Securities of the series shall be payable,
any Registered Securities of the series may be surrendered for
registration of transfer, or exchange and notices or demands to or
upon the Issuer in respect of the Securities of the series and this
Indenture may be served;
(vii) the period or periods within which, the price or prices at
which, the currency or currencies, currency unit or units or composite
currency or currencies in which, and other terms and conditions upon
which Securities of the series may be redeemed, in whole or in part,
at the option of the Issuer, if the Issuer is to have the option;
(viii) the obligation, if any, of the Issuer to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the
period or periods within which or the date or dates on which, the
price or prices at which, the currency or currencies, currency unit or
units or composite currency or currencies in which, and other terms
and conditions upon which Securities of the series shall be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
(ix) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Registered Securities
of the series shall be issuable and, if other than denominations of
$5,000 and any integral multiple thereof, the denomination or
denominations in which any Bearer Securities of the series shall be
issuable;
(x) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(xi) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series that shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502 or the method by which such portion shall be determined;
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(xii) if other than Dollars, the Foreign Currency or Currencies
in which payment of the principal of (and premium, if any) or
interest, if any, or Additional Amounts, if any, on the Securities of
the series shall be payable or in which the Securities of the series
shall be denominated;
(xiii) whether the amount of payments of principal of (and
premium, if any) or interest, if any, on the Securities of the series
may be determined with reference to an index, formula or other method
(which index, formula or method may be based, without limitation, on
one or more currencies, currency units, composite currencies,
commodities, equity indices or other indices) and the manner in which
such amounts shall be determined;
(xiv) whether the principal of (and premium, if any) or
interest, if any, or Additional Amounts, if any, on the Securities of
the series are to be payable, at the election of the Issuer or a
Holder thereof, in a currency or currencies, currency unit or units or
composite currency or currencies other than that in which such
Securities are denominated or stated to be payable, the period or
periods within which, and the terms and conditions upon which, such
election may be made, and the time and manner of, and identity of the
exchange rate agent with responsibility for, determining the exchange
rate between the currency or currencies, currency unit or units or
composite currency or currencies in which such Securities are
denominated or stated to be payable and the currency or currencies,
currency unit or units or composite currency or currencies in which
such Securities are to be so payable;
(xv) provisions, if any, granting special rights to the Holders
of Securities of the series upon the occurrence of such events as may
be specified;
(xvi) any deletions from, modifications of or additions to the
Events of Default or covenants of the Issuer with respect to
Securities of the series, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants set
forth herein;
(xvii) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or
both, any restrictions applicable to the offer, sale or delivery of
Bearer Securities and the terms upon which Bearer Securities of the
series may be exchanged for Registered Securities of the series and
vice versa (if permitted by applicable laws and regulations), whether
any Securities of the series are to be issuable initially in temporary
global form and whether any Securities of the series are to be
issuable in permanent global form with or without coupons and, if so,
whether beneficial owners of interests in any such permanent global
Security may exchange such interests for Securities of such series and
of like tenor of any authorized form and denomination and the
circumstances under which any such exchanges may occur, if other than
in the manner provided in Section 305, and, if Registered Securities
of the series are to be issuable as a global Security, the identity of
the depositary for such series;
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(xviii) the date as of which any Bearer Securities of the series
and any temporary global Security representing Outstanding Securities
of the series shall be dated if other than the date of original
issuance of the first Security of the series to be issued;
(xix) the Person to whom any interest on any Registered Security
of the series shall be payable, if other than the Person in whose name
that Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest,
the manner in which, or the Person to whom, any interest on any Bearer
Security of the series shall be payable, if otherwise than upon
presentation and surrender of the coupons appertaining thereto as they
severally mature, and the extent to which, or the manner in which, any
interest payable on a temporary global Security on an Interest Payment
Date will be paid if other than in the manner provided in Section 304;
(xx) the applicability, if any, of Sections 1402 and/or 1403 to
the Securities of the series and any provisions in modification of, in
addition to or in lieu of any of the provisions of Article Fourteen;
(xxi) if the Securities of the series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
then the form and/or terms of such certificates, documents or
conditions;
(xxii) if the Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Securities
to be authenticated and delivered;
(xxiii) if the Securities of the series are subordinated in right
of payment to any other class or classes of Debt of the Issuer, the
terms and conditions of such subordination;
(xxiv) if the Securities of the series are to be guaranteed, the
terms and conditions of such guarantee;
(xxv) whether and under what circumstances the Issuer will pay
Additional Amounts as contemplated by Section 1008 on the Securities
of the series to any Holder who is not a United States person
(including any modification to the definition of such term) in respect
of any tax, assessment or governmental charge and, if so, whether the
Issuer will have the option to redeem such Securities rather than pay
such Additional Amounts (and the terms of any such option); and
(xxvi) any other terms of the Securities of the series (which
terms shall not be inconsistent with the provisions of this
Indenture).
All Securities of any one series and the coupons appertaining to any
Bearer Securities of such series shall be substantially identical except,
in the case of Registered Securities, as to denomination and except as may
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otherwise be provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in any such
indenture supplemental hereto. All Securities of any one series need not
be issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders, for issuances of additional
Securities of such series.
If any of the terms of the Securities of any series are established by
action taken pursuant to one or more Board Resolutions, a copy of an
appropriate record of such action(s) shall be certified by the Secretary or
an Assistant Secretary of the General Partner and delivered to the Trustee
at or prior to the delivery of the Officers' Certificate setting forth the
terms of the Securities of such series.
SECTION 302. DENOMINATIONS. The Securities of each series shall be
issuable in such denominations as shall be specified as contemplated by
Section 301. With respect to Securities of any series denominated in
Dollars, in the absence of any such provisions with respect to the
Securities of any series, the Registered Securities of such series, other
than Registered Securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $1,000 and any
integral multiple thereof and the Bearer Securities of such series, other
than Bearer Securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $5,000 and any
integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Securities and any coupons appertaining thereto shall be executed on behalf
of the Issuer by the General Partner's Chairman of the Board, its President
or one of its Vice Presidents, under its corporate seal reproduced thereon,
and attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities and coupons may be
manual or facsimile signatures of the present or any future such authorized
officer and may be imprinted or otherwise reproduced on the Securities.
Securities or coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the General Partner
shall bind the Issuer, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such
Securities or coupons.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Securities of any series, together
with any coupon appertaining thereto, executed by the Issuer to the Trustee
for authentication, together with an Issuer Order for the authentication
and delivery of such Securities, and the Trustee in accordance with the
Issuer Order shall authenticate and deliver such Securities; PROVIDED,
HOWEVER, that, in connection with its original issuance, no Bearer Security
shall be mailed or otherwise delivered to any location in the United
States; and PROVIDED FURTHER that, unless otherwise specified with respect
to any series of Securities pursuant to Section 301, a Bearer Security may
be delivered in connection with its original issuance only if the Person
entitled to receive such Bearer Security shall have furnished a certificate
to Euroclear or CEDEL, as the case may be, in the form set forth in Exhibit
A-1 to this Indenture or such other certificate as may be specified with
respect to any series of Securities pursuant to Section 301, dated no
earlier than 15 days prior to the earlier of the date on which such Bearer
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Security is delivered and the date on which any temporary Security first
becomes exchangeable for such Bearer Security in accordance with the terms
of such temporary Security and this Indenture. If any Security shall be
represented by a permanent global Bearer Security, then, for purposes of
this Section and Section 304, the notation of a beneficial owner's interest
therein upon original issuance of such Security or upon exchange of a
portion of a temporary global Security shall be deemed to be delivery in
connection with its original issuance of such beneficial owner's interest
in such permanent global Security. Except as permitted by Section 306, the
Trustee shall not authenticate and deliver any Bearer Security unless all
appurtenant coupons for interest then matured have been detached and
cancelled.
If all the Securities of any series are not to be issued at one time
and if the Board Resolution or supplemental indenture establishing such
series shall so permit, such Issuer Order may set forth procedures
acceptable to the Trustee for the issuance of such Securities and
determining the terms of particular Securities of such series, such as
interest rate or formula, maturity date, date of issuance and date from
which interest shall accrue. In authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation
to such Securities, the Trustee shall be entitled to receive, and (subject
to Section 315(a) through 315(d) of the TIA) shall be fully protected in
relying upon;
(i) an Opinion of Counsel stating that:
(a) the form or forms of such Securities and any coupons
have been established in conformity with the provisions of this
Indenture;
(b) the terms of such Securities and any coupons have been
established in conformity with the provisions of this Indenture;
and
(c) such Securities, together with any coupons appertaining
thereto, when completed by appropriate insertions and executed
and delivered by the Issuer to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by
the Trustee in accordance with this Indenture and issued by the
Issuer in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute legal, valid and binding
obligations of the Issuer, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency,
reorganization and other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights
generally and to general equitable principles; and
(ii) an Officers' Certificate stating that all conditions
precedent provided for in this Indenture relating to the issuance of
the Securities have been complied with and that, to the best of the
knowledge of the signers of such certificate, no Event of Default with
respect to any of the Securities shall have occurred and be
continuing.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties,
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obligations or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all the Securities of any series are not to be issued at one
time, it shall not be necessary to deliver an Officers' Certificate
otherwise required pursuant to Section 301 or an Issuer Order, or an
Opinion of Counsel or an Officers' Certificate otherwise required pursuant
to the preceding paragraph at the time of issuance of each Security of such
series, but such order, opinion and certificates, with appropriate
modifications to cover such future issuances, shall be delivered at or
before the time of issuance of the first Security of such series.
Each Registered Security shall be dated the date of its authentication
and each Bearer Security shall be dated as of the date specified as
contemplated by Section 301.
No Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security or Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed
by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Issuer, and the Issuer shall deliver such Security to the Trustee for
cancellation as provided in Section 309 together with a written statement
(which need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel) stating that such Security has never been issued and
sold by the Issuer, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES. (A) Pending the preparation
of definitive Securities of any series, the Issuer may execute, and
upon Issuer Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of
the tenor of the definitive Securities in lieu of which they are issued, in
registered form, or, if authorized, in bearer form with one or more
coupons or without coupons, and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their execution of
such Securities. In the case of Securities of any series,
such temporary Securities may be in global form.
Except in the case of temporary Securities in global form (which shall
be exchanged in accordance with Section 304(B) or as otherwise provided in
or pursuant to a Board Resolution), if temporary Securities of any series
are issued, the Issuer will cause definitive Securities of that series to
be prepared without unreasonable delay. After the preparation of
definitive Securities of such series, the temporary Securities of such
series shall be exchangeable for definitive Securities of such series upon
surrender of the temporary Securities of such series at the office or
agency of the Issuer in a Place of Payment for that series, without charge
to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series (accompanied by any nonmatured coupons
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appertaining thereto), the Issuer shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations;
PROVIDED, HOWEVER, that no definitive Bearer Security shall be delivered in
exchange for a temporary Registered Security; and PROVIDED FURTHER that a
definitive Bearer Security shall be delivered in exchange for a temporary
Bearer Security only in compliance with the conditions set forth in Section
303. Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
(B) Unless otherwise provided in or pursuant to a Board Resolution,
this Section 304(B) shall govern the exchange of temporary Securities
issued in global form other than through the facilities of DTC. If any
such temporary Security is issued in global form, then such temporary
global Security shall, unless otherwise provided therein, be delivered to
the London office of a depositary or common depositary (the "COMMON
DEPOSITARY"), for the benefit of Euroclear and CEDEL, for credit to the
respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
Without unnecessary delay, but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary
global Security (the "EXCHANGE DATE"), the Issuer shall deliver to the
Trustee definitive Securities, in aggregate principal amount equal to the
principal amount of such temporary global Security, executed by the Issuer.
On or after the Exchange Date, such temporary global Security shall be
surrendered by the Common Depositary to the Trustee, as the Issuer's agent
for such purpose, to be exchanged, in whole or from time to time in part,
for definitive Securities without charge, and the Trustee shall
authenticate and deliver, in exchange for each portion of such temporary
global Security, an equal aggregate principal amount of definitive
Securities of the same series of authorized denominations and of like tenor
as the portion of such temporary global Security to be exchanged. The
definitive Securities to be delivered in exchange for any such temporary
global Security shall be in bearer form, registered form, permanent global
bearer form or permanent global registered form, or any combination
thereof, as specified as contemplated by Section 301, and, if any
combination thereof is so specified, as requested by the beneficial owner
thereof; PROVIDED, HOWEVER, that, unless otherwise specified in such
temporary global Security, upon such presentation by the Common Depositary,
such temporary global Security is accompanied by a certificate dated the
Exchange Date or a subsequent date and signed by Euroclear as to the
portion of such temporary global Security held for its account then to be
exchanged and a certificate dated the Exchange Date or a subsequent date
and signed by CEDEL as to the portion of such temporary global Security
held for its account then to be exchanged, each in the form set forth in
Exhibit A-2 to this Indenture or in such other form as may be established
pursuant to Section 301; and PROVIDED FURTHER that definitive Bearer
Securities shall be delivered in exchange for a portion of a temporary
global Security only in compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Security, the
interest of a beneficial owner of Securities of a series in a temporary
global Security shall be exchanged for definitive Securities of the same
series and of like tenor following the Exchange Date when the account
holder instructs Euroclear or CEDEL, as the case may be, to request such
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exchange on his behalf and delivers to Euroclear or CEDEL, as the case may
be, a certificate in the form set forth in Exhibit A-1 to this Indenture
(or in such other form as may be established pursuant to Section 301),
dated no earlier than 15 days prior to the Exchange Date, copies of which
certificate shall be available from the offices of Euroclear and CEDEL, the
Trustee, any Authenticating Agent appointed for such series of Securities
and each Paying Agent. Unless otherwise specified in such temporary global
Security, any such exchange shall be made free of charge to the beneficial
owners of such temporary global Security, except that a Person receiving
definitive Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such
definitive Securities in person at the offices of Euroclear or CEDEL.
Definitive Securities in bearer form to be delivered in exchange for any
portion of a temporary global Security shall be delivered only outside the
United States.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of the same series
and of like tenor authenticated and delivered hereunder, except that,
unless otherwise specified as contemplated by Section 301, interest payable
on a temporary global Security on an Interest Payment Date for Securities
of such series occurring prior to the applicable Exchange Date shall be
payable to Euroclear and CEDEL on such Interest Payment Date upon delivery
by Euroclear and CEDEL to the Trustee of a certificate or certificates in
the form set forth in Exhibit A-2 to this Indenture (or in such other forms
as may be established pursuant to Section 301), for credit without further
interest on or after such Interest Payment Date to the respective accounts
of Persons who are the beneficial owners of such temporary global Security
on such Interest Payment Date and who have each delivered to Euroclear or
CEDEL, as the case may be, a certificate dated no earlier than 15 days
prior to the Interest Payment Date occurring prior to such Exchange Date in
the form set forth as Exhibit A-1 to this Indenture (or in such other forms
as may be established pursuant to Section 301). Notwithstanding anything
to the contrary herein contained, the certifications made pursuant to this
paragraph shall satisfy the certification requirements of the preceding two
paragraphs of this Section 304(B) and of the third paragraph of Section 303
of this Indenture and the interests of the Persons who are the beneficial
owners of the temporary global Security with respect to which such
certification was made will be exchanged for definitive Securities of the
same series and of like tenor on the Exchange Date or the date of
certification if such date occurs after the Exchange Date, without further
act or deed by such beneficial owners. Except as otherwise provided in
this paragraph, no payments of principal or interest owing with respect to
a beneficial interest in a temporary global Security will be made unless
and until such interest in such temporary global Security shall have been
exchanged for an interest in a definitive Security. Any interest so
received by Euroclear and CEDEL and not paid as herein provided shall be
returned to the Trustee prior to the expiration of two years after such
Interest Payment Date in order to be repaid to the Issuer.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Issuer shall cause to be kept at the Corporate Trust Office of the
Trustee or in any office or agency of the Issuer in a Place of Payment a
register for each series of Securities (the registers maintained in such
office or in any such office or agency of the Issuer in a Place of Payment
being herein sometimes referred to collectively as the "SECURITY REGISTER")
in which, subject to such reasonable regulations as it may prescribe, the
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Issuer shall provide for the registration of Registered Securities and of
transfers of Registered Securities. The Security Register shall be in
written form or any other form capable of being converted into written form
within a reasonable time. The Trustee, at its Corporate Trust Office, is
hereby appointed "Security Registrar" for the purpose of registering
Registered Securities and transfers of Registered Securities on such
Security Register as herein provided. In the event that the Trustee shall
cease to be Security Registrar, it shall have the right to examine the
Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon surrender for
registration of transfer of any Registered Security of any series at any
office or agency of the Issuer in a Place of Payment for that series, the
Issuer shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Registered Securities of the same series, of any authorized denominations
and of a like aggregate principal amount, bearing a number not
contemporaneously outstanding, and containing identical terms and
provisions.
