<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1997
REGISTRATION STATEMENT NO. 333-24579
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MERIDIAN INDUSTRIAL TRUST, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 94-3224765
(State of Organization) (I.R.S. Employer
Identification Number)
</TABLE>
455 MARKET STREET, 17TH FLOOR
SAN FRANCISCO, CALIFORNIA 94105
(415) 281-3900
(Address of principal executive offices)
------------------------
Allen J. Anderson Copies to:
Chairman and Chief Executive Officer Michael D. Wortley, Esq.
Meridian Industrial Trust, Inc. Vinson & Elkins L.L.P.
455 Market Street, 17th Floor 2001 Ross Avenue, Suite 3700
San Francisco, California 94105 Dallas, Texas 75201
(Name and address of agent for (214) 220-7700
service)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(2) FEE
<S> <C> <C> <C> <C>
Debt Securities(4)..........................
Preferred Stock, par value $0.001 per
share(5).................................. (3) (3) (3) (3)
Common Stock, par value $0.001 per
share(6)..................................
Warrants(7).................................
Total..................................... $600,000,000(8) 100% $600,000,000(8) $181,818.00(9)
</TABLE>
FOOTNOTES TO TABLE ON NEXT PAGE
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE>
FOOTNOTES FROM PREVIOUS PAGE
(1) The proposed maximum offering price per unit will be determined from time to
time by the registrant in connection with the issuance by the registrant of
the securities registered hereunder.
(2) The proposed maximum aggregate offering price has been estimated solely for
the purpose of calculating the registration fee pursuant to Rule 457(o)
under the Securities Act of 1933.
(3) Not applicable pursuant to General Instruction II.D. of Form S-3.
(4) Subject to note (8) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities. If any Debt Securities
are issued at an original issue discount, then the offering price shall be
in such greater principal amount as shall result in an aggregate initial
offering price not to exceed $600,000,000 less the dollar amount of any
securities previously issued hereunder.
(5) Subject to note (8) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold, from time
to time, by the registrant.
(6) Subject to note (8) below, there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from time to
time, by the registrant. There is also being registered hereunder an
indeterminate number of shares of Common Stock as shall be issuable upon
conversion or redemption of Preferred Stock or Debt Securities registered
hereunder.
(7) Subject to note (8) below, there is being registered hereunder an
indeterminate amount and number of Warrants, representing rights to purchase
Debt Securities, Preferred Stock, or Common Stock registered hereunder.
(8) In no event will the aggregate initial offering price of all securities
issued from time to time pursuant to this Registration Statement exceed
$600,000,000 or the equivalent thereof in one or more foreign currencies,
foreign currency units, or composite currencies. The aggregate amount of
Common Stock registered hereunder is further limited to that which is
permissible under Rule 415(a)(4) under the Securities Act of 1933. The
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(9) Previously paid.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 10, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
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DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
MERIDIAN INDUSTRIAL TRUST, INC.
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Meridian Industrial Trust, Inc. (the "Company") may from time to time offer
in one or more series its (a) debt securities ("Debt Securities"), (b) warrants
to purchase Debt Securities ("Debt Warrants"), (c) Preferred Stock, par value
$0.001 per share ("Preferred Stock"), (d) warrants to purchase Preferred Stock
("Preferred Stock Warrants"), (e) Common Stock, par value $0.001 per share
("Common Stock"), or (f) warrants to purchase Common Stock ("Common Stock
Warrants"), all having an aggregate initial offering price not to exceed
$600,000,000 or the equivalent thereof in one or more foreign currencies,
foreign currency units, or composite currencies, including European Currency
Units. The Debt Warrants, Preferred Stock Warrants and Common Stock Warrants are
collectively referred to herein as the "Warrants." The Debt Securities,
Preferred Stock, Common Stock and Warrants offered by the Company hereby
(collectively referred to herein as the "Offered Securities") may be offered,
separately or together, in separate series, in amounts, at prices and on terms
to be set forth in a supplement to this Prospectus (a "Prospectus Supplement").
