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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1998
REGISTRATION STATEMENT NO. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RECKSON ASSOCIATES REALTY CORP. AND
RECKSON OPERATING PARTNERSHIP, L.P.
(Exact name of each registrant as specified in its charter)
RECKSON ASSOCIATES REALTY CORP. - MARYLAND RECKSON ASSOCIATES REALTY CORP. - 11-3233650
RECKSON OPERATING PARTNERSHIP, L.P. - DELAWARE RECKSON OPERATING PARTNERSHIP, L.P. -11-3233647
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-6900
(Address, including zip code, and telephone number, including area
code, of each registrant's principal executive office)
DONALD J. RECHLER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-6900
(Name, address, including zip code, and telephone number, including area code, of agent for service)
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Copy to:
THOMAS R. SMITH, JR., ESQ.
EDWARD F. PETROSKY, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER, 58TH FLOOR
NEW YORK, N.Y. 10048
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box.|_|
If any of the securities being registered on this form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), other than
securities offered only in connection with dividend or interest reinvestment plans, please check the following
box.|X|
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under
the Securities Act, please check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following
box.|X|
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CALCULATION OF REGISTRATION FEE
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Title of Class of Proposed Maximum Amount of
Securities to be Registered(1) Aggregate Offering Registration Fee
Price(1)
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Debt Securities....................................................... $260,000,000 $72,280(4)
Guarantees(3).........................................................
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(1) Estimated solely for purposes of calculating the registration fee.
(2) The Debt Securities will be issued by Reckson Operating Partnership, L.P
(3) Debt Securities not rated investment grade at the time of issuance by at least one nationally
recognized statistical rating organization, will be accompanied by Guarantees to be issued by Reckson
Associates Realty Corp. None of the proceeds from the sale of the Debt Securities will be received by
Reckson Associates Realty Corp. for the issuance of the Guarantees. Pursuant to Rule 457(n) under the
Securities Act, no separate filing fee for the Guarantees is required.
(4) Calculated pursuant to Rule 457(o) under the Securities Act.
Pursuant to Rule 429 under the Securities Act, the Prospectus included in this Registration Statement
is a combined prospectus and relates to Registration Statement No. 333-46883 previously filed by Reckson
Associates Realty Corp. on Form S-3 in respect of its Common Stock and Preference Stock and declared effective
on March 25, 1998. This Registration Statement, which is a new registration statement, also constitutes
Post-effective Amendment No. 1 to Registration Statement No. 333-46883 and such Post-effective Amendment No. 1
shall hereafter become effective concurrently with the effectiveness of this Registration Statement in
accordance with Section 8(c) of the Securities Act.
EACH REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY
TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMeNT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE WITH SECTION 8(A) OF THE SECURItIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMIsSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 12, 1998
PROSPECTUS
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$744,739,654
RECKSON ASSOCIATES REALTY CORP.
COMMON STOCK, COMMON STOCK WARRANTS,
PREFERRED STOCK, DEPOSITARY SHARES AND PREFERRED STOCK WARRANTS
$260,000,000
RECKSON OPERATING PARTNERSHIP, L.P.
DEBT SECURITIES
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Reckson Associates Realty Corp. may offer shares of its common stock,
shares of its preferred stock, depositary shares representing interests in
preferred stock, and warrants to purchase common stock or preferred stock, in an
aggregate initial public offering price not to exceed $744,739,654.
Reckson Operating Partnership, L.P. may offer one or more series of its
debt securities, in an aggregate initial public offering price not to exceed
$260,000,000. If any debt securities are not rated investment grade by at least
one nationally recognized statistical rating organization at the time of
issuance, such debt securities will be fully and unconditionally guaranteed by
Reckson Associates Realty Corp. as to payment of principal, premium, if any, and
interest.
We may offer the securities referred to above at prices and on terms to
be set forth in one or more supplements to this Prospectus. The Securities may
be offered directly, through agents on our behalf or through underwriters or
dealers.
The terms of the securities may include such limitations on ownership
and restrictions on transfer thereof as may be appropriate to preserve the
status of Reckson Associates Realty Corp. as a real estate investment trust for
United States federal income tax purposes.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A
DESCRIPTION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE
SECURITIES.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
THE DATE OF THIS PROSPECTUS IS ___________ __, 1998.
AVAILABLE INFORMATION
The Company and the Operating Partnership are 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 files reports with
the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well
as the regional offices of the Commission at 7 World Trade Center (13th Floor),
New York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such information can be obtained
by mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Such materials can also be
inspected at the office of the New York Stock Exchange, Inc. ("NYSE"), 20 Broad
Street, New York, New York 10005. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
The Company and the Operating Partnership have filed with the
Commission a Registration Statement on Form S-3 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 have been omitted in accordance with the rules
and regulations of the Commission. For further information with respect to the
Company, the Operating Partnership and the Securities, reference is made to the
Registration Statement, including the exhibits filed as a part thereof and
otherwise incorporated therein. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
such exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
Copies of the Registration Statement and the exhibits may be inspected, without
charge, at the offices of the Commission, or obtained at prescribed rates from
the Public Reference Section of the Commission at the address set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. Annual Report on Form 10-K for the year ended December 31, 1997.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998
and June 30, 1998.
3. Current Reports on Form 8-K (including Form 8-K/A) dated
February 18, 1997, May 15, 1997, June 12, 1997, August 7, 1997, September 9,
1997, October 21, 1997, January 6, 1998, January 26, 1998, February 10, 1998,
February 12, 1998, March 24, 1998, April 6, 1998, July 22, 1998, August 15, 1998
and November 2, 1998, respectively.
4. The description of the Company's Common Stock which is contained in
Item 1 of the Company's registration statement on Form 8-A, as amended, filed
May 9, 1995 pursuant to Section 12 of the Exchange Act.
All documents filed by the Company or the Operating Partnership
pursuant to Sections 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
particular Securities shall be deemed to be incorporated by reference herein and
in the applicable Prospectus Supplement, and to be a part hereof and thereof
from the date of the filing of such reports and documents. Any statement
contained herein or therein or in a document incorporated or deemed to be
incorporated by reference herein and therein shall be deemed to be modified or
superseded for the purposes of this Prospectus and in the applicable Prospectus
Supplement, to the extent that a statement contained therein or therein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein and therein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus or the
applicable Prospectus Supplement.
The Company and the Operating Partnership will provide a copy of any or
all of such documents (exclusive of exhibits unless such exhibits are
specifically incorporated by reference therein), without charge, to each person
to whom this Prospectus is delivered, upon written or oral request to Reckson
Associates Realty Corp., 225 Broadhollow Road, Melville, New York 11747, Attn:
Jason M. Barnett, Senior Vice President and General Counsel, telephone number
(516) 694-6900.
THE COMPANY AND THE OPERATING PARTNERSHIP
Reckson Associates Realty Corp. was incorporated in September 1994 and
commenced operations effective with the completion of its initial public
offering (the "IPO") on June 2, 1995. The Company, together with the Operating
Partnership, was formed for the purpose of continuing the commercial real estate
business of Reckson Associates, its affiliated partnerships and other entities
("Reckson"). For more than 36 years, Reckson has been engaged in the business of
owning, developing, acquiring, constructing, managing and leasing suburban
office and industrial properties in the New York metropolitan area. Based on
industry surveys, management believes that the Company is one of the largest
owners and managers of Class A suburban office and industrial properties in the
New York City metropolitan Tri-State area of New York, New Jersey and
Connecticut (the "New York Tri-State area"). The Company operates as a
fully-integrated, self administered and self-managed REIT. As of September 30,
1998, the Company owned and controlled directly or indirectly 202 properties
(the "Properties") encompassing approximately 20.7 million rentable square feet,
all of which are managed by the Company. The Properties consist of 73 Class A
suburban office properties (the "Office Properties") encompassing approximately
10.1 million rentable square feet, 127 industrial properties (the "Industrial
Properties") encompassing approximately 10.6 million rentable square feet and
two 10,000 square foot retail properties. In addition, as of September 30, 1998,
the Company owned or had contracted to acquire approximately 852 acres of land
(including approximately 370 acres under option) that may present future
development opportunities. In addition, the Company has invested $17 million in
a note receivable secured by the interest of Odyssey Partners, L.P. in Omni
Partners, L.P.
The Office Properties are Class A suburban office buildings and are
well-located, well-maintained and professionally managed. In addition, these
properties are modern with high finishes or have been modernized to successfully
compete with newer buildings and achieve among the highest rent, occupancy and
tenant retention rates within their markets. The majority of the Office
Properties are located in eight planned office parks and are tenanted primarily
by national service firms such as "big six" accounting firms, securities
brokerage houses, insurance companies and health care providers. The Industrial
Properties are utilized for distribution, warehousing, research and development
and light manufacturing/assembly activities and are located primarily in three
planned industrial parks.
The executive offices of the Company and the Operating Partnership are
located at 225 Broadhollow Road, Melville, New York 11747 and their telephone
number at that location is (516) 694-6900. At October 20, 1998, the Company had
approximately 240 employees.
RISK FACTORS
This Prospectus contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed below.
An investment in the Securities involves various risks. Prospective investors
should carefully consider the following information in conjunction with the
other information contained in this Prospectus and the related Prospectus
Supplement before purchasing the Securities offered by such Prospectus
Supplement (the "Offering"). References in this Prospectus to "we" and "our"
includes, as the context requires, the Company and/or the Operating Partnership.
WE ARE DEPENDENT ON THE NEW YORK TRI-STATE AREA MARKET DUE TO LIMITED GEOGRAPHIC
DIVERSIFICATION
All of our Properties are located in the New York Tri-State area. A
decline in the economic conditions in the Tri-State New York area and for
commercial real estate could adversely affect our business, financial condition
and results of operations.
DEBT SERVICING AND REFINANCING, INCREASES IN INTEREST RATES, FINANCIAL COVENANTS
AND ABSENCE OF LIMITATION OF DEBT COULD ADVERSELY AFFECT OUR ECONOMIC
PERFORMANCE
Debt Financing. We are subject to risks normally associated with debt
financing. Our cash flow could be insufficient to meet required payments of
principal and interest. We may not be able to refinance existing indebtedness
(which in virtually all cases requires substantial principal payments at
maturity) or the terms of such refinancing might not be as favorable as the
terms of the existing indebtedness. We may not be able to refinance any
indebtedness we incur or to otherwise obtain funds by selling assets or raising
equity to make required payments on maturing indebtedness.
Existing Debt Maturities; Foreclosures. We anticipate repaying only a
portion of the principal of our mortgage indebtedness currently outstanding
prior to maturity. However, we may not be able to repay such indebtedness at
maturity; therefore we may have to refinance debt through additional debt
financing or equity offerings. If we are unable to refinance this indebtedness
on acceptable terms, we may be forced to dispose of properties upon
disadvantageous terms, which could result in losses and adversely affect the
amount of cash available for distribution to stockholders. Further, if we
mortgage any properties to secure payment of indebtedness and we are unable to
meet mortgage payments, the mortgagee could foreclose on the property resulting
in our loss of income and asset value. In addition, even in the case of
non-recourse indebtedness, the lender may have the rights to recover
deficiencies from us in certain circumstances, including environmental
liabilities.
Rising Interest Rates Could Adversely Affect Cash Flow. Outstanding
advances under the Credit Facility (defined below) bear interest at a variable
rate. In addition, we may incur indebtedness in the future that also bears
interest at a variable rate or we may be required to refinance our debt at
higher rates. Accordingly, increases in interest rates could increase our
interest expense, which could adversely affect our ability to pay distributions
to our stockholders and to service our indebtedness.
Credit Facility Requirements Could Adversely Affect our Financial
Condition. We obtained a three-year unsecured credit facility (the "Credit
Facility") from The Chase Manhattan Bank ("Chase"), Union Bank of Switzerland
("UBS") and PNC Bank, National Association ("PNC"), which provides for a maximum
borrowing amount of up to $500 million. Our ability to borrow under the Credit
Facility is subject to certain financial covenants, including covenants relating
to limitations on unsecured and secured borrowings, minimum interest and fixed
charge coverage ratios, a minimum equity value and a maximum dividend payout
ratio. In addition, interest rates applicable to borrowings under the Credit
Facility will be priced off of LIBOR plus a scale ranging from 112.5 basis
points to 137.5 basis points based on our leverage ratio. Upon the Operating
Partnership receiving an investment grade rating on its senior unsecured debt by
two rating agencies, the pricing is adjusted based off of LIBOR plus a scale
ranging from 65 basis points to 90 basis points depending upon the rating.
No Limitation on Debt. Currently, we have a policy of incurring debt
only if upon such incurrence our Debt Ratio would be 50% or less. For these
purposes, Debt Ratio is defined as our total debt as a percentage of the market
value of outstanding shares of Common Stock on a fully diluted basis plus total
debt. Certain of our indebtedness contains limitations on the ability of the
Operating Partnership to incur additional indebtedness. However, our
organizational documents do not contain any limitation on the amount of
indebtedness we may incur. Accordingly, the Board of Directors could alter or
eliminate this policy and would do so, for example, if it were necessary in
order for us to continue to qualify as a REIT. If this policy were changed, we
could become more highly leveraged, resulting in higher interest payments that
could adversely affect our ability to pay distributions to our stockholders and
could increase the risk of default on our existing indebtedness.
RISKS OF ACQUISITION, DEVELOPMENT AND CONSTRUCTION ACTIVITIES
We intend to acquire existing office and industrial properties to the
extent that such acquisitions are on advantageous terms and meet our investment
criteria. Acquisitions of commercial properties entail risks, such as the risk
that investments will fail to perform as expected or that estimates of the cost
of improvements to bring an acquired property up to standards established for
the intended market position may prove inaccurate.
In addition, we formed RSVP to be a "research and development" vehicle
to identify and invest in real estate companies that don't operate in our office
and industrial sectors. Such investments may involve different risks than those
in our office and industrial sectors.
We also intend to continue the selective development and construction
of office and industrial properties in accordance with our development and
underwriting policies as opportunities arise. Such development and construction
activities include the risks that: we may abandon development opportunities
after expending resources to determine feasibility; construction costs of a
project may exceed original estimates; occupancy rates and rents at a newly
completed property may not be sufficient to make the property profitable;
financing may not be available on favorable terms for development of a property;
and construction and lease-up may not be completed on schedule, resulting in
increased debt service expense and construction costs. Development activities
are also subject to risks relating to the inability to obtain, or delays in
obtaining, all necessary zoning, land-use, building, occupancy and other
required governmental permits and authorizations. If any of the above occur, our
ability to pay distributions to our stockholders and service our indebtedness
could be adversely affected. In addition, new development activities, regardless
of whether or not they are ultimately successful, typically require a
substantial portion of management's time and attention.
REAL ESTATE INVESTMENT RISKS
General Risks A commercial property's revenues and value may be
adversely affected by a number of factors, including the national, state and
local economic climate and real estate conditions (such as oversupply of or
reduced demand for space and changes in market rental rates); the perceptions of
prospective tenants of the safety, convenience and attractiveness of the
properties; the ability of the owner to provide adequate management, maintenance
and insurance; the ability to collect on a timely basis all rent from tenants;
the need to periodically renovate, repair and relet spaces; and increasing
operating costs (including real estate taxes and utilities) which may not be
passed through to tenants. Certain expenses of real estate investments (such as
mortgage payments, real estate taxes, insurance and maintenance costs) are
generally not reduced when circumstances cause a decrease in income from the
property. If a property is mortgaged and we are unable to meet the mortgage
payments, the lender will foreclose on the mortgage and take the property. In
addition, real estate values and income from properties are also affected by
such factors as compliance with laws, including tax laws, interest rate levels
and the availability of financing. Also, the rentable square feet of commercial
property is often affected by market conditions and may therefore fluctuate over
time.
Tenants May Default on Leases. Substantially all of our income is
derived from rental income from real property and, consequently, our
distributable cash flow and ability to pay distributions to our stockholders and
service our indebtedness would be adversely affected if a significant number of
our tenants fail to meet their lease obligations. If a tenant defaults, we may
experience delays in enforcing our rights as lessor and may incur substantial
costs in protecting our investment.
Because Real Estate Investments are Illiquid, We May Not be Able to
Sell Properties When Appropriate. Real estate investments generally cannot be
sold quickly. We may not be able to vary our portfolio promptly in response to
economic or other conditions. In addition, provisions of the Code limit a REIT's
ability to sell properties in some situations when it may be economically
advantageous to do so, thereby adversely affecting returns to our stockholders.
Increasing Operating Costs Could Adversely Affect Cash Flow. Our
Properties are subject to our operating risks common to commercial real estate,
any and all of which may adversely affect occupancy or rental rates. Our
Properties are subject to increases in operating expenses such as cleaning;
electricity; heating, ventilation and air conditioning ("HVAC"); elevator repair
and maintenance; insurance and administrative costs; and other costs associated
with security, landscaping, repairs and maintenance. While our tenants generally
are currently obligated to pay a portion of these costs, there is no assurance
that tenants will agree to pay such costs upon renewal or that new tenants will
agree to pay such costs. If operating expenses increase, the local rental market
may limit the extent to which rents may be increased to meet increased expenses
without at the same time decreasing occupancy rates. While we have costs saving
measures at each of our Properties, if any of the above occurs, our ability to
pay distributions to our stockholders and service our indebtedness could be
adversely affected.
Other Competitors Could Hurt Our Business. Numerous commercial
properties compete with us in attracting tenants and numerous companies compete
in selecting land for development and properties for acquisition.
Third-Party Property Management and Construction. We actively pursue
(through our affiliated management company) the management of properties owned
by third parties. Managing properties owned by third parties entails risks. Such
risks include the termination of management contracts (typically cancelable
without notice) by a third party, in connection with the sale of such property,
the non-renewal of contracts upon expiration or renewal on terms inconsistent
with the current terms and the decline of the rental revenues resulting in
decreased management fees and thus, decreased management fee income. Our
third-party interior construction business (conducted through our affiliated
construction company) is subject to similar risks.
Some Potential Losses Are Not Covered by Insurance. We carry
comprehensive liability, fire, extended coverage and rental loss insurance on
all of our Properties. However, certain types of losses (such as losses arising
from acts of war or relating to pollution) are not generally insured because
they are either uninsurable or not economically insurable. If an uninsured loss
or a loss in excess of insured limits should occur, we could lose our capital
invested in a property, as well as any future revenue from such property. We
would remain obligated on any mortgage indebtedness or other obligations related
to such property.
Investments in Mortgage Debt Could Lead to Losses. We may invest in
mortgages secured by office or industrial properties. We may acquire such
properties through foreclosure proceedings or negotiated settlements. In
addition to the risks associated with investments in commercial properties,
investments in mortgage indebtedness present additional risks, including the
risk that the fee owners of such properties may not make payments of interest on
a current basis and we may not realize our anticipated return or sustain losses
relating to such investments.
PROPERTY OWNERSHIP THROUGH PARTNERSHIPS AND JOINt VENTURES COULD LIMIT OUR
CONTROL OF SUCH INVESTMENTS
We own through the Operating Partnership a 60% general partner interest
in Omni Partners, L.P. (the "Omni Partnership"), the partnership that owns the
Omni, a 575,000 square foot office building located in our Nassau West Corporate
Center office park. Odyssey Partners, L.P. and an affiliate of Odyssey
(collectively, "Odyssey") own the remaining 40% interest. Through our
partnership interest, we act as managing partner and have the sole authority to
conduct the business and affairs of the Omni Partnership subject to the
limitations set forth in the amended and restated agreement of limited
partnership of Omni Partners, L.P. (the "Omni Partnership Agreement"). These
limitations include Odyssey's right to negotiate under certain circumstances a
refinancing of the mortgage debt encumbering the Omni and the right to approve
any sale of the Omni made on or before March 13, 2007 (the "Acquisition Date").
The Operating Partnership will continue to act as the sole managing partner of
the Omni Partnership unless certain conditions specified in the Omni Partnership
Agreement shall occur. Upon the occurrence of any of such conditions the
Operating Partnership's general partnership interest shall convert to a limited
partnership interest (in which case an affiliate of Odyssey shall be the sole
managing partner), or at the option of Odyssey, the Operating Partnership shall
be a co-managing partner with an affiliate of Odyssey. In addition, on the
Acquisition Date, the Operating Partnership will have the right to purchase
Odyssey's interest in the Omni Partnership at a price (the "Option Price") based
on 90% of its fair market value. If the Operating Partnership fails to exercise
such option, Odyssey has the right to require the Operating Partnership to
purchase Odyssey's interest in the Omni Partnership on the Acquisition Date at
the Option Price. The Operating Partnership has the right to extend the
Acquisition Date until March 13, 2012. The Option Price shall apply to the
payment of all sums due under a loan (the "Odyssey Loan") made by the Operating
Partnership in March 1997 to Odyssey in the amount of approximately $17 million.
The Odyssey Loan matures on the Acquisition Date (subject to the Operating
Partnership's right to extend the Acquisition Date as set forth above) and is
secured by a pledge of all of Odyssey's right, title and interest in the Omni
Partnership. All distributions of net cash flow which Odyssey is otherwise
entitled to shall apply to all interest due under the Odyssey Loan. All
distributions from a sale or refinancing of the Omni which Odyssey is otherwise
entitled to shall apply to the interest and principal outstanding under the
Odyssey Loan.
In addition, we may in the future acquire either a limited partnership
interest in a property partnership without partnership management responsibility
or a co-venturer interest or co-general partnership interest in a property
partnership with shared responsibility for managing the affairs of a property
partnership or joint venture. Therefore, we will not be in a position to
exercise sole decision-making authority regarding the property partnership or
joint venture. In that regard, we (through the Operating Partnership) own a 60%
managing member interest in a limited liability company that owns 520 White
Plains Road, a 171,761 square foot office building located in Tarrytown, New
York. The remaining 40% member interest is held by Tarrytown Corporate Center
III, L.P. ("TCC"), a partnership affiliated with the Halpern organization. The
member agreement governing the joint venture arrangement requires us to obtain
the consent of TCC prior to engaging in certain activities, including entering
into or modifying a major lease (i.e., a lease for more than 25,000 rentable
square feet), financing or refinancing indebtedness encumbering the property and
selling or otherwise transferring the property.
Partnership or joint venture investments may involve risks not
otherwise present for investments made solely by us, including the possibility
that our partners or co-venturer might become bankrupt, that such partners or
co-venturer might at any time have different interests or goals than we do, and
that such partners or co-venturer may take action contrary to our instructions,
requests, policies or objectives. This includes our policy with respect to
maintaining our qualification as a REIT. Other risks of such investments include
impasse on decisions, such as a sale, because neither the partner or co-venturer
nor us would have full control over the partnership or joint venture.
Consequently, actions by such partner or co-venturer might result in subjecting
properties owned by the partnership or joint venture to additional risk. We
will, however, seek to maintain sufficient control of such partnerships or joint
ventures to permit our business objectives to be achieved. There is no
limitation under our organizational documents as to the amount of available
funds that may be invested in partnerships or joint ventures.
ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND MAY BE COSTLY
Federal, state and local laws and regulations relating to the
protection of the environment may require a current or previous owner or
operator of real estate to investigate and clean up hazardous or toxic
substances or petroleum product releases at such property. An owner of real
estate is liable for the costs of removal or remediation of certain hazardous or
toxic substances on or in such property. These laws often impose such liability
without regard to whether the owner knew of, or caused, the presence of such
contaminants. Clean-up costs and the owner's liability generally are not limited
under such enactments and could exceed the value of the property and/or the
aggregate assets of the owner. The presence of or the failure to properly
remediate such substances, may adversely affect the owner's ability to sell or
rent such property or to borrow using such property as collateral. Persons who
arrange for the disposal or treatment of hazardous or toxic substances may also
be liable for the clean-up costs of such substances at a disposal or treatment
facility, whether or not such facility is owned or operated by such person. Even
if more than one person was responsible for the contamination, each person
covered by the environmental laws may be held responsible for the clean-up costs
incurred. In addition, third parties may sue the owner or operator of a site for
damages and costs resulting from environmental contamination emanating from that
site.
Environmental laws also govern the presence, maintenance and removal of
asbestos-containing materials ("ACMs"). Such laws impose liability for release
of ACMs into the air and third parties may seek recovery from owners or
operators of real properties for personal injury associated with ACMs. In
connection with the ownership (direct or indirect), operation, management and
development of real properties, we may be considered an owner or operator of
such properties. Having arranged for the disposal or treatment of contaminants
we may be potentially liable for removal, remediation and other costs, including
governmental fines and injuries to persons and property.
All of our Office Properties and all of our Industrial Properties have
been subjected to a Phase I or similar environmental site assessment after April
1, 1994 (which involved general inspections without soil sampling, ground water
analysis or radon testing and, for our Properties constructed in 1978 or
earlier, survey inspections to ascertain the existence of ACMs were conducted)
completed by independent environmental consultant companies (except for 35
Pinelawn Road which was originally developed by us and subjected to a Phase I in
April 1992). These environmental site assessments have not revealed any
environmental liability that would have a material adverse effect on our
business.
FAILURE TO QUALIFY AS A REIT WOULD BE COSTLY
We have operated (and intend to operate) so as to qualify as a REIT
under the Code beginning with our taxable year ended December 31, 1995. Although
our management believes that we are organized and operate in such a manner, no
assurance can be given that we will qualify or remain qualified as a REIT.
If we fail to qualify as a REIT in any taxable year, we will be subject
to federal income tax (including any applicable alternative minimum tax) on our
taxable income at regular corporate rates. Moreover, unless entitled to relief
under certain statutory provisions, we also will be disqualified from treatment
as a REIT for the four taxable years following the year during which
qualification was lost. This treatment would significantly reduce our net
earnings available to service our indebtedness, make investments or pay
distributions to our shareholders because of the additional tax liability to the
Company for the years involved. Also, we would not then be required to pay
distributions to our shareholders.
CONFLICTS OF INTEREST COULD RESULT IN DECISIONS NOT IN OUR BEST INTERESTS
Tax Consequences Upon Sale or Refinancing. Holders of units of limited
partnership of the Operating Partnership ("Units") or co-owners of properties
not owned entirely by us may suffer different and more adverse tax consequences
than we will upon the sale or refinancing of the Properties. We may have
different objectives from these co-owners and holders of Units regarding the
appropriate pricing and timing of any sale or refinancing of such Properties.
While we, as the sole general partner of the Operating Partnership, have the
exclusive authority as to whether and on what terms to sell or refinance each
Property owned solely by the Operating Partnership, our directors and officers
who hold Units may seek to influence us not to sell or refinance the Properties,
even though such a sale might otherwise be financially advantageous to us, or
may seek to influence us to refinance a Property with a higher level of debt.
We May Have Potential Conflicts with RSI. Donald J. Rechler serves as
our Chairman of the Board and our Chief Executive Officer and Chairman of the
Board of RSI. Scott H. Rechler serves as our President and our Chief Operating
Officer and President and Chief Executive Officer of RSI and is a director of
Reckson and RSI. Michael Maturo serves as Executive Vice President, Treasurer
and Chief Financial Officer of Reckson and RSI and is a director of RSI.
Furthermore, Roger Rechler, Gregg Rechler and Mitchell Rechler are executive
officers of Reckson and Roger Rechler and Mitchell Rechler are directors of
Reckson, while all three individuals are members of the management advisory
committee and directors of RSI. Although each of the individuals referred to
above is committed to the success of Reckson, they are also committed to the
success of RSI. As of September 30, 1998, our senior management and directors
beneficially owned approximately 15% of our outstanding Common Stock (with a
total market value (based on the New York Stock Exchange closing price of $23
per share) of approximately $178.4 million as of such date) (assuming the
conversion of all Units into shares of Common Stock and the exercise of all
vested stock options) and approximately 29% of the outstanding common stock of
RSI (with a total market value (at a stock price of $2 per share) of
approximately 14.3 million as of such date). There is a risk that the common
membership of management, members of the Boards of Directors and ownership of
Reckson and RSI will lead to conflicts of interest in the fiduciary duties owed
to stockholders by common directors and officers in connection with transactions
between the two companies, as well as a conflict in allocating management time.
The Operating Partnership and RSI have entered into an intercompany
agreement (the "Reckson Intercompany Agreement") to formalize their relationship
and to limit conflicts of interest. Under the Reckson Intercompany Agreement,
RSI granted the Operating Partnership a right of first opportunity to make any
REIT-qualified investment that becomes available to RSI. In addition, if a
REIT-qualified investment opportunity becomes available to an affiliate of RSI,
including Reckson Strategic Venture Partners, LLC ("RSVP"), 100% of the common
ownership interest of which is indirectly owned 100% by RSI, the Reckson
Intercompany Agreement requires such affiliate to allow the Operating
Partnership to participate in such opportunity to the extent of RSI's interest.
Under the Reckson Intercompany Agreement, the Operating Partnership
granted RSI a right of first opportunity to provide Commercial Services (as
defined below) to the Operating Partnership and its tenants. RSI will provide
services to the Operating Partnership at rates and on terms as attractive as
either the best available for comparable services in the market or those offered
by RSI to third parties. In addition, the Operating Partnership will give RSI
access to its tenants with respect to Commercial Services (as defined below)
that may be provided to such tenants.
Under the Reckson Intercompany Agreement, subject to certain
conditions, the Operating Partnership granted RSI a right of first refusal to
become the lessee of any real property acquired by the Operating Partnership if
the Operating Partnership determines that, consistent with Reckson's status as a
REIT, it is required to enter into a "master" lease arrangement.
With respect to services that RSI will provide to the Operating
Partnership, management will have a conflict of interest in determining the
market rates to charge the Operating Partnership for such services. In addition,
management will have a conflict of interest in determining whether the Company
or RSI shall pursue a REIT-qualified investment opportunity outside of Reckson's
core business strategy. Furthermore, the Company and RSI may structure
investments so that joint ventures between the Operating Partnership and RSVP
may pursue the portion of investments generating REIT-qualified income and RSVP
will pursue directly the other portion of such investments. RSVP and the
RSVP-Reckson Operating Partnership joint venture may have conflicts of interest
in the structuring, valuation, management and disposition of such investments.
In June 1998 we established a credit facility with RSI (the "RSI
Facility") in the amount of $100 million for RSI's service sector operations and
other general corporate purposes. In addition, in June 1998 we also established
a credit facility with RSVP (the "RSVP Facility", and together with the RSI
Facility, the "RSI Credit Facilities") for the funding of investments of up to
$100 million with or in RSVP. Advances under the RSVP Facility in excess of $25
million in respect of any single platform will be subject to approval by our
Board of Directors, while advances under the RSI Facility in excess of $10
million in respect of any single investment in services for occupants of office,
industrial and other property types that we may not be permitted to provide
under Federal tax laws ("Commercial Services"), as well as advances for
investments in opportunities in non-Commercial Services, will be subject to
approval by our board of directors, or a committee thereof. Each RSI Credit
Facility has a term of five years and advances thereunder will be recourse
obligations of RSI. Interest will accrue on advances made under the RSI Credit
Facilities at a rate equal to the greater of (i) the prime rate plus 2% and (ii)
12% per annum, with the rate referred to in clause (ii) increasing annually at a
rate of 4% of the prior year's rate. Prior to maturity, interest will be payable
quarterly but only to the extent of net cash flow and on an interest-only basis
and will be prepayable without penalty at the option of RSI. As long as there
are outstanding advances under the RSI Credit Facilities, RSI will be prohibited
from paying dividends on any shares of its capital stock. The RSI Credit
Facilities are subject to certain other covenants and prohibit advances
thereunder to the extent such advances could, in our determination endanger our
status as a REIT. The terms of the RSI Credit Facilities were not negotiated at
arms' length and thus may not reflect terms that could have been obtained from
independent third parties. Additional indebtedness may be incurred by
subsidiaries of RSI. As of September 30, 1998 borrowing under the RSI Credit
Facilities aggregated approximately $6.6 million.
Policies With Respect to Conflicts of Interest May Not Be Successful.
We have adopted certain policies designed to eliminate or minimize conflicts of
interest. These policies include the approval by of all transactions in which
directors or officers have a conflicting interest by a majority of our directors
who are neither officers nor affiliated with the Company (the "Independent
Directors"). However, there is no assurance that these policies will be
successful and, if they are not successful, decisions could be made that might
fail to reflect fully the interests of all of our stockholders.
LIMITS ON OWNERSHIP AND CHANGES IN CONTROL MAY DETER CHANGES IN MANAGEMENT AND
THIRD PARTY ACQUISITION PROPOSALS
Ownership Limit. To maintain our qualification as a REIT, five or fewer
individuals (as defined in the Internal Revenue Code of 1986, as amended (the
"Code"), to include certain entities) may not own, directly or indirectly, more
than 50% in value of our outstanding capital stock during the last half of a
taxable year (other than the first year). In order to protect against the risk
of losing REIT status, our charter limits ownership of our issued and
outstanding Common Stock by any single stockholder to 9.0% of the lesser of the
number or value of the outstanding shares of Common Stock. We may also impose
limitations on the ownership of issued and outstanding Preferred Stock. See
"Restrictions on Ownership of Capital Stock" and "Description of Preferred
Stock-Restrictions on Ownership." Such provisions may delay, defer or prevent a
change of control of the Company or other transaction by a third party without
the consent of the Board of Directors even if a change of control were in the
best interests of our stockholders.
Staggered Board. Our Board of Directors is divided into three classes.
The terms of the Class I, Class II and Class III directors expire in 1999, 2000
and 2001, respectively. Directors are chosen for a three-year term.
Required Consent of Holders of Units for Certain Transactions. Through
June 2, 2000, we may not sell, transfer or otherwise dispose of all or
substantially all of its assets or engage in any other similar transaction
(regardless of the form of such transaction) without the consent of the holders
of 85% of all outstanding Units. This voting requirement could delay, defer or
prevent a change in control of the Company.
Future Issuances of Common Stock. Our charter authorizes the Board of
Directors to issue additional shares of Common Stock without shareholder
approval. We may issue shares of Common Stock in exchange for Units pursuant to
the Operating Partnership agreement. Any such issuance could have the effect of
diluting existing shareholders' interests in the Company.
Preferred Stock. Our charter authorizes the Board of Directors to issue
up to 25 million shares of preferred stock (the "Preferred Stock" and, together
with the Common Stock, the "Stock"), of which 9,200,000 shares of our Series A
Preferred Stock have been issued (8,000 shares of which have been converted to
shares of Common Stock), to reclassify unissued shares of Stock, and to
establish the preferences, conversion and other rights, voting powers,
restrictions, limitations and restrictions on ownership, limitations as to
dividends or other distributions, qualifications, and terms and conditions of
redemption for each such class or series of any Preferred Stock issued. Although
the Board of Directors has no such intention at the present time, it could
establish a series of Preferred Stock that could, depending on the terms of such
series, delay, defer or prevent a transaction or a change in control of the
Company that might involve a premium price for the Common Stock or otherwise be
in the best interest of our stockholders.
Limitations on Acquisition of and Changes in Control Pursuant to
Maryland Law. Certain provisions of the Maryland General Corporation Law (the
"MGCL") may have the effect of inhibiting a third party from making an
acquisition proposal for the Company or of delaying, deferring or preventing a
change in control of the Company under circumstances that otherwise could
provide the holders of shares of Common Stock with the opportunity to realize a
premium over the then-prevailing market price of such shares. However, as
permitted by the MGCL, our bylaws contain a provision exempting any and all
acquisitions by any person of the Company's shares of Stock from the control
share acquisition statute. In addition, the Board of Directors adopted a
resolution exempting the Company from the provisions of the business combination
statute. The Company may amend or eliminate such provisions at any time.
POTENTIAL IMPACT OF PENDING LITIGATION
In July 1998, the Company formed a joint venture, Metropolitan Partners
LLC, a Delaware limited liability company ("Metropolitan Partners"), with
Crescent Real Estate Equities Company, a Texas real estate investment trust
("Crescent"). Pursuant to a merger agreement executed on July 9, 1998 and
amended and restated on August 11, 1998 (the "Merger Agreement") between
Metropolitan Partners, the Company and Crescent and Tower Realty Trust, Inc., a
Maryland corporation ("Tower"), Metropolitan Partners agreed, subject to the
terms and conditions of the Merger Agreement, to purchase the common stock of
Tower.
Prior to the execution of the Merger Agreement, Metropolitan Partners
identified certain tax issues regarding Tower's operations. Metropolitan
Partners entered into the Merger Agreement only after Tower made detailed
representations and warranties purporting to address these issues. In the course
of due diligence, however, Metropolitan Partners, the Company and Crescent
discovered that these representations and warranties may not be correct and
discussed these concerns with Tower, specifically advising Tower that they were
not terminating the Merger Agreement at that time. Metropolitan Partners, the
Company and Crescent invited Tower to respond to these concerns. However, on
November 2, 1998, Tower filed a complaint in the Supreme Court of the State of
New York alleging Metropolitan Partners, the Company and Crescent willfully
breached the Merger Agreement. Tower is seeking declaratory and other relief,
including damages of not less than $75 million and specific performance by
Metropolitan Partners, the Company and Crescent of their obligations under the
Merger Agreement. Although management believes the Company has meritorious
defenses to this action, there can be no assurance as to the impact of this
action on the Company's operations and/or financial condition.
THE MARKET VALUE OF COMMON STOCK AND PREFERRED STOCK COULD DECREASE
EFFECT OF MARKET CONDITIONS. As with other publicly traded equity
securities, the value of the Common Stock and Preferred Stock depends upon
various market conditions, which may change from time to time. Such market
conditions include: the extent of institutional investor interest in our
Company; the reputation of office and industrial REITs and the attractiveness of
their equity securities in comparison to other equity securities (including
securities issued by other real estate-based companies); our financial condition
and results of operations; and general financial market conditions.
EFFECT OF EARNINGS AND CASH DISTRIBUTIONS. The market value of the
equity securities of a REIT may be based primarily upon the market's perception
of the REIT's growth potential and its current and future cash distributions,
and may be secondarily based upon the real estate market value of the underlying
assets. For that reason, the Common Stock may trade above or below the net asset
value per share of Common Stock. Although we may retain operating cash flow for
investment or working capital purposes, which increases the value of our
underlying assets, this may not correspondingly increase the market price of the
Common Stock. Our failure to meet the market's expectation with regard to future
earnings and cash distributions likely would adversely affect the market price
of the Common Stock and Preferred Stock.
RISING INTEREST RATES COULD ADVERSELY AFFECT CASH FLOW. One factor
which influences the price of the Common Stock and Preferred Stock is the
distribution rate on such shares (as a percentage of the price of such shares)
relative to market interest rates. Thus, rising interest rates may lead
potential buyers of shares to expect a higher distribution rate, which would
adversely affect the market price of the Common Stock and Preferred Stock.
WE MAY NOT BE ABLE TO PAY ON GUARANTEES
The Operating Partnership conducts all of our operations, and our only
asset is our interest in the Operating Partnership. As a result, we are
dependent upon the receipt of distributions or other payments from the Operating
Partnership in order to meet our financial obligations, including our
obligations under any Guarantees. Any Guarantees will be effectively
subordinated to existing and future liabilities of the Operating Partnership. At
September 30, 1998, the Operating Partnership had approximately $814 million of
indebtedness outstanding (including its proportionate share of joint-venture
debt and net of minority partners' interest). The Operating Partnership is a
party to a loan agreement with various bank lenders which requires the Operating
Partnership to comply with various financial and other covenants before it may
make distributions to us. Although the Operating Partnership presently is in
compliance with such covenants, there is no assurance that the Operating
Partnership will continue to be in compliance and that it will be able to
continue to pay distributions to our shareholders and service our indebtedness.
CERTAIN TRANSACTIONS BY THE OPERATING PARTNERSHIP OR THE COMPANY COULD ADVERSELY
AFFECT DEBT HOLDERS
The Indenture does not contain any provisions that would protect
holders of Debt Securities in the event of (i) a highly leveraged or similar
transaction involving the Operating Partnership, the management of the Operating
Partnership or the Company, or any affiliate of any such party, (ii) a change of
control, or (iii) certain reorganizations, restructuring, mergers or similar
transactions involving the Operating Partnership or the Company.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the
net proceeds to the Company or the Operating Partnership, as the case may be,
from the sale of the Securities offered hereby will be used for general
corporate purposes, which may include the repayment of existing indebtedness,
the development or acquisition of additional properties as suitable
opportunities arise and the renovation, expansion and improvement of our
existing properties.
<TABLE>
<CAPTION>
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's and the Operating Partnership's consolidated ratios of
earnings to fixed charges and preferred stock dividends for the periods shown:
<S> <C> <C> <C> <C> <C> <C> <C>
June 3, 1995 January 1, 1995
Six Months Ended Year Ended December to to Year Ended December 31,
June 30, 1998 1997 1996 December 31, 1995 June 2, 1995 1994 1993
---------------- ---- ---- ----------------- ------------ ---- ----
Company:
- -------
Ratio of 2.20x 2.77x 2.72x 2.71x 1.02x(1) 0.97x(1) 0.65x(1)
Earnings to
Fixed Charges
Plus Preferred 2.03x(2) -- -- -- -- -- --
Dividend
Requirements
Operating Partnership:
- --------------------
Ratio of 2.22x 2.78x 2.71x 2.71x 1.02x(1) 0.97x(1) 0.65x(1)
Earnings to
Fixed Charges
Plus Preferred 2.04x(2) -- -- -- -- -- --
Dividend
Requirements
(1) Prior to completion of the IPO on June 2, 1995, the Company's predecessors operated in a manner as to
minimize net taxable income to the owners. The IPO and the related formation transactions permitted
the Company to deleverage its properties significantly, resulting in a significantly improved ratio
of earnings to fixed charges.
(2) Neither the Company nor the Operating Partnership had preferred stock outstanding prior to April
1998.
</TABLE>
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. The ratio of earnings to combined fixed charges and
preferred dividends were computed by dividing earnings by the aggregate of fixed
charges and preferred dividends. For this purpose, earnings consist of income
from continuing operations before minority interest, fixed charges and preferred
dividends. Fixed charges consist of interest expense (including interest costs
capitalized) and the amortization of debt issuance costs plus preferred
dividends.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture (the "Indenture")
among the Operating Partnership, the Company and the trustee named therein (the
"Trustee"). The Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part and is available for inspection at
the corporate trust office of the trustee or as described above under "Available
Information." The Indenture is subject to, and governed by, the Trust Indenture
Act of 1939, as amended (the "TIA"). The statements made hereunder relating to
the Indenture and the Debt Securities to be issued thereunder are summaries of
certain provisions thereof and do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indenture and such Debt Securities. All section references appearing herein are
to sections of the Indenture, and capitalized terms used but not defined herein
shall have the respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Operating Partnership and will rank equally with all other unsecured and
unsubordinated indebtedness of the Operating Partnership. The Debt Securities
may be issued without limit as to aggregate principal amount, in one or more
series, in each case as established from time to time in or pursuant to
authority granted by a resolution of the Board of Directors of the Company as
sole general partner of the Operating Partnership or as established in one or
more indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series (Section
301).
The Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under the Indenture may resign or be removed with respect to one or more
series of Debt Securities, and a successor Trustee may be appointed to act with
respect to such series (Section 608). 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 (Section 609), and, except as
otherwise indicated herein, any action described herein to be taken by a Trustee
may be taken by each such Trustee with respect to, and only with respect to, the
one or more series of Debt Securities for which it is Trustee under the
Indenture.
Reference is made to the Prospectus Supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including:
(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 percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity
thereof;
(4) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(5) the rate or rates (which may be fixed or variable), or the
method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
(6) the date or dates, or the method for determining such date or
dates, from which any interest will accrue, the dates on which
any such interest will be payable, the record dates for such
interest payment dates, or the method by which any such date
shall be determined, the person 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, if
any) and interest, if any, on such Debt Securities will be
payable, such Debt Securities may be surrendered for
registration of transfer or exchange and notices or demands to
or upon the Operating Partnership in respect of such Debt
Securities and the Indenture may be served;
(8) the date or dates on which or the period or periods within
which, the price or prices at which and the terms and
conditions upon which such Debt Securities may be redeemed, as
a whole or in part, at the option of the Operating
Partnership, if the Operating Partnership is to have such an
option;
(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 date or dates on which or the period
or periods within which, the price or prices at which and the
terms and conditions upon which such Debt Securities will be
redeemed, repaid or purchased, as a whole or in part, pursuant
to such obligation;
(10) if other than U.S. dollars, the currency or currencies in
which such Debt Securities are denominated and payable, which
may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the
terms and conditions relating thereto;
(11) whether the amount of payments of principal of (and premium,
if any) or interest, if any, on such Debt Securities may be
determined with reference to an index, formula or other method
(which index, formula or method may, but need not be, based on
a currency, currencies, currency unit or units or composite
currency or currencies) and the manner in which such amounts
shall be determined;
(12) the events of default or covenants of such Debt Securities, to
the extent different from or in addition to those described
herein;
(13) whether such Debt Securities will be issued in certificated
and/or book-entry form;
(14) whether such Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in
bearer form, the denominations thereof if other than $5,000
and terms and conditions relating thereto;
(15) whether such Debt Securities will be fully and unconditionally
guaranteed by the Company pursuant to the Guarantees (the
"Guaranteed Securities");
(16) if the defeasance and covenant defeasance provisions described
herein are to be inapplicable or any modification of such
provisions;
(17) if such Debt Securities are to be issued upon the exercise of
debt warrants, the time, manner and place for such Debt
Securities to be authenticated and delivered;
(18) whether and under what circumstances the Operating Partnership
will pay additional amounts on such Debt Securities in respect
of any tax, assessment or governmental charge and, if so,
whether the Operating Partnership will have the option to
redeem such Debt Securities in lieu of making such payment;
(19) if other than the Trustee, the identity of each security
registrar and/or paying agent; and
(20) any other material terms of such Debt Securities.
