<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1996
REGISTRATION NO. 333-3344
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SUSA PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TENNESSEE 62-1554135
(State or other jurisdiction (I.R.S. Employer
of Identification
incorporation or organization) No.)
</TABLE>
10440 LITTLE PATUXENT PARKWAY, SUITE 1100
COLUMBIA, MARYLAND 21044
(410) 730-9500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
MR. DEAN JERNIGAN
10440 LITTLE PATUXENT PARKWAY, SUITE 1100
COLUMBIA, MARYLAND 21044
(410) 730-9500
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPY TO:
RANDALL S. PARKS
HUNTON & WILLIAMS
RIVERFRONT PLAZA, EAST TOWER
951 E. BYRD STREET
RICHMOND, VIRGINIA 23219-4074
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
IN LIGHT OF MARKET CONDITIONS AND OTHER FACTORS.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering." / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering." / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box." / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 27, 1996
PROSPECTUS
$250,000,000
SUSA PARTNERSHIP, L.P.
DEBT SECURITIES
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SUSA Partnership, L.P. (the "Partnership"), may from time to time offer in
one or more series unsecured, non-convertible debt securities ("Debt
Securities") having an aggregate initial public offering price not to exceed
$250,000,000, on terms to be determined at the time of offering. The Debt
Securities may be offered by the Partnership in separate series, in amounts, at
prices and on terms to be determined at the time of sale and to be set forth in
a supplement to this Prospectus (a "Prospectus Supplement").
The Debt Securities will be effectively subordinated to any secured
indebtedness of the Partnership. At March 31, 1996, the Partnership had $6.6
million in secured indebtedness outstanding. The Debt Securities will rank in
pari passu with all other unsecured and unsubordinated indebtedness of the
Partnership. Subject to certain limitations set forth in the indenture regarding
the Debt Securities, the Operating Partnership may incur additional secured or
unsecured indebtedness. See "Description of Debt Securities -- Certain Covenants
- -- Limitations on Incurrence of Indebtedness." Except as described under
"Description of Debt Securities -- Merger, Consolidation or Sale" or
"Description of Debt Securities -- Certain Covenants" or as may be set forth in
any Prospectus Supplement, the applicable indenture will not contain any
provisions that would limit the ability of the Partnership to incur indebtedness
or that would afford holders of the Debt Securities protection in the event of a
significant transaction involving the Partnership that may adversely affect the
holders of the Debt Securities.
The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include the specific title, aggregate principal amount, form
(which may be certificated or global), authorized denominations, maturity, rate
(or manner of calculation thereof) and time of payment of interest, terms for
redemption at the option of the Partnership or repayment at the option of the
holder, terms for sinking fund payments, covenants, and any initial public
offering price. The applicable Prospectus Supplement will also contain
information, where applicable, concerning material United States federal income
tax considerations relating to, and any listing on a securities exchange of, the
Debt Securities covered thereby.
The Debt Securities may be offered directly, through agents designated from
time to time by the Partnership, or to or through underwriters or dealers. If
any designated agents or any underwriters are involved in the sale of Debt
Securities, they will be identified and their compensation will be described in
the applicable Prospectus Supplement. See "Plan of Distribution." No Debt
Securities may be sold without delivery of the applicable Prospectus Supplement
describing such Debt Securities and the method and terms of the offering
thereof.
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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.
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THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN REGISTERED
SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS.
The date of this Prospectus is , 1996.
<PAGE>
AVAILABLE INFORMATION
The Partnership and its general partner, Storage USA, Inc. (the "Company"),
are subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in accordance therewith, the
Partnership will file reports and other information with the Securities and
Exchange Commission (the "Commission") and the Company files reports, proxy
statements and other information with the Commission. Information for the
Partnership is substantially identical to that for the Company. The reports,
proxy statements and other information filed by the Partnership and the Company
with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its Regional Offices at Suite 1400, Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661 and Suite 1300,
7 World Trade Center, New York, New York 10048, and can also be inspected and
copied at the offices of the New York Stock Exchange, 20 Broad Street, New York,
New York 10005. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the prescribed fees. In the case of the Company, such
materials can also be inspected at the office of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
This Prospectus is part of a registration statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") filed
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules of the Commission. For further information, reference
is made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 001-12910) with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
(i) Annual Report on Form 10-K, as amended, for the year ended December
31, 1995;
(ii) Quarterly Report on Form 10-Q, as amended, for the quarter ended
March 31, 1996;
(iii) Current Reports on Form 8-K filed on March 7, April 1, April 5 and
June 21, 1996; and
(iv) the 1996 Annual Meeting Proxy Statement filed on April 5, 1996
(excluding information under the headings "Report of the Compensation
Committee on Executive Compensation" and "Performance Graph".
All documents filed by the Partnership and the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the offering of all of the Debt Securities shall be deemed to
be incorporated by reference herein.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
in any accompanying Prospectus Supplement relating to a specific offering of
Debt Securities or in any other subsequently filed document, as the case may be,
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 or any accompanying Prospectus Supplement.
The Partnership will provide on request and without charge to each person to
whom this Prospectus is delivered a copy (without exhibits) of any or all
documents incorporated by reference into this Prospectus. Requests for such
copies should be directed to SUSA Partnership, L.P., 10440 Little Patuxent
Parkway, Suite 1100, Columbia, Maryland 21044, Attention: Storage USA, Inc.,
Secretary (telephone (410) 730-9500).
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THE PARTNERSHIP
The Partnership is managed by its general partner, Storage USA, Inc. The
Company is a self-managed, self-advised real estate investment trust ("REIT")
engaged in the business of owning, managing, acquiring and developing
self-storage facilities. The Company operates through the Partnership, in which
it owns approximately a 95% interest and through SUSA Management, Inc., which
provides self-storage management and ancillary services to the Partnership and
in which the Partnership owns a 99% economic interest. The description of
business, property information, policies with respect to certain activities and
management information for the Partnership are substantially identical to that
of the Company. Such information may be found in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, as amended, and in the Company's
1996 Annual Meeting Proxy Statement filed April 5, 1996. At March 31, 1996, the
Partnership owned 166 facilities containing 11.1 million net rentable square
feet in 24 states and the District of Columbia and managed for others 29
facilities containing an additional 1.8 million net rentable square feet.
Average physical and economic occupancy for the facilities owned by the
Partnership at March 31, 1996, were 88% and 81%, respectively. Average weighted
annual rent per square foot for these facilities was $9.40.
The Partnership is a Tennessee limited partnership and the Company is a
Tennessee corporation. Their executive offices are located at 10440 Little
Patuxent Parkway, Suite 1100, Columbia, Maryland 21044 and their telephone
number is (410) 730-9500.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the net
proceeds from the sale of any Debt Securities will be used by the Partnership
for general partnership purposes, which may include repayment of indebtedness,
making improvements to properties and the acquisition and development of
additional properties.
RATIOS OF EARNINGS TO FIXED CHARGES
The Partnership's ratio of earnings to fixed charges for the quarter ended
March 31, 1996 was 5.43 and for the year ended December 31, 1995, was 7.73. For
the period January 1, 1994, through March 23, 1994, fixed charges exceeded
earnings by $165,000. The Partnership's ratio of earnings to fixed charges for
the period March 24, 1994, to December 31, 1994 was 9.16 and the Partnership's
pro forma ratio of earnings to fixed charges for the year ended December 31,
1994, was 8.63. The pro forma results of operations from which the ratio of
earnings to fixed charges for 1994 is calculated reflect the Partnership's
annual results of operations and assume that the Company's initial public
offering and related transactions, including the contribution of the net
proceeds from such offering to the Partnership, were completed on January 1,
1994. The Partnership's ratio of earnings to fixed charges for the years ended
December 31, 1993 was 1.10. For the years ended December 31, 1992 and 1991,
respectively, fixed charges exceeded earnings by $3.0 and $4.2 million.
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For purposes of computing these ratios, earnings consist of
income before extraordinary items plus fixed charges other than capitalized
interest, and fixed charges consist of interest on borrowed funds (including
capitalized interest) and amortization of debt discount and expense. To date,
the Partnership has not issued any preferred interests in the Partnership;
therefore, the ratios of earnings to combined fixed charges and preferred share
dividends are identical.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities being offered and the extent to which
such general provisions may apply will be described in a Prospectus Supplement
relating to such Debt Securities.
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<PAGE>
The Debt Securities will be issued under an indenture to be dated as of
, 1996, as amended or supplemented from time to time (the
"Indenture"), between the Partnership and The First National Bank of Chicago, as
trustee (the "Trustee"). The Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and is available for
inspection at the corporate trust services office of the Trustee at One First
National Plaza -- Suite 0126, Chicago, Illinois 60670 or as described above
under "Available Information." The Indenture is subject to, and governed by, the
Trust Indenture Act of 1939, as amended (the "TIA"). The statements made
hereunder relating to the Indenture and the Debt Securities to be issued
thereunder are summaries of certain provisions thereof and do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all provisions of the Indenture and such Debt Securities. Capitalized terms
used but not defined herein shall have the respective meanings set forth in the
Indenture.
Wherever particular Sections or defined terms of the Indenture are referred
to herein or in a Prospectus Supplement, such Sections or defined terms are
incorporated by reference herein or therein, as the case may be.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Partnership
and will rank in pari passu with all other unsecured and unsubordinated
indebtedness of the Partnership. The Debt Securities will be effectively
subordinated to any secured indebtedness of the Partnership. At March 31, 1996,
the Partnership had $6.6 million in secured indebtedness outstanding. 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 as
sole general partner of the Partnership or as established in the Indenture 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, a
series may be reopened, without the consent of the holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series (Section 301).
The Indenture provides that there may be 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 (Section 610). In the event that two or more persons are acting as
Trustee with respect to different series of Debt Securities, each such trustee
shall be a Trustee of a trust under the applicable Indenture separate and apart
from the trust administered by any other Trustee (Section 609), and, except as
otherwise indicated herein, any action described herein to be taken by a Trustee
may be taken by each such Trustee with respect to, and only with respect to, the
one or more series of Debt Securities for which it is Trustee under the
applicable Indenture.
The applicable Prospectus Supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe the
following terms of such Debt Securities: (1) the title of such Debt Securities;
(2) any limit on the aggregate principal amount of such Debt Securities or the
series of which they are a part; (3) the Person to whom any interest on a Debt
Security shall be payable, if other than the Person in whose name the Debt
Security is registered; (4) the date or dates on which the principal of any of
such Debt Securities will be payable; (5) the rate or rates at which any of such
Debt Securities will bear interest, if any, the date or dates from which any
such interest will accrue, the Interest Payment Dates on which any such interest
will be payable and the Regular Record Date for any such interest payable on any
Interest Payment Date; (6) the place or places where the principal of and any
premium and interest on any of such Debt Securities will be payable; (7) the
period or periods within which, the price or prices at which and the terms and
conditions on which any of such Debt Securities may be redeemed, in whole or in
part, at the option of the Partnership; (8) the obligation, if any, of the
Partnership to redeem or purchase any of such Debt Securities pursuant to any
sinking fund or analogous provision or at the option of the Holder thereof, and
the period or periods within which, the price or prices at which, and the terms
and conditions on
4
<PAGE>
which any of such Debt Securities will be redeemed or purchased, in whole or in
part, pursuant to any such obligation; (9) the denominations in which any of
such Debt Securities will be issuable, if other than denominations of $1,000 and
any integral multiple thereof; (10) if the amount of principal of or any premium
or interest on any of such Debt Securities may be determined with reference to
an index or pursuant to a formula, the manner in which such amounts will be
determined; (11) if other than the entire principal amount thereof, the portion
of the principal amount of any of such Debt Securities which will be payable
upon declaration of acceleration of the Maturity thereof; (12) if the principal
amount payable at the Stated Maturity of any of such Debt Securities will not be
determinable as of any one or more dates prior to the Stated Maturity, the
amount which will be deemed to be such principal amount as of any such date for
any purpose, including the principal amount thereof which will be due and
payable upon any Maturity other than the Stated Maturity or which will be deemed
to be Outstanding as of any such date (or, in any such case, the manner in which
such deemed principal amount is to be determined); (13) if applicable, that such
Debt Securities, in whole or any specified part, are defeasible pursuant to the
provisions of the Indenture described under "-- Defeasance and Covenant
Defeasance -- Defeasance and Discharge" or "-- Defeasance and Covenant
Defeasance -- Covenant Defeasance", or under both such captions; (14) whether
any of such Debt Securities will be issuable in whole or in part in the form of
one or more Global Debt Securities and, if so, the respective Depositaries for
such Global Debt Securities, the form of any legend or legends to be borne by
any such Global Debt Security in addition to or in lieu of the legend referred
to under "-- Form, Exchange and Transfer -- Global Debt Securities" and, if
different from those described under such caption, any circumstances under which
any such Global Debt Security may be exchanged in whole or in part for Debt
Securities registered, and any transfer of such Global Debt Security in whole or
in part may be registered, in the names of Persons other than the Depositary for
such Global Debt Security or its nominee; (15) any addition to or change in the
Events of Default applicable to any of such Debt Securities and any change in
the right of the Trustee or the Holders thereof to declare the principal amount
of any of such Debt Securities due and payable; (16) any addition to or change
in the covenants in the Indenture described under "-- Certain Covenants"
applicable to any of such Debt Securities; and (17) any other terms of such Debt
Securities not inconsistent with the provisions of the Indenture. (Section 301)
Debt Securities, including Original Issue Discount Debt Securities, may be
sold at a substantial discount below their principal amount. Certain special
United States federal income tax considerations (if any) applicable to Debt
Securities sold at an original issue discount may be described in the applicable
Prospectus Supplement.
Except as described under "-- Merger, Consolidation or Sale" or "-- Certain
Covenants" or as may be set forth in any Prospectus Supplement, the Indenture
does not contain any provisions that would limit the ability of the 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 Partnership, the management of the Partnership, or any affiliate
of any such party, (ii) a change of control or (iii) a reorganization,
restructuring, merger or similar transaction involving the 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 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
Partnership, that would increase the amount of the Partnership's indebtedness or
substantially reduce or eliminate the Partnership's assets, which may have an
adverse effect on the Partnership's ability to service its indebtedness,
including the Debt Securities. However, restrictions on ownership and transfers
of the Company's Common Stock designed to preserve its status as a REIT may act
to prevent or hinder a change of control. 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 provision
providing event risk or similar protection.
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DENOMINATIONS, REGISTRATION AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form, without coupons, and, unless otherwise specified in the applicable
Prospectus Supplement, only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Debt Securities, Debt Securities of each series
will be exchangeable for other Debt Securities of the same series of any
authorized denomination and of a like tenor and aggregate principal amount.
(Section 305)
Subject to the terms of the Indenture and the limitations applicable to
Global Debt Securities, Debt Securities may be presented for exchange as
provided above or for registration of transfer (duly endorsed or with the form
of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Partnership
for such purpose. No service charge will be made for any registration of
transfer or exchange of Debt Securities, but the Partnership may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. Such transfer or exchange will be effected upon the
Security Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request. The
Partnership has appointed the Trustee as Security Registrar. Any transfer agent
(in addition to the Security Registrar) initially designated by the Partnership
for any Debt Securities will be named in the applicable Prospectus Supplement.
(Section 305) The Partnership may at any time designate additional transfer
agents or rescind the designation of any transfer agent or approve a change in
the office through which any transfer agent acts, except that the Partnership
will be required to maintain a transfer agent in each Place of Payment for the
Debt Securities of each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified terms)
are to be redeemed in part, the Partnership will not be required to (i) issue,
register the transfer of or exchange any Debt Security of that series (or of
that series and specified terms, as the case may be) during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security that may be selected for redemption and
ending at the close of business on the day of such mailing, (ii) register the
transfer of or exchange any Debt Security so selected for redemption, in whole
or in part, except the unredeemed portion of any such Debt Security being
redeemed in part or (iii) to issue, register the transfer of or exchange any
Debt Security that has been surrendered for payment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid. (Section
305)
GLOBAL DEBT SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Debt Securities which will have an
aggregate principal amount equal to that of the Debt Securities represented
thereby. Each Global Debt Security will be registered in the name of a
Depositary or a nominee thereof identified in the applicable Prospectus
Supplement, will be deposited with such Depositary or nominee or a custodian
therefor and will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof referred to below and any such other matters as
may be provided for pursuant to the Indenture. (Section 305)
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Debt Security may be exchanged in whole or in part
for Debt Securities registered, and no transfer of a Global Debt Security in
whole or in part may be registered, in the name of any Person other than the
Depositary for such Global Debt Security or any nominee of such Depositary
unless (i) the Depositary has notified the Partnership that it is unwilling or
unable to continue as Depositary for such Global Debt Security or has ceased to
be qualified to act as such as required by the Indenture, (ii) there shall have
occurred and be continuing an Event of Default with respect to the Debt
Securities represented by such Global Debt Security or (iii) there shall exist
such circumstances, if any, in addition to or in
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lieu of those described above as may be described in the applicable Prospectus
Supplement (Section 305). All securities issued in exchange for a Global Debt
Security or any portion thereof will be registered in such names as the
Depositary may direct. (Sections 204 and 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Debt Security, the Depositary or such nominee, as the case may be, will
be considered the sole owner and Holder of such Global Debt Security and the
Debt Securities represented thereby for all purposes under the Debt Securities
and the Indenture (Section 308). Except in the limited circumstances referred to
above, owners of beneficial interests in a Global Debt Security will not be
entitled to have such Global Debt Security or any Debt Securities represented
thereby registered in their names, will not receive or be entitled to receive
physical delivery of certificated Debt Securities in exchange therefor and will
not be considered to be the owners or Holders of such Global Debt Security or
any Debt Securities represented thereby for any purpose under the Debt
Securities or the Indenture. All payments of principal of and any premium and
interest on a Global Debt Security will be made to the Depositary or its
nominee, as the case may be, as the Holder thereof. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a Global Debt Security.
Ownership of beneficial interests in a Global Debt Security will be limited
to institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Debt Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global Debt
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Debt Security will be shown only on, and the transfer of those
ownership interests will be effected only through, records maintained by the
Depositary (with respect to participants' interests) or any such participant
(with respect to interests of persons held by such participants on their
behalf). Payments, transfers, exchanges and others matters relating to
beneficial interests in a Global Debt Security may be subject to various
policies and procedures adopted by the Depositary from time to time. None of the
Partnership, the Trustee or any agent of the Partnership or the Trustee will
have any responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Debt Security, or for maintaining, supervising
or reviewing any records relating to such beneficial interests.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Debt Security, in some cases, may trade in the Depositary's same-day
funds settlement system, in which secondary market trading activity in those
beneficial interests would be required by the Depositary to settle in
immediately available funds. The Partnership cannot predict the effect, if any,
that settlement in immediately available funds would have on trading activity in
such beneficial interests. Also, settlement for purchases of beneficial
interests in a Global Debt Security upon the original issuance thereof may be
required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as
the Partnership may designate for such purpose from time to time, except that at
the option of the Partnership payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears in
the Security Register. Unless otherwise indicated in the applicable Prospectus
Supplement, the corporate trust office of the Trustee
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in the City of New York will be designated as the Partnership's sole Paying
Agent for payments with respect to Debt Securities of each series. Any other
Paying Agents initially designated by the Partnership for the Debt Securities of
a particular series will be named in the applicable Prospectus Supplement. The
Partnership may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts, except that the Partnership will be required to maintain
a Paying Agent in each Place of Payment for the Debt Securities of a particular
series. (Section 1002)
All moneys paid by the Partnership to a Paying Agent for the payment of the
principal of, or any premium or interest on, any Debt Security that remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Partnership, and the Holder of such
Debt Security thereafter may look only to the Partnership for payment thereof.
(Section 1003)
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 applicable
supplement (Section 307).
MERGER, CONSOLIDATION OR SALE
The Partnership may not consolidate with or merge into, or convey, transfer
or lease its properties and assets substantially as an entirety to, any Person
(a "successor Person"), and may not permit any Person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to, the
Partnership, UNLESS (i) the successor Person (if any) is a corporation,
partnership or trust organized and validly existing under the laws of any
domestic jurisdiction and assumes, by a supplemental indenture, the
Partnership's obligations on the Debt Securities and under the Indenture, (ii)
immediately after giving effect to the transaction, and treating any
indebtedness which becomes an obligation of the Partnership or any Subsidiary as
a result of the transaction as having been incurred by it at the time of the
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing and (iii) certain other conditions are met. (Section 801)
CERTAIN COVENANTS
EXISTENCE. Except as permitted under "-- Merger, Consolidation or Sale,"
the 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 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 (Section 1005).
MAINTENANCE OF PROPERTIES. The Partnership will be required to cause all
properties used or useful in the conduct of its business or the business of any
subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and to cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Partnership may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times; provided, however, that the Partnership shall not be prevented from
discontinuing the operation or maintenance of any of its properties if such
discontinuance is, in the judgment of the Partnership, desirable in the conduct
of its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders. (Section 1006).
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INSURANCE. The Partnership will be required to, and to cause each of its
subsidiaries to, keep all of its insurable properties insured against loss or
damage with insurers of recognized responsibility in commercially reasonable
amounts and types (Section 1008).
PAYMENT OF TAXES AND OTHER CLAIMS. The Partnership will be required to pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Partnership or any subsidiary or upon the income, profits or
property of the 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 Partnership or any subsidiary; provided, however, that the
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.
(Section 1007).
PROVISION OF FINANCIAL INFORMATION. Whether or not the Partnership is
subject to Section 13 or Section 15(d) of the Exchange Act and for so long as
any Debt Securities are outstanding, the Partnership will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Partnership would have been
required to file with the Commission pursuant to such Section 13 or Section
15(d) (the "Financial Statements") if the Partnership 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 Partnership would have been required
so to file such documents if the Partnership were so subject. The Partnership
will also in any event (x) within 15 days of each Required Filing Date (i)
transmit by mail to all holders of Debt Securities whose names appear in the
security register for such Debt Securities (the "Holders"), as their names and
addresses appear in the security register for such Debt Securities, without cost
to such Holders, copies of the annual reports and quarterly reports which the
Partnership would have been required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act if the Partnership were subject
to such Sections and (ii) file with any Trustee copies of the annual reports,
quarterly reports and other documents which the Partnership would have been
required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act if the Partnership were subject to such Sections and (y) if
filing such documents by the Partnership 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 1010).
LIMITATIONS ON INCURRENCE OF INDEBTEDNESS. The Partnership will not, and
will not permit any Subsidiary to, incur any Indebtedness (as defined below),
other than inter-company debt representing Indebtedness to which the only
parties are the Company, the Partnership and any of their Subsidiaries (but only
so long as such Indebtedness is held solely by any of the Company, the
Partnership and any Subsidiary) that is subordinate in right of payment to
Outstanding Debt Securities if, immediately after giving effect to the
incurrence of such additional Indebtedness, the aggregate principal amount of
all outstanding Indebtedness of the Partnership and its Subsidiaries on a
consolidated basis is greater than 60% of the sum of (i) Total Assets (as
defined below) as of the end of the calendar quarter covered in the
Partnership's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as
the case may be, most recently filed with the Trustee (or such reports of the
Company if filed by the Partnership with the Trustee in lieu of filing its own
reports) prior to the incurrence of such additional Indebtedness and (ii) the
increase in Total Assets from the end of such quarter including, without
limitation, any increase in Total Assets resulting from the incurrence of such
additional Indebtedness (such increase, together with the Total Assets, is
referred to as "Adjusted Total Assets"). (Section 1009)
In addition to the foregoing limitation on the incurrence of Indebtedness,
the Partnership will not, and will not permit any Subsidiary to, incur any
Indebtedness if the ratio of Consolidated Income Available for Debt Service to
the Annual Service Charge (in each case as defined below) for the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Indebtedness is to be incurred shall have been less than 1.5 to 1, on
a pro forma basis, after giving effect to the
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incurrence of such Indebtedness and to the application of the proceeds therefrom
and calculated on the assumption that (i) such Indebtedness and any other
Indebtedness incurred by the Partnership or its Subsidiaries since the first day
of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the beginning of such
period, (ii) the repayment or retirement of any other Indebtedness by the
Partnership or its Subsidiaries since the first day of such four-quarter period
and had been incurred, repaid or retired at the beginning of such period (except
that, in making such computation, the amount of Indebtedness under any revolving
credit facility shall be computed based upon the average daily balance of such
Indebtedness during such period), (iii) the income earned on any increase in
Adjusted Total Assets since the end of such four-quarter period had been earned
on an annualized basis, during such period, and (iv) in the case of any
acquisition or disposition by the Partnership or any Subsidiary of any asset or
group of assets since the first day of such four-quarter period, including,
without limitation, by merger, stock purchase or sale, or asset purchase or
sale, such acquisition or disposition or any related repayment Indebtedness had
occurred as of the first day of such period with appropriate adjustments with
respect to such acquisition or disposition being included in such pro forma
calculation. (Section 1009)
For purposes of the foregoing provisions regarding the limitation on the
incurrence of Indebtedness, Indebtedness shall be deemed to be "incurred" by the
Partnership or a Subsidiary whenever the Partnership and its Subsidiary shall
create, assume, guarantee or otherwise become liable in respect thereof.
