As filed with the Securities and Exchange Commission on June 15, 1998
Registration Statement No. 333-51169
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_________________________
SOVRAN SELF STORAGE, INC.
AND SOVRAN ACQUISITION LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
Sovran Self Storage, Inc. - Maryland 16-1194043
Sovran Acquisition Limited Partnership-Delaware 16-1481551
(State of Incorporation or Organization) (I.R.S. Employer
Identification Number)
5116 Main Street
Williamsville, New York 14211
(716) 631-1850
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
_________________________
KENNETH F. MYSZKA
President
5116 Main Street
Williamsville, New York 14211
(716) 631-1850
(Name, address, including zip code, and telephone number,
including area code, of agent for service of process)
_________________________
Copy to:
Frederick G. Attea, Esq.
David J. Murray, Esq.
Phillips, Lytle, Hitchcock,
Blaine & Huber LLP
3400 Marine Midland Center
Buffalo, New York 14203
(716) 847-8400
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
<PAGE>
The Registrants hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrants shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective 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.
The Prospectus contained in this Registration Statement relates to and
constitutes a Post-Effective Amendment to the Registration Statement on
Form S-3 (No. 333-08883) of Sovran Self Storage, Inc., and is intended to
be the combined prospectus referred to in Rule 429 of the Securities Act of
1933, as amended.
PAGE
<PAGE>
PROSPECTUS SUPPLEMENT SUBJECT TO COMPLETION
(To Prospectus dated June __, 1998) PRELIMINARY PROSPECTUS
SUPPLEMENT DATED JUNE __, 1998
$75,000,000
SOVRAN ACQUISITION LIMITED PARTNERSHIP
____% Senior Notes Due 2005
________________
The ___% Senior Notes due June __, 2005 (the "Senior Notes") offered
hereby (the "Offering") are being issued by Sovran Acquisition Limited
Partnership, a Delaware limited partnership (the "Operating Partnership"),
in an aggregate principal amount of $75 million. Interest on the Senior
Notes will be payable semi-annually in arrears on June 15, and December 15
of each year commencing December 15, 1998. See "Description of Senior
Notes -- Principal and Interest." The Senior Notes are redeemable at any
time at the option of the Operating Partnership, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount of the Senior
Notes being redeemed plus accrued interest to the redemption date, and
(ii) the Make-Whole Amount (as defined in "Description of the Senior
Notes -- Optional Redemption"), if any. The Senior Notes are unsecured
obligations of the Operating Partnership and will rank equally with all
unsecured and unsubordinated indebtedness of the Operating Partnership. The
Senior Notes are not subject to any mandatory sinking fund. The Senior
Notes contain certain restrictions on the Operating Partnership's ability
to incur additional indebtedness. See "Description of Senior Notes."
The Senior Notes constitute a separate series of debt securities which
will be represented by a single fully registered global note in book-entry
form without coupons (a "Global Note") registered in the name of The
Depository Trust Company ("DTC") or its nominee. Beneficial interests in
the Global Note will be shown on, and transfers thereof will be effected
only through, records maintained by DTC (with respect to beneficial
interests of participants) or by participants or persons that hold
interests through participants (with respect to beneficial interests of
beneficial owners). Owners of beneficial interests in the Global Note will
be entitled to physical delivery of Senior Notes in certificated form equal
in principal amount to their respective beneficial interests only under the
limited circumstances described under "Description of Senior Notes -- Book-
Entry System." Settlement of the Senior Notes will be made in immediately
available funds. The Senior Notes will trade in DTC's Same-Day Funds
Settlement System until maturity or earlier redemption, as the case may be,
or until the Senior Notes are issued in certificated form, and secondary
market trading activity in the Senior Notes will therefore settle in
immediately available funds. All payments of principal and interest in
respect of the Senior Notes will be made by the Operating Partnership in
immediately available funds. See "Description of Senior Notes -- Same-Day
Settlement and Payment."
See "Risk Factors" commencing on page __ of the accompanying
Prospectus for certain factors relevant to an investment in the Senior
Notes.
<PAGE>
___________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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>
=========================================================================
Price to Public Underwriting Discounts (2) Proceeds to
and Commissions Operating
Partnership (1)(3)
- ------------------------------------------------------------------------
Per Senior Note........[___]% [___]% [___]%
- ------------------------------------------------------------------------
Total............... $[___] $[___] $[___]
=========================================================================
(1) Plus accrued interest, if any, from ________, 1998 to the date of
delivery.
(2) The Operating Partnership and Sovran Self Storage, Inc. have agreed
to indemnify the Underwriter against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deducting estimated expenses of approximately $279,000 payable
by the Operating Partnership.
__________________
The Senior Notes are offered by the Underwriter subject to
prior sale, when, as and if delivered to and accepted by the
Underwriters, and subject to their right to reject orders in whole or in
part. It is expected that delivery of the Senior Notes will be made on
or about , 1998 through the book-entry facilities of DTC,
against payment therefor in immediately available funds.
__________________
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
Solomon Smith Barney
__________________
The date of this Prospectus Supplement is _____________, 1998.
<PAGE>
Forward-Looking Statements
This Prospectus Supplement and the accompanying Prospectus,
including the information incorporated by reference herein and therein,
contain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The foregoing provisions by their
express terms do not apply to forward-looking statements made in
connection with an initial public offering. The words "believe,"
"expect," "anticipate," "intend," "estimate," "assume" and other similar
expressions which are predictions of or indicate future events and trends
and which do not relate solely to historical matters identify forward-
looking statements. Reliance should not be placed on forward-looking
statements because they involve known and unknown risks, uncertainties
and other factors, which are in some cases beyond the control of the
Company (as defined herein) and may cause the actual results, performance
or achievements of the Company to differ materially from anticipated
future results, performance or achievements expressed or implied by such
forward-looking statements.
Factors that might cause such a difference include, but are not
limited to, the following: occupancy rates and market rents may be
adversely affected by local economic and market conditions which are
beyond management's control; financing may not be available, or may not
be available on favorable terms; the Company's cash flow may be
insufficient to meet required payments of principal and interest; and
existing indebtedness may mature in an unfavorable credit environment,
preventing such indebtedness from being refinanced, or, if refinanced,
causing such refinancing to occur on terms that are not as favorable as
the terms of existing indebtedness. In addition, the factors described
under "Risk Factors" commencing on page __ of the accompanying Prospectus
may result in such differences. Prospective purchasers of the Senior
Notes offered hereby should carefully review all of these factors.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF
THE SENIOR NOTES. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF THE
SENIOR NOTES IN THE OPEN MARKET TO STABILIZE THE MARKET PRICE AND THE
PURCHASE OF SENIOR NOTES TO COVER SHORT POSITIONS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the more
detailed information included elsewhere in this Prospectus Supplement and
the accompanying Prospectus or incorporated herein or therein by
reference. Unless the context otherwise requires, all references in this
Prospectus Supplement to the "Company" shall mean Sovran Self
Storage, Inc., a Maryland corporation, and its subsidiaries on a
consolidated basis (including the Operating Partnership) or, where the
context so requires, Sovran Self Storage, Inc. only, and, as the context
may require, their predecessors.
The Company
The Senior Notes offered hereby are being issued by Sovran
Acquisition Limited Partnership, which is the operating partnership of
Sovran Self Storage, Inc., a self-administered and self-managed real
estate investment trust ("REIT") whose common shares, par value $0.01 per
share (the "Common Shares"), are listed on the New York Stock Exchange
(the "NYSE") under the symbol "SSS." Substantially all of the Company's
business is conducted through, and all of the Company's interests in
property are held by or through, the Operating Partnership. As of
June 15, 1998, Sovran Self Storage, Inc. was an 96.5% economic owner of
the Operating Partnership. The Company operates as a REIT under the
Internal Revenue Code of 1986, as amended ("the Code").
The Company is one of the largest owners and operators of self-
storage facilities in the United States. As of June 15, 1998, the
Company owned and operated 186 storage facilities containing an aggregate
of 10.2 million rentable square feet containing approximately 92,000
units (the "Properties"). The Properties are located in 19 states,
primarily in the Eastern United States and Texas. The Properties as a
whole have over 65,000 tenants and a majority of the Properties have been
constructed within the past 10 years. At May 31, 1998, the weighted
average occupancy level of the Properties was approximately 85%.
The self-storage industry is characterized by numerous small,
local operators, with over 80% of all operators owning five or fewer
facilities. The Company believes that the shortage of skilled operators,
the scarcity of financing available to small operators for acquisitions
and expansions and the potential for savings through economies of scale
are leading to a consolidation in the self-storage industry. With its
13-year operating history and in-house acquisition and management
expertise, the Company believes it is well-positioned to continue to take
advantage of potential growth opportunities resulting from the further
consolidation of the self-storage industry. The Company has a
$150 million unsecured credit facility to finance acquisition of
additional self-storage facilities, expansion and improvement of the
Properties, development of new facilities and for general working capital
purposes.
The Company also seeks to grow internally by improving cash flow
from the Properties through intensive, proactive property management that
focuses on quality property maintenance, customer satisfaction and
retention, increases in rents and occupancy levels and control of
operating expenses. The Company has designed its incentive compensation
program to financially motivate its Area Managers and Property Managers
to maximize revenues and net operating income.
<PAGE>
Most of the Properties conduct business under the trade name Uncle
BoB's Self-Storage (registered trademark). The Company intends to
convert the remaining Properties and all newly acquired self-storage
facilities to the trade name Uncle BoB's Self-Storage (registereed
trademark) upon expiration of prepaid advertising arrangements employing
names acquired with the Properties. The Company believes the name Uncle
BoB's Self-Storage (registered trademark) is particularly user-friendly
and conveys the feeling of personalized service.
Recent Developments
Investment Grade Credit Ratings. In May 1998, Standard & Poor's
Investment Services ("Standard & Poor's") assigned a corporate rating of
"BBB-" to the Operating Partnership. In March 1998, Moody's Investors
Service ("Moody's") assigned a prospective rating of "(P) Baa3" to the
unissued shelf registration of debt securities filed by the Operating
Partnership. In addition, in March 1998, Duff & Phelps Credit Ratings
Company assigned a corporate rating of "BBB-" to the Operating
Partnership.
New Unsecured Credit Facility. In February 1998, the Company
entered into a new $150 million unsecured revolving credit facility (the
"Unsecured Credit Facility") with a syndicate of banks, for whom Fleet
Bank acts as agent, replacing the previous $75 million secured credit
facility. The Unsecured Credit Facility matures in February 2001 and
outstanding borrowings under the Unsecured Credit Facility bear interest
at an annual rate equal to LIBOR plus 1.25%. Following the closing of
the Unsecured Credit Facility, 99% of the Company's assets were
unencumbered.
Property Acquisitions. From January 1, 1998 through June 15, 1998,
the Company acquired 30 Properties containing 17,905 units for an
aggregate purchase price of $94.5 million. In addition, the Company
currently has 14 properties under contract of purchase for an aggregate
purchase price of $44 million. The closing of these acquisitions are
subject to several customary conditions including, among other things,
satisfactory completion of the Company's due diligence. There can be no
assurance that any or all of these acquisitions will be consummated on
the terms currently contemplated or at all.
Risk Factors
An investment in the Senior Notes involves various risks.
Prospective investors should carefully consider the matters discussed
under "Risk Factors" commencing on page __ of the accompanying Prospectus
before making an investment in the Senior Notes. Certain statements
contained in this Prospectus Supplement or incorporated herein by
reference are "forward-looking statements," which investors should not
rely on because they are subject to a variety of risks that may cause
material differences between actual and anticipated results, performance
or achievements. See "Forward-Looking Statements" on page S-__.
The Offering
All capitalized terms used herein and not defined shall have the
meanings provided under "Description of Senior Notes."
<PAGE>
Securities Offered......... $75 million aggregate principal amount of
the _____% Senior Notes Due 2005.
Maturity................... June __, 2005.
Interest Payment Dates..... Interest on the Senior Notes is payable
semi-annually on each June 15 and
December 15, commencing December 15, 1998,
and at maturity.
Ranking.................... The Senior Notes will be senior unsecured
obligations of the Operating Partnership
and will rank equally with the Operating
Partnership's other unsecured and
unsubordinated indebtedness, including
indebtedness under the Company's Unsecured
Credit Facility. The outstanding principal
balance under the Unsecured Credit Facility
varies from time to time and as of June 15,
1998 the total amount outstanding was
approximately $132 million. The Senior
Notes will be effectively subordinated to
secured indebtedness of the Operating
Partnership, which as of June 15, 1998 was
$3 million in the aggregate (representing
0.8% of the Company's assets at June 15,
1998).
Optional Redemption........ The Senior Notes are redeemable at any time
at the option of the Operating Partnership,
in whole or in part, at a redemption price
equal to the sum of (i) the principal
amount of the Senior Notes being redeemed
plus accrued interest to the redemption
date and (ii) the Make-Whole Amount, if
any. See "Description of Senior Notes--
Optional Redemption."
Use of Proceeds............ The net proceeds from the sale of the
Senior Notes will be used to reduce
borrowings under the Unsecured Credit
Facility, which borrowings were used
primarily to acquire Properties. See "Use
of Proceeds" and "Underwriting."
Certain Covenants.......... The Senior Notes contain various covenants
including the following:
- Neither the Operating Partnership nor any
Subsidiary may incur any Debt, other than
intercompany Debt, if, after giving effect
thereto, the aggregate principal amount of all
outstanding Debt of the Operating Partnership
and its Subsidiaries on a consolidated basis is
greater than 60% of the sum of (i) the Operating
Partnership's Adjusted Total Assets as of the
end of the most recent fiscal quarter prior to
<PAGE>
the incurrence of such additional Debt, (ii) the
purchase price of any real estate assets or
mortgages receivable (or interests therein)
acquired by the Operating Partnership or any
Subsidiary since the end of such fiscal quarter,
including those obtained in connection with the
incurrence of such additional Debt and (iii) the
amount of any securities offering proceeds
received by the Operating Partnership or any
Subsidiary since the end of such fiscal quarter
(to the extent that such proceeds were not used
to acquire such real estate assets or mortgages
receivable or used to reduce Debt).
- Neither the Operating Partnership nor any
Subsidiary may incur any Debt, other than
intercompany Debt, if, after giving effect
thereto, the ratio of Consolidated Income
Available for Debt Service to the Annual Debt
Service Charge for the four consecutive fiscal
quarters most recently ended prior to the date
on which such additional Debt is to be incurred
shall have been less than 1.5:1, on a pro forma
basis after giving effect to certain
assumptions.
- Neither the Operating Partnership nor any
Subsidiary may incur any Secured Debt, whether
the collateral is owned at the date of the
Indenture or thereafter acquired, if, after
giving effect thereto, the aggregate principal
amount of all outstanding Secured Debt of the
Operating Partnership and its Subsidiaries on a
consolidated basis is greater than 40% of the
sum of (i) the Operating Partnership's Adjusted
Total Assets as of the end of the most recent
fiscal quarter prior to the incurrence of such
additional Secured Debt, (ii) the purchase price
of any real estate assets or mortgages
receivable (or interests therein) acquired by
the Operating Partnership or any Subsidiary
since the end of such fiscal quarter, including
those obtained in connection with the incurrence
of such additional Secured Debt and (iii) the
amount of any securities offering proceeds
received by the Operating Partnership or any
Subsidiary since the end of such fiscal quarter
(to the extent that such proceeds were not used
to acquire such real estate assets or mortgages
receivable or used to reduce Debt).
- The Operating Partnership will at all times
maintain an Unencumbered Total Asset Value in an
amount not less than 150% of the aggregate
principal amount of all outstanding unsecured
Debt of the Operating Partnership and its
Subsidiaries on a consolidated basis.
<PAGE>
For a more complete description of the terms and
definitions used in the foregoing summary, see
"Description of Senior Notes--Certain
Covenants."
<PAGE>
INDUSTRY OVERVIEW
Self-storage facilities offer inexpensive storage space to
residential and commercial users. In addition to fully enclosed, secure
storage space, some operators, including the Company, also offer outside
storage for vehicles and boats at certain facilities. Facilities are
usually fenced-in, have locked gates and are lighted. Facilities
generally have a manager on-site during business hours and, in many
cases, the manager resides in an apartment at the facility. Customers
have access to their storage area during business hours and some
commercial customers are provided 24-hour access. Individual storage
units are typically secured by a lock furnished by the customer to
provide the customer with control of access to the unit.
The Company believes that the self-storage industry is characterized
by a trend toward consolidation, continuing increase in demand,
relatively slow growth in supply and a targeted market of primarily
residential customers.
Trend Toward Consolidation
The self-storage industry is characterized by numerous, small local
operators, with over 80% of all operators owning five or fewer facilities
according to the Self Storage Association. However, the Company believes
that, at a time when demand for the service appears strong, the
self-storage industry is showing a trend toward consolidation resulting
from the following factors:
- Shortage of Skilled Operators - The smaller, local operators
generally lack the expertise necessary to manage multiple
facilities, to market their self-storage facilities
effectively, to develop and introduce innovative management
systems, and to selectively identify and acquire new
facilities.
- Scarcity of Financing for Small Operators - Financing for the
acquisition, development and expansion of commercial real
estate projects, particularly self-storage facilities, has been
scarce in recent years and the Company anticipates that this
trend will continue.
- Economies of Scale - Successful centralized management systems
can be easily applied to new facilities regardless of location
and permit an operator to spread fixed costs over a larger
base.
The Company believes that as a result of these factors, significant
growth opportunities exist for operators with proven management systems
that possess sufficient capital resources.
Continuing Increase in Demand
Demand for self-storage services has increased significantly, as
indicated by an increase in industry average occupancy from 81.5% in 1990
to approximately 85.1% in 1997 and by an increase in industry-wide
average rents, as reported by the Self-Storage Almanac. The Company
believes that demand for self-storage services continues to increase for
the following reasons:
<PAGE>
- Demographics - Population growth and increasing population
mobility continue to increase demand for storage space.
- Consumer Awareness - Residential and commercial customers are
becoming increasingly familiar with the advantages of self-
storage and its favorable comparison to traditional
alternatives. Commercial users in particular are taking
advantage of self-storage as a low-cost alternative to
warehouses and other commercial storage options.
- Demand Inelasticity - Self-storage consumers are generally less
sensitive to price increases than consumers of other services
because of the lack of reasonable alternatives and the
inconvenience of moving stored goods to a new location. This
phenomenon has allowed aggressive operators to increase rents
on a regular basis without experiencing a material decrease in
occupancy levels.
- Recession Resistance - Self-storage is relatively inexpensive
and is not generally considered a luxury. As a result,
residential and commercial users are less likely to reduce
consumption during recessionary periods and, in some cases,
will increase usage to facilitate downsizing of residences or
as a cost-effective alternative to commercial office or
warehouse space.
Market Segmentation
The self-storage market is generally segmented into two parts:
residential users and commercial users. According to data published by
MiniCo., Inc. in 1997, residential users constitute approximately 80% of
the United States market while commercial users account for approximately
20%, based on square feet. Residential users may include single family
homeowners with insufficient storage; apartment, condominium, townhouse
and mobile home dwellers; military base occupants; recreational vehicle
owners; and households in transition. Commercial users may include
salespersons and distributors; retail businesses; professionals; and
small contractors.
THE COMPANY
The Company is a self-administered and self-managed REIT which has
acquired, developed, owned and managed self-storage facilities since
1985. As of June 15, 1998, the Company owned and operated 186 Properties
containing an aggregate of 10.2 million rentable square feet. The
Properties are located in 19 states, predominantly in the Eastern United
States and Texas. At May 31, 1998, the occupancy level of the Properties
was approximately 85%.
Most of the Properties conduct business under the trade name Uncle
BoB's Self-Storage (registered trademark). The Company intends to
convert the remaining Properties and all newly acquired self-storage
facilities to this trade name upon expiration of prepaid advertising
arrangements employing names acquired with the Properties. The Company
believes the name Uncle BoB's Self-Storage (registered trademark) is
particularly user-friendly and conveys the feeling of personalized
service.
<PAGE>
Growth Strategy
The Company seeks to increase cash flow and enhance shareholder
value by aggressively managing its Properties, selectively acquiring new
self-storage facilities and strategically expanding and improving its
Properties.
The following table sets forth certain historical data for the
Company's Properties since 1993:
Property Data
March 31
1993 1994 1995 1996 1997 1998
Actual rent per occupied
square foot $6.03 $6.44 $6.81 $7.14 $7.67 $7.52
Increase in actual rent per
occupied square foot over
prior period 1.2% 6.8% 5.7% 4.8% 7.4% (2.0%)
Occupancy level (for the
period ended) 86.7% 88.7% 86.4% 87.0% 85.1% 84.1%
Increase (decrease) in
occupancy over prior
period 7.8% 2.3% (2.6%) 0.7% (2.2%) (1.2%)
Net operating margin 67.7% 71.1% 72.6% 72.8% 72.3% 72.1%
Increase (decrease) in net
operating margin over prior
period 4.3% 5.0% 2.1% 0.3% (0.7%) (0.3%)
Property Management
The Company has developed substantial expertise in managing self-
storage facilities. The Company is the only self-storage operator to be
designated as an Accredited Management Organization by the Institute of
Real Estate Management. Key elements of the Company's management system
include:
- Recruiting, training and retaining capable, aggressive on-site
Property Managers.
- Motivating Property Managers and Area Managers by providing an
opportunity to earn additional incentive-based compensation
based on Property performance.
- Linking all Properties to its central customized management
information system which enhances control and property specific
management.
- Developing and maintaining for each Property an integrated
marketing plan which emphasizes commercial tenants.
- Performing regular preventive maintenance to avoid significant
repair obligations.
<PAGE>
The Company's philosophy is to thoroughly train each Property
Manager and Area Manager to operate effectively within the Company's
management systems, and to recognize and reward performance which
increases revenues and decreases expenses.
Each Property is managed by a full-time Property Manager and one or
more part-time Assistant Managers. A Property Manager typically resides
on-site in an apartment furnished by the Company, except where prohibited
by local ordinance. A Property Manager is responsible for nearly all
day-to-day operational decisions with respect to his or her Property,
including rent charges and maintenance, subject to certain monetary
limits. Property Managers generally have authority to either increase
rental rates in response to demand or promote specials to raise
occupancies, both of which have a direct impact on their incentive
compensation. See "Incentive Compensation." An Assistant Manager is
employed on a part-time basis to give a Property Manager sufficient time
to perform marketing functions. Each Property Manager reports to an Area
Manager. The Area Managers report to one of four Regional Vice-
Presidents, who are each responsible for up to 50 properties. The four
Regional Vice Presidents report to the Company's President and Chief
Operating Officer.
Recruiting and Training of Property Managers
The Company actively recruits capable, aggressive Property Managers.
Once hired, new Property Managers attend an orientation program which
includes a thorough review of the Company's property management systems.
The orientation program emphasizes telephone skills, closing techniques,
identification of selected marketing opportunities (e.g., local
industrial parks, office suites and apartment complexes) and
familiarization with the Company's customized management information
system.
The Company places great importance on developing a Property
Manager's telephone skills because most inquiries by potential customers
are received by telephone. The telephone skills of each Property Manager
are surveyed at least quarterly by having Company representatives pose as
potential customers. The results of the survey are immediately presented
to the Property Manager, together with suggestions for improvement.
Property Managers who score particularly well on telephone surveys
receive a cash award.
Incentive Compensation
In addition to base salary, the Company's Property Managers, Area
Managers and Regional Vice Presidents may earn incentive compensation
based on increases in the gross income and net operating income of their
Properties. The Company annually establishes a target gross income and
net operating income for each Property. A Property Manager earns a
percentage of all gross income in excess of the target level. Similarly,
Area Managers and Regional Vice Presidents earn a percentage of net
operating income in excess of the combined target levels for all
Properties reporting to them. The incentive awards are not subject to
any caps or increment requirements. Under the Company's program, it is
not unusual for such employees to earn incentive compensation equal to
25% of base salary.
<PAGE>
The Company believes that the structure of its incentive
compensation program causes its managers to exercise their operational
autonomy in a manner to maximize net operating margin through increased
rental income and increased occupancy levels and, in the case of Area
Managers and Regional Vice Presidents, decreased expenses.
Customized Management Information System
The Company utilizes a customized management information system
linking each of the Properties with the Company's headquarters. The
system is designed with significant security, control and efficiency
features to perform daily billing, collection and reservation functions
for each Property and tracks information regarding occupancy levels,
tenant demographics and histories, and expenses. Newly acquired self-
storage facilities are usually linked to the customized system within 45-
60 days of the date of acquisition. The system generates daily, weekly
and monthly financial reports for each Property that are transmitted to
the Company's headquarters each night via modem. The system
automatically imposes and reports late fees and also requires a Property
Manager to input a descriptive explanation for all debt and credit
transactions, paid-to-date charges, and all other discretionary
activities, which allows the accounting staff at the Company's
headquarters to review all such transactions within 24 hours. More
sensitive activities such as rental rate decreases, unit size changes and
adding or deleting units into a Property's system are only accessible by
Area Managers and Regional Vice Presidents and are password protected.
The tenant data tracked by the customized management information
system has proven to be a valuable marketing resource. For example, the
system automatically tracks historical tenant address and demographic
information and generates solicitations to be sent to seasonal tenants.
The Company's management is committed to continued investment in
information technology so that information systems will continue to be
adequate to support the growth of the Company.
Property Marketing
As of May 31, 1998, 153 of the Properties conducted business under
the trade name Uncle BoB's Self-Storage (registered trademark). The
Company intends to convert the remaining Properties and all newly
acquired self-storage facilities to the trade name Uncle BoB's Self-
Storage (registered trademark) upon expiration of prepaid advertising
employing names acquired with the Properties. The Company believes the
name Uncle BoB's Self-Storage (registered trademark) is particularly
user-friendly and conveys the feeling of personalized service.
The Company annually develops a written marketing plan for each of
its Properties. The focus of each marketing plan is, in part, determined
by occupancy rates. If all storage units of a same size at a Property
are at or near 90% occupancy, the plan will generally include increases
in rental rates for units of that size. If a Property has excess
capacity, the marketing plan will target selected markets such as local
industrial parks, medical centers, retail shopping malls, office suites,
military bases, colleges, and apartment and condominium complexes.
<PAGE>
The Company's customized management information system allows it to
maintain historical data regarding its customers, such as type of
customer and length of stay, which is used in developing marketing plans.
The Company also conducts quarterly surveys of its competitors'
practices, which include "shopping" at competing facilities.
The Company believes that it is desirable to have a greater
proportion of commercial customers because commercial customers tend to
rent larger units for longer terms and are more reliable payors.
Accordingly, the Company has marketing programs which target commercial
users. The Company estimates that commercial users account for
approximately 30% to 35% of its total occupancy, which is substantially
higher than the industry average of approximately 20%.
Property Maintenance
The Company's self-storage facilities are significantly less
expensive to maintain than most other types of real estate due to the
simple construction techniques and durable construction materials. The
Properties are typically constructed with metal roofs, concrete or
masonry exterior walls, metal interior walls and concrete floors.
Substantially all of the Company's storage units are ground level thereby
providing customers with the convenience of direct vehicle access to
their storage units. Typical maintenance includes door repair, masonry
repair, fence repair, painting, landscaping and driveway repair. Climate
controlled units also require maintenance of air conditioning equipment.
Maintenance within a storage unit is generally limited to sweeping
between rentals. Maintenance is the primary responsibility of the
Property Manager who may engage third party contractors to perform some
types of maintenance.
Capital Structure
Management intends to finance the Company's future growth through
the maintenance of a flexible capital structure designed to allow the
Company to take advantage of acquisition opportunities while providing
access to the public debt and equity capital markets on favorable terms.
The Company intends to maintain a strong financial position by:
(i) maintaining a low level of leverage (i.e. a ratio of debt and
Preferred Stock to Real Estate Value of 50% or less, with "Real Estate
Value" defined as annualized net operating income of the most recent
fiscal quarter divided by 10.50%), (ii) maintaining almost 100% of
unencumbered properties, (iii) managing its exposure to variable interest
rates, and (iv) extending and staggering its debt maturities. Management
currently expects that all future indebtedness will be incurred by the
Operating Partnership.
Management believes the following indicators reflect the strong
financial position of the Company:
- As of March 31, 1998, on a pro forma basis giving effect to the
Offering and the application of the net proceeds therefrom, the
Company and its subsidiaries had $421 million of total
unencumbered assets supporting unsecured debt of the Company
and its subsidiaries of $129 million.
<PAGE>
- As of March 31, 1998, on a pro forma basis giving effect to the
Offering and the application of the net proceeds therefrom, the
Company and its subsidiaries had a ratio of debt to total
assets of 31%, a ratio of secured debt to total assets of 0.8%,
and a ratio of total unencumbered assets to unsecured debt of
326%.
- For the three months ended March 31, 1998, the Company's DSCR
was 7.8. "DSCR" is defined as EBITDA, divided by the sum of
interest expense and scheduled principal payments. "EBITDA" is
defined as income before extraordinary items, provisions for
gains and losses of properties and minority interest and
federal income taxes, plus depreciation and amortization and
interest expense. EBITDA should not be considered as an
alternative to operating income, as determined in accordance
with generally accepted accounting principles, as an indicator
of the Company's operating performance, or to cash flows from
operating activities as a measure of liquidity.
PROPERTIES
As of June 15, 1998, the Company owned 186 Properties containing an
aggregate of approximately 10.2 million rentable square feet, located in
19 states.
Distribution of Properties as of June 15, 1998
# Properties % Sq. Feet % # of Units %
Alabama 7 3.83 382,706 3.73 2,834 3.09
Connecticut 3 1.64 123,925 1.21 992 1.08
Florida 40 21.00 2,339,624 22.83 21,478 23.40
Georgia 20 10.93 1,047,267 10.22 8,879 9.67
Louisiana 2 1.09 116,835 1.14 862 0.94
Massachusetts 6 3.28 250,369 2.44 2,355 2.57
Maryland 4 2.19 173,669 1.69 1,977 2.15
Michigan 6 3.28 428,295 4.18 4,270 4.65
Mississippi 3 1.64 142,727 1.39 1,078 1.17
North Carolina 12 6.56 590,790 5.77 5,882 6.41
New Hampshire 1 0.55 62,075 0.61 546 0.59
New York 9 4.92 484,371 4.73 4,168 4.54
Ohio 17 9.29 950,025 9.27 7,969 8.68
Pennsylvania 7 3.83 371,736 3.64 3,262 3.55
Rhode Island 2 1.09 109,015 1.06 1,067 1.16
South Carolina 7 3.83 345,833 3.37 2,780 3.03
Tennessee 4 2.19 208,495 2.03 1,712 1.87
Texas 18 9.02 1,096,856 10.71 10,067 10.97
Virginia 18 9.84 1,022,369 9.98 9,611 10.48
Totals 186 100.00% 10,246,982 100.00% 91,789 100.00%
=== ======= ========== ======= ====== =======
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial and other data on
a historical basis for the Operating Partnership and on a combined
historical basis for the Partnership's Predecessor. The following
information should be read in conjunction with all of the financial
statements and notes thereto incorporated by reference herein. The
selected financial data for the three months ended March 31, 1998 has
been derived from the unaudited financial statements of the Operating
Partnership. The selected financial data of the Operating Partnership
for the years ended December 31, 1997, and 1996 and for the period from
June 26, 1995 to December 31, 1995 have been derived from the financial
statements audited by Ernst & Young LLP, independent auditors, whose
report with respect thereto is incorporated by reference herein. The
combined selected financial data for the period ended June 25, 1995 and
the years ended December 31, 1994 and 1993 has been derived from audited
combined financial statements of the Company Predecessors not included in
such report.
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION> Operating Partnership Predecessor
---------------------------------------------------------------------- -----------------------------
At or for At or for At or for At or for For Period For Period At or for
three months three months Year Year from from Year Ended
Ended Ended Ended Ended 6/26/95 to 1/1/95 to December 31,
(Dollars in thousands, 3/31/98 3/31/97 12/31/97 12/31/96 12/31/95 6/25/95 1994 1993
except Unit data)
---------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Operating revenues $ 14,375 $ 10,732 $ 49,354 $ 33,597 $ 12,942 $ 9,532 $18,530 $13,660
Income (loss) before
extraordinary item 6,203 4,935 23,763 15,682 6,744 311 1,836 (825)
Earnings (losses) 5,853 4,935 23,763 15,682 6,744 311 1,836 (825)
Net income per Unit-
basic .46 .46 1.97 1.88 0.91 - - -
Net income per Unit-
diluted .46 .46 1.96 1.87 0.91 - - -
Distributions declared
per Unit .54 .52 2.12 2.05 1.04 - - -
Weighted average units:
Basic 12,773,076 10,839,168 12,090,141 8,344,065 7,429,872 - - -
Diluted 12,785,861 10,870,390 12,152,166 8,379,350 7,439,415 - - -
Balance Sheet Data:
Storage facilities
before accumulated
depreciation $390,349 $280,112 $333,036 $220,711 $159,461 $114,008 $91,889 $83,727
Total Assets 384,467 279,170 327,073 235,415 160,437 84,527 82,733 78,918
Total Debt 91,059 35,559 39,559 - 5,000 69,102 66,340 61,550
Total Liabilities 105,419 45,243 50,319 8,131 10,697 71,311 69,014 64,096
Limited partners' capital
interest 13,170 11,564 14,454 4,435 - - - -
Partners' capital 265,878 222,363 262,300 222,849 149,740 13,216 13,719 14,822
Other Data:
Net cash provided by
operating activities $ 10,476 $ 7,865 $31,159 $20,152 $7,188 $2,003 $5,428 $1,470
Net cash used in
investing activities (54,717) (48,547) (98,765) (59,146) (157,965) (3,340) (6,609) (15,217)
Net cash provided by
financing activities 44,661 26,391 53,486 54,949 151,509 507 1,030 14,283
Funds from operations(b) 8,242 6,364 30,294 19,816 9,904 - - -
Number of facilities 173 138 155 111 82 74 60 54
Weighted average occupancy 84.1% 85.2% 85.1% 86.0% 86.1% 86.6% 88.7% 86.7%
<PAGE>
(a) The Operating Partnership began operations on June 26, 1995, and had no historical results of
operations before that date. Results of operations prior to June 26, 1995 relate to Sovran Capital,
Inc. and the Sovran Partnerships (Company Predecessors).
(b) Funds from operations ("FFO") means income (loss)(computed in accordance with generally accepted
accounting principles) plus depreciation of real estate assets and amortization of intangible assets
exclusive of deferred financing costs. FFO is a supplemental performance measure for REITs as defined
by the National Association of Real Estate Investment Trusts, Inc. FFO is presented because analysts
consider FFO to be one measure of the performance of the Operating Partnership. FFO does not take into
consideration scheduled principal payments on debt, capital improvements and other obligations.
Accordingly, FFO is not a substitute for the Operating Partnership's cash flow or net income as a
measure of the Operating Partnership liquidity or operating performance or ability to pay
distributions.
</TABLE>
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA
The following table sets forth selected unaudited pro forma
operating and other data for the Operating Partnership as if
(i) the acquisition of 44 Properties in 1997 and 30 Properties in
1998 had occurred as of the beginning of 1997, and (ii) the
proceeds of the Company's April 1997 common stock offering were
received at the beginning of 1997. The pro forma balance sheet
data was prepared as if the 12 Properties acquired since
March 31, 1998 had all been acquired at March 31, 1998. The
following information should be read in conjunction with all of
the financial statements and notes thereto incorporated by
reference herein. The pro forma financial information is not
necessarily indicative of what the actual financial position and
results of operations of the Operating Partnership would have
been as of the dates or for the periods indicated, nor does it
purport to represent the Operating Partnership's future financial
position and results of operations.
Pro Forma Pro Forma
At or for At or for
Three Months Year Ended
(Dollars in thousands, ended 3/31/98 12/31/97
except Unit data) (unaudited) (unaudited)
------------- ----------
Operating Data:
Operating revenues $ 16,775 $ 66,228
Income (loss) before
extraordinary item 6,443 26,169
Earnings (losses) 6,093 26,169
Net income per Unit-
basic .48 2.05
Net income per Unit-
diluted .47 2.04
Distributions declared
per Unit .54 2.12
Weighted average units:
Basic 12,784,572 12,784,572
Diluted 12,837,357 12,846,597
Balance Sheet Data:
Storage facilities
before accumulated
depreciation $ 432,395 $ ---
Total Assets 426,537 ---
Total Debt 132,347 ---
Total Liabilities 147,216 ---
Limited partners' capital
interest 13,443 ---
Partners' capital 265,878 ---
<PAGE>
Other Data:
Net cash provided by
operating activities $ 11,073 $36,231
Net cash used in
investing activities (96,005) (188,969)
Net cash provided by
financing activities 85,352 138,618
Funds from operations(b) 8,839 35,366
Number of facilities 186 186
Weighted average occupancy 84.1% 85.1%
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company and the Operating
Partnership's and their predecessor's consolidated ratios of
earnings to fixed charges for the period shown:
Company and Operating Partnership Predecessors
- ------------------------------------------ ------------
Three months
ended January 1, 1995 Year Ended
March 31, Year ended December 31, to December 31,
1998 1997 1996 1995 June 25, 1995 1994 1993
- ------------- ---- ---- ---- ------------- ---- ----
5.27 9.43 7.56 21.88 1.09 1.31 0.84
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.
USE OF PROCEEDS
The net proceeds to the Operating Partnership from the sale
of the Senior Notes are estimated to be approximately
$___ million after deducting fees and expenses of the offering
payable by the Operating Partnership. The Operating Partnership
intends to use such proceeds to reduce borrowings under the
Company's Unsecured Credit Facility. The Company borrows under
the Unsecured Credit Facility to fund its acquisitions of
additional self-storage facilities. Borrowings under the
Unsecured Credit Facility bear interest at a rate of LIBOR +
1.25% per year (6.9% as of May 31, 1998). The Unsecured Credit
Facility matures in February, 2001.
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the
Operating Partnership on a historical basis as of March 31, 1998
and as adjusted to give effect to the sale of the Operating
Partnership of the Senior Notes at their face value and the
application of the assumed net proceeds therefrom as if such
event had occurred on March 31, 1998. See "Use of Proceeds."
The information set forth in the table below should be read in
conjunction with the Consolidated Financial Statements and the
notes thereto incorporated by reference in the accompanying
Prospectus.
March 31, 1998
HISTORICAL AS ADJUSTED
(DOLLARS IN THOUSANDS)
DEBT:
Senior Notes Payable $ --- $ 75,000
Unsecured Credit
Facilities 88,000 13,748
Mortgage Payable 3,059 3,059
-------- --------
Total Debt $ 91,059 $ 91,807
Limited Partners' Capital
Interest (443,609 Units),
at redemption value $ 13,170 $ 13,170
PARTNERS' CAPITAL:
General Partner (219,567
Units issued and
outstanding) 5,244 5,244
Limited Partner (12,111,396
Units issued and
outstanding) 260,634 260,634
------- -------
Total Partners' Capital 265,878 265,878
------- -------
Total Capitalization $370,107 $370,855
======= =======
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial
condition and results of operations should be read in conjunction
with the financial statements and notes incorporated by reference
in this Prospectus.
The following discussion is based on the financial
statements of the Operating Partnership as of March 31, 1998,
December 31, 1997, December 31, 1996, December 31, 1995, and for
the period from June 26, 1995 (commencement of operations) to
December 31, 1995; and the combined statements of the Company
Predecessors for the period from January 1, 1995 to June 25,
1995. The combined financial statements of the Company
Predecessors are presented for comparative purposes.
