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As filed with the Securities and Exchange Commission on April 3, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
______________________
CENTERPOINT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
MARYLAND 36-3910279
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
401 NORTH MICHIGAN AVENUE
30TH FLOOR
CHICAGO, ILLINOIS 60611
312-346-5600
(Address of registrant's principal executive offices)
JOHN S. GATES, JR.
PRESIDENT
CENTERPOINT PROPERTIES TRUST
401 NORTH MICHIGAN AVENUE, 30TH FLOOR
CHICAGO, ILLINOIS 60611
312-346-5600
(Name and address of agent for service)
______________________
COPIES TO:
RICHARD A. UNGARETTI, ESQ.
JAMES T. EASTERLING, ESQ.
Ungaretti & Harris
Three First National Plaza, Suite 3500
Chicago, Illinois 60602
312-977-4400
______________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
POSSIBLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AND FROM TIME
TO TIME THEREAFTER AS DETERMINED BY MARKET CONDITIONS.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, 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 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. /X/
______________________
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED(1) PER SECURITY (2) OFFERING PRICE (2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Debt Securities..............
Preferred Shares.............(3)
Common Shares................(5) $500,000,000 (4) $500,000,000 $147,500
Securities Warrants..........(6)
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(1) In United States dollars or the equivalent thereof in any other currency,
currency unit or units, or composite currency of currencies.
(2) Estimated solely for purposes of calculating the registration fee. The
aggregate maximum offering price of all Securities issued pursuant to
this Registration Statement will not exceed $500,000,000.
(3) Also includes such indeterminate number of Preferred Shares of Beneficial
Interest as may be issued upon conversion of or in exchange for any Debt
Securities that provide for conversion or exchange into Preferred Shares.
No separate consideration will be received for the Preferred Shares
issued upon conversion of or in exchange for Debt Securities.
(4) Omitted pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
(5) Also includes such indeterminate number of shares of Common Shares of
Beneficial Interest as may be issued upon conversion of or in exchange
for any Debt Securities or Preferred Shares that provide for conversion
or exchange into Common Shares. No separate consideration will be
received for the Common Shares issued upon conversion of or in exchange
for Debt Securities or Preferred Shares.
(6) Securities Warrants may be sold separately or with Debt Securities,
Preferred Shares or Common Shares.
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 BECOME EFFECTIVE IN ACCORDANCE WITH SECTION
8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID
SECTION 8(A) MAY DETERMINE.
<PAGE>
PROSPECTUS
$500,000,000
CENTERPOINT PROPERTIES TRUST
DEBT SECURITIES, COMMON SHARES, PREFERRED SHARES, SECURITIES WARRANTS
_________________
CenterPoint Properties Trust (the "Company") may from time to time offer
in one or more series its (i) senior debt securities ("Senior Debt
Securities"), (ii) subordinated debt securities ("Subordinated Debt
Securities") (Senior Debt Securities and Subordinated Debt Securities being
collectively referred to herein as "Debt Securities"), (iii) common shares of
beneficial interest, $.001 par value per share ("Common Shares"), (iv)
preferred shares of beneficial interest, par value $.001 per share
("Preferred Shares"), and (v) warrants exercisable for Debt Securities,
Common Shares or Preferred Shares ("Securities Warrants"), in amounts, at
prices and on terms to be determined at the time of offering. The Senior
Debt Securities, Subordinated Debt Securities, Common Shares, Preferred
Shares and Securities Warrants (collectively referred to herein as the
"Securities") may be offered separately or together, in separate series, in
amounts, at prices and on terms to be described in one or more supplements to
this Prospectus (a "Prospectus Supplement").
The aggregate public offering price for Securities offered by the
Company will be up to $500,000,000 (or the equivalent based on the applicable
exchange rate at the time of the offering).
The specific terms of the Securities with respect to which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, any terms for redemption at the option of the Company or
repayment at the option of the holder, any terms for any sinking fund
payment, covenants and any initial public offering price; (ii) in the case of
Common Shares, any initial public offering price; (iii) in the case of
Preferred Shares, the specific title and stated value, any dividend,
liquidation, redemption, conversion, voting and other rights, and any initial
public offering price; and (iv) in the case of Securities Warrants, the
specific title and aggregate number, the issue price and the exercise price.
In addition, such specific terms may include limitations on direct or
beneficial ownership and restrictions on transfer of the Securities, in each
case as may be appropriate to preserve the status of the Company as a real
estate investment trust ("REIT") for U.S. federal income tax purposes.
The applicable Prospectus Supplement also will contain information,
where applicable, about certain U.S. federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities
covered by such Prospectus Supplement.
The Securities may be offered directly by the Company, through agents
designated from time to time by the Company, or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of
the Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement with, between or among them, will be set
forth, or will be calculable from the information set forth, in an
accompanying Prospectus Supplement. See "Plan of Distribution." No
Securities may be sold without delivery of a Prospectus Supplement describing
the method and terms of the offering of such Securities.
SEE "RISK FACTORS" ON PAGE 5 OF THIS PROSPECTUS FOR CERTAIN FACTORS AND
MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF THE SECURITIES.
________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
________________
THE 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.
April 3, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and other
applicable legal or New York Stock Exchange, Inc. ("NYSE") requirements,
pursuant to which the Company files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information filed by the Company
under the Exchange Act may be examined without charge at, or copies obtained
upon payment of prescribed fees from, the Public Reference Section of the
Commission at Judiciary Plaza Office Building, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and will also be available for inspection and copying
at the regional offices of the Commission located at 13th Floor, 7 World
Trade Center, New York, New York 10048 and at Citicorp Center, Suite 1400,
500 West Madison Street, Chicago, Illinois 60661-2511, and at the NYSE, 20
Broad Street, New York, New York 10005. Electronic filings made through the
Electronic Data Gathering, Analysis and Retrieval System are publicly
available through the Commission's Web Site (http://www.sec.gov).
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder, with respect to the Securities offered
pursuant to this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information with respect to the Company and the Securities,
reference is made to the Registration Statement, which may be inspected and
copied in the manner and at the sources described above.
Statements contained in this Prospectus as to the contents of any
contract or other document that is filed as an exhibit to the Registration
Statement are not necessarily complete, and each such statement is qualified
in its entirety by reference to the full text of such contract or document.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
2. The Company's Current Report on Form 8-K/A No. 1 filed with the
Commission on February 27, 1998;
3. The Company's Current Report on Form 8-K filed with the Commission
on March 27, 1998;
4. The Company's Current Report on Form 8-K filed with the Commission
on April 3, 1998; and
5. The description of the Company's Common Shares set forth in the
Company's Pre-Effective Amendment No. 1 to Form S-4 registration
statement filed with the Commission on August 28, 1997 (File No.
333-33515).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of all Securities offered hereby
shall be deemed to be incorporated by reference in this Prospectus and to be
a part hereof from the date of filing of such documents. Any statement
herein or in any document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for the
purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed to constitute a
part of this Prospectus except as so modified or superseded.
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The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all of the
documents that have been or may be incorporated herein by reference
(excluding exhibits to such information unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Requests for such information should be directed to
CenterPoint Properties Trust, 401 North Michigan, 30th Floor, Chicago,
Illinois 60611; Attention: Paul S. Fisher, Secretary; telephone (312)
346-5600.
THE COMPANY
The Company is a self administered and self managed real estate
investment trust focused on the acquisition, development, redevelopment,
management and ownership of warehouse/industrial property located in Greater
Chicago (defined as the area within a 150-mile radius of Chicago, including
Milwaukee, Wisconsin and South Bend, Indiana). The Company has elected and
qualified for REIT status since January 1, 1994. See "Federal Income Tax
Considerations Relating to the Company's REIT status -- Qualification as a
REIT; Opinion of Counsel."
The Company, a Maryland real estate investment trust, was founded in
1984 and completed its initial public offering of securities in December 1993
(the "IPO"). Between completion of the IPO and December 31, 1997, the Company
has increased the size of its warehouse/industrial portfolio by 16.9 million
square feet or 325% by acquiring (net of dispositions) 60 fully-leased
warehouse/industrial properties. On October 15, 1997, the Company completed
a corporate reorganization pursuant to which the Company was converted from a
Maryland corporation to a Maryland real estate investment trust.
As of December 31, 1997, the Company's investment and management
portfolio consisted of 95 warehouse/industrial properties containing
approximately 22.1 million square feet. Based on published statistics
regarding square feet of space owned and managed by other firms and publicly
available information filed with the Commission, as well as its knowledge and
experience in the market, the Company believes it is the largest owner and
operator of warehouse/industrial property in Greater Chicago. The Company
also owns and manages three retail properties, one parking lot and one
apartment property, holds mortgages on two warehouse/industrial properties,
and is developing eight build-to-suit projects. As of December 31, 1997, the
Company's properties were 97% leased, excluding properties which are
currently being redeveloped and not leasable, with the warehouse/industrial
properties occupied by 178 tenants in diverse industries. No tenant accounts
for more than 5% of the Company's total revenues. Substantially all of the
Company's properties have been constructed or renovated during the past ten
years.
The Company believes that Greater Chicago offers significant
opportunities for investment in and ownership of warehouse/industrial
property. Greater Chicago, due to its central location and extensive air,
roadway, rail, and water transportation infrastructure, supports a diverse
industrial and service industry base. Based on published statistics
regarding square feet of space owned and managed by other firms and publicly
available information filed with the Securities and Exchange Commission, as
well as its knowledge and experience in the market, the Company believes it
is the largest owner and operator of warehouse/industrial property in Greater
Chicago.
The Company believes that investment in warehouse/industrial property
offers attractive returns and stable cash flow. Published statistics
indicate that total returns from warehouse/industrial properties have been
among the highest of any commercial property type in each of the past 15
years. The Company believes that cash flow from warehouse/industrial
property investments is generally more predictable than cash flow from other
property types because: (i) relatively short construction periods discourage
speculative building; (ii) lower capital expenditures are required to sustain
rental income due to the adaptable character of warehouse/industrial
property; and (iii) tenant renewal rates are higher due to the significant
cost and disruption to tenant operations resulting from relocations.
Moreover, leases for warehouse/industrial properties provide generally for
rent growth through contractual rent increases or rents tied to certain
indices such as the Consumer Price Index and are generally structured as net
leases, providing for the pass through to tenants of all operating and real
estate tax expenses.
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The Company's objective is to maximize stockholder value by pursuing a
growth strategy consisting of (i) intensive management of the Company's
existing properties and (ii) the acquisition of existing leased properties,
build-to-suit projects and properties suitable for redevelopment.
The Company's principal executive office is located at 401 North
Michigan Avenue, 30th Floor, Chicago, Illinois 60611, and its telephone
number is (312) 346-5600.
4
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RISK FACTORS
Prospective investors should carefully consider, among other factors,
the matters described below.
LIMITED GEOGRAPHICAL AND PROPERTY-TYPE DIVERSIFICATION
All of the Company's properties are located in Greater Chicago, and
substantially all of the Company's properties are warehouse/industrial
properties. While the Company believes that its focus on this geographical
area and property type is an advantage, the Company's performance and its
ability to make distributions to stockholders could be adversely affected by
unfavorable economic and/or warehouse/industrial real estate conditions in
Greater Chicago.
RISKS OF DEBT FINANCING
The Company is subject to the risks normally associated with the
incurrence of debt financing, including the risks that (i) the Company will
be unable to meet required payments of principal and interest, (ii) existing
indebtedness will not be able to be refinanced or, if refinanced, the terms
of such refinancing will not be as favorable as the original terms of such
indebtedness and (iii) necessary capital expenditures for such purposes as
renovations and other improvements will not be able to be financed or, if
financed, will not be able to be financed on terms favorable to the Company.
If a property is mortgaged to secure payment of indebtedness and the Company
is unable to meet mortgage payments, the property could be foreclosed upon by
the mortgagee with a consequent loss of income and asset value to the Company.
The Company intends to continue its policy of maintaining a ratio of
debt to total market capitalization of the Company of less than 50%.
However, the Declaration of Trust does not contain any limitations on the
ratio of debt to total market capitalization. Accordingly, the Board of
Trustees could alter or eliminate the current limitation on borrowing without
the approval of the Company's shareholders. If this policy were changed, the
Company could become more highly leveraged, resulting in an increase in debt
service that could adversely affect the Company's Funds from Operations and
its ability to make expected distributions to shareholders, as well as
increase the risk of default on the Company's other indebtedness and any
borrowings incurred under the Company's lines of credit.
Certain of the Company's debt now provides, and may in the future
provide, for variable interest rates. To the extent that the Company has
variable interest rate debt, the Company is exposed to the risk of interest
rate fluctuations and, consequently, an increase in interest expense. An
increase in interest expense could have a material adverse impact on the
Company's operations.
LIMITATION ON OWNERSHIP OF SHARES
In order for the Company to qualify as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"), not more than 50% in value of the
Company's outstanding shares of beneficial interest may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities). Due to this limitation on the concentration of ownership
of shares of beneficial interest in a REIT, ownership of more than 9.8% of
the value of the outstanding shares of beneficial interest by any single
shareholder has been restricted in the Declaration of Trust, with the
exception of the ownership of the Common Shares by the Company's former
parent company, CRP-London.
In connection with the limitation described in the preceding paragraph,
shares held by certain domestic pension trusts are treated as held by the
beneficiaries of such trusts. The Company does not intend to rely on this
rule to maintain compliance with such limitation. Under the Declaration of
Trust, domestic pension funds are subject to the restriction on ownership of
more than 9.8% of the value of the outstanding shares of beneficial interest.
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These ownership limits, as well as the ability of the Company to issue
additional Common Shares and Preferred Shares, may discourage a change of
control of the Company and may also (i) deter tender offers for the Common
Shares, which offers may be advantageous to shareholders, and (ii) limit the
opportunity for shareholders to receive a premium over then prevailing market
prices for their Common Shares that might otherwise exist if an investor were
attempting to assemble a block of Common Shares or otherwise effect a change
of control of the Company. See "Description of Shares of Beneficial Interest
- --Restrictions on Transfer."
CHANGES IN INVESTMENT AND FINANCING OBJECTIVES
The investment and financing objectives of the Company, and its
objectives with respect to certain other activities, including without
limitation, the objective that the Company continue to qualify as a REIT,
will be determined by the Board of Trustees. Although the Board of Trustees
has no present intention to do so, the Board may revise current objectives of
the Company at any time and from time to time in its sole discretion.
Accordingly, shareholders will have no direct control over changes in the
objectives of the Company.
REAL ESTATE INVESTMENT CONSIDERATIONS
GENERAL. The business of owning and investing in real estate is highly
competitive and is subject to numerous inherent risks, including adverse
changes in general or local economic conditions and/or specific industry
segments, real estate values, rental rates, interest rates, real estate tax
rates and other operating expenses, the possibility of competitive
overbuilding and of the Company's inability to obtain or maintain high levels
of occupancy in the Company's properties, tenant defaults, unfavorable
changes in governmental rules and fiscal policies (including rent control
legislation), acts of God and other factors which are beyond the control of
the Company. In addition to affecting the profitability of operations, these
and other factors could impact the marketability of the Company's properties.
In addition to the general risks of ownership and investment in real
property, the Company will be subject to other risks in connection with the
leasing, redevelopment and improvement of properties, such as the risk that
the properties may operate at a cash deficit during the redevelopment and/or
lease-up period, and the risk of a contractor's inability to control costs
and to conform to plans, specifications and timetables, which may in turn be
affected by strikes, weather, government regulations and other conditions
beyond the contractor's control. The benefits anticipated from such
transactions, therefore, may be reduced or may not materialize. The Company
may in the future acquire properties in need of additional leasing activity,
rehabilitation or improvement.
COMPETITION. All of the Company's existing properties are, and all of
the properties that it may acquire in the future are expected to be, located
in areas that include numerous other warehouse/industrial, retail or
apartment properties, many of which may be deemed to be more suitable to any
potential tenant. The resulting competition could have a material adverse
effect on the Company's ability to lease its properties and to increase the
rentals charged on existing leases.
