As filed with the Securities and Exchange Commission on July 25, 1996
Registration Statement No. 333-
_______________________________________________________________________________
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_________________________
Sovran Self Storage, Inc.
(Exact name of Registrant as specified in its charter)
Maryland 16-1194043
(State of incorporation) (I.R.S. Employer Identification Number)
5166 Main Street
Williamsville, N.Y. 14221
(716) 633-1850
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
_______________________________
Kenneth F. Myszka
President and Chief Executive Officer
Sovran Self Storage, Inc.
5166 Main Street
Williamsville, N.Y. 14221
(716) 633-1850
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
____________________________
With copies to:
Frederick G. Attea, Esq.
Phillips, Lytle, Hitchcock, Blaine & Huber
3400 Marine Midland Center
Buffalo, NY 14203
(716) 847-7010
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
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, check the following box. [X]
<PAGE>
If this form is used 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. [ ]
_____________________________
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Securities Amount to be Price Offering Registration
Being Registered Registered(1) Per Unit(2) Price(3) Fee
Debt Securities
Preferred Stock $150,000,000 N.A. $150,000,000 $51,724
Common Stock
(1) The amount to be registered consists of up to $150,000,000 of an
indeterminate amount of Debt Securities, Preferred Stock and/or Common
Stock. There is also being registered hereunder such currently
indeterminate number of shares of Common Stock as may be issued upon
conversion of the Debt Securities or Preferred Stock registered hereby.
(2) The proposed maximum offering price per unit has been omitted pursuant to
Securities Act Release No. 6964. The registration fee has been calculated
in accordance with Rule 457(o) under the Securities Act of 1933, as
amended, and reflects the offering price rather than the principal amount
of any Debt Securities issued at a discount.
(3) Estimated solely for purposes of computing the registration fee. No
separate consideration will be received for shares of Common Stock issued
upon conversion of Debt Securities or Preferred Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
NOR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 25, 1996
PROSPECTUS
$150,000,000
Sovran Self Storage, Inc.
Debt Securities
Preferred Stock
Common Stock
_______________
Sovran Self Storage, Inc. ("Sovran" or the "Company") may
offer from time to time in one or more series (i) its debt
securities ("Debt Securities") which may be senior or
subordinated, (ii) shares of its preferred stock, $.01 par value
per share ("Preferred Stock"), and (iii) shares of its common
stock, $.01 par value per share ("Common Stock"), with an
aggregate public offering price of up to $150,000,000 (or its
equivalent based on the exchange rate at the time of sale) in
amounts, at prices and on terms to be determined at the time of
offering. The Debt Securities, Preferred Stock and Common Stock
(collectively, the "Securities") may be offered separately or
together, in separate classes or series, in amounts, at prices
and on terms to be set forth in one or more supplements to this
Prospectus (each a "Prospectus Supplement").
The specific terms of the Securities for which this
Prospectus is being delivered will be set forth in the applicable
Prospectus Supplement and will include, where applicable: (i) in
the case of Debt Securities, the specific title, aggregate
principal amount, ranking, currency, form (which may be
registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof)
and time of payment of interest, terms for redemption at the
option of the Company or repayment at the option of the holder,
terms for sinking fund payments, terms for conversion into Common
Stock or Preferred Stock, covenants and any initial public
offering price; (ii) in the case of Preferred Stock, the specific
designation and stated value per share, any dividend,
liquidation, redemption, conversion, voting and other rights, and
any initial public offering price; and (iii) in the case of
Common Stock, any initial public offering price. In addition,
such specific terms may include limitations on direct or
beneficial ownership and restrictions on transfer of the
Securities, in each case as may be consistent with the Company's
Amended and Restated Articles of Incorporation or otherwise
appropriate to preserve the status of the Company as a real
estate investment trust ("REIT") for federal income tax purposes.
See "Restrictions on Transfers of Capital Stock."
The applicable Prospectus Supplement will also contain
information, where appropriate, about certain United States
federal income tax considerations relating to, and any listing on
a securities exchange of, the Securities covered by such
Prospectus Supplement.
<PAGE>
The Securities may be offered by the Company directly to one
or more purchasers, through agents designated from time to time
by the Company or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of any of the
securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them will be
set forth, or will be calculable from the information set forth,
in an accompanying Prospectus Supplement. See "Plan of
Distribution." No Securities may be sold without delivery of a
Prospectus Supplement describing the method and terms of the
offering of such Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
___________________
The date of this Prospectus is July ____, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "SEC" or "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, which constitutes part of the Registration Statement,
omits certain of the information contained in the Registration
Statement and the exhibits thereto on file with the Commission
pursuant to the Securities Act and the rules and regulations of
the Commission thereunder. The Registration Statement, including
exhibits thereto, may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, 13th
Floor, New York, New York 10048, and Northwestern Atrium Center,
500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511,
and copies may be obtained at the prescribed rates from the
Public Reference Section of the Commission at its principal
office in Washington, D.C. Statements contained in this
Prospectus as to the contents of any contract or other document
referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports and proxy
statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected
and copied at the locations described above. Copies of such
materials can be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. In addition, the
Common Stock is listed on the New York Stock Exchange (the
"NYSE"), and such materials can be inspected and copied at the
NYSE, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with
the Commission pursuant to the Exchange Act are incorporated by
reference in this Prospectus: (i) Annual Report on Form 10-K for
the fiscal year ended December 31, 1995, (ii) Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 1996, (iii) the
Company's Current Report on Form 8-K dated July 25, 1996, and
(iv) the description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A dated June 16,
1995.
All documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the
offering of all Securities shall be deemed to be incorporated by
<PAGE>
reference in this Prospectus and to be a part hereof from the
date of filing of such documents. The Company will provide,
without charge, to each person, including any beneficial owner,
to whom a copy of this Prospectus is delivered, at the request of
such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits thereto, unless such
exhibits are specifically incorporated by reference into such
documents). Written requests for such copies should be directed
to David L. Rogers, Chief Financial Officer, Sovran Self Storage,
Inc., 5166 Main Street, Williamsville, New York, 14221, telephone
(716) 633-1850.
Any statement contained herein or in a document incorporated
or deemed to be incorporated herein by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein (or in an applicable
Prospectus Supplement) or in any subsequently filed document
that is incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded
shall not be deemed to constitute a part of this Prospectus or
any Prospectus Supplement, except as so modified or superseded.
<PAGE>
THE COMPANY
General
Sovran Self Storage, Inc. is a self-administered and self-
managed real estate investment trust ("REIT") which acquires,
owns and manages self storage properties. (The Company's self
storage properties are hereinafter referred to collectively as
the "Properties" and individually as a "Property"). The Company
was formed through the transfer for cash on June 26, 1995 of 62
Properties previously owned by limited partnerships of which the
Company was the general partner, and the simultaneous acquisition
of 12 additional Properties from unrelated third parties, in
connection with the contemporaneous consummation of the Company's
initial public offering (the "Initial Offering") and related
transactions. The Company has since acquired 26 additional
Properties from unrelated third parties. As of June 30, 1996,
the Company owned and operated, a total of 100 self-storage
Properties, consisting of approximately 5.45 million net rentable
square feet, situated primarily in the Eastern United States, in
15 states. As of June 30, 1996, the Properties had a weighted
average occupancy of 87.8% and a weighted average annual rent per
square foot of $7.20. The Company believes that it is one of the
largest operators of self-storage properties in the United States
based on facilities owned.
The Company seeks to increase cash flow and enhance
shareholder value through aggressive management of the Properties
and selective acquisition of new self-storage properties.
Aggressive property management entails increasing rents,
increasing occupancy levels, strictly controlling costs,
maximizing collections, strategically expanding and improving the
Properties and, should economic conditions warrant, developing
new properties. The Company believes that there continue to be
significant opportunities for growth through acquisitions, and
constantly seeks to acquire self-storage properties located
primarily in the Eastern United States that are susceptible to
realization of increased economies of scale and enhanced
performance through the application of the Company's management
expertise.
The Company was formed to continue the business of its
predecessor company which had engaged in the self storage
business since 1985. The Company owns a 100% fee simple interest
in each of the Properties through a limited partnership (the
"Partnership") of which the Company holds a 99% limited
partnership interest and a wholly-owned subsidiary of the Company
(the "Subsidiary") holds a 1% general partnership interest. The
Company believes that this structure, commonly known as an
umbrella partnership real estate investment trust ("UPREIT"),
facilitates the Company's ability to acquire properties by using
units of the Partnership as currency in property acquisitions.
The Company was incorporated on April 19, 1995 under
Maryland law. The Company's principal executive offices are
located at 5166 Main Street, Williamsville, New York 14221, and
<PAGE>
its telephone number is (716) 633-1850. The Company also
maintains a regional office in Atlanta, Georgia.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus
Supplement, the Company intends to use the net proceeds from the
sale of Securities for general corporate purposes, which may
include the acquisition of additional properties, the repayment
of outstanding debt or the improvement of certain properties
already in the Company's portfolio.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's and its
predecessor's consolidated ratios of earnings to fixed charges
for the periods shown:
Company Predecessors
______________________________ __________________________________________
Six months Year ended January 1, 1995 Year ended December 31,
ended June December to 1994 1993 1992 1991
30, 1996 31, 1995 June 25, 1995
______________________________ __________________________________________
7.26 21.88 1.09 1.31 0.84 0.53 0.31
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. For this purpose, earnings consist of
pre-tax income from continuing operations plus fixed charges.
Fixed charges consist of interest expense and the amortization of
debt issuance costs. To date, the Company has not issued any
Preferred Stock; therefore, the ratios of earnings to combined
fixed charges and preferred stock dividend requirements are the
same as the ratios of earnings to fixed charges presented above.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be direct unsecured obligations of
the Company and may be either senior Debt Securities ("Senior
Debt Securities") or subordinated Debt Securities ("Subordinated
Debt Securities"). The Debt Securities will be issued under one
or more indentures, each dated as of a date prior to the issuance
of the Debt Securities to which it relates. Senior Debt
Securities and Subordinated Debt Securities may be issued
pursuant to separate indentures (respectively, a "Senior
Indenture" and a "Subordinated Indenture"), in each case between
the Company and a trustee (a "Trustee"), which may be the same
Trustee, and in the form that has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part,
subject to such amendments or supplements as may be adopted from
time to time. The Senior Indenture and the Subordinated
Indenture, as amended or supplemented from time to time, are
<PAGE>
sometimes hereinafter referred to collectively as the
"Indentures." The Indentures will be subject to and governed by
the Trust Indenture Act of 1939, as amended (the "TIA"). The
statements made under this heading relating to the Debt
Securities and the Indentures are summaries of the anticipated
provisions thereof, do not purport to be complete and are
qualified in their entirety by reference to the Indentures and
such Debt Securities.
Capitalized terms used herein and not defined shall have the
meanings assigned to them in the applicable Indenture.
Terms
General. The Debt Securities will be direct, unsecured
obligations of the Company. The indebtedness represented by the
Senior Debt Securities will rank equally with all other unsecured
and unsubordinated indebtedness of the Company. The indebtedness
represented by Subordinated Debt Securities will be subordinated
in right of payment to the prior payment in full of Senior
Indebtedness of the Company as described under "-Subordination."
The particular terms of the Debt Securities offered by a
Prospectus Supplement will be described in the applicable
Prospectus Supplement, along with any applicable modifications of
or additions to the general terms of the Debt Securities as
described herein and in the applicable Indenture and any
applicable federal income tax considerations. Accordingly, for a
description of the terms of any series of Debt Securities,
reference must be made to both the Prospectus Supplement relating
thereto and the description of the Debt Securities set forth in
this Prospectus.
Except as set forth in any Prospectus Supplement, the Debt
Securities may be issued without limit as to aggregate principal
amount, in one or more series, in each case as established from
time to time by the Company or as set forth in the applicable
Indenture or in one or more indentures supplemental to such
Indenture. All Debt Securities of one series need not be issued
at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the holders of the Debt
Securities of such series, for issuance of additional Debt
Securities of such series.
Each Indenture will provide that the Company may, but need
not, designate more than one Trustee thereunder, each with
respect to one or more series of Debt Securities. Any Trustee
under an Indenture may resign or be removed with respect to one
or more series of Debt Securities, and a successor Trustee may be
appointed to act with respect to such series. In the event that
two or more persons are acting as Trustee with respect to
different series of Debt Securities, each such Trustee shall be a
Trustee of a trust under the applicable Indenture separate and
apart from the trust administered by any other Trustee, and,
except as otherwise indicated herein, any action described herein
to be taken by each Trustee may be taken by each such Trustee
<PAGE>
with respect to, and only with respect to, the one or more series
of Debt Securities for which it is Trustee under the applicable
Indenture.
