PROSPECTUS SUPPLEMENT
September 11, 1997
(To Prospectus dated April 30, 1997)
637,440 Shares
First Industrial Realty Trust, Inc.
Common Stock
All of the shares of common stock, par value $.01 per share (the "Common
Stock"), offered hereby (the "Offering") are being sold by First Industrial
Realty Trust, Inc. (the "Company"). The Common Stock is listed on the New York
Stock Exchange ("NYSE") under the symbol "FR." On September 11, 1997, the
reported last sale price of the Common Stock on the NYSE was $31 3/8 per share.
Prospective investors should carefully consider the matters discussed under
"Risk Factors" beginning on page 4 in the accompanying Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Underwriter has agreed to purchase the shares of Common Stock from the
Company at a price of $29.80625 per share, resulting in aggregate proceeds to
the Company of $18,999,696 before payment of expenses by the Company estimated
at $100,000, subject to the terms and conditions in the Underwriting Agreement.
The Underwriter intends to deposit the shares of Common Stock with the trustee
of The Equity Focus Trusts--REIT Portfolio Series, 1997 (the "Trust") in
exchange for units in the Trust. If all of the shares of Common Stock so
deposited with the trustee of the Trust are valued at their reported last sale
price on the NYSE on September 11, 1997, the aggregate underwriting commissions
would be $999,984. See "Underwriting."
The shares of Common Stock offered hereby are being offered by the
Underwriter, subject to prior sale, when, as and if issued to and accepted by
the Underwriter and subject to approval of certain legal matters by Rogers &
Wells, counsel for the Underwriter. It is expected that delivery of the Common
Stock offered hereby will be made against payment therefor in New York, New York
on or about September 16, 1997.
Smith Barney Inc.
<PAGE>
FORWARD-LOOKING INFORMATION
This Prospectus Supplement and the accompanying Prospectus contain certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The Company intends such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained in the
Private Securities Reform Act of 1995, and is including this statement for
purposes of complying with these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe future plans,
strategies and expectations of the Company, are generally identifiable by use of
the words "believe," "expect," "intend," "anticipate," "estimate," "project" or
similar expressions. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on the operations and future prospects of
the Company include, but are not limited to, changes in: economic conditions
generally and the real estate market specifically, legislative/regulatory
changes (including changes to laws governing the taxation of REITs),
availability of capital, interest rates, competition, supply and demand for
industrial properties in the Company's current and proposed market areas and
general accounting principles, policies and guidelines applicable to REITs.
These risks and uncertainties, together with those stated under the caption
"Risk Factors" in the accompanying Prospectus, should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are expected to be approximately $18.9 million. The Company
intends to use such net proceeds for the repayment of borrowings under the
Company's $200.0 million unsecured revolving credit facility (the "Acquisition
Facility"). As of September 11, 1997, the Acquisition Facility, which matures
April 2000, bore interest at a weighted average interest rate of 6.43%.
Borrowings under the Acquisition Facility generally have been applied in
connection with acquisitions and development of properties from time to time.
FEDERAL INCOME TAX CONSIDERATIONS
The Company believes it has operated, and the Company intends to continue
to operate, in such a manner as to qualify as a real estate investment trust (a
"REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), but no
assurance can be given that it has qualified or will so qualify at all times.
See "Federal Income Tax Considerations" and "Risk Factors -- Tax Risks --
Consequences of Failure to Qualify as a REIT" in the accompanying Prospectus.
In any year for which the Company qualifies as a REIT, distributions made
to stockholders out of the Company's current or accumulated earnings and profits
generally will be taxed to stockholders as ordinary dividend income, except
that, subject to the discussion below regarding the new tax rates contained in
the Taxpayer Relief Act of 1997 (the "1997 Act"), distributions of net capital
gain designated by the Company as capital gain dividends will be taxed to
stockholders as long-term capital gain. To the extent that distributions exceed
current or accumulated earnings and profits, they will constitute a return of
capital, rather than dividend or capital gain income, and will reduce the tax
basis of the stockholder's shares of Common Stock with respect to which the
distribution is made. To the extent that distributions exceed such basis, they
will be taxed in the same manner as gain from the sale of those shares.
The Company is permitted under the Code to elect to retain and pay income
tax on its net long-term capital gain for any taxable year. Under the 1997 Act,
however, for taxable years beginning after December 31, 1997, if the Company so
elects, a stockholder must include in income such stockholder's proportionate
share of the Company's undistributed long-term capital gain for the taxable
year, and will be deemed to have paid such stockholder's proportionate share of
the income tax paid by the Company with respect to such un-
S-2
<PAGE>
distributed capital gain. Such tax would be credited against the stockholder's
tax liability and subject to normal refund procedures. In addition, each
stockholder's basis in such stockholder's shares of Common Stock would be
increased by the amount of undistributed long-term capital gain (less the tax
paid by the Company) included in the stockholder's income.
The 1997 Act also alters the taxation of capital gain income for
individuals (and for certain trusts and estates). Gain from the sale or exchange
of certain investments held for more than 18 months will be taxed at a maximum
long-term capital gain rate of 20%. Gain from the sale or exchange of such
investments held for 18 months or less, but for more than one year, will be
taxed at a maximum mid-term capital gain rate of 28%. The 1997 Act also provides
a maximum rate of 25% for "unrecaptured section 1250 gain" recognized on the
sale or exchange of certain real estate assets, introduces special rules for
"qualified 5-year gain" and makes certain other changes to prior law. The
Internal Revenue Service may prescribe regulations on how the 1997 Act's new
capital gain rates will apply to sales of capital assets by REITs and other
pass-through entities, but it has not yet done so, and it remains unclear how
the 1997 Act's new rates will apply to capital gain dividends and undistributed
capital gain. For example, the extent, if any, to which capital gain dividends
and undistributed capital gain from the Company will be taxed to individuals at
the new rates for mid-term capital gain and unrecaptured section 1250 gain,
rather than the long-term capital gain rates, is unclear.
Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the shares of Common Stock offered hereby
and with respect to the tax consequences arising under federal law and the laws
of any state, municipality or other taxing jurisdiction, including tax
consequences resulting from such investor's own tax characteristics. In
particular, investors are urged to consult their own tax advisors concerning the
tax consequences of an investment in the Company, including the possibility of
U.S. income tax withholding on Company distributions.
UNDERWRITING
Subject to the terms and conditions contained in the underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase from the Company,
637,440 shares of Common Stock at the purchase price set forth on the cover page
of this Prospectus Supplement. The Underwriting Agreement provides that the
obligation of the Underwriter is subject to certain conditions precedent, and
that the Underwriter will be obligated to purchase all of the shares of Common
Stock if any are purchased.
The Underwriter intends to deposit the shares of Common Stock with the
trustee of the Trust, a registered unit investment trust under the Investment
Company Act of 1940, as amended, in exchange for units in the Trust. If all of
the shares of Common Stock so deposited with the trustee of the Trust are valued
at their reported last sale price on the NYSE on September 11, 1997, the
aggregate underwriting commissions would be $999,984. The Underwriter is acting
as sponsor and depositor of the Trust and is therefore considered an affiliate
of the Trust.
The Company has agreed to indemnify the Underwriter against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriter may be required to make in respect
thereof. In the ordinary course of business, the Underwriter and/or affiliates
of the Underwriter have engaged, and may in the future engage, in investment
banking and/or investment advisory transactions with the Company and its
affiliates for which customary compensation has been, and will be, received.
S-3
<PAGE>
PROSPECTUS
$589,525,000
First Industrial Realty Trust, Inc.
Common Stock, Preferred Stock and Depositary Shares
First Industrial, L.P.
Debt Securities
First Industrial Realty Trust, Inc. (the "Company") may from time to time
offer in one or more series (i) shares of common stock, par value $.01 per share
("Common Stock"), (ii) shares of preferred stock, par value $.01 per share
("Preferred Stock"), and (iii) shares of Preferred Stock represented by
depositary shares ("Depositary Shares"), with an aggregate public offering price
of up to $239,525,000, in amounts, at prices and on terms to be determined at
the time of offering. First Industrial, L.P. (the "Operating Partnership") may
from time to time offer in one or more series unsecured non-convertible
investment grade debt securities ("Debt Securities"), with an aggregate public
offering price of up to $350,000,000, in amounts, at prices and on terms to be
determined at the time of offering. The Common Stock, Preferred Stock,
Depositary Shares and Debt Securities (collectively, the "Securities") may be
offered, separately or together, in separate series in amounts, at prices and on
terms to be set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Common Stock, any initial
public offering price; (ii) in the case of Preferred Stock, the specific title
and stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and any initial public offering price; (iii) in the case of
Depositary Shares, the fractional share of Preferred Stock represented by each
such Depositary Share; and (iv) 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, terms for
redemption at the option of the Operating Partnership or repayment at the option
of the holder, terms for sinking fund payments, covenants and any initial public
offering 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 consistent with the Company's Amended and Restated
Articles of Incorporation (the "Articles of Incorporation") or otherwise
appropriate to preserve the status of the Company as a real estate investment
trust ("REIT") for federal income tax purposes. See "Description of Preferred
Stock-Restrictions on Ownership" and "Restrictions on Transfers of Capital
Stock."
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement, not contained in this Prospectus.
The Securities may be offered directly to one or more purchasers, through
agents designated from time to time by the Company or the Operating Partnership
or to or through underwriters or dealers. If any agents or underwriters are
involved in the sale of any of the Securities, their names, and any applicable
purchase price, fee, commission or discount arrangement between or among them,
will be set forth, or will be calculable from the information set forth, in an
accompanying Prospectus Supplement. No Securities may be sold by the Company or
the Operating Partnership without delivery of a Prospectus Supplement describing
the method and terms of the offering of such series of Securities. See "Plan of
Distribution."
It is currently anticipated that the first offering of Securities pursuant
to this Prospectus and an applicable Prospectus Supplement will be an offering
of approximately $225,000,000 of Debt Securities of the Operating Partnership;
however, there can be no assurance that such offering will in fact take place.
For a discussion of certain factors that should be considered in connection
with an investment in the Securities, see "Risk Factors" commencing on page 4.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------
The date of this Prospectus is April 30, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is, and upon effectiveness of the Registration Statement (as
hereinafter defined) the Operating Partnership will be, subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, the Company files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission") and the Operating Partnership will file reports
and other information with the Commission. Such reports, proxy statements and
other information can be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission at 7 World Trade Center, 13th Floor, New York, New York 10048 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material also can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C 20549 at prescribed rates. In addition, the Commission maintains
a Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
at http://www.sec.gov. Securities of the Company are listed on the New York
Stock Exchange (the "NYSE"), and all such material filed by the Company with the
NYSE also can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
The Company and the Operating Partnership have filed with the Commission a
registration statement on Form S-3 (together with all amendments and exhibits,
the "Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities. 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
concerning the Company, the Operating Partnership and the Securities, reference
is made to the Registration Statement. Statements contained in this Prospectus
as to the contents of any contract or other documents are not necessarily
complete, and in each instance, reference is made to the copy of such contract
or documents filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company (File No. 1-13102)
with the Commission are incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(b) the Company's Current Report on Form 8-K dated February 12, 1997
(the "Form 8-K"), as amended by Form 8-K/A No. 1 filed April 10, 1997 (the
"Form 8-K/A No. 1"); and
(c) the description of the Common Stock included in the Company's
Registration Statement on Form 8-A dated June 23, 1994.
All documents filed by the Company or the Operating Partnership pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the Securities
offered hereby shall be deemed to be incorporated by reference in this
Prospectus and made a part hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
document subsequently filed with the Commission which also is incorporated or
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
2
<PAGE>
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any or all of the information incorporated by
reference herein (not including the exhibits to the information that is
incorporated by reference herein, unless such exhibits are specifically
incorporated by reference into the information that is incorporated by reference
herein). Requests for such copies should be directed to: First Industrial Realty
Trust, Inc., Attn: Investor Relations, 150 N. Wacker Drive, Suite 150, Chicago,
Illinois 60606, telephone (312) 704-9000.
Certain information, including, but not limited to, information relating to
the Operating Partnership's principal security holders, management, executive
compensation, certain relationships and related transactions and legal
proceedings that would be required to be disclosed in a prospectus included in a
registration statement on Form S-11 has been omitted from this Prospectus,
because such information is not materially different from the information
contained in the Company's periodic reports, proxy statements and other
information filed by the Company with the Commission.
3
<PAGE>
THE COMPANY AND THE OPERATING PARTNERSHIP
Unless the context otherwise requires, all references in this Prospectus to
the "Company" refer to First Industrial Realty Trust, Inc. and its subsidiaries,
including First Industrial, L.P. (the "Operating Partnership"), and all
references in this Prospectus to the "Other Real Estate Partnerships" refer to
all partnership subsidiaries of First Industrial Realty Trust, Inc. other than
the Operating Partnership. Unless otherwise indicated, all information regarding
properties relates to properties owned and in service as of December 31, 1996.
The Company is a REIT which owns, manages, acquires and develops bulk
warehouse and light industrial properties. Markets in which the Company operates
include the following metropolitan areas: Minneapolis/St. Paul, Minnesota;
Detroit, Michigan; Atlanta, Georgia; Chicago, Illinois; Grand Rapids, Michigan;
Indianapolis, Indiana; Central Pennsylvania; Nashville, Tennessee; St. Louis,
Missouri; Columbus, Ohio; Cincinnati, Ohio; Des Moines, Iowa; Milwaukee,
Wisconsin; Dayton, Ohio; and Cleveland, Ohio. As of December 31, 1996, the
Company owned 379 in service properties containing an aggregate of approximately
32.7 million square feet of gross leasable area ("GLA") which was approximately
97% leased to over 990 tenants. The Company is a self-administered and fully
integrated industrial real estate company.
The Company is the sole general partner of, and, as of March 31, 1997, held
approximately 88.3% of the outstanding units of partnership interest ("Units")
in, the Operating Partnership. Approximately 11.7% of the outstanding Units are
held by outside investors, including certain members of the Company's
management. Each Unit, other than those held by the Company, may be exchanged by
the holder thereof for one share (subject to certain adjustments) of Common
Stock. With each such exchange, the number of Units owned by the Company, and,
therefore, the Company's percentage interest in the Operating Partnership, will
increase.