<PAGE>
This Prospectus Supplement and the accompanying Prospectus,
including the information incorporated by reference herein and
therein, contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
The foregoing provisions by their express terms do not apply to
forward-looking statements made in connection with an initial
public offering. The words "believe," "expect," "anticipate,"
"intend," "estimate," "assume" and other similar expressions
which are predictions of or indicate future events and trends and
which do not relate solely to historical matters identify
forward-looking statements. Reliance should not be placed on
forward-looking statements because they involve known and unknown
risks, uncertainties and other factors, which are in some cases
beyond the control of the Company (as defined herein) and may
cause the actual results, performance or achievements of the
Company to differ materially from anticipated future results,
performance or achievements expressed or implied by such forward-
looking statements.
Factors that might cause such a difference include, but are
not limited to, the following: occupancy rates and market rents
may be adversely affected by local economic and market conditions
which are beyond management's control; financing may not be
available, or may not be available on favorable terms; the
Company's cash flow may be insufficient to meet required payments
of principal and interest; and existing indebtedness may mature
in an unfavorable credit environment, preventing such
indebtedness from being refinanced, or, if refinanced, causing
such refinancing to occur on terms that are not as favorable as
the terms of existing indebtedness.
Results of Operations
For the period January 1, 1998 through March 31, 1998
The Operating Partnership reported revenues of $14.4 million
during the period and incurred $4 million in operating expenses.
General and administrative expenses of $0.9 million, interest
expense of $1.2 million and depreciation and amortization
expenses of $2.1 million resulted in income of $6.2 million
before extraordinary item. An extraordinary loss of $0.35
million resulted from the write-off of the unamortized financing
costs of the revolving credit facility that was replaced in
February 1998. Net income amounted to $5.9 million.
Three months ended March 31, 1998, compared to Three months ended
March 31, 1997
The following discussion compares the activities of the
Operating Partnership for the three months ended March 31, 1998
with the activities of the Operating Partnership for the three
months ended March 31, 1997.
<PAGE>
Total revenues increased from $10.7 million for the three
months ended March 31, 1997 to $14.4 for the three months ended
March 31, 1998, an increase of $3.7 million or 34%. Of this,
$3.4 million resulted from the acquisition of 62 properties
during the period January 1, 1997 through March 31, 1998 and $0.3
million was realized as a result of increased rental rates at the
111 properties owned by the Operating Partnership at December 31,
1996. Interest income decreased slightly. Overall, same-store
revenues grew 3.7% for the three month period ended March 31,
1998 as compared to the same period in 1997.
Property operating and real estate tax expense increased $1
million or 33% during the period. $0.9 million was a result of
absorbing additional expenses from operating the newly acquired
Properties, and $0.1 million related to the operations of
Properties operated more than one year.
General and administrative expenses, which includes losses
of $0.1 million realized as the result of replacement of
equipment, increased $0.1 million principally as a result of the
need for additional personnel and increased administrative costs
associated with managing the 62 additional properties.
Interest expense increased $0.7 million due to the $52
million drawn on the Operating Partnership's line of credit
during the first three months of 1998.
Earnings before minority interest, extraordinary item,
interest expense, and depreciation and amortization increased
from $7.0 million to $9.5 million, an increase of $2.5 million or
36%.
Year Ended December 31, 1997 compared to Year Ended December 31,
1996
Rental revenues improved from $32.9 million for the year
ended December 31, 1996 to $48.6 million for the year ended
December 31, 1997, an increase of $15.7 million, or 48%. Of
this, $10.4 million resulted from the acquisition of 44
properties during 1997, $4.3 million resulted from having the
1996 acquisitions included for a full year of operations, and
$1 million resulted from increased revenues at the eighty-two
core properties considered in same store sales. For this core
group, revenues increased 3.5%, primarily as the result of rental
rate increases, as average occupancy was unchanged from 1996's
level of 87.8%. Interest and other income increased just
slightly to $0.8 million in 1997.
Property operating and real estate tax expense increased
$4.5 million or 49% during the period. Of this, $3.1 million was
incurred by the facilities acquired in 1997, $1.3 million
resulted from the having the 1996 acquisitions included for a
full year of operations, and $0.1 million additional cost was
incurred in the operation of the eighty-two core properties.
General and administrative expenses increased $0.5 million,
primarily as a result of increased supervisory and accounting
costs associated with the operation of an increased number of
properties.
<PAGE>
Interest expense of $2.2 million in 1997 resulted primarily
from borrowings on the Operating Partnership's line of credit
facility (a mortgage loan assumed in an acquisition transaction
required interest payments of $0.2 million). The Operating
Partnership had borrowings outstanding of $42 million before
paying off the balance with the proceeds of a Company common
stock offering in April 1997. The credit facility was then
utilized throughout the balance of the year to fund further
acquisitions, so that by the end of the year, the amount
outstanding on the line was $36 million.
Depreciation and amortization expense increased to $7
million from $4.6 million, primarily as a result of the
additional depreciation taken on the $112 million of real estate
assets acquired in 1997 and a full year of depreciation on 1996
acquisitions.
Earnings before minority interest, interest expense, and
depreciation and amortization increased $10.7 million or 48%, in
1997 as a result of the aforementioned items.
Year Ended December 31, 1996 compared to Year Ended December 31,
1995
Rental revenues improved from $21.8 million for the year
ended December 31, 1995 to $32.9 million for the year ended
December 31, 1996, an increase of $11.1 million, or 51%. Of
this, $5.1 million resulted from the acquisition of twenty-nine
properties during 1996, $ 4.9 million resulted from having 1995
acquisitions included for a full year of operations, and $1.1
million resulted from increased occupancy levels and rental
rates. Interest and other income remained unchanged at
approximately $0.7 million.
Property operating and real estate tax expense increased $3
million or 48% during the period. Of this, $1.5 million was
incurred by the facilities acquired in 1996, $1.4 million
resulted from having the 1995 acquisitions included for a full
year of operations, and $0.1 million of additional cost was
incurred in the operation of the sixty facilities owned by the
Operating Partnership since January 1, 1995.
General and administrative expenses decreased $0.3 million,
primarily as a result of non-recurring legal, accounting and
other professional fees associated with the winding up of
partnership activities and the merger and formation transactions.
Interest expenses of $1.9 million in 1996 resulted
exclusively from borrowings on the Operating Partnership's line
of credit facility. The Operating Partnership had borrowings
outstanding of $59.3 million before paying off the balance with
the proceeds of a Company common stock offering in October 1996.
Interest expense in 1995 was $3.4 million, or $1.5 million higher
than in 1996. This was primarily due to the fact that until the
Initial Offering in June 1995, the Predecessors had incurred
substantial mortgage debt as a means to finance its acquisitions,
<PAGE>
and paid approximately $3.3 million to carry that debt through
June 1995. Upon completion of the Initial Offering, this
mortgage debt was paid in full, and there was only a line of
credit borrowing of $5 million outstanding at the end of 1995.
Depreciation and amortization expense increased to $4.6
million from $3.3 million, primarily as a result of the
additional depreciation taken on the $60 million or real estate
assets acquired in 1996.
Earnings before interest, and depreciation and amortization
increased $8.4 million or 61% in 1996 as a result of the
aforementioned items.
Liquidity and Capital Resources
Capital Resources and Establishment of Line of Credit
The Company and the Operating Partnership have relied
principally on equity capital since inception and have raised net
proceeds of $269 million from an initial public offering in 1995
and additional offerings of common stock in 1996 and 1997. The
Operating Partnership used the proceeds of the offerings to repay
indebtedness, to purchase additional properties, and to acquire
limited partners' interest in the Company's predecessor
partnerships.
The equity offerings have been supplemented with borrowings
on the $75 million line of credit which was replaced on February
20, 1998, by a three-year, $150 million Unsecured Credit
Facility. The commitment fee on the new line was $750,000, and
interest is payable monthly at 125 basis points above LIBOR.
In addition to the equity and debt capital, the Operating
Partnership issued $3.6 million and $9.2 million of Units in 1996
and 1997, respectively, in exchange for self storage facilities.
DESCRIPTION OF SENIOR NOTES
The following description of the particular terms of the
Senior Notes offered hereby supplements, and to the extent
inconsistent therewith replaces, the description of the general
terms and provisions of the "Senior Securities" set forth under
"Description of Debt Securities" in the accompanying Prospectus,
to which reference is hereby made.
General
The Senior Notes constitute a separate series of Senior
Securities (which are more fully described in the accompanying
Prospectus) to be issued under an Indenture, dated as of June __,
1998, as supplemented by Supplemental Indenture No. 1, dated as
of June __, 1998 (the "Supplemental Indenture" and together with
the Original Indenture, the "Indenture") between the Operating
Partnership and Marine Midland Bank (the "Trustee"). The form of
the Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement is a part and is
available for inspection at the offices of the Operating
<PAGE>
Partnership. The Indenture is subject to, and governed by, the
Trust Indenture Act of 1939, as amended (the "TIA"). The
statements made hereunder relating to the Indenture and the
Senior Notes are summaries of certain provisions thereof, do not
purport to be complete and are subject to, and are qualified in
their entirety by reference to, all provisions of the Indenture
and the Senior Notes. All capitalized terms used but not defined
herein shall have the respective meanings set forth in the
Indenture.
The Senior Notes will be limited to an aggregate principal
amount of $75 million and will be direct, senior unsecured
recourse obligations of the Operating Partnership and will rank
equally with all other unsecured and unsubordinated indebtedness
of the Operating Partnership from time to time outstanding,
including indebtedness outstanding from time to time under the
Operating Partnership's Unsecured Credit Facility. The Senior
Notes will be effectively subordinated to the claims of mortgage
lenders and others holding secured indebtedness of the Operating
Partnership now existing or that may be formed by the Operating
Partnership in the future as to the specific properties securing
such indebtedness. As of March 31, 1998, the total amount of
secured indebtedness of the Operating Partnership was
$3.1 million. In addition, the Senior Notes will be effectively
subordinated to unsecured indebtedness and other liabilities of
any Subsidiaries now existing or that may be formed by the
Operating Partnership in the future. All such secured
indebtedness or unsecured indebtedness will have to be satisfied
in full before holders of the Senior Notes will be able to
realize any value from encumbered or indirectly-held properties.
The Senior Notes will be recourse to all of the assets of the
Operating Partnership, but will be non-recourse to any general
partner or limited partner of the Operating Partnership,
including Sovran Self Storage Inc., for the repayment of the
Senior Notes.
As of June 15, 1998, on a pro forma basis after giving
effect to the issuance and sale of the Senior Notes offered
hereby and the application of the proceeds therefrom, the total
outstanding indebtedness of the Operating Partnership would have
been approximately $132.3 million, of which approximately
$3.1 million in the aggregate would have been secured
indebtedness $129.2 million would have been unsecured
indebtedness. The outstanding principal balance under the
Unsecured Credit Facility varies from time to time and as of
June 15, 1998 was in the aggregate approximately $132 million.
The Senior Notes will mature on June __, 2005 (the "Maturity
Date"). The Senior Notes will not be subject to any sinking fund
provisions and will not be convertible into or exchangeable for
any equity interest in the Operating Partnership or Sovran Self
Storage Inc. The Senior Notes will be issued only in fully
registered book-entry form without coupons, in denominations of
$1,000 and integral multiples thereof.
<PAGE>
Except as described below under "--Certain Covenants--
Limitations on Incurrence of Debt" and under "--Merger,
Consolidation or Sale of Assets," the Indenture does not contain
any provisions that would limit the ability of the Operating
Partnership to incur indebtedness or that would afford holders of
the Senior Notes protection in the event of: (i) a highly
leveraged or similar transaction involving the Operating
Partnership or Sovran Self Storage Inc. or any affiliate of
either such party; (ii) a change of control; or (iii) a
reorganization, restructuring, merger or similar transaction
involving the Operating Partnership that may adversely affect the
holders of the Senior Notes. However, certain restrictions on the
ownership and transfer of the Common Shares designed to preserve
Sovran Self Storage Inc.'s status as a REIT may act to prevent or
hinder a change of control. The Operating Partnership and its
management have no present intention of engaging in a transaction
which would result in the Operating Partnership's being highly
leveraged or that would result in a change of control.
Principal and Interest
The Senior Notes will bear interest at [___]% per annum from
[________], 1998 or from the immediately preceding Interest
Payment Date (as defined below) to which interest has been paid,
payable semi-annually in arrears on December 15 and June 15 of
each year, commencing December 15, 1998 (each, an "Interest
Payment Date"), to the persons (the "Holders") in whose name the
applicable Senior Notes are registered in the Security Register
at the close of business 15 calendar days prior to such Interest
Payment Date, i.e., May 31 and November 30, respectively
(regardless of whether such day is a Business Day, as defined
below), as the case may be (each, a "Regular Record Date").
Interest on the Senior Notes will be computed on the basis of a
360-day year of twelve 30-day months.
Any interest not punctually paid or duly provided for on any
Interest Payment Date with respect to a Note ("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 Note is registered at the close of
business on a special record date (the "Special Record Date") for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Note
not less than ten days prior to such Special Record Date, or may
be paid at any time in any other lawful manner, as more
particularly described in the Indenture.
If any Interest Payment Date or Maturity falls on a day that
is not a Business Day, the required payment shall be on the next
Business Day as if it were made on the date such payment was due
and no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date or Maturity, as
the case may be. "Business Day" means any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions in the City of New York are required
or authorized by law, regulation or executive order to close.
<PAGE>
The principal of (and premium or Make-Whole Amount, if any)
and interest on the Senior Notes will be payable at the corporate
trust office of the agent of the Trustee in New York, in such
coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private
debt, provided that, at the option of the Operating Partnership,
payment of interest may be made by check mailed to the address of
the Person entitled thereto as it appears in the Security
Register or by wire transfer of funds to such Person at an
account maintained within the United States.
Certain Covenants
Limitations on incurrence of debt. The Operating
Partnership will not, and will not permit any Subsidiary to,
incur any Debt (as defined below), other than intercompany Debt
(representing Debt to which the only parties are the Company, any
of its Subsidiaries or the Operating Partnership, but only so
long as such Debt is held solely by any of the foregoing), if,
immediately after giving effect to the incurrence of such
additional Debt and the application of the proceeds thereof, the
aggregate principal amount of all outstanding Debt of the
Operating Partnership on a consolidated basis determined in
accordance with GAAP is greater than 60% of the sum of (without
duplication) (i) the Operating Partnership's Adjusted Total
Assets (as defined below) as of the end of the calendar quarter
covered in the Operating Partnership's Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, most
recently filed with the Securities and Exchange Commission (or,
if such filing is not permitted under the Securities Exchange Act
of 1934, as amended, filed with the Trustee) prior to the
incurrence of such additional Debt, (ii) the purchase price of
any real estate assets or mortgages receivable (or interests
therein) acquired by the Operating Partnership or any Subsidiary
since the end of such calendar quarter, including those obtained
in connection with the incurrence of such additional Debt and
(iii) the amount of any securities offering proceeds received by
the Operating Partnership or any Subsidiary since the end of such
calendar quarter (to the extent that such proceeds were not used
to acquire such real estate assets or mortgages receivable or
used to reduce Debt).
The Operating Partnership will not, and will not permit any
Subsidiary to, incur any Debt, other than intercompany Debt, if
the ratio of Consolidated Income Available for Debt Service (as
defined below) to the Annual Debt Service Charge (as defined
below) for the four consecutive fiscal quarters most recently
ended prior to the date on which such additional Debt is to be
incurred shall have been less than 1.5:1, on a pro forma basis
after giving effect to the incurrence of such Debt and to the
application of the proceeds therefrom, and calculated on the
assumption that (i) such Debt and any other Debt incurred by the
Operating Partnership and its Subsidiaries since the first day of
such four-quarter period and the application of the proceeds
therefrom, including to refinance other Debt, had occurred at the
beginning of such period; (ii) the repayment or retirement of any
<PAGE>
other Debt by the Operating Partnership and its Subsidiaries
since the first day of such four-quarter period had been repaid
or retired at the beginning of such period (except that, in
making such computation, the amount of Debt under any revolving
credit facility shall be computed based upon the average daily
balance of such Debt during such period); (iii) in the case of
Acquired Debt (as defined below) or Debt incurred in connection
with any acquisition since the first day of such four-quarter
period, the related acquisition had occurred as of the first day
of such period with the appropriate adjustments with respect to
such acquisition being included in such pro forma calculation;
and (iv) in the case of any acquisition or disposition by the
Operating Partnership or its Subsidiaries of any asset or group
of assets since the first day of such four-quarter period,
whether by merger, stock purchase or sale, or asset purchase or
sale, such acquisition or disposition or any related repayment of
Debt had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation.
The Operating Partnership will not, and will not permit any
Subsidiary to, incur any Debt secured by any mortgage, lien,
charge, pledge, encumbrance or security interest of any kind upon
any of the property of the Operating Partnership or any
Subsidiary ("Secured Debt"), whether owned at the date of the
Indenture or thereafter acquired, if, immediately after giving
effect to the incurrence of such Secured Debt and the application
of the proceeds therefrom, the aggregate principal amount of all
outstanding Secured Debt of the Operating Partnership and its
Subsidiaries on a consolidated basis is greater than 40% of the
sum of (without duplication) (i) the Operating Partnership's
Adjusted Total Assets as of the end of the calendar quarter
covered in the Operating Partnership's Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, most
recently filed with the Securities and Exchange Commission (or,
if such filing is not permitted under the Securities Exchange Act
of 1934, as amended, filed with the Trustee) prior to the
incurrence of such additional Secured Debt, (ii) the purchase
price of any real estate assets or mortgages receivable (or
interests therein) acquired by the Operating Partnership or any
Subsidiary since the end of such calendar quarter, including
those obtained in connection with the incurrence of such
additional Secured Debt and (iii) the amount of any securities
offering proceeds received by the Operating Partnership or any
Subsidiary since the end of such calendar quarter (to the extent
that such proceeds were not used to acquire such real estate
assets or mortgages receivable or used to reduce Debt).
The Operating Partnership will at all times maintain an
Unencumbered Total Asset Value (as defined below) in an amount
not less than 150% of the aggregate principal amount of all
outstanding unsecured Debt of the Operating Partnership and its
Subsidiaries on a consolidated basis.
As used herein, and in the Indenture:
"Acquired Debt" means Debt of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in
<PAGE>
connection with the acquisition of assets from such Person, in
each case, other than Debt incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary or such
acquisition. Acquired Debt shall be deemed to be incurred on the
date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"Adjusted Total Assets" as of any date means the sum of
(i) the amount determined by multiplying the price at which the
Company's Common Shsares were offered in the Initial Offering by
the sum of (A) the Common Shares issued in the Initial Offering
and (B) the Units of the Operating Partnership not held by the
Company that were issued in connection with the Initial Offering,
(ii) the principal amountof outstanding Debt of the Operating
Partnership immediately following the Initial Offering and
(iii) the purchase price or cost of any real estate assets or
mortgages receivable (or interests therein) acquired (including
the value of any Units issued in connection therewith) or
developed after the Initial Offering and the amount of any
securities offering proceeds and other proceeds of Debt received
after the Initial Offering (to the extent such proceeds were not
used to acquire real estate assets or mortgages receivable or
used to reduce Debt), adjusted for the proceeds of any real
estate assets disposed of by the Operating Partnership. This
definition of "Adjusted Total Assets" values the assets owned by
the Operating Partnership at the time of the Initial Offering at
the market capitalization of the Operating Partnership at that
time, which the Operating Partnership believes to be a more
appropriate measure of the value of those assets than
undepreciated book value, which reflect their pre-Initial
Offering cost before accumulated depreciation.
"Annual Debt Service Charge" as of any date means the amount
of any interest expensed during the four consecutive fiscal
quarters most recently ended prior to such date.
"Consolidated Income Available for Debt Service" for any
period means Consolidated Net Income (as defined below) of the
Operating Partnership and its Subsidiaries plus amounts which
have been deducted for (i) interest on Debt of the Operating
Partnership and its Subsidiaries, (ii) provision for taxes of the
Operating Partnership and its Subsidiaries based on income,
(iii) amortization of debt discount, (iv) provisions for gains
and losses on properties, (v) depreciation and amortization,
(vi) the effect of any noncash charge resulting from a change in
accounting principles in determining Consolidated Net Income for
such period and (vii) amortization of deferred charges.
"Consolidated Net Income" for any period means the amount of
net income (or loss) of the Operating Partnership and its
Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP.
"Debt" of the Operating Partnership or any Subsidiary means
any indebtedness of the Operating Partnership or any Subsidiary,
whether or not contingent, in respect of (i) borrowed money
evidenced by bonds, notes, debentures or similar instruments,
<PAGE>
(ii) indebtedness secured by any mortgage, pledge, lien, charge,
encumbrance or any security interest existing on property owned
by the Operating Partnership or any Subsidiary,
(iii) reimbursement obligations in connection with any letters of
credit actually issued or amounts representing the balance
deferred and unpaid of the purchase price of any property except
any such balance that constitutes an accrued expense or trade
payable or (iv) any lease of property by the Operating
Partnership or any Subsidiary as lessee which is reflected on the
Operating Partnership's consolidated balance sheet as a
capitalized lease in accordance with GAAP; in the case of items
of indebtedness incurred under (i) through (iii) above to the
extent that any such items (other than letters of credit) would
appear as a liability on the Operating Partnership's consolidated
balance sheet in accordance with GAAP; and also includes, to the
extent not otherwise included, any obligation of the Operating
Partnership or any Subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of
collection in the ordinary course of business), indebtedness of
another Person (other than the Operating Partnership or any
Subsidiary).
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of (i) the voting
power of the voting equity securities or (ii) the outstanding
equity interests of which are owned, directly or indirectly, by
such Person. For the purposes of this definition, "voting equity
securities" means equity securities having voting power for the
election of directors, whether at all times or only so long as no
senior class of security has such voting power by reason of any
contingency.
"Undepreciated Real Estate Assets" as of any date means the
cost (original cost plus capital improvements) of real estate
assets of the Operating Partnership and its Subsidiaries on such
date, before depreciation and amortization, determined on a
consolidated basis in accordance with GAAP.
"Unencumbered Total Asset Value" as of any date means the
sum of (i) the portion of Adjusted Total Assets allocable to the
Operating Partnership's real estate assets and (ii) the value of
all other assets of the Operating Partnership and its
Subsidiaries on a consolidated basis determined in accordance
with GAAP (but excluding intangibles and accounts receivable), in
each case which are unencumbered by any mortgage, lien, charge,
pledge or security interest.
Compliance with the covenants described herein and with
respect to the Senior Notes generally may not be waived by the
Operating Partnership, or by the Trustee unless the Holders of at
least a majority in principal amount of all outstanding Senior
Notes consent to such waiver; provided, however, that the
defeasance and covenant defeasance provisions of the Indenture
described under "Discharge, Defeasance and Covenant Defeasance,"
below, will apply to the Senior Notes, including with respect to
the covenants described in this Prospectus Supplement.
<PAGE>
Optional Redemption
The Senior Notes may be redeemed at any time at the option
of the Operating Partnership, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount of
the Senior Notes being redeemed plus accrued interest thereon to
the redemption date and (ii) the Make-Whole Amount, if any, with
respect to such Senior Notes (the "Redemption Price").
If notice of redemption has been given as provided in the
Indenture and funds for the redemption of any Senior Notes called
for redemption shall have been made available on the redemption
date referred to in such notice, such Senior Notes will cease to
bear interest on the date fixed for such redemption specified in
such notice and the only right of the Holders of the Senior Notes
from and after the redemption date will be to receive payment of
the Redemption Price.
Notice of any optional redemption of any Senior Notes will
be given to Holders at their addresses, as shown in the Security
Register, not more than 60 nor less than 30 days prior to the
date fixed for redemption. The notice of redemption will specify,
among other items, the Redemption Price and the principal amount
of the Senior Notes held by such Holder to be redeemed.
If less than all the Senior Notes are to be redeemed at the
option of the Operating Partnership, the Operating Partnership
will notify the Trustee at least 45 days prior to giving the
notice of redemption (or such shorter period as is satisfactory
to the Trustee) of the aggregate principal amount of Senior Notes
to be redeemed and their redemption date. The Trustee shall
select, in such manner as it shall deem fair and appropriate,
Senior Notes to be redeemed in whole or in part. Senior Notes may
be redeemed in part in the minimum authorized denomination for
Senior Notes or in any integral multiple thereof.
Neither the Operating Partnership nor the Trustee shall be
required to: (i) issue, register the transfer of or exchange
Senior Notes during a period beginning at the opening of business
15 days before any selection of Senior Notes to be redeemed and
ending at the close of business on the day of mailing of the
relevant notice of redemption; (ii) register the transfer of or
exchange any Note, or portion thereof, called for redemption,
except the unredeemed portion of any Note being redeemed in part;
or (iii) issue, register the transfer of or exchange any Note
that has been surrendered for repayment at the option of the
Holder, except the portion, if any, of such Note not to be so
repaid.
As used herein and in the Indenture:
"Make-Whole Amount" means, in connection with any optional
redemption or accelerated payment of any Note, the excess, if
any, of (i) the aggregate present value as of the date of such
redemption or accelerated payment of each dollar of principal
being redeemed or paid and the amount of interest (exclusive of
interest accrued to the date of redemption or accelerated
<PAGE>
payment) that would have been payable in respect of such dollar
if such redemption or accelerated payment had not been made,
determined by discounting, on a semi-annual basis, such principal
and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is
given or declaration of acceleration is made) from the respective
dates on which such principal and interest would have been
payable if such redemption or accelerated payment had not been
made, over (ii) the aggregate principal amount of the Senior
Notes being redeemed or paid.
"Reinvestment Rate" means the yield on Treasury securities
at a constant maturity corresponding to the remaining life (as of
the date of redemption, and rounded to the nearest month) to
stated maturity of the principal being redeemed (the "Treasury
Yield"), plus 0.25%. For purposes hereof, the Treasury Yield
shall be equal to the arithmetic mean of the yields published in
the Statistical Release (as defined below) under the heading
"Week Ending" for the "U.S. Government Securities -- Treasury
Constant Maturities" with a maturity equal to such remaining
life; provided, that if no published maturity exactly corresponds
to such remaining life, then the Treasury Yield shall be
interpolated or extrapolated on a straight-line basis from the
arithmetic means of the yields for the next shortest and next
longest published maturities. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published
prior to the date of determination of the Make-Whole Amount shall
be used. If the format or content of the Statistical Release
changes in a manner that precludes determination of the Treasury
Yield in the above manner, then the Treasury Yield shall be
determined in the manner that most closely approximates the above
manner, as reasonably determined by the Operating Partnership.
"Statistical Release" means the statistical release
designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve System and which
establishes yields on actively traded United States government
securities adjusted to constant maturities or, if such
statistical release is not published at the time of any
determination of the Make-Whole Amount, then such other
reasonably comparable index which shall be designated by the
Operating Partnership.
Merger, Consolidation or Sale of Assets
The Indenture provides that the Operating Partnership may,
without the consent of the holders of any outstanding Debt
Securities, consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any
other entity provided that (a) either the Operating Partnership
shall be the continuing entity, or the successor entity (if other
than the Operating Partnership) formed by or resulting from any
such consolidation or merger or which shall have received the
transfer of such assets is organized under the laws of any
domestic jurisdiction and assumes the Operating Partnership's
obligations to pay principal of (and premium or Make-Whole
Amount, if any) and interest on all of the Debt Securities and
<PAGE>
the due and punctual performance and observance of all of the
covenants and conditions contained in the Indenture;
(b) immediately after giving effect to such transaction and
treating any indebtedness that becomes an obligation of the
Operating Partnership or any Subsidiary as a result thereof as
having been incurred by the Operating Partnership or such
Subsidiary at the time of such transaction, no Event of Default
under the Indenture, and no event which, after notice or the
lapse of time, or both, would become such an Event of Default,
shall have occurred and be continuing; and (c) an officers'
certificate and legal opinion covering such conditions shall be
delivered to the Trustee.
Events of Default, Notice and Waiver
The Indenture provides that the following events are "Events
of Default" with respect to the Senior Notes: (a) default in the
payment of any interest on any Senior Notes 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 Senior Notes when due and
payable that continues for a period of 5 days; (c) default in the
performance, or breach, of any other covenant or warranty of the
Operating Partnership in the Indenture with respect to the Senior
Notes and continuance of such default or breach for a period of
60 days after there has been given to the Operating Partnership
by the Trustee, or to the Operating Partnership and the Trustee
by the Holders of at least 25% in principal amount of the Senior
Notes, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Indenture; (d) default under any
bond, debenture, note, mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Operating
Partnership (or by any Subsidiary, the repayment of which the
Operating Partnership has guaranteed or for which the Operating
Partnership is directly responsible or liable as obligor or
guarantor), having an aggregate principal amount outstanding of
at least $10,000,000, whether such indebtedness now exists or
shall hereafter be created, which default shall have resulted in
such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or
such acceleration having been rescinded or annulled, within a
period of 10 days after there shall have been given, by
registered or certified mail, to the Operating Partnership by the
Trustee, or to the Operating Partnership and the Trustee by the
Holders of at least 25% in principal amount of the outstanding
Senior Notes, a written notice specifying such default and
requiring the Operating Partnership to cause such indebtedness to
be discharged or cause such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default"
under the Indenture, provided, however, that such a default on
indebtedness which constitutes tax-exempt financing having an
aggregate principal amount outstanding not exceeding $25,000,000
that results solely from a failure of an entity providing credit
support for such indebtedness to honor a demand for payment on a
letter of credit shall not constitute an Event of Default; or
<PAGE>
(e) certain events of bankruptcy, insolvency or reorganization,
or court appointment of a receiver, liquidator or trustee of the
Operating Partnership or any Significant Subsidiary or for all or
substantially all of either of its property.
See "Description of Debt Securities--Events of Default,
Notice and Waiver" in the accompanying Prospectus for a
description of rights, remedies and other matters relating to
Events of Default.
Discharge, Defeasance and Covenant Defeasance
The provisions of Article __ of the Indenture relating to
defeasance and covenant defeasance which are described in the
accompanying Prospectus will apply to the Senior Notes, including
without limitation the covenants described under "Description of
Senior Notes--Certain Covenants."
Book-Entry System
The Senior Notes will be issued in the form of one or more
fully registered global notes ("Global Senior Notes") which will
be deposited with, or on behalf of DTC, and registered in the
name of DTC's nominee, Cede & Co. Except under the circumstance
described below, the Senior Notes will not be issuable in
definitive form. Unless and until it is exchanged in whole or in
part for the individual Senior Notes represented thereby, a
Global Note may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee
of DTC or by DTC or any nominee of DTC to a successor depository
or any nominee of such successor.
Upon the issuance of a Global Note, DTC or its nominee will
credit on its book-entry registration and transfer system the
respective principal amounts of the individual Senior Notes
represented by such Global Note to the accounts of persons that
have accounts with DTC ("Participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to
the Senior Notes. Ownership of beneficial interests in a Global
Note will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests
in such Global Note 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).
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 any beneficial interest in a Global Note.
So long as DTC or its nominee is the registered owner of
such Global Note, DTC or its nominee, as the case may be, will be
considered the sole owner or holder of the Senior Notes
represented by such Global Note for all purposes under the
Indenture and the beneficial owners of the Senior Notes will be
entitled only to those rights and benefits afforded to them in
<PAGE>
accordance with DTC's regular operating procedures. Except as
provided below, owners of beneficial interest in a Global Note
will not be entitled to have any of the individual Senior Notes
registered in their names, will not receive or be entitled to
receive physical delivery of any such notes in definitive form
and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of and any interest on, individual
Senior Notes represented by a Global Note registered in the name
of DTC or its nominee will be made to DTC or its nominee, as the
case may be, as the registered owner of the Global Note
representing such Senior Notes. None of the Operating
Partnership, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests in the Global Note for such Senior
Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Operating Partnership expects that DTC or its nominee,
upon receipt of any payment of principal or interest in respect
of a permanent Global Note representing any Senior Notes,
immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in
the principal amount of such Global Note as shown on the records
to DTC or its nominee. The Operating Partnership also expects
that payments by Participants to owners of beneficial interests
in such Global Note held through such Participants will be
governed by standing instructions and customary practices, as is
the case with securities held for the account of customers in
bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
If DTC is at any time unwilling, unable or ineligible to
continue as depository and a successor depository is not
appointed by the Operating Partnership within 90 days, the
Operating Partnership will issue individual Senior Notes in
exchange for the Global Note or Senior Notes representing the
Senior Notes. In addition, the Operating Partnership may, at any
time and in its sole discretion, determine not to have any Senior
Notes represented by one or more Global Senior Notes and, in such
event, will issue individual Senior Notes in exchange for the
Global Note or Senior Notes representing the Senior Notes.
DTC has advised the Operating Partnership of the following
information regarding DTC: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended.
DTC holds securities that its Participants deposit with DTC. DTC
also facilitates the settlement among its Participants of
securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry
<PAGE>
charges in its Participants' accounts, thereby eliminating the
need for physical movement of securities certificates. Direct
Participants of DTC include securities brokers and dealers
(including the Underwriter), banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a
number of its direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct Participant of
DTC, either directly or indirectly. The rules applicable to DTC
and its Participants are on file with the Securities and Exchange
Commission.
Same-Day Settlement and Payment
Settlement for the Senior Notes will be made by the
Underwriter in immediately available funds. All payments of
principal and interest in respect of the Senior Notes will be
made by the Operating Partnership in immediately available funds.
Secondary trading in long-term notes and debentures of
corporate issuers is generally settled in clearing house or next-
day funds. In contrast, the Senior Notes will trade in DTC's
Same-Day Funds Settlement System until maturity or until the
Senior Notes are issued in certificated form, and secondary
market trading activity in the Senior Notes will therefore be
required by DTC to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Senior
Notes.
Governing Law
The Indenture is governed by and shall be construed in
accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in such state.
No Personal Liability or Recourse
No recourse under or upon any obligation, covenant or
agreement contained in the Indenture or the Senior Notes, or
because of any indebtedness evidenced thereby, shall be had
(i) against the Company or any other past, present or future
partner in the Operating Partnership, (ii) against any other
person or entity which owns an interest, directly or indirectly,
in any partner of the Operating Partnership, or (iii) against any
past, present or future shareholder, employee, officer or
director, as such, of the Company or any successor, either
directly or through the Company or the Operating Partnership or
any successor, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise. Each holder of Senior Notes
waives and releases all such liability by accepting such Senior
Notes. The waiver and release are part of the consideration for
the issue of the Senior Notes.
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes, subject to the
limitations set forth below, the material U.S. Federal income tax
consequences of the acquisition, ownership and disposition of the
Senior Notes. The discussion is based upon provisions of the
Code, its legislative history, judicial authority, current
administrative rulings and practice, and existing and proposed
Treasury Regulations, all as in effect and existing on the date
hereof. Legislative, judicial or administrative changes or
interpretations may be forthcoming that could alter or modify the
validity of the statements and conclusions set forth below. Any
such changes or interpretations may be retroactive and could
adversely affect a holder of the Senior Notes. Except as
otherwise described herein, this discussion applies both to a
person who is (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any
political subdivision thereof (other than a partnership that is
not treated as a United States person under any applicable
Treasury regulations), (iii) an estate or trust the income of
which is subject to U.S. Federal income taxation regardless of
its source, (iv) a trust if (a) a U.S. court may exercise primary
supervision over its administration and (b) one or more U.S.
persons have authority to control all substantial decisions of
the trust, or (v) any other person whose income or gain in
respect of a Note is effectively connected with the conduct of a
United States trade or business (a "U.S. Holder") and a person
who is not a U.S. Holder (a "Non-U.S. Holder"). This discussion
deals only with the Senior Notes held as capital assets (within
the meaning of Section 1221 of the Code) by holders and does not
purport to deal with all aspects of U.S. Federal income taxation
that might be relevant to particular holders in light of their
personal investment circumstances or status, nor does it discuss
the U.S. Federal income tax consequences to certain types of
holders subject to special treatment under the U.S. Federal
income tax laws, such as certain financial institutions,
insurance companies, dealers in securities or foreign currency,
tax-exempt organizations, or persons that hold Senior Notes that
are a hedge against, or that are hedged against, currency risk or
that are part of a straddle, a constructive sale transaction,
conversion transaction, or persons whose functional currency is
not the U.S. Dollar. Moreover, the effect of any applicable
state, local or foreign tax laws, or any estate or gift tax laws,
is not discussed.
Phillips, Lytle, Hitchcock, Blaine & Huber LLP counsel to
the Operating Partnership, has reviewed the following discussion
and is of the opinion that, to the extent that it constitutes
matters of law or legal conclusions or purports to describe
certain provisions of the U.S. Federal tax laws, the following
discussion is a correct summary in all material respects of the
matters discussed therein.
THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY.
EACH INVESTOR IS URGED TO CONSULT WITH ITS OWN TAX ADVISORS TO
DETERMINE THE IMPACT OF SUCH INVESTOR'S PERSONAL TAX SITUATION ON
<PAGE>
THE ANTICIPATED TAX CONSEQUENCES, INCLUDING THE TAX CONSEQUENCES
UNDER STATE, LOCAL, FOREIGN OR OTHER TAX LAWS, OF THE
ACQUISITION, OWNERSHIP AND DISPOSITION OF THE SENIOR NOTES.
U.S. Holders: Interest, Original Issue Discount
A U.S. Holder of a Note will be required to report as
ordinary interest income for U.S. Federal income tax purposes
interest earned with respect to a Note in accordance with the
U.S. Holder's regular method of tax accounting. Although the
Senior Notes may be issued at a price that is less than their
stated principal amount, the discount is not expected to exceed
0.25% of the stated redemption price at maturity multiplied by
the number of whole years to maturity. Therefore, for U.S.
Federal income tax purposes, the amount of original issue
discount on the Senior Notes that is attributable to the
difference between their purchase price and their stated
redemption price is considered to be de minimis and is treated as
zero.
U.S. Holders: Market Discount, Acquisition Premium
If a U.S. Holder acquires a Note for an amount that is less
than the sum of all payments (other than payments with respect to
stated interest) due with respect to such Note at the time of
acquisition, the amount of such difference will be treated as
"market discount" for U.S. Federal income tax purposes, unless
such difference is less than a specified de minimis amount. Under
the market discount rules, a U.S. Holder will be required to
treat any principal payment on, or any gain on the sale,
exchange, retirement or other disposition of, a Note as ordinary
income to the extent that such gain does not exceed the accrued
market discount on such Note. If a U.S. Holder makes a gift of a
Note, accrued market discount, if any, will be recognized as if
such U.S. Holder had sold such Note for a price equal to its fair
market value. In addition, the U.S. Holder may be required to
defer, until the maturity of the Note or the earlier disposition
of the Note in a taxable transaction, the deduction of a portion
of the interest expense on any indebtedness incurred or continued
to purchase or carry such Note.
Any market discount will be considered to accrue on a
straight-line basis during the period from the date of
acquisition to the maturity date of the Note, unless the U.S.
Holder elects to accrue such market discount on a constant yield
to maturity basis. Such an election is applicable only to the
Note with respect to which it is made and is irrevocable. A U.S.