Subject to the provisions of this Section 305, at the option of the
Holder, Registered Securities of any series may be exchanged for other
Registered Securities of the same series, of any authorized denomination or
denominations and of a like aggregate principal amount, containing
identical terms and provisions, upon surrender of the Registered Securities
to be exchanged at any such office or agency. Whenever any such Registered
Securities are so surrendered for exchange, the Issuer shall execute, and
the Trustee shall authenticate and deliver, the Registered Securities which
the Holder making the exchange is entitled to receive. Unless otherwise
specified with respect to any series of Securities as contemplated by
Section 301, Bearer Securities may not be issued in exchange for Registered
Securities.
If (but only if) permitted by the applicable Board Resolution and
(subject to Section 303) set forth in the applicable Officers' Certificate,
or in any indenture supplemental hereto, delivered as contemplated by
Section 301, at the option of the Holder, Bearer Securities of any series
may be exchanged for Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount and
tenor, upon surrender of the Bearer Securities to be exchanged at any such
office or agency, with all unmatured coupons and all matured coupons in
default thereto appertaining. If the Holder of a Bearer Security is unable
to produce any such unmatured coupon or coupons or matured coupon or
coupons in default, any such permitted exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the
Issuer in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived
by the Issuer and the Trustee if there is furnished to them such security
or indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing coupon in respect of which such a payment
shall have been made, such Holder shall be entitled to receive the amount
of such payment; PROVIDED, HOWEVER, that, except as otherwise provided in
Section 1002, interest represented by coupons shall be payable only upon
presentation and surrender of those coupons at an office or agency located
outside the United States. Notwithstanding the foregoing, in case a Bearer
Security of any series is surrendered at any such office or agency in a
permitted exchange for a Registered Security of the same series and like
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tenor after the close of business at such office or agency on (i) any
Regular Record Date and before the opening of business at such office or
agency on the relevant Interest Payment Date or (ii) any Special Record
Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the coupon relating to such Interest
Payment Date or proposed date for payment, as the case may be, and interest
or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture. Whenever any Securities
are so surrendered for exchange, the Issuer shall execute, and the Trustee
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If the depositary for any
permanent global Security is DTC, then, unless the terms of such global
Security expressly permit such global Security to be exchanged in whole or
in part for definitive Securities, a global Security may be transferred, in
whole but not in part, only to a nominee of DTC, or by a nominee of DTC to
DTC, or to a successor to DTC for such global Security selected or approved
by the Issuer or to a nominee of such successor to DTC. If at any time DTC
notifies the Issuer that it is unwilling or unable to continue as
depositary for the applicable global Security or Securities or if at any
time DTC ceases to be a clearing agency registered under the Exchange Act
if so required by applicable law or regulation, the Issuer shall appoint a
successor depositary with respect to such global Security or Securities.
If (i) a successor depositary for such global Security or Securities is not
appointed by the Issuer within 90 days after the Issuer receives such
notice or becomes aware of such unwillingness, inability or ineligibility,
(ii) an Event of Default has occurred and is continuing and the beneficial
owners representing a majority in principal amount of the applicable series
of Securities represented by such global Security or Securities advise DTC
to cease acting as depositary for such global Security or Securities or
(iii) the Issuer, in its sole discretion, determines at any time that all
Outstanding Securities (but not less than all) of any series issued or
issuable in the form of one or more global Securities shall no longer be
represented by such global Security or Securities, then the Issuer shall
execute, and the Trustee shall authenticate and deliver, definitive
Securities of like series, rank, tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of such global
Security or Securities. If any beneficial owner of an interest in a
permanent global Security is otherwise entitled to exchange such interest
for Securities of such series and of like tenor and principal amount of
another authorized form and denomination, as specified as contemplated by
Section 301 and provided that any applicable notice provided in the
permanent global Security shall have been given, then without unnecessary
delay but in any event not later than the earliest date on which such
interest may be so exchanged, the Issuer shall execute, and the Trustee
shall authenticate and deliver definitive Securities in aggregate principal
amount equal to the principal amount of such beneficial owner's interest in
such permanent global Security. On or after the earliest date on which
such interests may be so exchanged, such permanent global Security shall be
surrendered for exchange by DTC or such other depositary as shall be
specified in the Issuer Order with respect thereto to the Trustee, as the
Issuer's agent for such purpose; PROVIDED, HOWEVER, that no such exchanges
may occur during a period beginning at the opening of business 15 days
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before any selection of Securities to be redeemed and ending on the
relevant Redemption Date if the Security for which exchange is requested
may be among those selected for redemption; and PROVIDED FURTHER that no
Bearer Security delivered in exchange for a portion of a permanent global
Security shall be mailed or otherwise delivered to any location in the
United States. If a Registered Security is issued in exchange for any
portion of a permanent global Security (i) after the close of business at
the office or agency where such exchange occurs on any Regular Record Date
and before the opening of business at such office or agency on the relevant
Interest Payment Date or (ii) after the close of business at the office or
agency where such exchange occurs on any Special Record Date and the
opening of business at such office or agency on the related proposed date
for payment of Defaulted Interest, interest or Defaulted Interest, as the
case may be, will not be payable on such Interest Payment Date or proposed
date for payment, as the case may be, in respect of such Registered
Security, but will be payable on such Interest Payment Date or proposed
date for payment, as the case may be, only to the Person to whom interest
in respect of such portion of such permanent global Security is payable in
accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange or redemption shall (if so required by the Issuer
or the Security Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Security
Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 906, 1107 or 1305
not involving any transfer.
The Issuer or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Security if such Security
may be among those selected for redemption during a period beginning at the
opening of business 15 days before selection of the Securities to be
redeemed under Section 1103 and ending at the close of business on (a) if
such Securities are issuable only as Registered Securities, the day of the
mailing of the relevant notice of redemption and (b) if such Securities are
issuable as Bearer Securities, the day of the first publication of the
relevant notice of redemption or, if such Securities are also issuable as
Registered Securities and there is no publication, the mailing of the
relevant notice of redemption, (ii) to register the transfer of or exchange
any Registered Security so selected for redemption in whole or in part,
except, in the case of any Registered Security to be redeemed in part, the
portion thereof not to be redeemed, (iii) to exchange any Bearer Security
so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series and like tenor; PROVIDED
that such Registered Security shall be simultaneously surrendered for
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redemption, or (iv) to issue, register the transfer of or exchange any
Security which has been surrendered for repayment at the option of the
Holder, except the portion, if any, of such Security not to be so repaid.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If
any mutilated Security or a Security with a mutilated coupon appertaining
to it is surrendered to the Trustee or the Issuer, together with, in proper
cases, such security or indemnity as may be required by the Issuer or the
Trustee to hold each of them or any agent of either of them harmless, the
Issuer shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series and principal amount,
containing identical terms and provisions and bearing a number not
contemporaneously outstanding, with coupons corresponding to the coupons,
if any, appertaining to the surrendered Security.
If there shall be delivered to the Issuer and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security or coupon and (ii) such security or indemnity as may be required
by them to hold each of them and any agent of either of them harmless,
then, in the absence of notice to the Issuer or the Trustee that such
Security or coupon has been acquired by a bona fide purchaser, the Issuer
shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security or in
exchange for the Security to which a destroyed, lost or stolen coupon
appertains (with all appurtenant coupons not destroyed, lost or stolen), a
new Security of the same series and principal amount, containing identical
terms and provisions and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs, in case
any such mutilated, destroyed, lost or stolen Security or coupon has become
or is about to become due and payable, the Issuer in its discretion may,
instead of issuing a new Security, with coupons corresponding to the
coupons, if any, appertaining to such destroyed, lost or stolen Security or
to the Security to which such destroyed, lost or stolen coupon appertains,
pay such Security or coupon; PROVIDED, HOWEVER, that payment of principal
of (and premium, if any), any interest on and any Additional Amounts with
respect to, Bearer Securities shall, except as otherwise provided in
Section 1002, be payable only at an office or agency located outside the
United States and, unless otherwise specified as contemplated by Section
301, any interest on Bearer Securities shall be payable only upon
presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen Security,
or in exchange for a Security to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual obligation
of the Issuer, whether or not the destroyed, lost or stolen Security and
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its coupons, if any, or the destroyed, lost or stolen coupon shall be at
any time enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other
Securities of that series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities
or coupons.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Except
as otherwise specified with respect to a series of Securities in accordance
with the provisions of Section 301, interest on any Registered Security
that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest at the office or
agency of the Issuer maintained for such purpose pursuant to Section 1002;
PROVIDED, HOWEVER, that each installment of interest on any Registered
Security may at the Issuer's option be paid by (i) mailing a check for such
interest, payable to or upon the written order of the Person entitled
thereto pursuant to Section 308, to the address of such Person as it
appears on the Security Register or (ii) wire transfer of funds to an
account maintained by the payee located inside the United States.
Unless otherwise provided as contemplated by Section 301 with respect
to the Securities of any series, payment of interest may be made, in the
case of a Bearer Security, by transfer to an account maintained by the
payee with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301, every
permanent global Security will provide that interest, if any, payable on
any Interest Payment Date will be paid to DTC, Euroclear and/or CEDEL, as
the case may be, with respect to that portion of such permanent global
Security held for its account by Cede & Co. or the Common Depositary, as
the case may be, for the purpose of permitting such party to credit the
interest received by it in respect of such permanent global Security to the
accounts of the beneficial owners thereof.
In case a Bearer Security of any series is surrendered in exchange for
a Registered Security of such series after the close of business (at an
office or agency where such exchange occurs) on any Regular Record Date and
before the opening of business (at such office or agency) on the next
succeeding Interest Payment Date, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date and interest will
not be payable on such Interest Payment Date in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable
only to the Holder of such coupon when due in accordance with the
provisions of this Indenture.
Except as otherwise specified with respect to a series of Securities
in accordance with the provisions of Section 301, any interest on ANY
Registered Security of any series that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"DEFAULTED INTEREST") shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Issuer, at its
election in each case, as provided in clause (i) or (ii) below:
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(i) the Issuer may elect to make payment of any Defaulted
Interest to the Persons in whose names the Registered Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Issuer shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each
Registered Security of such series and the date of the proposed
payment (which shall not be less than 20 days after such notice is
received by the Trustee), and at the same time the Issuer shall
deposit with the Trustee an amount of money in the currency or
currencies, currency unit or units or composite currency or currencies
in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such
series) equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit on or prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit
of the Persons entitled to such Defaulted Interest as provided in this
clause. Thereupon, the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Issuer of such Special Record Date and, in the name and at the
expense of the Issuer, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of Registered
Securities of such series at his address as it appears in the Security
Register not less than 10 days prior to such Special Record Date. The
Trustee may, in its discretion, in the name and at the expense of the
Issuer, cause a similar notice to be published at least once in an
Authorized Newspaper in each Place of Payment, but such publications
shall not be a condition precedent to the establishment of such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in
whose names the Registered Securities of such series (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (ii). In case a Bearer Security of
any series is surrendered at the office or agency in a Place of
Payment for such series in exchange for a Registered Security of such
series after the close of business at such office or agency on any
Special Record Date and before the opening of business at such office
or agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the coupon
relating to such proposed date of payment and Defaulted Interest will
not be payable on such proposed date of payment in respect of the
Registered Security issued in exchange for such Bearer Security, but
will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture; or
(ii) the Issuer may make payment of any Defaulted Interest on
the Registered Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Issuer to the Trustee
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of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer
of, in exchange for or in lieu of any other Security shall carry the rights
to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a
Registered Security for registration of transfer, the Issuer, the Trustee
and any agent of the Issuer or the Trustee may treat the Person in whose
name such Registered Security is registered as the owner of such Security
for the purpose of receiving payment of principal of (and premium, if any),
and (subject to Sections 305 and 307) interest, if any, on, such Registered
Security and for all other purposes whatsoever, whether or not such
Registered Security be overdue, and neither the Issuer, the Trustee nor any
agent of the Issuer or the Trustee shall be affected by notice to the
contrary.
Title to any Bearer Security and any coupons appertaining thereto
shall pass by delivery. The Issuer, the Trustee and any agent of the
Issuer or the Trustee may treat the Holder of any Bearer Security and the
Holder of any coupon as the absolute owner of such Security or coupon for
the purpose of receiving payment thereof or on account thereof and for all
other purposes whatsoever, whether or not such Security or coupon be
overdue, and neither the Issuer, the Trustee nor any agent of the Issuer or
the Trustee shall be affected by notice to the contrary.
None of the Issuer, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security,
nothing herein shall prevent the Issuer, the Trustee or any agent of the
Issuer or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by any depositary, as a Holder, with
respect to such global Security or impair, as between such depositary and
owners of beneficial interests in such global Security, the operation of
customary practices governing the exercise of the rights of such depositary
(or its nominee) as Holder of such global Security.
SECTION 309. CANCELLATION. All Securities and coupons surrendered
for payment, redemption, repayment at the option of the Holder,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities and coupons and
Securities and coupons surrendered directly to the Trustee for any such
purpose shall be promptly cancelled by it; PROVIDED, HOWEVER, where the
Place of Payment is located outside of the United States, the Paying Agent
at such Place of Payment may cancel the Securities surrendered to it for
such purposes prior to delivering the Securities to the Trustee. The
Issuer may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the
Issuer may have acquired in any manner whatsoever, and may deliver to the
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Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the
Issuer has not issued and sold, and all Securities so delivered shall be
promptly cancelled by the Trustee. If the Issuer shall so acquire any of
the Securities, however, such acquisition shall not operate as a redemption
or satisfaction of the indebtedness represented by such Securities unless
and until the same are surrendered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. Cancelled Securities and coupons held by the
Trustee shall be destroyed by the Trustee and the Trustee shall deliver a
certificate of such destruction to the Issuer, unless by an Issuer Order
the Issuer directs their return to it.
SECTION 310. COMPUTATION OF INTEREST. Except as otherwise specified
as contemplated by Section 301 with respect to Securities of any series,
interest on the Securities of each series shall be computed on the basis of
a 360-day year consisting of 12 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall upon Issuer Request cease to be of further effect with
respect to any series of Securities specified in such Issuer Request
(except as to any surviving rights of registration of transfer or exchange
of Securities of such series herein expressly provided for and any right to
receive Additional Amounts, as provided in Section 1008), and the Trustee,
upon receipt of an Issuer Order, and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture as to such series when
(i) either
(a) all Securities of such series theretofore authenticated
and delivered and all coupons, if any, appertaining thereto
(other than (i) coupons appertaining to Bearer Securities
surrendered for exchange for Registered Securities and maturing
after such exchange, whose surrender is not required or has been
waived as provided in Section 305, (ii) Securities and coupons of
such series which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306, (iii)
coupons appertaining to Securities called for redemption and
maturing after the relevant Redemption Date, whose surrender has
been waived as provided in Section 1106, and (iv) Securities and
coupons of such series for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 1003) have been delivered to
the Trustee for cancellation; or
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(b) all Securities of such series and, in the case of (1)
or (2) below, any coupons appertaining thereto not theretofore
delivered to the Trustee for cancellation
(1) have become due and payable,
(2) will become due and payable at their Stated
Maturity within one year, or
(3) if redeemable at the option of the Issuer, are to
be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense,
of the Issuer,
and the Issuer, in the case of (1), (2) or (3) above, has
irrevocably deposited or caused to be deposited with the Trustee
as trust funds in trust for the purpose an amount in the currency
or currencies, currency unit or units or composite currency or
currencies in which the Securities of such series are payable,
sufficient to pay and discharge the entire indebtedness on such
Securities and such coupons not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest, if any, and any Additional Amounts with respect
thereto, to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(ii) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(iii) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture as to such series have been complied
with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Issuer to any Authenticating Agent
under Section 611 and, if money shall have been deposited with and held by
the Trustee pursuant to subclause (b) of clause (i) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST FUNDS. Subject to the provisions
of the last paragraph of Section 1003, all money deposited with the Trustee
pursuant to Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities, the coupons and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium,
if any), and interest, if any, and Additional Amounts for whose payment
such money has been deposited with or received by the Trustee, but such
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money need not be segregated from other funds except to the extent required
by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "EVENT OF DEFAULT," wherever used
herein with respect to any particular series of Securities, means any one
of the following events (whatever the reason for such Event of Default and
whether or not it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental
body):
(i) default in the payment of any interest on or any Additional
Amounts payable in respect of any Security of that series or of any
coupon appertaining thereto, when such interest, Additional Amounts or
coupon becomes due and payable, and continuance of such default for a
period of 30 days;
(ii) default in the payment of the principal of (or premium, if
any, on) any Security of that series when it becomes due and payable
at its Maturity;
(iii) default in the deposit of any sinking fund payment, when
and as due by the terms of any Security of that series;
(iv) default in the performance, or breach, of any covenant or
warranty of the Issuer in this Indenture with respect to any Security
of that series (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
60 days after there has been given, by registered or certified mail,
to the Issuer by the Trustee or to the Issuer and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding
Securities of that series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder;
(v) default under any evidence of recourse indebtedness of the
Issuer, or under any mortgage, indenture or other instrument of the
Issuer (including a default with respect to Securities of any series
other than that series) under which there may be issued or by which
there may be secured any recourse indebtedness of the Issuer (or by
any Subsidiary, the repayment of which the Issuer has guaranteed or
for which the Issuer is directly responsible or liable as obligor or
guarantor), whether such indebtedness now exists or shall hereafter be
created, which default shall constitute a failure to pay an aggregate
principal amount exceeding $__________ of such indebtedness when due
and payable after the expiration of any applicable grace period with
respect thereto and shall have resulted in such indebtedness in an
aggregate principal amount exceeding $__________ becoming or being
declared due and payable prior to the date on which it would otherwise
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have become due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled,
within a period of 10 days after there shall have been given, by
registered or certified mail, to the Issuer by the Trustee or to the
Issuer and the Trustee by the Holders of at least 10% in principal
amount of the Outstanding Securities of that series a written notice
specifying such default and requiring the Issuer to cause such
indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of
Default" hereunder;
(vi) the Issuer or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it
in an involuntary case,
(c) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(d) makes a general assignment for the benefit of its
creditors;
(vii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that remains unstayed and in effect
for 90 days, and:
(a) is for relief against the Issuer or any Significant
Subsidiary in an involuntary case,
(b) appoints a Custodian of the Issuer or any Significant
Subsidiary or for all or substantially all of either of its
property, or
(c) orders the liquidation of the Issuer or any Significant
Subsidiary; or
(viii) any other Event of Default provided with respect to
Securities of that series.