The following summaries set forth certain general terms and
provisions of the Indentures and the Debt Securities. The
Prospectus Supplement relating to the series of Debt Securities
being offered will contain further terms of such Debt Securities,
including the following specific terms:
(1) The title of such Debt Securities and whether such
Debt Securities are Senior Debt Securities or
Subordinated Debt Securities;
(2) The aggregate principal amount of such Debt
Securities and any limit on such aggregate
principal amount;
(3) The price (expressed as a percentage of the
principal amount thereof) at which such Debt
Securities will be issued and, if other than the
principal amount thereof, the portion of the
principal amount thereof payable upon declaration
of acceleration of the maturity thereof, or (if
applicable) the portion of the principal amount of
such Debt Securities that is convertible into
Common Stock or Preferred Stock, or the method by
which any such portion shall be determined;
(4) If convertible, the terms on which such Debt
Securities are convertible, including the initial
conversion price or rate and the conversion period
and any applicable limitations on the ownership or
transferability of the Common Stock or Preferred
Stock receivable on conversion;
(5) The date or dates, or the method for determining
such date or dates, on which the principal of such
Debt Securities will be payable;
(6) 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;
(7) The date or dates, or the method for determining
such date or dates, from which any such interest
will accrue, the dates on which any such interest
will be payable, the record dates for such
interest payment dates, or the method by which
such dates shall be determined, the persons to
whom such interest shall be payable, and the basis
upon which interest shall be calculated if other
than that of a 360-day year of twelve 30-day
months;
<PAGE>
(8) The place or places where the principal of (and
premium or Make-Whole Amount (as defined in the
Indenture), if any) and interest, if any, on such
Debt Securities will be payable, where such Debt
Securities may be surrendered for registration of
transfer or exchange and where notices or demands
to or upon the Company in respect of such Debt
Securities and the applicable Indenture may be
served;
(9) The period or periods, if any, within which, the
price or prices at which and the other terms and
conditions upon which such Debt Securities may,
pursuant to any optional or mandatory redemption
provisions, be redeemed, as a whole or in part, at
the option of the Company;
(10) The obligation, if any, of the Company to redeem,
repay or purchase such Debt Securities pursuant to
any sinking fund or analogous provision or at the
option of a holder thereof, and the period or
periods within which, the price or prices at which
and the other terms and conditions upon which such
Debt Securities will be redeemed, repaid or
purchased, as a whole or in part, pursuant to such
obligation;
(11) 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;
(12) Whether the amount of payments of principal of
(and premium or Make-Whole Amount, if any,
including any amount due upon redemption, if any)
or interest, if any, on such Debt Securities may
be determined with reference to an index, formula
or other method (which index, formula or method
may, but need not be, based on the yield on or
trading price of other securities, including
United States Treasury securities, or on a
currency, currencies, currency unit or units, or
composite currency or currencies) and the manner
in which such amounts shall be determined;
(13) Whether the principal of (and premium or
Make-Whole Amount, if any) or interest on the Debt
Securities of the series are to be payable, at the
election of the Company or a holder thereof, in a
currency or currencies, currency unit or units or
composite currency or currencies other than that
in which such Debt Securities are denominated or
stated to be payable, the period or periods within
which, and the terms and conditions upon which,
such election may be made, and the time and manner
<PAGE>
of, and identity of the exchange rate agent with
responsibility for, determining the exchange rate
between the currency or currencies, currency unit
or units or composite currency or currencies in
which such Debt Securities are denominated or
stated to be payable and the currency or
currencies, currency unit or units or composite
currency or currencies in which such Debt
Securities are to be so payable;
(14) Provisions, if any, granting special rights to the
holders of Debt Securities of the series upon the
occurrence of such events as may be specified;
(15) Any deletions from, modifications of or additions
to the Events of Default (as defined in the
Indenture) or covenants of the Company with
respect to Debt Securities of the series, whether
or not such Events of Default or covenants are
consistent with the Events of Default or covenants
described herein;
(16) Whether and under what circumstances the Company
will pay any additional amounts on such Debt
Securities in respect of any tax, assessment or
governmental charge and, if so, whether the
Company will have the option to redeem such Debt
Securities in lieu of making such payment;
(17) Whether Debt Securities of the series are to be
issuable as Registered Securities, Bearer
Securities (with or without coupons) or both, any
restrictions applicable to the offer, sale or
delivery of Bearer Securities and the terms upon
which Bearer Securities of the series may be
exchanged for Registered Securities of the series
and vice versa (if permitted by applicable laws
and regulations), whether any Debt Securities of
the series are to be issuable initially in
temporary global form and whether any Debt
Securities of the series are to be issuable in
permanent global form with or without coupons and,
if so, whether beneficial owners of interests in
any such permanent global Security may exchange
such interests for Debt Securities of such series
and of like tenor of any authorized form and
denomination and the circumstances under which any
such exchanges may occur, if other than in the
manner provided in the Indenture, and, if
Registered Securities of the series are to be
issuable as a Global Security (as defined), the
identity of the depository for such series;
(18) The date as of which any Bearer Securities of the
series and any temporary Global Security
representing outstanding Debt Securities of the
<PAGE>
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 the
Indenture;
(20) The applicability, if any, of the defeasance and
covenant defeasance provisions of the Indenture to
the Debt Securities of the series;
(21) If the Debt Securities of such series are to be
issuable in definitive form (whether upon original
issue or upon exchange of a temporary Security of
such series) only upon receipt of certain
certificates or other documents or satisfaction of
other conditions, then the form and/or terms of
such certificates, documents or conditions;
(22) The obligation, if any, of the Company to permit
the conversion of the Debt Securities of such
series into Common Stock or Preferred Stock, as
the case may be, and the terms and conditions upon
which such conversion shall be effected
(including, without limitation, the initial
conversion price or rate, the conversion period,
any adjustment of the applicable conversion price
and any requirements relative to the reservation
of such shares for purposes of conversion); and
(23) Any other terms of the series (which terms shall
not be inconsistent with the provisions of the
Indenture under which the Debt Securities are
issued).
If so provided in the applicable Prospectus Supplement, the
Debt Securities may be issued at a discount below their principal
amount and provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the
maturity thereof ("Original Issue Discount Securities"). In such
cases, all material U.S. federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities
will be described in the applicable Prospectus Supplement.
<PAGE>
Except as may be set forth in any Prospectus Supplement, the
Debt Securities will not contain any provisions that would limit
the ability of the Company to incur indebtedness or that would
afford holders of Debt Securities protection in the event of a
highly leveraged or similar transaction involving the Company or
in the event of a change of control. Restrictions on ownership
and transfers of the Common Stock and Preferred Stock are
designed to preserve its status as a REIT and, therefore, may act
to prevent or hinder a change of control. See "Restrictions on
Transfers of Capital Stock." Reference is made to the applicable
Prospectus Supplement for information with respect to any
deletions from, modifications of, or additions to, the events of
default or covenants of the Company that are described below,
including any addition of a covenant or other provision providing
event risk or similar protection.
Denomination, Interest, Registration and Transfer
Unless otherwise described in the applicable Prospectus
Supplement, the Debt Securities of any series will be issuable in
denominations of $1,000 and integral multiples thereof. Where
Debt Securities of any series are issued in bearer form, the
special restrictions and considerations, including special
offering restrictions and special federal income tax
considerations, applicable to any such Debt Securities and to
payment on and transfer and exchange of such Debt Securities will
be described in the applicable Prospectus Supplement. Bearer
Debt Securities will be transferable by delivery.
Unless otherwise specified in the applicable Prospectus
Supplement, the principal of (and applicable premium or
Make-Whole Amount, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the
applicable Trustee, the address of which will be stated in the
applicable Prospectus Supplement; provided that, at the option of
the Company, payment of interest may be made by check mailed to
the address of the person entitled thereto as it appears in the
applicable register for such Debt Securities or by wire transfer
of funds to such person at an account maintained within the
United States.
Any interest not punctually paid or duly provided for on any
Interest Payment Date with respect to a Debt Security in
registered form ("Defaulted Interest") will forthwith cease to be
payable to the holder on the applicable Regular Record Date and
may either be paid to the Person in whose name such Debt Security
is registered at the close of business on a special record date
(the "Special Record Date") for the payment of such Defaulted
Interest to be fixed by the Trustee, in which case notice thereof
shall be given to the holder of such Debt Security not less than
10 days prior to such Special Record Date, or may be paid at any
time in any other lawful manner, all as more completely described
in the applicable Indenture.
Subject to certain limitations imposed upon Debt Securities
issued in book-entry form, the Debt Securities of any series will
<PAGE>
be exchangeable for any authorized denomination of other Debt
Securities of the same series and of a like aggregate principal
amount and tenor upon surrender of such Debt Securities at the
corporate trust office of the applicable Trustee or at the office
of any transfer agent designated by the Company for such purpose.
In addition, subject to certain limitations imposed upon Debt
Securities issued in book-entry form, the Debt Securities of any
series may be surrendered for registration of transfer or
exchange thereof at the corporate trust office of the applicable
Trustee or at the office of any transfer agent designated by the
Company for such purpose. Every Debt Security in registered form
surrendered for registration of transfer or exchange must be duly
endorsed or accompanied by a written instrument of transfer, and
the person requesting such action must provide evidence of title
and identity satisfactory to the applicable Trustee or transfer
agent. No service charge will be made for any registration of
transfer or exchange of any Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. If the
applicable Prospectus Supplement refers to any transfer agent (in
addition to the applicable Trustee) initially designated by the
Company with respect to any series of Debt Securities, the
Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which
any such transfer agent acts, except that the Company will be
required to maintain a transfer agent in each place of payment
for such series. The Company may at any time designate
additional transfer agents with respect to any series of Debt
Securities.
Neither the Company nor any Trustee shall be required to (a)
issue, register the transfer of or exchange Debt Securities of
any series during a period beginning at the opening of business
15 days before the selection of any Debt Securities for
redemption and ending at the close of business on the day of
mailing of the notice of redemption; (b) register the transfer of
or exchange any Debt Security, or portion thereof, so selected
for redemption, in whole or in part, except the unredeemed
portion of any Debt Security being redeemed in part; or (c)
issue, register the transfer of or exchange any Debt Security
that has been surrendered for repayment at the option of the
holder, except the portion, if any, of such Debt Security not to
be so repaid.
Payment in respect of Debt Securities in bearer form will be
made in the currency and in the manner designated in the
applicable Prospectus Supplement, subject to any applicable laws
and regulations, at such paying agencies outside the United
States as the Company may appoint from time to time. The paying
agents outside the United States, if any, initially appointed by
the Company for a series of Debt Securities will be named in the
Prospectus Supplement. Unless otherwise provided in the
applicable Prospectus Supplement, the Company may at any time
designate additional paying agents or rescind the designation of
any paying agents, except that, if Debt Securities of a series
are issuable in registered form, the Company will be required to
<PAGE>
maintain at least one paying agent in each place of payment for
such series and if Debt Securities of a series are issuable in
bearer form, the Company will be required to maintain at least
one paying agent in a place of payment outside the United States
where Debt Securities of such series and any coupons appertaining
thereto may be presented and surrendered for payment.
Merger, Consolidation or Sale of Assets
The Indentures will provide that the Company may, without
the consent of the holders of any outstanding Debt Securities,
consolidate with, or sell, lease or convey all or substantially
all of its assets to, or merge with or into, any other entity
provided that (a) either the Company shall be the continuing
entity, or the successor entity (if other than the Company)
formed by or resulting from any such consolidation or merger or
which shall have received the transfer of such assets is
organized under the laws of any domestic jurisdiction and assumes
the Company's obligations to pay principal of (and premium or
Make-Whole Amount, if any) and interest on all of the Debt
Securities and the due and punctual performance and observance of
all of the covenants and conditions contained in such Indenture;
(b) immediately after giving effect to such transaction and
treating any indebtedness that becomes an obligation of the
Company or any subsidiary as a result thereof as having been
incurred by the Company or such subsidiary at the time of such
transaction, no Event of Default under such Indenture, and no
event which, after notice or the lapse of time, or both, would
become such an Event of Default, shall have occurred and be
continuing; and (c) an officers' certificate and legal opinion
covering such conditions shall be delivered to each Trustee.
Certain Covenants
The applicable Prospectus Supplement will describe any
material covenants in respect of a series of Debt Securities that
are not described in this Prospectus. Unless otherwise indicated
in the applicable Prospectus Supplement, Senior Debt Securities
will include the following covenants of the Company:
Existence. Except as permitted under "-Merger,
Consolidation or Sale of Assets," the Indentures will require the
Company to do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence, rights (by articles of incorporation, by-laws and
statute) and franchises; provided, however, that the Company
shall not be required to preserve any right or franchise if its
Board of Directors determines that the preservation thereof is no
longer desirable in the conduct of its business.
Maintenance of Properties. The Indentures will require the
Company to cause all of its material properties used or useful in
the conduct of its business or the business of any subsidiary to
be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements,
<PAGE>
betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times; provided, however, that the Company and its
subsidiaries shall not be prevented from selling or otherwise
disposing of their properties for value in the ordinary course of
business.
Insurance. The Indentures will require the Company to cause
each of its and its subsidiaries' insurable properties to be
insured against loss or damage at least equal to their then full
insurable value with insurers of recognized responsibility and,
if described in the applicable Prospectus Supplement, having a
specified rating from a recognized insurance rating service.
Payment of Taxes and Other Claims. The Indentures will
require the Company to pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed
upon it or any subsidiary or upon the income, profits or
property of the Company or any subsidiary and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Company or any
subsidiary; provided, however, that the Company 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.
Events of Default, Notice and Waiver
Unless otherwise provided in the applicable Prospectus
Supplement, each Indenture will provide that the following events
are "Events of Default" with respect to any series of Debt
Securities issued thereunder: (a) default in the payment of any
interest on any Debt Security of such series when such interest
becomes due and payable that continues for a period of 30 days;
(b) default in the payment of the principal of (or premium or
Make-Whole Amount, if any, on) any Debt Security of such series
when due and payable; (c) default in making any sinking fund
payment as required for any Debt Security of such series; (d)
default in the performance, or breach, of any other covenant or
warranty of the Company in the applicable Indenture with respect
to the Debt Securities of such series and continuance of such
default or breach for a period of 60 days after written notice as
provided in the Indenture; (e) default under any bond, debenture,
note, mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company (or by any
Subsidiary, the repayment of which the Company has guaranteed or
for which the Company is directly responsible or liable as
obligor or guarantor), having an aggregate principal amount
outstanding of at least $25,000,000, whether such indebtedness
now exists or shall hereafter be created, which default shall
have resulted in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise have
become due and payable, without such indebtedness having been
<PAGE>
discharged, or such acceleration having been rescinded or
annulled, within a period of 30 days after written notice to the
Company as provided in the Indenture; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of
a receiver, liquidator or trustee of the Company or any
Significant Subsidiary; and (g) any other event of default
provided with respect to a particular series of Debt Securities.
The term "Significant Subsidiary" has the meaning ascribed to
such term in Regulation S-X promulgated under the Securities Act.