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities"). If material or applicable,
special 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 described under "Merger, Consolidation or Sale" or as may be
set forth in any Prospectus Supplement, the Indenture does not contain any other
provisions that would limit the ability of the Operating Partnership or the
Company to incur indebtedness or that would afford Holders of the Debt
Securities protection in the event of (i) a highly leveraged or similar
transaction involving the Operating Partnership, the management of the Operating
Partnership or the Company, or any affiliate of any such party, (ii) a change of
control, or (iii) a reorganization, restructuring, merger or similar transaction
involving the Operating Partnership or the Company that may adversely affect the
Holders of the Debt Securities. In addition, subject to the limitations set
forth under "Merger, Consolidation or Sale," the Operating Partnership or the
Company may, in the future, enter into certain transactions, such as the sale of
all or substantially all of its assets or the merger or consolidation of the
Operating Partnership or the Company, that would increase the amount of the
Operating Partnership's indebtedness or substantially reduce or eliminate the
Operating Partnership's assets, which may have an adverse effect on the
Operating Partnership's ability to service its indebtedness, including the Debt
Securities. In addition, restrictions on ownership and transfers of the
Company's common stock and preferred stock which are designed to preserve its
status as a REIT may act to prevent or hinder a change of control. See
"Description of Common Stock--Restrictions on Ownership" and "Description of
Preferred Stock--Restrictions on Ownership." Reference is made to the applicable
Prospectus Supplement for information with respect to any deletions from,
modifications of or additions to the events of default or covenants that are
described below, including any addition of a covenant or other provision
providing event risk or similar protection.
Reference is made to "--Certain Covenants" below and to the description
of any additional covenants with respect to a series of Debt Securities in the
applicable Prospectus Supplement. Except as otherwise described in the
applicable Prospectus Supplement, compliance with such covenants generally may
not be waived with respect to a series of Debt Securities by the Board of
Directors of the Company as sole general partner of the Operating Partnership or
by the Trustee unless the Holders of at least a majority in principal amount of
all outstanding Debt Securities of such series consent to such waiver, except to
the extent that the defeasance and covenant defeasance provisions of the
Indenture described under "--Discharge, Defeasance and Covenant Defeasance"
below apply to such series of Debt Securities. See "--Modification of the
Indenture."
GUARANTEES
The Company will fully and unconditionally guarantee the due and
punctual payment of principal of, premium, if any, and interest on any Debt
Securities not rated investment grade by at least one nationally recognized
statistical rating organization at the time of issuance by the Operating
Partnership, whether at a maturity date, by declaration of acceleration, call
for redemption or otherwise.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series which are registered securities, other than
registered securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $1,000 and any integral multiple thereof
and the Debt Securities which are bearer securities, other than bearer
securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $5,000 (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the Trustee 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 Security Register or by wire transfer of funds to such Person at an
account maintained within the United States (Sections 301, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the Person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer thereof at the corporate trust office of the Trustee
referred to above. Every Debt Security surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Trustee or the Operating Partnership
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 305). If the applicable
Prospectus Supplement refers to any transfer agent (in addition to the Trustee)
initially designated by the Operating Partnership with respect to any series of
Debt Securities, the Operating Partnership may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Operating
Partnership will be required to maintain a transfer agent in each place of
payment for such series. The Operating Partnership may at any time designate
additional transfer agents with respect to any series of De6t Securities
(Section 1002).
Neither the Operating Partnership nor the Trustee shall be required (i)
to issue, register the transfer of or exchange any Debt Security if such Debt
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Debt Securities to be
redeemed and ending at the close of business on the day of such selection, or
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except, in the case of any Registered
Security to be redeemed in part, the portion thereof not to be redeemed, or
(iii) to exchange any Bearer Security so selected for redemption except that
such a Bearer Security may be exchanged for a Registered Security of that series
and like tenor, provided that such Registered Security shall be simultaneously
surrendered for redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Debt Security not to be so
repaid (Section 305).
MERGER, CONSOLIDATION OR SALE
The Operating Partnership or, with respect to the Guaranteed
Securities, the Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other entity,
provided that (a) the Operating Partnership or the Company, as the case may be,
shall be the continuing entity, or the successor entity (if other than the
Operating Partnership or the Company, as the case may be) formed by or resulting
from any such consolidation or merger or which shall have received the transfer
of such assets shall expressly assume payment of the principal of (and premium,
if any) and interest on all the Debt Securities and the due and punctual
performance and observance of all of the covenants and conditions contained in
the Indenture and, if applicable, the Guarantees; (b) immediately after giving
effect to 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 officer's
certificate and legal opinion covering such conditions shall be delivered to the
Trustee (Sections 801 and 803).
CERTAIN COVENANTS
Existence. Except as permitted under "Merger, Consolidation or Sale,"
the Operating Partnership is required to do or cause to be done all things
necessary to preserve and keep in full force and effect their existence, rights
and franchises; provided, however, that the Operating Partnership shall not be
required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities (Section 1007).
Maintenance of Properties. The Operating Partnership is required to
cause all of its material properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and to 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 for value their respective
properties in the ordinary course of business (Section 1005).
Insurance. The Operating Partnership is required to, and is required to
cause each of its Subsidiaries to, keep all of its insurable properties insured
against loss or damage at least equal to their then full insurable value with
financially sound and reputable insurance companies (Section 1006).
Payment of Taxes and Other Claims. The Operating Partnership is
required to pay or discharge or cause to be paid or discharged, before the same
shall become delinquent, (i) all taxes, assessments and governmental charges
levied or imposed upon them or any Subsidiary or upon their income, profits or
property or that of any Subsidiary, and (ii) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Operating Partnership or any Subsidiary; provided, however, that
the Operating Partnership shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings (Section 1011).
Provision of Financial Information. The Holders of Debt Securities will
be provided with copies of the annual reports and quarterly reports of the
Operating Partnership. Whether or not the Operating Partnership is subject to
Section 13 or 15(d) of the Exchange Act and for so long as any Debt Securities
are outstanding, the Operating Partnership will, to the extent permitted under
the Exchange Act, be required to file with the Commission the annual reports,
quarterly reports and other documents which the Operating Partnership would have
been required to file with the Commission pursuant to such Section 13 or 15(d)
(the "Financial Statements") if the Operating Partnership were so subject, such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Operating Partnership would have been
required so to file such documents if the Operating Partnership were so subject.
The Operating Partnership will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all Holders of Debt Securities, as
their names and addresses appear in the Security Register, without cost to such
Holders, copies of the annual reports and quarterly reports which the Operating
Partnership would have been required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act if the Operating Partnership were
subject to such Sections and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Operating Partnership
would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Operating Partnership were subject to such
Sections and (y) if filing such documents by the Operating Partnership with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder (Section 1014).
As used herein and in the Prospectus Supplement:
"Subsidiary" means any entity of which the Operating Partnership or one
or more other Subsidiaries owns or controls, directly or indirectly, more than
50% of the shares of Voting Stock.
"Voting Stock" means stock having general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees, provided that stock that carries only the right to vote
conditionally on the happening of an event shall not be considered Voting Stock.
Additional Covenants. Any additional or different covenants of the
Operating Partnership or the Company with respect to any series of Debt
Securities will be set forth in the Prospectus Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (a)
default for 30 days in the payment of any installment of interest on any Debt
Security of such series; (b) default in the payment of the principal of (or
premium, if any, on) any Debt Security of such series at its maturity; (c)
default in making any sinking fund payment as required for any Debt Security of
such series; (d) default in the performance of any other covenant of the
Operating Partnership or the Company contained in the Indenture (other than a
covenant added to the Indenture solely for the benefit of a series of Debt
Securities issued thereunder other than such series), such default having
continued for 60 days after written notice as provided in the Indenture; (e)
certain events of bankruptcy, insolvency or reorganization, or court appointment
of a receiver, liquidator or trustee of the Operating Partnership, the Company
or any Significant Subsidiary or any of their respective property; and (f) any
other Event of Default provided with respect to a particular series of Debt
Securities. The term "Significant Subsidiary" means each significant subsidiary
(as defined in Regulation S-X promulgated under the Securities Act) of the
Operating Partnership or the Company (Section 501).
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 Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Debt Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities or Indexed Securities, such portion of the principal amount
as may be specified in the terms thereof) of all of the Debt Securities of that
series to be due and payable immediately by written notice thereof to the
Operating Partnership and the Company (and to the Trustee if given by the
Holders). However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of not less than a majority in principal amount of
Outstanding Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) may rescind and annul such
declaration and its consequences if (a) the Operating Partnership or the Company
shall have deposited with the Trustee all required payments of the principal of
(and premium, if any) and interest on the Debt Securities of such series (or of
all Debt Securities then outstanding under the Indenture, as the case may be),
plus certain fees, expenses, disbursements and advances of the Trustee and (b)
all Events of Default, other than the non-payment of accelerated principal of
(or specified portion thereof), or premium (if any) or interest on the Debt
Securities of such series (or of all Debt Securities then Outstanding under the
Indenture, as the case may be) have been cured or waived as provided in the
Indenture (Section 502). The Indenture also provides that the Holders of not
less than a majority in principal amount of the Outstanding Debt Securities of
any series (or of all Debt Securities then Outstanding under the Indenture, as
the case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or (y) in
respect of a covenant or provision contained in the Indenture that cannot be
modified or amended without the consent of the Holder of each Outstanding Debt
Security affected thereby (Section 513).
The Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture unless such default
has been cured or waived; provided, however, that the Trustee may withhold
notice to the Holders of any series of Debt Securities of any default with
respect to such series (except a default in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or in the
payment of any sinking fund installment in respect of any Debt Security of such
series) if specified Responsible Officers of the Trustee consider such
withholding to be in the interest of such Holders (Section 602).
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
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 reasonable indemnity (Section 507). This
provision will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on such Debt Securities at the respective due
dates thereof (Section 508).
Subject to provisions in the Indenture relating to its duties in case
of default, the Trustee is 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 (Section 601). 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 Trustee, or of exercising any trust or power
conferred upon the Trustee. However, the Trustee may refuse to follow any
direction which is in conflict with any law or the Indenture, or which may be
unduly prejudicial to the Holders of Debt Securities of such series not joining
therein (Section 512).
Within 120 days after the close of each fiscal year, the Operating
Partnership must certify to the Trustee 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 (Sections 1009 and 1010).
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be permitted to be
made only with the consent of the Holders of not less than a majority in
principal amount of all Outstanding Debt Securities or series of Outstanding
Debt Securities which are affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each such Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or premium (if any) or any installment of interest
on, any such Debt Security, reduce the principal amount of, or the rate or
amount of interest on, or any premium payable on redemption of, any such Debt
Security, or reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon declaration of acceleration of the
maturity thereof or would be provable in bankruptcy, or adversely affect any
right of repayment of the holder of any such Debt Security, change the place of
payment, or the coin or currency, for payment of principal of, premium, if any,
or interest on any such Debt Security or impair the right to institute suit for
the enforcement of any payment on or with respect to any such Debt Security; (b)
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; (c) modify or
affect in any manner adverse to the Holders the terms and conditions of the
obligations of the Company in respect of the payment of principal (and premium,
if any) and interest on any Guaranteed Securities; or (d) modify any of the
foregoing provisions or any of the provisions relating to the waiver of certain
past defaults or certain covenants, except to increase the required percentage
to effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902).
The Indenture provides that the Holders of not less than a majority in
principal amount of a series of Outstanding Debt Securities have the right to
waive compliance with certain covenants relating to such series of Debt
Securities in the Indenture (Section 1008).
Modifications and amendments of the Indenture will be permitted to be
made by the Operating Partnership, the Company and the Trustee without the
consent of any Holder of Debt Securities for any of the following purposes: (i)
to evidence the succession of another Person to the Operating Partnership as
obligor or the Company as guarantor under the Indenture; (ii) to add to the
covenants of the Operating Partnership or the Company for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Operating Partnership or the Company in the Indenture;
(iii) to add Events of Default for the benefit of the Holders of all or any
series of Debt Securities; (iv) to add 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; (v) to amend or supplement any provisions of the Indenture,
provided that no such amendment or supplement shall materially adversely affect
the interests of the Holders of any Debt Securities then Outstanding; (vi) to
secure the Debt Securities; (vii) to establish the form or terms of Debt
Securities of any series; (viii) to provide for the acceptance of appointment by
a successor Trustee or facilitate the administration of the trusts under the
Indenture by more than one Trustee; (ix) 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 in any material
respect; or (x) 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 Debt Securities of any series in any
material respect (Section 901). In addition, with respect to Guaranteed
Securities, without the consent of any Holder of Debt Securities, the Company,
or a subsidiary thereof, may directly assume the due and punctual payment of the
principal of, any premium and interest on all the Guaranteed Securities and the
performance of every covenant of the Indenture on the part of the Operating
Partnership to be performed or observed. Upon any such assumption, the Company
or such subsidiary shall succeed to, and be substituted for and may exercise
every right and power of, the Operating Partnership under the Indenture with the
same effect as if the Company or such subsidiary had been the issuer of the
Guaranteed Securities and the Operating Partnership shall be released from all
obligations and covenants with respect to the Guaranteed Securities. No such
assumption shall be permitted unless the Company has delivered to the Trustee
(i) an officers' certificate and an opinion of counsel, stating, among other
things, that the Guarantee and all other covenants of the Company in the
Indenture remain in full force and effect and (ii) an opinion of independent
counsel that the Holders of Guaranteed Securities shall have no materially
adverse United States federal tax consequences as a result of such assumption,
and that, if any Debt Securities are then listed on the New York Stock Exchange,
that such Debt Securities shall not be delisted as a result of such assumption.
The Indenture provides that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a foreign currency that shall be deemed
Outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (i) above), (iii) the
principal amount of an Indexed Security that shall be deemed Outstanding shall
be the principal face amount of such Indexed Security at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to the
Indenture, and (iv) Debt Securities owned by the Operating Partnership or any
other obligor upon the Debt Securities or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded.
The Indenture contains provisions for convening meetings of the Holders
of Debt Securities of a series (Section 1501). A meeting will be permitted to be
called at any time by the Trustee, and also, upon request, by the Operating
Partnership, the Company (in respect of a series of Guaranteed Securities) or
the Holders of at least 10% in principal amount of the Outstanding Debt
Securities of such series, in any such case upon notice given as provided in the
Indenture (Section 1502). Except for any consent that must be given by the
Holder of each Debt Security affected by certain modifications and amendments of
the Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present will be permitted to be adopted by the
affirmative vote of the Holders of a majority in principal amount of the
Outstanding Debt Securities of that series; provided, however, that, except as
referred to above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting duly reconvened at which
a quorum is present by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Debt Securities 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 taken at such meeting with respect to a consent or waiver which may be
given by the Holders of not less than a specified percentage in principal amount
of the Outstanding Debt Securities of a series, the Persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, any action to be taken at a
meeting of Holders of Debt Securities of any series with respect to any action
that the Indenture expressly provides may be 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 taken at a meeting at which a quorum is
present by the affirmative vote of Holders of such specified percentage in
principal amount of the Outstanding Debt Securities of such series (Section
1504).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership may discharge certain obligations to Holders
of any series of Debt Securities that have not already been delivered to the
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 Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be (Section 401).
The Indenture provides that, unless the provisions of Section 402 are
made inapplicable to the Debt Securities of or within any series pursuant to
Section 301 of the Indenture, the Operating Partnership may .elect either (a) to
defease and discharge itself and the Company (if such Debt Securities are
Guaranteed Securities) from any and all obligations with respect to such Debt
Securities (except for the obligation to pay additional amounts, if any, upon
the occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 402) or (b) to release itself and the Company (if such
Debt Securities are Guaranteed Securities) from their obligations with respect
to such Debt Securities under certain sections of the Indenture (including the
restrictions described under "Certain Covenants") and, if provided pursuant to
Section 301 of the Indenture, their obligations with respect to any other
covenant, and any omission to comply with such obligations shall not constitute
a default or an Event of Default with respect to such Debt Securities ("covenant
defeasance") (Section 402), in either case upon the irrevocable deposit by the
Operating Partnership or the Company with the 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, 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 or the Company has delivered to the Trustee an
Opinion of Counsel (as specified in the Indenture) to the effect that the
Holders of such Debt Securities will not recognize income, gain or loss for 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, must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable United States federal income
tax law (Section 402).
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of 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 or the Company has deposited funds and/or
Government Obligations to effect defeasance or covenant defeasance with respect
to Debt Securities of any series, (a) the Holder of a Debt Security of such
series is entitled to, and does, elect pursuant to 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 shall be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest on such Debt Security as they
become due out of the proceeds yielded by converting the amount so deposited in
respect of such Debt Security into the currency, currency unit or composite
currency in which such Debt Security becomes payable as a result of such
election or such Conversion Event based on the applicable market exchange rate.
"Conversion Event" means the cessation of use of (i) a currency, currency unit
or composite currency both by the government of the country which issued such
currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community or (ii) the
euro both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Community. Unless
otherwise provided in the applicable Prospectus Supplement, all payments of
principal of (and premium, if any) and interest on any Debt Security that is
payable in a foreign currency that ceases to be used by its government of
issuance 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 "Event of Default, Notice and Waiver"
with respect to sections no longer applicable to such Debt Securities or
described in clause (f) 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
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 and the Company (if such Debt
Securities are Guaranteed Securities) would remain liable to make payment of
such amounts due at the time of acceleration.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary (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.
DESCRIPTION OF COMMON STOCK
GENERAL
The Company's Charter (the "Charter") provides that the Company may
issue up to 100 million shares of Common Stock, $.01 par value per share. Each
outstanding share of Common Stock will entitle the holder to one vote on all
matters presented to stockholders for a vote and cumulative voting is not
permitted. Holders of the Common Stock do not have preemptive rights. On October
31, 1998, there were 40,033,913 shares of Common Stock outstanding.
All shares of Common Stock offered hereby have been duly authorized,
and will be fully paid and nonassessible. Subject to the preferential rights of
any other shares or series of stock and to the provisions of the Charter
regarding Excess Stock (as defined under "Restrictions on Ownership of Capital
Stock"), holders of shares of Common Stock are entitled to receive dividends on
such 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 Charter regarding Excess Stock, each
outstanding share of Common Stock entitles the holder to one vote on all matters
submitted to a vote of stockholders, including the election of directors, and,
except as provided with respect to any other class or series of stock, the
holders of such shares 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
will not be able to elect any directors.
Holders of shares of Common Stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any securities of the Company. Subject to the provisions
of the Charter regarding Excess Stock, shares of Common Stock will have equal
dividend, liquidation and other rights.
CERTAIN PROVISIONS OF THE COMPANY'S CHARTER
Under the Maryland General Corporation Law, as amended (the "MGCL"), a
Maryland corporation generally cannot dissolve, amend its charter, merge, sell
all or substantially all of its assets, engage in a share exchange or engage in
similar transactions outside the ordinary course of business unless approved by
the affirmative vote of stockholders holding at least two-thirds of the shares
entitled to vote on the matter unless a lesser percentage (but not less than a
majority of all of the votes entitled to be cast on the matter) is set forth in
the corporation's charter. The Company's Charter does not provide for a lesser
percentage in such situations. In addition, the Operating Partnership Agreement
provides that for the five-year period following the completion of the IPO (i.e.
through June 2, 2000), the Operating Partnership may not sell, transfer or
otherwise dispose of all or substantially all of its assets or engage in any
other similar transaction (regardless of the form of such transaction) without
the consent of the holders of 85% of all outstanding Units.
The Company's Charter authorizes the Board of Directors to reclassify
any unissued shares of Common Stock into other classes or series of classes of
stock and to establish the number of shares in each class or series and to set
the preferences, conversion and other rights, voting powers, restrictions,
limitations and restrictions on ownership, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption for each
such class or series.
The Company's Board of Directors is divided into three classes of
directors, each class constituting approximately one-third of the total number
of directors, with the classes serving staggered terms. At each annual meeting
of stockholders, the class of directors to be elected at such meeting will be
elected for a three-year term and the directors in the other two classes will
continue in office. The Company believes that classified directors will help to
assure the continuity and stability of the Board of Directors and the Company's
business strategies and policies as determined by the Board. The use of a
staggered board may delay or defer a change in control of the Company or removal
of incumbent management.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50%
in value of its outstanding Common Stock may be owned, directly or indirectly,
by five or fewer individuals (as defined in the Code) during the last half of a
taxable year and the Common 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 taxable year). To satisfy the above ownership
requirements and certain other requirements for qualification as a REIT, the
Board of Directors has adopted, and the stockholders prior to the IPO approved,
a provision in the Charter restricting the ownership or acquisition of shares of
Common Stock. See "Restrictions on Ownership of Capital Stock."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The Charter of the Company provides that the Company may issue up to 25
million shares of preferred stock, $.01 par value per share. On October 31, 1998
there were 9,192,000 shares of 7 5/8% Series A Convertible Cumulative Preferred
Stock outstanding. Dividends on the Series A Preferred Stock are payable
quarterly in arrears at an annual rate of 7 5/8% of the liquidation preference
of $25 per share. The Series A Preferred Stock is convertible at any time at the
option of the holder at a conversion price of $28.51 per share of common stock,
subject to adjustment in certain circumstances. On or after April 13, 2003, the
shares of Series A Preferred Stock will be redeemable, in whole or in part, at
the option of the Company.
In connection with the acquisition of the Cappelli portfolio, the
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership was supplemented (the "Supplements") to establish a series of 25,000
preferred units of limited partnership interest of the Operating Partnership
designated as Series B Preferred Units, a series of 11,518 preferred units
designated as Series C Preferred Units and a series of 6,000 preferred units
designated as Series D Preferred Units. Each of the Series B, C and D Units have
a liquidation preference of $1,000 per Unit. Distributions on each Series B, C
and D Preferred Unit is payable in arrears quarterly in an amount equal to the
greater of: (i) $17.50 or (ii) the quarterly distribution attributable to each
Series B, C and D Preferred Unit if such Unit was converted into Common Stock,
subject to a maximum increase of 5% of the distributions on the Series B, C or D
Preferred Units over the immediately preceding year. The distribution amount due
on all Series B, C or D Preferred Units may be reduced during any period which
certain Cappelli indebtedness remains subject to a prepayment premium or
prepayment penalty. Commencing two years after the issuance of each of the
Series B, C or D Preferred Units, the distribution amount may be adjusted to
reflect increases or decreases in the dividends of the Company's common stock.
The holders of Series B, C or D Preferred Units have the right to
convert their preferred units into common stock at a price per share of $32.51,
$29.39 or $29.12, respectively. The holders of Series B Preferred Units also
have the right to convert their Units into Series C Preferred Units, at any time
through April 21, 2000. Each Series B, C or D Preferred Unit is exchangeable, at
the option of its holder, for shares of Company Preferred Stock with a
liquidation preference equal to the liquidation preference of the Series B, C or
D Preferred Units and otherwise with the same terms as the Series B, C or D
Preferred Units other than the conversion and exchange rights referred to above.
The Operating Partnership, with regard to any notice of such an exchange, may
elect to redeem all of the Series B, C or D Preferred Units that are the subject
of the exchange for cash in an amount equal to the stated value of such Series
B, C or D Preferred Units plus any accrued distributions thereon.
The following description of the Preferred Stock sets forth certain
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement may relate. The statements below describing the Preferred Stock are
in all respects subject to and qualified in their entirety by reference to the
applicable provisions of the Charter and Bylaws of the Company and any
applicable articles supplementary to the Charter designating terms of a series
of Preferred Stock (a "Designating Amendment").
The issuance of Preferred Stock could adversely affect the voting
power, dividend rights and other rights of holders of Common Stock. Although the
Board of Directors has no such intention at the present time, it could establish
a series of Preferred Stock that could, depending on the terms of such series,
delay, defer or prevent a transaction or a change in control of the Company that
might involve a premium price for the Common Stock or otherwise be in the best
interest of the holders thereof. Management believes that the availability of
Preferred Stock will provide the Company with increased flexibility in
structuring possible future financing and acquisitions and in meeting other
needs that might arise.
TERMS
Subject to the limitations prescribed by the Charter, the Board of
Directors is authorized to fix the number of shares constituting each series of
Preferred Stock and the designations and powers, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof, including such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be fixed by
resolution of the Board of Directors. The Preferred Stock will, when issued, be
fully paid and nonassessible by the Company and will have no preemptive rights.
Reference is made to the Prospectus Supplement relating to the series
of Preferred Stock offered thereby for the specific terms thereof, including:
(1) The title and stated value of such Preferred Stock;
(2) The number of shares of such Preferred Stock, the liquidation
preference per share of such Preferred Stock 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 provisions 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 may or will be convertible into Common Stock of
the Company, including the conversion price (or manner of
calculation thereof);
(10) The relative ranking and preferences of such Preferred Stock as
to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company;
(11) 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;
(12) A discussion of federal income tax considerations applicable to
such Preferred Stock; and
(13) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
RANK
Unless otherwise specified in the applicable 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 of the Company and to all equity securities
issued by the Company the terms of which provide that such equity securities
shall rank junior to such Preferred Stock; (ii) on a parity with all equity
securities issued by the Company other than those referred to in clauses (i) and
(iii); and (iii) junior to all equity securities issued by the Company which the
terms of such Preferred Stock provide will rank senior to it. The term "equity
securities" does not include convertible debt securities.
DIVIDENDS
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will have the rights with respect to payment of dividends set
forth below.
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 in such
amounts and on such dates as will be set forth in, or pursuant to, 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.
Dividends on any series of 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
Preferred Stock for which dividends are non-cumulative, then the holders of such
series of Preferred Stock will have no right to receive a dividend in respect of
the related dividend period and the Company will have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series of
Preferred Stock are declared payable on any future dividend payment date.
If Preferred Stock of any series is outstanding, no full 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 set apart for such payment 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 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 and such other series of Preferred Stock
(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) 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
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, no dividends (other than in shares of Common Stock or other 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 or other
distribution shall 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 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 (1) 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 or (2) redemption's
for the purpose of preserving the Company's status as a REIT).
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 accumulated 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 capital stock of the Company, the terms of such
Preferred Stock may provide that, if no such 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 capital stock of
the Company pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred
Stock has a cumulative dividend, full cumulative dividends on all shares of any
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 such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, no shares of any
series of Preferred Stock shall be redeemed unless all outstanding Preferred
Stock of such series is 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 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 any 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 any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for 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 stock 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 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 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 lot in a 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 share 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 dividends on the
shares to be redeemed will cease to accumulate 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 accumulate on
such Preferred Stock, and all rights of the holders of such Preferred Stock 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 (referred to herein as a "liquidation"), 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 of such series in the distribution of assets upon
any liquidation, dissolution or winding up of the Company, the holders of such
Preferred Stock shall be entitled to receive out of assets of the Company
legally available for distribution to shareholders liquidating distributions in
the amount of the liquidation preference per share (set forth in the applicable
Prospectus Supplement), plus an amount equal to all dividends accumulated and
unpaid thereon (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). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Preferred Stock will
have no rights 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 Preferred Stock of
such series and the corresponding amounts payable on all shares of other classes
or series of capital stock of the Company ranking on a parity with such
Preferred Stock in the distribution of assets, then the holders of such
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.
The consolidation or merger of the Company with or into any other
entity, or the merger of another entity with or into the Company, or a statutory
share exchange by the Company, 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.
Whenever dividends on any series of Preferred Stock shall be in arrears
for six or more quarterly periods, the holders of such Preferred Stock (voting
separately as a class with all other series of Preferred Stock upon which like
voting rights have been conferred and are exercisable) will be entitled to vote
for the election of two additional directors of the Company at a special meeting
called by the holders of record of at least ten percent (10%) of any series of
Preferred Stock so in arrears (unless such request is received less than 90 days
before the date fixed for the next annual or special meeting of the
stockholders) or at the next annual meeting of stockholders, and at each
subsequent annual meeting until (i) if such series of Preferred Stock has a
cumulative dividend, all dividends accumulated on such shares of Preferred Stock
for the past dividend periods and the then current dividend period shall have
been fully paid or declared and a sum sufficient for the payment thereof set
aside for payment or (ii) if such series of Preferred Stock does not have a
cumulative dividend, four quarterly dividends shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
such cases, the entire Board of Directors of the Company will be increased by
two directors.
Unless provided otherwise for any series of Preferred Stock, so long as
any shares of such Preferred Stock 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 senior to such
Preferred Stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up of the Company, or reclassify
any authorized capital stock of the Company into such stock, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such stock; or (ii) amend, alter or repeal the provisions
of the Company's Charter 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 Preferred 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 such series of 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 powers of holders of such series 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 of Preferred Stock 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 of the Company, 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 or consent would otherwise be
required shall be effected, all outstanding shares of such series of Preferred
Stock shall have been converted, 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 shares of Common Stock will be set forth in the
applicable Prospectus Supplement. 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 the Preferred Stock.
SHAREHOLDER LIABILITY
As discussed below under "Description of Common Stock -- General,"
applicable Maryland law provides that no shareholder, including holders of
Preferred Stock, shall be personally liable for the acts and obligations of the
Company and that the funds and property of the Company shall be the only
recourse for such acts or obligations.
RESTRICTIONS ON OWNERSHIP
As discussed below under "Restrictions on Ownership of Capital Stock,"
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. Therefore, the Designating Amendment for each
series of Preferred Stock may contain provisions restricting the ownership and
transfer of such Preferred Stock. The applicable Prospectus Supplement will
specify any additional ownership limitation relating to a series of Preferred
Stock.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Preferred Stock is American
Stock Transfer & Trust Company.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest or a share of a
particular series of a class of Preferred Shares, as specified in the applicable
Prospectus Supplement. Preferred Shares of each series of each class represented
by Depositary Shares will be deposited under a separate Deposit Agreement (each,
a "Deposit Agreement") among the Company, the depositary named therein (such
depositary or its successor, the "Preferred Shares Depositary") and the holders
from time to time of the Depositary Receipts. Subject to the terms of the
Deposit Agreement, each owner of a Depositary Receipt will be entitled, in
proportion to the fractional interest of a share of the particular series of a
class of Preferred Shares represented by the Depositary Shares evidenced by such
Depositary Receipt, to all the rights and preferences of the Preferred Shares
represented by such Depositary Shares (including dividend, voting, conversion,
redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Shares by the Company to the Preferred Shares
Depositary, the Company will cause the Preferred Shares Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Shares Depositary will distribute all cash dividends or
other cash distributions received in respect of the Preferred Shares to the
record holders of the Depositary Receipts evidencing the related Depositary
Shares in proportion to the number of such Depositary Receipts owned by such
holder, subject to certain obligations of holders to file proofs, certificates
and other information and to pay certain charges and expenses to the Preferred
Shares Depositary.
In the event of a distribution other than in cash, the Preferred Shares
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Shares Depositary, unless the Preferred Shares
Depositary determines that it is not feasible to make such distribution, in
which case the Preferred Shares Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust office
of the Preferred Shares Depositary (unless the related Depositary Shares have
previously been called for redemption), the holders thereof will be entitled to
delivery at such office, to or upon such holder's order, of the number of whole
or fractional Preferred Shares and any money or other property represented by
the Depositary Shares evidenced by such Depositary Receipts. Holders of
Depositary Receipts will be entitled to receive whole or fractional shares of
the related Preferred Shares on the basis of the proportion of Preferred Shares
represented by each Depositary Share as specified in the applicable Prospectus
Supplement, but holders of such Preferred Shares will not thereafter be entitled
to receive Depositary Shares therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of Preferred Shares to be withdrawn,
the Preferred Shares Depositary will deliver to such holder at the same time a
new Depositary Receipt evidencing such excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems Preferred Shares held by the Preferred
Shares Depositary, the Preferred Shares Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the Preferred
Shares so redeemed, provided the Company shall have paid in full to the
Preferred Shares Depositary the redemption price of the Preferred Shares to be
redeemed plus an amount equal to any accrued and unpaid dividends thereon to the
date fixed for redemption. The redemption price per Depositary Share will be
equal to the redemption price and any other amounts per share payable with
respect to the Preferred Shares. If less than all the Depositary Shares are to
be redeemed, the Depositary Shares to be redeemed will be selected by the
Preferred Shares Depositary by lot.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Receipts evidencing the Depositary Shares so called
for redemption will cease, except the right to receive any moneys payable upon
such redemption and any money or other property to which the holders of such
Depositary Receipts were entitled upon such redemption upon surrender thereof to
the Preferred Shares Depositary.
VOTING OF THE UNDERLYING PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the
Preferred Shares are entitled to vote, the Preferred Shares Depositary will mail
the information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Shares. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Shares) will be entitled to instruct the Preferred Shares
Depositary as to the exercise of the voting rights pertaining to the amount of
Preferred Shares represented by such holder's Depositary Shares. The Preferred
Shares Depositary will vote the amount of Preferred Shares represented by such
Depositary Shares in accordance with such instructions, and the Company will
agree to take all reasonable action which may be deemed necessary by the
Preferred Shares Depositary in order to enable the Preferred Shares Depositary
to do so. The Preferred Shares Depositary will abstain from voting the amount of
Preferred Shares represented by such Depositary Shares to the extent it does not
receive specific instructions from the holders of Depositary Receipts evidencing
such Depositary Shares.
LIQUIDATION PREFERENCE
In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, each holder of a Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each Preferred
Share represented by the Depositary Share evidenced by such Depositary Receipt,
as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, are not convertible into Common Shares
or any other securities or property of the Company. Nevertheless, if so
specified in the applicable Prospectus Supplement relating to an offering of
Depositary Shares, the Depositary Receipts may be surrendered by holders thereof
to the Preferred Shares Depositary with written instructions to the Preferred
Shares Depositary to instruct the Company to cause conversion of the Preferred
Shares represented by the Depositary Shares evidenced by such Depositary
Receipts into whole Common Shares, other Preferred Shares of the Company or
other shares of capital stock, and the Company has agreed that upon receipt of
such instructions and any amounts payable in respect thereof, it will cause the
conversion thereof utilizing the same procedures as those provided for delivery
of Preferred Shares to effect such conversion. If the Depositary Shares
evidenced by a Depositary Receipt are to be converted in part only, one or more
new Depositary Receipts will be issued for any Depositary Shares not to be
converted. No fractional Common Shares will be issued upon conversion, and if
such conversion will result in a fractional share being issued, an amount will
be paid in cash by the Company equal to the value of the fractional interest
based upon the closing price of the Common Shares on the last business day prior
to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Shares and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the Preferred Shares
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts will not be effective unless such
amendment has been approved by the existing holders of at least a majority of
the Depositary Shares evidenced by the Depositary Receipts then outstanding.
The Deposit Agreement may be terminated by the Company upon not less
than 30 days' prior written notice to the Preferred Shares Depositary if (i)
such termination is to preserve the Company's status as a REIT or (ii) a
majority of each class of Preferred Shares affected by such termination consents
to such termination, whereupon the Preferred Shares Depositary shall 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
Preferred Shares as are represented by the Depositary Shares evidenced by such
Depositary Receipts. In addition, the Deposit Agreement will automatically
terminate if (i) all outstanding Depositary Shares shall have been redeemed,
(ii) there shall have been a final distribution in respect of the related
Preferred Shares 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 Shares or (iii) each related Preferred Share shall have been converted
into capital stock of the Company not so represented by Depositary Shares.
CHARGES OF PREFERRED SHARES DEPOSITARY
The Company will pay all transfer and other taxes and governmental
charges arising solely from the existence of the Deposit Agreement. In addition,
the Company will pay the fees and expenses of the Preferred Shares Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Shares Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Shares 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 Preferred Shares Depositary, any such resignation or removal to take
effect upon the appointment of a successor Preferred Shares Depositary. A
successor Preferred Shares Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Shares Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Shares Depositary with respect to the related Preferred Shares.
Neither the Preferred Shares Depositary nor the Company will be liable
if it is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The obligations
of the Company and the Preferred Shares Depositary under the Deposit Agreement
will be limited to performing their duties thereunder in good faith and without
negligence, gross negligence or willful misconduct, and the Company and the
Preferred Shares Depositary will not be obligated to prosecute or defend any
legal proceeding in respect of any Depositary Receipts, Depositary Shares or
Preferred Shares represented thereby unless satisfactory indemnity is furnished.
The Company and the Preferred Shares Depositary may rely on written advice of
counsel or accountants, or information provided by persons presenting Preferred
Shares represented thereby for deposit, holders of Depositary Receipts or other
persons believed to be competent to give such information, and on documents
believed to be genuine and signed by a proper party.
If the Preferred Shares 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 Preferred Shares Depositary shall
be entitled to act on such claims, requests or instructions received from the
Company.
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK
EXCESS STOCK
The Charter provides that the Company may issue up to 75 million shares
of excess stock, par value $.01 per share ("Excess Stock"). For a description of
Excess Stock, see "--Restrictions on Ownership" below.
RESTRICTIONS ON OWNERSHIP
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 (defined in the Code
to include certain entities) during the last half of a taxable year (other than
the first year) (the "Five or Fewer Requirement"), and such shares of capital
stock must be beneficially owned by 100 or more persons during at least 335 days
of a taxable year of 12 months (other than the first year) or during a
proportionate part of a shorter taxable year. Pursuant to the Code, Common Stock
held by certain types of entities, such as pension trusts qualifying under
Section 401(a) of the Code, United States investment companies registered under
the Investment Company Act of 1940, partnerships, trusts and corporations, will
be attributed to the beneficial owners of such entities for purposes of the Five
or Fewer Requirement (i.e., the beneficial owners of such entities will be
counted as shareholders of the Company).
In order to protect the Company against the risk of losing its status
as a REIT due to a concentration of ownership among its stockholders, the
Charter, subject to certain exceptions, provides that no stockholder may own, or
be deemed to own by virtue of the attribution provisions of the Code, more than
9.0% (the "Ownership Limit") of the aggregate number or value of the Company's
outstanding shares of Common Stock. Limitations on the ownership of Preferred
Stock may also be imposed by the Company. See "Description of Preferred Stock -
Restrictions on Ownership." Any direct or indirect ownership of shares of 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 shares of 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 shares of
capital stock. The foregoing restrictions on transferability and ownership will
not apply if the Board of Directors determines that it is no longer in the best
interests of the Company to attempt to qualify, or to continue to qualify, as a
REIT. The Board of Directors may, in its sole discretion, waive the Ownership
Limit if evidence satisfactory to the Board of Directors and the Company's tax
counsel is presented that the changes in ownership will not then or in the
future jeopardize the Company's REIT status and the Board of Directors otherwise
decides that such action is in the best interest of the Company.
Shares of capital stock owned, or deemed to be owned, or transferred to
a stockholder in excess of the Ownership Limit will automatically be converted
into shares of Excess Stock that will be transferred, by operation of law, to
the trustee of a trust for the exclusive benefit of one or more charitable
organizations described in Section 170(b)(1)(A) and 170(c) of the Code (the
"Charitable Beneficiary"). The trustee of the trust will be deemed to own the
Excess Stock for the benefit of the Charitable Beneficiary on the date of the
violative transfer to the original transferee-stockholder. Any dividend or
distribution paid to the original transferee-stockholder of Excess Stock prior
to the discovery by the Company that capital stock has been transferred in
violation of the provisions of the Company's Charter shall be repaid to the
trustee upon demand. Any dividend or distribution authorized and declared but
unpaid shall be rescinded as void ab initio with respect to the original
transferee-stockholder and shall instead be paid to the trustee of the trust for
the benefit of the Charitable Beneficiary. Any vote cast by an original
transferee-stockholder of shares of capital stock constituting Excess Stock
prior to the discovery by the Company that shares of capital stock have been
transferred in violation of the provisions of the Company's Charter shall be
rescinded as void ab initio. While the Excess Stock is held in trust, the
original transferee-stockholder will be deemed to have given an irrevocable
proxy to the trustee to vote the capital stock for the benefit of the Charitable
Beneficiary. The trustee of the trust may transfer the interest in the trust
representing the Excess Stock to any person whose ownership of the shares of
capital stock converted into such Excess Stock would be permitted under the
Ownership Limit. If such transfer is made, the interest of the Charitable
Beneficiary shall terminate and the proceeds of the sale shall be payable to the
original transferee-stockholder and to the Charitable Beneficiary as described
herein. The original transferee-stockholder shall receive the lesser of (i) the
price paid by the original transferee-stockholder for the shares of capital
stock that were converted into Excess Stock or, if the original
transferee-stockholder did not give value for such shares (e.g., the stock was
received through a gift, devise or other transaction), the average closing price
for the class of shares from which such shares of capital stock were converted
for the ten trading days immediately preceding such sale or gift, and (ii) the
price received by the trustee from the sale or other disposition of the Excess
Stock held in trust. The trustee may reduce the amount payable to the original
transferee-stockholder by the amount of dividends and distributions relating to
the shares of Excess Stock which have been paid to the original
transferee-stockholder and are owed by the original transferee-stockholder to
the trustee. Any proceeds in excess of the amount payable to the original
transferee-stockholder shall be paid by the trustee to the Charitable
Beneficiary. Any liquidation distributions relating to Excess Stock shall be
distributed in the same manner as proceeds of a sale of Excess Stock. If the
foregoing transfer restrictions are determined to be void or invalid by virtue
of any legal decision, statute, rule or regulations, then the original
transferee-stockholder of any shares of Excess Stock may be deemed, at the
option of the Company, to have acted as an agent on behalf of the Company in
acquiring the shares of Excess Stock and to hold the shares of Excess Stock on
behalf of the Company.
In addition, the Company will have the right, for a period of 90 days
during the time any shares of Excess Stock are held in trust, to purchase all or
any portion of the shares of Excess Stock at the lesser of (i) the price
initially paid for such shares by the original transferee-stockholder, or if the
original transferee-stockholder did not give value for such shares (e.g., the
shares were received through a gift, devise or other transaction), the average
closing price for the class of stock from which such shares of Excess Stock were
converted for the ten trading days immediately preceding such sale or gift, and
(ii) the average closing price for the class of stock from which such shares of
Excess Stock were converted for the ten trading days immediately preceding the
date the Company elects to purchase such shares. The Company may reduce the
amount payable to the original transferee-stockholder by the amount of dividends
and distributions relating to the shares of Excess Stock which have been paid to
the original transferee-stockholder and are owed by the original
transferee-stockholder to the trustee. The Company may pay the amount of such
reductions to the trustee for the benefit of the Charitable Beneficiary. The
90-day period begins on the later date of which notice is received 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.
These restrictions will not preclude settlement of transactions through
the New York Stock Exchange.
All certificates representing shares of stock will bear a legend
referring to the restrictions described above.
Each stockholder shall upon demand be required to disclose to the
Company in writing any information with respect to the direct, indirect and
constructive ownership of capital stock of the Company as the Board of Directors
deems necessary to comply with the provisions of the Code applicable to REITs,
to comply with the requirements of any taxing authority or governmental agency
or to determine any such compliance.
The Ownership Limit may have the effect of delaying, deferring or
preventing a change in control of the Company unless the Board of Directors
determines that maintenance of REIT status is no longer in the best interest of
the Company.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Common Stock or
Preferred Stock. Warrants may be issued independently or together with any
Securities and may be attached to or separate from such Securities. Each series
of Warrants will be issued under a separate warrant agreement (each, a "Warrant
Agreement") to be entered into between the Company and a warrant agent specified
therein ("Warrant Agent"). The Warrant Agent will act solely as an agent of the
Company in connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants.
The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered: (1) the title of such Warrants; (2) the aggregate number of such
Warrants; (3) the price or prices at which such Warrants will be issued; (4) the
currencies in which the price or prices of such Warrants may be payable; (5) the
designation, amount and terms of the Securities purchasable upon exercise of
such Warrants; (6) the designation and terms of the other Securities, if any,
with which such Warrants are issued and the number of such Warrants issued with
each such security; (7) if applicable, the date on and after which such Warrants
and the Securities purchasable upon exercise of such Warrants will be separately
transferable; (8) the price or prices at which and currency or currencies in
which the Securities purchasable upon exercise of such Warrants may be
purchased; (9) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire; (10) the minimum or
maximum amount of such Warrants which may be exercised at any one time; (11)
information with respect to book-entry procedures, if any; (12) a discussion of
certain federal income tax considerations; and (13) any other material terms of
such Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Warrants.
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 REIT under the Code,
but no assurance can be given that it will at all times so qualify.
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of certain provisions that
currently govern the federal income tax treatment of the Company and its
stockholders. For the particular provisions that govern the federal income tax
treatment of the Company and its stockholders, reference is made to Sections 856
through 860 of the Code and the regulations thereunder. The following summary is
qualified in its entirety by such reference.
Under the Code, if certain requirements are met in a taxable year, a
REIT generally will not be subject to federal income tax with respect to income
that it distributes to its stockholders. If the Company fails to qualify during
any taxable year as a REIT, unless certain relief provisions are available, it
will be subject to tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates, which could have a material adverse
effect upon its stockholders. See "Risk Factors-Risks of Failure to Qualify as a
REIT."
In any year in which the Company qualifies to be taxed as a REIT,
distributions made to its stockholders out of current or accumulated earnings
and profits will be taxed to stockholders as ordinary income except that
distributions of net capital gains designated by the Company as capital gain
dividends will be taxed as long-term capital gain income to the stockholders. 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 basis for the stockholder's Common
Stock or Preferred Stock with respect to which the distribution is paid or, to
the extent that they exceed such basis, will be taxed in the same manner as gain
from the sale of that Common Stock or Preferred Stock. Beginning in 1998, the
Company may elect to retain long-term capital gains and pay corporate-level
income tax on them and treat the retained gains as if they had been distributed
to stockholders. In such case, each stockholder would include in income, as
long-term capital gain, its proportionate share of the undistributed gains and
would be deemed to have paid its proportionate share of the tax paid by the
Company with respect thereto. In addition, the basis for a stockholder's Common
Stock or Preferred Stock would be increased by the amount of the undistributed
long-term capital gain included in its income, less the amount of the tax it is
deemed to have paid with respect thereto.
Investors are urged to consult their own tax advisors with respect to
the appropriateness of an investment in the Securities 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, foreign
investors should consult their own tax advisors concerning the tax consequences
of an investment in the Company, including the possibility of United States
income tax withholding on Company distributions.
PLAN OF DISTRIBUTION
The Company and the Operating Partnership may sell the Securities to
one or more underwriters for public offering and sale by them or may sell the
Securities to investors directly or through agents. Any such underwriter or
agent involved in the offer and sale of the Securities will be named in the
applicable Prospectus Supplement.
Underwriters may offer and sell the Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market prices
at the time of sale or at negotiated prices. The Company and the Operating
Partnership also may, from time to time, authorize underwriters acting as their
agents to offer and sell the Securities upon the terms and conditions as are set
forth in the applicable Prospectus Supplement. In connection with the sale of
Securities, underwriters may be deemed to have received compensation from the
Company or the Operating Partnership in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Securities for
whom they may act as agent. Underwriters may sell Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company or the Operating
Partnership to underwriters or agents in connection with the offering of
Securities, and any discounts, concessions for commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the Securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. Underwriters, dealers and agents may be
entitled, under agreements entered into with the Company and the Operating
Partnership, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company
and the Operating Partnership will authorize dealers acting as their agents to
solicit offers by certain institutions to purchase Securities from them at the
public offering price set forth in such Prospectus Supplement pursuant to
Delayed Delivery Contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all cases be subject
to the approval of the Company and the Operating Partnership. Contracts will not
be subject to any conditions except that the purchase by an institution of the
Securities covered by its Contracts shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with, and perform services for, the Company and the
Operating Partnership and its subsidiaries in the ordinary course of business.