Substantially all of the Company's assets are held through the Operating
Partnership and the Other Real Estate Partnerships. The Operating Partnership
owns a 99% limited partnership interest, and wholly owned subsidiaries of First
Industrial Realty Trust, Inc. own a 1% general partnership interest, in each of
the Other Real Estate Partnerships, except that in the case of one Other Real
Estate Partnership, First Industrial Securities L.P., the general partner also
owns a preferred limited partnership interest the terms of which mirror the
terms of the Company's outstanding 9 1/2% Series A Preferred Stock. See
"Description of Preferred Stock-Outstanding Preferred Stock."
The Company was incorporated in Maryland in August 1993. The Operating
Partnership was formed in Delaware in November 1993. The Company's and the
Operating Partnership's executive offices are located at 150 N. Wacker Drive,
Suite 150, Chicago, Illinois 60606, and their telephone number is (312)
704-9000.
RISK FACTORS
In evaluating an investment in the Securities, investors should consider
the following factors, in addition to other matters set forth or incorporated in
this Prospectus and in any applicable Prospectus Supplement.
Real Estate Investment Considerations
General
Income from real property investments, and the Company's resulting ability
to make expected distributions to stockholders, may be adversely affected by the
general economic climate, local conditions such as oversupply or a reduction in
demand in the area, the attractiveness of the properties to tenants, tenant
defaults, zoning or other regulatory restrictions, competition from other
available real estate, the ability of the Company to provide adequate
maintenance and insurance and increased operating costs (including insurance
premiums
4
<PAGE>
and real estate taxes). The Company's income would also be adversely affected if
tenants were unable to pay rent or the Company were unable to rent properties on
favorable terms. In addition, certain expenditures associated with real estate
investment (such as real estate taxes and maintenance costs) generally are not
reduced when circumstances cause a reduction in income from the investment.
Furthermore, real estate investments are relatively illiquid and, therefore,
will tend to limit the ability of the Company to vary its portfolio promptly in
response to changes in economic or other conditions.
Renewal of Leases and Reletting of Space
The Company will be subject to the risks that, upon expiration of leases,
the leases may not be renewed, the space subject to such leases may not be relet
or the terms of renewal or reletting (including the cost of required
renovations) may be less favorable than expiring lease terms. If the Company
were unable promptly to renew a significant number of expiring leases or
promptly to relet the space covered by such leases, or if the rental rates upon
such renewal or reletting were significantly lower than the then current rates,
the Company's funds from operations and ability to make expected distributions
to stockholders might be adversely affected. Leases with respect to
approximately 5.5 million, 5.9 million and 5.4 million square feet of GLA expire
in 1997, 1998 and 1999, respectively.
Potential Environmental Liability
Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate may be liable for the costs of clean-up of
certain conditions relating to the presence of hazardous or toxic materials on,
in or emanating from the property, and any related damages to natural resources.
Such laws often impose liability without regard to whether the owner or operator
knew of, or was responsible for, the presence of hazardous or toxic materials.
The presence of such materials, or the failure to address such conditions
properly, may adversely affect the ability to rent or sell the property or to
borrow using the property as collateral. Persons who dispose of or arrange for
the disposal or treatment of hazardous or toxic materials may also be liable for
the costs of clean-up of such materials, or for related natural resource
damages, at or from an off-site disposal or treatment facility, whether or not
such facility is owned or operated by such persons. No assurance can be given
that existing environmental assessments with respect to any of the Company's
properties reveal all environmental liabilities, that any prior owner or
operator of any of the properties did not create any material environmental
condition not known to the Company or that a material environmental condition
does not otherwise exist as to any one or more properties.
Limited Geographic Concentration
Approximately 68% of the Properties owned by the Company as of March 31,
1997 are located in the midwest region of the United States. A fundamental
element of the Company's growth strategy is to acquire additional properties in
its current markets. Consequently, the Company may be dependent upon the demand
for industrial space in those markets. The Company's revenues and the value of
its properties may be affected by a number of factors in its current markets,
including the local economic climate (which may be adversely impacted by
business layoffs or downsizing, industry slowdowns, changing demographics and
other factors) and local real estate conditions (such as oversupply of, or
reduced demand for, properties). Therefore, the Company's performance and its
ability to make distributions to stockholders will likely be dependent, to a
significant extent, on the economic conditions in its current markets.
5
<PAGE>
Tax Risks
Consequences of Failure to Qualify as a REIT
The Company intends to operate so as to qualify as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"). Although the Company
believes that it is organized and will operate in a manner so as to qualify as a
REIT, qualification as a REIT involves the satisfaction of numerous requirements
(some of which must be met on a recurring basis) established under highly
technical and complex Code provisions of 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 and, unless entitled to
relief under certain statutory provisions, the Company also would be
disqualified from treatment as a REIT for the four taxable years that follow.
See "Federal Income Tax Considerations."
Effect of Distribution Requirements
The Company could, in certain instances, have taxable income without
sufficient cash to enable the Company to meet the distribution requirements of
the REIT provisions of the Code. Accordingly, the Company could be required to
borrow funds or sell properties on adverse terms in order to meet such
distribution requirements. In addition, because the Company must distribute to
its stockholders at least 95% of its REIT taxable income each year, the
Company's ability to accumulate capital may be limited. Thus, it may be more
dependent on outside sources of financing, such as debt financing or issuances
of additional capital stock, in connection with future acquisitions. See
"Federal Income Tax Considerations."
Restrictions on Transfer of Shares
As noted below under "Description of Preferred Stock-Restrictions on
Ownership" and "Restrictions on Transfers of Capital Stock," in order to
maintain its qualification as a REIT under the Code, no more than 50% in value
of the outstanding capital stock of the Company may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year. Accordingly, the
Company's Articles of Incorporation contain, and the Designating Amendment for
each series of Preferred Stock may contain, provisions restricting the ownership
and transfer of the Company's capital stock.
Risks Associated with Debt Financing and Leverage;
Collateralization and Cross-collateralization
General
Where possible, the Company intends to continue to use leverage to increase
the rate of return on its investments and to allow the Company to make more
investments than it otherwise could. Such use of leverage presents an additional
element of risk in the event that the cash flow from the Company's properties is
insufficient to meet both debt payment obligations and the distribution
requirements of the REIT provisions of the Code. To the extent the Operating
Partnership determines to obtain additional debt financing in the future, it may
do so through mortgages on some or all of its properties. These mortgages may be
on recourse, non-recourse or crossed-collateralized bases. Holders of
indebtedness which is so secured will have a claim against these properties
which is senior to the claim of holders of Debt Securities. In addition, to the
extent
6
<PAGE>
indebtedness is crossed-collateralized, lenders may seek to foreclose upon
properties which are not the primary collateral for their loan, which may, in
turn, result in acceleration of other indebtedness secured by properties.
Foreclosure of properties would result in a loss of income and asset value to
the Operating Partnership and the Company.
Balloon Payments
The Company is required to make lump-sum or "balloon" payments pursuant to
the terms of certain of its indebtedness, including a $309.8 million unsecured
loan (the "Defeasance Loan") incurred by the Operating Partnership in April
1997, the proceeds of which were used to defease a mortgage loan under which
First Industrial Financing Partnership, L.P (the "Financing Partnership")
borrowed $300 million (the "Mortgage Loan"), and a $200 million unsecured
revolving credit facility (the "Acquisition Facility") under which the Company,
through the Operating Partnership, may borrow to finance the acquisition of
additional properties and for other corporate purposes, including working
capital. The Defeasance Loan and the Acquisition Facility provide for the
repayment of principal in a lump-sum or "balloon" payment at maturity in 1999
(subject to a two-year extension at the Operating Partnership's option, subject
to certain conditions) and 2000 (subject to successive one-year extensions at
the Operating Partnership's option, subject to certain conditions),
respectively. The Company's ability to make such payments may depend on its
ability either to refinance the applicable indebtedness or to sell properties.
The Company has no commitments to refinance the Defeasance Loan or the
Acquisition Facility. Certain other existing debt obligations of the Company are
secured by its properties, and therefore such obligations will permit the lender
to foreclose on those properties in the event of a default.
No Limitation on Debt in Organizational Documents
The Operating Partnership has no separate policy regarding the amount of
debt it may incur, but rather is encompassed by the Company's policy in this
regard. The Company currently has a policy of maintaining a ratio of debt to
total market capitalization (i.e., total consolidated debt of the Company as a
percentage of the aggregate market value of all outstanding shares of Common
Stock, assuming the exchange of all Units for Common Stock, plus the aggregate
stated value of all outstanding shares of preferred stock, plus total
consolidated debt) which generally will not exceed 50% and a coverage ratio
(computed as total revenues minus property expenses and general and
administrative expenses divided by interest expense plus dividends on preferred
stock) of at least 2.0:1. As of March 31, 1997, the Company's ratio of debt to
total market capitalization was 32.8%, and for the year ended December 31, 1996,
the Company's coverage ratio was 2.9:1. However, the organizational documents of
the Company do not contain any limitation on the amount or percentage of
indebtedness the Company may incur and the Company's Board of Directors has the
power to alter the current policy. Accordingly, the Company could become more
highly leveraged, resulting in an increase in debt service that could adversely
affect the Company's ability to make expected distributions to stockholders and
in an increased risk of default on its obligations. In addition, except as may
be set forth in any Prospectus Supplement, the Debt Securities will not contain
any provision that would afford holders of Debt Securities protection in the
event of a highly leveraged transaction or change in control of the Operating
Partnership or the Company.
Rising Interest Rates
The Acquisition Facility bears interest at a floating rate. Increases in
the interest rate payable on balances outstanding under the Acquisition Facility
would have an adverse effect on the Company's cash available for distribution.
7
<PAGE>
Limits on Changes in Control
General
Certain provisions of the Articles of Incorporation may have the effect of
delaying, deferring or preventing a third party from making an acquisition
proposal for the Company and thus inhibit a change in control of the Company and
limit the opportunity for stockholders to receive a premium for their Common
Stock over then-prevailing market prices. See "Certain Provisions of Maryland
Law and the Company's Articles of Incorporation and Bylaws." These provisions
include the following:
Risks Associated with Preferred Stock
Under its Articles of Incorporation, the Company has authority to issue up
to 10,000,000 shares of Preferred Stock (of which 1,650,000 shares were
outstanding on March 31, 1997) on such terms as may be authorized by the Board
of Directors of the Company. Although the Board of Directors has no such
intention at the present time, it has the power to establish a series of
Preferred Stock that could, depending on the terms of such series, have the
effect referred to above.
Maryland Business Combination Law
Under the Maryland General Corporation Law, as amended ("MGCL"), certain
"business combinations" (including certain issuances of equity securities)
between a Maryland corporation, such as the Company, and any person who
beneficially owns 10% or more of the voting power of the corporation's shares
(an "Interested Stockholder") or, in certain circumstances, an associate or an
affiliate thereof (as defined in the MGCL) are prohibited for five years after
the most recent date on which the Interested Stockholder becomes an Interested
Stockholder. Thereafter, any such business combination must be recommended by
the board of directors and approved by two super-majority stockholder votes
unless, among other conditions, the corporation's common stockholders receive a
minimum price (as defined in the MGCL) for their shares, in cash or in the same
form as previously paid by the Interested Stockholder for its shares. The
provisions of the MGCL do not apply to business combinations that are approved
or exempted by the Board of Directors prior to the time that the Interested
Stockholder becomes an Interested Stockholder. In addition, the Company's
Articles of Incorporation exempt from these provisions of the MGCL any business
combination in which there is no Interested Stockholder other than Jay H.
Shidler, the Chairman of the Board of Directors of the Company, or any entity
controlled by Mr. Shidler, unless Mr. Shidler is an Interested Stockholder
without taking into account Mr. Shidler's ownership of shares of Common Stock of
the Company and the right to acquire shares in an aggregate amount which does
not exceed the number of shares which Mr. Shidler owned and had the right to
acquire (including through the exchange of Units) at the time of the
consummation of the Company's initial public offering.
Maryland Control Share Acquisition Statute
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights, except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares owned by the acquiror, by officers of the corporation and by
directors who are also employees of the corporation. If voting rights with
respect to control shares have not been approved at a meeting of stockholders,
then, subject to certain conditions and limitations, the issuer may redeem any
or all of such control shares for fair value. If voting rights for control
shares are approved at a stockholders meeting and the acquiror becomes entitled
to vote a majority of the shares entitled to vote, all other stockholders may
exercise appraisal rights. The Company's Bylaws contain a provision exempting
any and all ac-
8
<PAGE>
quisitions of the Company's shares of capital stock from the control shares
provisions of the MGCL. There can be no assurance that this provision will not
be amended or eliminated in the future.
Classified Board of Directors
The Company's directors are divided into three classes by its Articles of
Incorporation, with terms expiring over a three year period. The classified
board provision could make it more difficult and time consuming to remove the
incumbent directors, thus discouraging a third party from attempting to take
control of the Company.
Risks Associated with Dilution
To the extent the Company issues Common Stock, the ownership interest of
existing stockholders would be diluted.
Risks Associated with Possible Conflicts of Interest
Competition from Other Business Interests of Certain Officers and
Directors
Entities affiliated with or controlled by certain officers and directors of
the Company hold equity interests in industrial properties not owned by the
Company. Some of these properties may compete with properties owned by the
Company. There can be no assurance that decisions by officers and directors of
the Company will fully represent the interests of stockholders of the Company
rather than such individuals and their affiliates.
Tax Consequences to Certain Officers and Directors
Certain officers and directors of the Company own Units which may be
exchanged for Common Stock. Prior to the exchange of Units for Common Stock,
officers and directors of the Company who own Units may suffer different and
more adverse tax consequences than holders of Common Stock upon the sale of
certain of the Company's properties, the refinancing of debt associated with
those properties or in connection with a proposed tender offer or merger
involving the Company and, therefore, such individuals and the Company, as
partners in the Operating Partnership, may have different objectives regarding
the appropriate terms of any such transaction.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company and the Operating Partnership intend to use the net proceeds from the
sale of Securities offered by this Prospectus and the applicable Prospectus
Supplement for general corporate purposes, which may include the acquisition of
additional properties, the repayment of outstanding debt or the improvement of
certain properties already in the Company's portfolio. Any proceeds from the
sale of Common Stock, Preferred Stock or Depositary Shares by the Company will
be invested in the Operating Partnership, which will use such proceeds for the
above-described purposes.