If an Event of Default under any Indenture with respect to
Debt Securities of any series at the time outstanding occurs and
is continuing, then in every such case the applicable Trustee or
the holders of not less than 25% in principal amount of the Debt
Securities of that series will have the right to declare the
principal amount (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such
portion of the principal amount as may be specified in the terms
thereof) of, and premium or Make-Whole Amount, if any, on, all
the Debt Securities of that series to be due and payable
immediately by written notice thereof to the Company (and to the
applicable Trustee if given by the holders). However, at any
time after such a declaration of acceleration with respect to
Debt Securities of such series has been made, but before a
judgment or decree for payment of the money due has been obtained
by the applicable Trustee, the holders of not less than a
majority in principal amount of outstanding Debt Securities of
such series may rescind and annul such declaration and its
consequences if (a) the Company shall have deposited with the
applicable Trustee all required payments of the principal of (and
premium or Make-Whole Amount, if any) and interest on the Debt
Securities of such series, plus certain fees, expenses,
disbursements and advances of the applicable Trustee and (b) all
Events of Default, other than the non-payment of accelerated
principal (or specified portion thereof and the premium or
Make-Whole Amount, if any), with respect to Debt Securities of
such series have been cured or waived as provided in such
Indenture. The Indentures will also provide that the holders of
not less than a majority in principal amount of the outstanding
Debt Securities of any series may waive any past default with
respect to such series and its consequences, except a default (i)
in the payment of the principal of (or premium or Make-Whole
Amount, if any) or interest on any Debt Security of such series
or (ii) in respect of a covenant or provision contained in the
applicable Indenture that cannot be modified or amended without
the consent of the holder of each outstanding Debt Security
affected thereby.
The Indentures will require each Trustee to give notice to
the holders of Debt Securities within 90 days of a default under
the applicable Indenture unless such default shall have been
cured or waived; provided, however, that such Trustee may
withhold notice to the holders of any series of Debt Securities
of any default with respect to such series (except a default in
the payment of the principal of (or premium or Make-Whole Amount,
if any) or interest on any Debt Security of such series or in the
<PAGE>
payment of any sinking fund installment in respect of any Debt
Security of such series) if specified responsible officers of
such Trustee consider such withholding to be in the interest of
such holders.
The Indentures will provide that no holders of Debt
Securities of any series may institute any proceedings, judicial
or otherwise, with respect to such Indenture or for any remedy
thereunder, except in the case of failure of the applicable
Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an Event of
Default from the holders of not less than 25% in principal amount
of the outstanding Debt Securities of such series, as well as an
offer of indemnity reasonably satisfactory to it. This provision
will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal
of (and premium or Make-Whole Amount, if any) and interest on
such Debt Securities at the respective due dates or redemption
dates thereof.
The Indentures will provide that, subject to provisions in
each Indenture relating to its duties in case of default, a
Trustee will be under no obligation to exercise any of its rights
or powers under an Indenture at the request or direction of any
holders of any series of Debt Securities then outstanding under
such Indenture, unless such holders shall have offered to the
Trustee thereunder reasonable security or indemnity. The holders
of not less than a majority in principal amount of the
outstanding Debt Securities of any series (or of all Debt
Securities then outstanding under an Indenture, as the case may
be) shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
applicable Trustee, or of exercising any trust or power conferred
upon such Trustee. However, a Trustee may refuse to follow any
direction which is in conflict with any law or the applicable
Indenture, which may involve such Trustee in personal liability
or which may be unduly prejudicial to the holders of Debt
Securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the
Company will be required to deliver to each Trustee a
certificate, signed by one of several specified officers of the
Company, stating whether or not such officer has knowledge of any
default under the applicable Indenture and, if so, specifying
each such default and the nature and status thereof.
Modification of the Indentures
Modifications and amendments of an Indenture will be
permitted to be made only with the consent of the holders of not
less than a majority in principal amount of all outstanding Debt
Securities issued under such Indenture affected by such
modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the holder
of each such Debt Security affected thereby, (a) change the
stated maturity of the principal of, or any installment of
<PAGE>
interest (or premium or Make-Whole Amount, if any) on, any such
Debt Security; (b) reduce the principal amount of, or the rate or
amount of interest on, or any premium or Make-Whole Amount
payable on redemption of, any such Debt Security, or reduce the
amount of principal of an Original Issue Discount Security that
would be due and payable upon declaration of acceleration of the
maturity thereof or would be provable in bankruptcy, or adversely
affect any right of repayment of the holder of any such Debt
Security; (c) change the place of payment, or the coin or
currency, for payment of principal of, premium or Make-Whole
Amount, if any, or interest on any such Debt Security; (d) impair
the right to institute suit for the enforcement of any payment on
or with respect to any such Debt Security; (e) reduce the
above-stated percentage of outstanding Debt Securities of any
series necessary to modify or amend the applicable Indenture, to
waive compliance with certain provisions thereof or certain
defaults and consequences thereunder or to reduce the quorum or
voting requirements set forth in the applicable Indenture; (f)
change the currency or currency unit in which any Debt Security
or any premium or interest thereon is payable; (g) in the case of
the Subordinated Indenture, modify the subordination provisions
thereof in a manner adverse to the holders of Subordinated Debt
Securities of any series then outstanding; or (h) modify any of
the foregoing provisions or any of the provisions relating to the
waiver of certain past defaults or certain covenants, except to
increase the required percentage to effect such action or to
provide that certain other provisions may not be modified or
waived without the consent of the holder of such Debt Security.
The holders of a majority in aggregate principal amount of
the outstanding Debt Securities of each series may, on behalf of
all holders of Debt Securities of that series, waive, insofar as
that series is concerned, compliance by the Company with certain
restrictive covenants of the applicable Indenture.
Modifications and amendments of an Indenture will be
permitted to be made by the Company and the respective Trustee
thereunder without the consent of any holder of Debt Securities
for any of the following purposes: (a) to evidence the succession
of another person to the Company as obligor under such Indenture;
(b) to add to the covenants of the Company for the benefit of the
holders of all or any series of Debt Securities or to surrender
any right or power conferred upon the Company in such Indenture;
(c) to add events of default for the benefit of the holders of
all or any series of Debt Securities; (d) to add or change any
provisions of an Indenture to facilitate the issuance of, or to
liberalize certain terms of, Debt Securities in bearer form, or
to permit or facilitate the issuance of Debt Securities in
uncertificated form, provided that such action shall not
adversely affect the interests of the holders of the Debt
Securities of any series in any material respect; (e) to change
or eliminate any provisions of an Indenture, provided that any
such change or elimination shall become effective only when there
are no Debt Securities outstanding of any series created prior
thereto which are entitled to the benefit of such provision; (f)
to secure the Debt Securities; (g) to establish the form or terms
<PAGE>
of Debt Securities of any series; (h) to provide for the
acceptance of appointment by a successor Trustee or facilitate
the administration of the trusts under an Indenture by more than
one Trustee; (i) to cure any ambiguity, defect or inconsistency
in an Indenture, provided that such action shall not adversely
affect the interests of holders of Debt Securities of any series
issued under such Indenture; or (j) to supplement any of the
provisions of an Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt
Securities, provided that such action shall not adversely affect
the interests of the holders of the outstanding Debt Securities
of any series.
The Indentures will provide that in determining whether the
holders of the requisite principal amount of outstanding Debt
Securities of a series have given any request, demand,
authorization, direction, notice, consent or waiver thereunder or
whether a quorum is present at a meeting of holders of Debt
Securities, (a) the principal amount of an Original Issue
Discount Security that shall be deemed to be outstanding shall be
the amount of the principal thereof that would be due and payable
as of the date of such determination upon declaration of
acceleration of the maturity thereof, (b) the principal amount of
any Debt Security denominated in a foreign currency that shall be
deemed Outstanding shall be the U.S. dollar equivalent,
determined on the issue date for such Debt Security, of the
principal amount (or, in the case of an Original Issue Discount
Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (a) above),
(c) the principal amount of an indexed security that shall be
deemed outstanding shall be the principal face amount of such
indexed security at original issuance, unless otherwise provided
with respect to such indexed security pursuant such Indenture,
and (d) Debt Securities owned by the Company or any other obligor
upon the Debt Securities or any affiliate of the Company or of
such other obligor shall be disregarded.
The Indentures will contain provisions for convening
meetings of the holders of Debt Securities of a series. A
meeting will be permitted to be called at any time by the
applicable Trustee, and also, upon request, by the Company or the
holders of at least 25% in principal amount of the outstanding
Debt Securities of such series, in any such case upon notice
given as provided in such Indenture. Except for any consent that
must be given by the holder of each Debt Security affected by
certain modifications and amendments of an Indenture, any
resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the
affirmative vote of the holders of a majority in principal amount
of the outstanding Debt Securities of that series; provided,
however, that, except as referred to above, any resolution with
respect to any request, demand, authorization, direction, notice,
consent, waiver or other action that may be made, given or taken
by the holders of a specified percentage, which is less than a
majority, in principal amount of the outstanding Debt Securities
of a series may be adopted at a meeting or adjourned meeting or
<PAGE>
adjourned meeting duly reconvened at which a quorum is present by
the affirmative vote of the holders of such specified percentage
in principal amount of the outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting
of holders of Debt Securities of any series duly held in
accordance with an Indenture will be binding on all holders of
Debt Securities of that series. The quorum at any meeting called
to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of
the outstanding Debt Securities of a series; provided, however,
that if any action is to be taken at such meeting with respect to
a consent or waiver which may be given by the holders of not less
than a specified percentage in principal amount of the
outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the
outstanding Debt Securities of such series will constitute a
quorum.
Notwithstanding the foregoing provisions, the Indentures
will provide that if any action is to be taken at a meeting of
holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent,
waiver and other action that such Indenture expressly provides
may be made, given or taken by the holders of a specified
percentage in principal amount of all outstanding Debt Securities
affected thereby, or of the holders of such series and one or
more additional series: (a) there shall be no minimum quorum
requirement for such meeting, and (b) the principal amount of the
outstanding Debt Securities of such series that vote in favor of
such request, demand, authorization, direction, notice, consent,
waiver or other action shall be taken into account in determining
whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken
under such Indenture.
Certain Definitions
"Indebtedness" means, with respect to any person, (a) any
obligation of such person to pay the principal of, premium, if
any, interest on (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization
relating to such person, whether or not a claim for such
post-petition interest is allowed in such proceeding), penalties,
reimbursement or indemnification amounts, fees, expenses or other
amounts relating to any indebtedness of such person (i) for
borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such person or only to a portion
thereof), (ii) evidenced by notes, debentures or similar
instruments (including purchase money obligations) given in
connection with the acquisition of any property or assets (other
than trade accounts payable for inventory or similar property
acquired in the ordinary course of business), including
securities, for the payment of which such person is liable,
directly or indirectly, or the payment of which is secured by a
lien, charge or encumbrance on property or assets of such person,
(iii) for goods, materials or services purchased in the ordinary
<PAGE>
course of business (other than trade accounts payable arising in
the ordinary course of business), (iv) with respect to letters of
credit or bankers acceptances issued for the account of such
person or performance bonds, (v) for the payment of money
relating to a Capitalized Lease Obligation (as defined in the
Indenture), or (vi) under interest rate swaps, caps or similar
agreements and foreign exchange contracts, currency swaps or
similar agreements; (b) any liability of others of the kind
described in the preceding clause (a) which such person has
guaranteed or which is otherwise its legal liability; and (c) any
and all deferrals, renewals, extensions and refunding of, or
amendments, modifications or supplements to, any liability of the
kind described in any of the preceding clauses (a) or (b).
"Senior Indebtedness" means Indebtedness of the Company,
whether outstanding on the date of issue of any Subordinated Debt
Securities or thereafter created, incurred, assumed or guaranteed
by the Company, other than the following: (a) any Indebtedness
as to which, in the instrument evidencing such Indebtedness or
pursuant to which such Indebtedness was issued, it is expressly
provided that such Indebtedness is subordinate in right of
payment to all indebtedness of the Company not expressly
subordinated to such Indebtedness; (b) any Indebtedness which by
its terms refers explicitly to the Subordinated Debt Securities
and states that such Indebtedness shall not be senior, shall be
pari passu or shall be subordinated in right of payment to the
Subordinated Debt Securities; and (c) with respect to any series
of Subordinated Debt Securities, any Indebtedness of the Company
evidenced by Subordinated Debt Securities of the same or of
another series. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness shall not include: (x)
Indebtedness of or amounts owed by the Company for compensation
to employees, or for goods, materials and services purchased in
the ordinary course of business, or (y) Indebtedness of the
Company to a subsidiary of the Company.
Subordination
Unless otherwise provided in the applicable Prospectus
Supplement, Subordinated Debt Securities will be subject to the
following subordination provisions.
The payment of the principal of, interest on, or any other
amounts due on, the Subordinated Debt Securities will be
subordinated in right of payment to the prior payment in cash in
full of all Senior Indebtedness of the Company. No payment on
account of the principal of, redemption of, interest on or any
other amounts due on the Subordinated Debt Securities and no
redemption, purchase or other acquisition of the Subordinated
Debt Securities may be made, unless (a) full payment in cash of
amounts then due for principal, sinking funds, interest
(including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the
Company, whether or not a claim for such post-petition interest
is allowed in such proceeding), penalties, reimbursement or
indemnification amounts, fees and expenses, and of all other
amounts then due on all Senior Indebtedness shall have been made
<PAGE>
or duly provided for pursuant to the terms of the instrument
governing such Senior Indebtedness, and (b) at the time of, or
immediately after giving effect to, any such payment, redemption,
purchase or other acquisition, there shall not exist under any
Senior Indebtedness or any agreement pursuant to which any Senior
Indebtedness has been issued, any default which shall not have
been cured or waived and which shall have resulted in the full
amount of such Senior Indebtedness being declared due and payable
and not rescinded. In addition, the Subordinated Indenture
provides that, if holders of any Senior Indebtedness notify the
Company and the Subordinated Trustee that a default has occurred
giving the holders of such Senior Indebtedness the right to
accelerate the maturity thereof, no payment on account of
principal, sinking fund or other redemption, interest or any
other amounts due on the Subordinated Debt Securities and no
purchase, redemption or other acquisition of the Subordinated
Debt Securities will be made for the period (the "Payment
Blockage Period") commencing on the date such notice is received
and ending on the earlier of (i) the date on which such event of
default shall have been cured or waived or (ii) 180 days from the
date such notice is received. Notwithstanding the foregoing, only
one payment blockage notice with respect to the same event of
default or any other events of default existing and known to the
person giving such notice at the time of such notice on the same
issue of Senior Indebtedness may be given during any period of
360 consecutive days. No new Payment Blockage Period may be
commenced by the holders of Senior Indebtedness during any period
of 360 consecutive days unless all events of default which
triggered the preceding Payment Blockage Period have been cured
or waived. Upon any distribution of its assets in connection with
any dissolution, winding-up, liquidation or reorganization of the
Company, all Senior Indebtedness must be paid in full in cash
before the holders of the Subordinated Debt Securities are
entitled to any payments whatsoever.
