<PAGE>
As filed with the Securities and Exchange Commission on July 21, 1998
Registration No. 333-18235
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2 TO
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 Identification Number)
incorporation or organization)
1808 SWIFT ROAD
OAK BROOK, ILLINOIS 60523
(630) 586-8000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JOHN S. GATES, JR.
PRESIDENT
CENTERPOINT PROPERTIES TRUST
1808 SWIFT ROAD
OAK BROOK, ILLINOIS 60523
(630) 586-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
______________________
COPIES OF ALL COMMUNICATIONS, INCLUDING COPIES OF COMMUNICATIONS
SENT TO AGENT FOR SERVICE, SHOULD ALSO BE SENT TO:
RICHARD A. UNGARETTI, ESQ.
JAMES T. EASTERLING, ESQ.
Ungaretti & Harris
Three First National Plaza, Suite 3500
Chicago, Illinois 60602
(312) 977-4400
______________________
<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus dated ________, 1998)
750,000 Shares
CENTERPOINT PROPERTIES TRUST
Common Shares of Beneficial Interest
Pursuant to the terms of a Sales Agency Agreement (the "Sales Agency
Agreement") between CenterPoint Properties Trust, a Maryland real estate
investment trust (the "Company"), and Brinson Patrick Securities Corporation
(the "Agent"), a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement is a part and is incorporated
herein by reference, the Company may issue and sell up to 750,000 common shares
(the "Maximum Amount") of beneficial interest in the Company, par value $.001
per share (the "Common Shares"), from time to time through the Agent, as sales
agent for the Company, which shares are being offered under this Prospectus
Supplement. Such sales, if any, will be made by means of ordinary brokers'
transactions on the New York Stock Exchange (the "NYSE") at prices prevailing at
the time of sale. Such sales will be effected during a series of one or more
periods, each consisting of five consecutive calendar days, commencing on Monday
and ending on Friday (each a "Sales Period"), unless a shorter period has been
agreed to by the Company and the Agent. Unless otherwise indicated in a
Prospectus Supplement, sales of Common Shares by the Agent will be made on a
best efforts basis.
The net proceeds to the Company for Common Shares sold during a Sales
Period will equal 98% of the proceeds from sales (after deducting from such
proceeds any fees imposed by any governmental or self-regulatory organization
with respect to such sales (the "Fees")) during a Sales Period. The
compensation to the Agent for sales of Common Shares during a Sales Period will
be 2% of the proceeds from sales during a Sales Period after deducting any Fees
from such proceeds.
Settlements of sales of Common Shares shall occur on the third business day
following each sale of Common Shares or such later date on which the settlement
of such sale is actually effected.
Promptly following the end of each Sales Period, the Company will file an
additional Prospectus Supplement under the applicable paragraph of Rule 424(b)
promulgated under the Securities Act of 1933, as amended (the "Act"), which
Prospectus Supplement will set forth the dates included in the such Sales
Period, the number of Common Shares sold through the Agent, the net proceeds to
the Company and the compensation to the Agent.
In connection with the sale of Common Shares on behalf of the Company, the
Agent may be deemed to be an underwriter within the meaning of the Act, and the
compensation of the Agent may be deemed to be underwriting commissions or
discounts. The Company has agreed to provide indemnification and contribution
to the Agent against certain civil liabilities, including liabilities under the
Act. The underwriting contemplated by this offering will represent the first
underwriting by the Agent. The Agent was formed in 1996 and since such time has
engaged primarily in the development of the DOCS-SM- Financing Program which is
contemplated by the Sales Agency Agreement. The Agent has not had a material
relationship with the Company. The principal business function of the Agent in
this offering will be to sell the Common Shares as agent for the Company.
The offering of Common Shares pursuant to the Sales Agency Agreement will
terminate upon the earlier of (i) the sale of the Maximum Amount or (ii) the one
year anniversary of the Sales Agency Agreement, unless otherwise agreed to in
writing by the Company and the Agent. The Company may terminate the Sales
Agency Agreement in its sole discretion upon ninety days prior written notice to
the Agent, and under certain other circumstances as specified in the Sales
Agency Agreement. The Agent has the right to terminate the Sales Agency
Agreement under certain circumstances specified in the Sales Agency Agreement.
Dated ____, 1998
<PAGE>
PROSPECTUS
$200,000,000
CENTERPOINT PROPERTIES TRUST
DEBT SECURITIES, COMMON SHARES, PREFERRED SHARES, SECURITIES WARRANTS
---------------
CenterPoint Properties Trust (the "Trust") 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 $200,000,000 (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 4 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 SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION 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.
__________, 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 Northwestern Atrium Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661, 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, 1995;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996;
3. The Company's Current Report on Form 8-K filed with the Commission on
July 1, 1996;
4. The Company's Current Report on Form 8-K filed with the Commission on
October 3, 1996, as amended by Form 8-K/A filed with the Commission
on November 27, 1996; and
5. The description of the Company's Common Stock set forth in the
Company's Post-Effective Amendment No. 1 to Form S-3 registration
statement filed with the Commission on March 22, 1995
(File No. 33-89630).
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
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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.
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 fully integrated 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. As of September 30, 1996, the Company owned and managed a portfolio of
73 warehouse/industrial properties, containing approximately 13.8 million
square feet of space, and believes it is the largest owner and operator of
warehouse/industrial property in Greater Chicago. The Company also owns and
manages three retail properties and one apartment property. As of September
30, 1996, the Company's properties were 98% leased, with the
warehouse/industrial properties occupied by 129 tenants in diverse industries
and no tenant accounting for the lease of more than 10% of the total square
footage of the Company's warehouse/industrial portfolio. 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 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.
The Company's objective is to maximize shareholder 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.
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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 shareholders 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 (excluding the Company's 8.22% Convertible Subordinated Debentures due
2004 (the "Debentures")) to total market capitalization of the Company of
less than 50%. However, the Company's 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 these limitations 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.
Recent tax legislation relaxed the rules concerning ownership of shares
of beneficial interest 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.
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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.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratios of earnings to fixed charges for the years ended
December 31, 1994 and 1995 were 1.19 and 1.63, respectively, and the
Company's ratios of earnings to fixed charges for the nine months ended
September 30, 1995 and 1996 were 1.49 and 2.27, respectively. The ratios of
earnings to fixed charges for the years ended December 31, 1991 through
December 31, 1993 were 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 Series A Preferred Stock in September, 1995, which
was converted into Class B Common Stock in May, 1996. The Company's ratios
of earnings to combined fixed charges and Preferred Stock dividends for the
year ended December 31, 1995 was 1.51 and the Company's ratio of earnings to
combined fixed charges and Preferred Stock dividends for the nine months
ended September 30, 1995 and September 30, 1996 was 1.48 and 2.05,
respectively. 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"). As of October 31, 1996, there were 14,312,195 shares
of Common Stock issued
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and outstanding and 2,272,727 shares of Class B Common Stock issued and
outstanding, all of which are fully-paid and non-assessable. The Class B
Common Stock was issued in May 1996 upon conversion of the Company Series A
Preferred Stock. As a consequence of such conversion, no shares of Preferred
Stock are as of October 31, 1996 issued and outstanding, and the Series A
Preferred Stock reverted to the status of authorized and unissued Preferred
Stock.
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 transfer agent and registrar for the Common Shares is First Chicago
Trust Company of New York, Jersey City, New Jersey.
CLASS B COMMON SHARES
DIVIDENDS
Holders of Class B Common Shares are entitled to receive, when and as
declared by the Board of Trustees, out of funds legally available therefor,
dividends PARI PASSU with any dividends paid on the Common Shares, in an
amount per share equal to the Class B Common Shares Common Dividend Amount as
in effect from time to time. Each calendar quarter is referred to as a
"Dividend Period." The amount of dividends payable with respect to each full
Dividend Period is computed by dividing the Class B Common Shares Common
Dividend Amount by four. The amount of dividends on the Class B Common Shares
with respect to any Dividend Period shorter or longer than a full Dividend
Period is computed ratably on the basis of the actual number of days in such
Dividend Period. The initial Class B Common Shares Dividend Amount is
$1.7268. Upon a change in the quarterly cash dividend per share applicable
to the Common Shares, the quarterly cash dividend per share of the Class B
Common Shares is adjusted for the same Dividend Period by an amount computed
by multiplying the amount of the change in the Common Shares dividend by the
Conversion Ratio (as defined below).
In the event that the Company declares a distribution payable in (i)
securities of other persons, (ii) evidences of indebtedness issued by the
Company or other persons, (iii) assets (excluding cash dividends) or (iv)
options or rights to purchase shares of beneficial interest or evidences of
indebtedness in the Company or other persons, then the holders of Class B
Common Shares will be entitled to a proportionate share of any such
distribution as though they were the holders of the number of Common Shares
into which their Class B Common
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Shares are or would be convertible (assuming such Class B Common Shares were
then convertible) as of the record date fixed for determination of the
holders of Common Shares entitled to receive such distribution.
LIQUIDATION RIGHTS
Subject to any prior rights of any other class or series of shares of
beneficial interest in the Company, the holders of the Class B Common Shares
will be entitled to receive the remaining assets of the Company available for
distribution pro rata with the holders of Common Shares as though they were
the holders of the number of Common Shares into which their Class B Common
Shares are or would be convertible (assuming such Class B Common Shares were
then convertible) as of the record date applicable to such distribution.
Neither a consolidation or merger of the Company with or into any other
entity, nor a merger of any other entity into the Company, nor the purchase
or redemption of all or part of the outstanding shares of any class or
classes of shares of beneficial interest in the Company, nor a sale or
transfer of all or any part of the Company's assets, will be considered a
liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
The holders of Class B Common Shares are not entitled to vote on any
matter on which the holders of Common Shares are entitled to vote, except
that the holders of a majority of the Class B Common Shares, voting as a
separate class, must approve (i) any material adverse change in the rights,
preferences or privileges of the Class B Common Shares and (ii) any creation
of a new class of shares of beneficial interest having rights, preferences or
privileges senior to or on a parity with the preferences or privileges of the
Class B Common Shares.
CONVERSION RIGHTS
Beginning on September 30, 1998, and at the end of each calendar
quarter thereafter, the number of Class B Common Shares will mandatorily
convert into such number of Common Shares as will result in the holders of
the Class B Common Shares owning, in the aggregate, 4.9% of the then
outstanding Common Shares; and if on any such date the total number of
outstanding Class B Common Shares would not, upon conversion, result in the
holders thereof owning, in the aggregate, 4.9% of the then outstanding Common
Shares, then all such outstanding Class B Common Shares will mandatorily
convert into Common Shares.
On May 22, 2006, each remaining Class B Common Share which has not been
converted to Common Shares will mandatorily convert to that number of
non-assessable Common Shares equal to the Conversion Ratio, as adjusted,
regardless of the 4.9% limitation.
Beginning on September 21, 1998, the holders of Class B Common Shares
will have the right, at their option, to convert each such Class B Common
Share, at any time and from time to time, into one fully paid and
non-assessable Common Share (the "Conversion Ratio," which is subject to
adjustment as provided below); PROVIDED, HOWEVER, that no holder of Class B
Common Shares will be entitled to convert such Class B Common Shares into
Common Shares pursuant to the foregoing provision if, as a result of such
conversion, such person would become the Beneficial Owner of more than 4.9%
of the outstanding Common Shares. "Beneficial Owner" has the meaning set
forth in Rule 13d-3 under the Exchange Act (or any successor provision
thereto). Notwithstanding the foregoing, the conversion right described
above may be exercised at any time and irrespective of the 4.9% limitation
(and no such limit will apply) if any of the following circumstances occurs:
(i) For any two consecutive fiscal quarters, the aggregate
amount outstanding as of the end of the quarter under (A) all mortgage
indebtedness of the Company and its consolidated entities and (B)
unsecured indebtedness of the Company and its consolidated entities
for money borrowed that has not been made generally subordinate to the
other indebtedness for borrowed money of the Company or any
consolidated entity exceeds 55% of the Company's total market
capitalization, defined as the market value of all of the Company's
outstanding shares of beneficial interest, assuming the conversion of
all
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outstanding convertible securities, including the Class B Common
Shares, plus the amount of the Company's total non-convertible
indebtedness; or
(ii) Fewer than three of John S. Gates, Jr., Robert M. Stovall,
Michael M. Mullen and Paul S. Fisher are continuing as Key Managers of
the Company. (For purposes of this subparagraph (ii), a "Key Manager"
means a person who (A) is employed by the Company and (B) actively
participates as a senior executive officer in the management of the
Company); or
(iii) If (A) the Company is party to, or has announced or
entered into an agreement for, any transaction (including, without
limitation, a merger, consolidation, statutory share exchange or sale
of all or substantially all of its assets (each of the foregoing a
"Transaction")), in each case as a result of which Common Shares have
been or will be converted into the right to receive shares of
beneficial interest, securities or other property (including cash or
any combination thereof) or which has resulted or will result in the
holders of Common Shares immediately prior to the Transaction owning
less than 50% of the Common Shares after the Transaction, or (B) a
"Change of Control" as defined in the next sentence occurs with
respect to the Company. "Change of Control" means the acquisition
(including by virtue of a merger, share exchange or other business
combination) by one shareholder or a group of shareholders acting in
concert of the power to elect a majority of the Company's Board of
Trustees.
No fractional shares will be issued upon conversion of the Class B Common
Shares into Common Shares, and the number of Common Shares to be issued will be
rounded to the nearest whole share.