9
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratios of earnings to fixed charges plus preferred dividend
requirements for the years ended December 31, 1996, 1995 and 1994 were 1.88,
1.56 and 1.33, respectively. The Operating Partnership's ratios of earnings to
fixed charges for the years ended December 31, 1996, 1995 and 1994 were 6.96,
2.56 and 1.65, respectively.
For purposes of computing the ratios of earnings to fixed charges, earnings
have been calculated by adding fixed charges (excluding capitalized interest) to
income (loss) before disposition of interest rate protection agreement, gain on
sales of properties, minority interest and extraordinary items. Fixed charges
consist of interest costs, whether expensed or capitalized, and amortization of
interest rate protection agreement and deferred financing costs.
With respect to the Company and the Operating Partnership, earnings were
inadequate to cover fixed charges by approximately $3.4 million and $4.3 million
for the years ended December 31, 1993 and 1992, respectively, which periods were
prior to the Company's initial public offering. No preferred stock of the
Company was outstanding during such years.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an indenture (the "Indenture"),
dated as of a date prior to the issuance of the Debt Securities to which it
relates, between the Operating Partnership and a trustee (a "Trustee"), and in
the form that has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part, subject to such amendments or supplements as
may be adopted from time to time. The Indenture is subject to and governed by
the Trust Indenture Act of 1939, as amended (the "TIA"). The statements made
under this heading relating to the Debt Securities and the Indenture are
summaries of certain provisions thereof, do not purport to be complete and are
qualified in their entirety by reference to the Indenture and such Debt
Securities. All material terms of the Debt Securities and the Indenture, other
than those disclosed in the applicable Prospectus Supplement, are described in
this Prospectus.
Capitalized terms used herein and not defined shall have the meanings
assigned to them in the Indenture.
The Debt Securities to be offered hereby and in any applicable Prospectus
Supplement will be "investment grade" securities, meaning at the time of the
offering of such Debt Securities, at least one nationally recognized statistical
rating organization (as defined in the Exchange Act) will have rated such Debt
Securities in one of its generic rating categories which signifies investment
grade (typically the four highest rating categories, within which there may be
sub-categories or gradations indicating relative standing, signify investment
grades). An investment grade rating is not a recommendation to buy, sell or hold
securities, is subject to revision or withdrawal at any time by the assigning
entity and should be evaluated independently of any other rating.
Terms
General. The Debt Securities will be direct unsecured obligations of the
Operating Partnership. The indebtedness represented by the Debt Securities will
rank equally with all other unsecured and unsubordinated indebtedness of the
Operating Partnership. No partner (whether limited or general, including the
Company) of the Operating Partnership has any obligation for the payment of
principal of (or premium, if any) or interest, if any, on, or any other amount
with respect to, the Debt Securities. The particular terms of the Debt
Securities offered by a Prospectus Supplement will be described in the
applicable Prospectus Supplement, along with any applicable modifications of or
additions to the general terms of the Debt Securities as described herein and in
the Indenture and any applicable federal income tax considerations. Accordingly,
for a description of the
10
<PAGE>
terms of any series of Debt Securities, reference must be made to both the
Prospectus Supplement relating thereto and the description of the Debt
Securities set forth in this Prospectus.
Except as set forth in any Prospectus Supplement, 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 by the Operating Partnership or as
set forth in the Indenture or in one or more indentures supplemental to the
Indenture. All Debt Securities of one series need not be issued at the same time
and, unless otherwise provided, a series may be reopened, without the consent of
the holders of the Debt Securities of such series, for issuance of additional
Debt Securities of such series.
The Indenture provides that the Operating Partnership may, but need not,
designate more than one Trustee thereunder, each with respect to one or more
series of Debt Securities. Any Trustee under the Indenture may resign or be
removed with respect to one or more series of Debt Securities, and a successor
Trustee may be appointed to act with respect to such series. In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a Trustee of a trust under the
Indenture separate and apart from the trust administered by any other Trustee,
and, except as otherwise indicated herein, any action described herein to be
taken by 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 Indenture.
The following summaries set forth certain general terms and provisions of
the Indenture and the Debt Securities. The Prospectus Supplement relating to the
series of Debt Securities being offered will contain further terms of such Debt
Securities, including the following specific terms:
(1) The title of such Debt Securities;
(2) The aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) The price (expressed as a percentage of the principal amount
thereof) at which such Debt Securities will be issued and, if other than
the principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof;
(4) The date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be payable;
(5) The rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) The date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the dates on which any
such interest will be payable, the record dates for such interest payment
dates, or the method by which such dates shall be determined, the persons
to whom such interest shall be payable, and the basis upon which interest
shall be calculated if other than that of a 360-day year of twelve 30-day
months;
(7) The place or places where the principal of (and premium or
Make-Whole Amount, if any) and interest, if any, on such Debt Securities
will be payable, where such Debt Securities may be surrendered for
registration of transfer or exchange and where notices or demands to or
upon the Operating Partnership in respect of such Debt Securities and the
Indenture may be served;
(8) The period or periods, if any, within which, the price or prices
at which and the other terms and conditions upon which such Debt Securities
may, pursuant to any optional or mandatory redemption provisions, be
redeemed, as a whole or in part, at the option of the Operating
Partnership;
(9) The obligation, if any, of the Operating Partnership to redeem,
repay or purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a holder thereof, and the period or
periods within which, the price or prices at which and the other terms and
11
<PAGE>
conditions upon which such Debt Securities will be redeemed, repaid or
purchased, as a whole or in part, pursuant to such obligation;
(10) If other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(11) Whether the amount of payments of principal of (and premium or
Make-Whole Amount, if any, including any amount due upon redemption, if
any) or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on the yield on or trading price of
other securities, including United States Treasury securities, or on a
currency, currencies, currency unit or units, or composite currency or
currencies) and the manner in which such amounts shall be determined;
(12) Whether the principal of (and premium or Make-Whole Amount, if
any) or interest on the Debt Securities of the series are to be payable, at
the election of the Operating Partnership or a holder thereof, in a
currency or currencies, currency unit or units or composite currency or
currencies other than that in which such Debt Securities are denominated or
stated to be payable, the period or periods within which, and the terms and
conditions upon which, such election may be made, and the time and manner
of, and identity of the exchange rate agent with responsibility for,
determining the exchange rate between the currency or currencies, currency
unit or units or composite currency or currencies in which such Debt
Securities are denominated or stated to be payable and the currency or
currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are to be so payable;
(13) Provisions, if any, granting special rights to the holders of
Debt Securities of the series upon the occurrence of such events as may be
specified;
(14) Any deletions from, modifications of or additions to the Events
of Default or covenants of the Operating Partnership with respect to Debt
Securities of the series, whether or not such Events of Default or
covenants are consistent with the Events of Default or covenants described
herein;
(15) Whether and under what circumstances the Operating Partnership
will pay any additional amounts on such Debt Securities in respect of any
tax, assessment or governmental charge and, if so, whether the Operating
Partnership will have the option to redeem such Debt Securities in lieu of
making such payment;
(16) Whether Debt Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or both,
any restrictions applicable to the offer, sale or delivery of Bearer
Securities and the terms upon which Bearer Securities of the series may be
exchanged for Registered Securities of the series and vice versa (if
permitted by applicable laws and regulations), whether any Debt Securities
of the series are to be issuable initially in temporary global form and
whether any Debt Securities of the series are to be issuable in permanent
global form with or without coupons and, if so, whether beneficial owners
of interests in any such permanent global Security may exchange such
interests for Debt Securities of such series and of like tenor of any
authorized form and denomination and the circumstances under which any such
exchanges may occur, if other than in the manner provided in the Indenture,
and, if Registered Securities of the series are to be issuable as a Global
Security, the identity of the depository for such series;
(17) The date as of which any Bearer Securities of the series and any
temporary Global Security representing outstanding Debt Securities of the
series shall be dated if other than the date of original issuance of the
first Security of the series to be issued;
(18) The Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, the manner in
12
<PAGE>
which, or the Person to whom, any interest on any Bearer Security of the
series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on a
temporary Global Security on an Interest Payment Date will be paid if other
than in the manner provided in the Indenture;
(19) Whether such Debt Securities will be issued in certificated or
book entry form;
(20) The applicability, if any, of the defeasance and covenant
defeasance provisions of the Indenture to the Debt Securities of the
series;
(21) If the Debt Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, then
the form and/or terms of such certificates, documents or conditions; and
(22) Any other terms of the series (which terms shall not be
inconsistent with the provisions of the Indenture).
If so provided in the applicable Prospectus Supplement, the Debt Securities
may be issued at a discount below their principal amount and provide for less
than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof ("Original Issue Discount Securities"). In
such cases, all material U.S. federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as may be set forth in any Prospectus Supplement, the Indenture does
not contain any provisions that would limit the ability of the Operating
Partnership to incur indebtedness or that would afford holders of Debt
Securities protection in the event of a highly leveraged or similar transaction
involving the Operating Partnership or in the event of a change of control.
Restrictions on ownership and transfers of the Common Stock and Preferred Stock
are designed to preserve the Company's status as a REIT and, therefore, may act
to prevent or hinder a change of control. See "Restrictions on Transfers of
Capital Stock." Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of, or additions
to, the Events of Default or covenants of the Operating Partnership 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. Where Debt Securities of any series are issued in
bearer form, the special restrictions and considerations, including special
offering restrictions and special federal income tax considerations, applicable
to any such Debt Securities and to payment on and transfer and exchange of such
Debt Securities will be described in the applicable Prospectus Supplement.
Bearer Debt Securities will be transferable by delivery.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium or Make-Whole Amount, if any) and interest
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 Operating
Partnership, payment of interest may be made by check mailed to the address of
the person entitled thereto as it appears in the applicable register for such
Debt Securities or by wire transfer of funds to such person at an account
maintained within the United States.
Unless otherwise specified in the applicable Prospectus Supplement, any
interest not punctually paid or duly provided for on any Interest Payment Date
with respect to a Debt Security in registered form ("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
13
<PAGE>
the Trustee, in which case notice thereof shall be given to the holder of such
Debt Security not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner, all as more completely described in
the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for any
authorized denomination of other Debt Securities of the same series and of a
like aggregate principal amount and tenor upon surrender of such Debt Securities
at the corporate trust office of the applicable Trustee or at the office of any
transfer agent designated by the Operating Partnership for such purpose. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable Trustee or at the office of any transfer agent designated by the
Operating Partnership for such purpose. Every Debt Security in registered form
surrendered for registration of transfer or exchange must be duly endorsed or
accompanied by a written instrument of transfer, and the person requesting such
action must provide evidence of title and identity satisfactory to the
applicable Trustee or transfer agent. No service charge will be made for any
registration of transfer or exchange of any Debt Securities, but the Operating
Partnership may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. If the applicable
Prospectus Supplement refers to any transfer agent (in addition to the
applicable Trustee) initially designated by the Operating Partnership with
respect to any series of Debt Securities, the Operating Partnership may at any
time rescind the designation of any such transfer agent or approve a change in
the location through which any such transfer agent acts, except that the
Operating Partnership will be required to maintain a transfer agent in each
place of payment for such series. The Operating Partnership may at any time
designate additional transfer agents with respect to any series of Debt
Securities.
Neither the Operating Partnership nor any Trustee shall be required to (a)
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before the selection of
any Debt Securities for redemption and ending at the close of business on (i) if
such Debt Securities are issuable only as Registered Securities, the day of the
mailing of the relevant notice of redemption and (ii) if such Debt Securities
are issuable as Bearer Securities, the day of the first publication of the
relevant notice of redemption or, if such Debt Securities are also issuable as
Registered Securities and there is no publication, the mailing of the relevant
notice of redemption; (b) register the transfer of or exchange any Debt
Security, or portion thereof, so selected for redemption, in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part; (c)
exchange any Bearer Security so selected for redemption except that, to the
extent provided with respect to such Bearer Security, such Bearer Security may
be exchanged for a Registered Security of that series and of like tenor,
provided that such Registered Security shall be simultaneously surrendered for
redemption; or (d) issue, register the transfer of or exchange any Debt Security
that 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.
Payment in respect of Debt Securities in bearer form will be made in the
currency and in the manner designated in the applicable Prospectus Supplement,
subject to any applicable laws and regulations, at such paying agencies outside
the United States as the Operating Partnership may appoint from time to time.
The paying agents outside the United States, if any, initially appointed by the
Operating Partnership for a series of Debt Securities will be named in the
applicable Prospectus Supplement. Unless otherwise provided in the applicable
Prospectus Supplement, the Operating Partnership may at any time designate
additional paying agents or rescind the designation of any paying agents, except
that, if Debt Securities of a series are issuable in registered form, the
Operating Partnership will be required to maintain at least one paying agent in
each place of payment for such series and if Debt Securities of a series are
issuable in bearer form, the Operating Partnership will be required to maintain
at least one paying agent in a place of payment outside the United States where
Debt Securities of such series and any coupons appertaining thereto may be
presented and surrendered for payment.
14
<PAGE>
Merger, Consolidation or Sale of Assets
The Indenture provides that the Operating Partnership may, without the
consent of the holders of any outstanding Debt Securities, 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 Operating Partnership
shall be the continuing entity, or the successor entity (if other than the
Operating Partnership) formed by or resulting from any such consolidation or
merger or which shall have received the transfer of such assets is organized
under the laws of any domestic jurisdiction and expressly assumes the Operating
Partnership's obligations to pay principal of (and premium or Make-Whole Amount,
if any) and interest on all of the Debt Securities and the due and punctual
performance and observance of all of the covenants and conditions contained in
the Indenture; (b) immediately after giving effect to such transaction and
treating any indebtedness that becomes an obligation of the Operating
Partnership or any subsidiary as a result thereof as having been incurred by the
Operating Partnership or such subsidiary at the time of such transaction, no
Event of Default under the Indenture, and no event which, after notice or the
lapse of time, or both, would become such an Event of Default, shall have
occurred and be continuing; and (c) an officers' certificate and legal opinion
covering such conditions shall be delivered to each Trustee.
Certain Covenants
The applicable Prospectus Supplement will describe any material covenants
in respect of a series of Debt Securities that are not described in this
Prospectus. Unless otherwise indicated in the applicable Prospectus Supplement,
the Debt Securities will include the following covenants of the Operating
Partnership:
Existence. Except as permitted under "-Merger, Consolidation or Sale of
Assets," the Indenture requires the Operating Partnership to do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights and franchises; provided, however, that the Operating
Partnership shall not be required to preserve any right or franchise if it
determines that the preservation thereof is no longer desirable in the conduct
of its business.