Holder of a Note may elect to include market discount in income
currently as it accrues (on either a straight-line basis or
constant yield to maturity basis), in which case the rules
described above regarding the deferral of interest deductions
will not apply. This election to include market discount in
income currently, once made, applies to all market discount
obligations acquired on or after the first day of the first
taxable year to which the election applies and may not be revoked
without the consent of the Internal Revenue Service.
<PAGE>
A U.S. Holder that purchases a Note for an amount in excess
of the sum of all payments (other than payments with respect to
stated interest) due with respect to such Note will be considered
to have purchased the Note at a "premium." A U.S. Holder
generally may elect to amortize the premium over the remaining
term of the Note on a constant yield to maturity basis. The
amount amortized in any year will be treated as a reduction of
the U.S. Holder's interest income from the Note. A U.S. Holder
that elects to amortize such premium must also reduce its tax
basis in a Note by the amount of amortization deduction
allowable. Bond premium on a Note held by a U.S. Holder that
does not make an election will decrease the gain or increase the
loss otherwise recognized on disposition of the Note. The
election to amortize premium on a constant yield to maturity
basis once made applies to all debt obligations held or
subsequently acquired by the electing U.S. Holder on or after the
first day of the first taxable year to which the election applies
(other than debt instruments the interest on which is excludable
from gross income) and may not be revoked without the consent of
the Internal Revenue Service.
U.S. Holders: Sale or Redemption
Unless a nonrecognition provision applies, the sale,
exchange, redemption (including pursuant to an offer by the
Operating Partnership) or other disposition of a Note will be a
taxable event for U.S. Federal income tax purposes. In such
event, a U.S. Holder will recognize gain or loss equal to the
difference between (i) the amount of cash plus the fair market
value of any property received upon such sale, exchange,
redemption or other taxable disposition and (ii) the U.S.
Holder's adjusted tax basis therein. A U.S. Holder's adjusted tax
basis for a Note generally will be the U.S. Holder's purchase
price for the Note increased by amounts includible in income by
the U.S. Holder as market discount and reduced by any
amortization deduction allowable. Except with respect to accrued
market discount or accrued and unpaid interest (which will
constitute ordinary income), such gain or loss generally will
constitute capital gain or loss and will be long-term capital
gain or loss if the Note has been held by the U.S. Holder for
more than 12 months at the time of such sale, exchange,
redemption or other disposition (or, if there is net capital gain
and the U.S. Holder is an individual, trust or estate, will be
taxed as long-term capital gain if the Note has been held for
more than 18 months, and as mid-term capital gain if the Note has
been held for more than 12 months). The distinction between
capital gain or loss and ordinary income or loss is also relevant
for purposes of, among other things, limitations on the
deductibility of capital losses.
Non-U.S. Holder
Generally, a Non-U.S. Holder will be subject to a 30%
withholding tax on interest paid with respect to a Note if such
Non-U.S. Holder is a direct or indirect 10% or greater holder of
the capital or profits interest in the Operating Partnership, a
controlled foreign corporation related to the Operating
<PAGE>
Partnership, a bank receiving interest described in Section
881(c)(3)(A) of the Code, or any Non-U.S. Holder who has failed
to deliver the statement described in Section 871(h)(5) of the
Code and the Regulations thereunder (certifying that such holder
is not a U.S. person, citizen or resident).
Final regulations dealing with withholding tax on income
paid to foreign persons, backup withholding and related matters
(the "New Withholding Regulations") were issued by the Treasury
Department on October 6, 1997. The New Withholding Regulations
generally will be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective Non-U.S.
Holders are strongly urged to consult their tax advisors with
respect to the New Withholding Regulations.
Generally, a Non-U.S. Holder will not be subject to Federal
income taxes on any amount that constitutes capital gain upon
retirement or disposition of a Note. Certain exceptions may be
applicable, however, and a Non-U.S. Holder should consult its tax
advisor in this regard.
UNDERWRITING
Subject to the terms and conditions set forth in the
Underwriting Agreement dated __________________ (the
"Underwriting Agreement") by and among the Operating Partnership,
the Company and the underwriters named below (the
"Underwriters"), the Operating Partnership has agreed to sell to
each of the Underwriters named below, and each of the
Underwriters has agreed severally to purchase from the Operating
Partnership, the respective principal amount of Senior Notes set
forth opposite its name below.
Principal Amount
Underwriter of Notes
----------- ----------------
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
[Solomon Smith Barney] ________________
Total $75,000,000
The Underwriters have advised the Operating Partnership that
they propose to offer the Senior Notes in part to the public at
the public offering price set forth on the cover page of this
Prospectus Supplement, and in part to certain securities dealers
(who may include the Underwriters) at such price less a
concession not in excess of _____% of the principal amount of the
Senior Notes. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of ______% of the principal
amount of the Senior Notes to certain other dealers, including
the Underwriters. Following completion of the initial offering of
the Senior Notes, the public offering price, concession and
reallowance may change.
<PAGE>
The Senior Notes are a new issue of securities with no
established trading market. The Operating Partnership has been
advised by the Underwriters that the Underwriters intend to make
a market in the Senior Notes but are not obligated to do so and
may discontinue market making at any time without notice. No
assurance can be given as to the liquidity of the trading market
for the Senior Notes.
Pursuant to the Underwriting Agreement, the Company and the
Operating Partnership have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments
the Underwriters may be required to make in respect thereof.
Until the distribution of the Senior Notes is completed,
rules of the Securities and Exchange Commission may limit the
ability of the Underwriters to bid for and purchase the Senior
Notes. As an exception to these rules, the Underwriters are
permitted to engage in certain transactions that stabilize the
price of the Senior Notes. Such transactions consist of bids and
purchases for the purpose of pegging, fixing or maintaining the
price of the Senior Notes.
If the Underwriters create a short position in the Senior
Notes in connection with this Offering, i.e., if they sell a
greater aggregate principal amount of Senior Notes than is set
forth on the cover page of this Prospectus Supplement, the
Underwriters may reduce that short position by purchasing Senior
Notes in the open market. In general, purchases of a security
for the purpose of stabilization or to reduce a short position
could cause the price of the security to be higher than it might
be in the absence of such purchases.
Neither the Operating Partnership nor the Underwriters make
any representation or prediction as to the direction or magnitude
of any effect that the transactions described above may have on
the price of the Senior Notes. In addition, neither the
Operating Partnership nor the Underwriters make any
representation that the Underwriters will engage in such
transactions or that such transactions, once commenced, will not
be discontinued without notice.
In the ordinary course of business, certain of the
Underwriters and their affiliates have engaged, and may in the
future engage, in commercial banking and investment banking
transactions with the Company, the Operating Partnership and
their affiliates.
LEGAL MATTERS
Certain legal matters, including the legality of the Senior
Notes being offered hereby, are being passed upon for the
Operating Partnership by Phillips, Lytle, Hitchcock, Blaine &
Huber LLP, Buffalo, New York. Certain legal matters related to
this Offering are being passed upon for the Underwriter by
Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE __, 1998
PROSPECTUS
$100,000,000
Sovran Self Storage, Inc.
Preferred Stock
Common Stock
$150,000,000
Sovran Acquisition Limited
Partnership
Debt Securities
__________________
Sovran Self Storage, Inc. ("Sovran" or the "Company") may
offer from time to time in one or more series (i) shares of its
preferred stock, $.01 par value per share ("Preferred Stock"),
and (ii) shares of its common stock, $.01 par value per share
("Common Stock"), with an aggregate public offering price of up
to $100,000,000 (or its equivalent in another currency 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. Sovran
Acquisition Limited Partnership (the "Operating Partnership") may
offer from time to time in one or more series unsecured, non-
convertible investment grade debt securities ("Debt Securities")
with an aggregate offering price of up to $150,000,000 (or its
equivalent in another currency based upon the exchange rate at
the time of sale) in amounts, at prices and on terms to be
determined at the time of offering. The Preferred Stock, Common
Stock and Debt Securities (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 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; (ii) in the case of Common Stock, any initial
public offering price; (iii) 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 Operating Partnership or
repayment at the option of the holder, terms for sinking fund
payments, covenants and any initial public offering price. In
addition, such specific terms may include limitations on direct
or beneficial ownership and restrictions on transfer of the
Securities, in each case as may be consistent with the Company's
Amended and Restated Articles of Incorporation 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."
<PAGE>
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.
The Preferred Stock and Common Stock may be offered by the
Company and the Debt Securities may be offered by the Operating
Partnership directly to one or more purchasers, through agents
designated from time to time by the Company or the Operating
Partnership or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of any of the
securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them will be
set forth, or will be calculable from the information set forth,
in an accompanying Prospectus Supplement. See "Plan of
Distribution." No Securities may be sold without delivery of a
Prospectus Supplement describing the method and terms of the
offering of such Securities.
See "Risk Factors" on page 5 for certain factors that should
be considered by prospective investors.
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 ___________, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company and the Operating Partnership have 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. The Commission maintains an Internet Web site
(http://www.sec.gov.) that contains such documents filed
electronically by the Company and the Operating Partnership with
the Commission through its Electronic Data Gathering, Analysis
and Retrieval System (EDGAR) filing system. 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 and, since April 1998, the Operating
Partnership, are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in accordance therewith the Company and the Operating
Partnership file 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 with the Commission
pursuant to the Exchange Act are incorporated by reference in
this Prospectus: (i) the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, as amended by the
Company's Amended Annual Report on Form 10-K/A filed on June 12,
1998, (ii) the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998, (iii) the Company's Current Report
on From 8-K filed on October 24, 1997, (iv) the Company's Current
Report on Form 8-K filed on February 20, 1998, as amended by the
Company's AmendedCurrent Report on Form 8-K/A filed on April 17,
<PAGE>
1998, (v) the Company's Current Report on Form 8-K filed on
June 10, 1998, (vi) the description of the Company's Common Stock
contained in the Company's Registration Statement on Form 8-A
dated June 16, 1995, including all amendments and reports
updating such description, and (vii) the Operating Partnership's
Registration Statement on Form 10, dated April 22, 1998,
including all amendments and reports updating such Registration
Statement.
All documents filed by the Company or the Operating
Partnership pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of all Securities shall be
deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the date of filing of such documents. The
Company and the Operating Partnership 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>
RISK FACTORS
"Safe Harbor" statement under the Private Securities
Litigation Reform Act of 1995: This Prospectus, including the
information incorporated by reference herein, and the applicable
Prospectus Supplement contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Actual results could differ materially from those
projected in the forward-looking statements as a result of the
risk factors set forth below, and prospective investors should
carefully consider such risk factors in conjunction with the
other information contained or incorporated by reference in this
Prospectus and the applicable Prospectus Supplement before making
a decision to purchase any Securities. Section 27A of the
Securities Act of 1933, as amended and Section 21E of the
Security Exchange Act of 1934, as amended by their express terms
do not apply to forward-looking statements made in connection
with an initial public offering. Unless the context otherwise
requires, the "Company" shall also hereinafter refer to the
Operating Partnership and its subsidiaries.
Prospective investors should carefully consider the
following information in conjunction with the other information
contained in this Prospectus and the applicable Prospectus
Supplement before purchasing Securities.
Acquisitions May Not Perform as Anticipated
The Company has completed many acquisitions of self storage
facilities since the Company's initial public offering of Common
Stock in June 1995 (the "Initial Offering"). (The Company's self
storage facilities are sometimes referred to individually as a
"Property" and collectively as the "Properties".) The Company's
strategy is to continue to grow by acquiring additional self-
storage facilities. Acquisitions entail risks that investments
will fail to perform in accordance with expectations and that
judgments with respect to the prices paid for acquired properties
and the costs of any improvements required to bring an acquired
property up to standards established for the market position
intended for that property will prove inaccurate, as well as
general investment risks associated with any new real estate
investment.
Real Estate Financing May Become Unavailable or Infeasible
Unsecured Credit Facility. The Company has a line of credit
(the "Unsecured Credit Facility") with a syndicate of financial
institutions (the "Lenders"). The Unsecured Credit Facility is
recourse to the Company and the Operating Partnership and the
required payments are not reduced if the economic performance of
any of the Properties declines. The Unsecured Credit Facility,
except under certain circumstances, limits the Company's ability
to make distributions to its shareholders. If there should occur
certain other events of default, the Lenders may seek to exercise
their rights under the Unsecured Credit Facility, which could
have a material adverse effect on the Company and its ability to
<PAGE>
make expected distributions to shareholders and distributions
required by the real estate investment trust provisions of the
Internal Revenue Code of 1986, as amended (the "Code").
Rising Interest Rates. Indebtedness that the Company incurs
under the Unsecured Credit Facility bears interest at a variable
rate. Accordingly, increases in interest rates could increase
the Company's interest expense, which would adversely affect the
Company's cash available for distribution and its ability to pay
expected distributions to shareholders. The Company may in the
future hedge, cap or otherwise limit its exposure to rising
interest rates as appropriate and cost effective. If the amount
of the Company's indebtedness bearing interest at a variable rate
exceeds certain levels, the Company may be required to make such
arrangements pursuant to the terms of the Unsecured Credit
Facility.
Refinancing May Not be Available. It may be necessary for
the Company to refinance the Unsecured Credit Facility through
additional debt financing or equity offerings. If the Company
were unable to refinance this indebtedness on acceptable terms,
the Company might be forced to dispose of certain Properties upon
disadvantageous terms, which might result in losses to the
Company and might adversely affect the cash available for
distribution. If prevailing interest rates or other factors at
the time of refinancing result in higher interest rates on
refinancings, the Company's interest expense would increase,
which would adversely affect the Company's cash available for
distribution and its ability to pay expected distributions to
shareholders.
No Limitations on Debt. The Board of Directors of the
Company currently has a policy of limiting the amount of Company
debt at the time of incurrence to less than 50% of the sum of the
market value of the issued and outstanding Common Shares and the
Company's debt at the time such debt is incurred; however, the
organizational documents of the Company do not contain any
limitation on the amount of indebtedness the Company might incur.
Accordingly, the Board of Directors could alter or eliminate the
current policy limitation on borrowing without a vote of the
shareholders. The Company could become highly leveraged if this
policy were changed.
The Self-Storage Industry Entails Fluctuating Demand and
Significant Competition
The Properties are subject to all operating risks common to
the self-storage industry. These risks include decreases in
demand for rental spaces in a particular locale, changes in
supply of or demand for similar or competing facilities in an
area and changes in market rental rates. There is also risk of
inability to collect rents from customers. The Company's current
strategy is to acquire interests only in self-storage facilities.
Consequently, the Company is subject to risks inherent in
investments in a single industry. The Properties compete with
other self-storage facilities in their geographic markets. As a
result of competition, the Properties could experience a decrease
<PAGE>
in occupancy levels and rental rates, thereby decreasing the cash
available for distribution. The Company competes in operations
and for acquisition opportunities with entities that have
substantial financial resources. Competition may reduce the
number of suitable acquisition opportunities offered to the
Company and increase the bargaining power of property owners
seeking to sell. The self-storage industry has at times
experienced overbuilding in response to perceived increases in
demand. A recurrence of such overbuilding might cause the
Company to experience a decrease in occupancy levels, limit the
Company's ability to increase rents and compel the Company to
offer discounted rents.
Real Estate Investments Are Illiquid and Are Subject to
Uninsurable Risks and Government Regulation
General Risks. The Company's investments are subject to
varying degrees of risk generally incident to the ownership of
real property. The underlying value of the Company's real estate
investments and the Company's income and ability to make
distributions to its shareholders are dependent upon the
Company's ability to operate the Properties in a manner
sufficient to maintain or increase cash available for
distribution. Income from the Properties may be adversely
affected by changes in national economic conditions; changes in
local market conditions due to changes in general or local
economic conditions and neighborhood characteristics; competition
from other self-storage facilities; changes in interest rates and
in the availability, cost and terms of mortgage funds; the impact
of present or future environmental legislation and compliance
with environmental laws; the ongoing need for capital
improvements, particularly in older facilities; changes in real
estate tax rates and other operating expenses; adverse changes in
governmental rules and fiscal policies; uninsured losses
resulting from casualties associated with civil unrest, acts of
God, including natural disasters, and acts of war; adverse
changes in zoning laws; and other factors which are beyond the
control of the Company.
Illiquidity of Real Estate May Limit its Value. Real estate
investments are relatively illiquid. The ability of the Company
to vary its portfolio in response to changes in economic and
other conditions is limited. In addition, provisions of the Code
may limit the Company's ability to profit on the sale of
Properties held for fewer than four years. There can be no
assurance that the Company will be able to dispose of a Property
when it finds disposition advantageous or necessary or that the
sale price of any disposition will recoup or exceed the amount of
the Company's investment.
Uninsured and Underinsured Losses Could Result in Loss of
Value of Properties. There are certain types of losses,
generally of a catastrophic nature, that may be uninsurable or
not economically insurable, as to which the Properties are at
risk in their particular locales. The Company's management uses
its discretion in determining amounts, coverage limits and
deductibility provisions of insurance, with a view to acquiring
<PAGE>
appropriate insurance on the Company's investments at a
reasonable cost and on suitable terms. This may result in
insurance coverage that in the event of a substantial loss would
not be sufficient to pay the full current market value or current
replacement cost of the Company's lost investment. Inflation,
changes in building codes and ordinances, environmental
considerations, and other factors also might make it infeasible
to use insurance proceeds to replace a Property after it has been
damaged or destroyed. Under such circumstances, the insurance
proceeds received by the Company might not be adequate to restore
its economic position with respect to such Property.
Possible Liability Relating to Environmental Matters. Under
various federal, state and local environmental laws, ordinances
and regulations, a current or previous owner or operator of real
property may be liable for the costs of removal or remediation of
hazardous or toxic substances on, under or in such property.
Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or
toxic substances and whether or not the storage of such
substances was in violation of a tenant's lease. In addition,
the presence of hazardous or toxic substances, or the failure to
remediate such property, may adversely affect the owner's ability
to borrow using such real property as collateral. In connection
with the ownership of the Properties, the Company may be
potentially liable for any such costs.
Americans with Disabilities Act. The Americans with
Disabilities Act of 1990 ("ADA") generally requires that
buildings be made accessible to persons with disabilities. A
determination that the Company is not in compliance with the ADA
could result in imposition of fines or an award of damages to
private litigants. If the Company were required to make
modifications to comply with the ADA, the Company's results of
operations and ability to make expected distributions to its
shareholders could be adversely affected.
Limitations on Ability to Change Control
Limitation on Ownership of Shares. In order to maintain its
qualification as a REIT, not more than 50% in value of the
Company's outstanding shares of stock may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code)
(the "Five or Fewer Test"). The Company's Amended and Restated
Articles of Incorporation ("Articles of Incorporation") limit
ownership of the issued and outstanding Common Stock by any
single shareholder (directly or by virtue of the attribution
provisions of the Code) to 9.8% of the aggregate value of the
Company's outstanding stock, except that the ownership by certain
entities is limited to 15% (the "Ownership Limit"). The
Ownership Limit may (i) have the effect of precluding acquisition
of control of the Company by a third party without consent of the
Board of Directors even if a change in control were in the
interest of shareholders, and (ii) limit the opportunity for
shareholders to receive a premium for their Common Stock that
might otherwise exist if an investor were attempting to assemble
a block of Common Stock in excess of 9.8% or 15%, as the case may
<PAGE>
be, of the outstanding shares of beneficial interest of the
Company or to otherwise effect a change in control of the
Company. The Board of Directors, in its sole discretion, may
waive the Ownership Limit if it is satisfied that ownership by
such shareholders in excess of such limits will not jeopardize
the Company's status as a REIT under the Code or in the event it
determines that it is no longer in the best interests of the
Company to be a REIT. A transfer of Common Stock to a person
who, as a result of the transfer, violates the Ownership Limit
may not be effective under some circumstances.
Shareholder Rights Agreement. The Company has a
shareholders' rights plan (the "Shareholder Rights Agreement")
which grants the holders of the Common Stock rights which
generally become exercisable if (i) a person becomes an
"acquiring person" by acquiring 10% or more of the Common Stock,
or (ii) a person commences a tender offer that would result in
that person owning 10% or more of the Common Stock. In the event
a person becomes an "acquiring person," each holder of a right
(other than the acquiring person) would be entitled to acquire
such number of preferred shares of the Company which are
equivalent to the Common Stock having a value of twice the then-
current exercise price of the right. If the Company is acquired
in a merger or other business combination transaction after any
such event, each holder of a right would then be entitled to
purchase, at the then-current exercise price, shares of the
acquiring company's common stock having a value of twice the
exercise price of the right. The Shareholder Rights Agreement
may have the effect of delaying or preventing a change in control
of the Company.
Other Limitations. Certain other limitations could have the
effect of discouraging a takeover or other transaction in which
holders of some, or a majority, of the outstanding Common Stock
might receive a premium for their Common Stock over the then
prevailing market price or which such holders might believe to be
otherwise in their best interest. The issuance of preferred
stock could have the effect of delaying or preventing a change in
control of the Company even if a change in control were in the
shareholders' interest. In addition, the Maryland General
Corporation Law (the "MGCL") imposes certain restrictions and
requires certain procedures with respect to the acquisition of
certain levels of share ownership and business combinations,
including combinations with interested shareholders. These
provisions of the MGCL would have the effect of delaying or
preventing a change in control of the Company even if a change in
control were in the shareholders' interest. In addition, under
the Operating Partnership's agreement of limited partnership, in
general the Company may not merge, consolidate or engage in any
combination with another person or sell all or substantially all
of its assets unless such transaction includes the merger of the
Operating Partnership, which requires the approval of the holders
of 75% of the limited partnership interests thereof. If the
Company were to own less than 75% of the limited partnership
interests in the Operating Partnership, this provision of the
limited partnership agreement could have the effect of delaying
or preventing the Company from engaging in certain change of
control transactions.
<PAGE>
Adverse Consequences of Failure to Qualify as a REIT
The Company intends to operate so as to qualify as a REIT
under the Code. Qualification as a REIT involves the application
of highly technical and complex Code provisions for which there
are only limited judicial and administrative interpretations.
Continued qualification as a REIT depends upon the Company's
continuing ability to meet various requirements concerning, among
other things, the ownership of the outstanding stock, the nature
of its assets, the sources of its income and the amount of its
distributions to its shareholders. If the Company were to fail
to qualify as a REIT in any taxable year, the Company would not
be allowed a deduction for distributions to shareholders in
computing its taxable income and would be subject to federal
income tax (including any applicable alternative minimum tax) on
its taxable income at regular corporate rates. Unless entitled
to relief under certain Code provisions, the Company also would
be ineligible for qualification as a REIT for the four taxable
years following the year during which qualification was lost. As
a result, distributions to the shareholders would be reduced for
each of the years involved. Although the Company currently
intends to operate in a manner designed to qualify as a REIT, it
is possible that future economic, market, legal, tax or other
considerations may cause the Board of Directors to revoke the
REIT election.
Effect of Market Interest Rates on Price of Shares
One of the factors that may influence the price of the
Common Stock in public trading markets is the annual yield on
Common Stock as compared to yields on other financial
instruments. Thus, an increase in market interest rates will
result in higher yields on other financial instruments, which
could adversely affect the market price of the Common Stock.
Legal Proceeding
Robert J. Amsdell, a former business associate of certain
officers and directors of the Company, including Robert J. Attea,
Charles E. Lannon, Kenneth F. Myszka and David L. Rogers, filed a
lawsuit against the Company on June 13, 1995 in the United States
District Court for the Northern District of Ohio in connection
with the formation of the Company as a REIT and related
transactions, as well as the Initial Offering. On April 29,
1996, Mr. Amsdell filed a first amended complaint and on
September 24, 1997, a second amended complaint was filed. The
complaint alleges, among other things, breach of fiduciary duty,
breach of contract, breach of general partnership/joint venture
arrangement, fraud and deceit, breach of duty of good faith and
other causes of action including a declaratory judgment as to
Mr. Amsdell's continuing interest in the Company. Mr. Amsdell is
seeking money damages in excess of $15 million, as well as
punitive damages and declaratory and injunctive relief (including
the imposition of a constructive trust on assets of the Company
in which Mr. Amsdell claims to have a continuing interest) and an
accounting. The first amended complaint also added
Messrs. Attea, Lannon, Myszka and Rogers as additional
<PAGE>
defendants. The parties are currently involved in discovery.
The Company intends to vigorously defend the lawsuit.
Messrs. Attea, Lannon, Myszka and Rogers have agreed to indemnify
the Company for any loss arising from the lawsuit. The Company
believes that the actual amount of Mr. Amsdell's recovery in this
matter, if any, would be within the ability of these individuals
to provide indemnification. The Company does not believe that
the lawsuit will have a material adverse effect upon the Company.
THE COMPANY AND THE OPERATING PARTNERSHIP
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 was formed
to continue the business of its predecessor companies which had
engaged in the self storage business since 1985. The Company
owns an indirect interest in each of the Properties through the
Operating Partnership of which the Company holds a 96.45%
economic interest consisting of a 94.73% direct limited
partnership interest and a 1.72% general partnership interest
owned by Sovran Holdings, Inc., a wholly-owned subsidiary of the
Company. Unaffiliated third parties own collectively a 3.55%
limited partnership interest in the Operating Partnership. The
Operating Partnership owns a 100% fee simple interest in each of
the Properties. 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 Operating Partnership as
currency in property acquisitions.
As of June 15, 1998, the Company owned and operated
186 self-storage properties consisting of approximately
10.2 million net rentable square feet, situated in 19 states,
primarily the Eastern United States and Texas. As of March 31,
1998, the Properties had a weighted average occupancy of 84.1%
and a weighted average annual rent per occupied square foot of
$7.62. 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.
<PAGE>
The Company was incorporated on April 19, 1995 under
Maryland law. The Operating Partnership was formed on June 1,
1995 under Delaware law. The Company's Common Stock has traded
on the New York Stock Exchange since the completion of the
Company's initial public offering on June 26, 1995. The
Company's and the Operating Partnership's principal executive
offices are located at 5166 Main Street, Williamsville, New York
14221, and its telephone number is (716) 633-1850. The Company
and the Operating Partnership also maintain a regional office in
Atlanta, Georgia.
USE OF PROCEEDS
The Company is required by the terms of the partnership
agreement of the Operating Partnership to invest the net proceeds
of any sale of Common Stock or Preferred Stock in the Operating
Partnership in exchange for additional units of limited
partnership of the Operating Partnership ("Units"). As will be
more fully described in the applicable Prospectus Supplement, the
Company and the Operating Partnership intend to use the net
proceeds from the sale of Securities for one or more of the
following: repayment of indebtedness, acquisition of in new self
storage facilities, maintenance and improvement of currently
owned Properties and general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company and the Operating
Partnership's and their predecessor's consolidated ratios of
earnings to fixed charges for the periods shown:
Company and Operating Partnership Predecessors
- ---------------------------------- ------------
Three
Months
Ended Year Ended January 1, 1995 Year Ended
March 31, December 31 to December 31,
1998 1997 1996 1995 June 25, 1995 1994 1993
- -------------------------------- --------------- ------------
5.27 9.43 7.56 21.88 1.09 1.31 0.84
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.
<PAGE>
DESCRIPTION OF DEBT SECURITIES
General
The Company conducts its business principally through the
Operating Partnership. Consequently, the Operating Partnership,
and not the Company, will issue the Debt Securities. The Debt
Securities will be direct unsecured obligations of the Operating
Partnership 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 Operating Partnership 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 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
The indebtedness represented by the Senior Debt Securities
will rank equally with all other unsecured and unsubordinated
indebtedness of the Operating Partnership. 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 Operating Partnership or as set forth in the
<PAGE>
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 Operating Partnership
may, but need not, designate more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any
Trustee under 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
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;
(4) The date or dates, or the method for determining such
date or dates, on which the principal of such Debt Securities
will be payable;
(5) The rate or rates (which may be fixed or variable), or
the method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
(6) The date or dates, or the method for determining such
date or dates, from which any such interest will accrue, the
dates on which any such interest will be payable, the record
dates for such interest payment dates, or the method by which
such dates shall be determined, the persons to whom such interest
shall be payable, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day
months;
<PAGE>
(7) 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
Operating Partnership in respect of such Debt Securities and the
applicable Indenture may be served;
(8) The period or periods, if any, within which, the price
or prices at which and the other terms and conditions upon which
such Debt Securities may, pursuant to any optional or mandatory
redemption provisions, be redeemed, as a whole or in part, at the
option of the Operating Partnership;
(9) The obligation, if any, of the Operating Partnership to
redeem, repay or purchase such Debt Securities pursuant to any
sinking fund or analogous provision or at the option of a holder
thereof, and the period or periods within which, the price or
prices at which and the other terms and conditions upon which
such Debt Securities will be redeemed, repaid or purchased, as a
whole or in part, pursuant to such obligation;
(10) If other than U.S. dollars, the currency or currencies
in which such Debt Securities are denominated and payable, which
may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the terms
and conditions relating thereto;
(11) Whether the amount of payments of principal of (and
premium or Make-Whole Amount, if any, including any amount due
upon redemption, if any) or interest, if any, on such Debt
Securities may be determined with reference to an index, formula
or other method (which index, formula or method may, but need not
be, based on the yield on or trading price of other securities,
including United States Treasury securities, or on a currency,
currencies, currency unit or units, or composite currency or
currencies) and the manner in which such amounts shall be
determined;
(12) Whether the principal of (and premium or Make-Whole
Amount, if any) or interest on the Debt Securities of the series
are to be payable, at the election of the Operating Partnership
or a holder thereof, in a currency or currencies, currency unit
or units or composite currency or currencies other than that in
which such Debt Securities are denominated or stated to be
payable, the period or periods within which, and the terms and
conditions upon which, such election may be made, and the time
and manner of, and identity of the exchange rate agent with
responsibility for, determining the exchange rate between the
currency or currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are
denominated or stated to be payable and the currency or
currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are to be so payable;
(13) Provisions, if any, granting special rights to the
holders of Debt Securities of the series upon the occurrence of
such events as may be specified;
<PAGE>
(14) Any deletions from, modifications of or additions to
the Events of Default (as defined in the Indenture) or covenants
of the Operating Partnership with respect to Debt Securities of
the series, whether or not such Events of Default or covenants
are consistent with the Events of Default or covenants described
herein;
(15) Whether and under what circumstances the Operating
Partnership will pay any additional amounts on such Debt
Securities in respect of any tax, assessment or governmental
charge and, if so, whether the Operating Partnership will have
the option to redeem such Debt Securities in lieu of making such
payment;
(16) Whether Debt Securities of the series are to be
issuable as Registered Securities, Bearer Securities (with or
without coupons) or both, any restrictions applicable to the
offer, sale or delivery of Bearer Securities and the terms upon
which Bearer Securities of the series may be exchanged for
Registered Securities of the series and vice versa (if permitted
by applicable laws and regulations), whether any Debt Securities
of the series are to be issuable initially in temporary global
form and whether any Debt Securities of the series are to be
issuable in permanent global form with or without coupons and, if
so, whether beneficial owners of interests in any such permanent
global Security may exchange such interests for Debt Securities
of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges
may occur, if other than in the manner provided in the Indenture,
and, if Registered Securities of the series are to be issuable as
a Global Security (as defined), the identity of the depository
for such series;
(17) The date as of which any Bearer Securities of the
series and any temporary Global Security representing outstanding
Debt Securities of the series shall be dated if other than the
date of original issuance of the first Security of the series to
be issued;
(18) The Person to whom any interest on any Registered
Security of the series shall be payable, if other than the Person
in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such interest, the manner in which, or the Person
to whom, any interest on any Bearer Security of the series shall
be payable, if otherwise than upon presentation and surrender of
the coupons appertaining thereto as they severally mature, and
the extent to which, or the manner in which, any interest payable
on a temporary Global Security on an Interest Payment Date will
be paid if other than in the manner provided in the Indenture;
(19) The applicability, if any, of the defeasance and
covenant defeasance provisions of the Indenture to the Debt
Securities of the series;
<PAGE>
(20) 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;
(21) 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.
Except as described under "--Merger, Consolidation or Sale
of Assets" or as may be set forth in any Prospectus Supplement,
the Debt Securities will not contain any provisions that would
limit the ability of the Operating Partnership to incur
indebtedness or that would afford holders of Debt Securities
protection in the event of (i) a highly leveraged or similar
transaction involving the Operating Partnership, the management
of the Operating Partnership or the Company, or any affiliate of
any such party, (ii) a change of control, or (iii) a
reorganization, restructuring, merger or similar transaction
involving the Operating Partnership that may adversely affect the
holders of the Debt Securities. In addition, subject to the
limitations set forth under "--Merger, Consolidation or Sale of
Assets," the Operating Partnership may, in the future, enter into
certain transactions, such as the sale of all or substantially
all of its assets or the merger or consolidation of the Operating
Partnership, that would increase the amount of the Operating
Partnership's indebtedness or substantially reduce or eliminate
the Operating Partnership's indebtedness or substantially reduce
or eliminate the Operating Partnership's assets, which may have
an adverse effect on the Operating Partnership's ability to
service its indebtedness, including the Debt Securities. Neither
Maryland General Corporation Law nor the governing instruments of
the Company and the Operating Partnership define the term
"substantially all" in connection with the sale of assets.
Additionally, Maryland cases interpreting the words
"substantially all" all rely heavily upon the facts and
circumstances of the particular case. Consequently, to determine
whether a sale of "substantially all" of the Operating
Partnership's assets has occurred, a holder of Debt Securities
must review the financial and other information disclosed by the
Operating Partnership to the public. Restrictions on ownership
and transfers of the Common Shares and Preferred Shares are
designed to preserve the Company's status as a REIT and,
therefore, may act to prevent or hinder a change of control. See
"Limits on Ownership of Shares of Beneficial Interest." Reference
is made to the applicable Prospectus Supplement for information
<PAGE>
with respect to any deletions from, modifications of, or
additions to, the events of default or covenants that are
described below, including any addition of a covenant or other
provision providing event risk or similar protection.
Denomination, Interest, Registration and Transfer
Unless otherwise described in the applicable Prospectus
Supplement, the Debt Securities of any series will be issuable in
denominations of $1,000 and integral multiples thereof. Where
Debt Securities of any series are issued in bearer form, the
special restrictions and considerations, including special
offering restrictions and special federal income tax
considerations, applicable to any such Debt Securities and to
payment on and transfer and exchange of such Debt Securities will
be described in the applicable Prospectus Supplement. Bearer
Debt Securities will be transferable by delivery.
Unless otherwise specified in the applicable Prospectus
Supplement, the principal of (and applicable premium or Make-
Whole Amount, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the
applicable Trustee, the address of which will be stated in the
applicable Prospectus Supplement; provided that, at the option of
the Operating Partnership, payment of interest may be made by
check mailed to the address of the person entitled thereto as it
appears in the applicable register for such Debt Securities or by
wire transfer of funds to such person at an account maintained
within the United States.
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
be exchangeable for any authorized denomination of other Debt
Securities of the same series and of a like aggregate principal
amount and tenor upon surrender of such Debt Securities at the
corporate trust office of the applicable Trustee or at the office
of any transfer agent designated by the Operating Partnership for
such purpose. In addition, subject to certain limitations
imposed upon Debt Securities issued in book-entry form, the Debt
Securities of any series may be surrendered for registration of
transfer or exchange thereof at the corporate trust office of the
applicable Trustee or at the office of any transfer agent
designated by the Operating Partnership for such purpose. Every
Debt Security in registered form surrendered for registration of
<PAGE>
transfer or exchange must be duly endorsed or accompanied by a
written instrument of transfer, and the person requesting such
action must provide evidence of title and identity satisfactory
to the applicable Trustee or transfer agent. No service charge
will be made for any registration of transfer or exchange of any
Debt Securities, but the Operating Partnership may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. If the
applicable Prospectus Supplement refers to any transfer agent (in
addition to the applicable Trustee) initially designated by the
Operating Partnership with respect to any series of Debt
Securities, the Operating Partnership may at any time rescind the
designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, except that
the Operating Partnership will be required to maintain a transfer
agent in each place of payment for such series. The Operating
Partnership may at any time designate additional transfer agents
with respect to any series of Debt Securities.
Neither the Operating Partnership nor any Trustee shall be
required to (a) issue, register the transfer of or exchange Debt
Securities of any series during a period beginning at the opening
of business 15 days before the selection of any Debt Securities
for redemption and ending at the close of business on 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 Operating Partnership may appoint from time to
time. The paying agents outside the United States, if any,
initially appointed by the Operating Partnership for a series of
Debt Securities will be named in the Prospectus Supplement.
Unless otherwise provided in the applicable Prospectus
Supplement, the Operating Partnership may at any time designate
additional paying agents or rescind the designation of any paying
agents, except that, if Debt Securities of a series are issuable
in registered form, the Operating Partnership will be required to
maintain at least one paying agent in each place of payment for
such series and if Debt Securities of a series are issuable in
bearer form, the Operating Partnership will be required to
maintain at least one paying agent in a place of payment outside
the United States where Debt Securities of such series and any
coupons appertaining thereto may be presented and surrendered for
payment.
<PAGE>
Merger, Consolidation or Sale of Assets
The Indentures provide that the Operating Partnership may,
without the consent of the holders of any outstanding Debt
Securities, consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any
other entity provided that (i) either the Operating Partnership
shall be the continuing entity, or the successor entity (if other
than the Operating Partnership) formed by or resulting from any
such consolidation or merger or which shall have received the
transfer of such assets, and which is organized under the laws of
any domestic jurisdiction and assumes (A) the Operating
Partnership's obligations to pay principal of (and premium, if
any) and interest on all of the Debt Securities and (B) the due
and punctual performance and observance of all of the covenants
and conditions contained in each Indenture; (ii) immediately
after giving effect to such transaction and treating any
indebtedness that becomes an obligation of the Operating
Partnership or any subsidiary or any subsidiary as a result
thereof as having been incurred by the Operating Partnership or
such subsidiary at the time of such transaction, no event of
default under the Indentures, 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 (iii) 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 Operating
Partnership:
Existence. Except as permitted under "--Merger,
Consolidation or Sale of Assets," the Indentures will require the
Operating Partnership to do or cause to be done all things
necessary to preserve and keep in full force and effect its
existence, rights and franchises; provided, however, that the
Operating Partnership shall not be required to preserve any right
or franchise if it determines that the preservation thereof is no
longer desirable in the conduct of its business.
Maintenance of Properties. The Indentures will require the
Operating Partnership to cause all of its material properties
used or useful in the conduct of its business or the business of
any subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all
as in the judgment of the Operating Partnership may be necessary
so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided,
however, that the Operating Partnership and its subsidiaries
shall not be prevented from selling or otherwise disposing of
their properties for value in the ordinary course of business.
<PAGE>
Insurance. The Indentures will require the Operating
Partnership to cause each of its and its subsidiaries' insurable
properties to be insured against loss or damage at least equal to
their then full insurable value with insurers of recognized
responsibility and, if described in the applicable Prospectus
Supplement, having a specified rating from a recognized insurance
rating service.
Payment of Taxes and Other Claims. The Indentures will
require the Operating Partnership to pay or discharge or cause to
be paid or discharged, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges levied or
imposed upon it or any subsidiary or upon the income, profits or
property of the Operating Partnership or any subsidiary and
(ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the
Operating Partnership or any subsidiary; provided, however, that
the Operating Partnership shall not be required to pay or
discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or
validity is being contested in good faith.