The Conversion Ratio is subject to adjustment as follows:
(i) In the event that the Company at any time (A) pays a
dividend or makes a distribution to holders of Common Shares in Common
Shares, (B) subdivides its outstanding Common Shares into a larger
number of shares, (C) combines its outstanding Common Shares into a
smaller number of shares, or (D) issues by reclassification of its
Common Shares any shares of beneficial interest in the Company, the
Conversion Ratio in effect immediately prior thereto will be adjusted
as provided below so that the holder of any Class B Common Shares
thereafter surrendered for conversion will be entitled to receive the
number of Common Shares which such holder would have owned or have
been entitled to receive after the happening of any of the events
described above, had such Class B Common Shares been converted
immediately prior to the happening of such event. Any adjustment made
pursuant to this subparagraph (i) will become effective retroactively
immediately after the record date in the case of a dividend and will
become effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
(ii) In case the Company issues rights or warrants to all
holders of Common Shares entitling them to subscribe for or purchase
Common Shares at a price per share less than the current market price
(as hereinafter defined) per share of Common Shares at the record date
mentioned below, the number of Common Shares into which each Class B
Common Share will thereafter be convertible will be determined by
multiplying the number of Common Shares into which such Class B Common
Share was theretofore convertible by a fraction, of which the
numerator will be the number of Common Shares outstanding on the date
of issuance of such rights or warrants plus the number of additional
Common Shares offered for subscription or purchase, and of which the
denominator will be the number of Common Shares outstanding on the
date of issuance of such rights or warrants plus the number of Shares
which the aggregate offering price of the total number of Shares so
offered would purchase at such current market price. Such adjustment
will be made whenever such rights or warrants are issued, and will
become effective retroactively immediately after the record date for
the determination of shareholders entitled to receive such rights or
warrants.
(iii) In case the Company distributes to all holders of
Common Shares evidences of its indebtedness or assets or rights or
warrants to subscribe for or purchase securities issued by the Company
or property of the Company (excluding those referred to in
subparagraph (ii) above), then in each such case
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the number of Common Shares into which each Class B Common Share will
thereafter be convertible will be determined by multiplying the number
of Common Shares into which such Class B Common Share was theretofore
convertible by a fraction, of which the numerator will be the current
market price per share of the Common Shares, and of which the
denominator will be such current market price per share of Common
Shares, less the then fair market value (as determined by the Board of
Trustees of the Company, whose determination will be conclusive) of
the portion of the assets or evidence of indebtedness so distributed
or of such rights or warrants applicable to one of the Common Shares.
Such adjustment will be made whenever any such distribution is made,
and will become effective retroactively immediately after the record
date for the determination of shareholders entitled to receive such
distribution.
(iv) If any such rights or warrants referred to above expires
without having been exercised, the Conversion Ratio as theretofore
adjusted because of the issuance of such rights or warrants will
forthwith be readjusted to the Conversion Ratio which would have been
in effect had an adjustment been made on the basis that only the
rights or warrants issued or sold were those rights or warrants
actually exercised and that with respect to any such rights or
warrants to subscribe for or purchase securities issued by the
Company, other than Common Shares or property of the Company, the fair
market value thereof will be the fair market value of the rights or
warrants actually exercised or warrants actually exercised.
For the purpose of any computation under these paragraphs (i)-(iv), the
current market price per Common Share at any date will be deemed to be the
average of the daily closing prices for the 15 consecutive business days
commencing 30 business days before the day in question. The closing price
for each day will be the last reported sale price regular way or, in the case
no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the NYSE, or, if
the Common Shares are not listed or admitted to trading on the NYSE, on any
national securities exchange, designated by the Board of Trustees, on which
the Common Shares are listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices as furnished by any NYSE firm selected from time
to time by the Company for such purpose.
No adjustment of the Conversion Ratio will be made as a result of or in
connection with the issuance of Common Shares pursuant to options or share
purchase agreements now or hereafter granted or entered into with trustees,
officers or employees of the Company or its subsidiaries in connection with
their employment, whether entered into at the beginning of the employment or
at any time thereafter.
In case of:
(i) any capital reorganization of the Company, or
(ii) the consolidation or merger of the Company with or into
another entity, or
(iii) a statutory share exchange whereby the Common Shares are
converted into property other than cash, or
(iv) the sale, transfer or other disposition of all or
substantially all of the property, assets or business of the Company
as a result of which sale, transfer or other disposition property
other than cash will be payable or distributable to the holders of the
Common Shares,
then, in each such case, each Class B Common Share will thereafter be
convertible into the number and class of shares or other securities or
property of the Company, or of the entity resulting from such consolidation
or merger or with or to which such statutory share exchange, sale, transfer
or other disposition has been made, to which the Common Shares otherwise
issuable upon conversion of such Class B Common Share would have been
entitled upon such reorganization, consolidation, merger, statutory share
exchange, or sale, transfer or other disposition if outstanding at the time
thereof; and in any such case appropriate adjustment, as determined by the
Board of Trustees, will be made in the application of the provisions set
forth in the foregoing paragraph with respect to the conversion rights
thereafter of the holders of the Class B Common Shares, to the end that such
provisions will
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thereafter be applicable, as nearly as reasonably may be, in relation to any
shares or securities or other property thereafter issuable or deliverable
upon the conversion of Class B Common Shares. Proper provision will be made
as a part of the terms of any such reorganization, consolidation, merger,
statutory share exchange or sale, transfer or other disposition whereby the
conversion rights of the holders of Class B Common Shares will be protected
and preserved in accordance with the provisions of this paragraph. The
provisions of this paragraph will similarly apply to successive capital
reorganizations, consolidations, mergers, statutory share exchanges, sales,
transfers or other dispositions of property as aforesaid.
Upon conversion of any Class B Common Shares, no payment or adjustment
will be made on account of dividends accrued, whether or not in arrears, on
such shares or on account of dividends declared and payable to holders of
Common Shares of record on a date prior to the date of conversion.
If the Company is party to any Transaction in each case as a result of
which Common Shares will be converted into the right to receive securities or
other property (including cash or any combination thereof), the holder of
each Class B Common Share will have the right after such Transaction to
convert such share, pursuant to the optional conversion provisions hereof,
into the number and kind of shares of beneficial interest or other securities
and the amount and kind of property receivable upon such Transaction by a
holder of the number of Common Shares issuable upon conversion of such Class
B Common Share immediately prior to such Transaction. The Company will not
be party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this paragraph, and it will not consent to
or agree to the occurrence of any Transaction until the Company has entered
into an agreement with the successor or purchasing entity, as the case may
be, for the benefit of the holders of the Class B Common Shares, thereby
enabling the holders of the Class B Common Shares to receive the benefits of
this paragraph and the other provisions of the Company's Declaration of Trust
applicable to the Class B Common Shares.
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;
(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;
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(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.
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.
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
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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.
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.
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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.
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
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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.
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.
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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.
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.
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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
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
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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).
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
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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 director 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.
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.
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
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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.
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.
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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.
The Declaration of Trust provides certain restrictions on ownership of shares
designed to assure compliance with this requirement.
REVENUE RECONCILIATION ACT OF 1993. Under the 1993 Act, pension funds
generally will not be 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 recent law.
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.
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 during the entire period of its existence.
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.
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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 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 or interest
income or 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.
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- 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 rents with
respect to any property with respect to which the REIT furnishes or
renders "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." 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 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.
30% INCOME TEST. Less than 30% of a REIT's gross income must be
derived from the sale or other disposition of: (a) stock or securities held
for less than one year; (b) property in a prohibited transaction; or (c) real
property (including interests in real property and interests in mortgages on
real property) held for less than four
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<PAGE>
years, other than property involuntarily converted within the meaning of
Section 1033 of the Code or foreclosure property (as defined below).
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 two years after 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, 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 under the Code's rent allocation and original issue discount rules,
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 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.
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<PAGE>
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 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
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<PAGE>
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.
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
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<PAGE>
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 financial statements and financial statement schedules included in
the Company's Annual Report on Form 10-K and the statements of revenue and
certain expenses included in the Company's Form 8-K/A filed with the
Commission on November 27, 1996, incorporated by reference in this
Prospectus, to the extent and for the periods indicated in their reports,
have been audited by Coopers & Lybrand L.L.P., independent accountants, and
are included herein in reliance upon the authority of those experts in giving
their report.
-41-
<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>
<CAPTION>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . $ 8,364.00
Exchange Listing Fee . . . . . . . . . . . . . . . 1,650.00
Printing and Engraving Expenses. . . . . . . . . . 1,000.00
Legal Fees and Expenses. . . . . . . . . . . . . . 20,000.00
Accounting Fees and Expenses . . . . . . . . . . . 10,000.00
Blue Sky Fees and Expenses . . . . . . . . . . . . 10,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . 20,000.00
-------------
Total . . . . . . . . . . . . . . . . . . . . $ 61,014.00
-------------
-------------
</TABLE>
________________________
ITEM 16. EXHIBITS
The following exhibits are included as part of this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
1.1 Form of sales agency agreement with Brinson Patrick
Securities
3.1 By-laws, as amended
5 Opinion Letter of Ungaretti & Harris regarding the validity
of the securities being registered
8 Opinion Letter of Ungaretti & Harris regarding certain tax
matters
23.1 Consent of Ungaretti & Harris (included as part of
Exhibit 5)
23.2 Consent of PricewaterhouseCoopers LLP
24 Power of Attorney (included on signature page)
</TABLE>
______________________
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Post-Effective Amendment No. 2 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago, State of Illinois on the
20th day of July, 1998.
CENTERPOINT PROPERTIES TRUST,
a Maryland real estate investment 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
Post-effective Amendment No. 2 to the Registration Statement has been signed
by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Name and Title Date
---------- -------------- ------
<S> <C> <C>
Martin Barber, Chairman and
/s/ Paul S. Fisher * Trustee July 20, 1998
- ----------------------------
John S. Gates, Jr.,
President, Chief Executive
/s/ John S. Gates, Jr. Officer and Trustee July 20, 1998
- ----------------------------
Robert L. Stovall, Vice
/s/ Paul S. Fisher * Chairman and Trustee July 20, 1998
- ----------------------------
Nicholas C. Babson,
/s/ Paul S. Fisher * Independent Trustee July 20, 1998
- ----------------------------
Norman R. Bobins,
Independent Trustee
- ----------------------------
Alan D. Feld,
/s/ Paul S. Fisher * Independent Trustee July 20, 1998
- ----------------------------
John J. Kinsella,
/s/ Paul S. Fisher * Independent Trustee July 20, 1998
- ----------------------------
Thomas E. Robinson,
/s/ Paul S. Fisher * Independent Trustee July 20, 1998
- ----------------------------
* As attorney in fact
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
---------- -----------
<S> <C>
1.1 Form of sales agency agreement with Brinson Patrick
Securities
3.1 By-laws, as amended
5 Opinion Letter of Ungaretti & Harris regarding the validity
of the securities being registered
8 Opinion Letter of Ungaretti & Harris regarding certain tax
matters
23.1 Consent of Ungaretti & Harris (included as part of Exhibit 5)
23.2 Consent of PricewaterhouseCoopers LLP
24 Power of Attorney (included on signature page)
</TABLE>
<PAGE>
CENTERPOINT PROPERTIES TRUST
DOCS-SM- FINANCING PROGRAM
750,000 SHARES
(COMMON SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE)
SALES AGENCY AGREEMENT
JULY 20, 1998
DOCS-SM- is a service mark of Brinson Patrick Securities Corporation.
<PAGE>
THIS SALES AGENCY AGREEMENT (the "Agreement") dated July 20, 1998
between Brinson Patrick Securities Corporation, a corporation having its
principal office at One Penn Plaza, 36th Floor, New York, NY 10119 (the
"Agent"), and CenterPoint Properties Trust, a real estate investment trust
organized and existing under the laws of the State of Maryland (the
"Company").
WHEREAS, the Company desires to issue and sell through the Agent up to
750,000 shares (the "Maximum Amount") of common shares of beneficial
interest, par value $.001 per share (the "Stock"), on the terms set forth in
Article II hereof.
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Agent agree as follows:
ARTICLE I.
REPRESENTATIONS AND WARRANTIES
1.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Agent that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
thereunder ("Rules and Regulations"). A registration statement on Form S-3
(Registration No. 333-18235) with respect to, among other securities, the
Stock, including a form of prospectus, has been prepared by the Company in
conformity with the requirements of the Act and the Rules and Regulations and
filed with the Securities and Exchange Commission (the "Commission") and has
become effective. Such registration statement and prospectus may have been
amended or supplemented prior to the date of this Agreement. Any such
amendment or supplement was so prepared and filed, and any such amendment or
supplement filed after the effective date of such registration statement has
become effective. No stop order suspending the effectiveness of the
registration statement has been issued, and no proceeding for that purpose
has been instituted or threatened by the Commission. Copies of such
registration statement and prospectus and any such amendment or supplement
that was filed with the Commission on or prior to the date of this Agreement
have been delivered to the Agent. Such registration statement, as it may
have heretofore been amended, is referred to herein as the "Registration
Statement," and the final form of prospectus included in the Registration
1
<PAGE>
Statement, as amended or supplemented from time to time, is referred to
herein as the "Prospectus." Any reference herein to the Registration
Statement, the Prospectus, or any amendment or supplement thereto shall be
deemed to refer to and include the documents incorporated (or deemed to be
incorporated) by reference therein, and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Registration
Statement or Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. The Company may sell up to approximately
$13 million of securities in at the market offerings pursuant to the
Registration Statement. To the extent the Company desires to sell more than
approximately $13 million of securities pursuant to this Agreement, the
Company shall file a new registration statement with respect to such shares
and shall cause such registration statement to become effective pursuant to
Rule 462(b) of the Act. After the effectiveness of said registration
statement, all references to "Registration Statement" included in this
Agreement shall be deemed to include such new registration statement.
(b) Each part of the Registration Statement, when such part became or
becomes effective, and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at each
Closing Date (as hereinafter defined), conformed or will conform in all
material respects with the requirements of the Act and the Rules and
Regulations; each part of the Registration Statement, when such part became
or becomes effective, did not or will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and the
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at each Closing Date, did not or will not
include an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing shall not apply to statements in or omissions from any such
document in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Agent, specifically for use
in the Registration Statement, the Prospectus or any amendment or supplement
thereto.