Maintenance of Properties. The Indenture requires the Operating Partnership
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 Operating
Partnership may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that the Operating Partnership and its subsidiaries shall not be
prevented from selling or otherwise disposing of their properties for value in
the ordinary course of business.
Insurance. The Indenture requires the Operating Partnership to cause each
of its and its subsidiaries' insurable properties to be insured against loss or
damage at least equal to their then full insurable value with insurers of
recognized responsibility and, if described in the applicable Prospectus
Supplement, having a specified rating from a recognized insurance rating
service.
Payment of Taxes and Other Claims. The Indenture requires the Operating
Partnership to pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges levied or imposed upon it or any subsidiary or upon the income, profits
or property of the Operating Partnership or any subsidiary and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of the Operating Partnership or any subsidiary; provided,
however, that the Operating Partnership shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith.
15
<PAGE>
Events of Default, Notice and Waiver
Unless otherwise provided in the applicable Prospectus Supplement, the
Indenture provides that the following events are "Events of Default" with
respect to any series of Debt Securities issued thereunder: (a) default in the
payment of any interest on any Debt Security of such series when such interest
becomes due and payable that continues for a period of 30 days; (b) default in
the payment of the principal of (or premium or Make-Whole Amount, if any, on)
any Debt Security of such series when due and payable; (c) default in making any
sinking fund payment as required for any Debt Security of such series; (d)
default in the performance, or breach, of any other covenant or warranty of the
Operating Partnership in the Indenture with respect to the Debt Securities of
such series and continuance of such default or breach for a period of 60 days
after written notice as provided in the Indenture; (e) default under any bond,
debenture, note, mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Operating Partnership (or by any subsidiary the repayment of
which the Operating Partnership has guaranteed or for which the Operating
Partnership is directly responsible or liable as obligor or guarantor) having an
aggregate principal amount outstanding of at least $10,000,000, whether such
indebtedness now exists or shall hereafter be created, which default shall have
resulted in such indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable, without
such indebtedness having been discharged, or such acceleration having been
rescinded or annulled, within a period of 10 days after written notice to the
Operating Partnership as provided in the Indenture; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Operating Partnership or any Significant
Subsidiary; and (g) any other event of default provided with respect to a
particular series of Debt Securities. The term "Significant Subsidiary" has the
meaning ascribed to such term in Regulation S-X promulgated under the Securities
Act.
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every
such case the applicable Trustee or the holders of not less than 25% in
principal amount of the 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, and premium or
Make-Whole Amount, if any, on, all the Debt Securities of that series to be due
and payable immediately by written notice thereof to the Operating Partnership
(and to the applicable Trustee if given by the holders); provided, that in the
case of an Event of Default described under clause (f) of the preceding
paragraph, acceleration is automatic. However, at any time after such a
declaration of acceleration with respect to Debt Securities of such series 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 may rescind and
annul such declaration and its consequences if (a) the Operating Partnership
shall have deposited with the applicable Trustee all required payments of the
principal of (and premium or Make-Whole Amount, if any) and interest on the Debt
Securities of such series, 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 and the
premium or Make-Whole Amount, if any), with respect to Debt Securities of such
series have been cured or waived as provided in the Indenture. The Indenture
will also provide that the holders of not less than a majority in principal
amount of the outstanding Debt Securities of any series may waive any past
default with respect to such series and its consequences, except a default (i)
in the payment of the principal of (or premium or Make-Whole Amount, if any) or
interest on any Debt Security of such series or (ii) in respect of a covenant or
provision contained in the Indenture that cannot be modified or amended without
the consent of the holder of each outstanding Debt Security affected thereby.
The Indenture requires each Trustee to give notice to the holders of Debt
Securities within 90 days of a default under the Indenture unless such default
shall have 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 or Make-Whole Amount, if any) or interest on any Debt Security of
such series or in the payment of any sinking fund installment in respect of
16
<PAGE>
any Debt Security of such series) if specified responsible officers of such
Trustee consider such withholding to be in the interest of such holders.
The Indenture provides that no holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the applicable
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the holders of not
less than 25% in principal amount of the outstanding Debt Securities of such
series, as well as an offer of indemnity reasonably satisfactory to it. This
provision will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and premium
or Make-Whole Amount, if any) and interest on such Debt Securities at the
respective due dates or redemption dates thereof.
The Indenture provides that, subject to provisions in the Indenture
relating to its duties in case of default, a Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request or
direction of any holders of any series of Debt Securities then outstanding under
the Indenture, unless such holders shall have offered to the Trustee thereunder
reasonable security or indemnity. The holders of not less than a majority in
principal amount of the outstanding Debt Securities of any series (or of all
Debt Securities then outstanding under the Indenture, as the case may be) shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the applicable Trustee, or of exercising any trust
or power conferred upon such Trustee. However, a Trustee may refuse to follow
any direction which is in conflict with any law or the Indenture, which may
involve such Trustee in personal liability or which may be unduly prejudicial to
the holders of Debt Securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to deliver to each Trustee a certificate, signed by
one of several specified officers of the Company, stating whether or not such
officer has knowledge of any default under the Indenture and, if so, specifying
each such default and the nature and status thereof.
Modification of the Indenture
Modifications and amendments of the Indenture are 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 the Indenture 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 premium or Make-Whole Amount 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 or currency, for payment of principal of (or
premium or Make-Whole Amount, 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
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 Indenture; or (f) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the required percentage to
effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the holder of such Debt Security.
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series, waive, insofar as that series is concerned, compliance by the
Operating Partnership with certain restrictive covenants of the Indenture.
17
<PAGE>
Modifications and amendments of the Indenture are permitted to be made by
the Operating Partnership and the respective Trustee thereunder without the
consent of any holder of Debt Securities for any of the following purposes: (a)
to evidence the succession of another person to the Operating Partnership as
obligor under the Indenture; (b) to add to the covenants of the Operating
Partnership for the benefit of the holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Operating
Partnership in the Indenture; (c) to add events of default for the benefit of
the holders of all or any series of Debt Securities; (d) to add or change any
provisions of the 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
shall not adversely affect the interests of the holders of the Debt Securities
of any series in any material respect; (e) to change or eliminate any provisions
of the Indenture, provided that any such change or elimination shall become
effective only when there are no Debt Securities outstanding of any series
created prior thereto which are entitled to the benefit of such provision; (f)
to secure the Debt Securities; (g) to establish the form or terms of Debt
Securities of any series; (h) to provide for the acceptance of appointment by a
successor Trustee or facilitate the administration of the trusts under the
Indenture by more than one Trustee; (i) to cure any ambiguity, defect or
inconsistency in the Indenture, provided that such action shall not adversely
affect the interests of holders of Debt Securities of any series issued under
the Indenture in any material respect; or (j) to supplement any of the
provisions of the Indenture to the extent necessary to permit or facilitate
defeasance and discharge of any series of such Debt Securities, provided that
such action shall not adversely affect the interests of the holders of the
outstanding Debt Securities of any series in any material respect.
The Indenture provides that in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (a) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (b) the principal amount of
any Debt Security denominated in a foreign currency that shall be deemed
Outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount of such Debt Security (or, in
the case of an Original Issue Discount Security, the U.S. dollar equivalent on
the issue date of such Debt Security of the amount determined as provided in (a)
above), (c) the principal amount of an indexed security that shall be deemed
Outstanding shall be the principal face amount of such indexed security at
original issuance, unless otherwise provided with respect to such indexed
security pursuant to the Indenture, and (d) Debt Securities owned by the
Operating Partnership or any other obligor upon the Debt Securities or any
affiliate of the Operating Partnership or of such other obligor shall be
disregarded.
The Indenture contains provisions for convening meetings of the holders of
Debt Securities of a series. A meeting will be permitted to be called at any
time by the applicable Trustee, and also, upon request, by the Operating
Partnership or the holders of at least 25% in principal amount of the
outstanding Debt Securities of such series, in any such case upon notice given
as provided in the Indenture. Except for any consent that must be given by the
holder of each Debt Security affected by certain modifications and amendments of
the Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting 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 the Indenture will be
binding on all holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
outstanding Debt Securities of a series; provided, however, that if any action
is to be
18
<PAGE>
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.
Notwithstanding the foregoing provisions, the Indenture provides that if
any action is to be taken at a meeting of holders of Debt Securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver and other action that the 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 of the holders of
such series and one or more additional series: (a) there shall be no minimum
quorum requirement for such meeting, and (b) the principal amount of the
outstanding Debt Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under the Indenture.
Discharge, Defeasance and Covenant Defeasance
Unless otherwise indicated in the applicable Prospectus Supplement, the
Operating Partnership will be permitted, at its option, to discharge certain
obligations to holders of any series of Debt Securities issued under the
Indenture 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 or Make-Whole Amount, if any) and interest to the date of such deposit
(if such Debt Securities have become due and payable) or to the stated maturity
or redemption date, as the case may be.
The Indenture provides that, unless otherwise indicated in the applicable
Prospectus Supplement, the Operating Partnership 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") or (b) to be released from certain obligations with respect to
such Debt Securities under the Indenture (including the restrictions described
under "-Certain Covenants") or, if provided in the applicable Prospectus
Supplement, its obligations with respect to any other covenant, and any omission
to comply with such obligations shall not constitute an Event of Default with
respect to such Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Operating Partnership with the applicable Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are payable at
stated maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities, which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium or Make-Whole Amount, 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 Operating Partnership has delivered to the applicable Trustee an
opinion of counsel (as specified in the Indenture) to the effect that the
holders of such Debt Securities will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to U.S. 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 received from the Internal Revenue Service or a change in appli-
19
<PAGE>
cable United States federal income tax law occurring after the date of the
Indenture. In the event of such defeasance, the holders of such Debt Securities
would thereafter be able to look only to such trust fund for payment of
principal (and premium or Make-Whole Amount, if any) and interest.
"Government Obligations" means securities that are (a) 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 (b) 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 payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Operating Partnership has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(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 or Make-Whole Amount, 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 or
Make-Whole Amount, 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 shall be
made in U.S. dollars.
In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (d) under "-Events of Default, Notice and Waiver"
with respect to specified sections of the Indenture (which sections would no
longer be applicable to such Debt Securities) or described in clause (g) under
"-Events of Default, Notice and Waiver" with respect to any other covenant as to
which there has been covenant defeasance, the amount in such currency, currency
unit or composite currency in which such Debt Securities are payable, and
Government Obligations on deposit with the applicable Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
stated maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Operating Partnership would remain liable to make payment of such
amounts due at the time of acceleration.
20
<PAGE>
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.
No Conversion Rights
The Debt Securities will not be convertible into or exchangeable for any
capital stock of the Company or equity interest in the Operating Partnership.
Global Securities
The Debt Securities of a series may be issued in whole or in part in
book-entry form consisting of one or more global securities (the "Global
Securities") that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the applicable Prospectus Supplement relating to
such series. Global Securities may be issued in either registered or bearer form
and in either temporary or permanent form. The specific terms of the depositary
arrangement with respect to a series of Debt Securities will be described in the
applicable Prospectus Supplement relating to such series.
Payment and Paying Agents
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium or Make-Whole Amount, if any) and interest
on any series of Debt Securities will be payable at the corporate trust office
of the Trustee, the address of which will be stated in the applicable Prospectus
Supplement; provided that, at the option of the Operating Partnership, payment
of interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register for such Debt Securities or by
wire transfer of funds to such person at an account maintained within the United
States.
All moneys paid by the Operating Partnership to a paying agent or a Trustee
for the payment of the principal of or any premium, Make-Whole Amount or
interest on any Debt Security which remain unclaimed at the end of two years
after such principal, premium, Make-Whole Amount or interest has become due and
payable will be repaid to the Operating Partnership, and the holder of such Debt
Security thereafter may look only to the Operating Partnership for payment
thereof.
DESCRIPTION OF PREFERRED STOCK
The description of the Preferred Stock set forth below does not purport to
be complete and is qualified in its entirety by reference to the Company's
Amended and Restated Articles of Incorporation, as amended (the "Articles of
Incorporation"), and Amended and Restated Bylaws (the "Bylaws"). All material
terms of the Preferred Shares, except those disclosed in the applicable
Prospectus Supplement, are described in this Prospectus.
General
Under the Articles of Incorporation, the Company has authority to issue 10
million shares of Preferred Stock, par value $.01 per share. The Preferred Stock
may be issued from time to time, in one or more series, as authorized by the
Board of Directors of the Company. Prior to issuance of shares of each series,
the Board of Directors is required by the Maryland General Corporation Law
("MGCL") and the Articles of Incorporation to fix for each series, subject to
the provisions of the Articles of Incorporation regarding excess stock, $.01 par
value per share ("Excess Stock"), the terms, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of
21
<PAGE>
redemption of such shares as may be permitted by Maryland law. Such rights,
powers, restrictions and limitations could include the right to receive
specified dividend payments and payments on liquidation prior to any such
payments to holders of Common Stock or other capital stock of the Company
ranking junior to the Preferred Stock. The outstanding shares of Preferred Stock
are, and additional shares of Preferred Stock will be, when issued, fully paid
and nonassessable and will have no preemptive rights. The Board of Directors
could authorize the issuance of shares of Preferred Stock with terms and
conditions that could have the effect of discouraging a takeover or other
transaction that holders of Common Stock might believe to be in their best
interests or in which holders of some, or a majority, of the shares of Common
Stock might receive a premium for their shares over the then market price of
such shares of Common Stock.
Outstanding Preferred Stock
At March 31, 1997, the Company had outstanding 1,650,000 shares of 9 1/2%
Series A Preferred Stock, $.01 par value ("Series A Preferred Stock"),
constituting all of the Company's then outstanding Preferred Stock. The terms of
the Series A Preferred Stock provide for a preference as to the payment of
dividends over shares of Common Stock and any other capital stock ranking junior
to the Series A Preferred Stock, and for cumulative quarterly dividends at the
rate of $2.375 per share per year. On and after November 17, 2000, the Series A
Preferred Stock is subject to redemption, in whole or in part, at the option of
the Company, at a cash redemption price of $25.00 per share, plus accrued and
unpaid dividends.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Series A Preferred Stock will be
entitled to receive out of the Company's assets available for distribution to
stockholders, before any distribution of assets is made to holders of Common
Stock or any other shares of capital stock ranking as to such distributions
junior to the Series A Preferred Stock, liquidating distributions in the amount
of $25.00 per share, plus all accrued and unpaid dividends.