The Subordinated Indenture does not restrict the amount of
Senior Indebtedness or other indebtedness of the Company or any
Subsidiary. As a result of these subordination provisions, in
the event of the Company's insolvency, holders of the
Subordinated Debt Securities may recover ratably less than
general creditors of the Company.
If this Prospectus is being delivered in connection with a
series of Subordinated Debt Securities, the accompanying
Prospectus Supplement or the information incorporated herein by
reference will set forth the approximate amount of Senior
Indebtedness outstanding as of the end of the Company's most
recent fiscal quarter.
Discharge, Defeasance and Covenant Defeasance
Unless otherwise indicated in the applicable Prospectus
Supplement, the Company will be permitted, at its option, to
discharge certain obligations to holders of any series of Debt
Securities issued under any Indenture that have not already been
delivered to the applicable Trustee for cancellation and that
either have become due and payable or will become due and payable
<PAGE>
within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust,
funds in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities
are payable in an amount sufficient to pay the entire
indebtedness on such Debt Securities in respect of principal (and
premium or Make-Whole Amount, if any) and interest to the date of
such deposit (if such Debt Securities have become due and
payable) or to the stated maturity or redemption date, as the
case may be.
The Indentures will provide that, unless otherwise indicated
in the applicable Prospectus Supplement, the Company may elect
either (a) to defease and be discharged from any and all
obligations with respect to such Debt Securities (except for the
obligations to register the transfer or exchange of such Debt
Securities, to replace temporary or mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities, and to hold moneys for payment
in trust) ("defeasance") or (b) to be released from certain
obligations with respect to such Debt Securities under the
applicable Indenture (including the restrictions described under
"-Certain Covenants") or, if provided in the applicable
Prospectus Supplement, its obligations with respect to any other
covenant, and any omission to comply with such obligations shall
not constitute an Event of Default with respect to such Debt
Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Company with the applicable Trustee,
in trust, of an amount, in such currency or currencies, currency
unit or units or composite currency or currencies in which such
Debt Securities are payable at stated maturity, or Government
Obligations (as defined below), or both, applicable to such Debt
Securities, which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium or
Make-Whole Amount, if any) and interest on such Debt Securities,
and any mandatory sinking fund or analogous payments thereon, on
the scheduled due dates therefor.
Such a trust will only be permitted to be established if,
among other things, the Company has delivered to the applicable
Trustee an opinion of counsel (as specified in the applicable
Indenture) to the effect that the holders of such Debt Securities
will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant
defeasance and will be subject to U.S. federal income tax on the
same amounts, in the same manner and at the same times as would
have been the case if such defeasance or covenant defeasance had
not occurred, and such opinion of counsel, in the case of
defeasance, will be required to refer to and be based upon a
ruling received from or published by the Internal Revenue Service
or a change in applicable United States federal income tax law
occurring after the date of the Indenture. In the event of such
defeasance, the holders of such Debt Securities would thereafter
be able to look only to such trust fund for payment of principal
(and premium or Make-Whole Amount, if any) and interest.
<PAGE>
"Government Obligations" means securities that are (a)
direct obligations of the United States of America or the
government which issued the foreign currency in which the Debt
Securities of a particular series are payable, for the payment of
which its full faith and credit is pledged or (b) obligations of
a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such
government which issued the foreign currency in which the Debt
Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation
by the United States of America or such other government, which,
in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to
any such Government Obligation or a specific payment of interest
on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific
payment of interest on or principal of the Government Obligation
evidenced by such depository receipt.
Unless otherwise provided in the applicable Prospectus
Supplement, if after the 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 applicable Indenture or the terms of
such Debt Security to receive payment in a currency, currency
unit or composite currency other than that in which such deposit
has been made in respect of such Debt Security, or (b) a
Conversion Event (as defined below) occurs in respect of the
currency, currency unit or composite currency in which such
deposit has been made, the indebtedness represented by such Debt
Security will be deemed to have been, and will be, fully
discharged and satisfied through the payment of the principal of
(and premium or Make-Whole Amount, if any) and interest on such
Debt Security as they become due out of the proceeds yielded by
converting the amount so deposited in respect of such Debt
Security into the currency, currency unit or composite currency
in which such Debt Security becomes payable as a result of such
election or such cessation of usage based on the applicable
market exchange rate. "Conversion Event" means the cessation of
use of (i) a currency, currency unit or composite currency both
by the government of the country which issued such currency and
for the settlement of transactions by a central bank or other
public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System
and for the settlement of transactions by public institutions of
or within the European Communities or (iii) any currency unit or
composite currency other than the ECU for the purposes for which
it was established. Unless otherwise provided in the applicable
Prospectus Supplement, all payments of principal of (and premium
or Make-Whole Amount, if any) and interest on any Debt Security
<PAGE>
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 Company effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are
declared due and payable because of the occurrence of any of
Event of Default other than the Event of Default described in
clause (d) under "-Events of Default, Notice and Waiver" with
respect to specified sections of an Indenture (which sections
would no longer be applicable to such Debt Securities) or
described in clause (g) under "-Events of Default, Notice and
Waiver" with respect to any other covenant as to which there has
been covenant defeasance, the amount in such currency, currency
unit or composite currency in which such Debt Securities are
payable, and Government Obligations on deposit with the
applicable Trustee, will be sufficient to pay amounts due on such
Debt Securities at the time of their stated maturity but may not
be sufficient to pay amounts due on such Debt Securities at the
time of the acceleration resulting from such of Event of Default.
However, the Company would remain liable to make payment of such
amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe
the provisions, if any, permitting such defeasance or covenant
defeasance, including any modifications to the provisions
described above, with respect to the Debt Securities of or within
a particular series.
Conversion Rights
The terms and conditions, if any, upon which the Debt
Securities are convertible into Common Stock or Preferred Stock
will be set forth in the applicable Prospectus Supplement
relating thereto. Such terms will include whether such Debt
Securities are convertible into shares of Common Stock or
Preferred Stock, the conversion price (or manner of calculation
thereof), the conversion period, provisions as to whether
conversion will be at the option of the holders or the Company,
the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of
such Debt Securities and any restrictions on conversion,
including restrictions directed at maintaining the Company's REIT
status.
Book-Entry System
The Debt Securities of a series may be issued in whole or in
part in the form of one or more global securities ("Global
Securities") that will be deposited with, or on behalf of, a
depository (the "Depository") identified in the Prospectus
Supplement relating to such series. Global Securities, if any,
issued in the United States are expected to be deposited with The
Depository Trust Company ("DTC"), as Depository. Global
Securities may be issued in fully registered form and may be
issued in either temporary or permanent form. Unless and until
it is exchanged in whole or in part for the individual Debt
Securities represented thereby, a Global Security may not be
<PAGE>
transferred except as a whole by the Depository for such Global
Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such
Depository or by such Depository or any nominee of such Depositor
to a successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with
respect to a series of Debt Securities will be described in the
Prospectus Supplement relating to such series. The Company
expects that unless otherwise indicated in the applicable
Prospectus Supplement, the following provisions will apply to
depository arrangements.
Upon the issuance of a Global Security, the Depository for
such Global Security or its nominee will credit on its book-entry
registration and transfer system the respective principal amounts
of the individual Debt Securities represented by such Global
Security to the accounts of persons that have accounts with such
Depository ("Participants"). Such accounts shall be designated
by the underwriters, dealers or agents with respect to such Debt
Securities or by the Company if such Debt Securities are offered
directly by the Company. Ownership of beneficial interests in
such Global Security will be limited to Participants or persons
that may hold interests through Participants.
The Company expects that, pursuant to procedures established
by DTC, ownership of beneficial interests in any Global Security
with respect to which DTC is the Depository will be shown on, and
the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to
beneficial interests of Participants) and records of Participants
(with respect to beneficial interests of persons who hold through
Participants). Neither the Company nor the Trustee will have any
responsibility or liability for any aspect of the records of DTC
or for maintaining, supervising or reviewing any records of DTC
or any of its Participants relating to beneficial ownership
interests in the Debt Securities. The laws of some states
require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and
laws may impair the ability to own, pledge or transfer beneficial
interest in a Global Security.
So long as the Depository for a Global Security or its
nominee is the registered owner of such Global Security, such
Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the
applicable Indenture. Except as described below or in the
applicable Prospectus Supplement, owners of beneficial interest
in a Global Security will not be entitled to have any of the
individual Debt Securities represented by such Global Security
registered in their names, will not receive or be entitled to
receive physical delivery of any such Debt Securities in
definitive form and will not be considered the owners or holders
thereof under the applicable Indenture. Beneficial owners of
Debt Securities evidenced by a Global Security will not be
considered the owners or holders thereof under the applicable
<PAGE>
Indenture for any purpose, including with respect to the giving
of any direction, instructions or approvals to the Trustee
thereunder. Accordingly, each person owning a beneficial
interest in a Global Security with respect to which DTC is the
Depository must rely on the procedures of DTC and, if such person
is not a Participant, on the procedures of the Participant
through which such person owns its interests, to exercise any
rights of a holder under the applicable Indenture. The Company
understands that, under existing industry practice, if it
requests any action of holders or if an owner of a beneficial
interest in a Global Security desires to give or take any action
which a holder is entitled to give or take under the applicable
Indenture, DTC would authorize the Participants holding the
relevant beneficial interest to give or take such action, and
such Participants would authorize beneficial owners through such
Participants to give or take such actions or would otherwise act
upon the instructions of beneficial owners holding through them.
Payments of principal of, any premium or Make-Whole Amount
and any interest on individual Debt Securities represented by a
Global Security registered in the name of a Depository or its
nominee will be made to or at the direction of the Depository or
its nominee, as the case may be, as the registered owner of the
Global Security under the applicable Indenture. Under the terms
of the applicable Indenture, the Company and the Trustee may
treat the persons in whose name Debt Securities, including a
Global Security, are registered as the owners thereof for the
purpose of receiving such payments. Consequently, neither the
Company nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of
Debt Securities (including principal, premium or Make-Whole
Amount, if any, and interest). The Company believes, however,
that it is currently the policy of DTC to immediately credit the
accounts of relevant Participants with such payments, in amounts
proportionate to their respective holdings of beneficial
interests in the relevant Global Security as shown on the records
of DTC or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global
Security held through such Participants will be governed by
standing instructions and customary practices, as is the case
with securities held for the account of customers in bearer form
or registered in street name, and will be the responsibility of
such Participants. Redemption notices with respect to any Debt
Securities represented by a Global Security will be sent to the
Depository or its nominee. If less than all of the Debt
Securities of any series are to be redeemed, the Company expects
the Depository to determine the amount of the interest of each
Participant in such Debt Securities to be redeemed to be
determined by lot. None of the Company, the Trustee, any Paying
Agent or the Security Registrar for such Debt Securities will
have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
ownership interests in the Global Security for such Debt
Securities or for maintaining any records with respect thereto.
Neither the Company nor the Trustee will be liable for any
delay by the holders of a Global Security or the Depository in
<PAGE>
identifying the beneficial owners of Debt Securities and the
Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the holder of a Global
Security or the Depository for all purposes. The rules
applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
If a Depository for any Debt Securities is at any time
unwilling, unable or ineligible to continue as depository and a
successor depository is not appointed by the Company within 90
days, the Company will issue individual Debt Securities in
exchange for the Global Security representing such Debt
Securities. In addition, the Company may at any time and in its
sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Debt Securities, determine
not to have any of such Debt Securities represented by one or
more Global Securities and in such event will issue individual
Debt Securities in exchange for the Global Security or Securities
representing such Debt Securities. Individual Debt Securities so
issued will be issued in denominations of $1,000 and integral
multiples thereof.
The Debt Securities of a series may also be issued in whole
or in part in the form of one or more bearer global securities (a
"Bearer Global Security") that will be deposited with a
depository, or with a nominee for such depository, identified in
the applicable Prospectus Supplement. Any such Bearer Global
Securities may be issued in temporary or permanent form. The
specific terms and procedures, including the specific terms of
the depository arrangement, with respect to any portion of a
series of Debt Securities to be represented by one or more Bearer
Global Securities will be described in the applicable Prospectus
Supplement.
Payment and Paying Agents
Unless otherwise specified in the applicable Prospectus
Supplement, the principal of (and applicable premium or
Make-Whole Amount, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the
Trustee, the address of which will be stated in the applicable
Prospectus Supplement; provided that, at the option of the
Company, payment of interest may be made by check mailed to the
address of the person entitled thereto as it appears in the
applicable register for such Debt Securities or by wire transfer
of funds to such person at an account maintained within the
United States.
All moneys paid by the Company to a paying agent or a
Trustee for the payment of the principal of or any premium,
Make-Whole Amount or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium,
Make-Whole Amount or interest has become due and payable will be
repaid to the Company, and the holder of such Debt Security
thereafter may look only to the Company for payment thereof.
<PAGE>
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 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.
<PAGE>
DESCRIPTION OF PREFERRED STOCK
The description of the Company's preferred stock, par value
$.01 per share ("Preferred Stock"), set forth below does not
purport to be complete and is qualified in its entirety by
reference to the Company's Amended and Restated Articles of
Incorporation (the "Articles of Incorporation") and Amended and
Restated Bylaws (the "Bylaws").