As used in this Section 501, the term "BANKRUPTCY LAW" means Title 11 of
the United States Code or any similar Federal or State law for the relief
of debtors and the term "CUSTODIAN" means any receiver, trustee, assignee,
liquidator or other similar official under any Bankruptcy Law.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If
an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal (or, if any
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Securities are Original Issue Discount Securities or Indexed Securities,
such portion of the principal as may be specified in the terms thereof) of
all the Securities of that series to be due and payable immediately, by a
notice in writing to the Issuer (and to the Trustee if given by the
Holders), and upon any such declaration such principal or specified portion
thereof shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Issuer and
the Trustee, may rescind and annul such declaration and its consequences
if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay in the currency or currency unit or composite
currency in which the Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Securities of such
series):
(a) all overdue installments of interest on and any
Additional Amounts payable in respect of all Outstanding
Securities of that series and any related coupons,
(b) the principal of (and premium, if any, on) any
Outstanding Securities of that series which have become due
otherwise than by such declaration of acceleration and interest
thereon at the rate or rates borne by or provided for in such
Securities,
(c) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest and any Additional
Amounts at the rate or rates borne by or provided for in such
Securities, and
(d) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and
(ii) all Events of Default with respect to Securities of that
series, other than the nonpayment of the principal of (or premium, if
any) or interest, if any, on Securities of that series which have
become due solely by such declaration of acceleration, have been cured
or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Issuer covenants that if:
(i) default is made in the payment of any installment of
interest or Additional Amounts, if any, on any Security of any series
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and any related coupon when such interest or Additional Amount becomes
due and payable and such default continues for a period of 30 days, or
(ii) default is made in the payment of the principal of (or
premium, if any, on) any Security of any series at its Maturity,
then the Issuer will, upon demand of the Trustee, pay to the Trustee, for
the benefit of the Holders of such Securities of such series and coupons,
the whole amount then due and payable on such Securities and coupons for
principal (and premium, if any) and interest, if any, and Additional
Amounts, with interest upon any overdue principal (and premium, if any)
and, to the extent that payment of such interest shall be legally
enforceable, upon any overdue installments of interest or Additional
Amounts, if any, at the rate or rates borne by or provided for in such
Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Issuer fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and
may enforce the same against the Issuer or any other obligor upon such
Securities of such series and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Issuer or
any other obligor upon such Securities of such series, wherever situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such
series and any related coupons by such appropriate judicial proceedings as
the Trustee shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or
to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Issuer or any other obligor upon the Securities
or the property of the Issuer or of such other obligor or their creditors,
the Trustee (irrespective of whether the principal of the Securities of any
series shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any
demand on the Issuer for the payment of overdue principal, premium, if any,
or interest, if any) shall be entitled and empowered, by intervention in
such proceeding or otherwise:
(i) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Securities of such series,
of principal (and premium, if any) and interest, if any, and
Additional Amounts, if any, owing and unpaid in respect of the
Securities and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
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(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby
authorized by each Holder of Securities of such series and coupons to make
such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and any predecessor Trustee,
their agents and counsel, and any other amounts due the Trustee or any
predecessor Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or coupon in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES OR COUPONS. All rights of action and claims under this
Indenture or any of the Securities or coupons may be prosecuted and
enforced by the Trustee without the possession of any of the Securities or
coupons or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for
the ratable benefit of the Holders of the Securities and coupons in respect
of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED. Any money collected by
the Trustee pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, if any, and any Additional Amounts, upon presentation of the
Securities or coupons, or both, as the case may be, and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: to the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: to the payment of the amounts then due and unpaid upon
the Securities and coupons for principal (and premium, if any) and
interest, if any, and any Additional Amounts payable, in respect of
which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
aggregate amounts due and payable on such Securities and coupons for
principal (and premium, if any), interest and Additional Amounts,
respectively; and
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THIRD: to the payment of the remainder, if any, to the Issuer.
SECTION 507. LIMITATION ON SUITS. No Holder of any Security of any
series or any related coupon shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Securities of that series;
(ii) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatsoever by virtue of, or by availing to,
any provision of this Indenture to affect, disturb or prejudice the rights
of any other of such Holders, to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all such Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM, IF ANY, INTEREST AND ADDITIONAL AMOUNTS. Notwithstanding any
other provision in this Indenture, the Holder of any Security or coupon
shall have the right which is absolute and unconditional to receive payment
of the principal of (and premium, if any) and (subject to Sections 305 and
307) interest, if any, on, and any Additional Amounts in respect of, such
Security or payment of such coupon on the respective due dates expressed in
such Security or coupon (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or
any Holder of a Security or coupon has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case, the Issuer,
the Trustee and the Holders of Securities and coupons shall, subject to any
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determination in such proceeding, be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of
the Trustee and the Holders shall continue as though no such proceeding had
been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities or coupons in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities or coupons is intended to be
exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion
or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Trustee or of any Holder of any Security or coupon to exercise any
right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders
of Securities or coupons, as the case may be.
SECTION 512. CONTROL BY HOLDERS OF SECURITIES. The Holders of not
less than a majority in principal amount of the Outstanding Securities of
any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Securities of such series; PROVIDED that:
(i) such direction shall not be in conflict with any rule of law
or with this Indenture;
(ii) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(iii) the Trustee need not take any action which might involve
it in personal liability or be unduly prejudicial to the Holders of
Securities of such series not joining therein.
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less than
a majority in principal amount of the Outstanding Securities of any series
may on behalf of the Holders of all the Securities of such series and any
related coupons waive any past default hereunder with respect to such
series and its consequences, except a default:
(i) in the payment of the principal of (or premium, if any) or
interest on, or Additional Amounts payable in respect of, any Security
of such series or any related coupons; or
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(ii) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Issuer (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 515. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of any undertaking
to pay the costs of such suit, and that such court may in its discretion
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in such suit having due regard to the merits and good faith
of the claims or defenses made by such party litigant; but the provisions
of this Section shall not apply to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment
of the principal of (or premium, if any) or interest, if any, on any
Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS. Within 90 days after the
occurrence of any default hereunder with respect to the Securities of any
series, the Trustee shall transmit in the manner and to the extent provided
in Section 313(c) of the TIA, notice of such default hereunder known to the
Trustee, unless such default shall have been cured or waived; PROVIDED,
HOWEVER, that, except in the case of a default in the payment of the
principal of (or premium, if any) or interest, if any, on or any Additional
Amounts with respect to any Security of such series, or in the payment of
any sinking fund installment with respect to the Securities of such series,
the Trustee shall be protected in withholding such notice if and so long as
Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Holders of the
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Securities and coupons of such series; and PROVIDED FURTHER that in the
case of any default or breach of the character specified in Section 501(iv)
with respect to the Securities and coupons of such series, no such notice
to Holders shall be given until at least 60 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any
event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to the Securities of such series.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions
of Section 315(a) through 315(d) of the TIA:
(i) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) any request or direction of the Issuer mentioned herein
shall be sufficiently evidenced by an Issuer Request or Issuer Order
(other than delivery of any Security, together with any coupons
appertaining thereto, to the Trustee for authentication and delivery
pursuant to Section 303 which shall be sufficiently evidenced as
provided therein) and any resolution of the Board of Trustees may be
sufficiently evidenced by a Board Resolution;
(iii) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(iv) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(v) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities of any series or any
related coupons pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(vi) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, coupon or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
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premises of the Issuer, personally or by agent or attorney following
reasonable notice to the Issuer;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(viii) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
Except during the continuance of an Event of Default, the Trustee
undertakes to perform only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations shall be read into
this Indenture against the Trustee.
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Issuer, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this Indenture or
of the Securities or coupons, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by
the Issuer of Securities or the proceeds thereof.
SECTION 604. MAY HOLD SECURITIES. The Trustee, any Paying Agent,
Security Registrar, Authenticating Agent or any other agent of the Issuer,
in its individual or any other capacity, may become the owner or pledgee of
Securities and coupons and, subject to Sections 310(b) and 311 of the TIA,
may otherwise deal with the Issuer with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar, Authenticating Agent or
such other agent.
SECTION 605. MONEY HELD IN TRUST. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the
extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed
with the Issuer.
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SECTION 606. COMPENSATION AND REIMBURSEMENT. The Issuer agrees:
(i) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(ii) except as otherwise expressly provided herein, to reimburse
each of the Trustee and any predecessor Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
bad faith; and
(iii) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its own part,
arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(vi) or Section 501(vii),
the expenses (including the reasonable charges and expenses of its counsel)
and the compensation for the services are intended to constitute expenses
of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
As security for the performance of the obligations of the Issuer under
this Section, the Trustee shall have a lien prior to the Securities upon
all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (or premium, if any) or
interest, if any, on particular Securities or any coupons.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING
INTERESTS. There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Section 310(a)(1) of the TIA and shall
have a combined capital and surplus of at least $50,000,000. If such
corporation publishes reports of condition at least annually, pursuant to
law or the requirements of Federal, State, Territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(A) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of
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appointment by the successor Trustee in accordance with the applicable
requirements of Section 609.
(B) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Issuer. If
an instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(C) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series delivered to the
Trustee and to the Issuer.
(D) If at any time:
(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the TIA after written request therefor by the Issuer
or by any Holder of a Security who has been a bona fide Holder of a
Security for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 607
and shall fail to resign after written request therefor by the Issuer
or by any Holder of a Security who has been a bona fide Holder of a
Security for at least six months, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer by or pursuant to a Board Resolution
may remove the Trustee and appoint a successor Trustee with respect to all
Securities or (ii) subject to Section 315(e) of the TIA, any Holder of a
Security who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Securities and the appointment of a successor Trustee
or Trustees.
(E) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause
with respect to the Securities of one or more series, the Issuer, by or
pursuant to a Board Resolution, shall promptly appoint a successor Trustee
or Trustees with respect to the Securities of that or those series (it
being understood that any such successor Trustee may be appointed with
respect to the Securities of one or more or all of such series and that at
any time there shall be only one Trustee with respect to the Securities of
any particular series). If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor
Trustee with respect to the Securities of any series shall be appointed by
Act of the Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Issuer and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of
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such appointment, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor
Trustee appointed by the Issuer. If no successor Trustee with respect to
the Securities of any series shall have been so appointed by the Issuer or
the Holders of Securities and accepted appointment in the manner
hereinafter provided, any Holder of a Security who has been a bona fide
Holder of a Security of such series for at least six months may, on behalf
of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with
respect to Securities of such series.
(F) The Issuer shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series in the manner provided for notices to the Holders of Securities in
Section 106. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (A) In case of
the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee shall execute, acknowledge and
deliver to the Issuer and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Issuer or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder,
subject nevertheless to its claim, if any, provided for in Section 606.
(B) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Issuer,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto, pursuant to Article Nine hereof, wherein each
successor Trustee shall accept such appointment and which (i) shall contain
such provisions as shall be necessary or desirable to transfer and confirm
to, and to vest in, each successor Trustee all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates,
(ii) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as
to which the retiring Trustee is not retiring shall continue to be vested
in the retiring Trustee, and (iii) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustee's co-trustees of the same trust and
that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any
other such Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such
successor Trustee, without any further act, deed or conveyance, shall
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become vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates; but, on request of
the Issuer or any successor Trustee, such retiring Trustee shall duly
assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates.
(C) Upon request of any such successor Trustee, the Issuer shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (A) or (B) of this Section, as the case may be.
(D) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder; PROVIDED that such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
In case any Securities or coupons shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities or coupons so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities or coupons. In case any Securities or coupons shall not have
been authenticated by such predecessor Trustee, any such successor Trustee
may authenticate and deliver such Securities or coupons, in either its own
name or that of its predecessor Trustee, with the full force and effect
which this Indenture provides for the certificate of authentication of the
Trustee.
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT. At any time when
any of the Securities remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon exchange, registration
of transfer or partial redemption or repayment thereof, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Any such appointment shall be evidenced by an instrument in
writing signed by a Responsible Officer of the Trustee, a copy of which
instrument shall be promptly furnished to the Issuer. Wherever reference
is made in this Indenture to the authentication and delivery of Securities
by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Issuer and
shall at all times be a bank or trust company or corporation organized and
doing business and in good standing under the laws of the United States of
America or of any State or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus
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of not less than $50,000,000 and subject to supervision or examination by
Federal or State authorities. If such Authenticating Agent publishes
reports of condition at least annually, pursuant to law or the requirements
of the aforesaid supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent; PROVIDED such corporation
shall be otherwise eligible under this Section, without the execution or
filing of any paper or further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time
resign by giving written notice of resignation to the Trustee for such
series and to the Issuer. The Trustee for any series of Securities may at
any time terminate the agency of an Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Issuer. Upon
receiving such a notice of resignation or upon such a termination, or in
case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee for such series
may appoint a successor Authenticating Agent which shall be acceptable to
the Issuer and shall give notice of such appointment to all Holders of
Securities of the series with respect to which such Authenticating Agent
will serve in the manner set forth in Section 106. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall
become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating
Agent herein. No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section.
The Issuer agrees to pay to each Authenticating Agent from time to
time reasonable compensation including reimbursement of its reasonable
expenses for its services under this Section.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon,
in addition to or in lieu of the Trustee's certificate of authentication,
an alternate certificate of authentication substantially in the following
form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
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[TRUSTEE]
as Trustee
By:_________________________,
as Authenticating Agent
By:________________________
Authorized Signatory
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. Every
Holder of Securities or coupons, by receiving and holding the same, agrees
with the Issuer and the Trustee that neither the Issuer nor the Trustee nor
any Authenticating Agent nor any Paying Agent nor any Security Registrar
shall be held accountable by reason of the disclosure of any information as
to the names and addresses of the Holders of Securities in accordance with
Section 312 of the TIA, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made under Section
312(b) of the TIA.
SECTION 702. REPORTS BY TRUSTEE. Within 60 days after [MAY 15] of
each year commencing with the first [MAY 15] after the first issuance of
Securities pursuant to this Indenture, the Trustee shall transmit by mail
to all Holders of Securities as provided in Section 313(c) of the TIA a
brief report dated as of such [MAY 15] if required by Section 313(a) of the
TIA.
SECTION 703. REPORTS BY ISSUER. The Issuer will:
(i) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(ii) transmit by mail to the Holders of Securities, within 30
days after the filing thereof with the Trustee, in the manner and to
the extent provided in Section 313(c) of the TIA, such summaries of
any information, documents and reports required to be filed by the
Issuer pursuant to Section 1006 and paragraph (i) of this Section as
may be required by rules and regulations prescribed from time to time
by the Commission.
SECTION 704. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. The Issuer will furnish or cause to be furnished to the Trustee:
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(i) semiannually, not later than 15 days after the Regular Record
Date for interest for each series of Securities, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the
Holders of Registered Securities of such series as of such Regular Record
Date, or if there is no Regular Record Date for interest for such series of
Securities, semiannually, upon such dates as are set forth in the Board
Resolution or indenture supplemental hereto authorizing such series, and
(ii) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
PROVIDED, HOWEVER, that, so long as the Trustee is the Security Registrar,
no such list shall be required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. CONSOLIDATIONS AND MERGERS OF ISSUER AND SALES, LEASES
AND CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS. The Issuer may
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into any other corporation; PROVIDED that in
any such case, (i) either the Issuer shall be the continuing corporation,
or the successor corporation shall be a corporation organized and existing
under the laws of the United States or a State thereof and such successor
corporation shall expressly assume the due and punctual payment of the
principal of (and premium, if any) and any interest (including all
Additional Amounts, if any, payable pursuant to Section 1008) on all of the
Securities, according to their tenor, and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to
be performed by the Issuer by supplemental indenture, complying with
Article Nine hereof, satisfactory to the Trustee, executed and delivered to
the Trustee by such corporation, (ii) immediately after giving effect to
such transaction and treating any indebtedness which becomes an obligation
of the Issuer or any Subsidiary as a result thereof as having been incurred
by the Issuer or such Subsidiary at the time of such transaction, no Event
of Default, and no event which, after notice or the lapse of time, or both,
would become an Event of Default, shall have occurred and be continuing and
(iii) an Officer's Certificate and Opinion of Counsel covering such
conditions shall be delivered to the Trustee.