The Series A Preferred Stock is also entitled to the benefits of a
Guarantee and Payment Agreement between First Industrial Securities, L.P.
("Securities, L.P.") and its general partner, First Industrial Securities
Corporation (each a subsidiary of the Company), for the benefit of American
National Bank and Trust Company of Chicago as Guarantee Agent thereunder (the
"Guarantee Agreement") pursuant to which Securities, L.P. has guaranteed,
subject to the terms of the Guarantee Agreement, dividends on, and redemption
and liquidation payments with respect to, the Series A Preferred Stock. No other
Preferred Stock of the Company will be entitled to the benefits of the Guarantee
Agreement.
Except as expressly required by law and in certain other limited
circumstances, the holders of the Series A Preferred Stock are not entitled to
vote. The consent of holders of at least 66% of the outstanding Series A
Preferred Stock and any other series of Preferred Stock ranking on a parity
therewith, voting as a single class, is required to authorize another class of
shares senior to such Preferred Stock. The affirmative vote or consent of the
holders of at least 66% of the outstanding shares of Series A Preferred Stock is
required to amend or repeal any provision of, or add any provision to, the
Articles of Incorporation, including the Articles Supplementary relating to the
Series A Preferred Stock, if such action would materially and adversely alter or
change the rights, preferences or privileges of the Series A Preferred Stock.
Future Series of Preferred Stock
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Articles of Incorporation and Bylaws and any
applicable amendment to the Articles of Incorporation designating terms of a
series of Preferred Stock (a "Designating Amendment").
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including:
22
<PAGE>
(1) The title and stated value of such Preferred Stock;
(2) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the offering price of such Preferred
Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock;
(4) The date from which dividends on such Preferred Stock shall
accumulate, if applicable;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) The provision for a sinking fund, if any, for such Preferred
Stock;
(7) The provision for redemption, if applicable, of such Preferred
Stock;
(8) Any listing of such Preferred Stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock, including the conversion price
(or manner of calculation thereof);
(10) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(11) A discussion of federal income tax considerations applicable to
such Preferred Stock;
(12) The relative ranking and preference of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;
(13) Any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company; and
(14) Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to preserve
the status of the Company as a REIT.
Rank
Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company, rank (i) senior to all classes or
series of Common Stock, and to all equity securities ranking junior to such
Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company; (ii) on a parity with all equity
securities issued by the Company the terms of which specifically provide that
such equity securities rank on a parity with the Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the
Company; and (iii) junior to all equity securities issued by the Company the
terms of which specifically provide that such equity securities rank senior to
the Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company. The term "equity securities" does not
include convertible debt securities.
Dividends
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of assets
of the Company legally available for payment, cash dividends at such rates and
on such dates as will be set forth in the applicable Prospectus Supplement. Each
such dividend shall be payable to holders of record as they appear on the share
transfer books of the Company on such record dates as shall be fixed by the
Board of Directors of the Company.
23
<PAGE>
Dividends on any series of the Preferred Stock 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 Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are non-cumulative, then the holders of such
series of the Preferred Stock 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 Preferred Stock of any series is outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of the Company of
any other series ranking, as to dividends, on a parity with or junior to the
Preferred Stock of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for such payment on the Preferred Stock of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock 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
is set apart for such payment on the Preferred Stock of such series. When
dividends are not paid in full (or a sum sufficient for such full payment is not
so set apart) upon Preferred Stock of any series and the shares of any other
series of Preferred Stock ranking on a parity as to dividends with the Preferred
Stock of such series, all dividends declared upon Preferred Stock of such series
and any other series of Preferred Stock ranking on a parity as to dividends with
such Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share of Preferred Stock of such series and such other series of
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Stock of such series (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend) and such
other series of Preferred Stock bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof is set apart for payment for the then current dividend
period, no dividends (other than in shares of Common Stock or other shares of
capital stock ranking junior to the Preferred Stock of such series as to
dividends and upon liquidation) shall be declared or paid or set aside for
payment nor shall any other distribution be declared or made upon the Common
Stock, or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock of such series as to dividends or upon
liquidation, nor shall any shares of Common Stock, or any other shares of
capital stock of the Company ranking junior to or on a parity with the Preferred
Stock 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 capital stock of the
Company ranking junior to the Preferred Stock of such series as to dividends and
upon liquidation).
Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains payable.
24
<PAGE>
Redemption
If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock does 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 Stock of any series is payable only from the net
proceeds of the issuance of shares of capital stock of the Company, the terms of
such Preferred Stock may provide that, if no such shares of capital stock shall
have been issued or to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then due, such
Preferred Stock shall automatically and mandatorily be converted into the
applicable shares of capital stock of the Company pursuant to conversion
provisions specified in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of such
series of Preferred Stock shall have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current dividend period, and
(ii) if a series of Preferred Stock does not have a cumulative dividend, full
dividends on all shares of the Preferred Stock of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for the then current dividend period, no
shares of such series of Preferred Stock shall be redeemed unless all
outstanding shares of Preferred Stock of such series are simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of Preferred Stock of such series to preserve the REIT status of
the Company or pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of Preferred Stock of such series. In
addition, unless (i) if such series of Preferred Stock has a cumulative
dividend, full cumulative dividends on all outstanding shares of such series of
Preferred Stock have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for all past
dividend periods and the then current dividend period, and (ii) if such series
of Preferred Stock does not have a cumulative dividend, full dividends on the
Preferred stock of such series have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, the Company shall not purchase or
otherwise acquire directly or indirectly any shares of Preferred Stock of such
series (except by conversion into or exchange for capital shares of the Company
ranking junior to the Preferred Stock of such series as to dividends and upon
liquidation); provided, however, that the foregoing shall not prevent the
purchase or acquisition of shares of Preferred Stock of such series to preserve
the REIT status of the Company or pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding shares of Preferred Stock of
such series.
If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
or for which redemption is requested by such holder (with adjustments to avoid
redemption of fractional shares) or by any other equitable manner determined by
the Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that divi-
25
<PAGE>
dends on the shares to be redeemed will cease to accrue on such redemption date;
and (vi) the date upon which the holder's conversion rights, if any, as to such
shares shall terminate. If fewer than all the shares of Preferred Stock of any
series are to be redeemed, the notice mailed to each such holder thereof shall
also specify the number of shares of Preferred Stock to be redeemed from each
such holder. If notice of redemption of any Preferred Stock has been given and
if the funds necessary for such redemption have been set aside by the Company in
trust for the benefit of the holders of any Preferred Stock so called for
redemption, then from and after the redemption date dividends will cease to
accrue on such Preferred Stock, and all rights of the holders of such shares
will terminate, except the right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Stock or any other class or series of capital
stock of the Company ranking junior to the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up of the Company, the
holders of each series of Preferred Stock shall be entitled to receive out of
assets of the Company legally available for distribution to stockholders
liquidating distributions in the amount of the liquidation preference per share,
if any, set forth in the applicable Prospectus Supplement, plus an amount equal
to all dividends accrued and unpaid thereon (which shall not include any
accumulation in respect of unpaid noncumulative dividends for prior dividend
periods). After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Preferred Stock will have no right or
claim to any of the remaining assets of the Company. In the event that, upon any
such voluntary or involuntary liquidation, dissolution or winding up, the
available assets of the Company are insufficient to pay the amount of the
liquidating distributions on all outstanding shares of Preferred Stock and the
corresponding amounts payable on all shares of other classes or series of
capital stock of the Company ranking on a parity with the Preferred Stock in the
distribution of assets, then the holders of the Preferred Stock and all other
such classes or series of capital stock shall share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes or series of capital stock ranking junior to
the Preferred Stock upon liquidation, dissolution or winding up, according to
their respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
the Company with or into any other corporation, trust or entity, or the sale,
lease or conveyance of all or substantially all of the property or business of
the Company, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Company.
Voting Rights
Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock of a series remain outstanding, the Company will not,
without the affirmative vote or consent of the holders of at least two-thirds of
the shares of such series of Preferred Stock outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such series voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any class or series of capital stock ranking prior to such
series of Preferred Stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up or reclassify
any authorized capital stock of the Company into such shares, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) amend, alter or repeal the provisions
of the Company's Articles of Incorporation or the Designating Amendment for such
series of Preferred Stock, whether by merger, consolidation or otherwise (an
"Event"), so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Pre-
26
<PAGE>
ferred Stock 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 Stock remains outstanding with the terms thereof materially unchanged,
taking into account that upon the occurrence of an Event the Company may not be
the surviving entity, the occurrence of any such Event shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
power of holders of Preferred Stock, and provided further that (x) any increase
in the amount of the authorized Preferred Stock or the creation or issuance of
any other series of Preferred Stock, or (y) any increase in the amount of
authorized shares of such series or any other series of Preferred Stock, in each
case ranking on a parity with or junior to the Preferred Stock of such series
with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
Conversion Rights
The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into Common Stock will be set forth in the applicable Prospectus
Supplement relating thereto. Such terms will include the number of shares of
Common Stock into which the shares of Preferred Stock are convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such series of Preferred Stock.
Restrictions on Ownership
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by individuals of the Company's outstanding
equity securities, including any Preferred Stock. Therefore, the Designating
Amendment for each series of Preferred Stock may contain provisions restricting
the ownership and transfer of the Preferred Stock. The applicable Prospectus
Supplement will specify any additional ownership limitation relating to a series
of Preferred Stock. See "Restrictions on Transfers of Capital Stock."
Transfer Agent
The transfer agent and registrar for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
The Company may, at its option, elect to offer Depositary Shares rather
than full shares of Preferred Stock. In the event such option is exercised, each
of the Depositary Shares will represent ownership of and entitlement to all
rights and preferences of a fraction of a share of Preferred Stock of a
specified series (including dividend, voting, redemption and liquidation
rights). The applicable fraction will be specified in the Prospectus Supplement.
The shares of Preferred Stock represented by the Depositary Shares will be
deposited with a Depositary (the "Depositary") named in the applicable
Prospectus Supplement, under a Deposit Agreement (the "Deposit Agreement"),
among the Company, the Depositary and the holders of the Depositary Re-
27
<PAGE>
ceipts. Certificates evidencing Depositary Shares ("Depositary Receipts") will
be delivered to those persons purchasing Depositary Shares in the offering. The
Depositary will be the transfer agent, registrar and dividend disbursing agent
for the Depositary Shares. Holders of Depositary Receipts agree to be bound by
the Deposit Agreement, which requires holders to take certain actions such as
filing proof of residence and paying certain charges.
The summary of terms of the Depositary Shares contained in this Prospectus
does not purport to be complete and is subject to, and qualified in its entirety
by, the provisions of the Deposit Agreement, the Articles of Incorporation and
the form of Designating Amendment for the applicable series of Preferred Stock.
All material terms of the Depository Shares, except those disclosed in the
applicable Prospectus Supplement, are described in this Prospectus.
Dividends
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the series of Preferred Stock represented
by the Depositary Shares to the record holders of Depositary Receipts in
proportion to the number of Depositary Shares owned by such holders on the
relevant record date, which will be the same date as the record date fixed by
the Company for the applicable series of Preferred Stock. The Depositary,
however, will distribute only such amount as can be distributed without
attributing to any Depositary Share a fraction of one cent, and any balance not
so distributed will be added to and treated as part of the next sum received by
the Depositary for distribution to record holders of Depositary Receipts then
outstanding.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Receipts
entitled thereto, in proportion, as nearly as may be practicable, to the number
of Depositary Shares owned by such holders on the relevant record date, unless
the Depositary determines (after consultation with the Company) that it is not
feasible to make such distribution, in which case the Depositary may (with the
approval of the Company) adopt any other method for such distribution as it
deems equitable and appropriate, including the sale of such property (at such
place or places and upon such terms as it may deem equitable and appropriate)
and distribution of the net proceeds from such sale to such holders.
No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock converted into Excess Stock.
Liquidation Preference
In the event of the liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or involuntary, the holders of each Depositary
Share will be entitled to the fraction of the liquidation preference accorded
each share of the applicable series of Preferred Stock, as set forth in the
Prospectus Supplement.
Redemption
If the series of Preferred Stock represented by the applicable series of
Depositary Shares is redeemable, such Depositary Shares will be redeemed from
the proceeds received by the Depositary resulting from the redemption, in whole
or in part, of Preferred Stock held by the Depositary. Whenever the Company
redeems any Preferred Stock held by the Depositary, the Depositary will redeem
as of the same redemption date the number of Depositary Shares representing the
Preferred Stock so redeemed. The Depositary will mail the notice of redemption
promptly upon receipt of such notice from the Company and not less than 30 nor
more than 60 days prior to the date fixed for redemption of the Preferred Stock
and the Depositary Shares to the record holders of the Depositary Receipts.
28
<PAGE>
Voting
Promptly upon receipt of notice of any meeting at which the holders of the
series of Preferred Stock represented by the applicable series of Depositary
Shares are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Receipts as of
the record date for such meeting. Each such record holder of Depositary Receipts
will be entitled to instruct the Depositary as to the exercise of the voting
rights pertaining to the number of shares of Preferred Stock represented by such
record holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote such Preferred Stock represented by such Depositary Shares
in accordance with such instructions, and the Company will agree to take all
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting any of the
Preferred Stock to the extent that it does not receive specific instructions
from the holders of Depositary Receipts.
Withdrawal of Preferred Stock
Upon surrender of Depositary Receipts at the principal office of the
Depositary, upon payment of any unpaid amount due the Depositary, and subject to
the terms of the Deposit Agreement, the owner of the Depositary Shares evidenced
thereby is entitled to delivery of the number of whole shares of Preferred Stock
and all money and other property, if any, represented by such Depositary Shares.
Partial shares of Preferred Stock will not be issued. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of Preferred
Stock to be withdrawn, the Depositary will deliver to such holder at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares. Holders of Preferred Stock thus withdrawn will not thereafter be
entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Receipts evidencing Depositary Shares therefor.
Amendment and Termination of Deposit Agreement
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary. However, any
amendment which materially and adversely alters the rights of the holders (other
than any change in fees) of Depositary Shares will not be effective unless such
amendment has been approved by at least a majority of the Depositary Shares then
outstanding. No such amendment may impair the right, subject to the terms of the
Deposit Agreement, of any owner of any Depositary Shares to surrender the
Depositary Receipt evidencing such Depositary Shares with instructions to the
Depositary to deliver to the holder the Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law.