General
Under the Articles of Incorporation, the Company has
authority to issue 10 million shares of Preferred Stock, none of
which was outstanding as of July 25, 1996. Shares of Preferred
Stock may be issued from time to time, in one or more series, as
authorized by the Board of Directors of the Company. Prior to
issuance of shares of each series, the Board of Directors is
required by the Maryland General Corporation Law ("MGCL") and
the Company's Articles of Incorporation to fix for each series,
the terms, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of
redemption, as are permitted by Maryland law. The Preferred
Stock will, when issued, be fully paid and nonassessable and will
have no preemptive rights. The Board of Directors could
authorize the issuance of shares of Preferred Stock with terms
and conditions that could have the effect of discouraging a
takeover or other transaction that holders of Common Stock might
believe to be in their best interests or in which holders of
some, or a majority, of the shares of Common Stock might receive
a premium for their shares over the then market price of such
shares of Common Stock.
Terms
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 Company's Articles of Incorporation and Bylaws
and any applicable amendment to the Articles of Incorporation
designating terms of a series of Preferred Stock (a "Designating
Amendment").
Reference is made to the Prospectus Supplement relating to
the Preferred Stock offered thereby for specific terms,
including:
(1) The title and stated value of such Preferred
Stock;
(2) The number of shares of such Preferred Stock
offered, the liquidation preference per share and
the offering price of such Preferred Stock;
<PAGE>
(3) The dividend rate(s), period(s) and/or payment
date(s) or method(s) of calculation thereof
applicable to such Preferred Stock;
(4) The date from which dividends on such Preferred
Stock shall accumulate, if applicable;
(5) The procedures for any auction and remarketing, if
any, for such Preferred Stock;
(6) The provision for a sinking fund, if any, for such
Preferred Stock;
(7) The provision for redemption, if applicable, of
such Preferred Stock;
(8) Any listing of such Preferred Stock on any
securities exchange;
(9) The terms and conditions, if applicable, upon
which such Preferred Stock will be convertible
into Common Stock, including the conversion price
(or manner of calculation thereof);
(10) Any other specific terms, preferences, rights,
limitations or restrictions of such Preferred
Stock;
(11) A discussion of federal income tax considerations
applicable to such Preferred Stock;
(12) The relative ranking and preference of such
Preferred Stock as to dividend rights and rights
upon liquidation, dissolution or winding up of the
affairs of the Company;
(13) Any limitations on issuance of any series of
Preferred Stock ranking senior to or on a parity
with such series of Preferred Stock as to dividend
rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company; and
(14) Any limitations on direct or beneficial ownership
and restrictions on transfer, in each case as may
be appropriate to preserve the status of the
Company as a REIT.
Rank
Unless otherwise specified in the Prospectus Supplement, the
Preferred Stock will, with respect to dividend rights and rights
upon liquidation, dissolution or winding up of the Company, rank
(i) senior to all classes or series of Common Stock of the
Company, and to all equity securities ranking junior to such
Preferred Stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Company; (ii) on a
parity with all equity securities issued by the Company the terms
<PAGE>
of which specifically provide that such equity securities rank on
a parity with the Preferred Stock with respect to dividend rights
or rights upon liquidation, dissolution or winding up of the
Company; and (iii) junior to all equity securities issued by the
Company the terms of which specifically provide that such equity
securities rank senior to the Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or
winding up of the Company. The term "equity securities" does not
include convertible debt securities.
Dividends
Holders of the Preferred Stock of each series will be
entitled to receive, when, as and if declared by the Board of
Directors of the Company, out of assets of the Company legally
available for payment, cash dividends at such rates and on such
dates as will be set forth in the applicable Prospectus
Supplement. Each such dividend shall be payable to holders of
record as they appear on the share transfer books of the Company
on such record dates as shall be fixed by the Board of Directors
of the Company.
Dividends on any series of the Preferred Stock may be
cumulative or non-cumulative, as provided in the applicable
Prospectus Supplement. Dividends, if cumulative, will be
cumulative from and after the date set forth in the applicable
Prospectus Supplement. If the Board of Directors of the Company
fails to declare a dividend payable on a dividend payment date on
any series of the Preferred Stock for which dividends are non-
cumulative, then the holders of such series of the Preferred
Stock will have no right to receive a dividend in respect of the
dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for
such period, whether or not dividends on such series are declared
payable on any future dividend payment date.
If Preferred Stock of any series is outstanding, no
dividends will be declared or paid or set apart for payment on
any capital stock of the Company of any other series ranking, as
to dividends, on a parity with or junior to the Preferred Stock
of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative
dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof is set
apart for such payment on the Preferred Stock of such series for
all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock does not have a cumulative
dividend, full dividends for the then current dividend period
have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof is set apart for
such payment on the Preferred Stock of such series. When
dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon Preferred Stock of any series
and the shares of any other series of Preferred Stock ranking on
a parity as to dividends with the Preferred Stock of such series,
all dividends declared upon Preferred Stock of such series and
any other series of Preferred Stock ranking on a parity as to
<PAGE>
dividends with such Preferred Stock shall be declared pro rata so
that the amount of dividends declared per share of Preferred
Stock of such series and such other series of Preferred Stock
shall in all cases bear to each other the same ratio that accrued
dividends per share on the Preferred Stock of such series (which
shall not include any accumulation in respect of unpaid dividends
for prior dividend periods if such Preferred Stock does not have
a cumulative dividend) and such other series of Preferred Stock
bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or
payments on Preferred Stock of such series which may be in
arrears.
Except as provided in the immediately preceding paragraph,
unless (i) if such series of Preferred Stock has a cumulative
dividend, full cumulative dividends on the Preferred Stock of
such series have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof is set
apart for payment for all past dividend periods and the then
current dividend period, and (ii) if such series of Preferred
Stock does not have a cumulative dividend, full dividends on the
Preferred Stock of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for the then current
dividend period, no dividends (other than in shares of Common
Stock or other shares of capital stock ranking junior to the
Preferred Stock of such series as to dividends and upon
liquidation) shall be declared or paid or set aside for payment
nor shall any other distribution be declared or made upon the
Common Stock, or any other capital stock of the Company ranking
junior to or on a parity with the Preferred Stock of such series
as to dividends or upon liquidation, nor shall any shares of
Common Stock, or any other shares of capital stock of the Company
ranking junior to or on a parity with the Preferred Stock of such
series as to dividends or upon liquidation be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption
of any such shares) by the Company (except by conversion into or
exchange for other capital stock of the Company ranking junior to
the Preferred Stock of such series as to dividends and upon
liquidation).
Any dividend payment made on shares of a series of Preferred
Stock shall first be credited against the earliest accrued but
unpaid dividend due with respect to shares of such series which
remains payable.
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
<PAGE>
number of shares of such Preferred Stock that shall be redeemed
by the Company in each year commencing after a date to be
specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends
thereon (which shall not, if such Preferred Stock does not have a
cumulative dividend, include any accumulation in respect of
unpaid dividends for prior dividend periods) to the date of
redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement.
If the redemption price for Preferred Stock of any series is
payable only from the net proceeds of the issuance of shares of
capital stock of the Company, the terms of such Preferred Stock
may provide that, if no such shares of capital stock shall have
been issued or to the extent the net proceeds from any issuance
are insufficient to pay in full the aggregate redemption price
then due, such Preferred Stock shall automatically and
mandatorily be converted into the applicable shares of capital
stock of the Company pursuant to conversion provisions specified
in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of
Preferred Stock has a cumulative dividend, full cumulative
dividends on all shares of such series of Preferred Stock shall
have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current
dividend period, and (ii) if a series of Preferred Stock does not
have a cumulative dividend, full dividends on all shares of the
Preferred Stock of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for the then current
dividend period, no shares of such series of Preferred Stock
shall be redeemed unless all outstanding shares of Preferred
Stock of such series are simultaneously redeemed; provided,
however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Stock of such series to preserve the
REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares
of Preferred Stock of such series. In addition, unless (i) if
such series of Preferred Stock has a cumulative dividend, full
cumulative dividends on all outstanding shares of such series of
Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then
current dividend period, and (ii) if such series of Preferred
Stock does not have a cumulative dividend, full dividends on the
Preferred stock of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for the then current
dividend period, the Company shall not purchase or otherwise
acquire directly or indirectly any shares of Preferred Stock of
such series (except by conversion into or exchange for capital
shares of the Company ranking junior to the Preferred Stock of
such series as to dividends and upon liquidation); provided,
however, that the foregoing shall not prevent the purchase or
acquisition of shares of Preferred Stock of such series to
preserve the REIT status of the Company or pursuant to a purchase
<PAGE>
or exchange offer made on the same terms to holders of all
outstanding shares of Preferred Stock of such series.
If fewer than all of the outstanding shares of Preferred
Stock of any series are to be redeemed, the number of shares to
be redeemed will be determined by the Company and such shares may
be redeemed pro rata from the holders of record of such shares in
proportion to the number of such shares held or for which
redemption is requested by such holder (with adjustments to avoid
redemption of fractional shares) or by any other equitable manner
determined by the Company.
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each holder of
record of Preferred Stock of any series to be redeemed at the
address shown on the stock transfer books of the Company. Each
notice shall state: (i) the redemption date; (ii) the number of
shares and series of the Preferred Stock to be redeemed;
(iii) the redemption price; (iv) the place or places where
certificates for such Preferred Stock are to be surrendered for
payment of the redemption price; (v) that dividends on the shares
to be redeemed will cease to accrue on such redemption date; and
(vi) the date upon which the holder's conversion rights, if any,
as to such shares shall terminate. If fewer than all the shares
of Preferred Stock of any series are to be redeemed, the notice
mailed to each such holder thereof shall also specify the number
of shares of Preferred Stock to be redeemed from each such
holder. If notice of redemption of any Preferred Stock has been
given and if the funds necessary for such redemption have been
set aside by the Company in trust for the benefit of the holders
of any Preferred Stock so called for redemption, then from and
after the redemption date dividends will cease to accrue on such
Preferred Stock, and all rights of the holders of such shares
will terminate, except the right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company, then, before any
distribution or payment shall be made to the holders of any
Common Stock or any other class or series of capital stock of the
Company ranking junior to the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up of the
Company, the holders of each series of Preferred Stock shall be
entitled to receive out of assets of the Company legally
available for distribution to stockholders liquidating
distributions in the amount of the liquidation preference per
share, if any, set forth in the applicable Prospectus Supplement,
plus an amount equal to all dividends accrued and unpaid thereon
(which shall not include any accumulation in respect of unpaid
noncumulative dividends for prior dividend periods). After
payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Preferred Stock will have
no right or claim to any of the remaining assets of the Company.
In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of
the Company are insufficient to pay the amount of the liquidating
<PAGE>
distributions on all outstanding shares of Preferred Stock and
the corresponding amounts payable on all shares of other classes
or series of capital stock of the Company ranking on a parity
with the Preferred Stock in the distribution of assets, then the
holders of the Preferred Stock and all other such classes or
series of capital stock shall share ratably in any such
distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively
entitled.
If liquidating distributions shall have been made in full to
all holders of Preferred Stock, the remaining assets of the
Company shall be distributed among the holders of any other
classes or series of capital stock ranking junior to the
Preferred Stock upon liquidation, dissolution or winding up,
according to their respective rights and preferences and in each
case according to their respective number of shares. For such
purposes, the consolidation or merger of the Company with or into
any other corporation, trust or entity, or the sale, lease or
conveyance of all or substantially all of the property or
business of the Company, shall not be deemed to constitute a
liquidation, dissolution or winding up of the Company.
Voting Rights
Holders of the Preferred Stock will not have any voting
rights, except as set forth below or as otherwise from time to
time required by law or as indicated in the applicable Prospectus
Supplement.
Unless provided otherwise for any series of Preferred Stock,
so long as any shares of Preferred Stock of a series remain
outstanding, the Company will not, without the affirmative vote
or consent of the holders of at least two-thirds of the shares of
such series of Preferred Stock outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize or create, or
increase the authorized or issued amount of, any class or series
of capital stock ranking prior to such series of Preferred Stock
with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up or reclassify
any authorized capital stock of the Company into such shares, or
create, authorize or issue any obligation or security convertible
into or evidencing the right to purchase any such shares; or
(ii) amend, alter or repeal the provisions of the Company's
Articles of Incorporation or the Designating Amendment for such
series of Preferred Stock, whether by merger, consolidation or
otherwise (an "Event"), so as to materially and adversely affect
any right, preference, privilege or voting power of such series
of 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 the Preferred Stock remains outstanding
with the terms thereof materially unchanged, taking into account
that upon the occurrence of an Event the Company may not be the
surviving entity, the occurrence of any such Event shall not be
deemed to materially and adversely affect such rights,
preferences, privileges or voting power of holders of Preferred
<PAGE>
Stock, and provided further that (x) any increase in the amount
of the authorized Preferred Stock or the creation or issuance of
any other series of Preferred Stock, or (y) any increase in the
amount of authorized shares of such series or any other series of
Preferred Stock, in each case ranking on a parity with or junior
to the Preferred Stock of such series with respect to payment of
dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting
powers.
The foregoing voting provisions will not apply if, at or
prior to the time when the act with respect to which such vote
would otherwise be required shall be effected, all outstanding
shares of such series of Preferred Stock shall have been redeemed
or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
Conversion Rights
The terms and conditions, if any, upon which any series of
Preferred Stock is convertible into Common Stock will be set
forth in the applicable Prospectus Supplement relating thereto.
Such terms will include the number of shares of Common Stock into
which the shares of Preferred Stock are convertible, the
conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at
the option of the holders of the Preferred Stock or the Company,
the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of
such series of Preferred Stock.