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In case of
any such consolidation, merger, sale, lease or conveyance and upon any such
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Issuer, with the same effect as if it
had been named herein as the party of the first part, and the predecessor
corporation, except in the event of a lease, shall be relieved of any
further obligation under this Indenture and the Securities. Such successor
corporation thereupon may cause to be signed, and may issue either in its
own name or in the name of the Issuer, any or all of the Securities
issuable hereunder which theretofore shall not have been signed by the
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Issuer and delivered to the Trustee; and, upon the order of such successor
corporation, instead of the Issuer, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have
been signed and delivered by the officers of the Issuer to the Trustee for
authentication, and any Securities which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee for that
purpose. All the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities theretofore
or thereafter issued in accordance with the terms of this Indenture as
though all of such Securities had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale, lease or conveyance,
such changes in phraseology and form (but not in substance) may be made in
the Securities thereafter to be issued as may be appropriate.
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL. Any
consolidation, merger, sale, lease or conveyance permitted under Section
801 is also subject to the condition that the Trustee receive an Officers'
Certificate and an Opinion of Counsel to the effect that any such
consolidation, merger, sale, lease or conveyance, and the assumption by any
successor corporation, complies with the provisions of this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Securities or coupons, the Issuer,
when authorized by or pursuant to a Board Resolution, and the Trustee, at
any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(i) to evidence the succession of another Person to the Issuer
and the assumption by any such successor of the covenants of the
Issuer herein and in the Securities contained;
(ii) to add to the covenants of the Issuer for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for
the benefit of such series) or to surrender any right or power herein
conferred upon the Issuer;
(iii) to add any additional Events of Default for the benefit of
the Holders of all or any series of Securities (and if such Events of
Default are to be for the benefit of less than all series of
Securities, stating that such Events of Default are expressly being
included solely for the benefit of such series); PROVIDED, HOWEVER,
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that in respect of any such additional Events of Default such
supplemental indenture may provide for a particular period of grace
after default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to
the Trustee upon such default or may limit the right of the Holders of
a majority in aggregate principal amount of that or those series of
Securities to which such additional Events of Default apply to waive
such default;
(iv) to add to or change any of the provisions of this Indenture
to provide that Bearer Securities may be registrable as to principal,
to change or eliminate any restrictions on the payment of principal of
or any premium or interest on Bearer Securities, to permit Bearer
Securities to be issued in exchange for Registered Securities, to
permit Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations or to permit or
facilitate the issuance of Securities in uncertificated form; PROVIDED
that any such action shall not adversely affect the interests of the
Holders of Securities of any series or any related coupons in any
material respect;
(v) to change or eliminate any of the provisions of this
Indenture; PROVIDED that any such change or elimination shall become
effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision;
(vi) to secure the Securities;
(vii) to establish the form or terms of Securities of any series
and any related coupons as permitted by Sections 201 and 301;
(viii) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee;
(ix) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture; PROVIDED such
provisions shall not adversely affect the interests of the Holders of
Securities of any series or any related coupons in any material
respect; or
(x) to supplement any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Sections 401, 1402 and 1403; PROVIDED that any such action shall not
adversely affect the interests of the Holders of Securities of such
series and any related coupons or any other series of Securities in
any material respect.
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SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With
the consent of the Holders of not less than a majority in principal amount
of all Outstanding Securities affected by such supplemental indenture, by
Act of said Holders delivered to the Issuer and the Trustee, the Issuer,
when authorized by or pursuant to a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of this Indenture or of modifying in any manner the rights
of the Holders of Securities and any related coupons under this Indenture;
PROVIDED, HOWEVER, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(i) change the Stated Maturity of the principal of (or premium,
if any, on) or any installment of principal of or interest on, any
Security, or reduce the principal amount thereof or the rate or amount
of interest thereon or any Additional Amounts payable in respect
thereof, or any premium payable upon the redemption thereof, or change
any obligation of the Issuer to pay Additional Amounts pursuant to
Section 1008 (except as contemplated by Section 801(i) and permitted
by Section 901(i)), or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to
Section 502 or the amount thereof provable in bankruptcy pursuant to
Section 504, or adversely affect any right of repayment at the option
of the Holder of any Security, or change any Place of Payment where,
or the currency or currencies, currency unit or units or composite
currency or currencies in which, any Security or any premium or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption or repayment at the option of
the Holder, on or after the Redemption Date or the Repayment Date, as
the case may be);
(ii) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver with respect to such series (or
compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1504 for quorum or
voting; or
(iii) modify any of the provisions of this Section, Section 513
or Section 1009, except to increase the required percentage to effect
such action or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely
for the benefit of one or more particular series of Securities, or which
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modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of any other
series.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modification thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and shall be
fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution
of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
and of any coupon appertaining thereto shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article shall conform to
the requirements of the TIA as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall, if
required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Issuer
shall so determine, new Securities of any series so modified as to conform,
in the opinion of the Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Trustee in exchange for Outstanding Securities of such
series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST AND
ADDITIONAL AMOUNTS. The Issuer covenants and agrees for the benefit of the
Holders of each series of Securities that it will duly and punctually pay
the principal of (and premium, if any) and interest, if any, on and any
Additional Amounts payable in respect of the Securities of that series in
accordance with the terms of such series of Securities, any coupons
appertaining thereto and this Indenture. Unless otherwise specified as
contemplated by Section 301 with respect to any series of Securities, any
interest due on and any Additional Amounts payable in respect of Bearer
Securities on or before Maturity, other than Additional Amounts, if any,
payable as provided in Section 1008 in respect of principal of (or premium,
if any, on) such a Security, shall be payable only upon presentation and
surrender of the several coupons for such interest installments as are
evidenced thereby as they severally mature. Unless otherwise specified with
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respect to Securities of any series pursuant to Section 301, at the option
of the Issuer, all payments of principal may be paid by check to the
registered Holder of the Registered Security or other person entitled
thereto against surrender of such Security.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. If Securities of a
series are issuable only as Registered Securities, the Issuer shall
maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for
payment, where Securities of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or
upon the Issuer in respect of the Securities of that series and this
Indenture may be served. If Securities of a series are issuable as Bearer
Securities, the Issuer will maintain: (i) in the Borough of Manhattan, New
York City, an office or agency where any Registered Securities of that
series may be presented or surrendered for payment, where any Registered
Securities of that series may be surrendered for registration of transfer,
where Securities of that series may be surrendered for exchange, where
notices and demands to or upon the Issuer in respect of the Securities of
that series and this Indenture may be served and where Bearer Securities of
that series and related coupons may be presented or surrendered for payment
in the circumstances described in the following paragraph (and not
otherwise); (ii) subject to any laws or regulations applicable thereto, in
a Place of Payment for that series which is located outside the United
States, an office or agency where Securities of that series and related
coupons may be presented and surrendered for payment (including payment of
any Additional Amounts payable on Securities of that series pursuant to
Section 1008); PROVIDED, HOWEVER, that if the Securities of that series are
listed on the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and such stock exchange shall so require, the
Issuer will maintain a Paying Agent for the Securities of that series in
Luxembourg or any other required city located outside the United States, as
the case may be, so long as the Securities of that series are listed on
such exchange; and (iii) subject to any laws or regulations applicable
thereto, in a Place of Payment for that series located outside the United
States an office or agency where any Registered Securities of that series
may be surrendered for registration of transfer, where Securities of that
series may be surrendered for exchange and where notices and demands to or
upon the Issuer in respect of the Securities of that series and this
Indenture may be served. The Issuer will give prompt written notice to the
Trustee of the location, and any change in the location, of each such
office or agency. If at any time the Issuer shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, except
that Bearer Securities of that series and the related coupons may be
presented and surrendered for payment (including payment of any Additional
Amounts payable on Bearer Securities of that series pursuant to Section
1008) at the offices specified in the Security, in London, England, and the
Issuer hereby appoints the same as its agent to receive such respective
presentations, surrenders, notices and demands, and the Issuer hereby
appoints the Trustee its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, no payment of principal, premium or interest on or Additional
Amounts in respect of Bearer Securities shall be made at any office or
agency of the Issuer in the United States or by check mailed to any address
in the United States or by transfer to an account maintained with a bank
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located in the United States; PROVIDED, HOWEVER, that, if the Securities of
a series are payable in Dollars, payment of principal of and any premium
and interest on any Bearer Security (including any Additional Amounts
payable on Securities of such series pursuant to Section 1008) shall be
made at the office of the designated agent of the Issuer's Paying Agent in
the Borough of Manhattan, New York City, if (but only if) payment in
Dollars of the full amount of such principal, premium, interest or
Additional Amounts, as the case may be, at all offices or agencies outside
the United States maintained for the purpose by the Issuer in accordance
with this Indenture, is illegal or effectively precluded by exchange
controls or other similar restrictions.
The Issuer may from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all of such purposes, and may from time to time
rescind such designations; PROVIDED, HOWEVER, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to
maintain an office or agency in accordance with the requirements set forth
above for Securities of any series for such purposes. The Issuer will give
prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
Unless otherwise specified with respect to any Securities pursuant to
Section 301 with respect to a series of Securities, the Issuer hereby
designates as a Place of Payment for each series of Securities the office
or agency of the Issuer in the Borough of Manhattan, New York City, and
initially appoints the Trustee at its Corporate Trust Office as Paying
Agent in such city and as its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, if and so long as the Securities of any series (i) are
denominated in a Foreign Currency or (ii) may be payable in a Foreign
Currency, or so long as it is required under any other provision of the
Indenture, then the Issuer will maintain with respect to each such series
of Securities, or as so required, at least one exchange rate agent.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST. If
the Issuer shall at any time act as its own Paying Agent with respect to
any series of any Securities and any related coupons, it will, on or before
each due date of the principal of (and premium, if any), or interest on or
Additional Amounts in respect of, any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto
a sum in the currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities
of such series) sufficient to pay the principal (and premium, if any) or
interest or Additional Amounts so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its action or failure so to act.
Whenever the Issuer shall have one or more Paying Agents for any
series of Securities and any related coupons, it will, before each due date
of the principal of (and premium, if any), or interest on or Additional
Amounts in respect of, any Securities of that series, deposit with a Paying
Agent a sum (in the currency or currencies, currency unit or units or
composite currency or currencies described in the preceding paragraph)
sufficient to pay the principal (and premium, if any) or interest or
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Additional Amounts, so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal, premium or interest or
Additional Amounts and (unless such Paying Agent is the Trustee) the Issuer
will promptly notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will:
(i) hold all sums held by it for the payment of principal of
(and premium, if any) or interest on Securities or Additional Amounts
in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein
provided;
(ii) give the Trustee notice of any default by the Issuer (or
any other obligor upon the Securities) in the making of any such
payment of principal (and premium, if any) or interest or Additional
Amounts; and
(iii) at any time during the continuance of any such default
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Issuer Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Issuer or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Issuer or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such sums.
Except as otherwise provided in the Securities of any series, any
money deposited with the Trustee or any Paying Agent, or then held by the
Issuer, in trust for the payment of the principal of (and premium, if any)
or interest, if any, on, or any Additional Amounts in respect of, any
Security of any series and remaining unclaimed for two years after such
principal (and premium, if any), interest or Additional Amounts has become
due and payable shall be paid to the Issuer upon Issuer Request or (if then
held by the Issuer) shall be discharged from such trust; and the Holder of
such Security shall thereafter, as an unsecured general creditor, look only
to the Issuer for payment of such principal of (and premium, if any) or
interest, if any, on, or any Additional Amounts in respect of, any
Security, without interest thereon, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of
the Issuer as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER,
that the Trustee or such Paying Agent, before being required to make any
such repayment, may at the expense of the Issuer cause to be published
once, in an Authorized Newspaper, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30
days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer.
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SECTION 1004. EXISTENCE. Subject to Article Eight, the Issuer will
do or cause to be done all things necessary to preserve and keep in full
force and effect its existence, rights and franchises; PROVIDED, HOWEVER,
that the Issuer shall not be required to preserve any right or franchise if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Issuer and that the
loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS. The Issuer will pay
or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges
levied or imposed upon it or any Subsidiary or upon the income, profits or
property of the Issuer or any Subsidiary, and (ii) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Issuer or any Subsidiary; PROVIDED, HOWEVER, that
the Issuer shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1006. PROVISION OF FINANCIAL INFORMATION. Whether or not the
Issuer is subject to Section 13 or 15(d) of the Exchange Act and for so
long as any Securities are outstanding, the Issuer will, to the extent
permitted under the Exchange Act, file with the Commission the annual
reports, quarterly reports and other documents which the Issuer would have
been required to file with the Commission pursuant to such Section 13 or
15(d) (the "FINANCIAL STATEMENTS") if the Issuer were so subject, such
documents to be filed with the Commission on or prior to the respective
dates (the "REQUIRED FILING DATES") by which the Issuer would have been
required so to file such documents if the Issuer were so subject.
The Issuer will also in any event (i) within 15 days of each Required
Filing Date (a) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders
copies of the annual reports and quarterly reports which the Issuer would
have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Issuer were subject to such Sections and
(b) file with the Trustee copies of the annual reports, quarterly reports
and other documents which the Issuer would have been required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act if the
Issuer were subject to such Sections and (ii) if filing such documents by
the Issuer with the Commission is not permitted under the Exchange Act,
promptly upon written request and payment of the reasonable cost of
duplication and delivery, supply copies of such documents to any
prospective Holder.
SECTION 1007. STATEMENT AS TO COMPLIANCE. The Issuer will deliver to
the Trustee, within 120 days after the end of each fiscal year, a brief
certificate from the General Partner's principal executive officer,
principal financial officer or principal accounting officer as to his or
her knowledge of the Issuer's compliance with all conditions and covenants
under this Indenture and, in the event of any noncompliance, specifying
such noncompliance and the nature and status thereof. For purposes of this
Section 1007, such compliance shall be determined without regard to any
period of grace or requirement of notice under this Indenture.
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SECTION 1008. ADDITIONAL AMOUNTS. If any Securities of a series
provide for the payment of Additional Amounts, the Issuer will pay to the
Holder of any Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301.
Whenever in this Indenture there is mentioned, in any context except in the
case of Section 502(i), the payment of the principal of or any premium or
interest on, or in respect of, any Security of any series or payment of any
related coupon or the net proceeds received on the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of
the payment of Additional Amounts provided by the terms of such series
established pursuant to Section 301 to the extent that, in such context,
Additional Amounts are, were or would be payable in respect thereof
pursuant to such terms and express mention of the payment of Additional
Amounts (if applicable) in any provisions hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made.
Except as otherwise specified as contemplated by Section 301, if the
Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to that
series of Securities (or if the Securities of that series will not bear
interest prior to Maturity, the first day on which a payment of principal
and any premium is made), and at least 10 days prior to each date of
payment of principal and any premium or interest if there has been any
change with respect to the matters set forth in the below-mentioned
Officers' Certificate, the Issuer will furnish the Trustee and the Issuer's
principal Paying Agent or Paying Agents, if other than the Trustee, with an
Officers' Certificate instructing the Trustee and such Paying Agent or
Paying Agents whether such payment of principal of and any premium or
interest on the Securities of that series shall be made to Holders of
Securities of that series or any related coupons who are not United States
persons without withholding for or on account of any tax, assessment or
other governmental charge described in the Securities of the series. If
any such withholding shall be required, then such Officers' Certificate
shall specify by country the amount, if any, required to be withheld on
such payments to such Holders of Securities of that series or related
coupons and the Issuer will pay to the Trustee or such Paying Agent the
Additional Amounts required by the terms of such Securities. If the
Trustee or any Paying Agent, as the case may be, shall not so receive the
above-mentioned certificate, then the Trustee or such Paying Agent shall be
entitled (i) to assume that no such withholding or deduction is required
with respect to any payment of principal or interest with respect to any
Securities of a series or related coupons until it shall have received a
certificate advising otherwise and (ii) to make all payments of principal
and interest with respect to the Securities of a series or related coupons
without withholding or deductions until otherwise advised. The Issuer
covenants to indemnify the Trustee and any Paying Agent for, and to hold
them harmless against, any loss, liability or expense reasonably incurred
without negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them or in reliance on
any Officers' Certificate furnished pursuant to this Section or in reliance
on the Issuer's not furnishing such an Officers' Certificate.
SECTION 1009. WAIVER OF CERTAIN COVENANTS. The Issuer may omit in
any particular instance to comply with any term, provision or condition set
forth in Sections 1004 to 1009, inclusive, if before or after the time for
such compliance the Holders of at least a majority in principal amount of
all outstanding Securities of such series, by Act of such Holders, either
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waive such compliance in such instance or generally waive compliance with
such covenant or condition, but no such waiver shall extend to or affect
such covenant or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Issuer and
the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE. Securities of any series
which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as
contemplated by Section 301 for Securities of any series) in accordance
with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of
the Issuer to redeem any Securities shall be evidenced by or pursuant to a
Board Resolution. In case of any redemption at the election of the Issuer
of less than all of the Securities of any series, the Issuer shall, at
least 45 days prior to the giving of the notice of redemption in Section
1104 (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of
Securities of such series to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture,
the Issuer shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If
less than all the Securities of any series issued on the same day with the
same terms are to be redeemed, the particular Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Securities of such series issued on such date
with the same terms not previously called for redemption, by such method as
the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple
thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities
of that series.