ENVIRONMENTAL MATTERS. All of the Company's existing properties have
been, and all properties the Company may acquire in the future will be,
subjected to a Phase I or similar environmental assessment. The purpose of a
Phase I environmental assessment is to determine if past and present uses of
a property indicate the potential for soil or groundwater contamination or if
other environmental conditions might affect the value of or future uses of
the property. Phase I environmental assessments generally include the
following: visual inspection of environmental conditions at and around the
property; review of available land use records; interviews with the property
representatives; examination of information from environmental agencies; and
a walk through survey for suspected asbestos containing or other toxic
materials. These environmental assessments have not revealed any
environmental condition with respect to any of the Company's existing
properties that the Company believes could have a material adverse effect
upon the business or assets of the Company. However, no assurance can be
given that environmental assessments have revealed or will reveal all
potentially negative environmental conditions that may exist.
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Under various federal, state and local laws, ordinances and regulations,
an owner or operator of real estate is potentially liable to governmental
entities or third parties for property damage and the costs of investigation,
removal or remediation of contamination caused by certain hazardous or toxic
substances on or in such property. Such laws often impose liability without
regard to whether the owner knew of, or was responsible for, the presence of
such hazardous or toxic substances. The presence of such substances, or the
failure to properly remove such substances or remediate any contamination
caused thereby, may adversely affect the owner's ability to sell or rent such
property or to borrow using such property as collateral. Persons who arrange
for the disposal of hazardous substances at a treatment, storage or disposal
facility may be liable for the cost of removal or remediation of such
substances at such treatment, storage or disposal facility, whether or not
such facility is owned or operated by such person. Certain environmental
laws impose liability for release of asbestos-containing materials into the
air, and third parties may seek recovery from owners or operators of real
properties for personal injury associated with such materials. In connection
with the ownership, operation, management and development of properties, the
Company may be considered the owner or operator of such properties or as
having arranged for the disposal of hazardous or toxic substances and,
therefore, may be potentially liable for removal or remediation costs, as
well as certain other related costs, including governmental fines and damages
for injuries to persons and properties.
UNINSURED LOSS. The Company maintains comprehensive liability, fire,
flood (where appropriate), extended coverage and rental loss insurance with
respect to its properties, with limits and deductibles customary in the
industry. Certain types of losses, however, may be either uninsurable or not
economically insurable, such as those due to earthquakes, riots or acts of
war. Should an uninsured loss occur, the Company could lose both its
investment in and anticipated profits and cash flow from a property and would
continue to be obligated on any mortgage indebtedness or other obligations
related to the property. Any such loss could adversely affect the Company.
COST OF COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT. Under the
Americans with Disabilities Act of 1990 (the "ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. Existing warehouse/industrial properties
generally are exempt from the provisions of ADA but may be subject to
provisions requiring that buildings be made accessible to people with
disabilities. Compliance with the ADA could require removal of access
barriers, and non-compliance could result in the imposition of fines by the
federal government or an award of damages to private litigants. While the
amounts of such compliance costs, if any, are not currently ascertainable,
they are not expected to have an adverse effect on the Company.
CERTAIN RISKS RELATED TO REIT STATUS AND STRUCTURE
TAXATION AS A CORPORATION. The Company has elected and qualified for
REIT status since January 1, 1994. Although the Company believes that it has
operated in such a manner as to qualify as a REIT, no assurance can be given
that the Company will remain so qualified. Qualification as a REIT involves
the satisfaction of numerous requirements (some on an annual and quarterly
basis) established under highly technical and complex Code provisions for
which there are only limited judicial or administrative interpretations, and
involves the determination of various factual matters and circumstances not
entirely within the Company's control.
If the Company were to fail to qualify as a REIT in any taxable year,
the Company would be subject to federal income tax (including any applicable
alternative minimum tax) on its taxable income at corporate rates. Moreover,
unless entitled to relief under certain statutory provisions, the Company
would also be disqualified from treatment as a REIT for the four taxable
years following the year during which disqualification occurred. This
treatment would reduce the net earnings of the Company available for
investment or distribution to shareholders because of the additional tax
liability to the Company for the years involved. In addition, distributions
to shareholders would no longer be required to be made.
LACK OF CONTROL OF CERTAIN SUBSIDIARY CORPORATIONS. The Company expects
to derive income from certain activities (such as management of properties
owned by third parties) in excess of amounts the Company could earn directly or
through an entity controlled by the Company without jeopardizing its REIT
status. Accordingly, the Company owns a small percentage of the voting stock
of corporations carrying on such activities, and the Company
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has limited ability to influence the day-to-day management of such
corporations, even though the Company owns stock representing most of the
economic interest in such corporations.
OTHER TAX LIABILITIES. Even as a REIT, the Company will be subject to
certain federal, state and local taxes on its income and property.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
Company intends to invest the net proceeds of any sale of Securities for
general business purposes, including the development, redevelopment and
acquisition of additional properties and repayment of outstanding debt.
CERTAIN RATIOS
The Company's ratios of earnings to fixed charges for the years ended
December 31, 1997, 1996, 1995 and 1994 were 3.27, 2.33, 1.63 and 1.19,
respectively. The ratio of earnings to fixed charges for the year ended
December 31, 1993 was less than one-to-one.
The ratio of earnings to fixed charges means the ratio of pretax income
from continuing operations (with certain adjustments) to the total of: (i)
interest, (ii) amortization of debt expense and (iii) such portion of rental
expense as can be demonstrated to be representative of the interest factor in
the particular case.
The Company issued 2,272,727 shares of Series A Preferred Stock in
September, 1995, which was converted into 2,272,727 shares of Class B Common
Stock in May, 1996, and issued 3,000,000 8.48% Series A Cumulative Redeemable
Preferred Shares of Beneficial Interest in November, 1997. The Company's
ratios of earnings to combined fixed charges and Preferred Share dividends
for the years ended December 31, 1997, 1996 and 1995 were 3.04, 2.15 and
1.51. The Company had not issued any Preferred Stock prior to 1995;
therefore, the ratios of earnings to combined fixed charges and Preferred
Stock dividends for years prior to 1995 are unchanged from the ratios of
earnings to fixed charges for such years as set forth above.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and
provisions of the Debt Securities to which this Prospectus and any applicable
Prospectus Supplement may relate. The particular terms of the Debt
Securities being offered and the extent to which such general provisions may
apply will be set forth in the applicable Indenture or in one or more
indentures supplemental thereto and described in a Prospectus Supplement
relating to such Debt Securities.
The Senior Debt Securities will be issued under an Indenture, as amended
or supplemented from time to time (the "Senior Indenture"), between the Company
and a trustee to be selected by the Company (the "Senior Trustee"), and the
Subordinated Debt Securities will be issued under an Indenture, as amended and
supplemented from time to time (the "Subordinated Indenture"), between the
Company and a trustee to be selected by the Company (the "Subordinated
Trustee"). The Senior Indenture and the Subordinated Indenture are each
referred to herein individually as an "Indenture," and they are together
referred to herein as the "Indentures;" the Senior Trustee and the Subordinated
Trustee are each referred to herein individually as a "Trustee," and they are
together referred to herein as the "Trustees." Forms of the Senior Indenture
and of the Subordinated Indenture have been filed as exhibits to the
Registration Statement of which this Prospectus is a part and will be available
for inspection at the corporate office of the Senior Trustee and Subordinated
Trustee, respectively, or as described above under "Available Information."
The Indentures will be subject to, and governed by, the Trust Indenture Act of
1939, as amended. The Company will execute the applicable Indenture when and
if the Company issues Debt Securities. The statements made hereunder relating
to the Indentures 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
Indentures and such Debt Securities. Unless otherwise indicated,
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all Section references appearing herein are to Sections of the Indentures and
capitalized terms used but not otherwise defined herein will have the
meanings set forth in the Indentures.
PROVISIONS APPLICABLE TO SENIOR DEBT SECURITIES AND SUBORDINATED DEBT
SECURITIES
GENERAL. The Debt Securities will be direct, unsecured obligations of
the Company and may be either Senior Debt Securities or Subordinated Debt
Securities.
The indebtedness represented by the Senior Debt Securities will rank
pari passu with other Senior Debt (as defined under "Provisions Applicable
Solely to Subordinated Debt Securities -- General") of the Company that may
be outstanding from time to time. The payment of principal of (and premium,
if any) and interest on indebtedness represented by Subordinated Debt
Securities will be subordinated, to the extent and in the manner provided in
the Subordinated Indenture, in right of payment to the prior payment in full
of the Senior Debt of the Company, including the Senior Debt Securities, as
described under the heading "Provisions Applicable Solely to Subordinated
Debt Securities -- Subordination."
Each Indenture will provide that the Debt Securities may be issued
without limit as to aggregate principal amount, in one or more series, in
each case as established from time to time in or pursuant to authority
granted by a resolution of the Board of Trustees of the Company or as
established in the applicable Indenture or as may be established in one or
more indentures supplemental thereto. 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).
Each Indenture will provide that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under an Indenture may resign or be removed with respect to one or
more series of Debt Securities, and a successor Trustee may be appointed to
act with respect to such series (Section 608). In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee will be a trustee of a trust under the
applicable Indenture separate and apart from the trust administered by any
other Trustee thereunder, and, except as otherwise indicated herein, any
action described herein to be taken by each Trustee may be taken by each such
Trustee with respect to, and only with respect to, the one or more series of
Debt Securities for which it is Trustee under the applicable Indenture.
The Prospectus Supplement relating to any series of Debt Securities
being offered will contain the specific terms thereof, including, without
limitation:
(1) the title of such Debt Securities;
(2) the classification of such Debt Securities as Senior Debt
Securities or Subordinated Debt Securities;
(3) The aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(4) The percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of the maturity thereof;
(5) If convertible in whole or in part into Common Shares or Preferred
Shares, the terms on which such Debt Securities are convertible,
including the initial conversion price or rate (or method for
determining the same), the portion that is convertible and the
conversion period, and any applicable limitations on the ownership
or transferability of the Common Shares or Preferred Shares
receivable on conversion;
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(6) The date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(7) The rate or rates (which may be fixed or variable), or the method
by which such rate or rates will be determined, at which such Debt
Securities will bear interest, if any;
(8) The date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the dates on which
any such interest will be payable, the Regular Record Dates for
such Interest Payment Dates, or the method by which such dates will
be determined, the person to whom such interest will be payable,
and the basis upon which interest will be calculated if other than
that of a 360-day year of twelve 30-day months;
(9) The place or places where the principal of (and premium or
Make-Whole Amount, if any) and interest and Additional Amounts, if
any, on such Debt Securities will be payable, where such Debt
Securities may be surrendered for conversion or registration of
transfer or exchange and where notices or demands to or upon the
Company in respect of such Debt Securities and the applicable
Indenture may be served;
(10) The period or periods within which, the price or prices at which
and the other terms and conditions upon which such Debt Securities
may be redeemed, in whole or in part, at the option of the Company,
if the Company is to have such an option;
(11) The obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or
periods within which or the date and dates on which, the price or
prices at which and the other terms and conditions upon which such
Debt Securities will be redeemed, repaid or purchased, in whole or
in part, pursuant to such obligation;
(12) If other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a
foreign currency or units of two or more foreign currencies or a
composite currency or currencies, and the terms and conditions
relating thereto;
(13) Whether the amount of payments of principal of (and premium or
Make-Whole Amount, if any) or interest and Additional Amounts, if
any, on such Debt Securities may be determined with reference to an
index, formula or other method (which index, formula or method may,
but need not be, based on a currency, currencies, currency unit or
units or composite currency or currencies) and the manner in which
such amounts will be determined;
(14) Any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to Events of Default or covenants
set forth in the applicable Indenture;
(15) Whether such Debt Securities will be issued in certificated or
book-entry form;
(16) Whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than
$1,000 and any integral multiple thereof and, if in bearer form,
the denominations thereof and terms and conditions relating thereto;
(17) The applicability, if any, of the defeasance and covenant
defeasance provisions of Article Fourteen of the applicable
Indenture;
(18) If such Debt Securities are to be issued upon the exercise of
Warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
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(19) Whether and under what circumstances the Company will pay any
Additional Amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether the Company
will have the option to redeem such Debt Securities in lieu of
making such payment; and
(20) Any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture (Section 301).
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities"). Special federal income tax,
accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
The Indentures will not contain any provisions that would limit the
ability of the Company to incur indebtedness or that would afford Holders of
Debt Securities protection in the event of a highly leveraged or similar
transaction involving the Company or in the event of a change of control.
Restrictions on ownership and transfers of the Company's Common Shares and
Preferred Shares are designed to preserve its status as a REIT and,
therefore, may act to prevent or hinder a change of control. See
"Description of Shares of Beneficial Interest -- Restrictions on Transfer"
and "Risk Factors --Limitation on Ownership of Shares." Reference is made to
the applicable Prospectus Supplement for information with respect to any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company that are described below, including any addition of
a covenant or other provision providing event risk or similar protection.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER. Unless otherwise
described in the applicable Prospectus Supplement, the Debt Securities of any
series will be issuable in denominations of $1,000 and integral multiples
thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium or Make-Whole Amount, if any) and
interest and Additional Amounts, if any, on any series of Debt Securities
will be payable at the corporate trust office of the applicable Trustee, the
address of which will be stated in the applicable Prospectus Supplement;
provided that, at the option of the Company, payment of interest may be made
by check mailed to the address of the person entitled thereto as it appears
in the applicable register for such Debt Securities or by wire transfer of
funds to such person at an account maintained within the United States
(Sections 301, 305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
applicable Trustee, notice whereof will be given to the Holder of such Debt
Security not less than ten days prior to such Special Record Date, or may be
paid at any time in any other lawful manner, all as more completely described
in the applicable Indenture (Section 307).
Subject to certain limitations imposed upon Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount and
tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the applicable Trustee. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
conversion or registration of transfer or exchange thereof at the corporate
trust office of the applicable Trustee. Every Debt Security surrendered for
conversion, registration of transfer or exchange must be duly endorsed or
accompanied by a written instrument of transfer. No service charge will be
made for any registration of transfer or exchange of any Debt Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (Section 305). If the
applicable Prospectus Supplement refers to any transfer agent (in addition to
the applicable Trustee) initially designated by the Company with respect to any
series of Debt Securities,
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the Company may at any time rescind the designation of any such transfer
agent or approve a change in the location through which any such transfer
agent acts, except that the Company will be required to maintain a transfer
agent in each place of payment for such series. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities (Section 1002).
Neither the Company nor any Trustee will be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of
Debt Securities of that series to be redeemed and ending at the close of
business on the day of mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Debt Security
being redeemed in part; (iii) exchange any Bearer Security so selected for
redemption, except to exchange such Bearer Security for a Registered Security
of that series of like tenor when immediately surrendered for redemption; or
(iv) issue, register the transfer of or exchange any Debt Security which has
been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305).
MERGER, CONSOLIDATION OR SALE. The Company will be permitted to
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into, any other entity, provided that (a) either
the Company will be the continuing entity, or the successor entity (if other
than the Company) formed by or resulting from any such consolidation or
merger or which has received the transfer of such assets will expressly
assume payment of the principal of (and premium or Make-Whole Amount, if any)
and interest and Additional Amounts, if any, on all of the Debt Securities
and the due and punctual performance and observance of all of the covenants
and conditions contained in each Indenture; (b) immediately after giving
effect to such transaction and treating any indebtedness that becomes an
obligation of the Company or any Subsidiary as a result thereof as having
been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default under the Indentures, and no event which,
after notice or the lapse of time, or both, would become such an Event of
Default, has occurred and be continuing; and (c) an officer's certificate and
legal opinion covering such conditions will be delivered to each Trustee
(Sections 801 and 803).
CERTAIN COVENANTS.
EXISTENCE. Except as described above under "Merger, Consolidation or
Sale," the Company will be required to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
and franchises; provided, however, that the Company will 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 1006).
MAINTENANCE OF PROPERTIES. The Company will be required to cause all of
its material properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, the
Company and its Subsidiaries will not be prevented from selling or otherwise
disposing for value its properties in the ordinary course of business
(Section 1007).
INSURANCE. The Company will be required to, and will be required to
cause each of its Subsidiaries to, keep all of its insurable properties
insured against loss or damage at least equal to their then full insurable
value with financially sound and reputable insurers and, if described in the
applicable Prospectus Supplement, having a specified rating from a recognized
insurance rating service (Section 1008).