Certain holders (the "Selling Stockholders") of the Company's Common Stock and
Series B Preferred Stock may also offer and sell certain shares of Common Stock
held by them or issuable upon the conversion or exchange of shares of Series B
Preferred Stock ("Selling Stockholder Offered Securities" and together with the
Company Offered Securities, the "Offered Securities").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (a) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the Company or
repayment at the option of the Holder, terms for sinking fund payments, and any
initial public offering price, (b) in the case of Preferred Stock, the
designation and stated value, any dividend, liquidation, redemption, conversion,
voting and other rights, and the number of shares and the terms or the offering
and sale thereof, (c) in the case of Common Stock, the number of shares and the
terms of the offering and sale thereof, (d) in the case of Warrants, the number
and terms thereof, the designation and the number of securities issuable upon
exercise, the exercise price, the terms of the offering and sale thereof, and
where applicable, the duration and detachability thereof, and (e) in the case of
all Offered Securities, whether such Offered Securities will be offered
separately or as a unit with other Offered Securities. The Selling Stockholder
Offered Securities may be offered in amounts, at prices and on terms to be
determined at the time of sale and set forth in a Prospectus Supplement. In
addition, such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of the Offered Securities, in each case
as may be appropriate to preserve the status of the Company as a real estate
investment trust ("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.
The Company may sell the Offered Securities in or outside the United States
through underwriters, brokers or dealers, directly to one or more purchasers, or
through agents. The Selling Stockholder Offered Securities may be offered to or
through underwriters either separately or in connection with offerings of
Offered Securities by the Company. If any agents or underwriters are involved in
the sale of any of the Offered 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 the
applicable Prospectus Supplement. See "Plan of Distribution." No Offered
Securities may be sold without delivery of the applicable Prospectus Supplement
describing the method and terms of the offering of such series of Offered
Securities. The Company will not receive any of the proceeds from the sale of
any of the Selling Stockholder Offered Securities by any of the Selling
Stockholders.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material can also be obtained from the Commission's
worldwide web site at http://www.sec.gov. The Company's outstanding shares of
Common Stock are listed on the New York Stock Exchange (the "NYSE") under the
symbol "MDN" and all such reports, proxy statements and other information filed
by the Company with the NYSE may be inspected at the NYSE's offices at 20 Broad
Street, New York, New York 10005. In addition, warrants to purchase shares of
the Company's Common Stock are listed on the American Stock Exchange ("ASE") and
such reports, proxy statements and other information filed by the Company with
the ASE may be inspected at the ASE's offices at 86 Trinity Place, New York, New
York 10006-1881.
This Prospectus constitutes part of a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by the Company with the Commission under the Securities Act. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is hereby made to the
Registration Statement.
INCORPORATION BY REFERENCE
There are incorporated herein by reference the following documents
heretofore filed by the Company with the Commission (File No. 1-14166):
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996 amended;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
(c) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997;
(d) Quarterly Report on Form 10-Q for the quarter ended September 30,
1997;
(e) Current Report on Form 8-K filed October 9, 1997, as amended;
(f) Current Report on Form 8-K filed October 15, 1997, as amended;
(g) Current Report on Form 8-K filed November 6, 1997, as amended; and
(h) The description of the Common Stock contained in the Company's
registration statement on Form 8-A filed on January 4, 1996 for registration
of the Common Stock pursuant to Section 12(b) of the Exchange Act, including
any amendment or report filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
of the Offered 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. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein, or in any subsequently filed document which is incorporated or
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
2
<PAGE>
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated herein by reference, other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents.
Requests should be addressed to General Counsel, Meridian Industrial Trust,
Inc., 455 Market Street, 17th Floor, San Francisco, California 94105.
3
<PAGE>
AS USED HEREIN THE TERM "COMPANY" INCLUDES MERIDIAN INDUSTRIAL TRUST, INC., A
MARYLAND CORPORATION, AND ONE OR MORE OF ITS SUBSIDIARIES, AS APPROPRIATE.
CERTAIN ADDITIONAL TERMS CONTAINED HEREIN ARE DEFINED IN THE GLOSSARY OF THIS
PROSPECTUS.
THE COMPANY
Meridian Industrial Trust, Inc. is a self-administered and self-managed real
estate operating company engaged primarily in the business of owning, acquiring,
developing, managing and leasing income-producing warehouse/distribution and
light industrial properties. Based on the total square feet of leasable space
and management's knowledge of the industrial real estate market, the Company
believes it is one of the largest owners and managers of industrial space for
lease in the United States. The Company's strategy is to be a demand-driven,
competitively priced, nationwide provider of warehouse/distribution space.