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 Operating Partnership 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 Operating Partnership (or by any Subsidiary, the repayment of
which the Operating Partnership 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 discharged, or
such acceleration having been rescinded or annulled, within a
period of 30 days after written notice to the Operating
Partnership as provided in the Indenture; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of
a receiver, liquidator or trustee of the Operating Partnership or
any Significant Subsidiary; and (g) any other event of default
<PAGE>
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 Operating
Partnership (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 Operating
Partnership shall have deposited with the applicable Trustee all
required payments of the principal of (and premium or Make-Whole
Amount, if any) and interest on the Debt Securities of such
series, plus certain fees, expenses, disbursements and advances
of the applicable Trustee and (b) all Events of Default, other
than the non-payment of accelerated principal (or specified
portion thereof and the premium or Make-Whole Amount, if any),
with respect to Debt Securities of such series have been cured or
waived as provided in 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
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.
<PAGE>
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
Operating Partnership will be required to deliver to each Trustee
a certificate, signed by one of several specified officers of the
Operating Partnership, 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
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
<PAGE>
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 Operating Partnership
with certain restrictive covenants of the applicable Indenture.
Modifications and amendments of an Indenture will be
permitted to be made by the Operating Partnership and the
respective Trustee thereunder without the consent of any holder
of Debt Securities for any of the following purposes: (a) to
evidence the succession of another person to the Operating
Partnership as obligor under such Indenture; (b) to add to the
covenants of the Operating Partnership for the benefit of the
holders of all or any series of Debt Securities or to surrender
any right or power conferred upon the Operating Partnership in
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 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
<PAGE>
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 Operating Partnership or any
other obligor upon the Debt Securities or any affiliate of the
Operating Partnership or of such other obligor shall be
disregarded.
The 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 Operating
Partnership or the holders of at least 25% in principal amount of
the outstanding Debt Securities of such series, in any such case
upon notice given as provided in 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
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
<PAGE>
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
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
<PAGE>
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 Operating
Partnership, whether outstanding on the date of issue of any
Subordinated Debt Securities or thereafter created, incurred,
assumed or guaranteed by the Operating Partnership, 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 Operating Partnership 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
Operating Partnership 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 Operating
Partnership for compensation to employees, or for goods,
materials and services purchased in the ordinary course of
business, or (y) Indebtedness of the Operating Partnership to a
subsidiary of the Operating Partnership.
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 Operating Partnership. 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
Operating Partnership, 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 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
<PAGE>
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 Operating Partnership 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 Operating Partnership, 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 Operating
Partnership or any Subsidiary. As a result of these
subordination provisions, in the event of the Operating
Partnership'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 Operating
Partnership's most recent fiscal quarter.
Discharge, Defeasance and Covenant Defeasance
Unless otherwise indicated in the applicable Prospectus
Supplement, the Operating Partnership will be permitted, at its
option, to discharge certain obligations to holders of any series
of Debt Securities issued under 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 within one year (or scheduled for redemption within
one year) by irrevocably depositing with the applicable Trustee,
<PAGE>
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 Operating
Partnership may elect either (a) to defease and be discharged
from any and all obligations with respect to such Debt Securities
(except for the 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 Operating Partnership with the
applicable Trustee, in trust, of an amount, in such currency or
currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable at stated
maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities, which through the scheduled
payment of principal and interest in accordance with their terms
will provide money in an amount sufficient to pay the principal
of (and premium or Make-Whole Amount, if any) and interest on
such Debt Securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if,
among other things, the Operating Partnership has delivered to
the applicable Trustee an opinion of counsel (as specified in the
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 Operating Partnership has deposited
funds and/or Government Obligations to effect defeasance or
covenant defeasance with respect to Debt Securities of any
series, (a) the holder of a Debt Security of such series is
entitled to, and does, elect pursuant to the 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 that is payable in a foreign
currency that ceases to be used by its government of issuance
shall be made in U.S. dollars.
<PAGE>
In the event the Operating Partnership effects covenant
defeasance with respect to any Debt Securities and such Debt
Securities are declared due and payable because of the occurrence
of any Event 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 Operating Partnership 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.
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
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 Operating
Partnership 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
<PAGE>
by the underwriters, dealers or agents with respect to such Debt
Securities or by Operating Partnership if such Debt Securities
are offered directly by the Operating Partnership. Ownership of
beneficial interests in such Global Security will be limited to
Participants or persons that may hold interests through
Participants.
The Operating Partnership 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 Operating
Partnership 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
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 Operating
Partnership 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.
<PAGE>
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 Operating Partnership 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership 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 Operating
Partnership 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 Operating
Partnership, 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 Operating Partnership nor the Trustee will be
liable for any delay by the holders of a Global Security or the
Depository in identifying the beneficial owners of Debt
Securities and the Operating Partnership 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 Operating
Partnership within 90 days, the Operating Partnership will issue
individual Debt Securities in exchange for the Global Security
representing such Debt Securities. In addition, the Operating
Partnership may at any time and in its sole discretion, subject
to any limitations described in the Prospectus Supplement
<PAGE>
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
Operating Partnership, payment of interest may be made by check
mailed to the address of the person entitled thereto as it
appears in the applicable register for such Debt Securities or by
wire transfer of funds to such person at an account maintained
within the United States.
All moneys paid by the Operating Partnership to a paying
agent or a Trustee for the payment of the principal of or any
premium, Make-Whole Amount or interest on any Debt Security which
remain unclaimed at the end of two years after such principal,
premium, Make-Whole Amount or interest has become due and payable
will be repaid to the Operating Partnership, and the holder of
such Debt Security thereafter may look only to the Operating
Partnership for payment thereof.
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 June 15, 1998. 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;
(3) The dividend rate(s), period(s) and/or payment date(s)
or method(s) of calculation thereof applicable to such Preferred
Stock;
<PAGE>
(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
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.
<PAGE>
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
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.
<PAGE>
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
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
<PAGE>
been issued or to the extent the net proceeds from any issuance
are insufficient to pay in full the aggregate redemption price
then due, such Preferred Stock shall automatically and
mandatorily be converted into the applicable shares of capital
stock of the Company pursuant to conversion provisions specified
in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of
Preferred Stock has a cumulative dividend, full cumulative
dividends on all shares of such series of Preferred Stock shall
have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current
dividend period, and (ii) if a series of Preferred Stock does not
have a cumulative dividend, full dividends on all shares of the
Preferred Stock of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for the then current
dividend period, no shares of such series of Preferred Stock
shall be redeemed unless all outstanding shares of Preferred
Stock of such series are simultaneously redeemed; provided,
however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Stock of such series to preserve the
REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares
of Preferred Stock of such series. In addition, unless (i) if
such series of Preferred Stock has a cumulative dividend, full
cumulative dividends on all outstanding shares of such series of
Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then
current dividend period, and (ii) if such series of Preferred
Stock does not have a cumulative dividend, full dividends on the
Preferred stock of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for the then current
dividend period, the Company shall not purchase or otherwise
acquire directly or indirectly any shares of Preferred Stock of
such series (except by conversion into or exchange for capital
shares of the Company ranking junior to the Preferred Stock of
such series as to dividends and upon liquidation); provided,
however, that the foregoing shall not prevent the purchase or
acquisition of shares of Preferred Stock of such series to
preserve the REIT status of the Company or pursuant to a purchase
or exchange offer made on the same terms to holders of all
outstanding shares of Preferred Stock of such series.
If fewer than all of the outstanding shares of Preferred
Stock of any series are to be redeemed, the number of shares to
be redeemed will be determined by the Company and such shares may
be redeemed pro rata from the holders of record of such shares in
proportion to the number of such shares held or for which
redemption is requested by such holder (with adjustments to avoid
redemption of fractional shares) or by any other equitable manner
determined by the Company.
<PAGE>
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
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.
<PAGE>
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
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.
<PAGE>
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.
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
<PAGE>
not responsible for the corporation's debts or obligations. At
June 15, 1998, the Company had outstanding 12,330,963 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
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.
<PAGE>
Restrictions on Ownership
For the Company to qualify as a REIT under the Code, not
more than 50% in value of its outstanding capital stock may be
owned, directly or indirectly, by five or fewer individuals (as
defined in the Code to include certain entities) during the last
half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the
beneficial ownership, directly or indirectly, by a single person
of the Company's outstanding equity securities. See
"Restrictions on Transfers of Capital Stock."
Shareholder Rights Agreement
The Company has a shareholders' rights plan (the
"Shareholder Rights Agreement") which grants the holders of the
Common Stock rights which generally become exercisable if (i) a
person becomes an "acquiring person" by acquiring 10% or more of
the Common Stock, or (ii) a person commences a tender offer that
would result in that person owning 10% or more of the Common
Stock. In the event a person becomes an "acquiring person," each
holder of a right (other than the acquiring person) would be
entitled to acquire such number of preferred shares of the
Company which are equivalent to the Common Stock having a value
of twice the then-current exercise price of the right. If the
Company is acquired in a merger or other business combination
transaction after any such event, each holder of a right would
then be entitled to purchase, at the then-current exercise price,
shares of the acquiring company's common stock having a value of
twice the exercise price of the right. The Shareholder Rights
Agreement may have the effect of delaying or preventing a change
in control of the Company.
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
<PAGE>
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
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,
<PAGE>
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
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.
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material U.S. Federal
income tax considerations 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
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 LLP, 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 LLP 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 LLP is not binding on
the Internal Revenue Service (the "Service"). In addition, the
opinion of Phillips, Lytle, Hitchcock, Blaine & Huber LLP 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
<PAGE>
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
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").
<PAGE>
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
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 Operating Partnership.
The Company holds a 94.73% limited partnership interest in the
Partnership. The Subsidiary, a wholly-owned subsidiary of the
Company, holds a 1.72% general partner interest in the Operating
Partnership. The Operating 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 Operating Partnership is currently
<PAGE>
disregarded for Federal income tax purposes since the existence
of the Subsidiary is ignored for Federal income tax purposes and,
as a result, the Operating Partnership has only one partner for
Federal income tax purposes.
The Operating Partnership is treated as a partnership for
Federal income tax purposes and the Company is treated as a
partner in the Operating Partnership. In the case of a REIT that
is a partner in a partnership, Treasury Regulations provide that
the REIT is deemed to own its proportionate share of the assets
of the partnership and is 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
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 Operating
Partnership are 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
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
<PAGE>
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.
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
<PAGE>
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
distribute 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,
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.
<PAGE>
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 has represented that
it had no non-REIT earnings and profits for Federal income tax
purposes as of the end of its first taxable year ended December
31, 1995. 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. The Company
believes that even if there were a subsequent determination that
it received non-REIT earnings and profits in the Formation
Transactions, distributions to shareholders in 1995 in excess of
current earnings and profits likely were sufficient to distribute
any such non-REIT earnings and profits. Moreover, although not
free from doubt, pursuant to Treasury Regulations, the Company
may be able to use certain "deficiency dividend" procedures to
distribute any non-REIT earnings and profits determined to exist
that were not distributed by the close of the 1995 taxable year.
There can be no assurance, however, that 1995 distributions were
sufficient to distribute any non-REIT earnings and profits
determined to exist or that such deficiency dividend procedures
would be available. In the event that 1995 distributions were
insufficient to distribute any such non-REIT earnings and
profits, and the Company were unable to utilize the deficiency
dividend procedures in the Treasury Regulations, the Company
would fail to qualify as a REIT.
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
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.
<PAGE>
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
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.
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell Preferred Stock and Common Stock and
the Operating Partnership may sell Debt Securities to or through
one or more underwriters or dealers for public offering and sale
by or through them, directly to one or more individual,
institutional or other purchasers, through agents or through a
combination of any such methods of sale. Direct sales to
investors may also be accomplished through subscription rights
distributed to the Company's shareholders on a pr rata basis,
which may or may not be transferred. In connection with any
distribution of subscription rights to shareholders, if all of
the underlying Securities are not subscribed for, the Company may
sell the unsubscribed Securities directly to third parties or may
engage the services of one or more underwriters, dealers or
agents, including standby underwriters, to sell the unsubscribed
Securities to third parties.
The distribution of the Securities may be effected from time
to time in one or more transactions at a fixed price or prices,
which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market price, or at
negotiated prices (any of which may represent a discount from the
prevailing market prices).
In connection with the sale of Securities, underwriters or
agents may receive compensation from the Company or the Operating
Partnership or from purchasers of Securities, for whom they may
act as agents, in the form of discounts, concessions or
commissions. Underwriters may sell Securities to and through
dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers, and agents that participate in
the distribution of Securities may be deemed to be underwriters
under the Securities Act, and any discounts or commissions they
receive from the Company or the Operating Partnership and any
profit on the resale of Securities they realize may be deemed to
be underwriting discounts and commissions under the Securities
Act. Any such underwriter or agent will be identified, and any
such compensation received from the Company or the Operating
Partnership will be described, in the applicable Prospectus
Supplement.
Unless otherwise specified in the related Prospectus
Supplement, each series of Securities will be a new issue with no
established trading market, other than the Common Shares which
are listed on the NYSE. Any Common Shares sold pursuant to a
Prospectus Supplement will be listed on the NYSE, subject to
official notice of issuance. The Operating Partnership or the
Company may elect to list any series of Debt Securities or
Preferred Stock, respectively, on an exchange, but are 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, any series of Debt
Securities, or Preferred Stock.
<PAGE>
Until the distribution of the Securities is completed, rules
of the Commission may limit the ability of any underwriters and
selling group members to bid for and purchase the Securities. As
an exception to these rules, underwriters are permitted to engage
in certain transactions that stabilize the price of the
Securities. Such transactions consist of bids or purchases for
the purpose of pegging, fixing or maintaining the price of the
Securities.
If the underwriters create a short position in the
Securities in connection with an offering, i.e., if they sell
more Securities than are set forth on the cover page of the
applicable Prospectus Supplement, the underwriters may reduce
that short position by purchasing Securities in the open market.
The lead underwriters may also impose a penalty bid on
certain other underwriters and selling group members
participating in an offering. This means that if the lead
underwriters purchase Securities in the open market to reduce the
underwriters' short position or to stabilize the price of the
Securities, they may reclaim the amount of any selling concession
from the underwriters and selling group members who sold those
Securities as part of the offering.
In general, purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of
such purchases. The imposition of a penalty bid might also have
an effect on the price of a security to the extent that it were
to discourage resales of the security before the distribution is
completed.
Neither the Company nor the Operating Partnership makes any
representation or prediction as to the direction or magnitude of
any effect that the transactions described above might have on
the price of the Securities. In addition, neither the Company
nor the Operating Partnership makes any representation that
underwriters will engage in such transaction or that such
transactions, once commenced, will not be discontinued without
notice.
Under agreements into which the Company or the Operating
Partnership may enter, underwriters, dealers and agents who
participate in the distribution of Securities may be entitled to
indemnification by the Company or the Operating Partnership
against certain liabilities, including liabilities under the
Securities Act.
Underwriters, dealers and agents may engage in transactions
with, or perform services for, or be tenants of, the Company or
the Operating Partnership in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the
Company will authorize underwriters or other persons acting as
the Company's agents to solicit offers by certain institutions to
purchase Securities from the Company at the public offering price
set forth in such Prospectus Supplement pursuant to delayed
<PAGE>
delivery contracts ("Company Contracts") providing the payment
and delivery on the date or dates stated in such Prospectus
Supplement. Institutions with which such contracts, when
authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all
cases such institutions must be approved by the Company. The
obligations of any purchaser under any such contracts will be
subject to the condition that the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The
underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such
contracts.
If so indicated in the applicable Prospectus Supplement, the
Operating Partnership will authorize underwriters or other
persons acting as the Operating Partnership's agents to solicit
offers by certain institutions to purchase Debt Securities from
the Operating Partnership at the public offering price set forth
in such Prospectus Supplement pursuant to delayed delivery
contracts ("Operating Partnership Contracts") providing for
payment and delivery on the date or dates stated in such
Prospectus Supplement. Each Operating Partnership Contract will
be for an amount no less than, and the aggregate principal
amounts of Debt Securities sold pursuant to Operating Partnership
Contracts shall be not less nor more than, the respective amounts
stated in the applicable Prospectus Supplement. Institutions
with which such contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and
others, but will in all cases be subject to the approval of the
Operating Partnership. The obligations of any purchaser under
any such contract will be subject to the conditions that (i) the
purchase of the Debt Securities shall not at the time of delivery
be prohibited under the laws of any jurisdiction in the United
States to which such purchaser is subject, and (ii) if the Debt
Securities are being sold to underwriters, the Operating
Partnership shall have sold to such underwriters the total
principal amount of the Debt Securities less the principal amount
thereof covered by the Operating Partnership Contracts. The
underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such
contracts.
In order to comply with the securities laws of certain
states, if applicable, the Securities offered hereby will be sold
in such jurisdictions only through registered or licensed brokers
or dealers. In addition, in certain states Securities may not be
sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
<PAGE>
LEGAL MATTERS
Phillips, Lytle, Hitchcock, Blaine & Huber LLP 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 and Chief
Executive Officer of the Company, is the brother of a partner of
Phillips, Lytle, Hitchcock, Blaine & Huber LLP. Several partners
of Phillips, Lytle, Hitchcock, Blaine & Huber LLP own shares of
Common Stock.
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, auditors, and
are incorporated herein in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
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, the Operating
Partnership 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.
<PAGE>
TABLE OF CONTENTS
Page
- ----
Prospectus Supplement
Prospectus Supplement Summary
Industry Overview
The Company
Properties
Selected Financial Data
Ratios of Earnings to Fixed Changes
Use of Proceeds
Capitalization
Management Discussion and Analysis
of Financial Condition and Results
of Operations
Description of Senior Notes
Certain Federal Income Tax Consequences
Underwriting
Legal Matters
Prospectus
Available Information
Incorporation of Certain Documents by Reference
Risk Factors
The Company
Use of Proceeds
Ratios of Earnings to Fixed Charges
Description of Debt Securities
Description of Preferred Stock
Description of Common Stock
Restrictions on Transfers of Capital Stock
Certain Federal Income Tax Considerations
Plan of Distribution
Legal Matters
Experts
<PAGE>
=================================================================
$75,000,000
SOVRAN ACQUISITION LIMITED PARTNERSHIP
___% SENIOR NOTES DUE 2005
_________________________
PROSPECTUS SUPPLEMENT
_________________________
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
Solomon Smith Barney
____________________
_______, 1998
=================================================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and
distribution of the securities being registered will be borne by
the Company and Operating Partnership and are set forth in the
following table (all amounts except the registration fee and NASD
fee are estimated):
Registration fee. . . . . . . . . . . . . . . . . . . . .$ 73,750
NASD fee. . . . . . . . . . . . . . . . . . . . . . . . .$ 25,500
Legal fees and expenses . . . . . . . . . . . . . . . . .$ 50,000
Blue Sky expenses . . . . . . . . . . . . . . . . . . . .$ 5,000
Accounting fees and expenses. . . . . . . . . . . . . . .$ 10,000
Printing fees and expenses. . . . . . . . . . . . . . . .$100,000
Trust Fees. . . . . . . . . . . . . . . . . . . . . . . .$ 5,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . .$ 10,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . .$279,250
Item 15. Indemnification of Directors and Officers.
The Company's officers and Directors are and will be
indemnified under the Articles of Incorporation and Bylaws of the
Company against certain liabilities. The Articles of
Incorporation requires the Company 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 By-laws of Sovran Holdings, Inc.
("Holdings"), a Delaware corporation and wholly-owned subsidiary
of the Company and sole general partner of the Operating
Partnership, contain similar provisions that are consistent with
Delaware law.
The Company has entered into indemnification agreements with
each of its senior executive officers and Directors. The
indemnification agreements require, among other matters, that the
Company 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 Company 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 Company'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
<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 money 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. The Certificate of
Incorporation of Holdings contains similar provisions that are
consistent with Delaware law.
Item 16. Exhibits.
Exhibit No. Description
3.1 Amended and Restated Articles of Incorporation of
the Company. (Incorporated by reference to
Exhibit 3.1 of the Registration Statement on
Form S-11 of the Company, Registration
No. 33-91422.)
3.2 Amended and Restated Bylaws of the Company.
(Incorporated by reference to Exhibit 3.2 of the
Registration Statement on Form S-11 of the Company,
Registration No. 33-91422.)
3.3 Agreement of Limited Partnership, as amended, of the
Operating Partnership. (Incorporated by reference
to Exhibit 3.1 of the General Form for Registration
of Securities of the Operating Partnership on Form
10.)
4.1 Indenture for Senior Debt Securities
4.2 Form of Senior Debt Security. (Included in Exhibit
No. 4.1).
*4.3 Indenture for Subordinated Debt Securities
*4.4 Form of Subordinated Debt Security. (Included in
Exhibit No. 4.3)
5.1 Opinion of Phillips, Lytle, Hitchcock, Blaine &
Huber LLP as to the legality of the Securities being
registered.
8.1 Opinion of Phillips, Lytle, Hitchcock, Blaine &
Huber LLP 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 LLP. (Included in Exhibits 5.1 and 8.1
hereto.)
<PAGE>
*24.1 Powers of Attorney.
*25.1 Statement of Eligibility and Qualification of
Trustee
___________________________________
* Previously filed.
Item 17. Undertakings.
(a) The undersigned registrants hereby undertake:
(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 of 1933, as amended (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 Securities and Exchange Act of 1934, as amended (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
<PAGE>
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrants hereby undertake that, for
purposes of determining any liability under the Securities Act,
each filing of the respective 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 registrants pursuant to the
provisions described under Item 15 above, or otherwise, the
registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrants of expenses incurred or paid by a director,
officer, or controlling person of the registrants 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 registrants will,
unless in the opinion of their 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 Sovran Acquisition Limited
Partnership 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.
(e) The undersigned registrants hereby undertake to
supplement the prospectus, after the expiration of the
subscription period, to set forth the results of the subscription
offer, the transactions by the underwriters during the
subscription period, the amount of unsubscribed securities to be
purchased by the underwriters, and the terms of any subsequent
reoffering thereof. If any public offering by the underwriters is
to be made on terms differing from those set forth on the cover
page of the prospectus, a post-effective amendment will be filed
to set forth the terms of such offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Sovran Self Storage, Inc. and Sovran Acquisition Limited
Partnership each 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 amended Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Buffalo, New York on the 15th day of
June, 1998.
SOVRAN SELF STORAGE, INC.
By: /s/ Kenneth F. Myszka
-----------------------------
Kenneth F. Myszka, President
SOVRAN ACQUISITION LIMITED
PARTNERSHIP
By: SOVRAN HOLDINGS, INC.,
as General Partner
By: /s/ Kenneth F. Myszka
----------------------------
Kenneth F. Myszka, President
Pursuant to the requirements of the Securities Act of 1933,
this amended 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 June 15, 1998
- --------------------------- Board of Directors
Robert J. Attea and, Chief Executive
Officer of the Company;
Chairman of the Board
of Directors and
Chief Executive Officer
of Holdings
/s/Kenneth F. Myszka* President, Chief June 15, 1998
- --------------------------- Operating Officer and
Kenneth F. Myszka Director (Principal
Executive Officer) of
the Company; President,
Chief Operating
Officer and Director
("Principal Executive
Officer) of Holdings
<PAGE>
/s/David L. Rogers Chief Financial Officer June 15, 1998
- --------------------------- of the Company (Principal
David L. Rogers Financial and Accounting
Officer); Chief Financial
Officer of Holdings
(Principal Financial and
Accounting Officer)
/s/John Burns* Director of the Company; June 15, 1998
- --------------------------- Director of Holdings
John Burns
/s/Michael A. Elia* Director of the Company; June 15, 1998
- --------------------------- Director of Holdings
Michael A. Elia
/s/Anthony P. Gammie* Director of the Company; June 15, 1998
- --------------------------- Director of Holdings
Anthony P. Gammie
/s/Charles E. Lannon* Director of the Company; June 15, 1998
- --------------------------- Director of Holdings
Charles E. Lannon
____________
* By David L. Rogers as attorney-in-fact.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
3.1 Amended and Restated Articles of Incorporation of the
Company. (Incorporated by reference to Exhibit 3.1 of the
Registration Statement on Form S-11 of the Company,
Registration No. 33-91422.)
3.2 Amended and Restated Bylaws of the Company. (Incorporated
by reference to Exhibit 3.2 of the Registration Statement on
Form S-11 of the Company, Registration No. 33-91422.)
3.3 Agreement of Limited Partnership, as amended, of the
Operating Partnership. (Incorporated by reference to
Exhibit 3.1 of the General Form for Registration of
Securities of the Operating Partnership on Form 10.)
4.1 Indenture for Senior Debt Securities
4.2 Form of Senior Debt Security. (Included in Exhibit
No. 4.1).
*4.3 Indenture for Subordinated Debt Securities
*4.4 Form of Subordinated Debt Security. (Included in Exhibit
No. 4.3)
5.1 Opinion of Phillips, Lytle, Hitchcock, Blaine & Huber LLP as
to the legality of the Securities being registered.
8.1 Opinion of Phillips, Lytle, Hitchcock, Blaine & Huber LLP 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 LLP.
(Included in Exhibits 5.1 and 8.1 hereto.)
*24.1 Powers of Attorney.
*25.1 Statement of Eligibility and Qualification of Trustee
- ----------------------
* Previously filed.
<PAGE>
EXHIBIT 4.1
- ----------------------------------------------------------------------
SOVRAN ACQUISITION LIMITED PARTNERSHIP
TO
MARINE MIDLAND BANK
Trustee
____________________
Indenture
Dated as of June __, 1998
____________________
Senior Debt Securities
- ----------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERALAPPLICATION 1
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . 1
SECTION 102. Compliance Certificates and Opinions. . . . . . .10
SECTION 103. Form of Documents Delivered to Trustee. . . . . .11
SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . .11
SECTION 105. Notices, etc., to Trustee and Partnership . . . .13
SECTION 106. Notice to Holders: Waiver . . . . . . . . . . . .14
SECTION 107. Counterparts; Effect of Headings and Table of
Contents . . . . . . . . . . . . . . . . . . . . . . . . .15
SECTION 108. Successors and Assigns. . . . . . . . . . . . . .15
SECTION 109. Severability Clause . . . . . . . . . . . . . . .15
SECTION 110. Benefits of Indenture . . . . . . . . . . . . . .15
SECTION 111. Governing Law . . . . . . . . . . . . . . . . . .15
SECTION 112. Legal Holidays. . . . . . . . . . . . . . . . . .15
SECTION 113. Non-Recourse. . . . . . . . . . . . . . . . . . .16
SECTION 114. Conflict with Trust Indenture Act . . . . . . . .16
ARTICLE TWO - SECURITIES FORMS . . . . . . . . . . . . . . . . . . .16
SECTION 201. Forms of Securities . . . . . . . . . . . . . . .16
SECTION 202. Form of Trustee's Certificate of Authentication .17
SECTION 203. Securities Issuable in Global Form. . . . . . . .17
ARTICLE THREE - THE SECURITIES . . . . . . . . . . . . . . . . . . .18
SECTION 301. Amount Unlimited; Issuable in Series. . . . . . .18
SECTION 302. Denominations . . . . . . . . . . . . . . . . . .22
SECTION 303. Execution, Authentication, Delivery and Dating. .22
SECTION 304. Temporary Securities. . . . . . . . . . . . . . .25
SECTION 305. Registration, Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.31
SECTION 307. Payment of Interest; Interest Rights Preserved. .32
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . .34
SECTION 309. Cancellation. . . . . . . . . . . . . . . . . . .35
SECTION 310. Computation of Interest . . . . . . . . . . . . .35
ARTICLE FOUR - SATISFACTION AND DISCHARGE. . . . . . . . . . . . . .35
SECTION 401. Satisfaction and Discharge of Indenture . . . . .35
SECTION 402. Application of Trust Funds. . . . . . . . . . . .37
ARTICLE FIVE - REMEDIES. . . . . . . . . . . . . . . . . . . . . . .37
SECTION 501. Events of Default . . . . . . . . . . . . . . . .37
SECTION 502. Acceleration of Maturity; Rescission and Annulment39
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . . . . . .40
SECTION 504. Trustee May File Proofs of Claim. . . . . . . . .41
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities or Coupons. . . . . . . . . . . . . . . . . . .42
SECTION 506. Application of Money Collected. . . . . . . . . .42
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . .43
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium, if any, Interest and Additional Amounts43
<PAGE>
SECTION 509. Restoration of Rights and Remedies. . . . . . . .44
SECTION 510. Rights and Remedies Cumulative. . . . . . . . . .44
SECTION 511. Delay or Omission Not Waiver. . . . . . . . . . .44
SECTION 512. Control by Holders of Securities. . . . . . . . .44
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . .45
SECTION 514. Waiver of Usury, Stay or Extension Laws . . . . .45
SECTION 515. Undertaking for Costs . . . . . . . . . . . . . .45
ARTICLE SIX - THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . .46
SECTION 601. Notice of Defaults. . . . . . . . . . . . . . . .46
SECTION 602. Certain Rights of Trustee . . . . . . . . . . . .46
SECTION 603. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 604. May Hold Securities . . . . . . . . . . . . . . .48
SECTION 605. Money Held in Trust . . . . . . . . . . . . . . .48
SECTION 606. Compensation and Reimbursement. . . . . . . . . .48
SECTION 607. Corporate Trustee Required; Eligibility;
Conflicting Interests. . . . . . . . . . . . . . . . . . .49
SECTION 608. Resignation and Removal; Appointment of Successor49
SECTION 609. Acceptance of Appointment by Successor. . . . . .51
SECTION 610. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . . .52
SECTION 611. Appointment of Authenticating Agent . . . . . . .52
SECTION 612. Certain Duties and Responsibilities of the
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . .54
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY TRUSTEE AND
PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . .55
SECTION 701. Disclosure of Names and Addresses of Holders. . .55
SECTION 702. Reports by Trustee. . . . . . . . . . . . . . . .56
SECTION 703. Reports by Partnership. . . . . . . . . . . . . .56
SECTION 704. Partnership to Furnish Trustee Names and Addresses
of Holders . . . . . . . . . . . . . . . . . . . . . . . .56
ARTICLE EIGHT - CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE . .57
SECTION 801. Consolidations and Mergers of Partnership and
Sales, Leases and Conveyances Permitted Subject to Certain
Conditions . . . . . . . . . . . . . . . . . . . . . . . .57
SECTION 802. Rights and Duties of Successor Entity . . . . . .57
SECTION 803. Officers' Certificate and Opinion of Counsel. . .58
ARTICLE NINE - SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . .58
SECTION 901. Supplemental Indentures Without Consent of Holders58
SECTION 902. Supplemental Indentures with Consent of Holders .60
SECTION 903. Execution of Supplemental Indentures. . . . . . .61
SECTION 904. Effect of Supplemental Indentures . . . . . . . .61
SECTION 905. Conformity with Trust Indenture Act . . . . . . .61
SECTION 906. Reference in Securities to Supplemental Indentures61
ARTICLE TEN - COVENANTS. . . . . . . . . . . . . . . . . . . . . . .61
SECTION 1001. Payment of Principal, Premium, if any; Interest
and Additional Amounts . . . . . . . . . . . . . . . . . .61
SECTION 1002. Maintenance of Office or Agency. . . . . . . . .62
SECTION 1003. Money for Securities Payments to Be Held in Trust63
SECTION 1004. Existence. . . . . . . . . . . . . . . . . . . .65
SECTION 1005. Maintenance of Properties. . . . . . . . . . . .65
SECTION 1006. Insurance. . . . . . . . . . . . . . . . . . . .65
<PAGE>
SECTION 1007. Payment of Taxes and Other Claims. . . . . . . .65
SECTION 1008. Statement as to Compliance . . . . . . . . . . .66
SECTION 1009. Additional Amounts . . . . . . . . . . . . . . .66
SECTION 1010. Waiver of Certain Covenants. . . . . . . . . . .67
ARTICLE ELEVEN - REDEMPTION OF SECURITIES. . . . . . . . . . . . . .67
SECTION 1101. Applicability of Article . . . . . . . . . . . .67
SECTION 1102. Election to Redeem; Notice to Trustee. . . . . .67
SECTION 1103. Selection by Trustee of Securities to Be Redeemed68
SECTION 1104. Notice of Redemption . . . . . . . . . . . . . .68
SECTION 1105. Deposit of Redemption Price. . . . . . . . . . .70
SECTION 1106. Securities Payable on Redemption Date. . . . . .70
SECTION 1107. Securities Redeemed in Part. . . . . . . . . . .71
ARTICLE TWELVE - SINKING FUNDS . . . . . . . . . . . . . . . . . . .71
SECTION 1201. Applicability of Article . . . . . . . . . . . .71
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities . . . . . . . . . . . . . . . . . . . . . . . .71
SECTION 1203. Redemption of Securities for Sinking Fund. . . .72
ARTICLE THIRTEEN - REPAYMENT AT THE OPTION OF HOLDERS. . . . . . . .72
SECTION 1301. Applicability of Article . . . . . . . . . . . .72
SECTION 1302. Repayment of Securities. . . . . . . . . . . . .72
SECTION 1303. Exercise of Option . . . . . . . . . . . . . . .73
SECTION 1304. When Securities Presented for Repayment Become Due
and Payable. . . . . . . . . . . . . . . . . . . . . . . .73
SECTION 1305. Securities Repaid in Part. . . . . . . . . . . .74
ARTICLE FOURTEEN - DEFEASANCE AND COVENANT DEFEASANCE. . . . . . . .75
SECTION 1401. Applicability of Article: Partnership's Option to
Effect Defeasance or Covenant Defeasance . . . . . . . . .75
SECTION 1402. Defeasance and Discharge . . . . . . . . . . . .75
SECTION 1403. Covenant Defeasance. . . . . . . . . . . . . . .76
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.76
SECTION 1405. Deposited Money and Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions. . . . . . .78
ARTICLE FIFTEEN - MEETINGS OF HOLDERS OF SECURITIES. . . . . . . . .79
SECTION 1501. Purposes for Which Meetings May Be Called. . . .79
SECTION 1502. Call, Notice and Place of Meetings . . . . . . .79
SECTION 1503. Persons Entitled to Vote at Meetings . . . . . .79
SECTION 1504. Quorum; Action . . . . . . . . . . . . . . . . .80
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings. . . . . . . . . . . . . . . . . .81
SECTION 1506. Counting Votes and Recording Action of Meetings.82
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . .83
ACKNOWLEDGMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .84
EXHIBIT AFORM OF REDEEMABLE OR NON-REDEEMABLE SENIOR SECURITY. . . A-1
yEXHIBIT BFORMS OF CERTIFICATION . . . . . . . . . . . . . . . . . B-1
<PAGE>
SOVRAN ACQUISITION LIMITED PARTNERSHIP
Reconciliation and tie between Trust Indenture Act of 1939 (the
"TIA") and Indenture, dated as of June __, 1998.
Trust Indenture
Act Section Indenture Section
Section 310(a)(1). . . . . . . . . . . . . . . 607
(a)(2). . . . . . . . . . . . . . . 607
(b). . . . . . . . . . . . . . .607, 608
Section 312(c). . . . . . . . . . . . . . . 701
Section 313(a). . . . . . . . . . . . . . . 702
(c). . . . . . . . . . . . . . . 702
Section 314(a). . . . . . . . . . . . . . . 703
(a)(4). . . . . . . . . . . . . . . 1008
(c)(1). . . . . . . . . . . . . . . 102
(c)(2). . . . . . . . . . . . . . . 102
(e). . . . . . . . . . . . . . . 102
Section 315(b). . . . . . . . . . . . . . . 601
Section 316(a) (last sentence). . . . . . . 101 ("Outstanding")
(a)(1)(A). . . . . . . . . . . . . . .502, 512
(a)(1)(B). . . . . . . . . . . . . . . 513
(b). . . . . . . . . . . . . . . 508
Section 317(a)(1). . . . . . . . . . . . . . . 503
(a)(2). . . . . . . . . . . . . . . 504
Section 318(a). . . . . . . . . . . . . . . 111
(c). . . . . . . . . . . . . . . 111
_______________
NOTE: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
Attention should also be directed to Section 318(c) of the
TIA, which provides that the provisions of Sections 310 to and
including 317 of the TIA are a part of and govern every qualified
indenture, whether or not physically contained therein.
<PAGE>
INDENTURE, dated as of June __, 1998, between SOVRAN
ACQUISITION LIMITED PARTNERSHIP, a limited partnership organized
under the laws of the State of Delaware (hereinafter called the
"Partnership"), having its principal office at 5166 Main Street,
Williamsville, New York 14221, and Marine Midland Bank, a banking
corporation and trust company organized under the laws of the
State of New York, as Trustee hereunder (hereinafter called the
"Trustee"), having its Corporate Trust Office at 140 Broadway,
New York, New York 10005-1180.
RECITALS OF THE PARTNERSHIP
The Partnership deems it necessary to issue from time to
time for its lawful purposes senior debt securities (hereinafter
called the "Securities") evidencing its unsecured and
unsubordinated indebtedness, and has duly authorized the
execution and delivery of this Indenture to provide for the
issuance from time to time of the Securities, to be issued in one
or more series as provided in this Indenture.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are deemed to be
incorporated into this Indenture and shall, to the extent
applicable, be governed by such provisions.
All things necessary to make this Indenture a valid
agreement of the Partnership, in accordance with its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase
of the Securities by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities, as follows:
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION
SECTION 101. Definitions. For all purposes of this
Indenture, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article, and include the
plural as well as the singular;
(2) all other terms used herein which are defined in
the TIA, either directly or by reference therein, have the
meanings assigned to them therein, and the terms "cash
transaction" and "self-liquidating paper," as used in TIA
Section 311, shall have the meanings assigned to them in
the rules of the Commission adopted under the TIA;
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
GAAP; and
<PAGE>
(4) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
"Act," when used with respect to any Holder, has the
meaning specified in Section 104.
"Additional Amounts" means any additional amounts which
are required by a Security or by or pursuant to a Board
Resolution, under circumstances specified therein, to be paid by
the Partnership in respect of certain taxes imposed on certain
Holders and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person.
For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 611 hereof to act on behalf of the
Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper, printed in the
English language or in an official language of the country of
publication, customarily published on each Business Day, whether
or not published on Saturdays, Sundays or holidays, and of
general circulation in each place in connection with which the
term is used or in the financial community of each such place.
Whenever successive publications are required to be made in
Authorized Newspapers, the successive publications may be made in
the same or in different Authorized Newspapers in the same city
meeting the foregoing requirements and in each case on any
Business Day.
"Bankruptcy Law" has the meaning specified in Section 501.
"Bearer Security" means any Security established pursuant
to Section 201 which is payable to bearer.
"Board of Directors" means the board of directors of the
Company, as general partner of the Partnership, or any committee
of that board duly authorized to act hereunder.
"Board Resolution" means a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company, as
general partner of the Partnership, to have been duly adopted by
the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of
Payment or any other particular location referred to in this
Indenture or in the Securities, means, unless otherwise specified
<PAGE>
with respect to any Securities issued pursuant to Section 301,
any day, other than a Saturday or Sunday, that is not a day on
which banking institutions in that Place of Payment or particular
location are authorized or required by law, regulation or
executive order to close.
"Capital" means, (i) with respect to any corporation, any
and all shares of stock issued by that corporation and (ii) with
respect to any other person, any partnership interest, joint
venture interest, limited liability company member interest or
other form of equity sharing or participation interest, as
applicable.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres,
S.A., or its successor.
"Commission" means the Securities and Exchange Commission,
as from time to time constituted, created under the Securities
Exchange Act of 1934, or, if at any time after execution of this
instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties on such date.
"Common Stock" means, with respect to any Person, all
shares of capital stock issued by such Person other than
Preferred Stock.