(Section 1009)
MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. For so long as there are
Outstanding any Debt Securities (other than Debt Securities that are not, by
their terms, entitled to the benefit of this covenant), the Partnership is
required to maintain Total Unencumbered Assets of not less than 150% of the
aggregate outstanding principal amount of all outstanding Unsecured
Indebtedness. (Section 1009)
As used herein:
"ANNUAL SERVICE CHARGE" as of any date means the maximum amount which is
payable in any 12-month period from such date for interest and required
amortization (including amounts payable to sinking funds or similar
arrangements for the retirement of debt which matures serially, but
excluding principal payable at final maturity of such debt) on Indebtedness
of the Partnership and its Subsidiaries.
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" for any period means
Consolidated Net Income plus amounts which have been deducted for (a)
interest on Indebtedness of the Partnership and its Subsidiaries, (b)
provision for taxes of the Partnership and its Subsidiaries based on income,
(c) amortization of Indebtedness discount, (d) provisions for gains and
losses on properties, (e) depreciation and amortization, (f) the effect of
any noncash charge resulting from a change in accounting principles in
determining Consolidated Net Income for such period, (g) amortization of
deferred charges and (h) the effect of net income (or loss) of joint
ventures in which the Partnership or any Subsidiary owns an interest to the
extent not providing a source of, or requiring a use of, cash, respectively.
"CONSOLIDATED NET INCOME" for any period means the amount of
consolidated net income (or loss) of the Partnership and its Subsidiaries
for such period determined on a consolidated basis in accordance with
generally accepted accounting principles.
"INDEBTEDNESS" of the Partnership or any Subsidiary means any
indebtedness of the Partnership or such Subsidiary, as applicable, whether
or not contingent, in respect of (i) borrowed money evidenced by bonds,
notes, debentures or similar instruments, (ii) indebtedness secured by a
mortgage, pledge, lien, charge, encumbrance of any security interest
existing on property owned by the Partnership or such Subsidiary, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued or amounts representing the balance
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that constitutes an accrued expense or trade payable or (iv) any lease of
property by the Partnership or such Subsidiary as lessee which is reflected
in the Partnership's consolidated balance sheet as a capitalized lease in
accordance with generally accepted accounting principles, in the case of
items of indebtedness under (i) through (iii) above to the extent that any
such items (other than letters of credit) would appear as a liability on the
Partnership's consolidated balance sheet in accordance with generally
accepted accounting principles, and also includes, to the extent not
otherwise included, any obligation by the Partnership or such 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 Partnership or any Subsidiary).
"SUBSIDIARY" means a corporation, partnership or limited liability
company more than 50% 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 Partnership or by one or more
other Subsidiaries, or by the Partnership and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means
stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such
voting power by reason of any contingency.
"TOTAL ASSETS" as of any date means the sum of (i) Undepreciated Real
Estate Assets and (ii) all other assets of the Partnership and its
Subsidiaries on a consolidated basis determined in accordance with generally
accepted accounting principles (but excluding intangibles and accounts
receivable).
"TOTAL UNENCUMBERED ASSETS" means the sum of (i) those Undepreciated
Real Estate Assets which have not been pledged, mortgaged or otherwise
encumbered by the owner thereof to secure Indebtedness, excluding
infrastructure assessment bonds and (ii) all other assets of the Partnership
and its Subsidiaries determined in accordance with generally accepted
accounting principles (but excluding intangibles and accounts receivable)
which have not been pledged, mortgaged or otherwise encumbered by the owner
thereof to secure Indebtedness.
"UNDEPRECIATED REAL ESTATE ASSETS" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the
Partnership and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with
generally accepted accounting principles.
"UNSECURED INDEBTEDNESS" means Indebtedness which is (i) not
subordinated to any other Indebtedness and (ii) not secured by any mortgage,
lien, charge, pledge, encumbrance or security interest of any kind upon any
of the properties of the Partnership or any Subsidiary.
ADDITIONAL COVENANTS. Any additional or different covenants of the
Partnership with respect to any series of Debt Securities will be set forth in
the applicable Prospectus Supplement.
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (a) failure to pay any
interest on any Debt Securities of that series when due, that has continued for
30 days; (b) failure to pay principal of or any premium on any Debt Security of
that series when due; (c) failure to deposit any sinking fund payment, when due,
in respect of any Debt Security of that series; (d) failure to perform any other
covenant of the Partnership in the Indenture (other than a covenant included in
the Indenture solely for the benefit of a series other than that series), that
has continued for 60 days after written notice has been given by the Trustee, or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Debt Securities of that series, as provided in the Indenture; (e) failure to pay
when due (subject to any applicable grace period) the principal of, or
acceleration of, any indebtedness for money borrowed by the Partnership, if, in
the case of any such failure, such indebtedness has not been discharged or, in
the case of any such acceleration, such indebtedness has not been discharged or
such acceleration has not been rescinded or annulled, in each case within 10
days after written notice has been given by the Trustee, or the
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Holders of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series, as provided in the Indenture, if the aggregate
outstanding principal amount of indebtedness under the instrument with respect
to which such default or acceleration has occurred exceeds $10 million; (f)
certain events of bankruptcy, insolvency or reorganization of the Partnership or
any Significant Subsidiary or any of their respective property; and (g) any
other event of default provided with respect to a particular series of Debt
Securities. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(f) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series by notice as provided in the Indenture may declare the principal
amount of the Debt Securities of that series (or, in the case of any Debt
Security that is an Original Issue Discount Debt Security or the principal
amount of which is not then determinable, such portion of the principal amount
of such Debt Security, or such other amount in lieu of such principal amount, as
may be specified in the terms of such Debt Security) to be due and payable
immediately. If an Event of Default described in clause (f) above with respect
to the Debt Securities of any series at the time Outstanding shall occur, the
principal amount of all the Debt Securities of that series (or, in the case of
any such Original Issue Discount Debt Security or other Debt Security, such
specified amount) will automatically, and without any action by the Trustee or
any Holder, become immediately due and payable. After any such acceleration, but
before a judgment or decree based on acceleration, the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of that series
may, under certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the non-payment of accelerated principal (or other
specified amount), have been cured or waived as provided in the Indenture.
(Section 502) For information as to waiver of defaults, see "-- Modification and
Waiver".
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (Section 603) Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of any
series will 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 Debt Securities of that
series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing Event
of Default with respect to the Debt Securities of that series, (ii) the Holders
of at least 25% in aggregate principal amount of the Outstanding Debt Securities
of that series have made written request, and such Holder or Holders have
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee and (iii) the Trustee has failed to institute such proceeding, and has
not received from the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of that series a direction inconsistent with such
request, within 60 days after such notice, request and offer. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal of or any premium
or interest on such Debt Security on or after the applicable due date specified
in such Debt Security. (Section 508)
Within 120 days after the close of each fiscal year, the Partnership will be
required to furnish to the Trustee a statement by certain of the Company's
officers as to whether the Partnership, to their knowledge, is in default in the
performance or observance of any of the terms, provisions and conditions of the
Indenture and, if so, specifying all such known defaults. (Section 1004)
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MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Partnership
and the Trustee with the consent of the Holders of a majority in principal
amount of the Outstanding Debt Securities of each series affected by such
modification or amendment; PROVIDED, HOWEVER, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (a) change the Stated Maturity of the principal of,
or any installment of principal of or interest on, any Debt Security, (b) reduce
the principal amount of, or any premium or interest on, any Debt Security, (c)
reduce the amount of principal of an Original Issue Discount Debt Security or
any other Debt Security payable upon acceleration of the Maturity thereof, (d)
change the place or currency of payment of principal of, or any premium or
interest on, any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, (f) reduce
the percentage in principal amount of Outstanding Debt Securities of any series,
the consent of whose Holders is required for modification or amendment of the
Indenture, (g) reduce the percentage in principal amount of Outstanding Debt
Securities of any series necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults or (h) modify such
provisions with respect to modification and waiver. (Section 902)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may waive compliance by the Partnership with certain
restrictive provisions of the Indenture. (Section 1011) The Holders of a
majority in principal amount of the Outstanding Debt Securities of any series
may waive any past default under the Indenture, except a default in the payment
of principal, premium or interest and certain covenants and provisions of the
Indenture that cannot be amended without the consent of the Holder of each
Outstanding Debt Security of such series affected. (Section 513)
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under the Indenture
as of any date (i) the principal amount of an Original Issue Discount Debt
Security that will be deemed to be Outstanding will be the amount of the
principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date and (ii) if, as of such date,
the principal amount payable at the Stated Maturity of a Debt Security is not
determinable (for example, because it is based on an index), the principal
amount of such Debt Security deemed to be Outstanding as of such date will be an
amount determined in the manner prescribed for such Debt Security. Certain Debt
Securities, including those for whose payment or redemption money has been
deposited or set aside in trust for the Holders and those that have been fully
defeased pursuant to Section 1302, will not be deemed to be Outstanding.
(Section 101)
Except in certain limited circumstances, the Partnership will be entitled to
set any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled to give or take any
direction, notice, consent, waiver or other action under the Indenture, in the
manner and subject to the limitations provided in the Indenture. In certain
limited circumstances, the Trustee will be entitled to set a record date for
action by Holders. If a record date is set for any action to be taken by Holders
of a particular series, such action may be taken only by persons who are Holders
of Outstanding Debt Securities of that series on the record date. To be
effective, such action must be taken by Holders of the requisite principal
amount of such Debt Securities within a specified period following the record
date. For any particular record date, this period will be 180 days or such
shorter period as may be specified by the Partnership (or the Trustee, if it set
the record date), and may be shortened or lengthened (but not beyond 180 days)
from time to time. (Section 104)
Modifications and amendments of the Indenture may be made by the Partnership
and the Trustee without the consent of any holders of Debt Securities for any of
the following purposes: (i) to evidence the succession of another person to the
Partnership and the assumption by such successor of the covenants of the
Partnership in the Indenture and the Debt Securities; (ii) to add to the
covenants of the Partnership for the benefit of the holders of all or any series
of Debt Securities or to surrender
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any right or power conferred upon the Partnership in the Indenture; (iii) to add
events of default for the benefit of the holders of all or any series of Debt
Securities; (iv) to add to or change any provisions of the Indenture as
necessary to permit or facilitate the issuance of Debt Securities in
uncertificated form; (v) to add to, change or eliminate any of the provisions of
the Indenture with respect to one or more series of Debt Securities, so long as
the changes (A) do not (1) apply to any Debt Securities of any series created
prior to such modification or amendment and entitled to the benefit of such
provision or (2) modify the rights of the holder of any such Debt Security with
respect to such provision, or (B) will only become effective when there is no
such Debt Security Outstanding; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series as permitted in the
Indenture; or (viii) to provide for the acceptance of appointment by a successor
Trustee. (Section 901)
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Partnership may elect, at its option at any time, to have the provisions of
Section 1302 of the Indenture, relating to defeasance and discharge of
indebtedness, or Section 1303, relating to defeasance of certain restrictive
covenants in the Indenture, applied to the Debt Securities of any series, or to
any specified part of a series. (Section 1301)
DEFEASANCE AND DISCHARGE. The Indenture provides that, upon the
Partnership's exercise of its option (if any) to have Section 1302 applied to
any Debt Securities, the Partnership will be discharged from all its obligations
with respect to such Debt Securities (except for certain obligations to exchange
or register the transfer of Debt Securities, to replace stolen, lost or
mutilated Debt Securities, to maintain paying agencies and to hold moneys for
payment in trust) upon the deposit in trust for the benefit of the Holders of
such Debt Securities of money or U.S. Government Obligations, or both, which,
through the payment of principal and interest in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay the
principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indenture and
such Debt Securities. Such defeasance or discharge may occur only if, among
other things, the Partnership has delivered to the Trustee an Opinion of Counsel
to the effect that the Partnership has received from, or there has been
published by, the United States Internal Revenue Service a ruling, or there has
been a change in tax law, in either case to the effect that Holders of such Debt
Securities will not recognize gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount, in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge were not to occur.
(Sections 1302 and 1304)
DEFEASANCE OF CERTAIN COVENANTS. The Indenture provides that, upon the
Partnership's exercise of its option (if any) to have Section 1303 applied to
any Debt Securities, the Partnership may omit to comply with certain restrictive
covenants, including those described under "Certain Covenants," in the last
sentence under "Merger, Consolidation or Sale" and any that may be described in
the applicable Prospectus Supplement, and the occurrence of certain Events of
Default, which are described above in clause (d) (with respect to such
restrictive covenants) and clauses (e) and (g) under "Events of Default" and any
that may be described in the applicable Prospectus Supplement, will be deemed
not to be or result in an Event of Default, in each case with respect to such
Debt Securities. The Partnership, in order to exercise such option, will be
required to deposit, in trust for the benefit of the Holders of such Debt
Securities, money or U.S. Government Obligations, or both, which, through the
payment of principal and interest in respect thereof in accordance with their
terms, will provide money in an amount sufficient to pay the principal of and
any premium and interest on such Debt Securities on the respective Stated
Maturities in accordance with the terms of the Indenture and such Debt
Securities. The Partnership will also be required, among other things, to
deliver to the Trustee an Opinion of Counsel to the effect that Holders of such
Debt Securities will not recognize gain or loss for federal income tax purposes
as a result of such deposit and defeasance of certain obligations and will be
subject to federal income tax on the same amount, in the same manner and at the
same times as
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would have been the case if such deposit and defeasance were not to occur. In
the event the Partnership exercised this option with respect to any Debt
Securities and such Debt Securities were declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations so deposited in trust would be sufficient to pay amounts due on such
Debt Securities at the time of their respective Stated Maturities but may not be
sufficient to pay amounts due on such Debt Securities upon any acceleration
resulting from such Event of Default. In such case, the Partnership would remain
liable for such payments. (Sections 1303 and 1304) "U.S. Government Obligations"
means securities which are (i) direct obligations of the United States of
America 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 a agency or
instrumentality of the United States of America, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, 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 U.S. Government
Obligation or a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian of 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 U.S. Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such depository
receipt. (Section 1304)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106)
TITLE
The Partnership, the Trustee and any agent of the Partnership or the Trustee
may treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the purpose
of making payment and for all other purposes. (Section 308)
NO CONVERSION RIGHTS
The Debt Securities will not be convertible into or exchangeable for any
capital stock of the Company or equity interest in the Partnership.
PLAN OF DISTRIBUTION
The Partnership may sell Debt Securities to or through underwriters and also
may sell Debt Securities directly to other purchasers or through agents.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Partnership or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt 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 Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Partnership and any profit on
the resale of Debt Securities by them may be deemed to be underwriting discounts
and commissions, under the Securities Act of 1933 (the "Act"). Any such
underwriter or agent will be identified, and any such compensation received from
the Partnership will be described, in the Prospectus Supplement.
15
<PAGE>
Under agreements which may be entered into by the Partnership, underwriters
and agents who participate in the distribution of Debt Securities may be
entitled to indemnification by the Partnership against certain liabilities,
including liabilities under the Act.
Certain of the underwriters and their affiliates may be customers of, engage
in transactions with, and perform services for, the Company and the Partnership
in the ordinary course of business.
VALIDITY OF DEBT SECURITIES
The validity of the Debt Securities will be passed upon for the Partnership
by Hunton & Williams, Richmond, Virginia.
EXPERTS
The consolidated financial statements of the Partnership as of December 31,
1995 and 1994, and for the year ended December 31, 1995, and for the period from
March 23, 1994 (inception) to December 31, 1994, and the combined results of
Storage USA, Inc. (the "Predecessor") for the period from January 1, 1994
through March 23, 1994 and for the year ended December 31, 1993, appearing in
this Prospectus and Registration Statement have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report thereon
included therein. Such financial statements are included herein in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of the Company incorporated by
reference in its Annual Report on Form 10-K for the year ended December 31,
1995, and Historical Summaries of Combined Gross Revenue and Direct Operating
Expenses for the year ended December 31, 1994 included in the Company's Current
Report on Form 8-K filed on April 5, 1996, have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their reports thereon
included therein and incorporated herein by reference. Such financial statements
are incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
16
<PAGE>
SUSA PARTNERSHIP, L.P.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1996
(UNAUDITED)
F-1
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated financial
condition and results of operations of the Operating Partnership should be read
in conjunction with the Consolidated Financial Statements and Notes thereto.
References to the Operating Partnership include SUSA Management, Inc., a wholly
owned subsidiary. Storage USA, Inc., ("the Company") a self-managed real estate
investment trust ("REIT") is the sole general partner of the Operating
Partnership.
Due to the substantial number of facilities acquired from March 31, 1995 to
March 31, 1996, management believes that it is meaningful and relevant in
understanding the present and ongoing operations of the Operating Partnership to
compare certain information using occupancy, per square foot and pro forma data.
The following are definitions of terms used throughout this discussion in
analyzing the Operating Partnership's business. PHYSICAL OCCUPANCY is defined as
the total net rentable square feet rented as of the date computed divided by the
total net rentable square feet available. GROSS POTENTIAL INCOME is defined as
the sum of all units available to rent at a facility multiplied by the market
rental rate applicable to those units as of the date computed. EXPECTED INCOME
is defined as the sum of the monthly rent being charged for the rented units at
a facility as of the date computed. ECONOMIC OCCUPANCY is defined as the
Expected Income divided by the Gross Potential Income. RENT PER SQUARE FOOT is
defined as the annualized result of dividing Gross Potential Income on the date
computed by total net rentable square feet available. DIRECT PROPERTY OPERATING
COST is defined as the costs incurred in the operation of a facility, such as
utilities, real estate taxes, and on-site personnel. INDIRECT PROPERTY
OPERATIONS COST is defined as costs incurred in the management of all
facilities, such as accounting personnel and management level operations
personnel. NET OPERATING INCOME ("NOI") is defined as total property revenues
less Direct Property Operating Costs.
RESULTS OF OPERATIONS -- QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED
MARCH 31, 1995.
In the first quarter of 1996, the Operating Partnership reported growth in
revenue, income from property operations and net income, respectively, of $9
million, $5.7 million and $2.9 million over the same quarter of 1995. Since
March 31,1995, the Operating Partnership has acquired 67 facilities and
completed construction and opened one new facility. These 68 facilities added
47,620 units, and 4.7 million square feet, bringing the total square feet and
units of the 166 facilities owned by the Operating Partnership at March 31, 1996
to 11.1 million square feet and 110,010 units, respectively. For the first
quarter of 1996, the 98 facilities owned during the first quarter of 1995,
provided 59% of the Operating Partnership's rental income. These same
facilities' rental income grew 7.2% over 1995 results. Most of this growth was
provided by rate increases. At March 31, 1996, the physical and economic
occupancy and rent per square foot on these facilities were 88%, 81%, and $9.61,
respectively, while the figures for the same period ended in 1995 were 87%, 79%,
and $8.93, respectively. The Operating Partnership's portfolio as a whole had
average occupancy at March 31, 1996 of 88% physical and 81% economic, with an
average rent per square foot of $9.40. Management income for the quarter ended
March 31, 1996 remained relatively consistent with the comparable period in
1995. Other income, which reflects primarily sales of lock and packaging
products and truck rentals, increased primarily due to property acquisitions.
Cost of property operations and maintenance was $5.7 million for the quarter
ended March 31, 1996, representing a $2.4 million increase over the first
quarter of 1995. Cost of property operations and maintenance was 27% of revenues
for both the quarter ended March 31, 1996 and for the quarter ended March 31,
1995.
Real estate tax expense increased from $.8 million or 6.5 % of revenues for
the quarter ended March 31, 1995 to $1.7 million or 7.9% of revenue for the
quarter ended March 31, 1996. This growth as a percentage of revenue reflects
the impact of reassessments on the properties purchased during 1994 and 1995.
The majority of the increase is attributable to reassessments on acquisitions
with the
F-2
<PAGE>
remainder attributable to increased tax rates or reassessments on properties
owned for a full year. The Operating Partnership expects real estate tax expense
as a percentage of revenues for the remainder of 1996 to remain consistent with
the first quarter.
General and administrative expense increased $0.3 million to $0.8 million
for the first quarter of 1996 from the comparable quarter of 1995. As a
percentage of revenues the expense fell from 4.2% for the quarter ended March
31, 1995 to 3.6% for the quarter ended March 31, 1996. The Operating Partnership
expects that the expense will decline further as a percentage of revenue in
1996, while the gross expense will grow as the Operating Partnership expands its
accounting, management information systems, and human resource departments, in
connection with its ongoing growth strategy.
Depreciation expense increased to $2.7 million for the quarter ended March
31, 1996 from $1.6 million for the comparable period in 1995, reflecting the
increase in the number of facilities owned. The Operating Partnership has
acquired approximately $179 million in depreciable assets since April 1, 1995.
Interest expense for the quarter ended March 31, 1996 was $1.7 million as
compared to $0.2 million for the comparable period in 1995. 1996 interest
expense represents weighted average borrowings of $105 million under the
Operating Partnership's lines of credit at a weighted average interest rate of
6.1%.
Interest income was $0.15 million for the quarter ended March 31, 1996 as
compared to $0.01 million for the quarter ended March 31, 1995. 1996 interest
income represents earnings on overnight deposits and amounts contributed by the
Company from earnings under the Company's 1995 Employee Stock Purchase and Loan
Plan.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations grew to $10.9 million for the three months
ended March 31, 1996 from $5.9 million for the three months ended March 31,
1995. This increase is a result of the Operating Partnership's net income
growing $2.9 million or 48% primarily as a result of the increase in number of
facilities owned, and the improvement of operations at the facilities acquired
plus depreciation and amortization of $2.7 million.
The Operating Partnership's first quarter investing activities consisted of
six facility acquisitions for approximately $22 million. In addition, the
Operating Partnership acquired three parcels of land for $2.2 million to permit
expansion of two facilities and the construction of a new self-storage facility.
Three new property constructions are underway at an estimated cost of $11
million. Completion dates range from the second quarter of 1996 through 1997. A
total of 15 expansion projects are in process with an estimated cost of $12 to
$13 million with openings scheduled for late 1996 into 1997. The Operating
Partnership currently plans to the develop 11 new facilities primarily in the
Washington, D.C. and Memphis, TN metropolitan areas. The Operating Partnership
expects that the cost of the land, the facility construction costs and the soft
costs, such as capitalized interest, will total approximately $42 million. These
contracts are subject to zoning approvals and other contingencies, and assuming
successful completion of the development and construction process, the
properties are expected to open during 1997 and 1998.
On March 1, 1996, the Company entered into a Stock Purchase Agreement with
Security Capital U.S. Realty ("US Realty"), an affiliate of Security Capital
Group. Under the Stock Purchase Agreement, and pursuant to the terms and
conditions thereof, US Realty will invest a total of $220 million in the
Company, initially place two of its nominees on the Company's Board of
Directors, one of whom the Company has been informed will be William D. Sanders,
Chairman of the Board and Chief Executive Officer of Security Capital Group, and
make available to the Company certain strategic advice, research and related
information and expertise (the "Strategic Alliance"). As part of the
transaction, on March 19, 1996, the Company issued to US Realty 1,948,882 shares
of Common Stock, approximately 10.0% of the outstanding Common Stock, at a price
of $31.30 per share, plus a purchase price adjustment for accrued dividends. At
the same time, the Company executed a Strategic Alliance
F-3
<PAGE>
Agreement and a Registration Rights Agreement with US Realty. The Company
contributed the proceeds of the offering to the Operating Partnership, which
used the proceeds to pay off $43.4 million of borrowings under the available
lines of credit, for property acquisitions, and for working capital.
At March 31, 1996, the Operating Partnership had $64.2 million of borrowings
outstanding on its line of credit, $3.4 million of fixed rate debt maturing in
2001, $2.3 million of fixed rate debt maturing in 2006, and $0.9 million of
fixed rate debt maturing in 2000. The Operating Partnership had $40.9 million of
unused borrowing capacity under its lines of credit at March 31, 1996.
During the quarter, the Operating Partnership issued approximately 48,000
units of limited partnership interest valued at approximately $1.5 million in
connection with the acquisition of facilities. The Operating Partnership's
acquisition of self-storage facilities using Units as consideration may
partially defer the seller's tax liability.
The Operating Partnership has entered into various property acquisition
contracts for facilities with an aggregate cost of approximately $55.8 million.