The Company's fundamental business objective is to maximize total return to
its stockholders by increasing cash flow per share and increasing the long-term
value of the Company's properties. In order to achieve this objective, the
Company will seek to add value to the Company's Properties, build market share,
achieve name recognition and continue to improve its operating efficiency. The
Company places a high priority on disciplined portfolio management and
anticipating customers' needs. The Company intends to achieve its primary
business objective by applying its corporate strategies to achieve growth in its
portfolio of Properties. The Company will seek to grow through (a) acquiring
warehouse/distribution properties, (b) developing warehouse/distribution
properties to meet customer demand, (c) selectively acquiring land parcels in
anticipation of development projects, (d) repositioning the Company's existing
portfolio by selling Properties which no longer meet its investment objectives
and reinvesting the proceeds and (e) maximizing cash flow from its operating
Properties by increasing occupancy levels and releasing space at higher levels.
The Company's executive offices are located at 455 Market Street, 17th
Floor, San Francisco, California 94105, and its telephone number at those
offices is (415) 281-3900.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities will be used for the
acquisition and development of additional industrial properties, as suitable
opportunities arise, for the repayment of certain outstanding indebtedness at
such time, for capital improvements to properties and for general corporate
purposes. None of the proceeds from the sale of any of the Selling Stockholder
Offered Securities by any of the Selling Stockholders will be received by the
Company.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
For the nine months ended September 30, 1997 and for the year ended December
31, 1996, the Company's ratio of earnings to fixed charges was 2.58:1 and
2.60:1, respectively. For the same periods, the ratio of earnings to combined
fixed charges and preferred dividends was 2.04:1 and 1.91:1, respectively. For
the period from May 18, 1995 (inception) to December 31, 1995, except for
interest earned on its investments and general and administrative expenses
incurred and accrued the Company had no activities. During this period the
Company's fixed charges were in excess of earnings by $1.29 million and combined
fixed charges and preferred stock dividends were in excess of earnings of $1.32
million.
For purposes of computing these ratios, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income (loss) before
extraordinary items. Fixed charges consist of interest costs, whether expensed
or capitalized, the interest component of rental expense, and amortization of
capitalized loan fees.
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Debt Securities so offered will be described
in the Prospectus Supplement relating to such Debt Securities. Accordingly, for
a description of the terms of a particular issue of Debt Securities, reference
must be made to both the Prospectus Supplement relating thereto and to the
following description.
The Debt Securities will be general obligations of the Company and may be
subordinated to Senior Indebtedness (as defined below) of the Company to the
extent set forth in the Prospectus Supplement relating thereto. See "Description
of Debt Securities--Subordination." Debt Securities will be issued under an
Indenture (the "Indenture") to be entered into between the Company and one or
more commercial banks to be selected as trustees (collectively, the "Trustee").
A copy of the form of Indenture has been filed as an exhibit to the Registration
Statement filed with the SEC. The following discussion of certain provisions of
the Indenture is a summary only and does not purport to be a complete
description of the terms and provisions of the Indenture. Accordingly, the
following discussion is qualified in its entirety by reference to the provisions
of the Indenture, including the definition therein of terms used below with
their initial letters capitalized.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that can be issued thereunder. The Debt Securities may be issued in
one or more series as may be authorized from time to time by the Company.