The Trustee shall promptly notify the Issuer and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has
been or is to be redeemed.
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SECTION 1104. NOTICE OF REDEMPTION. Notice of redemption shall be
given in the manner provided in Section 106, not less than 30 days nor more
than 60 days prior to the Redemption Date, unless a shorter period is
specified by the terms of such series established pursuant to Section 301,
to each Holder of Securities to be redeemed, but failure to give such
notice in the manner herein provided to the Holder of any Security
designated for redemption as a whole or in part, or any defect in the
notice to any such Holder, shall not affect the validity of the proceedings
for the redemption of any other such Security or portion thereof.
Any notice that is mailed to the Holders of Registered Securities in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the Holder receives the notice.
All notices of redemption shall state:
(i) the Redemption Date,
(ii) the Redemption Price, accrued interest to the Redemption
Date payable as provided in Section 1106, if any, and Additional
Amounts, if any,
(iii) if less than all Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial
redemption, the principal amount) of the particular Security or
Securities to be redeemed,
(iv) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after
the Redemption Date, upon surrender of such Security, the holder will
receive, without a charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(v) that on the Redemption Date the Redemption Price and accrued
interest to the Redemption Date payable as provided in Section 1106,
if any, will become due and payable upon each such Security, or the
portion thereof, to be redeemed and, if applicable, that interest
thereon shall cease to accrue on and after said date,
(vi) the Place or Places of Payment where such Securities,
together in the case of Bearer Securities with all coupons
appertaining thereto, if any, maturing after the Redemption Date, are
to be surrendered for payment of the Redemption Price and accrued
interest, if any,
(vii) that the redemption is for a sinking fund, if such is the
case,
(viii) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons maturing subsequent to the date fixed for
redemption or the amount of any such missing coupon or coupons will be
deducted from the Redemption Price, unless security or indemnity
satisfactory to the Issuer, the Trustee for such series and any Paying
Agent is furnished,
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(ix) if Bearer Securities of any series are to be redeemed and
any Registered Securities of such series are not to be redeemed, and
if such Bearer Securities may be exchanged for Registered Securities
not subject to redemption on this Redemption Date pursuant to Section
305 or otherwise, the last date, as determined by the Issuer, on which
such exchanges may be made, and
(x) the CUSIP number of such Security, if any.
Notice of redemption of Securities to be redeemed shall be given by
the Issuer or, at the Issuer's request, by the Trustee in the name and at
the expense of the Issuer.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. At least one Business Day
prior to any Redemption Date, the Issuer shall deposit with the Trustee or
with a Paying Agent (or, if the Issuer is acting as its own Paying Agent,
which it may not do in the case of a sinking fund payment under Article
Twelve, segregate and hold in trust as provided in Section 1003) an amount
of money in the currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the Securities
of such series) sufficient to pay on the Redemption Date the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment
Date) accrued interest on, all the Securities or portions thereof which are
to be redeemed on that date.
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified in the currency or currencies, currency unit or
units or composite currency or currencies in which the Securities of such
series are payable (except as otherwise specified pursuant to Section 301
for the Securities of such series) (together with accrued interest, if any,
to the Redemption Date), and from and after such date (unless the Issuer
shall default in the payment of the Redemption Price and accrued interest)
such Securities shall, if the same were interest-bearing, cease to bear
interest and the coupons for such interest appertaining to any Bearer
Securities so to be redeemed, except to the extent provided below, shall be
void. Upon surrender of any such Security for redemption in accordance
with said notice, together with all coupons, if any, appertaining thereto
maturing after the Redemption Date, such Security shall be paid by the
Issuer at the Redemption Price, together with accrued interest, if any, to
the Redemption Date; PROVIDED, HOWEVER, that installments of interest on
Bearer Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon presentation
and surrender of coupons for such interest; and PROVIDED FURTHER that
installments of interest on Registered Securities whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms
and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date,
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such Security may be paid after deducting from the Redemption Price an
amount equal to the face amount of all such missing coupons, or the
surrender of such missing coupon or coupons may be waived by the Issuer and
the Trustee if there be furnished to them such security or indemnity as
they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the Trustee or
any Paying Agent any such missing coupon in respect of which a deduction
shall have been made from the Redemption Price, such Holder shall be
entitled to receive the amount so deducted; PROVIDED, HOWEVER, that
interest represented by coupons shall be payable only at an office or
agency located outside the United States (except as otherwise provided in
Section 1002) and, unless otherwise specified as contemplated by Section
301, only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne
by the Security.
SECTION 1107. SECURITIES REDEEMED IN PART. Any Registered Security
which is to be redeemed only in part (pursuant to the provisions of this
Article or of Article Twelve) shall be surrendered at a Place of Payment
therefor (with, if the Issuer or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Issuer
and the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing) and the Issuer shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge a new Security or Securities of the same series, of any authorized
denomination as requested by such Holder in aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the
Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this
Article shall be applicable to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by
Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount
provided for by the terms of such Securities of any series is herein
referred to as an "optional sinking fund payment." If provided for by the
terms of any Securities of any series, the cash amount of any mandatory
sinking fund payment may be subject to reduction as provided in Section
1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Issuer may, in satisfaction of all or any part of any mandatory sinking
fund payment with respect to the Securities of a series, (i) deliver
Outstanding Securities of such series (other than any previously called for
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redemption) together in the case of any Bearer Securities of such series
with all unmatured coupons appertaining thereto and (ii) apply as a credit
Securities of such series which have been redeemed either at the election
of the Issuer pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the
terms of such Securities, as provided for by the terms of such Securities,
or which have otherwise been acquired by the Issuer; PROVIDED that such
Securities so delivered or applied as a credit have not been previously so
credited. Such Securities shall be received and credited for such purpose
by the Trustee at the applicable Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the
amount of such mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND. Not less
than 60 days prior to each sinking fund payment date for Securities of any
series, the Issuer will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing mandatory sinking fund payment
for that series pursuant to the terms of that series, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency or
currencies, currency unit or units or composite currency or currencies in
which the Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such series) and
the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities of that series pursuant to Section 1202, and the
optional amount, if any, to be added in cash to the next ensuing mandatory
sinking fund payment, and will also deliver to the Trustee any Securities
to be so delivered and credited. If such Officers' Certificate shall
specify an optional amount to be added in cash to the next ensuing
mandatory sinking fund payment, the Issuer shall thereupon be obligated to
pay the amount therein specified. Not less than 30 days before each such
sinking fund payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner specified in
Section 1103 and cause notice of the redemption thereof to be given in the
name of and at the expense of the Issuer in the manner provided in Section
1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in
Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. APPLICABILITY OF ARTICLE. Repayment of Securities of
any series before their Stated Maturity at the option of Holders thereof
shall be made in accordance with the terms of such Securities, if any, and
(except as otherwise specified by the terms of such series established
pursuant to Section 301) in accordance with this Article.
SECTION 1302. REPAYMENT OF SECURITIES. Securities of any series
subject to repayment in whole or in part at the option of the Holders
thereof will, unless otherwise provided in the terms of such Securities, be
repaid at a price equal to the principal amount thereof, together with
interest, if any, thereon accrued to the Repayment Date specified in or
pursuant to the terms of such Securities. The Issuer covenants that at
least one Business Day prior to the Repayment Date it will deposit with the
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Trustee or with a Paying Agent (or, if the Issuer is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the
Securities of such series) sufficient to pay the principal (or, if so
provided by the terms of the Securities of any series, a percentage of the
principal) of, and (except if the Repayment Date shall be an Interest
Payment Date) accrued interest on, all the Securities or portions thereof,
as the case may be, to be repaid on such date.
SECTION 1303. EXERCISE OF OPTION. Securities of any series subject
to repayment at the option of the Holders thereof will contain an "Option
to Elect Repayment" form on the reverse of such Securities. In order for
any Security to be repaid at the option of the Holder, the Trustee must
receive at the Place of Payment therefor specified in the terms of such
Security (or at such other place or places of which the Issuer shall from
time to time notify the Holders of such Securities) not earlier than 60
days nor later than 30 days prior to the Repayment Date (i) the Security so
providing for such repayment together with the "Option to Elect Repayment"
form on the reverse thereof duly completed by the Holder (or by the
Holder's attorney duly authorized in writing) or (ii) a telegram, telex,
facsimile transmission or a letter from a member of a national securities
exchange, or the National Association of Securities Dealers, Inc., or a
commercial bank or trust company in the United States setting forth the
name of the Holder of the Security, the principal amount of the Security,
the principal amount of the Security to be repaid, the CUSIP number, if
any, or a description of the tenor and terms of the Security, a statement
that the option to elect repayment is being exercised thereby and a
guarantee that the Security to be repaid, together with the duly completed
form entitled "Option to Elect Repayment" on the reverse of the Security,
will be received by the Trustee not later than the fifth Business Day after
the date of such telegram, telex, facsimile transmission or letter;
PROVIDED, HOWEVER, that such telegram, telex, facsimile transmission or
letter shall only be effective if such Security and form duly completed are
received by the Trustee by such fifth Business Day. If less than the
entire principal amount of such Security is to be repaid in accordance with
the terms of such Security, the principal amount of such Security to be
repaid, in increments of the minimum denomination for Securities of such
series, and the denomination or denominations of the Security or Securities
to be issued to the Holder for the portion of the principal amount of such
Security surrendered that is not to be repaid, must be specified. The
principal amount of any Security providing for repayment at the option of
the Holder thereof may not be repaid in part if, following such repayment,
the unpaid principal amount of such Security would be less than the minimum
authorized denomination of Securities of the series of which such Security
to be repaid is a part. Except as otherwise may be provided by the terms
of any Security providing for repayment at the option of the Holder
thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Issuer.
SECTION 1304. WHEN SECURITIES PRESENTED FOR REPAYMENT BECOME DUE AND
PAYABLE. If Securities of any series providing for repayment at the option
of the Holders thereof shall have been surrendered as provided in this
Article and as provided by or pursuant to the terms of such Securities,
such Securities or the portions thereof, as the case may be, to be repaid
shall become due and payable and shall be paid by the Issuer on the
Repayment Date therein specified, and on and after such Repayment Date
(unless the Issuer shall default in the payment of such Securities on such
Repayment Date) such Securities shall, if the same were interest-bearing,
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cease to bear interest and the coupons for such interest appertaining to
any Bearer Securities so to be repaid, except to the extent provided below,
shall be void. Upon surrender of any such Security for repayment in
accordance with such provisions, together with all coupons, if any,
appertaining thereto maturing after the Repayment Date, the principal
amount of such Security so to be repaid shall be paid by the Issuer,
together with accrued interest, if any, to the Repayment Date; PROVIDED,
HOWEVER, that coupons whose Stated Maturity is on or prior to the Repayment
Date shall be payable only at an office or agency located outside the
United States (except as otherwise provided in Section 1002) and, unless
otherwise specified pursuant to Section 301, only upon presentation and
surrender of such coupons; and PROVIDED FURTHER that, in the case of
Registered Securities, installments of interest, if any, whose Stated
Maturity is on or prior to the Repayment Date shall be payable (but without
interest thereon, unless the Issuer shall default in the payment thereof)
to the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for repayment shall not be
accompanied by all appurtenant coupons maturing after the Repayment Date,
such Security may be paid after deducting from the amount payable therefor
as provided in Section 1302 an amount equal to the face amount of all such
missing coupons, or the surrender of such missing coupon or coupons may be
waived by the Issuer and the Trustee if there be furnished to them such
security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall
surrender to the Trustee or any Paying Agent any such missing coupon in
respect of which a deduction shall have been made as provided in the
preceding sentence, such Holder shall be entitled to receive the amount so
deducted; PROVIDED, HOWEVER, that interest represented by coupons shall be
payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise
specified as contemplated by Section 301, only upon presentation and
surrender of those coupons.
If the principal amount of any Security surrendered for repayment
shall not be so repaid upon surrender thereof, such principal amount
(together with interest, if any, thereon accrued to such Repayment Date)
shall, until paid, bear interest from the Repayment Date at the rate of
interest or Yield to Maturity (in the case of Original Issue Discount
Securities) set forth in such Security.
SECTION 1305. SECURITIES REPAID IN PART. Upon surrender of any
Registered Security which is to be repaid in part only, the Issuer shall
execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge and at the expense of the Issuer, a
new Registered Security or Securities of the same series, of any authorized
denomination specified by the Holder, in an aggregate principal amount
equal to and in exchange for the portion of the principal of such Security
so surrendered which is not to be repaid.
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ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. APPLICABILITY OF ARTICLE; ISSUER'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE. If, pursuant to Section 301, provision
is made for either or both of (i) defeasance of the Securities of or within
a series under Section 1402 or (ii) covenant defeasance of the Securities
of or within a series under Section 1403, then the provisions of such
Section or Sections, as the case may be, together with the other provisions
of this Article (with such modifications thereto as may be specified
pursuant to Section 301 with respect to any Securities), shall be
applicable to such Securities and any coupons appertaining thereto, and the
Issuer may at its option by Board Resolution, at any time, with respect to
such Securities and any coupons appertaining thereto, elect to have Section
1402 (if applicable) or Section 1403 (if applicable) be applied to such
Outstanding Securities and any coupons appertaining thereto upon compliance
with the conditions set forth below in this Article.
SECTION 1402. DEFEASANCE AND DISCHARGE. Upon the Issuer's exercise
of the above option applicable to this Section with respect to any
Securities of or within a series, the Issuer shall be deemed to have been
discharged from its obligations with respect to such Outstanding Securities
and any coupons appertaining thereto on the date the conditions set forth
in Section 1404 are satisfied (hereinafter, "DEFEASANCE"). For this
purpose, such defeasance means that the Issuer shall be deemed to have paid
and discharged the entire indebtedness represented by such Outstanding
Securities and any coupons appertaining thereto, which shall thereafter be
deemed to be "Outstanding" only for the purposes of Section 1405 and the
other Sections of this Indenture referred to in clauses (i) and (ii) below,
and to have satisfied all of its other obligations under such Securities
and any coupons appertaining thereto and this Indenture insofar as such
Securities and any coupons appertaining thereto are concerned (and the
Trustee, at the expense of the Issuer, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of
such Outstanding Securities and any coupons appertaining thereto to
receive, solely from the trust fund described in Section 1404 and as more
fully set forth in such Section, payments in respect of the principal of
(and premium, if any) and interest, if any, on such Securities and any
coupons appertaining thereto when such payments are due, (ii) the Issuer's
obligations with respect to such Securities under Sections 305, 306, 1002
and 1003 and with respect to the payment of Additional Amounts, if any, on
such Securities as contemplated by Section 1008, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this
Article. Subject to compliance with this Article Fourteen, the Issuer may
exercise its option under this Section notwithstanding the prior exercise
of its option under Section 1403 with respect to such Securities and any
coupons appertaining thereto.
SECTION 1403. COVENANT DEFEASANCE. Upon the Issuer's exercise of the
above option applicable to this Section with respect to any Securities of
or within a series, the Issuer shall be released from its obligations under
Sections 1004 to 1009, inclusive, and, if specified pursuant to Section
301, its obligations under any other covenant, with respect to such
Outstanding Securities and any coupons appertaining thereto on and after
the date the conditions set forth in Section 1404 are satisfied
(hereinafter, "COVENANT DEFEASANCE"), and such Securities and any coupons
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appertaining thereto shall thereafter be deemed to be not "Outstanding" for
the purposes of any direction, waiver, consent or declaration or Act of
Holders (and the consequences of any thereof) in connection with Sections
1004 to 1009, inclusive, or such other covenant, but shall continue to be
deemed "Outstanding" for all other purposes hereunder. For this purpose,
such covenant defeasance means that, with respect to such Outstanding
Securities and any coupons appertaining thereto, the Issuer may omit to
comply with and shall have no liability in respect of any term, condition
or limitation set forth in any such Section or such other covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such Section or such other covenant or by reason of reference in any such
Section or such other covenant to any other provision herein or in any
other document and such omission to comply shall not constitute a default
or an Event of Default under Section 501(iv) or 501(viii) or otherwise, as
the case may be, but, except as specified above, the remainder of this
Indenture and such Securities and any coupons appertaining thereto shall be
unaffected thereby.
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to application of Section 1402 or Section
1403 to any Outstanding Securities of or within a series and any coupons
appertaining thereto:
(i) The Issuer shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 607 who shall agree to comply with the provisions of this
Article Fourteen applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities and any
coupons appertaining thereto, (i) an amount in such currency, currencies or
currency unit in which such Securities and any coupons appertaining thereto
are then specified as payable at Stated Maturity, (ii) Government
Obligations applicable to such Securities and coupons appertaining thereto
(determined on the basis of the currency, currencies or currency unit in
which such Securities and coupons appertaining thereto are then specified
as payable at Stated Maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment of
principal of (and premium, if any) and interest, if any, on such Securities
and any coupons appertaining thereto, money in an amount, or (iii) a
combination thereof, in any case, in an amount, sufficient, without
consideration of any reinvestment of such principal and interest, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, (i) the principal of (and
premium, if any) and interest, if any, on such Outstanding Securities and
any coupons appertaining thereto on the Stated Maturity of such principal
or installment of principal or interest and (ii) any mandatory sinking fund
payments or analogous payments applicable to such Outstanding Securities
and any coupons appertaining thereto on the day on which such payments are
due and payable in accordance with the terms of this Indenture and of such
Securities and any coupons appertaining thereto.