These acquisitions are subject to customary conditions to closing, including
satisfactory due diligence and should close during the second quarter. Should
these contracts be disapproved, the costs incurred by the Operating Partnership
would be immaterial.
On April 10, 1996, the Operating Partnership filed a shelf registration
statement relating to $250 million of unsecured non convertible senior debt
securities which should enable the Operating Partnership to access the public
debt markets efficiently at opportune times.
FUNDS FROM OPERATIONS ("FFO")
The Operating Partnership believes that FFO should be considered in
conjunction with its net income and cash flows to facilitate a clear
understanding of its results of operations. FFO is defined as net income,
computed in accordance with GAAP, excluding gains (losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures. FFO should
not be considered an alternative to net income as a measure of the Company's
performance or to cash flows as a measure of liquidity.
Effective January 1, 1996, the National Association of Real Estate
Investment Trusts amended its definition of FFO. The impact of conforming to the
amended definition was to reduce FFO by approximately $104,000 and $50,000 for
the three months ended March 31, 1996 and March 31, 1995, respectively. Because
certain REITs may have not yet adopted the amended method of FFO computation,
the Company's FFO and FFO per share may not be comparable to similarly titled
measures of other REITs.
The following table illustrates the components of the Operating
Partnership's FFO for the quarters ended March 31, 1996 and March 31, 1995.
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
MARCH 31, 1996 MARCH 31, 1995
-------------- ---------------
<S> <C> <C>
Net Income................................................... $ 8,886 $ 5,939
Depreciation of real property................................ 2,445 1,234
Amortization of lease guarantees............................. 53 192
Amortization of non-compete.................................. 62 63
-------------- -------
Consolidated FFO............................................. $ 11,446 $ 7,428
-------------- -------
-------------- -------
</TABLE>
The Company, in order to qualify as a REIT, is required to distribute a
substantial portion of its net income as dividends to its shareholders. For the
year ended December 31, 1995, those distributions were approximately 85% of the
Company's FFO. It is the intent of the Operating Partnership that cash
distributions will be made for each fiscal year to enable the Company to meet
its distribution requirements for qualification as a REIT. While the Operating
Partnership's goal is to generate and
F-4
<PAGE>
retain sufficient cash flow to meet its operating, capital, and debt service
needs, its dividend requirements may require the Operating Partnership to
utilize its bank lines of credit to finance property acquisitions and
development and major capital improvements.
The Operating Partnership has incurred approximately $0.2 million for
regularly scheduled maintenance and repairs during the three months ended March
31, 1996. For the year, the Operating Partnership expects to incur approximately
$1.2 million for scheduled maintenance and repairs and approximately $5.9
million to conform facilities acquired during 1995 and 1994 to Operating
Partnership standards.
The Operating Partnership believes that its liquidity and capital resources
are adequate to meet its cash requirements relating to its existing operations
for the next twelve months.
INFLATION
The Operating Partnership does not believe that inflation has had or will
have a direct effect on its operations. Substantially all of the leases at the
facilities allow for monthly increases which provide the Operating Partnership
with the opportunity to achieve increases in rental income as each lease
matures.
SEASONALITY
The Operating Partnership's revenues typically have been higher in the third
and fourth quarter primarily because the Operating Partnership increases its
rental rates on most of its storage units at the beginning of May, and to a
lesser extent because self-storage facilities tend to experience greater
occupancy during the late spring and early fall months due to the greater
incidence of residential moves during those periods. The Operating Partnership
believes that its tenant mix, rental structure, and expense structure provide
adequate protection against undue fluctuations in cash flows and net revenues
during off-peak seasons. Thus, the Operating Partnership does not expect
seasonality to materially affect distributions to shareholders.
RECENT ACCOUNTING DEVELOPMENTS
In October of 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123") was issued. The standard
is effective for fiscal years beginning after December 15, 1995. The Operating
Partnership has continued to elect expense recognition under APB 25, and
disclosing pro forma net income, and earnings per share information based on the
FAS123 fair value methodology.
F-5
<PAGE>
SUSA PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
AS OF AS OF
MARCH 31, DECEMBER 31,
1996 1995
----------- --------------
(AMOUNTS IN THOUSANDS,
EXCEPT UNIT DATA)
(unaudited)
Investment in storage facilities, at cost:
Land......................................................... $ 147,113 $ 139,603
Buildings and equipment...................................... 391,050 369,694
----------- --------------
538,163 509,297
Accumulated depreciation..................................... (17,031) (14,561)
----------- --------------
521,132 494,736
Cash & cash equivalents...................................... 2,985 2,802
Other assets................................................. 11,133 11,987
----------- --------------
Total assets............................................... $ 535,250 $ 509,525
----------- --------------
----------- --------------
<CAPTION>
LIABILITIES & SHAREHOLDERS' EQUITY
<S> <C> <C>
Line of credit borrowings...................................... $ 64,165 $ 107,605
Mortgage notes payable......................................... 6,612 6,670
Accounts payable & accrued expenses............................ 3,295 5,910
Distributions payable.......................................... 10,149 --
Rents received in advance...................................... 4,184 3,680
Minority interest.............................................. 515 524
----------- --------------
Total liabilities.......................................... 89,920 124,389
----------- --------------
Partners' capital:
General partnership units, 19,552,645 and 17,562,363
outstanding................................................. 425,362 364,947
Limited partnership units 1,073,231 and 1,025,423
outstanding................................................. 28,948 26,916
Notes receivable -- officers................................. (7,980) (6,727)
----------- --------------
Total partners' capital.................................... 446,330 385,136
----------- --------------
Total liabilities & partners' capital...................... $ 535,250 $ 509,525
----------- --------------
----------- --------------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
SUSA PARTNERSHIP, L.P
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1996 MARCH 31, 1995
------------------- -------------------
(AMOUNTS IN THOUSANDS,
EXCEPT PER UNIT DATA)
<S> <C> <C>
REVENUES:
Rental income......................................................... $ 20,819 $ 11,921
Management income..................................................... 240 244
Other income.......................................................... 274 147
-------- --------
Total revenues...................................................... 21,333 12,312
-------- --------
EXPENSES:
Cost of property operations & maintenance............................. 5,733 3,290
Real estate taxes..................................................... 1,693 806
General & administrative.............................................. 780 512
Depreciation & amortization........................................... 2,670 1,569
-------- --------
Total expenses...................................................... 10,876 6,177
-------- --------
INCOME FROM OPERATIONS.................................................. 10,457 6,135
OTHER INCOME (EXPENSE)
Interest expense...................................................... (1,665) (157)
Interest income....................................................... 155 15
-------- --------
INCOME BEFORE MINORITY INTEREST......................................... 8,947 5,993
Minority interest..................................................... (61) (54)
-------- --------
NET INCOME.............................................................. $ 8,886 $ 5,939
-------- --------
-------- --------
NET INCOME PER UNIT..................................................... $ 0.47 $ 0.43
WEIGHTED AVERAGE UNITS OUTSTANDING...................................... 18,617 13,727
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
SUSA PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1996 MARCH 31, 1995
------------------- -------------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................................ $ 8,886 $ 5,939
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization....................................... 2,670 1,569
Minority interest................................................... 61 54
Changes in assets and liabilities:
Other assets...................................................... 1,583 (660)
Other liabilities................................................. (2,109) (1,078)
-------- --------
Net cash provided by operating activities....................... 11,091 5,824
-------- --------
INVESTING ACTIVITIES:
Acquisition and improvements of storage facilities.................... (27,329) (12,065)
Development of storage facilities..................................... (930) --
-------- --------
Net cash used in investing activities........................... (28,259) (12,065)
-------- --------
FINANCING ACTIVITIES:
Net borrowings/(repayments) under line of credit...................... (43,440) 5,850
Mortgage principal payments........................................... (58) (11)
General partner contributions......................................... 60,919
Distributions to minority interests................................... (70) (60)
-------- --------
Net cash provided by financing activities....................... 17,351 5,779
-------- --------
Net increase (decrease) in cash and equivalents......................... 183 (462)
Cash and equivalents, beginning of period............................... 2,802 3,331
-------- --------
Cash and equivalents, end of period..................................... $ 2,985 $ 2,869
-------- --------
-------- --------
Supplemental schedules of non-cash activities:
Storage facilities acquired in exchange for Operating Partnership
Units................................................................ $ 1,538 --
Operating Partnership Units issued in exchange for notes receivable... $ 1,253 --
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(THOUSANDS, EXCEPT PER UNIT DATA)
1. UNAUDITED INTERIM FINANCIAL STATEMENTS
Interim consolidated financial statements of SUSA Partnership, L.P. (The
"Operating Partnership") are prepared pursuant to the requirements for reporting
on Form 10-Q. Accordingly, certain disclosures accompanying annual financial
statements prepared in accordance with generally accepted accounting principles
are omitted. In the opinion of management, all adjustments, consisting solely of
normal recurring adjustments, necessary for the fair presentation of
consolidated financial statements for the interim periods have been included.
The current period's results of operations are not necessarily indicative of
results which ultimately may be achieved for the year. The interim consolidated
financial statements and notes thereto should be read in conjunction with the
financial statements and notes thereto included in the Company's Form 10-K, as
filed with the Securities and Exchange Commission.
2. ORGANIZATION
The Operating Partnership, which commenced operation on March 23, 1994, is
engaged in owning, developing, constructing and operating self-storage
facilities throughout the United States. The sole general partner in the
Operating Partnership, Storage USA, Inc. (the "Company"), a Tennessee
corporation, is a self-administered and self-managed real estate investment
trust ("REIT").
On March 23, 1994, the Company contributed substantially all of its net
assets of approximately $109,969 to the Operating Partnership in exchange for an
approximately 98.9% general partnership interest in the Operating Partnership.
In addition, the Operating Partnership formed SUSA Management, Inc., ("SUSA
Management") to provide self-storage management to third parties and certain
ancillary services. The Operating Partnership owns 99% of the economic interest
of SUSA Management.
3. PARTNERSHIP CAPITAL
FORMATION OF STRATEGIC ALLIANCE
On March 1, 1996, the Company, as corporate general partner, entered into a
Stock Purchase Agreement with Security Capital U.S.Realty (US Realty), an
affiliate of Security Capital Group. Under the Stock Purchase Agreement, subject
to the terms and conditions thereof, US Realty will invest a total of $220,000
in the Company, initially place two of its nominees on the Company's Board of
Directors, one of whom the Company has been informed will be William D. Sanders,
Chairman of the Board and Chief Executive Officer of Security Capital Group, and
make available to the Company certain strategic advice, research and related
information and expertise (the "Strategic Alliance"). As part of the
transaction, on March 19, 1996, the Company issued to US Realty 1,948,882 shares
of Common Stock, approximately 10.0% of the outstanding Common Stock, at a price
of $31.30 per share, plus a purchase price adjustment for accrued dividends less
issuance costs. At the same time, the Company executed a Strategic Alliance
Agreement and a Registration Rights Agreement with US Realty.
After the Strategic Alliance has been approved by the shareholders of the
Company, and prior to December 31, 1996, the Company will issue to US Realty an
additional 5,079,872 shares of the Company's common stock at the same price for
an aggregate of $159,000. After acquiring the additional shares (and assuming no
other change in the number of outstanding shares) US Realty will own
approximately 28.6% of the outstanding Common Stock. The proceeds of additional
fundings will be contributed to the Operating Partnership in exchange for
additional Operating Partnership Units and used to support the acquisition and
development of self-storage facilities.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996
(THOUSANDS, EXCEPT PER UNIT DATA)
3. PARTNERSHIP CAPITAL (CONTINUED)
The Company has agreed to submit to the shareholders a proposal to amend the
ownership limitations of the Company's Charter to permit US Realty to acquire up
to 37.5% of the Company's capital stock. The Strategic Alliance, the amendment
and certain related transactions have been submitted to shareholders for
approval at the Company's 1995 annual meeting to be held June 5, 1996.
EMPLOYEE STOCK PURCHASE AND LOAN PLAN
The Company established the 1995 Employee Stock Purchase and Loan Plan.
Under the terms of the partnership agreement, all proceeds from the issuance of
common stock under the plan are contributed to the Operating Partnership in
exchange for Operating Partnership units. In March of 1996, the Company issued
40,000 shares of its common stock under the plan. Pursuant to the terms of the
plan, the Company and certain officers entered into stock purchase agreements
whereby the officers purchased common stock at the then current stock price. The
Company provides 100% financing for the purchase of the shares with interest at
7% per anum payable quarterly. The underlying notes are secured by the shares
and mature in November 2002. At March 31, 1996, there are 270,000 shares
outstanding under the plan.
4. INVESTMENT IN STORAGE FACILITIES
The following summarizes activity in storage facilities during the period:
<TABLE>
<CAPTION>
COST:
<S> <C>
Balance on January 1, 1996..................................... $ 509,297
Property acquisitions.......................................... 24,578
Land acquisitions.............................................. 2,200
Improvements................................................... 2,088
---------
Balance at March 31, 1996.................................... $ 538,163
---------
---------
ACCUMULATED DEPRECIATION:
Balance at January 1, 1996..................................... $ 14,561
Additions during the period.................................... 2,470
---------
Balance at March 31, 1996.................................... $ 17,031
---------
---------
</TABLE>
Unaudited pro forma combined results of operations of the Operating
Partnership for three months ended March 31, 1996 are presented below. Such pro
forma presentation has been prepared assuming that the acquisition of the 6
properties acquired during the quarter had been completed as of January 1, 1996.
<TABLE>
<CAPTION>
PRO FORMA FOR
QUARTER ENDED
MARCH 31, 1996
--------------
<S> <C>
Revenues...................................................................... $ 22,224
Net income.................................................................... $ 9,271
Earnings per unit............................................................. $ 0.49
</TABLE>
The unaudited pro forma information is not necessarily indicative of what
actual results of operations of the Operating Partnership would have been
assuming such transactions had been completed as of January 1, 1996, nor does it
purport to represent the results of operations for future periods.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996
(THOUSANDS, EXCEPT PER UNIT DATA)
5. LINE OF CREDIT BORROWINGS
Line of credit borrowings at March 31, 1996 consists of $64,165 of
borrowings under a $75,000 line of credit with a group of commercial banks. This
line bears interest at various spreads over a base rate based on the Operating
Partnership's debt service coverage. During the first quarter of 1996, the
weighted average borrowing was $105,540, and the weighted average interest rate
was 6.1%. The Operating Partnership also has a line of credit with a commercial
bank which bears interest at Prime or LIBOR plus 2.25%. During the quarter, the
commercial bank agreed to release the mortgages collateralizing the line and
increase the amount available under the line from $23 million to $30 million,
with an initial maturity of July 1, 1996.
6. INTEREST RATE SWAP AGREEMENT
In anticipation of a debt offering in 1996, the Operating Partnership
entered into an interest rate swap agreement in October 1995, with the objective
of reducing its exposure to future interest rate fluctuations. The agreement
involved the exchange of a variable rate for a fixed rate interest payment
obligation. On March 8, 1996, the Operating Partnership closed the interest rate
swap agreement and received proceeds of approximately $50. The Operating
Partnership filed a $250,000 debt shelf registration statement on Form S-3 with
the Securities and Exchange Commission on April 10, 1996. Upon successful
completion of an offering of unsecured debt securities under the shelf, the
Operating Partnership will recognize the gain as a yield adjustment over the
life of the debt.
7. COMMITMENTS AND CONTINGENCIES
PROPERTY DEVELOPMENT
The Operating Partnership has entered into an agreement to develop a
self-storage facility in Northern Virginia. The facility will be owned by the
Operating Partnership and an unaffiliated third party. Under the terms of the
agreement the Operating Partnership is required to fund the cost of
construction, which is currently estimated to be approximately $6,500. As of
March 31, 1996, the Operating Partnership has incurred costs of approximately
$4,183. The facility is expected to be complete by the second quarter of 1996.
8. SUBSEQUENT EVENTS
Subsequent to March 31, 1996, the Operating Partnership has completed the
acquisition of five self-storage facilities for approximately $16,000. These
acquisitions were financed through operating cash flows and borrowings under the
available line of credit. The Operating Partnership has entered into various
property acquisition contracts with an aggregate cost of approximately $55,800.
These acquisitions are subject to customary conditions to closing, including
satisfactory due diligence and should close during the second quarter. Should
these contracts be disapproved, the costs incurred by the Operating Partnership
would be immaterial.
F-11
<PAGE>
SUSA PARTNERSHIP, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS:
The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the
Consolidated Financial Statements and Notes thereto. Storage USA, Inc. (the
"Company") is the sole general partner in the Operating Partnership and is a
self-administered, self-managed real estate investment trust ("REIT"). As
discussed in Note 1 to the Consolidated Financial Statements, SUSA Partnership,
L.P.'s (the "Operating Partnership") 1994 results of operations are presented
from March 24, 1994, the date the Operating Partnership commenced operation. As
discussed in Note 11 to the Consolidated Financial Statements, the accompanying
combined financial statements for the periods prior to March 24, 1994, present
only the "carved out" accounts of Storage USA, Inc. (the "Predecessor")
comprised of the combined assets, liabilities, and operations of the Predecessor
preceding the IPO, including 11 owned facilities and 6 controlled facilities and
Storage USA Management Corp. The Predecessor completed its initial public
offering (the "IPO") on March 23, 1994, forming the Company and the Operating
Partnership. References to the "Operating Partnership" include SUSA Management,
Inc., a wholly owned subsidiary.
Due to the substantial number of facilities acquired during 1995 and 1994,
management believes that it is meaningful and relevant in understanding the
present and ongoing operations of the Operating Partnership to compare
information using occupancy, per square foot and pro forma data. The assumptions
underlying the pro forma data presented are described under "Pro Forma Results
of Operations for the period January 1, 1994 through December 31, 1994."
The following are definitions of terms used throughout this discussion in
analyzing the Operating Partnership's business. Physical Occupancy is defined as
the total net rentable square feet rented as of the date computed divided by the
total net rentable square feet available. Gross Potential Income is defined as
the sum of all units available to rent at a facility multiplied by the market
rental rate applicable to those units as of the date computed.
Expected Income is defined as the sum of the monthly rent being charged for
the rented units at a facility as of the date computed. Economic Occupancy is
defined as the Expected Income divided by the Gross Potential Income. Rent Per
Square Foot is defined as the annualized result of dividing Gross Potential
Income on the date computed by total net rentable square feet. Direct Property
Operating Cost is defined as the costs incurred in the operation of a facility,
such as utilities, real estate taxes, and on-site personnel. Indirect Property
Operations Cost is defined as costs incurred in the management of all
facilities, such as accounting personnel and management level operations
personnel. Net Operating Income ("NOI") is defined as total property revenues
less Direct Property Operating Costs.
OVERVIEW:
In 1995, the Operating Partnership continued executing its strategy of
acquiring suitably located, under-performing facilities that offer upside
potential due to low occupancy rates or non-premium pricing. During the year,
the Operating Partnership invested $220 million in acquiring 63 facilities. In
addition, the Operating Partnership pursued development opportunities in
selective markets, specifically the San Francisco, Memphis, and Washington, D.C.
areas. The Operating Partnership invested $4.7 million in acquiring 11 parcels
of land for expansion of existing facilities and $0.8 million acquiring a parcel
of land to be developed. The 1995 financial results reflect the continuing
implementation of this acquisition and development strategy.
Contributions to the Operating Partnership's revenue growth came from
successful execution of both external and internal growth strategies. The
Operating Partnership continues to purchase properties on an accretive basis.
Internal growth remained strong during 1995. The 96 properties owned at December
31, 1994 demonstrated total revenue growth of 7.2% and NOI growth of 4.6% over
F-12
<PAGE>
the pro forma 1994 results. The lower rate of NOI growth reflects the fact that
the pro forma expense is based on the previous operator's expense structure for
the period prior to acquisition, and the Operating Partnership's expense
structure is generally higher than that of the previous operator. The Operating
Partnership expects that when comparing its actual "same store" results, NOI
growth will generally exceed revenue growth, similarly to the 67 facilities
described herein. The Operating Partnership considers facilities to be suitable
for a year-over-year results comparison only after four complete quarters of
operation by the Operating Partnership. For example, if a facility was purchased
in January of 1995, the Operating Partnership would consider it suitable for a
year-over-year comparison beginning with the second quarter of 1996. The 67
properties owned by the Operating Partnership for the entire fourth quarter of
1994, experienced 5.2% rental income growth and 7.7% NOI growth for the fourth
quarter of 1995 over the same quarter in 1994. The Operating Partnership
believes that once it implements its property operations expense structure, its
Direct Property Operations Costs should increase on a year-over-year basis in a
more predictable pattern.
In 1995, the Operating Partnership experienced cost growth principally in
the areas of real estate tax and Indirect Property Operations Cost. The
Operating Partnership's cost to manage, or Indirect Property Operations Cost,
grew during 1995 to a year-end result of $3.3 million or 4.9% of total revenues.
This was a result of the Operating Partnership's planning and structuring for
continued growth. The Operating Partnership added four district offices during
the year, and added regional coordinators and trainers at each of its four
regional offices. The personnel additions allow the Operating Partnership to
shift to the regional offices certain duties that were previously performed at
the Partnership's home office. During the fourth quarter of 1995, the Operating
Partnership began to experience growth in property tax expense as a result of
revised assessments on acquired facilities. In the initial period following the
Operating Partnership's purchase of a facility, the Operating Partnership is
subject to reassessments which may result in increased real estate tax expense
for the facility. While these increases are estimated by the Operating
Partnership in underwriting the acquisitions of the facility, they may not
actually be incurred by the Operating Partnership until generally 12-24 months
after closing. In the periods that follow the initial reassessment, increases in
property tax expense becomes more predictable.
The Operating Partnership expects to continue implementing its strategies
for growth in 1996. The addition of Indirect Property Operations Cost in 1995
will allow the Operating Partnership capacity to add more facilities in the
future, assuming an even distribution of the facilities in the Operating
Partnership's existing markets. Acquisitions continue to be available at
attractive capitalization rates and at prices that approximate replacement cost.
Development efforts will intensify in 1996, with the Operating Partnership
planning to have 500,000 square feet under development during 1996. This
development includes expansion of existing facilities as well as new
construction. The Operating Partnership considers a project to enter the
development stage when it obtains a conditional contract on the land, which
generally is subject to rezoning or special use permits. The Operating
Partnership will normally not acquire land until it is satisfied it can obtain
the entitlements required to develop a self-storage facility. Typical
self-storage facility construction costs range from $22 to $25 per net rentable
square foot. Land costs vary by location, with the Operating Partnership's past
experience being $12 to $35 per buildable square foot. Soft costs, such as
capitalized interest, can add $4 to $9 per net rentable square foot. The
Operating Partnership's development policy requires a projected 12.5% return at
stabilization, in order for the Operating Partnership to develop a facility. The
Operating Partnership considers a property at stabilization when it reaches an
85% physical occupancy level, which generally occurs over an 18 - 24 month
lease-up period. The 1996 development efforts are not expected to have a
material impact on earnings.
In 1996, the Operating Partnership anticipates funding its capital
requirements through a contribution from the Company following the sale of 7.03
million shares of common stock of the Company at $31.30 per share to the
Company's strategic alliance partner, Security Capital U.S. Realty, pursuant to
a Stock Purchase Agreement entered into on March 1, 1996. In addition, the
Operating Partnership
F-13
<PAGE>
anticipates filing a shelf registration statement relating to $250 million of
unsecured, nonconvertible senior debt securities, which should enable the
Operating Partnership to access the public debt markets efficiently at opportune
times.
RESULTS OF OPERATIONS:
YEAR ENDED DECEMBER 31, 1995, AS COMPARED TO PERIOD MARCH 24, 1994
(INCEPTION) THROUGH DECEMBER 31, 1994:
In 1995, the Operating Partnership reported growth in revenue, income from
property operations, and net income, respectively, of $42.2 million, $27.3
million, and $18.2 million over the prior period. Compared to pro forma results
for 1994, the Operating Partnership's revenues grew $21.0 million, income from
property operations increased $12.2 million and net income rose $5.9 million.