LEGAL MATTERS
The validity of the issuance of the Securities offered hereby and
certain legal matters described under "Federal Income Tax Considerations" will
be passed upon for the Company or the Operating Partnership, as the case maybe,
by Brown & Wood LLP, New York, New York. Brown & Wood LLP may rely on Ballard
Spahr Andrews & Ingersoll, Baltimore, Maryland, as to certain matters of
Maryland law.
EXPERTS
The consolidated financial statements and schedule of Reckson
Associates Realty Corp. as of December 31, 1997 and December 31, 1996 and for
the years then ended and for the period June 3, 1995 to December 31, 1995 and
the combined financial statements of the Reckson Group for the period January 1,
1995 to June 2 1995 appearing in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997; and the combined statement of revenues and
certain expenses of the New Jersey Portfolio (as defined therein) for the year
ended December 31, 1996, the combined statement of revenues and certain expenses
for the Hauppauge Portfolio (as defined therein) for the year ended December 31,
1996 and the statement of revenues and certain expenses of the Uniondale Office
Property (as defined therein), for the year ended December 31, 1996, appearing
in the Company's Form 8-K, dated February 18, 1997; and the statement of
revenues and certain expenses of 710 Bridgeport Avenue (as defined therein), for
the year ended December 31, 1996 and the statement of revenues and certain
expenses of the Shorthills Office Center (as defined therein), for the year
ended December 31, 1996 appearing in the Company's Form 8-K dated June 12, 1997;
and the statement of revenues and certain expenses of Garden City Plaza for the
year ended December 31, 1996, appearing in the Company's Form 8-K dated
September 9, 1997, and the statement of revenues and certain expenses of the
Christiana Office Property (as defined therein) for the year ended June 30,
1997, appearing in the Company's Form 8-K dated February 10, 1998, and the
statement of revenues and certain expenses of the Stamford Office Property (as
defined therein) for the year ended December 31, 1997, appearing in the
Company's Form 8-K dated March 24, 1998; and the statement of revenues and
certain expenses of the Cappelli Portfolio for the year ended December 31, 1997,
appearing in the Company's Form 8-K dated April 6, 1998, have in each case been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon, included therein and incorporated herein by reference. Such
consolidated and combined financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements and schedule of Reckson Operating
Partnership L.P. as of December 31, 1997 and December 31, 1996 and for the years
then ended and for the period June 3, 1995 to December 31, 1995 and the combined
financial statements of Reckson Group for the period January 1, 1995 to June 2,
1995 appearing in this Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon appearing
elsewhere herein and in the Registration Statement, and are included in reliance
upon such reports given upon the authority of such firms as experts in
accounting and auditing.
RECKSON OPERATING PARTNERSHIP, L.P.
AND
THE RECKSON GROUP
PAGE
Selected Financial Data ....................................................
Management's Discussion and Analysis of Financial Condition and
Results of Operations..............................................
CONSOLIDATED FINANCIAL STATEMENTS...........................................
Report of Independent Auditors..............................................
Consolidated Balance Sheets as of June 30, 1998 (unaudited), December
31, 1997 and December 31, 1996 ....................................
Consolidated Statements of Income for the six months ended June 30,
1998, and 1997 (unaudited), the years ended December 31,
1997, 1996 and for the period from June 3, 1995 to December
31, 1995 and the Combined Statement of Income for the period
from January 1, 1995 to June 2, 1995 ..............................
Consolidated Statements of Partners' Capital for the six months ended
June 30, 1998 (unaudited), the years ended December 31, 1997,
1996 and for the period from June 3, 1995 to December 31,
1995 and the Combined Statement of Owners' (Deficit) for the
period from January 1, 1995 to June 2, 1995 .......................
Consolidated Statements of Cash Flows for the six months ended June
30, 1998, and 1997 (unaudited), the years ended December 31,
1997, 1996 and for the period from June 3, 1995 to December
31, 1995 and the Combined Statement of Cash Flows for the
period January 1, 1995 to June 2, 1995 ............................
Notes to Consolidated Financial Statements .................................
Schedule III - Real Estate and Accumulated Depreciation ....................
OTHER INFORMATION
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Reckson Operating Partnership, L.P. Reckson Group
----------------------------------------------------------------- ------------------------
For the six months ended For the year ended For the year ended
-------------------------- ------------------- -----------------------
for the
for the Period
Period January 1,
June 3, 1995 1995 to
June 30, June 30, December 31, December 31, to December June 2,
1998 1997 1997 1996 31, 1995(1) 1995(1) 1994 1993
-------- ------------- --------------- -------------- ------------ ------------ -------- --------
OPERATING DATA:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.................. $121,329 $67,858 $153,348 $96,030 $38,455 $20,889 $56,931 $60,347
Total expenses........... 91,278 47,046 107,639 70,935 27,892 20,695 55,685 67,580
Income (loss) before minority
interests and
extraordinary items 30,051 20,812 45,709 25,095 10,563 194 1,246 (7,233)
Minority interests........ 1,273 496 920 915 246 --- --- ---
Extraordinary items - gain
(loss) --- (2,362) (2,808) (1,259) (6,022) --- 4,434 41,190
Preferred distributions... 4,168 --- --- --- --- --- --- ---
Net income available to
common unit holders..... 24,610 17,954 41,981 22,921 4,295 194 5,680 33,957
PER UNIT DATA: (2)
Net income per common unit:
General Partner......... $ .51 $ .48 $ 1.06 $ .87 $ .22
Limited Partners'....... $ .62 $ .48 $ 1.03 $ .86 $ .19
Weighted average common units
outstanding
General Partner........ 38,914,000 30,455,000 32,727,000 19,928,000 14,678,000
Limited Partners'...... 7,701,000 6,968,000 7,016,000 6,503,000 5,648,000
BALANCE SHEET DATA:
(PERIOD END)
Real estate, before accumulated
depreciation............ $1,540,195 $ 705,496 $1,015,282 $519,504 $290,712 --- $162,192 ---
Total assets.............. 1,624,342 769,859 1,113,105 543,391 242,540 --- 132,035 ---
Mortgage notes payable.... 236,776 165,527 180,023 161,513 98,126 --- 180,286 ---
Credit facility........... 298,250 113,000 210,250 108,500 40,000 --- --- ---
Senior unsecured notes.... 150,000 --- 150,000 --- --- --- --- ---
Market value of equity (3). 1,393,077 950,061 1,141,592 653,606 303,943 --- --- ---
Total market capitalization
including debt (3 and 4). 2,061,732 1,221,746 1,668,800 921,423 426,798 --- --- ---
OTHER DATA:
Funds from operations (5).. $46,871 $31,457 $69,619 $40,938 $17,190 --- --- ---
Total square feet (at end of
period)................ 19,438 10,976 13,645 8,800 5,430 4,529 4,529 4,529
Number of properties (at
end of period)......... 191 130 155 110 81 72 72 72
</TABLE>
(1) Represents certain financial information on a consolidated historical
basis for Reckson Operating Partnership, L. P., and on a combined
historical basis for the Reckson Group.
(2) Based on the weighted average units outstanding for the period then
ended.
(3) Based on the market value of the Operating Partnership's common units,
the stated value of the Operating Partnership's preferred units and
the number of units outstanding at the end of the period.
(4) Debt amount is net of minority partners' proportionate share of Omni
debt plus the Company's share of joint venture debt.
(5) See "Management's Discussion and Analysis" for a discussion of funds
from operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the
accompanying Consolidated Financial Statements of Reckson Operating
Partnership, L. P. (the "Operating Partnership") and the combined financial
statements of the Reckson Group and related notes.
OVERVIEW AND BACKGROUND
The Reckson Group, the predecessor to the Company (the "Predecessor"),
was engaged in the ownership, management, operation, leasing and development
of commercial real estate properties, principally office and industrial
buildings, and also owned certain undeveloped land located primarily on Long
Island, New York. The Operating Partnership commenced operations on June 2,
1995 and is the successor to the operations of the Reckson Group. The sole
general partner in the Operating Partnership, Reckson Associates Realty Corp.
(the "Company") is a self administered and self managed Real Estate Investment
Trust ("REIT"). During June 1995 the Company contributed approximately $162
million in cash to the Operating Partnership in exchange for an approximate
73% general partnership interest. As a result, the Operating Partnership owned
or had an interest in 72 properties (including one joint venture property).
At June 30, 1998, the Operating Partnership's portfolio of real estate
properties included 69 office buildings containing approximately 9.6 million
square feet, 120 industrial buildings containing approximately 9.8 million
square feet and two retail properties containing approximately 20,000 square
feet.
Subsequent to June 2, 1995, the Operating Partnership has acquired or
contracted to acquire approximately $1.3 billion of Class A suburban office
and industrial properties encompassing approximately 12.8 million square feet
located in the New York City Tri-State Area of Long Island, Westchester,
Southern Connecticut and Northern. In that regard, the Operating Partnership
has acquired 13 office Properties and 32 industrial Properties encompassing
approximately 2.1 million and 2.5 million square feet, respectively, located
on Long Island for an aggregate purchase price of approximately $300 million.
In February 1996, the Operating Partnership established its Westchester
Division with the acquisition of an eight building 935,000 square foot Class A
office portfolio and associated management and construction operations for an
aggregate purchase price of approximately $79 million. Since its initial
investment in Westchester the Operating Partnership has acquired 17 office
properties encompassing approximately 2.4 million square feet and three
industrial properties encompassing approximately 163,000 square feet for an
aggregate purchase price of approximately $305 million. In October 1996, the
Operating Partnership established its Southern Connecticut Division with the
purchase of Landmark Square, a six building office complex encompassing
approximately 800,000 square feet located in Stamford, Connecticut for an
aggregate purchase price of approximately $77 million. Since its initial
investment in Southern Connecticut the Company has acquired two office
properties and one industrial property encompassing approximately 317,000 and
452,414 square feet, respectively, for a purchase price of approximately $89
million. In May 1997, the Operating Partnership acquired five Class A suburban
office properties encompassing approximately 496,000 square feet located in
Northern New Jersey for an aggregate purchase price of approximately $56.9
million and, in connection with this acquisition, established its Northern New
Jersey Division. Since its initial investment in Northern New Jersey the
Operating Partnership has acquired 12 office properties encompassing
approximately 1.5 million square feet and seven industrial properties
encompassing approximately 1.1 million square feet for an aggregate purchase
price of approximately $232 million. Additionally, the Operating Partnership
has invested approximately $12 million for approximately 81 acres of land
located in Long Island, approximately 39 acres of land located in Westchester
and 668 acres of land located in New Jersey which allows for approximately 7.7
million square feet of future development opportunities. In addition, the
Operating Partnership has invested approximately $47.3 million in certain
mortgage indebtedness encumbering four Class A office properties on Long
Island encompassing approximately 577,000 square feet, a 400 acre parcel of
land located in New Jersey and in a note receivable secured by a partnership
interest in Omni partners, L.P., owner of a 575,000 square foot, Class A
office property located in Uniondale, New York. In October 1997, the Operating
Partnership entered into an agreement to invest $150 million in the Morris
Companies, a New Jersey developer and owner of "Big Box" warehouse facilities.
The Morris Companies' properties include 23 industrial buildings encompassing
approximately 4.0 million square feet. In connection with the transaction the
Morris Companies contributed 100% of their interests in certain industrial
properties to Reckson Morris Operating Partnership, L.P. ("RMI") in exchange
for operating partnership units in RMI. On January 6, 1998, the Operating
Partnership acquired an approximate 70% controlling interest in RMI for
approximately $65 million. In addition, at June 30, 1998, the Company had
advanced approximately $17.7 million to the Morris Companies primarily to fund
certain construction costs related to development properties to be contributed
to RMI.
During 1997, the Company formed Reckson Service Industries, Inc. ("RSI")
and Reckson Strategic Venture Partners, LLC ("RSVP"). The Operating
Partnership owned a 95% non voting common stock interest in RSI through June
10, 1998. RSI serves as the managing member of RSVP. RSI invests in operating
companies that generally provides commercial services to properties owned by
the Operating Partnership and its tenants and third parties. RSVP was formed
to provide the Operating Partnership with a "research and development" vehicle
to invest in alternative real estate sectors. RSVP invests primarily in real
estate and real estate related operating companies generally outside of the
Operating Partnership's core office and industrial focus. RSVP's strategy is
to identify and acquire interests in established entrepreneurial enterprises
with experienced management teams in market sectors which are in the early
stages of their growth cycle or offer unique circumstances for attractive
investments as well as a platform for future investments. The research and
development vehicle enables the Operating Partnership to minimize its
investment risks during the early stages of an investment. The vehicle permits
the Operating Partnership to monitor the long-term potential for each
investment. As later stage capital is required, the Operating Partnership will
determine the prudence of additional investment and the potential for
incorporating it as a core business line. Following the spin off of RSI the
Company will make investments with RSVP on a joint venture basis. To
facilitate investment by RSVP, the Operating Partnership has committed $100
million of initial capital. In addition, RSVP has obtained a $200 million
preferred equity facility from Paine Webber Real Estate Securities ("PWRES")
and a PWRES/George Soros sponsored fund. At June 30, 1998, the Operating
Partnership had made loans to RSI and RSVP aggregating approximately $21.8
million and $7.6 million, respectively in connection with start up costs and
certain initial investments.
On June 11, 1998, the Operating Partnership distributed its 95% net
non-voting common stock interest in RSI of approximately $3 million to its
partners. Additionally, during June 1998, the Operating Partnership
established a credit facility with RSI (the "RSI Facility") in the amount of
$100 million for RSI's service sector operations and other general corporate
purposes. The Operating Partnership also established a credit facility with
RSI for the funding of investments of up to $100 million with or in RSVP (the
"RSVP Facility").
In July 1998, the Company announced the formation of a joint venture,
Metropolitan Partners LLC, a Delaware limited liability company ("Metropolitan
Partners"), controlled equally by the Operating Partnership and Crescent Real
Estate Equities Company, a Texas real estate investment trust ("Crescent").
Pursuant to a merger agreement, executed on July 9, 1998 and amended and
restated on August 11, 1998 (the "Merger Agreement") between Metropolitan
Partners, the Company and Crescent and Tower Realty Trust Inc., a Maryland
corporation ("Tower"), Metropolitan Partners agreed, subject to the terms and
conditions of the Merger Agreement, to purchase the common stock of Tower.
Prior to the execution of the Merger Agreement, Metropolitan Partners
identified certain tax issues regarding Tower's operations. Metropolitan
Partners entered into the Merger Agreement only after Tower made detailed
representations and warranties purporting to address these issues. In the
course of due diligence, however, Metropolitan Partners, the Company and
Crescent discovered that these representations and warranties may not be
correct and discussed these concerns with Tower, specifically advising Tower
that they were not terminating the Merger Agreement at that time. Metropolitan
Partners, the Company and Crescent invited Tower to respond to these concerns.
However, on November 2, 1998, Tower filed a compliant in the Supreme Court of
the State of New York alleging Metropolitan Partners, the Company and Crescent
willfully breached the Merger Agreement. Tower is seeking declaratory and
other relief, including damages of not less than $75 million and specific
performance by Metropolitan Partners, the Company and Crescent of their
obligations under the Merger Agreement. Although management believes the
Company has meritorious defenses to this action, there can be no assurance as
to the impact of this action on the Company's operations and/or financial
condition.
The market capitalization of the Operating Partnership at June 30, 1998
was approximately $2.1 billion. The Operating Partnership's market
capitalization is calculated based on the value of the Operating Partnership's
common units (which, for this purpose, is assumed to be the same per unit as
the value of a share of the Company's common stock) and the stated values of
the Operating Partnership's preferred units and the $688.7 million (including
its share of joint venture debt and net of minority partners' interest) of
debt outstanding at June 30, 1998. As a result, the Operating Partnership's
total debt to total market capitalization ratio at June 30, 1998 equaled
approximately 32.4%.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997:
The Operating Partnership's total revenues increased by $53.5 million or
79% for the six months ended June 30, 1998 as compared to the 1997 period. The
growth in total revenues is substantially attributable to the Operating
Partnership's acquisition of 81 properties comprising approximately 10.6
million square feet. Property operating revenues, which include base rents and
tenant escalations and reimbursements ("Property Operating Revenues")
increased by $51.3 million or 80% for the six months ended June 30, 1998 as
compared to the 1997 period. The 1998 increase in Property Operating Revenues
is comprised of $1.4 million attributable to increases in rental rates and
changes in occupancies and $49.9 million attributable to acquisitions of
properties. The remaining balance of the increase in total revenues in 1998 is
primarily attributable to interest income on the Operating Partnership's
investments in mortgage notes and notes receivable. The Operating
Partnership's base rent was increased by the impact of the straight-line rent
adjustment by $3.6 million for the six months ended June 30, 1998 as compared
to $2.3 million for the 1997 period.
Property operating expenses, real estate taxes and ground rents
("Property Expenses") increased by $17.2 million for the six months ended June
30, 1998 as compared to the 1997 period. These increases are primarily due to
the acquisition of properties. Gross operating margins (defined as Property
Operating Revenues less Property Expenses, taken as a percentage of Property
Operating Revenues) for 1998 and 1997 were 65.5% and 64.7%, respectively. The
increase in gross operating margins reflects increases realized in rental
rates, the Operating Partnership's ability to realize certain operating
efficiencies as a result of operating a larger portfolio of properties with a
concentration of properties in office and industrial parks or in its
established sub-markets and increased ownership of net leased properties
including the impact of the RMI properties.
Marketing, general and administrative expenses increased by $2.8 million
for the six months ended June 30, 1998 as compared to the 1997 period. The
increase is due to the increased costs of managing the acquisition properties,
the costs of opening the Operating Partnership's Northern New Jersey division,
costs associated with the management of the RMI assets, and the increase in
corporate management and administrative costs associated with the growth of
the Operating Partnership. Marketing, general and administrative expenses as a
percentage of total revenues were 5.6% for the six months ended June 30, 1998
and 1997.
Interest expense increased by $12.9 million for the six months ended June
30, 1998 as compared to the 1997 period. The increase is attributable to an
increase in mortgage debt including the refinancing of the Omni in the amount
of $58 million in August 1997, the assumption of approximately $14.8 million
of mortgage indebtedness in connection with the Operating Partnership's
investment in RMI, the assumption of approximately $45.1 million of mortgage
indebtedness in connection with the Cappelli acquisition, increased cost
attributable to an increased average balance on the Operating Partnership's
credit facilities and interest on the Operating partnership's $150 million of
senior unsecured notes. The weighted average balance outstanding on the
Operating Partnership's credit facilities was $311.5 million for the six
months ended June 30, 1998 as compared to $92.5 million for the 1997 period.
COMPARISONS FOR THE YEARS ENDED DECEMBER 31, 1997 TO 1996 AND DECEMBER 31,
1996 TO 1995:
For discussion purposes, the results of operations for the year ended
December 31, 1995 combine the operating results of the Predecessor (excluding
results of properties not transferred to the Operating Partnership) for the
period January 1, 1995 to June 2, 1995.
The Operating Partnership's total revenues increased by $57.3 million or
60% from 1996 to 1997 and $36.7 million or 62% from 1995 to 1996. The growth
in total revenues is substantially attributable to the Operating Partnership's
acquisition of 46 properties comprising approximately 4.9 million square feet
in 1997 and 29 properties comprising approximately 3.3 million square feet in
1996 and nine properties comprising approximately 900,000 square feet in 1995.
Property Operating Revenues, increased by $51 million or 55% from 1996 to 1997
and by $35.6 million or 62% from 1995 to 1996. The 1997 increase in Property
Operating Revenues is comprised of $2.1 million attributable to increases in
rental rates and changes in occupancies and $48.9 million attributable to
acquisitions of properties. The 1996 increase in Property Operating Revenues
is comprised of $6.6 million attributable to increases in rental rates and
changes in occupancies and $29 million attributable to acquisitions of
properties. The remaining balance of the increase in total revenues in 1997 is
primarily attributable to interest income on the Operating Partnership's
investments in mortgage notes and notes receivable. The increase from 1996 to
1997 was offset by a decrease in the equity in earnings of service companies
as a result of the management and construction companies focusing most of
their resources on the Operating Partnership's core portfolio and
redevelopment opportunities rather than third party services. The Operating
Partnership base rent was increased by the impact of the straight-line rent
adjustment by $4.5 million in 1997, $3.8 million in 1996 and $2.8 million in
1995.
Property Expenses, increased by $16.8 million from 1996 to 1997 and by
$12.9 million from 1995 to 1996. These increases are primarily due to the
acquisition of properties. Gross operating margins for 1997, 1996 and 1995
were 64.7%, 63.4% and 63.2%, respectively. The increases in gross operating
margins reflects increases realized in rental rates, the Operating
Partnership's ability to realize certain operating efficiencies as a result of
operating a larger portfolio of properties with concentrations of properties
in office and industrial parks or in its established sub-markets, and to a
lesser extent increased ownership of net leased properties.
Marketing, general and administrative expenses were $8.0 million in 1997,
$5.9 million in 1996 and $3.7 million in 1995. The increase in marketing,
general and administrative expenses is due to the increased costs of managing
the acquisition properties, the cost of opening and maintaining the Company's
Westchester, Southern Connecticut and Northern New Jersey divisions and the
increase in corporate management and administrative costs associated with the
growth of the Company. Marketing, general and administrative expenses as a
percentage of total revenues were 5.2% in 1997, 6.1% in 1996 and 6.3% in 1995.
Interest expense was $21.6 million in 1997, $13.3 million in 1996 and
$12.9 million in 1995. The increase of $8.3 million from 1996 to 1997 is
attributable to an increase in mortgage debt including a $50 million mortgage
note incurred in connection with the acquisition of Landmark Square in October
1996, the refinancing of Omni in the amount of $58 million in August 1997,
increased interest cost attributable to an increased average balance on the
Operating Partnership's credit facilities and interest on the Operating
Partnership's $150 million of senior unsecured notes (the "Senior Unsecured
Notes"). The weighted average balance outstanding on the Operating
Partnership's credit facilities was $103.2 million for 1997, $71.2 million for
1996 and $24.8 million for the period from June 3, 1995 to December 31, 1995.
Included in amortization expense is amortized finance costs of $.80
million in 1997, $.53 million in 1996 and $.52 million for the period June 3,
1995 to December 31, 1995. The increase of $.27 million from 1996 to 1997 was
the result of the amortization of financing costs associated with the
Unsecured Credit Facility, the Landmark Square mortgage, the Omni refinanced
mortgage and the Senior Unsecured Notes.
Extraordinary items resulted in a $2.8 million loss in 1997, a $1.3 million
loss in 1996 and a $6.0 million loss for the period June 3, 1995 to December 31,
1995. In 1997, the extraordinary items were attributable to the write off of
certain deferred loan costs incurred in connection with the Company's secured
credit facility which was terminated in April 1997. In 1996, the extraordinary
item was attributable to the write-off of certain deferred loan costs incurred
in connection with the secured credit facility which was substantially modified
and restated in February 1996.
LIQUIDITY AND CAPITAL RESOURCES
SUMMARY OF CASH FLOWS
Net cash provided by operating activities totaled $73.4 million in 1997,
$40.9 million in 1996 and $19.0 million in 1995. Increases for each year were
primarily attributable to the growth in cash flow provided by the acquisition
of properties and to a lesser extent from interest income from mortgage notes
and notes receivable.
Net cash used by investing activities totaled $547 million in 1997,
$273.7 million in 1996 and $79.0 million in 1995. Cash used in investing
activities related primarily to investments in real estate properties
including development costs and investments in mortgage notes and notes
receivable.
Net cash provided by financing activities totaled $482.9 million in 1997,
$238.3 million in 1996 and $62.7 million in 1995. Cash provided by financing
activities during 1997 and 1996 was primarily attributable to proceeds from
general partner contributions and draws on the Company's credit facilities and
additionally, in 1997, proceeds from the issuance of the Senior Unsecured
Notes.
INVESTING ACTIVITIES
During 1997, the Operating Partnership acquired (I) on Long Island, five
office properties encompassing an aggregate of approximately 881,000 square
feet for approximately $87.5 million and 15 industrial properties encompassing
approximately 968,000 square feet for approximately $43.5 million; (ii) in
Westchester, eight office properties encompassing approximately 830,000 square
feet for approximately $109.4 million and three industrial properties
encompassing approximately 163,000 square feet for approximately $8.0 million;
(iii) in Connecticut, one industrial property encompassing 452,000 square feet
for approximately $27.0 million and (iv) in Northern New Jersey, five Class A
office properties including Executive Hill Office Park encompassing
approximately 496,000 square feet for approximately $56.9 million.
Additionally, in New Jersey the Operating Partnership acquired eight office
properties encompassing approximately 1.5 million square feet for $153 million
and one industrial property encompassing approximately 128,000 square feet for
$2.8 million. During 1997, the Operating Partnership invested $29 million in
mortgage notes receivable encumbering one Class A office property, one
industrial property and a 400 acre parcel of land. In addition, on March 13,
1997, the Operating Partnership loaned $17 million to its minority partner in
Omni, its flagship Long Island office property, and effectively increased its
economic interest in the property owning partnership.
FINANCING ACTIVITIES
During June 1995, the Company contributed approximately $162 million in
cash to the Operating Partnership in exchange for 7,438,000 units representing
an approximate 73% general partnership interest. During 1996 and 1997 the
Company contributed approximately $437 million in cash to the Operating
Partnership in exchange for 22,421,200 additional units. Proceeds from the
contributions were primarily used to repay borrowings under the credit
facilities and to fund the purchase of commercial real estate properties.
During the six months ended June 30, 1998, the Company contributed
approximately $44.4 million in cash to the Operating Partnership in exchange
for 1,884,896 units. Proceeds from the contributions were used to repay
borrowings under the credit facilities.
Additionally, during April 1998, the Company contributed approximately $221
million to the Operating Partnership in exchange for 9,200,000 Series A
preferred units. The Series A preferred units have a liquidation preference of
$25 per unit, a distribution rate of 7 5/8% and are convertible to the Operating
Partnership's common units at a conversion rate of .8769 common units for each
preferred unit. Net proceeds from the contribution were used to repay borrowings
under credit facilities.
On January 7, 1997, the Operating Partnership issued 101,902 units in
connection with the acquisition of a 147,281 square foot office property
located in Farmingdale, New York.
During August 1997, the Operating Partnership refinanced approximately
$43 million of mortgage debt on its Omni office property with a $58 million
fixed rate mortgage loan. The loan which matures on September 1, 2007 has a
fixed rate of 7.72%.
On August 28, 1997, the Operating Partnership sold $150 million of 7.2%
Senior Unsecured notes due August 2007. The net proceeds of the Senior
Unsecured notes were used to repay borrowings under the unsecured credit
facilities and for the acquisitions of properties.
During 1997, the Operating Partnership paid distributions of $1.54 per
unit (representing distributions for five quarters).
On January 6, 1998, the Operating Partnership issued 513,259 units in
connection with the acquisition of one office property, located in Uniondale,
New York.
On April 21, 1998, the Operating Partnership issued 25,000 Series B
preferred units at a stated value of $1,000 per unit and 11,518 Series C
preferred units at a stated value of $1,000 per unit in connection with the
acquisition of the Cappelli Portfolio. The Series B preferred units have a
current distribution rate of 6.25% and are convertible to common units at a
conversion price of approximately $32.51 for each preferred unit. The Series C
preferred units have a current distribution rate of 6.25% and are convertible to
common units at a conversion price of approximately $29.39 for each preferred
unit.
Additionally, on April 21, 1998, in connection with the acquisition of
155 Passaic Avenue in Fairfield, New Jersey, the Operating Partnership issued
1,979 units.
On July 2, 1998, the Operating Partnership issued 6,000 Series D preferred
units at a stated value of $1,000 per unit in connection with the acquisition of
the remaining 50% interest in 360 Hamilton Avenue located in White Plains, New
York. The Series D preferred units have a current distribution rate of 6.25% and
are convertible to common units at a conversion price of approximately $29.12
for each preferred unit
As of June 30, 1998, the Operating Partnership had a three-year $250
million unsecured credit facility from a bank group led by Chase Manhattan
Bank and Union Bank of Switzerland (the "Unsecured Credit Facility"). The
Operating Partnership's ability to borrow thereunder is subject to the
satisfaction of certain financial covenants, including covenants relating to
limitations on unsecured and secured borrowings, minimum interest and fixed
charge coverage ratios, a minimum equity value and a maximum dividend payout
ratio. In additional, borrowings under the Unsecured Credit Facility bear
interest at a floating rate equal to one, two, three or six month LIBOR (at
the Operating Partnership's election) plus a spread ranging from 1.125% to
1.50%, based on the Operating Partnership's leverage ratio. The Operating
Partnership utilizes the Unsecured Credit Facility primarily to finance the
acquisitions of properties and other real estate investments, fund its
development activities and for working capital purposes. At June 30, 1998, the
Operating Partnership had availability under the Unsecured Credit Facility to
borrow an additional $96.3 million (net of $7.7 million of outstanding undrawn
letters of credit). In addition, the Operating Partnership obtained a $200
million unsecured credit facility (the "Bridge Facility") which matured on
July 15, 1998. The Bridge Facility was provided by the two lead members of the
Unsecured Credit Facility bank group and served as interim financing while the
Operating Partnership seeked to expand the availability under the Unsecured
Credit Facility. At June 30, 1998, the Operating Partnership had availability
under the Bridge Facility to borrow an additional $47.75 million.
On July 23, 1998, the Operating Partnership obtained a $500 million
unsecured revolving credit facility (the "Credit Facility") with Chase
Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the
credit facility bank group. This Credit Facility replaces both the Unsecured
Credit and Bridge Facilities. Interest rates on borrowings under the Credit
Facility will be priced off of LIBOR plus a sliding scale ranging from 112.5
basis points to 137.5 basis points based on the leverage ratio of the
Operating Partnership. Upon the Operating Partnership receiving an investment
grade rating on its senior unsecured debt by two rating agencies, the pricing
is adjusted based off of LIBOR plus a scale ranging from 65 basis points to 90
basis points depending upon the rating.
The Operating Partnership's indebtedness at June 30, 1998 totaled $668.7
million (including its share of joint venture debt and net of the minority
partners' interests) and was comprised of $146 million outstanding under the
Unsecured Credit Facility, $152.25 million outstanding under the Bridge
Facility, $150 million of unsecured notes and approximately $220.45 million of
mortgage indebtedness. Based on the Operating Partnership's total market
capitalization of approximately $2.1 billion at June 30, 1998, (calculated
based on the value of the Operating Partnership's common units (which, for this
purpose, is assumed to be the same per unit as the value of a share of the
Company's common stock), the stated value of the Operating Partnership's
preferred units), the Operating partnership's debt represented approximately
32.4% of its total market capitalization.
Historically, rental revenue has been the principal source of funds to
pay operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures of the Operating Partnership. In addition,
construction, management, maintenance, leasing and property management fees
have provided sources of cash flow. The Operating Partnership expects to meet
its short-term liquidity requirements generally through its net cash provided
by operating activities along with the Unsecured Credit Facility previously
discussed. The Operating Partnership expects to meet certain of its financing
requirements through long-term secured and unsecured borrowings and the
issuance of debt securities and additional equity securities of the Operating
Partnership. The Operating Partnership will refinance existing mortgage
indebtedness or indebtedness under the Unsecured Credit Facility at maturity
or retire such debt through the issuance of additional debt securities or
additional equity securities. The Operating Partnership anticipates that the
current balance of cash and cash equivalents and cash flows from operating
activities, together with cash available from borrowings and equity offerings,
will be adequate to meet the capital and liquidity requirements of the
Operating Partnership in both the short-and long-term.
At June 30, 1998, the Operating Partnership had three office buildings
totaling approximately 712,000 square feet and four industrial buildings
totaling approximately 442,000 square feet under construction whereby the
Operating Partnership anticipates costs to complete of approximately $57.6
million.
INFLATION
Certain office leases provide for fixed base rent increases or indexed
escalations. In addition, certain office leases provide for separate
escalations of real estate taxes and electric costs over a base amount. The
industrial leases also generally provide for fixed base rent increases, direct
pass through of certain operating expenses and separate real estate tax
escalation over a base amount. The Operating Partnership believes that
inflationary increases in expenses will generally be offset by contractual
rent increases and expense escalations described above.
The Unsecured Credit Facility bears interest at a variable rate, which
will be influenced by changes in short-term interest rates, and is sensitive
to inflation.
IMPACT OF YEAR 2000
Some of the Operating Partnership's older computer programs were written
using two digits rather than four to define the applicable year. As a result,
those computer programs have time-sensitive software that recognizes a date
using "00" as the year 1900 rather than the year 2000. This could cause a
system failure or miscalculation causing disruptions of operations, including,
among other things, a temporary inability to process transactions, or engage
in similar normal business activities.
The Operating Partnership has completed an assessment to modify or
replace portions of its software so that its computer systems will function
properly with respect to dates in the year 2000 and thereafter. Currently, the
entire property management system is year 2000 compliant and has been
thoroughly tested. Since the Operating Partnership's accounting software is
maintained and supported by a third party, the total year 2000 project cost is
estimated to be minimal.
The year 2000 project is estimated to be completed not later than July
31, 1999, which is prior to any anticipated impact on its operating systems.
Additionally, the Operating Partnership has received assurances from its
contractors that all of the Operating Partnership's building management and
mechanical systems are currently year 2000 compliant or will be made compliant
prior to any impact on those systems. However, the Operating Partnership
cannot guarantee that all contractors will comply with their assurances and
therefore, the Operating Partnership may not be able to determine year 2000
compliance of those contractors. At that time, the Operating Partnership will
determine the extent to which the Operating Partnership will be able to
replace non compliant contractors. The Operating Partnership believes that
with modifications to existing software and conversions to new software, the
year 2000 issue will not pose significant operational problems for its
computer systems. However, if such modifications and conversions are not made,
or are not completed timely, the year 2000 issue could have a material impact
on the operations of the Operating Partnership.
The costs of the project and the date on which the Operating Partnership
believes it will complete the year 2000 modifications are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources
and other factors. However, there can be no guarantee that these estimates
will be achieved and actual results could differ materially from those
anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and costs of personnel
trained in this area, the ability to locate and correct all relevant computer
codes, and similar uncertainties.
If the Operating Partnership is not successful in implementing their year
2000 compliance plan, the Operating Partnership may suffer a material adverse
impact on their consolidated results of operations and financial condition.
Because of the importance of addressing the year 2000 issue, the Operating
Partnership expects to develop contingency plans if they determine that the
compliance plans will not be implemented by July 31, 1999.
FUNDS FROM OPERATIONS
Management believes that funds from operations ("FFO") is an appropriate
measure of performance of an equity REIT. FFO is defined by the National
Association of Real Estate Investment Trusts (NAREIT) as net income or loss,
excluding gains or losses from debt restructurings and sales of properties,
plus depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash generated from
operating activities in accordance with generally accepted accounting
principles and is not indicative of cash available to fund cash needs. FFO
should not be considered as an alternative to net income as an indicator of
the Operating Partnership's operating performance or as an alternative to cash
flow as a measure of liquidity. (See Selected Financial Data). In March 1995,
NAREIT issued a "White Paper" analysis to address certain interpretive issues
under its definition of FFO. The White Paper provides that amortization of
deferred financing costs and depreciation of non-rental real estate assets are
no longer to be added back to net income to arrive at FFO.
Since all companies and analysts do not calculate FFO in a similar
fashion, the Operating Partnership's calculation of FFO presented herein may
not be comparable to similarly titled measures as reported by other companies.
The following table presents the Operating Partnerhip's FFO calculation
(in thousands):
<TABLE>
<CAPTION>
Six Months Ended
-----------------------
Year Ended
--------------- June 3,
1995 to
June 30, 1998 June 30, 1997 December 31, December 31, December 31,
1997 1996 1995
------------- ------------- ------------- ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Income before extraordinary
items.................... $ 24,610 $20,316 $44,789 $24,180 $10,317
Less:
Extraordinary loss....... --- 2,362 2,808 1,259 6,022
-------- ------- ------- -------- --------
Net Income.................. 24,610 17,954 41,981 22,921 4,295
Adjustment for Funds From Operations
Add:
Depreciation and
Amortization........... 22,787 11,836 26,834 17,429 7,233
Minority interests in
consolidated
partnership............ 1,273 496 920 915 246
Extraordinary loss....... --- 2,362 2,808 1,259 6,022
Less:
Gain on sale of property. --- --- 672 --- ---
Amount distributed to minority
partners in consolidated
partnerships............ 1,799 1,191 2,252 1,586 606
-------- ------ ------- ------- -------
Funds From Operations (FFO).. $ 46,871 $ 31,457 $69,619 $40,938 $17,190
======== ========= ======= ======= ----- =======
Weighted average units
outstanding ............ 46,615 37,423 39,743 26,431 20,326
======== ========= ======= ======= =======
</TABLE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
Reckson Operating Partnership, L. P.
We have audited the accompanying consolidated balance sheets of Reckson
Operating Partnership, L. P. (the "Operating Partnership") as of December 31,
1997 and 1996, and the related consolidated statements of income, partners'
capital, and cash flows for the years then ended and for the period from June
3, 1995 (commencement of operations) to December 31, 1995 and the related
combined statement of income, owners' (deficit) and cash flows for the period
January 1, 1995 to June 2, 1995 of the Reckson Group. We have also audited the
financial statement schedule listed in the Index. These financial statements
and financial statement schedule are the responsibility of the Operating
Partnership's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Reckson Operating Partnership, L. P. at December 31, 1997 and 1996, and the
consolidated results of operations and cash flows for the years then ended and
for the period June 3, 1995 (commencement of operations) to December 31, 1995
and the combined results of operations and cash flows for the period January
1, 1995 to June 2, 1995 of the Reckson Group in conformity with generally
accepted accounting principles. Also, in our opinion, the financial statement
schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
ERNST & YOUNG LLP
New York, New York
February 13, 1998
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
------------ -------------------------------
1998 1997 1996
------------ -------------- ----------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Commercial real estate properties, at cost- (Notes 2, 3, 5, 7 and 8 )
Land......................................................................... $ 191,847 $ 138,526 $ 45,259
Buildings and improvements................................................... 1,245,715 818,229 457,403
Developments in progress:
Land......................................................................... 16,503 29,309 5,637
Development costs............................................................ 81,299 25,164 8,469
Furniture, fixtures and equipment............................................... 4,831 4,054 2,736
---------- --------- --------
1,540,195 1,015,282 519,504
Less accumulated depreciation............................................. (132,399) (111,068) (88,602)
---------- --------- --------
1,407,796 904,214 430,902
Investments in real estate joint ventures....................................... 11,628 7,223 5,437
Investment in mortgage notes and notes receivable (Note 8)...................... 84,674 104,509 51,837
Cash and cash equivalents (Note 12)............................................. 2,821 21,676 12,321
Tenant receivables.............................................................. 4,062 4,975 1,732
Affiliate receivables (Note 7).................................................. 56,171 18,090 3,826
Deferred rent receivable........................................................ 19,098 14,973 12,573
Prepaid expenses and other assets (Note 7)...................................... 15,467 13,705 6,225
Contract and land deposits and pre-acquisition costs............................ 3,088 7,559 7,100
Deferred lease and loan costs, less accumulated amortization of $13,899,
$14,844 and $12,915 respectively................................................ 19,537 16,181 11,438
----------- ---------- ---------
Total Assets................................................................. $1,624,342 $1,113,105 $ 543,391
=========== ========== ==========
LIABILITIES
Mortgage notes payable (Note 2)................................................. $ 236,776 $ 180,023 $161,513
Credit facilities (Notes 3 and 12).............................................. 298,250 210,250 108,500
Senior unsecured notes ( Note 4)................................................ 150,000 150,000 ---
Accrued expenses and other liabilities (Note 5)................................. 36,053 30,799 15,867
Dividends and distributions payable............................................. 20,461 120 9,442
Affiliate payables (Note 7)..................................................... 2,341 1,764 1,128
---------- ---------- --------
Total Liabilities............................................................ 743,881 572,956 296,450
---------- ---------- --------
Commitments and other comments (Notes 9, 10 and 12)............................. --- --- ---
Minority interest in consolidated partnership 35,685 7,697 10,264
---------- ---------- --------
PARTNERS' CAPITAL (NOTE 6)
Preferred Capital, 9,236,518, -, and - units outstanding, respectively.......... 257,318 --- ---
General Partner's Capital, 39,991,745, 37,770,158 and 24,356,354 units
outstanding, respectively....................................................... 455,293 446,702 184,798
Limited Partners' Capital, 7,693,310, 7,218,688 and 6,763,010 units
outstanding respectively........................................................ 132,165 85,750 51,879
---------- --------- --------
Total Partners' Capital...................................................... 844,776 532,452 236,677
---------- --------- --------
Total Liabilities and Partners' Capital................................... $ 1,624,342 $ 1,113,105 $ 543,391
============ =========== =========
</TABLE>
(see accompanying notes to financial statements)
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENTS OF INCOME
AND RECKSON GROUP
COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT UNIT DATA)
<TABLE>
<CAPTION>
Reckson Operating Partnership, L. P. Reckson Group
----------------------------------------------------------------------------------- -------------
for the six months ended for the year ended
------------------------------- -------------------
For the Period For the Period
June 3, 1995 to January 1,
December 31, 1995 to
June 30, 1998 June 30, 1997 December 31, 1997 December 31, 1996 1995 June 2, 1995
------------- -------------- ----------------- ----------------- ------------- --------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
REVENUES (Note 10):
Base rents...................... $102,571 $ 57,751 $128,778 $82,150 $32,661 $16,413
Tenant escalations and
reimbursements................ 13,113 6,585 14,981 10,628 5,246 2,907
Construction revenues - net..... --- --- --- --- --- 432
Management revenues............. --- --- --- --- --- 589
Equity in earnings of service
companies..................... 392 201 55 1,031 100 ---
Equity in earnings of real
estate joint ventures......... 273 142 459 266 --- ---
Interest income on mortgage notes
and notes receivable.......... 3,453 1,889 5,437 --- --- ---
Investment and other income
(Note 8)...................... 1,527 1,290 3,638 1,955 448 548
-------- --------- -------- ------ ------- ------
Total Revenues............... 121,329 67,858 153,348 96,030 38,455 20,889
-------- --------- -------- ------ ------- ------
EXPENSES:
Property operating expenses..... 22,018 12,733 28,943 18,959 7,144 3,985
Real estate taxes............... 17,036 9,370 20,579 13,935 5,755 3,390
Ground rents.................... 845 609 1,269 1,107 579 234
Marketing, general and
administrative................ 6,618 3,794 8,026 5,933 1,850 1,858
Interest........................ 21,497 8,583 21,585 13,331 5,331 7,622
Depreciation and amortization... 23,264 11,957 27,237 17,670 7,233 3,606
------- --------- ------- ------ ------ ------
Total Expenses.................. 91,278 47,046 107,639 70,935 27,892 20,695
------- --------- ------- ------ ------ ------
Income before distributions to
preferred unit holders,
minority interests and
extraordinary items........... 30,051 20,812 45,709 25,095 10,563 194
Preferred unit distributions.... (4,168) --- --- --- --- ---
Minority partners' interest in
consolidated partnerships
income........................ (1,273) (496) (920) (915) (246) ---
------- -------- ------- ------- ------- -----
Income before extraordinary
items.......................... 24,610 20,316 44,789 24,180 10,317 194
Extraordinary items - (loss)
on extinguishment
of debts. (Notes 1 and 3)..... --- (2,362) (2,808) (1,259) (6,022) ---
------- ---------- ------- ------- ------- ------
Net income available to common
unit holders.................. 24,610 $ 17,954 $ 41,981 $ 22,921 $4,295 $194
======= ======= ======= ======= ======= ======
Net Income:
General Partner............. $ 19,857 $ 14,583 $ 34,742 $ 17,325 $ 3,200
Limited Partners'........... 4,753 3,371 7,239 5,596 1,095
---------- --------- --------- ------- ----------
Total........................... $ 24,610 $ 17,954 $ 41,981 $ 22,921 $ 4,295
========== ========== ========== ============ ==========
Net income per common unit:
General Partner.............. $ .51 $ .48 $ 1.06 $ .87 $ .22
Limited Partners'............ $ .62 $ .48 $ 1.03 $ .86 $ .19
Weighted average common units
outstanding:
General Partner.............. 38,914,000 30,455,000 32,727,000 19,928,000 14,678,000
Limited Partners'............ 7,701,000 6,968,000 7,016,000 6,503,000 5,648,000
</TABLE>
(see accompanying notes to financial statements)
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
AND RECKSON GROUP
COMBINED STATEMENT OF OWNER'S (DEFICIT)
(IN THOUSANDS)
<TABLE>
<CAPTION>
General Partner's Limited Partners' Total
Capital Capital Partners' Capital
----------------- ----------------- -----------------
<S> <C> <C> <C>
OWNERS' DEFICIT, DECEMBER 31, 1994............. $ (73,492) $ --- $ (73,492)
Net income..................................... 194 --- 194
Distributions.................................. (4,399) --- (4,399)
Contributions.................................. 119 --- 119
Adjustment to unrealized gain on
available-for-sale securities............... 95 --- 95
----------------- ---------------- -------------
OWNERS' DEFICIT, JUNE 2, 1995.................. (77,483) --- (77,483)
Deficit not contributed by the Owners of
Reckson Group................................ 7,776 --- 7,776
Initial capital contribution June 2, 1995 162,011 --- 162,011
Established of Minority Interests in the
Operating Partnership ....................... (25,651) 25,651 ---
Net Income..................................... 3,200 1,095 4,295
Contributions.................................. --- 3,237 3,237
Distributions.................................. (9,960) (3,835) (13,795)
------------------ ---------------- ------------
BALANCE DECEMBER 31, 1995...................... 59,893 26,148 86,041
Net Income..................................... 17,325 5,596 22,921
Contributions.................................. 131,716 27,881 159,597
Distributions.................................. (24,136) (7,746) (31,882)
------------------ ----------------- -------------
BALANCE DECEMBER 31, 1996...................... 184,798 51,879 236,677
Net Income..................................... 34,742 7,239 41,981
Contributions.................................. 267,827 35,339 303,166
Distributions.................................. (40,665) (8,707) (49,372)
------------------ ----------------- -------------
BALANCE DECEMBER 31, 1997...................... 446,702 85,750 532,452
Net Income..................................... 19,857 4,753 24,610
Contributions.................................. 272,706 47,561 320,267
Distributions.................................. (27,730) (5,899) (33,629)
Contribution of a 1% interest in Reckson FS
Limited Partnership.......................... 1,076 --- 1,076
----------------- ----------------- -------------
BALANCE JUNE 30, 1998 (UNAUDITED) $ 712,611 $ 132,165 $ 844,776
================= ================= =============
</TABLE>
(see accompanying notes to financial statements)
Reckson Operating Partnership, L. P. Consolidated Statements of Cash Flows
and Reckson Group
Combined Statement of Cash Flows (in thousands)
<TABLE>
<CAPTION>
Reckson Group
-------------
Reckson Operating Partnership, L. P.