"Company" means Sovran Holdings, Inc., a Delaware
corporation and the general partner of the Partnership, or any
successor corporation thereto.
"Conversion Event" means the cessation of use of (i) a
Foreign 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.
"Corporate Trust Office" means the office of the Trustee
at which, at any particular time, its corporate trust business
shall be principally administered, which office at the date
hereof is located at 140 Broadway, New York, New York 10005-1180.
"corporation" includes corporations, associations,
companies and business trusts.
"coupon" means any interest coupon appertaining to a
Bearer Security.
"Custodian" has the meaning specified in Section 501.
"Defaulted Interest" has the meaning specified in
Section 307.
<PAGE>
"Dollar" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States of America as at the
time shall be legal tender for the payment of public and private
debts.
"ECU" means the European Currency Unit as defined and
revised from time to time by the Council of the European
Communities.
"Euroclear" means Morgan Guaranty Trust Company of New
York, Brussels office, or its successor as operator of the
Euroclear System.
"European Communities" means the European Economic
Community, the European Coal and Steel Community and the European
Atomic Energy Community.
"European Monetary System" means the European Monetary
System established by the Resolution of December 5, 1978 of the
Council of the European Communities.
"Event of Default" has the meaning specified in Article
Five.
"Foreign Currency" means any currency, currency unit or
composite currency, including, without limitation, the ECU issued
by the government of one or more countries other than the United
States of America or by any recognized confederation or
association of such governments.
"GAAP" means generally accepted accounting principles, as
in effect from time to time, as used in the United States applied
on a consistent basis.
"Global Security" means a Security evidencing all or a
part of a series of Securities issued to and registered in the
name of the depositary for such series, or its nominee, in
accordance with Section 305, and bearing the legend prescribed in
Section 203.
"Government Obligations" means securities which are
(i) direct obligations of the United States of America or the
government which issued the Foreign Currency in which the
Securities of a particular series are payable, for the payment of
which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such
government which issued the Foreign Currency in which the
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,
<PAGE>
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.
"Holder" means, in the case of a Registered Security, the
Person in whose name a Security is registered in the Security
Register and, in the case of a Bearer Security, the bearer
thereof and, when used with respect to any coupon, shall mean the
bearer thereof.
"Indenture" means this instrument as originally executed
or as it may be supplemented or amended from time to time by one
or more indentures supplemental hereto entered into pursuant to
the applicable provisions hereof, and shall include the terms of
particular series of Securities established as contemplated by
Section 301; provided, however, that, if at any time more than
one Person is acting as Trustee under this instrument,
"Indenture" shall mean, with respect to any one or more series of
Securities for which such Person is Trustee, this instrument as
originally executed or as it may be supplemented or amended from
time to time by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof and
shall include the terms of the or those particular series of
Securities for which such Person is Trustee established as
contemplated by Section 301, exclusive, however, of any
provisions or terms which relate solely to other series of
Securities for which such Person is Trustee, regardless of when
such terms or provisions were adopted, and exclusive of any
provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had
become such Trustee but to which such Person, as such Trustee,
was not a party.
"Indexed Security" means a Security the terms of which
provide that the principal amount thereof payable at Stated
Maturity may be more or less than the principal face amount
thereof at original issuance.
"Interest," when used with respect to an Original Issue
Discount Security which by its terms bears interest only after
Maturity, shall mean interest payable after Maturity, and, when
used with respect to a Security which provides for the payment of
Additional Amounts pursuant to Section 1009, includes such
Additional Amounts.
"Interest Payment Date," when used with respect to any
Security, means the Stated Maturity of an installment of interest
on such Security.
"Maturity," when used with respect to any Security, means
the date on which the principal of such Security or an
installment of principal becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration
of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.
<PAGE>
"Officers' Certificate" means a certificate signed by the
Chairman of the Board of Directors, the President or a Vice
President and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, as general
partner of the Partnership, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Partnership or who may be an employee
of or other counsel for the Partnership and who shall be
satisfactory to the Trustee.
"Original Issue Discount Security" means any Security
which provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration
of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities,
means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture,
except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment
or redemption (including repayment at the option of the
Holder) money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than
the Partnership) in trust or set aside and segregated in
trust by the Partnership (if the Partnership shall act as
its own Paying Agent) for the Holders of such Securities and
any coupons appertaining thereto; provided, however, that,
if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been
made;
(iii) Securities, except to the extent provided in
Sections 1402 and 1403, with respect to which the
Partnership has effected defeasance and/or covenant
defeasance as provided in Article Fourteen; and
(iv) Securities which have been paid pursuant to
Section 306 or in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid
obligations of the Partnership;
provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have
given any request, demand, authorization, direction, notice,
consent or waiver hereunder or are present at a meeting of
Holders for quorum purposes, and for the purpose of making the
calculations required by TIA Section 313, (i) the principal
<PAGE>
amount of an Original Issue Discount Security that may be counted
in making such determination or calculation and that shall be
deemed to be Outstanding for such purpose shall be equal to the
amount of principal thereof that would be (or shall have been
declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity
thereof pursuant to Section 502, (ii) the principal amount of any
Security denominated in a Foreign Currency that may be counted in
making such determination or calculation and that shall be deemed
Outstanding for such purpose shall be equal to the Dollar
equivalent, determined pursuant to Section 301 as of the date
such Security is originally issued by the Partnership, of the
principal amount (or, in the case of an Original Issue Discount
Security, the Dollar equivalent as of such date of original
issuance of the amount determined as provided in clause (i)
above) of such Security, (iii) the principal amount of any
Indexed Security that may be counted in making such determination
or calculation and that shall be deemed outstanding for such
purpose shall be equal to the principal face amount of such
Indexed Security at original issuance, unless otherwise provided
with respect to such Security pursuant to Section 301, and
(iv) Securities owned by the Partnership or any other obligor
upon the Securities or any Affiliate of the Partnership or of
such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee
shall be protected in making such calculation or in relying upon
any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be
so owned shall be so disregarded. Securities owned as provided
in clause (iv) above which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with
respect to such Securities and that the pledgee is not the
Partnership or any other obligor upon the Securities or any
Affiliate of the Partnership or of such other obligor. In case
of a dispute as to such right, the advice of counsel shall be
full protection in respect of any decision made by the Trustee in
accordance with such advice.
"Partnership" means the Person named as the "Partnership" in
the first paragraph of this Indenture until a successor limited
partnership or corporation shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter
"Partnership" shall mean such successor limited partnership or
corporation.
"Partnership Request" and "Partnership Order" mean,
respectively, a written request or order signed in the name of
the Partnership, by the Chairman of the Board, President or a
Vice President, Treasurer or an Assistant Treasurer, and
Secretary or an Assistant Secretary of the Company, as general
partner of the Partnership, and delivered to the Trustee.
"Paying Agent" means any Person authorized by the
Partnership to pay the principal of (and premium, if any) or
interest on any Securities or coupons on behalf of the
Partnership.
<PAGE>
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment," when used with respect to the Securities
of or within any series, means the place or places where the
principal of (and premium, if any) and interest on such
Securities are payable as specified as contemplated by
Sections 301 and 1002.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security or a Security to
which a mutilated, destroyed, lost or stolen coupon appertains
shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security or the Security to which the
mutilated, destroyed, lost or stolen coupon appertains.
"Preferred Stock" means, with respect to any Person, all
capital stock issued by such Person that are entitled to a
preference or priority over any other capital stock issued by
such Person with respect to any distribution of such Person's
assets, whether by dividend or upon any voluntary or involuntary
liquidation, dissolution or winding up.
"Redemption Date," when used with respect to any Security to
be redeemed, in whole or in part, means the date fixed for such
redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security
to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.
"Registered Security" shall mean any Security which is
registered in the Security Register.
"Regular Record Date" for the interest payable on any
Interest Payment Date on the Registered Securities of or within
any series means the date specified for that purpose as
contemplated by Section 301, whether or not a Business Day.
"Repayment Date" means, when used with respect to any
Security to be repaid at the option of the Holder, the date fixed
for such repayment by or pursuant to this Indenture.
"Repayment Price" means, when used with respect to any
Security to be repaid at the option of the Holder, the price at
which it is to be repaid by or pursuant to this Indenture.
"Responsible Officer," when used with respect to the
Trustee, means the chairman or vice-chairman of the board of
directors, the chairman or vice-chairman of the executive
committee of the board of directors, the president, any vice
<PAGE>
president (whether or not designated by a number or a word or
words added before or after the title "vice president"), the
secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer
or assistant trust officer, the controller or any other officer
of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of such officer's
knowledge and familiarity with the particular subject.
"Security" has the meaning stated in the first recital of
this Indenture and, more particularly, means any Security or
Securities authenticated and delivered under this Indenture;
provided, however, that, if at any time there is more than one
Person acting as Trustee under this Indenture, "Securities" with
respect to the Indenture as to which such Person is Trustee shall
have the meaning stated in the first recital of this Indenture
and shall more particularly mean Securities authenticated and
delivered under this Indenture, exclusive, however, of Securities
of any series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" (as defined in Article I, Rule 1-02 of
Regulation S-X, promulgated under the Securities Act of 1933) of
the Partnership.
"Special Record Date" for the payment of any Defaulted
Interest on the Registered Securities of or within any series
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or
any installment of principal thereof or interest thereon, means
the date specified in such Security or a coupon representing such
installment of interest as the fixed date on which the principal
of such Security or such installment of principal or interest is
due and payable.
"Subsidiary" with respect to any person, means (i) any
corporation, association or other business entity of which more
than 50% of the total voting power of Capital entitled (without
regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such person,
by one or more Subsidiaries of such person or by such person and
one or more Subsidiaries of such person and (ii) any partnership
(a) the sole general partner or the managing general partner of
which is such person or a Subsidiary of such person or (b) the
only general partners of which are such person and/or one or more
Subsidiaries of such person (or any combination thereof.)
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939, as amended and as in force at the date as of which this
Indenture was executed, except as provided in Section 905.
<PAGE>
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this Indenture until a successor Trustee shall
have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean or include each
Person who is then a Trustee hereunder; provided, however, that
if at any time there is more than one such Person, "Trustee" as
used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
"United States" means, unless otherwise specified with
respect to any Securities pursuant to Section 301, the United
States of America (including the states and the District of
Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
"United States Person" means, unless otherwise specified
with respect to any Securities pursuant to Section 301, an
individual who is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in
or under the laws of the United States or an estate or trust the
income of which is subject to United States Federal income
taxation regardless of its source.
"Yield to Maturity" means the yield to maturity, computed at
the time of issuance of a Security (or, if applicable, at the
most recent redetermination of interest on such Security) and as
set forth in such Security in accordance with generally accepted
United States bond yield computation principles.
SECTION 102. Compliance Certificates and Opinions. Upon
any application or request by the Partnership to the Trustee to
take any action under any provision of this Indenture, the
Partnership shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (including
certificates delivered pursuant to Section 1008) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such condition or covenant
and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
<PAGE>
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such condition or covenant has been
complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
SECTION 103. Form of Documents Delivered to Trustee. In
any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an officer of the Company, as
general partner of the Partnership, may be based, insofar as it
relates to legal matters, upon an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer
knows, or in the exercise of reasonable care should know, that
the opinion, certificate or representations with respect to the
matters upon which his certificate or opinion is based are
erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Company, as general partner of the
Partnership, stating that the information as to such factual
matters is in the possession of the Company, as general partner
of the Partnership, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
SECTION 104. Acts of Holders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders of the
Outstanding Securities of all series or one or more series, as
the case may be, may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders
in person or by agents duly appointed in writing. If Securities
of a series are issuable as Bearer Securities, any request,
demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by
Holders of Securities of such series may, alternatively, be
embodied in and evidenced by the record of Holders of Securities
of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of
<PAGE>
Securities of such series duly called and held in accordance with
the provisions of Article Fifteen, or a combination of such
instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such
instrument or instruments or record or both are delivered to the
Trustee and, where it is hereby expressly required, to the
Partnership. Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments or so voting at any such meeting.
Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Partnership and
any agent of the Trustee or the Partnership, if made in the
manner provided in this Section. The record of any meeting of
Holders of Securities shall be proved in the manner provided in
Section 1506.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved by the affidavit
of a witness of such execution or by a certificate of a notary
public or other officer authorized by law to take acknowledgments
of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in
any other reasonable manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be
proved by the Security Register. As to any matter relating to
beneficial ownership interests in any Global Security, the
appropriate depositary's records shall be dispositive for
purposes of this Indenture.
(d) The ownership of Bearer Securities may be proved
by the production of such Bearer Securities or by a certificate
executed, as depositary, by any trust company, bank, banker or
other depositary, wherever situated, if such certificate shall be
deemed by the Trustee to be satisfactory, showing that at the
date therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities therein
described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such
certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Partnership may assume that
such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect
of the same Bearer Security is produced, or (2) such Bearer
Security is produced to the Trustee by some other Person, or
(3) such Bearer Security is surrendered in exchange for a
Registered Security, or (4) such Bearer Security is no longer
Outstanding. The ownership of Bearer Securities may also be
proved in any other manner which the Trustee deems sufficient.
<PAGE>
(e) If the Partnership shall solicit from the Holders
of Registered Securities any request, demand, authorization,
direction, notice, consent, waiver or other Act, the Partnership
may, at its option, in or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled
to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Partnership shall have no
obligation to do so. Notwithstanding TIA Section 316(c), such
record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the
date 30 days prior to the first solicitation of Holders generally
in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes
of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding
Securities shall be computed as of such record date; provided
that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not
later than eleven months after the record date.
(f) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any
Security shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the
Trustee, any Security Registrar, any Paying Agent, any
Authenticating Agent or the Partnership in reliance thereon,
whether or not notation of such action is made upon such
Security.
SECTION 105. Notices, etc., to Trustee and Partnership.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted
by this Indenture to be made upon, given or furnished to, or
filed with,
(1) the Trustee by any Holder or by the
Partnership shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with the
Trustee at 140 Broadway, New York, New York 10005-1180; or
(2) the Partnership by the Trustee or by any
Holder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing
and mailed, first class postage prepaid, to the Partnership,
c/o Sovran Self Storage, Inc., addressed to it at the
address of its principal office specified in the first
paragraph of this Indenture or at any other address
previously furnished in writing to the Trustee by the
Partnership, Attention: Chief Financial Officer (with a
copy to the Partnership's general counsel), or
<PAGE>
(3) either the Trustee or the Partnership, by the
other party, shall be sufficient for every purpose hereunder
if given by facsimile transmission, receipt confirmed by
telephone followed by an original copy delivered by
guaranteed overnight courier; if to the Trustee at facsimile
number (212) 658-6425; and if to the Partnership at
facsimile number (716) 633-1860.
SECTION 106. Notice to Holders: Waiver. Where this
Indenture provides for notice of any event to Holders of
Registered Securities by the Partnership or the Trustee, such
notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to each such Holder affected by such event, at his
address as it appears in the Security Register, not later than
the latest date, if any, and not earlier than the earliest date,
if any, prescribed for the giving of such notice. In any case
where notice to Holders of Registered Securities is given by
mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders of
Registered Securities or the sufficiency of any notice to Holders
of Bearer Securities given as provided herein. Any notice mailed
to a Holder in the manner herein prescribed shall be conclusively
deemed to have been received by such Holder, whether or not such
Holder actually receives such notice.
If by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause it shall be
impracticable to give such notice by mail, then such notification
to Holders of Registered Securities as shall be made with the
approval of the Trustee shall constitute a sufficient
notification to such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise
specified with respect to any Securities pursuant to Section 301,
where this Indenture provides for notice to Holders of Bearer
Securities of any event, such notice shall be sufficiently given
if published in an Authorized Newspaper in The City of New York
and in such other city or cities as may be specified in such
Securities on a Business Day, such publication to be not later
than the latest date, if any, and not earlier than the earliest
date, if any, prescribed for the giving of such notice. Any such
notice shall be deemed to have been given on the date of such
publication or, if published more than once, on the date of the
first such publication.
If by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any
other cause it shall be impracticable to publish any notice to
Holders of Bearer Securities as provided above, then such
notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither the
failure to give notice by publication to any particular Holder of
Bearer Securities as provided above, nor any defect in any notice
so published, shall affect the sufficiency of such notice with
<PAGE>
respect to other Holders of Bearer Securities or the sufficiency
of any notice to Holders of Registered Securities given as
provided herein.
Any request, demand, authorization, direction, notice,
consent or waiver required or permitted under this Indenture
shall be in the English language, except that any published
notice may be in an official language of the country of
publication.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall
not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
SECTION 107. Counterparts; Effect of Headings and Table of
Contents. This Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same Indenture. The Article and Section headings
herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 108. Successors and Assigns. All covenants and
agreements in this Indenture by the Partnership shall bind its
successors and assigns, whether so expressed or not.
SECTION 109. Severability Clause. In case any provision in
this Indenture or in any Security or coupon shall be invalid,
illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION 110. Benefits of Indenture. Nothing in this
Indenture or in the Securities or coupons, express or implied,
shall give to any Person, other than the parties hereto, any
Security Registrar, any Paying Agent, any Authenticating Agent
and their successors hereunder and the Holders any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law. This Indenture and the
Securities and coupons shall be governed by and construed in
accordance with the law of the State of New York. This Indenture
is subject to the provisions of the TIA that are required to be
part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 112. Legal Holidays. In any case where any
Interest Payment Date, Redemption Date, Repayment Date, sinking
fund payment date, Stated Maturity or Maturity of any Security or
the last date on which a Holder has the right to exchange a
Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or
any Security or coupon other than a provision in the Securities
<PAGE>
of any series which specifically states that such provision shall
apply in lieu hereof), payment of interest or any Additional
Amounts or principal (and premium, if any) or exchange of such
security need not be made at such Place of Payment on such date,
but (except as otherwise provided in the supplemental indenture
with respect to such Security) may be made on the next succeeding
Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date, Redemption Date,
Repayment Date or sinking fund payment date, or at the Stated
Maturity or Maturity, or on such last day for exchange, provided
that no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date, Redemption
Date, Repayment Date, sinking fund payment date, Stated Maturity
or Maturity, as the case may be.
SECTION 113. Non-Recourse. Notwithstanding anything
contained herein to the contrary, no recourse under or upon any
obligation, covenant or agreement contained in this Indenture, in
any Security or coupon appertaining thereto, or because of any
indebtedness evidenced thereby (including, without limitation,
any obligation or indebtedness relating to the principal of, or
premium or Additional Amounts, if any, interest or any other
amounts due, or claimed to be due, on any Security issued
hereunder), or for any claim based thereon or otherwise in
respect thereof, shall be had (i) against the Company or any
other past, present or future partner in the Partnership,
(ii) against any other Person which owns an interest, directly or
indirectly, in any partner of the Partnership or (iii) against
any past, present or future stockholder, employee, officer or
director, as such, of the Company or of any successor, either
directly or through the Partnership or the Company or any
successor, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities
by the Holders and as part of the consideration for the issue of
the Securities.
SECTION 114. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another
provision hereof which is required or deemed to be included in
this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be.
ARTICLE TWO - SECURITIES FORMS
SECTION 201. Forms of Securities. The Registered
Securities, if any, of each series and the Bearer Securities, if
any, of each series and related coupons shall be substantially in
the form of Exhibit A hereto or in such other form as shall be
established in one or more indentures supplemental hereto or
approved from time to time by or pursuant to a Board Resolution
<PAGE>
in accordance with Section 301, shall have such appropriate
insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or any indenture
supplemental hereto, and may have such letters, numbers or other
marks of identification or designation and such legends or
endorsements placed thereon as the Partnership may deem
appropriate and as are not inconsistent with the provisions of
this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Securities
may be listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301,
Bearer Securities shall have interest coupons attached.
The definitive Securities and coupons shall be printed,
lithographed or engraved or produced by any combination of these
methods on a steel engraved border or steel engraved borders or
mechanically reproduced on safety paper or may be produced in any
other manner, all as determined by the officers executing such
Securities or coupons, as evidenced by their execution of such
Securities or coupons.
SECTION 202. Form of Trustee's Certificate of
Authentication. Subject to Section 611, the Trustee's
certificate of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated
therein referred to in the within- mentioned Indenture.
MARINE MIDLAND BANK
as Trustee
By____________________________
Authorized Signatory
SECTION 203. Securities Issuable in Global Form. If
Securities of or within a series are issuable in the form of one
or more Global Securities, then, notwithstanding clause (8) of
Section 301 and the provisions of Section 302, any such Global
Security or Securities may provide that it or they shall
represent the aggregate amount of all Outstanding Securities of
such series (or such lesser amount as is permitted by the terms
thereof) from time to time endorsed thereon and may also provide
that the aggregate amount of Outstanding Securities of such
series represented thereby may from time to time be increased or
decreased to reflect exchanges. Any endorsement of any Global
Security to reflect the amount, or any increase or decrease in
the amount, or changes in the rights of Holders thereof, of
Outstanding Securities represented thereby shall be made by the
Trustee in such manner or by such Person or Persons as shall be
specified therein or in the Partnership Order to be delivered to
the Trustee pursuant to Section 303 or 304. Subject to the
provisions of Section 303 and, if applicable, Section 304, the
Trustee shall deliver and redeliver any Global Security in
<PAGE>
permanent global form in the manner and upon instructions given
by the Person or Persons specified therein or in the applicable
Partnership Order. If a Partnership Order pursuant to
Section 303 or 304 has been, or simultaneously is, delivered, any
instructions by the Partnership with respect to endorsement or
delivery or redelivery of a Global Security shall be in writing
but need not comply with Section 102 and need not be accompanied
by an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall
apply to any Security represented by a Global Security if such
Security was never issued and sold by the Partnership and the
Partnership delivers to the Trustee the Global Security together
with written instructions (which need not comply with Section 102
and need not be accompanied by an Opinion of Counsel) with regard
to the reduction in the principal amount of Securities
represented thereby, together with the written statement
contemplated by the last sentence of Section 303.
Notwithstanding the provisions of Section 307, unless
otherwise specified as contemplated by Section 301, payment of
principal of and any premium and interest on any Global Security
in permanent global form shall be made to the registered Holder
thereof.
Notwithstanding the provisions of Section 308 and except as
provided in the preceding paragraph, the Partnership, the Trustee
and any agent of the Partnership and the Trustee shall treat as
the Holder of such principal amount of Outstanding Securities
represented by a permanent Global Security (i) in the case of a
permanent Global Security in registered form, the Holder of such
permanent Global Security in registered form, or (ii) in the case
of a permanent Global Security in bearer form, Euroclear or
CEDEL.
Any Global Security authenticated and delivered hereunder
shall bear a legend in substantially the following form:
"This Security is a Global Security within
the meaning set forth in the Indenture
hereinafter referred to and is registered in
the name of a Depositary or a nominee of a
Depositary. This Security is exchangeable
for Securities registered in the name of a
person other than the Depositary or its
nominee only in the limited circumstances
described in the Indenture, and may not be
transferred except as a whole by the
Depositary to a nominee of the Depositary or
by a nominee of the Depositary to the
Depositary or another nominee of the
Depositary or by the Depositary or its
nominee to a successor Depositary or its
nominee."
<PAGE>
ARTICLE THREE - THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series. The
aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in one or more Board Resolutions or pursuant
to authority granted by one or more Board Resolutions and,
subject to Section 303, set forth in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series:
(1) the title of the Securities of the series
(which shall distinguish the Securities of such series from
all other series of Securities);
(2) any limit upon the aggregate principal amount
of the Securities of the series that may be authenticated
and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of
the series pursuant to Section 304, 305, 306, 906, 1107 or
1305);
(3) the date or dates, or the method by which
such date or dates will be determined, on which the
principal of the Securities of the series shall be payable;
(4) the rate or rates at which the Securities of
the series shall bear interest, if any, or the method by
which such rate or rates shall be determined, the date or
dates from which such interest shall accrue or the method by
which such date or dates shall be determined, the Interest
Payment Dates on which such interest will be payable and the
Regular Record Date, if any, for the interest payable on any
Registered Security on any Interest Payment Date, or the
method by which such date shall be determined, and the basis
upon which interest shall be calculated if other than that
of a 360-day year of twelve 30-day months;
(5) the place or places where the principal of
(and premium, if any), interest, if any, on, and Additional
Amounts, if any, payable in respect of, Securities of the
series shall be payable, any Registered Securities of the
series may be surrendered for registration of transfer or
exchange and notices or demands to or upon the Partnership
in respect of the Securities of the series and this
Indenture may be served;
(6) the period or periods within which, the price
or prices at which, the currency or currencies, currency
unit or units or composite currency or currencies in which,
and other terms and conditions upon which Securities of the
series may be redeemed, in whole or in part, at the option
of the Partnership, if the Partnership is to have the
option;
<PAGE>
(7) the obligation, if any, of the Partnership to
redeem, repay or purchase Securities of the series pursuant
to any sinking fund or analogous provision or at the option
of a Holder thereof, and the period or periods within which
or the date or dates on which, the price or prices at which,
the currency or currencies, currency unit or units or
composite currency or currencies in which, and other terms
and conditions upon which Securities of the series shall be
redeemed, repaid or purchased, in whole or in part, pursuant
to such obligation;
(8) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which any
Securities of the series shall be issuable;
(9) if other than the Trustee, the identity of
each Security Registrar and/or Paying Agent;
(10) if other than the principal amount thereof,
the portion of the principal amount of Securities of the
series that shall be payable upon declaration of
acceleration of the Maturity thereof pursuant to Section 502
or the method by which such portion shall be determined;
(11) if other than Dollars, the Foreign Currency
or Currencies in which payment of the principal of (and
premium, if any) and interest or Additional Amounts, if any,
on the Securities of the series shall be payable or in which
the Securities of the series shall be denominated and the
manner of determining the equivalent thereof in Dollars for
purposes of the definition of "Outstanding" in Section 101;
(12) whether the amount of payments of principal
of (and premium, if any) or interest, if any, on the
Securities of the series may be determined with reference to
an index, formula or other method (which index, formula or
method may be based, without limitation, on one or more
currencies, currency units, composite currencies,
commodities, equity indices or other indices), and the
manner in which such amounts shall be determined;
(13) whether the principal of (and premium, if
any) or interest or Additional Amounts, if any, on the
Securities of the series are to be payable, at the election
of the Partnership or a Holder thereof, in a currency or
currencies, currency unit or units or composite currency or
currencies other than that in which such Securities are
denominated or stated to be payable, the period or periods
within which, and the terms and conditions upon which, such
election may be made, and the time and manner of, and
identity of the exchange rate agent with responsibility for,
determining the exchange rate between the currency or
currencies, currency unit or units or composite currency or
currencies in which such Securities are denominated or
stated to be payable and the currency or currencies,
currency unit or units or composite currency or currencies
in which such Securities are to be so payable;
<PAGE>
(14) provisions, if any, granting special rights
to the Holders of 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 or covenants of the
Partnership with respect to Securities of the series,
whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth
herein;
(16) whether Securities of the series are to be
issuable as Registered Securities, Bearer Securities (with
or without coupons) or both, any restrictions applicable to
the offer, sale or delivery of Bearer Securities and the
terms upon which Bearer Securities of the series may be
exchanged for Registered Securities of the series and vice
versa (if permitted by applicable laws and regulations),
whether any Securities of the series are to be issuable
initially in temporary global form and whether any
Securities of the series are to be issuable in permanent
global form with or without coupons and, if so, whether
beneficial owners of interests in any such permanent global
Security may exchange such interests for Securities of such
series and of like tenor of any authorized form and
denomination and the circumstances under which any such
exchanges may occur, if other than in the manner provided in
Section 305, and, if Registered Securities of the series are
to be issuable as a Global Security, the identity of the
depositary for such series;
(17) the date as of which any Bearer Securities of
the series and any temporary Global Security representing
Outstanding Securities of the series shall be dated if other
than the date of original issuance of the first Security of
the series to be issued;
(18) the Person to whom any interest on any
Registered Security of the series shall be payable, if other
than the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, the
manner in which, or the Person to whom, any interest on any
Bearer Security of the series shall be payable, if otherwise
than upon presentation and surrender of the coupons
appertaining thereto as they severally mature, and the
extent to which, or the manner in which, any interest
payable on a temporary Global Security on an Interest
Payment Date will be paid if other than in the manner
provided in Section 304;
(19) the applicability, if any, of Sections 1402
and/or 1403 to the Securities of the series and any
provisions in modification of, in addition to or in lieu of
any of the provisions of Article Fourteen;
<PAGE>
(20) if the Securities of such series are to be
issuable in definitive form (whether upon original issue or
upon exchange of a temporary Security of such series) only
upon receipt of certain certificates or other documents or
satisfaction of other conditions, then the form and/or terms
of such certificates, documents or conditions;
(21) if the Securities of the series are to be
issued upon the exercise of warrants, the time, manner and
place for such Securities to be authenticated and delivered;
(22) whether and under what circumstances the
Partnership will pay Additional Amounts as contemplated by
Section 1009 on the Securities of the series to any Holder
who is not a United States person (including any
modification to the definition of such term) in respect of
any tax, assessment or governmental charge and, if so,
whether the Partnership will have the option to redeem such
Securities rather than pay such Additional Amounts (and the
terms of any such option); and
(23) any other terms of the series (which terms
shall not be inconsistent with the provisions of this
Indenture).
All Securities of any one series and the coupons
appertaining to any Bearer Securities of such series shall be
substantially identical except, in the case of Registered
Securities, as to denomination and except as may otherwise be
provided in or pursuant to such Board Resolution (subject to
Section 303) and set forth in such Officers' Certificate or in
any such indenture supplemental hereto. All Securities of any
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, for issuances of additional Securities of such
series.
If any of the terms of the Securities of any series are
established by action taken pursuant to one or more Board
Resolutions, a copy of an appropriate record of such action(s)
shall be certified by the Secretary or an Assistant Secretary of
the Company, as general partner of the Partnership, and delivered
to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the Securities of such
series.
SECTION 302. Denominations. The Securities of each series
shall be issuable in such denominations as shall be specified as
contemplated by Section 301. With respect to Securities of any
series denominated in Dollars, in the absence of any such
provisions with respect to the Securities of any series, the
Securities of such series, other than Global Securities (which
may be of any denomination), shall be issuable in denominations
of $1,000 and any integral multiple thereof.
<PAGE>
SECTION 303. Execution, Authentication, Delivery and
Dating. The Securities and any coupons appertaining thereto
shall be executed on behalf of the Partnership by the Chairman of
the Board and the President or one of the Vice Presidents of the
Company, as general partner of the Partnership, under its
corporate seal reproduced thereon, and attested by its Secretary
or one of its Assistant Secretaries. The signature of any of
these officers on the Securities and coupons may be manual or
facsimile signatures of the present or any future such authorized
officer and may be imprinted or otherwise reproduced on the
Securities.
Securities or coupons bearing the manual or facsimile
signatures of individuals who were at any time the proper
officers of the Company, as general partner of the Partnership,
shall bind the Partnership, notwithstanding that such individuals
or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold
such offices at the date of such Securities or coupons.
At any time and from time to time after the execution and
delivery of this Indenture, the Partnership may deliver
Securities of any series, together with any coupon appertaining
thereto, executed by the Partnership to the Trustee for
authentication, together with a Partnership Order for the
authentication and delivery of such Securities, and the Trustee
in accordance with the Partnership Order shall authenticate and
deliver such Securities; provided, however, that, in connection
with its original issuance, no Bearer Security shall be mailed or
otherwise delivered to any location in the United States; and
provided further that, unless otherwise specified with respect to
any series of Securities pursuant to Section 301, a Bearer
Security may be delivered in connection with its original
issuance only if the Person entitled to receive such Bearer
Security shall have furnished a certificate to Euroclear or
CEDEL, as the case may be, in the form set forth in Exhibit B-1
to this Indenture or such other certificate as may be specified
with respect to any series of Securities pursuant to Section 301,
dated no earlier than 15 days prior to the earlier of the date on
which such Bearer Security is delivered and the date on which any
temporary Security first becomes exchangeable for such Bearer
Security in accordance with the terms of such temporary Security
and this Indenture. If any Security shall be represented by a
permanent global Bearer Security, then, for purposes of this
Section and Section 304, the notation of a beneficial owner's
interest therein upon original issuance of such Security or upon
exchange of a portion of a temporary Global Security shall be
deemed to be delivery in connection with its original issuance of
such beneficial owner's interest in such permanent Global
Security. Except as permitted by Section 306, the Trustee shall
not authenticate and deliver any Bearer Security unless all
appurtenant coupons for interest then matured have been detached
and canceled.
If all the Securities of any series are not to be issued at
one time and if the Board Resolution or supplemental indenture
establishing such series shall so permit, such Partnership Order
<PAGE>
may set forth procedures acceptable to the Trustee for the
issuance of such Securities and determining the terms of
particular Securities of such series, such as interest rate or
formula, maturity date, date of issuance and date from which
interest shall accrue. In authenticating such Securities, and
accepting the additional responsibilities under this Indenture in
relation to such Securities, the Trustee shall be entitled to
receive, and (subject to TIA Section 315(a) through 315(d)) shall
be fully protected in relying upon,
(i) an Opinion of Counsel stating that
(a) the form or forms of such Securities and any
coupons have been established in conformity with the
provisions of this Indenture;
(b) the terms of such Securities and any coupons
have been established in conformity with the provisions
of this Indenture; and
(c) such Securities, together with any coupons
appertaining thereto, when completed by appropriate
insertions and executed and delivered by the
Partnership to the Trustee for authentication in
accordance with this Indenture, authenticated and
delivered by the Trustee in accordance with this
Indenture and issued by the Partnership in the manner
and subject to any conditions specified in such Opinion
of Counsel, will constitute legal, valid and legally
binding obligations of the Partnership, enforceable in
accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer,
reorganization and other similar laws of general
applicability relating to or affecting the enforcement
of creditors' rights generally and to general equitable
principles; and
(ii) an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating
to the issuance of the Securities have been complied with
and that, to the best of the knowledge of the signers of
such certificate, that no Event of Default with respect to
any of the Securities shall have occurred and be continuing.
If such form or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of
such Securities pursuant to this Indenture will affect the
Trustee's own rights, duties, obligations or immunities under the
Securities and this Indenture or otherwise in a manner which is
not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the
preceding paragraph, if all the Securities of any series are not
to be issued at one time, it shall not be necessary to deliver an
Officers' Certificate otherwise required pursuant to Section 301
or a Partnership Order, or an Opinion of Counsel or an Officers'
Certificate otherwise required pursuant to the preceding
<PAGE>
paragraph at the time of issuance of each Security of such
series, but such order, opinion and certificates, with
appropriate modifications to cover such future issuances, shall
be delivered at or before the time of issuance of the first
Security of such series.
Each Registered Security shall be dated the date of its
authentication and each Bearer Security shall be dated as of the
date specified as contemplated by Section 301.
No Security or coupon shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless
there appears on such Security or Security to which such coupon
appertains a certificate of authentication substantially in the
form provided for herein duly executed by the Trustee by manual
signature of an authorized signatory, and such certificate upon
any Security shall be conclusive evidence, and the only evidence,
that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security (including a
Global Security) shall have been authenticated and delivered
hereunder but never issued and sold by the Partnership, and the
Partnership shall deliver such Security to the Trustee for
cancellation as provided in Section 309 together with a written
statement (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel) stating that such Security
has never been issued and sold by the Partnership, for all
purposes of this Indenture such Security shall be deemed never to
have been authenticated and delivered hereunder and shall never
be entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities. Pending the preparation
of definitive Securities of any series, the Partnership may
execute, and upon Partnership Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued, in
registered form, or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate
insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as conclusively
evidenced by their execution of such Securities. In the case of
Securities of any series, such temporary Securities may be in
global form.
Except in the case of temporary Global Securities (which
shall be exchanged as otherwise provided herein or as otherwise
provided in or pursuant to a Board Resolution), if temporary
Securities of any series are issued, the Partnership will cause
definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such
series shall be exchangeable for definitive Securities of such
series upon surrender of the temporary Securities of such series
at the office or agency of the Partnership in a Place of Payment
for that series, without charge to the Holder. Upon surrender
<PAGE>
for cancellation of any one or more temporary Securities of any
series (accompanied by any non-matured coupons appertaining
thereto), the Partnership shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series of authorized
denominations; provided, however, that no definitive Bearer
Security shall be delivered in exchange for a temporary
Registered Security; and provided further that a definitive
Bearer Security shall be delivered in exchange for a temporary
Bearer Security only in compliance with the conditions set forth
in Section 303. Until so exchanged, the temporary Securities of
any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series.
Unless otherwise provided in or pursuant to a Board
Resolution, the following provisions of this Section 304 shall
govern the exchange of temporary Securities other than through
the facilities of The Depository Trust Company. If any such
temporary Security is issued in global form, then such temporary
Global Security shall, unless otherwise provided therein, be
delivered to the London office of a depositary or common
depositary (the "Common Depositary"), for the benefit of
Euroclear and CEDEL, for credit to the respective accounts of the
beneficial owners of such Securities (or to such other accounts
as they may direct).
Without unnecessary delay but in any event not later than
the date specified in, or determined pursuant to the terms of,
any such temporary Global Security (the "Exchange Date"), the
Partnership shall deliver to the Trustee definitive Securities,
in aggregate principal amount equal to the principal amount of
such temporary Global Security, executed by the Partnership. On
or after the Exchange Date, such temporary Global Security shall
be surrendered by the Common Depositary to the Trustee, as the
Partnership's agent for such purpose, to be exchanged, in whole
or from time to time in part, for definitive Securities without
charge, and the Trustee shall authenticate and deliver, in
exchange for each portion of such temporary Global Security, an
equal aggregate principal amount of definitive Securities of the
same series of authorized denominations and of like tenor as the
portion of such temporary Global Security to be exchanged. The
definitive Securities to be delivered in exchange for any such
temporary Global Security shall be in bearer form, registered
form, permanent global bearer form or permanent global registered
form, or any combination thereof, as specified as contemplated by
Section 301, and, if any combination thereof is so specified, as
requested by the beneficial owner thereof; provided, however,
that, unless otherwise specified in such temporary Global
Security, upon such presentation by the Common Depositary, such
temporary Global Security is accompanied by a certificate dated
the Exchange Date or a subsequent date and signed by Euroclear as
to the portion of such temporary Global Security held for its
account then to be exchanged and a certificate dated the Exchange
Date or a subsequent date and signed by CEDEL as to the portion
of such temporary Global Security held for its account then to be
exchanged, each in the form set forth in Exhibit A-2 to this
Indenture or in such other form as may be established pursuant to
<PAGE>
Section 301; and provided further that definitive Bearer
Securities shall be delivered in exchange for a portion of a
temporary Global Security only in compliance with the
requirements of Section 303.
Unless otherwise specified in such temporary Global
Security, the interest of a beneficial owner of Securities of a
series in a temporary Global Security shall be exchanged for
definitive Securities of the same series and of like tenor
following the Exchange Date when the account holder instructs
Euroclear or CEDEL, as the case may be, to request such exchange
on his behalf and delivers to Euroclear or CEDEL, as the case may
be, a certificate in the form set forth in Exhibit B-1 to this
Indenture (or in such other form as may be established pursuant
to Section 301), dated no earlier than 15 days prior to the
Exchange Date, copies of which certificate shall be available
from the offices of Euroclear and CEDEL, the Trustee, any
Authenticating Agent appointed for such series of Securities and
each Paying Agent. Unless otherwise specified in such temporary
Global Security, any such exchange shall be made free of charge
to the beneficial owners of such temporary Global Security,
except that a Person receiving definitive Securities must bear
the cost of insurance, postage, transportation and the like
unless such Person takes delivery of such definitive Securities
in person at the offices of Euroclear or CEDEL. Definitive
Securities in bearer form to be delivered in exchange for any
portion of a temporary Global Security shall be delivered only
outside the United States.