(ii) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Issuer is a party
or by which it is bound.
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(iii) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to such Securities
and any coupons appertaining thereto shall have occurred and be continuing
on the date of such deposit or, insofar as Sections 501(vi) and 501(vii)
are concerned, at any time during the period ending on the 91st day after
the date of such deposit (it being understood that this condition shall not
be deemed satisfied until the expiration of such period).
(iv) In the case of an election under Section 1402, the Issuer shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Issuer has received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the date of execution of this
Indenture, there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of such Outstanding Securities and any
coupons appertaining thereto will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had not
occurred.
(v) In the case of an election under Section 1403, the Issuer shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Securities and any coupons appertaining thereto
will not recognize income, gain or loss for Federal income tax purposes as
a result of such covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred.
(vi) The Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 1402 or the covenant defeasance
under Section 1403 (as the case may be) have been complied with and an
Opinion of Counsel to the effect that either (a) as a result of a deposit
pursuant to subsection (i) above and the related exercise of the Issuer's
option under Section 1402 or Section 1403 (as the case may be),
registration is not required under the Investment Company Act of 1940, as
amended, by the Issuer, with respect to the trust funds representing such
deposit or by the Trustee for such trust funds or (b) all necessary
registrations under said Act have been effected.
(vii) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be
imposed on the Issuer in connection therewith pursuant to Section 301.
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the
last paragraph of Section 1003, all money and Government Obligations (or
other property as may be provided pursuant to Section 301) (including the
proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 1405, the "Trustee") pursuant to
Section 1404 in respect of any Outstanding Securities of any series and any
coupons appertaining thereto shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and any
coupons appertaining thereto and this Indenture, to the payment, either
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directly or through any Paying Agent (including the Issuer acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities and any coupons appertaining thereto of all sums due and to
become due thereon in respect of principal (and premium, if any) and
interest and Additional Amounts, if any, but such money need not be
segregated from other funds except to the extent required by law.
Unless otherwise specified with respect to any Security pursuant to
Section 301, if, after a deposit referred to in Section 1404(i) has been
made, (i) the Holder of a Security in respect of which such deposit was
made is entitled to, and does, elect pursuant to Section 301 or the terms
of such Security to receive payment in a currency or currency unit other
than that in which the deposit pursuant to Section 1404(i) has been made in
respect of such Security or (ii) a Conversion Event occurs in respect of
the currency or currency unit in which the deposit pursuant to Section
1404(i) has been made, the indebtedness represented by such Security and
any coupons appertaining thereto shall be deemed to have been, and will be,
fully discharged and satisfied through the payment of the principal of (and
premium, if any), and interest, if any, on such Security as the same
becomes due out of the proceeds yielded by converting (from time to time as
specified below in the case of any such election) the amount or other
property deposited in respect of such Security into the currency or
currency unit in which such Security becomes payable as a result of such
election or Conversion Event based on the applicable market exchange rate
for such currency or currency unit in effect on the second Business Day
prior to each payment date, except, with respect to a Conversion Event, for
such currency or currency unit in effect (as nearly as feasible) at the
time of the Conversion Event.
The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1404 or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by
law is for the account of the Holders of such Outstanding Securities and
any coupons appertaining thereto.
Anything in this Article to the contrary notwithstanding, subject to
Section 606, the Trustee shall deliver or pay to the Issuer from time to
time upon Issuer Request any money or Government Obligations (or other
property and any proceeds therefrom) held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required
to be deposited to effect a defeasance or covenant defeasance, as
applicable, in accordance with this Article.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting
of Holders of Securities of any series may be called at any time and from
time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
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provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS. (A) The Trustee
may at any time call a meeting of Holders of Securities of any series for
any purpose specified in Section 1501, to be held at such time and at such
place in the Borough of Manhattan, New York City, or in London as the
Trustee shall determine. Notice of every meeting of Holders of Securities
of any series, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be
given, in the manner provided in Section 106, not less than 21 nor more
than 180 days prior to the date fixed for the meeting.
(B) In case at any time the Issuer, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding
Securities of any series shall have requested the Trustee to call a meeting
of the Holders of Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
made the first publication of the notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Issuer or the Holders of
Securities of such series in the amount above specified, as the case may
be, may determine the time and the place in the Borough of Manhattan, New
York City, or in London for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in subsection A. of this
Section.
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled
to vote at any meeting of Holders of Securities of any series, a Person
shall be (i) a Holder of one or more Outstanding Securities of such series
or (ii) a Person appointed by an instrument in writing as proxy for a
Holder or Holders of one or more Outstanding Securities of such series by
such Holder or Holders. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders of Securities of any series
shall be the Persons entitled to vote at such meeting and their counsel,
any representatives of the Trustee and its counsel and any representatives
of the Issuer and its counsel.
SECTION 1504. QUORUM; ACTION. The Persons entitled to vote a
majority in principal amount of the Outstanding Securities of a series
shall constitute a quorum for a meeting of Holders of Securities of such
series; PROVIDED, HOWEVER, that if any action is to be taken at such
meeting with respect to a consent or waiver which this Indenture expressly
provides may be given by the Holders of not less than a specified
percentage in principal amount of the Outstanding Securities of a series,
the Persons entitled to vote such specified percentage in principal amount
of the Outstanding Securities of such series shall constitute a quorum. In
the absence of a quorum within 30 minutes after the time appointed for any
such meeting, the meeting shall, if convened at the request of Holders of
Securities of such series, be dissolved. In any other case the meeting may
be adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at the reconvening of any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned
meeting shall be given as provided in Section 1502(A), except that such
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notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening
of any adjourned meeting shall state expressly the percentage, as provided
above, of the principal amount of the Outstanding Securities of such series
which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution
presented at a meeting or adjourned meeting duly reconvened at which a
quorum is present as aforesaid may be adopted by the affirmative vote of
the persons entitled to vote a majority in aggregate principal amount of
the Outstanding Securities represented at such meeting; PROVIDED, HOWEVER,
that, except as limited by the proviso to Section 902, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage, which is less than
a majority, in principal amount of the Outstanding Securities of a series
may be adopted at a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding
Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any
action is to be taken at a meeting of Holders of Securities of any series
with respect to any request, demand, authorization, direction, notice,
consent, waiver or other action that this Indenture expressly provides may
be made, given or taken by the Holders of a specified percentage in
principal amount of all Outstanding Securities affected thereby, or of the
Holders of such series and one or more additional series:
(i) there shall be no minimum quorum requirement for such
meeting; and
(ii) the principal amount of the Outstanding Securities of
such series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into
account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made,
given or taken under this Indenture.
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS. (A) Notwithstanding any provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities of a series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved
in the manner specified in Section 104 and the appointment of any proxy
shall be proved in the manner specified in Section 104 or by having the
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signature of the Person executing the proxy witnessed or guaranteed by any
trust company, bank or banker authorized by Section 104 to certify to the
holding of Bearer Securities. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be presumed
valid and genuine without the proof specified in Section 104 or other proof.
(B) The Trustee shall, by an instrument in writing appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Issuer or by Holders of Securities as provided in Section
1502(B), in which case the Issuer or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled
to vote a majority in principal amount of the Outstanding Securities of
such series represented at the meeting.
(C) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Securities of such series held or represented by him; PROVIDED,
HOWEVER, that no vote shall be cast or counted at any meeting in respect of
any Security challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder of a Security of such series or proxy.
(D) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting, and
the meeting may be held as so adjourned without further notice.
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The
vote upon any resolution submitted to any meeting of Holders of Securities
of any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities of such series or of their
representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in duplicate of all votes cast at the meeting. A record,
at least in duplicate, of the proceedings of each meeting of Holders of
Securities of any Series shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the fact, setting forth a copy of
the notice of the meeting and showing that said notice was given as
provided in Section 1502 and, if applicable, Section 1504. Each copy shall
be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one such copy shall be delivered to the Issuer
and another to the Trustee to be preserved by the Trustee, the latter to
have attached thereto the ballots voted at the meeting. Any record so
signed and verified shall be conclusive evidence of the matters therein
stated.
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* * * * *
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Indenture.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
PRICE DEVELOPMENT COMPANY,
LIMITED PARTNERSHIP
By:_________________________
Name:
Title:
[TRUSTEE]
as Trustee
By:_________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
75
<PAGE>
STATE OF ___________ )
) ss:
COUNTY OF __________ )
On the _____ day of ____________ 1995, before me personally came
____________________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at _____________________________________, that
he/she is ________________ of JP Realty, Inc., the sole general partner of
Price Development Company, Limited Partnership, which is one of the parties
described in and which executed the foregoing instrument, and that he/she
signed his/her name thereto by authority the Board of Trustees.
[Notarial Seal]
_______________________________
Notary Public
COMMISSION EXPIRES
76
<PAGE>
STATE OF ____________ )
) ss:
COUNTY OF ____________ )
On the _____ day of ____________ 1995, before me personally came
____________________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at _____________________________________, that
he/she is ________________ of [TRUSTEE], one of the parties described in
and which executed the foregoing instrument, and that he/she signed his/her
name thereto by authority of the Board of Directors.
[Notarial Seal]
___________________________
Notary Public
COMMISSION EXPIRES
77
<PAGE>
EXHIBIT A
FORMS OF CERTIFICATION
EXHIBIT A-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, as of the date hereof, and except as set
forth below, the above-captioned Securities held by you for our account (i)
are owned by person(s) that are not citizens or residents of the United
States, domestic partnerships, domestic corporations or any estate or trust
the income of which is subject to United States federal income taxation
regardless of its source ("UNITED STATES PERSON(S)"), (ii) are owned by
United States person(s) that are (a) foreign branches of United States
financial institutions (financial institutions, as defined in United States
Treasury Regulations Section 2.165-12(c)(1)(v) are herein referred to as
"FINANCIAL INSTITUTIONS") purchasing for their own account or for resale,
or (b) United States person(s) who acquired the Securities through foreign
branches of United States financial institutions and who hold the
Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you
may advise Price Development Company, Limited Partnership or its agent that
such financial institution will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) are owned by
United States or foreign financial institution(s) for purposes of resale
during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner
is a United States or foreign financial institution described in clause
(iii) above (whether or not also described in clause (i) or (ii)), this is
to further certify that such financial institution has not acquired the
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
As used herein, "UNITED STATES" means the United States of America
(including the States and the District of Columbia); and its "POSSESSIONS"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the
above-captioned Securities held by you for our account in accordance with
your Operating Procedures if any applicable statement herein is not correct
A-1
<PAGE>
on such date, and in the absence of any such notification it may be assumed
that this certification applies as of such date.
This certificate excepts and does not relate to U.S.$ _______________
of such interest in the above-captioned Securities in respect of which we
are not able to certify and as to which we understand an exchange for an
interest in a Permanent Global Security or an exchange for and delivery of
definitive Securities (or, if relevant, collection of any interest) cannot
be made until we do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to
produce this certificate or a copy thereof to any interested party in such
proceedings.
Dated: __________________, 19__
[To be dated no earlier than the 15th day prior
to (i) the Exchange Date or (ii) the relevant
Interest Payment Date occurring prior to the
Exchange Date, as applicable]
[Name of Person Making Certification]
_____________________________
(Authorized Signatory)
Name:
Title:
A-2
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be delivered]
This is to certify that, based solely on written certifications that
we have received in writing, by tested telex or by electronic transmission
from each of the persons appearing in our records as persons entitled to a
portion of the principal amount set forth below (our "MEMBER
ORGANIZATIONS") substantially in the form attached hereto, as of the date
hereof, [U.S.$] _______________ principal amount of the above-captioned
Securities (i) is owned by person(s) that are not citizens or residents of
the United States, domestic partnerships, domestic corporations or any
estate or trust the income of which is subject to United States Federal
income taxation regardless of its source ("UNITED STATES PERSON(S)"), (ii)
is owned by United States person(s) that are (a) foreign branches of United
States financial institutions (financial institutions, as defined in U.S.
Treasury Regulations Section 1.165-12(c)(1)(v) are herein referred to as
"FINANCIAL INSTITUTIONS") purchasing for their own account or for resale,
or (b) United States person(s) who acquired the Securities through foreign
branches of United States financial institutions and who hold the
Securities through such United States financial institutions on the date
hereof (and in either case (a) or (b), each such financial institution has
agreed, on its own behalf or through its agent, that we may advise Price
Development Company, Limited Partnership or its agent that such financial
institution will comply with the requirements of Section 165(j)(3)(A), (B)
or (C) of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) is owned by United States or foreign
financial institution(s) for purposes of resale during the restricted
period (as defined in United States Treasury Regulations Section
1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that financial
institutions described in clause (iii) above (whether or not also described
in clause (i) or (ii)) have certified that they have not acquired the
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
As used herein, "UNITED STATES" means the United States of America
(including the States and the District of Columbia); and its "POSSESSIONS"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Security representing the above-captioned Securities
excepted in the above-referenced certificates of Member Organizations and
(ii) as of the date hereof we have not received any notification from any
of our Member Organizations to the effect that the statements made by such
A-3
<PAGE>
Member Organizations with respect to any portion of the part submitted
herewith for exchange (or, if relevant, collection of any interest) are no
longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to
produce this certificate or a copy thereof to any interested party in such
proceedings.
Dated: _____________ 19__
[To be dated no earlier than the Exchange Date
or the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]
[ ]
as Operator of the Euroclear System [CEDEL
S.A.]