PAYMENT OF TAXES AND OTHER CLAIMS. The Company will be required to pay or
discharge or cause to be paid or discharged, before the same becomes
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or property of
the Company or any Subsidiary, and (ii) all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien upon the property of
the Company or any Subsidiary; provided, however, that the Company will not be
required to pay or
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discharge or cause to be paid or discharged any such tax, assessment, charge
or claim (i) whose amount, applicability or validity is being contested in
good faith by appropriate proceedings or (ii) for which the Company has set
apart and maintains an adequate reserve (Section 1009).
PROVISION OF FINANCIAL INFORMATION. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Company will, to the
extent permitted under the Exchange Act, file with the Commission the annual
reports, quarterly reports and other documents (the "Financial Information")
which the Company would have been required to file with the Commission
pursuant to such Sections 13 or 15(d) if the Company were so subject, 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 of Debt Securities, as their names and
addresses appear in the Security Register, without cost to such Holders,
copies of the annual reports and quarterly reports and (ii) file with the
Trustees copies of the Financial Information, and (y) if filing such
documents by the Company with the Commission is not permitted under the
Exchange Act, promptly upon written request and payment of the reasonable
cost of duplication and delivery, supply copies of such documents to any
prospective Holder (Section 1010).
ADDITIONAL COVENANTS AND/OR MODIFICATIONS TO THE COVENANTS DESCRIBED
ABOVE. Any additional covenants of the Company and/or modifications to the
covenants described above with respect to any Debt Securities or series
thereof, including any covenants relating to limitations on incurrence of
indebtedness or other financial covenants, will be set forth in the
applicable Indenture or an indenture supplemental thereto and described in
the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER. Each Indenture will provide that
the following events are "Events of Default" with respect to any series of
Debt Securities issued thereunder: (i) default for 30 days in the payment of
any installment of interest on any Debt Security of such series; (ii) default
in the payment of principal of (or premium or Make-Whole Amount, if any, on)
any Debt Security of such series at its Maturity; (iii) default in making any
sinking fund payment as required for any Debt Security of such series; (iv)
default in the performance or breach of any other covenant or warranty of the
Company contained in the applicable Indenture (other than a covenant added to
the Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series), that continues for 60 days after written
notice as provided in the applicable Indenture; (v) default in the payment of
an aggregate principal amount exceeding $10,000,000 of any indebtedness of
the Company or any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured, such default
having occurred after the expiration of any applicable grace period and
having resulted in the acceleration of the maturity of such indebtedness, but
only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled within a specified period of time; (vi) certain events
of bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of the Company or any Significant Subsidiary
or either of its property; and (vii) any other Event of Default provided with
respect to a particular series of Debt Securities (Section 501). The term
"Significant Subsidiary" will mean each significant subsidiary (as defined in
Regulation S-X promulgated under the Securities Act) of the Company.
If an Event of Default under any Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing,
then in every such case the applicable Trustee or the Holders of not less
than 25% of the principal amount of the Outstanding Debt Securities of that
series will have the right to declare the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities or indexed
securities, such portion of the principal amount as may be specified in the
terms thereof) of all the Debt Securities of that series to be due and
payable immediately by written notice thereof to the Company (and to the
applicable Trustee if given by the Holders). However, at any time after such
a declaration of acceleration with respect to Debt Securities of such series
(or of all Debt Securities then Outstanding under any Indenture, as the case
may be) has been made, but before a judgment or decree for payment of the
money due has been obtained by the applicable Trustee, the Holders of not
less than a majority in principal amount of Outstanding Debt Securities of
such series (or of all Debt Securities then Outstanding under the applicable
Indenture, as the case may be) may rescind and annul such declaration and its
consequences if (a) the Company has deposited with the applicable Trustee all
required payments of the principal of (and premium, if any) and interest on
the Debt Securities of such series (or of all Debt
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Securities then Outstanding under the applicable Indenture, as the case may
be), plus certain fees, expenses, disbursements and advances of the
applicable Trustee and (b) all events of default, other than the non-payment
of accelerated principal (or specified portion thereof), with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding under
the applicable Indenture, as the case may be) have been cured or waived as
provided in such Indenture (Section 502). Each Indenture also will provide
that the Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the applicable Indenture, as the case may be) may waive any
past default with respect to such series and its consequences, except a
default (x) in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series or (y) in respect of a covenant
or provision contained in the applicable Indenture that cannot be modified or
amended without the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513).
Each Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the applicable Indenture unless
such default has been cured or waived; provided, however, that such Trustee
may withhold notice to the Holders of any series of Debt Securities of any
default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any
Debt Security of such series) if Responsible Officers of such Trustee
consider such withholding to be in the interest of such Holders (Section 601).
Each Indenture will provide that no Holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the cases of failure
of the applicable Trustee, for 60 days, to act after it has received a
written request to institute proceedings in respect of an Event of Default
from the Holders of not less than 25% in principal amount of the Outstanding
Debt Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507). This provision will not prevent, however,
any Holder of Debt Securities from instituting suit for the enforcement of
payment of the principal of (and premium or Make-Whole Amount, if any) and
interest on, and any Additional Amounts in respect of such Debt Securities at
the respective due dates thereof (Section 508).
Subject to provisions in each Indenture relating to its duties in case
of default, no Trustee will be under any obligation to exercise any of its
rights or powers under an Indenture at the request or direction of any
Holders of any series of Debt Securities then Outstanding under such
Indenture, unless such Holders have offered to the Trustee thereunder
reasonable security or indemnity (Section 602). The Holders of not less than
a majority in principal amount of the Outstanding Debt Securities of any
series (or of all Debt Securities then Outstanding under an Indenture, as the
case may be) will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable Trustee,
or of exercising any trust or power conferred upon such Trustee. However, a
Trustee may refuse to follow any direction which is in conflict with any law
or the applicable Indenture, which may involve such Trustee in personal
liability or which may be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, the Company will be
required to deliver to each Trustee a certificate, signed by one of several
specified officers, stating whether or not such officer has knowledge of any
default under the applicable Indenture and, if so, specifying each such
default and the nature and status thereof (Section 1011).
MODIFICATION OF THE INDENTURES. Modifications and amendments of an
Indenture will be permitted to be made only with the consent of the Holders of
not less than a majority in principal amount of all Outstanding Debt Securities
issued under such Indenture which are affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the Holder of each such Debt Security affected thereby,
(a) change the stated maturity of the principal of, or any installment of
interest (or premium or Make-Whole Amount, if any) on, any such Debt Security;
(b) reduce the principal amount of, or the rate or amount of interest on or any
Additional Amounts payable in respect thereof, or any premium payable on
redemption of, any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon declaration
of acceleration of the maturity thereof or would be provable in bankruptcy, or
adversely affect any right of repayment of the Holder of any such Debt
Security; (c) change the place of payment, or the coin
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or currency, for payment of principal or premium, if any, or interest on any
such Debt Security; (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any such Debt Security; (e)
reduce the above-stated percentage of Outstanding Debt Securities of any
series necessary to modify or amend the applicable Indenture, to waive
compliance with certain provisions thereof or certain defaults and
consequences thereunder or to reduce the quorum or voting requirements set
forth in the applicable Indenture; (f) if Subordinated Debt Securities,
modify any of the provisions of the Subordinated Indenture relating to the
subordination of such Subordinated Debt Securities in a manner adverse to the
Holders thereof; or (g) modify any of the foregoing provisions or any of the
provisions relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect such action
or to provide that certain other provisions may not be modified or waived
without the consent of the Holder of such Debt Security (Section 902).
The Holders of not less than a majority in principal amount of
Outstanding Debt Securities of each series affected thereby will have the
right to waive compliance by the Company with certain covenants in such
Indenture (Section 1013).
Modifications and amendments of each Indenture will be permitted to be
made by the Company and the respective Trustee thereunder without the consent
of any Holder of Debt Securities for any of the following purposes: (i) to
evidence the succession of another person to the Company as obligor under
such Indenture; (ii) to add to the covenants of the Company for the benefit
of the Holders of all or any series of Debt Securities or to surrender any
right or power conferred upon the Company in an Indenture; (iii) to add
Events of Default for the benefit of the Holders of all or any series of Debt
Securities; (iv) to add or change any provisions of an Indenture to
facilitate the issuance of, or to liberalize certain terms of, Debt
Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided that such action will not
adversely affect the interests of the Holders of the Debt Securities of any
series in any material respect; (v) to change or eliminate any provisions of
an Indenture, provided that any such change or elimination will become
effective only when there are no Debt Securities Outstanding of any series
created prior thereto which are entitled to the benefit of such provision;
(vi) to secure the Debt Securities; (vii) to establish the form or terms of
Debt Securities of any series, including the provisions and procedures, if
applicable, for the conversion of such Debt Securities into Common Shares or
Preferred Shares of the Company; (viii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration of the
trusts under an Indenture by more than one Trustee; (ix) to cure any
ambiguity, defect or inconsistency in an Indenture, provided that such action
will not adversely affect the interests of Holders of Debt Securities of any
series issued under such Indenture in any material respect; (x) to close
either Indenture with respect to the authentication and delivery of
additional sums of Debt Securities or to qualify, or maintain qualification
of either Indenture under the Trust Indenture Act; or (xi) to supplement any
of the provisions of an Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities,
provided that such action will not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect (Section
901).
Each Indenture will provide that in determining whether the Holders of
the requisite principal amount of Outstanding Debt Securities of a series
have given any request, demand, authorization, direction, notice, consent or
waiver thereunder or whether a quorum is present at a meeting of Holders of
Debt Securities, (i) the principal amount of an Original Issue Discount
Security that will be deemed to be Outstanding will be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon declaration of acceleration of the maturity thereof, (ii)
the principal amount of any Debt Security denominated in a foreign currency
that will be deemed Outstanding will be the U.S. dollar equivalent,
determined on the issue date for such Debt Security, of the principal amount
(or, in the case of Original Issue Discount Security, the U.S. dollar
equivalent on the issue date of such Debt Security of the amount determined
as provided in (i) above), (iii) the principal amount of an indexed security
that will be deemed Outstanding will be the principal face amount of such
indexed security at original issuance, unless otherwise provided with respect
to such indexed security pursuant to Section 301 of the applicable Indenture,
and (iv) Debt Securities owned by the Company or any other obligor upon the
Debt Securities or any affiliate of the Company or of such other obligor will
be disregarded (Section 101).
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Each Indenture will contain provisions for convening meetings of the
Holders of Debt Securities of a series (Section 1501). A meeting may be
called at any time by the applicable Trustee, and also, upon request, by the
Company or the Holders of at least 10% in principal amount of the Outstanding
Debt Securities of such series, in any such case upon notice given as
provided in the Indenture (Section 1502). Except for any consent that must
be given by the Holder of each Debt Security affected by certain
modifications and amendments of an Indenture, any resolution presented at a
meeting or adjourned meeting duly reconvened at which a quorum is present may
be adopted by the affirmative vote of the Holders of a majority in principal
amount of the Outstanding Debt Securities of that series; provided, however,
that, except as referred to above, any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or
adjourned meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Debt Securities of that series. Any
resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with an Indenture will be
binding on all Holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver
which may be given by the Holders of not less than a specified percentage in
principal amount of the Outstanding Debt Securities of a series, the persons
holding or representing such specified percentage in principal amount of the
Outstanding Debt Securities of such series will constitute a quorum (Section
1504).
Notwithstanding the foregoing provisions, each Indenture will provide
that if any action is to be taken at a meeting of Holders of Debt Securities
of any series with respect to any request, demand, authorization, direction,
notice, consent, waiver and other action that such Indenture expressly
provides may be made, given or taken by the Holders of a specified percentage
in principal amount of all Outstanding Debt Securities affected thereby, or
the Holders of such series and one or more additional series: (i) there will
be no minimum quorum requirement for such meeting, and (ii) the principal
amount of the Outstanding Debt Securities of such series that vote in favor
of such request, demand, authorization, direction, notice, consent, waiver or
other action will be taken into account in determining whether such request,
demand, authorization, direction, notice, consent, waiver or other action has
been made, given or taken under such Indenture (Section 1504).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE. The Company may be
permitted under the applicable Indenture to discharge certain obligations to
Holders of any series of Debt Securities issued thereunder that have not
already been delivered to the applicable Trustee for cancellation and that
either have become due and payable or will become due and payable within one
year (or scheduled for redemption within one year) by irrevocably depositing
with the applicable Trustee, in trust, funds in such currency or currencies,
currency unit or units or composite currency or currencies in which such Debt
Securities are payable in an amount sufficient to pay the entire indebtedness
on such Debt Securities in respect of principal (and premium, if any) and
interest and any Additional Amounts to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or
redemption date, as the case may be (Section 401).
Each Indenture will provide that, if the provisions of Article Fourteen
are made applicable to the Debt Securities of or within any series pursuant to
Section 301 of such Indenture, the Company may elect either (a) to defease and
be discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities, and the obligations to register
the transfer or exchange of such Debt Securities, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") (Section 1402) or (b) to be released from its obligations
with respect to such Debt Securities under certain specified sections of
Article Ten of such Indenture as specified in the applicable Prospectus
Supplement, whereupon any omission to comply with such obligations will not
constitute an Event of Default with respect to such Debt Securities ("covenant
defeasance") (Section 1403), in either case upon the irrevocable deposit by the
Company with the applicable Trustee, in trust, of an amount, in such currency
or currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are payable at stated maturity, or Government
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Obligations (as defined below), or both, applicable to such Debt Securities
which through the scheduled payment of principal and interest in accordance
with their terms will provide money in an amount sufficient without
reinvestment to pay the principal of (and premium, if any) and interest on
such Debt Securities, and any mandatory sinking fund or analogous payments
thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Company has delivered to the applicable Trustee an opinion of
counsel (as specified in the applicable Indenture) to the effect that the
Holders of such Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such opinion of
counsel, in the case of defeasance, will be required to refer to and be based
upon a ruling of the Internal Revenue Service or a change in applicable U.S.
federal income tax law occurring after the date of the Indenture (Section
1404).
"Government Obligations" will be defined in the Indentures to mean
securities which are (i) direct obligations of the United States of America
or the government which issued the foreign currency in which the Debt
Securities of a particular series are payable, for the payment of which its
full faith and credit is pledged or (ii) obligations of a person controlled
or supervised by and acting as an agency or instrumentality of the United
States of America or such government which issued the foreign currency in
which the Debt Securities of such series are payable, the timely payment of
which is unconditionally guaranteed as a full faith and credit obligation of
the United States of America or such government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and will also
include a depository receipt issued by a bank or trust company as custodian
with respect to any such Government Obligation or a specific payment of
interest on or principal of any such Government Obligation held by such
custodian for the account of the Holder of a depository receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the Holder of such depository receipt
from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by such depository receipt (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to Section 301 of the applicable Indenture or the terms
of such Debt Security to receive payment in a currency, currency unit or
composite currency other than that in which such deposit has been made in
respect of such Debt Security, or (b) a Conversion Event (as defined below)
occurs in respect of the currency, currency unit or composite currency in
which such deposit has been made, the indebtedness represented by such Debt
Security will be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any) and
interest on such Debt Security as they become due out of the proceeds yielded
by converting the amount so deposited in respect of such Debt Security into
the currency, currency unit or composite currency in which such Debt Security
becomes payable as a result of such election or such cessation of usage based
on the applicable market exchange rate. "Conversion Event" means the
cessation of use of (i) a currency, currency unit or composite currency both
by the government of the country which issued such currency and for the
settlement of transactions by a central bank or other public institutions of
or within the international banking community, (ii) the ECU both within the
European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities or (iii) any currency unit
or composite currency other than the ECU for the purposes for which it was
established. Unless otherwise provided in the applicable Prospectus
Supplement, all payments of principal of (and premium, if any) and interest
on any Debt Security that is payable in a foreign currency that ceases to be
used by its government of issuance will be made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because
of the occurrence of any Event of Default other than the Event of Default
described in clause (iv) under "Events of Default, Notice and Waiver" with
respect to certain specified sections of Article Ten of each Indenture (which
sections would no longer be applicable to such Debt Securities as a result of
such covenant defeasance) or described in clause (vii) under "Events of
Default, Notice and Waiver" with
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respect to any other covenant as to which there has been covenant defeasance,
the amount in such currency, currency unit or composite currency in which
such Debt Securities are payable, and Government Obligations on deposit with
the applicable Trustee, will be sufficient to pay amounts due on such Debt
Securities at the time of their stated maturity but may not be sufficient to
pay amounts due on such Debt Securities at the time of the acceleration
resulting from such Event of Default. However, the Company would remain
liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance,
including any modifications to the provisions described above, with respect
to the Debt Securities of or within a particular series.