Until exchanged in full as hereinabove provided, the
temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive
Securities of the same series and of like tenor authenticated and
delivered hereunder, except that, unless otherwise specified as
contemplated by Section 301, interest payable on a temporary
Global Security on an Interest Payment Date for Securities of
such series occurring prior to the applicable Exchange Date shall
be payable to Euroclear and CEDEL on such Interest Payment Date
upon delivery by Euroclear and CEDEL to the Trustee of a
certificate or certificates in the form set forth in Exhibit B-2
to this Indenture (or in such other forms as may be established
pursuant to Section 301), for credit without further interest on
or after such Interest Payment Date to the respective accounts of
Persons who are the beneficial owners of such temporary Global
Security on such Interest Payment Date and who have each
delivered to Euroclear or CEDEL, as the case may be, a
certificate dated no earlier than 15 days prior to the Interest
Payment Date occurring prior to such Exchange Date in the form
set forth as Exhibit B-1 to this Indenture (or in such other
forms as may be established pursuant to Section 301).
Notwithstanding anything to the contrary herein contained, the
certifications made pursuant to this paragraph shall satisfy the
certification requirements of the preceding two paragraphs of
this Section 304(b) and of the third paragraph of Section 303 of
this Indenture and the interests of the Persons who are the
beneficial owners of the temporary Global Security with respect
to which such certification was made will be exchanged for
<PAGE>
definitive Securities of the same series and of like tenor on the
Exchange Date or the date of certification if such date occurs
after the Exchange Date, without further act or deed by such
beneficial owners. Except as otherwise provided in this
paragraph, no payments of principal or interest owing with
respect to a beneficial interest in a temporary Global Security
will be made unless and until such interest in such temporary
Global Security shall have been exchanged for an interest in a
definitive Security. Any interest so received by Euroclear and
CEDEL and not paid as herein provided shall be returned to the
Trustee prior to the expiration of two years after such Interest
Payment Date in order to be repaid to the Partnership.
SECTION 305. Registration, Registration of Transfer and
Exchange. The Partnership shall cause to be kept at the
Corporate Trust Office of the Trustee or in any office or agency
of the Partnership in a Place of Payment a register for each
series of Securities (the registers maintained in such office or
in any such office or agency of the Partnership in a Place of
Payment being herein sometimes referred to collectively as the
"Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Partnership shall provide
for the registration of Registered Securities and of transfers of
Registered Securities. The Security Register shall be in written
form or any other form capable of being converted into written
form within a reasonable time. The Trustee, at its Corporate
Trust Office, is hereby initially appointed "Security Registrar"
for the purpose of registering Registered Securities and
transfers of Registered Securities on such Security Register as
herein provided. In the event that the Trustee shall cease to be
Security Registrar, it shall have the right to examine the
Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon
surrender for registration of transfer of any Registered Security
of any series at any office or agency of the Partnership in a
Place of Payment for that series, the Partnership shall execute,
and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new
Registered Securities of the same series, of any authorized
denominations and of a like aggregate principal amount, bearing a
number not contemporaneously outstanding, and containing
identical terms and provisions.
Subject to the provisions of this Section 305, at the option
of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series, of
any authorized denomination or denominations and of a like
aggregate principal amount, containing identical terms and
provisions, upon surrender of the Registered Securities to be
exchanged at any such office or agency. Whenever any such
Registered Securities are so surrendered for exchange, the
Partnership shall execute, and the Trustee shall authenticate and
deliver, the Registered Securities which the Holder making the
exchange is entitled to receive. Unless otherwise specified with
respect to any series of Securities as contemplated by
Section 301, Bearer Securities may not be issued in exchange for
Registered Securities.
<PAGE>
If (but only if) permitted by the applicable Board
Resolution and (subject to Section 303) set forth in the
applicable Officers' Certificate, or in any indenture
supplemental hereto, delivered as contemplated by Section 301, at
the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount
and tenor, upon surrender of the Bearer Securities to be
exchanged at any such office or agency, with all unmatured
coupons and all matured coupons in default thereto appertaining.
If the Holder of a Bearer Security is unable to produce any such
unmatured coupon or coupons or matured coupon or coupons in
default, any such permitted exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable
to the Partnership in an amount equal to the face amount of such
missing coupon or coupons, or the surrender of such missing
coupon or coupons may be waived by the Partnership and the
Trustee if there is furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall
surrender to any Paying Agent any such missing coupon in respect
of which such a payment shall have been made, such Holder shall
be entitled to receive the amount of such payment; provided,
however, that, except as otherwise provided in Section 1002,
interest represented by coupons shall be payable only upon
presentation and surrender of those coupons at an office or
agency located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security of any series is surrendered
at any such office or agency in a permitted exchange for a
Registered Security of the same series and like tenor after the
close of business at such office or agency on (i) any Regular
Record Date and before the opening of business at such office or
agency on the relevant Interest Payment Date, or (ii) any Special
Record Date and before the opening of business at such office or
agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date or proposed date
for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case
may be, in respect of the Registered Security issued in exchange
for such Bearer Security, but will be payable only to the Holder
of such coupon when due in accordance with the provisions of this
Indenture. Whenever any Securities are so surrendered for
exchange, the Partnership shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified
as contemplated by Section 301, any permanent Global Security
shall be exchangeable only as provided in this paragraph. If the
depositary for any permanent Global Security is The Depository
Trust Company ("DTC"), then, unless the terms of such Global
Security expressly permit such Global Security to be exchanged in
whole or in part for definitive Securities, a Global Security may
be transferred, in whole but not in part, only to a nominee of
DTC, or by a nominee of DTC to DTC, or to a successor to DTC for
<PAGE>
such Global Security selected or approved by the Partnership or
to a nominee of such successor to DTC. If at any time DTC
notifies the Partnership that it is unwilling or unable to
continue as depositary for the applicable Global Security or
Securities or if at any time DTC ceases to be a clearing agency
registered under the Securities Exchange Act of 1934 if so
required by applicable law or regulation, the Partnership shall
appoint a successor depositary with respect to such Global
Security or Securities. If (x) a successor depositary for such
Global Security or Securities is not appointed by the Partnership
within 90 days after the Partnership receives such notice or
becomes aware of such unwillingness, inability or ineligibility,
(y) an Event of Default has occurred and is continuing and the
beneficial owners representing a majority in principal amount of
the applicable series of Securities represented by such Global
Security or Securities advise DTC to cease acting as depositary
for such Global Security or Securities or (z) the Partnership, in
its sole discretion, determines at any time that all Outstanding
Securities (but not less than all) of any series issued or
issuable in the form of one or more Global Securities shall no
longer be represented by such Global Security or Securities, then
the Partnership shall execute, and the Trustee shall authenticate
and deliver definitive Securities of like series, rank, tenor and
terms in definitive form in an aggregate principal amount equal
to the principal amount of such Global Security or Securities.
If any beneficial owner of an interest in a permanent global
Security is otherwise entitled to exchange such interest for
Securities of such series and of like tenor and principal amount
of another authorized form and denomination, as specified as
contemplated by Section 301 and provided that any applicable
notice provided in the permanent Global Security shall have been
given, then without unnecessary delay but in any event not later
than the earliest date on which such interest may be so
exchanged, the Partnership shall execute, and the Trustee shall
authenticate and deliver definitive Securities in aggregate
principal amount equal to the principal amount of such beneficial
owner's interest in such permanent Global Security. On or after
the earliest date on which such interests may be so exchanged,
such permanent Global Security shall be surrendered for exchange
by DTC or such other depositary as shall be specified in the
Partnership Order with respect thereto to the Trustee, as the
Partnership's agent for such purpose; provided, however, that no
such exchanges may occur during a period beginning at the opening
of business 15 days before any selection of Securities to be
redeemed and ending on the relevant Redemption Date if the
Security for which exchange is requested may be among those
selected for redemption; and provided further that no Bearer
Security delivered in exchange for a portion of a permanent
Global Security shall be mailed or otherwise delivered to any
location in the United States. If a Registered Security is
issued in exchange for any portion of a permanent Global Security
after the close of business at the office or agency where such
exchange occurs on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant
Interest Payment Date, or (ii) any Special Record Date and the
opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, interest or
<PAGE>
Defaulted Interest, as the case may be, will not be payable on
such Interest Payment Date or proposed date for payment, as the
case may be, in respect of such Registered Security, but will be
payable on such Interest Payment Date or proposed date for
payment, as the case may be, only to the Person to whom interest
in respect of such portion of such permanent Global Security is
payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the
Partnership, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange or redemption shall (if
so required by the Partnership or the Security Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Partnership and the Security
Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Securities, but the Partnership may
require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1107 or 1305 not
involving any transfer.
The Partnership or the Trustee, as applicable, shall not be
required (i) to issue, register the transfer of or exchange any
Security if such Security may be among those selected for
redemption during a period beginning at the opening of business
15 days before selection of the Securities to be redeemed under
Section 1103 and ending at the close of business on (A) if such
Securities are issuable only as Registered Securities, the day of
the mailing of the relevant notice of redemption and (B) if such
Securities are issuable as Bearer Securities, the day of the
first publication of the relevant notice of redemption or, if
such Securities are also issuable as Registered Securities and
there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any
Registered Security so selected for redemption in whole or in
part, except, in the case of any Registered Security to be
redeemed in part, the portion thereof not to be redeemed, or
(iii) to exchange any Bearer Security so selected for redemption
except that such a Bearer Security may be exchanged for a
Registered Security of that series and like tenor, provided that
such Registered Security shall be simultaneously surrendered for
redemption, or (iv) to issue, register the transfer of or
exchange any Security which has been surrendered for repayment at
the option of the Holder, except the portion, if any, of such
Security not to be so repaid.
SECTION 306. Mutilated, Destroyed, Lost and Stolen
Securities. If any mutilated Security or a Security with a
mutilated coupon appertaining to it is surrendered to the Trustee
<PAGE>
or the Partnership, together with, in proper cases, such security
or indemnity as may be required by the Partnership or the Trustee
to save each of them or any agent of either of them harmless, the
Partnership shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same series
and principal amount, containing identical terms and provisions
and bearing a number not contemporaneously outstanding, with
coupons corresponding to the coupons, if any, appertaining to the
surrendered Security.
If there shall be delivered to the Partnership and to the
Trustee (i) evidence to their satisfaction of the destruction,
loss or theft of any Security or coupon, and (ii) such security
or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of
notice to the Partnership or the Trustee that such Security or
coupon has been acquired by a bona fide purchaser, the
Partnership shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security or in exchange for the Security to which a
destroyed, lost or stolen coupon appertains (with all appurtenant
coupons not destroyed, lost or stolen), a new Security of the
same series and principal amount, containing identical terms and
provisions and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any,
appertaining to such destroyed, lost or stolen Security or to the
Security to which such destroyed, lost or stolen coupon
appertains.
Notwithstanding the provisions of the previous two
paragraphs, in case any such mutilated, destroyed, lost or stolen
Security or coupon has become or is about to become due and
payable, the Partnership in its discretion may, instead of
issuing a new Security, with coupons corresponding to the
coupons, if any, appertaining to such destroyed, lost or stolen
Security or to the Security to which such destroyed, lost or
stolen coupon appertains, pay such Security or coupon; provided,
however, that payment of principal of (and premium, if any), any
interest on and any Additional Amounts with respect to, Bearer
Securities shall, except as otherwise provided in Section 1002,
be payable only at an office or agency located outside the United
States and, unless otherwise specified as contemplated by Section
301, any interest on Bearer Securities shall be payable only upon
presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this Section,
the Partnership may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every new Security of any series with its coupons, if any,
issued pursuant to this Section in lieu of any destroyed, lost or
stolen Security, or in exchange for a Security to which a
destroyed, lost or stolen coupon appertains, shall constitute an
original additional contractual obligation of the Partnership,
whether or not the destroyed, lost or stolen Security and its
<PAGE>
coupons, if any, or the destroyed, lost or stolen coupon shall be
at any time enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionately with
any and all other Securities of that series and their coupons, if
any, duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities or coupons.
SECTION 307. Payment of Interest; Interest Rights
Preserved. Except as otherwise specified with respect to a
series of Securities in accordance with the provisions of
Section 301, interest on any Registered Security that is payable,
and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to 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 at the office or agency of the Partnership maintained
for such purpose pursuant to Section 1002; provided, however,
that each installment of interest on any Registered Security may
at the Partnership's option be paid by (i) mailing a check for
such interest, payable to or upon the written order of the Person
entitled thereto pursuant to Section 308, to the address of such
Person as it appears on the Security Register or (ii) transfer to
an account maintained by the payee located inside the United
States.
Unless otherwise provided as contemplated by Section 301
with respect to the Securities of any series, payment of interest
may be made, in the case of a Bearer Security, by transfer to an
account maintained by the payee with a bank located outside the
United States.
Unless otherwise provided as contemplated by Section 301,
every permanent global Security will provide that interest, if
any, payable on any Interest Payment Date will be paid to DTC,
Euroclear and/or CEDEL, as the case may be, with respect to that
portion of such permanent global Security held for its account by
Cede & Co. or the Common Depositary, as the case may be, for the
purpose of permitting such party to credit the interest received
by it in respect of such permanent global Security to the
accounts of the beneficial owners thereof.
In case a Bearer Security of any series is surrendered in
exchange for a Registered Security of such series after the close
of business (at an office or agency in a Place of Payment for
such series) on any Regular Record Date and before the opening of
business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date and
interest will not be payable on such Interest Payment Date in
respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of such
coupon when due in accordance with the provisions of this
Indenture.
<PAGE>
Except as otherwise specified with respect to a series of
Securities in accordance with the provisions of Section 301, any
interest on any Registered Security of any series that is
payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the registered Holder thereof on
the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the
Partnership, at its election in each case, as provided in clause
(1) or (2) below:
(1) The Partnership may elect to make payment of
any Defaulted Interest to the Persons in whose names the
Registered Securities of such series (or their respective
Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following
manner. The Partnership shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on
each Registered Security of such series and the date of the
proposed payment (which shall not be less than 20 days after
such notice is received by the Trustee), and at the same
time the Partnership shall deposit with the Trustee an
amount of money in the currency or currencies, currency unit
or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such
series) equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit on
or prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the
Partnership of such Special Record Date and, in the name and
at the expense of the Partnership, shall cause notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Registered Securities of such
series at his address as it appears in the Security Register
not less than 10 days prior to such Special Record Date.
The Trustee may, in its discretion, in the name and at the
expense of the Partnership, cause a similar notice to be
published at least once in an Authorized Newspaper in each
Place of Payment, but such publications shall not be a
condition precedent to the establishment of such Special
Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Persons in whose names the Registered
Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on such
<PAGE>
Special Record Date and shall no longer be payable pursuant
to the following clause (2). In case a Bearer Security of
any series is surrendered at the office or agency in a Place
of Payment for such series in exchange for a Registered
Security of such series after the close of business at such
office or agency on any Special Record Date and before the
opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the coupon relating to
such proposed date of payment and Defaulted Interest will
not be payable on such proposed date of payment in respect
of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of
this Indenture.
(2) The Partnership may make payment of any
Defaulted Interest on the Registered Securities of any
series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
Partnership to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any
other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners. Prior to due
presentment of a Registered Security for registration of
transfer, the Partnership, the Trustee and any agent of the
Partnership or the Trustee may treat the Person in whose name
such Registered Security is registered as the owner of such
Security for the purpose of receiving payment of principal of
(and premium, if any), and (subject to Sections 305 and 307)
interest on, such Registered Security and for all other purposes
whatsoever, whether or not such Registered Security be overdue,
and neither the Partnership, the Trustee nor any agent of the
Partnership or the Trustee shall be affected by notice to the
contrary. All such payments so made to any such Person, or upon
such Person's order, shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the
liability for money payable upon any such Security.
Title to any Bearer Security and any coupons appertaining
thereto shall pass by delivery. The Partnership, the Trustee and
any agent of the Partnership or the Trustee may treat the Holder
of any Bearer Security and the Holder of any coupon as the
absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Security or coupon be
overdue, and neither the Partnership, the Trustee nor any agent
of the Partnership or the Trustee shall be affected by notice to
the contrary.
<PAGE>
No Holder of any beneficial interest in any Global Security
held on its behalf by a depositary shall have any rights under
this Indenture with respect to such Global Security and such
depositary shall be treated by the Partnership, the Trustee, and
any agent of the Partnership or the Trustee as the owner of such
Global Security for all purposes whatsoever. None of the
Partnership, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests of a Global Security or for
maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any Global
Security, nothing herein shall prevent the Partnership, the
Trustee, or any agent of the Partnership or the Trustee, from
giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with
respect to such Global Security or impair, as between such
depositary and owners of beneficial interests in such Global
Security, the operation of customary practices governing the
exercise of the rights of such depositary (or its nominee) as
Holder of such Global Security.
SECTION 309. Cancellation. All Securities and coupons
surrendered for payment, redemption, repayment at the option of
the Holder, registration of transfer or exchange or for credit
against any sinking fund payment shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee, and
any such Securities and coupons and Securities and coupons
surrendered directly to the Trustee for any such purpose shall be
promptly canceled by it. The Partnership may at any time deliver
to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Partnership may
have acquired in any manner whatsoever, and may deliver to the
Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder
which the Partnership has not issued and sold, and all Securities
so delivered shall be promptly canceled by the Trustee. If the
Partnership shall so acquire any of the Securities, however, such
acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Securities unless and until
the same are surrendered to the Trustee for cancellation. No
Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. Canceled Securities and
coupons held by the Trustee shall be destroyed by the Trustee and
the Trustee shall deliver a certificate of such destruction to
the Partnership, unless the Trustee is otherwise directed by a
Partnership Order.
SECTION 310. Computation of Interest. Except as otherwise
specified as contemplated by Section 301 with respect to
Securities of any series, interest on the Securities of each
series shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
<PAGE>
ARTICLE FOUR - SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture. This
Indenture shall upon Partnership Request cease to be of further
effect with respect to any series of Securities specified in such
Partnership Request (except as to any surviving rights of
registration of transfer or exchange of Securities of such series
herein expressly provided for and any right to receive Additional
Amounts, as provided in Section 1009), and the Trustee, upon
receipt of a Partnership Order, and at the expense of the
Partnership, shall execute instruments in form and substance
satisfactory to the Trustee and the Partnership acknowledging
satisfaction and discharge of this Indenture as to such series
when
(1) either
(A) all Securities of such series theretofore
authenticated and delivered and all coupons, if any,
appertaining thereto (other than (i) coupons
appertaining to Bearer Securities surrendered for
exchange for Registered Securities and maturing after
such exchange, whose surrender is not required or has
been waived as provided in Section 305, (ii) Securities
and coupons of such series which have been destroyed,
lost or stolen and which have been replaced or paid as
provided in Section 306, (iii) coupons appertaining to
Securities called for redemption and maturing after the
relevant Redemption Date, whose surrender has been
waived as provided in Section 1106, and (iv) Securities
and coupons of such series for whose payment money has
theretofore been deposited in trust or segregated and
held in trust by the Partnership and thereafter repaid
to the Partnership or discharged from such trust, as
provided in Section 1003) have been delivered to the
Trustee for cancellation; or
(B) all Securities of such series and, in the
case of (i) or (ii) below, any coupons appertaining
thereto not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) if redeemable at the option of the
Partnership, are to be called for redemption
within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of
the Partnership,
and the Partnership, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for
<PAGE>
the purpose an amount in the currency or currencies,
currency unit or units or composite currency or
currencies in which the Securities of such series are
payable, sufficient to pay and discharge the entire
indebtedness on such Securities and such coupons not
theretofore delivered to the Trustee for cancellation,
for principal (and premium, if any) and interest, and
any Additional Amounts with respect thereto, to the
date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Partnership has paid or caused to be paid
all other sums payable hereunder by the Partnership; and
(3) the Partnership has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Partnership to the Trustee and any
predecessor Trustee under Section 606, the obligations of the
Partnership to any Authenticating Agent under Section 611 and, if
money shall have been deposited with and held by the Trustee
pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Funds. Subject to the
provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of
the Securities, the coupons and this Indenture, to the payment,
either directly or through any Paying Agent (including the
Partnership acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and
premium, if any), and any interest and Additional Amounts for
whose payment such money has been deposited with or received by
the Trustee, but such money need not be segregated from other
funds except to the extent required by law.
ARTICLE FIVE - REMEDIES
SECTION 501. Events of Default. "Event of Default,"
wherever used herein with respect to any particular series of
Securities, means any one of the following events (whatever the
reason for such Event of Default and whether or not it shall be
voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental
body):
(1) default in the payment of any interest upon
or any Additional Amounts payable in respect of any Security
of that series or of any coupon appertaining thereto, when
<PAGE>
such interest, Additional Amounts or coupon becomes due and
payable, and continuance of such default for a period of 30
days; or
(2) default in the payment of the principal of
(or premium, if any, on) any Security of that series when it
becomes due and payable at its Maturity and continuance of
such default for a period of 5 days; or
(3) default in the deposit of any sinking fund
payment, when and as due by the terms of any Security of
that series and continuance of such default for a period of
5 days; or
(4) default in the performance, or breach, of any
covenant or warranty of the Partnership in this Indenture
with respect to any Security of that series (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt
with), and continuance of such default or breach for a
period of 60 days after there has been given, by registered
or certified mail, to the Partnership by the Trustee or to
the Partnership and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of
that series a written notice specifying such default or
breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(5) 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 Partnership (or by
any Subsidiary, the repayment of which the Partnership has
guaranteed or for which the Partnership is directly
responsible or liable as obligor or guarantor), having an
aggregate principal amount outstanding of at least
$10,000,000, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in
such indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise have become
due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or
annulled, within a period of 10 days after there shall have
been given, by registered or certified mail, to the Partn-
ership by the Trustee, or to the Partnership and the Trustee
by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series, a written notice
specifying such default and requiring the Partnership to
cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that
such notice is a "Notice of Default" hereunder; provided,
however, that such a default on indebtedness which
constitutes tax-exempt financing having an aggregate
principal amount outstanding not exceeding $25,000,000 that
results solely from a failure of an entity providing credit
support for such indebtedness to honor a demand for payment
on a letter of credit shall not constitute an Event of
Default; or
<PAGE>
(6) the Partnership or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for
relief against it in an involuntary case,
(C) consents to the appointment of a
Custodian of it or for all or substantially all of its
property, or
(D) makes a general assignment for the
benefit of its creditors; or
(7) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against the Partnership or
any Significant Subsidiary in an involuntary case,
(B) appoints a Custodian of the Partnership
or any Significant Subsidiary or for all or
substantially all of either of its property, or
(C) orders the liquidation of the
Partnership or any Significant Subsidiary, and the
order or decree remains unstayed and in effect for 90
days; or
(8) any other Event of Default provided with
respect to Securities of that series.
As used in this Section 501, the term "Bankruptcy Law" means
title 11, U.S. Code or any similar Federal or state law for the
relief of debtors and the term "Custodian" means any receiver,
trustee, assignee, liquidator or other similar official under any
Bankruptcy Law.
SECTION 502. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default with respect to Securities of
any series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less
than 25% in principal amount of the Outstanding Securities of
that series may declare the principal amount (or, if Securities
of that Series are Original Issue Discount Securities or Indexed
Securities, such portion of the principal as may be specified in
the terms thereof) of all the Securities of that series to be due
and payable immediately, by a notice in writing to the
Partnership (and to the Trustee if given by the Holders), and
upon any such declaration such principal or specified portion
thereof shall become immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a
judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article provided, the
<PAGE>
Holders of a majority in principal amount of the Outstanding
Securities of that series, by written notice to the Partnership
and the Trustee, may rescind and annul such declaration of
acceleration and its consequences if:
(1) the Partnership has paid or deposited with
the Trustee a sum sufficient to pay in the currency,
currency unit or composite currency in which the Securities
of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series):
(A) all overdue installments of interest on
and any Additional Amounts payable in respect of all
Outstanding Securities of that series and any related
coupons,
(B) the principal of (and premium, if any,
on) any Outstanding Securities of that series which
have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates
borne by or provided for in such Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue installments
of interest and any Additional Amounts at the rate or
rates borne by or provided for in such Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel; and
(2) all Events of Default with respect to
Securities of that series, other than the nonpayment of the
principal of (or premium, if any) or interest on Securities
of that series which have become due solely by such
declaration of acceleration, have been cured or waived as
provided in Section 513.
No such rescission shall affect any subsequent default or impair
any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Partnership covenants that if:
(1) default is made in the payment of any
installment of interest or Additional Amounts, if any, on
any Security of any series and any related coupon when such
interest or Additional Amount becomes due and payable and
such default continues for a period of 30 days, or
(2) default is made in the payment of the
principal of (or premium, if any, on) any Security of any
series at its Maturity and such default continues for a
period of 5 days,
then the Partnership will, upon demand of the Trustee, pay to the
Trustee, for the benefit of the Holders of such Securities of
<PAGE>
such series and coupons, the whole amount then due and payable on
such Securities and coupons for principal (and premium, if any)
and interest and Additional Amounts, with interest upon any
overdue principal (and premium, if any) and, to the extent that
payment of such interest shall be legally enforceable, upon any
overdue installments of interest or Additional Amounts, if any,
at the rate or rates borne by or provided for in such Securities,
and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Partnership fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid, and may prosecute such
proceeding to judgment or final decree, and may enforce the same
against the Partnership or any other obligor upon such Securities
of such series and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the
Partnership or any other obligor upon such Securities of such
series, wherever situated.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the
rights of the Holders of Securities of such series and any
related coupons by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such
rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Partnership or any
other obligor upon the Securities or the property of the
Partnership or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities
of any series shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Partnership for the
payment of overdue principal, premium, if any, or interest) shall
be entitled and empowered, by intervention in such proceeding or
otherwise:
(i) to file and prove a claim for the whole
amount, or such lesser amount as may be provided for in the
Securities of such series, of principal (and premium, if
any) and interest and Additional Amounts, if any, owing and
unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
<PAGE>
(ii) to collect and receive any moneys or
other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) in any such judicial
proceeding is hereby authorized by each Holder of Securities of
such series and coupons to make such payments to the Trustee, and
in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and any predecessor
Trustee, their agents and counsel, and any other amounts due the
Trustee or any predecessor Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Holder of a Security or coupon any plan of reorganization,
arrangement, adjustment or composition affecting the Securities
or coupons or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party) the Trustee
shall be held to represent all the Holders of the Securities, and
it shall not be necessary to make any Holders of the Securities
parties to any such proceedings.
SECTION 505. Trustee May Enforce Claims Without Possession
of Securities or Coupons. All rights of action and claims under
this Indenture or any of the Securities or coupons may be
prosecuted and enforced by the Trustee without the possession of
any of the Securities or coupons or the production thereof in any
proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the
Securities and coupons in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected. Any money
collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account
of principal (or premium, if any) or interest and any Additional
Amounts, upon presentation of the Securities or coupons, or both,
as the case may be, and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
and any predecessor Trustee under Section 606;
<PAGE>
SECOND: To the payment of the amounts then due and
unpaid upon the Securities and coupons for principal (and
premium, if any) and interest and any Additional Amounts
payable, in respect of which or for the benefit of which
such money has been collected, ratably, without preference
or priority of any kind, according to the aggregate amounts
due and payable on such Securities and coupons for principal
(and premium, if any), interest and Additional Amounts,
respectively; and
THIRD: To the payment of the remainder, if any, to the
Partnership.
SECTION 507. Limitation on Suits. No Holder of any
Security of any series or any related coupon shall have any right
to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written
notice to the Trustee of a continuing Event of Default with
respect to the Securities of that series;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities of that series shall
have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the
Trustee indemnity reasonably satisfactory to the Trustee
against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of
the Outstanding Securities of that series;
it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other of such Holders, or
to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal
and ratable benefit of all such Holders.
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium, if any, Interest and Additional Amounts.
Notwithstanding any other provision in this Indenture, the Holder
of any Security or coupon shall have the right which is absolute
and unconditional to receive payment of the principal of (and
<PAGE>
premium, if any) and (subject to Sections 305 and 307) interest
on, and any Additional Amounts in respect of, such Security or
payment of such coupon on the respective due dates expressed in
such Security or coupon (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any
such payment, and such rights shall not be impaired without the
consent of such Holder.
SECTION 509. Restoration of Rights and Remedies. If the
Trustee or any Holder of a Security or coupon has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, the Partnership, the
Trustee and the Holders of Securities and coupons shall, subject
to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities or coupons in the
last paragraph of Section 306, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders of
Securities or coupons is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 511. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Security or
coupon to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the
Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the
Holders of Securities or coupons, as the case may be.
SECTION 512. Control by Holders of Securities. The Holders
of not less than a majority in principal amount of the
Outstanding Securities of any series shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee with respect to the Securities
of such series, provided that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture,
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction, and
<PAGE>
(3) the Trustee need not take any action which
might involve it in personal liability or be unduly
prejudicial to the Holders of Securities of such series not
joining therein.
Nothing in this Indenture shall impair the right of the
Trustee in its discretion to take any action deemed proper by the
Trustee and which is not inconsistent with such direction by
Holders.
SECTION 513. Waiver of Past Defaults. The Holders of not
less than a majority in principal amount of the Outstanding
Securities of any series may on behalf of the Holders of all the
Securities of such series and any related coupons waive any past
default hereunder with respect to such series and its
consequences, except a default
(1) in the payment of the principal of (or
premium, if any) or interest on or Additional Amounts
payable in respect of any Security of such series or any
related coupons, or
(2) in respect of a covenant or provision hereof
which under Article Nine cannot be modified or amended
without the consent of the Holder of each Outstanding
Security of such series affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon.
SECTION 514. Waiver of Usury, Stay or Extension Laws. The
Partnership covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any
usury, stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Partnership (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 515. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit having
due regard to the merits and good faith of the claims or defenses
<PAGE>
made by such party litigant; but the provisions of this Section
shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the
Outstanding Securities of any series, or to any suit instituted
by any Holder for the enforcement of the payment of the principal
of (or premium, if any) or interest on any Security on or after
the respective Stated Maturities expressed in such Security (or,
in the case of redemption, on or after the Redemption Date).
ARTICLE SIX - THE TRUSTEE
SECTION 601. Notice of Defaults. Within 90 days after the
occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice
of such default hereunder known to the Trustee, unless such
default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal
of (or premium, if any) or interest on or any Additional Amounts
with respect to any Security of such series, or in the payment of
any sinking fund installment with respect to the Securities of
such series, the Trustee shall be protected in withholding such
notice if and so long as Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in
the interests of the Holders of the Securities and coupons of
such series; and provided further that in the case of any default
or breach of the character specified in Section 501(4) with
respect to the Securities and coupons of such series, no such
notice to Holders shall be given until at least 60 days after the
occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of
time or both would become, an Event of Default with respect to
the Securities of such series.
SECTION 602. Certain Rights of Trustee. Subject to the
provisions of TIA Section 315(a) through 315(d):
(1) the Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
coupon or other paper or document believed by it to be
genuine and to have been signed or presented by the proper
party or parties;
(2) any request or direction of the Partnership
mentioned herein shall be sufficiently evidenced by a
Partnership Request or Partnership Order (other than
delivery of any Security, together with any coupons
appertaining thereto, to the Trustee for authentication and
delivery pursuant to Section 303 which shall be sufficiently
evidenced as provided therein) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board
Resolution;
<PAGE>
(3) whenever in the administration of this
Indenture the Trustee shall deem it desirable that a matter
be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers'
Certificate;
(4) the Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders
of Securities of any series or any related coupons pursuant
to this Indenture, unless such Holders shall have offered to
the Trustee security or indemnity reasonably satisfactory to
the Trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, coupon or other paper or document, unless
requested in writing so to do by the Holders of not less
than a majority in aggregate principal amount of the
Outstanding Securities of any series; provided that, if the
payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such
expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such examination shall be paid
by the Holders or, if paid by the Trustee, shall be repaid
by the Holders upon demand. The Trustee, in its discretion,
may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books,
records and premises of the Partnership and the Company, as
applicable, relevant to the facts or matters that are the
subject of its inquiry, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed
with due care by it hereunder; and
<PAGE>
(8) the Trustee shall not be liable for any
action taken, suffered or omitted by it in good faith and
reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Indenture.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
Except during the continuance of an Event of Default, the
Trustee undertakes to perform only such duties as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee.
SECTION 603. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities,
except the Trustee's certificate of authentication, and in any
coupons shall be taken as the statements of the Partnership, and
neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or of the Securities or coupons, except that the
Trustee represents that it is duly authorized to execute and
deliver this Indenture, authenticate the Securities and perform
its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or
application by the Partnership of Securities or the proceeds
thereof.
SECTION 604. May Hold Securities. The Trustee, any Paying
Agent, Security Registrar, Authenticating Agent or any other
agent of the Partnership, in its individual or any other
capacity, may become the owner or pledgee of Securities and
coupons and, subject to TIA Sections 310(b) and 311, may
otherwise deal with the Partnership with the same rights it would
have if it were not Trustee, Paying Agent, Security Registrar,
Authenticating Agent or such other agent.
SECTION 605. Money Held in Trust. Money held by the
Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Partnership.
SECTION 606. Compensation and Reimbursement. The
Partnership agrees:
(1) to pay to the Trustee from time to time
reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee
of an express trust);
<PAGE>
(2) except as otherwise expressly provided
herein, to reimburse each of the Trustee and any predecessor
Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture
(including the reasonable compensation and the reasonable
expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any
predecessor Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence
or bad faith on its part, arising out of or in connection
with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties
hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(6)
or Section 501(7), the expenses (including the reasonable charges
and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration
under any applicable Federal or state bankruptcy, insolvency or
other similar law.
As security for the performance of the obligations of the
Partnership under this Section, the Trustee shall have a lien
prior to the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for
the payment of principal of (or premium, if any) or interest on
particular Securities or any coupons.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 607. Corporate Trustee Required; Eligibility;
Conflicting Interests. There shall at all times be a Trustee
hereunder which shall be eligible to act as Trustee under TIA
Section 310(a)(1) and shall have a combined capital and surplus
of at least $50,000,000. If such corporation publishes reports
of condition at least annually, pursuant to law or the
requirements of Federal, state, territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article. Neither the Partnership nor any
Person directly or indirectly controlling, controlled by, or
under common control with the Partnership shall serve as Trustee.
SECTION 608. Resignation and Removal; Appointment of
Successor.
<PAGE>
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements
of Section 609.
(b) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice
thereof to the Partnership. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time with
respect to the Securities of any series by Act of the Holders of
a majority in principal amount of the Outstanding Securities of
such series delivered to the Trustee and to the Partnership.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of TIA Section 310(b) after written request
therefor by the Partnership or by any Holder of a Security
who has been a bona fide Holder of a Security for at least
six months, or
(2) the Trustee shall cease to be eligible under
Section 607 and shall fail to resign after written request
therefor by the Partnership or by any Holder of a Security
who has been a bona fide Holder of a Security for at least
six months, or
(3) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a receiver
of the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Partnership by or pursuant to a
Board Resolution may remove the Trustee and appoint a successor
Trustee with respect to all Securities, or (ii) subject to TIA
Section 315(e), any Holder of a Security who has been a bona fide
Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause with respect to the Securities of one or
more series, the Partnership, by or pursuant to a Board
Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series
(it being understood that any such successor Trustee may be
<PAGE>
appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series). If,
within one year after such resignation, removal or incapability,
or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act
of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the
Partnership and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the
successor Trustee appointed by the Partnership. If no successor
Trustee with respect to the Securities of any series shall have
been so appointed by the Partnership or the Holders of Securities
and accepted appointment in the manner hereinafter provided, any
Holder of a Security who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee
with respect to Securities of such series.
(f) The Partnership shall give notice of each
resignation and each removal of the Trustee with respect to the
Securities of any series and each appointment of a successor
Trustee with respect to the Securities of any series in the
manner provided for notices to the Holders of Securities in
Section 106. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the
address of its Corporate Trust Office.
SECTION 609. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the
Partnership and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of
the retiring Trustee; but, on request of the Partnership or the
successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the
retiring Trustee, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such
retiring Trustee hereunder, subject nevertheless to its claim, if
any, provided for in Section 606.
(b) In case of the appointment hereunder of a
successor Trustee with respect to the Securities of one or more
(but not all) series, the Partnership, the retiring Trustee and
each successor Trustee with respect to the Securities of one or
more series shall execute and deliver an indenture supplemental
hereto, pursuant to Article Nine hereof, wherein each successor
Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer
<PAGE>
and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities,
shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of
that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the
execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee
relates; but, on request of the Partnership or any successor
Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor
Trustee relates.
(c) Upon request of any such successor Trustee, the
Partnership shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Trustee
all such rights, powers and trusts referred to in paragraph (a)
or (b) of this Section 609, as the case may be.
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.
SECTION 610. Merger, Conversion, Consolidation or
Succession to Business. Any corporation into which the Trustee
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Securities or coupons
shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities or coupons so
<PAGE>
authenticated with the same effect as if such successor Trustee
had itself authenticated such Securities or coupons. In case any
Securities or coupons shall not have been authenticated by such
predecessor Trustee, any such successor Trustee may authenticate
and deliver such Securities or coupons, in either its own name or
that of its predecessor Trustee, with the full force and effect
which this Indenture provides for the certificate of
authentication of the Trustee.
SECTION 611. Appointment of Authenticating Agent. At any
time when any of the Securities remain Outstanding, the Trustee
may appoint an Authenticating Agent or Agents with respect to one
or more series of Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series
issued upon exchange, registration of transfer or partial
redemption or repayment thereof, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Any such appointment shall be evidenced by an
instrument in writing signed by a Responsible Officer of the
Trustee, a copy of which instrument shall be promptly furnished
to the Partnership. Wherever reference is made in this Indenture
to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Partnership and shall at all times be a bank or
trust company or corporation organized and doing business and in
good standing under the laws of the United States of America or
of any state or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital
and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or state authorities. If
such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or the requirements of the aforesaid
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
In case at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a
party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation
shall be otherwise eligible under this Section, without the
execution or filing of any paper or further act on the part of
the Trustee or the Authenticating Agent.
<PAGE>
An Authenticating Agent for any series of Securities may at
any time resign by giving written notice of resignation to the
Trustee for such series and to the Partnership. The Trustee for
any series of Securities may at any time terminate the agency of
an Authenticating Agent by giving written notice of termination
to such Authenticating Agent and to the Partnership. Upon
receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating Agent
shall cease to be eligible in accordance with the provisions of
this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Partnership
and shall give notice of such appointment to all Holders of
Securities of the series with respect to which such
Authenticating Agent will serve in the manner set forth in
Section 106. Any successor Authenticating Agent upon acceptance
of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent herein.
No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section.
The Partnership agrees to pay to each Authenticating Agent
from time to time reasonable compensation including reimbursement
of its reasonable expenses for its services under this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have
endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication, an alternate certificate of
authentication substantially in the following form:
This is one of the Securities of the series designated
therein referred to in the within- mentioned Indenture.