These significant increases are primarily attributable to both the Operating
Partnership's aggressive acquisition strategy and aggressive rental rate
increases. Facility acquisitions during 1995, by quarter, were as follows
(dollar and square footage amounts in thousands):
<TABLE>
<CAPTION>
NET
NUMBER OF RENTABLE
1995 FACILITIES COST SQUARE FEET
- ------------------------------------------------------------ ---------- -------- -----------
<S> <C> <C> <C>
Quarter ended March 31,..................................... 2 $ 7,080 180
Quarter ended June 30,...................................... 34 119,788 2,248
Quarter ended September 30,................................. 14 56,682 1,110
Quarter ended December 31,.................................. 13 36,450 890
--
-------- -----
63 $220,000 4,428
--
--
-------- -----
-------- -----
</TABLE>
YEAR ENDED DECEMBER 31, 1995, AS COMPARED TO PERIOD MARCH 24, 1994
(INCEPTION) THROUGH DECEMBER 31, 1994, CONTINUED:
These acquisitions added 44,000 units, bringing the total square feet and
units of the 159 facilities owned by the Operating Partnership at December 31,
1995 to 10,715,000 and 105,000, respectively. For the year, the 96 facilities
owned on December 31, 1994, provided 74% of the Operating Partnership's rental
income. These facilities' rental income grew 9.1% over pro forma 1994 results.
Approximately 8% of this growth was provided by rate increases. At December 31,
1995, the physical and economic occupancy and rent per square foot on these
facilities was 88%, 81%, and $9.24, respectively. The Operating Partnership's
portfolio as a whole had average occupancy at December 31, 1995, of 88% physical
and 81% economic, with an average rent per square foot of $8.93.
Management income increased $365 thousand over the prior period, and $216
thousand over the 1994 pro forma results. The pro forma variance reflects the
addition of three managed facilities and management during the year of
facilities that were subsequently purchased by the Operating Partnership.
Other Income, which consists primarily of sales of lock and packaging
products and truck rentals, increased 4% over the prior period. This increase
reflects primarily the growth in the number of facilities owned.
Cost of property operations and maintenance was 27.2% of revenue for 1995 as
compared to 26.5% for the prior period. This increase reflects the addition of
Indirect Property Operations Cost to support the level of growth experienced in
1995 and planned in 1996.
Real estate taxes were 7.2% of revenue for 1995 as compared to 6.5% for the
prior period and 6.8% for the pro forma results. This growth as a percentage of
revenue reflects the impact of reassessments on the properties purchased during
1994 and 1995. The majority of the increase is attributable to reassessments on
acquisitions with the remainder attributable to increased tax rates or
reassessments on properties owned for a full year. The Operating Partnership
expects continued modest real estate tax expense growth as a percentage of
revenues in 1996.
F-14
<PAGE>
Direct Property Operating Cost was 29.9% of rental income, both on the 96
properties owned at December 31, 1994 and the portfolio as a whole. The property
level margins remained consistent from 1994 to 1995.
General and Administrative ("G&A") expense declined as a percentage of total
revenue as compared to the prior period and was consistent as compared to the
1994 pro forma results. 1995 G&A expense was $2.6 million, or 3.8% of total
revenue as compared to $1.4 million or 5.3% in the prior period. G&A was $762
thousand for the quarter ended December 31, 1995 and the Operating Partnership
expects that the expense will decline further as a percentage of revenue in
1996, while the gross expense will grow as the Operating Partnership expands its
accounting, management information systems, and human resource departments, in
connection with its ongoing growth strategy.
YEAR ENDED DECEMBER 31, 1995, AS COMPARED TO PERIOD MARCH 24, 1994
(INCEPTION) THROUGH DECEMBER 31, 1994:
The increase in depreciation and amortization to $8.6 million from $2.9
million in the prior period and $5.7 million on a pro forma basis reflects the
Operating Partnership's acquisition of $220 million of facilities in 1995. In
addition, the Operating Partnership amortized $903 thousand of the loan fees
related to short term borrowings in 1995. As of December 31, 1995, the Operating
Partnership has unamortized loan fees of approximately $230 thousand.
Interest expense was $3.0 million in 1995, a $1.6 million increase over the
prior period. 1995 interest expense represents weighted average borrowings of
$47.2 million under the Operating Partnership's lines of credit at a weighted
average interest rate of 6.4%.
Interest income in 1995 was $166 thousand, as compared to $658 thousand in
1994. 1995 interest income represents earnings on overnight deposits and amounts
outstanding under the 1995 Employee Stock Purchase and Loan Plan, while the
prior period reflected the temporary investment of a portion of the proceeds
from the Company's two common stock offerings during the Period.
PERIOD MARCH 24, 1994 (INCEPTION) THROUGH DECEMBER 31, 1994:
The Operating Partnership reported rental income of $24.7 million, income
before minority interest of $12.3 million and net income of $12.1 million during
the Period. These results reflect the significant portfolio expansion that
occurred during 1994. On March 23, 1994, 17 facilities were contributed by the
Company (the "Original Properties") to the Operating Partnership. Property
acquisitions by quarter were as follows (dollar and square footage amounts in
thousands):
<TABLE>
<CAPTION>
NET
NUMBER OF RENTABLE
1995 FACILITIES COST SQUARE FEET
- ------------------------------------------------------------ ---------- -------- -----------
<S> <C> <C> <C>
Quarter ended March 31,..................................... 26 $ 65,193 1,743
Quarter ended June 30,...................................... 12 25,004 596
Quarter ended September 30,................................. 12 40,796 797
Quarter ended December 31,.................................. 29 83,831 1,991
--
-------- -----
79 $214,824 5,127
--
--
-------- -----
-------- -----
</TABLE>
The rental revenues reflect the weighted average per square foot rent
increases ranging from 4.9% for some of the facilities acquired during the
second quarter to 6.9% for facilities acquired during the first quarter.
There were no rent increases implemented at three of the facilities acquired
during the quarter ended June 30 nor at any of the facilities acquired during
the quarters ended September 30 and December 31. The Operating Partnership
generally operates an acquisition facility for three to six months prior to
implementing rent increases. At December 31, 1994, the Operating Partnership's
physical and economic occupancy and rent per square foot were 87%, 81% and
$8.53, respectively.
F-15
<PAGE>
Cost of operations and maintenance expense was $6.9 million, or 26.5% of
revenue. The expense reflects the direct cost of operating the 96 properties
owned by the Operating Partnership at December 31, 1994. The ratio is
approximately 4% higher than the pro forma ratio in the Company's Prospectus,
dated September 22, 1994. The 4% increase reflects the Operating Partnership's
level of acquisition during the fourth quarter as there tends to be a slight
time lag between the cost structure the Operating Partnership puts in place at
an acquisition facility and the related impact of the Operating Partnership's
rent increases.
Real estate tax expense was $1.7 million or 6.5% of revenue. The Operating
Partnership evaluates real estate taxes on a property by property basis and
appeals assessments where it deems the action warranted.
General and Administrative expense was $1.4 million in 1994, reflecting
growth in the number of facilities owned.
The 1994 depreciation expense of $2.9 million reflects the expansion in the
number of facilities owned. The facilities acquired during the Period had an
average depreciable base of 73% of cost.
Interest expense was $1.4 million. The Operating Partnership had a weighted
average of approximately $20.5 million in debt outstanding during the Period at
a weighted average interest rate of 6.8%.
Interest income was $0.7 million reflecting the temporary investment of a
portion of the proceeds contributed by the Company from the Company's two common
stock offerings during the Period.
YEAR ENDED DECEMBER 31, 1995, RESULTS OF THE OPERATING PARTNERSHIP AS
COMPARED TO THE COMBINED (HISTORICAL) YEAR ENDED DECEMBER 31, 1994 RESULTS OF
THE PREDECESSOR AND THE OPERATING PARTNERSHIP:
Rental Income increased $39.4 million (146%) primarily as a result of rental
rate increases, and an increase in the number of facilities owned as a result of
the Operating Partnership acquiring 63 facilities during fiscal year 1995.
Management income increased $.18 million (20%) reflecting the addition of three
managed facilities and management during the year of facilities that were
subsequently purchased by the Operating Partnership.
Cost of property operations and maintenance increased $10.8 million (142%)
as a result of an increase in the number of facilities owned during fiscal year
1995. Cost of property operations and maintenance was 27.2% of revenue for 1995
as compared to 26.9% for the combined 1994 period.
YEAR ENDED DECEMBER 31, 1995, RESULTS OF THE OPERATING PARTNERSHIP AS
COMPARED TO THE COMBINED (HISTORICAL) YEAR ENDED DECEMBER 31, 1994 RESULTS OF
THE PREDECESSOR AND THE OPERATING PARTNERSHIP:
Real estate taxes increased $3.1 million (166%) as a result of additional
expenses due to acquisitions of 63 facilities during fiscal year 1995 and the
impact of property reassessments. Real estate taxes were 7.2% of revenue for
1995 as compared to 6.5% for the combined 1994 period.
General and administrative (G&A) expense increased $.9 million (51%) as a
result of additional expenses incurred to support the Operating Partnership's
aggressive growth strategy. G&A expense was 3.8% of revenue for 1995 as compared
to 6.0% for the combined 1994 period. This decline as a percentage of revenue
reflects an overall increase in revenue over the prior year.
Depreciation and amortization expense increased $5.5 million (175%) due to
the acquisition of $220 million of facilities in 1995, as well as the impact of
recognizing a full years of depreciation on the facilities acquired in the prior
period.
Interest expense increased $.4 million reflecting the changes in the
Operating Partnership's debt structure between the periods.
F-16
<PAGE>
COMBINED (HISTORICAL) YEAR ENDED DECEMBER 31, 1994 RESULTS OF THE
PREDECESSOR AND THE OPERATING PARTNERSHIP, AS COMPARED TO THE YEAR ENDED
DECEMBER 31, 1993 RESULTS OF THE PREDECESSOR:
Rental Income increased $17.0 million (170%) primarily as a result of rental
rate increases, and an increase in the number of facilities owned as a result of
the Operating Partnership acquiring 79 facilities during fiscal year 1994.
Management income increased $.04 million (4%) reflecting growth in revenues at
managed properties.
Cost of property operations and maintenance increased $4.5 million (144%) as
a result of the Company operating 96 facilities during 1994, as compared to 17
facilities in 1993. Cost of property operations and maintenance was 26.9% of
revenue for the combined 1994 period as compared to 28.0% for 1993.
Real estate taxes increased $1.2 million (169%) as a result of an increase
in the number of properties owned during the combined periods of 1994. Real
estate taxes were 6.5% of revenue for the combined 1994 period as compared to
6.1% for 1993. General and administrative (G&A) expense increased $.9 million
(104%) as a result of additional expenses incurred to support the current and
future growth in the number of facilities and the related increased requirements
for accounting, management information systems, and administrative personnel.
G&A expense was 6.0% of revenue for the combined 1994 period, as compared to
7.4% for 1993.
PRO FORMA RESULTS OF OPERATIONS FOR THE PERIOD JANUARY 1, 1994 THROUGH
DECEMBER 31, 1994:
Depreciation and amortization expense increased $1.8 million (138%) as the
Operating Partnership acquired 79 facilities for approximately $214 million
during 1994.
Interest expense decreased $1.8 million as a result of the Predecessor's
outstanding mortgage debt balance being significantly reduced through the use of
the proceeds from the Company's March 1994 initial public offering.
PRO FORMA FOR THE PERIOD JANUARY 1, 1994 THROUGH DECEMBER 31, 1994:
The Operating Partnership believes that pro forma results of operations
provide a meaningful and relevant understanding of the Operating Partnership's
results as if it had been operating since January 1, 1994. The following pro
forma results of operations were prepared as if: (i) the sale in the IPO of
6.325 million shares of the Company's common stock for aggregate proceeds of
approximately $125.8 million, the related transactions and the contributions of
the proceeds to the Operating Partnership, (ii) the sale of 5.980 million shares
of the Company's common stock for aggregate proceeds of approximately $155.5
million in a secondary offering, the related transactions, and the contributions
of the proceeds to the Operating Partnership, and (iii) the acquisition of the
79 facilities acquired during the year, had taken place on January 1, 1994.
F-17
<PAGE>
The pro forma information is not necessarily indicative of the results of
operations which may have occurred if such transactions had been consummated on
January 1, 1994, nor does it purport to represent the results of operations for
future periods.
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
<S> <C>
Revenues:
Rental income............................................. $45,093
Management income......................................... 856
Other income.............................................. 1,045
-------
Total revenues.......................................... 46,994
-------
Expenses:
Cost of property operations and maintenance............... 11,328
Real estate taxes......................................... 3,206
General and administrative................................ 1,794
Depreciation and amortization............................. 5,738
-------
Total expenses.......................................... 22,066
-------
Income from operations 24,928
Other income (expense)
Interest expense.......................................... (446)
Interest income........................................... 23
-------
Net income before minority interest......................... $24,505
-------
-------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES:
CAPITAL RESOURCES:
On March 1, 1996, the Company entered into a Stock Purchase Agreement with
Security Capital U.S. Realty (US Realty), an affiliate of Security Capital
Group. Under the Stock Purchase Agreement and pursuant to the terms and
conditions thereof, US Realty will invest a total of $220 million in the
Company, initially place two of its nominees on the Company's Board of
Directors, one of whom the Company has been informed will be William D. Sanders,
Chairman of the Board and Chief Executive Officer of Security Capital Group, and
make available to the Company certain strategic advice, research and related
information and expertise (the "Strategic Alliance"). As part of the
transaction, on March 19, 1996, the Company issued to US Realty 1,948,882 shares
of Common Stock, approximately 10.0% of the outstanding Common Stock, at a price
of $31.30 per share, plus a purchase price adjustment for accrued dividends, and
contributed the proceeds to the Operating Partnership. At the same time, the
Company executed a Strategic Alliance Agreement and a Registration Rights
Agreement with US Realty.
The Company believes that the Strategic Alliance represents an attractive
opportunity to improve long-term shareholder value by providing the Company with
access to significant additional financial and strategic resources not otherwise
readily available to it, thereby enhancing the Company's short-term and
long-term growth prospects and better positioning it to capitalize on
opportunities as the REIT industry matures.
After the Strategic Alliance has been approved by the shareholders of the
Company, and prior to December 31, 1996, the Company will issue to US Realty an
additional 5,079,872 shares of the Company's common stock at the same price.
After acquiring the additional shares (and assuming no other change in the
number of outstanding shares), US Realty will own approximately 28.6% of the
outstanding Common Stock. The Company has agreed to submit to the shareholders a
proposal to amend the ownership limitations of the Company's Charter to permit
US Realty to acquire up to 37.5% of the Company's capital stock. The Strategic
Alliance, the amendment, and certain related
F-18
<PAGE>
transactions are expected to be submitted to shareholders for approval at the
Company's 1996 annual meeting. Pursuant to the terms of the Partnership
Agreement, the Company intends to contribute proceeds received from US Realty to
the Operating Partnership.
The Operating Partnership expects to finance the acquisition and development
of self-storage facilities primarily through the Company's issuance of equity
securities and the contribution of the proceeds to the Operating Partnership by
the Company, and the Operating Partnership issuance of debt securities. As
described above under "Strategic Alliance with Security Capital U.S. Realty,"
pursuant to the Strategic Alliance with US Realty the Company issued to US
Realty 1,948,882 shares of common stock for $61 million on March 19, 1996, and
expects to issue an additional 5,079,872 shares of common stock for $159 million
on or prior to December 31, 1996.
The Operating Partnership anticipates filing a shelf registration statement
relating to $250 million of unsecured, nonconvertible debt securities. In
addition, the Company has outstanding a shelf registration statement covering
approximately $75 million of unallocated equity securities. These registration
statements should permit the Operating Partnership and the Company to access the
public capital markets efficiently when it deems appropriate.
The Operating Partnership anticipates using the proceeds of the Company's
common stock issuance to U.S. Realty for acquisition and development of
self-storage facilities. The proceeds from any debt or equity offering by the
Operating Partnership or the Company would be used to repay borrowings under the
Operating Partnership's lines of credit used to finance acquisitions or
development and for general purposes. As a general matter, the Operating
Partnership anticipates utilizing its lines of credit as an interim source of
funds to acquire and develop self-storage facilities and repaying the credit
lines with longer-term debt or equity when management determines that market
conditions are favorable. The Operating Partnership believes that the
combination of the Company's common stock issuance pursuant to the Strategic
Alliance, and debt or equity issuances pursuant to the shelf registration
statements, in addition to borrowings under its credit facilities and issuances
of Operating Partnership Units, as described below, will provide the Operating
Partnership with necessary liquidity and capital resources to meet the
requirements of its operating strategies in 1996.
On February 8, 1995, the Operating Partnership entered into a Credit
Agreement for a $55 million unsecured revolving line of credit (the "Line") with
a financial institution acting as an agent for a group of lenders. On October
31, 1995, the First Amendment to the Credit Agreement was entered into by the
Operating Partnership increasing the aggregate commitment available under the
Line to $75 million. The Line had an initial termination date of February 8,
1996, with the Operating Partnership having an option to extend the term for two
successive one-year periods. The Operating Partnership has exercised that right
and has extended the maturity on the Line to February 1997. The Line bears
interest at various spreads (75 basis points at March 1, 1996) over LIBOR based
on the Operating Partnership's debt service coverage. On December 31, 1995, the
Operating Partnership entered into a $25 million unsecured term loan facility
(the "Facility") with the same agent as on the Line. The Facility has a maturity
date of December 21, 1996, and bears interest at various spreads (135 basis
points at March 1, 1996) over LIBOR.
In addition to the $75 million Line, the Operating Partnership has a $30
million unsecured line of credit with a commercial bank with an initial maturity
date of July 1, 1996. This line of credit was increased from $15 million to $23
million in November 1995 and increased to $30 million after year end. In
connection with the last increase, the lender released its security interest in
13 self-storage facilities that previously had been pledged by the Operating
Partnership. This line of credit, at the option of the Operating Partnership,
bears interest at Prime or LIBOR plus 2.25%.
The Operating Partnership assumed a $2.4 million mortgage on a facility
acquired during September 1995. The mortgage bears interest at 8.375% and
matures in 2006.
At December 31, 1995, the Operating Partnership had $3.4 million of fixed
rate debt maturing in 2001, $2.3 million of fixed rate date maturing in 2006,
and $.9 million of floating rate debt maturing in
F-19
<PAGE>
1999. The Operating Partnership does not believe it has significant refinancing
or interest rate risk on its debt. At December 31, 1995, the Operating
Partnership had $15.4 million available under the $23 million line of credit
with a commercial bank.
During 1995, the Operating Partnership revised its debt policy. The
Operating Partnership's policy limits indebtedness at time of incurrence to the
lesser of 50% of its total assets at cost or the amount that will sustain a
minimum debt service coverage ratio of 3:1. In addition, following shareholder
approval of the Strategic Alliance Agreement with US Realty, the Strategic
Alliance Agreement with US Realty will restrict the Company, including the
Operating Partnership, from incurring total consolidated indebtedness in an
amount exceeding 60% of the market value of the total assets (generally defined
as the sum of (i) the value of the Company's outstanding common stock at $31.30
per share, (ii) the Company's consolidated outstanding indebtedness, and (iii)
net property acquisitions after March 1, 1996). The Operating Partnership does
not anticipate operating at a debt level that would cause the debt-to-total
assets ratio to exceed 40% for an extended period of time, and, consequently,
does not believe that these restrictions will materially restrict its operations
or have a material adverse effect on its financial condition or results of
operations, though there can be no assurance that they will not do so in the
future.
On June 7, 1995, the Company issued 4.025 million shares of common stock
raising net proceeds of approximately $107.6 million. Following the contribution
of the proceeds to the Operating Partnership, the proceeds were used to repay
$99.9 million of the Operating Partnership's indebtedness, and for portfolio
acquisitions.
During 1995, the Operating Partnership issued approximately 600,000 units of
limited partnership interest ("Units") valued at approximately $18 million in
connection with the acquisition of facilities. The Operating Partnership's
acquisition of self-storage facilities using Units as consideration may
partially defer the seller's tax liability.
The Operating Partnership's investing activities during the year consisted
primarily of the acquisition of 63 self storage facilities, a warehouse to be
converted by the Operating Partnership into a self-storage facility, 11
expansion parcels of land at existing facilities and one parcel of land for
development by the Operating Partnership.
The Operating Partnership expects to incur approximately $1.2 million for
scheduled maintenance and repairs during the next twelve months and
approximately $5.9 million to conform facilities acquired during 1995 and 1994
to Operating Partnership standards.
The Operating Partnership at December 31, 1995, had Partners Capital of
approximately $385 million, a debt-to-equity ratio of 29.6% and a debt-to-total
assets ratio of 22.4%.
FUNDS FROM OPERATIONS
The Operating Partnership believes FFO should be considered in conjunction
with net income and cash flows to facilitate a clear understanding of its
operating results. FFO is defined as net income, computed in accordance with
generally accepted accounting principles ("GAAP"), excluding gains (losses) from
debt restructuring and sales of property, plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint ventures. FFO
should not be considered as an alternative to net income as a measure of the
Operating Partnership's financial performance or as an alternative to cash flows
from operating activities as a measure of liquidity. FFO does not represent cash
generated from operating activities in accordance with GAAP and is not
necessarily indicative of cash available to fund cash needs. Effective January
1, 1996, the National Association of Real Estate Investment Trusts amended its
definition of FFO. The Operating Partnership will begin presenting FFO under the
amended definition for the first quarter 1996. As such, the Operating
Partnership's 1995 FFO and FFO per share may not be comparable to similarly
titled measures of other REITs who may have chosen early adoption of the amended
method of FFO computation. The pro forma FFO was prepared as if the IPO and the
related formation transactions, including the acquisition of the 26 facilities,
had occurred on January 1, 1994.
F-20
<PAGE>
The following table illustrates the components of the Operating
Partnership's FFO for the year ended December 31, 1995, the period ending
December 31, 1994 and pro forma for the year ended December 31, 1994 (in
thousands except per share data):
<TABLE>
<CAPTION>
1995 1994 1994
HISTORICAL HISTORICAL PRO FORMA
---------- ---------- ---------
<S> <C> <C> <C>
Net income.................................................. $ 30,420 $ 12,137 $14,531
Depreciation of real property............................... 7,246 2,474 2,984
Amortization of non compete................................. 248 167 167
Amortization of lease guarantees............................ 189 186 186
Amortization of loan fees...................................
Consolidated FFO............................................ 903 55 55
---------- ---------- ---------
$ 39,006 $ 15,019 $17,923
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
The Company, as a qualified REIT, is required to distribute a substantial
portion of its net income as dividends to its shareholders. In 1995, those
distributions were approximately 85% of the Company's funds from operations. It
is the intent of the Operating Partnership that cash distributions will be made
for each fiscal year to enable the Company to meet its distribution requirements
for qualification as a REIT. While the Operating Partnership's goal is to
generate and retain sufficient cash flow to meet its operating, capital and debt
service needs, its distribution requirements may require the Operating
Partnership to utilize its bank lines of credit and other sources of liquidity
to finance property acquisitions and development, and major capital
improvements.
The Operating Partnership believes that its liquidity and capital resources
are adequate to meet its cash requirements for the next twelve months.
FUTURE ACTIVITIES:
The Company's strategic alliance with US Realty will not affect the
Operating Partnership's business plan or growth strategies for 1996. However,
the alliance has positively affected the Operating Partnership's access to
capital. Pursuant to the terms of the alliance, US Realty will provide certain
economic and market research, and assistance in capital strategy and formation.
The Operating Partnership expects that this alliance will positively impact the
formulation of the Operating Partnership's longer term strategic plan and its
ability to execute its strategies.
The Operating Partnership's external growth strategy is to increase the
number of facilities owned by the Operating Partnership either by acquiring
suitably located, under-performing facilities that offer potential for
improvement of occupancy or rental rates, or by developing and constructing new
facilities in favorable markets. The Operating Partnership, since its
commencement, has made approximately $435 million of acquisitions. The Operating
Partnership expects to continue investing at a consistent pace during 1996,
seeking to acquire approximately 65-75 facilities. The Operating Partnership
anticipates purchasing properties in 1996 at an average yield on trailing NOI of
not less than 10%.
The Operating Partnership will continue to selectively develop facilities in
markets that are determined by management to be favorable. The Operating
Partnership has budgeted commitments of approximately $30 million for
development beginning in 1996. The development activities will consist of
additions to existing facilities and construction of new facilities. The
Operating Partnership, at December 31, 1995, had 12 parcels of land in its
portfolio in various stages of development. The Operating Partnership has
entered into an agreement to develop a self-storage facility in Northern
Virginia, to be owned jointly by the Operating Partnership and an unaffiliated
third party. The Operating Partnership estimates that its share of the
construction expenses under the agreement will be approximately $6.5 million.
The Operating Partnership expects to complete construction in April of 1996 and
at December 31, 1995, had incurred costs of approximately $3.3 million. The
Operating Partnership is converting a warehouse into a self-storage facility at
an estimated cost of construction
F-21
<PAGE>
of $1 million. At December 31, 1995, the Operating Partnership had incurred
construction costs of approximately $400 thousand, and expects to complete the
facility by the end of the first quarter of 1996.