Reference is made to the applicable Prospectus Supplement for the following
terms of the Debt Securities of the series with respect to which such Prospectus
Supplement is being delivered:
(a) The title of the Debt Securities of the series;
(b) Any limit on the aggregate principal amount of the Debt Securities
of the series that may be authenticated and delivered under the Indenture;
(c) The date or dates on which the principal and premium with respect to
the Debt Securities of the series are payable;
(d) The rate or rates (which may be fixed or variable) at which the Debt
Securities of the series shall bear interest (if any) or the method of
determining such rate or rates, the date or dates from which such interest
shall accrue, the interest payment dates on which such interest shall be
payable or the method by which such dates will be determined, the record
dates for the determination of holders thereof to whom such interest is
payable (in the case of Registered Securities), and the basis upon which
interest will be calculated if other than that of a 360-day year of twelve
30-day months;
(e) The place or places, if any, in addition to or instead of the
corporate trust office of the Trustee (in the case of Registered Securities)
or the principal London office of the Trustee (in the case of Bearer
Securities), where the principal, premium and interest with respect to Debt
Securities of the series shall be payable;
(f) The price or prices at which, the period or periods within which,
and the terms and conditions upon which Debt Securities of the series may be
redeemed, in whole or in part, at the option of the Company or otherwise;
(g) Whether Debt Securities of the series are to be issued as Registered
Securities or Bearer Securities or both and, if Bearer Securities are to be
issued, whether coupons will be attached thereto, whether Bearer Securities
of the series may be exchanged for Registered Securities of the series, and
5
<PAGE>
the circumstances under which and the places at which any such exchanges, if
permitted, may be made;
(h) If any Debt Securities of the series are to be issued as Bearer
Securities or as one or more Global Securities representing individual
Bearer Securities of the series, whether certain provisions for the payment
of additional interest or tax redemptions shall apply; whether interest with
respect to any portion of a temporary Bearer Security of the series payable
with respect to any interest payment date prior to the exchange of such
temporary Bearer Security for definitive Bearer Securities of the series
shall be paid to any clearing organization with respect to the portion of
such temporary Bearer Security held for its account and, in such event, the
terms and conditions (including any certification requirements) upon which
any such interest payment received by a clearing organization will be
credited to the persons entitled to interest payable on such interest
payment date; and the terms upon which a temporary Bearer Security may be
exchanged for one or more definitive Bearer Securities of the series;
(i) The obligation, if any, of the Company to redeem, purchase, or repay
Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a holder thereof and the price or prices at
which, the period or periods within which, and the terms and conditions upon
which Debt Securities of the series shall be redeemed, purchased or repaid,
in whole or in part, pursuant to such obligations;
(j) The terms, if any, upon which the Debt Securities of the series may
be convertible into or exchanged for Common Stock, Preferred Stock, other
Debt Securities, or warrants for Common Stock, Preferred Stock or
indebtedness or other securities of any kind of the Company or any other
issuer or obligor and the terms and conditions upon which such conversion or
exchange shall be effected, including the initial conversion or exchange
price or rate, the conversion or exchange period, and any other additional
provisions;
(k) If other than denominations of $1,000 or any integral multiple
thereof, the denominations in which Debt Securities of the series shall be
issuable;
(l) If the amount of principal, premium, or interest with respect to the
Debt Securities of the series may be determined with reference to an index
or pursuant to a formula, the manner in which such amounts will be
determined;
(m) If the principal amount payable at the stated maturity of Debt
Securities of the series will not be determinable as of any one or more
dates prior to such stated maturity, the amount that will be deemed to be
such principal amount as of any such date for any purpose, including the
principal amount thereof which will be due and payable upon any maturity
other than the stated maturity or which will be deemed to be outstanding as
of any such date (or, in any such case, the manner in which such deemed
principal amount is to be determined), and if necessary, the manner of
determining the equivalent thereof in United States currency;
(n) Any changes or additions to the provisions of the Indenture dealing
with defeasance, including the addition of additional covenants that may be
subject to the Company's covenant defeasance option;
(o) If other than such coin or currency of the United States as at the
time of payment is legal tender for payment of public and private debts, the
coin or currency or currencies or units of two or more currencies in which
payment of the principal, premium and interest with respect to Debt
Securities of the series shall be payable;
(p) If other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series that shall be payable upon
declaration of acceleration of the maturity thereof or provable in
bankruptcy;
6
<PAGE>
(q) The terms, if any, of the transfer, mortgage, pledge or assignment
as security for the Debt Securities of the series of any properties, assets,
moneys, proceeds, securities or other collateral, including whether certain
provisions of the Trust Indenture Act are applicable and any corresponding
changes to provisions of the Indenture as then in effect;
(r) Any addition to or change in the Events of Default with respect to
the Debt Securities of the series and any change in the right of the Trustee
or the holders to declare the principal, premium and interest with respect
to such Debt Securities due and payable;
(s) If the Debt Securities of the series shall be issued in whole or in
part in the form of a Global Security, the terms and conditions, if any,
upon which such Global Security may be exchanged in whole or in part for
other individual Debt Securities in definitive registered form, the
Depositary for such Global Security, and the form of any legend or legends
to be borne by any such Global Security in addition to or in lieu of the
legend referred to in the Indenture;
(t) Any Trustee, authenticating or paying agents, transfer agents or
registrars;
(u) The applicability of, and any addition to or change in, the
covenants and definitions then set forth in the Indenture or in the terms
then set forth in the Indenture relating to permitted consolidations,
mergers, or sales of assets, including conditioning any merger, conveyance,
transfer or lease permitted by the Indenture upon the satisfaction of an
indebtedness coverage standard by the Company and any successor to the
Company;
(v) The terms, if any, of any guarantee of the payment of principal,
premium and interest with respect to Debt Securities of the series and any
corresponding changes to the provisions of the Indenture as then in effect;
(w) The subordination, if any, of the Debt Securities of the series
pursuant to the Indenture and any changes or additions to the provisions of
the Indenture relating to subordination;
(x) With regard to Debt Securities of the series that do not bear
interest, the dates for certain required reports to the Trustee; and
(y) Any other terms of the Debt Securities of the series (which terms
shall not be prohibited by the provisions of the Indenture).