(c) The documents incorporated by reference in the Registration
Statement or the Prospectus, or any amendment or supplement thereto, when
they became or become effective under the Act or were or are filed with the
Commission under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), as the case may be, conformed or will conform in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder.
(d) The financial statements of the Company and its subsidiaries,
together with the related notes and schedules, set forth or incorporated by
reference in the Registration Statement
2
<PAGE>
and Prospectus fairly present the financial condition and the results of
operations and cash flows of the Company and its subsidiaries as of the dates
indicated or for the periods therein specified and were prepared in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein).
(e) The Company has been duly formed and is validly existing as a real
estate investment trust in good standing under the laws of the state of its
formation with power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and
Prospectus; and the Company is duly qualified to transact business and is in
good standing in each jurisdiction in which the laws of such jurisdiction
require such qualification, except where the failure to so qualify and be in
good standing, considering all such cases in the aggregate, would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(f) Each significant subsidiary (as defined in Section 1-02 of
Regulation S-X) of the Company has been duly incorporated and is validly
existing as a real estate investment trust, corporation, general or limited
partnership or other legal entity, as the case may be, in good standing under
the laws of the jurisdiction of its incorporation, has power (corporate or
other) and authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement and Prospectus and is
duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure to so qualify and be in good standing would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise; and all of the issued and outstanding capital
stock (or other equity interests) of each subsidiary has been duly authorized
and validly issued, is fully paid and nonassessable and (except as otherwise
stated in the Registration Statement) is majority-owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(g) The outstanding common shares of beneficial interest of the Company
and the Stock have been duly authorized and are, or when issued as
contemplated hereby will be, validly issued, fully paid and nonassessable and
conform, or when so issued will conform, to the description thereof in the
Prospectus. The shareholders of the Company have no preemptive rights with
respect to the Stock.
(h) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company
3
<PAGE>
nor any of its subsidiaries has incurred any liabilities or obligations,
direct or contingent, or entered into any transactions, not in the ordinary
course of business, that are material to the Company and its subsidiaries
considered as a whole, and there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
subsidiaries, or any material change, or any development involving a
prospective material change, in the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(i) Except as set forth in the Prospectus, there is not pending or, to
the knowledge of the Company, threatened any action, suit or proceeding to
which the Company or any of its subsidiaries is a party, before or by any
court or governmental agency or body, that could reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, or that could
reasonably be expected to materially and adversely affect the properties or
assets thereof considered as a whole.
(j) There are no contracts or documents of the Company or any of its
subsidiaries that are required to be filed as exhibits to the Registration
Statement or to any of the documents incorporated by reference therein by the
Act or the Exchange Act or by the rules and regulations of the Commission
thereunder that have not been so filed.
(k) All necessary action has been duly and validly taken by the Company
to authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
(l) The performance of this Agreement and the consummation of the
transactions contemplated herein will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under with giving
of notice or lapse of time or both, any agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it is bound or to
which any of the property of the Company or any of its subsidiaries is
subject except for such breaches or defaults that would not in the aggregate
have a material adverse effect on the Company's ability to perform its
obligations under this Agreement or on the condition, financial or otherwise,
or the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as a whole, nor will such action result in the
violation of the Company's charter or by-laws, or any statute or any order,
rule or regulation of any court or governmental
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agency or body having jurisdiction over the Company or any of its
subsidiaries or any of its properties; no consent, approval, authorization or
order of, or filing with, any court or governmental agency or body is
required for the consummation by the Company of the transactions contemplated
by this Agreement, except such as may be required by state securities or blue
sky laws.
(m) Each of the Company and its subsidiaries has (i) good and
indefeasible title to all of the properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges, encumbrances
or restrictions, except such as are described in the Prospectus or are not
material to the business, condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, (ii) peaceful and undisturbed possession under
all material leases to which it is party as lessee, (iii) all governmental or
regulatory licenses, certificates, permits, authorizations, approvals,
franchises or other rights necessary to engage in the business currently
conducted by it, except such as are not material to the business, condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
(iv) no reason to believe that any governmental body or agency is considering
limiting, suspending or revoking any such license, certificate, permit,
authorization, approval, franchise or right and (v) not received any notice
of and has no reason to believe that any governmental body or agency is
considering enacting, amending or repealing any statute, law, ordinance or
regulation required to be described in the Registration Statement and
Prospectus that is not so described as required. All material leases to
which the Company or any of its subsidiaries is a party are valid and binding
and no default has occurred and is continuing thereunder, and, to the best
knowledge of the Company, no material defaults by the landlord are existing
under any such leases.
(n) Each of the Company and its subsidiaries owns or possesses all of
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures), trademarks, service
marks and trade names presently employed by them in connection with the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, if
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise.
(o) The Company and its subsidiaries have not violated and, to its
knowledge, are in compliance in all material respects with all material laws,
statutes, ordinances, regulations, rules
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and orders of any foreign, federal, state or local government and any other
governmental department or agency, and any judgment, decision, decree or
order of any court or governmental agency, department or authority,
including, without limitation, environmental laws. Neither the Company nor
any of its subsidiaries has received any notice to the effect that, or
otherwise been advised that, it is not in compliance with any such statutes,
regulations, rules, judgments, decrees, orders, ordinances or other laws, and
the Company is not aware of any existing circumstances which are likely to
result in material violations of any of the foregoing.
ARTICLE II.
SALE AND DELIVERY OF SECURITIES
2.1. SALE AND DELIVERY OF SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to issue and
sell through the Agent, subject to Section 3.1(h), as exclusive Agent, and
the Agent agrees to sell, as agent for the Company, on a best efforts basis,
up to the Maximum Amount of Stock during a maximum of 52 Sales Periods (as
hereinafter defined) on the terms set forth herein; provided, however, that
the Company shall not be obligated to issue and sell, and the Agent shall not
be obligated to use its best efforts to sell, Stock if the Stock is then
trading on the Trading Market (as defined below) at a price (after deduction
of the Agent's Compensation (as defined below)) lower than the Minimum Price
(as defined below). "Minimum Price" means the price per share determined by
the Company from time to time in its sole discretion and which is
communicated to the Agent by telephone and confirmed promptly by telecopy,
each such price to become effective upon receipt of such notice by the Agent
and to apply to sales made thereafter.
The Company shall open and maintain a trading account (the "Trading
Account") at a clearing agent designated by the Agent (the "Clearing Agent")
to facilitate the transactions contemplated by this Agreement. The Agent
shall effect any sales of the Stock from such account. The Company shall
deliver (or cause its transfer agent to deliver) shares of the Stock to such
account to settle any such sales. Proceeds from such sales shall be
collected in the Trading Account.
The Stock, up to the Maximum Amount, is to be sold during one or more
periods each consisting of five consecutive calendar days, commencing on
Monday and ending on Friday (each a "Sales Period"), or such lesser number of
days as shall be agreed to by the Company and the Agent. Subject to the
terms and conditions hereof, the Agent shall use its best efforts to (i) sell
during each such Sales Period that number of shares as determined by the
Company from time to time in its sole discretion and which is communicated to
the Agent by telephone and confirmed
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promptly by telecopy, each such amount to become effective upon receipt of
such notice by the Agent and to apply to Sales Periods thereafter (the "Sales
Period Shares") and (ii) sell the entire Maximum Amount during the 52 Sales
Periods. The Agent shall sell the shares of Stock only by means of ordinary
brokers' transactions on the Trading Market (as hereinafter defined) for the
Stock at market prices prevailing at the time of sale. The Trading Market
shall be defined as (i) the New York Stock Exchange, Inc., the American Stock
Exchange or any national securities exchange on which the Stock is admitted
for trading or (ii) the facilities of the Nasdaq Stock Market ("Nasdaq").
The Company or the Agent may, upon notice to the other party hereto by
telephone (confirmed promptly by telecopy), at any time and from time to
time, suspend the offering of Stock hereunder until the Company notifies the
Agent in writing to resume sales under this Agreement; provided, however,
that such suspension or termination shall not affect or impair the parties'
respective obligations with respect to shares of Stock sold hereunder prior
to the giving of such notice. The Agent shall not solicit or arrange for the
solicitation of customers' orders in anticipation of or in connection with
such transactions, nor shall it sell short as principal shares of Stock
except in connection with customary market making activities in the Company's
outstanding securities.
The net proceeds (the "Net Proceeds") to the Company for the Sales
Period Shares sold by the Agent during a Sales Period will equal .98 times
the Sales Proceeds. Sales Proceeds shall mean, for a given Sales Period, the
aggregate gross sales proceeds for the sale of Sales Period Shares, minus any
fees imposed by any governmental or self-regulatory organization with respect
to such sales. The compensation payable by the Company to the Agent with
respect to the sale of Sales Period Shares sold hereunder (the "Agent's
Compensation") shall equal .02 times the Sales Proceeds.
The Agent shall provide written confirmation to the Company on the
business day following the final day of each Sales Period during which sales
of Sales Period Shares are made setting forth, with regard to such Sales
Period, the dates included in the Sales Period, the number of Sales Period
Shares sold, the gross proceeds from the sale of such shares, any fees
imposed by any governmental or self-regulatory organization, the Sales
Proceeds, the Agent's Compensation and the Net Proceeds to the Company.
The Company shall effect the delivery of the applicable number of shares
of Stock to the Clearing Agent's account at The Depository Trust Corporation
on or before the settlement date of each sale hereunder. Proceeds from the
sale of Stock shall be available in the Trading Account on the third business
day following each sale of Stock hereunder or such later date on which the
Clearing Agent actually effects the settlement of such sale (each a "Closing
Date"). The Company shall pay the Agent's compensation, in immediately
available funds, or the Agent may direct the Clearing Agent to withhold such
funds from the Clearing Agent's account and pay the same to the Agent, on
each Closing Date.
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On each Closing Date, the Company shall be deemed to have affirmed each
representation, warranty, covenant and other agreement contained in the
Agreement. Any obligation of the Agent to use its best efforts to sell the
Stock shall be subject to the continuing accuracy of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the continuing satisfaction of the additional
conditions specified in Article IV of this Agreement.
ARTICLE III.
COVENANTS OF THE COMPANY
3.1. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Agent and the Company that:
(a) During the period in which a prospectus relating to the Stock is
required to be delivered under the Act, the Company will notify the Agent
promptly of the time when any subsequent amendment to the Registration
Statement has become effective or any subsequent supplement to the Prospectus
has been filed and of any request by the Commission for any amendment or
supplement to the Registration Statement or Prospectus or for additional
information; it will prepare and file with the Commission, promptly upon the
Agent's request, any amendments or supplements to the Registration Statement
or Prospectus that, in the Agent's reasonable opinion, may be necessary or
advisable in connection with the distribution of the Stock by the Agent; the
Company will not file any amendment or supplement to the Registration
Statement or Prospectus (other than any prospectus supplement relating to the
offering of other securities (including, without limitation, common stock not
included in an Delayed Offering of Equity Securities, as defined below)
registered under the Registration Statement) unless a copy thereof has been
submitted to the Agent a reasonable period of time before the filing (which
in the case of a prospectus supplement filed under Rule 424(b) may be the
date of filing where necessary) and the Agent has not reasonably objected
thereto; and the Company will cause each amendment or supplement to the
Prospectus to be filed with the Commission as required pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations or, in the
case of any document to be incorporated therein by reference, to be filed
with the Commission as required pursuant to the Exchange Act, within the time
period prescribed.
(b) The Company will advise the Agent, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement, of the
suspension of the qualification of the Stock for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for any
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<PAGE>
such purpose; and it will promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such a stop order
should be issued.
(c) Within the time during which a prospectus relating to the Stock is
required to be delivered under the Act, the Company will comply as far as it
is able with all requirements imposed upon it by the Act and by the Rules and
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Stock as contemplated by the
provisions hereof and the Prospectus. If during such period any event occurs
as a result of which the Prospectus as then amended or supplemented or any
document that is deemed to be incorporated by reference in the Prospectus
would include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or Prospectus or
any document that is deemed to be incorporated by reference in the
Registration Statement or Prospectus to comply with the Act, the Company will
promptly notify the Agent to suspend the offering of Stock during such period
and the Company will amend or supplement the Registration Statement or
Prospectus or any document that is deemed to be incorporated by reference in
the Registration Statement or Prospectus (at the expense of the Company) so
as to correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify the Stock for sale
under the securities laws of such jurisdictions as the Agent designates and
to continue such qualifications in effect so long as required for the
distribution of the Stock, except that the Company shall not be required in
connection therewith to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction.
(e) The Company will furnish to the Agent and its counsel (at the
expense of the Company) copies of the Registration Statement, the Prospectus
(including all documents incorporated by reference therein) and all
amendments and supplements to the Registration Statement or Prospectus that
are filed with the Commission during the period in which a prospectus
relating to the Stock is required to be delivered under the Act, in each case
as soon as available and in such quantities as the Agent may from time to
time reasonably request and, in the case when the Trading Market is a
national securities exchange, the Company will also furnish copies of the
Prospectus to such exchange in accordance with Rule 153 of the Rules and
Regulations.
(f) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than 15 months after the
end of the Company's current fiscal quarter, an earnings statement (which
need not be audited) covering a 12-month period that satisfies the provisions
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations.
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<PAGE>
(g) The Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay all of its expenses
incident to the performance of its obligations hereunder (including, but not
limited to, any transaction fees imposed by any governmental or
self-regulatory organization with respect to transactions contemplated by
this Agreement and any blue sky fees) and will pay the expenses of printing
all documents relating to the offering.