At December 31, 1995, the Operating Partnership had 1,025,423 Limited
Partnership Units outstanding. Certain Limited Partnership Units became
redeemable beginning on March 23, 1995, for an amount equal to their then fair
market value ($2.7 million, based upon a price per Unit of $32.625 at December
31, 1995) payable by the Operating Partnership either in cash or (at the
Operating Partnership's option, based upon a determination by the Company's
Board of Directors that the Operating Partnership's anticipated cash
requirements and anticipated cash flow make a lump sum payment imprudent) by a
promissory note payable in quarterly installments over two years with interest
at the prime rate. Units held by other Limited Partners are redeemable, at the
option of such Limited Partners, beginning on the first anniversary of their
issuance, for amounts equal to the then fair market value of their Units ($11.3
million, based upon a price per Unit of $32.625 at December 31, 1995) payable by
the Operating Partnership in cash or, at the option of the Operating
Partnership, in shares of the Company's Common Stock at the initial exchange
ratio of one share for each Unit. As of March 29, 1996, no Limited Partner has
requested to redeem Units. It is anticipated that a source of funds for any such
cash redemption will be retained cash flow or proceeds from the future sale of
securities of the Operating Partnership or the Company or other Operating
Partnership or Company indebtedness. The Company has granted registration rights
to the holders of Units entitling them to require the Company to register under
the Securities Act of 1933 any shares of the Company's common stock issued upon
redemption of Units held by them.
Portfolio expansion and repayment of principal on Operating Partnership
indebtedness represent the Operating Partnership's primary liquidity
requirements. The Operating Partnership does not expect to generate sufficient
funds from operating cash flow to meet such long-term liquidity needs and
intends to finance them primarily through borrowings under its lines of credit,
debt or equity offerings, or additional borrowings for such purpose.
COMPETITION:
The Operating Partnership monitors the development of self-storage
facilities in its markets. The Operating Partnership has identified four markets
in which potential overbuilding may be occurring. In three of these markets
(Dallas, Atlanta, and Phoenix) the Operating Partnership may be required to
reduce by 50% its normal yearly rental rate increase, and in one market,
Albuquerque, the Operating Partnership may be unable to aggressively increase
rates in 1996. All of these markets may also demonstrate a minimal reduction in
the seasonal physical occupancy achieved throughout the year. As a result of the
geographic diversity of the Operating Partnership's portfolio, the Operating
Partnership does not expect the potential for excess supply in these markets to
have a significant impact on its financial condition or results of operations.
INFLATION:
The Operating Partnership does not believe that inflation has had or will
have a direct effect on its operations. Substantially all of the leases at the
facilities allow for monthly rent increases which provide the Operating
Partnership with the opportunity to achieve increases in rental income as each
lease matures.
SEASONALITY:
The Operating Partnership's revenues typically have been higher in the third
and fourth quarter primarily because the Operating Partnership increases its
rental rates on most of its storage units at the beginning of May, and to a
lesser extent because self-storage facilities tend to experience greater
occupancy during the late spring, summer, and early fall months due to the
greater incidence of moves during those periods. The Operating Partnership
believes that its tenant mix, rental structure, and expense structure provide
adequate protection against undue fluctuations in cash flows and net revenues
during off-peak seasons. Thus, the Operating Partnership does not expect
seasonality to materially affect distributions to unitholders.
F-22
<PAGE>
RECENT ACCOUNTING DEVELOPMENTS:
In October of 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123") was issued. The standard
is effective for fiscal years beginning after December 15, 1995. The Operating
Partnership anticipates continuing to elect expense recognition under APB 25,
and disclosing pro forma net income, and earnings per unit information based on
the FAS 123 fair value methodology.
F-23
<PAGE>
SUSA PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1995 1994
----------- -----------
(AMOUNTS IN THOUSANDS,
EXCEPT UNIT DATA)
<S> <C> <C>
Investment in storage facilities, at cost:
Land.................................................................................. $ 139,603 $ 74,544
Buildings and equipment............................................................... 369,694 204,449
----------- -----------
509,297 278,993
Accumulated depreciation.............................................................. (14,561) (7,224)
----------- -----------
494,736 271,769
Cash & cash equivalents............................................................... 2,802 3,278
Other assets.......................................................................... 11,987 4,385
----------- -----------
Total assets........................................................................ $ 509,525 $ 279,432
----------- -----------
----------- -----------
LIABILITIES & PARTNERS CAPITAL
Line of credit borrowings............................................................... $ 107,605 $ 4,000
Mortgage notes payable.................................................................. 6,670 4,373
Accounts payable & accrued expenses..................................................... 5,910 4,998
Rents received in advance............................................................... 3,680 2,038
Minority interest....................................................................... 524 133
----------- -----------
Total liabilities................................................................... 124,389 15,542
----------- -----------
Partners' capital:
General partnership units, 17,562,363 and 13,298,817 outstanding...................... 364,947 254,340
Limited partnership units, 1,025,423 and 406,890 outstanding.......................... 26,916 9,550
Notes receivable -- employees......................................................... (6,727) --
----------- -----------
Total partners' capital............................................................. 385,136 263,890
----------- -----------
Total liabilities and partners' capital............................................. $ 509,525 $ 279,432
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-24
<PAGE>
SUSA PARTNERSHIP, L.P. (THE "OPERATING PARTNERSHIP")
AND
STORAGE USA, INC. (THE "PREDECESSOR")
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
OPERATING PARTNERSHIP
---------------------------- PREDECESSOR
FOR THE PERIOD ----------------------------
MARCH 24, 1994 FOR THE PERIOD
FOR THE (INCEPTION) JAN. 1, 1994 FOR THE
YEAR ENDED THROUGH THROUGH YEAR ENDED
DEC 31, 1995 DEC 31, 1994 MARCH 23, 1994 DEC 31, 1993
------------ -------------- -------------- ------------
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C>
REVENUES:
Rental income...................................... $ 66,455 $ 24,667 $ 2,358 $ 10,019
Management income.................................. 1,072 707 188 859
Other income....................................... 480 460 52 311
------------ -------------- ------- ------------
Total revenues................................... 68,007 25,834 2,598 11,189
------------ -------------- ------- ------------
EXPENSES:
Cost of property operations and maintenance........ 18,471 6,851 792 3,130
Real estate taxes.................................. 4,900 1,686 153 683
General and administrative......................... 2,568 1,374 325 831
Depreciation and amortization...................... 8,586 2,882 244 1,313
------------ -------------- ------- ------------
Total expense.................................... 34,525 12,793 1,514 5,957
------------ -------------- ------- ------------
------------ -------------- ------- ------------
INCOME FROM OPERATIONS............................... 33,482 13,041 1,084 5,232
OTHER INCOME (EXPENSE):
Interest expense................................... (3,004) (1,404) (1,195) (4,432)
Interest income.................................... 166 658 --
------------ -------------- ------- ------------
INCOME (LOSS) BEFORE MINORITY INTEREST............... 30,644 12,295 (111) 800
Minority interest.................................. (224) (158) (54) (351)
------------ -------------- ------- ------------
NET INCOME (LOSS).................................... $ 30,420 $ 12,137 $ (165) $ 449
------------ -------------- ------- ------------
------------ -------------- ------- ------------
NET INCOME PER UNIT.................................. $ 1.87 $ 1.28
------------ -------------- ------- ------------
WEIGHTED AVERAGE UNITS OUTSTANDING................... 16,294 9,467
------------ -------------- ------- ------------
------------ -------------- ------- ------------
</TABLE>
See notes to consolidated financial statements.
F-25
<PAGE>
SUSA PARTNERSHIP, L.P. (THE "OPERATING PARTNERSHIP")
AND
STORAGE USA, INC. (THE "PREDECESSOR")
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
OPERATING PARTNERSHIP
---------------------------- PREDECESSOR
FOR THE PERIOD -----------------------------
FOR THE MARCH 24, 1994 FOR THE
YEAR ENDED (INCEPTION) JAN. 1, 1994 YEAR ENDED
DEC. 31, THROUGH THROUGH DEC. 31,
1995 DEC. 31, 1994 MARCH 23, 1994 1993
------------ -------------- --------------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income........................................ $ 30,420 $ 12,137 $ (165) $ 449
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 8,586 2,882 244 1,313
Minority interest............................... 224 158 -- --
Changes in assets and liabilities:
Other assets.................................. (4,009) (4,385) (809) (591)
Other liabilities............................. 2,554 7,036 393 218
------------ -------------- ------ ------------
Net cash provided by operating activities... 37,775 17,828 (337) 1,389
------------ -------------- ------ ------------
------------ -------------- ------ ------------
INVESTING ACTIVITIES:
Acquisition and improvements of
storage facilities............................... (212,326) (264,561) (655)
Development of storage facilities................. (4,842) (327) -- (3,095)
------------ -------------- ------ ------------
Net cash used in investing activities....... (217,168) (264,888) -- (3,750)
------------ -------------- ------ ------------
------------ -------------- ------ ------------
FINANCING ACTIVITIES:
Net borrowings under line of credit............... 103,605 4,000 450 --
Proceeds from the issuance of bank
notes............................................ -- -- -- 900
Mortgage principal payments....................... (79) (40) (44) (71)
Mortgage principal borrowing...................... 2,376 4,413 -- 2,970
Increase (decrease) in payable to
affiliates....................................... -- -- 178 (589)
Increase in deferred costs........................ -- -- -- (372)
General partner contributions..................... 108,169 255,483 -- --
Distributions to general partner.................. (33,414) (13,070) (397) (350)
Distributions to limited partners................. (1,483) (271) -- --
Distributions to minority interests............... (257) (177) -- --
------------ -------------- ------ ------------
Net cash provided by financing activities... 178,917 250,338 187 2,488
------------ -------------- ------ ------------
------------ -------------- ------ ------------
Net increase (decrease) in cash and equivalents... (476) 3,278 (150) 127
------------ -------------- ------ ------------
Cash and equivalents, beginning of period........... 3,278 150 23
------------ -------------- ------ ------------
------------ -------------- ------ ------------
Cash and equivalents, end of period................. $ 2,802 $ 3,278 $ $ 150
Supplemental schedules of non-cash activities:
Storage facilities acquired in exchange for
Limited Partnership Units........................ 17,978 $ 9,611 -- --
General Partnership Units in exchange for notes
receivable....................................... $ 6,727 -- -- --
</TABLE>
See notes to consolidated financial statements.
F-26
<PAGE>
SUSA PARTNERSHIP, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL LIMITED NOTES TOTAL
PARTNERSHIP PARTNERSHIP RECEIVABLE PARTNERS'
CAPITAL CAPITAL EMPLOYEES CAPITAL
----------- ----------- ----------- -----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Initial capital contribution at March 24, 1994................ $ 109,969 $ $ $ 109,969
Contribution of self-storage facilities in exchange for
units........................................................ -- 9,611 -- 9,611
Capital contribution.......................................... 145,514 -- -- 145,514
Net income.................................................... 11,927 210 -- 12,137
Distributions................................................. (13,070) (271) -- (13,341)
----------- ----------- ----------- -----------
Balance at December 31, 1994................................ 254,340 9,550 -- 263,890
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Capital contribution.......................................... 114,896 -- -- 114,896
Contribution of self-storage facilities in exchange for
units........................................................ -- 17,554 -- 17,554
Issuance of units to employees in exchange for notes
receivable................................................... -- -- (6,727) (6,727)
Net income.................................................... 29,125 1,295 -- 30,420
Distributions................................................. (33,414) (1,483) -- (34,897)
----------- ----------- ----------- -----------
Balance at December 31, 1995................................ $ 364,947 $ 26,916 $ (6,727) $ 385,136
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-27
<PAGE>
STORAGE USA, INC. (THE "PREDECESSOR")
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------- NOTES DISTRIBUTIONS IN
NUMBER OF PAID IN RECEIVABLE- ACCUMULATED EXCESS OF NET
SHARES AMOUNT CAPITAL OFFICERS DEFICIT INCOME
------------- ----------- ----------- --------------- ------------ -----------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993............. 1 $ 1 -- -- $ (3,562) --
Dividends deemed cash distributions.... -- -- -- -- (11,012) --
Capital contributions.................. -- -- -- -- 1,462 --
Stock split............................ 993 9 -- -- (9) --
Net income............................. -- -- -- -- 449 --
-- -- --
--- --- ------------
Balance at December 31, 1993........... 994 10 -- -- (12,672) --
-- -- --
-- -- --
--- --- ------------
--- --- ------------
Corporate reorganization adjustments... -- -- -- -- (2,994) --
Net loss............................... -- -- -- -- (165) --
-- -- --
--- --- ------------
Balance at March 23, 1994.............. 994 $ 10 -- -- $ (15,831) --
-- -- --
-- -- --
--- --- ------------
--- --- ------------
<CAPTION>
TOTAL
SHAREHOLDERS'
EQUITY
-------------
<S> <C>
Balance at January 1, 1993............. $ (3,561)
Dividends deemed cash distributions.... (11,012)
Capital contributions.................. 1,462
Stock split............................ --
Net income............................. 449
-------------
Balance at December 31, 1993........... (12,662)
-------------
-------------
Corporate reorganization adjustments... (2,994)
Net loss............................... (165)
-------------
Balance at March 23, 1994.............. $ (15,821)
-------------
-------------
</TABLE>
See notes to consolidated financial statements.
F-28
<PAGE>
SUSA PARTNERSHIP L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
1. ORGANIZATION:
SUSA Partnership, L.P. (the "Operating Partnership"), which commenced
operation on March 23, 1994, is engaged in owning, developing, constructing and
operating self-storage facilities throughout the United States. Storage USA,
Inc. (the "Predecessor" See Note 11), a Tennessee corporation, was formed in
1985 to own, develop, construct and operate self-storage facilities throughout
the United States. On March 23, 1994, the Predecessor completed an initial
public offering (the "IPO") of 6,325,000 shares of common stock at $21.75 per
share forming Storage USA, Inc. (the "Company"), the sole general partner in the
Operating Partnership. The Company is a self-administered and self-managed real
estate investment trust ("REIT").
The results for the period prior to January 1, 1994, and for the period from
January 1, 1994, through March 23, 1994 are presented for the Predecessor and
are labeled as such on the financial statements.
On March 23, 1994, the Company contributed substantially all of its net
assets of approximately $109,969 to the Operating Partnership in exchange for an
approximately 98.9% general partnership interest in the Operating Partnership.
The Operating Partnership used the contribution from the Company to acquire 26
self-storage facilities from unrelated third parties, to acquire the outstanding
partnership interests in five controlled facilities, and for working capital.
In addition, the Operating Partnership formed SUSA Management, Inc. ("SUSA
Management"), to provide self-storage management to third parties and certain
ancillary services. The Operating Partnership owns 99% of the economic interest
of SUSA Management.
On September 29, 1994, the Company contributed approximately $145,514 to the
Operating Partnership in exchange for approximately 5,980 units of interest in
the Operating Partnership ("Units"). The Operating Partnership used the
contribution from the Company to acquire 27 self-storage facilities from
unrelated third parties, to retire approximately $33,200 of indebtedness, and
for working capital. On June 7, 1995, the Company contributed $108,169 to the
Operating Partnership in exchange for approximately 4,025 Units. The Operating
Partnership used the contribution from the Company to acquire and repay debt
related to the acquisition of 34 self-storage facilities.
On October 31, 1995, the Company contributed $6,727 of notes receivable from
employees who are officers of the Company to the Operating Partnership in
exchange for approximately 230 Units. During 1995, the Company contributed
approximately $219 of proceeds from various issuances of common stock in
exchange for approximately 8 Units.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of the Operating
Partnership and SUSA Management. All intercompany balances and transactions have
been eliminated. The financial statements reflect the segregation of the
operating activities for the periods presented related to the Operating
Partnership and the Predecessor, which has been accounted for on a basis
consistent with the Operating Partnership except for the items noted in Note 12.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of
F-29
<PAGE>
SUSA PARTNERSHIP L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
assets and liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and the reported amounts of revenues and
expenses during the reported periods. Actual results could differ from those
estimates.
FEDERAL INCOME TAXES:
No provision has been made for income taxes in the accompanying consolidated
financial statements since such taxes, if any, are the responsibility of the
individual partners.
CASH AND CASH EQUIVALENTS:
The Operating Partnership considers all highly liquid debt instruments
purchased with maturity of three months or less to be cash equivalents.
REVENUE RECOGNITION:
Rental income and management income is recorded when due from tenants and
customers. Rental income received prior to the start of the rental period is
included in rents received in advance.
INVESTMENT IN STORAGE FACILITIES:
Storage facilities are recorded at cost. Depreciation is computed using the
straight line method over estimated useful lives of 40 years for buildings and
improvements, and three to ten years for furniture, fixtures and equipment.
Expenditures for significant renovations or improvements which extend the useful
life of assets are capitalized. Repairs and maintenance costs are expensed as
incurred.
During 1995, the Operating Partnership adopted Statement of Accounting
Standards No. 121 "Accounting for Impairment of Long-Lived Assets." The adoption
of this standard had no impact on the Operating Partnership's financial
statements. Impairment is evaluated based upon comparing the sum of the expected
future cash flows (undiscounted and without interest charges) to the carrying
value of the asset. If the cash flows is less, an impairment loss is recognized
for the amount by which the carrying amount of the assets exceeds the fair value
of the asset.
OTHER INCOME:
Other income consists primarily of sales of storage-related merchandise
(locks and packing supplies) and commissions from truck rentals.
MINORITY INTEREST:
The minority interest reflects the ownership interest of the limited
partners in two facilities in which the Operating Partnership is the general
partner. The limited partner's share of the net income of the Operating
Partnership is charged to minority interest expense and increases the Operating
Partnership's liability. Distributions to the limited partners reduces the
Operating Partnership's liability.
OTHER ASSETS:
Included in other assets in 1995 and 1994, respectively, are $4,842 and $327
of costs related to two development projects, $257 and $63 due from affiliate,
prepaid expenses, accounts receivable and intangible assets. The intangible
assets at December 31, 1995 and 1994, respectively, consist primarily of loan
acquisition costs of approximately $254 and $230, net of accumulated
amortization of approximately $24 and $78, a covenant not to compete of $500,
net of accumulated amortization of approximately $415 and $167, and minimum
lease guarantees of approximately $189 and $186, which have
F-30
<PAGE>
SUSA PARTNERSHIP L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
been fully amortized. Loan acquisition costs are amortized over the terms of the
related debt, the covenant is amortized over the contract period of the
agreement. Amounts under minimum lease guarantees on five of the Operating
Partnership's facilities are amortized as earned.
INCOME PER UNIT:
Net income per unit is calculated using the weighted average number of Units
outstanding during the period.
3. INVESTMENT IN STORAGE FACILITIES:
The following summarizes activity in storage facilities during the period:
<TABLE>
<CAPTION>
COST:
<S> <C>
Balance at March 23, 1994...................................... $ 54,762
Property acquisitions.......................................... 224,147
Improvements................................................... 84
---------
Balance at December 31, 1994................................... 278,993
Property acquisitions.......................................... 220,541
Land acquisitions.............................................. 5,733
Improvements................................................... 4,030
---------
Balance at December 31, 1995................................. $ 509,297
---------
---------
ACCUMULATED DEPRECIATION:
Balance at March 23, 1994...................................... $ 4,695
Additions during the year...................................... 2,529
---------
Balance at December 31, 1994................................... 7,224
Additions during the year...................................... 7,337
---------
Balance at December 31, 1995................................. $ 14,561
---------
---------
</TABLE>
The aggregate cost of real estate facilities for federal income tax purposes
was approximately $479,037 and $255,755 at December 31, 1995 and 1994,
respectively.
F-31
<PAGE>
SUSA PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in Thousands, Except Per Unit Data)
4. MORTGAGE NOTES PAYABLE:
Mortgage Notes payable consist of the following at December 31.
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
First mortgage note, payable in equal monthly installments
of $34, including interest at 10.6%, through May 2001, with
the remaining balance of $3,081 due June 2001.............. $3,428 $3,473
First mortgage note, payable in equal monthly installments
of $28, including interest at 8.375%, through June 2006.... 2,342
First mortgage note, interest only at prime plus 2% (9% at
December 31, 1994) payable monthly through December 31,
1998, with the balance due in full in January 1999......... 900
First mortgage note, payable in equal monthly installments
of $8, including interest at 8.5%, through August 2000,
with the remaining balance of $815 due September 2000...... 900
------ ------
Total................................................... $6,670 $4,373
------ ------
------ ------
</TABLE>
Principal payments are due as follows:
<TABLE>
<S> <C> <C>
1996........................................................ $ 214
1997........................................................ 234
1998........................................................ 255
1999........................................................ 279
2000........................................................ 1,094
Thereafter.................................................. 4,594
------
$6,670
------
------
</TABLE>
5. LINE OF CREDIT BORROWINGS:
Line of credit borrowings at December 31, 1995, consists of $100,000 of
borrowings under a $100,000 line of credit with a group of commercial banks, and
$7,605 of borrowings under a $23,000 line of credit with a commercial bank. The
balance at December 31, 1994, consists of $4,000 of borrowings under the $23,000
line. The $100,000 facility, consists of a $75,000 tranche with an initial
termination date of February 8, 1996, and a $25,000 tranche with an initial
termination date of April 21, 1996. On the $75,000 tranche, the Operating
Partnership has an option to extend the term for two successive one year
periods. On the $25,000 tranche, the Operating Partnership has an option to
extend the term until December 21, 1996. Subsequent to year end, the Operating
Partnership exercised its option on the $75,000 tranche and extended the
maturity to February 8, 1997. This line bears interest at various spreads over a
base rate based on the Operating Partnership's debt service coverage. The
weighted average borrowings during the year was $41,662, the maximum borrowing
outstanding under the line during the period was $100,000, and the weighted
average interest rate during the year was 6.1%. The $23,000 line consists of an
$8,000 tranche maturing on February 15, 1996, and a $15,000 tranche maturing on
July 1, 1996. Both tranches, at the option of the Operating Partnership, bear
interest at prime or LIBOR plus 2.25%, and are collateralized by mortgages on 13
facilities. The facilities have a net book value of $28,035. Subsequent to year
end, the commercial bank agreed to release the mortgages, increase the line to
$30,000 with an initial maturity of July 1,
F-32
<PAGE>
SUSA PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
5. LINE OF CREDIT BORROWINGS: (CONTINUED)
1996, and continue the borrowing arrangement. During 1995 and 1994,
respectively, the weighted average daily borrowings were $5,513 and $4,900, the
maximum borrowings outstanding under the line were $21,700 and $11,500, and the
weighted average interest rates were 8.9% and 6.5%.
Under the terms of the agreements, the Operating Partnership is required to
maintain certain financial ratios and a minimum net worth, as defined under the
agreements.
Interest is capitalized on accumulated expenditures relating to the
development of certain qualifying properties. During 1995 and 1994, total cash
paid by the Operating Partnership for the interest was $3,345 and $2,281,
respectively, which includes $532 which was capitalized in 1995. No interest was
capitalized in 1994.
6. PRO FORMA FINANCIAL INFORMATION (UNAUDITED):
The following unaudited pro forma statement of operations of the Operating
Partnership is presented as if the 1995 capital contributions, and the
acquisition of 63 properties during 1995 had occurred on January 1, 1995. This
unaudited pro forma statement of operations is not necessarily indicative of
what actual results of operations of the Operating Partnership would have been
assuming such transactions had been completed as of January 1, 1995, nor does it
purport to represent the results of operations for future periods.
Pro forma for the year ended December 31, 1995
<TABLE>
<S> <C>
Revenues
Rental income............................................... $81,875
Management income........................................... 1,072
Other income................................................ 1,037
-------
Total revenues.......................................... 83,984
-------
Expenses
Cost of property operations and maintenance................. 22,385
Real estate taxes........................................... 6,171
General and administrative.................................. 3,046
Depreciation and amortization............................... 9,579
-------
Total expenses.......................................... 41,181
-------
Income from operations...................................... 42,803
Other income (expense):
Interest expense.......................................... (7,679)
Interest income........................................... 637
-------
Income before minority interest............................. $35,761
-------
-------
Net Income per Unit......................................... $ 1.93
-------
-------
</TABLE>
7. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The Operating Partnership's carrying amount and fair value of its financial
instruments as of December 31, 1995 and 1994, respectively, were as follows:
CASH AND CASH EQUIVALENTS:
The carrying amount of $2,802 and $3,278 reported in the balance sheets for
cash and cash equivalents approximates its fair value.
F-33
<PAGE>
SUSA PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
7. FAIR VALUE OF FINANCIAL INSTRUMENTS: (CONTINUED)
MORTGAGE AND LINE OF CREDIT BORROWINGS:
The carrying amount of $107,605 and $4,000 reported in the balance sheets
for line of credit borrowings approximates their fair value. The fair value of
the $6,670 and $4,373 of mortgage notes payable reported in the balance sheets
is $7,003 and $4,631. These fair values were estimated using discounted cash
flow analysis, based on the Operating Partnership's current incremental
borrowing rate for similar types of borrowing arrangements.