By:____________________________
A-4
<PAGE>
___________________________________________________________________________
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
Issuer
TO
[TRUSTEE]
Trustee
__________________________
Form of Indenture
Dated as of ________________, 199_
__________________________
Debt Securities
___________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
PARTIES
RECITALS OF THE ISSUER
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions ........................................1
Act .......................................................2
Additional Amounts ..........................................2
Affiliate ...................................................2
Annual Service Charge .......................................2
Authenticating Agent ........................................2
Authorized Newspaper ........................................2
Bankruptcy Law ..............................................2
Bearer Security .............................................2
Board of Directors ..........................................2
Board Resolution ............................................2
Business Day ................................................3
CEDEL .......................................................3
Commission ..................................................3
Conversion Event ............................................3
Corporate Trust Office ......................................3
corporation .................................................3
coupon ......................................................3
Custodian ...................................................3
Debt .......................................................3
Defaulted Interest ..........................................4
Dollar" or "$ ...............................................4
DTC .......................................................4
ECU .......................................................4
Euroclear ...................................................4
European Communities ........................................4
European Monetary System ....................................4
Event of Default ............................................4
Foreign Currency ............................................4
GAAP .......................................................4
General Partner .............................................4
Government Obligations ......................................4
Holder ......................................................5
Indenture ...................................................5
Indexed Security ............................................5
Interest ....................................................5
i
<PAGE>
Interest Payment Date .......................................5
Issuer ......................................................5
Issuer Request and Issuer Order .............................5
Maturity ....................................................6
Officers' Certificate .......................................6
Opinion of Counsel ..........................................6
Original Issue Discount Security ............................6
Outstanding .................................................6
Paying Agent ................................................7
Person ......................................................7
Place of Payment ............................................7
Predecessor Security ........................................7
Redemption Date .............................................8
Redemption Price ............................................8
Registered Security .........................................8
Regular Record Date .........................................8
Repayment Date ..............................................8
Repayment Price .............................................8
Responsible Officer .........................................8
Security ....................................................8
Security Register and Security Registrar ....................8
Significant Subsidiary ......................................8
Special Record Date .........................................9
Stated Maturity .............................................9
Subsidiary ..................................................9
Trust Indenture Act or TIA ..................................9
Trustee .....................................................9
United States ...............................................9
Unsecured Debt ..............................................9
Yield to Maturity ...........................................9
SECTION 102. Compliance Certificates and Opinions ...............9
SECTION 103. Form of Documents Delivered to Trustee .............10
SECTION 104. Acts of Holders ....................................11
SECTION 105. Notices, etc., to Trustee and Issuer ...............12
SECTION 106. Notice to Holders; Waiver ..........................12
SECTION 107. Effect of Headings and Table of Contents ...........13
SECTION 108. Successors and Assigns .............................14
SECTION 109. Separability Clause ................................14
SECTION 110. Benefits of Indenture ..............................14
SECTION 111. Governing Law ......................................14
SECTION 112. Legal Holidays .....................................14
ARTICLE TWO
SECURITIES FORMS
SECTION 201. Forms of Securities ................................14
SECTION 202. Form of Trustee's Certificate of Authentication.....15
ii
<PAGE>
SECTION 203. Securities Issuable in Global Form .................15
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series ...............16
SECTION 302. Denominations ......................................20
SECTION 303. Execution, Authentication, Delivery and Dating .....20
SECTION 304. Temporary Securities ...............................22
SECTION 305. Registration, Registration of Transfer and Exchange 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities....28
SECTION 307. Payment of Interest; Interest Rights Preserved......29
SECTION 308. Persons Deemed Owners ..............................31
SECTION 309. Cancellation .......................................31
SECTION 310. Computation of Interest ............................32
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture ............32
SECTION 402. Application of Trust Funds .........................33
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default ..................................34
SECTION 502. Acceleration of Maturity; Rescission and Annulment .35
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee..............................................36
SECTION 504. Trustee May File Proofs of Claim ....................37
SECTION 505. Trustee May Enforce Claims Without Possession of Securities
or Coupons...........................................38
SECTION 506. Application of Money Collected ......................38
SECTION 507. Limitation on Suits .................................39
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium, if any, Interest and Additional Amounts.....39
SECTION 509. Restoration of Rights and Remedies ..................39
SECTION 510. Rights and Remedies Cumulative ................. ....40
SECTION 511. Delay or Omission Not Waiver ........................40
SECTION 512. Control by Holders of Securities ....................40
SECTION 513. Waiver of Past Defaults .............................40
SECTION 514. Waiver of Usury, Stay or Extension Laws .............41
SECTION 515. Undertaking for Costs ...............................41
ARTICLE SIX
THE TRUSTEE
iii
<PAGE>
SECTION 601. Notice of Defaults ..................................41
SECTION 602. Certain Rights of Trustee ...........................42
SECTION 603. Not Responsible for Recitals or Issuance of Securities43
SECTION 604. May Hold Securities .................................43
SECTION 605. Money Held in Trust .................................43
SECTION 606. Compensation and Reimbursement ......................44
SECTION 607. Corporate Trustee Required; Eligibility; Conflicting
Interests............................................44
SECTION 608. Resignation and Removal; Appointment of Successor ...44
SECTION 609. Acceptance of Appointment by Successor ..............46
SECTION 610. Merger, Conversion, Consolidation or Succession to Business47
SECTION 611. Appointment of Authenticating Agent .................47
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUER
SECTION 701. Disclosure of Names and Addresses of Holders ........49
SECTION 702. Reports by Trustee ..................................49
SECTION 703. Reports by Issuer ...................................49
SECTION 704. Issuer to Furnish Trustee Names and Addresses of Holders49
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Issuer and Sales, Leases and
Conveyances Permitted Subject to Certain Conditions..50
SECTION 802. Rights and Duties of Successor Corporation ..........50
SECTION 803. Officers' Certificate and Opinion of Counsel ........51
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures without Consent of Holders...51
SECTION 902. Supplemental Indentures with Consent of Holders......53
SECTION 903. Execution of Supplemental Indentures ................54
SECTION 904. Effect of Supplemental Indentures ...................54
SECTION 905. Conformity with Trust Indenture Act .................54
SECTION 906. Reference in Securities to Supplemental Indentures...54
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if any, Interest and
Additional Amounts.................................54
SECTION 1002. Maintenance of Office or Agency ...................55
iv
<PAGE>
SECTION 1003. Money for Securities Payments to Be Held in Trust .56
SECTION 1004. Existence .........................................58
SECTION 1005. Payment of Taxes and Other Claims .................58
SECTION 1006. Provision of Financial Information ................58
SECTION 1007. Statement as to Compliance ........................58
SECTION 1008. Additional Amounts ................................59
SECTION 1009. Waiver of Certain Covenants .......................59
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article ..........................60
SECTION 1102. Election to Redeem; Notice to Trustee .............60
SECTION 1103. Selection by Trustee of Securities to Be Redeemed..60
SECTION 1104. Notice of Redemption ..............................61
SECTION 1105. Deposit of Redemption Price .......................62
SECTION 1106. Securities Payable on Redemption Date .............62
SECTION 1107. Securities Redeemed in Part .......................63
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article ..........................63
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities63
SECTION 1203. Redemption of Securities for Sinking Fund .........64
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article ..........................64
SECTION 1302. Repayment of Securities ...........................64
SECTION 1303. Exercise of Option ................................65
SECTION 1304. When Securities Presented for Repayment Become Due and
Payable........................................... 65
SECTION 1305. Securities Repaid in Part .........................66
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Issuer's Option to Effect
Defeasance or Covenant Defeasance..................67
SECTION 1402. Defeasance and Discharge ..........................67
SECTION 1403. Covenant Defeasance ...............................67
SECTION 1404. Conditions to Defeasance or Covenant Defeasance ...68
v
<PAGE>
SECTION 1405. Deposited Money and Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions..............69
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called .........70
SECTION 1502. Call, Notice and Place of Meetings ................71
SECTION 1503. Persons Entitled to Vote at Meetings ..............71
SECTION 1504. Quorum; Action ....................................71
SECTION 1505. Determination of Voting Rights; Conduct and Adjournment of
Meetings...........................................72
SECTION 1506. Counting Votes and Recording Action of Meetings ...73
vi
<PAGE>
Price Development Company, Limited Partnership
Reconciliation and tie between Trust Indenture Act of 1939, as amended
(the "TIA") and Indenture, dated as of _________, 199_
Trust Indenture Act Section Indenture Section
Sec. 310(a)(1) 607
(a)(2) 607
(b) 607, 608
Sec. 312(a) 704
Sec.312(c) 701
Sec. 313(a) 702
(c) 702
Sec. 314(a) 1006
(a)(4) 1007
(c)(1) 102
(c)(2) 102
(e) 102
Sec. 315(b) 601
Sec. 316(a) (last sentence) 101 ("Outstanding")
(a)(1)(A) 502, 512
(a)(1)(B) 513
(b) 508
Sec. 317(a)(1) 503
(a)(2) 504
Sec. 318(a) 111
(c) 111
____________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
Attention should also be directed to Section 318(c) of the TIA,
which provides that the provisions of Sections 310 to and including 317 of
the TIA are a part of and govern every qualified indenture, whether or not
physically contained therein.
vii
ROGERS & WELLS
200 Park Avenue
New York, New York 10166
(212) 878-8000
FAX (212) 878-8375
PARIS WASHINGTON, D.C. FRANKFURT
LONDON HONG KONG
November 7, 1997
JP Realty, Inc.
Price Development Company,
Limited Partnership
35 Century Park-Way
Salt Lake City, Utah 84115
Ladies and Gentlemen:
We have acted as special counsel to JP Realty, Inc., a Maryland
corporation (the "Company"), and Price Development Company, Limited
Partnership, a Maryland limited partnership (the "Partnership"), in
connection with the Company's and the Partnership's registration statement
on Form S-3 (Registration Numbers 333-34835 and 333-34835-01)(as the same
may be amended or supplemented from time to time, the "Registration
Statement"), including the prospectus included therein at the time the
Registration Statement is declared effective (the "Prospectus"), filed with
the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), for the offering (i) by
the Company from time to time of up to $147,062,500 aggregate initial
offering price of (a) shares of common stock, par value $0.0001 per share
(the "Common Stock"); (b) warrants to purchase Common Stock (the "Common
Stock Warrants"); and (c) shares or fractional shares of preferred stock,
par value $0.0001 per share (the "Preferred Stock"), which may be issued in
the form of depositary shares (the "Depositary Shares") evidenced by
depositary receipts (the "Depositary Receipts"); and (ii) by the
Partnership from time to time of up to $200,000,000 aggregate initial
offering price of debt securities (the "Debt Securities") which may
be fully guaranteed by nconditional guarantees thereof by the Company
(the "Guarantees"). The Debt Securities, the Common Stock, the Common
Stock Warrants, the Preferred Stock, the Depositary Shares and the
Guarantees are collectively referred
<PAGE>
JP Realty, Inc. 2 November 7, 1997
Price Development Company,
Limited Partnership
to as the "Securities." The Registration Statement provides that the
Securities may be offered separately or together, in separate series, in
amounts, at prices and on terms to be set forth in one or more supplements
to the Prospectus (each, a "Prospectus Supplement"). This opinion is being
provided at your request in connection with the filing of the Registration
Statement.
The Debt Securities will be issued from time to time pursuant to
an indenture in substantially the form included as an exhibit to the
Registration Statement (the "Indenture"). The Common Stock Warrants will
be issued under one or more warrant agreements (each, a "Warrant
Agreement"), each to be between the Company and a financial institution
identified therein as warrant agent (each, a "Warrant Agent"). The
Depositary Shares will be issued under one or more deposit agreements
(each, a "Deposit Agreement"), each to be between the Company and a
financial institution identified therein as depositary (each, a
"Depositary"). The Guarantees will be evidenced by an agreement or other
instrument of the Company (each, a "Guaranty Agreement") to be issued with
the related issuance of the Debt Securities.
In rendering the opinions expressed herein, we have examined the
Registration Statement, the Indenture, the Company's Amended and Restated
Articles of Incorporation (the "Charter") and Bylaws, the Partnership's
Amended and Restated Agreement of Limited Partnership (the "Partnership
Agreement"), and Certificate of Limited Partnership, and certain minutes of
corporate proceedings and/or written consents of the Company's Board of
Directors. We have also examined and relied as to factual matters upon the
representations, warranties and other statements contained in originals or
copies, certified or otherwise identified to our satisfaction, of such
records, documents, certificates and other instruments as in our judgment
are necessary or appropriate to enable us to render the opinions expressed
below.
In our examination of the aforesaid documents, we have assumed
the genuineness of all signatures, the authenticity of all documents,
certificates and instruments submitted to us as originals and the
conformity with originals of all documents submitted to us as copies.
We assume that (i) prior to the issuance of any shares of Common
Stock or Preferred Stock (or Securities convertible into shares of Common
Stock or Preferred Stock), there will exist, under the Charter, the
<PAGE>
JP Realty, Inc. 3 November 7, 1997
Price Development Company, Limited Partnership
requisite number of authorized but unissued shares of Common Stock or
Preferred Stock, as the case may be; and (ii) appropriate certificates
representing shares of Common Stock or Preferred Stock, as the case may be,
will be executed and delivered upon issuance and sale of any such shares,
and will comply with all applicable requirements of Maryland law.
We assume that the issuance, sale, amount and terms of the
Securities to be offered from time to time will be authorized and
determined by proper action of the Board of Directors of the Company or by
the Board of Directors of the Company as the general partner of the
Partnership, as the case may be, in accordance with the parameters
described in the Registration Statement (each, a "Board Action") and in
accordance with the Charter, the Partnership Agreement, the Indenture or
any applicable Supplemental Indenture, as the case may be, and applicable
Maryland law.
To the extent that the obligations of the Partnership under any
Indenture may be dependent upon such matters, we assume for purposes of
this opinion that the financial institution identified in such Indenture as
trustee (the "Trustee") is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization; that the
Trustee is duly qualified to engage in the activities contemplated by such
Indenture; that such Indenture has been duly authorized, executed and
delivered by the Trustee and constitutes the legally valid and binding
obligation of the Trustee enforceable against the Trustee in accordance
with its terms; that the Trustee is in compliance, generally, with respect
to acting as a trustee under such Indenture, with all applicable laws and
regulations; and that the Trustee has the requisite organizational and
legal power and authority to perform its obligations under such Indenture.
To the extent that the obligations of the Company under a Warrant
Agreement may be dependent upon such matters, we assume for purposes of
this opinion that the Warrant Agent is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization; that
the Warrant Agent is duly qualified to engage in the activities
contemplated by the Warrant Agreement; that the Warrant Agreement has been
duly authorized, executed and delivered by the Warrant Agent and
constitutes the legally valid and binding obligation of the Warrant Agent
enforceable against the Warrant Agent in accordance with its terms; that
the Warrant Agent is in compliance, generally, with respect to acting as
Warrant Agent under the Warrant Agreement, with all applicable laws and
<PAGE>
JP Realty, Inc. 4 November 7, 1997
Price Development Company, Limited Partnership
regulations; and that the Warrant Agent has the requisite organizational
and legal power and authority to perform its obligations under the Warrant
Agreement.
To the extent that the obligations of the Company under a Deposit
Agreement may be dependent upon such matters, we assume for purposes of
this opinion that the Depositary is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization; that the
Depositary is duly qualified to engage in the activities contemplated by
the Deposit Agreement; that the Deposit Agreement has been duly authorized,
executed and delivered by the Depositary and constitutes the legally valid
and binding obligation of the Depositary enforceable against the Depositary
in accordance with its terms; that the Depositary is in compliance,
generally, with respect to acting as Depositary under the Deposit
Agreement, with all applicable laws and regulations; and that the
Depositary has the requisite organizational and legal power and authority
to perform its obligations under the Deposit Agreement.
Based upon the foregoing, and such examination of law as we have
deemed necessary, we are of the opinion that:
1. Upon approval of the Indenture by all necessary Board Action, and
when executed and delivered by the Partnership in accordance with
such Board Action, and assuming due authorization, execution and
delivery by the Trustee, the Indenture will constitute a valid
and binding obligation of the Partnership.
2. When the Registration Statement has become effective under the
Act and the Debt Securities have been (a) duly established by the
Indenture or a Supplemental Indenture, (b) duly authenticated by
the Trustee, and (c) duly executed and delivered on behalf of the
Partnership against payment therefor in accordance with the terms
and provisions of the applicable Board Action, the Indenture, any
applicable Supplemental Indenture, and as contemplated by the
Registration Statement, the Prospectus or the applicable
Prospectus Supplement and, if applicable, an underwriting
agreement relating to the issuance of such Debt Securities, the
Debt Securities will be duly authorized and will constitute valid
and binding obligations of the Company.
<PAGE>
JP Realty, Inc. 5 November 7, 1997
Price Development Company, Limited Partnership
3. When the Registration Statement has become effective under the
Act and a series of the Preferred Stock has been duly authorized
and established in accordance with the applicable Board Action,
the terms of the Charter and applicable Maryland law, and upon
payment for shares of such Preferred Stock (a) in the manner
contemplated by the applicable Board Action, the Registration
Statement, the Prospectus or the applicable Prospectus Supplement
and, if applicable, an underwriting agreement relating to the
issuance of such Preferred Stock, or (b) pursuant to the exchange
shares of such Preferred Stock for validly issued and fully paid
Depositary Shares in accordance with the terms of an applicable
valid and binding Deposit Agreement, such shares of Preferred
Stock issued thereby will be duly authorized, validly issued,
fully paid and non-assessable.
4. When the Registration Statement has become effective under the
Act, the Depositary Shares have been duly authorized and
established in accordance with the applicable Board Action, and
the Depositary Receipts in the form contemplated and authorized
by a Deposit Agreement have been duly executed and delivered by
the Depositary and delivered to and paid for by the purchasers
thereof in the manner contemplated by such Board Action, the
Registration Statement, the Prospectus or the applicable
Prospectus Supplement and, if applicable, an underwriting
agreement relating to the issuance of such Depositary Shares,
such Depositary Shares will be validly issued and will entitle
the holders thereof to the rights specified in the Depositary
Receipts and such Deposit Agreement.
5. When the Registration Statement has become effective under the
Act, the Common Stock Warrants have been (a) duly established by
the related Warrant Agreement and (b) duly authenticated by the
Warrant Agent and duly authorized and established by the
applicable Board Action, and warrant certificates representing
the Common Stock Warrants have been duly executed and delivered
on behalf of the Company against payment therefor in accordance
with the terms and provisions of the applicable Board Action, the
Warrant Agreement and as contemplated by the Registration
Statement, the Prospectus or the applicable Prospectus Supplement
and, if applicable, an underwriting agreement relating to the
<PAGE>
JP Realty, Inc. 6 November 7, 1997
Price Development Company, Limited Partnership
issuance of such Common Stock Warrants, the Common Stock Warrants
will be duly authorized and will constitute valid and binding
obligations of the Company.
6. When the Registration Statement has become effective under the
Act and payment for such shares of Common Stock has been made (a)
in the manner contemplated by the applicable Board Action, the
Registration Statement, the Prospectus or the applicable
Prospectus Supplement and, if applicable, an underwriting
agreement relating to the issuance of such shares, or (b)
pursuant to (i) the conversion of validly issued and fully paid
and non-assessable shares of Preferred Stock in accordance with
the established terms of such Preferred Stock, or (ii) the
exercise of validly issued Common Stock Warrants in accordance
with the terms of an applicable Warrant Agreement, such shares of
Common Stock issued thereby will be duly authorized, validly
issued, fully paid and non-assessable by the Company.
7. When the Registration Statement has become effective under the
Act, the Guaranty Agreement evidencing the Company's guaranty of
validly issued and binding Debt Securities has been duly
authorized and established in accordance with the applicable
Board Action, the Registration Statement, the Prospectus or the
applicable Prospectus Supplement, the applicable Guarantees will
be duly authorized and will constitute valid and binding
obligations of the Company.
The opinions stated herein relating to the validity and binding
nature of obligations of the Company and the Partnership, as
the case may be, are subject to (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and (ii) the effect
of general principles of equity (regardless of whether considered
in a proceeding in equity or at law).