MARINE MIDLAND BANK
as Trustee
By:______________________________
as Authenticating Agent
By:______________________________
Authorized Signatory
SECTION 612. Certain Duties and Responsibilities of the
Trustee.
(a) With respect to the Securities of any series,
except during the continuance of an Event of Default with respect
to the Securities of such series:
(1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
<PAGE>
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; but in the case of any
such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture, but shall
not be under any duty to verify the contents or accuracy thereof.
(b) In case an Event of Default with respect to the
Securities of any series has occurred and is continuing, the
Trustee shall, with respect to Securities of such series,
exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this Subsection shall not be construed to
limit the effect of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(3) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Securities of any series
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities of such series; and
(4) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(d) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section 612.
<PAGE>
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY TRUSTEE AND
PARTNERSHIP
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities or coupons, by receiving and holding
the same, agrees with the Partnership and the Trustee that
neither the Partnership nor the Trustee nor any Authenticating
Agent nor any Paying Agent nor any Security Registrar shall be
held accountable by reason of the disclosure of any information
as to the names and addresses of the Holders of Securities in
accordance with TIA Section 312, regardless of the source from
which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material
pursuant to a request made under TIA Section 312(b).
SECTION 702. Reports by Trustee. The Trustee shall
transmit to Holders such reports concerning the Trustee and its
actions under this Indenture as may be required by TIA Section
313 at the times and in the manner provided by the TIA, which
shall initially be not less than every twelve months commencing
on May 15, 1999. A copy of each such report shall, at the time
of such transmission to Holders, be filed by the Trustee with
each stock exchange, if any, upon which any Securities are
listed, with the Commission and with the Partnership. The
Partnership will notify the Trustee when any Securities are
listed on any stock exchange.
SECTION 703. Reports by Partnership. The Partnership will:
(1) file with the Trustee, within 15 days after
the Partnership is required to file the same with the
Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the
Partnership may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or, if the Partnership is not required
to file information, documents or reports pursuant to either
of such Sections, then it will file with the Trustee and the
Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 of the
Securities Exchange Act of 1934 in respect of a security
listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time
to time by the Commission, such additional information,
documents and reports with respect to compliance by the
Partnership with the conditions and covenants of this
Indenture as may be required from time to time by such rules
and regulations; and
<PAGE>
(3) transmit by mail to the Holders of
Securities, within 30 days after the filing thereof with the
Trustee, in the manner and to the extent provided in TIA
Section 313(c), such summaries of any information, documents
and reports required to be filed by the Partnership pursuant
to paragraphs (1) and (2) of this Section as may be required
by rules and regulations prescribed from time to time by the
Commission.
SECTION 704. Partnership to Furnish Trustee Names and
Addresses of Holders. The Partnership will furnish or cause to
be furnished to the Trustee:
(a) semiannually, not later than 15 days after the
Regular Record Date for interest for each series of Securities, a
list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Registered Securities of
such series as of such Regular Record Date, or if there is no
Regular Record Date for interest for such series of Securities,
semiannually, upon such dates as are set forth in the Board
Resolution or indenture supplemental hereto authorizing such
series, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Partnership of
any such request, a list of similar form and content as of a date
not more than 15 days prior to the time such list is furnished,
provided, however, that, so long as the Trustee is the Security
Registrar, no such list shall be required to be furnished.
ARTICLE EIGHT - CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. Consolidations and Mergers of Partnership and
Sales, Leases and Conveyances Permitted Subject to Certain
Conditions. The Partnership may consolidate with, or sell, lease
or convey all or substantially all of its assets to, or merge
with or into, any other entity, provided that in any such case,
(1) either the Partnership shall be the continuing entity, or the
successor entity (if other than the Partnership) formed by or
resulting from any such consolidation or merger or which shall
have received the transfer of such assets, shall expressly assume
the due and punctual payment of the principal of (and premium, if
any) and any interest (including all Additional Amounts, if any,
payable pursuant to Section 1009) on all of the Securities,
according to their tenor, and the due and punctual performance
and observance of all of the covenants and conditions of this
Indenture to be performed by the Partnership by supplemental
indenture, complying with Article Nine hereof, satisfactory to
the Trustee, executed and delivered to the Trustee by such entity
and (2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the
Partnership or any Subsidiary as a result thereof as having been
incurred by the Partnership or such Subsidiary at the time of
such transaction, no Event of Default, and no event which, after
notice or the lapse of time, or both, would become an Event of
Default, shall have occurred and be continuing.
<PAGE>
SECTION 802. Rights and Duties of Successor Entity. In
case of any such consolidation, merger, sale, lease or conveyance
and upon any such assumption by the successor entity, such
successor entity shall succeed to and be substituted for the
Partnership, with the same effect as if it had been named herein
as the party of the first part, and the predecessor entity,
except in the event of a lease, shall be relieved of any further
obligation under this Indenture and the Securities. Such
successor entity thereupon may cause to be signed, and may issue
either in its own name or in the name of the Partnership, any or
all of the Securities issuable hereunder which theretofore shall
not have been signed by the Partnership and delivered to the
Trustee; and, upon the order of such successor entity, instead of
the Partnership, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously
shall have been signed and delivered by the Partnership to the
Trustee for authentication, and any Securities which such
successor entity thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though
all of such Securities had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, lease or
conveyance, such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued
as may be appropriate.
SECTION 803. Officers' Certificate and Opinion of Counsel.
Any consolidation, merger, sale, lease or conveyance permitted
under Section 801 is also subject to the condition that the
Trustee receive an Officers' Certificate and an Opinion of
Counsel to the effect that any such consolidation, merger, sale,
lease or conveyance, and the assumption by any successor entity,
complies with the provisions of this Article and that all
conditions precedent herein provided for relating to such
transaction have been complied with.
ARTICLE NINE - SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holders of Securities or
coupons, the Partnership, when authorized by or pursuant to a
Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto,
in form satisfactory to the Trustee, for any of the following
purposes:
(1) to evidence the succession of another Person
to the Partnership and the assumption by any such successor
of the covenants of the Partnership herein and in the
Securities contained; or
<PAGE>
(2) to add to the covenants of the Partnership
for the benefit of the Holders of all or any series of
Securities (and if such covenants are to be for the benefit
of less than all series of Securities, stating that such
covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power
herein conferred upon the Partnership; or
(3) to add any additional Events of Default for
the benefit of the Holders of all or any series of
Securities (and if such Events of Default are to be for the
benefit of less than all series of Securities, stating that
such Events of Default are expressly being included solely
for the benefit of such series); provided, however, that in
respect of any such additional Events of Default such
supplemental indenture may provide for a particular period
of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or
may provide for an immediate enforcement upon such default
or may limit the remedies available to the Trustee upon such
default or may limit the right of the Holders of a majority
in aggregate principal amount of that or those series of
Securities to which such additional Events of Default apply
to waive such default; or
(4) to add to or change any of the provisions of
this Indenture to provide that Bearer Securities may
be registrable as to principal, to change or eliminate any
restrictions on the payment of principal of or any premium
or interest on Bearer Securities, to permit Bearer
Securities to be issued in exchange for Registered
Securities, to permit Bearer Securities to be issued in
exchange for Bearer Securities of other authorized
denominations or to permit or facilitate the issuance of
Securities in uncertificated form, provided that any such
action shall not adversely affect the interests of the
Holders of Securities of any series or any related coupons
in any material respect; or
(5) to change or eliminate any of the provisions
of this Indenture, provided that any such change or
elimination shall become effective only when there is no
Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled
to the benefit of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities
of any series and any related coupons as permitted by
Sections 201 and 301; or
(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to
the Securities of one or more series and to add to or change
any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee; or
<PAGE>
(9) to cure any ambiguity, to correct or
supplement any provision herein which may be defective or
inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture, provided such
provisions shall not adversely affect the interests of the
Holders of Securities of any series or any related coupons
in any material respect; or
(10) to supplement any of the provisions of this
Indenture to such extent as shall be necessary to permit or
facilitate the defeasance and discharge of any series of
Securities pursuant to Sections 401, 1402 and 1403; provided
that any such action shall not adversely affect the
interests of the Holders of Securities of such series and
any related coupons or any other series of Securities in any
material respect.
SECTION 902. Supplemental Indentures with Consent of
Holders. With the consent of the Holders of not less than a
majority in principal amount of all Outstanding Securities
affected by such supplemental indenture, by Act of said Holders
delivered to the Partnership and the Trustee, the Partnership,
when authorized by or pursuant to a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture
or of modifying in any manner the rights of the Holders of
Securities and any related coupons under this Indenture;
provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security
affected thereby:
(1) change the Stated Maturity of the principal
of (or premium, if any, on) or any installment of principal
of or interest on, any Security; or reduce the principal
amount thereof or the rate or amount of interest thereon or
any Additional Amounts payable in respect thereof, or any
premium payable upon the redemption thereof, or change any
obligation of the Partnership to pay Additional Amounts
pursuant to Section 1009 (except as contemplated by Section
801(l) and permitted by Section 901(1)), or reduce the
amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502
or the amount thereof provable in bankruptcy pursuant to
Section 504, or adversely affect any right of repayment at
the option of the Holder of any Security, or change any
Place of Payment where, or the currency or currencies,
currency unit or units or composite currency or currencies
in which, any Security or any premium or the interest
thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption or
repayment at the option of the Holder, on or after the
Redemption Date or the Repayment Date, as the case may be),
or
<PAGE>
(2) reduce the percentage in principal amount of
the Outstanding Securities of any series, the consent of
whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for
any waiver with respect to such series (or compliance with
certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1504 for
quorum or voting, or
(3) modify any of the provisions of this Section,
Section 513 or Section 1010, except to increase the required
percentage to effect such action or to provide that certain
other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding
Security affected thereby.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly
been included solely for the benefit of one or more particular
series of Securities, or which modifies the rights of the Holders
of Securities of such series with respect to such covenant or
other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
SECTION 903. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the
modification thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for
all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder and of any
coupon appertaining thereto shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in
effect.
<PAGE>
SECTION 906. Reference in Securities to Supplemental
Indentures. Securities of any series authenticated and delivered
after the execution of any supplemental indenture pursuant to
this Article may, and shall, if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Partnership
shall so determine, new Securities of any series so modified as
to conform, in the opinion of the Trustee and the Partnership, to
any such supplemental indenture may be prepared and executed by
the Partnership and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN - COVENANTS
SECTION 1001. Payment of Principal, Premium, if any;
Interest and Additional Amounts. The Partnership covenants and
agrees for the benefit of the Holders of each series of
Securities that it will duly and punctually pay the principal of
(and premium, if any) and interest on and any Additional Amounts
payable in respect of the Securities of that series in accordance
with the terms of such series of Securities, any coupons
appertaining thereto and this Indenture. Unless otherwise
specified as contemplated by Section 301 with respect to any
series of Securities, any interest due on and any Additional
Amounts payable in respect of Bearer Securities on or before
Maturity, other than Additional Amounts, if any, payable as
provided in Section 1009 in respect of principal of (or premium,
if any, on) such a Security, shall be payable only upon
presentation and surrender of the several coupons for such
interest installments as are evidenced thereby as they severally
mature. Unless otherwise specified with respect to Securities of
any series pursuant to Section 301, at the option of the
Partnership, all payments of principal may be paid by check to
the registered Holder of the Registered Security or other person
entitled thereto against surrender of such Security.
SECTION 1002. Maintenance of Office or Agency. If
Securities of a series are issuable only as Registered
Securities, the Partnership shall maintain in each Place of
Payment for any series of Securities an office or agency where
Securities of that series may be presented or surrendered for
payment, where Securities of that series may be surrendered for
registration of transfer or exchange and where notices and
demands to or upon the Partnership in respect of the Securities
of that series and this Indenture may be served. If Securities
of a series are issuable as Bearer Securities, the Partnership
will maintain: (A) in the Borough of Manhattan, The City of New
York, an office or agency where any Registered Securities of that
series may be presented or surrendered for payment, where any
Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be
surrendered for exchange, where notices and demands to or upon
the Partnership in respect of the Securities of that series and
this Indenture may be served and where Bearer Securities of that
series and related coupons may be presented or surrendered for
payment in the circumstances described in the following paragraph
<PAGE>
(and not otherwise); (B) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series which
is located outside the United States, an office or agency where
Securities of that series and related coupons may be presented
and surrendered for payment (including payment of any Additional
Amounts payable on Securities of that series pursuant to Section
1009); provided, however, that if the Securities of that series
are listed on any stock exchange located outside the United
States and such stock exchange shall so require, the Partnership
will maintain a Paying Agent for the Securities of that series in
any required city located outside the United States, as the case
may be, so long as the Securities of that series are listed on
such exchange; and (C) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series located
outside the United States an office or agency where any
Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be
surrendered for exchange and where notices and demands to or upon
the Partnership in respect of the Securities of that series and
this Indenture may be served. The Partnership will give prompt
written notice to the Trustee of the location, and any change in
the location, of each such office or agency. If at any time the
Partnership shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may
be made or served at the Corporate Trust Office of the Trustee,
except that Bearer Securities of that series and the related
coupons may be presented and surrendered for payment (including
payment of any Additional Amounts payable on Bearer Securities of
that series pursuant to Section 1009) at the offices specified in
the Security, in London, England, and the Partnership hereby
appoints the same as its agent to receive such respective
presentations, surrenders, notices and demands, and the
Partnership hereby appoints the Trustee its agent to receive all
such presentations, surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, no payment of principal, premium or
interest on or Additional Amounts in respect of Bearer Securities
shall be made at any office or agency of the Partnership in the
United States or by check mailed to any address in the United
States or by transfer to an account maintained with a bank
located in the United States; provided, however, that, if the
Securities of a series are payable in Dollars, payment of
principal of and any premium and interest on any Bearer Security
(including any Additional Amounts payable on Securities of such
series pursuant to Section 1009) shall be made at the office of
the Partnership's Paying Agent in the Borough of Manhattan, The
City of New York, if (but only if) payment in Dollars of the full
amount of such principal, premium, interest or Additional
Amounts, as the case may be, at all offices or agencies outside
the United States maintained for the purpose by the Partnership
in accordance with this Indenture, is illegal or effectively
precluded by exchange controls or other similar restrictions.
The Partnership may from time to time designate one or more
other offices or agencies where the Securities of one or more
series may be presented or surrendered for any or all of such
<PAGE>
purposes, and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall
in any manner relieve the Partnership of its obligation to
maintain an office or agency in accordance with the requirements
set forth above for Securities of any series for such purposes.
The Partnership will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the
location of any such other office or agency. Unless otherwise
specified with respect to any Securities pursuant to Section 301
with respect to a series of Securities, the Partnership hereby
designates as a Place of Payment for each series of Securities
the office or agency of the Partnership in the Borough of
Manhattan, The City of New York, and initially appoints the
Trustee at its Corporate Trust Office as Paying Agent in such
city and as its agent to receive all such presentations,
surrenders, notices and demands.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, if and so long as the Securities of any
series (i) are denominated in a Foreign Currency or (ii) may be
payable in a Foreign Currency, or so long as it is required under
any other provision of the Indenture, then the Partnership will
maintain with respect to each such series of Securities, or as so
required, at least one exchange rate agent.
SECTION 1003. Money for Securities Payments to Be Held in
Trust. If the Partnership shall at any time act as its own
Paying Agent with respect to any series of any Securities and any
related coupons, it will, on or before each due date of the
principal of (and premium, if any), or interest on or Additional
Amounts in respect of, any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons
entitled thereto a sum in the currency or currencies, currency
unit or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such
series) sufficient to pay the principal (and premium, if any) or
interest or Additional Amounts so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Partnership shall have one or more Paying
Agents for any series of Securities and any related coupons, it
will, on or before each due date of the principal of (and
premium, if any), or interest on or Additional Amounts in respect
of, any Securities of that series, deposit with a Paying Agent a
sum (in the currency or currencies, currency unit or units or
composite currency or currencies described in the preceding
paragraph) sufficient to pay the principal (and premium, if any)
or interest or Additional Amounts, so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such
principal, premium or interest or Additional Amounts and (unless
such Paying Agent is the Trustee) the Partnership will promptly
notify the Trustee of its action or failure so to act.
<PAGE>
The Partnership will cause each Paying Agent for any series
of Securities other than the Trustee to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that
such Paying Agent will
(1) hold all sums held by it for the payment of
principal of (and premium, if any) or interest on Securities
in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any default by the
Partnership (or any other obligor upon the Securities) in
the making of any such payment of principal (and premium, if
any) or interest on the Securities of that series; and
(3) at any time during the continuance of any
such default upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by
such Paying Agent.
The Partnership may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Partnership Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Partnership or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were
held by the Partnership or such Paying Agent; and, upon such
payment by any Paying Agent to the Trustee, such Paying Agent
shall be released from all further liability with respect to such
sums.
Except as otherwise provided in the Securities of any
series, any money deposited with the Trustee or any Paying Agent,
or then held by the Partnership, in trust for the payment of the
principal of (and premium, if any) or interest on, or any
Additional Amounts in respect of, any Security of any series and
remaining unclaimed for two years after such principal (and
premium, if any), interest or Additional Amounts has become due
and payable shall be paid to the Partnership upon Partnership
Request or (if then held by the Partnership) shall be discharged
from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the
Partnership for payment of such principal of (and premium, if
any) or interest on, or any Additional Amounts in respect of, any
Security, without interest thereon, and all liability of the
Trustee or such Paying Agent with respect to such trust money,
and all liability of the Partnership as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment,
may at the expense of the Partnership cause to be published once,
in an Authorized Newspaper, notice that such money remains
unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to
the Partnership.
<PAGE>
SECTION 1004. Existence. Subject to Article Eight, the
Partnership will do or cause to be done all things necessary to
preserve and keep in full force and effect its limited
partnership existence, all material rights (by agreement of
limited partnership and statute) and material franchises;
provided, however, that the Partnership shall not be required to
preserve any such right or franchise if the Board of Directors
shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Partnership.
SECTION 1005. Maintenance of Properties. The Partnership
will cause all of its material properties used or useful in the
conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as in the judgment of the
Partnership may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times; provided, however, that the Partnership and its
Subsidiaries shall not be prevented from selling or otherwise
disposing of their properties for value in the ordinary course of
business.
SECTION 1006. Insurance. The Partnership will cause each
of its and its Subsidiaries' insurable properties to be insured
against loss or damage in an amount at least equal to their then
full insurable value with insurers of recognized responsibility.
SECTION 1007. Payment of Taxes and Other Claims. The
Partnership will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all
taxes, assessments and governmental charges levied or imposed
upon it or any Subsidiary or upon the income, profits or property
of the Partnership or any Subsidiary, and (2) all lawful claims
for labor, materials and supplies which, if unpaid, might by law
become a lien upon the property of the Partnership or any
Subsidiary; provided, however, that the Partnership shall not be
required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 1008. Statement as to Compliance. The Partnership
will deliver to the Trustee, within 120 days after the end of
each fiscal year, a brief certificate from the principal
executive officer, principal financial officer or principal
accounting officer of the Company, as general partner of the
Partnership, as to his or her knowledge of the Partnership's
compliance with all conditions and covenants under this Indenture
and, in the event of any noncompliance, specifying such
noncompliance and the nature and status thereof. For purposes of
this Section 1008, such compliance shall be determined without
regard to any period of grace or requirement of notice under this
Indenture.
<PAGE>
SECTION 1009. Additional Amounts. If any Securities of a
series provide for the payment of Additional Amounts, the
Partnership will pay to the Holder of any Security of such series
or any coupon appertaining thereto Additional Amounts as may be
specified as contemplated by Section 301. Whenever in this
Indenture there is mentioned, in any context except in the case
of Section 502(l), the payment of the principal of or any premium
or interest on, or in respect of, any Security of any series or
payment of any related coupon or the net proceeds received on the
sale or exchange of any Security of any series, such mention
shall be deemed to include mention of the payment of Additional
Amounts provided by the terms of such series established pursuant
to Section 301 to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof pursuant
to such terms and express mention of the payment of Additional
Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions
hereof where such express mention is not made.
Except as otherwise specified as contemplated by Section
301, if the Securities of a series provide for the payment of
Additional Amounts, at least 10 days prior to the first Interest
Payment Date with respect to that series of Securities (or if the
Securities of that series will not bear interest prior to
Maturity, the first day on which a payment of principal and any
premium is made), and at least 10 days prior to each date of
payment of principal and any premium or interest if there has
been any change with respect to the matters set forth in the
below-mentioned Officers' Certificate, the Partnership will
furnish the Trustee and the Partnership's principal Paying Agent
or Paying Agents, if other than the Trustee, with an Officers'
Certificate instructing the Trustee and such Paying Agent or
Paying Agents whether such payment of principal of and any
premium or interest on the Securities of that series shall be
made to Holders of Securities of that series or any related
coupons who are not United States persons without withholding for
or on account of any tax, assessment or other governmental charge
described in the Securities of the series. If any such
withholding shall be required, then such Officers' Certificate
shall specify by country the amount, if any, required to be
withheld on such payments to such Holders of Securities of that
series or related coupons and the Partnership will pay to the
Trustee or such Paying Agent the Additional Amounts required by
the terms of such Securities. In the event that the Trustee or
any Paying Agent, as the case may be, shall not so receive the
above-mentioned certificate, then the Trustee or such Paying
Agent shall be entitled (i) to assume that no such withholding or
deduction is required with respect to any payment of principal or
interest with respect to any Securities of a series or related
coupons until it shall have received a certificate advising
otherwise and (ii) to make all payments of principal and interest
with respect to the Securities of a series or related coupons
without withholding or deductions until otherwise advised. The
Partnership covenants to indemnify the Trustee and any Paying
Agent for, and to hold them harmless against, any loss, liability
or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or
<PAGE>
omitted by any of them or in reliance on any Officers'
Certificate furnished pursuant to this Section or in reliance on
the Partnership's not furnishing such an Officers' Certificate.
SECTION 1010. Waiver of Certain Covenants. The Partnership
may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004 to 1007,
inclusive, if before or after the time for such compliance the
Holders of at least a majority in principal amount of all
outstanding Securities of such series, by Act of such Holders,
either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to
the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Partnership and the
duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
ARTICLE ELEVEN - REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article. Securities of any
series which are redeemable before their Stated Maturity shall be
redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities
of any series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee. The
election of the Partnership to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any
redemption at the election of the Partnership of less than all of
the Securities of any series, the Partnership shall, at least 45
days prior to the giving of the notice of redemption in Section
1104 (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date and of the
principal amount of Securities of such series to be redeemed. In
the case of any redemption of Securities prior to the expiration
of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Partnership
shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be
Redeemed. If less than all the Securities of any series issued
on the same day with the same terms are to be redeemed, the
particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such series issued on such date
with the same terms not previously called for redemption, by such
method as the Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal
to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount
of Securities of such series of a denomination larger than the
minimum authorized denomination for Securities of that series.
<PAGE>
The Trustee shall promptly notify the Partnership and the
Security Registrar (if other than itself) in writing of the
Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Security redeemed or
to be redeemed only in part, to the portion of the principal
amount of such Security which has been or is to be redeemed.
SECTION 1104. Notice of Redemption. Notice of redemption
shall be given in the manner provided in Section 106, not less
than 30 days nor more than 60 days prior to the Redemption Date,
unless a shorter period is specified by the terms of such series
established pursuant to Section 301, to each Holder of Securities
to be redeemed, but failure to give such notice in the manner
herein provided to the Holder of any Security designated for
redemption as a whole or in part, or any defect in the notice to
any such Holder, shall not affect the validity of the proceedings
for the redemption of any other such Security or portion thereof.
Any notice that is mailed to the Holders of Registered
Securities in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder
receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, accrued interest to the
Redemption Date payable as provided in Section 1106, if any,
and Additional Amounts, if any,
(3) if less than all Outstanding Securities of
any series are to be redeemed, the identification (and, in
the case of partial redemption, the principal amount) of the
particular Security or Securities to be redeemed,
(4) in case any Security is to be redeemed in
part only, the notice which relates to such Security shall
state that on and after the Redemption Date, upon surrender
of such Security, the holder will receive, without a charge,
a new Security or Securities of authorized denominations for
the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption
Price and accrued interest to the Redemption Date payable as
provided in Section 1106, if any, will become due and
payable upon each such Security, or the portion thereof, to
be redeemed and, if applicable, that interest thereon shall
cease to accrue on and after said date,
<PAGE>
(6) the Place or Places of Payment where such
Securities, together in the case of Bearer Securities with
all coupons appertaining thereto, if any, maturing after the
Redemption Date, are to be surrendered for payment of the
Redemption Price and accrued interest, if any,
(7) that the redemption is for a sinking fund, if
such is the case,
(8) that, unless otherwise specified in such
notice, Bearer Securities of any series, if any, surrendered
for redemption must be accompanied by all coupons maturing
subsequent to the date fixed for redemption or the amount of
any such missing coupon or coupons will be deducted from the
Redemption Price, unless security or indemnity satisfactory
to the Partnership, the Trustee for such series and any
Paying Agent is furnished,
(9) if Bearer Securities of any series are to be
redeemed and any Registered Securities of such series are
not to be redeemed, and if such Bearer Securities may be
exchanged for Registered Securities not subject to
redemption on this Redemption Date pursuant to Section 305
or otherwise, the last date, as determined by the
Partnership, on which such exchanges may be made, and
(10) the CUSIP number of such Security, if any.
Notice of redemption of Securities to be redeemed at the
election of the Partnership shall be given by the Partnership or,
at the Partnership's request, by the Trustee in the name and at
the expense of the Partnership.
SECTION 1105. Deposit of Redemption Price. On or prior to
any Redemption Date, the Partnership shall deposit with the
Trustee or with a Paying Agent (or, if the Partnership is acting
as its own Paying Agent, which it may not do in the case of a
sinking fund payment under Article Twelve, segregate and hold in
trust as provided in Section 1003) an amount of money in the
currency or currencies, currency unit or units or composite
currency or currencies in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 301
for the Securities of such series) sufficient to pay on the
Redemption Date the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities or portions thereof which are to
be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified
in the currency or currencies, currency unit or units or
composite currency or currencies in which the Securities of such
series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series) (together with
accrued interest, if any, to the Redemption Date), and from and
<PAGE>
after such date (unless the Partnership shall default in the
payment of the Redemption Price and accrued interest) such
Securities shall, if the same were interest-bearing, cease to
bear interest and the coupons for such interest appertaining to
any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice, together
with all coupons, if any, appertaining thereto maturing after the
Redemption Date, such Security shall be paid by the Partnership
at the Redemption Price, together with accrued interest, if any,
to the Redemption Date; provided, however, that installments of
interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office
or agency located outside the United States (except as otherwise
provided in Section 1002) and, unless otherwise specified as
contemplated by Section 301, only upon presentation and surrender
of coupons for such interest; and provided further that
installments of interest on Registered Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable
to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions
of Section 307.
If any Bearer Security surrendered for redemption shall not
be accompanied by all appurtenant coupons maturing after the
Redemption Date, such Security may be paid after deducting from
the Redemption Price an amount equal to the face amount of all
such missing coupons, or the surrender of such missing coupon or
coupons may be waived by the Partnership and the Trustee if there
be furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to the
Trustee or any Paying Agent any such missing coupon in respect of
which a deduction shall have been made from the Redemption Price,
such Holder shall be entitled to receive the amount so deducted;
provided, however, that interest represented by coupons shall be
payable only at an office or agency located outside the United
States (except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon
presentation and surrender of those coupons.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate borne by the Security.
SECTION 1107. Securities Redeemed in Part. Any Registered
Security which is to be redeemed only in part (pursuant to the
provisions of this Article or of Article Twelve) shall be
surrendered at a Place of Payment therefor (with, if the
Partnership or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the
Partnership and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing) and the Partnership
shall execute and the Trustee shall authenticate and deliver to
the Holder of such Security without service charge a new Security
<PAGE>
or Securities of the same series, of any authorized denomination
as requested by such Holder in aggregate principal amount equal
to and in exchange for the unredeemed portion of the principal of
the Security so surrendered. If a Global Security is so
surrendered, the Partnership shall execute and the Trustee shall
authenticate and deliver to the depositary, without service
charge, a new Global Security in a denomination equal to and in
exchange for the unredeemed portion of the principal of the
Global Security so surrendered.
ARTICLE TWELVE - SINKING FUNDS
SECTION 1201. Applicability of Article. The provisions of
this Article shall be applicable to any sinking fund for the
retirement of Securities of a series except as otherwise
specified as contemplated by Section 301 for Securities of such
series.
The minimum amount of any sinking fund payment provided for
by the terms of Securities of any series is herein referred to as
a "mandatory sinking fund payment," and any payment in excess of
such minimum amount provided for by the terms of such Securities
of any series is herein referred to as an "optional sinking fund
payment." If provided for by the terms of any Securities of any
series, the cash amount of any mandatory sinking fund payment may
be subject to reduction as provided in Section 1202. Each
sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of
Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities. The Partnership may, in satisfaction of all or any
part of any mandatory sinking fund payment with respect to the
Securities of a series, (1) deliver Outstanding Securities of
such series (other than any previously called for redemption)
together in the case of any Bearer Securities of such series with
all unmatured coupons appertaining thereto and (2) apply as a
credit Securities of such series which have been redeemed either
at the election of the Partnership pursuant to the terms of such
Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities,
as provided for by the terms of such Securities, or which have
otherwise been acquired by the Partnership; provided that such
Securities so delivered or applied as a credit have not been
previously so credited. Such Securities shall be received and
credited for such purpose by the Trustee at the applicable
Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for
Securities of any series, the Partnership will deliver to the
Trustee an Officers' Certificate specifying the amount of the
next ensuing mandatory sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if
<PAGE>
any, which is to be satisfied by payment of cash in the currency
or currencies, currency unit or units or composite currency or
currencies in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 301 for the
Securities of such series) and the portion thereof, if any, which
is to be satisfied by delivering and crediting Securities of that
series pursuant to Section 1202, and the optional amount, if any,
to be added in cash to the next ensuing mandatory sinking fund
payment, and will also deliver to the Trustee any Securities to
be so delivered and credited. If such Officers' Certificate
shall specify an optional amount to be added in cash to the next
ensuing mandatory sinking fund payment, the Partnership shall
thereupon be obligated to pay the amount therein specified. Not
less than 30 days before each such sinking fund payment date the
Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 1103
and cause notice of the redemption thereof to be given in the
name of and at the expense of the Partnership in the manner
provided in Section 1104. Such notice having been duly given,
the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN - REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. Applicability of Article. Repayment of
Securities of any series before their Stated Maturity at the
option of Holders thereof shall be made in accordance with the
terms of such Securities, if any, and (except as otherwise
specified by the terms of such series established pursuant to
Section 301) in accordance with this Article.
SECTION 1302. Repayment of Securities. Securities of any
series subject to repayment in whole or in part at the option of
the Holders thereof will, unless otherwise provided in the terms
of such Securities, be repaid at a price equal to the principal
amount thereof, together with interest, if any, thereon accrued
to the Repayment Date specified in or pursuant to the terms of
such Securities. The Partnership covenants that on or prior to
the Repayment Date it will deposit with the Trustee or with a
Paying Agent (or, if the Partnership is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003)
an amount of money in the currency or currencies, currency unit
or units or composite currency or currencies in which the
Securities of such series are payable (except as otherwise
specified pursuant to Section 301 for the Securities of such
series) sufficient to pay the principal (or, if so provided by
the terms of the Securities of any series, a percentage of the
principal) of, and (except if the Repayment Date shall be an
Interest Payment Date) accrued interest on, all the Securities or
portions thereof, as the case may be, to be repaid on such date.
SECTION 1303. Exercise of Option. Securities of any series
subject to repayment at the option of the Holders thereof will
contain an "Option to Elect Repayment" form on the reverse of
such Securities. In order for any Security to be repaid at the
option of the Holder, the Trustee must receive at the Place of
<PAGE>
Payment therefor specified in the terms of such Security (or at
such other place or places of which the Partnership shall from
time to time notify the Holders of such Securities) not earlier
than 60 days nor later than 30 days prior to the Repayment Date
(1) the Security so providing for such repayment together with
the "Option to Elect Repayment" form on the reverse thereof duly
completed by the Holder (or by the Holder's attorney duly
authorized in writing) or (2) a telegram, telex, facsimile
transmission or a letter from a member of a national securities
exchange, or the National Association of Securities Dealers, Inc.
("NASD"), or a commercial bank or trust company in the United
States setting forth the name of the Holder of the Security, the
principal amount of the Security, the principal amount of the
Security to be repaid, the CUSIP number, if any, or a description
of the tenor and terms of the Security, a statement that the
option to elect repayment is being exercised thereby and a
guarantee that the Security to be repaid, together with the duly
completed form entitled "Option to Elect Repayment" on the
reverse of the Security, will be received by the Trustee not
later than the fifth Business Day after the date of such
telegram, telex, facsimile transmission or letter; provided,
however, that such telegram, telex, facsimile transmission or
letter shall only be effective if such Security and form duly
completed are received by the Trustee by such fifth Business Day.
If less than the entire principal amount of such Security is to
be repaid in accordance with the terms of such Security, the
principal amount of such Security to be repaid, in increments of
the minimum denomination for Securities of such series, and the
denomination or denominations of the Security or Securities to be
issued to the Holder for the portion of the principal amount of
such Security surrendered that is not to be repaid, must be
specified. The principal amount of any Security providing for
repayment at the option of the Holder thereof may not be repaid
in part if, following such repayment, the unpaid principal amount
of such Security would be less than the minimum authorized
denomination of Securities of the series of which such Security
to be repaid is a part. Except as otherwise may be provided by
the terms of any Security providing for repayment at the option
of the Holder thereof, exercise of the repayment option by the
Holder shall be irrevocable unless waived by the Partnership.
SECTION 1304. When Securities Presented for Repayment
Become Due and Payable. If Securities of any series providing
for repayment at the option of the Holders thereof shall have
been surrendered as provided in this Article and as provided by
or pursuant to the terms of such Securities, such Securities or
the portions thereof, as the case may be, to be repaid shall
become due and payable and shall be paid by the Partnership on
the Repayment Date therein specified, and on and after such
Repayment Date (unless the Partnership shall default in the
payment of such Securities on such Repayment Date) such
Securities shall, if the same were interest-bearing, cease to
bear interest and the coupons for such interest appertaining to
any Bearer Securities so to be repaid, except to the extent
provided below, shall be void. Upon surrender of any such
Security for repayment in accordance with such provisions,
together with all coupons, if any, appertaining thereto maturing
<PAGE>
after the Repayment Date, the principal amount of such Security
so to be repaid shall be paid by the Partnership, together with
accrued interest, if any, to the Repayment Date; provided,
however, that coupons whose Stated Maturity is on or prior to the
Repayment Date shall be payable only at an office or agency
located outside the United States (except as otherwise provided
in Section 1002) and, unless otherwise specified pursuant to
Section 301, only upon presentation and surrender of such
coupons; and provided further that, in the case of Registered
Securities, installments of interest, if any, whose Stated
Maturity is on or prior to the Repayment Date shall be payable
(but without interest thereon, unless the Partnership shall
default in the payment thereof) to the Holders of such
Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for repayment shall not
be accompanied by all appurtenant coupons maturing after the
Repayment Date, such Security may be paid after deducting from
the amount payable therefor as provided in Section 1302 an amount
equal to the face amount of all such missing coupons, or the
surrender of such missing coupon or coupons may be waived by the
Partnership and the Trustee if there be furnished to them such
security or indemnity as they may require to save each of them
and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to the Trustee or any Paying Agent any
such missing coupon in respect of which a deduction shall have
been made as provided in the preceding sentence, such Holder
shall be entitled to receive the amount so deducted; provided,
however, that interest represented by coupons shall be payable
only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless
otherwise specified as contemplated by Section 301, only upon
presentation and surrender of those coupons.
If the principal amount of any Security surrendered for
repayment shall not be so repaid upon surrender thereof, such
principal amount (together with interest, if any, thereon accrued
to such Repayment Date) shall, until paid, bear interest from the
Repayment Date at the rate of interest or Yield to Maturity (in
the case of Original Issue Discount Securities) set forth in such
Security.
SECTION 1305. Securities Repaid in Part. Upon surrender of
any Registered Security which is to be repaid in part only, the
Partnership shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security, without service charge
and at the expense of the Partnership, a new Registered Security
or Securities of the same series, of any authorized denomination
specified by the Holder, in an aggregate principal amount equal
to and in exchange for the portion of the principal of such
Security so surrendered which is not to be repaid.
<PAGE>
ARTICLE FOURTEEN - DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article: Partnership's
Option to Effect Defeasance or Covenant Defeasance. If, pursuant
to Section 301, provision is made for either or both of (a)
defeasance of the Securities of or within a series under Section
1402 or (b) covenant defeasance of the Securities of or within a
series under Section 1403, then the provisions of such Section or
Sections, as the case may be, together with the other provisions
of this Article (with such modifications thereto as may be
specified pursuant to Section 301 with respect to any
Securities), shall be applicable to such Securities and any
coupons appertaining thereto, and the Partnership may at its
option by Board Resolution, at any time, with respect to such
Securities and any coupons appertaining thereto, elect to have
Section 1402 (if applicable) or Section 1403 (if applicable) be
applied to such Outstanding Securities and any coupons
appertaining thereto upon compliance with the conditions set
forth below in this Article.
SECTION 1402. Defeasance and Discharge. Upon the
Partnership's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the
Partnership shall be deemed to have been discharged from its
obligations with respect to such Outstanding Securities and any
coupons appertaining thereto on the date the conditions set forth
in Section 1404 are satisfied (hereinafter, "defeasance"). For
this purpose, such defeasance means that the Partnership shall be
deemed to have paid and discharged the entire indebtedness
represented by such Outstanding Securities and any coupons
appertaining thereto, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 1405 and the other
Sections of this Indenture referred to in clauses (A) and (B)
below, and to have satisfied all of its other obligations under
such Securities and any coupons appertaining thereto and this
Indenture insofar as such Securities and any coupons appertaining
thereto are concerned (and the Trustee, at the expense of the
Partnership, shall execute proper instruments acknowledging the
same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of
Holders of such Outstanding Securities and any coupons
appertaining thereto to receive, solely from the trust fund
described in Section 1404 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if
any) and interest, if any, on such Securities and any coupons
appertaining thereto when such payments are due, (B) the
Partnership's obligations with respect to such Securities under
Sections 305, 306, 1002 and 1003 and with respect to the payment
of Additional Amounts, if any, on such Securities as contemplated
by Section 1009, (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (D) this Article.
Subject to compliance with this Article Fourteen, the Partnership
may exercise its option under this Section notwithstanding the
prior exercise of its option under Section 1403 with respect to
such Securities and any coupons appertaining thereto.