INTEREST RATE SWAP AGREEMENT:
The Operating Partnership had entered into an interest rate swap agreement
as more fully described in footnote 11. At December 31, 1995, the fair value of
the agreement was ($3,547). This fair value represents the estimated amount the
Operating Partnership would pay to terminate the swap at that date. The swap was
terminated on March 8, 1996, and the Operating Partnership recognized a gain of
$50 in connection with the termination. See footnote 11.
8. COMMITMENTS AND CONTINGENCIES:
LEASE AGREEMENTS:
The Operating Partnership has various lease agreements for office space.
Total future minimum rental payments on the office leases are $1,124: $222 in
years one through three; and $229 in years four and five.
PROPERTY DEVELOPMENT:
The Operating Partnership has entered into an agreement to develop a
self-storage facility in Northern Virginia. The facility will be owned by the
Operating Partnership and an unaffiliated third party. Under the terms of the
agreement, the Operating Partnership is required to fund the cost of
construction, which is currently estimated to be approximately $6,500. At
December 31, 1995, the Operating Partnership has incurred costs of approximately
$3,290. The facility is expected to be complete by the middle of the second
quarter of 1996.
REDEMPTION OF LIMITED PARTNERSHIP UNITS:
At December 31, 1995, there were 1,025,423 Units outstanding. Certain Units
became redeemable on March 23, 1995, for an amount equal to their then fair
market value ($2.7 million, based upon a price per Unit of $32.625 at December
31, 1995) payable by the Company either in cash or by a promissory note payable
in quarterly installments over two years with interest at the prime rate. Units
held by other Limited Partners are redeemable, at the option of such Limited
Partners, beginning on the first anniversary of their issue, for amounts equal
to the then fair market value of their Units ($11.3 million, based upon a price
per Unit of $32.625 at December 31, 1995) payable in cash or, at the option of
the Company, in shares of the Company's common stock at the exchange ratio of
one share for each Unit.
9. POST EMPLOYMENT BENEFIT PLAN:
The Operating Partnership contributes to a 401(k) savings plan (a voluntary
defined contribution plan) for the benefit of employees meeting certain
eligibility requirements and electing participation in the plan. Each year the
Operating Partnership is obligated to make a matching contribution on the
employee's behalf equal to 50% of the participant's contribution to the plan, up
to 2% of the participant's compensation. Operating Partnership profit sharing
contributions to the plan are determined annually by the Operating Partnership.
Operating Partnership contributions totaled $223 and $137 during 1995 and 1994,
respectively.
F-34
<PAGE>
SUSA PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
10. PARTNERSHIP CAPITAL:
The Company, as a corporate general partner, has Stock Option, Employee
Stock Purchase and Loan, and Dividend Reinvestment and Stock Purchase Plans.
Under the terms of the partnership agreement, all proceeds from the issuance of
common stock under the plans are contributed to the Operating Partnership in
exchange for Operating Partnership Units.
STOCK OPTIONS (amounts not in thousands):
The shareholders of the Company have approved and the Company has adopted
the Storage USA, Inc. 1993 Omnibus Stock Incentive Plan. The Company has granted
options to certain directors, officers and key employees to purchase shares of
the Company's common stock at a price not less than the fair market value at the
date of grant. There are 1,000,000 shares available to be issued under the plan.
Generally, the optionee has up to ten years from the date of the grant to
exercise the options. Plan activity is as follows:
<TABLE>
<CAPTION>
NUMBER OF PRICE
OPTIONS PER SHARE
---------- ---------------
<S> <C> <C>
Option outstanding:
March 24, 1994............................................ -- --
Granted................................................... 492,402 $21.75 - $24.75
Exercised................................................. -- --
Canceled.................................................. -- --
---------- ---------------
Options outstanding:
December 31, 1994......................................... 492,402 $21.75 - $24.75
Granted................................................... 220,750 $31.00
Exercised................................................. (4,500) $21.75 - $24.75
Canceled.................................................. -- --
---------- ---------------
Options outstanding:
December 31, 1995......................................... 708,652 $21.75 - $31.00
---------- ---------------
---------- ---------------
</TABLE>
At December 31, 1995, 525,486 options are exercisable under the plan.
EMPLOYEE STOCK PURCHASE AND LOAN PLAN (AMOUNTS NOT IN THOUSANDS):
In 1995, the Company issued 230,000 shares of its common stock under the
1995 Employee Stock Purchase and Loan Plan. Pursuant to the terms of the plan,
the Company and certain officers entered into stock purchase agreements whereby
the officers purchased common stock at the then current market price. The
Company provides 100% financing for the purchase of the shares with interest at
7% per annum payable quarterly. The underlying notes are secured by the shares
and mature in November 2002. Under the terms of the partnership agreement, all
proceeds from the issuance of common stock under the plan are contributed to the
Operating Partnership in exchange for Operating Partnership Units.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN:
In 1995, the Company adopted the Dividend Reinvestment and Stock Purchase
Plan (the "Plan"). Under the Plan, the Company offers holders of its common
stock the opportunity to purchase, through reinvestment of dividends or by
additional cash payments, additional shares of its common stock. The shares of
common stock for participants may be purchased from the Company at the greater
of the average high and low sales price or the average closing sales price on
the investment date or in the open market at 100% of the average price of all
shares purchased for the Plan. During
F-35
<PAGE>
SUSA PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
10. PARTNERSHIP CAPITAL: (CONTINUED)
1995, 653 shares were issued under the Plan. Under the terms of the partnership
agreement, all proceeds from the issuance of common stock under the plan are
contributed to the Operating Partnership in exchange for Operating Partnership
units.
11. SUMMARY OF PREDECESSOR SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The accompanying combined financial statements for the periods prior to
March 24, 1994 present only the "carved-out" accounts of the Predecessor
comprised of the continuing assets, liabilities and operations of the
Predecessor following the IPO, including 11 owned facilities and six controlled
facilities (Original Facilities) and Storage USA Management Corporation
(Management Corp.). All other accounts of the Predecessor were excluded since
the business segments to which they relate were discontinued by the Company
before the IPO. Due to common ownership and management of the Original
Facilities and Management Corp., the historical financial statements have been
accounted for as a group of entities under common control, which is similar to
the accounting method used for a pooling of interest. All significant
intercompany transactions and balances have been eliminated in the combined
presentation. The financial information included herein may not necessarily
reflect the financial position and results of operations of the Predecessor had
it been a separate stand-alone entity during the periods prior to March 24,
1994.
MINORITY INTEREST:
The Predecessor financial statements include the accounts of six facilities
(Selling Partnerships) which were owned by investment partnerships in which the
Predecessor or its affiliates had a controlling interest. The ownership interest
of the other partners in these partnerships is treated as a minority interest
and reported as a liability of the Predecessor. Increases in minority interest
are charged to operations.
FEDERAL INCOME TAXES:
The Predecessor was an S Corporation and thus was not subject to taxation at
the corporate level. The self-storage facilities owned through the investment
partnerships required the partners to include their respective share of profits
and losses in their individual tax returns. Therefore, the statements of
operations contain no provision for federal income taxes for any periods prior
to March 24, 1994.
SHAREHOLDERS' DEFICIT:
The Predecessor's President and Chief Executive Officer contributed a
portion of his interests in two of the Selling Partnerships in exchange for the
satisfaction of his indebtedness to the Predecessor. The value attributed to his
interest in the Selling Partnerships was determined on the same basis as the
determination of payments made by the Predecessor to the unrelated limited
partners in the Selling Partnerships.
Corporate reorganization adjustments consist primarily of dividends deemed
cash distributions, reclassification of certain minority interests, and other
non-cash adjustments relating to the IPO.
RELATED PARTY TRANSACTIONS:
The Predecessor had demand notes payable to the Predecessor's founder,
bearing interest at prime plus 2% (8% at December 31, 1993). These notes were
collateralized by second mortgages on
F-36
<PAGE>
SUSA PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
11. SUMMARY OF PREDECESSOR SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
certain of the Original Facilities. Total interest expense to affiliates
amounted to approximately $178 and $1,426 for period from January 1, 1994 to
March 23, 1994 and the year ended December 31, 1993, respectively.
OTHER:
There was no significant Investment in Storage Facilities activity for the
period from January 1, 1994 to March 23, 1994 and for the year ended December
31, 1993.
Total cash paid for interest expense related to the mortgages payable and
notes payable balances for the period from January 1, 1994 to March 23, 1994 and
the year ended December 31, 1993 was $1,017 and $3,006, respectively.
12. SUBSEQUENT EVENTS:
FORMATION OF STRATEGIC ALLIANCE:
On March 1, 1996, the Company entered into a Stock Purchase Agreement with
Security Capital U.S. Realty (US Realty), an affiliate of Security Capital
Group. Under the Stock Purchase Agreement, subject to the terms and conditions
thereof, US Realty will invest a total of $220,000 in the Company, initially
place two of its nominees on the Company's Board of Directors, one of whom the
Company has been informed will be William D. Sanders, Chairman of the Board and
Chief Executive Officer of Security Capital Group, and make available to the
Company certain strategic advice, research and related information and expertise
(the "Strategic Alliance"). As part of the transaction, on March 19, 1996, the
Company issued to US Realty 1,948,882 shares of Common Stock, approximately
10.0% of the outstanding Common Stock, at a price of $31.30 per share, plus a
purchase price adjustment for accrued dividends. At the same time, the Company
executed a Strategic Alliance Agreement and a Registration Rights Agreement with
US Realty.
After the Strategic Alliance has been approved by the shareholders of the
Company, and prior to December 31, 1996, the Company will issue to US Realty an
additional 5,079,872 shares of the Company's common stock at the same price for
an aggregate of $159,000. After acquiring the additional shares (and assuming no
other change in the number of outstanding shares), US Realty will own
approximately 28.6% of the outstanding Common Stock. The proceeds of both
fundings will be contributed to the Operating Partnership in exchange for
additional Operating Partnership Units and used to support the acquisition and
development of self-storage facilities.
The Company has agreed to submit to the shareholders a proposal to amend the
ownership limitations of the Company's Charter to permit US Realty to acquire up
to 37.5% of the Company's capital stock. The Strategic Alliance, the amendment,
and certain related transactions are expected to be submitted to shareholders
for approval at the Company's 1996 annual meeting.
PROPERTY ACQUISITIONS:
Subsequent to December 31, 1995, the Operating Partnership has completed the
acquisition of six self-storage facilities for approximately $21,460. In
addition, the Operating Partnership purchased two land parcels for approximately
$688. These acquisitions were financed through operating cash flows and
borrowings under the $30,000 line of credit.
INTEREST RATE SWAP AGREEMENT:
In anticipation of a debt offering in 1996, the Operating Partnership
entered into an interest rate swap agreement in October 1995, with the objective
of reducing its exposure to future interest rate fluctuations. The agreement
involved the exchange of a variable rate for a fixed rate interest payment
F-37
<PAGE>
SUSA PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
12. SUBSEQUENT EVENTS: (CONTINUED)
obligation. The agreement had a notional principal amount of $100,000, an
effective date of March 1, 1996, and a maturity date of March 1, 2003. On March
8, 1996, the Operating Partnership closed the interest rate swap agreement and
received proceeds of approximately $50. The Operating Partnership anticipates
filing a $250,000 debt shelf registration statement on Form S-3 with the
Securities and Exchange Commission. Upon successful completion of an offering of
unsecured debt securities under the shelf, the Operating Partnership will
recognize the gain as a yield adjustment over the life of the debt.
13. QUARTERLY FINANCIAL DATA (UNAUDITED):
The following is a summary of quarterly results of operations for 1995 and
1994:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1995 QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue..................................................... $12,312 $16,233 $18,667 $20,795
Net Income.................................................. $ 5,938 $ 6,992 $ 8,937 $ 8,553
Per Unit
Net Income................................................ $ 0.43 $ 0.47 $ 0.49 $ 0.47
</TABLE>
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1994 QUARTER* QUARTER QUARTER QUARTER
- ------------------------------------------------------------ -------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue..................................................... $ 523 $ 6,376 $ 7,668 $11,267
Net Income.................................................. $ 245 $ 3,029 $ 3,128 $ 5,735
Per Unit
Net Income................................................ $0.03 $ 0.41 $ 0.42 $ 0.42
</TABLE>
- ------------------------
* For the period March 24, 1994 (inception) to March 31, 1994 (See Note 1).
F-38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of Storage USA, Inc.
We have audited the accompanying consolidated balance sheets of SUSA
Partnership, L.P. (the "Operating Partnership") as of December 31, 1995 and
1994, and the related consolidated statements of operations, shareholders'
equity, and cash flows for the year ended December 31, 1995, and for the period
from March 24, 1994, (inception) through December 31, 1994. We have also audited
the accompanying combined statements of operations, shareholders' equity, and
cash flows of Storage USA, Inc. (the "Predecessor") for the period from January
1, 1994 through March 23, 1994 and for the year ended December 31, 1993 (See
Note 1 and 11). These financial statements are the responsibility of the
management of the Operating Partnership. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Operating
Partnership as of December 31, 1995 and 1994, the consolidated results its
operations and its cash flows for the year ended December 31, 1995 and for the
period from March 24, 1994 (inception) through December 31, 1994 and the
combined results of the Predecessor's operations and cash flows for the period
from January 1, 1994 through March 23, 1994 and for the year ended December 31,
1993, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 26, 1996, except for
Note 5 and Note 12, as to which
the date is March 21, 1996
F-39
<PAGE>
SUSA PARTNERSHIP, L.P.
SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS)
The following table summarizes certain selected financial data for the
Operating Partnership and its Predecessor. The results of operations of the
Predecessor for the period January 1, 1994 to March 23, 1994, and the Operating
Partnership for the period March 24, 1994 to December 31, 1994, have been
combined. This financial data should be read in conjunction with the Operating
Partnership's financial statements and notes thereto, and with Management's
Discussion and Analysis of Financial Condition and Results of Operations.
<TABLE>
<CAPTION>
PREDECESSOR
PREDECESSOR AND OPERATING
------------------------------ PARTNERSHIP OPERATING
COMBINED* PARTNERSHIP
YEAR ENDED DECEMBER 31, ------------- -----------
------------------------------ YEAR ENDED YEAR ENDED
1991 1992 1993 1994 1995
------- ------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Operating data:
Total revenue............................................. $ 6,732 $ 8,900 $11,189 $ 28,432 $ 68,007
Net (loss) income......................................... $(4,095) $ 9,235(1) $ 449 $ 11,972 $ 30,420
Net income per unit....................................... -- -- -- -- $ 1.87
Distributions declared per unit........................... -- -- -- -- $ 2.04
Balance sheet data:
Total assets.............................................. $51,900 $51,620 $55,253 $280,173 $509,525
Total Borrowings.......................................... $47,500 $53,237 $65,753 $ 8,373 $114,275
</TABLE>
<TABLE>
<CAPTION>
OPERATING
PREDECESSOR PARTNERSHIP
------------ -----------
PERIOD FROM PERIOD FROM
JANUARY 1, MARCH 24,
1994 TO 1994 TO
MARCH 23 DECEMBER 31
1994 1994
------------ -----------
<S> <C> <C>
Operating data:
Total Revenue............................................. $2,598 $25,834
Net (loss) income......................................... $ (165) $12,137
</TABLE>
- ------------------------
* The combined results for 1994 are presented unaudited as they represent the
sum of the amounts derived by combining the audited results of the
Predecessor for the period January 1, 1994 to March 23, 1994, and the
audited results of the Operating Partnership for the period March 24, 1994
through December 31, 1994.
(1) Inclues a $12,279 gain from the early extinguishment of debt.
F-40
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 86,208
Accounting fees and expenses..................................... 100,000
Blue Sky fees and expenses....................................... 45,000
Legal fees and expenses.......................................... 125,000
Printing......................................................... 50,000
Miscellaneous.................................................... 18,792
---------
TOTAL........................................................ $ 425,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Second Amended and Restated Agreement of Limited Partnership, dated as
of September 21, 1994 (the "Partnership Agreement"), of the Operating
Partnership provides, generally, for the indemnification of an "indemnitee"
against losses, claims, damages, liabilities, judgments, fines, settlements and
other amounts (including reasonable expenses) that relate to the operations of
the Operating Partnership unless it is established that (i) the act or omission
of the Indemnitee was material and either was committed in bad faith or pursuant
to active and deliberate dishonesty, (ii) the Indemnitee actually received an
improper personal benefit in money, property or services, or (iii) in the case
of any criminal proceeding, the Indemnitee had reasonable cause to believe that
the act or omission was unlawful. For this purpose, the term "Indemnitee"
includes any person made a party to a proceeding by reason of his status as a
director or officer of the Operating Partnership, SUSA Management, Inc. or the
Company, and such other persons (including affiliates of the Company or the
Operating Partnership) as the Company, may designate from time to time in its
discretion. Any such indemnification will be made only out of assets of the
Operating Partnership, and in no event may an Indemnitee subject the limited
partners of the Operating Partnership to personal liability by reason of the
indemnification provisions in the Partnership Agreement. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted pursuant to the foregoing provisions or otherwise, the Operating
Partnership has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy and, therefore,
unenforceable. The Operating Partnership has purchased liability insurance for
the purpose of providing a source of funds to pay the indemnification described
above.
The Company's Charter obligates it to indemnify and advance expenses to
present and former directors and officers to the maximum extent permitted by
Tennessee law. The Tennessee Business Corporation Act ("TBCA") permits a
corporation to indemnify its present and former directors and officers, among
others, against judgments, settlements, penalties, fines or reasonable expenses
incurred with respect to a proceeding to which they may be made a party by
reason of their service in those or other capacities if (i) such persons
conducted themselves in good faith, (ii) they reasonably believed, in the case
of conduct in their official capacities with the corporation, that their conduct
was in its best interests and, in all other cases, that their conduct was at
least not opposed to its best interests, and (iii) in the case of any criminal
proceeding, they had no reasonable cause to believe that their conduct was
unlawful.
Any indemnification by the Company pursuant to the provisions of the Charter
described above shall be paid out of the assets of the Company and shall not be
recoverable from the shareholders. To
II-1
<PAGE>
the extent that the foregoing indemnification provisions purport to include
indemnification for liabilities arising under the Securities Act of 1933, in the
opinion of the Securities and Exchange Commission such indemnification is
contrary to public policy and, therefore, unenforceable. The Company has
purchased director and officer liability insurance for the purpose of providing
a source of funds to pay any indemnification described above.
The TBCA permits the charter of a Tennessee corporation to include a
provision eliminating or limiting the personal liability of its directors to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except that such provision cannot eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its shareholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of the law,
or (iii) for unlawful distributions that exceed what could have been distributed
without violating the TBCA or the corporation's charter. The Company's Charter
contains a provision eliminating the personal liability of its directors or
officers to the Company or its shareholders for money damages to the maximum
extent permitted by Tennessee law from time to time.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
4.1 Form of Indenture
4.2 Form of Debt Security (included in Exhibit 4.1)
5 Opinion of Hunton & Williams*
12 Statement regarding computation of ratios*
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Hunton & Williams (included in Exhibit 5)
24 Power of Attorney (located on the signature page of this Registration Statement)
25 Statement of Eligibility of Trustee on Form T-1*
</TABLE>
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, 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 the volume of securities offered (if
the total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and 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 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 the
undertakings set forth in subparagraphs (i) and (ii) above do not apply if
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 either of the registrants pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in
this 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;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrants hereby further undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrants' annual reports pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof; and
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
either of the registrants pursuant to the foregoing provisions or otherwise, the
registrants have been advised that the in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by either of
the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted against either of the registrants by such
director, officer or controlling person in connection with the securities being
registered, the relevant registrant or registrants will, unless in the opinion
of its or their counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned registrants further hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Columbia, State of Maryland on the
27th day of June, 1996.
SUSA PARTNERSHIP, L.P.
By: STORAGE USA, INC., as
general partner
By: /s/ JOHN R. ERICKSON
-----------------------------------
John R. Erickson
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities indicated on April 10, 1996.
SIGNATURE TITLE & CAPACITY
- -------------------------------------------------- -------------------------
Chairman of the Board,
/s/ DEAN JERNIGAN* Chief Executive Officer
------------------------------------------- and Director (Principal
Dean Jernigan Executive Officer)
/s/ THOMAS E. ROBINSON* President, Chief
------------------------------------------- Operating Officer and
Thomas E. Robinson Director
Senior Vice President,
/s/ JOHN R. ERICKSON Chief Financial Officer,
------------------------------------------- Secretary and Treasurer
John R. Erickson (Principal Financial and
Accounting Officer)
------------------------------------------- Director
Howard P. Colhoun
/s/ MARK JORGENSEN*
------------------------------------------- Director
Mark Jorgensen
/s/ JOHN P. MCCANN*
------------------------------------------- Director
John P. McCann
/s/ DENNIS A. REEVE*
------------------------------------------- Director
Dennis A. Reeve
/s/ HARRY J. THIE*
------------------------------------------- Director
Harry J. Thie
*By: /s/ JOHN R. ERICKSON
--------------------------------------
John R. Erickson
Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ------------- ------------------------------------------------------------------------------------------- -----------
<S> <C> <C>
4.1 Form of Indenture
4.2 Form of Debt Security (included in Exhibit 4.1)
5 Opinion of Hunton & Williams*
12 Statement regarding computation of ratios*
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Hunton & Williams (included in Exhibit 5)
24 Power of Attorney (located on the signature page of this Registration Statement)
25 Statement of Eligibility of Trustee on Form T-1*
</TABLE>
- ------------------------
* Previously filed.
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUSA PARTNERSHIP, L.P.