---------------------------------------------------------------------------
For the six months ended For the year ended
----------------------------- ------------------
For the Period
June 3, 1995 For the Period
to January 1, 1995
December 31, December 31, December 31, to
June 30, 1998 June 30, 1997 1997 1996 1995 June 2, 1995
------------ ------------- ------------ ------------ ----------- ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Income................................. $ 24,610 $ 17,954 $ 41,981 $ 22,921 $ 4,295 $ 194
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization........... 23,264 11,957 27,237 17,670 7,233 3,606
Loss on extinguishment of debts......... --- 2,362 2,808 1,259 6,022 ---
Minority partners' interest in consolidated
partnerships 1,273 496 920 915 246 ---
Gain on sale of interest in Reckson Executive
Centers,
LLC (9) --- --- --- --- ---
Gain on sales of property and securities.... (43) --- (672) --- --- (134)
Distribution from and share of net loss
(income) from investments in
partnerships............................. 217 191 408 191 --- (303)
Deferred rents receivable................... (3,614) (2,371) (4,500) (3,837) --- ---
Equity in undistributed earnings of service
companies.................................. (392) (142) (55) (931) (100) ---
Equity in earnings of real estate
partnerships.............................. (273) (201) (459) (266) --- ---
Interest income on mortgage notes and notes
receivable................................. (316) (374) (2,392) (870) --- ---
Changes in operating assets and liabilities:
Escrow reserves............................. 115 34 --- --- --- ---
Prepaid expenses and other assets........... (9,832) (4,301) (1,931) (619) (286) 417
Tenant and affiliate receivables............ 913 (561) (1,183) (256) (2,438) 302
Accrued expenses and other liabilities...... 8,573 3,115 11,240 4,716 2,396 (2,463)
------ ------ ------- ------ ------- -------
Net cash provided by operating activities... 44,486 28,159 73,402 40,893 17,368 1,619
------ ------ ------- ------ ------- -------
Cash Flows from Investing Activities:
Increase in escrow reserves................. (580) --- --- --- --- ---
Cash from contributed net assets............ --- --- --- --- 629 ---
Purchases of commercial real estate
properties................................ (383,366) (154,303) (429,379) (181,130) (49,241) ---
Repayment of notes payable - affiliates..... --- --- --- --- (6,000) ---
Cash paid in exchange for partnership net
assets.................................... --- --- --- --- (16,075) ---
Investment in mortgage notes and notes
receivable................................ 20,097 (29,124) (50,282) (50,892) --- ---
Increase in contract deposits and
preacquisition costs...................... 4,187 (275) (1,303) (6,668) (810) ---
Additions to developments in progress....... (43,330) (16,617) (40,367) (8,427) (2,567) ---
Additions to commercial real estate
properties................................ (9,754) (7,608) (12,038) (12,441) (2,326) (814)
Payment of leasing costs.................... (3,768) (3,194) (5,417) (5,028) (1,672) (125)
Investment in securities.................... 809 --- (1,756) --- --- ---
Additions to furniture, fixtures and
equipment................................. (776) (481) (1,159) (115) (21) (13)
Investments in and advances to real estate
joint ventures............................ (2,970) (1,385) (1,734) (5,832) (232) ---
Investment in service companies 15 15 (4,241) (3,170) --- ---
Distributions from partnership investments.. --- --- --- --- --- 115
Contributions to partnership investments.... --- --- --- --- --- (244)
Proceeds from sales of properties and
securities................................ --- --- 725 --- --- 371
------- ------ ------ ------- ------ ----
Net cash (used in) investing activities..... (419,436) (212,972) (546,951) (273,703) (78,315) (710)
-------- ---------- -------- --------- ------- -----
Cash Flows from Financing Activities:
Proceeds from borrowings.................... --- --- --- 54,402 40,779 14,004
Principal payments on borrowings............ (3,118) (653) (1,624) (380) (151,230) (13,088)
Proceeds from issuance of bonds, net of bond
issuance costs............................ --- --- 147,420 --- --- ---
Proceeds from mortgage refinancing, net of
refinancing costs......................... --- --- 20,134 --- --- ---
Payment of loan costs and prepayment
penalties................................. (69) (2,807) (2,403) (2,525) (9,138) (268)
Advances to affiliates...................... (26,220) (1,803) (20,182) (2,952) 383 (1,060)
Proceeds from credit facilities............. 180,996 126,500 421,000 144,500 40,000 ---
Principal payments on credit facilities..... (94,000) (122,000) (319,250) (76,000) --- ---
Contributions............................... 314,315 212,117 299,991 145,317 151,427 ---
Distributions .............................. (14,498) (18,657) (53,327) (22,546) (3,835) ---
Distributions to minority partners in
operating partnerships.................... (1,311) (602) (8,855) (1,492) (633) ---
Deferred offering costs..................... --- --- --- --- --- (400)
Distributions to Predecessor Owners......... --- --- --- --- --- (4,280)
--------- -------- -------- -------- ------- -------
Net cash provided by (used in) financing
activities................................ 356,095 192,095 482,904 238,324 67,753 (5,092)
--------- --------- -------- -------- ------- -------
Net increase (decrease) in cash and cash
equivalents............................... (18,855) 7,282 9,355 5,514 6,806 (4,183)
Cash and cash equivalents at beginning of
period.................................... 21,676 12,321 12,321 6,807 1 7,041
---------- -------- -------- -------- -------- -------
Cash and cash equivalents at end of period..... $2,821 $ 19,603 $21,676 $12,321 $6,807 $2,858
========== ======== ======== ======== ======== =======
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest.... $17,869 $9,956 $20,246 $13,261 $4,700 $8,600
========== ======== ======== ======== ======== =======
</TABLE>
(see accompanying notes to financial statements)
Reckson Operating Partnership, L. P.
and
Reckson Group
Notes to Consolidated Financial Statements
1. Description of Business and Significant Accounting Policies
Description of Business
Reckson Operating Partnership, L. P. (the "Operating Partnership") and
the Reckson Group (the "Predecessor") are engaged in the ownership,
management, operation, leasing and development of commercial real estate
properties, principally office and industrial buildings and also own certain
undeveloped land (collectively, the "Properties") located in the New York City
tri-state area.
Organization and Formation of the Operating Partnership
The Operating Partnership commenced operations on June 2, 1995 and is the
successor to the operations of the Reckson Group. The sole general partner in
the Operating Partnership, Reckson Associates Realty Corp. (the "Company") is
a self administered and self managed Real Estate Investment Trust ("REIT").
During June, 1995, the Company contributed approximately $162 million in cash
to the Operating Partnership in exchange for an approximate 73% general
partnership interest.
The Operating Partnership executed various option and purchase agreements
whereby it issued 2,758,960 units in the Operating Partnership ("Units") to
the continuing investors and assumed approximately $163 million (net of the
Omni mortgages) of indebtedness in exchange for interests in certain property
partnerships, fee simple and leasehold interests in properties and development
land, certain business assets of the executive center entities and 100% of the
non-voting preferred stock of the management and construction companies.
As of June 30, 1998, the Operating Partnership owned and operated 69
office properties comprising approximately 9.6 million square feet, 120
industrial properties comprising approximately 9.8 million square feet and two
retail properties comprising approximately 20,000 square feet, located in the
New York "Tri-State" area. In addition, the Operating Partnership owned or had
contracted to acquire approximately 914 acres of land (including 400 acres
under option) in 19 separate parcels of which the Operating Partnership can
develop 1.9 million square feet of industrial space and 6.8 million square
feet of office space. The Operating Partnership also has invested
approximately $47.3 million in certain mortgage notes encumbering four Class A
office properties encompassing approximately 577,000 square feet and a 400
acre parcel of land and in a note receivable secured by a partnership interest
in Omni Partners, L.P., owner of the Omni, a 575,000 Class A office property
located in Uniondale, New York (unaudited).
During 1997, the Company formed Reckson Service Industries, Inc. ("RSI")
and Reckson Strategic Venture Partners, LLC ("RSVP"). The Operating
Partnership owned a 95% nonvoting common stock interest in RSI through June
10, 1998. RSI serves as the managing member of RSVP. RSI invests in operating
companies that generally will provide commercial services to properties owned
by the Operating Partnership and its tenants and third parties. RSVP was
formed to provide the Operating Partnership with a research and development
vehicle to invest in alternative real estate sectors. RSVP invests primarily
in real estate and real estate related operating companies generally outside
of the Operating Partnership's core office and industrial focus. RSVP's
strategy is to identify and acquire interests in established entrepreneurial
enterprises with experienced management teams in market sectors which are in
the early stages of their growth cycle or offer unique circumstances for
attractive investments as well as a platform for future growth. At December
31, 1997, the Operating Partnership had made investments in or loans to RSI
and RSVP aggregating approximately $4.3 million and $7.4 million, respectively
in connection with start up costs and certain initial investments. Such
amounts have been included in other assets on the accompanying balance sheet.
On June 11, 1998, the Operating Partnership distributed its 95% net non
voting common stock interest in RSI of approximately $3 million to its
partners. At June 30, 1998, the Operating Partnership had made loans to RSI
and RSVP aggregating approximately $21.8 million and $7.6 million,
respectively in connection with start up costs and certain initial
investments. Such amounts have been included in investments in and advances to
affiliates on the accompanying balance sheet. Subsequent to June 30, 1998, RSI
and RSVP repaid approximately $13 million and $6.8 million, respectively of
loans to the Operating Partnership (unaudited).
At June 30, 1998, the Operating Partnership had made loans to RSI and
RSVP aggregating approximately $21.8 million and $7.6 million, respectively in
connection with start up costs and certain initial investments. Such amounts
have been included in investments in and advances to affiliates on the
accompanying balance sheet. Subsequent to June 30, 1998, RSI and RSVP repaid
approximately $13 million and $6.8 million, respectively of loans to the
Operating Partnership. (unaudited).
In October 1997, the Operating Partnership entered into an agreement to
invest $150 million in the Morris Companies, a New Jersey developer and owner
of "Big Box" warehouse facilities. The Morris Companies' properties include 23
industrial buildings encompassing approximately 4.0 million square feet. The
Operating Partnership has invested approximately $72 million for an
approximate 73% controlling interest in Reckson Morris Operating Partnership,
L.P. ("RMI"). In connection with the transaction the Morris Companies
contributed 100% of their interests in certain industrial properties to RMI in
exchange for operating partnership units in RMI.
Basis of Presentation and Summary of Significant Accounting Policies
The accompanying consolidated financial statements include the
consolidated financial position of the Operating Partnership and its
subsidiaries. The Operating Partnership's investment in RMI is reflected in
the accompanying financial statements on a consolidated basis with a reduction
for minority partner interest. The operating results of the service businesses
currently conducted by Reckson Management Group, Inc., and Reckson
Construction Group, Inc., are reflected in the accompanying financial
statements on the equity method of accounting. The operating results of
Reckson Executive Centers, L.L.C., ("REC"), a service business of the
Operating Partnership were reflected in the accompanying financial statements
on the equity method of accounting through March 31, 1998. On April 1, 1998,
the Operating Partnership sold its 9.9% interest in REC to RSI for $200,000
(unaudited). Additionally, the operating results of RSI, were reflected in the
accompanying financial statements on the equity method of accounting through
June 10, 1998. On June 11, 1998 the Operating Partnership distributed its 95%
net non voting common stock interest in RSI to its partners (unaudited). The
Operating Partnership also invests in real estate joint ventures where it may
own less than a controlling interest, such investments are also reflected in
the accompanying financial statements on the equity method of accounting. All
significant intercompany balances and transactions have been eliminated in the
consolidated financial statements.
The accompanying Interim unaudited financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosure normally included in
the financial statements prepared in accordance with generally accepted
accounting principles may have been condensed or omitted pursuant to such
rules and regulations, although management believes that the disclosures are
adequate to make the information presented not misleading. The unaudited
financial statements as of June 30, 1998 and for the six month periods ended
June 30, 1998 and 1997 include, in the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial information set forth herein.
During 1997 the Financial Accounting Standards Board ("FASB") issued
statement No. 130, "Reporting Comprehensive Income" ("SFAS 130") which is
effective for fiscal years beginning after December 15, 1997. SFAS 130
established standards for reporting comprehensive income and its components in
a full set of general-purpose financial statements. SFAS 130 requires that all
components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements. The
adoption of this standard will not have an impact on the Operating
Partnership's financial position or results of operations. Additionally, in
June 1997, the FASB also issued SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131") which is effective for fiscal
years beginning after December 15, 1997. SFAS 131 establishes standards for
reporting information about operating segments in annual financial statements
and in interim financial reports. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
The adoption of this standard will not have an impact on the Operating
Partnership's financial position or results of operations.
The following table presents the minority partners' interest in
consolidated partnerships income:
December 31,
-----------------------------
June 30, 1998 1997 1996 1995
---------------- ------- ------- ------
(unaudited)
Omni Partners, L. P. 40% 40% 40% 40%
Reckson Morris Operating
Partnership, L. P. (1) 27% --- -- ---
Reckson FS Limited
Partnership --- 1% 1% 1%
- --------
(1) Approximate
The Reckson Group was not a legal entity but rather a combination of
partnerships, an "S" corporation and affiliated real estate management and
construction corporations which were under the common control of Reckson
Associates (a general partnership) and affiliated entities. All significant
intercompany transactions and balances were eliminated in combination. The
Reckson Group used the equity method of accounting for investments in less
than 50% owned entities and majority owned entities where control was
temporary.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Real Estate
Depreciation is computed utilizing the straight-line method over the
estimated useful lives of ten to thirty years for buildings and improvements
and five to ten years for furniture, fixtures and equipment. Tenant
improvements, which are included in buildings and improvements, are amortized
on a straight-line basis over the term of the related leases.
Cash Equivalents
The Operating Partnership considers highly liquid investments with a
maturity of three months or less when purchased, to be cash equivalents.
Deferred Costs
Lease fees and loan costs are capitalized and amortized over the life of
the related lease or loan.
Income Taxes
No provision has been made for income taxes in the accompanying
consolidated financial statements since such taxes, if any, are the
responsibility of the individual partners.
Revenue Recognition
Minimum rental income is recognized on a straight-line basis over the
term of the lease. The excess of rents recognized over amounts contractually
due are included in deferred rents receivable on the accompanying balance
sheets. Contractually due but unpaid rents are included in tenant receivables
on the accompanying balance sheets. Certain lease agreements provide for
reimbursement of real estate taxes, insurance, common area maintenance costs
and indexed rental increases, which are recorded on an accrual basis.
The Operating Partnership records interest income on investments in
mortgage notes and notes receivable on an accrual basis of accounting. The
Operating Partnership does not accrue interest on impaired loans where, in the
judgment of management, collection of interest according to the contractual
terms is considered doubtful. Among the factors the Operating Partnership
considers in making an evaluation of the collectibility of interest are, the
status of the loan, the value of the underlying collateral, the financial
condition of the borrower and anticipated future events. Loan discounts are
amortized over the life of the real estate using the constant interest method.
Net Income Per Common Partnership Unit
Net income per common partnership unit is determined by allocating net
income after preferred distributions to the general and limited partners'
based on their weighted average common partnership units outstanding during
the respective periods presented.
Distributions to Preferred Unit Holders
Preferred unit holders are entitled to distributions based on the stated
rates of return (subject to adjustment) for the units.
Capitalized Interest
Interest incurred on borrowings used to fund the property development and
construction are capitalized as developments in progress and allocated to the
individual property costs once construction is completed
Construction Operations
Construction operations are accounted for utilizing the completed
contract method. Under this method, costs and related billings are deferred
until the contract is substantially complete. Estimated losses on uncompleted
contracts are recorded in the period that management determines that a loss
may be incurred.
Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year presentation.
2. Mortgage Notes Payable
At December 31, 1997, there are thirteen mortgage notes payable with an
aggregate outstanding principal amount of approximately $180 million.
Properties with an aggregate carrying value at December 31, 1997 of
approximately $225 million are pledged as collateral against the mortgage
notes payable. In addition, $59.2 million of the $180 million are recourse to
the Operating Partnership. The mortgage notes bear interest at rates ranging
from 6.82% to 9.25%, and mature between 1999 and 2012. The weighted average
interest rate on the outstanding mortgage notes payable at December 31, 1997
is 7.71%. Certain of the mortgage notes payable are guaranteed by certain
minority partners in the Operating Partnership.
Scheduled principal repayments during the next five years and thereafter
are as follows (in thousands):
Year Ended December 31,
--------------------------
1998.............................. $2,327
1999.............................. 2,368
2000.............................. 33,788
2001.............................. 2,336
2002.............................. 26,978
Thereafter........................ 112,226
----------
$180,023
=========
On April 21,1998, in connection with the acquisitions of the Capelli
portfolio, the Operating Partnership assumed approximately $45.1 million of
mortgage indebtedness which bear interest at rates ranging from 8.5% to 9.25%
and which encumber two properties (unaudited).
On May 21, 1998, the Company satisfied the mortgage note encumbering one
property in the amount of approximately $1.9 million (unaudited).
As of June 30, 1998, the Company had approximately $237 million of fixed
rate mortgage notes which mature at various times between 1999 and 2012. The
notes are secured by 21 properties and have a weighted average interest rate
of 7.91% (unaudited).
3. Credit Facilities
As of December 31, 1997, the Operating Partnership had a three-year $250
million unsecured credit facility from Chase Manhattan Bank and Union Bank of
Switzerland (the "Unsecured Credit Facility"). The Operating Partnership's
ability to borrow thereunder was subject to the satisfaction of certain
customary financial covenants. In addition, borrowings under the Unsecured
Credit Facility bear interest at a floating rate equal to one, two, three or
six month LIBOR (at the Operating Partnership's election) plus a spread
ranging from 1.125% to 1.5% based on the Operating Partnership's leverage
ratio.
In addition, the Operating Partnership obtained a $200 million unsecured
credit facility (the "Bridge Facility") which matured on July 15, 1998. The
Bridge Facility was provided by the two lead members of the Unsecured Credit
Facility bank group and served as interim financing while the Operating
Partnership seeked to expand the availability under the Unsecured Credit
Facility (unaudited).
On July 23, 1998, the Operating Partnership obtained a three year $500
million unsecured revolving credit facility (the "Credit Facility") with Chase
Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the
credit facility bank group. This Credit Facility replaces both the Unsecured
Credit and Bridge Facilities. Interest rates on borrowings under the Credit
Facility will be priced off of LIBOR plus a sliding scale ranging from 112.5
basis points to 137.5 basis points based on the leverage ratio of the
Operating Partnership. Upon the Operating Partnership receiving an investment
grade rating on its senior unsecured debt by two rating agencies, the pricing
is adjusted based off of LIBOR plus a scale ranging from 65 basis points to 90
basis points depending upon the rating (unaudited).
The Operating Partnership capitalized interest incurred on credit
facility borrowings to fund certain development costs in the amount of
$2,351,201 and $800,434 for the years ended December 31, 1997 and 1996,
respectively.
For the six months ended June 30, 1998 and 1997, the Operating
Partnership capitalized interest incurred on credit facility borrowings to
find certain development costs in the amount of approximately $1.8 million and
$.9 million, respectively (unaudited).
4. Senior Unsecured Notes
On August 28, 1997, the Operating Partnership sold $150 million of
10-year senior unsecured notes in a privately placed transaction. The senior
unsecured notes were priced at par with interest at 110 basis points over the
10- year treasury note for an all in coupon of 7.2%. Interest is payable
semiannually with principal and unpaid interest due on August 28, 2007.
5. Land Leases
The Operating Partnership leases, pursuant to noncancellable operating
leases, the land on which seven of its buildings were constructed. The leases,
which contain renewal options, expire between 2018 and 2080. The leases
contain provisions for scheduled increases in the minimum rent and one of the
leases additionally provides for adjustments to rent based upon the fair
market value of the underlying land at specified intervals. Minimum ground
rent is recognized on a straight-line basis over the terms of the leases. The
excess of amounts recognized over amounts contractually due is $1,948,000 and
$1,676,000 at December 31, 1997 and 1996, respectively. These amounts are
included in accrued expenses and other liabilities on the accompanying balance
sheets. Future minimum lease commitments relating to the land leases as of
December 31, 1997 are as follows (in thousands):
1998................................................. $1,093
1999................................................. 1,202
2000................................................. 1,203
2001................................................. 1,212
2002................................................. 1,212
Thereafter........................................... 42,114
----------
$48,036
==========
The excess of amounts recognized over amounts contractually due at June
30, 1998 is approximately $2,127,000 (unaudited).
6. Partners' Capital
The Operating Partnership made loans to certain senior officers to
purchase units at market prices ranging from $12.13 per unit to $21.94 per
unit. The loans bear interest at rates ranging between 8% to 8.5% and are
secured by the units purchased. Such loans will be forgiven ratably at each
anniversary of employment over a four to five year period. The loan balances
of $240,400 (unaudited), $325,500 and $250,000 at June 30, 1998, December 31,
1997 and 1996, respectively have been included as a reduction of the general
partner's capital on the accompanying consolidated balance sheets.
On April 21, 1998, the Operating Partnership issued 25,000 Series B
preferred units of limited partnership interest at a stated value of $1,000
per unit and 11,518 Series C preferred units of limited partnership interest
at a stated valued of $1,000 per unit in connection with the acquisition of
the Cappelli portfolio. The Series B preferred units have a current
distribution rate of 6.25% and are convertible to common units at a conversion
price of approximately $32.51 for each preferred unit. The Series C preferred
units have a current distribution rate of 6.25% and are convertible to common
units at a conversion price of approximately $29.39 for each preferred unit
(unaudited).
During the six months ended June 30, 1998, the Operating Partnership
issued 1,884,896 units of general partnership interest to the Company in
exchange for approximately $44.4 million. The proceeds were used to repay
borrowings under the credit facilities (unaudited).
Additionally, during the six months ended June 30, 1998, the Operating
Partnership issued 9,200,000 Series A preferred units of general partnership
interest to the Company in exchange for approximately $221 million. The Series
A preferred units have a liquidation preference of $25 per unit, a
distribution rate of 7 5/8 % and are convertible to common units at a
conversion rate of .8769 common units for each preferred unit (unaudited).
On July 2, 1998, the Operating Partnership issued 6,000 Series D
preferred units of limited partnership interest at a stated value of $1,000
per unit in connection wit the acquisition of the remaining 50% interest in
360 Hamilton Avenue located in White Plains, New York. The Series D preferred
units have a current distribution rate of 6.25% and are convertible to common
units at a conversion price of approximately $29.12 for each preferred unit
(unaudited).
7. Related Party Transactions
The Operating Partnership, through its subsidiaries and affiliates,
provides management, leasing and other tenant related services to the
Properties. Certain executive officers of the Company have continuing
ownership interests in the unconsolidated service companies.
The Operating Partnership in connection with its formation, was granted
options, exercisable over a 10 year period to acquire six properties owned by
the Predecessor (the "Reckson Option Properties") and four properties in which
the Predecessor owns a non-controlling minority interest (the "Other Option
Properties" and, together with the Reckson Option Properties, the "Option
Properties") at a purchase price equal to the lesser of (I) a fixed purchase
price and (ii) the Net Operating Income, as defined, attributable to such
Option Property during the 12 month period preceding the exercise of the
option divided by a capitalization rate of 11.5%, but the purchase price shall
in no case be less than the outstanding balance of the mortgage debt
encumbering the Option Property on the acquisition date.
During 1996, the Operating Partnership acquired three of the Reckson
Option Properties for an aggregate purchase price of approximately $26
million. In connection with the purchase of such Option Properties the
Operating Partnership issued 271,228 common units at prices ranging from
$16.38 per unit to $18.50 per unit as partial consideration in the
transactions. Such units were issued to certain members of management and
entities whose partners included members of management.
During 1997, the Operating Partnership acquired one of the Reckson Option
Properties for a purchase price of approximately $9 million. In connection
with the purchase, the Operating Partnership issued 203,804 common units at a
price of $21 per unit as partial consideration in the transaction. Such units
were issued to certain members of management and entities whose partners
include members of management.
The Operating Partnership made construction loan advances to fund certain
redevelopment and leasing costs relating to one of the Other Option
Properties. At December 31, 1997 and 1996, advances due the Operating
Partnership were approximately $4,200,000 and $2,940,000, respectively. Such
amounts bear interest at the rate of 11% per annum and are due on demand. In
January 1998, the outstanding advances including accrued and unpaid interest
was repaid in full.
At December 31, 1997, the Operating Partnership had made investments in
or loans to RSI and RSVP aggregating approximately $4.3 million and $7.4
million, respectively in connection with start up costs and certain initial
investments. Such amounts have been included in other assets on the
accompanying balance sheet.
On March 23, 1998, the Company sold approximately $5.9 million of common
stock to RSI at the market closing price of $25 per share. The Operating
Partnership loaned RSI the $5.9 million to execute this transaction. Such
amount was repaid to the Operating Partnership by RSI subsequent to June 30,
1998 (unaudited).
On June 11, 1998, the Operating Partnership distributed its 95% net non
voting common stock interest in RSI of approximately $3 million to its
partners. Additionally, during June 1998, the Operating Partnership
established a credit facility with RSI (the "RSI Facility") in the amount of
$100 million for RSI's service sector operations and other general corporate
purposes. The Operating Partnership also established a credit facility with
RSI for the funding of investments of up to $100 million with or in RSVP (the
"RSVP Facility") (unaudited).
8. Commercial Real Estate Investments
During the period from June 3, 1995 to December 31, 1996 the Operating
Partnership acquired 22 office properties encompassing approximately 2.8
million square feet and 16 industrial properties encompassing approximately
1.4 million square feet for an aggregate purchase price of approximately $273
million.
During 1997, the Operating Partnership acquired five office properties
encompassing approximately 881,000 square feet and 15 industrial properties
encompassing approximately 968,000 square feet on Long Island for an aggregate
purchase price of approximately $131 million.
During 1997, the Operating Partnership acquired eight office properties
encompassing approximately 830,000 square feet and three industrial properties
encompassing approximately 163,000 square feet in Westchester for an aggregate
purchase price of approximately $117 million. In addition, the Operating
Partnership acquired approximately 32 acres of land located in Westchester for
a purchase price of approximately $8 million.
During 1997, the Operating Partnership acquired one industrial property
encompassing approximately 452,000 square feet in Connecticut for a purchase
price of approximately $27 million.
During 1997, the Operating Partnership acquired 13 office properties
encompassing approximately 1.5 million square feet and one industrial property
encompassing approximately 128,000 square feet in New Jersey for an aggregate
purchase price of approximately $156 million. In addition, the Operating
Partnership acquired approximately 303 acres of land located in New Jersey for
an aggregate purchase price of approximately $16.2 million.
In October 1997, the Operating Partnership entered into an agreement to
invest $150 million in the Morris Companies, a New Jersey developer and owner
of "Big Box" warehouse facilities. The Morris Companies' properties include
twenty three industrial buildings encompassing approximately 4.0 million
square feet. In connection with the transaction the Morris Companies
contributed 100% of their interests in certain industrial properties to RMI in
exchange for Operating Partnership units in RMI. On January 6, 1998, the
Operating Partnership acquired an approximate 70% controlling interest in RMI
for approximately $65 million. In addition, at December 31, 1997, the
Operating Partnership had advanced approximately $12 million to the Morris
Companies primarily to fund certain construction costs related to development
properties to be contributed to RMI.
In October 1997, the Operating Partnership sold 671 Old Willets Path in
Hauppauge, New York for approximately $725,000 and recorded a gain on the sale
of $672,000.
During January, 1998, the Operating Partnership acquired two office
properties and five industrial properties encompassing 325,000 and 775,000
square feet, respectively for aggregate purchase prices of approximately $27.6
million and $32.1 million, respectively. In addition, the Operating
Partnership acquired approximately 99 acres of land for approximately $3.39
million which allows for approximately 730,000 square feet of development
opportunities. These acquisitions were financed with proceeds from the credit
facilities and the issuance of 513,259 common units (unaudited).
During February 1998, the Operating Partnership acquired approximately 25
acres of land and a vacant 165,000 square foot building for approximately
$3.43 million. The Operating Partnership is currently repositioning these
properties which will allow for approximately 483,000 square feet of future
development opportunities (unaudited).
Additionally, on February 6, 1998 the Operating Partnership completed its
acquisition of a 351,000 square foot office building located in Lake Success,
New York for approximately $9.3 million. The Operating Partnership had
previously acquired an approximate 68% first mortgage interest in the property
for approximately $25.7 million for a total acquisition of $35 million. The
acquisition was financed with proceeds from a draw under the credit facilities
(unaudited).
On March 20, 1998, the Operating Partnership acquired a 250,000 square
foot office building located in Short Hills, New Jersey for approximately $67
million. The acquisition was financed with proceeds from a draw under the
credit facilities (unaudited).
On April 3, 1998, the Operating Partnership completed its acquisition of
approximately 33.6 acres of vacant land located in Huntington Township, New
York, which allows for approximately 495,000 square feet of future development
opportunities for approximately $8.5 million (of which $6.4 million had been
previously paid) (unaudited).
On April 21, 1998, the Operating Partnership acquired a portfolio of six
office properties encompassing approximately 980,000 square feet in
Westchester County, New York from Cappelli Enterprises and affiliated entities
("Cappelli") for a purchase price of approximately $173 million. The Cappelli
acquisition includes a five building, 850,000 square foot Class A office park
in Valhalla and Court House Square, a 130,000 square foot Class A office
building located in White Plains. The Operating Partnership also obtained an
option from Cappelli to acquire the remaining 50% interest in 360 Hamilton
Avenue, a 365,000 square foot vacant office tower in downtown White Plains for
$10 million of which $4 million was paid at closing of the portfolio
acquisition. In addition, the Operating Partnership received an option from
Cappelli to acquire the remaining development parcels within the Valhalla
office park on which up to 875,000 square feet of office space can be
developed. During April 1998, the Company made mortgage loans to Cappelli
totaling $18 million which are secured by the development parcels. The loans
bear interest at 10% per annum and mature on April 14, 1999. Such amounts have
been included in investments in mortgage notes and notes receivable on the
accompanying balance sheet. This acquisition was financed in part through
proceeds from a draw under the credit facilities, the issuance of 36,518
preferred units, and the assumption of approximately $45.1 million of mortgage
debt. On July 2, 1998, Cappelli exercised his option to sell the remaining 50%
interest in 360 Hamilton Avenue located in downtown White Plains, New York to
the Operating Partnership for $10 million (of which $4 million had been
previously paid) plus the return of his capital contributions of approximately
$1.5 million. As a result, the Operating Partnership now owns 100% of the
property. The acquisition was financed in part through proceeds from a draw
under the credit facilities, the issuance of 6,000 preferred units, and the
assumption of approximately $2 million of additional mortgage debt
(unaudited).
Additionally, on April 21, 1998, the Operating Partnership acquired a
84,500 square foot office building located in Fairfield, New Jersey for $3.4
million. The acquisition was financed in part with proceeds from a draw under
the credit facilities and the issuance of 1,979 common units (unaudited).
On May 1, 1998, the Operating Partnership leased a 120,000 square foot
office building located in Hicksville, New York. The lease which expires in
the year 2018 requires fixed monthly rental payments subject to annual
increases and for the pass through to the Company of all operating expenses
and real estate taxes relating to the property (unaudited).
On June 19, 1998, the Operating Partnership acquired a 210,000 square
foot industrial property located in West Caldwell, New Jersey for $9.4
million. The acquisition was financed with proceeds from a draw under the
credit facilities (unaudited).
On June 24, 1998, the Operating Partnership acquired approximately 19.3
acres of land located in Melville, New York for approximately $5.5 million.
The Operating Partnership has entered into contract negotiations to sell this
parcel during the fourth calendar quarter of 1998. The acquisition was
financed with proceeds from a draw under the credit facilities (unaudited).
On July 1, 1998, the Operating Partnership acquired Stamford Towers
located in Stamford, Connecticut for approximately $61.3 million. Stamford
Towers is a Class A office complex consisting of two eleven story towers
totaling approximately 325,000 square feet (unaudited).
During July, 1998, RMI purchased two industrial properties encompassing
approximately 426,000 square feet for approximately $24.75 million. These
acquisitions were financed through draws under the credit facilities
(unaudited).
In addition, the Operating Partnership has invested approximately $72.5
million in certain mortgage indebtedness encumbering five Class A office
buildings located on Long Island encompassing approximately 927,000 square
feet, a 400 acre parcel of land located in New Jersey and, a 586,000 square
foot industrial property in New Jersey. In addition, on March 13, 1997 the
Operating Partnership loaned approximately $17 million to its minority partner
in Omni, its flagship Long Island office property, and effectively increased
its economic interest in the property owning partnership.
9. Fair Value of Financial Instruments
The following disclosures of estimated fair value at December 31, 1997
and 1996 were determined by management, using available market information and
appropriate valuation methodologies. Considerable judgment is necessary to
interpret market data and develop estimated fair value. The use of different
market assumptions and/or estimation methodologies may have a material effect
on the estimated fair value amounts.
Disclosure about fair value of financial instruments is based on
pertinent information available to management as of December 31, 1997.
Although management is not aware of any factors that would significantly
affect the reasonable fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements since that
date and current estimates of fair value may differ significantly from the
amounts presented herein.
Cash equivalents and variable rate debt are carried at amounts which
reasonably approximate their fair values.
Mortgage notes payable have an estimated aggregate fair value which
approximates its carrying value. Estimated fair value is based on interest
rates currently available to the Operating Partnership for issuance of debt
with similar terms and remaining maturities.
10. Rental Income
The Properties are being leased to tenants under operating leases. The
minimum rental amount due under certain leases are generally either subject to
scheduled fixed increases or indexed escalations. In addition, the leases
generally also require that the tenants reimburse the Operating Partnership
for increases in certain operating costs and real estate taxes above base year
costs.
Included in base rents and tenant escalations and reimbursements in the
accompanying statements of operations are amounts from Reckson Executive
Centers, LLC, an equity investee, as follows (in thousands):
Tenant
Escalations and
For the Periods Base Rents Reimbursements
- --------------- ---------- --------------
Six months ended June 30, 1998 (unaudited). $1,263 $277
Year ended December 31, 1997............... $2,154 $441
Year ended December 31, 1996............... $1,898 $417
June 3, 1995 to December 31, 1995.......... $1,095 $100
January 1, 1995 to June 2, 1995............ $675 $48
Expected future minimum rents to be received over the next five years and
thereafter from leases in effect at December 31, 1997 are as follows (in
thousands):
Reckson Executive
Centers, LLC Other Tenants Total
----------------- ------------- -----
1998............... $2,561 $156,909 $159,470
1999............... 2,634 147,473 150,107
2000............... 1,549 133,814 135,363
2001............... 787 109,767 110,554
2002............... 820 94,112 94,932
Thereafter......... 3,814 206,336 210,150
------- -------- --------
$12,165 $848,411 $860,576
======= ======== ========
11. Non-Cash Investing and Financing Activities
Additional supplemental disclosures of non-cash investing and financing
activities are as follows (in thousands):
(1) During 1996, the Operating Partnership purchased eight
office properties located in Westchester County and
associated management and construction operations as
follows:
Cash Paid........................ $58,533
Issuance of 677,534 common units. 9,527
Purchase price holdback.......... 1,700
Mortgage assumed................. 9,366
------
Total purchase price............. $79,126
=======
(2) During 1996, the Operating Partnership acquired three of the Reckson
Option Properties as follows:
Debt assumed and repaid................ $21,750
Issuance of 271,228 common units....... 4,516
-------------
Total purchase price................... $26,266
=============
(3) In January 1997, the Operating Partnership acquired one of the
Reckson Option Properties as follows:
Mortgage assumed...................... $4,667
Issuance of 203,804 common units...... 4,280
Cash paid............................. 61
--------------
Total purchase price.................. $9,008
==============
(4) In November 1997, the Operating Partnership purchased a 181,000
square foot industrial building located in Hauppauge, New York as follows:
Mortgage assumed and repaid........... $3,037
Issuance of 62,905 common units....... 1,578
Cash paid............................. 10
--------------
Total purchase price.................. $4,625
==============
(5) In December 1997, the Operating Partnership purchased a 92,000 square
foot industrial building located in Elmsford, New York as follows:
Issuance of 183,469 common units...... $4,700
===============
On January 2, 1998, the Operating Partnership issued an additional 18,752
common units in connection with the acquisition of a 92,000 square foot
industrial building located in Elmsford, New York for an additional non cash
investment of approximately $.48 million (unaudited).
On January 6, 1998, the Operating Partnership acquired 51 Charles
Lindbergh Boulevard in Uniondale, New York which included the issuance of
513,259 common units for a total non cash investment of $12 million.
Additionally, in connection with the Operating Partnership's investment in the
Morris Companies, the Operating Partnership assumed approximately $10.8
million of indebtedness net of minority partners interest (unaudited).
On April 21, 1998, in connection with the acquisition of the Cappelli
portfolio, the Operating Partnership assumed approximately $45.1 million of
indebtedness. Additionally, in connection with the acquisition of 155 Passaic
Avenue in Fairfield, New Jersey, the Operating Partnership issued 1,979 common
units for a total non cash investment of approximately $50,000 (unaudited).
On June 11, 1998, the Operating Partnership distributed its 95% net non
voting common stock interest in RSI of approximately $3 million to its
partners (unaudited).
12. Commitments and Other Comments
At December 31, 1996, the Operating Partnership had restricted cash of
$1.8 million which collateralized an outstanding letter of credit for an equal
amount.
At December 31, 1997, the Operating Partnership had outstanding undrawn
letters of credit against the Unsecured Credit Facility of approximately $4
million.
At June 30, 1998 the Operating Partnership had outstanding undrawn letters
of credit against the Unsecured Credit Facility of approximately $7.7 million
(unaudited).
In July 1998, the Company announced the formation of a joint venture,
Metropolitan Partners LLC, a Delaware limited liability company ("Metropolitan
Partners"), controlled equally by the Operating Partnership and Crescent Real
Estate Equities Company, a Texas real estate investment trust ("Crescent").
Pursuant to a merger agreement, executed on July 9, 1998 and amended and
restated on August 11, 1998 (the "Merger Agreement") between Metropolitan
Partners, the Company and Crescent and Tower Realty Trust Inc., a Maryland
corporation ("Tower"), Metropolitan Partners agreed, subject to the terms and
conditions of the Merger Agreement, to purchase the common stock of Tower.
Prior to the execution of the Merger Agreement, Metropolitan Partners
identified certain tax issues regarding Tower's operations. Metropolitan
Partners entered into the Merger Agreement only after Tower made detailed
representations and warranties purporting to address these issues. In the
course of due diligence, however, Metropolitan Partners, the Company and
Crescent discovered that these representations and warranties may not be
correct and discussed these concerns with Tower, specifically advising Tower
that they were not terminating the Merger Agreement at that time. Metropolitan
Partners, the Company and Crescent invited Tower to respond to these concerns.
However, on November 2, 1998, Tower filed a compliant in the Supreme Court of
the State of New York alleging Metropolitan Partners, the Company and Crescent
willfully breached the Merger Agreement. Tower is seeking declaratory and
other relief, including damages of not less than $75 million and specific
performance by Metropolitan Partners, the Company and Crescent of their
obligations under the Merger Agreement. Although management believes the
Company has meritorious defenses to this action, there can be no assurance as
to the impact of this action on the Company's operations and/or financial
condition. (unaudited).
During June 1998, the Operating Partnership established a credit facility
with RSI (the "RSI Facility") in the amount of $100 million for RSI's service
sector operations and other general corporate purposes. The Operating
Partnership also established a credit facility with RSI for the funding of
investments of up to $100 million with or in RSVP (the "RSVP Facility")
(unaudited).
13. Quarterly Financial Data (Unaudited)
The following summary represents the Operating Partnership's results of
operations for the first and second quarters of 1998 and each quarter during
1997 and 1996 (in thousands, except unit data):
1998
-------------------------------------
First Quarter Second Quarter
-------------------------------------
Total revenues............. $ 55,062 $66,267
=========== =======
Income before distributions to
preferred unit holders and minority
interests................... $ 12,387 $17,664
Preferred distributions..... --- (4,168)
Minority partners' interest in
consolidated partnerships
income...................... (561) (712)
----------- --------
Net income available to common
unit holders. $ 11,826 $12,784
=========== =========
Net income:
General Partner.......... $ 9,835 $ 10,022
Limited Partners'........ 1,991 2,762
----------- ---------
Total....................... $ 11,826 $ 12,784
=========== =========
Net income per common unit:
General Partner.......... $ .26 $ .25
Limited Partners'........ $ .26 $ .36
Weighted average common units
outstanding:
General Partner.......... 38,182,577 39,636,815
Limited Partners'........ 7,709,228 7,694,349
<TABLE>
<CAPTION>
1997
-------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
--------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
Total revenues..................... $31,670 $36,188 $40,328 $45,162
=============== ============== ============= =================
Income before, minority interests and
extraordinary items............. $8,806 $12,006 $11,545 $13,352
Minority partners' interest in consolidated
partnerships income............. (268) (228) (228) (196)
Extraordinary (loss)............... --- (2,362) (446) --
--------------- -------------- ------------- -----------------
Net income......................... $8,538 $9,416 $10,871 $13,156
=============== ============== ============= =================
Net Income:
General Partner................. $6,760 $7,823 $ 9,188 $10,971
Limited Partners'............... 1,778 1,593 1,683 2,185
--------------- -------------- ------------- ----------------
Total.............................. $8,538 $9,416 $10,871 $13,156
=============== ============== ============= ================
Net income per unit:
General Partner................. $ .25 $ .23 $ .27 $ .31
Limited Partners'............... $ .26 $ .23 $ .24 $ .31
Weighted average common units outstanding:
General Partner................. 26,569,162 34,298,137 34,477,050 35,445,213
Limited Partners'............... 6,960,428 6,974,814 6,974,031 7,153,848
</TABLE>
<TABLE>
<CAPTION>
1996
-------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
--------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C>
Total revenues........................... $19,065 $22,686 $24,712 $29,567
=============== ============== ============== =================
Income before, minority interests and
extraordinary items................... $4,907 $ 6,414 $ 6,397 $ 7,377
Minority partners' interest in consolidated
partnership income ................... (261) (263) (194) (197)
Extraordinary (loss)..................... (1,259) --- --- ---
--------------- -------------- -------------- ------------------
Net income............................... $3,387 $6,151 $ 6,203 $ 7,180
=============== ============== ============== ==================
Net Income:
General Partner....................... $2,403 $4,658 $ 4,687 $ 5,577
Limited Partners'..................... 984 1,493 1,516 1,603
--------------- -------------- -------------- ------------------
Total.................................... $3,387 $6,151 $ 6,203 $ 7,180
=============== ============== ============== ==================
Net income per unit:
General Partner....................... $ .16 $ .23 $ .22 $ .24
Limited Partners'..................... $ .16 $ .23 $ .23 $ .24
Weighted average units outstanding:
General Partner........................ 14,889,612 20,349,210 20,880,474 23,541,600
Limited Partners'.................... 6,064,498 6,486,304 6,721,226 6,737,124
</TABLE>
<TABLE>
<CAPTION>
Reckson Operating Partnership, L. P.
Schedule III-Real Estate and Accumulated Depreciation
December 31, 1997
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Cost Capitalized
Subsequent to Gross Amount at Which
Initial Cost Acquisition Carried at Close of Period
------------ ---------------- --------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements
----------- ----------- ---- ------------- ---- ------------- ---- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an
industrial park)............... B $1,940 $9,955 $--- $8,789 $1,940 $18,744
Airport International Plaza
New York (17 buildings
industrial park)............... 2,616(copyright) 1,263 13,608 --- 9,670 1,263 23,278
County Line Industrial Cent
Huntington, New York
(3 buildings in an industry
park).......................... B 628 3,686 --- 2,438 628 6,124
32 Windsor Place,
Islip, New York................ B 32 321 --- 46 32 367
42 Windsor Place,
Islip, New York................ B 48 327 --- 542 48 869
505 Walt Whitman Rd.,
Huntington, New York........... B 140 42 --- 52 140 94
1170 Northern Blvd., N.
Great Neck, New York........... B 30 99 --- 31 30 130
50 Charles Lindbergh Blvd.,
Mitchel Field, New York ....... 15,479 A 12,089 --- 3,526 --- 15,615
200 Broadhollow Road,
Melville, New York............. 6,649 338 3,354 --- 2,362 338 5,716
48 South Service Road,
Melville, New York............. B 1,652 10,245 --- 3,351 1,652 13,596
395 North Service Road,
Melville, New York............. 9,917 A 15,551 --- 6,475 --- 22,026
6800 Jericho Turnpike,
Syosset, New York.............. 15,001 582 6,566 --- 5,941 582 12,507
6900 Jericho Turnpike,
Syosset, New York.............. 5,279 385 4,228 --- 1,674 385 5,902
300 Motor Parkway,
Hauppauge, New York............ B 276 1,136 --- 828 276 1,964
88 Duryea Road,
Melville, New York............. B 200 1,565 --- 616 200 2,181
210 Blydenburgh Road,
Islandia, New York............. B 11 158 --- 159 11 317
208 Blydenburgh Road,
Islandia, New York............. B 12 192 --- 145 12 337
71 Hoffman Lane,
Islandia, New York............. B 19 260 --- 172 19 432
933 Motor Parkway,
Smithtown, New York............ B 106 375 --- 361 106 736
Column F Column G Column H Column I
-------- -------- -------- --------
Life on which
Accumulated Date of Date of Depreciation
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -------------
<S> <C> <C> <C> <C> <C>
Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an 1961- 1961-
industrial park)............... $20,684 $11,432 1979 1979 10-30 years
Airport International Plaza
New York (17 buildings 1970- 1970-
industrial park)............... 24,541 12,463 1988 1988 10-30 years
County Line Industrial Cent
Huntington, New York
(3 buildings in an industry 1975- 1975-
park).......................... 6,752 3,721 1979 1979 10-30 years
32 Windsor Place,
Islip, New York................ 399 294 1971 1971 10-30 years
42 Windsor Place,
Islip, New York................ 917 615 1972 1972 10-30 years
505 Walt Whitman Rd.,
Huntington, New York........... 234 60 1950 1968 10-30 years
1170 Northern Blvd., N.
Great Neck, New York........... 160 115 1947 1962 10-30 years
50 Charles Lindbergh Blvd.,
Mitchel Field, New York ....... 15,615 7,347 1984 1984 10-30 years
200 Broadhollow Road,
Melville, New York............. 6,054 3,151 1981 1981 10-30 years
48 South Service Road,
Melville, New York............. 15,248 5,895 1986 1986 10-30 years
395 North Service Road,
Melville, New York............. 22,026 8,849 1988 1988 10-30 years
6800 Jericho Turnpike,
Syosset, New York.............. 13,089 7,338 1977 1978 10-30 years
6900 Jericho Turnpike,
Syosset, New York.............. 6,287 2,898 1982 1982 10-30 years
300 Motor Parkway,
Hauppauge, New York............ 2,240 1,101 1979 1979 10-30 years
88 Duryea Road,
Melville, New York............. 2,381 1,027 1980 1980 10-30 years
210 Blydenburgh Road,
Islandia, New York............. 328 243 1969 1969 10-30 years
208 Blydenburgh Road,
Islandia, New York............. 349 284 1969 1969 10-30 years
71 Hoffman Lane,
Islandia, New York............. 451 345 1970 1970 10-30 years
933 Motor Parkway,
Smithtown, New York............ 842 490 1973 1973 10-30 years
</TABLE>
<TABLE>
<CAPTION>
Reckson Operating Partnership, L. P.