(h) Unless this Agreement is terminated by the Agent or is terminated
by the Company for "cause" (as hereinafter defined), the Company agrees not
to engage in, or enter into any agreement with any other party to act as
underwriter for, any offering of securities involving a program similar, as
reasonably determined by the Agent, to the Agent's DOCS-SM- transaction
contemplated by this Agreement (a "Delayed Offering of Equity Securities"),
other than a dividend reinvestment or stock purchase plan, until the earlier
date to occur (the "Non-Exclusivity Date") of (i) the sale by the Agent of an
aggregate of 375,000 shares of Stock under this Agreement and (ii) the date
one year from the date of this Agreement. If, during the two-year period
following the Non-Exclusivity Date, this Agreement is terminated by the
Company without cause or terminates pursuant to Section 7.2, the Company
desires to engage another party with respect to a Delayed Offering of Equity
Securities, the Company shall deliver to the Agent a written summary of the
material terms and conditions of such Delayed Offering of Equity Securities.
If, within 15 days of delivery of such written summary, the Agent modifies
its program such that, in the reasonable determination of the Company, the
Agent's program is at least as beneficial to the Company as is the other
Delayed Offering of Equity Securities, then the Company shall maintain its
exclusive arrangement with the Agent (subject to submissions, from time to
time, of other Delayed Offering of Equity Securities and the Company's and
the Agent's respective rights to terminate this Agreement pursuant to Article
VII hereof); if the Agent does not so modify its program, the Company shall
be able to engage such other party in connection with such Delayed Offering
of Equity Securities.
(i) The Company will apply the net proceeds from the sale of the Stock
as set forth in the Prospectus.
(j) The Company will not, directly or indirectly, offer or sell any
common shares of beneficial interest (other than the Stock) or securities
convertible into or exchangeable for, or any rights to purchase or acquire,
common shares of beneficial interest during the period from the date of this
Agreement through the final Closing Date for the sale of Stock hereunder
without (a) giving the Agent at least three business days' prior written
notice specifying the nature of the proposed sale and the date of such
proposed sale and (b) suspending activity under this program for such period
of time as may be determined by the Company in its sole discretion; provided,
however, that no such notice and suspension shall be required in connection
with the Company's issuance or sale of (i) common shares of beneficial
interest pursuant to any employee or director stock
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<PAGE>
option or benefits plan, stock ownership plan, dividend reinvestment or stock
purchase plan now in effect as such plans may be amended from time to time,
and (ii) common shares of beneficial interest issuable upon conversion of
securities or the exercise of warrants, options or other rights in effect or
outstanding on the date hereof.
(k) The Company will, at any time during the term of this Agreement, as
supplemented from time to time, advise the Agent immediately after it shall
have received notice or obtain knowledge thereof, of any information or fact
that would alter or affect any opinion, certificate, letter and other
document provided to the Agent pursuant to Article IV herein.
(l) Each time that the Registration Statement or the Prospectus shall
be amended or supplemented, the Company shall furnish or cause to be
furnished to the Agent forthwith a certificate dated the date of filing with
the Commission of such supplement or the date of effectiveness of such
amendment, as the case may be, in form satisfactory to the Agent to the
effect that the statements contained in the certificate referred to in
Section 4.1(f) hereof which were last furnished to the Agent are true and
correct at the time of such amendment or supplement as though made at and as
of such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in said Section 4.1(f), modified as necessary to
relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such certificate.
(m) Each time that the Registration Statement or the Prospectus is
amended or supplemented, the Company shall furnish or cause to be furnished
forthwith to the Agent and to counsel to the Agent (1) a written opinion of
Ungaretti & Harris, counsel to the Company ("Company Counsel"), or other
counsel satisfactory to the Agent, dated the date of filing with the
Commission of such supplement or the date of effectiveness of such amendment,
as the case may be, in form and substance satisfactory to the Agent, of the
same tenor as the opinion referred to in Section 4.1(d) hereof, but modified
as necessary to relate to the Registration Statement and the Prospectus as
amended and supplemented to the time of delivery of such opinion.
(n) Each time that the Registration Statement or the Prospectus shall
be amended or supplemented to include additional amended financial
information or there is filed with the Commission any document incorporated
by reference into the Prospectus which contains additional amended financial
information, the Company shall cause Coopers & Lybrand, or other independent
accountants satisfactory to the Agent, forthwith to furnish the Agent a
letter, dated the date of effectiveness of such amendment, or the date of
filing of such supplement or other document with the Commission, as the case
may be, in form satisfactory to the Agent, of the same tenor as the letter
referred to in Section 4.1(e) hereof but modified to relate to the
Registration Statement and the Prospectus, as amended and supplemented to the
date of such letter.
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(o) The Company shall use its best efforts to list, subject to notice
of issuance, the Stock on the applicable Trading Market.
ARTICLE IV.
CONDITIONS OF THE AGENT'S OBLIGATIONS
4.1. CONDITIONS OF AGENT'S OBLIGATIONS. The obligations of the Agent to
sell the Stock as provided herein shall be subject to the accuracy, as of the
date hereof, and as of each Closing Date for any Sales Period contemplated
under this Agreement, of the representations and warranties of the Company
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall
have been instituted or, to the knowledge of the Company or the Agent,
threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the Agent's
satisfaction.
(b) The Agent shall not have advised the Company that the Registration
Statement or Prospectus, or any amendment or supplement thereto, contains an
untrue statement of fact that in the Agent's reasonable opinion is material,
or omits to state a fact that in the Agent's reasonable opinion is material
and is required to be stated therein or is necessary to make the statements
therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been any material change,
on a consolidated basis, in the capital stock of the Company and its
subsidiaries, or any material adverse change, or any development that may
reasonably be expected to cause a material adverse change, in the condition
(financial or other), business, prospects, net worth or results of operations
of the Company and its subsidiaries, or any change in the rating assigned to
any securities of the Company.
(d) The Agent shall have received at the date of the commencement of
the first Sales Period hereunder (the "Commencement Date") and at every other
date specified in Section 3.1(m) hereof, opinions of Company Counsel, dated
as of the Commencement Date and dated as of such other date, respectively, to
the effect that:
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(i) The Company has been duly formed and is validly existing as a
real estate investment trust in good standing under the laws of its
jurisdiction of formation, has full power and authority to conduct its
business as described in the Registration Statement and Prospectus and
is duly qualified to do business in each jurisdiction set forth on a
schedule thereto; to their knowledge, such jurisdictions are the only
jurisdictions in which the Company's ownership or leasing of real
property or conduct of its business requires such qualification;
(ii) Each subsidiary of the Company has been duly incorporated or
formed and is validly existing as a corporation, or partnership or real
estate investment trust, as the case may be) in good standing under the
laws of the jurisdiction of its incorporation or formation, has power
and authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement and Prospectus, and
is duly qualified to transact business and is in good standing in each
jurisdiction set forth on a schedule thereto; to their knowledge, such
jurisdictions are the only jurisdictions in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business; all of the issued outstanding capital stock (or
other equity interests) of each such subsidiary has been duly authorized
and validly issued, is fully paid and nonassessable, and free and clear
of any mortgage, pledge, lien, encumbrance, claim or equity;
(iii) The shares of Stock have been duly and validly authorized,
and, when issued and delivered to and paid for by the purchasers thereof
pursuant to this Agreement, will be fully paid and nonassessable and
conform to the description thereof in the Prospectus; and the
shareholders of the Company have no preemptive rights with respect to
the Stock; all corporate action required to be taken for the
authorization, issue and sale of the Stock has been validly and
sufficiently taken; and the shares of Stock are the subject of an
effective registration statement permitting their sale in the manner
contemplated by this Agreement;
(iv) The Registration Statement has become effective under the Act;
(if applicable, the filing of the Prospectus Supplements pursuant to
Rule 424(b) have been made in the manner and within the time period
required by Rule 424(b)); to the knowledge of such counsel no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or
threatened by the Commission;
(v) The Registration Statement, when it became effective, and the
Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission (and at each Closing Date on or prior
to the date of the opinion), complied as to form in
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<PAGE>
all material respects with the requirements of the Act and the Rules and
Regulations; and the documents incorporated by reference in the
Registration Statement or Prospectus or any amendment or supplement
thereto, when filed with the Commission under the Exchange Act, complied
as to form in all material respects with the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder;
(vi) The description in the Registration Statement and Prospectus
of statutes, legal and governmental proceedings, contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown; and such counsel do not know of any
statutes or legal or governmental proceedings required to be described
in the Prospectus that are not described as required, or of any
contracts or documents of a character required to be described in the
Registration Statement or Prospectus (or required to be filed under the
Exchange Act if upon such filing they would be incorporated by reference
therein) or to be filed as exhibits to the Registration Statement that
are not described and filed as required;
(vii) This Agreement has been duly authorized, executed and delivered
by the Company;
(viii) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated herein
by the Company do not and will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, any
agreement or instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which it is bound or to which
any of the property of the Company or any of its subsidiaries is subject
except for such breaches or defaults that would not in the aggregate
have a material adverse effect on the Company's ability to perform its
obligations under this Agreement or on the condition, financial or
otherwise, or the earnings business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, nor will such
action result in the violation of the Company's charter or by-laws, or
any statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of its properties; and no
consent, approval, authorization or order of, or filing with, any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the
issuance or sale of the Stock by the Company, except such as have been
obtained under the Act and such as may be required under state
securities or blue sky laws in connection with the sale and distribution
of the Stock by the Agent;
(ix) Except for permits and similar authorizations required under
the securities or blue sky laws of certain states, no consent, waiver,
approval, authorization or other
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<PAGE>
order of any regulatory body, administrative agency or other
governmental body is legally required for the sale of the Stock by the
Agent as contemplated hereby and by the Prospectus; and
(x) Based upon review of such documents, certificates and records
as such counsel has deemed necessary to express its opinion, upon its
discussions with management of the Company, independent accountants for
the Company and with certain shareholders of the Company, and based upon
the facts set forth in the Registration Statement, certain assumptions
and certain representations made to it by the Company's management and
by certain shareholders, such counsel is of the view that, as of the
date of its opinion, the Company's form of organization and its share
ownership is such as to enable the Company to meet the requirements of
the Code for qualification as a real estate investment trust thereunder
and that the Company's income, assets and method of operations have
allowed it to qualify as a real estate investment trust for its taxable
year ended December 31, 1994 and all years thereafter, and its currently
contemplated future assets, income and method of operations should put
it in a position to qualify to be treated as a real estate investment
trust for the calendar year 1998;
In addition, such counsel shall state that such counsel has no reason to
believe that either the Registration Statement, at the time it (including
each Post-Effective Amendment thereto) became effective, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading
or that the Prospectus and any amendments or supplements thereto, on the date
of filing thereof with the Commission and at the Commencement Date and at
each Closing Date on or prior to the date of the opinion, included an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; it being understood that such counsel need
express no opinion as to the financial statements or other financial and
statistical data included in any of the documents mentioned in this paragraph.
(e) At the Commencement Date and at such other dates specified in
Section 3.1(n) hereof, the Agent shall have received a letter from Coopers &
Lybrand, independent public accountants for the Company, or other independent
accountants satisfactory to the Agent, dated the date of delivery thereof,
substantially in the form attached hereto as Exhibit I and otherwise in form
and substance satisfactory to Agent.
(f) The Agent shall have received from the Company a certificate, or
certificates, signed by the Chairman of the Board, the President or a Vice
President and by the principal financial or accounting officer of the
Company, dated as of the Commencement Date and dated as of the first business
day of each calendar month thereafter (each a "Certificate Date"), to the
effect that, to the best of their knowledge based upon reasonable
investigation:
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(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made at and as of the Commencement
Date or the Certificate Date (as the case may be), and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Commencement Date
and each such Certificate Date (as the case may be);
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceeding for that purpose has been
instituted or, to the knowledge of such officer after due inquiry, is
threatened, by the Commission;
(iii) Since the date of this Agreement there has occurred no event
required to be set forth in an amendment or supplement to the
Registration Statement or Prospectus that has not been so set forth and
there has been no document required to be filed under the Exchange Act
and the rules and regulations of the Commission thereunder that upon
such filing would be deemed to be incorporated by reference in the
Prospectus that has not been so filed; and
(iv) Since the date of this Agreement, there has not been any
material adverse change, on a consolidated basis, in the business,
financial condition or results of operations of the Company and its
subsidiaries considered as one enterprise which has not been described
in an amendment or supplement to the Registration Statement or
Prospectus (directly or by incorporation).
In addition, on each Certificate Date the certificate shall also
reconfirm that the shares of Stock sold during each Sales Period in the
immediately preceding month were duly and validly authorized by the
Company and that all corporate action required to be taken for the
authorization, issuance and sale of such Stock had been validly and
sufficiently taken.
(g) At the Commencement Date and on each Closing Date, the Company
shall have furnished to the Agent such appropriate further information,
certificates and documents as the Agent may reasonably request.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form
and substance to the Agent. The Company will furnish the Agent with such
conformed copies of such opinions, certificates, letters and other documents
as the Agent shall reasonably request.
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ARTICLE V.