CONVERSION RIGHTS. The terms and conditions, if any, upon which the
Debt Securities are convertible into Common Shares or Preferred Shares will
be set forth in the applicable Prospectus Supplement relating thereto. Such
terms will include whether such Debt Securities are convertible into Common
Shares or Preferred Shares, the conversion price (or manner of calculation
thereof), the conversion period, provisions as to whether conversion will be
at the option of the Holders or the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Debt Securities and any restrictions on
conversion, including restrictions directed at maintaining the Company's REIT
status.
REDEMPTION OF SECURITIES. Each Indenture will provide that the Debt
Securities may be redeemed at any time at the option of the Company, in whole
or in part, at the Redemption Price, except as may otherwise be provided in
connection with any Debt Securities or series thereof (Section 1102).
From and after notice has been given as provided in the Indentures, if
funds for the redemption of any Debt Securities called for redemption have
been made available on such redemption date, such Debt Securities will cease
to bear interest on the date fixed for such redemption specified in such
notice (Section 1105), and the only right of the Holders of the Debt
Securities will be to receive payment of the Redemption Price (Section 1106).
Notice of any optional redemption of any Debt Securities will be given
to Holders at their addresses, as shown in the Security Register, not more
than 60 nor less than 30 days prior to the date fixed for redemption. The
notice of redemption will specify, among other items, the Redemption Price
and the principal amount of the Debt Securities held by such Holder to be
redeemed (Section 1104). With respect to Bearer Securities, notice will be
sufficiently given if published in an Authorized Newspaper in the City of New
York and in such other city or cities as may be specified in the Debt
Securities (Section 106).
If the Company elects to redeem Debt Securities, it will notify the
applicable Trustee at least 45 days prior to the redemption date (or such
shorter period as satisfactory to such Trustee) of the aggregate principal
amount of Debt Securities to be redeemed and the redemption date (Section
1102). If less than all the Debt Securities are to be redeemed, the
applicable Trustee will select the Debt Securities to be redeemed PRO RATA,
by lot or in such manner as it deems fair and appropriate (Section 1103).
GLOBAL SECURITIES. The Debt Securities of a series may be issued in
whole or in part in the form of one or more global securities (the "Global
Securities") that will be deposited with, or on behalf of, a depository
identified in the applicable Prospectus Supplement relating to such series
(Section 201). Global Securities, if any, issued in the United States are
expected to be deposited with the Depository Trust Company, as Depository.
Global Securities may be issued in fully registered form and may be issued in
either temporary or permanent form. Unless and until a Global Security is
exchanged in whole or in part for the individual Securities represented
thereby, it may not be transferred except as a whole by the Depository for
such Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by
such Depository or any nominee of such Depository to a successor Depository
or any nominee of such successor.
The specific terms of the depository arrangement with respect to
particular Securities will be described in the Prospectus Supplement relating
to such Securities. The Company expects that unless otherwise indicated in
the applicable Prospectus Supplement, the following provisions will apply to
depository arrangements.
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Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and
transfer system the respective principal amounts of the individual Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depository ("Participants"). Such accounts will be
designated by the underwriters, dealers or agents with respect to such
Securities or by the Company if such Securities are offered directly by the
Company. Ownership of beneficial interests in such Global Security will be
limited to Participants or person that may hold interests through
Participants. Ownership of beneficial interests in such Global Security will
be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depository for such Global Security or its
nominee (with respect to beneficial interests of participants) and records
of Participants (with respect to beneficial interests of persons who hold
through Participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and laws may impair the ability to own, pledge
or transfer beneficial interest in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the
Securities represented by such Global Security for all purposes. Except as
described below or in the applicable Prospectus Supplement, owners of
beneficial interest in a Global Security will not be entitled to have any of
the individual Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
any such Securities in definitive form and will not be considered the Owners
or Holders thereof.
Payment with respect to Securities represented by a Global Security
registered in the name of a Depository or its nominee (including dividends,
with respect to Common Shares, dividends and any redemption payments on
Preferred Shares and principal of, any premium or Make-Whole Amount and any
interest on, or any Additional Amounts payable with respect to, individual
Debt Securities) will be made to the Depository or its nominee, as the case
may be, as the registered owner of the Global Security. None of the Company,
any Trustee, any Paying Agent, the Security Registrar or any transfer agent
for Securities represented by a Global Security will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global Security for such
Securities or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Company expects that the Depository for any Securities or its
nominee, upon receipt of any payment with respect to Securities represented
by a Global Security will immediately credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
such Global Security as shown on the records of such Depository or its
nominee. The Company also expects that payments by Participants to owners of
beneficial interests in such Global Security held through such Participants
will be governed by standing instructions and customary practices, as is the
case with securities held for the account of customers in bearer form or
registered in street name. Such payments will be the responsibility of such
Participants.
If a Depository for any Securities is at any time unwilling, unable or
ineligible to continue as depository and a successor depository is not
appointed by the Company within 90 days, the Company will issue individual
Securities in exchange for the Global Security representing such discretion,
subject to any limitations described in the Prospectus Supplement relating to
such Securities, determine not to have any of such Securities represented by
one or more Global Securities and in such event will issue individual
Securities in exchange for the Global Security or Securities representing
such Securities. Individual Debt Securities so issued will be issued in
denominations of $1,000 and integral multiples thereof.
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
GENERAL. Subordinated Debt Securities will be issued under the
Subordinated Indenture and will rank pari passu with certain other
subordinated debt of the Company that may be outstanding from time to time
and will rank junior to all Senior Debt of the Company, including the Senior
Debt Securities, that may be outstanding from time to time. All Section
references appearing below are to Sections of the Subordinated Indenture.
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If Subordinated Debt Securities are issued under the Subordinated
Indenture, the aggregate principal amount of Senior Debt outstanding as of a
recent date will be set forth in the Prospectus Supplement. The Subordinated
Indenture will not restrict the amount of Senior Debt that the Company may
incur.
The term "Senior Debt" will be defined in the Subordinated Indenture to
mean: (i) the principal of and premium, if any, and interest on indebtedness
for borrowed money; (ii) purchase money and similar obligations; (iii)
obligations under capital leases; (iv) guarantees, assumptions or purchase
commitments relating to, or other transactions as a result of which the
Company is responsible for payment of, such indebtedness of others; (v)
renewals, extensions and refunding of any such indebtedness; (vi) interest or
obligations in respect of any such indebtedness accruing after the
commencement of any insolvency or bankruptcy proceedings; and (vii)
obligations associated with derivative products such as interest rate and
currency exchange contracts, foreign exchange contracts, commodity contracts,
and similar arrangements, unless, in each case, the instrument by which the
Company incurred, assumed or guaranteed the indebtedness or obligations
described in clauses (i) through (vii) expressly provides that such
indebtedness or obligation is subordinate or junior in right of payment to
any other indebtedness or obligations of the Company. As used in the
preceding sentence, the term "purchase-money obligations" means indebtedness
or obligations evidenced by a note, debenture, bond or other instrument
(whether or not secured by any lien or other security interest but excluding
indebtedness or obligations for which recourse is limited to the property
purchased) issued or assumed as all or a part of the consideration for the
acquisition of property, whether by purchase, merger, consolidation or
otherwise, but will not include any trade accounts payable (Section 101).
SUBORDINATION. The payment of the principal of (and premium, if any)
and interest on the Subordinated Debt Securities is expressly subordinated,
to the extent and in the manner set forth in the Subordinated Indenture, in
right of payment to the prior payment in full of all Senior Debt of the
Company (Section 1601).
No Payment or Distribution will be made by the Company, the Trustee or
the Paying Agent on account of principal of (or premium, if any) or interest
on the Subordinated Debt Securities, whether upon stated maturity, upon
redemption or acceleration, or otherwise, or on account of the purchase or
other acquisition of Subordinated Debt Securities, whether upon stated
maturity, upon redemption or acceleration, or otherwise, if there has
occurred and be continuing a default with respect to any Senior Debt
permitting the acceleration thereof or with respect to the payment of any
Senior Debt and (a) such default is the subject of a judicial proceeding or
(b) notice of such default in writing or by telegram has been given to the
Company by any holder or holders of any Senior Debt, unless and until the
Company has received written notice from such holder or holders that such
default or event of default has been cured or waived or has ceased to exist
(Section 1602).
Upon any acceleration of the principal of the Subordinated Debt
Securities or any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization
of the Company, whether voluntary or involuntary, or in bankruptcy,
insolvency, receivership or other proceedings, all amounts due or to become
due upon all Senior Debt will first be paid in full in cash, or payment
thereof provided for to the satisfaction of the holders thereof, before any
Payment or Distribution is made on account of the redemption price or
principal of (and premium, if any) or interest on the Subordinated Debt
Securities; and (subject to the power of a court of competent jurisdiction to
make other equitable provision, which has been determined by such court to
give effect to the rights conferred in Article 16 of the Subordinated
Indenture upon the Senior Debt and the holders thereof with respect to the
Subordinated Debt Securities or the Holders thereof or the Trustee, by a
lawful plan of reorganization or readjustment under applicable law) upon any
such dissolution or winding up or liquidation or reorganization, any Payment
or Distribution by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to which the
Holders of the Subordinated Debt Securities or the Trustee would be entitled
except for the provisions of Article 16 of the Subordinated Indenture, will
be paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such Payment or Distribution directly
to the holders of Senior Debt of the Company or their representative or
representatives, or to the trustee or trustees under any indenture pursuant
to which any instruments evidencing any Senior Debt may have been issued, as
their respective interests may appear, to the extent necessary to pay all
Senior Debt in full in cash, after giving
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effect to any concurrent payment or distribution to or for the holders of
Senior Debt, before any Payment or Distribution is made to the Holders of the
Subordinated Debt Securities or to the Trustee, except that the Trustee will
have a lien for the payment of its fees and expenses (Section 1602).
In the event that, notwithstanding the foregoing, any Payment or
Distribution by the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, will be received by the
Trustee or the Holders of the Subordinated Debt Securities before all Senior
Debt is paid in full in cash, or provision is made for such payment to the
satisfaction of the holders thereof, and if such fact has then been or
thereafter is made known to a Responsible Officer of the Trustee or, as the
case may be, such Holder, then and in such event such Payment or Distribution
will be paid over or delivered to the holders of Senior Debt or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Debt may
have been issued, as their respective interests may appear, for application
to the payment of all Senior Debt remaining unpaid to the extent necessary to
pay all Senior Debt in full in cash, after giving effect to any concurrent
Payment or Distribution to or for the holders of such Senior Debt, and, until
so delivered, the same will be held in trust by any Holder of a Security as
the property of the holders of Senior Debt (Section 1602).
The holders of Senior Debt may, at any time and from time to time,
without the consent of or notice to the Holders of the Subordinated Debt
Securities, without incurring responsibility to the Holders of the
Subordinated Debt Securities and without impairing or releasing the
obligations of the Holders of the Subordinated Debt Securities hereunder to
the holders of Senior Debt: (i) change the manner, place or terms of payment
or change or extend the time of payment of, or renew or alter, Senior Debt,
or otherwise amend in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the collection of Senior Debt; and/or (iv) exercise or refrain from
exercising any rights against the Company and any other Person (Section 1602).
SUBROGATION. Subject to the payment in full in cash of all amounts then
due (whether by acceleration of the maturity thereof or otherwise) on account
of all Senior Debt at the time outstanding, the Holders of the Subordinated
Debt Securities will be subrogated to the rights of the holders of Senior
Debt to receive Payments or Distributions of cash, property or securities of
the Company applicable to the Senior Debt until the principal of (and
premium, if any) and interest on the Subordinated Debt Securities is paid in
full; and, for the purposes of such subrogation, no Payments or Distributions
to the holders of Senior Debt to which the Holders of the Subordinated Debt
Securities or the Trustee would be entitled except for the provisions of
Article 16 of the Subordinated Indenture, and no payments other than pursuant
to the provisions of Article 16 of the Subordinated Indenture to the holders
of Senior Debt by Holders of the Subordinated Debt Securities or the Trustee,
will, as between the Company, the Company's creditors other than holders of
Senior Debt, and the Holders of the Subordinated Debt Securities, be deemed
to be a payment by the Company to or on account of the Senior Debt. It is
understood that the provisions of Article 16 of the Subordinated Indenture
are and are intended solely for the purpose of defining the relative rights
of the Holders of the Subordinated Debt Securities, on the one hand, and the
holders of Senior Debt, on the other hand (Section 1603).
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST
The following is a summary of the terms of the shares of beneficial
interest in the Company. This summary does not purport to be complete and is
subject to and qualified in its entirety by reference to the Company's
Declaration of Trust and the By-laws. See "Available Information."
GENERAL
The Declaration of Trust authorizes the issuance of up to 60,000,000
shares of beneficial interest in the Company, of which 47,727,273 are common
shares, par value $.001 per share ("Common Shares"), 2,272,727 are Class B
Common Shares, par value $.001 per share ("Class B Common Shares"), and
10,000,000 are shares of Series Preferred Shares, par value $.001 per share
("Preferred Shares") of which 3,000,000 are 8.48% Series A Cumulative
Redeemable Preferred Shares ("Series A Preferred Shares"). As of March 25,
1998, there were
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16,923,565 Common Shares, 2,272,727 Class B Common Shares and 3,000,000
Series A Preferred Shares issued and outstanding, all of which are fully-paid
and non-assessable.
Title 8 of the Corporations and Associations Article of the Annotated
Code of Maryland (the "Maryland Real Investment Trust Law") and the Company's
Declaration of Trust provide that no shareholder shall be personally liable
for any obligation of the Company. However, with respect to tort claims,
claims for taxes and certain statutory liabilities, shareholders may, in some
jurisdictions, be personally liable to the extent such claims are not
satisfied by the Company. Because the Company has public liability insurance
in amounts that it considers adequate, any risk of personal liability to
shareholders would be limited to situations in which the Company's assets,
together with its insurance coverage, would be insufficient to satisfy the
claims against the Company and its shareholders.
COMMON SHARES
Holders of Common Shares are entitled to receive dividends when and as
declared by the Board of Trustees out of funds legally available therefor
after payment of any preferential dividends to the holders of any series of
Preferred Shares that may then be issued and outstanding. Upon any
liquidation, dissolution or winding up of the Company, holders of Common
Shares are entitled to receive ratably any assets remaining after payment in
full of all liabilities of the Company and any preferential payments to the
holders of Preferred Shares. The holders of Common Shares are entitled to
one vote per share on all matters voted on by shareholders, including
elections of trustees, and, except as otherwise required by law with respect
to class voting rights, or as granted to the holders of Class B Common
Shares, or provided in any resolution adopted by the Board of Trustees with
respect to any series of Preferred Shares establishing the powers,
designations, preferences and relative, participating, optional or other
special rights of such series, the holders of Common Shares possess all
voting powers. Holders of Common Shares do not possess preemptive rights to
subscribe for additional securities of the Company or the right to cumulate
their shares in the election of trustees or in any other matter. All Common
Shares offered by the Company will be, and all issued and outstanding Common
Shares are, fully paid and non-assessable.
The current transfer agent and registrar for the Common Shares is First
Chicago Trust Company of New York, Jersey City, New Jersey.
PREFERRED SHARES
GENERAL. Preferred Shares may be issued from time to time, in one or
more series, as authorized by the Board of Trustees. Prior to issuance of
shares of each series, the Board is required to fix for each such series,
subject to the provisions of Maryland law and the Declaration of Trust, the
powers, designations, preferences and relative, participating, optional or
other special rights of such series and qualifications, limitations or
restrictions thereof, including such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other matters as may be fixed by resolution
of the Board of Trustees or a duly authorized committee thereof. The Board
could authorize the issuance of Preferred Shares with terms and conditions
which could have the effect of discouraging a takeover or other transaction
which holders of some, or a majority of, Common Shares might believe to be in
their best interests, or in which holders of some, or a majority of, Common
Shares might receive a premium for their Common Shares over the then market
price of such shares. The Preferred Shares will, when issued, be fully-paid
and non-assessable and will have no preemptive rights.
The Prospectus Supplement relating to any Preferred Shares offered
thereby will contain the specific terms, including:
(1) The title and stated value of such Preferred Shares;
(2) The number of such Preferred Shares offered, the liquidation
preference per share and the offering price of such Preferred
Shares;
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(3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Shares;
(4) The date from which dividends on such Preferred Shares will
accumulate, if applicable.