Schedule III-Real Estate and Accumulated Depreciation
December 31, 1997 (continued)
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Cost Capitalized
Subsequent to Gross Amount at Which
Initial Cost Acquisition Carried at Close of Period
------------ ---------------- --------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements
----------- ----------- ---- ------------- ---- ------------- ---- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
65 and 85 South Service Road
Plainview, New York............ B 40 218 --- 10 40 228
333 Earl Ovington Blvd., 57,839 A 67,221 --- 15,556 --- 82,777
Mitchel Field, New York (Omni)
135 Fell Court
Islip, New York................ B 462 1,265 --- 48 462 1,313
40 Cragwood Road, B
South Plainfield, New Jersey 708 7,131 17 3,664 725 10,795
110 Marcus Drive,
Huntington, New York........... B 390 1,499 --- 13 390 1,512
333 East Shore Road,
Great Neck, New York........... B A 564 --- 128 --- 692
310 East Shore Road,
Great Neck, New York........... 2,322 485 2,009 --- 265 485 2,274
70 Schmitt Blvd.,
Farmingdale, New York.......... 425 727 3,408 --- 15 727 3,423
19 Nicholas Drive,
Yaphank, New York.............. B 160 7,399 --- --- 160 7,399
1516 Motor Parkway,
Hauppauge, New York............ B 603 6,722 --- 13 603 6,735
125 Baylis Road,
Melville, New York............. B 1,601 8,626 --- 422 1,601 9,048
35 Pinelawn Road,
Melville, New York............. B 999 7,073 --- 1,354 999 8,427
520 Broadhollow Road,
Melville, New York............. B 457 5,572 --- 1,404 457 6,976
1660 Walt Whitman Road,
Melville, New York............. B 370 5,072 --- 389 370 5,461
70 Maxess Road,
Melville, New York............. 1,863 708 1,859 96 3,806 804 5,665
85 Nicon Court,
Hauppauge, New York............ B 797 2,818 --- 54 797 2,872
104 Parkway Drive So.,
Hauppauge, New York............ B 54 804 --- 130 54 934
20 Melville Park Rd.,
Melville, New York............. B 391 2,650 --- 96 391 2,746
105 Price Parkway,
Hauppauge, New York............ B 2,030 6,327 --- 311 2,030 6,638
48 Harbor Park Drive,
Hauppauge, New York............ B 1,304 2,247 --- 89 1,304 2,336
125 Ricefield Lane,
Hauppauge, New York............ B 13 852 --- 330 13 1,182
Column F Column G Column H Column I
-------- -------- -------- --------
Life on which
Accumulated Date of Date of Depreciation
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -------------
<S> <C> <C> <C> <C> <C>
65 and 85 South Service Road
Plainview, New York............ 268 221 1961 1961 10-30 years
333 Earl Ovington Blvd., 82,777 12,371 1990 1995 10-30 years
Mitchel Field, New York (Omni)
135 Fell Court
Islip, New York................ 1,775 238 1965 1992 10-30 years
40 Cragwood Road,
South Plainfield, New Jersey 11,520 5,957 1970 1983 10-30 years
110 Marcus Drive,
Huntington, New York........... 1,902 1,113 1980 1980 10-30 years
333 East Shore Road,
Great Neck, New York........... 692 430 1976 1976 10-30 years
310 East Shore Road,
Great Neck, New York........... 2,759 1,215 1981 1981 10-30 years
70 Schmitt Blvd.,
Farmingdale, New York.......... 4,150 267 1965 1995 10-30 years
19 Nicholas Drive,
Yaphank, New York.............. 7,559 597 1989 1995 10-30 years
1516 Motor Parkway,
Hauppauge, New York............ 7,338 560 1981 1995 10-30 years
125 Baylis Road,
Melville, New York............. 10,649 654 1980 1995 10-30 years
35 Pinelawn Road,
Melville, New York............. 9,426 701 1980 1995 10-30 years
520 Broadhollow Road,
Melville, New York............. 7,433 736 1978 1995 10-30 years
1660 Walt Whitman Road,
Melville, New York............. 5,831 419 1980 1995 10-30 years
70 Maxess Road,
Melville, New York............. 6,469 193 1967 1995 10-30 years
85 Nicon Court,
Hauppauge, New York............ 3,669 191 1984 1995 10-30 years
104 Parkway Drive So.,
Hauppauge, New York............ 988 54 1985 1996 10-30 years
20 Melville Park Rd.,
Melville, New York............. 3,137 105 1965 1996 10-30 years
105 Price Parkway,
Hauppauge, New York............ 8,668 342 1969 1996 10-30 Years
48 Harbor Park Drive,
Hauppauge, New York............ 3,640 116 1976 1996 10-30 Years
125 Ricefield Lane,
Hauppauge, New York............ 1,195 95 1973 1996 10-30 Years
</TABLE>
<TABLE>
<CAPTION>
Reckson Operating Partnership, L. P.
Schedule III-Real Estate and Accumulated Depreciation
December 31, 1997 (continued)
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Cost Capitalized
Subsequent to Gross Amount at Which
Initial Cost Acquisition Carried at Close of Period
------------ ---------------- --------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements
----------- ----------- ---- ------------- ---- ------------- ---- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
110 Ricefield Lane,
Hauppauge, New York............ B 33 1,043 --- 52 33 1,095
120 Ricefield Lane,
Hauppauge, New York............ B 16 1,051 --- 30 16 1,081
135 Ricefield Lane,
Hauppauge, New York............ B 24 906 --- 473 24 1,379
30 Hub Drive,
Huntington, New York........... B 469 1,571 --- 246 469 1,817
60 Charles Lindbergh,
Mitchel Field, New York ....... B A 20,800 --- 1,344 --- 22,144
155 White Plains Rod.,
Tarrytown, New York............ B 1,613 2,542 --- 595 1,613 3,137
2 Church Street,
Tarrytown, New York ........... B 232 1,307 --- 385 232 1,692
235 Main Street,
Tarrytown, New York............ B 955 5,375 --- 562 955 5,937
245 Main Street,
Tarrytown, New York............ B 1,294 7,284 --- 790 1,294 8,074
505 White Plains Road,
Tarrytown, New York............ B 236 1,332 --- 163 236 1,495
555 White Plains Road,
Tarrytown, New York............ B 712 4,133 13 2,658 725 6,791
560 White Plains Road,
Tarrytown, New York............ B 1,553 8,756 --- 1,688 1,553 10,444
580 White Plains Road,
Tarrytown, New York............ 8,811 2,591 14,595 --- 1,347 2,591 15,942
660 White Plains Road,
Tarrytown, New York............ B 3,929 22,640 --- 1,738 3,929 24,378
Landmark Square,
Stamford, CT................... 49,291 11,603 64,466 --- 6,216 11,603 70,682
110 Bi-County Blvd.,
Farmingdale, New York.......... 4,531 2,342 6,665 --- 124 2,342 6,789
RREEF Portfolio,
Hauppauge, New York
(10 additional buildings in
Vanderbuilt Industrial Park) ... B 930 20,619 --- 523 930 21,142
275 Broadhollow Road,
Melville, New York.............. B 5,250 11,761 --- 464 5,250 12,225
One Eagle Rock, East
Hanover, New Jersey............. B 803 7,563 --- 21 803 7,584
710 Bridgeport Avenue,
Shelton, CT..................... B 5,405 21,620 --- 440 5,405 22,060
101 JFK Expressway,
Short Hills, New Jersey ........ B 7,745 43,889 --- 263 7,745 44,152
Column F Column G Column H Column I
-------- -------- -------- --------
Life on which
Accumulated Date of Date of Depreciation
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -------------
<S> <C> <C> <C> <C> <C>
110 Ricefield Lane,
Hauppauge, New York............ 1,128 68 1980 1996 10-30 Years
120 Ricefield Lane,
Hauppauge, New York............ 1,097 44 1983 1996 10-30 Years
135 Ricefield Lane,
Hauppauge, New York............ 1,403 116 1981 1996 10-30 Years
30 Hub Drive,
Huntington, New York........... 2,286 93 1976 1996 10-30 Years
60 Charles Lindbergh,
Mitchel Field, New York ....... 22,144 1,249 1989 1996 10-30 Years
155 White Plains Rod.,
Tarrytown, New York............ 4,750 133 1963 1996 10-30 Years
2 Church Street,
Tarrytown, New York ........... 1,924 94 1979 1996 10-30 Years
235 Main Street,
Tarrytown, New York............ 6,892 374 1974 1996 10-30 Years
245 Main Street,
Tarrytown, New York............ 9,368 507 1983 1996 10-30 Years
505 White Plains Road,
Tarrytown, New York............ 1,731 109 1974 1996 10-30 Years
555 White Plains Road,
Tarrytown, New York............ 7,516 588 1972 1996 10-30 Years
560 White Plains Road,
Tarrytown, New York............ 11,997 837 1980 1996 10-30 Years
580 White Plains Road,
Tarrytown, New York............ 18,533 1,108 1977 1996 10-30 Years
660 White Plains Road,
Tarrytown, New York............ 28,307 1,603 1983 1996 10-30 Years
Landmark Square,
Stamford, CT................... 82,285 2,764 1973-1984 1996 10-30 years
110 Bi-County Blvd.,
Farmingdale, New York.......... 9,131 233 1984 1997 10-30 Years
RREEF Portfolio,
Hauppauge, New York
(10 additional buildings in
Vanderbuilt Industrial Park) ... 22,072 570 1974-1982 1997 10-30 Years
275 Broadhollow Road,
Melville, New York.............. 17,475 300 1970 1997 10-30 Years
One Eagle Rock, East
Hanover, New Jersey............. 8,387 179 1986 1997 10-30 Years
710 Bridgeport Avenue,
Shelton, CT..................... 27,465 506 1971-1979 1977 10-30 Years
101 JFK Expressway,
Short Hills, New Jersey ........ 51,897 978 1981 1997 10-30 Years
Continued-
</TABLE>
<TABLE>
<CAPTION>
Reckson Operating Partnership, L. P.
Schedule III-Real Estate and Accumulated Depreciation
December 31, 1997 (continued)
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Cost Capitalized
Subsequent to Gross Amount at Which
Initial Cost Acquisition Carried at Close of Period
------------ ---------------- --------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements
----------- ----------- ---- ------------- ---- ------------- ---- -------------
<S> <C> <C> <C> <C> <C> C> <C>
10 Rooney Circle,
West Orange, New Jersey ....... B 1,302 4,615 --- 408 1,302 5,023
Executive Hill Office Park,
West Orange, New Jersey ....... B 7,629 31,288 --- 410 7,629 31,698
3 University Plaza,
Hackensack, New Jersey......... B 7,894 11,846 --- 110 7,894 11,956
400 Garden City Plaza,
Garden City, New York.......... B 13,986 10,127 --- 225 13,986 10,352
425 Rabro Drive,
Hauppauge, New York............ B 665 3,489 --- 63 665 3,552
One Paragon Drive,
Montvale, New Jersey........... B 2,773 9,901 --- 91 2,773 9,992
90 Merrick Avenue,
East Meadow, New York.......... B A 19,193 --- 332 --- 19,525
150 Motor Parkway,
Hauppauge, New York............ B 1,114 20,430 --- 839 1,114 21,269
390 Motor Parkway,
Hauppauge, New York............ B 240 4,459 --- 202 240 4,661
Royal Executive Park,
Ryebrook, New York..... ....... B 18,343 55,028 --- 479 18,343 55,507
120 White Plains Road,
Tarrytown, New York............ B 3,355 24,605 --- --- 3,355 24,605
University Square,
Princeton, New Jersey.......... B 8,045 8,888 --- 19 8,045 8,907
100 Andrews Road,
Hicksville, New York........... B 2,812 1,711 --- 5,155 2,812 6,866
2 Macy Road,
Harrison, New York............. B 642 2,131 --- 19 642 2,150
80-100 Grasslands,
Elmsford, New York............. B 1,609 6,823 --- 106 1,609 6,929
65 Marcus Drive,
Melville, New York............. B 295 1,966 --- 865 295 2,831
Land held for development......... B 29,309 --- --- --- 29,309 ---
Development in progress........... B 5,492 10,757 --- 8,915 5,492 19,672
Other property.................... B --- --- --- 1,998 --- 1,998
----------- -------- ----------- ------- ----------- -------- -----------
Total............................ 180,023 173,201 $722,268 $126 $115,633 $173,327 $837,901
----------- -------- ----------- ------- ----------- -------- -----------
----------- -------- ----------- ------- ----------- -------- -----------
Column F Column G Column H Column I
-------- -------- -------- --------
Life on which
Accumulated Date of Date of Depreciation
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -------------
<S> <C> <C> <C> <C> <C>
10 Rooney Circle,
West Orange, New Jersey ....... 6,325 119 1971 1997 10-30 Years
Executive Hill Office Park,
West Orange, New Jersey ....... 39,327 504 1978-1984 1997 10-30 Years
3 University Plaza,
Hackensack, New Jersey......... 19,850 167 1985 1997 10-30 Years
400 Garden City Plaza,
Garden City, New York.......... 24,338 139 1989 1997 10-30 Years
425 Rabro Drive,
Hauppauge, New York............ 4,217 49 1980 1997 10-30 Years
One Paragon Drive,
Montvale, New Jersey........... 12,765 86 1980 1997 10-30 Years
90 Merrick Avenue,
East Meadow, New York.......... 19,525 135 1985 1997 10-30 Years
150 Motor Parkway,
Hauppauge, New York............ 22,383 151 1984 1997 10-30 Years
390 Motor Parkway,
Hauppauge, New York............ 4,901 32 1980 1997 10-30 Years
Royal Executive Park,
Ryebrook, New York..... ....... 73,850 195 1983-1986 1997 10-30 Years
120 White Plains Road,
Tarrytown, New York............ 27,960 68 1984 1997 10-30 Years
University Square,
Princeton, New Jersey.......... 16,952 25 1987 1997 10-30 Years
100 Andrews Road,
Hicksville, New York........... 9,678 137 1954 1996 10-30 Years
2 Macy Road,
Harrison, New York............. 2,792 8 1962 1997 10-30 Years
80-100 Grasslands,
Elmsford, New York............. 8,538 24 1989/1964 1997 10-30 Years
65 Marcus Drive,
Melville, New York............. 3,126 28 1968 1996 10-30 Years
Land held for development......... 29,309 --- N/A variouss N/A
Development in progress........... 25,164 ---
Other property.................... 1,998 89
---------- -- --------
Total............................. $1,011,228 $ 108,652
========== ===========
- ---------------------------
A These land parcels are leased (see Note 4).
B There are no encumbrances on these properties.
C The Encumbrance of $2,616 is related to one property.
The aggregate cost for Federal Income Tax purposes was approximately $932.4 million at December 31, 1997.
</TABLE>
Reckson Operating Partnership, L. P.
And Reckson Group
Schedule III-Real Estate and Accumulated Depreciation (continued)
(in thousands)
The changes in real estate for each of the periods in the three years
ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
January 1, 1997 January 1, 1996 June 3, 1995 January 1, 1995
to to to to
December 31, 1997 December 31, 1996 December 31, 1995 June 2, 1995
----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Real estate balance at beginning of
period................................... $516,768 $288,056 $216,333 $159,693
Improvements................................ 37,778 15,174 3,768 814
Disposal, including write-off of fully
depreciated building improvements........ (154) (936) (3,174) ---
Properties not contributed to the
Operating Partnership ................... --- --- --- (15,133)
Consolidation of Omni (1)................... --- --- --- 70,959
Acquisitions................................ 456,836 214,474 55,054 ---
Cash paid in exchange for properties........ --- --- 16,075 ---
---------- -------- -------- ----------
Balance at end of period.................... $1,011,228 $516,768 $288,056 $216,333
---------- -------- -------- ----------
---------- -------- -------- ----------
The changes in accumulated depreciation, exclusive of amounts relating to equipment, autos, furniture and fixtures, for each of
the periods in the three years ended December 31, 1997 are as follows:
</TABLE>
<TABLE>
<CAPTION>
January 1, 1997 January 1, 1996 June 3, 1995 January 1, 1995
to to to to
December 31, 1997 December 31, 1996 December 31, 1995 June 2, 1995
----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Balance at beginning of period............... $86,344 $72,499 $69,841 $71,596
Depreciation for period...................... 22,442 14,781 5,832 2,453
Disposal, including write-off of fully
depreciated building improvements........... (134) (936) (3,174) ---
Properties not contributed to the
Operating Partnership....................... --- --- --- (7,946)
Consolidation of Omni........................ --- --- --- 3,738
---------- -------- -------- --------
Balance at end of period..................... $108,652 $86,344 $72,499 $69,841
========= ======== ======== ========
(1) The Omni was consolidated as a result of the Operating Partnership purchasing a controlling interest as part of the
Formation Transactions.
</TABLE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the estimated expenses in connection with the
issuance and distribution of the Registrant's securities being registered
hereby, other than underwriting discounts and commissions, all of which will be
borne by the Registrant:
Securities and Exchange Commission registration fee.............. $72,280
Printing and engraving expenses.................................. 200,000
Legal fees and expenses.......................................... 150,000
Accounting fees and expenses..................................... 40,000
Blue Sky fees and expenses....................................... 20,000
Trustee's fees................................................... 10,000
Miscellaneous.................................................... 57,720
--------
Total $550,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Maryland General Corporation Law, as amended from time to time (the
"MGCL"), permits a Maryland corporation to include in its Charter a provision
limiting the liability of its directors and officers to the corporation and its
stockholders for money damages except for liability resulting from (a) actual
receipt of an improper benefit or profit in money, property or services or (b)
active and deliberate dishonesty established by a final judgment as being
material to the cause of action. The Charter of the Company contains such a
provision which eliminates such liability to the maximum extent permitted by
Maryland law.
The Charter of the Company authorizes the Company, to the maximum
extent permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present or former director or officer or (b) any individual who, while a
director of the Company and at the request of the Company, serves or has served
another corporation, real estate investment trust, partnership, joint venture,
trust, employee benefit plan or any other enterprise as a director, officer,
partner or trustee of such corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or other enterprise and
who is made a party to the proceeding by reason of his or her service in that
capacity. The Bylaws of the Company obligate it, to the maximum extent permitted
by Maryland law, to indemnify and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any present or former
director or officer who is made a party to the proceeding by reason of his
service in that capacity or (b) any individual who, while a director of the
Company and at the request of the Company, serves or has served another
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer, partner or
trustee of such corporation, real estate investment trust, partnership, joint
venture, trust, employee benefit plan or other enterprise and who is made a
party to the proceeding by reason of his service in that capacity. The Charter
and Bylaws also permit the Company to indemnify and advance expenses to any
person who served a predecessor of the Company in any of the capacities
described above and to any employee or agent of the Company or a predecessor of
the Company.
The MGCL requires a corporation (unless its charter provides otherwise,
which the Company's Charter does not) to indemnify a director or officer who has
been successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity. The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (a) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (i) was
committed in bad faith or (ii) was the result of active and deliberate
dishonesty, (b) the director or officer actually received an improper personal
benefit in money, property or services or (c) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the act
or omission was unlawful. However, under the MGCL, a Maryland corporation may
not indemnify for an adverse judgment in a suit by or in the right of the
corporation or for a judgment of liability on the basis that personal benefit
was improperly received, unless in either case a court orders indemnification
and then only for expenses. In addition, the MGCL permits a corporation to
advance reasonable expenses, upon the corporation's receipt of (a) a written
affirmation by the director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification by the Company and (b) a
written statement by or on his behalf to repay the amount paid or reimbursed by
the Corporation if it shall ultimately be determined that the standard of
conduct was not met.
The Company has entered into indemnification agreements with each of
its executive officers and directors. The indemnification agreements require,
among other matters, that the Company indemnify its executive officers and
directors to the fullest extent permitted by law and advance to the executive
officers and directors all related expenses, subject to reimbursement if it is
subsequently determined that indemnification is not permitted. Under these
agreements, the Company must also indemnify and advance all expenses incurred by
executive officers and directors seeking to enforce their rights under the
indemnification agreements and may cover executive officers and directors under
the Company's directors' and officers' liability insurance. Although
indemnification agreements offer substantially the same scope of coverage
afforded the Bylaws, they provide greater assurance to directors and executive
officers that indemnification will be available, because, as contracts, they
cannot be modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights they provide.
The Partnership Agreement of the Operating Partnership contains
provisions indemnifying its partners and their officers and directors to the
fullest extent permitted by the Delaware Limited Partnership Act.
ITEM 16. EXHIBITS.
1 -- Form of Underwriting Agreement.(1)
4.1 -- Form of Common Stock Certificate.(2)
4.2 -- Form of Designating Amendment for Preferred Stock.(1)
4.3 -- Form of Preferred Stock Certificate.(1)
4.4 -- Form of Warrant Agreement.(1)
4.5 -- Form of Warrant.(1)
4.6 -- Form of Indenture
5 -- Opinion of Brown & Wood LLP as to the legality of
the Securities.
8 -- Opinion of Brown & Wood LLP as to tax matters.
12.1 -- Calculation of Reckson Associates Realty Corp.
Ratios of Earnings to Combined Fixed Charges.
12.2 -- Calculation of Reckson Associates Realty Corp.
Ratios of Earnings to Fixed Charges and Preferred
Dividends.
12.3 -- Calculation of Reckson Operating Partnership L.P.
Ratios of Earnings to Combined Fixed Charges.
12.4 -- Calculation of Reckson Operating Partnership L.P.
Ratios of Earnings to Fixed Charges and Preferred
Dividends.
23.1 -- Consent of Brown & Wood LLP (included in Exhibits
5 and 8).
23.2 -- Consent of Ernst & Young LLP.
24 -- Power of attorney (included on the signature page of
this Registration Statement).
- ---------------
(1) To be filed by amendment or incorporated by reference in connection
with the offering of Securities.
(2) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) Each Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii)
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) Each Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of such Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, partners and controlling
persons of a Registrant pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a Registrant
of expenses incurred or paid by a director, officer, partner or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, partner or controlling person
in connection with the securities being registered, the applicable Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(d) Each registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305 (b)(2) of the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Reckson
Associates Realty Corp. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Township of Huntington, State of New York, on November
10, 1998.
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Donald J. Rechler
---------------------
Donald J. Rechler
Chairman
KNOWN ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Reckson Associates Realty Corp. hereby severally constitute Scott
H. Rechler, Mitchell D. Rechler and Michael Maturo, and each of them singly, our
true and lawful attorneys with full power to them, and each of them singly, to
sign for us and in our names in the capacities indicated below, the Registration
Statement filed herewith and any and all amendments to said Registration
Statement, and generally to do all such things in our names and in our
capacities as officers and directors to enable Reckson Associates Realty Corp.
to comply with the provisions of the Securities Act of 1933, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Registration Statement and any all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Donald J. Rechler Chairman of the Board, Chief Executive November 11, 1998
- --------------------- Officer and Director (Principal Executive
Donald J. Rechler Officer)
/s/ Scott H. Rechler President, Chief Operating Officer and November 11, 1998
- -------------------- Director
Scott H. Rechler
/s/ Michael Maturo Executive Vice President, Treasurer and November 11, 1998
------------------ Chief Financial Officer (Principal
Michael Maturo Financial Officer and Principal Accounting
Officer)
/s/ Roger M. Rechler Vice-Chairman of the Board and Director November 11, 1998
- --------------------
Roger M. Rechler
/s/ Mitchell D. Rechler Executive Vice President and Director November 11, 1998
- ----------------------
Mitchell D. Rechler
/s/ Harvey R. Blau Director November 11, 1998
------------------
Harvey R. Blau
/s/ Leonard Feinstein Director November 11, 1998
- ---------------------
Leonard Feinstein
/s/ Herve A. Kevenides Director November 11, 1998
- ---------------------
Herve A. Kevenides
/s/ John V.N. Klein Director November 11, 1998
-------------------
John V.N. Klein
Director November 11, 1998
/s/ Lewis S. Ranieri
- --------------------
Lewis S. Ranieri
____________________ Director
Conrad D. Stephenson
</TABLE>
EXHIBIT INDEX
EXHIBITS DESCRIPTION PAGE
- -------- ----------- ----
1 -- Form of Underwriting Agreement.(1)
4.1 -- Form of Common Stock Certificate.(2)
4.2 -- Form of Designating Amendment for Preferred Stock.(1)
4.3 -- Form of Preferred Stock Certificate.(1)
4.4 -- Form of Warrant Agreement.(1)
4.5 -- Form of Warrant.(1)
4.6 -- Form of Indenture
5 -- Opinion of Brown & Wood LLP as to the legality of the
Securities.
8 -- Opinion of Brown & Wood LLP as to tax matters.
12.1 -- Calculation of Reckson Associates Realty Corp. Ratios of
Earnings to Combined Fixed Charges.
12.2 -- Calculation of Reckson Associates Realty Corp. Ratios of
Earnings to Fixed Charges and Preferred Dividends
12.3 -- Calculation of Reckson Operating Partnership L.P. Ratios of
Earnings to Combined Fixed Charges.
12.4 -- Calculation of Reckson Operating Partnership L.P. Ratios of
Earnings to Fixed Charges and Preferred Dividends
23.1 -- Consent of Brown & Wood LLP (included in Exhibits 5 and 8).
23. 2 -- Consent of Ernst & Young LLP.
24 -- Power of attorney (included on the signature page of this
Registration Statement)
- -----------------
(1) To be filed by amendment or incorporated by reference in connection
with the offering of Securities.
(2) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
Exhibit 4.6
RECKSON OPERATING PARTNERSHIP, L.P.,
Issuer
and
RECKSON ASSOCIATES REALTY CORP.,
Guarantor
to
------------------------------------,
Trustee
---------------
INDENTURE
---------------
Dated as of __________ ___, 199_
Debt Securities
Reconciliation and tie between
Trust Indenture Act of 1939 (the "Trust Indenture Act")
and Indenture
Trust Indenture
Act Section Indenture Section
ss.310(a)(1) 607
(a)(2) 607
(b) 608
ss.312(a) 701
(b) 702
(c) 702
ss.313(a) 703
(b)(2) 703
(c) 703
(d) 703
ss.314(a) 704
(c)(1) 102
(c)(2) 102
(e) 102
(f) 102
ss.316(a) (last sentence) 101
(a)(1)(A) 502, 512
(a)(1)(B) 513
(b) 508
ss.317(a)(1) 503
(a)(2) 504
(b) 1003
ss.318(a) 108
- ------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to
and including 317 are a part of and govern every qualified indenture,
whether or not physically contained herein.
Table of Contents
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions.........................................2
Act..........................................................2
Additional Amounts...........................................2
Affiliate....................................................2
Authenticating Agent.........................................3
Authorized Newspaper.........................................3
Bearer Security..............................................3
Board of Directors...........................................3
Board Resolution.............................................3
Business Day.................................................3
Code.........................................................3
Commission...................................................3
Common Stock.................................................3
Consolidated Net Income .....................................3
Conversion Event.............................................3
Corporate Trust Office.......................................4
Corporation..................................................4
Coupon.......................................................4
Currency.....................................................4
CUSIP number.................................................4
Defaulted Interest...........................................4
Dollars or $.................................................4
Euro.........................................................4
European Monetary System.....................................4
European Union...............................................4
Event of Default.............................................4
Foreign Currency.............................................4
GAAP.........................................................4
General Partner..............................................5
Government Obligations.......................................5
Guarantee....................................................5
Guaranteed Securities........................................5
Guarantor....................................................5
Guarantor's Board of Directors...............................5
Guarantor's Board Resolution.................................5
Guarantor's Officers' Certificate............................5
Guarantor Request............................................6
Holder.......................................................6
Indebtedness.................................................6
Indenture....................................................6
Independent Public Accountants...............................6
Indexed Security.............................................6
Interest.....................................................6
Interest Payment Date........................................7
Issuer.......................................................7
Issuer Request or Issuer Order...............................7
Judgment Currency............................................7
Legal Holiday................................................7
Maturity.....................................................7
New York Banking Day.........................................7
Office or Agency.............................................7
Officers' Certificate........................................7
Opinion of Counsel...........................................7
Original Issue Discount Security.............................7
Outstanding..................................................8
Paying Agent.................................................9
Person.......................................................9
Place of Payment.............................................9
Predecessor Security.........................................9
Redemption Date..............................................9
Redemption Price.............................................9
Registered Security..........................................9
Regular Record Date..........................................9
Required Currency............................................9
Responsible Officer.........................................10
Security or Securities......................................10
Security Register and Security Registrar....................10
Special Record Date.........................................10
Stated Maturity.............................................10
Subsidiary..................................................10
Trust Indenture Act.........................................10
Trustee.....................................................10
Undepreciated Real Estate Assets............................10
United States...............................................11
United States Alien.........................................11
Unsecured Debt..............................................11
U.S. Depository or Depository...............................11
Vice President..............................................11
Voting Stock................................................11
Section 102. Compliance Certificates and Opinions...............11
Section 103. Form of Documents Delivered to Trustee.............12
Section 104. Acts of Holders....................................12
Section 105. Notices, etc., to Trustee and Issuer
and Guarantor......................................14
Section 106. Notice to Holders of Securities; Waiver............14
Section 107. Language of Notices................................15
Section 108. Conflict with Trust Indenture Act..................16
Section 109. Effect of Headings and Table of Contents...........16
Section 110. Successors and Assigns.............................16
Section 111. Separability Clause................................16
Section 112. Benefits of Indenture..............................16
Section 113. Governing Law......................................16
Section 114. Legal Holidays.....................................16
Section 115. Counterparts.......................................17
Section 116. Judgment Currency..................................17
ARTICLE TWO
Securities Forms
Section 201. Forms Generally....................................17
Section 202. Form of Trustee's Certificate
of Authentication..................................18
Section 203. Securities in Global Form..........................18
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series...............19
Section 302. Currency; Denominations............................23
Section 303. Execution, Authentication, Delivery and Dating.....23
Section 304. Temporary Securities...............................25
Section 305. Registration, Transfer and Exchange................26
Section 306. Mutilated, Destroyed, Lost and Stolen Securities...29
Section 307. Payment of Interest and Certain Additional
Amounts; Rights to Interest and Certain
Additional Amounts Preserved.......................30
Section 308. Persons Deemed Owners..............................32
Section 309. Cancellation.......................................33
Section 310. Computation of Interest............................33
ARTICLE FOUR
Satisfaction and Discharge of Indenture
Section 401. Satisfaction and Discharge.........................33
Section 402. Defeasance and Covenant Defeasance.................35
Section 403. Application of Trust Money.........................39
ARTICLE FIVE
Remedies
Section 501. Events of Default..................................39
Section 502. Acceleration of Maturity; Rescission
and Annulment......................................41
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee.........................42
Section 504. Trustee May File Proofs of Claim...................43
Section 505. Trustee May Enforce Claims without
Possession of Securities or Coupons................44
Section 506. Application of Money Collected.....................44
Section 507. Limitations on Suits...............................45
Section 508. Unconditional Right of Holders to Receive
Principal and any Premium, Interest and
Additional Amounts ................................45
Section 509. Restoration of Rights and Remedies.................45
Section 510. Rights and Remedies Cumulative.....................46
Section 511. Delay or Omission Not Waiver.......................46
Section 512. Control by Holders of Securities...................46
Section 513. Waiver of Past Defaults............................46
Section 514. Waiver of Stay or Extension Laws...................47
Section 515. Undertaking for Costs..............................47
ARTICLE SIX
The Trustee
Section 601. Certain Rights of Trustee..........................48
Section 602. Notice of Defaults.................................49
Section 603. Not Responsible for Recitals or
Issuance of Securities.............................49
Section 604. May Hold Securities................................50
Section 605. Money Held in Trust................................50
Section 606. Compensation and Reimbursement.....................50
Section 607. Corporate Trustee Required; Eligibility............51
Section 608. Resignation and Removal;
Appointment of Successor...........................51
Section 609. Acceptance of Appointment by Successor.............52
Section 610. Merger, Conversion, Consolidation
or Succession to Business..........................54
Section 611. Appointment of Authenticating Agent................54
ARTICLE SEVEN
Holders Lists and Reports by Trustee, Guarantor and Issuer
Section 701. Issuer and the Guarantor to Furnish
Trustee Names and Addresses of Holders.............56
Section 702. Preservation of Information;
Communications to Holders..........................56
Section 703. Reports by Trustee.................................57
Section 704. Reports by Issuer and Guarantor....................57
ARTICLE EIGHT
Consolidation, Merger and Sales
Section 801. Issuer May Consolidate, Etc.,
Only on Certain Terms..............................58
Section 802. Successor Person Substituted for Issuer............58
Section 803. Guarantor May Consolidate, Etc.,
Only on Certain Terms..............................59
Section 804. Successor Person Substituted for Guarantor.........59
Section 805. Assumption by Guarantor............................60
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures without
Consent of Holders.................................60
Section 902. Supplemental Indentures with
Consent of Holders.................................61
Section 903. Execution of Supplemental Indentures...............63
Section 904. Effect of Supplemental Indentures..................63
Section 905. Reference in Securities to
Supplemental Indentures............................63
Section 906. Conformity with Trust Indenture Act................63
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, any Premium,
Interest and Additional Amounts....................63
Section 1002. Maintenance of Office or Agency....................64
Section 1003. Money for Securities Payments to
Be Held in Trust...................................65
Section 1004. Additional Amounts.................................66
Section 1005. Maintenance of Properties..........................67
Section 1006. Insurance..........................................68
Section 1007. Existence..........................................68
Section 1008. Waiver of Certain Covenants........................68
Section 1009. Issuer Statement as to Compliance;
Notice of Certain Defaults.........................68
Section 1010. Guarantor Statement as to Compliance;
Notice of Certain Defaults.........................69
Section 1011. Payment of Taxes and Other Claims..................69
Section 1012. Provision of Financial Information.................69
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article...........................70
Section 1102. Election to Redeem; Notice to Trustee..............70
Section 1103. Selection by Trustee of Securities
to be Redeemed.....................................70
Section 1104. Notice of Redemption...............................71
Section 1105. Deposit of Redemption Price........................72
Section 1106. Securities Payable on Redemption Date..............73
Section 1107. Securities Redeemed in Part........................73
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article...........................74
Section 1202. Satisfaction of Sinking Fund
Payments with Securities...........................74
Section 1203. Redemption of Securities for Sinking Fund..........75
ARTICLE THIRTEEN
Repayment at the Option of Holders
Section 1301. Applicability of Article...........................75
ARTICLE FOURTEEN
Securities in Foreign Currencies
Section 1401. Applicability of Article...........................76
ARTICLE FIFTEEN
Meetings of Holders of Securities
Section 1501. Purposes for Which Meetings May Be Called..........76
Section 1502. Call, Notice and Place of Meetings.................76
Section 1503. Persons Entitled to Vote at Meetings...............77
Section 1504. Quorum; Action.....................................77
Section 1505. Determination of Voting Rights;
Conduct and Adjournment of Meetings................78
Section 1506. Counting Votes and Recording Action of Meetings....79
ARTICLE SIXTEEN
Guarantee
Section 1601. Guarantee..........................................79
INDENTURE, dated as of _________ __, 199_ (the "Indenture"),
among RECKSON OPERATING PARTNERSHIP, L.P., a limited partnership duly organized
and existing under the laws of Delaware (hereinafter called the "Issuer"),
having its principal executive office located at 225 Broadhollow Road, Melville,
NY 11747, RECKSON ASSOCIATES REALTY CORP., a corporation duly organized and
existing under the laws of the Maryland (hereinafter called the "Guarantor" or
the "General Partner"), having its principal executive office at 225 Broadhollow
Road, Melville, NY 11747, and _____________________, a __________ trust company
duly organized and existing under the laws of the _________ of _____________
(hereinafter called the "Trustee"), having its Corporate Trust Office located at
__________________________.
RECITALS
The execution and delivery by the Issuer of this Indenture to
provide for the issuance from time to time of the Issuer's senior unsecured
debentures, notes or other evidences of Indebtedness (hereinafter called the
"Securities"), unlimited as to principal amount, to bear such rates of interest,
to mature at such time or times, to be issued in one or more series and to have
such other provisions as shall be fixed as hereinafter provided, has been duly
authorized.
All things necessary to make this Indenture a valid agreement
of the Issuer, in accordance with its terms, have been done.
For value received, the execution and delivery by the
Guarantor of this Indenture to provide for the issuance of the Guarantee
provided for herein has been duly authorized. All things necessary to make this
Indenture a valid agreement of the Guarantor, in accordance with its terms, have
been done.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder that are required to
be part of this Indenture and, to the extent applicable, shall be governed by
such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders (as herein defined) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders of
the Securities or of any series thereof and any Coupons (as herein defined) as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
Except as otherwise expressly provided in or pursuant to this
Indenture or unless the context otherwise requires, for all purposes of this
Indenture:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the terms
"generally accepted accounting principles" or "GAAP" with respect to any
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation;
(4) the words "herein", "hereof", "hereto" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(5) the word "or" is always used inclusively (for example, the phrase
"A or B" means "A or B or both", not "either A or B but not both").
Certain terms used principally in certain Articles hereof are defined
in those Articles.
"Act", when used with respect to any Holders, has the meaning
specified in Section 104.
"Additional Amounts" means any additional amounts which are required
hereby or by any Security, under circumstances specified herein or therein, to
be paid by the Issuer in respect of certain taxes, assessments or other
governmental charges imposed on Holders specified therein and which are owing to
such Holders.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have the meanings correlative to
the foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 611 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper, in an official language of
the place of publication or in the English language, customarily published on
each day that is a Business Day in the place of publication, whether or not
published on days that are Legal Holidays in the place of publication, and of
general circulation in each place in connection with which the term is used or
in the financial community of each such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any day that is a Business Day in the
place of publication.
"Bearer Security" means any Security in the form established pursuant
to Section 201 which is payable to bearer.
"Board of Directors" means the board of directors of the General
Partner or any committee of that board duly authorized to act hereunder.
"Board Resolution" means a copy of one or more resolutions, certified
by the Secretary or an Assistant Secretary of the General Partner to have been
duly adopted by the Board of Directors and to be in full force and effect on the
date of such certification, delivered to the Trustee.
"Business Day", with respect to any Place of Payment or other
location, means, unless otherwise specified with respect to any Securities
pursuant to Section 301, any day other than a Saturday, Sunday or other day on
which banking institutions in such Place of Payment or other location are
authorized or obligated by law, regulation or executive order to close.
"Code" means the Internal Revenue Code of 1986, as amended, together
with its predecessor.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Stock" includes any stock of any class of the General Partner
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the General Partner and which is not subject to redemption by the General
Partner.
"Consolidated Net Income" for any period means the amount of
consolidated net income (or loss) of the Issuer and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
"Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country or the confederation which issued
such Foreign Currency and for the settlement of transactions by a central bank
or other public institutions of or within the international banking community
or (ii) the Euro both within the European Monetary System and for the settlement
of transactions by public institutions of or within the European Community.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of original execution of this
Indenture is located at ___________________________.
"Corporation" includes corporations and limited liability companies
and, except for purposes of Article Eight, associations, companies and business
trusts.
"Coupon" means any interest coupon appertaining to a Bearer Security.
"Currency," with respect to any payment, deposit or other transfer in
respect of the principal of or any premium or interest on or any Additional
Amounts with respect to any Security, means Dollars or the Foreign Currency, as
the case may be, in which such payment, deposit or other transfer is required to
be made by or pursuant to the terms hereof or such Security and, with respect to
any other payment, deposit or transfer pursuant to or contemplated by the terms
hereof or such Security, means Dollars.
"CUSIP number" means the alphanumeric designation assigned to a
Security by Standard & Poor's Corporation, CUSIP Service Bureau.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollars" or "$" means a dollar or other equivalent unit of legal
tender for payment of public or private debts in the United States of America.
"Euro" means the European Currency Units as defined and revised from
time to time by the Council of the European Community.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the European
Community.
"European Union" means the European Community, the European Coal and
Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 501.
"Foreign Currency" means any currency, currency unit or composite
currency, including, without limitation, the Euro, issued by the government of
one or more countries other than the United States of America or by any
recognized confederation or association of such governments.
"GAAP" means such accounting principles as are generally accepted in
the United States of America as of the date or time of any computation required
hereunder.
"General Partner" means Reckson Associates Realty Corp., as the sole
general partner of the Issuer.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the other government or
governments in the confederation which issued the Foreign Currency in which the
principal of or any premium or interest on such Security or any Additional
Amounts in respect thereof shall be payable, in each case where the payment or
payments thereunder are supported by the full faith and credit of such
government or governments or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America or such other government or governments, in each case where the timely
payment or payments thereunder are unconditionally guaranteed as a full faith
and credit obligation by the United States of America or such other government
or governments, and which, in the case of (i) or (ii), are not callable or
redeemable at the option of the issuer or issuers 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 or other amount with respect to 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 or other
amount with respect to the Government Obligation evidenced by such depository
receipt.
"Guarantee" means the unconditional guarantee of the payment of the
principal of or any premium or interest on or any Additional Amounts with
respect to the Guaranteed Securities by the Guarantor, as more fully set forth
in Article Sixteen.
"Guaranteed Securities" means a series of Securities made subject to a
Guarantee (as set forth in Article Sixteen) pursuant to Section 301.
"Guarantor" means the Person named as the "Guarantor" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantor" shall mean such successor Person.
"Guarantor's Board of Directors" means the board of directors of the
Guarantor or any committee of that board duly authorized to act generally or in
any particular respect for the Guarantor hereunder.
"Guarantor's Board Resolution" means a copy of one or more
resolutions, certified by the Secretary or an Assistant Secretary of the
Guarantor to have been duly adopted by the Guarantor's Board of Directors and to
be in full force and effect on the date of such certification, delivered to the
Trustee.
"Guarantor's Officers' Certificate" means a certificate signed by the
Chairman, the President or a Vice President and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, that
complies with the requirements of Section 14(e) of the Trust Indenture Act and
is delivered to the Trustee.
"Guarantor Request" and "Guarantor Order" mean, respectively, a
written request or order signed in the name of the Guarantor by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary, of the Guarantor, and delivered to the
Trustee.
"Holder," in the case of any Registered Security, means the Person in
whose name such Security is registered in the Security Register and, in the case
of any Bearer Security, means the bearer thereof and, in the case of any Coupon,
means the bearer thereof.
"Indebtedness" means any indebtedness, whether or not contingent, in
respect of (i) borrowed money evidenced by bonds, notes, debentures or similar
instruments, (ii) indebtedness secured by any mortgage, pledge, lien, charge,
encumbrance or any security interest existing on property, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued or amounts representing the balance deferred
and unpaid of the purchase price of any property except any such balance that
constitutes an accrued expense or trade payable or (iv) any lease of property as
lessee which would be reflected on a balance sheet as a capitalized lease in
accordance with GAAP, in the case of items of indebtedness under (i) through
(iii) above to the extent that any such items (other than letters of credit)
would appear as a liability on a balance sheet in accordance with GAAP, and also
includes, to the extent not otherwise included, any obligation to be liable for,
or to pay, as obligor, guarantor or otherwise (other than for purposes of
collection in the ordinary course of business), indebtedness of another person.
"Indenture" means this instrument as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and, with respect to any
Security, by the terms and provisions of such Security and any Coupon
appertaining thereto established pursuant to Section 301 (as such terms and
provisions may be amended pursuant to the applicable provisions hereof).
"Independent Public Accountants" means accountants or a firm of
accountants that, with respect to the Issuer and the Guarantor and any other
obligor under the Securities or the Coupons, are independent public accountants
within the meaning of the Securities Act of 1933, as amended, and the rules and
regulations promulgated by the Commission thereunder, who may be the independent
public accountants regularly retained by the Issuer or the Guarantor or who may
be other independent public accountants. Such accountants or firm shall be
entitled to rely upon any Opinion of Counsel as to the interpretation of any
legal matters relating to this Indenture or certificates required to be provided
hereunder.
"Indexed Security" means a Security the terms of which provide that
the principal amount thereof payable at Stated Maturity may be more or less than
the principal face amount thereof at original issuance.
"Interest", with respect to any Original Issue Discount Security which
by its terms bears interest only after Maturity, means interest payable after
Maturity and, when used with respect to a Security which provides for the
payment of Additional Amounts pursuant to Section 1004, includes such Additional
Amounts.
"Interest Payment Date", with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Issuer" means the Person named as the "Issuer" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Issuer" shall mean
such successor Person, and any other obligor upon the Securities.
"Issuer Request" and "Issuer Order" mean, respectively, a written
request or order, as the case may be, signed in the name of the Issuer by the
Chairman of the Board of Directors, a Vice Chairman, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the General Partner acting in its capacity as the
general partner of the Issuer, and delivered to the Trustee.