The Deposit Agreement will be permitted to be terminated by the Company
upon not less than 30 days prior written notice to the applicable Depositary if
(i) such termination is necessary to preserve the Company's status as a REIT or
(ii) a majority of each series of Preferred Stock affected by such termination
consents to such termination, whereupon such Depositary will be required to
deliver or make available to each holder of Depositary Receipts, upon surrender
of the Depositary Receipts held by such holder, such number of whole or
fractional shares of Preferred Stock as are represented by the Depositary Shares
evidenced by such Depositary Receipts together with any other property held by
such Depositary with respect to such Depositary Receipts. The Company will agree
that if the Deposit Agreement is terminated to preserve the Company's status as
a REIT, then the Company will use its best efforts to list the Preferred Stock
issued upon surrender of the related Depositary Shares on a national securities
exchange. In addition, the Deposit Agreement will automatically terminate if (i)
all outstanding Depositary Shares thereunder shall have been redeemed, (ii)
there shall have been a final distribution in respect of the related Preferred
Stock in connection with any liquidation, dissolution or winding up of the
Company and such distribution shall have been distributed to the holders of
Depositary Receipts evidencing the Depositary Shares representing such Preferred
Stock or (iii) each share of
29
<PAGE>
the related Preferred Stock shall have been converted into stock of the Company
not so represented by Depositary Shares.
Charges of Depositary
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Depositary in connection with the initial deposit of the
Preferred Stock and initial issuance of the Depositary Shares, and redemption of
the Preferred Stock and all withdrawals of Preferred Stock by owners of
Depositary Shares. Holders of Depositary Receipts will pay transfer, income and
other taxes and governmental charges and certain other charges as are provided
in the Deposit Agreement to be for their accounts. In certain circumstances, the
Depositary may refuse to transfer Depositary Shares, may withhold dividends and
distributions and sell the Depositary Shares evidenced by such Depositary
Receipt if such charges are not paid.
Miscellaneous
The Depositary will forward to the holders of Depositary Receipts all
reports and communications from the Company which are delivered to the
Depositary and which the Company is required to furnish to the holders of the
Preferred Stock. In addition, the Depositary will make available for inspection
by holders of Depositary Receipts at the principal office of the Depositary, and
at such other places as it may from time to time deem advisable, any reports and
communications received from the Company which are received by the Depositary as
the holder of Preferred Stock.
Neither the Depositary nor the Company assumes any obligation or will be
subject to any liability under the Deposit Agreement to holders of Depositary
Receipts other than for its negligence or willful misconduct. Neither the
Depositary nor the Company will be liable if it is prevented or delayed by law
or any circumstance beyond its control in performing its obligations under the
Deposit Agreement. The obligations of the Company and the Depositary under the
Deposit Agreement will be limited to performance in good faith of their duties
thereunder, and they will not be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Company and the Depositary may rely on
written advice of counsel or accountants, on information provided by holders of
the Depositary Receipts or other persons believed in good faith to be competent
to give such information and on documents believed to be genuine and to have
been signed or presented by the proper party or parties.
In the event the Depositary shall receive conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and the
Company, on the other hand, the Depositary shall be entitled to act on such
claims, requests or instructions received from the Company.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice for
resignation or removal and must be a bank or trust company having its principal
office in the United States of America and having a combined capital and surplus
of at least $150,000,000.
Federal Income Tax Consequences
Owners of Depositary Shares will be treated for Federal income tax purposes
as if they were owners of the Preferred Stock represented by such Depositary
Shares. Accordingly, such owners will be entitled to
30
<PAGE>
take into account, for Federal income tax purposes, income and deductions to
which they would be entitled if they were holders of such Preferred Stock. In
addition, (i) no gain or loss will be recognized for Federal income tax purposes
upon the withdrawal of Preferred Stock in exchange for Depositary Shares, (ii)
the tax basis of each share of Preferred Stock to an exchanging owner of
Depositary Shares will, upon such exchange, be the same as the aggregate tax
basis of the Depositary Shares exchanged therefor, and (iii) the holding period
for Preferred Stock in the hands of an exchanging owner of Depositary Shares
will include the period during which such person owned such Depositary Shares.
DESCRIPTION OF COMMON STOCK
The description of the Company's Common Stock set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Articles of Incorporation and the Bylaws. All material terms of the Company's
Common Stock are included in this Prospectus.
General
Under the Articles of Incorporation, the Company has authority to issue 100
million shares of Common Stock, par value $.01 per share. Under Maryland law,
stockholders generally are not responsible for the corporation's debts or
obligations. At March 31, 1997, the Company had outstanding 30,081,117 shares of
Common Stock.
Terms
Subject to the preferential rights of any other shares or series of stock
(including Preferred Stock outstanding from time to time) and to the provisions
of the Articles of Incorporation regarding Excess Stock, holders of shares of
Common Stock will be entitled to receive dividends on shares of Common Stock if,
as and when authorized and declared by the Board of Directors of the Company out
of assets legally available therefor and to share ratably in the assets of the
Company legally available for distribution to its stockholders in the event of
its liquidation, dissolution or winding up after payment of, or adequate
provision for, all known debts and liabilities of the Company.
Subject to the provisions of the Articles of Incorporation regarding Excess
Stock, each outstanding share of Common Stock entitles the holder to one vote on
all matters submitted to a vote of stockholders, including the election of
Directors, and, except as otherwise required by law or except as provided with
respect to any other class or series of stock, the holders of Common Stock will
possess the exclusive voting power. There is no cumulative voting in the
election of Directors, which means that the holders of a majority of the
outstanding shares of Common Stock can elect all of the Directors then standing
for election, and the holders of the remaining shares of Common Stock will not
be able to elect any Directors.
Holders of Common Stock have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any securities of the Company.
Subject to the provisions of the Articles of Incorporation regarding Excess
Stock, all shares of Common Stock will have equal dividend, distribution,
liquidation and other rights, and will have no preference, appraisal or exchange
rights.
Pursuant to the MGCL, a corporation generally cannot dissolve, amend its
Articles of Incorporation, merge, sell all or substantially all of its assets,
engage in a share exchange or engage in similar transactions outside the
ordinary course of business unless approved by the affirmative vote of
stockholders holding at least two-thirds of the shares entitled to vote on the
matter unless a lesser percentage (but not less than a majority of all of the
votes to be cast on the matter) is set forth in the corporation's Articles of
Incorporation. The Articles of Incorporation do not provide for a lesser
percentage in such situations.
31
<PAGE>
Restrictions on Ownership
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by individuals of the Company's outstanding
equity securities. See "Restrictions on Transfers of Capital Stock."
Transfer Agent
The transfer agent and registrar for the Common Stock is KeyCorp
Shareholder Services, Inc. of Cleveland, Ohio.
CERTAIN PROVISIONS OF MARYLAND LAW AND
THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The following summary of certain provisions of Maryland law and the
Company's Articles of Incorporation and Bylaws does not purport to be complete
and is qualified by reference to Maryland law and the Company's Articles of
Incorporation and Bylaws.
Business Combinations
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and an Interested Stockholder or in certain circumstances, an
associate or an affiliate thereof are prohibited for five years after the most
recent date on which the Interested Stockholder became an Interested
Stockholder. Thereafter, any such business combination must be recommended by
the board of directors of the corporation and approved by the affirmative vote
of at least (a) 80% of the vote entitled to be cast by holders of outstanding
voting shares of the corporation and (b) two-thirds of the vote entitled to be
cast by holders of outstanding voting shares of the corporation other than
shares held by the Interested Stockholder with whom the business combination is
to be effected, unless, among other things, the corporation's stockholders
receive a minimum price (as defined in the MGCL) for their shares and the
consideration is received in cash or in the same form as previously paid by the
Interested Stockholder for its shares. These provisions of Maryland law do not
apply, however, to business combinations that are approved or exempted by the
board of directors of the corporation prior to the time that the Interested
Stockholder becomes an Interested Stockholder. The Articles of Incorporation
exempt from these provisions of the MGCL any business combination in which there
is no Interested Stockholder other than Mr. Shidler or any entity controlled by
Mr. Shidler unless Mr. Shidler is an Interested Stockholder without taking into
account Mr. Shidler's ownership of shares of the Company's Common Stock and the
right to acquire shares of the Company's Common Stock in an aggregate amount
which does not exceed the number of shares of the Company's Common Stock which
Mr. Shidler owned and had the right to acquire (including through the exchange
of Units) at the time of the consummation of the Company's initial public
offering.
Control Share Acquisitions
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror or by officers or directors who
are employees of the corporation. "Control shares" are voting shares of stock
that, if aggregated, with all other
32
<PAGE>
shares of stock previously acquired by that person, would entitle the acquiror
to exercise voting power in electing directors within one of the following
ranges of voting power; (i) one-fifth or more but less than one-third, (ii)
one-third or more but less than a majority, or (iii) a majority of all voting
power. Control shares do not include shares the acquiring person is then
entitled to vote as a result of having previously obtained stockholder approval.
A "control share acquisition" means the acquisition of control shares, subject
to certain exceptions.
A person who has made or proposes to make a control share acquisition may
compel the board of directors, upon satisfaction of certain conditions
(including an undertaking to pay expenses), to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by statute, then
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to voting rights, as of
the date of the last control share acquisition or of any meeting of stockholders
at which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a stockholders meeting and the
acquiror becomes entitled to vote a majority of the shares entitled to vote, all
other stockholders may exercise appraisal rights. The fair value of the shares
as determined for purposes of the appraisal rights may not be less than the
highest price per share paid in the control share acquisition. Certain
limitations and restrictions otherwise applicable to the exercise of dissenters'
rights do not apply in the context of a control share acquisition.
The control share acquisition statute does not apply to shares acquired in
a merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the Company's Articles
of Incorporation.
The Company's Bylaws contain a provision exempting any and all acquisitions
of the Company's shares of capital stock from the control shares provisions of
the MGCL. There can be no assurance that this provision will not be amended or
eliminated in the future.
Amendment of Articles of Incorporation
The Company's Articles of Incorporation, including its provisions on
classification of the Board of Directors (discussed below), 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.
Meetings of Stockholders
The Company's Bylaws provide for annual meetings of stockholders to be held
on the third Wednesday in April or on any other day as may be established from
time to time by the Board of Directors. Special meetings of stockholders may be
called by (i) the Company's Chairman of the Board or the Company's President,
(ii) a majority of the Board of Directors or (iii) stockholders holding at least
25% of the outstanding capital stock of the Company entitled to vote at the
meeting.
The Company's Bylaws provide that any stockholder of record wishing to
nominate a director or have a stockholder proposal considered at an annual
meeting must provide written notice and certain supporting documentation to the
Company relating to the nomination or proposal not less than 75 days nor more
than 180 days prior to the anniversary date of the prior year's annual meeting
or special meeting in lieu thereof (the "Anniversary Date"). In the event that
the annual meeting is called for a date more than seven calendar days before the
Anniversary Date, stockholders generally must provide written notice within 20
calendar days after the date on which notice of the meeting is mailed to
stockholders or the date of the meeting is publicly disclosed.
33
<PAGE>
The purpose of requiring stockholders to give the Company advance notice of
nominations and other business is to afford the Board of Directors 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 desirable by the Board of Directors, to inform stockholders and make
recommendations about the qualifications or business, as well as to provide a
more orderly procedure for conducting meetings of stockholders. Although the
Company's Bylaws do not give the Board of Directors any power to disapprove
stockholder nominations for the election of directors or proposals for action,
they may have the effect of precluding a contest for the election of directors
or the consideration of stockholder proposals if the proper procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal, without regard to whether consideration of the nominees or
proposal might be harmful or beneficial to the Company and its stockholders.
Classification of the Board of Directors
The Company's Bylaws provide that the number of directors of the Company
may be established by the Board of Directors but may not be fewer than the
minimum number required by Maryland law nor more than nine. Any vacancy will be
filled, at any regular meeting or at any special meeting called for that
purpose, 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 of Directors. Pursuant to the terms of the Articles
of Incorporation, the directors are divided into three classes. One class holds
office for a term expiring at the annual meeting of stockholders to be held in
1997, and the other two classes hold office for terms expiring at the annual
meetings of stockholders to be held in 1998 and 1999, respectively. As the term
of each class expires, directors in that class will be elected for a term of
three years and until their successors are duly elected and qualified. The
Company believes that classification of the Board of Directors will help to
assure the continuity and stability of the Company's business strategies and
policies as determined by the Board of Directors.