Restrictions on Ownership
For the Company to qualify as a REIT under the Internal
Revenue Code of 1986, as amended (the "Code"), not more than 50%
in value of its outstanding capital stock may be owned, directly
or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities) during the last half of a
taxable year. To assist the Company in meeting this requirement,
the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by a single person of the
Company's outstanding equity securities, including any Preferred
Stock of the Company. Therefore, the Designating Amendment for
each series of Preferred Stock may contain provisions restricting
the ownership and transfer of the Preferred Stock. The
applicable Prospectus Supplement will specify any additional
ownership limitation relating to a series of Preferred Stock.
See "Restrictions on Transfers of Capital Stock."
Transfer Agent
The transfer agent and registrar for the Preferred Stock
will be set forth in the applicable Prospectus Supplement.
<PAGE>
DESCRIPTION OF COMMON STOCK
The description of the Company's Common Stock set forth
below does not purport to be complete and is qualified in its
entirety by reference to the Company's Articles of Incorporation
and Bylaws.
General
Under the Articles of Incorporation, the Company has
authority to issue 100 million shares of Common Stock, par value
$.01 per share. Under Maryland law, stockholders generally are
not responsible for the corporation's debts or obligations. At
July 25, 1996, the Company had outstanding 7,544,171 shares of
Common Stock.
Terms
Subject to the preferential rights of any other shares or
series of stock, holders of shares of Common Stock will be
entitled to receive dividends on shares of Common Stock if, as
and when authorized and declared by the Board of Directors of the
Company out of assets legally available therefor and to share
ratably in the assets of the Company legally available for
distribution to its stockholders in the event of its liquidation,
dissolution or winding-up after payment of, or adequate provision
for, all known debts and liabilities of the Company.
Each outstanding share of Common Stock entitles the holder
to one vote on all matters submitted to a vote of stockholders,
including the election of Directors and, except as otherwise
required by law or except as provided with respect to any other
class or series of stock, the holders of Common Stock will
possess the exclusive voting power. There is no cumulative
voting in the election of Directors, which means that the holders
of a majority of the outstanding shares of Common Stock can elect
all of the Directors then standing for election, and the holders
of the remaining shares of Common Stock will not be able to elect
any Directors.
Holders of Common Stock have no conversion, sinking fund or
redemption rights, or preemptive rights to subscribe for any
securities of the Company.
The Company intends to furnish its stockholders with annual
reports containing audited consolidated financial statements and
an opinion thereon expressed by an independent public accounting
firm and quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.
All shares of Common Stock will have equal dividend,
distribution, liquidation and other rights, and will have no
preference, appraisal or exchange rights.
Pursuant to the MGCL, a corporation generally cannot
dissolve, amend its Articles of Incorporation, merge, sell all or
substantially all of its assets, engage in a share exchange or
<PAGE>
engage in similar transactions outside the ordinary course of
business unless approved by the affirmative vote of stockholders
holding at least two-thirds of the shares entitled to vote on the
matter unless a lesser percentage (but not less than a majority
of all of the votes to be cast on the matter) is set forth in the
corporation's Articles of Incorporation. The Company's Articles
of Incorporation do not provide for a lesser percentage in such
situations.
Restrictions on Ownership
For the Company to qualify as a REIT under the Code, not
more than 50% in value of its outstanding capital stock may be
owned, directly or indirectly, by five or fewer individuals (as
defined in the Code to include certain entities) during the last
half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the
beneficial ownership, directly or indirectly, by a single person
of the Company's outstanding equity securities. See
"Restrictions on Transfers of Capital Stock."
Transfer Agent
The transfer agent and registrar for the Common Stock is
American Stock Transfer and Trust Company.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among
other things, not more than 50% in value of its outstanding
capital stock may be owned, directly or indirectly, by five or
fewer individuals (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 Test"), 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. The Articles of Incorporation, subject to certain
exceptions, provide that no holder may own, or be deemed to own
by virtue of the attribution provisions of the Code, shares of
the Company's capital stock in excess of the Ownership Limit.
Pursuant to the Code, generally, 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, corporations, trusts and
partnerships will be looked-through for purposes of the Five or
Fewer Test (i.e., the beneficial owners of such entities will be
counted as holders). The Company's Articles of Incorporation
limit such entities under the Look-Through Ownership Limit to
holdings of no more than 15% of the aggregate value of the
Company's shares of capital stock. Any transfer of shares of
capital stock or any security convertible into shares of capital
stock that would create a direct or indirect ownership of shares
of capital stock in excess of the Ownership Limit or the Look-
Through Ownership Limit or that would result in the
disqualification of the Company as a REIT, including any transfer
<PAGE>
that results in the 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 or the Look-Through 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.
Capital stock owned, or deemed to be owned, or transferred
to a shareholder in excess of the Ownership Limit or the Look-
Through Ownership Limit or that causes the Company to be treated
as "closely-held" under Section 856(h) of the Code or is
otherwise not permitted as provided above, will be designated
shares in trust ("Shares in Trust") that will be transferred, by
operation of law, to a person unaffiliated with the Company
designated by the Board of Directors as trustee (the "Trustee")
of a trust (the "Share Trust") for the benefit of one or more
charitable organizations. Shares in Trust will remain issued and
outstanding Common or Preferred Shares of the Company and will be
entitled to the same rights and privileges as all other shares of
the same class or series. The Trustee will receive all dividends
and distributions on the Shares in Trust for the Share Trust and
will hold such dividends or distributions in trust for the
benefit of one or more designated charitable beneficiaries. The
Trustee will vote all Shares in Trust. Any vote cast by the
proposed transferee in respect of the Shares in Trust prior to
the discovery by the Company that such shares have been
transferred to the Share Trust shall be rescinded and shall be
void ab initio. Any dividend or distribution paid to a proposed
transferee or owner of Shares in Trust prior to the discovery by
the Company that such shares have been transferred to the Share
Trust will be required to be repaid upon demand to the Trustee
for the benefit of one or more charitable beneficiaries. The
Trustee may, at any time the Shares in Trust are held in the
Share Trust, transfer the interest in the Share Trust
representing the Shares in Trust to any person whose ownership of
the shares of capital stock designated as Shares in Trust would
not violate the Ownership Limit or the Look-Through Ownership
Limit, or otherwise result in the disqualification of the REIT,
as described above, and provided such permitted transferee
purchases such shares for valuable considerations. Upon such
sale, the proposed original transferee will receive the lesser of
(i) the price paid by the original transferee shareholder for the
shares of capital stock that were transferred to the Share Trust,
or if the original transferee shareholder did not give value for
such shares (e.g., the capital stock was received through a gift,
devise or other transaction), the average closing price for the
class of shares from which such shares of Shares in Trust were
designated for the ten days immediately preceding such sale or
gift and (ii) the price received by the Trustee from such sale.
Any amounts received by the Trustee in excess of the amounts paid
<PAGE>
to the proposed transferee will be distributed to one or more
charitable beneficiaries of the Share Trust. If the foregoing
transfer restrictions are determined to be void or invalid by
virtue of any legal decision, statute, rule or regulation, then
the intended transferee of shares held in the Share Trust may be
deemed, at the option of the Company, to have acted as an agent
on behalf of the Company in acquiring the Shares in Trust and to
hold the Shares in Trust on behalf of the Company.
In addition, the Company has the right, for a period of 90
days during the time any shares of Shares in Trust are held by
the Trustee, to purchase all or any portion of the Shares in
Trust from the Trust at the lesser of (i) the price initially
paid for such shares by the original transferee-shareholder, or
if the original transferee-shareholder did not give value for
such shares (e.g., the shares were received through a gift,
device or other transaction), the average closing price for the
class of stock from which such Shares in Trust were designated
for the ten days immediately preceding such sale or gift, and
(ii) the average closing price for the class of shares form which
such Shares in Trust were designated for the ten trading days
immediately preceding the date the Company elects to purchase
such shares. The 90-day period begins on date of the violative
transfer if the original transferee-shareholder 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.
All certificates representing shares of stock of the Company
bear a legend referring to the restrictions described above.
Each shareholder 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 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 and the Look-Through Ownership Limit may
have the effect of precluding acquisition of control of the
Company.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material U.S. Federal
income tax considerations to the Company regarding the offering
of Securities. The following discussion is not exhaustive of all
possible tax considerations and is not tax advice. The Code
provisions governing the Federal income tax treatment of REITs
are highly technical and complex, and this summary is qualified
in its entirety by the applicable Code provisions, rules and
regulations promulgated thereunder, and the administrative and
judicial interpretations thereof. The following discussion is
based on current law. The tax treatment of a holder of any of
the Securities will vary depending upon the terms of the specific
<PAGE>
Securities acquired by such holder as well as his particular
situation, and this discussion does not attempt to address any
aspects of Federal income taxation relating to the holders of
Securities. Certain Federal income tax considerations relevant
to holders of Securities will be provided in the applicable
Prospectus Supplement relating thereto.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT WITH HIS OR
HER OWN TAX ADVISOR WITH RESPECT TO SUCH PURCHASER'S SPECIFIC
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE
PURCHASE, HOLDING AND SALE OF SECURITIES.
Taxation of the Company
The Company intends to operate so as to meet the
requirements under the Code for qualification as a REIT,
commencing with its taxable year ending December 31, 1995. No
assurance can be given, however, that such requirements will be
met. Based on various assumptions and factual representations
made by the Company, in the opinion of Phillips, Lytle,
Hitchcock, Blaine & Huber, counsel to the Company, the Company
has been organized in conformity with the requirements for
qualification as a REIT beginning with its taxable year ending
December 31, 1995, and its proposed method of operation as
described in this Prospectus and as represented by the Company
will enable it to satisfy the requirements for such
qualification. Such qualification depends upon the Company's
ability to meet the various requirements imposed under the Code
through actual operating results, as discussed below. Phillips,
Lytle, Hitchcock, Blaine & Huber will not review these operating
results, and no assurance can be given that actual operating
results will meet these requirements. The opinion of Phillips,
Lytle, Hitchcock, Blaine & Huber is not binding on the Internal
Revenue Service (the "Service"). In addition, the opinion of
Phillips, Lytle, Hitchcock, Blaine & Huber is also based upon
existing law, Treasury regulations, currently published
administrative positions of the Service and judicial decisions,
which are subject to change either prospectively or
retroactively.
In any year in which the Company qualifies as a REIT, it
generally will not be subject to Federal corporate income taxes
on that portion of its ordinary income or capital gain that is
currently distributed to shareholders. The REIT provisions of
the Code generally allow a REIT to deduct distributions paid to
its shareholders. This deduction for distributions paid to
shareholders substantially eliminates the Federal "double
taxation" on earnings (once at the corporate level and once again
at the shareholder level) that usually results from investments
in a corporation.
Even if the Company qualifies as a REIT, however, the
Company will be subject to Federal income tax, as set forth
below. First, the Company will be taxed at regular corporate
rates on its undistributed REIT taxable income, including
undistributed net capital gains. Second, under certain
circumstances, the Company may be subject to the "alternative
<PAGE>
minimum tax" as a consequence of its items of tax preference.
Third, if the Company has net income from the sale or other
disposition of "foreclosure property" that is held primarily for
sale to customers in the ordinary course of business or other
non-qualifying income from foreclosure property, it will be
subject to tax at the highest corporate rate on such income.
Fourth, if the Company has net income from prohibited
transactions (which are, in general, certain sales or other
disposition of property other than foreclosure property held
primarily for sale to customers in the ordinary course of
business), such income will be subject to a 100% tax. Fifth, if
the Company should fail to satisfy either the 75% or 95% gross
income test (discussed below) but has nonetheless maintained its
qualification as a REIT because certain other requirements have
been met, it will be subject to a 100% tax on the net income
attributable to the greater of the amount by which the Company
fails the 75% or 95% test, multiplied by a fraction intended to
reflect the Company's profitability. Sixth, if the Company fails
to distribute during each year at least the sum of (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital
gain net income for such year and (iii) any undistributed taxable
income from prior periods, the Company will be subject to a 4%
excise tax on the excess of such required distribution over the
amounts actually distributed. Seventh, if the Company should
dispose of any of the asset owned at the time of the Initial
Offering that had a fair market value at such time in excess of
its adjusted tax basis ("Built-In-Gain") or any asset acquired by
the Company from a C corporation (i.e., a corporation generally
subject to the full corporate level tax) in a carryover basis
transaction during the ten-year period (the "Recognition Period")
beginning on the date of the Initial Offering with respect to
assets owned by the Company at the time of the Initial Offering,
or the date on which the asset was acquired by the Company from a
C corporation, then, to the extent of the Built-In Gain, such
gain will be subject to a tax at the highest regular corporate
rate, pursuant to guidelines issued by the Service (the "Built-In
Gain Rules").
Requirements for Qualification
To qualify as a REIT, the Company must elect to be so
treated and must meet the requirements, discussed below, relating
to the Company's organization, sources of income, nature of
assets and distributions of income to shareholders ("REIT
Requirements").
Organizational Requirements
The Code defines a REIT as a corporation, trust or
association: (i) that is managed by one or more trustees or
directors, (ii) the beneficial ownership of which is evidenced by
transferable shares or by transferable certificates of beneficial
interest, (iii) that would be taxable as a domestic corporation
but for the REIT Requirements, (iv) that is neither a financial
institution nor an insurance company subject to certain
<PAGE>
provisions of the Code, (v) the beneficial ownership of which is
held by 100 or more persons, and (vi) at all times during the
last half of each taxable year not more than 50% in value of the
outstanding shares of which is owned, directly or indirectly,
through the application of certain attribution rules, by five or
fewer individuals (as defined in the Code to include certain
entities). In addition, certain other tests, described below,
regarding the nature of its income and assets also must be
satisfied. The Code provides that conditions (i) through (iv),
inclusive, must be met during the entire taxable year and that
condition (v) must be met during at least 335 days of a taxable
year of twelve months, or during a proportionate part of a
taxable year of less than 12 months. Conditions (v) and (vi)
(the "100 shareholder" and "five or fewer" requirements) will not
apply until after the first taxable year for which an election is
made to be taxed as a REIT. For purposes of conditions (v) and
(vi), pension funds and certain other tax-exempt entities are
treated as individuals, subject to a "look-through" exception in
the case of condition (vi).