"Judgment Currency" has the meaning specified in Section 116.
"Legal Holiday" means a day that is not a Business Day.
"Maturity", with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and
payable as provided in or pursuant to this Indenture, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption or repurchase,
notice of option to elect repayment or otherwise, and includes the Redemption
Date.
"New York Banking Day" has the meaning specified in Section 116.
"Office" or "Agency", with respect to any Securities, means an office
or agency of the Issuer or the Guarantor maintained or designated in a Place of
Payment for such Securities pursuant to Section 1002 or any other office or
agency of the Issuer maintained or designated for such Securities pursuant to
Section 1002 or, to the extent designated or required by Section 1002 in lieu of
such office or agency, the Corporate Trust Office of the Trustee.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the General Partner in its capacity as sole managing general partner of the
Issuer, that complies with the requirements of Section 314(e) of the Trust
Indenture Act and is delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Issuer or the Guarantor, as the case may be, or
other counsel who shall be reasonably acceptable to the Trustee, that, if
required by the Trust Indenture Act, complies with the requirements of Section
314(e) of the Trust Indenture Act.
"Original Issue Discount Security" means a Security issued pursuant to
this Indenture which provides for declaration of an amount less than the
principal face amount thereof to be due and payable upon acceleration pursuant
to Section 502.
"Outstanding", when used with respect to any Securities, means, as of
the date of determination, all such Securities theretofore authenticated and
delivered under this Indenture, except:
(a) any such Security theretofore cancelled by the Trustee or the
Security Registrar or delivered to the Trustee or the Security
Registrar for cancellation;
(b) any such Security for whose payment at the Maturity thereof
money in the necessary amount has been theretofore deposited
pursuant hereto (other than pursuant to Section 402) with the
Trustee or any Paying Agent (other than the Issuer or the
Guarantor) in trust or set aside and segregated in trust by
the Issuer or the Guarantor (if the Issuer shall act as its
own, or authorize the Guarantor to act as, Paying Agent) for
the Holders of such Securities and any Coupons appertaining
thereto, provided that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee
has been made;
(c) any such Security with respect to which the Issuer or the
Guarantor has effected defeasance pursuant to the terms
hereof, except to the extent provided in Section 402; and
(d) any such Security which has been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture,
unless there shall have been presented to the Trustee proof
satisfactory to it that such Security is held by a bona fide
purchaser in whose hands such Security is a valid obligation
of the Issuer.
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Securities for quorum purposes, (i) the principal amount
of an Original Issue Discount Security that may be counted in making such
determination and that shall be deemed to be Outstanding for such purposes shall
be equal to the amount of the principal thereof that pursuant to the terms of
such Original Issue Discount Security would be declared (or shall have been
declared to be) due and payable upon a declaration of acceleration thereof
pursuant to Section 502 at the time of such determination, and (ii) the
principal amount of any Indexed Security that may be counted in making such
determination and that shall be deemed outstanding for such purpose shall be
equal to the principal face amount of such Indexed Security at original
issuance, unless otherwise provided in or pursuant to this Indenture, and (iii)
the principal amount of a Security denominated in a Foreign Currency shall be
the Dollar equivalent, determined on the date of original issuance of such
Security, of the principal amount (or, in the case of an Original Issue Discount
Security, the Dollar equivalent on the date of original issuance of such
Security of the amount determined as provided in (i) above) of such Security,
and (iv) Securities owned by the Issuer, the Guarantor or any other obligor upon
the Securities or any Affiliate of the Issuer, the Guarantor or such other
obligor, shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in making any such
determination or relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee knows to be so owned shall be so disregarded. Securities
so owned which shall have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee (A)
the pledgee's right so to act with respect to such Securities and (B) that the
pledgee is not the Issuer, the Guarantor or any other obligor upon the
Securities or any Coupons appertaining thereto or an Affiliate of the Issuer,
the Guarantor or such other obligor.
"Paying Agent" means any Person authorized by the Issuer to pay the
principal of, or any premium or interest on, or any Additional Amounts with
respect to, any Security or any Coupon on behalf of the Issuer.
"Person" means any individual, Corporation, partnership, joint
venture, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Place of Payment," with respect to any Security, means the place or
places where the principal of, or any premium or interest on, or any Additional
Amounts with respect to such Security are payable as provided in or pursuant to
this Indenture or such Security.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same Indebtedness as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a lost, destroyed, mutilated or stolen Security or any Security to which
a mutilated, destroyed, lost or stolen Coupon appertains shall be deemed to
evidence the same Indebtedness as the lost, destroyed, mutilated or stolen
Security or the Security to which a mutilated, destroyed, lost or stolen Coupon
appertains.
"Redemption Date", with respect to any Security or portion thereof to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture or such Security.
"Redemption Price", with respect to any Security or portion thereof to
be redeemed, means the price at which it is to be redeemed as determined by or
pursuant to this Indenture or such Security.
"Registered Security" means any Security established pursuant to
Section 201 which is registered in the Security Register.
"Regular Record Date" for the interest payable on any Registered
Security on any Interest Payment Date therefor means the date, if any, specified
in or pursuant to this Indenture or such Security as the "Regular Record Date".
"Required Currency" has the meaning specified in Section 116.
"Responsible Officer" means any officer of the Trustee in its
Corporate Trust Office and also means, with respect to a particular corporate
trust matter, any other officer of the Trustee to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Security" or "Securities" means any note or notes, bond or bonds,
debenture or debentures, or any other evidences of Indebtedness, as the case may
be, authenticated and delivered under this Indenture; provided, however, that,
if at any time there is more than one Person acting as Trustee under this
Indenture, "Securities", with respect to any such Person, shall mean Securities
authenticated and delivered under this Indenture, exclusive, however, of
Securities of any series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest on any
Registered Security means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", with respect to any Security or any installment of
principal thereof or interest thereon or any Additional Amounts with respect
thereto, means the date established by or pursuant to this Indenture or such
Security as the fixed date on which the principal of such Security or such
installment of principal or interest is, or such Additional Amounts are, due and
payable.
"Subsidiary" means any entity of which at the time of determination
the Issuer or one or more subsidiaries owns or controls directly or indirectly
more than 50% of the shares of Voting Stock.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean each Person
who is then a Trustee hereunder; provided, however, that if at any time there is
more than one such Person, "Trustee" shall mean each such Person and as used
with respect to the Securities of any series shall mean the Trustee with respect
to the Securities of such series.
"Undepreciated Real Estate Assets" means as of any date the cost
(original cost plus capital improvements) of real estate assets of the Issuer
and its Subsidiaries on such date, before depreciation and amortization,
determined on a consolidated basis in accordance with GAAP.
"United States," except as otherwise provided in or pursuant to this
Indenture or any Security, means the United States of America (including the
states thereof and the District of Columbia), its territories and possessions
and other areas subject to its jurisdiction.
"United States Alien," except as otherwise provided in or pursuant to
this Indenture or any Security, means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
non-resident alien fiduciary of a foreign estate or trust.
"Unsecured Debt" means Indebtedness of the Issuer or any Subsidiary
which is not secured by any mortgage, lien, charge, pledge or security interest
of any kind upon any of the properties owned by the Issuer or any of its
Subsidiaries.
"U.S. Depository" or "Depository" means, with respect to any Security
issuable or issued in the form of one or more global Securities, the Person
designated as U.S. Depository or Depository by the Issuer in or pursuant to this
Indenture, which Person must be, to the extent required by applicable law or
regulation, a clearing agency registered under the Securities Exchange Act of
1934, as amended, and, if so provided with respect to any Security, any
successor to such Person. If at any time there is more than one such Person,
"U.S. Depository" or "Depository" shall mean, with respect to any Securities,
the qualifying entity which has been appointed with respect to such Securities.
"Vice President," when used with respect to a vice president of the
General Partner acting in its capacity as the sole managing general partner of
the Issuer, or with respect to the Guarantor or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "Vice President".
"Voting Stock" means stock of a Corporation of the class or classes
having general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of such Corporation
provided that, for the purposes hereof, stock which carries only the right to
vote conditionally on the happening of an event shall not be considered voting
stock whether or not such event shall have happened.
Section 102. Compliance Certificates and Opinions.
Except as otherwise expressly provided in this Indenture, upon any
application or request by the Issuer or the Guarantor to the Trustee to take any
action under any provision of this Indenture, the Issuer or the Guarantor, as
the case may be, shall furnish to the Trustee an Officers' Certificate or a
Guarantor's Officers' Certificate, as the case may be, stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents or any of them is specifically required
by any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Issuer or the
Guarantor may be based, insofar as it relates to legal matters, upon an Opinion
of Counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the opinion with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Issuer or the
Guarantor, as the case may be, stating that the information with respect to such
factual matters is in the possession of the Issuer or the Guarantor, as the case
may be, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Security, they may, but need not, be
consolidated and form one instrument.
Section 104. Acts of Holders.
(1) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by or pursuant to this Indenture to be given or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing. If, but only if, Securities of a series are issuable as
Bearer Securities, any request, demand, authorization, direction, notice,
consent, waiver or other action provided in or pursuant to this Indenture to be
given or taken by Holders of Securities of such series may, alternatively, be
embodied in and evidenced by the record of Holders of Securities of such series
voting in favor thereof, either in person or by proxies duly appointed in
writing, at any meeting of Holders of Securities of such series duly called and
held in accordance with the provisions of Article Fifteen, or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
or record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Issuer and the Guarantor. Such instrument or instruments and
any such record (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders signing such instrument
or instruments or so voting at any such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the holding by any
Person of a Security, shall be sufficient for any purpose of this Indenture and
(subject to Section 315 of the Trust Indenture Act) conclusive in favor of the
Trustee and the Issuer and the Guarantor and any agent of the Trustee or the
Issuer and the Guarantor, if made in the manner provided in this Section. The
record of any meeting of Holders of Securities shall be proved in the manner
provided in Section 1506.
Without limiting the generality of this Section 104, unless otherwise
provided in or pursuant to this Indenture, a Holder, including a U.S. Depository
that is a Holder of a global Security, may make, give or take, by a proxy, or
proxies, duly appointed in writing, any request, demand, authorization,
direction, notice, consent, waiver or other Act provided in or pursuant to this
Indenture to be made, given or taken by Holders, and a U.S. Depository that is a
Holder of a global Security may provide its proxy or proxies to the beneficial
owners of interests in any such global Security through such U.S. Depository's
standing instructions and customary practices.
The Trustee shall fix a record date for the purpose of determining the
Persons who are beneficial owners of interest in any permanent global Security
held by a U.S. Depository entitled under the procedures of such U.S. Depository
to make, give or take, by a proxy or proxies duly appointed in writing, any
request, demand, authorization, direction, notice, consent, waiver or other Act
provided in or pursuant to this Indenture to be made, given or taken by Holders.
If such a record date is fixed, the Holders on such record date or their duly
appointed proxy or proxies, and only such Persons, shall be entitled to make,
give or take such request, demand, authorization, direction, notice, consent,
waiver or other Act, whether or not such Holders remain Holders after such
record date. No such request, demand, authorization, direction, notice, consent,
waiver or other Act shall be valid or effective if made, given or taken more
than 90 days after such record date.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient and in accordance with such reasonable rules as the Trustee may
determine; and the Trustee may in any instance require further proof with
respect to any of the matters referred to in this Section.
(3) The ownership, principal amount and serial numbers of Registered
Securities held by any Person, and the date of the commencement and the date of
the termination of holding the same, shall be proved by the Security Register.
(4) The ownership, principal amount and serial numbers of Bearer
Securities held by any Person, and the date of the commencement and the date of
the termination of holding the same, may be proved by the production of such
Bearer Securities or by a certificate executed, as depositary, by any trust
company, bank, banker or other depositary reasonably acceptable to the Issuer
and the Guarantor, wherever situated, if such certificate shall be deemed by the
Issuer and the Trustee to be satisfactory, showing that at the date therein
mentioned such Person had on deposit with such depositary, or exhibited to it,
the Bearer Securities therein described; or such facts may be proved by the
certificate or affidavit of the Person holding such Bearer Securities, if such
certificate or affidavit is deemed by the Trustee to be satisfactory. The
Trustee, the Guarantor and the Issuer may assume that such ownership of any
Bearer Security continues until (1) another certificate or affidavit bearing a
later date issued in respect of the same Bearer Security is produced, or (2)
such Bearer Security is produced to the Trustee by some other Person, or (3)
such Bearer Security is surrendered in exchange for a Registered Security, or
(4) such Bearer Security is no longer Outstanding. The ownership, principal
amount and serial numbers of Bearer Securities held by the Person so executing
such instrument or writing and the date of the commencement and the date of the
termination of holding the same may also be proved in any other manner which the
Issuer and the Trustee deem sufficient.
(5) If the Issuer or the Guarantor shall solicit from the Holders of
any Registered Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Issuer or the Guarantor, as the case may be,
may at its option (but is not obligated to), by Board Resolution or Guarantor's
Board Resolution, as the case may be, fix in advance a record date for the
determination of Holders of Registered Securities entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act. If such
a record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such record date, but
only the Holders of Registered Securities of record at the close of business on
such record date shall be deemed to be Holders for the purpose of determining
whether Holders of the requisite proportion of Outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
Outstanding Securities shall be computed as of such record date; provided that
no such authorization, agreement or consent by the Holders of Registered
Securities shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.
(6) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or suffered to be done by the Trustee, any Security
Registrar, any Paying Agent, the Guarantor or the Issuer in reliance thereon,
whether or not notation of such Act is made upon such Security.
Section 105. Notices, etc., to Trustee and Issuer and Guarantor.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, the Guarantor or the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office, or
(2) the Issuer or the Guarantor by the Trustee or any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Issuer or the Guarantor, as the case may be, addressed to the attention of
its Treasurer at the address of its principal office specified in the first
paragraph of this instrument or at any other address previously furnished
in writing to the Trustee by the Issuer or the Guarantor, as the case may
be.
Section 106. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided in or pursuant to this
Indenture, where this Indenture provides for notice to Holders of Securities of
any event,
(1) such notice shall be sufficiently given to Holders of Registered
Securities if in writing and mailed, first-class postage prepaid, to each
Holder of a Registered Security affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
notice; and
(2) such notice shall be sufficiently given to Holders of Bearer
Securities, if any, if published in an Authorized Newspaper in The City of
New York and, if such Securities are then listed on any stock exchange
outside the United States, in an Authorized Newspaper in such city as the
Issuer shall advise the Trustee that such stock exchange so requires, on a
Business Day at least twice, the first such publication to be not earlier
than the earliest date and the second such publication not later than the
latest date prescribed for the giving of such notice.
In any case where notice to Holders of Registered Securities is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of Registered
Securities or the sufficiency of any notice to Holders of Bearer Securities
given as provided herein. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided. In
the case by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearers Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient notice to such
Holders for every purpose hereunder. Neither failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect in
any notice so published, shall affect the sufficiency of any notice mailed to
Holders of Registered Securities as provided above.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
Section 107. Language of Notices.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that, if the Issuer or the Guarantor, as the case may
be, so elects, any published notice may be in an official language of the
country of publication.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any duties
under any required provision of the Trust Indenture Act imposed hereon by
Section 318(c) thereof, such required provision shall control.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not. All covenants and
agreements in this Indenture by the Guarantor shall bind its successors and
assigns, whether so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture, any Security or any Coupon
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture, any Security or any Coupon, express or
implied, shall give to any Person, other than the parties hereto, any Security
Registrar, any Paying Agent and their successors hereunder and the Holders of
Securities or Coupons, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
Section 113. Governing Law.
This Indenture, the Securities and any Coupons shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made or instruments entered into and, in each case, performed in said
state.
Section 114. Legal Holidays.
Unless otherwise specified in or pursuant to this Indenture or any
Securities, in any case where any Interest Payment Date, Stated Maturity or
Maturity of any Security, or the last date on which a Holder has the right to
convert or exchange Securities of a series that are convertible or exchangeable,
shall be a Legal Holiday at any Place of Payment, then (notwithstanding any
other provision of this Indenture, any Security or any Coupon other than a
provision in any Security or Coupon that specifically states that such provision
shall apply in lieu hereof) payment need not be made at such Place of Payment on
such date, and such Securities need not be converted or exchanged on such date
but such payment may be made, and such Securities may be converted or exchanged,
on the next succeeding day that is a Business Day at such Place of Payment with
the same force and effect as if made on the Interest Payment Date or at the
Stated Maturity or Maturity or on such last day for conversion or exchange, and
no interest shall accrue on the amount payable on such date or at such time for
the period from and after such Interest Payment Date, Stated Maturity, Maturity
or last day for conversion or exchange, as the case may be, to the next
succeeding Business Day.
Section 115. Counterparts.
This Indenture may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
Section 116. Judgment Currency.
The Issuer agrees, to the fullest extent that it may effectively do so
under applicable law, that (a) if for the purpose of obtaining judgment in any
court it is necessary to convert the sum due in respect of the principal of, or
premium or interest, if any, or Additional Amounts on the Securities of any
series (the "Required Currency") into a currency in which a judgment will be
rendered (the "Judgment Currency"), the rate of exchange used shall be the rate
at which in accordance with normal banking procedures the Trustee could purchase
in The City of New York the Required Currency with the Judgment Currency on the
New York Banking Day preceding that on which a final unappealable judgment is
given and (b) its obligations under this Indenture to make payments in the
Required Currency (i) shall not be discharged or satisfied by any tender, or any
recovery pursuant to any judgment (whether or not entered in accordance with
clause (a)), in any currency other than the Required Currency, except to the
extent that such tender or recovery shall result in the actual receipt, by the
payee, of the full amount of the Required Currency expressed to be payable in
respect of such payments, (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the Required
Currency the amount, if any, by which such actual receipt shall fall short of
the full amount of the Required Currency so expressed to be payable and (iii)
shall not be affected by judgment being obtained for any other sum due under
this Indenture. For purposes of the foregoing, "New York Banking Day" means any
day except a Legal Holiday in The City of New York.
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally.
Each Registered Security, Bearer Security, Coupon and temporary or
permanent global Security issued pursuant to this Indenture shall be in the form
established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, shall have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by or pursuant
to this Indenture or any indenture supplemental hereto and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Security or Coupon as evidenced by their execution of
such Security or Coupon.
Unless otherwise provided in or pursuant to this Indenture or any
Securities, the Securities shall be issuable in registered form without Coupons
and shall not be issuable upon the exercise of warrants.
Definitive Securities and definitive Coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers of the Issuer executing such
Securities or Coupons, as evidenced by their execution of such Securities or
Coupons.
Section 202. Form of Trustee's Certificate of Authentication.
Subject to Section 611, the Trustee's certificate of authentication
shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
_____________________________,
as Trustee
By___________________________
Authorized Officer
Section 203. Securities in Global Form.
Unless otherwise provided in or pursuant to this Indenture or any
Securities, the Securities shall not be issuable in temporary or permanent
global form. If Securities of a series shall be issuable in global form, any
such Security may provide that it or any number of such Securities shall
represent the aggregate amount of all Outstanding Securities of such series (or
such lesser amount as is permitted by the terms thereof) from time to time
endorsed thereon and may also provide that the aggregate amount of Outstanding
Securities represented thereby may from time to time be increased or reduced to
reflect exchanges. Any endorsement of any Security in global form to reflect the
amount, or any increase or decrease in the amount, or changes in the rights of
Holders, of Outstanding Securities represented thereby shall be made in such
manner and by such Person or Persons as shall be specified therein or in the
Issuer Order to be delivered pursuant to Section 303 or 304 with respect
thereto. Subject to the provisions of Section 303 and, if applicable, Section
304, the Trustee shall deliver and redeliver any Security in permanent global
form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Issuer Order. If an Issuer Order pursuant
to Section 303 or 304 has been, or simultaneously is, delivered, any
instructions by the Issuer with respect to a Security in global form shall be in
writing but need not be accompanied by or contained in an Officers' Certificate
and need not be accompanied by an Opinion of Counsel.
Notwithstanding the provisions of Section 307, unless otherwise
specified in or pursuant to this Indenture or any Securities, payment of
principal of, any premium and interest on, and any Additional Amounts in respect
of, any Security in temporary or permanent global form shall be made to the
Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided
in the preceding paragraph, the Issuer, the Trustee and any agent of the Issuer
and the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a global Security (i) in the case of a
global Security in registered form, the Holder of such global Security in
registered form, or (ii) in the case of a global Security in bearer form, the
Person or Persons specified pursuant to Section 301.
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued in one or more series.
With respect to any Securities to be authenticated and delivered
hereunder, there shall be established in or pursuant to a Board Resolution and
set forth in an Officers' Certificate, or established in one or more indentures
supplemental hereto,
(1) the title of the Securities of the series (which shall distinguish
the Securities of such series from all other series of Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series that may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 905 or 1107);
(3) the percentage of the principal amount at which the Securities of
the series will be issued and, if other than the principal amount thereof,
the portion of the principal amount thereof payable upon declaration of
acceleration of maturity thereof;
(4) the date or dates, or the method by which such date or dates will
be determined, on which the principal of the Securities of the series shall
be payable;
(5) the rate or rates at which the Securities of the series shall bear
interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be determined, the Interest
Payment Dates on which such interest will be payable and the Regular Record
Date, if any, for the interest payable on any Registered Security on any
Interest Payment Date, or the method by which such date shall be
determined, the person 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;
(6) the place or places, if any, other than or in addition to the City
of _________, ________________, where the principal of (and premium, if
any), interest, if any, on, and Additional Amounts, if any, payable in
respect of, Securities of the series shall be payable, any Registered
Securities of the series may be surrendered for registration of transfer or
exchange and notices or demands to or upon the Issuer in respect of the
Securities of the series and this Indenture may be served;
(7) the period or periods within which, the price or prices at which,
the currency or currencies, currency unit or units or composite currency or
currencies in which, and other terms and conditions upon which Securities
of the series may be redeemed, in whole or in part, at the option of the
Issuer, if the Issuer is to have the option;
(8) the obligation, if any, of the Issuer to redeem, repay or purchase
Securities of the series pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or periods
within which or the date or dates on which, the price or prices at which,
the currency or currencies, currency unit or units or composite currency or
currencies in which, and other terms and conditions upon which Securities
of the series shall be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Securities of the series
shall be issuable and, if other than denominations of $5,000 and any
integral multiple thereof, the denomination or denominations in which any
Bearer Securities of the series shall be issuable;
(10) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(11) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series that shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502
or the method by which such portion shall be determined;
(12) if other than Dollars, the Foreign Currency or Currencies in
which payment of the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the Securities of the series shall be
payable or in which the Securities of the series shall be denominated;
(13) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on the Securities of the series may be determined
with reference to an index, formula or other method (which index, formula
or method may be based, without limitation, on one or more currencies,
currency units, composite currencies, commodities, equity indices or other
indices), and the manner in which such amounts shall be determined;
(14) whether the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the Securities of the series are to be
payable, at the election of the Issuer or a Holder thereof, in a currency
or currencies, currency unit or units or composite currency or currencies
other than that in which such Securities are denominated or stated to be
payable, the period or periods within which, and the terms and conditions
upon which, such election may be made, and the time and manner of, and
identity of the exchange rate agent with responsibility for, determining
the exchange rate between the currency or currencies, currency unit or
units or composite currency or currencies in which such Securities are
denominated or stated to be payable and the currency or currencies,
currency unit or units or composite currency or currencies in which such
Securities are to be so payable;
(15) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be
specified;
(16) any deletions from, modifications of or additions to the Events
of Default or covenants of the Issuer with respect to Securities of the
series, whether or not such Events of Default or covenants are consistent
with the Events of Default or covenants set forth herein;
(17) whether Securities of the series are to be issuable as Registered
Securities, Bearer Securities (with or without coupons) or both, any
restrictions applicable to the offer, sale or delivery of Bearer Securities
and the terms upon which Bearer Securities of the series may be exchanged
for Registered Securities of the series and vice versa (if permitted by
applicable laws and regulations), whether any Securities of the series are
to be issuable initially in temporary global form and whether any
Securities of the series are to be issuable in permanent global form with
or without coupons and, if so, whether beneficial owners of interests in
any such permanent global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section 305, and, if
Registered Securities of the series are to be issuable as a global
Security, the identity of the depositary for such series;
(18) the date as of which any Bearer Securities of the series and any
temporary global Security representing Outstanding Securities of the series
shall be dated if other than the date of original issuance of the first
Security of the series to be issued;
(19) the Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, the manner in
which, or the Person to whom, any interest on any Bearer Security of the
series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest payable on a
temporary global Security on an Interest Payment Date will be paid if other
than in the manner provided in Section 304;
(20) if the Securities of such series are to be Guaranteed Securities;
(21) if either or both of Section 402(2) relating to defeasance or
Section 402(3) relating to covenant defeasance shall not be applicable to
the Securities of such series or any provisions in modification of, in
addition to or in lieu of any of the provisions of Article Four;
(22) if the 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;
(23) if the Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Securities to be
authenticated and delivered;
(24) whether and under what circumstances the Issuer will pay
Additional Amounts on the Securities of the series to any Holder who is not
a United States person (including any modification to the definition of
such term) in respect of any tax, assessment or governmental charge and, if
so, whether the Issuer will have the option to redeem such Securities
rather than pay such Additional Amounts (and the terms of any such option);
(25) with respect to any Securities that provide for optional
redemption or prepayment upon the occurrence of certain events (such as a
change of control of the Issuer), (i) the possible effects of such
provisions on the market price of the Issuer's or the General Partner's
securities or in deterring certain mergers, tender offers or other takeover
attempts, and the intention of the Issuer to comply with the requirements
of Rule 14e-1 under the Exchange Act and any other applicable securities
laws in connection with such provisions; (ii) whether the occurrence of the
specified events may give rise to cross-defaults on other indebtedness such
that payment on such Securities may be effectively subordinated; and (iii)
the existence of any limitation on the Issuer's financial or legal ability
to repurchase such Securities upon the occurrence of such an event (or, if
true, the lack of assurance that such a repurchase can be effected) and the
impact, if any, under the Indenture of such a failure, including whether
and under what circumstances such a failure may constitute an Event of
Default; and
(26) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and all Coupons, if any, appertaining
to Bearer Securities of such series shall be substantially identical except as
to Currency of payments due thereunder, denomination and the rate of interest,
or method of determining the rate of interest, if any, Maturity, and the date
from which interest, if any, shall accrue and except as may otherwise be
provided by the Issuer in or pursuant to the Board Resolution and set forth in
the Officers' Certificate or in any indenture or indentures supplemental hereto
pertaining to such series of Securities. The terms of the Securities of any
series may provide, without limitation, that the Securities shall be
authenticated and delivered by the Trustee on original issue from time to time
upon telephonic or written order of persons designated in the Officers'
Certificate or supplemental indenture (telephonic instructions to be promptly
confirmed in writing by such person) and that such persons are authorized to
determine, consistent with such Officers' Certificate or any applicable
supplemental indenture, such terms and conditions of the Securities of such
series as are specified in such Officers' Certificate or supplemental indenture.
All Securities of any one series need not be issued at the same time and, unless
otherwise so provided by the Issuer, a series may be reopened for issuances of
additional Securities of such series or to establish additional terms of such
series of Securities.
If any of the terms of the Securities of any series shall be
established by action taken by or pursuant to a Board Resolution, the Board
Resolution shall be delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
Section 302. Currency; Denominations.
Unless otherwise provided in or pursuant to this Indenture, the
principal of, any premium and interest on and any Additional Amounts with
respect to the Securities shall be payable in Dollars. Unless otherwise provided
in or pursuant to this Indenture, Registered Securities denominated in Dollars
shall be issuable in registered form without Coupons in denominations of $1,000
and any integral multiple thereof, and the Bearer Securities denominated in
Dollars shall be issuable in the denomination of $5,000. Securities not
denominated in Dollars shall be issuable in such denominations as are
established with respect to such Securities in or pursuant to this Indenture.
Section 303. Execution, Authentication, Delivery and Dating.
Securities shall be executed on behalf of the Issuer by the General
Partner acting in its capacity as sole managing general partner of the Issuer by
the General Partner's Chairman of the Board, one of its Vice Chairmen, its
President, its Treasurer or one of its Vice Presidents under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. Coupons shall be executed on behalf of the Issuer by the General
Partner acting in its capacity as sole managing general partner of the Issuer by
the General Partner's Treasurer or any Assistant Treasurer. The signature of any
of these officers on the Securities or any Coupons appertaining thereto may be
manual or facsimile.
Securities and any Coupons appertaining thereto bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Issuer shall bind the Issuer, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such
Securities or Coupons.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Securities, together with any Coupons
appertaining thereto, executed by the Issuer, to the Trustee for authentication
and, provided that the Board Resolution and Officers' Certificate or
supplemental indenture or indentures with respect to such Securities referred to
in Section 301 and an Issuer Order for the authentication and delivery of such
Securities have been delivered to the Trustee, the Trustee in accordance with
the Issuer Order and subject to the provisions hereof and of such Securities
shall authenticate and deliver such Securities. In authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities and any Coupons appertaining thereto, the Trustee
shall be entitled to receive, and (subject to Sections 315(a) through 315(d) of
the Trust Indenture Act) shall be fully protected in relying upon,
(1) an Opinion of Counsel to the effect that:
(a) the form or forms and terms of such Securities and Coupons, if
any, have been established in conformity with the provisions of this
Indenture;
(b) all conditions precedent to the authentication and delivery of
such Securities and Coupons, if any, appertaining thereto, have been
complied with and that such Securities, and Coupons, when completed by
appropriate insertions, executed under the Issuer's corporate seal and
attested by duly authorized officers of the Issuer, delivered by duly
authorized officers of the Issuer to the Trustee for authentication
pursuant to this Indenture, and authenticated and delivered by the Trustee
and issued by the Issuer in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute legally valid and
binding obligations of the Issuer, enforceable against the Issuer in
accordance with their terms, except as enforcement thereof may be subject
to or limited by bankruptcy, insolvency, reorganization, moratorium,
arrangement, fraudulent conveyance, fraudulent transfer or other similar
laws relating to or affecting creditors' rights generally, and subject to
general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law) and will entitle the Holders thereof
to the benefits of this Indenture, including the Guarantee; such Opinion of
Counsel need express no opinion as to the availability of equitable
remedies;
(c) all laws and requirements in respect of the execution and delivery
by the Issuer of such Securities and Coupons, if any, have been complied
with; and
(d) this Indenture has been qualified under the Trust Indenture Act;
and
(2) an Officers' Certificate and a Guarantor's Officers' Certificate,
in each case stating that, to the best knowledge of the Persons executing such
certificate, no event which is, or after notice or lapse of time would become,
an Event of Default with respect to any of the Securities shall have occurred
and be continuing.
If all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver an Opinion of Counsel and an Officers'
Certificate at the time of issuance of each Security, but such opinion and
certificate, with appropriate modifications, shall be delivered at or before the
time of issuance of the first Security of such series. After any such first
delivery, any separate request by the Issuer that the Trustee authenticate
Securities of such series for original issue will be deemed to be a
certification by the Issuer that all conditions precedent provided for in this
Indenture relating to authentication and delivery of such Securities continue to
have been complied with.
The Trustee shall not be required to authenticate or to cause an
Authenticating Agent to authenticate any Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee or if the Trustee,
being advised by counsel, determines that such action may not lawfully be taken.
Each Registered Security shall be dated the date of its
authentication. Each Bearer Security and any Bearer Security in global form
shall be dated as of the date specified in or pursuant to this Indenture.
No Security or Coupon appertaining thereto shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Security a certificate of authentication substantially in
the form provided for in Section 202 or 611 executed by or on behalf of the
Trustee or by the Authenticating Agent by the manual signature of one of its
authorized officers. Such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder. Except as permitted by Section 306 or 307, the Trustee
shall not authenticate and deliver any Bearer Security unless all Coupons
appertaining thereto then matured have been detached and cancelled.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Issuer may
execute and deliver to the Trustee and, upon Issuer Order, the Trustee shall
authenticate and deliver, in the manner provided in Section 303, temporary
Securities in lieu thereof which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized in or pursuant to this
Indenture, in bearer form with one or more Coupons or without Coupons and with
such appropriate insertions, omissions, substitutions and other variations as
the officers of the Issuer executing such Securities may determine, as
conclusively evidenced by their execution of such Securities. Such temporary
Securities may be in global form.
Except in the case of temporary Securities in global form, which shall
be exchanged in accordance with the provisions thereof, if temporary Securities
are issued, the Issuer shall cause definitive Securities to be prepared without
unreasonable delay. After the preparation of definitive Securities of the same
series and containing terms and provisions that are identical to those of any
temporary Securities, such temporary Securities shall be exchangeable for such
definitive Securities upon surrender of such temporary Securities at an Office
or Agency for such Securities, without charge to any Holder thereof. Upon
surrender for cancellation of any one or more temporary Securities (accompanied
by any unmatured Coupons appertaining thereto), the Issuer shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of authorized denominations of the same series
and containing identical terms and provisions; provided, however, that no
definitive Bearer Security, except as provided in or pursuant to this Indenture,
shall be delivered in exchange for a temporary Registered Security; and
provided, further, that a definitive Bearer Security shall be delivered in
exchange for a temporary Bearer Security only in compliance with the conditions
set forth in or pursuant to this Indenture. Unless otherwise provided in or
pursuant to this Indenture with respect to a temporary global Security, until so
exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series.
Section 305. Registration, Transfer and Exchange.
With respect to the Registered Securities of each series, if any, the
Issuer shall cause to be kept a register (each such register being herein
sometimes referred to as the "Security Register") at an Office or Agency for
such series in which, subject to such reasonable regulations as it may
prescribe, the Issuer or the Guarantor shall provide for the registration of the
Registered Securities of such series and of transfers of the Registered
Securities of such series. Such Office or Agency shall be the "Security
Registrar" for that series of Securities. Unless otherwise specified in or
pursuant to this Indenture or the Securities, the Trustee shall be the initial
Security Registrar for each series of Securities. The Issuer shall have the
right to remove and replace from time to time the Security Registrar for any
series of Securities; provided that no such removal or replacement shall be
effective until a successor Security Registrar with respect to such series of
Securities shall have been appointed by the Issuer and shall have accepted such
appointment by the Issuer. In the event that the Trustee shall not be or shall
cease to be Security Registrar with respect to a series of Securities, it shall
have the right to examine the Security Register for such series at all
reasonable times. There shall be only one Security Register for each series of
Securities.
Upon surrender for registration of transfer of any Registered Security
of any series at any Office or Agency for such series, the Issuer shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Registered Securities of the same
series denominated as authorized in or pursuant to this Indenture, of a like
aggregate principal amount bearing a number not contemporaneously outstanding
and containing identical terms and provisions.
At the option of the Holder, Registered Securities of any series may
be exchanged for other Registered Securities of the same series containing
identical terms and provisions, in any authorized denominations, and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
any Office or Agency for such series. Whenever any Registered Securities are so
surrendered for exchange, the Issuer shall execute, and the Trustee shall
authenticate and deliver, the Registered Securities which the Holder making the
exchange is entitled to receive.
If provided in or pursuant to this Indenture, with respect to
Securities of any series, at the option of the Holder, Bearer Securities of such
series may be exchanged for Registered Securities of such series containing
identical terms, denominated as authorized in or pursuant to this Indenture and
in the same aggregate principal amount, upon surrender of the Bearer Securities
to be exchanged at any Office or Agency for such series, with all unmatured
Coupons and all matured Coupons in default thereto appertaining. If the Holder
of a Bearer Security is unable to produce any such unmatured Coupon or Coupons
or matured Coupon or Coupons in default, such exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Issuer,
the Guarantor (if such Bearer Securities are Guaranteed Securities) and the
Trustee in an amount equal to the face amount of such missing Coupon or Coupons,
or the surrender of such missing Coupon or Coupons may be waived by the Issuer,
the Guarantor (if such Bearer Securities are Guaranteed Securities) and the
Trustee if there is furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Bearer Security shall surrender to any Paying Agent any such
missing Coupon in respect of which such a payment shall have been made, such
Holder shall be entitled to receive the amount of such payment; provided,
however, that, except as otherwise provided in Section 1002, interest
represented by Coupons shall be payable only upon presentation and surrender of
those Coupons at an Office or Agency for such series located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series
is surrendered at any such Office or Agency for such series in exchange for a
Registered Security of such series and like tenor after the close of business at
such Office or Agency on (i) any Regular Record Date and before the opening of
business at such Office or Agency on the relevant Interest Payment Date, or (ii)
any Special Record Date and before the opening of business at such Office or
Agency on the related date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the Coupon relating to such Interest
Payment Date or proposed date of payment, as the case may be (or, if such Coupon
is so surrendered with such Bearer Security, such Coupon shall be returned to
the Person so surrendering the Bearer Security), and interest or Defaulted
Interest, as the case may be, shall not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but shall be payable only
to the Holder of such Coupon when due in accordance with the provisions of this
Indenture.
If provided in or pursuant to this Indenture with respect to
Securities of any series, at the option of the Holder, Registered Securities of
such series may be exchanged for Bearer Securities upon such terms and
conditions as may be provided in or pursuant to this Indenture with respect to
such series.
Whenever any Securities are surrendered for exchange as contemplated
by the immediately preceding two paragraphs, the Issuer shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise provided in or
pursuant to this Indenture, any global Security shall be exchangeable for
definitive Securities only if (i) the Depository is at any time unwilling,
unable or ineligible to continue as Depository and a successor depository is not
appointed by the Issuer within 90 days of the date the Issuer is so informed in
writing, (ii) the Issuer executes and delivers to the Trustee an Issuer Order to
the effect that such global Security shall be so exchangeable, or (iii) an Event
of Default has occurred and is continuing with respect to the Securities. If the
beneficial owners of interests in a global Security are entitled to exchange
such interests for definitive Securities as the result of an event described in
clause (i), (ii) or (iii) of the preceding sentence, then without unnecessary
delay but in any event not later than the earliest date on which such interests
may be so exchanged, the Issuer shall deliver to the Trustee definitive
Securities in such form and denominations as are required by or pursuant to this
Indenture, and of the same series, containing identical terms and in aggregate
principal amount equal to the principal amount of such global Security, executed
by the Issuer. On or after the earliest date on which such interests may be so
exchanged, such global Security shall be surrendered from time to time by the
U.S. Depository or such other Depository as shall be specified in the Issuer
Order with respect thereto, and in accordance with instructions given to the
Trustee and the U.S. Depository or such other Depository, as the case may be
(which instructions shall be in writing but need not be contained in or
accompanied by an Officers' Certificate or be accompanied by an Opinion of
Counsel), as shall be specified in the Issuer Order with respect thereto to the
Trustee, as the Issuer's agent for such purpose, to be exchanged, in whole or in
part, for definitive Securities as described above without charge. The Trustee
shall authenticate and make available for delivery, in exchange for each portion
of such surrendered global Security, a like aggregate principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor as the portion of such global Security to be exchanged, which (unless such
Securities are not issuable both as Bearer Securities and as Registered
Securities, in which case the definitive Securities exchanged for the global
Security shall be issuable only in the form in which the Securities are
issuable, as provided in or pursuant to this Indenture) shall be in the form of
Bearer Securities or Registered Securities, or any combination thereof, as shall
be specified by the beneficial owner thereof, but subject to the satisfaction of
any certification or other requirements to the issuance of Bearer Securities;
provided, however, that no such exchanges may occur during a period beginning at
the opening of business 15 days before any selection of Securities of the same
series to be redeemed and ending on the relevant Redemption Date; and provided,
further, that (unless otherwise provided in or pursuant to this Indenture) no
Bearer Security delivered in exchange for a portion of a global Security shall
be mailed or otherwise delivered to any location in the United States. Promptly
following any such exchange in part, such global Security shall be returned by
the Trustee to such Depository or the U.S. Depository, as the case may be, or
such other Depository or U.S. Depository referred to above in accordance with
the instructions of the Issuer referred to above. If a Registered Security is
issued in exchange for any portion of a global Security after the close of
business at the Office or Agency for such Security where such exchange occurs on
or after (i) any Regular Record Date for such Security and before the opening of
business at such Office or Agency on the next Interest Payment Date, or (ii) any
Special Record Date for such Security and before the opening of business at such
Office or Agency on the related proposed date for payment of interest or
Defaulted Interest, as the case may be, interest shall not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of such Registered Security, but shall be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
Person to whom interest in respect of such portion of such global Security shall
be payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer and the Guarantor,
respectively, evidencing the same debt and entitling the Holders thereof to the
same benefits under this Indenture as the Securities surrendered upon such
registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange or redemption shall (if so required by the Issuer or
the Security Registrar for such Security) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Issuer and the
Security Registrar for such Security duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange, or redemption of Securities, but the Issuer may require payment of a
sum sufficient to cover any tax or other governmental charge.
Except as otherwise provided in or pursuant to this Indenture, the
Issuer shall not be required (i) to issue, register the transfer of or exchange
any Securities during a period beginning at the opening of business 15 days
before the day of the selection for redemption of Securities of like tenor and
the same series under Section 1103 and ending at the close of business on the
day of such selection, or (ii) to register the transfer of or exchange any
Registered Security so selected for redemption in whole or in part, except in
the case of any Security to be redeemed in part, the portion thereof not to be
redeemed, or (iii) to exchange any Bearer Security so selected for redemption
except, to the extent provided with respect to such Bearer Security, that such
Bearer Security may be exchanged for a Registered Security of like tenor and the
same series, provided that such Registered Security shall be immediately
surrendered for redemption with written instruction for payment consistent with
the provisions of this Indenture or (iv) to issue, register the transfer of or
exchange any Security which, in accordance with its terms, has been surrendered
for repayment at the option of the Holder, except the portion, if any, of such
Security not to be so repaid.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated Coupon
appertaining to it is surrendered to the Trustee, subject to the provisions of
this Section 306, the Issuer shall execute and the Trustee shall authenticate
and deliver in exchange therefor a new Security of the same series containing
identical terms and of like principal amount and bearing a number not
contemporaneously outstanding, with Coupons appertaining thereto corresponding
to the Coupons, if any, appertaining to the surrendered Security.
If there be delivered to the Issuer, the Guarantor (if the Security is
a Guaranteed Security) and to the Trustee (i) evidence to their satisfaction of
the destruction, loss or theft of any Security or Coupon, and (ii) such security
or indemnity as may be required by them to save each of them and any agent of
either of them harmless, then, in the absence of notice to the Issuer, the
Guarantor (if the Security is a Guaranteed Security) or the Trustee that such
Security or Coupon has been acquired by a bona fide purchaser, the Issuer shall
execute and, upon the Issuer's request the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Security or in exchange for the Security to which a destroyed, lost or
stolen Coupon appertains with all appurtenant Coupons not destroyed, lost or
stolen, a new Security of the same series containing identical terms and of like
principal amount and bearing a number not contemporaneously outstanding, with
Coupons corresponding to the Coupons, if any, appertaining to such destroyed,
lost or stolen Security or to the Security to which such destroyed, lost or
stolen Coupon appertains.
Notwithstanding the foregoing provisions of this Section 306, in case
any mutilated, destroyed, lost or stolen Security or Coupon has become or is
about to become due and payable, the Issuer in its discretion may, instead of
issuing a new Security, pay such Security or Coupon; provided, however, that
payment of principal of, any premium or interest on or any Additional Amounts
with respect to any Bearer Securities shall, except as otherwise provided in
Section 1002, be payable only at an Office or Agency for such Securities located
outside the United States and, unless otherwise provided in or pursuant to this
Indenture, any interest on Bearer Securities and any Additional Amounts with
respect to such interest shall be payable only upon presentation and surrender
of the Coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security, with any Coupons appertaining thereto issued
pursuant to this Section in lieu of any destroyed, lost or stolen Security, or
in exchange for a Security to which a destroyed, lost or stolen Coupon
appertains shall constitute a separate obligation of the Issuer and the
Guarantor (if the Security is a Guaranteed Security), whether or not the
destroyed, lost or stolen Security and Coupons appertaining thereto or the
destroyed, lost or stolen Coupon shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of such series and any
Coupons, if any, duly issued hereunder.
The provisions of this Section, as amended or supplemented pursuant to
this Indenture with respect to particular Securities or generally, shall be
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities or Coupons.
Section 307. Payment of Interest and Certain Additional Amounts;
Rights to Interest and Certain Additional Amounts
Preserved.
Unless otherwise provided in or pursuant to this Indenture, any
interest on and any Additional Amounts with respect to any Registered Security
which shall be payable, and are punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name such Security
(or one or more Predecessor Securities) is registered as of the close of
business on the Regular Record Date for such interest. Unless otherwise provided
in or pursuant to this Indenture, in case a Bearer Security is surrendered in
exchange for a Registered Security after the close of business at an Office or
Agency for such Security on any Regular Record Date therefor and before the
opening of business at such Office or Agency on the next succeeding Interest
Payment Date therefor, such Bearer Security shall be surrendered without the
Coupon relating to such Interest Payment Date and interest shall not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but shall be payable only to the Holder of
such Coupon when due in accordance with the provisions of this Indenture.
Unless otherwise provided in or pursuant to this Indenture, any
interest on and any Additional Amounts with respect to any Registered Security
which shall be payable, but shall not be punctually paid or duly provided for,
on any Interest Payment Date for such Registered Security (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder; and
such Defaulted Interest may be paid by the Issuer or the Guarantor (if the
Registered Security is a Guaranteed Security), at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Issuer or the Guarantor (if the Registered Security is a
Guaranteed Security) may elect to make payment of any Defaulted Interest to
the Person in whose name such Registered Security (or a Predecessor
Security thereof) shall be registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Issuer or the Guarantor (if the
Registered Security is a Guaranteed Security) shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on such
Registered Security and the date of the proposed payment, and at the same
time the Issuer or the Guarantor (if the Registered Security is a
Guaranteed Security), as the case may be, shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit on or prior to the date of the proposed
payment, such money when so deposited to be held in trust for the benefit
of the Person entitled to such Defaulted Interest as in this Clause
provided. Thereupon, the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Issuer or the
Guarantor, as the case may be, of such Special Record Date and, in the name
and at the expense of the Issuer or the Guarantor, as the case may be,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to the Holder of such Registered Security (or a Predecessor Security
thereof) at his address as it appears in the Security Register not less
than 10 days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Issuer or the Guarantor,
as the case may be, cause a similar notice to be published at least once in
an Authorized Newspaper of general circulation in the Borough of Manhattan,
The City of New York, but such publication shall not be a condition
precedent to the establishment of such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall be
paid to the Person in whose name such Registered Security (or a Predecessor
Security thereof) shall be registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following clause (2). In case a Bearer Security is surrendered at the
Office or Agency for such Security in exchange for a Registered Security
after the close of business at such Office or Agency on any Special Record
Date and before the opening of business at such Office or Agency on the
related proposed date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the Coupon relating to such Defaulted
Interest and Defaulted Interest shall not be payable on such proposed date
of payment in respect of the Registered Security issued in exchange for
such Bearer Security, but shall be payable only to the Holder of such
Coupon when due in accordance with the provisions of this Indenture.