INDEMNIFICATION AND CONTRIBUTION
5.1.(a) The Company agrees to indemnify and hold harmless the Agent and
each person, if any, who controls the Agent within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 5(c) hereof, the reasonable fees and
disbursements of counsel chosen by the Agent), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Agent expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
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(b) The Agent agrees to indemnify and hold harmless the Company and its
directors and each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Article, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any amendments thereto)
or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Agent expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Any indemnified party that proposes to assert the right to be
indemnified under this Article VI will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is
to be made against an indemnifying party or parties under this Article V,
notify each such indemnifying party of the commencement of such action,
enclosing a copy of all papers served, but the omission so to notify such
indemnifying party will not relieve the indemnifying party from (i) any
liability that it might have to any indemnified party otherwise than under
this Article V and (ii) any liability that it may have to any indemnified
party under the foregoing provision of this Article V unless, and only to the
extent that, such omission results in the forfeiture of substantive rights or
defenses by the indemnifying party. If any such action is brought against
any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and,
to the extent that it elects by delivering written notice to the indemnified
party promptly after receiving notice of the commencement of the action from
the indemnified party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel satisfactory to
the indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying
party will not be liable to the indemnified party for any legal or other
expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection
with the defense. The indemnified party will have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of
such counsel will be at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been authorized in writing
by the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to it
or other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf
of the indemnified party) or (4) the indemnifying party has not in fact
employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of
which cases the reasonable fees,
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disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party
or parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party
or parties. All such fees, disbursements and other charges will be
reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or
claim effected without its written consent (which consent will not be
unreasonably withheld).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Article V is applicable in accordance with its terms but
for any reason is held to be unavailable from the Company or the Agent, the
Company and the Agent will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and
other expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but
after deducting any contribution received by the Company from persons other
than the Agent, such as persons who control the Company within the meaning of
the Act, officers of the Company who signed the Registration Statement and
directors of the Company, who also may be liable for contribution) to which
the Company and the Agent may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the
one hand and the Agent on the other. The relative benefits received by the
Company on the one hand and the Agent on the other hand shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total compensation
(before deducting expenses) received by the Agent from the sale of Stock on
behalf of the Company. If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect
not only the relative benefits referred to in the foregoing sentence but also
the relative fault of the Company, on the one hand, and the Agent, on the
other, with respect to the statements or omission which resulted in such
loss, claim, liability, expense or damage, or action in respect thereof, as
well as any other relevant equitable considerations with respect to such
offering. Such relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Agent, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Agent agree that it would not be
just and equitable if contributions pursuant to this Section 5(d) were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, liability, expense or damage, or action in respect thereof, referred
to above in this Section 5(d) shall be deemed to include, for the purpose of
this Section 5(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the
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foregoing provisions of this Section 5(d), the Agent shall not be required to
contribute any amount in excess of the amount by which the total actual sales
price at which Stock sold by the Agent exceeds the amount of any damages that
the Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and no person found
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section
5(d), any person who controls a party to this Agreement within the meaning of
the Act will have the same rights to contribution as that party, and each
officer of the Company who signed the Registration Statement will have the
same rights to contribution as the Company, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action against such party in respect
of which a claim for contribution may be made under this Section 5(d), will
notify any such party or parties from whom contribution may be sought, but
the omission so to notify will not relieve that party or parties from whom
contribution may be sought from any other obligation it or they may have
under this Section 5(d). No party will be liable for contribution with
respect to any action or claim settled without its written consent (which
consent will not be unreasonably withheld).
(e) The indemnity and contribution provided by this Article V shall not
relieve the Company and the Agent from any liability the Company and the
Agent may otherwise have (including, without limitation, any liability the
Agent may have for a breach of its obligations under Article II hereof).
ARTICLE VI.
REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY
6.1. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the Agent
contained in Article V hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Agent or
any controlling persons, or the Company (or any of their officers, directors
or controlling persons), and shall survive delivery of and payment for the
Stock.
ARTICLE VII.
TERMINATION
7.1. (a) The Agent shall have the right, by giving notice as
hereinafter specified at any time at or prior to any Closing Date, to
terminate this Agreement if (i) any material adverse
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change, or any development that has actually occurred and that is reasonably
expected to cause material adverse change, in the business, financial
condition or results of operations of the Company and its subsidiaries has
occurred which, in the judgment of such Agent, materially impairs the
investment quality of the Stock, (ii) the Company shall have failed, refused
or been unable, at or prior to the Closing Date, to perform any agreement on
its part to be performed hereunder, (iii) any other condition of the Agent's
obligations hereunder is not fulfilled, (iv) any suspension or limitation of
trading in the Stock on the Trading Market, or any setting of minimum prices
for trading of the Stock on such Trading Market, shall have occurred, (v) any
banking moratorium shall have been declared by Federal or New York
authorities or (vi) an outbreak or material escalation of major hostilities
in which the United States is involved, a declaration of war by Congress, any
other substantial national or international calamity or any other event or
occurrence of a similar character shall have occurred since the execution of
this Agreement that, in the judgment of the Agent, makes it impractical or
inadvisable to proceed with the completion of the sale of and payment for the
Stock to be sold by the Agent on behalf of the Company. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 3.1(g), Article V and Article VI hereof shall remain in
full force and effect notwithstanding such termination. If the Agent elects
to terminate this Agreement as provided in this Article, the Agent shall
provide the required notice as specified herein.
(b) The Company shall have the right to terminate this Agreement (i)
without cause upon ninety (90) days' prior written notice to the Agent, (ii)
if neither Todd Wyche nor Sean O'Brien is then a principal of the Agent upon
five (5) days' prior written notice to the Agent or (iii) upon thirty (30)
days' prior written notice to the Agent if during any period of sixty (60)
consecutive calendar days during which the Company has not imposed any
limitations on sales by the Agent hereunder (other than Minimum Price), the
Agent fails to sell the lesser of (x) 80% of the aggregate Sales Period
Shares for such period or (y) 8% of the reported trading volume that exceeds
the Minimum Price by $0.125 or more during such period. If the Company
terminates this Agreement pursuant to subsection (i) above, the Company shall
pay the Agent liquidated damages in an amount equal to $5,000. For purposes
of this Agreement, "cause" shall mean either of the events referred to in
(ii) or (iii) above.
Except with respect to liquidated damages as expressly set forth
above, any termination of this Agreement shall be without liability or
obligation of any party to the other party, except that Section 3.1(g),
Article V and Article VI hereof shall remain in full force and effect
notwithstanding such termination and except that upon a termination by the
Company under subsection (i) of Section 7.1(b) the provisions of Section
3.1(h) also shall remain in full force and effect notwithstanding such
termination.
7.2. Notwithstanding the provisions of Section 3.1(h) hereof, this
Agreement shall automatically terminate on the earlier of (i) the first
anniversary of the date of this Agreement and (ii) the date on which the
Maximum Amount has been sold under this agreement (such date being
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the "Permitted Termination Date"), unless the Company and the Agent agree in
writing to the contrary.
7.3. The Agent shall have the right, by giving notice as hereinafter
specified, to terminate this Agreement in its sole discretion at any time
after the earlier of (i) the first anniversary of the date of this Agreement
and (ii) the Company's engagement of another party to act as underwriter
pursuant to Section 3.1(h) hereof in connection with an Delayed Offering of
Equity Securities. Any such termination shall be without liability of any
party to any other party except that the provisions of Article 3.1(g),
Article V and Article VI hereof shall remain in full force and effect
notwithstanding such termination.
7.4. This Agreement shall remain in full force and effect unless
terminated pursuant to Section 7.1, 7.2 or 7.3 above or otherwise by mutual
agreement of the parties; provided that any such termination by mutual
agreement shall in all cases be deemed to provide that Section 3.1(g),
Article V and Article VI shall remain in full force and effect.
7.5. Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by the Agent or the Company, as the case may be.
If such termination shall occur during a Sales Period, any Sales Period
Shares shall settle in accordance with the provisions of the second to last
paragraph of Article II hereof.
ARTICLE VIII.
NOTICES
8.1. NOTICES. All notices or communications hereunder shall be in
writing and if sent to the Agent shall be mailed, delivered, telexed or
telecopied and confirmed to the Agent at Brinson Patrick Securities
Corporation, One Penn Plaza, 36th Floor, New York, New York 10119, facsimile
number (212) 453-5555, Attention: Sean O'Brien, or if sent to the Company,
shall be mailed, delivered, telexed or telecopied and confirmed to the
Company at 401 N. Michigan Avenue, Suite 3000, Chicago, IL 60611, Attention:
Paul S. Fisher. Each party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose.
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ARTICLE IX.
MISCELLANEOUS
9.1. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Company and the Agent and their respective successors and
the controlling persons, officers and directors referred to in Article V
hereof, and no other person will have any right or obligation hereunder.
9.2. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and supersedes all other prior and contemporaneous agreements and
undertakings, both written and oral, among the parties hereto with regard to
the subject matter hereof.
9.3. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
9.4. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth the understanding between the
Company and the Agent, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement
between the Company and the Agent. Alternatively, the execution of this
Agreement by the Company and its acceptance by or on behalf of the Agent may
be evidenced by an exchange of telegraphic or other written communications.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
CENTERPOINT PROPERTIES TRUST
By: ____________________________
Name:
Title:
BRINSON PATRICK SECURITIES CORPORATION
By: ____________________________
Name:
Title:
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<PAGE>
BY-LAWS*
OF
CENTERPOINT PROPERTIES TRUST
ARTICLE I
OFFICES
SECTION 1.1 MARYLAND REGISTERED OFFICE. The trust shall continuously
maintain in the State of Maryland a registered office and registered agent
whose office is identical with such registered office.
SECTION 1.2 OTHER OFFICES. The trust may have other offices within
any other state of the United States, including, without limitation, the
State of Illinois.
ARTICLE II
SHAREHOLDERS
SECTION 2.1 ANNUAL MEETING. An annual meeting of the shareholders
shall be held each year for the purpose of electing trustees and for the
transaction of such other business as may come before the meeting. The date
of the annual meeting shall be set by the board of trustees on a date
following the availability of the trust's audited financial statements of the
preceding year but in no event later than May 31.
SECTION 2.2 SPECIAL MEETINGS. Special meetings of the shareholders
may be called either by the President or the Board of Trustees. Special
meetings of shareholders shall also be called by the Secretary upon the
written request of the holders of shares entitled to cast not less than
66-2/3% of all the votes entitled to be cast at such meeting. Such request
shall state the purpose of such meeting and the matters proposed to be acted
on at such meeting. The Secretary shall inform such shareholders of the
reasonably estimated cost of preparing and mailing notice of the meeting and,
upon payment by such shareholders to the trust of such costs, the Secretary
shall give notice to each shareholder entitled to notice of the meeting.
SECTION 2.3 PLACE OF MEETING. The board of trustees may designate
any place the place of meeting for any annual meeting or for any special
meeting called by the board of trustees. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be at the
main offices of the trust in Chicago, Illinois.
SECTION 2.4 INFORMAL ACTION BY SHAREHOLDERS. Any action required to
be taken at a meeting of the shareholders, or any other action which may be
taken at a meeting of the shareholders, if a consent in writing, setting
forth such action, is signed by each shareholder entitled to vote on the
matter and any other shareholder entitled to notice of a meeting of the
shareholders (but not to vote thereat) has waived in writing any right to
dissent from such action, and such consent and waiver are filed with the
minutes of proceedings of the shareholders.
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*As amended by amendments to Sections 2.2 and 3.8 and a new Section 2.15,
adopted on May 15, 1998.
<PAGE>
SECTION 2.5 NOTICE OF MEETINGS. Written notice stating the place,
date and hour of the meeting, and in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten nor more than ninety days before the date of the meeting, or in
the case of a merger, consolidation, share exchange, dissolution or sale,
lease or exchange of assets, not less than twenty nor more than sixty days
before the meeting, either personally or by mail, by or at the direction of
the president, or the board of trustees, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to
be delivered when deposited with the United States Postal Service, addressed
to the shareholder at his address as it appears on the records of the trust,
with postage thereon prepaid. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken.
SECTION 2.6 FIXING OF RECORD DATE. For the purpose of determining
the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to receive payment of any
dividend, or any rights in respect of any change, conversion or exchange of
shares or for the purpose of any other lawful action, the board of trustees
of the trust may fix in advance a record date which shall not be more than
sixty days and, for a meeting of shareholders, not less than twenty days, or
in the case of a merger, consolidation, share exchange, dissolution or sale,
lease or exchange of assets, not less than twenty days, immediately preceding
the date of such meeting. If no record date is fixed, the record date for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders shall be the date on which notice of the meeting is
mailed, and the record date for the determination of shareholders for any
other purpose shall be the date on which the board of trustees adopts the
resolution relating thereto. A determination of shareholders of record
entitled to notice of or to vote at a meeting of shareholders shall apply to
any adjournment of the meeting.
SECTION 2.7 SHAREHOLDERS' LIST. The officer or agent having charge
of the transfer books for shares of the trust shall make, within twenty days
after record date or twenty days before each meeting of shareholders,
whichever is earlier, a complete list of the shareholders entitled to vote at
such meeting, arranged in alphabetical order, showing the address of and the
number of shares registered in the name of the shareholder, which list, for a
period of twenty days prior to such meeting, shall be kept on file at the
registered office of the Trust and shall be open to inspection by any
shareholder for any purpose germane to the meeting, at any time during usual
business hours. Such list shall also be produced and kept open at the time
and place of the meeting and may be inspected by any shareholder during the
whole time of the meeting. The original share ledger or transfer book, or a
duplicate thereof kept in the State of Illinois, shall be prima facie
evidence as to who are the shareholders entitled to examine such list or
share ledger or transfer book or to vote at any meeting of shareholders.
SECTION 2.8 VOTING OF SHARES. A plurality of all the votes cast at a
meeting of shareholders duly called and at which a quorum is present shall be
sufficient to elect a trustee. Each share may be voted for as many
individuals as there are trustees to be elected and for whose election the
share is entitled to vote. No shareholder shall have the right to cumulate
his votes in elections for trustees. A majority of the votes cast at a
meeting of shareholders duly called and at which a quorum is present shall be
sufficient to approve any other matter which may properly come before the
meeting, unless a greater vote is required by statute or by the declaration
of trust. Except as otherwise provided in the declaration of trust or these
by-laws, each outstanding share, regardless of class, shall be entitled to
one vote upon each matter submitted to vote at a meeting of shareholders.
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SECTION 2.9 VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in
the name of another trust or corporation, domestic or foreign, may be voted
by such officer, agent, or proxy as the by-laws of such trust or corporation
may prescribe, or, in the absence of such provision, as the board of trustees
or directors of such trust may or corporation determine and under the law of
the state or organization of such trust or the state of incorporation of such
corporation.
(a) Shares standing in the name of a deceased person, a minor ward
or an incompetent person, may be voted by his administrator, executor,
court appointed guardian, or conservator, either in person or by proxy
without a transfer of such shares in the name of such administrator,
executor, court appointed guardian, or conservator. Shares standing in
the name of a trustee may be voted by him, either in person or by proxy.