Prior to consummation of the Initial Offering, the Company
did not satisfy conditions (v) and (vi) above. The Initial
Offering and related transactions allowed the Company to satisfy
the 100 shareholder and five or fewer requirements. In addition,
the Company's Articles of Incorporation currently include certain
restrictions regarding transfer of its stock, which restrictions
are intended (among other things) to assist the Company in
continuing to satisfy conditions (v) and (vi) above.
In addition, a corporation may not elect to become a REIT
unless its taxable year is the calendar year. Effective
January 1, 1995, the Company changed its taxable year to the
calendar year.
In order to provide the Company with flexibility, the
Company owns the Properties through the Partnership. The Company
holds a 99% limited partnership interest in the Partnership. The
Subsidiary, a wholly-owned subsidiary of the Company, holds a 1%
general partner interest in the Partnership. The Partnership and
the Subsidiary are qualified REIT subsidiaries. A qualified REIT
subsidiary is any corporation that is 100% owned by a REIT at all
times during the period the subsidiary is in existence. Under
Section 856(i) of the Code, a qualified REIT subsidiary is not
treated as a separate corporation from the REIT, and all assets,
liabilities, income, deductions, and credits of the qualified
REIT subsidiary are treated as assets, liabilities and such items
(as the case may be) of the REIT. The Partnership is currently
disregarded for Federal income tax purposes since the existence
of the Subsidiary is ignored for Federal income tax purposes and,
as a result, the Partnership has only one partner for Federal
income tax purposes.
Although the Partnership is, as of July 25, 1996, wholly-
owned by the Company and the Subsidiary, the Company anticipates
using units of the Partnership to acquire properties from
unrelated third parties which would result in the Partnership
being treated as a partnership for Federal income tax purposes
<PAGE>
and the Company being treated as a partner in the Partnership.
In the case of a REIT that is a partner in a partnership,
Treasury Regulations provide that the REIT will be deemed to own
its proportionate share of the assets of the partnership and will
be deemed to be entitled to the income of the partnership
attributable to such share. In addition, the character of the
assets and gross income of the partnership shall retain the same
character in the hands of the REIT for purposes of Section 856 of
the Code, including satisfying the gross income tests and asset
tests. Thus, the Company's proportionate share of the assets,
liabilities and items of income of the Partnership will be
treated as assets, liabilities and items of income of the Company
for purposes of applying the requirements described herein.
Income Tests
To maintain qualification as a REIT, three gross income
requirements must be satisfied annually.
- First, at least 75% of the Company's gross income,
excluding gross income from certain dispositions
of property held primarily for sale to customers
in the ordinary course of a trade or business
("prohibited transactions"), for each taxable year
must be derived directly or indirectly from
investments relating to real property or mortgages
on real property (including "rents form real
property" and in certain circumstances, interest)
or from certain types of temporary investments.
- Second, at least 95% of the Company's gross income
(excluding gross income from prohibited
transactions) for each taxable year must be
derived from such real property investments and
from dividends, interest and gain from the sale or
disposition of stock or securities or from any
combination of the foregoing.
- Third, less than 30% of the Company's gross income
(including gross income from prohibited
transactions) for each taxable year is derived
from gain from the sale or other disposition of
stock or securities held for less than one year,
gain from prohibited transactions and gain from
the sale or other disposition of real property
held for less than four years (apart from
involuntary conversion and sales of foreclosure
property). For purposes of applying the 30% gross
income test, the holding period of the Properties
acquired by the Company at the time of the Initial
Offering will be deemed to have commenced on the
date of acquisition.
Rents received or deemed to be received by the Company will
qualify as "rents from real property in satisfying the gross
income requirements for a REIT described above only if several
conditions are met.
<PAGE>
- First, the amount of rent generally must not be
based in whole or in part on the income or profits
of any person.
- Second, the Code provides that rents from a tenant
will not qualify as "rents from real property" in
satisfying the gross income tests if the REIT, or
an owner of 10% or more of the REIT, directly or
constructively owns 10% or more of such tenant (a
"Related Party Tenant").
- Third, if rent attributable to personal property,
leased in connection with a lease of real
property, is greater than 15% of the total rent
received under the lease, then the portion of rent
attributable to the personal property will not
qualify as "rents from real property."
- Finally, for rents to qualify as "rents from real
property" the REIT must not operate or manage the
property or furnish or render services to tenants,
other than through an "independent contractor" who
is adequately compensated and from whom the REIT
does not derive any income; provided, however,
that a REIT may provide services with respect to
its properties and the income will qualify as
"rents from real property" if the services are
"usually or customarily rendered" in connection
with the rental of a room or other space for
occupancy only and are not otherwise considered
"rendered to the occupant."
The Company does not anticipate charging rent that is based
in whole or in part on the income or profits of any person. The
Company will not derive rent attributable to personal property
leased in connection with real property that exceeds 15% of the
total rents. The Company does not anticipate receiving rent from
Related Party Tenants.
The Company provides certain services with respect to the
Properties. The Company believes that the services provided by
it directly are usually or customarily rendered in connection
with the rental of space for occupancy only and are not otherwise
rendered to particular tenants and therefore that the provision
of such services will not cause rents received with respect to
the Properties to fail to qualify as rents from real property.
Services with respect to the Properties that may not be provided
by the Company directly will be performed by independent
contractors.
If the Company fails to satisfy one or both of the 75% or
95% gross income tests for any taxable year, it may nevertheless
qualify as a REIT for that year if it is eligible for relief
under certain provisions of the Code. These relief provisions
will generally be available if (i) the Company's failure to meet
these tests was due to reasonable cause and not due to willful
neglect, (ii) the Company attaches a schedule of the sources of
<PAGE>
its income to its Federal income tax return and (iii) any
incorrect information on the schedule is not due to fraud with
intent to evade tax. It is not possible, however, to state
whether, in all circumstances, the Company would be entitled to
the benefit of these relief provisions. For example, if the
Company fails to satisfy the gross income tests because non-
qualifying income that the Company intentionally incurs exceeds
the limits on such income, the Service could conclude that the
Company's failure to satisfy the tests was not due to reasonable
cause. As discussed above, even if these relief provisions
apply, a 100% tax would be imposed on the greater of the amount
by which the Company fails either the 75% or 95% gross income
test, multiplied by a fraction intended to reflect the Company's
profitability. No similar mitigation provision provides relief
if the Company fails the 30% income test, and in such case, the
Company will cease to qualify as a REIT.
Asset Tests
At the close of each quarter of its taxable year, the
Company also must satisfy three tests relating to the nature and
diversification of its assets.
- First, at least 75% of the value of the Company's
total assets must be represented by real estate
assets, cash, cash items and government
securities.
- Second, no more than 25% of the value of the
Company's total assets may be represented by
securities other than those in the 75% asset
class.
- Third, of the investments included in the 25%
asset class, the value of any one issuer's
securities owned by the Company may not exceed 5%
of the value of the Company's total assets, and
the Company may not own more than 10% of any one
issuer's outstanding voting securities.
After initially meeting the asset tests at the close of any
quarter, the Company will not lose its status as a REIT for
failure to satisfy the asset tests at the end of a later quarter
solely by reason of changes in asset values. If the failure to
satisfy the asset tests results from an acquisition of securities
or other property during a quarter, the failure can be cured by
disposition of sufficient non-qualifying assets within 30 days
after the close of that quarter. The Company intends to maintain
adequate records of the value of its assets to ensure compliance
with the asset tests and to take such other actions within
30 days after the close of any quarter as may be required to cure
any noncompliance.
<PAGE>
Annual Distribution Requirements
To qualify as a REIT, the Company is required to make
distributions (other than capital gain distributions) to its
shareholders in an amount at least equal to (a) the sum of
(i) 95% of the Company's "REIT taxable income" (computed without
regard to the dividends-paid deduction and the Company's capital
gain) and (ii) 95% of the net income, if any, from foreclosure
property in excess of the special tax on income from foreclosure
property, minus (b) the sum of certain items of non-cash income.
Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before the
Company timely files its Federal income tax return for such year
and if paid on or before the first regular distribution after
such declaration. To the extent that the Company does not
distribute all of its net capital gain or distributes less than
100% (but at least 95%) of its "REIT taxable income" as adjusted,
it will be subject to tax thereon at regular ordinary or capital
gains corporate tax rates, as the case may be. Further, if the
Company should fail to distribute during each calendar year at
least the sum of (a) 85% of its REIT ordinary income for that
year, (b) 95% of its REIT capital gain net income for that year
and (c) any undistributed taxable income from prior periods, the
Company would be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. In
addition, during its Recognition Period, if the Company disposes
of any asset subject to the Built-In Gain Rules, the Company will
be required, pursuant to guidance issued by the Service, to dis-
tribute at least 95% of the Built-In Gain (after tax), if any,
recognized on the disposition of the asset.
The Company intends to make timely distributions sufficient
to satisfy the annual distribution requirements.
It is expected that the Company's REIT taxable income will
be less than its cash flow due to the allowance of depreciation
and other non-cash charges in computing REIT taxable income.
Accordingly, the Company anticipates that it will generally have
sufficient cash or liquid assets to enable it to satisfy the 95%
distribution requirement. It is possible, however, that the
Company, from time to time, may not have sufficient cash or other
liquid assets to meet the 95% distribution requirement or to
distribute such greater amount as may be necessary to avoid
income and excise taxation, due to timing differences between
(i) the actual receipt of income and actual payment of deductible
expenses and (ii) the inclusion of such income and deduction of
such expenses in arriving at taxable income of the Company, or if
the amount of nondeductible expenses such as principal
amortization or capital expenditures exceed the amount of non-
cash deductions. In the event that such timing differences
occur, the Company may find it necessary to arrange for
borrowings, if possible, in order to meet the distribution
requirement.
Under certain circumstances, the Company may be able to
rectify a failure to meet the distribution requirement for a year
by paying "deficiency dividends" to shareholders in a later year,
<PAGE>
which may be included in the Company's deduction for dividends
paid for the earlier year. Thus, the Company may be able to
avoid being taxed on amounts distributed as deficiency dividends.
The Company will, however, be required to pay interest based upon
the amount of any deduction taken for deficiency dividends.
Earnings and Profits.
In order to qualify as a REIT, the Company must either
satisfy the REIT requirements described in this Prospectus for
all taxable years after 1986 or have, at the close of any taxable
year, no earnings and profits attributable to a non-REIT year.
Pursuant to Treasury Regulations, in order to qualify under
either of these two provisions, the Company must not have
acquired the assets of a corporation in a nonrecognition
transaction after 1986 with accumulated earnings and profits
attributable to a non-REIT period unless, by the close of its
first taxable year, such earnings are distributed to the
shareholders. Accordingly, any earnings and profits that are
carried over to the Company through the transactions resulting in
the formation of the Company (the "Formation Transactions") were
required, pursuant to Section 381 of the Code, to have been
distributed to the shareholders prior to the close of the
Company's first taxable year. The Company compiled an estimate
of its earnings and profits based on its Federal income tax
returns as filed. This estimate indicates that the Company had
no accumulated earnings and profits immediately prior to
January 1, 1995. If the Service subsequently determines,
however, that such calculations are incorrect and the Company has
accumulated non-REIT earnings and profits, the Company must,
within 90 days of such determination, distribute such accumulated
earnings and profits. To the extent any distribution is used to
reduce non-REIT earnings and profits, the shareholders will
recognize ordinary income for Federal income tax purposes.
Therefore, if the Company has any non-REIT earnings and profits,
the shareholders may be required to pay more Federal income tax
for the year in which such distribution is made than they would
if the Company had no non-REIT earnings and profits. The Company
has represented that it will have no non-REIT earnings and
profits for Federal income tax purposes. In rendering its
opinion regarding the eligibility of the Company to qualify as a
REIT, Phillips, Lytle, Hitchcock, Blaine & Huber is relying on
such representation.
Failure to Qualify
If the Company fails to qualify as a REIT in any taxable
year and the relief provisions do not apply, the Company will be
subject to tax (including any applicable alternative minimum tax)
on its taxable income at regular corporate rates. Distributions
to shareholders in any year in which the Company fails to qualify
will not be deductible by the Company nor will they be required
to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to
shareholders will be dividends, taxable as ordinary income, and
<PAGE>
subject to certain limitations of the Code, corporate
distributees may be eligible for the dividends-received
deduction. Unless the Company is entitled to relief under
specific statutory provisions, the Company also will be
ineligible for qualification as a REIT for the four taxable years
following the year during which qualification was lost. It is
not possible to state whether in all circumstances the Company
would be entitled to such statutory relief. For example, if the
Company fails to satisfy the gross income tests because non-
qualifying income that the Company intentionally incurs exceeds
the limit on such income, the Service could conclude that the
Company's failure to satisfy the tests was not due to reasonable
cause.
Built-in Gain
To the extent the Company held any asset that has Built-In
Gain as of the first day of the first taxable year for which the
Company qualifies as a REIT, the Company may recognize a
corporate level tax at the time it disposes of such asset.
Pursuant to Section 337(d)(1) of the Code, Congress has
authorized the Service to issue regulations to ensure that the
repeal of the General Utilities doctrine is not circumvented
through the use of investment vehicles like a REIT. In
Notice 88-19, 1988-1 C.B. 486, the Service announced that it
intends to promulgate regulations requiring a C corporation to
recognize any net Built-In Gain that would have been realized if
the corporation had liquidated at the end of the last taxable
year before the taxable year in which it qualifies to be taxed as
a REIT. However, in lieu of this immediate recognition rule, the
regulations will permit a REIT to elect to be subject to rule
similar to rules applicable to S corporations with built-in gains
under Section 1374 of the Code. Section 1374 of the Code
generally provides that a corporation with appreciated assets
that elects S corporation status will recognize a corporate level
tax on the built-in gain if the S corporation disposes of the
appreciated assets within a ten-year period commencing on the
date on which the S corporation election was made. The Company
has represented that it will elect to have rules similar to the
rules of Section 1374 of the Code apply to it. Accordingly, if
the Company disposes of appreciated assets in a taxable
transaction within a ten-year period commencing on the date the
Company first qualifies as a REIT, the Company will be taxed at
the corporate level on the Built-in Gain attributable to the
disposed assets. For these purposes, the assets owned by the
Company prior to the Formation Transactions will be appreciated
assets. If these assets are disposed of within the ten-year
recognition period, the Company will recognize a corporate level
tax on the Built-In Gain attributable to the disposed assets.