The Prospectus Supplement will also describe any material United States
federal income tax consequences or other special considerations applicable to
the series of Debt Securities to which such Prospectus Supplement relates,
including those applicable to (a) Bearer Securities, (b) Debt Securities with
respect to which payments of principal, premium, or interest are determined with
reference to an index or formula (including changes in prices of particular
securities, currencies, or commodities), (c) Debt Securities with respect to
which principal, premium or interest is payable in a foreign or composite
currency, (d) Debt Securities that are issued at a discount below their stated
principal amount, bearing no interest or interest at a rate that at the time of
issuance is below market rates ("Original Issue Discount Debt Securities"), and
(e) variable rate Debt Securities that are exchangeable for fixed rate Debt
Securities.
Payments of interest on Registered Securities may be made at the option of
the Company by check mailed to the registered holders thereof or, if so provided
in the applicable Prospectus Supplement, at the option of a holder by wire
transfer to an account designated by such holder. Except as otherwise provided
in the applicable Prospectus Supplement, no payment on a Bearer Security will be
made by mail to an address in the United States or by wire transfer to an
account in the United States.
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Securities may be transferred or exchanged at the office of the
Trustee at which its corporate trust business is principally administered in the
United States or at the office of the Trustee or the Trustee's agent in the
Borough of
7
<PAGE>
Manhattan, the City and State of New York, at which its corporate agency
business is conducted, subject to the limitations provided in the Indenture,
without the payment of any service charge, other than any tax or governmental
charge payable in connection therewith. Bearer Securities will be transferable
only by delivery. Provisions with respect to the exchange of Bearer Securities
will be described in the Prospectus Supplement relating to such Bearer
Securities.
All funds paid by the Company to a paying agent for the payment of
principal, premium or interest with respect to any Debt Securities that remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company, and the holders
of such Debt Securities or any coupons appertaining thereto will thereafter look
only to the Company 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. A Global Security is a Debt Security that
represents, and is denominated in an amount equal to the aggregate principal
amount of, all outstanding Debt Securities of a series, or any portion thereof,
in either case having the same terms, including the same original issue date,
date or dates on which principal and interest are due, and interest rate or
method of determining interest. A Global Security will be deposited with, or on
behalf of, a Depositary, which will be identified in the Prospectus Supplement
relating to such Debt Securities. Global Securities may be issued in either
registered or bearer form and in either temporary or definitive 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 Depositary to a nominee of the Depositary, by a nominee of the Depositary
to the Depositary or another nominee of the Depositary, or by the Depositary or
any nominee of the Depositary to a successor Depositary or any nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to such
Debt Securities. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security 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 the
Depositary ("participants"). Such accounts shall be designated by the dealers or
underwriters with respect to such Debt Securities or, if such Debt Securities
are offered and sold directly by the Company or through one or more agents, by
the Company or such agents. Ownership of beneficial interests in a Global
Security will be limited to participants or persons that hold beneficial
interests through participants. Ownership of beneficial interests in such Global
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the Depositary (with respect to interests of
participants) or records maintained by participants (with respect to interests
of persons other than participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limitations and laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner or holder of such Global Security, such Depositary or nominee,
as the case may be, will be considered the sole owner or holder of the
individual Debt Securities represented by such Global Security for all purposes
under the Indenture. Except as provided below, owners of beneficial interests 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 of such Debt
Securities in definitive form, and will not be considered the owners or holders
thereof under the Indenture.