(b) Shares standing in the name of a receiver may be voted by
such receiver, and shares held by or under the control of a receiver may
be voted by such receiver without the transfer thereof into his name if
authority so to do be contained in an appropriate order of the court by
which such receiver was appointed.
(c) A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of
the pledgee, and thereafter the pledgee shall be entitled to vote the
shares so transferred.
(d) Any number of shareholders may create a voting trust for the
purpose of conferring upon a trustee or trustees the right to vote or
otherwise represent their share, for a period not to exceed ten years,
by entering into a written voting trust agreement specifying the terms
and conditions of the voting trust, and by transferring their shares to
such trustee or trustees for the purpose of the agreement. Any such
trust agreement shall not become effective until a counterpart of the
agreement is deposited with the trust at its registered office. The
counterpart of the voting trust agreement so deposited with the trust
shall be subject to the same right of examination by a shareholder of
the trust, in person or by agent or attorney, as are the books and
records of the trust, and shall be subject to examination by any holder
of a beneficial interest in the voting trust, either in person or by
agent or attorney, at any reasonable time for any proper purpose.
(e) Shareholders may provide for the voting of their shares by
signing an agreement for that purpose. A voting agreement under this
subsection is not subject to the provisions of subsection (a) above.
(f) Shares of its own stock belonging to this trust shall not be
voted, directly or indirectly, at any meeting and shall not be counted
in determining the total number of outstanding shares at any given time,
but shares of its own stock held by it in a fiduciary capacity may be
voted and shall be counted in determining the total number of
outstanding shares at any given time.
SECTION 2.10 PROXIES. Each shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
him by proxy by signing an appointment form and delivering it to the person
so appointed, but no such proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy.
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SECTION 2.11 QUORUM. At an annual meeting of the shareholders called
for the sole purpose of electing trustees and ratifying the selection of the
trust's independent public accountants, the holders of one-third of the
outstanding shares of the trust entitled to vote, present in person or
represented by proxy, shall constitute a quorum at such annual meeting of
shareholders; provided that, if less than one-third of the outstanding shares
entitled to vote are represented at said meeting, a majority of the shares so
represented may adjourn the meeting at any time without further notice. At
any other annual meeting or any special meeting of shareholders, the holders
of a majority of the outstanding shares of the trust entitled to vote,
present in person or represented by proxy, shall constitute a quorum at such
meeting of shareholders; provided that, if less than a majority of the
outstanding shares entitled to vote are represented at said meeting, a
majority of the shares so represented may adjourn the meeting at any time
without further notice. If a quorum is present at any meeting of the
shareholders, the affirmative vote of the majority of the shares entitled to
vote represented at the meeting and entitled to vote on the matter shall be
the act of the shareholders, unless a greater vote is required under the
Declaration of Trust or Maryland law. At any adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the original meeting. Withdrawal of shareholders from any
meeting shall not cause failure of a duly constituted quorum at that meeting.
SECTION 2.12 INSPECTORS. At any meeting of shareholders, the chairman
of the meeting may, or upon request of any shareholder shall, appoint one or
more persons as inspectors for such meeting.
(a) Such inspectors shall ascertain and report the number of
shares represented at the meeting, based upon their determination of the
validity and effect of proxies; count all votes and report the results;
and do such other acts as are proper to conduct the election and voting
with impartiality and fairness to all the shareholders.
(b) Each report of an inspector shall be in writing and signed by
him or by a majority of them if there be more than one inspector acting
at such meeting. If there is more than one inspector, the report of a
majority shall be the report of the inspectors. The report of the
inspector or inspectors on the number of shares represented at the
meeting and the results of the voting shall be prima facie evidence
thereof.
SECTION 2.13 VOTING BY BALLOT. Voting on any question or in any
election may be by voice unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
SECTION 2.14 REPORTS TO SHAREHOLDERS. Prior to the annual meeting of
shareholders each year, the trustees shall deliver or cause to be delivered a
report of the business and operations of the trust during such fiscal year to
the shareholders, containing a balance sheet and a statement of income and
surplus of the trust, accompanied by the certification of an independent
certified public accountant, and such further information as the trustees may
determine is required pursuant to any law or regulation to which the trust is
subject. A signed copy of the annual report and the accountant's certificate
shall be filed by the trustees with the State Department of Assessments and
Taxation of Maryland, and with such other governmental agencies as may be
required by law and as the trustees may deem appropriate.
SECTION 2.15 OPT-OUT ELECTION. The provisions of Sections 3-701
through 3-709 of the Corporations and Associations Article of the Annotated
Code of Maryland shall not be applicable to the Company or its operations.
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ARTICLE III
TRUSTEES
SECTION 3.1 GENERAL POWERS. The business and affairs of the trust
shall be managed by, or under the direction of, its board of trustees.
SECTION 3.2 NUMBER, TENURE AND QUALIFICATIONS. The number of
trustees of the trust shall be not less than three (3) and not more than ten
(10), as determined from time to time by the then acting board of trustees.
Each trustee shall hold office until the next annual meeting of shareholders,
thereafter, until his successor shall have been elected. Trustees need not
be residents of Maryland or Illinois or shareholders of the trust. The
number of trustees may be increased or decreased from time to time as
provided by the declaration of trust by the amendment of this section; but no
decrease shall have the effect of shortening the term of any incumbent
trustee. A trustee may resign at any time by giving written notice to the
board of trustees, its chairman, or to the president or secretary of the
trust. A resignation is effective when the notice is given unless the notice
specifies a future date. The pending vacancy may be filled before the
effective date, but the successor shall not take office until the effective
date. A majority of the number of trustees of the Board of Trustees shall be
independent (non-management) trustees of the trust.
SECTION 3.3 QUORUM. A majority of the number of trustees fixed by
these by-laws shall constitute a quorum for transaction of business at any
meeting of the board of trustees, provided that if less than a majority of
such number of trustees are present at said meeting, a majority of the
trustees present may adjourn the meeting at any time without further notice.
SECTION 3.4 MANNER OF ACTING. The act of the majority of the
trustees present at a meeting at which a quorum is present shall be the act
of the board of trustees, unless the act of a greater number is required by
statute, these by-laws, or the declaration of trust.
SECTION 3.5 REGULAR MEETINGS. A regular meeting of the board of
trustees shall be held without other notice than this By-Law, immediately
after the annual meeting of shareholders. The board of trustees may provide,
by resolution, the time and place for holding of additional regular meetings
without other notice than such resolution.
SECTION 3.6 SPECIAL MEETINGS. Special meetings of the board of
trustees may be called by or at the request of the president or any one or
more trustees. The person or persons authorized to call special meetings of
the board of trustees may fix any place as the place for holding any special
meeting of the board of trustees called by them.
SECTION 3.7 NOTICE. Notice of any special meeting shall be given at
least ten days previous thereto by written notice to each trustee at his
business address. If mailed, such notice shall be deemed to be delivered
when deposited with the United States Postal Service so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegram
company. The attendance of a trustee at any meeting shall constitute a
waiver of notice of such meeting, except where a trustee attends a meeting
for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of
the board of trustees need be specified in the notice or waiver of notice of
such meeting.
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SECTION 3.8 VACANCIES. If for any reason any or all of the trustees
cease to be trustees, such event shall not terminate the trust or affect
these By-Laws or the powers of the trustees remaining hereunder (even if
fewer than three trustees remain). Any vacancy occurring in the Board of
Trustees, and any trusteeship to be filled by reason of an increase in the
number of trustees, may be filled by (1) election to an annual meeting of
shareholders, or (2) by the remaining members of the Board of Trustees. A
trustee elected by the shareholders to fill a vacancy shall hold office for
the balance of the term to which he or she was elected. A trustee appointed
to fill a vacancy shall serve until the next meeting of shareholders at which
trustees are to be elected.
SECTION 3.9 REMOVAL OF TRUSTEES. One or more of the trustees may be
removed, with or without cause, at a meeting of shareholders by the
affirmative vote of the holders of a majority of the outstanding shares then
entitled to vote at an election of trustees, except as follows:
(a) No trustee shall be removed at a meeting of shareholders
unless the notice of such meeting shall state that a purpose of the
meeting is to vote upon the removal of one or more trustees named in the
notice. Only the named trustee or trustees may be removed at such
meeting.
(b) If a trustee is elected by a class or series of shares, he or
she may be removed only by the shareholders of that class or series.
In addition, one or more of the trustees may be removed, with or without
cause, by the board of trustees upon the affirmative vote of a majority of
the then acting trustees.
SECTION 3.10 COMMITTEES OF TRUSTEES. The board of trustees may, by
resolution or resolutions adopted by a majority of the number of trustees
fixed by the by-laws or otherwise, designate one or more committees, each
committee to consist of one or more of the trustees of the trust. The board
may designate one or more trustees as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the resolution of
the board, shall have and may exercise all of the powers and authority of the
board of trustees in the management of the business and affairs of the trust,
and may authorize the seal of the trust to be affixed to all papers which may
require it; but no such committee shall have the power of authority in
reference to amending the declaration of trust; adopting an agreement of
merger or consolidation; recommending to the shareholders the sale, lease or
exchange of all or substantially all of the trust's property and assets;
recommending to the shareholders a dissolution of the trust or a revocation
of a dissolution; recommending to the shareholders any other action which
requires shareholder approval; amending the by-laws of the trust; declaring a
dividend or authorizing the issuance of distributions on stock; or issue
stock other than pursuant to a stock option or similar compensation plan.
Such committee or committees shall have such name or names as may be
determined by the board of trustees. The committees shall keep regular
minutes of their proceedings and report the same to the full board of
trustees when required.
SECTION 3.11 ACTION WITHOUT A MEETING. Unless specifically prohibited
by the declaration of trust or these by-laws, any action required to be taken
at a meeting of the board of trustees, or any other action which may be taken
at a meeting of the board of trustees, or of any committee thereof may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all the trustees entitled to vote with respect to
the subject matter thereof, or by all the members of such committee, as the
case may be. Any such consent signed by all the trustees or all the members
of the committee shall have the same effect as a unanimous vote.
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SECTION 3.12 COMPENSATION. The board of trustees, by the affirmative
vote of a majority of trustees then in office, and irrespective of any
personal interest of any of its members, shall have authority to establish
reasonable compensation of all trustees for services to the trust as
trustees, officers, or otherwise. By resolution of the board of trustees,
the trustees may be paid their expenses, if any, of attendance at each
meeting of the board. No such payment previously mentioned in this section
shall preclude any trustee from serving the trust in any other capacity and
receiving compensation therefor. Members of committees of the board may be
allowed like compensation for attending committee meetings.
SECTION 3.13 PRESUMPTION OF ASSENT. A trustee of the trust who is
present at a meeting of the board of trustees at which action on any
corporate matter is taken shall be conclusively presumed to have assented to
the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the secretary of the
trust immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a trustee who voted in favor of such action.
SECTION 3.14 LOSS OF DEPOSITS. No trustee shall be liable for any
loss which may occur by reason of the failure of the bank, trust company,
savings and loan association or other institution with whom money or shares
have been deposited.
SECTION 3.15 SURETY BONDS. Unless required by law, no trustee shall
be obligated to give any bond or surety or other security for the performance
of any of his duties.
SECTION 3.16 RELIANCE. Each trustee, officer, employee and agent of
the trust shall, in the performance of his duties with respect to the trust,
be fully justified and protected with regard to any act or failure to act in
reliance in good faith upon the books of account or other records of the
trust, upon an opinion of counsel or upon reports made to the trust by any of
its officers or employees or consultants or by the adviser, accountants,
appraisers or other experts or consultants selected by the trustees or
officers of the trust, regardless of whether such counsel or expert may also
be a trustee.
SECTION 3.17 CERTAIN RIGHTS OF TRUSTEES. The trustees shall have no
responsibility to devote their full time to the affairs of the trust and may
engage in business activities similar to or in addition to those of or
relating to the trust.
ARTICLE IV
OFFICERS
SECTION 4.1 NUMBER. The officers of the trust shall be a chairman, a
president, a secretary, a treasurer, and any number of vice presidents (who
may be designated as executive vice presidents, senior vice presidents or
non-executive vice presidents), treasurers, assistant treasurers, assistant
secretaries or other officers as may be elected by the board of trustees or,
in the case of non-executive vice presidents, appointed by the president.
Any two or more offices may be held by the same person except that for the
offices of president and vice president.
SECTION 4.2 APPOINTMENT OR ELECTION AND TERM OF OFFICE.
Non-executive vice-presidents, if any, shall be appointed by the president
and shall serve at the pleasure of the president.
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The other officers of the trust shall be elected or appointed annually by the
board of trustees at the first meeting of the board of trustees held after
each annual meeting of shareholders. If the election of officers shall not
be held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and
filled at any meeting of the board of trustees. Each officer elected or
appointed by the Board shall hold office until his successor shall have been
duly elected and shall have qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided.
Election or appointment of an officer shall not of itself create contract
rights.
SECTION 4.3 REMOVAL. Any officer elected or appointed by the board
of trustees may be removed by the board of trustees whenever in its judgment
the best interests of the trust would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
SECTION 4.4 THE CHAIRMAN. The chairman shall be the chairman of the
board of trustees. He shall advise and counsel with the president and shall
assume such other duties as from time to time may be assigned by the board of
trustees. He shall preside at all meetings of the board of trustees and, in
the absence of the president or at the president's request, shall preside at
all meetings of the shareholders. He may execute for the trust certificates
for its shares, and any contracts, deeds, mortgages, bonds, or other
instruments which the board of trustees has authorized to be executed, and he
may accomplish such execution either under or without the seal of the trust
and either individually or with the secretary, any assistant secretary, or
any other officer thereunto authorized by the board of trustees, according to
the requirements of the form of the instrument.