Accordingly, the disposition of assets acquired in the Formation
Transactions will adversely affect a shareholder's investment in
the Company. However, the Company may dispose of Property that
is subject to the tax on Built-in Gain in a tax-free exchange of
like-kind property pursuant to Section 1031 of the Code which
will not trigger Built-In Gain. Moreover, the Company does not
anticipate disposing of a substantial portion of its Built-In
<PAGE>
Gain assets, other than in a tax-free exchange, within the ten-
year recognition period. The Company estimates that the amount
of Built-In Gain with respect to the Properties is approximately
$5,000,000 and the amount of the corporate level tax if such
Built-In Gain was recognized would be approximately $1,750,000 at
current tax rates. The amount of such Built-In Gain is based
upon the Company's determination of fair value as of the first
day of the first taxable year for which the Company qualified as
a REIT which valuation could be challenged by the Service.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through one or more
underwriters or dealers for public offering and sale by or
through them, and may also sell Securities directly to one or
more institutional or other purchasers, through agents or through
any combination of these methods of sale. Any such underwriter,
dealer or agent involved in the offer and sale of 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, or from time to time at
market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The
Company also may offer and sell the Securities in exchange for
one or more of its outstanding issues of debt or convertible or
exchangeable debt securities. The Company also may, from time to
time, authorize underwriters acting as the Company's agents to
offer and sell the Securities upon the terms and conditions as
shall be set forth in any Prospectus Supplement. In connection
with the sale of Securities, underwriters may be deemed to have
received compensation from the Company in the form of
underwriting discounts or commissions and may also receive
commissions from purchasers of Securities for whom they may act
as agent. Underwriters may sell Securities to or through
dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters
and/or commissions (which may be changed from time to time) from
the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to
underwriters or agents in connection with the offering of
Securities, and any discounts, concessions or commission allowed
by underwriters to participating dealers, will be set forth in an
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 with the Company, to
indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act, and
to reimbursement by the Company for certain expenses.
<PAGE>
Each series of Debt Securities or Preferred Stock will be a
new issue with no established trading market. The Company may
elect to list any series of Debt Securities or Preferred Stock on
an exchange, but is not obligated to do so. It is possible that
one or more underwriters may make a market in a series of
Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice.
Therefore, no assurance can be given as to the liquidity of, or
the trading market for, the Securities.
Underwriters, dealers and agents and their associates may
engage in transactions with, or perform services for, the Company
in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the
Company will authorize dealers or other persons acting as the
Company's agents to solicit offers by certain institutions to
purchase Debt Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts ("Contracts") providing for payment and
delivery on the date or dates stated in such Prospectus
Supplement. Each Contract will be for an amount no less than,
and the aggregate principal amounts of Debt Securities sold
pursuant to Contracts shall be not less nor more than, the
respective amounts stated in the applicable Prospectus
Supplement. Institutions with whom Contracts, when authorized,
may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all
cases be subject to the approval of the Company. Contracts will
not be subject to any conditions except (i) the purchase by an
institution of the Debt 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, and (ii) if Debt Securities are being sold to
underwriters, the Company shall have sold to such underwriters
the total principal amount of the Debt Securities less the
principal amount thereof covered by the Contracts. If in
conjunction with the sale of Debt Securities to institutions
under Contracts, Debt Securities are also being sold to the
public, the consummation of the sale under the Contracts shall
occur simultaneously with the consummation of the sale to the
public. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such
Contracts.
In order to comply with the securities laws of certain
states and other jurisdictions, if applicable, the Securities
offered hereby will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in
certain states Securities may not be sold unless they have been
registered or qualified for sale in the applicable state or other
jurisdiction or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange
Act, any person engaged in the distribution of the Securities
<PAGE>
offered hereby may not simultaneously engage in market making
activities with respect to the Securities for a period of two
business days prior to the commencement of such distribution.
LEGAL MATTERS
Phillips, Lytle, Hitchcock, Blaine & Huber, Buffalo, New
York, will pass upon certain legal matters for the Company.
Phillips, Lytle, Hitchcock, Blaine & Huber has in the past
represented and is presently representing the Company in certain
other matters. Robert J. Attea, Chairman of the Board of the
Company, is the brother of a partner of Phillips, Lytle,
Hitchcock, Blaine & Huber. Several partners of Phillips, Lytle,
Hitchcock, Blaine & Huber own shares of Common Stock. Phillips,
Lytle, Hitchcock, Blaine & Huber will rely upon the opinion of
Hogan & Hartson, L.L.P., Washington, D.C., as to all matters of
Maryland law.
EXPERTS
The financial statements and schedules thereto incorporated
by reference in this Prospectus or elsewhere in the Registration
Statement, to the extent and for the periods indicated in their
reports, have been audited by Ernst & Young LLP, independent
accountants, and are incorporated herein in reliance upon the
authority of said firm as experts in giving said reports.
<PAGE>
No person has been authorized in connection with the
offering made hereby to give any information or to make any
representation not contained in this Prospectus and, if given or
made, such information or representation must not be relied upon
as having been authorized by the Company or any other person.
This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the Securities offered
hereby to any person or by anyone in any jurisdiction in which it
is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that the
information contained herein is correct as of any date subsequent
to the date hereof.
TABLE OF CONTENTS
Page
Available Information..................................... 2
Incorporation of Certain
Documents by Reference ................................. 2
The Company............................................... 3
Use of Proceeds........................................... 3
Ratios of Earnings to Fixed Charges....................... 4
Description of Debt Securities............................ 5
Description of Preferred Stock............................ 20
Description of Common Stock............................... 25
Restrictions on Transfers of Capital Stock................ 26
Certain Federal Income Tax Considerations................. 28
Plan of Distribution...................................... 35
Legal Matters............................................. 36
Experts................................................... 36
<PAGE>
$150,000,000
Sovran Self Storage, Inc.
Debt Securities
Preferred Stock
Common Stock
_____________
PROSPECTUS
_____________
, 1996
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and
distribution of the securities being registered will be borne by
the Company and are set forth in the following table (all amounts
except the registration fee and NASD fee are estimated):
Registration fee $ 51,724
NASD fee 20,500
Legal fees and expenses *
Blue Sky expenses *
Accounting fees and expenses *
Printing fees and expenses *
Miscellaneous *
_________
Total $ *
=========
_______________
*To be completed by amendment
Item 15. Indemnification of Directors and Officers.
The Registrant's officers and Directors are and will be
indemnified under the Articles of Incorporation and Bylaws of the
Registrant against certain liabilities. The Articles of
Incorporation requires the Registrant to indemnify its Directors
and officers, among others, against claims and liabilities and
reasonable expenses actually incurred by them in connection with
any claim or liability by reason of their services in those or
other capacities unless it is established that the act or
omission of the Director or officer was material to the matter
giving rise to the proceeding and was committed in bad faith or
was the result of active and deliberate dishonestly or the
Director or officer actually received an improper personal
benefit or, in the case of any criminal proceeding, the Director
or officer has reasonable cause to believe that the act or
omission was unlawful.
The Registrant has entered into indemnification agreements
with each of its senior executive officers and Directors. The
indemnification agreements require, among other matters, that the
Registrant indemnify such officers and Directors to the fullest
extent permitted by law and advance to such officers and
Directors all related expenses, subject to reimbursement if it is
subsequently determined that indemnification is not permitted.
Under these agreements, the Registrant must also indemnify and
advance all expenses incurred by officers and Directors seeking
to enforce their rights under the indemnification agreements and
may cover officers and Directors under the Registrant's
directors' and officers' liability insurance. Although the form
of indemnification agreement offers substantially the same scope
of coverage afforded by law, it provides additional assurance to
II-1
<PAGE>
Directors and officers that indemnifications will be available
because, as a contract, it cannot be modified unilaterally in the
future by the Board of Directors or the stockholders to eliminate
the rights it provides.
It is the position of the Commission that indemnification of
directors and officers for liabilities under the Securities Act
is against public policy and unenforceable pursuant to Section 14
of the Securities Act.
As permitted by Maryland Law, the Articles of Incorporation
provides that a Director or officer of the Company shall not be
liable for monetary damages to the Company or its shareholders
for any act or omission in the performance of his duties, except
to the extent that (1) the person actually received an improper
benefit or (2) the person's action or failure to act was the
result of active and deliberate dishonesty and was material to
the cause of action adjudicated.
II-2
<PAGE>
Item 16. Exhibits.
____________
Exhibit No. Description
4.1 Amended and Restated Articles of Incorporation.
(Incorporated by reference to Exhibit 3.1 of the
Registration Statement on Form S-11 of Sovran Self
Storage, Inc., Registration No. 33-91422.)
4.2 Amended and Restated Bylaws. (Incorporated by
reference to Exhibit 3.2 of the Registration
Statement on Form S-11 of Sovran Self Storage, Inc.,
Registration No. 33-91422.)
4.3* Indenture for Senior Debt Securities
4.4* Form of Senior Debt Security (included in Exhibit No.
4.3)
4.5* Indenture for Subordinated Debt Securities
4.6* Form of Subordinated Debt Security (included in
Exhibit No. 4.5)
5.1* Opinion of Phillips, Lytle, Hitchcock, Blaine & Huber
as to the legality of the Securities being
registered.
8.1* Opinion of Phillips, Lytle, Hitchcock, Blaine & Huber
as to certain tax matters.
12.1 Calculation of Ratios of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP, Independent
Accountants.
23.2* Consent of Phillips, Lytle, Hitchcock, Blaine & Huber
(included in Exhibit 5.1 hereto).
24.1 Powers of Attorney (included in Part II of this
registration statement).
_________________
* To be filed by amendment.
II-3
<PAGE>
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(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 and of the estimated
maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) herein do not apply if the information
required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the undersigned
registrant pursuant to Section 13 or Section 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.
II-4
<PAGE>
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d)
of the 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 and controlling persons of the registrant
pursuant to the provisions described under Item 15 above,
or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer, or
controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(d) The undersigned 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 ("Act") in
accordance with the rules and regulations prescribed by
the Commission under Section 305(b)(2) of the Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Sovran Self Storage, Inc. 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 City of Buffalo, New York, on
the 25th day of July, 1996.
Sovran Self Storage, Inc.
By: /s/ Kenneth F. Myszka
Kenneth F. Myszka, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned
officers and directors of Sovran Self Storage, Inc. hereby
severally constitute Kenneth F. Myszka and David L. Rogers, 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 Sovran Self Storage, Inc. 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 and 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.
Signature Capacity Date
/s/ Robert J. Attea Chairman of the Board of Directors July 25, 1996
Robert J. Attea
/s/ Kenneth F. Myszka President, Chief Executive Officer July 25, 1996
Kenneth F. Myszka and Director (Principal Executive
Officer)
/s/ David L. Rogers Chief Financial Officer July 25, 1996
David L. Rogers (Principal Financial and Accounting
Officer)
/s/ John Burns Director July 25, 1996
John Burns
/s/ Michael A. Elia Director July 25, 1996
Michael A. Elia
II-6
<PAGE>
Director July 25, 1996
Anthony P. Gammie
/s/ Charles E. Lannon Director July 25, 1996
Charles E. Lannon
II-7
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
4.3* Indenture for Senior Debt Securities
4.4* Form of Senior Debt Security (included in Exhibit No. 4.3)
4.5* Indenture for Subordinated Debt Securities
4.6* Form of Subordinated Debt Security (included in Exhibit No.
4.5)
5.1* Opinion of Phillips, Lytle, Hitchcock, Blaine & Huber as to the
legality of the Securities being registered.
8.1* Opinion of Phillips, Lytle, Hitchcock, Blaine & Huber as to
certain tax matters.
12.1 Calculation of Ratios of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP, Independent Accountants.
23.2* Consent of Phillips, Lytle, Hitchcock, Blaine & Huber (included
in Exhibit 5.1 hereto).
24.1 Powers of Attorney (included in Part II of this registration
statement).
* To be filed by amendment.
II-8
<PAGE>
<TABLE> Exhibit 12.1
Sovran Self Storage, Inc.
Calculation of Earnings to Fixed Charges
(in thousands)
<CAPTION>
Predecessors Company
Sovran Capital, Inc, and Sovran Partnerships Sovran Self Storage, Inc.
January 1, June 26, Six Months
Year ended December 31, 1995, to 1995 to ended
1991 1992 1993 1994 June 25, 1995 December 31, 1995 June 30, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net Income $(3,160) $(2,377) $ (825) $1,836 $ 311 $ 6,744 $ 6,763
Fixed charges 4,558 5,109 5,184 5,984 3,388 323 1,081
__________________________________________ __________________________
Earnings(1) 1,398 2,732 4,359 7,820 3,699 7,067 7,844
Fixed charges:
Interest
expense 4,397 4,961 5,021 5,868 3,268 131 869
Amortization of
financing
costs 161 148 183 116 120 192 192
___________________________________________ __________________________
Fixed charges(2) 4,558 5,109 5,184 5,984 3,388 323 1,081
Ratio of earnings
to fixed
charges(1)/(2) 0.31 0.53 0.84 1.31 1.09 21.88 7.25
</TABLE> II-9
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the captions
"Experts" in the Registration Statement (Form S-3,
No. 333- ) and related Prospectus of Sovran Self Storage,
Inc. for the registration of $150,000,000 of its debt securities,
preferred stock, or common stock and to the incorporation by
reference therein of our report dated February 2, 1996, with
respect to the consolidated financial statements of Sovran Self
Storage, Inc. incorporated by reference in its Annual Report
(Form 10-K) for the period ended December 31, 1995, and our
report on the related financial statement schedule included
therein, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Buffalo, New York
July 25, 1996
II-10
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