(5) The procedures for any auction and remarketing, if any, for such
Preferred Shares;
(6) The provision for a sinking fund, if any, for such Preferred Shares;
(7) The provisions for redemption, if applicable, of such Preferred
Shares;
(8) Any listing of such Preferred Shares on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Shares will be convertible into Common Shares of the Company,
including the conversion price (or manner of calculation thereof);
(10) A discussion of federal income tax considerations applicable to
such Preferred Shares;
(11) The relative ranking and preferences of such Preferred Shares as to
dividend rights and rights upon liquidation, dissolution or winding
up of the affairs of the Company;
(12) Any limitations on issuance of any series of Preferred Shares
ranking senior to or on a parity with such series of Preferred
Shares as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company;
(13) Any limitations on direct or beneficial ownership and restrictions
on transfer of such Preferred Shares, in each case as may be
appropriate to preserve the status of the Company as a REIT; and
(14) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares.
The Registrar and Transfer Agent for the Preferred Shares will be set
forth in the applicable Prospectus Supplement.
The description of the provisions of the Preferred Shares as will be set
forth in the related Prospectus Supplement is only a summary, does not
purport to be complete and is subject to, and is qualified in its entirety
by, reference to the definitive Articles Supplementary to the Company's
Declaration of Trust relating to such series of Preferred Shares. In
connection with any offering of Preferred Shares, such Certificate of
Amendment will be filed with the Commission as an exhibit or incorporated by
reference in the Registration Statement.
RANK. Unless otherwise specified in the Prospectus Supplement, the
Preferred Shares will, with respect to dividend rights and/or rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of Common Shares of the Company, and to all Equity Shares
(defined below) ranking junior to such Preferred Shares; (ii) on a parity
with all Equity Shares issued by the Company the terms of which specifically
provide that such Equity Shares rank on a parity with the Preferred Shares;
and (iii) junior to all Equity Shares issued by the Company the terms of
which specifically provide that such Equity Shares rank senior to the
Preferred Shares. The term "Equity Shares" includes Common Shares and
Preferred Shares and does not include convertible debt securities.
DIVIDENDS. Holders of the Preferred Shares of each series will be
entitled to receive, when, as and if declared by the Board of Trustees of the
Company, out of assets of the Company legally available for payment, cash
dividends at such rates (or method of calculation thereof) and on such dates
as will be set forth in the applicable Prospectus Supplement. Each such
dividend will be payable to holders of record as they appear on the stock
transfer books of the Company on such record dates as are fixed by the Board
of Trustees of the Company.
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Dividends on any series of Preferred Shares may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement.
Dividends, if cumulative, will be cumulative from and after the date set
forth in the applicable Prospectus Supplement. If the Board of Trustees of
the Company fails to declare a dividend payable on a dividend payment date on
any series of the Preferred Shares for which dividends are non-cumulative,
then the holders of such series of the Preferred Shares will have no right to
receive a dividend in respect of the dividend period ending on such dividend
payment date, and the Company will have no obligation to pay the dividend
accrued for such period, whether or not dividends on such series are declared
payable on any future dividend payment date.
If any Preferred Shares of any series are outstanding, no full dividends
will be declared or paid or set apart for payment on any Preferred Shares of
the Company of any other series ranking, as to dividends, on a parity with or
junior to the Preferred Shares of such series for any period unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
the Preferred Shares of such series for all past dividend periods and the
then current dividend period or (ii) if such series of Preferred Shares does
not have a cumulative dividend, full dividends for the then current dividend
period have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
Preferred Shares of such series. When dividends are not paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Preferred
Shares of any series and the shares of any other series of Preferred Shares
ranking on a parity as to dividends with the Preferred Shares of such series,
all dividends declared upon the Preferred Shares of such series and any other
series of Preferred Shares ranking on a parity as to dividends with such
Preferred Shares will be declared pro rata so that the amount of dividends
declared per share on Preferred Shares of such series and such other series
of Preferred Shares will in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Shares of such series (which
will not include any accumulation in respect of unpaid dividends for prior
dividend periods if such Preferred Shares do not have a cumulative dividend)
and such other series of Preferred Shares bear to each other. No interest,
or sum of money in lieu of interest, will be payable in respect of any
dividend payment or payments on Preferred Shares of such series which may be
in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on the Preferred Shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and
the then current dividend period, and (ii) if such series of Preferred Shares
does not have a cumulative dividend, full dividends on the Preferred Shares
of such series have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment
for the then current dividend period, no dividends (other than in Common
Shares or other shares of beneficial interest ranking junior to the Preferred
Shares of such series as to dividends and upon liquidation) will be declared
or paid or set aside for payment or other distribution upon the Common
Shares, or any other shares of beneficial interest in the Company ranking
junior to or on a parity with the Preferred Shares of such series as to
dividends or upon liquidation, nor will any Common Shares, or any other
shares of beneficial interest of the Company ranking junior to or on a parity
with the Preferred Shares of such series as to dividends or upon liquidation
be redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of
any such shares) by the Company (except by conversion into or exchange for
other shares of beneficial interest of the Company ranking junior to the
Preferred Shares of such series as to dividends and upon liquidation).
Any dividend payment made on a series of Preferred Shares will first be
credited against the earliest accrued but unpaid dividend due with respect to
shares of such series which remains payable.
REDEMPTION. If so provided in the applicable Prospectus Supplement, the
Preferred Shares will be subject to mandatory redemption or redemption at the
option of the Company, in whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus
Supplement.
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The Prospectus Supplement relating to a series of Preferred Shares that
is subject to mandatory redemption will specify the number of Preferred
Shares, if any, that will be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be
specified, together with an amount equal to all accrued and unpaid dividends
thereon (which will not, if such Preferred Shares do not have a cumulative
dividend, include any accumulation in respect of unpaid dividends for prior
dividend periods) to the date of redemption. The redemption price may be
payable in cash or other property as specified in the applicable Prospectus
Supplement. If the redemption price for Preferred Shares of any series is
payable only from the net proceeds of the issuance of shares of beneficial
interest in the Company, the terms of such Preferred Shares may provide that
if no such shares of beneficial interest have been issued or to the extent
the net proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, such Preferred Shares will automatically
and mandatorily be converted into the applicable shares of beneficial
interest in the Company pursuant to conversion provisions specified in the
applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred
Shares has a cumulative dividend, full cumulative dividends on all Preferred
Shares of any series have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment
for all past dividend periods and the current dividend period and (ii) if
such series of Preferred Shares does not have a cumulative dividend, full
dividends on all shares of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, no Preferred
Shares of such series will be redeemed unless all outstanding Preferred
Shares of such series are simultaneously redeemed; provided, however, that
the foregoing will not prevent the purchase or acquisition of Preferred
Shares of such series to preserve the REIT status of the Company or pursuant
to a purchase or exchange offer made on the same terms to holders of all
outstanding Preferred Shares of such series. In addition, unless (i) if such
series of Preferred Shares has a cumulative dividend, full cumulative
dividends on all outstanding Preferred Shares of any series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and
the then current dividend period, and (ii) if such series of Preferred Shares
does not have a cumulative dividend, full dividends on all shares of such
series of Preferred Shares have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, the Company will not purchase
or otherwise acquire directly or indirectly any Preferred Shares of such
series (except by conversion into or exchange for shares of beneficial
interest of the Company ranking junior to the Preferred Shares of such series
as to dividends and upon liquidation); provided, however, that the foregoing
will not prevent the purchase or acquisition of Preferred Shares of such
series to preserve the REIT status of the Company or pursuant to a purchase
or exchange offer made on the same terms to holders of all outstanding
Preferred Shares of such series.
If fewer than all of the outstanding Preferred Shares of any series are
to be redeemed, the number of shares to be redeemed will be determined by the
Company and such shares may be redeemed pro rata from the holders of record
of such shares in proportion to the number of such shares held or for which
redemption is requested by such holders (with adjustments to avoid redemption
of fractional shares) or in any other manner determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of Preferred
Shares of any series to be redeemed at the address shown on the stock
transfer books of the Company. Each notice will state: (i) the redemption
date; (ii) the number of shares and series of Preferred Shares to be
redeemed; (iii) the redemption price; (iv) the place or places where
certificates for such Preferred Shares are to be surrendered for payment of
the redemption prices; (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date; and (vi) the date upon which the
holder's conversion rights, if any, as to such shares will terminate. If
fewer than all of the Preferred Shares of any series are to be redeemed, the
notice mailed to each such holder thereof will also specify the number of
Preferred Shares to be redeemed from each such holder. If notice of
redemption of any Preferred Shares has been given and if the funds necessary
for such redemption have been irrevocably set aside by the Company in trust
for the benefit of the holders of any Preferred Shares so called for
redemption, then from and after the redemption date dividends will cease to
accrue on such Preferred Shares, such Preferred Shares will no longer be
deemed outstanding and all rights of the holders of such shares will
terminate, except the right to receive the redemption price.
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LIQUIDATION PREFERENCE. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, then, before any
distribution or payment will be made to the holders of any Common Shares or
any other class or series of shares of beneficial interest in the Company
ranking junior to the Preferred Shares in the distribution of assets upon any
liquidation, dissolution or winding up of the Company, the holders of each
series of Preferred Shares will be entitled to receive out of assets of the
Company legally available for distribution to shareholders liquidating
distributions in the amount of the liquidation preference per share (set
forth in the applicable Prospectus Supplement), plus an amount equal to all
dividends accrued and unpaid thereon (which will not include any accumulation
in respect of unpaid dividends for prior dividend periods if such Preferred
Shares do not have a cumulative dividend). After payment of the full amount
for the liquidating distributions to which they are entitled, the holders of
Preferred Shares will have no right or claim to any of the remaining assets
of the Company. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the legally available assets of the
Company are insufficient to pay the amount of the liquidating distributions
on all outstanding Preferred Shares and the corresponding amounts payable on
all shares of other classes or series of shares of beneficial interest in the
Company ranking on a parity with the Preferred Shares in the distribution of
assets, then the holders of the Preferred Shares and all other such classes
or series of shares of beneficial interest will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
If liquidating distributions have been made in full to all holders of a
series of Preferred Shares, the remaining assets of the Company will be
distributed among the holders of any other classes or series of shares of
beneficial interest ranking junior to the Preferred Shares upon liquidation,
dissolution or winding up, according to their respective rights and
preferences and in each case according to their respective number of shares.
For such purposes, the consolidation or merger of the Company with or into
any other trust, corporation or entity, or the sale, lease or conveyance of
all or substantially all of the property or business of the Company, will not
be deemed to constitute a liquidation, dissolution or winding up of the
Company.
VOTING RIGHTS. Holders of Preferred Shares will not have any voting
rights, except as set forth below or as otherwise from time to time required
by law or as indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Shares, so long as
any Preferred Shares remain outstanding, the Company will not, without the
affirmative vote or consent of the holders of at least two-thirds of each
series of Preferred Shares outstanding at the time, given in person or by
proxy, either in writing or at a meeting (such series voting separately as a
class), (i) authorize, create or increase the authorized or issued amount of,
any class or series of shares of beneficial interest ranking prior to such
series of Preferred Shares with respect to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized shares of beneficial interest in the Company into
such shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares; or (ii)
amend, alter or repeal the provisions of the Company's Declaration of Trust,
whether by merger, consolidation or otherwise (an "Event"), so as to
materially adversely affect any right, preference, privilege or voting power
of such series of Preferred Shares or the holders thereof; provided, however,
with respect to the occurrence of any of the Events set forth in (ii) above,
so long as the Preferred Shares remains outstanding with the terms thereof
materially unchanged, taking into account that upon the occurrence of an
Event, the Company may not be the surviving entity, the occurrence of any
such Event will not be deemed to materially and adversely affect such rights,
preferences, privileges or voting power of holders of Preferred Shares and
provided further that (x) any increase in the amount of the authorized
Preferred Shares or the creation or issuance of any other series of Preferred
Shares, or (y) any increase in the amount of authorized shares of such series
or any other series of Preferred Shares, in each case ranking on a parity
with or junior to the Preferred Shares of such series with respect to payment
of dividends or the distribution of assets upon liquidation, dissolution or
winding up, will not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
is effected, all outstanding Preferred Shares of such series have been
redeemed or called for redemption and sufficient funds have been deposited in
trust to effect such redemption.
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CONVERSION RIGHTS. The terms and conditions, if any, upon which any
series of Preferred Shares is convertible into Common Shares will be set
forth in the applicable Prospectus Supplement relating thereto. Such terms
will include the number of Common Shares into which the Preferred Shares are
convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option
of the holders of the Preferred Shares or the Company, the events requiring
an adjustment of the conversion price and provisions affecting conversion in
the event of the redemption of such series of Preferred Shares.
RESTRICTIONS ON TRANSFER
For the Company to qualify as a REIT under the Code, Common Shares must
be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months (other than the first year for which REIT status is
elected) or during a proportionate part of a shorter taxable year. Also, not
more than 50% of the value of the issued and outstanding shares of beneficial
interest may be owned, directly or indirectly, by five or fewer individuals
(as defined in the Code to include certain entitles) during the last half of
a taxable year (other than the first year for which REIT status is elected)
or during a proportionate part of a shorter taxable year. To ensure
compliance with these requirements, the Declaration of Trust contains
provisions restricting the ownership and acquisition of shares of beneficial
interest in the Company, including any Preferred Shares of the Company.
The Declaration of Trust, subject to an exception in favor of Capital
and Regional Properties, plc ("CRP-London"), provides that no holder may own,
or be deemed to own by virtue of the attribution provisions of the Code, more
than 9.8% in value (the "Ownership Limit") of the issued and outstanding
Common Shares or Preferred Shares (collectively, "Equity Shares"). The
constructive ownership rules are complex and may cause Equity Shares owned
directly or constructively by a group of related individuals and/or entities
to be deemed to be constructively owned by one individual or entity. As a
result, the acquisition of less than 9.8% of the Equity Shares (or the
acquisition of an interest in an entity which owns Equity Shares) by an
individual or entity could cause that individual or entity (or another
individual or entity) to own constructively in excess of 9.8% of the Equity
Shares, and thus subject such Equity Shares to the Ownership Limit. In
addition, for these purposes, Common Shares that may be acquired upon
conversion or exchange of convertible Debt Securities directly or
constructively held by an investor, but not necessarily Common Shares
issuable with respect to convertible Debt Securities held by others, will be
deemed to be outstanding prior to conversion or exchange, for purposes of
determining the percentage of ownership of Equity Shares held by that
investor. The Board of Trustees may, upon the receipt of a ruling from the
IRS or an opinion of counsel satisfactory to it, waive the Ownership Limit
with respect to a given holder if such holder's ownership will not then or in
the future jeopardize the Company's status as a REIT.
Recent tax legislation relaxed the rules concerning ownership of stock
in a REIT by certain domestic pension trusts. The Declaration of Trust does
not implement this change in the tax law. Under the Declaration of Trust,
domestic pension funds are subject to the restriction on ownership of more
than 9.8% of the value of the outstanding shares of beneficial interest.
The Declaration of Trust contains a provision which limits the right of
any shareholder to transfer or otherwise dispose of his Equity Shares in a
manner which is contrary to the Ownership Limit. If any shareholder purports
to transfer his shares to another person and either the transfer would result
in the Company failing to qualify as a REIT or such transfer would cause the
transferee to hold more than the Ownership Limit, the purported transfer will
be null and void and the shareholder will be deemed not to have transferred
his shares. Moreover, if any person holds shares in excess of the Ownership
Limit ("Excess Shares"), such person will be deemed to hold such Excess
Shares that cause such limit to be exceeded solely in trust for the benefit
of the Company, and will not receive distributions with respect to such
Excess Shares or be entitled to vote such shares. In such event, such person
will be deemed to have offered to sell such Excess Shares to the Company for
the lesser of the amount paid for such shares or the market price of such
shares, which offer the Company can accept for a period of 90 days after the
later of (i) the date of the transfer resulting in such excess shares and
(ii) the date the Company's Board of Trustees determines that such Excess
Shares exist. In its sole discretion, the Company may repurchase such shares
for cash.