The classified board provision could have the effect of making the removal
of incumbent directors more time-consuming and difficult, which could discourage
a third party from making a tender offer or otherwise attempting to obtain
control of the Company, even though such an attempt might be beneficial to the
Company and its stockholders. At least two annual meetings of stockholders,
instead of one, will generally be required to effect a change in a majority of
the Board of Directors. Thus, the classified board provision could increase the
likelihood that incumbent directors will retain their positions. Holders of
shares of Common Stock will have no right to cumulative voting for the election
of directors. Consequently, at each annual meeting of stockholders, the holders
of a majority of the shares of Common Stock will be able to elect all of the
successors of the class of directors whose term expires at that meeting.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code to
include certain entities) during the last half of a taxable year, and such
capital stock must be beneficially owned by 100 or more persons during at least
335 days of a taxable year of 12 months or during a proportionate part of a
shorter tax year. See "Certain Federal Income Tax Considerations." To ensure
that the Company remains a qualified REIT, the Articles of Incorporation,
subject to certain exceptions, provide that no holder may own, or be deemed to
own by virtue of the attribution provisions of the Code, more than an aggregate
of 9.9% in value of the Company's capital stock. Any transfer of capital stock
or any security convertible into capital stock that would create a direct or
indirect ownership of capital stock in excess of the ownership limit or that
would result in the disqualification of the Company as a REIT, including any
transfer that results in the capital stock being owned by fewer than 100 persons
or results in the Company being "closely held" within the meaning of Section
856(h) of the Code, shall be null and void, and the intended transferee will
acquire no rights to the capital stock. Capital stock owned, or deemed to be
owned, or transferred to a stockholder in excess of the ownership limit will
automatically be exchanged for shares of Excess
34
<PAGE>
Stock that will be transferred, by operation of law, to the Company as trustee
of a trust for the exclusive benefit of the transferees to whom such capital
stock may be ultimately transferred without violating the ownership limit. While
the Excess Stock is held in trust, it will not be entitled to vote, it will not
be considered for purposes of any stockholder vote or the determination of a
quorum for such vote, and it will not be entitled to participate in the
accumulation or payment of dividends or other distributions. A transferee of
Excess Stock may, at any time such Excess Stock is held by the Company in trust,
designate as beneficiary of the transferee stockholder's interest in the trust
representing the Excess Stock any individual whose ownership of the capital
stock exchanged into such Excess Stock would be permitted under the ownership
limit, and may transfer such interest to such beneficiary at a price not in
excess of the price paid by the original transferee-stockholder for the capital
stock that was exchanged into Excess Stock. Immediately upon the transfer to the
permitted beneficiary, the Excess Stock will automatically be exchanged for
capital stock of the class from which it was converted. In addition, the Company
will have the right, for a period of 90 days during the time any Excess Stock is
held by the Company in trust, and, with respect to Excess Stock resulting from
the attempted transfer of Preferred Stock, at any time when any outstanding
shares of Preferred Stock of such series are being redeemed, to purchase all or
any portion of the Excess Stock from the original transferee-stockholder at the
lesser of the price paid for the capital stock by the original
transferee-stockholder and the market price (as determined in the manner set
forth in the Articles of Incorporation) of the capital stock on the date the
Company exercises its option to purchase or, in the case of a purchase of Excess
Stock attributed to Preferred Stock which has been called for redemption, at its
stated value, plus all accumulated and unpaid dividends to the date of
redemption. The 90-day period begins on the date of the violative transfer if
the original transferee-stockholder gives notice to the Company of the transfer
or, if no such notice is given, the date the Board of Directors determines that
a violative transfer has been made.
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES
OF THE OPERATING PARTNERSHIP
The following is a discussion of certain investment, financing, conflicts
of interest and other policies of the Operating Partnership. These policies have
been determined by the Board of Directors of the Company, which is the General
Partner of the Operating Partnership, and generally may be amended or revised
from time to time by the Board of Directors without a vote of stockholders.
Investment Policies
Investments in Real Estate or Interests in Real Estate. The Operating
Partnership's investment objectives are to increase cash flow and the value of
its properties, to acquire established income-producing industrial properties
with cash flow growth potential and, in limited circumstances, to develop
build-to-suit properties or undertake redevelopment projects. Additionally,
where prudent and possible, the Operating Partnership will seek to expand and
upgrade both its existing properties and any newly acquired properties. The
Operating Partnership's business will be focused solely on industrial
properties. The Operating Partnership's policy is to acquire assets primarily
for generation of current income and long-term value appreciation; however,
where appropriate, the Operating Partnership may sell certain properties.
The Operating Partnership expects to pursue its investment objectives
through the direct and indirect ownership of properties and the ownership of
interests in other entities. The Operating Partnership currently expects that it
will make further investments in the Company's current markets and will expand
into other markets within the Company's operating region as investment
opportunities the Operating Partnership considers attractive become available.
The Operating Partnership believes that opportunities exist to acquire, on
attractive terms, established properties which do not pose the risks of
development.
The Operating Partnership also may participate with other entities in
property ownership through joint ventures or other types of co-ownership. Equity
investments may be subject to existing mortgage financing and other
indebtedness, or such financing or indebtedness may be incurred in connection
with acquiring invest-
35
<PAGE>
ments. Any such financing or indebtedness will have priority over the Company's
equity interest in such property.
Investments in Real Estate Mortgages. While the Operating Partnership will
emphasize equity real estate investments in industrial properties, it may, in
its discretion, invest in mortgage loans and other interests related to
industrial properties. The Operating Partnership does not presently intend to
invest to a significant extent in mortgage loans, but may do so subject to the
investment restrictions applicable to REITs. The mortgage loans in which the
Operating Partnership may invest may be either first mortgage loans or junior
mortgage loans, and may or may not be insured by a government agency.
Securities of or Interests in Persons Primarily Engaged in Real Estate
Activities and Other Issuers. Subject to the ownership limitations and gross
income tests necessary for REIT qualification, the Operating Partnership also
may invest in securities of entities engaged in real estate activities or
securities of other issuers, including for the purpose of exercising control
over such entities. The Operating Partnership may acquire all or substantially
all of the securities or assets of other REITs or similar entities where such
investments would be consistent with the Operating Partnership's investment
policies. In any event, the Operating Partnership does not intend that its
investments in securities will require it to register as an "investment company"
under the Investment Company Act of 1940, and the Operating Partnership would
intend to divest securities before any such registration would be required.
Financing Policies
The Operating Partnership has no separate policy regarding the amount of
debt it may incur, but rather is encompassed by the Company's policy in this
regard. The Company currently has a policy of maintaining a ratio of debt to
total market capitalization (i.e., total consolidated debt of the Company as a
percentage of the aggregate market value of all outstanding shares of Common
Stock, assuming the exchange of all Units for Common Stock, plus the aggregate
stated value of all outstanding shares of preferred stock, plus total
consolidated debt) which generally will not exceed 50% and a coverage ratio
(computed as total revenues minus property expenses and general and
administrative expenses divided by interest expense plus dividends on preferred
stock) of at least 2.0:1. As of March 31, 1997, the Company's ratio of debt to
total market capitalization was 32.8%, and for the year ended December 31, 1996,
the Company's coverage ratio was 2.9:1. However, the organizational documents of
the Company do not contain any limitation on the amount or percentage of
indebtedness the Company may incur and the Company's Board of Directors has the
power to alter the current policy. Accordingly, the Company could become more
highly leveraged, resulting in an increase in debt service that could adversely
affect the Company's ability to make expected distributions to stockholders and
in an increased risk of default on its obligations. In addition, except as may
be set forth in any Prospectus Supplement, the Debt Securities will not contain
any provision that would afford holders of Debt Securities protection in the
event of a highly leveraged transaction or change in control of the Operating
Partnership or the Company.
To the extent that the Board of Directors determines to obtain additional
debt financing, the Company intends to do so generally through mortgages on its
properties and lines of credit, but also may do so through the issuance of debt
securities. These mortgages may be recourse, non-recourse or
cross-collateralized and may contain cross-default provisions. The Company does
not have a policy limiting the number or amount of mortgages that may be placed
on any particular property, but mortgage financing instruments usually limit
additional indebtedness on such properties. Future credit facilities and lines
of credit may be used for the purpose of making acquisitions or capital
improvements or providing working capital to the Company or meeting the taxable
income distribution requirements for REITs under the Code if the Company has
taxable income without receipt of cash sufficient to enable the Company to meet
such distribution requirements.
In the future, the Company may seek to extend, expand, reduce or renew its
acquisition facility, or obtain new credit facilities or lines of credit or
issue debt securities, subject to its general policy on debt capitalization.
36
<PAGE>
Policies with Respect to Other Activities
The Operating Partnership may, but does not presently intend to, make
investments other than as previously described. The Operating Partnership has
authority to offer Units and other equity or debt securities in exchange for
property and to repurchase or otherwise reacquire Units or any other securities
and may engage in such activities in the future. The Operating Partnership also
may make loans to joint ventures in which it participates. The Operating
Partnership will not engage in trading, underwriting or the agency distribution
or sale of securities of other issuers. At all times, the Operating Partnership
intends to make investments in such a manner as to be consistent with the
requirements of the Code for the Company to qualify as a REIT unless, because of
circumstances or changes in the Code (or the regulations promulgated
thereunder), the Company's Board of Directors determines that it is no longer in
the best interests of the Company to continue to have the Company qualify as a
REIT. The Company's policies with respect to such activities may be reviewed and
modified from time to time by the Company's directors without notice to or the
vote of the stockholders.
PROPERTIES OF THE OPERATING PARTNERSHIP
AND THE OTHER REAL ESTATE PARTNERSHIPS
General
The Operating Partnership and the Other Real Estate Partnerships
collectively owned, as of December 31, 1996, 379 in service properties (137 of
which were owned by the Operating Partnership and 242 of which were owned by the
Other Real Estate Partnerships) containing an aggregate of approximately 32.7
million square feet of GLA in 14 states (12.7 million square feet of which
comprised the properties owned by the Operating Partnership and 20.0 million
square feet of which comprised the properties owned by the Other Real Estate
Partnerships) with a diverse base of 993 tenants (427 of which were tenants of
the Operating Partnership and 566 of which were tenants of the Other Real Estate
Partnerships) engaged in a wide variety of businesses, including manufacturing,
retailing, wholesale trade, distribution and professional services. The
properties are generally located in business parks which have convenient access
to interstate highways and rail and air transportation. The median age of the
properties is approximately 11 years. The Operating Partnership and the Other
Real Estate Partnerships maintain insurance coverage on their respective
properties which the Operating Partnership believes to be adequate.
The Operating Partnership and the Other Real Estate Partnerships classify
their properties into two industrial categories: bulk warehouse and light
industrial. The bulk warehouse properties are generally used for bulk storage of
materials and manufactured goods and its light industrial properties are
generally used for the design, assembly, packaging and distribution of goods
and, in some cases, the provision of services.
The Operating Partnership and the Other Real Estate Partnerships compete
with numerous commercial developers, real estate companies and other owners of
real estate in seeking properties for acquisition and land for development. In
addition, many of the properties owned by the Operating Partnership and the
Other Real Estate Partnerships are located in areas that include other bulk
warehouse and light industrial properties which compete for the same tenants as
the Operating Partnership and the Other Real Estate Partnerships.
37
<PAGE>
The following table summarizes certain information as of December 31, 1996
with respect to properties owned by the Operating Partnership. Information in
the table excludes properties under development at December 31, 1996.
<TABLE>
<CAPTION>
Bulk Warehouse Light Industrial Total GLA as
a % of
Number of Number of Number of Average Total
Metropolitan Area GLA Properties GLA Properties GLA Properties Occupancy Portfolio
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta............ 2,541,736 9 294,264 4 2,836,000 13 93% 22%
Chicago............ 1,311,811 6 542,470 5 1,854,281 11 100% 15%
Cincinnati......... 951,080 3 111,375 5 1,062,455 8 97% 8%
Cleveland.......... -- -- 102,500 1 102,500 1 100% 1%
Columbus........... 1,110,334 2 56,849 1 1,167,183 3 99% 9%
Dayton............. -- -- 264,000 5 264,000 5 98% 2%
Detroit............ 654,095 23 484,126 12 1,138,221 35 91% 9%
Indianapolis....... 683,357 5 1,063,780 25 1,747,137 30 98% 14%
Milwaukee.......... -- -- 173,390 3 173,390 3 100% 1%
Minneapolis/St. Paul 534,527 6 1,034,068 16 1,568,595 22 97% 13%
Nashville.......... 538,811 3 -- -- 538,811 3 100% 4%
St. Louis.......... 198,413 3 -- -- 198,413 3 100% 2%
--------- ----- --------- -- --------- ----- -----
Total or Average... 8,524,164 60 4,126,822 77 12,650,986 137 96% 100%
========= == ========= == ========== === ===
</TABLE>
The following table summarizes certain information as of December 31, 1996
with respect to properties owned by the Other Real Estate Partnerships.
Information in the table excludes properties under development at December 31,
1996.
<TABLE>
<CAPTION>
Bulk Warehouse Light Industrial Total GLA as
a % of
Number of Number of Number of Average Total
Metropolitan Area GLA Properties GLA Properties GLA Properties Occupancy Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta........... 985,501 9 213,467 5 1,198,968 14 97% 6%
Central
Pennsylvania(1). 1,744,699 12 681,008 13 2,425,707 25 99% 12%
Chicago........... 1,602,191 13 528,740 8 2,130,931 21 96% 11%
Des Moines........ 878,992 5 -- -- 878,992 5 100% 4%
Detroit........... 1,557,468 34 2,001,865 47 3,559,333 81 95% 18%
Grand Rapids...... 2,769,591 22 40,400 3 2,809,991 25 92% 14%
Indianapolis...... 976,273 1 -- -- 976,273 1 98% 5%
Milwaukee......... -- -- 133,173 3 133,173 3 100% 1%
Minneapolis/St. Paul 1,330,460 10 1,877,406 25 3,207,866 35 97% 16%
Nashville......... 760,229 4 227,267 3 987,496 7 99% 5%
St. Louis......... 674,682 12 385,713 3 1,060,395 15 100% 5%
Other (2)......... 301,355 4 378,603 6 679,958 10 100% 3%
--------- ---- --------- ---- --------- ---- ----
Total or Average.. 13,581,441 126 6,467,642 116 20,049,083 242 97% 100%
========== === ========= === ========== === ===
- --------------------------
</TABLE>
(1) Includes the Harrisburg, Allentown and Reading markets.
(2) Includes Denton, TX; Wichita, KS; West Lebanon, NH and Abilene, TX.
As of December 31, 1996, 23 properties owned by the Operating Partnership
were subject to encumbrances securing indebtedness thereof and 223 properties
owned by the Other Real Estate Partnerships, including 195 properties encumbered
by the 1994 Mortgage Loan which was defeased in April 1997, were subject to
encumbrances securing indebtedness thereof.
Tenant and Lease Information
As of December 31, 1996, the Operating Partnership and the Other Real
Estate Partnerships had a diverse base of 993 tenants (427 of which were tenants
of the Operating Partnership and 566 of which were tenants of the Other Real
Estate Partnerships), engaged in a wide variety of businesses including
manufacturing,
38
<PAGE>
retailing, wholesale trade, distribution and professional services. Most leases
have an initial term of between three and five years and provide for periodic
rental increases that are either fixed or based on changes in the Consumer Price
Index. Industrial tenants typically have net or semi-net leases and pay as
additional rent their percentage of the property's operating costs, including
the costs of common area maintenance, property taxes and insurance. As of
December 31, 1996, approximately 96% and 97% of the GLA of the properties owned
by the Operating Partnership and the Other Real Estate Partnerships,
respectively, was leased, and no single tenant or group of related tenants
accounted for more than 4.2% of the Operating Partnership's rent revenues or
more than 3.3% of the Other Real Estate Partnerships' rent revenues, nor did any
single tenant or group of related tenants occupy more than 5.8% of the total GLA
of the Operating Partnership or more than 4.0% of the total GLA of the Other
Real Estate Partnerships.