COMPANY
TO
THE FIRST NATIONAL BANK OF CHICAGO
TRUSTEE
------------------
INDENTURE
Dated as of , 199
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- ------------------ ------------------
<C> <S> <C>
Section310(a)(1) ............................................................................ 609
(a)(2) ............................................................................ 609
(a)(3) ............................................................................ Not Applicable
(a)(4) ............................................................................ Not Applicable
(b) ............................................................................ 608
610
Section311(a) ............................................................................ 613
(b) ............................................................................ 613
Section312(a) ............................................................................ 701
702
(b) ............................................................................ 702
(c) ............................................................................ 702
Section313(a) ............................................................................ 703
(b) ............................................................................ 703
(c) ............................................................................ 703
(d) ............................................................................ 703
Section314(a) ............................................................................ 704
(a)(4) ............................................................................ 101
1004
(b) ............................................................................ Not Applicable
(c)(1) ............................................................................ 102
(c)(2) ............................................................................ 102
(c)(3) ............................................................................ Not Applicable
(d) ............................................................................ Not Applicable
(e) ............................................................................ 102
Section315(a) ............................................................................ 601
(b) ............................................................................ 602
(c) ............................................................................ 601
(d) ............................................................................ 601
(e) ............................................................................ 514
Section316(a) ............................................................................ 101
(a)(1)(A) ............................................................................ 502
512
(a)(1)(B) ............................................................................ 513
(a)(2) ............................................................................ Not Applicable
(b) ............................................................................ 508
(c) ............................................................................ 104
Section317(a)(1) ............................................................................ 503
(a)(2) ............................................................................ 504
(b) ............................................................................ 1003
Section318(a) ............................................................................ 107
</TABLE>
- ------------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
RECITALS OF THE COMPANY.................................................................................... 1
</TABLE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
<TABLE>
<S> <C>
SECTION 101. DEFINITIONS........................................................... 1
Act................................................................................... 1
Adjusted Total Assets................................................................. 1
Affiliate............................................................................. 1
control............................................................................... 1
Annual Service Charge................................................................. 1
Authenticating Agent.................................................................. 2
Board of Directors.................................................................... 2
Board Resolution...................................................................... 2
Business Day.......................................................................... 2
Commission............................................................................ 2
Company............................................................................... 2
Company Request....................................................................... 2
Company Order......................................................................... 2
Consolidated Income Available for Debt Service........................................ 2
Consolidated Net Income............................................................... 2
Corporate Trust Office................................................................ 2
corporation........................................................................... 2
Covenant Defeasance................................................................... 2
Defaulted Interest.................................................................... 2
Defeasance............................................................................ 2
Depositary............................................................................ 2
Event of Default...................................................................... 3
Exchange Act.......................................................................... 3
Expiration Date....................................................................... 3
Financial Statements.................................................................. 3
General Partner....................................................................... 3
Global Security....................................................................... 3
Holder................................................................................ 3
Indebtedness.......................................................................... 3
Indenture............................................................................. 3
interest.............................................................................. 3
Interest Payment Date................................................................. 3
Investment Company Act................................................................ 3
Maturity.............................................................................. 3
NASD.................................................................................. 3
Notice of Default..................................................................... 4
Officers' Certificate................................................................. 4
Opinion of Counsel.................................................................... 4
Original Issue Discount Security...................................................... 4
Outstanding........................................................................... 4
Paying Agent.......................................................................... 5
Person................................................................................ 5
Place of Payment...................................................................... 5
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Predecessor Security.................................................................. 5
Redemption Date....................................................................... 5
Redemption Price...................................................................... 5
Regular Record Date................................................................... 5
Repayment Date........................................................................ 5
Required Filing Dates................................................................. 5
Responsible Officer................................................................... 5
Securities............................................................................ 5
Securities Act........................................................................ 5
Security Register"and"Security Registrar.............................................. 5
Significant Subsidiary................................................................ 5
Special Record Date................................................................... 5
Stated Maturity....................................................................... 5
Subsidiary............................................................................ 6
Total Assets.......................................................................... 6
Total Unencumbered Assets............................................................. 6
Trust Indenture Act................................................................... 6
Trustee............................................................................... 6
U.S. Government Obligation............................................................ 6
Undepreciated Real Estate Assets...................................................... 6
Unsecured Indebtedness................................................................ 6
Vice President........................................................................ 6
Yield to Maturity..................................................................... 6
</TABLE>
<TABLE>
<S> <C> <C>
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS................................. 6
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE............................... 7
SECTION 104. ACTS OF HOLDERS; RECORD DATES........................................ 7
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY................................ 9
SECTION 106. NOTICE TO HOLDERS; WAIVER............................................ 9
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.................................... 9
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS............................. 9
SECTION 109. SUCCESSORS AND ASSIGNS............................................... 10
SECTION 110. SEPARABILITY CLAUSE.................................................. 10
SECTION 111. BENEFITS OF INDENTURE................................................ 10
SECTION 112. GOVERNING LAW........................................................ 10
SECTION 113. LEGAL HOLIDAYS....................................................... 10
</TABLE>
ARTICLE TWO
SECURITY FORMS
<TABLE>
<S> <C> <C>
SECTION 201. FORMS GENERALLY...................................................... 10
SECTION 202. FORM OF FACE OF SECURITY............................................. 10
SECTION 203. FORM OF REVERSE OF SECURITY.......................................... 12
SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES................................. 15
SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION...................... 15
</TABLE>
ARTICLE THREE
THE SECURITIES
<TABLE>
<S> <C> <C>
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES................................. 15
SECTION 302. DENOMINATIONS........................................................ 17
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING....................... 17
SECTION 304. TEMPORARY SECURITIES................................................. 18
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.................. 19
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES..................... 20
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED....................... 20
SECTION 308. PERSONS DEEMED OWNERS................................................ 21
SECTION 309. CANCELLATION......................................................... 21
SECTION 310. COMPUTATION OF INTEREST.............................................. 22
</TABLE>
ARTICLE FOUR
SATISFACTION AND DISCHARGE
<TABLE>
<S> <C> <C>
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.............................. 22
SECTION 402. APPLICATION OF TRUST MONEY........................................... 23
</TABLE>
ARTICLE FIVE
REMEDIES
<TABLE>
<S> <C> <C>
SECTION 501. EVENTS OF DEFAULT.................................................... 23
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT................... 24
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE...... 25
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM..................................... 25
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.......... 26
SECTION 506. APPLICATION OF MONEY COLLECTED....................................... 26
SECTION 507. LIMITATION ON SUITS.................................................. 26
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, 27
PREMIUM AND INTEREST..............................................
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES................................... 27
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE....................................... 27
SECTION 511. DELAY OR OMISSION NOT WAIVER......................................... 27
SECTION 512. CONTROL BY HOLDERS................................................... 27
SECTION 513. WAIVER OF PAST DEFAULTS.............................................. 27
SECTION 514. UNDERTAKING FOR COSTS................................................ 28
SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.............................. 28
</TABLE>
ARTICLE SIX
THE TRUSTEE
<TABLE>
<S> <C> <C>
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.................................. 28
SECTION 602. NOTICE OF DEFAULTS................................................... 28
SECTION 603. CERTAIN RIGHTS OF TRUSTEE............................................ 28
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES............... 29
SECTION 605. MAY HOLD SECURITIES.................................................. 29
SECTION 606. MONEY HELD IN TRUST.................................................. 29
SECTION 607. COMPENSATION AND REIMBURSEMENT....................................... 29
SECTION 608. CONFLICTING INTERESTS................................................ 30
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.............................. 30
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.................... 30
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR............................... 31
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.......... 32
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.................... 32
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.................................. 32
</TABLE>
iv
<PAGE>
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
<TABLE>
<S> <C> <C>
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS............ 34
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS............... 34
SECTION 703. REPORTS BY TRUSTEE................................................... 34
SECTION 704. REPORTS BY COMPANY................................................... 34
</TABLE>
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
<TABLE>
<S> <C> <C>
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS................. 35
SECTION 802. SUCCESSOR SUBSTITUTED................................................ 35
</TABLE>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
<TABLE>
<S> <C> <C>
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS................... 36
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS...................... 36
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES................................. 37
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.................................... 38
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.................................. 38
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES................... 38
</TABLE>
ARTICLE TEN
COVENANTS
<TABLE>
<S> <C> <C>
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST........................... 38
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY...................................... 38
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.................... 38
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.................................. 39
SECTION 1005. EXISTENCE............................................................ 39
SECTION 1006. MAINTENANCE OF PROPERTIES............................................ 39
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS.................................... 40
SECTION 1008. INSURANCE............................................................ 40
SECTION 1009. RESTRICTIONS ON INDEBTEDNESS......................................... 41
SECTION 1010. PROVISION OF FINANCIAL INFORMATION................................... 41
SECTION 1011. WAIVER OF CERTAIN COVENANTS.......................................... 41
</TABLE>
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
<TABLE>
<S> <C> <C>
SECTION 1101. APPLICABILITY OF ARTICLE............................................. 41
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE................................ 41
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.................... 42
SECTION 1104. NOTICE OF REDEMPTION................................................. 42
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.......................................... 43
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE................................ 43
SECTION 1107. SECURITIES REDEEMED IN PART.......................................... 43
</TABLE>
v
<PAGE>
ARTICLE TWELVE
SINKING FUNDS
<TABLE>
<S> <C> <C>
SECTION 1201. APPLICABILITY OF ARTICLE............................................. 44
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES................ 44
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND............................ 44
</TABLE>
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
<TABLE>
<S> <C> <C>
SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE......... 44
SECTION 1302. DEFEASANCE AND DISCHARGE............................................. 45
SECTION 1303. COVENANT DEFEASANCE.................................................. 45
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE...................... 45
SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; 47
MISCELLANEOUS PROVISIONS...........................................
SECTION 1306. REINSTATEMENT........................................................ 47
</TABLE>
ARTICLE FOURTEEN
REPAYMENT AT THE OPTION OF HOLDERS
<TABLE>
<S> <C> <C>
SECTION 1401. APPLICABILITY OF ARTICLE............................................. 47
SECTION 1402. REPAYMENT OF SECURITIES.............................................. 47
SECTION 1403. EXERCISE OF OPTION................................................... 48
SECTION 1404. WHEN SECURITIES PRESENTED FOR RECIPIENT BECOME DUE AND PAYABLE....... 48
SECTION 1405. SECURITIES REPAID IN PART............................................ 48
</TABLE>
vi
<PAGE>
INDENTURE, dated as of , 199 , between SUSA Partnership, L.P., a
limited partnership duly organized and existing under the laws of the State of
Tennessee (herein called the "Company"), having its principal office at 10
Columbia Corporate Center, Suite 400, Columbia, Maryland 21044 and The First
National Bank of Chicago, a national banking association duly organized and
existing under the laws of the United States of America, as Trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture
to provide for the issuance from time to time of its unsecured debentures, notes
or other evidences of indebtedness (herein called the "Securities"), to be
issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted in the
United States at the date of such computation applied on a consistent basis;
(4) unless the context otherwise requires, any reference to an "Article" or
a "Section" refers to an Article or a Section, as the case may be, of this
Indenture; and
(5) 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.
"Adjusted Total Assets" has the meaning specified in Section 1009(1).
"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 maximum amount which is
payable in any 12-month period from such date for interest and required
amortization (including amounts payable to
<PAGE>
sinking funds or similar arrangements for the retirement of debt which matures
serially, but excluding principal payable at final maturity of such debt) on
Indebtedness of the Company and its Subsidiaries.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Board of Directors" means either the board of directors of the General
Partner, the executive committee thereof or any other committee of that board
duly authorized to act hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the 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.
"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.
"Commission" means the Securities and Exchange Commission, from time to time
constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order signed
by the General Partner, on behalf of the Company, by its Chairman of the Board,
its Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income plus amounts which have been deducted for (a) interest
on Indebtedness of the Company and its Subsidiaries, (b) provision for taxes of
the Company and its Subsidiaries based on income, (c) amortization of
Indebtedness discount, (d) provisions for gains and losses on properties, (e)
depreciation and amortization, (f) the effect of any noncash charge resulting
from a change in accounting principles in determining Consolidated Net Income
for such period, (g) amortization of deferred charges and (h) the effect of net
income (or loss) of joint ventures in which the Company or any Subsidiary owns
an interest to the extent not providing a source of, or requiring a use of,
cash, respectively.
"Consolidated Net Income" for any period means the amount of consolidated
net income (or loss) of the Company and its Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office at the date hereof is located at One National Plaza, Suite 0126, Chicago,
Illinois 60670-0126, Attention: Corporate Trust Services Division, except that
for purposes of Section 1002, "Corporate Trust Office" shall mean the office or
agency of the Trustee in the Borough of Manhattan, the City of New York, which
office at the date hereof is located at 14 Wall Street, Eighth Floor, Window 2,
New York, New York 10005.
"corporation" means a corporation, association, company, joint-stock company
or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
2
<PAGE>
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Financial Statements" has the meaning specified in Section 1010.
"General Partner" means Storage USA, Inc., a Tennessee corporation, as
general partner of the Company, or any successor thereto.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" of the Company or any Subsidiary means any indebtedness of
the Company or such Subsidiary, as applicable, whether or not contingent, in
respect of (i) borrowed money evidenced by bonds, notes, debentures or similar
instruments, (ii) indebtedness secured by a mortgage, pledge, lien, charge,
encumbrance of any security interest existing on property owned by the Company
or such Subsidiary, (iii) the reimbursement obligations, contingent or
otherwise, in connection with any letters of credit actually issued or amounts
representing the balance that constitutes an accrued expense or trade payable or
(iv) any lease of property by the Company or such Subsidiary as lessee which is
reflected in the Company's consolidated balance sheet as a capitalized lease in
accordance with generally accepted accounting principles, in the case of items
of indebtedness under (i) through (iii) above to the extent that any such items
(other than letters of credit) would appear as a liability on the Company's
consolidated balance sheet in accordance with generally accepted accounting
principles, and also includes, to the extent not otherwise included, any
obligation by the Company or such Subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), indebtedness of another person (other than the
Company or any Subsidiary).
"Indenture" means this instrument as originally executed and 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, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular series of Securities
established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an instalment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an instalment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"NASD" has the meaning specified in Section 1403.
3
<PAGE>
"Notice of Default" means a written notice of the kind specified in Section
501(4) or 501(5).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the General Partner, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company or the General Partner, and who shall be acceptable 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:
(1) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the Company (if
the Company shall act as its own Paying Agent) for the Holders of such
Securities; 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;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser in
whose hands such Securities are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall
be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated
in one or more foreign currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 301, of the principal amount of
such Security (or, in the case of a Security described in Clause (A) or (B)
above, of the amount determined as provided in such Clause), and (D) Securities
owned by the Company or any other obligor upon the Securities or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.
4
<PAGE>
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of and any premium and interest on
the Securities of that series are payable as specified as contemplated by
Section 301.
"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 shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
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.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"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.
"Required Filing Dates" has the meaning specified in Section 1010.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any 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 assistant 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 his knowledge of
and familiarity with the particular subject.
"Securities" has the meaning specified in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute successor
thereto, in each case as amended from time to time.
"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 1, Rule 1-02 of Regulation S-X, promulgated
under the Securities Act of 1933, as amended) of the Company.
"Special Record Date" for the payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any instalment
of principal thereof or interest thereon, means the date specified in such
Security as the fixed date on which the principal of such Security or such
instalment of principal or interest is due and payable.
5
<PAGE>
"Subsidiary" means a corporation, partnership or limited liability company
more than 50% 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 Partnership or by one or more other Subsidiaries,
or by the Partnership and one or more other Subsidiaries. For the purposes of
this definition, "voting stock" means stock which ordinarily has voting power
for the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
"Total Assets" as of any date means the sum of (i) Undepreciated Real Estate
Assets and (ii) all other assets of the Company and its Subsidiaries on a
consolidated basis determined in accordance with generally accepted accounting
principles (but excluding intangibles and accounts receivable).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated Real
Estate Assets which have not been pledged, mortgaged or otherwise encumbered by
the owner thereof to secure Indebtedness, excluding infrastructure assessment
bonds, and (ii) all other assets of the Company and its Subsidiaries determined
in accordance with generally accepted accounting principles (but excluding
intangibles and accounts receivable) which have not been pledged, mortgaged or
otherwise encumbered by the owner thereof to secure Indebtedness.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; PROVIDED, HOWEVER, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument 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, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"U.S. Government Obligation" has the meaning specified in Section 1304.
"Undepreciated Real Estate Assets" as of any date means the cost (original
cost plus capital improvements) of real estate assets of the Company and its
Subsidiaries on such date, before depreciation and amortization, determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Unsecured Indebtedness" means Indebtedness which is (i) not subordinated to
any other Indebtedness and (ii) not secured by any mortgage, lien, charge,
pledge, encumbrance or security interest of any kind upon any of the properties
of the Company or any Subsidiary.
"Vice President", when used with respect to the Company, the General Partner
or the Trustee, means any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president".
"Yield to Maturity" means the yield to maturity, computed at the time of
issuance of a Security (or, if applicable, at the most recent redetermination of
interest on such Security) and as set forth in such Security in accordance with
generally accepted United States bond yield computation principles.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or
request by the Company to the Trustee to take any action under any provision of
this Indenture, the Company shall furnish to the Trustee such certificates and
opinions as may be required under the Trust Indenture Act. Each such certificate
or opinion shall be given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an Opinion of Counsel, if to be given by
counsel, and shall comply with the requirements of the Trust Indenture Act and
any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include,
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<PAGE>
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) 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 with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or the General
Partner may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company or the
General Partner stating that the information with respect to such factual
matters is in the possession of the Company or the General Partner, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
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 manner which the Trustee deems sufficient.
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The ownership of Securities shall be proved by the Security Register.
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 or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders of Securities of such series, PROVIDED that the Company may not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Securities of the relevant series
on such record date, and no other Holders, shall be entitled to take the
relevant action, whether or not such Holders remain Holders after such record
date; PROVIDED that no such action shall be effective hereunder unless taken on
or prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of such series on such record date. Nothing in
this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities of the relevant series in the manner set forth in
Section 106.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; PROVIDED that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; PROVIDED that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set
8
<PAGE>
pursuant to this Section, the party hereto which set such record date shall be
deemed to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no
Expiration Date shall be later than the 180th day after the applicable record
date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to
it at the address of its principal office specified in the first paragraph
of this instrument or at any other address previously furnished in writing
to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. 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.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind its
successors and assigns, whether so expressed or not.
9
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SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions of such instrument or instruments shall not in any way
be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section)) payment of interest 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 or
Redemption Date, or at the Stated Maturity.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities, of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. FORM OF FACE OF SECURITY.
[INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND THE REGULATIONS
THEREUNDER.]
NO. $
Susa Partnership, L.P., a limited partnership duly organized and existing
under the laws of Tennessee (herein called the "Company", which term includes
any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to , or registered assigns, the
principal sum of Dollars on [IF THE SECURITY IS TO BEAR INTEREST
PRIOR TO MATURITY, INSERT --, and to pay interest thereon from or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on
10
<PAGE>
and in each year, commencing , at the rate of % per annum, until the
principal hereof is paid or made available for payment [IF APPLICABLE, INSERT --
PROVIDED that any principal and premium, and any such instalment of interest,
which is overdue shall bear interest at the rate of % per annum (to the
extent that the payment of such interest shall be legally enforceable), from the
dates such amounts are due until they are paid or made available for payment,
and such interest shall be payable on demand]. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the or
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture].
[IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY, INSERT -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of % per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are due
until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand. [Any such interest on overdue
principal or premium which is not paid on demand shall bear interest at the rate
of % per annum (to the extent that the payment of such interest on interest
shall be legally enforceable), from the date of such demand until the amount so
demanded is paid or made available for payment. Interest on any overdue interest
shall be payable on demand.]]
Payment of the principal of (and premium, if any) and [IF APPLICABLE, INSERT
- -- any such] interest on this Security will be made at the office or agency of
the Company maintained for that purpose in , in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts [IF APPLICABLE, INSERT --; PROVIDED, HOWEVER, that
at the option of the Company payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
<TABLE>
<S> <C>
SUSA PARTNERSHIP, L.P.
By: Storage USA, Inc., its general partner
By:
--------------------------------------------
Attest: Name:
Title:
- ------------------------
</TABLE>
SECTION 203. FORM OF REVERSE OF SECURITY.
This Security is one of a duly authorized issue of securities of the Company
(herein called the "Securities"), issued and to be issued in one or more series
under an Indenture, dated as of , , 199 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The First National Bank of Chicago, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof [IF
APPLICABLE, INSERT --, limited in aggregate principal amount to $ ].
[IF APPLICABLE, INSERT -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [IF APPLICABLE, INSERT --
(1) on in any year commencing with the year and ending with the
year through operation of the sinking fund for this series at a Redemption
Price equal to 100% of the principal amount, and (2)] at any time [IF
APPLICABLE, INSERT -- on or after , 19 ], as a whole or in part, at the
election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [IF APPLICABLE, INSERT -- on
or before , %, and if redeemed] during the 12-month period beginning
of the years indicated,
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE
--- ------------------- --- -------------------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to % of the principal amount,
together in the case of any such redemption [IF APPLICABLE, INSERT -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest instalments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[IF APPLICABLE, INSERT -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on in any
year commencing with the year and ending with
12
<PAGE>
the year through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table below,
and (2) at any time [IF APPLICABLE, INSERT -- on or after ], as a whole or
in part, at the election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below: If redeemed during the
12-month period beginning of the years indicated,
<TABLE>
<CAPTION>
REDEMPTION PRICE REDEMPTION PRICE FOR
FOR REDEMPTION REDEMPTION OTHERWISE
THROUGH OPERATION THAN THROUGH OPERATION
YEAR OF THE SINKING FUND OF THE SINKING FUND
--- ------------------------- -------------------------------
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to % of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest instalments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[IF APPLICABLE, INSERT -- Notwithstanding the foregoing, the Company may
not, prior to , redeem any Securities of this series as contemplated by [IF
APPLICABLE, INSERT -- Clause (2) of] the preceding paragraph as a part of, or in
anticipation of, any refunding operation by the application, directly or
indirectly, of moneys borrowed having an interest cost to the Company
(calculated in accordance with generally accepted financial practice) of less
than % per annum.]
[IF APPLICABLE, INSERT -- The sinking fund for this series provides for the
redemption on in each year beginning with the year and ending with the
year of [IF APPLICABLE, INSERT -- not less than $ ("mandatory sinking
fund") and not more than] $ aggregate principal amount of Securities of
this series. Securities of this series acquired or redeemed by the Company
otherwise than through [IF APPLICABLE, INSERT -- mandatory] sinking fund
payments may be credited against subsequent [IF APPLICABLE, INSERT -- mandatory]
sinking fund payments otherwise required to be made [IF APPLICABLE, INSERT -- ,
in the inverse order in which they become due].]
[IF THE SECURITY IS SUBJECT TO REDEMPTION OF ANY KIND, INSERT -- In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
[IF APPLICABLE, INSERT PARAGRAPH REGARDING SUBORDINATION OF THE SECURITY.]
[IF APPLICABLE, INSERT -- The Indenture contains provisions for defeasance
at any time of [the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [, in
each case] upon compliance with certain conditions set forth in the Indenture.]
[IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- INSERT FORMULA FOR DETERMINING THE
AMOUNT. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue
13
<PAGE>
principal, premium and interest (in each case to the extent that the payment of
such interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and premium and interest, if any, on
the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of
this Security shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $ and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
14
<PAGE>
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES.
Unless otherwise specified as contemplated by Section 301 for the Securities
evidenced thereby, every Global Security authenticated and delivered hereunder
shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificates 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.
<TABLE>
<S> <C>
THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE
By:
-------------------------------------------
AUTHORIZED OFFICER
</TABLE>
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution 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,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906, 1107 or 1404 and except for
any Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
15
<PAGE>
(3) the Person to whom any interest on a 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;
(4) the date or dates on which the principal of any Securities of the
series is payable;
(5) the rate or rates at which any Securities of the series shall bear
interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date for any such interest payable on any
Interest Payment Date;
(6) the place or places where the principal of and any premium and
interest on any Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at which and
the terms and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other
than by a Board Resolution, the manner in which any election by the Company
to redeem the Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem, repay or purchase
any Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof upon the occurrence of
specified circumstances or otherwise, and the period or periods within which
or the date or dates on which, the price or prices at which the other terms
and conditions upon which any Securities of the series shall be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation and
any provisions in modification of, in addition to or in lieu of any of the
provisions of Articles Eleven, Twelve or Fourteen;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(10) if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts shall be determined;
(11) the percentage of the principal amount at which Securities of such
series will be issued and, if other than the entire principal amount
thereof, the portion of the principal amount of any Securities of the series
which shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 502;
(12) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which shall be deemed to be
the principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall
be due and payable upon any Maturity other than the Stated Maturity or which
shall be deemed to be Outstanding as of any date prior to the Stated
Maturity (or, in any such case, the manner in which such amount deemed to be
the principal amount shall be determined);
(13) if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Section 1302 or Section 1303
or both such Sections and, if other than by a Board Resolution, the manner
in which any election by the Company to defease such Securities shall be
evidenced;
(14) if applicable, that any Securities of the series shall be issuable
in whole or in part in the form of one or more Global Securities and, in
such case, the respective Depositaries for such Global Securities, the form
of any legend or legends which shall be borne by any such Global Security in
addition to or in lieu of that set forth in Section 204 and any
circumstances in addition to or in lieu of those set forth in Clause (2) of
the last paragraph of Section 305 in which any such
16
<PAGE>
Global Security may be exchanged in whole or in part for Securities
registered, and any transfer of such Global Security in whole or in part may
be registered, in the name or names of Persons other than the Depositary for
such Global Security or a nominee thereof;
(15) any addition to or change in the Events of Default which applies to
any Securities of the series and any change in the right of the Trustee or
the requisite Holders of such Securities to declare the principal amount
thereof due and payable pursuant to Section 502;
(16) any addition to or change in the covenants set forth in Article Ten
which applies to Securities of the series; and
(17) the applicability, if any, of Article Fifteen 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 Fifteen.
(18) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
All Securities of one series need not be issued at the same time and, unless
otherwise provided in the Board Resolution or the Officer's Certificate
establishing the terms of a series, any series may be reopened, without the
consent of the holders of Securities of such series, for issuance of additional
Securities of such series.
SECTION 302. DENOMINATIONS.
The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by the General
Partner's Chairman of the Board, its Vice Chairman of the Board, its President
or one of its Vice Presidents, under the General Partner's corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries.
The signature of any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed on behalf
of the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established by or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and
17
<PAGE>
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an Opinion of Counsel
stating,
(1) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant
to Board Resolution as permitted by Section 301, that such terms have been
established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
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 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 Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, 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.
Pending the preparation of definitive Securities of any series, the Company
may cause to be executed, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Company shall execute and the
18
<PAGE>
Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount. 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 and tenor.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of like tenor and aggregate
principal amount.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 304, 906, 1107 or 1405 not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue, register
the transfer of or exchange any Securities of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security
or a nominee thereof and delivered to such Depositary or a nominee thereof
or custodian therefor, and each such Global Security shall constitute a
single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and
no transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such
19
<PAGE>
Global Security or a nominee thereof unless (A) such Depositary (i) has
notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or (ii) has ceased to be a clearing
agency registered under the Exchange Act, (B) there shall have occurred and
be continuing an Event of Default with respect to such Global Security or
(C) there shall exist such circumstances, if any, in addition to or in lieu
of the foregoing as have been specified for this purpose as contemplated by
Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued
in exchange for a Global Security or any portion thereof shall be registered
in such names as the Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 304, 306, 906,
1107 or 1405 or otherwise, shall be authenticated and delivered in the form
of, and shall be, a Global Security, unless such Security is registered in
the name of a Person other than the Depositary for such Global Security or a
nominee thereof.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security 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 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.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which 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.