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Federal income tax regulations require that the Company demand within 30
days after the end of each of its taxable years written statements from
shareholders of record holding more than a specified percentage of the
Company's shares of beneficial interest, in which the shareholders set out
information with respect to their actual and constructive ownership of the
Equity Shares and the Debentures. In addition, each shareholder must on
demand disclose to the Company in writing such additional information as the
Company may request in order to determine the effect of such shareholder's
direct, indirect and constructive ownership of such shares on the Company's
status as a REIT.
All certificates representing Common Shares and/or Preferred Shares will
bear a legend referring to the restrictions on transfer described above.
These ownership limitations could have the effect of discouraging a
takeover or other transactions in which holders of some, or a majority, of
Equity Shares might receive a premium for their shares over the prevailing
market price or which such holders might believe to be otherwise in their
best interest.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Shares or Common Shares. Securities Warrants may be
issued independently or together with any other Securities offered by any
Prospectus Supplement and may be attached to or separate from such
Securities. Each series of Securities Warrants will be issued under a
separate warrant agreement (each a "Securities Warrant Agreement") to be
entered into between the Company and a warrant agent specified in the
applicable Prospectus Supplement (the "Warrant Agent"). The Warrant Agent
will act solely as an agent of the Company in connection with the Securities
Warrants of such series and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of Securities
Warrants. The following summaries of certain provisions of the Securities
Warrant Agreement and the Securities Warrants do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
the provisions of the Securities Warrant Agreement and the Securities Warrant
certificates relating to each series of Securities Warrants which will be
filed with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of Securities Warrants.
If Securities Warrants are offered, the applicable Prospectus Supplement
will describe the terms of such Securities Warrants, including, in the case
of Securities Warrants for the purchase of Debt Securities, the following
where applicable: (i) the offering price; (ii) the denominations and terms
of the series of Debt Securities purchasable upon exercise of such Securities
Warrants; (iii) the designation and terms of any series of Debt Securities
with which such Securities Warrants are being offered and the number of such
Securities Warrants being offered with such Debt Securities; (iv) the date,
if any, on and after which such Securities Warrants and the related series of
Debt Securities will be transferable separately; (v) the principal amount of
the series of Debt Securities purchasable upon exercise of each such
Securities Warrant and the price at which such principal amount of Debt
Securities of such series may be purchased upon such exercise; (vi) the date
on which the right to exercise such Securities Warrants shall commence and
the date on which such right shall expire (the "Expiration Date"); (vii)
whether the Securities Warrants will be issued in registered or bearer form;
(viii) any special United States federal income tax consequences; (ix) the
terms, if any, on which the Company may accelerate the date by which the
Securities Warrants must be exercised; and (x) any other material terms of
such Securities Warrants.
In the case of Securities Warrants for the purchase of Preferred Shares
or Common Shares, the applicable Prospectus Supplement will describe the
terms of such Securities Warrants, including the following where applicable:
(i) the offering price; (ii) the aggregate number of shares purchasable upon
exercise of such Securities Warrants, the exercise price, and in the case of
Securities Warrants for Preferred Shares, the designation, aggregate number
and terms of the series of Preferred Shares with which such Securities
Warrants are being offered and the number of such Securities Warrants being
offered with such Preferred Shares; (iii) the date, if any, on and after
which such Securities Warrants and the related series of Preferred Shares or
Common Shares will be transferable separately; (iv) the date on which the
right to exercise such Securities Warrants shall commence and the Expiration
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Date; (v) any special United States federal income tax consequences; and (vi)
any other material terms of such Securities Warrants.
Securities Warrant certificates may be exchanged for new Securities
Warrant certificates of different denominations, may (if in registered form)
be presented for registration of transfer, and may be exercised at the
corporate trust office of the Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any
Securities Warrant to purchase Debt Securities, holders of such Securities
Warrants will not have any of the rights of holders of the Debt Securities
purchasable upon such exercise, including the right to receive payments of
principal, premium, if any, or interest, if any, on such Debt Securities or
to enforce covenants in the applicable Indenture. Prior to the exercise of
any Securities Warrants to purchase Preferred Shares or Common Shares,
holders of such Securities Warrants will not have any rights of holders of
such Preferred Shares or Common Shares, including the right to receive
payments of dividends, if any, on such Preferred Shares or Common Shares, or
to exercise any applicable right to vote.
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or number of Preferred Shares or Common
Shares, as the case may be, at such exercise price as shall in each case be
set forth in, or calculable from, the Prospectus Supplement relating to the
offered Securities Warrants. After the close of business on the Expiration
Date (or such later date to which such Expiration Date may be extended by the
Company), unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Warrant Agent
payment as provided in the applicable Prospectus Supplement of the amount
required to purchase the Common Shares purchasable upon such exercise,
together with certain information set forth on the reverse side of the
Securities Warrant certificate. Securities Warrants will be deemed to have
been exercised upon receipt of payment of the exercise price, subject to the
receipt within five (5) business days, of the Securities Warrant certificate
evidencing such Securities Warrants. Upon receipt of such payment and the
Securities Warrant certificate properly completed and duly executed at the
corporate trust office of the Securities Warrant agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon
as practicable, issue and deliver the Common Shares purchasable upon such
exercise. If fewer than all of the Securities Warrants represented by such
Securities Warrant certificate are exercised, a new Securities Warrant
certificate will be issued for the remaining amount of Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
The Warrant Agreements may be amended or supplemented without the
consent of the holders of the Securities Warrants issued thereunder to effect
changes that are not inconsistent with the provisions of the Securities
Warrants and that do not adversely affect the interests of the holders of the
Securities Warrants.
COMMON SHARES WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of Common Shares covered by, a Common
Shares Warrant are subject to adjustment in certain events, including (i)
payment of a dividend on the Common Shares payable in shares of beneficial
interest and stock splits, combinations or reclassification of the Common
Shares; (ii) issuance to all holders of Common Shares of rights or warrants
to subscribe for or purchase Common Shares at less than their current market
price (as defined in the Warrant Agreement for such series of Common Shares
Warrants); and (iii) certain distributions of evidences of indebtedness or
assets (including securities but excluding cash dividends or distributions
paid out of consolidated earnings or retained earnings or dividends payable
in Common Shares) or of subscription rights and warrants (excluding those
referred to above).
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No adjustment in the exercise price of, and the number of Common Shares
covered by, a Common Shares Warrant will be made for regular quarterly or
other periodic or recurring cash dividends or distributions or for cash
dividends or distributions to the extent paid from consolidated earnings or
retained earnings. No adjustment will be required unless such adjustment
would require a change of at least 1% in the exercise price then in effect.
Except as stated above, the exercise price of, and the number of Common
Shares covered by, a Common Shares Warrant will not be adjusted for the
issuance of Common Shares or any securities convertible into or exchangeable
for Common Shares, or carrying the right or option to purchase or otherwise
acquire the foregoing, in exchange for cash, other property or services.
In the event of any (i) consolidation or merger of the Company with or
into any entity (other than a consolidation or a merger that does not result
in any reclassification, conversion, exchange or cancellation of outstanding
Common Shares); (ii) sale, transfer, lease or conveyance of all or
substantially all of the assets of the Company; or (iii) reclassification,
capital reorganization or exchange of the Common Shares (other than solely a
change in par value or from par value to no par value), then any holder of a
Common Shares Warrant will be entitled, on or after the occurrence of any
such event, to receive on exercise of such Common Shares Warrant the kind and
amount of shares of beneficial interest or other securities, cash or other
property (or any combination thereof) that the holder would have received had
such holder exercised such holder's Common Shares Warrant immediately prior
to the occurrence of such event. If the consideration to be received upon
exercise of the Common Shares Warrant following any such event consists of
common stock of the surviving entity, then from and after the occurrence of
such event, the exercise price of such Common Shares Warrant will be subject
to the same anti-dilution and other adjustments described in the second
preceding paragraph, applied as if such common stock were Common Shares.
CERTAIN PROVISIONS OF MARYLAND LAW AND OF
THE COMPANY'S DECLARATION OF TRUST AND BYLAWS
The following paragraphs summarize certain provisions of Maryland law
and the Company's Declaration of Trust and Bylaws. The summary does not
purport to be complete and is subject to and qualified in its entirety by
reference to Maryland law and the Declaration of Trust and Bylaws. See
"Available Information."
THE BOARD OF TRUSTEES
The Company's Bylaws provide that the number of trustees of the Company
may be established by the Board but may not be fewer than three nor more than
ten, a majority of which must be independent. Any vacancy will be filled at
any regular meeting or at any special meeting of shareholders called for that
purpose or by a majority of the remaining directors, except that a vacancy
resulting from an increase in the number of directors will be filled by a
majority of the entire Board. Pursuant to the terms of the Declaration of
Trust, each trustee will hold office for a one-year term expiring at the
annual meeting of shareholders to be held the following year and until his
successor is duly elected and qualified. Holders of shares will have no
right to cumulative voting in the election of trustees.
BUSINESS COMBINATIONS
As a Maryland real estate investment trust, the Company is subject to
certain restrictions concerning certain "business combinations" (including a
merger, consolidation, share exchange, or, in certain circumstances, an asset
transfer or issuance or reclassification of equity securities) between the
Company and an Interested Shareholder (defined as any person who beneficially
owns 10% or more of the voting power of the Company's shares or an affiliate
of the Company who, at any time within the two-year period prior to the date
in question, was the beneficial owner of 10% or more of the voting power of
the then-outstanding voting shares of beneficial interest in the Company) or
an affiliate thereof. Such business combinations are prohibited for five
years after the most recent date on which the Interested Shareholder became
an Interested Shareholder. Thereafter, any such business combination must be
recommended by the Board of Trustees of the Company and approved by the
affirmative vote of at least 80% of the votes entitled to be cast by holders
of outstanding voting shares of the Company voting
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together as a single group and of at least two-thirds of the votes entitled
to be cast by holders of voting shares other than voting shares with whom the
business combination is to be effected, unless, among other things, the
Company's shareholders receive a "minimum price" (as determined under
Maryland law) for their shares and the consideration is received in cash or
in the same form as previously paid by the Interested Shareholder for its
shares. These provisions of Maryland law do not apply, however, to business
combination that are approved or exempted by the Board of Trustees of the
Company prior to the time that the Interested Shareholder becomes an
Interested Shareholder.
CONTROL SHARE ACQUISITIONS
Maryland law provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on
the matter, excluding shares of stock owned by the acquirer or by officers or
trustees who are employees of the Company. "Control Shares" are voting
shares which, if aggregated with all other such shares previously acquired by
such person, or in respect of which such person is able to exercise or direct
the exercise of voting power, except solely by virtue of a revocable proxy,
would entitle the acquirer, directly or indirectly, to exercise voting power
in electing directors within any one of the following ranges of voting power:
(i) one-fifth or more but less than one-third; (ii) one-third or more but
less than a majority; or (iii) a majority of all voting power. Control
shares do not include shares the acquiring person is then entitled to vote as
a result of having previously obtained shareholder approval. A "control
share acquisition" means the acquisition of control shares, subject to
certain exceptions.
A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the Board of Trustees to call a special meeting of
shareholders to be held within 50 days of the demand to consider the voting
rights of the shares. If no request for a meeting is made, the Company may
itself present the question at any shareholders' meeting.
If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by Maryland
law, then, subject to certain conditions and limitations, the Company may
redeem any or all of the control shares (except those for which voting rights
have previously been approved) for fair value, determined without regard to
the absence of voting rights for control shares, as of the date of the last
control share acquisition or of any meeting of shareholders at which the
voting rights of such shares are considered and not approved. If voting
rights for control shares are approved at a shareholders' meeting and the
acquirer becomes entitled to vote a majority of the shares entitled to vote,
all other shareholders may exercise appraisal rights. The fair value of the
shares determined for purposes of such appraisal rights may not be less than
the highest price per share paid in the control share acquisition, and
certain limitations and restrictions otherwise applicable to the exercise of
dissenter's rights do not apply in the context of a control share acquisition.
The control share acquisition provisions of Maryland law do not apply to
shares acquired in a merger, consolidation or share exchange if the Company
is a party to the transaction, or to acquisitions which may be approved of or
exempted by the Declaration of Trust or Bylaws of the Company. No such
provisions are currently contained in the Company's Declaration of Trust or
Bylaws. There can be no assurance, however, that such provisions will not be
provided for in the future.
AMENDMENT TO THE DECLARATION OF TRUST
The Company's Declaration of Trust may be amended only by the
affirmative vote of the holders of not less than two-thirds of all of the
votes entitled to be cast on the matter.
DISSOLUTION OF THE COMPANY
The dissolution of the Company must be approved by the affirmative vote
of the holders of not less than two-thirds of all of the votes entitled to be
cast on the matter or the written consent of all holders of shares entitled
to vote on this matter.
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ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS
The Company's Declaration of Trust establishes an advance notice
procedure for shareholders to make nominations of candidates for election as
trustees or bring other business before an annual meeting of shareholders
("Shareholder Notice Procedures").
The Shareholder Notice Procedures provide that (1) only persons who are
nominated by or at the direction of the Board of Trustees, or by a
shareholder who has given timely written notice containing specified
information to the Secretary of the Company prior to the meeting at which
directors are to be elected, will be eligible for election as trustees and
(2) at an annual meeting only such business may be conducted as has been
brought before the meeting by or at the direction of the Chairman of the
Board of Trustees or by a shareholder who has given timely written notice to
the Secretary of such shareholder's intention to bring such business before
the meeting. In general, to be considered timely, notice of shareholder
nominations to be made or business to be conducted at an annual meeting must
be received not less than 60 days nor more than 90 days prior to the first
anniversary of the previous year's annual meeting.
The purpose of requiring such advance notice by shareholders is to
provide the Board of Trustees a meaningful opportunity to consider the
qualifications of the proposed nominees or the advisability of the other
proposed business and, to the extent deemed necessary or advisable by the
Board of Trustees, to inform shareholders and make recommendations about such
qualifications or business, as well as to provide a more orderly procedure
for conducting meetings of shareholders. Although the Company's Declaration
of Trust do not give the Board of Trustees any power to disapprove of
shareholder nominations or proposals for action, they may have the effect of
precluding a contest for the election of trustees or the consideration of
shareholder proposals if the proper procedures are not followed. In
addition, the Declaration of Trust may discourage or deter a third party from
conducting a solicitation of proxies to elect its own slate of trustees or to
approve its own proposal, without regard to whether consideration of such
nominees or proposals might be harmful or in the best interests of the
Company and its shareholders. The provisions in the Company's Declaration of
Trust regarding advance notice provisions could have the effect of
discouraging a takeover or other transaction in which holders of some, or a
majority, of the Common Shares might receive a premium for their shares over
the then prevailing market price or which such holders might believe to be
otherwise in their best interests.
FEDERAL INCOME TAX CONSIDERATIONS RELATING TO
THE COMPANY'S REIT STATUS
The following is a summary of certain federal income tax considerations
regarding the Company's REIT election. The tax treatment of a holder of any
of the Securities will vary depending on the terms of the specific Securities
acquired by such holder, as well as his particular situation, and this
discussion does not attempt to address any aspects of federal income taxation
relating to holders of Securities. A description of certain federal income
tax considerations pertaining to holders of the Securities will be provided
in the relevant Prospectus Supplement.
The following summary is based on federal income tax law in effect as of
the date hereof. Such law is subject to change without notice, and may be
changed with retroactive effect. The summary is for general information
only, and does not constitute tax advice.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT THE APPLICABLE
PROSPECTUS SUPPLEMENT, AS WELL AS HIS OWN TAX ADVISOR, REGARDING THE SPECIFIC
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES, IN LIGHT OF HIS
INDIVIDUAL CIRCUMSTANCES, OF THE ACQUISITION, OWNERSHIP AND SALE OF THE
SECURITIES, AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
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QUALIFICATION AS A REIT; OPINION OF COUNSEL
The Company's REIT election was effective as of January 1, 1994. The
tax consequences described herein and in any Prospectus Supplement are
largely contingent on the qualification of the Company as a REIT for federal
income tax purposes. Failure of the Company to maintain its REIT status
would materially alter the tax and economic consequences to a purchaser. See
"Failure to Qualify as a REIT" below. Ungaretti & Harris, Chicago, Illinois
("Counsel"), has provided its opinion that the Company's method of operation
as described herein and as represented by the Company will permit it to
continue to qualify as a REIT for the current and subsequent taxable years.