SECTION 4.5 VICE CHAIRMAN. The vice chairman shall assist the
chairman in the discharge of his duties as the chairman may direct and shall
perform such other duties as from time to time may be assigned to him by the
chairman or by the board of trustees. In the absence of the chairman or in
the event of his inability or refusal to act, the vice chairman shall perform
the duties of the chairman, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the chairman. Except in those
instances in which the authority to execute is expressly delegated to another
officer or agent of the trust or a different mode of execution is expressly
prescribed by the board of trustees or these by-laws, the vice chairman may
execute for the trust certificates for its shares and any contracts, deeds,
mortgages, bonds or other instruments which the board of trustees has
authorized to be executed, and he may accomplish such execution either under
or without the seal of the trust and either individually or with the
secretary, any assistant secretary, or any other officer thereunto authorized
by the board of trustees, according to the requirements of the form of the
instrument.
SECTION 4.6 THE PRESIDENT. The president shall be the chief
executive officer of the trust. Subject to the direction and control of the
board of trustees, he shall be in charge of the business of the trust; he
shall see that the resolutions and directions of the board of trustees are
carried into effect except in those instances in which that responsibility is
specifically assigned to some other person by the board of trustees; and, in
general, he shall discharge all duties incident to the office of president
and such other duties as may be prescribed by the board of trustees from time
to time. He shall preside at all meetings of the shareholders and, in the
absence of the chairman, shall preside at all meetings of the board of
trustees. Except in those instances in which the authority to execute is
expressly delegated to another officer or agent of the trust or a different
mode of execution is expressly prescribed by the board of trustees or these
by-laws, he may execute for the trust certificates for its shares, and any
contracts, deeds, mortgages, bonds, or other instruments which the board of
trustees has authorized to be executed, and he may accomplish such execution
either under or without the seal of the trust and either individually or
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with the secretary, any assistant secretary, or any other officer thereunto
authorized by the board of trustees, according to the requirements of the
form of the instrument. He may vote all securities which the trust is
entitled to vote except as and to the extent such authority shall be vested
in a different officer or agent of the trust by the board of trustees.
SECTION 4.7 EXECUTIVE VICE-PRESIDENTS AND SENIOR VICE PRESIDENTS.
The executive vice-presidents and senior vice presidents, if any, shall
assist the president in the discharge of his duties as the president may
direct and shall perform such other duties as from time to time may be
assigned to them by the president or by the board of trustees. In the
absence of the president or in the event of his inability or refusal to act,
the executive vice-presidents (or in the event there be more than one
executive vice president, the executive vice-presidents in the order
designated by the board of trustees, or by the president if the board of
trustees has not made such a designation, or in the absence of any
designation, then in the order of seniority of tenure as executive vice
president) shall perform the duties of the president. In the absence or
inability or refusal to act of the president and any executive vice
presidents, the senior vice presidents in the order designated by the board
of trustees, or by the president if the board of trustees has not made such a
designation, or in the absence of any designation, then in the order of
seniority of tenure as senior vice president) shall perform the duties of the
president. When so acting, the executive vice presidents or senior vice
presidents, as the case may be, shall have all the powers of and be subject
to all the restrictions upon the president. Except in those instances in
which the authority to execute is expressly delegated to another officer or
agent of the trust or a different mode of execution is expressly prescribed
by the board of trustees or these by-laws, the executive vice presidents and
senior vice presidents may execute for the trust certificates for its shares
and any contracts, deeds, mortgages, bonds or other instruments which the
board of trustees has authorized to be executed, and they may accomplish such
execution either under or without the seal of the trust and either
individually or with the secretary, any assistant secretary, or any other
officer thereunto authorized by the board of trustees, according to the
requirements of the form of the instrument.
SECTION 4.8 NON-EXECUTIVE VICE PRESIDENTS. Non-executive vice
presidents shall assist the president in the discharge of his duties as the
president may direct, but shall not, unless specifically authorized by the
board of trustees, have any authority to bind or commit the trust.
SECTION 4.9 THE TREASURER. The treasurer shall be the chief
operating officer and principal accounting and financial officer of the
trust. He shall:
(a) have charge of and be responsible for the maintenance of
adequate books of account for the trust;
(b) have charge and custody of all funds and securities of the
trust, and be responsible therefore and for the receipt and disbursement
thereof; and
(c) perform all the duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him by the
president or by the board of trustees.
If required by the board of trustees, the treasurer shall give a bond
for the faithful discharge of his duties in such sum and with such surety or
sureties as the board of trustees may determine.
SECTION 4.10 THE SECRETARY. The secretary shall:
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(a) record the minutes of the shareholders' and of the board of
trustees' meetings in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these by-laws or as required by law;
(c) be custodian of the corporate records and of the seal of the
trust;
(d) keep a register of the post office address of each shareholder
which shall be furnished to the secretary by such shareholder;
(e) sign with the chairman, vice chairman, president, or an
executive vice-president or a senior vice president, or any other
officer thereunto authorized by the board of trustees, certificates for
shares of the trust, the issue of which shall have been authorized by
the board of trustees, and any contracts, deeds, mortgages, bonds, or
other instruments which the board of trustees has authorized to be
executed, according to the requirements of the form of the instrument,
except when a different mode of execution is expressly prescribed by the
board of trustees or these by-laws;
(f) otherwise certify that by-laws, resolutions of the
shareholders and board of trustees and committees thereof, and other
documents of the trust as true and correct copies thereof;
(g) have general charge of the share transfer books of the trust;
and
(h) perform all duties incident to the office of secretary and
such other duties as from time to time may be assigned to him or her by
the president or by the board of trustees.
SECTION 4.11 ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The
assistant treasurers and assistant secretaries shall perform such duties as
shall be assigned to them by the treasurer or the secretary, respectively, or
by the president or the board of trustees. The assistant secretaries may
sign with the chairman, vice chairman, president, or an executive
vice-president or senior vice president, or any other officer thereunto
authorized by the board of trustees, certificates for shares of the trust,
the issue of which shall have been authorized by the board of trustees, and
any contracts, deeds, mortgages, bonds, or other instruments which the board
of trustees has authorized to be executed, according to the requirements of
the form of the instrument, except when a different mode of execution is
expressly prescribed by the board of trustees or these by-laws. The
assistant treasurers shall respectively, if required by the board of
trustees, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the board of trustees shall determine.
SECTION 4.12 SALARIES. The salaries of the officers shall be fixed
from time to time by the board of trustees, and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a trustee of
the trust.
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ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 5.1 CONTRACTS. The board of trustees may authorize any
officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the trust, and
such authority may be general or confined to specific instances.
SECTION 5.2 LOANS. No loans shall be contracted on behalf of the
trust and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of trustees. Such authority may be
general or confined to specific instances.
SECTION 5.3 CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the trust shall be signed by such officer or officers, agent or
agents of the trust and in such manner as shall from time to time be
determined by resolution of the board of trustees.
SECTION 5.4 DEPOSITS. All funds of the trust not otherwise employed
shall be deposited from time to time to the credit of the trust in such
banks, trust companies or other depositories as the board of trustees may
select.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 6.1 CERTIFICATES FOR SHARES. Certificates representing
shares of the trust shall be signed by the chairman, vice chairman, president
or an executive vice-president or a senior vice president or by such officer
as shall be designated by resolution of the board of trustees and by the
secretary or an assistant secretary, and shall be sealed with the seal or a
facsimile of the seal of the trust. If both of the signatures of the
officers be by facsimile, the certificate shall be countersigned by the
trust's duly authorized registrar and transfer agent. Each certificate
representing shares shall be consecutively numbered or otherwise identified,
and shall also state the name of the person to whom issued, the number and
class of shares (with designation of series, if any), the date of issue, that
the trust is organized under Maryland law, and the par value or a statement
that the shares are without par value. If the trust is authorized and does
issue shares of more than one class or of series within a class, the
certificate shall also contain such information or statement as may be
required by law. The name and address of each shareholder, the number and
class of shares held and the date on which the certificates for the shares
were issued shall be entered on the books of the trust. The person in whose
name shares stand on the books of the trust shall be deemed the owner thereof
for all purposes as regard the trust.
SECTION 6.2 LOST CERTIFICATES. If a certificate representing shares
has allegedly been lost or destroyed the board of trustees may in its
discretion, except as may be required by law, direct that a new certificate
be issued upon such indemnification and other reasonable requirements as it
may impose.
SECTION 6.3 TRANSFERS OF SHARES. Transfers of shares of the trust
shall be recorded on the books of the trust and, except in the case of a lost
or destroyed certificate, on surrender for cancellation of the certificate
for such shares. A certificate presented for transfer must be duly endorsed
and accompanied by proper guaranty of signature and other appropriate
assurances that the endorsement is effective.
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SECTION 6.4 RESTRICTION ON TRANSFER OF SECURITIES. A restriction on
the transfer or registration of transfer of securities of the trust may be
imposed either under the declaration of trust or by these by-laws or by
agreement among any number of security holders or among such holders and the
trust. No restriction so imposed shall be binding with respect to securities
issued prior to the adoption of the restriction unless the holders of the
securities are parties to an agreement or voted in favor of the restriction.
A restriction on the transfer or registration of transfer of securities
of the trust is permitted if, without limitation, it:
(i) requires the trust or the holders of any class of securities
of the trust to consent to any proposed transfer of the restricted
securities or to approve the proposed transferee of the restricted
securities; or
(ii) prohibits the transfer of the restricted securities to
designated persons or classes of persons with designation is not
manifestly unreasonable; or
(iii) restricts transfer or registration of transfer in any
other lawful manner.
Unless noted conspicuously on the security, a restriction, even though
permitted by this section, is ineffective except against a person with actual
knowledge of the restriction.
ARTICLE VII
FISCAL YEAR
SECTION 7.1 DESIGNATION OF FISCAL YEAR. The fiscal year of the trust
shall end on December 31 of each year.
ARTICLE VIII
DIVIDENDS
SECTION 8.1 DECLARED BY TRUSTEES. The board of trustees may from
time to time declare, and the trust may pay, dividends on its outstanding
shares in the manner and upon the terms and conditions provided by law and
its declaration of trust.
ARTICLE IX
SEAL
SECTION 9.1 SEAL. The trustees may authorize the adoption of a seal
by the trust. The seal shall have inscribed thereon the name of the trust
and the year of its organization. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.
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ARTICLE X
WAIVER OF NOTICE
SECTION 10.1 WAIVER IN LIEU OF NOTICE. Whenever any notice is
required to be given under the provisions of these by-laws or under the
provisions of the declaration of trust or under the provisions of Maryland
law, a waiver thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance at any meeting shall
constitute waiver of notice thereof unless the person at the meeting objects
to the holding of the meeting because notice was not given.
ARTICLE XI
AMENDMENTS
SECTION 11.1 DETERMINED BY TRUSTEES. Unless reserved to the
shareholders by the declaration of trust or required by law, the by-laws of
the trust may be made, altered, amended or repealed solely by the board of
trustees. The by-laws may contain any provisions for the regulation and
management of the affairs of the trust not inconsistent with law or the
declaration of trust.
ARTICLE XII
INDEMNIFICATION OF OFFICERS,
TRUSTEES, EMPLOYEES AND AGENTS
SECTION 12.1 POWER TO HOLD HARMLESS. The trust shall have the power
to indemnify any person to the full extent permitted by Maryland law in
effect from time to time. Without limiting the generality of the foregoing,
the trust shall have the power, unless limited from time to time by Maryland
law, to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the trust) by reason of the fact that he
or she is or was a trustee, officer, employee or agent of the trust, or who
is or was serving at the request of the trust as a trustee, officer, employee
or agent of another trust, partnership, joint venture, corporation or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the trust, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit or proceeding by judgment or
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he or she reasonably believed to be in or
not opposed to the best interest of the trust, or with respect to any
criminal action or proceeding, that the person had reasonable cause to
believe that his or her conduct was unlawful.
SECTION 12.2 POWER TO INDEMNIFY LITIGANT. The trust shall have power
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the trust to procure a judgment in its favor by reason of the fact
that such person is or was a trustee, officer, employee or agent of the
trust, or is or was serving at the request of the trust as a trustee,
officer, employee or agent of another trust, partnership, joint venture,
corporation or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such
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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 or she reasonably believed
to be in, or not opposed to the best interests of the trust, provided that no
indemnification shall be made in respect of any claim, issue or matter as to
which such persons shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the trust, unless, and
only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court shall deem
proper.
SECTION 12.3 REIMBURSEMENT AUTHORIZED. To the extent that a trustee,
officer, employee, or agent of a trust has been successful, on the merits or
otherwise, in defense of any action, suit or proceeding referred to Sections
12.1 and 12.2 above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith to the
extent not inconsistent with the Maryland General Trust Law.
SECTION 12.4 DETERMINATION IF REIMBURSEMENT IS PROPER. Any
indemnification under Sections 12.1 and 12.2 above (unless ordered by court)
shall be made by the trust only as authorized in the specific case, upon a
determination that indemnification of a trustee, officer, employee or agent
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in Section 12.1 or 12.2 above. Such
determination shall be made:
(a) by the board of trustees by a majority of a quorum consisting
of trustees who were not parties to such action, suit or proceeding, or
(b) if such a quorum is not obtainable, or, even if obtainable, a
quorum of disinterested trustees so directs, by independent legal
counsel in a written opinion, or
(c) by the shareholders.
SECTION 12.5 ADVANCE OF EXPENSES. Expenses incurred in defending a
civil or criminal action, suit or proceeding may be paid by the trust in
advance of the final disposition of such action, suit or proceeding, as
authorized by the board of trustees in the specific case, upon receipt of an
undertaking by or on behalf of the trustee, officer, employee or agent to
repay such amount, unless it shall ultimately be determined that he or she is
entitled to be indemnified by the trust as authorized in this Article.