20
<PAGE>
Any interest on any Security of any series which 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 Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be paid on each
Security of such series and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of money
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 prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and
at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be given to
each Holder of Securities of such series in the manner set forth in Section
106, not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the following
Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, 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 shall be
promptly cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and may deliver to
the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be
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promptly cancelled by the Trustee. 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. All cancelled Securities held
by the Trustee shall be disposed of as directed by a Company Order.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for
the purpose money in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal and any premium and interest to the date
of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may
be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
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SECTION 402. APPLICATION OF TRUST MONEY.
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 and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as due
by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder; or
(5) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company (including a default with
respect to Securities of any series other than that series) having an
aggregate principal amount outstanding of in excess of Ten Million Dollars
($10,000,000), or under any mortgage, indenture or other instrument
(including this Indenture) under which there may be issued or by which there
may be secured or evidenced any indebtedness for money borrowed by the
Company (or by any Subsidiary, the repayment of which the Company has
guaranteed or for which the Company is directly responsible or liable as
obligor or guarantor) having an aggregate principal amount outstanding of in
excess of Ten Million Dollars ($10,000,000), whether such indebtedness now
exists or shall hereafter be created, which default (A) shall constitute a
failure to pay any portion of the principal of such indebtedness when due
and payable after the expiration of any applicable grace period with respect
thereto or (B) shall have resulted in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, without, in the case of Clause (A), such
indebtedness having been discharged or without, in the case of Clause (B),
such indebtedness having been discharged or such acceleration having been
rescinded or annulled, in each such case within a period of 10 days after
there shall have been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series a
written notice specifying such
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default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled, as the
case may be, and stating that such notice is a "Notice of Default"
hereunder; or
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under any applicable Federal
or State bankruptcy, insolvency, reorganization or other similar law or (B)
a decree or order adjudging the Company or any Significant Subsidiary a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or any Significant Subsidiary under any applicable Federal or
State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any
Significant Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree or order for relief in respect of the Company
or any Significant Subsidiary in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under any applicable Federal or
State law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or
any Significant Subsidiary or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company or any
Significant Subsidiary in furtherance of any such action; or
(8) any other Event of Default provided with respect to Securities of
that series.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in Section
501(6) or 501(7)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then 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 amount of all the Securities of that
series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms thereof) to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable. If an Event of Default specified in Section 501(6)
or 501 (7) with respect to Securities of any series at the time Outstanding
occurs, the principal amount of all the Securities of that series (or, if any
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified by the terms
thereof) shall automatically, and without any declaration or other action on the
part of the Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
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(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor 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 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 by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities) its property or its creditors, the Trustee shall be
entitled and empowered, by intervention in such proceeding or otherwise, to take
any and all actions authorized under the Trust Indenture Act in order to have
claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized 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 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 it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or
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composition affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding; PROVIDED, HOWEVER, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee in bankruptcy or similar official and be a
member of a creditors' or other similar committee.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities 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 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 any premium or
interest, upon presentation of the Securities 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 under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal
of and any premium and interest on the Securities 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 amounts due and payable
on such Securities for principal and any premium and interest, respectively;
and
THIRD: To the payment of the remainder, if any, to the Company.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
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SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (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 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, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall 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 in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders 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 Securities 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, as the case may
be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
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 waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on any
Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
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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 impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
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, suffered or omitted by
it as Trustee, a court may require any party litigant in such suit to file an
undertaking to pay the costs of such suit, and may assess costs against any such
party litigant, in the manner and to the extent provided in the Trust Indenture
Act; PROVIDED that neither this Section nor the Trust Indenture Act shall be
deemed to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Company.
SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee 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. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
If a default occurs hereunder with respect to Securities of any series, the
Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; PROVIDED,
HOWEVER, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 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 Securities of such series.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
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(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 606. 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 Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
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(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
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.
SECTION 608. CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
and to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Person 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 with respect to the Securities of any series 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 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
Subject to the foregoing paragraph, the Trustee may resign at any time with
respect to the Securities of one or more series by giving written notice thereof
to the Company. If the instrument of acceptance by a successor Trustee required
by Section 611 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 with
respect to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of any
series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
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(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder 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.
If the Trustee shall resign, be removed or become incapable of acting, or if
a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Company, by 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) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder 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 the Securities of such series.
The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders of
Securities of such series in the manner provided 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 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
In case of the appointment hereunder of a successor Trustee with respect to
all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to
the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the retiring
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Trustee is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental indenture
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
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 612. 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 the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities 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 so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company (or any
other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
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 original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 306, 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. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined
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capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said 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. If 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 any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. 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.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
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 the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
<TABLE>
<S> <C>
THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE
By
---------------------------------------------
AS AUTHENTICATING AGENT
By
---------------------------------------------
AUTHORIZED OFFICER
</TABLE>
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than and in each year, a list, in
such form as the Trustee may reasonably require, of the names and addresses
of the Holders of Securities of each series as of the preceding or ,
as the case may be, and
(2) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such
list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is required
to file the same with the Commission, copies of the annual reports and of
the information documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of such Sections, then
it will file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
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(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to the Holders of Securities, within 30 days after
the filing hereof with the Trustee, in the manner and to the extent provided
in Section 313(c) of the Trust Indenture Act, such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this section as may be required by
rules and regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
shall be organized and validly existing under the laws of the United States
of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and any premium and interest on all the
Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary as
a result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by this Indenture, the Company or
such successor Person, as the case may be, shall take such steps as shall be
necessary effectively to secure the Securities equally and ratably with (or
prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture
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with the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company herein and
in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change or elimination (A) shall neither (i) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (ii) modify the
rights of the Holder of any such Security with respect to such provision or
(B) shall become effective only when there is no such Security Outstanding;
or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more series
and to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
611; or
(9) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising
under this Indenture, PROVIDED that such action pursuant to this Clause (9)
shall not adversely affect the interests of the Holders of Securities of any
series in any material respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the
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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 of such series under this Indenture; PROVIDED,
HOWEVER, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any instalment of
principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of an Original
Issue Discount Security or any other Security which would be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or currency
in which, any Security or any premium or 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, on
or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or Section
1011, except to increase any such percentage 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;
PROVIDED, HOWEVER, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1011, or the
deletion of this proviso, in accordance with the requirements of Sections
611 and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
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.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) 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
shall be bound thereby.
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SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall conform
to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will 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 Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also 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 such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with respect to
any series of Securities, it will, on or before each due date of the principal
of or any premium or interest on any of the Securities of that series, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal and any premium and interest 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 Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of or any premium
or inter-est on any Securities of that series, deposit with a Paying Agent a sum
sufficient to pay such amount, such sum to be held as provided by the Trust
Indenture Act, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
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The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will (1) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in New York, New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1005. EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(partnership and statutory) and franchises; PROVIDED, HOWEVER, that the Company
shall not be required to preserve any such right or franchise if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted
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at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary, and (2) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
SECTION 1008. INSURANCE.
The Company will cause each of its properties and each of the properties of
its Subsidiaries which are of an insurable nature to be insured against loss of
damage with insurers of recognized responsibility, in commercially reasonable
amounts and types.
SECTION 1009. RESTRICTIONS ON INDEBTEDNESS.
(1) The Company will not, and will not permit any Subsidiary to, incur any
Indebtedness other than inter-company debt representing Indebtedness to which
the only parties are the Company and any of its Subsidiaries (but only so long
as such Indebtedness is held solely by any of the Company and any Subsidiary)
that is subordinate in right of payment to any Outstanding Securities if,
immediately after giving effect to the incurrence of such additional
Indebtedness, the aggregate principal amount of all outstanding Indebtedness of
the Company and its Subsidiaries on a consolidated basis is greater than 60% of
the sum of (i) Total Assets as of the end of the calendar quarter covered in the
Company's Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the
case may be, most recently filed with the Trustee prior to the incurrence of
such additional Indebtedness and (ii) the increase in Total Assets from the end
of such quarter including, without limitation, any increase in Total Assets
resulting from the incurrence of such additional Indebtedness (such increase,
together with the Total Assets, being referred to herein as "Adjusted Total
Assets").
(2) In addition to the foregoing limitation on the incurrence of
Indebtedness, the Company will not, and will not permit any Subsidiary to, incur
any Indebtedness if the ratio of Consolidated Income Available for Debt Service
to the Annual Service Charge for the four consecutive fiscal quarters most
recently ended prior to the date on which such additional Indebtedness is to be
incurred shall have been less than 1.5 to 1, on a pro forma basis, after giving
effect to the incurrence of such Indebtedness and to the application of the
proceeds therefrom and calculated on the assumption that (i) such Indebtedness
and any other Indebtedness incurred by the Company or its Subsidiaries since the
first day of such four-quarter period and the application of the proceeds
therefrom, including to refinance other Indebtedness, had occurred at the
beginning of such period, (ii) the repayment or retirement of any other
Indebtedness by the Company or its Subsidiaries since the first day of such
four-quarter period had been incurred, repaid or retired at the beginning of
such period (except that, in making such computation, the amount of Indebtedness
under any revolving credit facility shall be computed based upon the average
daily balance of such Indebtedness during such period), (iii) the income earned
on any increase in Adjusted Total Assets since the end of such four-quarter
period had been earned, on an annualized basis, during such period, and (iv) in
the case of any acquisition or disposition by the Company or any Subsidiary of
any asset or group of assets since the first day of such four-quarter period,
including, without limitation, by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any, related repayment of
Indebtedness had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition or disposition being
included in such pro forma calculation.
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For purposes of the foregoing provisions regarding the limitation on the
incurrence of Indebtedness, Indebtedness shall be deemed to be "incurred" by the
Company or a Subsidiary whenever the Company or its Subsidiary shall create,
assume, guarantee or otherwise become liable in respect thereof
(3) For so long as there are Outstanding any Securities entitled to the
benefit of this Section 1009(3), the Company will maintain Total Unencumbered
Assets of not less than 150% of the aggregate outstanding principal amount of
all outstanding Unsecured Indebtedness.
SECTION 1010. PROVISION OF FINANCIAL INFORMATION.
Whether or not the Company is subject to Section 13 or Section 15(d) of the
Exchange Act, the Company will, to the extent permitted under the Exchange Act,
file with the Commission the annual reports, quarterly reports and other
documents that the Company would have been required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act (the "Financial
Statements") if the Company were so subject, such documents to be filed with the
Commission on or prior to the respective dates (the "Required Filing Dates") by
which the Company would have been required so to file such documents if the
Company were so subject. The Company will also in any event (x) within 15 days
of each Required Filing Date (i) transmit by mail to all Holders, as their names
and addresses appear in the Security Register, without cost to such Holders,
copies of the annual reports and quarterly reports that the Company would have
been required to file with the Commission pursuant to Section 13 or Section
15(d) of the Exchange Act if the Company were subject to such Sections, and (ii)
file with the Trustee copies of the annual reports, quarterly reports and other
documents that the Company would have been required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act if the Company were
subject to such Sections and (y) if filing such documents by the Company with
the Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder.
SECTION 1011. WAIVER OF CERTAIN COVENANTS.
Except as otherwise specified as contemplated by Section 301 for Securities
of such series, the Company may, with respect to the Securities of any series,
omit in any particular instance to comply with any term, provision or condition
set forth in any covenant provided pursuant to Section 301(16), 901(2) or 901(7)
for the benefit of the Holders of such series or in any of Sections 1006 to
1010, inclusive, if before the time for such compliance the Holders of at least
a majority in principal amount of the Outstanding Securities of such series
shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Securities) in accordance with
this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be evidenced by a
Board Resolution or in another manner specified as contemplated by Section 301
for such Securities. In case of any redemption at the election of the Company of
less than all the Securities of any series (including any such redemption
affecting only a single Security), the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee),
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notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be redeemed (unless all
the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), 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
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 a
portion of the principal amount of any Security of such series, PROVIDED that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects only
a single Security), 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 and specified tenor not previously called
for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with respect
to any redemption affecting only a single Security, whether such Security is to
be redeemed in whole or in part. In the case of any such redemption in part, the
unredeemed portion of the principal amount of the Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
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 Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 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 at the
address for such Holder appearing in the Security Register, 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.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and accrued interest to the Redemption Date
payable as provided in Section 1106, if any,
(3) if less than all the Outstanding Securities of any series consisting
of more than a single Security are to be redeemed, the identification (and,
in the case of partial redemption of any such Securities, the principal
amounts) of the particular Securities to be redeemed and, if less than all
the Outstanding Securities of any series consisting of a single Security are
to be redeemed, the principal amount of the particular Security to be
redeemed,
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(4) 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 portion thereof, to
be redeemed and, if applicable, that interest thereon will cease to accrue
on and after said date,
(5) the place or places where each such Security is to be surrendered
for payment of the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the case, and
(7) the CUSIP number of such Security, if any.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent, which
it may not do in the case of a sinking fund payment under Article Twelve,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay 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, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; PROVIDED, HOWEVER, that, unless otherwise specified as
contemplated by Section 301, instalments of interest whose Stated Maturity is on
or prior to the Redemption Date will 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 Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall cause to be executed on its
behalf, 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
and of like tenor, 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.
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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 any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities 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 is herein referred to as an "optional sinking fund payment". If
provided for by the terms of any Securities, the cash amount of any 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 as provided for by
the terms of such Securities.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to any Securities of such series required to be made pursuant to the terms of
such Securities as and to the extent provided for by the terms of such
Securities; PROVIDED that the Securities to be so credited have not been
previously so credited. The Securities to be so credited shall be received and
credited for such purpose by the Trustee at the Redemption Price, as specified
in the Securities so to be redeemed, for redemption through operation of the
sinking fund and the amount of such 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 any
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. If such Officers' Certificate shall specify an optional amount to be
added in cash to the next ensuing mandatory sinking fund payment, the Company
shall thereupon be obligated to pay the amount therein specified. Not less than
30 days prior to each such sinking fund payment date, the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
The Company may elect, at its option at any time, to have Section 1302 or
Section 1303 applied to any Securities or any series of Securities, as the case
may be, designated pursuant to Section 301 as being defeasible pursuant to such
Section 1302 or 1303, in accordance with any applicable requirements provided
pursuant to Section 301 and upon compliance with the conditions set forth below
in this Article. Any such election shall be evidenced by a Board Resolution or
in another manner specified as contemplated by Section 301 for such Securities.
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SECTION 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Company shall be deemed to have been discharged from its obligations with
respect to such Securities as provided in this Section on and after the date the
conditions set forth in Section 1304 are satisfied (hereinafter called
"Defeasance"). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by such
Securities and to have satisfied all its other obligations under such Securities
and this Indenture insofar as such Securities are concerned (and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder: (1) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 1304 and as more fully
set forth in such Section, payments in respect of the principal of and any
premium and interest on such Securities when payments are due, (2) the Company's
obligations with respect to such Securities under Sections 304, 305, 306, 1002
and 1003, (3) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and (4) this Article. Subject to compliance with this Article, the
Company may exercise its option (if any) to have this Section applied to any
Securities notwithstanding the prior exercise of its option (if any) to have
Section 1303 applied to such Securities.
SECTION 1303. COVENANT DEFEASANCE.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, (1)
the Company shall be released from its obligations under Section 801(3),
Sections 1006 through 1010, inclusive, and any covenants provided pursuant to
Section 301(16), 901(2) or 901(7) for the benefit of the Holders of such
Securities and (2) the occurrence of any event specified in Sections 501(4)
(with respect to any of Section 801(3), Sections 1006 through 1010, inclusive,
and any such covenants provided pursuant to Section 301(16), 901(2) or 901(7)),
501(5) and 501(8) shall be deemed not to be or result in an Event of Default, in
each case with respect to such Securities as provided in this Section on and
after the date the conditions set forth in Section 1304 are satisfied
(hereinafter called "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that, with respect to such Securities, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such specified Section (to the extent so specified
in the case of Section 501(4)), whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or by reason of any reference in
any such Section to any other provision herein or in any other document, but the
remainder of this Indenture and such Securities shall be unaffected thereby.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of Section 1302 or
Section 1303 to any Securities or any series of Securities, as the case may be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article 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 benefits of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations 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, money in an amount, or (C) a combination
thereof, in each case sufficient, 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 any such other qualifying trustee) to pay and
discharge, the principal of and any premium and interest on such Securities
on the respective Stated Maturities, in accordance with the terms of this
Indenture and such Securities. As used herein, "U.S. Government Obligation"
means (x) any security which is (i) a direct obligation of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged or (ii) an
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obligation of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case (i) or (ii), is not callable
or redeemable at the option of the issuer thereof, and (y) any depositary
receipt issued by a bank (as defined in Section 3(a)(2) of the Securities
Act) as custodian with respect to any U.S. Government Obligation which is
specified in Clause (x) above and held by such bank for the account of the
holder of such depositary receipt, or with respect to any specific payment
of principal of or interest on any U.S. Government Obligation which is so
specified and held, 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 depositary receipt from any amount received by the custodian
in respect of the U.S. Government Obligation or the specific payment of
principal or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (A)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this instrument, there has
been a change in the applicable Federal income tax law, in either case (A)
or (B) to the effect that, and based thereon such opinion shall confirm
that, the Holders of such Securities will not recognize gain or loss for
Federal income tax purposes as a result of the deposit, Defeasance and
discharge to be effected with respect to such Securities and will be subject
to Federal income tax on the same amount, in the same manner and at the same
times as would be the case if such deposit, Defeasance and discharge were
not to occur.
(3) In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that
the Holders of such Securities will not recognize gain or loss for Federal
income tax purposes as a result of the deposit and Covenant Defeasance to be
effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as
would be the case if such deposit and Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Securities or any other
Securities shall have occurred and be continuing at the time of such deposit
or, with regard to any such event specified in Sections 501(6) and (7), at
any time on or prior to the 90th day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until
after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture Act
(assuming all Securities are in default within the meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the trust
arising from such deposit constituting an investment company within the
meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.
(9) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
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SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section and
Section 1306, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1304 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law. The Company shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
1304 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
Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time upon Company Request any money
or U.S. Government Obligations held by it as provided in Section 1304 with
respect to any Securities 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 the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.
SECTION 1306. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1302 or 1303 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1305 with respect to such Securities
in accordance with this Article; PROVIDED, HOWEVER, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.
ARTICLE FOURTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1401. 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 1402. REPAYMENT OF SECURITIES.
Securities of any series subject to repayment in whole or in part at the
option of the Holders thereof will, unless otherwise provided in the terms of
such Securities, be repaid at a price equal to the principal amount thereof,
together with interest, if any, thereon accrued to the Repayment Date specified
in or pursuant to the terms of such Securities. The Company covenants that on or
before the day prior to the Repayment Date it will deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the principal (or, if so provided by the terms of the
Securities of any
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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 1403. EXERCISE OF OPTION.
Securities of any series subject to repayment at the option of the Holders
thereof will contain an "Option to Elect Repayment" form on the reverse of such
Securities. In order for any Security to be repaid at the option of the Holder,
the Trustee must receive at the Place of Payment therefor specified in the terms
of such Security (or at such other place or places of which the Company shall
from time to time notify the Holders of such Securities) not earlier than 60
days nor later than 30 day prior to the Repayment Date (1) the Security so
providing for any such repayment together with the "Option to Elect Repayment"
form on the reverse thereof duly completed by the Holder or by the Holder's
attorney duly authorized in writing or (2) a telegram, facsimile transmission or
a letter from a member of a national securities exchange, or the National
Association of Securities Dealers, Inc. ("NASD"), or a commercial bank or trust
company in the United States setting forth the name of the Holder of the
Security, the principal amount of the Security, the principal amount of the
security to be repaid, the CUSIP number, if any, or a description of the tenor
and terms of the Security, a statement that the option to elect repayment is
being exercised thereby and a guarantee that the Security to be repaid, together
with the duly completed form entitled "Option to Elect Repayment" on the reverse
of the Security, will be received by the Trustee not later than the fifth
Business Day after the date of such telegram, 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, shall be
stated in a writing accompanying such Security. Except as otherwise may be
provided by the terms of any Security providing for repayment at the option of
the Holder thereof, exercise of the repayment option by the Holder shall be
irrevocable unless waived by the Company.
SECTION 1404. WHEN SECURITIES PRESENTED FOR RECIPIENT BECOME DUE AND PAYABLE.
If Securities of any series providing for repayment at the option of the
Holders thereof shall have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such Securities, such Securities or the
portions thereof, as the case may be, to be repaid shall become due and payable
and shall be paid by the Company on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Company shall default in the payment
of such Securities on such Repayment Date) such Securities shall, if the same
were interest-bearing, cease to bear interest. Upon surrender of any such
Security for repayment in accordance with such provisions, the principal amount
of such Security so to be repaid shall be paid by the Company, together with
accrued interest, if any, to the Repayment Date; provided, however, that
installments of interest, if any, whose Stated Maturity is on or prior to the
Repayment Date, shall be payable (but without interest thereon, unless the
Company shall default in the payment thereof) to the Holders of such Securities,
or one or more predecessor Securities, registered as such as the close of
business on the relevant Record Dates according to their terms and the
provisions of Section 307.
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 1405. SECURITIES REPAID IN PART.
Upon surrender of any Registered Security which is to be repaid in part
only, the Company shall execute and the Trustee shall authenticate and deliver
to the Holder of such Security, without charge
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and at the expense of the Company, a new 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.
This instrument 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 instrument.
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.
SUSA PARTNERSHIP, L.P.
By: Storage USA, Inc., its general
partner
By____________________________________
Name:
Title:
Attest:
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By____________________________________
Name:
Title:
Attest:
______________________________________
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STATE OF MARYLAND )
) ss.:
COUNTY OF )
On the day of , 199 , before me personally came ,
to me known, who, being by me duly sworn, did depose and say that he is of
Storage USA, Inc., the general partner of SUSA Partnership, L.P., the
partnership described in and which executed the foregoing instrument; that he
knows the seal of said partnership; that the seal affixed to said instrument is
such seal; that it was so affixed by authority of the Board of Directors of the
general partner of such partnership; and that he signed his name thereto by like
authority.
______________________________________
50
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STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On the day of , 199 , before me personally came ,
to me known, who, being by me duly sworn, did depose and say that he is of
The First National Bank of Chicago, the national banking association, the
Trustee described in and which executed the foregoing instrument; that he knows
the seal of said banking; that the seal affixed to said instrument is such seal;
that it was so affixed by authority of the Board of Directors of said banking
association; and that he signed his name thereto by like authority.
______________________________________
51
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Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to: (A) the inclusion in this Registration Statement on Form S-3
(333-3344) of SUSA Partnership, L.P., of (1) our report dated January 26, 1996,
except for Note 5 and Note 12, as to which the date is March 21, 1996, on our
audits of the consolidated financial statements of the SUSA Partnership, L.P. as
of December 31, 1995 and 1994 and for the year ended December 31, 1995 and for
the period from March 21, 1994 (inception) through December 31, 1994, and the
combined results of Storage USA, Inc. (the "Predecessor") for the period from
January 1, 1994 through March 23, 1994, and for the year ended December 31,
1993; and (2) our report dated January 26, 1996, on the financial statement
schedule of SUSA Partnership, L.P. as of December 31, 1995, and (B) the
incorporation by reference into this Registration Statement on Form S-3 of SUSA
Partnership, L.P. of: (1) our report dated January 26, 1996, except for Note 5
and Note 13, as to which the date is March 21, 1996, on our audit of the
consolidated financial statements of Storage USA, Inc. (the "Company") as of
December 31, 1995 and 1994, and for the year ended December 31, 1995 and for the
period from March 24, 1994 (inception) through December 31, 1994, and the
combined results of Storage USA, Inc. (the "Predecessor") for the period from
January 1, 1994 through March 23, 1994, and for the year ended December 31,
1993, which report is incorporated by reference in the Company's 1995 Form
10-K/A-1; (2) our report dated January 26, 1996, on our audit of the financial
statement schedule of Storage USA, inc. as of December 31, 1995, which report is
included in the Company's 1995 Form 10-A/A-1, and (3) our report dated December
29, 1995, on our audits of the Historical Summaries of Combined Gross Revenue
and Direct Operating Expenses for certain self-storage facilities (the
"Acquisition Facilities") for the year ended December 31, 1994, which report is
included in the Company's 8-K dated April 5, 1996.
We also consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 24, 1996