Such opinion is based upon the Code, as amended, applicable Treasury
Regulations adopted thereunder, reported judicial decisions, and IRS rulings,
all as of the date hereof, and certain representations of the Company and
factual assumptions related to the ownership and operation of the Company.
It should be noted that whether the Company will maintain its status as a
REIT under the Code will depend upon whether the Company meets the various
qualification tests imposed under the Code through actual annual operating
results. No assurance can be given that the actual results of the Company's
operations will satisfy such requirements. The principal requirements the
Company must meet to maintain its status as a REIT are described below.
SHARE OWNERSHIP
FREE TRANSFERABILITY. In general, shares representing ownership of a
REIT must be freely transferable. The Company's shares will be subject to
certain restrictions designed to assure compliance with the rule prohibiting
closely-held status, described below. A REIT will not fail the requirement
of free transferability by reason of such restrictions.
100 SHAREHOLDERS REQUIRED. The beneficial ownership of an entity
seeking to qualify as a REIT must be held by 100 or more persons. This
requirement must be met for at least 335 days of a 12-month year, or a
proportionate part of a shorter tax year. For purposes of this rule, the
word "person" generally includes individuals and entities, with pension and
profit-sharing trusts, rather than their beneficiaries, being treated as
persons. The Company anticipates that this requirement will continue to be
met.
CLOSELY-HELD STATUS NOT PERMITTED. An entity does not qualify as a REIT
if a group of five or fewer individuals own, directly or indirectly, more
than 50% of the value of the outstanding shares of the entity at any time
during the last half of the taxable year. For this purpose, certain entities
are treated as individuals, but stock owned, directly or indirectly, by a
corporation, partnership, estate or trust is generally considered as being
owned proportionately by such entity's shareholders, partners or
beneficiaries. Accordingly, shares held by CRP-London will be considered as
being owned proportionately by the individual shareholders of CRP-London. In
addition, pursuant to the Taxpayer Relief Act of 1997, compliance with
certain procedural requirements may protect the Company from loss of REIT
status by reason of an inadvertent violation of this rule. The Declaration
of Trust provides certain restrictions on ownership of shares designed to
assure compliance with this requirement.
Domestic pension funds generally are not treated as a single person for
purposes of this rule. Instead, the beneficiaries of the fund are treated as
holding stock in the REIT in proportion to their actuarial interests in the
fund. In the event the Company relies on this rule to maintain its status as
a REIT, however, it is possible that pension funds holding more than 10% of
the interests in the Company will be subject to unrelated business income tax
on a portion of the dividends they receive from the Company. Under the
Company's Declaration of Trust, pension funds are subject to the same
ownership restrictions as other persons, without regard to this rule.
SHAREHOLDER INFORMATION. Federal income tax regulations require that
the Company demand within 30 days after the end of each of its taxable years
written statements from shareholders of record holding more than a specified
percentage of the Company's shares of beneficial interest, in which the
shareholders set out information with respect to their actual and
constructive ownership of the Common Shares and the Debentures. In addition,
each shareholder must on demand disclose to the Company in writing such
additional information as the Company requests in order to determine the
effect of such shareholder's direct, indirect and constructive ownership of
such shares on the Company's status as a REIT.
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ASSET TESTS
An entity seeking to maintain its qualification as a REIT must meet
certain tests with regard to its assets. Assets held by a qualified REIT
subsidiary are treated as if they were owned directly by the REIT. A
corporation is a qualified REIT subsidiary if 100% of its stock is owned by a
REIT.
75% ASSET TEST. On the last day of each calendar quarter, at least 75%
of a REIT's assets must consist of real estate assets, cash and cash items,
and government securities. Real estate assets include interests in real
property, interests in mortgages on real property, and shares in other
qualified REITs. In addition, real estate assets include any property
attributable to the temporary investment of new capital if the property is
stock or a debt instrument, and the investment is only for the one-year
period beginning on the date the REIT receives the capital (a "Qualified
Temporary Investment"). Cash and cash items include receivables that arise
in the ordinary course of the REIT's business, but not receivables purchased
from another person. It is anticipated that substantially all of the
Company's assets will qualify under this test.
5% ASSET TEST. A REIT must not own securities of any one
non-governmental issuer (other than another qualified REIT, or a qualified
REIT subsidiary) in an amount greater in value than 5% of the value of the
REIT's total assets. The Company intends to comply with this requirement.
10% ASSET TEST. A REIT must not own securities of any one
non-governmental issuer (other than another qualified REIT or a qualified
REIT subsidiary) representing more than 10% of the outstanding voting
securities of such issuer. The Company intends to comply with this
requirement.
After initially meeting the asset tests at the close of any quarter, the
Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset
values. If the failure to satisfy the asset tests results from an
acquisition of securities or other property during a quarter, the failure can
be cured by disposition of sufficient non-qualifying assets within 30 days
after the close of the quarter. The Company intends to maintain adequate
records of the value of its assets to ensure compliance with the asset tests,
and to take such other actions within 30 days after the close of any quarter
as may be required to cure any noncompliance.
INTEREST IN MANAGEMENT CORPORATION. The Company expects to derive some
of its income from activities (such as management of properties owned by
third parties) which, if carried on directly by the Company or by an entity
controlled by the Company, would jeopardize its REIT status. The Company
will own non-voting stock representing more than 90 percent of the value of
corporations carrying on such activities, but intends to own less than 10% of
the voting stock of such corporations in order to comply with the 10% asset
test described above, and to hold stock in such corporations representing
less than 5% of the value of its overall assets in order to comply with the
5% assets test described above. There can be no assurance, however, that the
IRS will not contend that the non-voting stock held by the Company should be
considered voting stock for purposes of these rules, or that the value of the
stock held by the Company exceeds the 5% limitation.
INCOME TESTS
An entity will not maintain its qualification as a REIT unless its
income meets certain tests. In connection with these tests, income received
from a qualified REIT subsidiary is treated as having the same character as
it had when received by the subsidiary.
75% INCOME TEST. At least 75% of the REIT's gross income (excluding gross
income from "prohibited transactions," as described below) for each taxable
year must be derived from (i) rents from real property, (ii) interest on
obligations collateralized by mortgages on, or interests in, real property;
(iii) gain from the sale or other disposition of interests in real property and
real estate mortgages, other than gain from property held primarily for sale to
customers in the ordinary course of the Company's trade or business ("dealer
property"); (iv) dividends or other distributions on shares in other REITs as
well as the gain from the sale of such shares; (v) abatements and
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refunds of real property taxes; (vi) income from the operation, and gain from
the sale, of property acquired at or in lieu of foreclosure of the mortgage
collateralized by such property ("foreclosure property"); (vii) commitment
fees received for agreeing to make loans collateralized by mortgages on real
property or to purchase or lease real property; and (viii) certain qualified
temporary investment income.
95% INCOME TEST. At least 95% of the REIT's gross income (excluding
gross income from "prohibited transactions") for each taxable year must be
derived from sources qualifying for the 75% test, plus dividend and interest
income, certain hedging income and capital gain on the sale or other
disposition of stocks or securities.
RENTS FROM REAL PROPERTY. Rents received by the Company will constitute
"rents from real property," qualifying for the 75% and 95% income tests, if
the following requirements are met:
- The amount of rent received generally must not be based in whole or
in part on the income or profits of any person.
- Rents will not qualify as "rents from real property" if the REIT, or
a 10% owner of the REIT, owns directly or indirectly a 10% or
greater interest in any tenant or in the assets or net profits of a
tenant.
- The term "rents from real property" does not include "impermissible
tenant service income," which is generally income from providing
"disqualifying services" to tenants other than through an
independent contractor (as specially defined for this purpose) from
whom the REIT itself does not derive or receive any income. For
this purpose, "disqualifying services" are services which, if
provided by certain tax-exempt entities, would cause rents received
by such entities to be treated as unrelated business taxable income.
Generally, services other than services usually or customarily
rendered in connection with the rental of rooms or other space for
occupancy only are disqualifying services. Charges for services of
a type customarily furnished or rendered to tenants in connection
with the rental of real property of a similar class in the
geographic market in which the property is located qualify as "rents
from real property." If impermissible tenant service income with
respect to a property exceeds 1% of all amounts received or accrued
with respect to such property, then all such amounts are treated as
impermissible tenant service income. The Company represents that it
will not furnish or render services with respect to any of the
Properties that would cause rental income from such Properties to
fail to qualify as "rents from real property."
- Rent attributable to personal property will not qualify as "rents
from real property" unless the personal property is leased in
connection with a lease of real property and such rent is no more
than 15% of the total rent received under the lease. Rent
attributable to personal property is that amount which bears the
same ratio to total rent as the average of the adjusted bases of the
personal property at the beginning and end of the taxable year bears
to the average of the aggregate adjusted bases of both the real
property and personal property at the beginning and end of such
taxable year.
PROHIBITED TRANSACTIONS. The 75% and 95% income tests described above
are measured by reference to gross income of the Company. For this purpose,
however, gross income does not include income from "prohibited transactions."
Moreover, income from prohibited transactions is subject to a 100% tax.
The Company will be considered to have engaged in a prohibited transaction
if it sells stock in trade or other property of a kind which would properly be
included in inventory if on hand at the close of the taxable year, or property
held primarily for sale to customers in the ordinary course of business. The
Code provides a safe harbor under which certain sales of real estate assets
will not be considered to be a prohibited transaction. The safe harbor applies
if (a) the Company has held the property for at least four years; (b) the total
expenditures made by the Company, or any partner of the Company, and
capitalized as part of the basis of the property during the four-year period
preceding the sale, do not exceed 30% of the net sales price; and (c) the
Company meets the limitation on sales of such property. The Company will meet
the limitation on sales if (d) it makes no more than seven sales of property
during the year, or (e) the aggregate of the adjusted bases of the properties
sold does not exceed 10% of the aggregate adjusted bases of all the Company's
properties during the year. If the property consists of land or
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improvements not acquired through foreclosure, the Company must have held the
property for production of rental income for at least four years to be
eligible for the safe harbor. Also, if the Company sold more than seven
properties during the year, substantially all of the marketing and
development expenditures with respect to the property must have been made
through an independent contractor from whom the Company itself does not
derive or receive any income.
FAILURE TO MEET INCOME TESTS. If certain requirements are met, the
Company may retain its status as a REIT even in a year in which it fails
either the 75% or the 95% income test. In such event, however, the Company
will be subject to an excise tax based on the greater of the amount by which
it failed the 75% or 95% gross income test for that year, less expenses. The
Company will qualify for this relief if (a) it reports the amount and nature
of each item of its gross income in its federal income tax return for such
year; (b) the inclusion of any incorrect information in its return is not due
to fraud with intent to evade tax; and (c) the failure to meet such tests is
due to reasonable cause and not willful neglect.
DISTRIBUTIONS TO SHAREHOLDERS
95% DISTRIBUTION REQUIREMENT. In order to maintain its qualification as
a REIT, the Company is required to distribute dividends (other than capital
gains dividends) to its shareholders in an amount equal to 95% of the sum of
(a) its "REIT taxable income" before deduction of dividends paid and
excluding any net capital gain, plus (b) any net income from foreclosure
property less the tax on such income, minus (c) any "excess noncash income."
The deduction for dividends paid is discussed below. See "Federal Income Tax
Considerations -- Taxation of the Company."
"REIT taxable income" for purposes of this requirement is the taxable
income of a REIT, computed as if it were an ordinary corporation, adjusted by
certain items, including an exclusion for net income from foreclosure
property, a deduction for the excise tax on the failure of the 75% or 95%
income tests, and an exclusion for an amount equal to any net income derived
from prohibited transactions.
"Foreclosure property" is any real property, interest in real property,
or personal property incident to the real property, acquired by the REIT in a
foreclosure or by a deed in lieu of foreclosure following a default of a debt
obligation or after termination of a defaulted lease, provided the REIT
elects to treat the property as foreclosure property. The property ceases to
be foreclosure property as of the close of the third taxable year following
the taxable year in which the REIT acquires it, unless the IRS consents to an
extension of this time period.
"Excess noncash income" means the excess of certain amounts that the
REIT is required to recognize as income in advance of receiving cash, such as
original issue discount on purchase money debt or income from cancellation of
indebtedness, over 5% of REIT taxable income before deduction for dividends
paid and excluding any net capital gain.
The Company intends to make distributions to the shareholders on a
quarterly basis sufficient to meet the 95% distribution requirement.
However, because of the possible receipt of income without corresponding cash
receipts, timing differences that may rise between the realization of taxable
income and net cash flow, and the possible disallowance by the IRS of
deductions claimed by the Company, it is possible that the Company may not
have sufficient cash or liquid assets at a particular time to meet the 95%
distribution requirement. To assure compliance with the 95% distribution
requirement, the Company will closely monitor the relationship between its
REIT taxable income and cash flow and, if necessary, will borrow funds in
order to satisfy the distribution requirement. If the Company fails to meet
the 95% distribution requirements as a result of an adjustment to the
Company's tax return by the Service, the Company may retroactively cure the
failure by paying a "deficiency dividend" (plus applicable penalties and
interest) within a specified period.
NON-REIT ACCUMULATED EARNINGS AND PROFITS. The Company will not qualify
as a REIT if, as of the close of its taxable year, it has earnings and profits
accumulated in any non-REIT year. For purposes of this rule, positive earnings
and profits of a corporation that is liquidated or merged into another
corporation may not be netted against
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the other corporation's deficit in earnings and profits. The Company
believes that it and each of its subsidiaries had negative earnings and
profits as of the effective date of its REIT election.
FAILURE TO QUALIFY AS A REIT
For any taxable year the Company fails to qualify as a REIT, it would be
taxed as a corporation. It would not be entitled to a deduction for
dividends paid to its shareholders in computing its taxable income. Assets
of the Company and distributions to shareholders would be reduced to the
extent necessary to pay any resulting tax liability of the Company.
Distributions from the Company at such time would be taxable to shareholders
as dividends to the extent of the current and accumulated earnings and
profits of the Company and would be eligible for the 70% dividend-received
deduction for shareholders which are corporations.
If the Company's election to be treated as a REIT is terminated
automatically, the Company will not be eligible to elect REIT status until
the fifth taxable year which begins after the year for which the Company's
election was terminated, unless (a) the Company did not willfully fail to
file a timely return with respect to the termination taxable year, (b) the
incorrect information in such return was not due to fraud with intent to
evade tax, and (c) the Company establishes that failure to meet the
requirements was due to reasonable cause and not to willful neglect.
TAXATION OF THE COMPANY
GENERAL. In general, corporations are subject to federal income tax on
their net income regardless of whether such income is currently distributed
to shareholders. Distributions to shareholders constitute taxable dividends
to the extent of current and accumulated earnings and profits of the
corporation. Under this general rule, double taxation of corporate profits --
that is, taxation at the corporate level and the shareholder level -- is the
norm. However, the rules pertaining to REITs provide an exception to this
general rule. Except as otherwise discussed below, for any taxable year in
which the Company qualifies as a REIT, it will generally be able to deduct
for federal income tax purposes the portion of its ordinary income or capital
gain which is timely distributed to shareholders.
Even if the Company is treated as a REIT for federal income tax
purposes, however, it is subject to tax on any REIT taxable income and net
capital gain not distributed to shareholders. The Company may reinvest
income or gain recognized upon the sale of property or repayment of an
investment, although it does not intend to do so unless it has satisfied the
95% income distribution test. Capital gain income which is not distributed
will be taxable to the Company. The Company will not be required to
distribute capital gain income to maintain its status as a REIT. In
addition, the Company will be taxed at regular corporate tax rates on net
income from foreclosure property which is not otherwise REIT qualifying
income. Any tax incurred by the Company for these reasons, or for any of the
reasons discussed below, would reduce the amount of cash available for
distribution to shareholders, and ultimately reduce the return on an
investment in shares of the Company.
DIVIDENDS PAID DEDUCTION. For any taxable year it qualifies as a REIT,
the Company can claim the dividends paid deduction for dividends actually and
constructively paid during that tax year. The Company can also claim a
dividends paid deduction for dividends paid in the following year if it
declares the dividends before the time prescribed by law for filing its
return for the year, including extensions, and distributes the amount of the
dividend during the 12-month period following the close of the year but not
later than the date of the first regular dividend payment made after the
declaration. In this event, the Company will be required to specify the
dollar amount of the dividend, and send any notices required with respect to
the dividend not later than 30 days after the close of the tax year or by
mail with its annual report for the tax year. Certain so-called consent
dividends declared in subsequent years are also eligible for the dividends
paid deduction.