<PAGE>
SECTION 1403. Covenant Defeasance. Upon the Partnership's
exercise of the above option applicable to this Section with
respect to any Securities of or within a series, the Partnership
shall be released from its obligations under Sections 1004 to
1007, inclusive, and, if specified pursuant to Section 301, its
obligations under any other covenant, with respect to such
Outstanding Securities and any coupons appertaining thereto on
and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "covenant defeasance"), and such
Securities and any coupons appertaining thereto shall thereafter
be deemed to be not "Outstanding" for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and
the consequences of any thereof) in connection with Sections 1004
to 1007, inclusive, or such other covenant, but shall continue to
be deemed "Outstanding" for all other purposes hereunder. For
this purpose, such covenant defeasance means that, with respect
to such Outstanding Securities and any coupons appertaining
thereto, the Partnership may omit to comply with and shall have
no liability in respect of any term, condition or limitation set
forth in any such Section or such other covenant, whether
directly or indirectly, by reason of any reference elsewhere
herein to any such Section or such other covenant or by reason of
reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to
comply shall not constitute a default or an Event of Default
under Section 501(4) or 501(8) or otherwise, as the case may be,
but, except as specified above, the remainder of this Indenture
and such Securities and any coupons appertaining thereto shall be
unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant
Defeasance. The following shall be the conditions to application
of Section 1402 or Section 1403 to any Outstanding Securities of
or within a series and any coupons appertaining thereto:
(a) The Partnership shall irrevocably have deposited
or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 607 who shall agree to
comply with the provisions of this Article Fourteen applicable to
it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such
Securities and any coupons appertaining thereto, (1) an amount in
such currency, currencies or currency unit in which such
Securities and any coupons appertaining thereto are then
specified as payable at Stated Maturity, or (2) Government
Obligations applicable to such Securities and coupons
appertaining thereto (determined on the basis of the currency,
currencies or currency unit in which such Securities and coupons
appertaining thereto are then specified as payable at Stated
Maturity) which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment of principal
of (and premium, if any) and interest, if any, on such Securities
and any coupons appertaining thereto, money in an amount, or (3)
a combination thereof, in any case, in an amount, sufficient,
without consideration of any reinvestment of such principal and
<PAGE>
interest, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, (i) the principal of
(and premium, if any) and interest, if any, on such Outstanding
Securities and any coupons appertaining thereto on the Stated
Maturity of such principal or installment of principal or
interest and (ii) any mandatory sinking fund payments or
analogous payments applicable to such Outstanding Securities and
any coupons appertaining thereto on the day on which such
payments are due and payable in accordance with the terms of this
Indenture and of such Securities and any coupons appertaining
thereto.
(b) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a default
under, this Indenture or any other material agreement or
instrument to which the Partnership is a party or by which it is
bound.
(c) No Event of Default or event which with notice or
lapse of time or both would become an Event of Default with
respect to such Securities and any coupons appertaining thereto
shall have occurred and be continuing on the date of such deposit
or, insofar as Sections 501(6) and 501(7) are concerned, at any
time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not
be deemed satisfied until the expiration of such period).
(d) In the case of an election under Section 1402, the
Partnership shall have delivered to the Trustee an Opinion of
Counsel stating that (i) the Partnership has received from, or
there has been published by, the Internal Revenue Service a
ruling, or (ii) since the date of execution of this Indenture,
there has been a change in the applicable Federal income tax law,
in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of such Outstanding Securities
and any coupons appertaining thereto will not recognize income,
gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred.
(e) In the case of an election under Section 1403, the
Partnership shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such Outstanding
Securities and any coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as
a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant
defeasance had not occurred.
(f) The Partnership shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent to the defeasance under
<PAGE>
Section 1402 or the covenant defeasance under Section 1403 (as
the case may be) have been complied with and an Opinion of
Counsel to the effect that either (i) as a result of a deposit
pursuant to subsection (a) above and the related exercise of the
Partnership's option under Section 1402 or Section 1403 (as the
case may be), registration is not required under the Investment
Company Act of 1940, as amended, by the Partnership, with respect
to the trust funds representing such deposit or by the Trustee
for such trust funds or (ii) all necessary registrations under
said Act have been effected.
(g) Notwithstanding any other provisions of this
Section, such defeasance or covenant defeasance shall be effected
in compliance with any additional or substitute terms, conditions
or limitations which may be imposed on the Partnership in
connection therewith pursuant to Section 301.
SECTION 1405. Deposited Money and Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions. Subject to the
provisions of the last paragraph of Section 1003, all money and
Government Obligations (or other property as may be provided
pursuant to Section 301) (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 1405, the "Trustee")
pursuant to Section 1404 in respect of any Outstanding Securities
of any series and any coupons appertaining thereto shall be held
in trust and applied by the Trustee, in accordance with the
provisions of such Securities and any coupons appertaining
thereto and this Indenture, to the payment, either directly or
through any Paying Agent (including the Partnership acting as its
own Paying Agent) as the Trustee may determine, to the Holders of
such Securities and any coupons appertaining thereto of all sums
due and to become due thereon in respect of principal (and
premium, if any) and interest and Additional Amounts, if any, but
such money need not be segregated from other funds except to the
extent required by law.
Unless otherwise specified with respect to any Security
pursuant to Section 301, if, after a deposit referred to in
Section 1404(a) has been made, (a) the Holder of a Security in
respect of which such deposit was made is entitled to, and does,
elect pursuant to Section 301 or the terms of such Security to
receive payment in a currency or currency unit other than that in
which the deposit pursuant to Section 1404(a) has been made in
respect of such Security, or (b) a Conversion Event occurs in
respect of the currency or currency unit in which the deposit
pursuant to Section 1404(a) has been made, the indebtedness
represented by such Security and any coupons appertaining thereto
shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium,
if any), and interest, if any, on such Security as the same
becomes due out of the proceeds yielded by converting (from time
to time as specified below in the case of any such election) the
amount or other property deposited in respect of such Security
into the currency or currency unit in which such Security becomes
payable as a result of such election or Conversion Event based on
the applicable market exchange rate for such currency or currency
<PAGE>
unit in effect on the second Business Day prior to each payment
date, except, with respect to a Conversion Event, for such
currency or currency unit in effect (as nearly as feasible) at
the time of the Conversion Event.
The Partnership shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the
Government Obligations deposited pursuant to Section 1404 or the
principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of
the Holders of such Outstanding Securities and any coupons
appertaining thereto.
Anything in this Article to the contrary notwithstanding,
subject to Section 606, the Trustee shall deliver or pay to the
Partnership from time to time upon Partnership Request any money
or Government Obligations (or other property and any proceeds
therefrom) held by it as provided in Section 1404 which, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof
which would then be required to be deposited to effect a
defeasance or covenant defeasance, as applicable, in accordance
with this Article.
ARTICLE FIFTEEN - MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. Purposes for Which Meetings May Be Called. A
meeting of Holders of Securities of any series may be called at
any time and from time to time pursuant to this Article to make,
give or take any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be made, given or taken by Holders of Securities of
such series.
SECTION 1502. Call, Notice and Place of Meetings. (a) The
Trustee may at any time call a meeting of Holders of Securities
of any series for any purpose specified in Section 1501, to be
held at such time and at such place as the Trustee shall
determine. Notice of every meeting of Holders of Securities of
any series, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such
meeting, shall be given, in the manner provided in Section 106,
not less than 20 nor more than 180 days prior to the date fixed
for the meeting.
(b) In case at any time the Partnership, pursuant to a
Board Resolution, or the Holders of at least 10% in principal
amount of the Outstanding Securities of any series shall have
requested the Trustee to call a meeting of the Holders of
Securities of such series for any purpose specified in Section
1501, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall
not have made the first publication of the notice of such meeting
within 20 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided
<PAGE>
herein, then the Partnership or the Holders of Securities of such
series in the amount above specified, as the case may be, may
determine the time and the place for such meeting and may call
such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section.
SECTION 1503. Persons Entitled to Vote at Meetings. To be
entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding
Securities of such series, or (2) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or
more Outstanding Securities of such series by such Holder or
Holders. The only Persons who shall be entitled to be present or
to speak at any meeting of Holders of Securities of any series
shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and
any representatives of the Partnership and its counsel.
SECTION 1504. Quorum; Action. The Persons entitled to vote
a majority in principal amount of the Outstanding Securities of a
series shall constitute a quorum for a meeting of Holders of
Securities of such series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or
waiver which this Indenture expressly provides may be given by
the Holders of not less than a specified percentage in principal
amount of the Outstanding Securities of a series, the Persons
entitled to vote such specified percentage in principal amount of
the Outstanding Securities of such series shall constitute a
quorum. In the absence of a quorum within 30 minutes after the
time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series,
be dissolved. In any other case the meeting may be adjourned for
a period of not less than 10 days as determined by the chairman
of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at the reconvening of any such adjourned
meeting, such adjourned meeting may be further adjourned for a
period of not less than 10 days; at the reconvening of any
meeting adjourned or further adjourned for lack of a quorum, the
persons entitled to vote 25% in aggregate principal amount of the
then Outstanding Securities shall constitute a quorum for the
taking of any action set forth in the notice of the original
meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 1502(a), except that such
notice need be given only once not less than five days prior to
the date on which the meeting is scheduled to be reconvened.
Except as limited by the proviso to Section 902, any
resolution presented to a meeting or adjourned meeting duly
reconvened at which a quorum is present as aforesaid may be
adopted by the affirmative vote of the persons entitled to vote a
majority in aggregate principal amount of the Outstanding
Securities represented at such meeting; provided, however, that,
except as limited by the proviso to Section 902, any resolution
with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of
a specified percentage, which is less than a majority, in
<PAGE>
principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote
of the Holders of such specified percentage in principal amount
of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with
this Section shall be binding on all the Holders of Securities of
such series and the related coupons, whether or not present or
represented at the meeting.
Notwithstanding the foregoing provisions of this Section
1504, if any action is to be taken at a meeting of Holders of
Securities of any series with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action
that this Indenture expressly provides may be made, given or
taken by the Holders of a specified percentage in principal
amount of all Outstanding Securities affected thereby, or of the
Holders of such series and one or more additional series:
(i) there shall be no minimum quorum requirement
for such meeting; and
(ii) the principal amount of the Outstanding
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 this Indenture.
SECTION 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings. (a) Notwithstanding any provisions of
this Indenture, the Trustee may make such reasonable regulations
as it may deem advisable for any meeting of Holders of Securities
of a series in regard to proof of the holding of Securities of
such series and of the appointment of proxies and in regard to
the appointment and duties of inspectors of votes, the submission
and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct
of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of
Securities shall be proved in the manner specified in Section 104
and the appointment of any proxy shall be proved in the manner
specified in Section 104 or by having the signature of the Person
executing the proxy witnessed or guaranteed by any trust company,
bank or banker authorized by Section 104 to certify to the
holding of Bearer Securities. Such regulations may provide that
written instruments appointing proxies, regular on their face,
may be presumed valid and genuine without the proof specified in
Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing
appoint a temporary chairman of the meeting, unless the meeting
shall have been called by the Partnership or by Holders of
Securities as provided in Section 1502(b), in which case the
<PAGE>
Partnership or the Holders of Securities of the series calling
the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons
entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such
series or proxy shall be entitled to one vote for each $1,000
principal amount of the Outstanding Securities of such series
held or represented by him; provided, however, that no vote shall
be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall
have no right to vote, except as a Holder of a Security of such
series or proxy.
(d) Any meeting of Holders of Securities of any series
duly called pursuant to Section 1502 at which a quorum is present
may be adjourned from time to time by Persons entitled to vote a
majority in principal amount of the Outstanding Securities of
such series represented at the meeting, and the meeting may be
held as so adjourned without further notice.
SECTION 1506. Counting Votes and Recording Action of
Meetings. The vote upon any resolution submitted to any meeting
of Holders of Securities of any series shall be by written
ballots on which shall be subscribed the signatures of the
Holders of Securities of such series or of their representatives
by proxy and the principal amounts and serial numbers of the
Outstanding Securities of such series held or represented by
them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record, at least
in duplicate, of the proceedings of each meeting of Holders of
Securities of any Series shall be prepared by the secretary of
the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having
knowledge of the fact, setting forth a copy of the notice of the
meeting and showing that said notice was given as provided in
Section 1502 and, if applicable, Section 1504. Each copy shall
be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one such copy shall be
delivered to the Partnership and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
<PAGE>
SIGNATURES AND SEALS
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed all as of the day and year first
above written.
SOVRAN ACQUISITION
LIMITED PARTNERSHIP
By: Sovran Holdings, Inc., as General Partner
By: ______________________________________
Name:
Title:
Attest: ______________________________
Name:
Title:
MARINE MIDLAND BANK
as Trustee
By: ______________________________________
Name:
Title:
Attest:_______________________________
Name:
Title:
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK )
) ss:
COUNTY OF ERIE )
On the ____ day of June 1998, before me personally came
_____________ to me known, who, being by me duly sworn, did
depose and say that he/she resides at _________________, that
he/she is the ____________ of Sovran Holdings, Inc., the general
partner of SOVRAN ACQUISITION LIMITED PARTNERSHIP, one of the
parties described in and which executed the foregoing instrument,
and that he/she signed his/her name thereto by authority of the
Board of Directors of Sovran Holdings, Inc., the general partner
of Sovran Acquisition Limited Partnership.
[Notarial Seal]
________________________________
Notary Public
Commission Expires:
STATE OF NEW YORK )
) ss:
COUNTY OF ERIE )
On the ____ day of June 1998, before me personally came
_________________ to me known, who, being by me duly sworn, did
depose and say that he/she resides at __________________________,
that he/she is a ______________ of MARINE MIDLAND BANK, one of
the parties described in and which executed the foregoing
instrument, and that he/she signed his/her name thereto by
authority of the Board of Directors of Marine Midland Bank.
[Notarial Seal]
________________________________
Notary Public
Commission Expires
<PAGE>
EXHIBIT A
FORM OF REDEEMABLE OR NON-REDEEMABLE SENIOR SECURITY
[Face of Security]
[If the Holder of this Security (as indicated below) is The
Depository Trust Company ("DTC") or a nominee of DTC, this
Security is a Global Security and the following two legends
apply:
Unless this Security is presented by an authorized representative
of The Depository Trust Company ("DTC"), 55 Water Street, New
York, New York to the issuer or its agent for registration of
transfer, exchange or payment, and such Security issued is
registered in the name of CEDE & CO., or such other name as
requested by an authorized representative of DTC, ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL, since the registered owner hereof, CEDE &
CO., has an interest herein.
Unless and until this Security is exchanged in whole or in part
for Securities in certificated form, this Security may not be
transferred except as a whole by DTC to a nominee thereof or by a
nominee thereof to DTC or another nominee of DTC or by DTC or any
such nominee to a successor of DTC or a nominee of such
successor.]
[If this Security is an Original Issue Discount Security,
insert -- FOR PURPOSES OF SECTION 1273 and 1275 OF THE UNITED
STATES INTERNAL REVENUE CODE, THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT ON THIS SECURITY IS % OF ITS PRINCIPAL AMOUNT, THE
ISSUE DATE IS , 19 [AND] THE YIELD TO MATURITY IS
%. [THE METHOD USED TO DETERMINE THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD OF
, 19 TO , 19 , IS % OF THE PRINCIPAL AMOUNT OF
THIS SECURITY.]
SOVRAN ACQUISITION LIMITED PARTNERSHIP
[Designation of Series]
No. _______ $_______
SOVRAN ACQUISITION LIMITED PARTNERSHIP, a Delaware limited
partnership (herein referred to as the "Partnership," which term
includes any successor entity under the Indenture referred to on
the reverse hereof), for value received, hereby promises to pay
to ______________________________ or registered assigns the
principal sum of _______ Dollars on _____________________ (the
"Stated Maturity Date") [or insert date fixed for earlier
redemption (the "Redemption Date," and together with the Stated
Maturity Date with respect to principal repayable on such date,
the "Maturity Date.")]
<PAGE>
[If the Security is to bear interest prior to Maturity, insert --
and to pay interest thereon from ______________ or from the most
recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on __________ and _________ in
each year (each, an "Interest Payment Date"), commencing
__________, at the rate of __% per annum, until the principal
hereof is paid or duly provided for. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Holder
in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the ________ or
______ (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date [at the office or agency of
the Partnership maintained for such purpose; provided, however,
that such interest may be paid, at the Partnership's option, by
mailing a check to such Holder at its registered address or by
transfer of funds to an account maintained by such Holder within
the United States]. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the Holder
in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such
Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be
listed, and upon such notice as may be required by such exchange,
all as more fully provided in the Indenture. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.]
[If the Security is not to bear interest prior to Maturity,
insert -- The principal of this Security shall not bear interest
except in the case of a default in payment of principal upon
acceleration, upon redemption or at the [Stated] Maturity Date
and in such case the overdue principal of this Security shall
bear interest at the rate of % per annum (to the extent that
the payment of such interest shall be legally enforceable), which
shall accrue from the date of such default in payment to the date
payment of such principal has been made or duly provided for.
Interest on any overdue principal shall be payable on demand.
Any such interest on any overdue principal that is not so paid on
demand shall bear interest at the rate of % per annum (to the
extent that the payment of such interest shall be legally
enforceable), which shall accrue from the date of such demand for
payment to the date payment of such interest has been made or
duly provided for, and such interest shall also be payable on
demand.]
The principal of this Security payable on the Stated Maturity
Date [or the principal of, premium, if any, and, if the
Redemption Date is not an Interest Payment Date, interest on this
Security payable on the Redemption Date] will be paid against
presentation of this Security at the office or agency of the
Partnership maintained for that purpose in ___________________,
<PAGE>
in such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and
private debts.
Interest payable on this Security on any Interest Payment Date
and on the [Stated] Maturity Date [or Redemption Date, as the
case may be,] will include interest accrued from and including
the next preceding Interest Payment Date in respect of which
interest has been paid or duly provided for (or from and
including ____________, if no interest has been paid on this
Security) to but excluding such Interest Payment Date or the
[Stated] Maturity Date [or Redemption Date, as the case may be.]
If any Interest Payment Date or the [Stated] Maturity Date or
[Redemption Date] falls on a day that is not a Business Day, as
defined below, principal, premium, if any, and/or interest
payable with respect to such Interest Payment Date or [Stated]
Maturity Date [or Redemption Date, as the case may be,] will be
paid on the next succeeding Business Day with the same force and
effect as if it were paid on the date such payment was due, and
no interest shall accrue on the amount so payable for the period
from and after such Interest Payment Date or [Stated] Maturity
Date [or Redemption Date, as the case may be.] "Business Day"
means any day, other than a Saturday or Sunday, on which banks in
__________________ are not required or authorized by law or
executive order to close.
[If this Security is a Global Security, insert -- All payments of
principal, premium, if any, and interest in respect of this
Security will be made by the Partnership in immediately available
funds.]
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the Certificate of Authentication hereon has been executed
by the Trustee by manual signature of one of its authorized
signatories, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Partnership has caused this instrument to
be duly executed under the facsimile corporate seal of its
general partner.
Dated: SOVRAN ACQUISITION
LIMITED PARTNERSHIP
By: Sovran Holdings, Inc., as
General Partner
By:
Name:
Title:
Attest:
Name:
Secretary
<PAGE>
[Reverse of Security]
SOVRAN ACQUISITION LIMITED PARTNERSHIP
This Security is one of a duly authorized issue of securities of
the Partnership (herein called the "Securities"), issued and to
be issued in one or more series under an
Indenture, dated as of _____________, 199_ (herein called the
"Indenture") between the Partnership and _________________, as
Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture with respect to the series
of which this Security is a part), to which Indenture and all
indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Partnership, the Trustee and the
Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This
Security is one of the duly authorized series of Securities
designated on the face hereof (collectively, the "Securities"),
[if applicable, insert -- and the aggregate principal amount of
the Securities to be issued under such series is limited to
$______ (except for Securities authenticated and delivered upon
transfer of, or in exchange for, or in lieu of other
Securities).] All terms used in this Security which are defined
in the Indenture shall have the meanings assigned to them in the
Indenture.
If an Event of Default, as defined in the Indenture, shall occur
and be continuing, the principal of the Securities of this series
may be declared due and payable in the manner and with the effect
provided in the Indenture.
[If applicable, insert -- The Securities may not be redeemed
prior to the Stated Maturity Date.]
[If applicable, insert -- The Securities are subject to
redemption [ (l) (If applicable, insert -- on _________ in any
year commencing with the year ____ and ending with the year ____
through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2) ]
[If applicable, insert -- at any time [on or after ___________],
as a whole or in part, at the election of the Partnership, at the
following Redemption Prices (expressed as percentages of the
principal amount):
If redeemed on or before _______, __% and if redeemed during the
12-month period beginning _______ of the years indicated at the
Redemption Prices indicated below.
Year Redemption Price Year Redemption Price
and thereafter at a Redemption Price equal to __% of the
principal amount, together in the case of any such redemption [If
<PAGE>
applicable, insert -- (whether through operation of the sinking
fund or otherwise)] with accrued interest to the Redemption Date;
provided, however, that installments of interest on this Security
whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holder of this Security, or one or more
Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[If applicable, insert -- The Securities are subject to
redemption (1) on _______ in any year commencing with the year
____ and ending with the year ____ through operation of the
sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table
below, and (2) at any time [on or after _______], as a whole or
in part, at the election of the Partnership, at the Redemption
Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount)
set forth in the table below: If redeemed during the 12-month
period beginning ________ of the years indicated,
Redemption Price for Redemption Price for
Redemption Through Redemption Otherwise
Operation of the Than Through Operation
Year Sinking Fund of the Sinking Fund
and thereafter at a Redemption Price equal to ____% of the
principal amount, together in the case of any such redemption
(whether through operation of the sinking fund or otherwise) with
accrued interest to the Redemption Date; provided, however, that
installments of interest on this Security whose Stated Maturity
is on or prior to such Redemption Date will be payable to the
Holder of this Security, or one or more Predecessor Securities,
of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert -- Notwithstanding the foregoing, the
Partnership may not, prior to _______, redeem any Securities as
contemplated by [Clause (2) of] the preceding paragraph as a part
of, or in anticipation of, any refunding operation by the
application, directly or indirectly, of moneys borrowed having an
interest cost to the Partnership (calculated in accordance with
generally accepted financial practice) of less than __% per
annum.]
[If applicable, insert -- The sinking fund for the
Securities provides for the redemption on _______ in each year,
beginning with the year ____ and ending with the year ____, of
[not less than] $_______] [("mandatory sinking fund") and not
more than $_______] aggregate principal amount of the Securities.
[The Securities acquired or redeemed by the Partnership otherwise
than through [mandatory] sinking fund payments may be credited
against subsequent [mandatory] sinking fund payments otherwise
required to be made in the [describe order] order in which they
become due.]]
<PAGE>
Notice of redemption will be given by mail to Holders of
Securities, not less than 30 nor more than 60 days prior to the
Redemption Date, all as provided in the Indenture.
In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof
shall be issued in the name of the Holder hereof upon the
cancellation hereof.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the
rights and obligations of the Partnership and the rights of the
Holders of the Securities under the Indenture at any time by the
Partnership and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of all
Securities issued under the Indenture at the time Outstanding and
affected thereby. The Indenture also contains provisions
permitting the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Securities, on
behalf of the Holders of all such Securities, to waive compliance
by the Partnership with certain provisions of the Indenture.
Furthermore, provisions in the Indenture permit the Holders of
not less than a majority of the aggregate principal amount, in
certain instances, of the Outstanding Securities of any series to
waive, on behalf of all of the Holders of Securities of such
series, certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and other Securities
issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Partnership, which is absolute and
unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, places and rate, and in
the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein [and herein] set forth, the transfer of this
Security is registrable in the Security Register of the
Partnership upon surrender of this Security for registration of
transfer at the office or agency of the Partnership in any place
where the principal of (and premium, if any) and interest on this
Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the
Partnership and the Security Registrar duly executed by, the
Holder hereof or by his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations
and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
As provided in the Indenture and subject to certain
limitations therein [and herein] set forth, this Security is
exchangeable for a like aggregate principal amount of Securities
<PAGE>
of different authorized denominations but otherwise having the
same terms and conditions, as requested by the Holder hereof
surrendering the same.
The Securities of this series are issuable only in
registered form [without coupons] in denominations of $_______
and any integral multiple thereof.
No service charge shall be made for any such registration of
transfer or exchange, but the Partnership may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Security for registration
of transfer, the Partnership, the Trustee and any agent of the
Partnership or the Trustee may treat the Person in whose name
this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the
Partnership, the Trustee nor any such agent shall be affected by
notice to the contrary.
Notwithstanding anything contained herein to the contrary,
no recourse under or upon any obligation, covenant or agreement
contained in this Security or coupon appertaining hereto, or
because of any indebtedness evidenced hereby (including, without
limitation, any obligation or indebtedness relating to the
principal of, or premium or Additional Amounts, if any, interest
or any other amounts due, or claimed to be due, on any Security
issued hereunder), or for any claim based hereon or otherwise in
respect hereof, shall be had for the payment of the principal of
or premium, if any, or the interest on this Security, or for any
claim based hereon, or otherwise in respect hereof, or based on
or in respect of the Indenture or any indenture supplemental
thereto, (i) against the Company or any other past, present or
future partner in the Partnership, (ii) against any other Person
which owns an interest, directly or indirectly, in any partner of
the Partnership or (iii) against any past, present or future
stockholder, employee, officer or director, as such, of the
Company, or of any successor, either directly or through the
Partnership or the Company or any successor, whether by virtue of
any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the
issue hereof, expressly waived and released.
The Indenture and the Securities shall be governed by and
construed in accordance with the laws of [the State of New York]
applicable to agreements made and to be performed entirely in
such State.
<PAGE>
EXHIBIT B
FORMS OF CERTIFICATION
EXHIBIT B-1
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be
delivered]
This is to certify that, as of the date hereof, and except
as set forth below, the above-captioned Securities held by you
for our account (i) are owned by person(s) that are not citizens
or residents of the United States, domestic partnerships,
domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of
its source ("United States person(s)"), (ii) are owned by United
States person(s) that are (a) foreign branches of United States
financial institutions (financial institutions, as defined in
United States Treasury Regulations Section 2.165-12(c)(1)(v) are
herein referred to as "financial institutions") purchasing for
their own account or for resale, or (b) United States person(s)
who acquired the Securities through foreign branches of United
States financial institutions and who hold the Securities through
such United States financial institutions on the date hereof (and
in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its
agent, that you may advise Sovran Acquisition Limited Partnership
or its agent that such financial institution will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the United
States Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by United States or
foreign financial institution(s) for purposes of resale during
the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if
the owner is a United States or foreign financial institution
described in clause (iii) above (whether or not also described in
clause (i) or (ii)), this is to further certify that such
financial institution has not acquired the Securities for
purposes of resale directly or indirectly to a United States
person or to a person within the United States or its
possessions.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and
its "possessions" include Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
<PAGE>
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your
certification relating to the above-captioned Securities held by
you for our account in accordance with your Operating Procedures
if any applicable statement herein is not correct on such date,
and in the absence of any such notification it may be assumed
that this certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] of
such interest in the above-captioned Securities in respect of
which we are not able to certify and as to which we understand an
exchange for an interest in a permanent Global Security or an
exchange for and delivery of definitive Securities (or, if
relevant, collection of any interest) cannot be made until we do
so certify.
We understand that this certificate may be required in
connection with certain tax legislation in the United States. If
administrative or legal proceedings are commenced or threatened
in connection with which this certificate is or would be
relevant, we irrevocably authorize you to produce this
certificate or a copy thereof to any interested party in such
proceedings.
Dated: ________, ____
[To be dated no earlier than the 15th day prior to (i) the
Exchange Date or (ii) the relevant Interest Payment Date
occurring prior to the Exchange Date, as applicable]
[Name of Person Making
Certification]
____________________________________
(Authorized Signature)
Name:
Title:
<PAGE>
EXHIBIT B-2
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
[Insert title or sufficient description of Securities to be
delivered]
This is to certify that, based solely on written
certifications that we have received in writing, by tested telex
or by electronic transmission from each of the persons appearing
in our records as persons entitled to a portion of the principal
amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$]
principal amount of the above-captioned Securities (i) is owned
by person(s) that are not citizens or residents of the United
States, domestic partnerships, domestic corporations or any
estate or trust the income of which is subject to United States
Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States person(s) that are
(a) foreign branches of United States financial institutions
(financial institutions, as defined in U.S. Treasury Regulations
Section 1.165-12(c)(1)(v) are herein referred to as "financial
institutions") purchasing for their own account or for resale, or
(b) United States person(s) who acquired the Securities through
foreign branches of United States financial institutions and who
hold the Securities through such United States financial
institutions on the date hereof (and in either case (a) or (b),
each such financial institution has agreed, on its own behalf or
through its agent, that we may advise Sovran Acquisition Limited
Partnership or its agent that such financial institution will
comply with the requirements of Section 165(j)(3)(A), (B) or (C)
of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) is owned by United States or
foreign financial institution(s) for purposes of resale during
the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, to the further
effect, that financial institutions described in clause (iii)
above (whether or not also described in clause (i) or (ii)) have
certified that they have not acquired the Securities for purposes
of resale directly or indirectly to a United States person or to
a person within the United States or its possessions.
As used herein, "United States" means the United States of
America (including the States and the District of Columbia); and
its "Possessions" include Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
We further certify that (i) we are not making available
herewith for exchange (or, if relevant, collection of any
interest) any portion of the temporary Global Security
<PAGE>
representing the above-captioned Securities excepted in the
above-referenced certificates of Member Organizations and (ii) as
of the date hereof we have not received any notification from any
of our Member Organizations to the effect that the statements
made by such Member Organizations with respect to any portion of
the part submitted herewith for exchange (or, if relevant,
collection of any interest) are no longer true and cannot be
relied upon as of the date hereof.
We understand that this certification is required in
connection with certain tax legislation in the United States. If
administrative or legal proceedings are commenced or threatened
in connection with which this certificate is or would be
relevant, we irrevocably authorize you to produce this
certificate or a copy thereof to any interested party in such
proceedings.
Dated: _______ ____
[To be dated no earlier than the Exchange Date or the relevant
Interest Payment Date occurring prior to the Exchange Date, as
applicable]
[Morgan Guaranty Trust Company of
New York, Brussels Office,] as
Operator of the Euroclear System
[CEDEL S.A.]
By:
<PAGE>
EXHIBIT 5.1
PHILLIPS, LYTLE, HITCHCOCK, BLAINE & HUBER LLP
3400 MARINE MIDLAND CENTER
BUFFALO, NEW YORK 14203
(716) 847-8400
June 15, 1998
Sovran Self Storage, Inc.
Sovran Acquisition Limited Partnership
5166 Main Street
Williamsville, New York 14221
Re: Legality of Securities to be Registered Under
Registration Statement on Form S-3
Ladies and Gentlemen:
This opinion is delivered in our capacity as counsel to Sovran
Self Storage, Inc., a Maryland corporation (the "Company") and Sovran
Acquisition Limited Partnership, a Delaware limited partnership (the
"Operating Partnership") in connection with the Company and the Operating
Partnership's registration statement on Form S-3 (the "Registration
Statement") filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), relating to an
indeterminate amount of (i) Preferred Stock and Common Stock (as such terms
are defined in the Registration Statement) authorized for issuance by the
Company under the Company's Amended and Restated Articles of Incorporation
(the "Articles of Incorporation"), with an aggregate public offering price
of up to $100,000,000 and (ii) Debt Securities (as such term is defined in
the Registration Statement) for issuance by the Operating Partnership, with
an aggregate public offering price of up to $150,000,000 (such securities
being referred to collectively as the "Securities"). The Registration
Statement provides that the Securities may be offered separately or
together, in separate series, in amounts, at prices and on terms to be set
forth in one or more prospectus supplements (each a "Prospectus
Supplement") to the Prospectus contained in the Registration Statement.
In connection with rendering this opinion, we have examined
the Company's Articles of Incorporation, as amended to the date hereof and
on file with the Maryland State Department of Assessments and Taxation; the
By-laws of the Company; the Agreement of Limited Partnership of the
Operating Partnership, as amended; the Certificate of Incorporation and
By-laws of the general partner of the Operating Partnership (the "General
Partner"); such records of corporate proceedings of the Company and the
General Partner as we deem appropriate for the purposes of this opinion;
and the Registration Statement and the exhibits thereto.
Based upon the foregoing, we are of the opinion that,
(1) With respect to the Preferred Stock and Common Stock,
when issued as described in the Registration Statement and an applicable
Prospectus Supplement, and upon receipt by the Company of the consideration
provided for in the applicable Prospectus Supplement (which consideration
<PAGE>
is not less than the $.01 par value per share in the case of Common Stock
or Preferred Stock), the Securities will be legally issued, fully paid and
nonassessable.
(2) With respect to the Debt Securities, when issued as
described in the Registration Statement with an applicable Prospectus
Supplement and upon receipt by the Operating Partnership of the
consideration provided for in the applicable Prospectus Supplement, the
Debt Securities will be legally issued, fully paid and nonassessable and
binding obligations of the Operating Partnership.
The foregoing assumes that all requisite steps will be taken
to comply with the requirements of the Securities Act and applicable
requirements of state laws regulating the offer and sale of securities.
We hereby consent to being named as counsel to the Company in
the Registration Statement, to the references therein to our firm under the
caption "Legal Matters" and to the inclusion of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
PHILLIPS, LYTLE, HITCHCOCK, BLAINE & HUBER LLP
<PAGE>
EXHIBIT 8.1
PHILLIPS, LYTLE, HITCHCOCK, BLAINE & HUBER LLP
3400 MARINE MIDLAND CENTER
BUFFALO, NEW YORK 14203
(716) 847-8400
June 15, 1998
Sovran Self Storage, Inc.
5166 Main Street
Williamsville, New York 14221
Re: Certain Federal Income Tax Matters
Ladies and Gentlemen:
This opinion is delivered to you in our capacity as counsel to
Sovran Self Storage, Inc. (the "Company") in connection with the Company's
registration statement on Form S-3 (the "Registration Statement") filed by
the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, relating to an indeterminate amount of
Preferred Stock and Common Stock (as such terms are defined in the
Registration Statement) authorized for issuance under the Company's Amended
and Restated Articles of Incorporation and with an aggregate public
offering price of up to $100,000,000. This opinion relates to the Company's
qualification for federal income tax purposes as a real estate investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended (the
"Code").
In rendering the following opinion, we have examined the Amended
and Restated Articles of Incorporation and Bylaws of the Company, and such
other records, certificates and documents as we have deemed necessary or
appropriate for purposes of rendering the opinions set forth herein.
We have reviewed the Registration Statement and the descriptions set forth
therein of the Company and its investments and activities. We have relied
upon the factual representations of the Company and its affiliates and
certain officers thereof (including, without limitation, representations
contained in a representation letter dated as of this date) regarding the
manner in which the Company has been and will continue to be owned and
operated. We have neither independently investigated nor verified such
factual representations, and we assume that such factual representations
are true, correct and complete and that all representations made "to the
best of the knowledge and belief" of any person(s) or party(ies) are and
will be true, correct and complete as if made without such qualification.
We assume that the Company has been and
will be operated in accordance with applicable laws and the terms and
conditions of applicable documents, and that the descriptions of the
Company and its investments, and the proposed investments, activities,
operations and governance of the Company set forth in the Registration
Statement continue to be true. In addition, we have relied on certain
additional facts and assumptions described below.
In rendering the opinions set forth herein, we have assumed (i)
the genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the
conformity of final documents to all documents submitted to us as drafts,
<PAGE>
(v) the authority and capacity of the individual or individuals who
executed any such documents on behalf of any person, (vi) the accuracy and
completeness of all records made available to us, an (vii) the factual
accuracy of all representations, warranties and other statements made by
all parties. We have also assumed, without investigation, that all
documents, certificates, warranties and covenants on which we have relied
in rendering the opinion set forth below and that were given or dated
earlier than the date of this letter continue to remain accurate, insofar
as relevant to the opinion set forth herein, from such earlier date through
and including the date of this letter.
The discussion and conclusions set forth below are based upon the
Code, the Income Tax Regulations and Procedure and Administration
Regulations promulgated thereunder and existing administrative and judicial
interpretations thereof, all of which are subject to change. No assurance
can therefore be given that the federal income tax consequences described
below will not be altered in the future.
Based upon and subject to the foregoing, and provided that the
Company continues to meet the applicable asset composition, source of
income, shareholder diversification, distribution, recordkeeping and other
requirements of the Code necessary for a corporation to qualify as a REIT,
we are of the opinion that:
1. Commencing with the Company's first taxable year ended December
31, 1995, the Company has been organized in conformity with the
requirements for qualification as a "real estate investment
trust" under the Code, and its method of operation, as described
in the representations referred to above, will enable it to
continue to meet the requirements for qualification and taxation
as a "real estate investment trust" under the Code.
2. The Statements in the Registration Statement set forth under the
caption "Certain Federal Income Tax Considerations" to the extent
such information constitutes matters of law, summaries of legal
matters, or legal conclusions, have been reviewed by us, are
accurate in all material respects and are incorporated herein by
reference.
We express no opinion with respect to the transactions described
in the Registration Statement other than those expressly set forth herein.
You should recognize that our opinion is not binding on the IRS and that
IRS may disagree with the opinion contained herein. Although we believe
that our opinion will be sustained if challenged, there can be no assurance
that this will be the case. Except as specifically discussed above, the
opinion expressed herein is based upon the law as it currently exists.
Consequently, future changes in the law may cause the federal income tax
treatment of the transactions described herein to be materially and
adversely different from that described above.
We consent to being named as Counsel to the Company in the
Registration Statement, to the references in the Registration Statement to
our firm and to the inclusion of a copy of this opinion letter as an
exhibit to the Registration Statement.
Very truly yours,
PHILLIPS, LYTLE, HITCHCOCK, BLAINE & HUBER LLP
<PAGE>
EXHIBIT 12.1
Ratio of Earnings to Fixed Charges
(Dollars in thousands)
Three months
ended June 26, 1995
March 31, Year ended December 31, to
1998 1997 1996 December 31, 1995
---- ---- ---- ----------------
Earnings:
Net income 5,648 23,119 15,659 6,744
Fixed charges 1,324 2,743 2,386 323
-------------------------------------------------------
Earnings (1) 6,972 25,862 18,045 7,067
Fixed charges:
Interest expense 1,215 2,166 1,924 131
Amortization
financing fees 109 577 462 192
-------------------------------------------------------
Fixed charges (2) 1,324 2,743 2,386 323
Ratio of earnings
to fixed charges
(1)(2) 5.27 9.43 7.56 21.88
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Data" in the Registration Statement (Pre-effective
Amendment No. 1 Form S-3, No. 333-51169) and related Prospectus of Sovran
Self Storage, Inc. ("SSS") and Sovran Acquisition Limited Partnership
("SALP") for the registration of $100,000,000 of SSS Preferred or Common
Stock and $150,000,000 of SALP Debt Securities and to the incorporation by
reference therein of our report dated January 29, 1998 (except for Notes 5
and 14 for which the date is March 24, 1998), with respect to the
consolidated financial statements of Sovran Self Storage, Inc. included in
its Annual Report (Form 10-K, as amended) for the year ended December 31,
1997, and our report on the related financial statement schedule included
therein, filed with the Securities and Exchange Commission.
We also consent to the incorporation by reference of our reports dated:
October 10, 1997; April 9, 1998; June 9, 1998; with respect to the
Historical Summaries of Combined Gross Revenue and Direct Operating
Expenses included, respectively, in its Current Reports on: Form 8-K dated
October 10, 1997; Form 8-K/A dated April 16, 1998; Form 8-K dated June 10,
1998, all filed with the Securities and Exchange Commission.
Lastly, we consent to the incorporation by reference of our report dated
April 16, 1998, with respect to the financial statements of SALP included
in its General Form for Registration of Securities (Form 10) dated
April 22, 1998.
ERNST & YOUNG LLP
Buffalo, New York
June 12, 1998
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