SECTION 12.6 NON-EXCLUSIVITY. The indemnification provided by this
article shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any contract, agreement, vote of
shareholders or disinterested trustees, or otherwise, both as to action in
his or her official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
trustee, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
SECTION 12.7 RIGHT TO ACQUIRE INSURANCE. The trust shall have power
to purchase and maintain insurance on behalf of any person who is or was a
trustee, officer, employee or agent of the trust, or is or was serving at the
request of the trust, as a trustee, officer, employee or agent of another
trust, partnership, joint venture, trust or other enterprise, against any
liability asserted against such person and incurred by such person in any
such capacity, or arising out of his status as such, whether or not the
14
<PAGE>
trust would have the power to indemnify him or her against such liability
under the provisions of this Article.
SECTION 12.8 NOTICE OF SHAREHOLDERS. If a trust has paid indemnity or
has advanced expenses to a trustee, officer, employee or agent, the trust
shall report the indemnification or advance in writing to the shareholders
with or before the notice of the next shareholders' meeting.
SECTION 12.9 "TRUST;" DEFINITION. For purposes of this Article,
references to "the Trust" shall include, in addition to the surviving
corporation or trust, any merging corporation or trust (including any
corporation or trust having merged with a merging corporation or trust)
absorbed in a merger which, if its separate existence had continued, would
have had the power and authority to indemnify its trustees, officers, and
employees or agents, so that any person who was a trustee, officer, employee
or agent of such merging corporation or trust, or was serving at the request
of such merging trust as a trustee, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Article with respect
to the surviving corporation or trust as such person would have with respect
to such merging corporation or trust if its separate existence had continued.
SECTION 12.10 MISCELLANEOUS DEFINITIONS. For purposes of this Article,
references to "other enterprises" shall include employee benefit plans;
reference to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the
request of the trust" shall include any services as a trustee, officer,
employee or agent of the trust which imposes duties on, or involves services
by such trustee, officer, employee, or agent with respect to an employee
benefit plan, its participants, or beneficiaries. A person who acted in good
faith and in a manner he or she reasonably believed to be in the best
interests of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interest
of the trust" as referred to in this Article.
ARTICLE XIII
REPAYMENT OF DISALLOWED DEDUCTION
SECTION 13.1 FULL REIMBURSEMENT BY OFFICERS. Any payments made to an
officer of the trust such as salary, commission, bonus, interest, rent,
medical reimbursement or entertainment expense incurred by him which, for
Federal income tax purposes, shall be disallowed in whole or in part as a
deductible expense by the Internal Revenue Service, shall be reimbursed by
such officer to the trust to the full extent of such disallowance.
SECTION 13.2 SECURITY FOR REPAYMENT. It shall be the duty of the
trustees, as a board, to enforce payment of such amount disallowed. In lieu
of payment by the officer, subject to the determination of the trustees,
proportionate amounts may be withheld from his future compensation payments
until the amount owed to the trust has been recovered.
15
<PAGE>
EXHIBIT 5
UNGARETTI & HARRIS
3500 THREE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60602
July 21, 1998
CenterPoint Properties Trust
1808 Swift Road
Oak Brook, Illinois 60523
Ladies and Gentlemen:
We have acted as counsel to CenterPoint Properties Trust, a Maryland real
estate investment trust (the "Company"), in connection with the preparation
of (i) a Registration Statement on Form S-3 of the Company filed with the
Securities and Exchange Commission (the "Commission") on December 19, 1996
and declared effective by the Commission on January 6, 1997 as amended by a
Post-Effective Amendment No. 1 filed with the Commission of October 15, 1997
and declared effective by the Commission on October 23, 1997 and as amended
by a Post-Effective Amendment No. 2 filed with the Commission on the date
hereof (the "Registration Statement"), relating to the registration, under
Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"), of
up to $200,000,000 in securities of the Company; and (ii) a supplement dated
the date hereof (the "Supplement") to the Registration Statement, relating to
the issuance and sale from time to time of up to 750,000 Common Shares of
Beneficial Interest of the Company, $.001 par value per share (the "Common
Shares") pursuant to the terms of a Sales Agency Agreement dated as of
July 20, 1998 between the Company and Brinson Patrick Securities Corporation
filed as an exhibit to the Registration Statement.
In this regard, we have examined:
a. the declaration of trust, by-laws and organizational documents of the
Company;
b. certain resolutions adopted by the Company's Board of Trustees;
c. the Registration Statement and Supplement; and
<PAGE>
CenterPoint Properties Trust
July 21, 1998
Page -2-
d. such other documents as we have deemed relevant for the purpose of
rendering the opinions set forth herein, including certifications as to
certain matters of fact by responsible officers of the Company and by
governmental authorities.
We have assumed the authenticity of all documents submitted to us as
originals and the conformity to original documents of all documents submitted
to us as copies.
Based upon the foregoing, we are of the opinion that the Common Shares being
sold pursuant to the Registration Statement and Supplement, if and when
issued under the circumstances contemplated by the Supplement, will be
validly issued, fully paid and nonassessable.
We are members of the Bar of the State of Illinois. Our opinion is limited
to the laws of the State of Illinois and the general laws of the United
States of America. Insofar as our opinion relates to matters of Maryland
law, we have relied on the opinion dated the date hereof of Gordon,
Feinblatt, Rothman, Hoffberger & Hollander, LLC, a copy of which is attached
hereto.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the reference to our firm in the Prospectus that is part of
the Registration Statement. By giving such consent, we do not hereby admit
that we are in the category of persons whose consent is required under
Section 7 of the Securities Act.
Very truly yours,
Ungaretti & Harris
<PAGE>
Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC
The Garrett Building
233 East Redwood Street
Baltimore, Maryland 21202
July 21, 1998
CenterPoint Properties Trust
1808 Swift Road
Oak Brook, Illinois 60523
Ladies and Gentlemen:
We have acted as special Maryland counsel to CenterPoint Properties
Trust, a Maryland real estate investment trust (the "Company"), in connection
with the preparation of (i) a Registration Statement on Form S-3 of the
Company filed with the Securities and Exchange Commission (the "Commission")
on December 19, 1996 and declared effective by the Commission on January 6,
1997 as amended by a Post-Effective Amendment No. 1 filed with the Commission
on October 15, 1997 and declared effective by the Commission on October 23,
1997 and as amended by a Post-Effective Amendment No. 2 filed with the
Commission on the date hereof (the "Registration Statement"), relating to the
registration, under Rule 415 of the Securities Act of 1933, as amended (the
"Securities Act"), of up to $200,000,000 in securities of the Company; and
(ii) a supplement dated the date hereof (the "Supplement") to the
Registration Statement, relating to the issuance and sale of up to 750,000
Common Shares of beneficial interest of the Company, $.001 par value per
share (the "Common Shares"), pursuant to the terms of a Sales Agency
Agreement dated as of July 20, 1998 between the Company and Brinson Patrick
Securities Corporation filed as an exhibit to the Registration Agreement.
In this regard we have examined:
a. the declaration of trust, by-laws and organizational documents
of the Company;
b. certain resolutions adopted by the Company's Board of Trustees;
c. the Registration Statement and Supplement; and
d. such other documents as we have deemed necessary for the purpose
of rendering the opinions set forth
<PAGE>
CenterPoint Properties Trust
July 21, 1998
Page 2
herein, including certifications as to certain matters of fact by
responsible officers of the Company and by governmental authorities.
We have assumed the authenticity of all documents submitted to us as
originals and the conformity to original documents of all documents submitted
to us as copies.
Based upon the foregoing, we are of the opinion that the Common Shares
being sold pursuant to the Registration Statement and Supplement, if and when
issued under the circumstances contemplated by the Supplement, will be
validly issued, fully paid and nonassessable.
We are members of the Bar of the State of Maryland. Our opinion is
limited to the laws of the State of Maryland and the general laws of the
United States of America.
Very truly yours,
Gordon, Feinblatt, Rothman,
Hoffberger & Hollander, LLC
By: /s/ Edward E. Obstler
---------------------------
Edward E. Obstler, Member
<PAGE>
EXHIBIT 8
UNGARETTI & HARRIS
3500 THREE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60602
July 21, 1998
CenterPoint Properties Trust
1808 Swift Road
Oak Brook, Illinois 60523
Ladies and Gentlemen:
You have requested our opinion as to whether CenterPoint Properties Trust, a
Maryland real estate investment trust (the "Company"), is qualified to be
taxed as a real estate investment trust ("REIT") under section 856 of the
Internal Revenue Code of 1986, as amended (the "Code").
In this connection, we have examined:
a. the declaration of trust, by-laws and organizational documents of the
Company;
b. the Company's Registration Statement on Form S-3 filed with the Securities
and Exchange Commission (the "Commission") on December 19, 1996 (File No.
333-18235), as amended by Post-Effective Amendment No. 1 filed with the
Commission on October 15, 1997 and declared effective on October 23, 1997,
as amended by Post-Effective Amendment No. 2 filed with the Commission on
the date hereof (the "Registration Statement");
c. such other documents as we have deemed relevant for the purpose of
rendering the opinions set forth herein, including certifications as to
certain matters of fact by a responsible officer of the Company (the
"Officer's Certificate").
Based upon the foregoing, we are of the opinion that:
1. The Company is organized in conformity with the requirements for
qualification as a REIT under the Code.
<PAGE>
CenterPoint Properties Trust
July 21, 1998
Page -2-
2. The Company has met the requirements to qualify as a REIT for its taxable
years ending prior to the date hereof. If results of operations for its
current taxable year and subsequent taxable years are in accordance with
expectations set forth in the Officer's Certificate, the Registration
Statement and the Common Shares Supplement, the Company will continue to so
qualify.
Our opinion as expressed herein is based upon the Code, applicable Treasury
regulations adopted thereunder, reported judicial decisions and rulings of
the Internal Revenue Service, all as of the date hereof. It should be noted
that whether the Company will qualify as a REIT under the Code in the current
taxable year and future taxable years will depend upon whether the Company
continues to meet the various qualification tests imposed under the Code
through actual annual operating results. We express no opinion as to whether
the actual results of the Company's operations for any such taxable year will
satisfy such requirements.
We consent to the use of this opinion as an Exhibit to the Registration
Statement.
Very truly yours,
Ungaretti & Harris
<PAGE>
CERTIFICATE
THE UNDERSIGNED, PAUL S. FISHER, DOES HEREBY CERTIFY THAT:
1. He is the Chief Financial Officer of CenterPoint Properties Trust,
a Maryland real estate investment trust (the "Trust").
2. On October 15, 1997, CenterPoint Properties Corporation, a Maryland
corporation (the "Corporation") merged with and into the Trust. References
herein to the "Company" refer to and mean the Corporation for all periods
prior to such merger, and the Trust for all periods thereafter.
3. The Company elected to be taxed as a real estate investment trust
("REIT") as of January 1, 1994 under the provisions of Section 856 of the
Internal Revenue Code of 1986, as amended (the "Code"). As of the effective
date of its election, the Company did not have any earnings and profits
within the meaning of the Code. The election has not been terminated or
revoked.
4. The Company's taxable year is the calendar year.
5. Beneficial ownership of the Company was held by 100 or more persons
for at least 335 days out of the 1994 taxable year, and each subsequent
taxable year completed before the current taxable year (the "Post-Election
Years"). The Company intends to take steps reasonably designed to assure that
this will be true for at least 335 days out of the current taxable year and
each subsequent taxable year of 12 months (and a proportional part of any
taxable year of less than 12 months), and is not aware of any facts or
circumstances indicating that such results will not occur.
6. The Company has not been "closely held" within the meaning of
Section 856(h) of the Code, providing generally that an entity is closely
held if five or fewer individuals directly or indirectly own (or are deemed
to own) more than 50% by value of the Company's stock, at any time during the
last half of any Post-Election Year. The Company intends to take steps
(including enforcement of ownership limitations set forth in the Company's
declaration of trust and limitations on the conversion of the Company's
convertible subordinated debentures) reasonably designed to assure that this
will be true throughout the last half of its current taxable year and the
last half of each subsequent taxable year.
7. The Company met the gross income tests of paragraphs (2) and (3)
(and paragraph (4), to the extent applicable) of Section 856(c) of the Code
for each of the Post-Election Years. The Company expects to meet such tests
in its current taxable year and each subsequent taxable year. In addition:
<PAGE>
a. The Company does not manage any properties under contract with
third parties, and any such management activities in the past did not
produce enough gross income to cause the Company to fail any of the gross
income tests.
b. The Company does not and will not charge rents to any tenant
based in whole or part on the income or profits of such tenant.
c. The Company does not and will not derive rent attributable to
personal property in connection with any lease of real property that would
exceed 15 percent of the total rent from any such lease.
d. The Company does not and will not provide services to any of its
tenants that are not customarily provided to tenants in properties of a
similar class in the geographic market in which the properties are located,
except to the extent a DE MINIMIS amount of such services is permitted by
relevant provisions of the Code.
8. At the close of each calendar quarter beginning with the first
quarter of 1994 and through the end of the most recently completed calendar
quarter, the Company has met the assets tests of Section 856(c)(5) of the
Code. The Company expects to meet such tests at the end of the current
calendar quarter and at the end of each subsequent calendar quarter.
9. The Company's deduction for dividends paid for each of the
Post-Election Years met the requirement of Section 857(a)(1) of the Code, and
the Company expects to meet such requirement for the current taxable year and
all subsequent taxable years.
10. The Company has complied with requirements to collect certain
shareholder information and maintain certain records under Section 857(f)(1)
of the Code (or Section 857(a)(2) of the Code prior to the effective date of
the Taxpayer Relief Act of 1997) for each Post-Election Year, and intends to
comply with such requirements for its current taxable year and each
subsequent taxable year.
Ungaretti & Harris may rely on this Certificate in rendering its opinion
with respect to the Company's eligibility and qualification for taxation as a
REIT.
IN WITNESS WHEREOF, I have executed this Certificate as of the 21st day
of July, 1998.
/s/ Paul S. Fisher
-----------------------------
Paul S. Fisher
Chief Financial Officer
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Amendment No. 2 to the
registration statement of CenterPoint Properties Trust on Form S-3 (file No.
333-18235) 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."
PricewaterhouseCoopers LLP
Chicago, Illinois
July 21, 1998