TAX ON BUILT-IN GAIN. The Internal Revenue Service has announced its
intention to issue regulations dealing with "built-in gain" of REITs. A REIT
has built-in gain to the extent it has, at the time its status as a REIT
commences, any asset with a fair market value in excess of its adjusted tax
basis. The regulations would provide that a corporation that becomes a REIT
recognizes net built-in gain, and pays corporate level tax, as if it had been
liquidated at the end of the last taxable year before it qualified as a REIT
unless it makes an election under which it
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will recognize such gain only upon disposition of such assets within the
first ten years after it became a REIT. If the election is made, the portion
of any gain on such dispositions that is built-in gain is taxable to the REIT
without regard to whether the gain is distributed to shareholders.
Some or all of the assets held by the Company on January 1, 1994, the
effective date of its REIT election, had built-in gain. The Company made the
election described above. The Company will therefore recognize built-in gain
only upon disposition of those assets prior to January 1, 2004. If such a
disposition occurs, the corporate level tax paid by the Company will reduce
the amount available for distribution to shareholders.
EXCISE TAX ON FAILURE TO MEET 75% OR 95% INCOME TESTS. Regardless of
distributions to shareholders, if the Company fails either or both of the 75%
and 95% income tests, but still maintains its qualification as a REIT, it
will be subject to an excise tax on an amount equal to the greater of the
amount by which it failed the 75% test or the 95% test multiplied by a
fraction the numerator of which is REIT taxable income (determined without
deductions for dividends paid or net operating losses and excluding capital
gains) and the denominator of which is the gross income of the REIT
(determined, generally, by excluding income from prohibited transactions,
certain gross income from foreclosure property, long-term capital gain, and
short-term capital gain to the extent of any short-term capital loss).
100% TAX ON PROHIBITED TRANSACTIONS. To the extent the Company derives
any net income from a prohibited transaction, the Company will be subject to
a 100% tax on such net income.
ALTERNATIVE MINIMUM TAX. The Company will also be subject to the
alternative minimum tax on items of tax preference allocable to it. The Code
authorizes the Treasury Department to issue regulations allocating items of
tax preference between a REIT and its shareholders. Such regulations have
not been issued. The Company does not expect to have any significant items
of tax preference.
4% EXCISE TAX. A 4% excise tax applies if a REIT's "distributed amount"
for any year is less than its "required distribution." For this purpose, the
required distribution is specially defined, and does not correspond to the
amount the REIT must distribute in order to maintain its status as a REIT.
The required distribution is (a) 85% of the REIT's ordinary income for the
year, plus (b) 95% of the REIT's capital gain net income reduced by any net
ordinary loss. This amount must be "grossed up" for certain amounts of
undistributed income from prior years. For purposes of this rule, the REIT's
ordinary income is determined without regard to the dividends paid deduction.
The distributed amount includes dividends paid during the calendar year,
plus any tax imposed on REIT taxable income or capital gains, plus any excess
of the distributed amount for the preceding calendar year over the grossed up
required distribution for the preceding year.
TAX ELECTIONS. The Company's taxable year ends December 31. The
Company uses the accrual method of accounting. The effective date of the
Company's election to be taxed as a REIT is January 1, 1994.
STATE AND LOCAL TAXES
The Company may be subject to state and local taxes in various
jurisdictions such as those in which the Company owns property or may be
deemed to be engaged in activities. The tax treatment of the Company in
states having taxing jurisdiction over it may differ from the federal income
tax treatment described in this summary. No discussion of state taxation of
the Company, the shares or the shareholders is provided herein.
PLAN OF DISTRIBUTION
The Company may sell Securities to one or more underwriters for public
offer and sale by them or may sell Securities offered hereby to investors
directly or through agents. Any underwriter or agent involved in the offer
and sale of the Securities will be named in the applicable Prospectus
Supplement.
38
<PAGE>
The distribution of the Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
prices related to the prevailing market prices at the time of sale or at
negotiated prices (any of which may represent a discount from the prevailing
market prices). The Company also may, from time to time, authorize
underwriters acting as the Company's agents to offer and sell the Securities
upon the terms and conditions as are set forth in the applicable Prospectus
Supplement. In connection with the sale of Securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Securities and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Securities may be deemed to
be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Company, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company
will authorize the underwriters, dealers or other persons acting as the
Company's agents to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in such
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date or dates stated in such
Prospectus Supplement. Each Contract will be for an amount not less than, and
the aggregate principal amount of Securities sold pursuant to Contracts will
not be less than nor greater than, the respective amounts stated in the
applicable Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but will in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions
except that (i) the purchase by an institution of the Securities covered by
its Contract will not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject;
and (ii) if the Securities are being sold to underwriters, the Company has
sold to such underwriters the total principal amount of the Securities less
the principal amount thereof covered by the Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Ungaretti &
Harris, Chicago, Illinois. Ungaretti & Harris will rely on the opinion of
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, Baltimore, Maryland,
as to certain matters of Maryland law.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1997
and 1996 and the consolidated statements of operations, shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1997 included in the Company's Annual Report on Form 10-K and the combined
statement of revenues and certain expenses of the Other Acquisition II
Properties for the year ended December 31, 1996 included in the Company's
Current Report on Form 8-K/A No. 1 filed with the Commission on February 27,
1998, both incorporated by reference in this Prospectus, have been
incorporated herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
39
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being
registered:
<TABLE>
<S> <C>
SEC Registration Fee ........................................ $ 147,500
NASD Fee .................................................... 30,500
Exchange Listing Fee ........................................ 50,000
Fees for Rating Agencies .................................... 100,000
Printing and Engraving Expenses ............................. 200,000
Trustee, Transfer Agent and Registrar Expenses .............. 100,000
Legal Fees and Expenses ..................................... 150,000
Accounting Fees and Expenses ................................ 100,000
Blue Sky Fees and Expenses .................................. 45,000
Miscellaneous ............................................... 100,000
-------
Total ............................................... $1,023,000
----------
----------
</TABLE>
All expenses, except the Securities and Exchange Commission registration
fee and the NASD fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Declaration of Trust (the "Declaration of Trust") of CenterPoint
Properties Trust provides that, to the maximum extent permitted by Maryland
law from time to time, no trustee or officer of the Company shall be held
liable to the Company or any shareholder thereof for monetary damages. The
Declaration of Trust also provides the trustees and officers of the Company
with limited liability in the absence of any Maryland statute limiting the
liability of the trustees and officers of the Trust for money damages in a
suit by or on behalf of the Company or by any shareholder thereof, except if
(i) the trustee or officer actually received an improper benefit or profit in
money, property or services, for the amount of the benefit actually received
or (ii) a judgment or other final adjudication adverse to the trustee or
officer is entered in a proceeding based on a finding in the proceeding that
the trustee's or officer's action or failure to act was the result of active
and deliberate dishonesty and was material to the cause of action adjudicated
in the proceeding.
Title 8 of the Corporations and Associations Article of the Annotated
Code of Maryland ("Title 8") permits the declaration of trust of a Maryland
real estate investment trust to expand or limit the liability of its trustees
and officers, except to the extent that (x) the trustee or officer actually
receives an improper personal benefit in money, property or services or (y) a
judgment or other final adjudication adverse to the trustee or officer is
entered in a proceeding based on a finding that such person's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. However,
Title 8 also provides that, although trustees and officers of a Maryland real
estate investment trust are not personally liable for the obligations of the
trust, trustees are not relieved from liability for any act that constitutes
(a) bad faith, (b) willful misfeasance, (c) gross negligence or (d) reckless
disregard of the trustee's duties.
The Declaration of Trust and By-laws of the Company authorize the
Company, to the maximum extent permitted from time to time by Maryland law,
to indemnify its present and former trustees and officers and to pay or
reimburse expenses for such individuals in advance of the final disposition
of a proceeding. In addition, the Declaration of Trust permits the Company
to indemnify any individual who, while a trustee of the Company and at the
request of the Company serves or has served another corporation, trust,
partnership, joint venture, employee benefit plan or any other enterprise as
a director, officer, partner or trustee thereof. Furthermore, the Company
By-laws specify that all persons entitled to indemnification by the Company
for expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any action, suit or
II-1
<PAGE>
proceeding must have acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the Company and,
with respect to any criminal action or proceeding, must have had no
reasonable cause to believe their conduct was unlawful.
In addition, the Company By-laws authorize the Company, in certain
circumstances, to indemnify any party to an action or suit by or in the right
of the Company by reason of the fact that such person is or was a director,
officer, employee or agent of the Trust or is or was serving at the request
of the Company as a director, trustee, officer, employee or agent of another
enterprise against expenses actually and reasonably incurred by such person
in connection with the defense or settlement of such action or suit if such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, provided that no
indemnification will be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duties to the Company, subject to
certain exceptions.
Pursuant to Title 8, a real estate investment trust may indemnify its
trustees and officers in respect of any proceeding, except to the extent that
any trustee or officer actually received an improper benefit, whether or not
involving action in his official capacity, in which the trustee or officer
was adjudged to be liable on the basis that personal benefit was improperly
received. Title 8 permits a Maryland real estate investment trust to
indemnify its trustees and officers against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection
with any proceeding to which they may be made a party by reason of their
service to or at the request of the trust unless it is established that the
act or omission of the indemnified party was material to the matter giving
rise to the proceeding and (i) the act or omission was committed in bad faith
or was the result of active and deliberate dishonesty, (ii) the indemnified
party actually received an improper personal benefit or (iii) in the case of
any criminal proceeding, the indemnified party had reasonable cause to
believe that the act or omission was unlawful.
It is the position of the Securities and Exchange Commission (the
"Commission") that indemnification of trustees for liabilities arising under
the Securities Act of 1933, as amended (the "Securities Act"), is against
public policy and is unenforceable pursuant to Section 14 of the Securities
Act.
ITEM 16. EXHIBITS
The following exhibits are included as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
*1.1 Form of underwriting agreement
**3.3 Declaration of Trust
**3.4 By-Laws
**4.1 Form of certificate representing common stock
*4.2 Form of certificate representing preferred stock
***4.3 Form of Senior Securities Indenture
***4.4 Form of Subordinated Securities Indenture
*4.5 Form of warrant agreement
*5 Opinion Letter of Ungaretti & Harris regarding the validity of the
securities being registered
*8 Opinion Letter of Ungaretti & Harris regarding certain tax matters
12 Computation of Certain Ratios
23.1 Consent of Ungaretti & Harris (included as part of Exhibit 5)
23.2 Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney (included on signature page)
</TABLE>
II-2
<PAGE>
___________________
* To be filed by amendment.
** Incorporated by reference from the Company's Registration
Statement on Form S-4 (File No. 333-33515).
*** Incorporated by reference from the Company's Registration
Statement on Form S-3 (File No. 333-18235).
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement 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.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Securities offered herein, and the offering of such
Securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to trustees,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities act 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>
The undersigned registrant hereby undertakes to file an application for
purposes of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Trust Indenture Act.
II-4
<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
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Chicago, Illinois, on the 2nd day of April,
1998.
CENTERPOINT PROPERTIES TRUST
By: /s/ John S. Gates, Jr.
--------------------------------------
John S. Gates, Jr., President and
Chief Executive Officer
By: /s/ Paul S. Fisher
--------------------------------------
Paul S. Fisher, Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons
in the capacities and on the date indicated. Each of the following persons
does hereby authorize and designate John S. Gates, Jr. and Paul S. Fisher, or
either of them, as attorneys-in-fact with full power of substitution, to
execute in the name and on behalf of such person, individually and in each
capacity stated below, and to file any and all amendments to this
registration statement, including any and all pre-effective and
post-effective amendments.
<TABLE>
<CAPTION>
SIGNATURE NAME AND TITLE DATE
--------- -------------- ----
<S> <C> <C>
/s/ Martin Barber Martin Barber, Chairman and April 2, 1998
----------------------------------- Trustee
/s/ John S. Gates, Jr. John S. Gates, Jr., President, April 2, 1998
----------------------------------- Chief Executive Officer and Trustee
/s/ Robert L. Stovall Robert L. Stovall, Vice Chairman April 2, 1998
----------------------------------- and Trustee
/s/ Nicholas C. Babson Nicholas C. Babson April 2, 1998
----------------------------------- Independent Trustee
/s/ Alan D. Feld Alan D. Feld April 2, 1998
----------------------------------- Independent Trustee
/s/ John J. Kinsella John J. Kinsella April 2, 1998
----------------------------------- Independent Trustee
/s/ Thomas E. Robinson Thomas E. Robinson April 2, 1998
----------------------------------- Independent Trustee
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
*1.1 Form of underwriting agreement.
**3.3 Declaration of Trust
**3.4 By-Laws
**4.1 Form of certificate representing common stock.
*4.2 Form of certificate representing preferred stock.
***4.3 Form of Senior Securities Indenture.
***4.4 Form of Subordinated Securities Indenture.
*4.5 Form of warrant agreement.
*5 Opinion Letter of Ungaretti & Harris regarding the validity of the securities being
registered.
*8 Opinion Letter of Ungaretti & Harris regarding certain tax matters.
12 Computation of Certain Ratios.
23.1 Consent of Ungaretti & Harris (included as part of Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney (included on signature page).
</TABLE>
________________________
* To be filed by amendment.
** Incorporated by reference from the Company's Registration
Statement on Form S-4 (File No. 333-33515).
*** Incorporated by reference from the Company's Registration
Statement on Form S-3 (File No. 333-18235).
<PAGE>
EXHIBIT 12
CENTERPOINT PROPERTIES TRUST
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Available earnings:
Net income (loss) $27,630 $14,941 $ 8,212 $ 2,359 ($4,930)
Add interest expense (1) 10,871 10,992 12,985 12,157 4,111
------- ------- ------- ------- --------
Available earnings (loss) (2) $38,501 $25,933 $21,197 $14,516 ($ 819)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Fixed Charges:
Interest expense $10,871 $10,992 $12,985 $12,157 $4,111
Capitalized interest 893 142 20 63 470
------- ------- ------- ------- --------
Total Fixed Charges $11,764 $11,134 $13,005 $12,220 $4,581
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Ratio of earnings to Fixed Charges (3) 3.27 2.33 1.63 1.19
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
______________________________
NOTES:
(1) Interest expense includes amortization of debt expense.
(2) Interest portion of rental expense is not calculated because annual rental
expense for the Company is not significant.
(3) The ratio of earnings to fixed charges for the year ended December 31,
1993 was less than one to one. The approximate dollar amount necessary to
cover the deficiency in that period was $5,400.
CENTERPOINT PROPERTIES TRUST
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Available earnings:
Net income (loss) $27,630 $14,941 $ 8,212 $ 2,359 ($4,930)
Add interest expense (1) 10,871 10,992 12,985 12,157 4,111
------- ------- ------- ------- --------
Available earnings (loss) (2) $38,501 $25,933 $21,197 $14,516 ($ 819)
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Fixed Charges:
Interest expense $10,871 $10,992 $12,985 $12,157 $4,111
Capitalized interest 893 142 20 63 470
Preferred dividends 901 947 1,002
------- ------- ------- ------- --------
Total Fixed Charges $12,665 $12,081 $14,007 $12,220 $4,581
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Ratio of earnings to Fixed Charges (3) 3.04 2.15 1.51 1.19
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
______________________________
NOTES:
(1) Interest expense includes amortization of debt expense.
(2) Interest portion of rental expense is not calculated because annual rental
expense for the Company is not significant.
(3) The ratio of earnings to fixed charges for the year ended December 31,
1993, was less than one to one. The approximate dollar amount necessary
to cover the deficiency in that period $5,400.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of CenterPoint Properties Trust on Form S-3 of our report dated
February 10, 1998 on our audits of the consolidated financial statements and
financial statement schedules of CenterPoint Properties Trust and
Subsidiaries as of December 31, 1997 and 1996 and for each of the three years
in the period ended December 31, 1997, which report is included in the Annual
Report on Form 10-K and of our report dated January 30, 1998, on our audit of
the combined financial statement of the Other Acquisition II Properties for
the year ended December 31,1996, which report is included in the Company's
Current Report on Form 8-K/A No. 1 filed February 27, 1998. We also consent
to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
April 1, 1998