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Subject to the restrictions described under "Description of Debt
Securities--Limitations on Issuance of Bearer Securities," payments of
principal, premium and interest with respect to individual Debt Securities
represented by a Global Security will be made to the Depositary or its nominee,
as the case may be, as the registered owner or holder of such Global Security.
Neither the Company, the Trustee, any paying agent or registrar for such Debt
Securities, or any agent of the Company or the Trustee will have any
responsibility or liability for (a) any aspect of the records relating to or
payments made by the Depositary, its nominee or any participants on account of
beneficial interests in the Global Security or for maintaining, supervising, or
reviewing any records relating to such beneficial interests, (b) the payment to
the owners of beneficial interests in the Global Security of amounts paid to the
Depositary or its nominee, or (c) any other matter relating to the actions and
practices of the Depositary, its nominee or its participants. Neither the
Company, the Trustee, any paying agent or registrar for such Debt Securities, or
any agent of the Company or the Trustee will be liable for any delay by the
Depositary, its nominee or any of its participants in identifying the owners of
beneficial interests in the Global Security, and the Company and the Trustee may
conclusively rely on, and will be protected in relying on, instructions from the
Depositary or its nominee for all purposes.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal, premium or interest with
respect to a definitive Global Security representing any of such Debt
Securities, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security, as shown on the records of the Depositary or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers and registered in street
name. Such payments will be the responsibility of such participants. Receipt by
owners of beneficial interests in a temporary Global Security of payments of
principal, premium, or interest with respect thereto will be subject to the
restrictions described under "Description of Debt Securities--Limitations on
Issuance of Bearer Securities."
If the Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depositary, the Company shall appoint a
successor depositary. If a successor depositary is not appointed by the Company
within 90 days, the Company will issue individual Debt Securities of such series
in exchange for the Global Security representing such series of Debt Securities.
In addition, the Company may at any time and in its sole discretion, subject to
any limitations described in the Prospectus Supplement relating to such Debt
Securities, determine no longer to have Debt Securities of a series represented
by a Global Security and, in such event, will issue individual Debt Securities
of such series in exchange for the Global Security representing such series of
Debt Securities. Furthermore, if the Company so specifies with respect to the
Debt Securities of a series, an owner of a beneficial interest in a Global
Security representing Debt Securities of such series may, on terms acceptable to
the Company, the Trustee and the Depositary for such Global Security, receive
individual Debt Securities of such series in exchange for such beneficial
interests, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities of the series represented by such Global Security
equal in principal amount to such beneficial interest and to have such Debt
Securities registered in its name (if the Debt Securities are issuable as
Registered Securities). Individual Debt Securities of such series so issued will
be issued (a) as Registered Securities in denominations, unless otherwise
specified by the Company, of $1,000 and integral multiples thereof if the Debt
Securities are issuable as Registered Securities, (b) as Bearer Securities in
the denomination or denominations specified by the Company if the Debt
Securities are issuable as Bearer Securities, or (c) as either Registered
Securities or Bearer Securities as described above if the Debt Securities are
issuable in either form. See, however, "Description of Debt
Securities--Limitations on Issuance of Bearer Securities" for a description of
certain restrictions on the issuance of individual Bearer Securities in exchange
for beneficial interests in a bearer Global Security.
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LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
The Debt Securities of a series may be issued as Registered Securities
(which will be registered as to principal and interest in the register
maintained by the registrar for such Debt Securities) or Bearer Securities
(which will be transferable only by delivery). If such Debt Securities are
issuable as Bearer Securities, certain special limitations and considerations
will apply.
In compliance with United States federal income tax laws and regulations,
the Company and any underwriter, agent or dealer participating in an offering of
Bearer Securities will agree that, in connection with the original issuance of
such Bearer Securities and during the period ending 40 days after the issue
date, they will not offer, sell or deliver any such Bearer Security, directly or
indirectly, to a United States Person (as defined below) or to any person within
the United States, except to the extent permitted under United States Treasury
regulations.