The opinions stated herein are limited to the federal laws of the
United States, the laws of the State of New York and Maryland. To the
extent that the opinions set forth herein are dependent on the laws of the
State of Maryland, we have relied, with your permission, on the opinion of
Piper & Marbury L.L.P. of even date herewith. Our opinion, to the extent
based upon such reliance, is limited by the qualifications, assumptions and
<PAGE>
JP Realty, Inc. 7 November 7, 1997
Price Development Company, Limited Partnership
conditions set forth in such opinion in addition to those set forth herein.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and the reference to this firm under the caption
"Legal Matters" in the Prospectus.
Very truly yours,
/S/ Rogers & Wells
<PAGE>
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018
410-539-2530 WASHINGTON
FAX: 410-539-0489 NEW YORK
PHILADELPHIA
EASTON
November 10, 1997
JP Realty, Inc.
Price Development Company, Limited Partnership
35 Century Park-Way
Salt Lake City, Utah 84115
REGISTRATION STATEMENT OF FORM S-3
Ladies and Gentlemen:
We have acted as special Maryland counsel to JP Realty, Inc., a Maryland
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), pursuant to a Registration
Statement on Form S-3 (Registration Numbers 333-34835 and 333-34835-01) of
the Company and Price Development Company, Limited Partnership, a Maryland
limited partnership (the "Operating Partnership"), initially filed with the
Securities and Exchange Commission (the "Commission") on September 2, 1997
and Amendment No. 1 thereto (the "Registration Statement"), including the
prospectus included therein at the time the Registration Statement is
declared effective (the "Prospectus"), for offering (a) by the Company from
time to time of up to $147,062,500 aggregate initial offering price of:
(i) shares of its common stock, par value $0.0001 per share (the "Common
Stock"); (ii) warrants to purchase Common Stock (the "Warrants"); and (iii)
shares or fractional shares of its preferred stock, par value $0.0001 per
share (the "Preferred Stock"), which may be issued in the form of
depositary shares (the "Depositary Shares") evidenced by depositary
receipts (the "Depositary Receipts"); and (b) by the Operating Partnership
from time to time of up to $200,000,000 aggregate initial offering price of
unsecured non-convertible investment grade debt securities or other non-
convertible debt securities (the "Debt Securities"), which may be fully
guaranteed by unconditional guarantees thereof by the Company (the
"Guarantees"). The Common Stock, the Warrants, the Preferred Stock, the
Depositary Shares, the Debt Securities, and the Guarantees are collectively
referred to as the "Securities." The Registration Statement provides that
the Securities may be offered separately or together, in separate series,
<PAGE>
JP Realty, Inc. PIPER & MARBURY
Price Development Company, Limited Partnership L.L.P.
November 10, 1997
Page 2
in amounts, at prices, and on terms to be set forth in one or more
supplements to the Prospectus (each a "Prospectus Supplement"). This
opinion is being provided at your request in connection with the filing of
the Registration Statement.
In our capacity as special Maryland counsel, we have reviewed the
following:
(a) The Registration Statement;
(b) The Charter, certified by the Department of Assessments
and Taxation of the State of Maryland (the "Department"),
and By-Laws, as amended and restated and in effect on
the date hereof, of the Company;
(c) The Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, dated as of January
21, 1994 including Amendment No. 1 thereto dated January 21,
1994 and the Certificate of Limited Partnership of the
Operating Partnership dated September 10, 1993.
(d) The Preliminary Prospectus dated September 26, 1997 (the
"Preliminary Prospectus") relating to the issuance of the
Securities, which forms part of the Registration Statement;
(e) Certified resolutions of the Board of Directors of the
Company (i) relating to the Company's organization and to
the Board's authorization of the filing of the Registration
Statement;
(f) Short-form good standing certificates for the Company
dated a recent date issued by the Department;
(g) A Certificate of Secretary (the "Secretary's Certificate")
of the Company, dated the date hereof, as to certain factual
matters; and
(h) Such other documents as we have considered necessary to
the rendering of the opinions expressed below.
In our examination of the aforesaid documents, we have assumed, without
independent investigation, the genuineness of all signatures, the legal
capacity of all individuals who have executed any of the aforesaid
documents, the authenticity of all documents submitted to us as originals,
<PAGE>
JP Realty, Inc. PIPER & MARBURY
Price Development Company, Limited Partnership L.L.P.
November 10, 1997
Page 3
the conformity with originals of all documents submitted to us as copies
(and the authenticity of the originals of such copies), and that all public
records reviewed are accurate and complete. In making our examination of
documents executed by parties other than the Company, we have assumed that
such parties had the power, corporate or other, to enter into and perform
all obligations thereunder, and we have also assumed the due authorization
by all requisite action, corporate or other, and the valid execution and
delivery by such parties of such documents and the validity, binding effect
and enforceability thereof with respect to such parties. As to any facts
material to this opinion which we did not independently establish or
verify, we have relied solely upon the Secretary's Certificate.
We further assume that:
(a) The issuance, sale, amount, and terms of the Securities to be
offered from time to time by the Company will be authorized and determined
by proper action of the Board of Directors of the Company (each, a "Board
Action") in accordance with the Company's Charter and By-Laws and
applicable Maryland law, in each case so as not to result in a default
under or breach of any agreement or instrument binding upon the Company and
so as to comply with any requirement or restriction imposed by any court or
governmental or regulatory body having jurisdiction over the Company.
(b) Prior to the issuance of any shares of the Common Stock or the
Preferred Stock or of any of the Warrants, there will exist, under the
Charter of the Company, the requisite number of authorized but unissued
shares of the Common Stock or the Preferred Stock (and securities of any
class into which any Preferred Stock may be convertible), as the case may
be, and that all actions necessary to the creation of any such Preferred
Stock (and securities of any class into which any Preferred Stock may be
convertible), whether by Charter amendment or by classification or
reclassification of existing capital stock and the filing of Articles
Supplementary, will have been taken.
(c) Appropriate certificates representing shares of the Common Stock
or the Preferred Stock will be executed and delivered upon issuance and
sale of any shares of the Common Stock or the Preferred Stock, as the case
may be, and will comply with the Company's Charter and By-Laws and all
applicable requirements of Maryland law.
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JP Realty, Inc. PIPER & MARBURY
Price Development Company, Limited Partnership L.L.P.
November 10, 1997
Page 4
(d) Any Warrants will be issued under a valid and legally binding warrant
agreement (a "Warrant Agreement") that conforms to the description thereof
set forth in the Prospectus Supplement, and will comply with the Company's
Charter and By-Laws and all applicable requirements of Maryland law.
(e) Any Depositary Shares will be issued under a valid and legally binding
deposit agreement (each, a "Deposit Agreement") that conforms to the
description thereof set forth in the Prospectus Supplement, and will comply
with the Company's Charter and By-Laws and all applicable requirements of
Maryland law.
(f) Appropriate Depositary Receipts representing the Depositary
Shares will be executed and delivered upon issuance and sale of any
Depositary Shares and will comply with the Company's Charter and By-Laws,
the Deposit Agreement, and all applicable requirements of law.
(g) The issuance, sale, amount, and terms of the Debt Securities to be
offered from time to time by the Operating Partnership will be authorized
and determined by proper action of the Board of Directors of the Company,
the sole general partner of the Operating Partnership, (each, a
"Partnership Action") in accordance with the Partnership Agreement, the
Charter and By-Laws of the Company, and applicable Maryland law, in each
case so as not to result in a default under or breach of any agreement or
instrument binding upon the Operating Partnership or the Company and so as
to comply with any requirement or restriction imposed by any court or
governmental or regulatory body having jurisdiction over the Operating
Partnership and the Company.
(h) Any Debt Securities will be issued under a valid and legally binding
indenture (an "Indenture") that conforms to the description thereof set
forth in the Prospectus Supplement and will comply with the Partnership
Agreement and applicable Maryland law.
(i) Appropriate debentures, notes, and/or other evidences of indebtedness
evidencing the Debt Securities will be executed and authenticated in
accordance with the Indenture, will be delivered upon the issuance and sale
of the Debt Securities, and will comply with the Indenture, the Partnership
Agreement, and applicable Maryland law.
<PAGE>
JP Realty, Inc. PIPER & MARBURY
Price Development Company, Limited Partnership L.L.P.
November 10, 1997
Page 5
(j) Any Guarantees will be evidenced by a valid and legally binding
agreement or other instrument (each, a "Guaranty Agreement") that conforms
to the description thereof set forth in the Prospectus Supplement, will be
executed and delivered upon the issuance and sale of the Guarantees and the
related Debt Securities, and will comply with the Indenture, the Charter
and By-Laws of the Company, and applicable Maryland law.
(k) The underwriting agreements for offerings of the Common Stock, the
Warrants, the Preferred Stock, the Debt Securities, and the Guarantees
(each, an "Underwriting Agreement," and collectively, the "Underwriting
Agreements") will be valid and legally binding contracts that conform to
the description thereof set forth in the applicable Prospectus Supplement.
(l) To the extent that the obligations of the Company under any Warrant
Agreement may be dependent upon such matters, the financial institution to
be identified in such Warrant Agreement as warrant agent (the "Warrant
Agent") will be duly organized, validly existing, and in good standing
under the laws of its jurisdiction of organization; the Warrant Agent will
be duly qualified to engage in the activities contemplated by such Warrant
Agreement; such Warrant Agreement will have been duly authorized, executed,
and delivered by the Warrant Agent and will constitute the legally valid
and binding obligation of the Warrant Agent enforceable against the Warrant
Agent in accordance with its terms; the Warrant Agent will be in
compliance, generally, with respect to acting as Warrant Agent under such
Warrant Agreement, with all applicable laws and regulations; and the
Warrant Agent will have the requisite organizational and legal power and
authority to perform its obligations under such Warrant Agreement.
(m) To the extent that the obligations of the Company under any Deposit
Agreement may be dependent upon such matters, the financial institution to
be identified in such Deposit Agreement as depositary (the "Depositary")
will be duly organized, validly existing, and in good standing under the
laws of its jurisdiction of organization; the Depositary will be duly
qualified to engage in the activities contemplated by such Deposit
Agreement; such Deposit Agreement will have been duly authorized, executed,
and delivered by the Depositary and will constitute the legally valid and
binding obligation of the Depositary enforceable against the Depositary in
accordance with its terms; the Depositary will be in compliance, generally,
<PAGE>
JP Realty, Inc. PIPER & MARBURY
Price Development Company, Limited Partnership L.L.P.
November 10, 1997
Page 6
with respect to acting as Depositary under such Deposit Agreement, with all
applicable laws and regulations; and the Depositary will have the requisite
organizational and legal power and authority to perform its obligations
under such Deposit Agreement.
(n) To the extent that the obligations of the Operating Partnership under
any Debt Securities or related Indenture or of the Company under any
Guaranty Agreement may be dependent upon such matters, the financial
institution to be identified in such Indenture as Trustee (the "Trustee")
will be duly organized, validly existing, and in good standing under the
laws of its jurisdiction of organization; the Trustee will be duly
qualified to engage in the activities contemplated by such Indenture; such
Indenture will have been duly authorized, executed, and delivered by the
Trustee and will constitute the legally valid and binding obligation of the
Trustee enforceable against the Trustee in accordance with its terms; the
Trustee will be in compliance, generally, with respect to acting as Trustee
under such Indenture, with all applicable laws and regulations; and the
Trustee will have the requisite organizational and legal power and
authority to perform its obligations under such Indenture.
Based upon and subject to the foregoing, we are of the opinion and advise
you that, as of the date hereof:
1. Upon due authorization by Board Action of an issuance of Common Stock,
and upon issuance and delivery of certificates for shares of such Common
Stock against payment therefor in accordance with the terms and provisions
of such Board Action, the Registration Statement (as declared effective
under the Act), the Prospectus or the applicable Prospectus Supplement and,
if applicable, an Underwriting Agreement, or upon issuance and delivery of
certificates for shares of such Common Stock pursuant to the exercise of
one or more Warrants, the shares of Common Stock represented by such
certificates will be duly authorized, validly issued, fully paid, and non-
assessable.
2. When the Warrants have been duly authorized and established in
accordance with the applicable Board Action, the terms of the Company's
Charter and By-Laws, and applicable Maryland law, and, upon execution,
issuance, and delivery of the Warrant Agreements against payment therefor
in accordance with the terms and provisions of such Board Action, the
<PAGE>
JP Realty, Inc. PIPER & MARBURY
Price Development Company, Limited Partnership L.L.P.
November 10, 1997
Page 7
Warrant Agreement, the Registration Statement (as declared effective under
the Act), the Prospectus, or the applicable Prospectus Supplement and, if
applicable, an Underwriting Agreement, the Warrant Agreements will
constitute valid and legally binding obligations of the Company.
3. When a series of the Preferred Stock (and securities of any class into
which any Preferred Stock may be convertible) has been duly authorized and
established in accordance with the applicable Board Action, the terms of
the Company's Charter and By-Laws, and applicable Maryland law, and, upon
issuance and delivery of certificates for shares of such series of the
Preferred Stock against payment therefor in accordance with the terms and
provisions of such Board Action, the Registration Statement (as declared
effective under the Act), the Prospectus or the applicable Prospectus
Supplement and, if applicable, an Underwriting Agreement, the shares of the
Preferred Stock represented by such certificates will be duly authorized,
validly issued, fully paid, and non-assessable.
4. When the Depositary Shares have been duly authorized and established in
accordance with the applicable Board Action, the terms of the Company's
Charter and By-Laws, and applicable law and, upon execution, issuance, and
delivery of the Depositary Shares against payment therefor in accordance
with the terms and provisions of such Board Action, the Deposit Agreement,
the Registration Statement (as declared effective under the Act), the
Prospectus, or the applicable Prospectus Supplement and, if applicable, an
Underwriting Agreement (and upon the taking of the action contemplated in
paragraph 2 above with respect to the underlying Preferred Stock), the
Depositary Shares will constitute valid and legally binding obligations of
the Company.
5. When a series of the Debt Securities has been duly authorized and
established in accordance with the applicable Partnership Action, the terms
of the Indenture, the Partnership Agreement, and applicable Maryland law,
and, upon execution, issuance, and delivery of debentures, notes, and/or
other evidences of indebtedness for such series of the Debt Securities
against payment therefor in accordance with the terms and provisions of
such Partnership Action, the Indenture, the Registration Statement (as
declared effective under the Act), the Prospectus, or the applicable
Prospectus Supplement and, if applicable, an Underwriting Agreement, the
<PAGE>
JP Realty, Inc. PIPER & MARBURY
Price Development Company, Limited Partnership L.L.P.
November 10, 1997
Page 8
Debt Securities will constitute valid and legally binding obligations of
the Operating Partnership.
6. When a series of the Debt Securities has been duly authorized and
established in accordance with the applicable Partnership Action, the terms
of the Indenture, the Partnership Agreement, and applicable Maryland law,
when the related Guarantees has been duly authorized and established in
accordance with the applicable Board Action, the terms of the Indenture,
the Company's Charter and By-Laws, and applicable Maryland law and, upon
execution, issuance, and delivery of the Guaranty Agreements against
payment therefor in accordance with the terms and provisions of such Board
Action, the Indenture, the Registration Statement (as declared effective
under the Act), the Prospectus, or the applicable Prospectus Supplement
and, if applicable, an Underwriting Agreement, the Guarantees will
constitute valid and legally binding obligations of the Company.
The opinion stated herein relating to the validity and binding nature of
obligations of the Company or the Operating Partnership is subject to (i)
the effect of any applicable bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium, or similar laws affecting creditors' rights generally and (ii)
the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
The opinion expressed above is limited to the laws of the State of
Maryland, exclusive of the securities or "blue sky" laws of the State of
Maryland. The foregoing opinion is rendered as of the date hereof. We
assume no obligation to update such opinion to reflect any facts or
circumstances which may hereafter come to our attention or changes in the
law which may hereafter occur. To the extent that any documents referred
to herein are governed by the law of a jurisdiction other than Maryland, we
have assumed that the laws of such jurisdiction are the same as the law of
Maryland.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.2 to the Registration Statement and to the reference to our firm
under the heading "Legal Matters" in the Registration Statement. We
further consent to the reliance on this opinion by Rogers & Wells, in
rendering their opinion to the Company and the Operating Partnership in
connection with the filing of the Registration Statement. The opinion
expressed above is limited to the matters set forth herein, and no other
opinion should be inferred beyond the matters expressly stated.
<PAGE>
JP Realty, Inc. PIPER & MARBURY
Price Development Company, Limited Partnership L.L.P.
November 10, 1997
Page 9
Very truly yours,
/s/ Piper & Marbury L.L.P.
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
__________________________________
We hereby consent to the use in the Prospectus constituting
part of this Registration Statement on Form S-3 of our report
dated January 29, 1997, relating to the consolidated financial
statements of Price Development Company, Limited Partnership,
which appears in such Prospectus. We also consent to the
incorporation by reference in the Prospectus constituting part
of this Registration Statement on Form S-3 of our report dated
January 29, 1997 appearing on page F-2 of JP Realty's Annual
Report on Form 10-K for the year ended December 31, 1996.
We also consent to the incorporation by reference of our
report dated July 1, 1997, which appears on page F-2 of the Current
Report on Form 8-K dated June 30, 1997. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/S/ PRICE WATERHOUSE LLP
- ------------------------
PRICE WATERHOUSE LLP
Salt Lake City, Utah
November 7, 1997