The following table shows scheduled lease expirations for all leases for
the properties owned by the Operating Partnership as of December 31, 1996.
<TABLE>
<CAPTION>
Percentage of Annual Base Rent Percentage of
Number of GLA GLA Under Expiring Total Annual
Year of Expiration(1) Leases Expiring Expiring(2) Expiring Leases(3) Base
Rent Expiring
<S> <C> <C> <C> <C> <C>
1997................ 113 2,041,911 16.7% $7,884 18.4%
1998................ 105 1,906,139 15.6% 6,749 15.7%
1999................ 88 2,324,030 19.0% 7,874 18.4%
2000................ 52 1,508,463 12.4% 5,282 12.3%
2001................ 44 1,432,763 11.7% 5,003 11.7%
2002................ 23 514,726 4.2% 2,328 5.4%
2003................ 11 511,354 4.2% 1,640 3.8%
2004................ 5 762,466 6.3% 2,092 4.9%
2005................ 3 105,700 0.9% 471 1.1%
Thereafter.......... 7 1,100,308 9.0% 3,574 8.3%
---- ---------- ------- --------- -------
Total.......... 451 12,207,860 100.0% $42,897 100.0%
=== ========== ====== ======= ======
- ---------------------
</TABLE>
(1) Lease expirations as of December 31, 1996, assuming tenants do not exercise
existing renewal, termination or purchase options.
(2) Does not include existing vacancies of 443,126 aggregate square feet.
(3) In thousands and includes minimum contractual rent increases during the
term of the lease.
The following table shows scheduled lease expirations for all leases for
the properties owned by the Other Real Estate Partnerships as of December 31,
1996.
<TABLE>
<CAPTION>
Percentage of Annual Base Rent Percentage of
Number of GLA GLA Under Expiring Total Annual
Year of Expiration(1) Leases Expiring Expiring(2) Expiring Leases(3) Base Rent
<S> <C> <C> <C> <C> <C>
Expiring
1997................ 161 3,484,985 18.0% $12,984 16.2%
1998................ 148 3,997,795 20.6% 17,117 21.4%
1999................ 133 3,071,676 15.9% 13,421 16.8%
2000................ 84 2,984,135 15.4% 13,171 16.5%
2001................ 64 3,005,917 15.5% 10,956 13.7%
2002................ 5 506,963 2.6% 2,247 2.8%
2003................ 14 944,865 4.9% 4,038 5.0%
2004................ 5 319,128 1.7% 1,093 1.4%
2005................ 7 663,368 3.4% 2,745 3.4%
Thereafter.......... 12 392,593 2.0% 2,217 2.8%
--- ----------- ------- -------- -------
Total.......... 633 19,371,425 100.0% $79,989 100.0%
=== ========== ====== ======= ======
- ---------------------
</TABLE>
(1) Lease expirations as of December 31, 1996, assuming tenants do not exercise
existing renewal, termination or purchase options.
(2) Does not include existing vacancies of 677,658 aggregate square feet.
(3) In thousands and includes minimum contractual rent increases during the
term of the lease.
39
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
This section is a summary of the material federal income tax matters of
general application pertaining to REITs under the Code. The discussion is based
on current law and does not purport to deal with all aspects of federal income
taxation that may be relevant to investors subject to special treatment under
the federal income tax laws, such as tax-exempt investors, dealers in securities
or foreign persons. The provisions of the Code pertaining to REITs are highly
technical and complex and sometimes involve mixed questions of fact and law. In
addition, this section does not discuss foreign, state or local taxation. In the
opinion of Cahill Gordon & Reindel, the conclusions of law expressed in this
summary are correct in all material respects. Prospective investors should
consult their own tax advisors regarding the federal, state, local, foreign and
other tax consequences specific to them of holding and disposing of the
Securities.
Taxation of the Company
In the opinion of Cahill Gordon & Reindel, commencing with its taxable year
ended December 31, 1994, the Company has been organized in conformity with the
requirements for qualification as a REIT under the Code, the Company's method of
operation has enabled it to meet the requirements for qualification as a REIT
under the Code, and, provided that the Company continues to satisfy the various
requirements applicable under the Code to REITs, as described herein, it will
continue to so qualify. Cahill Gordon & Reindel's opinion is based on various
assumptions and is conditioned upon certain representations as to factual
matters made by the Company and, the Operating Partnership and the Other Real
Estate Partnerships (such partnerships being hereinafter collectively referred
to as the "Partnerships"). Moreover, such qualification and taxation as a REIT
depend upon the Company's ability to meet, as a matter of fact, through actual
annual operating results, distribution levels, diversity of stock ownership and
various other qualification tests imposed under the Code discussed below, the
results of which will not be reviewed by Cahill Gordon & Reindel. Accordingly,
no assurance can be given that the actual results of the Company's operation for
any one taxable year will satisfy such requirements.
To qualify as a REIT under the Code for a taxable year, the Company must
meet certain organizational and operational requirements, which generally
require it to be a passive investor in operating real estate and to avoid
excessive concentration of ownership of its capital stock. Initially, its
principal activities must be real estate related. Generally, at least 75% of the
value of the total assets of the Company at the end of each calendar quarter
must consist of real estate assets, cash or governmental securities. The Company
may not own more than 10% of the outstanding voting securities of any
corporation and the value of any one issuer's securities may not exceed 5% of
the Company's gross assets; shares of qualified REITs, qualified temporary
investments and shares of certain wholly owned subsidiary corporations are
exempt from these prohibitions. The Company holds assets through certain wholly
owned subsidiary corporations and holds Preferred Stock interests in certain
corporations that provide property management services to third parties; in the
opinion of Cahill Gordon & Reindel, based on certain factual representations,
these holdings do not violate the prohibition on ownership of voting securities.
Additionally, gross income from the sale or other disposition of stock and
securities held for less than one year and of real property held for less than
four years must constitute less than 30% of the gross income for each taxable
year of a REIT. For each taxable year, at least 75% of a REIT's gross income
must be derived from specified real estate sources and 95% must be derived from
such real estate sources plus certain other permitted sources. Real estate
income for purposes of these requirements includes gain from the sale of real
property not held primarily for sale to customers in the ordinary course of
business, dividends on REIT shares, interest on loans secured by mortgages on
real property, certain rents from real property and income from foreclosure
property. For rents to qualify, they may not be based on the income or profits
of any person, except that they may be based on a percentage or percentages of
gross income or receipts and, subject to certain limited exceptions, the REIT
may not manage the property or furnish services to tenants except through an
independent contractor which is paid an arm's-length fee and from which the REIT
derives no income. Substantially all of the Company's assets are held through
the Partnerships. In gen-
40
<PAGE>
eral, in the case of a REIT that is a partner in a partnership, applicable
regulations treat the REIT as holding directly its proportionate share of the
assets of the partnership and as being entitled to the income of the partnership
attributable to such share.
The Company must satisfy certain ownership restrictions that limit (i)
concentration of ownership of the Company's capital stock by a few individuals
and (ii) ownership by the Company of its tenants. The outstanding capital stock
of the Company must be held by at least 100 stockholders. No more than 50% in
value of the outstanding capital stock, including in some circumstances capital
stock into which outstanding securities might be converted, may be owned
actually or constructively by five or fewer individuals or certain other
entities at any time during the last half of the Company's taxable year.
Accordingly, the Articles of Incorporation contain certain restrictions
regarding the transfer of Common Stock, Preferred Stock and any other
outstanding securities convertible into Common Stock when necessary to maintain
the Company's qualification as a REIT under the Code. However, because the Code
imposes broad attribution rules in determining constructive ownership, no
assurance can be given that the restrictions contained in the Articles of
Incorporation will be effective in maintaining the Company's REIT status. See
"Restrictions on Transfers of Capital Stock."
So long as the Company qualifies for taxation as a REIT and distributes at
least 95% of its REIT taxable income (computed without regard to net capital
gain or the dividends paid deduction) for its taxable year to its stockholders
annually, the Company itself will not be subject to federal income tax on that
portion of such income distributed to stockholders. The Company will be taxed at
regular corporate rates on all income not distributed to stockholders. The
Company's policy is to distribute at least 95% of its taxable income. REITs also
may incur taxes for certain other activities or to the extent distributions do
not satisfy certain other requirements.
Failure of the Company to qualify during any taxable year as a REIT could,
unless certain relief provisions were available, have a material adverse effect
upon its stockholders. If disqualified for taxation as a REIT for a taxable
year, the Company also would be disqualified for taxation as a REIT for the next
four taxable years, unless the failure were considered to be due to reasonable
cause and not willful neglect. The Company would be subject to federal income
tax at corporate rates on all of its taxable income and would not be able to
deduct the dividends paid, which could result in a discontinuation of or
substantial reduction in dividends to stockholders. Dividends also would be
subject to the regular tax rules applicable to dividends received by
stockholders of corporations. Should the failure to qualify as a REIT be
determined to have occurred retroactively in an earlier tax year of the Company,
the imposition of a substantial federal income tax liability on the Company
attributable to any nonqualifying tax years may adversely affect the Company's
ability to pay dividends. In the event that the Company fails to meet certain
income tests applicable to REITs, it may, generally, nonetheless retain its
qualification as a REIT if it pays a 100% tax on the amount by which it failed
to meet the relevant income test so long as such failure was considered to be
due to reasonable cause and not willful neglect. Any such taxes would adversely
affect the Company's ability to pay dividends and distributions.
PLAN OF DISTRIBUTION
The Company and the Operating Partnership may sell Securities through
underwriters or dealers, directly to one or more purchasers, through agents or
through a combination of any such methods of sale. 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 market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company, from the Operating Partnership or from
purchasers of Securities, for whom they may act as agents, in the form of
discounts, concessions or commissions. Underwriters may sell Securities to or
through dealers,
41
<PAGE>
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of Securities may be deemed to be underwriters under the
Securities Act, and any discounts or commissions they receive from the Company
or the Operating Partnership and any profit on the resale of Securities they
realize may be deemed to be underwriting discounts and commissions under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company or the Operating Partnership will be
described, in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Stock, which is listed on the NYSE. Any shares of Common
Stock sold pursuant to a Prospectus Supplement will be listed on the NYSE,
subject to official notice of issuance. The Company or the Operating Partnership
may elect to list any series of Debt Securities, Preferred Stock or Depositary
Shares on an exchange, but neither is obligated to do so. It is possible that
one or more underwriters may make a market in a series of Securities, but will
not be obligated to do so and may discontinue any market making at any time
without notice. Therefore, no assurance can be given as to the liquidity of the
trading market for the Securities.
Under agreements into which the Company or the Operating Partnership may
enter, underwriters, dealers and agents who participate in the distribution of
Securities may be entitled to indemnification by the Company or the Operating
Partnership against certain liabilities, including liabilities under the
Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be tenants of, the Company or the Operating Partnership
in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Company or the
Operating Partnership will authorize underwriters or other persons acting as the
Company's or the Operating Partnership's agents to solicit offers by certain
institutions to purchase Securities from the Company or the Operating
Partnership pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company or the Operating Partnership, as
the case may be. The obligations of any purchaser under any such contract will
be subject to the condition that the purchase of the Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
In order to comply with the securities laws of certain states, if
applicable, the Securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states Securities may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of Securities offered hereby may not engage in
market making activities with respect to the Securities for a period of two
business days prior to the commencement of such distribution.
LEGAL MATTERS
Certain legal matters, including the legality of the Securities covered by
this Prospectus and certain tax matters, will be passed upon for the Company by
Cahill Gordon & Reindel (a partnership including a professional corporation),
New York, New York, and for any underwriters, dealers or agents by Rogers &
Wells, New York, New York. Cahill Gordon & Reindel and Rogers & Wells will rely
as to all matters of Maryland law on the opinion of McGuire, Woods, Battle &
Boothe, L.L.P., Baltimore, Maryland.
42
<PAGE>
EXPERTS
The financial statements and schedule thereto of the Company and the
Contributing Businesses, the financial statements of the Acquisition Properties
(as defined in the Form 8-K) and the financial statements of the Lazarus Burman
Properties (as defined in the Form 8-K/A No. 1), each incorporated by reference
in this Prospectus or elsewhere in the Registration Statement, and the financial
statements and schedule thereto of the Operating Partnership and the
Contributing Businesses and the financial statements of the Other Real Estate
Partnerships included 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 or incorporated herein in reliance
upon the authority of said firm as experts in giving said reports.
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
============================================================== ===========================================================
No one has been authorized to give any information or to
make any representations other than those contained in or
incorporated by reference in this prospectus supplement or 637,440 Shares
the accompanying prospectus and, if given or made, such
information or representations must not be relied upon as
having been authorized by the Company or the Underwriter.
This prospectus supplement and the accompanying prospectus First Industrial Realty
do not constitute an offer to sell or the solicitation of an Trust, Inc.
offer to buy any securities in any jurisdiction by any
persons not authorized or qualified to make such offer or
solicitation or to any persons to whom it is unlawful to
make such offer or solicitation. Neither the delivery of Common Stock
this prospectus supplement or the accompanying prospectus,
nor any sale made hereunder or thereunder, shall, under any
circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof
or thereof or that the information herein or therein is
correct as of any time subsequent to the date of such
information.
-----------------
TABLE OF CONTENTS
Prospectus Supplement ___________
Page
PROSPECTUS SUPPLEMENT
Forward Looking Information..........................S-2
Use of Proceeds......................................S-2 September 11, 1997
Federal Income Tax Considerations....................S-2
Underwriting.........................................S-3 ________________
Prospectus
Available Information................................2
Incorporation of Certain Documents by Reference......2
The Company and the Operating Partnership............4
Risk Factors.........................................4
Use of Proceeds......................................9
Ratio of Earnings to Fixed Charges...................10
Description of Debt Securities.......................10 Smith Barney Inc.
Description of Preferred Stock.......................21
Description of Depositary Shares.....................27
Description of Common Stock..........................31
Certain Provisions of Maryland Law and the
Company's Articles of Incorporation and Bylaws....32
Restrictions on Transfers of Capital Stock...........34
Policies with Respect to Certain Activities of
the Operating Partnership.........................35
Properties of the Operating Partnership and the
Other Real Estate Partnerships....................37
Federal Income Tax Considerations....................40
Plan of Distribution.................................41
Legal Matters........................................42
Experts..............................................43
============================================================== =========================================================
</TABLE>