(2) The Issuer or the Guarantor (if the Security is a Guaranteed
Security) may make payment of any Defaulted Interest in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which such Security may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Issuer or the Guarantor, as
the case may be, to the Trustee of the proposed payment pursuant to this
Clause, such payment shall be deemed practicable by the Trustee.
Unless otherwise provided in or pursuant to this Indenture or the
Securities of any particular series pursuant to the provisions of this
Indenture, at the option of the Issuer, interest on Registered Securities that
bear interest may be paid by mailing a check to the address of the Person
entitled thereto as such address shall appear in the Security Register or by
transfer to an account maintained by the payee with a bank located in the United
States.
Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
In the case of any Registered Security of any series that is
convertible, which Registered Security is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Registered Security with respect to which the Stated Maturity is prior to
such Interest Payment Date), interest with respect to which the Stated Maturity
is on such Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Registered Security (or one or more predecessor Registered Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Registered Security which is converted, interest with respect to which
the Stated Maturity is after the date of conversion of such Registered Security
shall not be payable.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Issuer, the Guarantor (if the Registered Security is a Guaranteed
Security), the Trustee and any agent of the Issuer or the Guarantor (if the
Registered Security is a Guaranteed Security) or the Trustee may treat the
Person in whose name such Registered Security is registered in the Security
Register as the owner of such Registered Security for the purpose of receiving
payment of principal of, any premium and (subject to Sections 305 and 307)
interest on and any Additional Amounts with respect to such Registered Security
and for all other purposes whatsoever, whether or not any payment with respect
to such Registered Security shall be overdue, and neither the Issuer, nor the
Guarantor, the Trustee or any agent of the Issuer, the Guarantor or the Trustee
shall be affected by notice to the contrary.
The Issuer, the Guarantor (if the Bearer Security is a Guaranteed
Security), the Trustee and any agent of the Issuer, the Guarantor (if the Bearer
Security is a Guaranteed Security) or the Trustee may treat the bearer of any
Bearer Security or the bearer of any Coupon as the absolute owner of such
Security or Coupon for the purpose of receiving payment thereof or on account
thereof and for all other purposes whatsoever, whether or not any payment with
respect to such Security or Coupon shall be overdue, and neither the Issuer, nor
the Guarantor, the Trustee or any agent of the Issuer, the Guarantor or the
Trustee shall be affected by notice to the contrary.
No Holder of any beneficial interest in any global Security held on
its behalf by a Depository shall have any rights under this Indenture with
respect to such global Security, and such Depository may be treated by the
Issuer, the Trustee, and any agent of the Issuer, the Guarantor (if the global
Security is a Guaranteed Security) or the Trustee as the owner of such global
Security for all purposes whatsoever. None of the Issuer, the Guarantor (if the
global Security is a Guaranteed Security), the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of a global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Section 309. Cancellation.
All Securities and Coupons surrendered for payment, redemption,
registration of transfer, exchange or conversion or for credit against any
sinking fund payment shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee, and any such Securities and Coupons, as well as
Securities and Coupons surrendered directly to the Trustee for any such purpose,
shall be cancelled promptly by the Trustee. The Issuer or the Guarantor (if the
Security is a Guaranteed Security) may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Issuer or the Guarantor (if the Security is a Guaranteed Security) may
have acquired in any manner whatsoever, and all Securities so delivered shall be
cancelled promptly by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by or pursuant to this Indenture. All cancelled
Securities and Coupons held by the Trustee shall be destroyed by the Trustee,
unless by an Issuer Order or Guarantor Order the Issuer or the Guarantor, as the
case may be, directs their return to it.
Section 310. Computation of Interest.
Except as otherwise provided in or pursuant to this Indenture or in
any Security, interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE FOUR
Satisfaction and Discharge of Indenture
Section 401. Satisfaction and Discharge.
Upon the direction of the Issuer by an Issuer Order or of the
Guarantor by a Guarantor Order (if the applicable series of Securities is a
series of Guaranteed Securities), this Indenture shall cease to be of further
effect with respect to any series of Securities specified in such Issuer Order
or Guarantor Order and any Coupons appertaining thereto, and the Trustee, on
receipt of an Issuer Order or a Guarantor Order, at the expense of the Issuer
and the Guarantor, shall execute proper instruments acknowledging satisfaction
and discharge of this Indenture as to such series, when
(1) either
(a) all Securities of such series theretofore authenticated and
delivered and all Coupons appertaining thereto (other than (i) Coupons
appertaining to Bearer Securities of such series surrendered in exchange
for Registered Securities of such series and maturing after such exchange
whose surrender is not required or has been waived as provided in Section
305, (ii) Securities and Coupons of such series which have been destroyed,
lost or stolen and which have been replaced or paid as provided in Section
306, (iii) Coupons appertaining to Securities of such series called for
redemption and maturing after the relevant Redemption Date whose surrender
has been waived as provided in Section 1107, and (iv) Securities and
Coupons of such series for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Issuer and
thereafter repaid to the Issuer or discharged from such trust, as provided
in Section 1003) have been delivered to the Trustee for cancellation; or
(b) all Securities of such series and, in the case of (i) or (ii)
below, any Coupons appertaining thereto not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) if redeemable at the option of the Issuer, are to be called
for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Issuer and the Guarantor (if the
Securities of such series are Guaranteed Securities),
and the Issuer or the Guarantor (if the Securities of such series are
Guaranteed Securities), in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose, money in the Currency in which such Securities
are payable in an amount sufficient to pay and discharge the entire
indebtedness on such Securities and any Coupons appertaining thereto
not theretofore delivered to the Trustee for cancellation, including
the principal of, any premium and interest on, and any Additional
Amounts with respect to such Securities and any Coupons appertaining
thereto, to the date of such deposit (in the case of Securities which
have become due and payable) or to the Maturity thereof, as the case
may be;
(2) the Issuer or the Guarantor (if the Securities of such series are
Guaranteed Securities) has paid or caused to be paid all other sums payable
hereunder by the Issuer and the Guarantor with respect to the Outstanding
Securities of such series and any Coupons appertaining thereto; and
(3) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel and the Guarantor has delivered to the Trustee a
Guarantor's Officers' Certificate (if the Securities of such series are
Guaranteed Securities), each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
as to such series have been complied with.
In the event there are Securities of two or more series hereunder, the
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of this Indenture only if requested to do so with respect to
Securities of such series as to which it is Trustee and if the other conditions
thereto are met.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to any series of Securities, the obligations of the Issuer and the
Guarantor to the Trustee under Section 605 and, if money shall have been
deposited with the Trustee pursuant to subclause (b) of clause (1) of this
Section, the obligations of the Issuer and the Trustee with respect to the
Securities of such series under Sections 305, 306, 403, 1002 and 1003, with
respect to the payment of Additional Amounts, if any, with respect to such
Securities as contemplated by Section 1004 (but only to the extent that the
Additional Amounts payable with respect to such Securities exceed the amount
deposited in respect of such Additional Amounts pursuant to Section 401(1)(b)),
and with respect to any rights to exchange such Securities into other securities
shall survive.
Section 402. Defeasance and Covenant Defeasance.
(1) Unless pursuant to Section 301, either or both of (i) defeasance of
the Securities of or within a series under clause (2) of this Section 402 shall
not be applicable with respect to the Securities of such series or (ii) covenant
defeasance of the Securities of or within a series under clause (3) of this
Section 402 shall not be applicable with respect to the Securities of such
series, then such provisions, together with the other provisions of this Section
402 (with such modifications thereto as may be specified pursuant to Section 301
with respect to any Securities), shall be applicable to such Securities and any
Coupons appertaining thereto, and the Issuer may at its option by Board
Resolution, at any time, with respect to such Securities and any Coupons
appertaining thereto, elect to have Section 402(2) or Section 402(3) be applied
to such Outstanding Securities and any Coupons appertaining thereto upon
compliance with the conditions set forth below in this Section 402.
(2) Upon the Issuer's exercise of the above option applicable to this
Section 402(2) with respect to any Securities of or within a series, each of the
Issuer and the Guarantor (if such Securities are Guaranteed Securities) shall be
deemed to have been discharged from its obligations with respect to such
Outstanding Securities and any Coupons appertaining thereto and under the
Guarantee in respect thereof (if applicable), respectively, on the date the
conditions set forth in clause (4) of this Section 402 are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Issuer and the Guarantor (if such Securities are Guaranteed Securities) shall be
deemed to have paid and discharged the entire Indebtedness represented by such
Outstanding Securities and any Coupons appertaining thereto, and under the
Guarantee in respect thereof (if such Securities are Guaranteed Securities),
which shall thereafter be deemed to be "Outstanding" only for the purposes of
clause (5) of this Section 402 and the other Sections of this Indenture referred
to in clauses (i) and (ii) below, and to have satisfied all of its other
obligations under such Securities and any Coupons appertaining thereto, and
under the Guarantee in respect thereof (if such Securities are Guaranteed
Securities), and this Indenture insofar as such Securities and any Coupons
appertaining thereto, and the Guarantee in respect thereof (if such Securities
are Guaranteed Securities), are concerned (and the Trustee, at the expense of
the Issuer and the Guarantor (if such Securities are Guaranteed Securities),
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of such Outstanding Securities and any
Coupons appertaining thereto to receive, solely from the trust fund described in
clause (4) of this Section 402 and as more fully set forth in such Section,
payments in respect of the principal of (and premium, if any) and interest, if
any, on, and Additional Amounts, if any, with respect to, such Securities and
any Coupons appertaining thereto when such payments are due, and any rights of
such Holder to convert or exchange such Securities into Common Stock or other
securities, (ii) the obligations of the Issuer, the Guarantor (if the Securities
are Guaranteed Securities) and the Trustee with respect to such Securities under
Sections 305, 306, 1002 and 1003 and with respect to the payment of Additional
Amounts, if any, on such Securities as contemplated by Section 1004 (but only to
the extent that the Additional Amounts payable with respect to such Securities
exceed the amount deposited in respect of such Additional Amounts pursuant to
Section 401(4)(a) below), and with respect to any rights to exchange such
Securities into other securities, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (iv) this Section 402. The Issuer may
exercise its option under this Section 402(2) notwithstanding the prior exercise
of its option under clause (3) of this Section 402 with respect to such
Securities and any Coupons appertaining thereto.
(3) Upon the Issuer's exercise of the above option applicable to this
Section 402(3) with respect to any Securities of or within a series, each of the
Issuer and the Guarantor (if the Securities are Guaranteed Securities) shall be
released from its obligations under Sections 1005, 1006, 1007, 1008, 1011 and
1012 and, to the extent specified pursuant to Section 301, any other covenant
applicable to such Securities, with respect to such Outstanding Securities and
any Coupons appertaining thereto, and the Guarantee in respect thereof (if the
Securities are Guaranteed Securities), on and after the date the conditions set
forth in clause (4) of this Section 402 are satisfied (hereinafter, "covenant
defeasance"), and such Securities and any Coupons appertaining thereto shall
thereafter be deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with any such covenant, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to such Outstanding Securities and any
Coupons appertaining thereto, the Issuer and the Guarantor (if applicable) may
omit to comply with, and shall have no liability in respect of, any term,
condition or limitation set forth in any such Section or such other covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such Section or such other covenant or by reason of reference in any such
Section or such other covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a default or an Event
of Default under Section 501(4) or 501(8) or otherwise, as the case may be, but,
except as specified above, the remainder of this Indenture and such Securities
and Coupons appertaining thereto and the Guarantee in respect thereof (if the
Securities are Guaranteed Securities) shall be unaffected thereby.
(4) The following shall be the conditions to application of clause (2)
or (3) of this Section 402 to any Outstanding Securities of or within a series
and any Coupons appertaining thereto and the Guarantee (if the Securities are
Guaranteed Securities) in respect thereof:
(a) The Issuer or the Guarantor shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 607 who shall agree to comply with the provisions
of this Section 402 applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Securities
and any Coupons appertaining thereto, (1) an amount in Dollars or in such
Foreign Currency in which such Securities and any Coupons appertaining
thereto are then specified as payable at Stated Maturity, or (2) Government
Obligations applicable to such Securities and Coupons appertaining thereto
(determined on the basis of the Currency in which such Securities and
Coupons appertaining thereto are then specified as payable at Stated
Maturity) which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than
one day before the due date of any payment of principal of (and premium, if
any) and interest, if any, on such Securities and any Coupons appertaining
thereto, money in an amount, or (3) a combination thereof, in any case, in
an amount, sufficient, without consideration of any reinvestment of such
principal and interest, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied
by the Trustee (or other qualifying trustee) to pay and discharge, (y) the
principal of (and premium, if any) and interest, if any, on such
Outstanding Securities and any Coupons appertaining thereto on the Stated
Maturity of such principal or installment of principal or interest and (z)
any mandatory sinking fund payments or analogous payments applicable to
such Outstanding Securities and any Coupons appertaining thereto on the day
on which such payments are due and payable in accordance with the terms of
this Indenture and of such Securities and any Coupons appertaining thereto.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Issuer or the
Guarantor (if the Securities are Guaranteed Securities) is a party or by
which it is bound.
(c) No Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to such Securities and
any Coupons appertaining thereto shall have occurred and be continuing on
the date of such deposit and, with respect to defeasance only, at any time
during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until
the expiration of such period).
(d) In the case of an election under clause (2) of this Section 402,
the Issuer or the Guarantor shall have delivered to the Trustee an Opinion
of Counsel stating that (i) the Issuer or the Guarantor (if the Securities
are Guaranteed Securities) has received from the Internal Revenue Service a
letter ruling, or there has been published by the Internal Revenue Service
a Revenue Ruling, or (ii) there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon such
opinion shall confirm that, the Holders of such Outstanding Securities and
any Coupons appertaining thereto will not recognize income, gain or loss
for Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had not
occurred.
(e) In the case of an election under clause (3) of this Section 402,
the Issuer or the Guarantor shall have delivered to the Trustee an Opinion
of Counsel to the effect that the Holders of such Outstanding Securities
and any Coupons appertaining thereto will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred.
(f) The Issuer or the Guarantor (if the Securities are Guaranteed
Securities) shall have delivered to the Trustee an Officers' Certificate
(if applicable) or a Guarantor's Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent to the defeasance or
covenant defeasance under clause (2) or (3) of this Section 402 (as the
case may be) have been complied with.
(g) Notwithstanding any other provisions of this Section 402(4), such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be
imposed on the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) in connection therewith pursuant to Section 301.
(5) Subject to the provisions of the last paragraph of Section 1003,
all money and Government Obligations (or other property as may be provided
pursuant to Section 301) (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
402(5) and Section 403, the "Trustee") pursuant to clause (4) of Section 402 in
respect of any Outstanding Securities of any series and any Coupons appertaining
thereto shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and any Coupons appertaining thereto and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities and any Coupons appertaining
thereto of all sums due and to become due thereon in respect of principal (and
premium, if any) and interest and Additional Amounts, if any, but such money
need not be segregated from other funds except to the extent required by law.
Unless otherwise specified in or pursuant to this Indenture or any
Security, if, after a deposit referred to in Section 402(4)(a) has been made,
(a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 301 or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 402(4)(a) has been made in respect of such Security, or (b)
a Conversion Event occurs in respect of the Foreign Currency in which the
deposit pursuant to Section 402(4)(a) has been made, the indebtedness
represented by such Security and any Coupons appertaining thereto shall be
deemed to have been, and will be, fully discharged and satisfied through the
payment of the principal of (and premium, if any), and interest, if any, on, and
Additional Amounts, if any, with respect to, such Security as the same becomes
due out of the proceeds yielded by converting (from time to time as specified
below in the case of any such election) the amount or other property deposited
in respect of such Security into the Currency in which such Security becomes
payable as a result of such election or Conversion Event based on (x) in the
case of payments made pursuant to clause (a) above, the applicable market
exchange rate for such Currency in effect on the second Business Day prior to
each payment date, or (y) with respect to a Conversion Event, the applicable
market exchange rate for such Foreign Currency in effect (as nearly as feasible)
at the time of the Conversion Event.
The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge, imposed on or assessed against the Government Obligations
deposited pursuant to this Section 402 or the principal or interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of such Outstanding Securities and any Coupons
appertaining thereto.
Anything in this Section 402 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon Issuer
Request, or the Guarantor, as the case may be, upon the Guarantor Request, any
money or Government Obligations (or other property and any proceeds therefrom)
held by it as provided in clause (4) of this Section 402 which, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect a
defeasance or covenant defeasance, as applicable, in accordance with this
Section 402.
Section 403. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money and Government Obligations deposited with the Trustee pursuant to Section
401 or 402 shall be held in trust and applied by it, in accordance with the
provisions of the Securities, the Coupons and this Indenture, to the payment,
either directly or through any Paying Agent (including the Issuer acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal, premium, interest and Additional Amounts for whose payment
such money has or Government Obligations have been deposited with or received by
the Trustee; but such money and Government Obligations need not be segregated
from other funds except to the extent required by law.
ARTICLE FIVE
Remedies
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body),
unless such event is specifically deleted or modified in or pursuant to the
supplemental indenture, Board Resolution or Officers' Certificate establishing
the terms of such Series pursuant to this Indenture:
(1) default in the payment of any interest on or any Additional
Amounts payable in respect of any Security of such series when such interest
becomes or such Additional Amounts become due and payable, and continuance of
such default for a period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of such series when it becomes due and payable at its Maturity; or
(3) default in the deposit of any sinking fund payment when and as due
by the terms of a Security of such series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Issuer or the Guarantor (if the Securities of such series are Guaranteed
Securities) in this Indenture or the Securities (other than a covenant or
warranty a default in the performance or the breach of which is elsewhere in
this Section specifically dealt with or which has been expressly included in
this Indenture solely for the benefit of a series of Securities other than such
series), and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Issuer and the
Guarantor (if the Securities of such series are Guaranteed Securities) by the
Trustee or to the Issuer, the Guarantor (if the Securities of such series are
Guaranteed Securities) and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of such series, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(5) the entry by a court having competent jurisdiction of:
(a) a decree or order for relief in respect of the Issuer, the
Guarantor (if the Securities of such series are Guaranteed Securities) or
any "significant subsidiary" of the Issuer or the Guarantor in Article 1,
Section 1-02 of Regulation S-X under the Securities Act of 1933, as amended
("Significant Subsidiary") in an involuntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law and
such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(b) a decree or order adjudging the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) or any Significant
Subsidiary to be insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) or any Significant
Subsidiary and such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or
(c) a final and non-appealable order appointing a custodian, receiver,
liquidator, assignee, trustee or other similar official of the Issuer, the
Guarantor (if the Securities of such series are Guaranteed Securities) or
any Significant Subsidiary or of any substantial part of the property of
the Issuer, the Guarantor (if the Securities of such series are Guaranteed
Securities) or any Significant Subsidiary, as the case may be, or ordering
the winding up or liquidation of the affairs of the Issuer, the Guarantor
(if the Securities of such series are Guaranteed Securities) or any
Significant Subsidiary; or
(6) the commencement by the Issuer, the Guarantor (if the Securities
of such series are Guaranteed Securities) or any Significant Subsidiary of a
voluntary proceeding under any applicable bankruptcy, insolvency, reorganization
or other similar law or of a voluntary proceeding seeking to be adjudicated
insolvent or the consent by the Issuer, the Guarantor (if the Securities of such
series are Guaranteed Securities) or any Significant Subsidiary to the entry of
a decree or order for relief in an involuntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any insolvency proceedings against it, or the filing by the
Issuer, the Guarantor (if the Securities of such series are Guaranteed
Securities) or any Significant Subsidiary of a petition or answer or consent
seeking reorganization or relief under any applicable law, or the consent by the
Issuer, the Guarantor (if the Securities of such series are Guaranteed
Securities) or any Significant Subsidiary to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or similar official of the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) or any Significant
Subsidiary or any substantial part of the property of the Issuer, the Guarantor
(if the Securities of such series are Guaranteed Securities) or any Significant
Subsidiary or the making by the Issuer, the Guarantor (if the Securities of such
series are Guaranteed Securities) or any Significant Subsidiary of an assignment
for the benefit of creditors, or the taking of corporate action by the Issuer,
the Guarantor (if the Securities of such series are Guaranteed Securities) or
any Significant Subsidiary in furtherance of any such action; or
(7) any other Event of Default provided in or pursuant to this
Indenture with respect to Securities of such series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding (other than an Event of Default specified in clause (6) or (7)
of Section 501) occurs and is continuing, then the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Securities of such series
may declare the principal (or, if any Securities are Original Issue Discount
Securities or Indexed Securities, such portion of the principal as may be
specified in the terms thereof) of all the Securities of such series, or such
lesser amount as may be provided for in the Securities of such series, to be due
and payable immediately, by a notice in writing to the Issuer and the Guarantor
(if the Securities are Guaranteed Securities) (and to the Trustee if given by
the Holders), and upon any such declaration such principal or such lesser amount
shall become immediately due and payable.
If an Event of Default specified in clause (6) or (7) of Section 501
occurs, all unpaid principal of and accrued interest on the Outstanding
Securities of that series (or such lesser amount as may be provided for in the
Securities of such series) shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of any Security of that series.
At any time after Securities of any series have been accelerated and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of not less
than a majority in principal amount of the Outstanding Securities of such
series, by written notice to the Issuer, the Guarantor (if the Securities are
Guaranteed Securities) and the Trustee, may rescind and annul such declaration
and its consequences if
(1) the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) has paid or deposited with the Trustee a sum of money sufficient to
pay
(a) all overdue installments of any interest on and Additional Amounts
with respect to all Securities of such series and any Coupon appertaining
thereto,
(b) the principal of and any premium on any Securities of such series
which have become due otherwise than by such declaration of acceleration
and interest thereon and any Additional Amounts with respect thereto at the
rate or rates borne by or provided for in such Securities,
(c) to the extent that payment of such interest or Additional Amounts
is lawful, interest upon overdue installments of any interest and
Additional Amounts at the rate or rates borne by or provided for in such
Securities, and
(d) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due the Trustee under
Section 606; and
(2) all Events of Default with respect to Securities of such series,
other than the non-payment of the principal of, any premium and interest on, and
any Additional Amounts with respect to Securities of such series which shall
have become due solely by such declaration of acceleration, shall have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Issuer covenants and the Guarantor (if the Securities are
Guaranteed Securities) covenants, in each case, that if
(1) default is made in the payment of any installment of interest on
or any Additional Amounts with respect to any Security or any Coupon
appertaining thereto when such interest or Additional Amounts shall have become
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of or any premium
on any Security at its Maturity,
the Issuer or the Guarantor (if the Securities are Guaranteed Securities), as
the case may be shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities and any Coupons appertaining thereto,
the whole amount of money then due and payable with respect to such Securities
and any Coupons appertaining thereto, with interest upon the overdue principal,
any premium and, to the extent that payment of such interest shall be legally
enforceable, upon any overdue installments of interest and Additional Amounts at
the rate or rates borne by or provided for in such Securities, and, in addition
thereto, such further amount of money as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and all other
amounts due to the Trustee under Section 606.
If the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) fails to pay the money it is required to pay the Trustee pursuant to
the preceding paragraph forthwith upon the demand of the Trustee, the Trustee,
in its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the money so due and unpaid, and may prosecute
such proceeding to judgment or final decree, and may enforce the same against
the Issuer or the Guarantor (if the Securities are Guaranteed Securities) or any
other obligor upon such Securities and any Coupons appertaining thereto and
collect the monies adjudged or decreed to be payable in the manner provided by
law out of the property of the Issuer or the Guarantor (if the Securities are
Guaranteed Securities) or any other obligor upon such Securities and any Coupons
appertaining thereto, wherever situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
and any Coupons appertaining thereto by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or such Securities or in aid of the exercise of any power granted
herein or therein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Issuer, the Guarantor (if the Securities are
Guaranteed Securities) or any other obligor upon the Securities or the property
of the Issuer, the Guarantor (if the Securities are Guaranteed Securities) or
such other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Issuer or the Guarantor (if the Securities are
Guaranteed Securities) for the payment of any overdue principal, premium,
interest or Additional Amounts) shall be entitled and empowered, by intervention
in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of such series, of the
principal and any premium, interest and Additional Amounts owing and unpaid
in respect of the Securities and any Coupons appertaining thereto and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents or counsel) and of the Holders of Securities or any
Coupons allowed in such judicial proceeding, and
(2) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities or any Coupons to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities or any Coupons, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and any other amounts due the
Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or any Coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or Coupons or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or any Coupon in any such proceeding.
Section 505. Trustee May Enforce Claims without Possession of
Securities or Coupons.
All rights of action and claims under this Indenture or any of the
Securities or Coupons may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or Coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery or judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, shall be for the ratable benefit of each and every Holder of a
Security or Coupon in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, or any
premium, interest or Additional Amounts, upon presentation of the Securities or
Coupons, or both, as the case may be, and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities and any Coupons for principal and any premium, interest and
Additional Amounts in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority
of any kind, according to the aggregate amounts due and payable on
such Securities and Coupons for principal and any premium, interest
and Additional Amounts, respectively;
THIRD: The balance, if any, to the Person or Persons entitled thereto.
Section 507. Limitations on Suits.
No Holder of any Security of any series or any Coupons appertaining
thereto shall have any right to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of such
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of such series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other such Holders or Holders of Securities of any other series, or to
obtain or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all such Holders.
Section 508. Unconditional Right of Holders to Receive Principal and
any Premium, Interest and Additional Amounts.
Notwithstanding any other provision in this Indenture, the Holder of
any Security or Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of, any premium and (subject
to Sections 305 and 307) interest on, and any Additional Amounts with respect to
such Security or payment of such Coupon, as the case may be, on the respective
Stated Maturity or Maturities therefor specified in such Security or Coupon (or,
in the case of redemption, on the Redemption Date or, in the case of repayment
at the option of such Holder if provided in or pursuant to this Indenture, on
the date such repayment is due) and to institute suit for the enforcement of any
such payment, and such right shall not be impaired without the consent of such
Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or a Coupon has instituted
any proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Issuer, the Guarantor (if the Security is a Guaranteed Security), the
Trustee and each such Holder shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and each such
Holder shall continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or Coupons in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to each and every Holder of a Security or a Coupon is
intended to be exclusive of any other right or remedy, and every right and
remedy, to the extent permitted by law, shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not, to the extent permitted by law, prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
or Coupon to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to any Holder of a Security or a Coupon may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by such Holder, as the case may be.
Section 512. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Securities of such series and any Coupons appertaining thereto, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture or with the Securities of any series,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) such direction is not unduly prejudicial to the rights of the
other Holders of Securities of such series not joining in such action.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series on behalf of the Holders of all the
Securities of such series and any Coupons appertaining thereto may waive any
past default hereunder with respect to such series and its consequences, except
a default
(1) in the payment of the principal of, any premium or interest on, or
any Additional Amounts with respect to, any Security of such series or any
Coupons appertaining thereto, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 514. Waiver of Stay or Extension Laws.
The Issuer covenants and the Guarantor covenants, in each case, that
(to the extent that it may lawfully do so) it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Issuer and the Guarantor each expressly waives (to the extent that it may
lawfully do so) all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 515. Undertaking for Costs
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of any
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit having due regard to the merits and good
faith of the claims or defenses made by such party litigant; but the provisions
of this Section 515 shall not apply to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of Outstanding Securities of any series, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest, if any, on or Additional Amounts,
if any, with respect to any Security on or after the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on or
after the Redemption Date, and, in the case of repayment, on or after the date
for repayment) or for the enforcement of the right, if any, to convert or
exchange any Security into Common Stock or other securities in accordance with
its terms.
ARTICLE SIX
The Trustee
Section 601. Certain Rights of Trustee.
Subject to Sections 315(a) through 315(d) of the Trust Indenture Act:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or an Issuer Order or of the
Guarantor mentioned herein shall be sufficiently evidenced by a Guarantor
Request or Guarantor Order (in each case, other than delivery of any
Security, together with any Coupons appertaining thereto, to the Trustee
for authentication and delivery pursuant to Section 303 which shall be
sufficiently evidenced as provided therein) and any resolution of the Board
of Directors may be sufficiently evidenced by a Board Resolution or by the
Guarantor's Board of Directors may be sufficiently evidenced by a
Guarantor's Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence shall be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate or, if such
matter pertains to the Guarantor, a Guarantor's Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by or pursuant to this Indenture at the
request or direction of any of the Holders of Securities of any series or
any Coupons appertaining thereto pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine,
during business hours and upon reasonable notice, the books, records and
premises of the Issuer and the Guarantor, personally or by agent or
attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) subject to the provisions of Section 602 hereof and Sections
315(a) through 315(d) of the Trust Indenture Act, the Trustee shall not be
charged with knowledge of any Event of Default described in Section 501(4),
(5), (6) or (7) hereof unless a Responsible Officer of the Trustee shall
have actual knowledge of such Event of Default.
Section 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series entitled to receive reports pursuant to
Section 703(3), notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided, however, that, except in
the case of a default in the payment of the principal of (or premium, if any),
or interest, if any, on, or Additional Amounts or any sinking fund or purchase
fund installment with respect to, any Security of such series, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the best interest of the Holders of Securities
and Coupons of such series; and provided, further, that in the case of any
default of the character specified in Section 501(8) with respect to Securities
of such series, no such notice to Holders shall be given until at least 30 days
after the occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to Securities of such series.
Section 603. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, and in any Coupons shall be taken as
the statements of the Issuer or the Guarantor (if the Securities are Guaranteed
Securities), as the case may be, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or the Coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1 supplied to the Issuer
are true and accurate, subject to the qualifications set forth therein. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Issuer of the Securities or the proceeds thereof.
Section 604. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other Person that may be an agent of the Trustee or the
Guarantor or the Issuer, in its individual or any other capacity, may become the
owner or pledgee of Securities or Coupons and, subject to Sections 310(b) and
311 of the Trust Indenture Act, may otherwise deal with the Issuer or the
Guarantor with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other Person.
Section 605. Money Held in Trust.
Except as provided in Section 403 and Section 1003, money held by the
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by law and shall be held uninvested. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Issuer or the Guarantor.
Section 606. Compensation and Reimbursement.
The Issuer and the Guarantor jointly and severally agree:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by the Trustee hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's negligence
or bad faith; and
(3) to indemnify the Trustee and its agents for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending themselves against any claim
or liability in connection with the exercise or performance of any of their
powers or duties hereunder, except to the extent that any such loss,
liability or expense was due to the Trustee's negligence or bad faith.
As security for the performance of the obligations of the Issuer and
the Guarantor under this Section, the Trustee shall have a lien prior to the
Securities of any series upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the payment of principal of, and
premium or interest on or any Additional Amounts with respect to Securities or
any Coupons appertaining thereto.
Any compensation or expense incurred by the Trustee after a default
specified by Section 501 is intended to constitute an expense of administration
under any then applicable bankruptcy or insolvency law. "Trustee" for purposes
of this Section 606 shall include any predecessor Trustee but the negligence or
bad faith of any Trustee shall not affect the rights of any other Trustee under
this Section 606.
Section 607. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that is a Corporation,
organized and doing business under the laws of the United States of America, any
state thereof or the District of Columbia, eligible under Section 310(a)(1) of
the Trust Indenture Act to act as trustee under an indenture qualified under the
Trust Indenture Act and that has a combined capital and surplus (computed in
accordance with Section 310(a)(2) of the Trust Indenture Act) of at least
$50,000,000 subject to supervision or examination by Federal or state authority.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
Section 608. Resignation and Removal; Appointment of Successor.
(1) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee pursuant to Section 609.
(2) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Issuer and the
Guarantor (if the Securities are Guaranteed Securities). If the instrument of
acceptance by a successor Trustee required by Section 609 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to such
series.
(3) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and the
Issuer and the Guarantor (if the Securities are Guaranteed Securities).
(4) If at any time:
(a) the Trustee shall fail to comply with the obligations imposed upon
it under Section 310(b) of the Trust Indenture Act with respect to
Securities of any series after written request therefor by the Issuer, the
Guarantor (if the Securities are Guaranteed Securities) or any Holder of a
Security of such series who has been a bona fide Holder of a Security of
such series for at least six months, or
(b) the Trustee shall cease to be eligible under Section 607 and shall
fail to resign after written request therefor by the Issuer, the Guarantor
(if the Securities are Guaranteed Securities) or any such Holder, or
(c) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer, by or pursuant to a Board Resolution, or
the Guarantor (if the Securities are Guaranteed Securities), by or pursuant to a
Guarantor's Board Resolution, may remove the Trustee with respect to all
Securities or the Securities of such series, or (ii) subject to Section 315(e)
of the Trust Indenture Act, any Holder of a Security who has been a bona fide
Holder of a Security of such series for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities of
such series and the appointment of a successor Trustee or Trustees.
(1) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Issuer, by or pursuant to a
Board Resolution, and the Guarantor (if the Securities are Guaranteed
Securities), by or pursuant to a Guarantor's Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the Securities of that
or those series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such series
and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 609. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Issuer, the Guarantor (if the Securities are Guaranteed
Securities) and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 609, become the successor Trustee with
respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Issuer and the Guarantor (if the Securities
are Guaranteed Securities). If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Issuer and the
Guarantor (if the Securities are Guaranteed Securities) or the Holders of
Securities and accepted appointment in the manner required by Section 609, any
Holder of a Security who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(2) The Issuer shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Registered Securities, if any, of such series as their names and
addresses appear in the Security Register and, if Securities of such series are
issued as Bearer Securities, by publishing notice of such event once in an
Authorized Newspaper in each Place of Payment located outside the United States.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
Section 609. Acceptance of Appointment by Successor.
(1) Upon the appointment hereunder of any successor Trustee with
respect to all Securities, such successor Trustee so appointed shall execute,
acknowledge and deliver to the Issuer, the Guarantor and the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties hereunder of the retiring Trustee; but, on the
request of the Issuer, the Guarantor or such successor Trustee, such retiring
Trustee, upon payment of its charges, shall execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and, subject to Section 1003, shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, subject nevertheless to its claim, if any, provided for in
Section 606.
(2) Upon the appointment hereunder of any successor Trustee with
respect to the Securities of one or more (but not all) series, the Issuer, the
Guarantor (if any of such series of Securities is a series of Guaranteed
Securities), the retiring Trustee and such successor Trustee shall execute and
deliver an indenture supplemental hereto wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, such
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust, that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart from any
trust or trusts hereunder administered by any other such Trustee and that no
Trustee shall be responsible for any notice given to, or received by, or any act
or failure to act on the part of any other Trustee hereunder, and, upon the
execution and delivery of such supplemental indenture, the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein, such retiring Trustee shall have no further responsibility for the
exercise of rights and powers or for the performance of the duties and
obligations vested in the Trustee under this Indenture with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates other than as hereinafter expressly set forth, and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates; but, on request of the Issuer, the Guarantor,
if applicable, or such successor Trustee, such retiring Trustee, upon payment of
its charges with respect to the Securities of that or those series to which the
appointment of such successor relates and subject to Section 1003 shall duly
assign, transfer and deliver to such successor Trustee, to the extent
contemplated by such supplemental indenture, the property and money held by such
retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates, subject to
its claim, if any, provided for in Section 606.
(3) Upon request of any Person appointed hereunder as a successor
Trustee, the Issuer and the Guarantor shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (1) or (2) of this
Section, as the case may be.
(4) No Person shall accept its appointment hereunder as a successor
Trustee unless at the time of such acceptance such successor Person shall be
qualified and eligible under this Article.
Section 610. Merger, Conversion, Consolidation or Succession to
Business.
Any Corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any Corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated
but not delivered by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
Section 611. Appointment of Authenticating Agent.
The Trustee may appoint one or more Authenticating Agents acceptable
to the Issuer with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of that or
those series issued upon original issue, exchange, registration of transfer,
partial redemption or partial repayment or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Issuer and the
Guarantor and, except as provided in or pursuant to this Indenture, shall at all
times be a corporation that would be permitted by the Trust Indenture Act to act
as trustee under an indenture qualified under the Trust Indenture Act, is
authorized under applicable law and by its charter to act as an Authenticating
Agent and has a combined capital and surplus (computed in accordance with
Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000. If at any
time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect specified in this Section.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of an Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, provided such
Corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee, the Guarantor and the Issuer. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent, the Guarantor and the Issuer. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time such Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Guarantor
and shall (i) mail written notice of such appointment by first-class mail,
postage prepaid, to all Holders of Registered Securities, if any, of the series
with respect to which such Authenticating Agent shall serve, as their names and
addresses appear in the Security Register, and (ii) if Securities of the series
are issued as Bearer Securities, publish notice of such appointment at least
once in an Authorized Newspaper in the place where such successor Authenticating
Agent has its principal office if such office is located outside the United
States. Any successor Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Issuer agrees and the Guarantor agrees to pay each Authenticating
Agent from time to time reasonable compensation for its services under this
Section. If the Trustee makes such payments, it shall be entitled to be
reimbursed for such payments, subject to the provisions of Section 606.
The provisions of Sections 308, 603 and 604 shall be applicable to
each Authenticating Agent.
If an Authenticating Agent is appointed with respect to one or more
series of Securities pursuant to this Section, the Securities of such series may
have endorsed thereon, in addition to or in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
__________________________
As Trustee
By_______________________
As Authenticating Agent
By_______________________
Authorized Officer
If all of the Securities of any series may not be originally issued at
one time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment where the Issuer
wishes to have Securities of such series authenticated upon original issuance,
the Trustee, if so requested in writing (which writing need not be accompanied
by or contained in an Officers' Certificate by the Issuer), shall appoint in
accordance with this Section an Authenticating Agent having an office in a Place
of Payment designated by the Issuer with respect to such series of Securities.
ARTICLE SEVEN
Holders Lists and Reports by Trustee, Guarantor and Issuer
Section 701. Issuer and the Guarantor to Furnish Trustee Names and
Addresses of Holders.
In accordance with Section 312(a) of the Trust Indenture Act, the
Issuer and the Guarantor (with respect to Securities of each series that are
Guaranteed Securities) shall furnish or cause to be furnished to the Trustee
(1) semi-annually with respect to Securities of each series, a list,
in each case in such form as the Trustee may reasonably require, of the
names and addresses of Holders as of the applicable date, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Issuer or the Guarantor (with respect to
Securities of each series that are Guaranteed Securities) of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished,
provided, however, that so long as the Trustee is the Security Registrar no such
list shall be required to be furnished.
Section 702. Preservation of Information; Communications to Holders.
The Trustee shall comply with the obligations imposed upon it pursuant
to Section 312 of the Trust Indenture Act.
Every Holder of Securities or Coupons, by receiving and holding the
same, agrees with the Issuer, the Guarantor and the Trustee that neither the
Issuer, the Guarantor, the Trustee, any Paying Agent or any Security Registrar
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Holders of Securities in accordance with
Section 312(c) of the Trust Indenture Act, regardless of the source from which
such information was derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made under Section
312(b) of the Trust Indenture Act.
Section 703. Reports by Trustee.
(1) Within 60 days after September 15 of each year commencing with the
first September 15 following the first issuance of Securities pursuant to
Section 301, if required by Section 313(a) of the Trust Indenture Act, the
Trustee shall transmit, pursuant to Section 313(c) of the Trust Indenture Act, a
brief report dated as of such September 15 with respect to any of the events
specified in said Section 313(a) which may have occurred since the later of the
immediately preceding September 15 and the date of this Indenture.
(2) The Trustee shall transmit the reports required by Section 313(a)
of the Trust Indenture Act at the times specified therein.
(3) Reports pursuant to this Section shall be transmitted in the
manner and to the Persons required by Sections 313(c) and 313(d) of the Trust
Indenture Act.
Section 704. Reports by Issuer and Guarantor.
The Issuer and the Guarantor, pursuant to Section 314(a) of the Trust
Indenture Act, shall:
(1) file with the Trustee, within 15 days after the Issuer or the
Guarantor, as the case may be, is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Issuer or the
Guarantor, as the case may be, may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934;
or, if the Issuer or the Guarantor, as the case may be, is not required to file
information, documents or reports pursuant to either of said Sections, then it
shall file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Issuer or
the Guarantor, as the case may be, with the conditions and covenants of this
Indenture as may be required from time to time by such rules and regulations;
and
(3) transmit within 30 days after the filing thereof with the Trustee,
in the manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, such summaries of any information, documents and reports required
to be filed by the Issuer or the Guarantor pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from time to
time by the Commission.
ARTICLE EIGHT
Consolidation, Merger and Sales
Section 801. Issuer May Consolidate, Etc., Only on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Issuer with or into any other Person
or Persons (whether or not affiliated with the Issuer), or successive
consolidations or mergers in which either the Issuer will be the continuing
entity or the Issuer or its successor or successors shall be a party or parties,
or shall prevent any conveyance, transfer or lease of all or substantially all
of the property of the Issuer, to any other Person (whether or not affiliated
with the Issuer); provided, however, that:
(1) in case the Issuer shall consolidate with or merge into another
Person or convey, transfer or lease all or substantially all of its properties
and assets to any Person, the entity formed by such consolidation or into which
the Issuer is merged or the Person which acquires by conveyance or transfer, or
which leases, all or substantially all of the properties of the Issuer shall be
a Person organized and existing under the laws of the United States of America,
any state thereof or the District of Columbia and shall expressly assume, by an
indenture (or indentures, if at such time there is more than one Trustee)
supplemental hereto, executed by the successor Person and the Guarantor and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of, any premium and interest on and any
Additional Amounts with respect to all the Securities and the performance of
every obligation in this Indenture and the Outstanding Securities on the part of
the Issuer to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default or event which, after notice or lapse of time, or both, would become an
Event of Default, shall have occurred and be continuing; and
(3) either the Issuer or the successor Person shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
No such consolidation, merger, conveyance, transfer or lease shall be permitted
by this Section unless prior thereto the Guarantor shall have delivered to the
Trustee a Guarantor's Officers' Certificate and an Opinion of Counsel, each
stating that the Guarantor's obligations hereunder shall remain in full force
and effect thereafter.
Section 802. Successor Person Substituted for Issuer.
Upon any consolidation by the Issuer with or merger of the Issuer into
any other Person or any conveyance, transfer or lease of all or substantially
all of the properties and assets of the Issuer to any Person in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Issuer is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Issuer under this Indenture with the same effect as if such successor Person
had been named as the Issuer herein; and thereafter, except in the case of a
lease, the predecessor Person shall be released from all obligations and
covenants under this Indenture, the Securities and the Coupons.
Section 803. Guarantor May Consolidate, Etc., Only on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Guarantor with or into any other
Person or Persons (whether or not affiliated with the Guarantor), or successive
consolidations or mergers in which either the Guarantor will be the continuing
entity or the Guarantor or its successor or successors shall be a party or
parties, or shall prevent any conveyance, transfer or lease of all or
substantially all of the property of the Guarantor, to any other Person (whether
or not affiliated with the Guarantor); provided, however, that:
(1) in case the Guarantor shall consolidate with or merge into another
Person or convey, transfer or lease all or substantially all of its properties
and assets to any Person, the entity formed by such consolidation or into which
the Guarantor is merged or the Person which acquires by conveyance or transfer,
or which leases, all or substantially all of the properties and assets of the
Guarantor shall be a Person organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia and shall
expressly assume, by an indenture (or indentures, if at such time there is more
than one Trustee) supplemental hereto, executed and delivered by the Issuer and
the successor Person to the Trustee, in form satisfactory to the Trustee, the
obligation of the Guarantor under the Guarantee and the performance of every
other covenant of this Indenture on the part of the Guarantor to be performed or
observed;
(2) immediately after giving effect to such transaction, no Event of
Default and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and
(3) each of the Guarantor and the successor Person has delivered to
the Trustee a Guarantor's Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
Section 804. Successor Person Substituted for Guarantor.
Upon any consolidation or merger or any conveyance, transfer or lease
of all or substantially all of the properties and assets of the Guarantor to any
Person in accordance with Section 803, the successor Person formed by such
consolidation or into which the Guarantor is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Guarantor under this Indenture with the
same effect as if such successor Person had been named as the Guarantor herein,
and thereafter, except in the case of a lease to another Person, the predecessor
Person shall be released from all obligations and covenants under this
Indenture.
Section 805. Assumption by Guarantor.
The Guarantor, or a subsidiary thereof that is a Corporation, may
directly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of, any premium and interest on and any Additional Amounts with
respect to all the Guaranteed Securities and the performance of every covenant
of this Indenture on the part of the Issuer to be performed or observed. Upon
any such assumption, the Guarantor or such subsidiary shall succeed to, and be
substituted for and may exercise every right and power of, the Issuer under this
Indenture with the same effect as if the Guarantor or such subsidiary had been
named as the Issuer herein and the Issuer shall be released from all obligations
and covenants with respect to the Guaranteed Securities. No such assumption
shall be permitted unless the Guarantor has delivered to the Trustee (i) a
Guarantor's Officers' Certificate and an Opinion of Counsel, each stating that
such assumption and supplemental indenture comply with this Article, and that
all conditions precedent herein provided for relating to such transaction have
been complied with and that, in the event of assumption by a subsidiary, the
Guarantee and all other covenants of the Guarantor herein remain in full force
and effect and (ii) an opinion of independent counsel that the Holders of
Guaranteed Securities or related Coupons (assuming such Holders are only taxed
as residents of the United States) shall have no materially adverse United
States federal tax consequences as a result of such assumption, and that, if
any Securities are then listed on the New York Stock Exchange, that such
Securities shall not be delisted as a result of such assumption.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities or Coupons, the
Issuer (when authorized by or pursuant to a Board Resolution), the Guarantor
(when authorized by a Guarantor's Board Resolution) and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Issuer or the
Guarantor, and the assumption by any such successor of the covenants of the
Issuer or the Guarantor, as the case may be, contained herein and in the
Securities; or
(2) to add to the covenants of the Issuer or the Guarantor for the
benefit of the Holders of all or any series of Securities (as shall be specified
in such supplemental indenture or indentures) or to surrender any right or power
herein conferred upon the Issuer or the Guarantor; or
(3) to add any additional Events of Default with respect to all or any
series of Securities (as shall be specified in such supplemental indenture); or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to change or
eliminate any restrictions on the payment of principal of, any premium or
interest on or any Additional Amounts with respect to Securities, to permit
Bearer Securities to be issued in exchange for Registered Securities, to permit
Bearer Securities to be exchanged for Bearer Securities of other authorized
denominations or to permit or facilitate the issuance of Securities in
uncertificated form, provided any such action shall not adversely affect the
interests of the Holders of Securities of any series or any Coupons appertaining
thereto in any material respect; or
(5) to add to, delete from or revise the conditions, limitations and
restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of Securities, as herein set forth; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series and any
Coupons appertaining thereto as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as shall
be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section 609;
or
(9) to cure any ambiguity or to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture which shall not adversely affect the interests of the
Holders of Securities of any series then Outstanding or any Coupons appertaining
thereto in any material respect; or
(10) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Article Four, provided that
any such action shall not adversely affect the interests of any Holder of a
Security of such series and any Coupons appertaining thereto or any other
Security or Coupon in any material respect; or
(11) to effect the assumption by the Guarantor or a subsidiary thereof
pursuant to Section 805; or
(12) to amend or supplement any provision contained herein or in any
supplemental indenture, provided that no such amendment or supplement shall
materially adversely affect the interests of the Holders of any Securities then
Outstanding.
Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Issuer, the
Guarantor (if the Securities are Guaranteed Securities) and the Trustee, the
Issuer (when authorized by or pursuant to an Issuer's Board Resolution), the
Guarantor (when authorized by or pursuant to a Guarantor's Board Resolution), if
applicable, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture or of the Securities of such series; provided, however,
that no such supplemental indenture, without the consent of the Holder of each
Outstanding Security affected thereby, shall
(1) change the Stated Maturity of the principal of, or any premium or
installment of interest on or any Additional Amounts with respect to, any
Security, or reduce the principal amount thereof or the rate (or modify the
calculation of such rate) of interest thereon or any Additional Amounts with
respect thereto, or any premium payable upon the redemption thereof or
otherwise, or change the obligation of the Issuer to pay Additional Amounts
pursuant to Section 1004 (except as contemplated by Section 801(1) and permitted
by Section 901(1)), or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502 or the amount
thereof provable in bankruptcy pursuant to Section 504, change the redemption
provisions or adversely affect the right of repayment at the option of any
Holder as contemplated by Article Thirteen, or change the Place of Payment,
Currency in which the principal of, any premium or interest on, or any
Additional Amounts with respect to any Security is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption Date
or, in the case of repayment at the option of the Holder, on or after the date
for repayment or in the case of change in control), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
reduce the requirements of Section 1504 for quorum or voting, or
(3) modify or effect in any manner adverse to the Holders the terms
and conditions of the obligations of the Guarantor in respect of the due and
punctual payments of principal of, or any premium or interest on or any sinking
fund requirements or Additional Amounts with respect to, Guaranteed Securities,
or
(4) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which shall have been included expressly and
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 903. Execution of Supplemental Indentures.
As a condition to executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trust created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Section 315 of the Trust Indenture Act)
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of a Security theretofore or thereafter authenticated and delivered hereunder
and of any Coupon appertaining thereto shall be bound thereby.
Section 905. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Issuer shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Issuer, to any such supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
Section 906. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, any Premium, Interest and
Additional Amounts.
The Issuer covenants and agrees for the benefit of the Holders of the
Securities of each series that it will duly and punctually pay the principal of,
any premium and interest on and any Additional Amounts with respect to the
Securities of such series in accordance with the terms thereof, any Coupons
appertaining thereto and this Indenture. Any interest due on any Bearer Security
on or before the Maturity thereof, and any Additional Amounts payable with
respect to such interest, shall be payable only upon presentation and surrender
of the Coupons appertaining thereto for such interest as they severally mature.
Section 1002. Maintenance of Office or Agency.
The Issuer or the Guarantor (if any Guaranteed Securities are
Outstanding) shall maintain in each Place of Payment for any series of
Securities an Office or Agency where Securities of such series (but not Bearer
Securities, except as otherwise provided below, unless such Place of Payment is
located outside the United States) may be presented or surrendered for payment,
where Securities of such series may be surrendered for registration of transfer
or exchange, and where notices and demands to or upon the Issuer or the
Guarantor (if any Guaranteed Securities are Outstanding) in respect of the
Securities of such series relating thereto and this Indenture may be served. If
Securities of a series are issuable as Bearer Securities, the Issuer or the
Guarantor (if any Guaranteed Securities are Outstanding) shall maintain, subject
to any laws or regulations applicable thereto, an Office or Agency in a Place of
Payment for such series which is located outside the United States where
Securities of such series and any Coupons appertaining thereto may be presented
and surrendered for payment; provided, however, that if the Securities of such
series are listed on The Stock Exchange of the United Kingdom and the Republic
of Ireland or the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and such stock exchange shall so require, the Issuer
or the Guarantor (if any Guaranteed Securities are Outstanding) shall maintain a
Paying Agent in London, Luxembourg or any other required city located outside
the United States, as the case may be, so long as the Securities of such series
are listed on such exchange. The Issuer or the Guarantor (if any Guaranteed
Securities are Outstanding) will give prompt written notice to the Trustee of
the location, and any change in the location, of such Office or Agency. If at
any time the Issuer or the Guarantor shall fail to maintain any such required
Office or Agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, except that Bearer Securities of such
series and any Coupons appertaining thereto may be presented and surrendered for
payment at the place specified for the purpose with respect to such Securities
as provided in or pursuant to this Indenture, and the Issuer and the Guarantor
each hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
Except as otherwise provided in or pursuant to this Indenture, no
payment of principal, premium, interest or Additional Amounts with respect to
Bearer Securities shall be made at any Office or Agency in the United States or
by check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, if
amounts owing with respect to any Bearer Securities shall be payable in Dollars,
payment of principal of, any premium or interest on and any Additional Amounts
with respect to any such Security may be made at the Corporate Trust Office of
the Trustee or any Office or Agency designated by the Issuer in the City of
_______, ______________, if (but only if) payment of the full amount of such
principal, premium, interest or Additional Amounts at all offices outside the
United States maintained for such purpose by the Issuer in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Issuer or the Guarantor (if any Guaranteed Securities are
Outstanding) may also from time to time designate one or more other Offices or
Agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Issuer or the Guarantor of its obligation to maintain an
Office or Agency in each Place of Payment for Securities of any series for such
purposes. The Issuer or the Guarantor (if any Guaranteed Securities are
Outstanding) shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
Office or Agency. Unless otherwise provided in or pursuant to this Indenture,
the Issuer and the Guarantor (with respect to any Guaranteed Securities) each
hereby designates as the Place of Payment for each series of Securities the City
of ________, _____________, and initially appoints _________________________ as
the Office or Agency of the Issuer or the Guarantor (with respect to any
Guaranteed Securities), as the case may be, in the City of ____________,
_______________ for such purpose. The Issuer or the Guarantor, as the case may
be, may subsequently appoint a different Office or Agency in the City of
_____________, _________________ for the Securities of any series.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, if and so long as the Securities of any series (i) are denominated
in a Foreign Currency or (ii) may be payable in a Foreign Currency, or so long
as it is required under any other provision of this Indenture, then the Issuer
will maintain with respect to each such series of Securities, or as so required,
at least one exchange rate agent.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Issuer shall at any time act as its own Paying Agent with
respect to any series of Securities, it shall, on or before each due date of the
principal of, any premium or interest on or Additional Amounts with respect to
any of the Securities of such series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum in the currency or currencies,
currency unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) sufficient to pay the principal
or any premium, interest or Additional Amounts so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
shall promptly notify the Trustee of its action or failure so to act.
Whenever the Issuer shall have one or more Paying Agents for any
series of Securities, it shall, on or prior to each due date of the principal
of, any premium or interest on or any Additional Amounts with respect to any
Securities of such series, deposit with any Paying Agent a sum (in the currency
or currencies, currency unit or units or composite currency or currencies
described in the preceding paragraph) sufficient to pay the principal or any
premium, interest or Additional Amounts so becoming due, such sum to be held in
trust for the benefit of the Persons entitled thereto, and (unless such Paying
Agent is the Trustee) the Issuer will promptly notify the Trustee of its action
or failure so to act.
The Issuer shall cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal of, any
premium or interest on or any Additional Amounts with respect to Securities of
such series in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as provided in or
pursuant to this Indenture;
(2) give the Trustee notice of any default by the Issuer or the
Guarantor (or any other obligor upon the Securities of such series) in the
making of any payment of principal, any premium or interest on or any Additional
Amounts with respect to the Securities of such series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Issuer or the Guarantor (with Securities that are Guaranteed
Securities) may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Issuer Order or
Guarantor Order, as the case may be, direct any Paying Agent to pay, to the
Trustee all sums held in trust by the Issuer or such Paying Agent, such sums to
be held by the Trustee upon the same terms as those upon which such sums were
held by the Issuer or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such sums.
Except as otherwise provided herein or pursuant hereto, any money
deposited with the Trustee or any Paying Agent, or then held by the Issuer, in
trust for the payment of the principal of, any premium or interest on or any
Additional Amounts with respect to any Security of any series or any Coupon
appertaining thereto and remaining unclaimed for two years after such principal
or any such premium or interest or any such Additional Amounts shall have become
due and payable shall be paid to the Issuer on Issuer Request (or if deposited
by the Guarantor, paid to the Guarantor on Guarantor Request), or (if then held
by the Issuer) shall be discharged from such trust; and the Holder of such
Security or any Coupon appertaining thereto shall thereafter, as an unsecured
general creditor, look only to the Issuer and the Guarantor (if the Securities
are Guaranteed Securities) for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Issuer as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuer cause to be published once, in an Authorized
Newspaper in each Place of Payment for such series or to be mailed to Holders of
Registered Securities of such series, or both, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication or mailing nor shall it be later than
two years after such principal and any premium or interest or Additional Amounts
shall have become due and payable, any unclaimed balance of such money then
remaining will be repaid to the Issuer or the Guarantor, as the case may be.
Section 1004. Additional Amounts.
If any Securities of a series provide for the payment of Additional
Amounts, the Issuer and the Guarantor (if the Securities are Guaranteed
Securities) agree to pay to the Holder of any such Security or any Coupon
appertaining thereto Additional Amounts as provided in or pursuant to this
Indenture or such Securities. Whenever in this Indenture there is mentioned, in
any context, the payment of the principal of or any premium or interest on, or
in respect of, any Security of any series or any Coupon or the net proceeds
received on the sale or exchange of any Security of any series, such mention
shall be deemed to include mention of the payment of Additional Amounts provided
by the terms of such series established hereby or pursuant hereto to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to such terms, and express mention of the payment of
Additional Amounts (if applicable) in any provision hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.
Except as otherwise provided in or pursuant to this Indenture or the
Securities of the applicable series, if the Securities of a series provide for
the payment of Additional Amounts, at least 10 days prior to the first Interest
Payment Date with respect to such series of Securities (or if the Securities of
such series shall not bear interest prior to Maturity, the first day on which a
payment of principal is made), and at least 10 days prior to each date of
payment of principal or interest if there has been any change with respect to
the matters set forth in the below-mentioned Officers' Certificate, the Issuer
or the Guarantor, as the case may be, shall furnish to the Trustee and the
principal Paying Agent or Paying Agents, if other than the Trustee, an Officers'
Certificate instructing the Trustee and such Paying Agent or Paying Agents
whether such payment of principal of and premium, if any, or interest on the
Securities of such series shall be made to Holders of Securities of such series
or the Coupons appertaining thereto who are United States Aliens without
withholding for or on account of any tax, assessment or other governmental
charge described in the Securities of such series. If any such withholding shall
be required, then such Officers' Certificate shall specify by country the
amount, if any, required to be withheld on such payments to such Holders of
Securities or Coupons, and the Issuer and the Guarantor (if the Securities are
Guaranteed Securities) agree to pay to the Trustee or such Paying Agent the
Additional Amounts required by the terms of such Securities. The Issuer and the
Guarantor each covenant to indemnify the Trustee and any Paying Agent for, and
to hold them harmless against, any loss, liability or expense reasonably
incurred without negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section.
Section 1005. Maintenance of Properties.
The Issuer will 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 Issuer may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Issuer or any Subsidiary
from selling or otherwise disposing for value any of its properties in the
ordinary course of its business.
Section 1006. Insurance.
The Issuer will, and will cause each of its Subsidiaries to, keep all
of its insurable properties insured against loss or damage at least equal to
their then full insurable value with financially sound and reputable insurers of
recognized responsibility.
Section 1007. Existence.
Subject to Article Eight, the Issuer shall do or cause to be done all
things necessary to preserve and keep in full force and effect their respective
existences and that of each Subsidiary and their respective rights (charter and
statutory) and franchises; provided, however, that the foregoing shall not
obligate the Issuer to preserve any such right or franchise if the Issuer or any
Subsidiary shall determine that the preservation thereof is no longer desirable
in the conduct of its business or the business of such Subsidiary and that the
loss thereof is not disadvantageous in any material respect to any Holder.
Section 1008. Waiver of Certain Covenants.
The Issuer or the Guarantor, as the case may be, may omit in any
particular instance to comply with any term, provision or condition set forth in
Sections 1005, 1006, 1007, 1011 or 1012 with respect to the Securities of any
series if before the time for such compliance the Holders of at least a majority
in principal amount of the Outstanding Securities of such series, by Act of such
Holders, either shall waive such compliance in such instance or generally shall
have waived compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Issuer and the Guarantor and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force and
effect.
Section 1009. Issuer Statement as to Compliance; Notice of Certain
Defaults.
The Issuer shall deliver to the Trustee, within 120 days after the end
of each fiscal year, a written statement (which need not be contained in or
accompanied by an Officers' Certificate) signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the General Partner acting in its capacity as the sole general partner of the
Issuer, stating that
(a) a review of the activities of the Issuer during such year and of
its performance under this Indenture has been made under his or her
supervision, and
(b) to the best of his or her knowledge, based on such review, (a) the
Issuer has complied with all the conditions and covenants imposed on it
under this Indenture throughout such year, or, if there has been a default
in the fulfillment of any such condition or covenant, specifying each such
default known to him or her and the nature and status thereof, and (b) no
event has occurred and is continuing which is, or after notice or lapse of
time or both would become, an Event of Default, or, if such an event has
occurred and is continuing, specifying each such event known to him and the
nature and status thereof.
(2) The Issuer shall deliver to the Trustee, within five days after
the occurrence thereof, written notice of any Event of Default or any event
which after notice or lapse of time or both would become an Event of Default
pursuant to clause (4) of Section 501.
Section 1010. Guarantor Statement as to Compliance; Notice of Certain
Defaults.
The Guarantor shall deliver to the Trustee, within 120 days after the
end of each fiscal year, a written statement (which need not be contained in or
accompanied by an Officers' Certificate) signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the Guarantor, stating that
(a) a review of the activities of the Guarantor during such year and
of performance under this Indenture has been made under his or her
supervision, and
(b) to the best of his or her knowledge, based on such review, (a) the
Guarantor has complied with conditions and covenants imposed on it under
this Indenture throughout such year, or, if there has been a default in the
fulfillment of any such condition or covenant, specifying each such default
known to him or her and the nature and status thereof, and (b) no event has
occurred and is continuing which constitutes, or which after notice or
lapse of time or both would become, an Event of Default, or, if such an
event has occurred and is continuing, specifying each such event known to
him and the nature and status thereof.
The Guarantor shall deliver to the Trustee, within five days after the
occurrence thereof, written notice of any event which after notice or lapse of
time or both would become an Event of Default pursuant to clause (4) of Section
501.
Section 1011. Payment of Taxes and Other Claims.
The Issuer will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon them or any Subsidiary or upon the income,
profits or property of the Issuer or any Subsidiary, and (2) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Issuer or any Subsidiary; provided, however, that the
Issuer shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
Section 1012. Provision of Financial Information.
Whether or not the Issuer is subject to Section 13 or 15(d) of the
Exchange Act and for so long as any Securities are outstanding, the Issuer will,
to the extent permitted under the Exchange Act, file with the Commission the
annual reports, quarterly reports and other documents which the Issuer would
have been required to file with the Commission pursuant to such Section 13 or
15(d) (the "Financial Statements") if the Issuer were so subject, such documents
to be filed with the Commission on or prior to the respective dates (the
"Required Filing Dates") by which the Issuer would have been required so to file
such documents if the Issuer were so subject.
The Issuer will also in any event (x) within 15 days after each
Required Filing Date (i) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders copies
of the annual reports and quarterly reports which the Issuer would have been
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Issuer were subject to such Sections, and (ii) file with the
Trustee copies of the annual reports, quarterly reports and other documents
which the Issuer would have been required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act if the Issuer were subject to such
Sections and (y) if filing such documents by the Issuer with the Commission is
not permitted under the Exchange Act, promptly upon written request and payment
of the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective Holder.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.
Redemption of Securities of any series at the option of the Issuer as
permitted or required by the terms of such Securities shall be made in
accordance with the terms of such Securities and (except as otherwise provided
herein or pursuant hereto) this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Issuer to redeem any Securities shall be evidenced
by or pursuant to a Board Resolution. In case of any redemption at the election
of the Issuer of (a) less than all of the Securities of any series or (b) all of
the Securities of any series, with the same issue date, interest rate or
formula, Stated Maturity and other terms, the Issuer shall, at least 60 days
prior to the Redemption Date fixed by the Issuer (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date and
of the principal amount of Securities of such series to be redeemed.
Section 1103. Selection by Trustee of Securities to be Redeemed.
If less than all of the Securities of any series with the same issue
date, interest rate or formula, Stated Maturity and other terms are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal amount of Registered
Securities of such series; provided, however, that no such partial redemption
shall reduce the portion of the principal amount of a Registered Security of
such series not redeemed to less than the minimum denomination for a Security of
such series established herein or pursuant hereto.
The Trustee shall promptly notify the Issuer and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal of such Securities which has been or is to be redeemed.
Unless otherwise specified in or pursuant to this Indenture or the
Securities of any series, if any Security selected for partial redemption is
converted or exchanged for Common Stock or other securities in part before
termination of the conversion or exchange right with respect to the portion of
the Security so selected, the converted portion of such Security shall be deemed
(so far as may be) to be the portion selected for redemption. Securities which
have been converted or exchanged during a selection of Securities to be redeemed
shall be treated by the Trustee as Outstanding for the purpose of such
selection.
Section 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section
106, not less than 30 nor more than 60 days prior to the Redemption Date, unless
a shorter period is specified in the Securities to be redeemed, to the Holders
of Securities to be redeemed. Failure to give notice by mailing in the manner
herein provided to the Holder of any Registered Securities designated for
redemption as a whole or in part, or any defect in the notice to any such
Holder, shall not affect the validity of the proceedings for the redemption of
any other Securities or portion thereof.
Any notice that is mailed to the Holder of any Registered Securities
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the Holder of such Security will receive,
without charge, a new Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed,
(5) that, on the Redemption Date, the Redemption Price shall become
due and payable upon each such Security or portion thereof to be redeemed, and,
if applicable, that interest thereon shall cease to accrue on and after said
date,
(6) the place or places where such Securities, together (in the case
of Bearer Securities) with all Coupons appertaining thereto, if any, maturing
after the Redemption Date, are to be surrendered for payment of the Redemption
Price and any accrued interest and Additional Amounts pertaining thereto,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer Securities
of any series, if any, surrendered for redemption must be accompanied by all
Coupons maturing subsequent to the date fixed for redemption or the amount of
any such missing Coupon or Coupons will be deducted from the Redemption Price,
unless security or indemnity satisfactory to the Issuer, the Trustee and any
Paying Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such series are not to be redeemed, and if such Bearer
Securities may be exchanged for Registered Securities not subject to redemption
on the Redemption Date pursuant to Section 305 or otherwise, the last date, as
determined by the Issuer, on which such exchanges may be made,
(10) in the case of Securities of any series that are convertible or
exchangeable into Common Stock or other securities, the conversion or exchange
price or rate, the date or dates on which the right to convert or exchange the
principal of the Securities of such series to be redeemed will commence or
terminate and the place or places where such Securities may be surrendered for
conversion or exchange, and
(11) the CUSIP number or the Euroclear or the Cedel reference numbers
of such Securities, if any (or any other numbers used by a Depository to
identify such Securities).
A notice of redemption published as contemplated by Section 106 need
not identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Issuer shall be given by the Issuer or, at the Issuer's request, by the
Trustee in the name and at the expense of the Issuer.
Section 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Issuer shall deposit, with
respect to the Securities of any series called for redemption pursuant to
Section 1104, with the Trustee or with a Paying Agent (or, if the Issuer is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money in the applicable Currency sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date, unless otherwise specified pursuant to Section 301 or in the
Securities of such series) any accrued interest on and Additional Amounts with
respect thereto, all such Securities or portions thereof which are to be
redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Issuer shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest and the Coupons for such
interest appertaining to any Bearer Securities so to be redeemed, except to the
extent provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all Coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Issuer at the Redemption Price, together with any accrued interest
and Additional Amounts to the Redemption Date; provided, however, that, except
as otherwise provided in or pursuant to this Indenture or the Bearer Securities
of such series, installments of interest on Bearer Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable only upon
presentation and surrender of Coupons for such interest (at an Office or Agency
located outside the United States except as otherwise provided in Section 1002),
and provided, further, that, except as otherwise specified in or pursuant to
this Indenture or the Registered Securities of such series, installments of
interest on Registered Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
Regular Record Dates therefor according to their terms and the provisions of
Section 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing Coupons, or the surrender of such missing
Coupon or Coupons may be waived by the Issuer and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Security
shall surrender to the Trustee or any Paying Agent any such missing Coupon in
respect of which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted; provided,
however, that any interest or Additional Amounts represented by Coupons shall be
payable only upon presentation and surrender of those Coupons at an Office or
Agency for such Security located outside of the United States except as
otherwise provided in Section 1002.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium, until paid,
shall bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 1107. Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part shall be
surrendered at any Office or Agency for such Security (with, if the Issuer or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Issuer and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing) and the Issuer shall execute
and the Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Registered Security or Securities of the same
series, containing identical terms and provisions, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered. If a Security in global form is so surrendered, the Issuer shall
execute, and the Trustee shall authenticate and deliver to the U.S. Depository
or other Depository for such Security in global form as shall be specified in
the Issuer Order with respect thereto to the Trustee, without service charge, a
new Security in global form in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Security in global form so
surrendered.
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series, except as otherwise permitted or
required in or pursuant to this Indenture or any Security of such series issued
pursuant to this Indenture.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of such series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series and this Indenture.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Issuer may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of any series to be made pursuant to the
terms of such Securities (1) deliver Outstanding Securities of such series
(other than any of such Securities previously called for redemption or any of
such Securities in respect of which cash shall have been released to the
Issuer), together in the case of any Bearer Securities of such series with all
unmatured Coupons appertaining thereto, and (2) apply as a credit Securities of
such series which have been redeemed either at the election of the Issuer
pursuant to the terms of such series of Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, provided that such series of Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by the
Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly. If as a result of the delivery or credit
of Securities of any series in lieu of cash payments pursuant to this Section
1202, the principal amount of Securities of such series to be redeemed in order
to exhaust the aforesaid cash payment shall be less than $100,000, the Trustee
need not call Securities of such series for redemption, except upon Issuer
Request, and such cash payment shall be held by the Trustee or a Paying Agent
and applied to the next succeeding sinking fund payment, provided, however, that
the Trustee or such Paying Agent shall at the request of the Issuer from time to
time pay over and deliver to the Issuer any cash payment so being held by the
Trustee or such Paying Agent upon delivery by the Issuer to the Trustee of
Securities of that series purchased by the Issuer having an unpaid principal
amount equal to the cash payment requested to be released to the Issuer.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 75 days prior to each sinking fund payment date for any
series of Securities, the Issuer shall deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting of
Securities of that series pursuant to Section 1202, and the optional amount, if
any, to be added in cash to the next ensuing mandatory sinking fund payment, and
will also deliver to the Trustee any Securities to be so credited and not
theretofore delivered. If such Officers' Certificate shall specify an optional
amount to be added in cash to the next ensuing mandatory sinking fund payment,
the Issuer shall thereupon be obligated to pay the amount therein specified. Not
less than 60 days before each such sinking fund payment date the Trustee shall
select the Securities to be redeemed upon such sinking fund payment date in the
manner specified in Section 1103 and cause notice of the redemption thereof to
be given in the name of and at the expense of the Issuer in the manner provided
in Section 1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
1106 and 1107.
ARTICLE THIRTEEN
Repayment at the Option of Holders
Section 1301. Applicability of Article.
Securities of any series which are repayable at the option of the
Holders thereof before their Stated Maturity shall be repaid in accordance with
the terms of the Securities of such series. The repayment of any principal
amount of Securities pursuant to such option of the Holder to require repayment
of Securities before their Stated Maturity, for purposes of Section 309, shall
not operate as a payment, redemption or satisfaction of the Indebtedness
represented by such Securities unless and until the Issuer, at its option, shall
deliver or surrender the same to the Trustee with a directive that such
Securities be cancelled. Notwithstanding anything to the contrary contained in
this Section 1301, in connection with any repayment of Securities, the Issuer
may arrange for the purchase of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Holders of such Securities on or before the close of business on the
repayment date an amount not less than the repayment price payable by the Issuer
on repayment of such Securities, and the obligation of the Issuer to pay the
repayment price of such Securities shall be satisfied and discharged to the
extent such payment is so paid by such purchasers.
ARTICLE FOURTEEN
Securities in Foreign Currencies
Section 1401. Applicability of Article.
Whenever this Indenture provides for (i) any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same Currency, or (ii)
any distribution to Holders of Securities, in the absence of any provision to
the contrary in the form of Security of any particular series or pursuant to
this Indenture or the Securities, any amount in respect of any Security
denominated in a Currency other than Dollars shall be treated for any such
action or distribution as that amount of Dollars that could be obtained for such
amount on such reasonable basis of exchange and as of the record date with
respect to Registered Securities of such series (if any) for such action,
determination of rights or distribution (or, if there shall be no applicable
record date, such other date reasonably proximate to the date of such action,
determination of rights or distribution) as the Issuer or the Guarantor may
specify in a written notice to the Trustee or, in the absence of such written
notice, as the Trustee may determine.
ARTICLE FIFTEEN
Meetings of Holders of Securities
Section 1501. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities of any series may be called at any
time and from time to time pursuant to this Article to make, give or take any
request, demand, authorization, direction, notice, consent, waiver or other Act
provided by this Indenture to be made, given or taken by Holders of Securities
of such series.
Section 1502. Call, Notice and Place of Meetings.
(1) The Trustee may at any time call a meeting of Holders of Securities
of any series for any purpose specified in Section 1501, to be held at such time
and at such place in the City of _____________, _____________, or, if Securities
of such series have been issued in whole or in part as Bearer Securities, in
London or in such place outside the United States as the Trustee shall
determine. Notice of every meeting of Holders of Securities of any series,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 106, not less than 21 nor more than 180 days prior to the
date fixed for the meeting.
(2) In case at any time the Issuer (by or pursuant to a Board
Resolution), the Guarantor (if the Securities are Guaranteed Securities), by or
pursuant to a Guarantor's Board Resolution or the Holders of at least 10% in
principal amount of the Outstanding Securities of any series shall have
requested the Trustee to call a meeting of the Holders of Securities of such
series for any purpose specified in Section 1501, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting, and
the Trustee shall not have mailed notice of or made the first publication of the
notice of such meeting within 21 days after receipt of such request (whichever
shall be required pursuant to Section 106) or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Issuer, the Guarantor,
if applicable, or the Holders of Securities of such series in the amount above
specified, as the case may be, may determine the time and the place in the City
of __________, _____________, or, if Securities of such series are to be issued
as Bearer Securities, in London for such meeting and may call such meeting for
such purposes by giving notice thereof as provided in clause (1) of this
Section.
Section 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel, any representatives of the Guarantor and its counsel
and any representatives of the Issuer and its counsel.
Section 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series. In the absence of a quorum within 30
minutes after the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved.
In any other case the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 1502(1), except that such notice need be given only
once not less than five days prior to the date on which the meeting is scheduled
to be reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted only by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Securities of that series;
provided, however, that, except as limited by the proviso to Section 902, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other Act which this Indenture expressly provides may
be made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Securities of a series
may be adopted at a meeting or an adjourned meeting duly reconvened and at which
a quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of such
series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the Coupons
appertaining thereto, whether or not such Holders were present or represented at
the meeting.
Section 1505. Determination of Voting Rights; Conduct and Adjournment
of Meetings.
(1) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of such series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Securities shall be proved in the manner specified in Section 104
and the appointment of any proxy shall be proved in the manner specified in
Section 104 or by having the signature of the person executing the proxy
witnessed or guaranteed by any trust company, bank or banker authorized by
Section 104 to certify to the holding of Bearer Securities. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section 104 or
other proof.
(2) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the Issuer
or by Holders of Securities as provided in Section 1502(2), in which case the
Issuer, the Guarantor or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(3) At any meeting, each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of Securities of
such series held or represented by him; provided, however, that no vote shall be
cast or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder of a
Security of such series or proxy.
(4) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be adjourned from time
to time by Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
Section 1506. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Issuer and the Guarantor, and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
ARTICLE SIXTEEN
Guarantee
Section 1601. Guarantee.
The Guarantee set forth in this Article Sixteen shall only be in
effect with respect to Securities of a series to the extent such Guarantee is
made applicable to such series in accordance with Section 301. The Guarantor
hereby unconditionally guarantees to each Holder of a Guaranteed Security
authenticated and delivered by the Trustee the due and punctual payment of the
principal of, any premium and interest on, and any Additional Amounts with
respect to such Guaranteed Security, whether at maturity, by acceleration,
redemption, repayment or otherwise, in accordance with the terms of such
Security and of this Indenture. In case of the failure of the Issuer punctually
to pay any such principal, premium, interest or Additional Amounts, the
Guarantor hereby agrees to cause any such payment to be made punctually when and
as the same shall become due and payable, whether at maturity, upon
acceleration, redemption, repayment or otherwise, and as if such payment were
made by the Issuer.
The Guarantor hereby agrees that its obligations hereunder shall be as
principal and not merely as surety, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any Guaranteed Security or this Indenture,
any failure to enforce the provisions of any Guaranteed Security or this
Indenture, or any waiver, modification, consent or indulgence granted with
respect thereto by the Holder of such Guaranteed Security or the Trustee, the
recovery of any judgment against the Issuer or any action to enforce the same,
or any other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or guarantor. The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
merger, insolvency or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer, protest or notice with respect to any such
Guaranteed Security or the Indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be discharged except by
payment in full of the principal of, any premium and interest on, and any
Additional Amounts required with respect to, the Guaranteed Securities and
the complete performance of all other obligations contained in the Guaranteed
Securities.
This Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time payment on any Guaranteed Security, in whole or in
part, is rescinded or must otherwise be restored to the Issuer or the Guarantor
upon the bankruptcy, liquidation or reorganization of the Issuer or otherwise.
The Guarantor shall be subrogated to all rights of the Holder of any
Guaranteed Security against the Issuer in respect of any amounts paid to such
Holder by the Guarantor pursuant to the provisions of this Guarantee; provided,
however, that the Guarantor shall not be entitled to enforce, or to receive any
payments arising out of or based upon, such right of subrogation until the
principal of, any premium and interest on, and any Additional Amounts required
with respect to, all Guaranteed Securities shall have been paid in full.
* * * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed, all
as of the day and year first above written.
Reckson Operating Partnership, L.P.
By: Reckson Associates Realty Corp.
By_________________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
Reckson Associates Realty Corp.,
as Guarantor
By_________________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
[SEAL]
___________________________
as Trustee
By_____________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
[SEAL]
STATE OF _________)
) ss.:
COUNTY OF _________)
On the _____ day of ________, 199_, before me personally came Donald
Rechler, to me known, who, being by me duly sworn, did depose and say that he is
the Chief Executive Officer of Reckson Associates Realty Corp., acting in its
capacity as the managing general partner of Reckson Operating Partnership, L.P.,
a Delaware limited partnership, one of the persons described in and who executed
the foregoing instrument; and that he signed his name thereto by authority of
the managing general partner of said Partnership.
____________________________
Notary Public
[NOTARIAL SEAL]
STATE OF ___________)
) ss.:
COUNTY OF __________)
On the _____ day of _______, 199_, before me personally came Donald
Rechler, to me known, who, being by me duly sworn, did depose and say that he is
the Chief Executive Officer of Reckson Associates Realty Corp., a Maryland
corporation, one of the persons described in and who executed the foregoing
instrument; that he knows the seal of said Corporation; that the seal affixed to
said instrument is such Corporation's seal; that it was so affixed by authority
of the Board of Directors of said Corporation; and that he signed his name
thereto by like authority.
____________________________
Notary Public
[NOTARIAL SEAL]
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On the _____ day of ____________, 199_, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he is a _____________ of ___________________________, a _________________
trust company organized and existing under the laws of the _____________ of
______________, one of the persons described in and who executed the foregoing
instrument; that he knows the seal of said Corporation; that the seal affixed to
said instrument is such trust company's seal; that it was so affixed by
authority of the Board of Directors of said trust company; and that he signed
his name thereto by like authority.
____________________________
Notary Public
[NOTARIAL SEAL]
Exhibit 5
Brown & Wood LLP
One World Trade Center
New York, New York 10048
November 12, 1998
Reckson Associates Realty Corp.
Reckson Operating Partnership, L.P.
225 Broadhollow Road
Melville, New York 11747
Ladies and Gentlemen:
This opinion is furnished in connection with the Registration
Statement on Form S-3 filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
registration of Debt Securities of Reckson Operating Partnership, L.P., a
Delaware limited partnership (the "Operating Partnership"), in an aggregate
initial public offering price not to exceed $260,000,000 (the "Debt
Securities"). The Debt Securities may be fully and unconditionally guaranteed
(the "Guarantees") under certain circumstances by Reckson Associates Realty
Corp., a Maryland corporation (the "Company"). The Registration Statement
provides that the Debt Securities may be issued in one or more series, in
amounts, at prices and on terms to be set forth in one or more prospectus
supplements to the prospectus contained in the Registration Statement
(collectively, the "Prospectus") and, if issued, will be issued under an
indenture in the form attached as an Exhibit to the Registration Statement
(the "Indenture").
In connection with rendering this opinion, we have examined the
Certificate of Limited Partnership and the Amended and Restated Agreement of
Limited Partnership, as amended, of the Operating Partnership and the Articles
of Incorporation and the Bylaws, as amended, of the Company; records of
corporate proceedings of the Company; the Registration Statement; and such other
certificates, receipts, records and documents as we considered necessary for the
purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Debt
Securities have been duly authorized by all necessary partnership action of the
Operating Partnership and the Guarantees have been duly authorized by all
necessary corporate action of the Company, and when (i) the applicable
provisions of the Securities Act and such state "blue sky" or securities laws as
may be applicable have been complied with, (ii) the Operating Partnership, the
Company and the trustee have duly executed and delivered the Indenture and (iii)
the final terms of the Debt Securities and, if applicable, the Guarantees have
been duly established and approved and have been duly executed, authenticated
(in the case of the Debt Securities) and delivered against consideration
therefor as contemplated in the Registration Statement, such Debt Securities and
Guarantees will constitute valid and legally binding obligations of the
Operating Partnership and the Company, respectively, and registered holders of
such Debt Securities will be entitled to the benefits of the Indenture;
provided, however, that the foregoing opinion is subject, as to enforcement, to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the enforcement of creditors' rights generally, (ii)
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) and (iii) provisions of law that require a
judgment for money damages rendered by a court in the United States of America
be expressed only in U.S. dollars.
We are attorneys admitted to practice in the State of New York. We
express no opinion concerning the laws of any jurisdiction other than the
federal laws of the United States of America, the Revised Uniform Limited
Partnership Act of the State of Delaware, the laws of the State of Maryland
and the laws of the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
/s/ Brown & Wood LLP
EXHIBIT 8
Brown & Wood LLP
One World Trade Center
New York, New York 10048
November 12, 1998
Reckson Associates Realty Corp.
Reckson Operating Partnership, L.P.
225 Broadhollow Road
Melville, New York 11747
Re: $260,000,000 Aggregate Principal Amount
of Debt Securities of Reckson Operating
Partnership, L.P. and Related Guarantees of
Reckson Associates Realty Corp.
--------------------------------------------
Ladies and Gentlemen:
You have requested our opinion concerning certain federal income tax
matters with respect to Reckson Associates Realty Corp. (the "Company") in
connection with the Form S-3 Registration Statement of the Company and Reckson
Operating Partnership, L.P. (the "Operating Partnership") to be filed by the
Company and the Operating Partnership with the Securities and Exchange
Commission on or about November 10, 1998 (the "Registration Statement").
This opinion is based, in part, upon various assumptions and
representations, including representations made by the Company as to factual
matters set forth in the Registration Statement, in registration statements on
Form S-11 and Form S-3 previously filed by the Company with the Securities and
Exchange Commission and in a letter delivered to us by the Company today. This
opinion is also based upon the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury Regulations promulgated thereunder and existing
administrative and judicial interpretations thereof, all as they exist at the
date of this interpretations are subject to change, in some circumstances with
retroactive effect. Any changes to the foregoing authorities might result in
modifications of our opinions contained herein.
Based on the foregoing, we are of the opinion that, commencing with the
Company's taxable year ended December 31, 1995, the Company has been organized
in conformity with the requirements for qualification as a real estate
investment trust (a "REIT") under the Code, and the proposed method of operating
of the Company will enable the Company to meet the requirements for
qualification and taxation as a REIT.
We express no opinion with respect to the transactions described herein
and in the Registration Statement other than those expressly set forth herein.
Furthermore, the Company's qualification as a REIT will depend upon the
Company's meeting, in its actual operations, the applicable asset composition,
source of income, shareholder diversification, distribution, recordkeeping and
other requirements of the Code and Treasury Regulations necessary for a
corporation to qualify as a REIT. We will not review these operations and no
assurance can be given that the actual operations of the Company and its
affiliates will meet these requirements or the representations made to us with
respect thereto.
This opinion is furnished to you solely for your use in connection with
the Registration Statement. We hereby consent to the filing of this opinion as
Exhibit 8 to the Registration Statement and to the use of our name in connection
with the material discussed therein under the caption "Federal Income Tax
Considerations."
Very truly yours,
/s/ Brown & Wood LLP
<TABLE>
<CAPTION>
EXHIBIT 12.1
Reckson Associates Realty Corp.
Ratios of Earnings to Combined Fixed Charges
The following table sets forth the calculation of the Company's
consolidated ratios of earnings to fixed charges for the periods shown (in
Thousands):
====================================================================================================================================
For the Period For the Period For the Period
from from from
January 1, 1998 June 3, 1995 January 1, 1995
To to to
Description June 30, 1998 1997 1996 December 31, 1995 June 2, 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------ ------------------ ---------- ------------ ------------------- ------------------- ------------- ----------
Interest $23,236 $23,936 $13,331 $5,331 $7,622 $17,426 $27,454
- ------------------------ ------------------ ---------- ------------ ------------------- ------------------- ------------- ----------
Rent Expense 634 952 830 434 176 375 771
- ------------------------ ------------------ ---------- ------------ ------------------- ------------------- ------------- ----------
Amortization of Debt
Issuance Costs 757 797 525 400 195 564 489
- ------------------------ ------------------ ---------- ------------ ------------------- ------------------- ------------- ----------
24,627 25,685 14,686 6,165 7,993 18,365 28,714
- ------------------------ ------------------ ---------- ------------ ------------------- ------------------- ------------- ----------
Income from Continuing
Operations before
Minority Interest and
Fixed Charges $54,248 $71,175 $39,876 $16,719 $8,187 $17,872 $18,609
- ------------------------ ------------------ ---------- ------------ ------------------- ------------------- ------------- ----------
Ratio of Earnings
to Fixed Charges 2.20 2.77 2.72 2.71 1.02 0.97 0.65
- ------------------------ ------------------ ---------- ------------ ------------------- ------------------- ------------- ----------
======================== ================== ========== ============ =================== =================== ============= ==========
</TABLE>
EXHIBIT 12.2
The following table sets forth the calculation of the Company's
consolidated Ratios of Earnings to fixed charges and preferred dividends for the
periods shown (in thousands)
For the six months
Description ended June 30, 1998
-------------------
Interest $ 23,236
Rent Expense 634
Amortization of debt issuance costs 757
Preferred dividends 4,168
$ 28,795
=========
Income from continuing operations before
minority interests, fixed charges & preferred
dividends $ 58,416
=========
Ratio of Earnings to fixed charges and preferred
dividends 2.03
====
EXHIBIT 12.3
Reckson Operating Partnership, L.P.
Ratios of Earnings to Combined Fixed Charges
The following table sets forth the calculation of the Operating
Partnership's consolidated ratios of earnings to fixed charges for the periods
shown (in Thousands):
<TABLE>
<CAPTION>
============================ ==================== ========== ========== ================== ================= =========== ==========
For the Period For the Period For the Period
from from from
January 1, 1998 June 3, 1995 January 1, 1995
To to to
Description June 30, 1998 1997 1996 December 31, 1995 June 2, 1995 1994 1993
- ---------------------------- -------------------- ---------- ---------- ------------------ ----------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest $23,236 $23,936 $13,331 $5,331 $7,622 $17,426 $27,454
- ---------------------------- -------------------- ---------- ---------- ------------------ ----------------- ----------- ----------
Rent Expense 634 952 830 434 176 375 771
- ---------------------------- -------------------- ---------- ---------- ------------------ ----------------- ----------- ----------
Amortization of Debt
Issuance Costs 757 797 525 400 195 564 489
- ---------------------------- -------------------- ---------- ---------- ------------------ ----------------- ----------- ----------
24,627 25,685 14,686 6,165 7,993 18,365 28,714
- ---------------------------- -------------------- ---------- ---------- ------------------ ----------------- ----------- ----------
Income from Continuing
Operations before Minority
Interest and Fixed Charges $54,678 $71,394 $39,781 $16,728 $8,187 $17,872 $18,609
- ---------------------------- -------------------- ---------- ---------- ------------------ ----------------- ----------- ----------
Ratio of Earnings to
Fixed Charges 2.22 2.78 2.71 2.71 1.02 0.97 0.65
- ---------------------------- -------------------- ---------- ---------- ------------------ ----------------- ----------- ----------
============================ ==================== ========== ========== ================== ================= =========== ==========
</TABLE>
EXHIBIT 12.4
The following table sets forth the calculation of the Operating
Partnership's consolidated Ratios of Earnings to fixed charges and preferred
dividends for the periods shown (in thousands)
For the six months
Description ended June 30, 1998
-------------------
Interest $ 23,236
Rent Expense 634
Amortization of debt issuance costs 757
Preferred dividends 4,168
-----
28,795
======
Income from continuing operations before
minority interests, fixed charges & preferred $ 58,846
=========
dividends
Ratio of Earnings to fixed charges and preferred
dividends 2.04
====
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) of Reckson Associates Realty Corp. (the
"Company") and Reckson Operating Partnership, L.P. (the "Operating Partnership")
for the registration of $744,739,654 of common stock, common stock warrants,
preferred stock, depositary shares and preferred stock warrants with respect to
the Company and $260,000,000 of debt securities with respect to the Operating
Partnership. We also consent to the inclusion of our report herein dated
February 13, 1998, with respect to the consolidated financial statements and
schedule of the Operating Partnership for the years ended December 31, 1997 and
1996 and for the period June 3, 1995 to December 31, 1995 and the combined
financial statements of the Reckson Group for the period January 1, 1995 to June
2, 1995 and to the incorporation by reference of our reports dated (i) February
13, 1998, except for Note 14, as to which the date is February 18, 1998, with
respect to the consolidated financial statements and schedule of the Company
included in its Annual Report (Form 10-K) for the years ended December 31, 1997
and 1996 and for the period June 3, 1995 to December 31, 1995 and the combined
financial statements of the Reckson Group for the period January 1, 1995 to June
2, 1995 filed with the Securities and Exchange Commission, (ii) February 4,
1997, with respect to the combined statement of revenues and certain expenses of
the New Jersey Portfolio for the year ended December 31, 1996, included in the
Company's Form 8-K filed with the Securities and Exchange Commission on February
19, 1997, (iii) January 16, 1997, with respect to the statement of revenues and
certain expenses of the Uniondale Office Property for the year ended December
31, 1996, included in the Company's Form 8-K filed with the Securities and
Exchange Commission on February 19, 1997, (iv) January 17, 1997, with respect to
the combined statement of revenues and certain expenses of the Hauppauge
Portfolio for the year ended December 31, 1996, included in the Company's Form
8-K filed with the Securities and Exchange Commission on February 19, 1997, (v)
May 23, 1997 with respect to the statement of revenues and certain expenses of
710 Bridgeport Avenue for the year ended December 31, 1996, included in the
Company's Form 8-K filed with the Securities and Exchange Commission on June 12,
1997, (vi) May 16, 1997 with respect to the statement of revenues and certain
expenses of the Shorthills Office Center for the year ended December 31, 1996,
included in the Company's Form 8-K filed with the Securities and Exchange
Commission on June 12, 1997, (vii) July 22, 1997 with respect to the statement
of revenues and certain expenses of Garden City Plaza for the year ended
December 31, 1996, included in the Company's Form 8-K filed with the Securities
and Exchange Commission on September 9, 1997, (viii) February 17, 1998 with
respect to the statement of revenues and certain expenses of the Stamford Office
Property for the year ended December 31, 1997, included in the Company's Form
8-K filed with the Securities and Exchange Commission on March 24, 1998, (ix)
December 17, 1997, with respect to the statement of revenues and certain
expenses of the Christiana Office Property, for the year ended June 30, 1997,
included in the Company's Form 8-K filed with the Securities and Exchange
Commission on February 10, 1998, and (x) March 27, 1998, with respect to the
combined statement of revenues and certain expenses of the Cappelli Portfolio,
for the year ended December 31, 1997, included in the Company's Form 8-K filed
with the Securities and Exchange Commission on April 6, 1998.
Ernst & Young LLP
New York, New York
November 6, 1998