Bearer Securities will bear a legend to the following effect: "Any United
States Person who holds this obligation will be subject to limitations under the
United States federal income tax laws, including the limitations provided in
Sections 165(j) and 1287(a) of the Internal Revenue Code." The sections referred
to in the legend provide that, with certain exceptions, a United States taxpayer
who holds Bearer Securities will not be allowed to deduct any loss with respect
to, and will not be eligible for capital gain treatment with respect to any gain
realized on the sale, exchange, redemption, or other disposition of, such Bearer
Securities.
For this purpose, "United States" includes the United States of America and
its possessions, and "United States Person" means 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.
Pending the availability of a definitive Global Security or individual
Bearer Securities, as the case may be, Debt Securities that are issuable as
Bearer Securities may initially be represented by a single temporary Global
Security, without interest coupons, to be deposited with a common depositary in
London for Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System ("Euroclear"), or Centrale de Livraison de
Valeurs Mobilieres S.A. ("CEDEL") for credit to the accounts designated by or on
behalf of the purchasers thereof. Following the availability of a definitive
Global Security in bearer form, without coupons attached, or individual Bearer
Securities and subject to any further limitations described in the applicable
Prospectus Supplement, the temporary Global Security will be exchangeable for
interests in such definitive Global Security or for such individual Bearer
Securities, respectively, only upon receipt of a "Certificate of Non-U.S.
Beneficial Ownership," which is a certificate to the effect that a beneficial
interest in a temporary Global Security is owned by a person that is not a
United States Person or is owned by or through a financial institution in
compliance with applicable United States Treasury regulations. No Bearer
Security will be delivered in or to the United States. If so specified in the
applicable Prospectus Supplement, interest on a temporary Global Security will
be paid to each of Euroclear and CEDEL with respect to that portion of such
temporary Global Security held for its account, but only upon receipt as of the
relevant interest payment date of a Certificate of Non-U.S. Beneficial
Ownership.
SUBORDINATION
Debt Securities of a series may be subordinated ("Subordinated Debt
Securities") to Senior Indebtedness (as defined below) to the extent set forth
in the Prospectus Supplement relating thereto. The Company currently conducts
certain of its operations through subsidiaries, and the holders of Debt
Securities (whether or not Subordinated Debt Securities) will be structurally
subordinated to the creditors of the Company's subsidiaries.
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Subordinated Debt Securities of a series and any coupons appertaining
thereto will be subordinate in right of payment, to the extent and in the manner
set forth in the Indenture and the Prospectus Supplement relating to such
Subordinated Debt Securities, to the prior payment of all indebtedness of the
Company that is designated as "Senior Indebtedness" with respect to such series.
"Senior Indebtedness," with respect to any series of Subordinated Debt
Securities, will consist of (a) any and all amounts payable under or with
respect to the Company's "Bank Indebtedness" (defined as the Revolving Credit
Agreement, dated February 26, 1996, among the Company, The First National Bank
of Boston, Texas Commerce Bank and NationsBank of Texas, as amended or modified
from time to time) (b) indebtedness under the Mortgage Loan, and (c) any other
indebtedness of the Company that is designated in a resolution of the Company's
Board of Directors or the supplemental Indenture establishing such series as
Senior Indebtedness with respect to such series.
Upon any payment or distribution of assets of the Company to creditors or
upon a total or partial liquidation or dissolution of the Company or in a
bankruptcy, receivership or similar proceeding relating to the Company or its
property, holders of Senior Indebtedness shall be entitled to receive payment in
full in cash of the Senior Indebtedness before holders of Subordinated Debt
Securities shall be entitled to receive any payment of principal, premium or
interest with respect to the Subordinated Debt Securities, and until the Senior
Indebtedness is paid in full, any distribution to which holders of Subordinated
Debt Securities would otherwise be entitled shall be made to the holders of
Senior Indebtedness (except that such holders may receive shares of stock and
any debt securities that are subordinated to Senior Indebtedness to at least the
same extent as the Subordinated Debt Securities).
The Company may not make any payments of principal, premium or interest with
respect to Subordinated Debt Securities, make any deposit for the purpose of
defeasance of such Subordinated Debt Securities, or repurchase, redeem or
otherwise retire (except, in the case of Subordinated Debt Securities that
provide for a mandatory sinking fund, by the delivery of Subordinated Debt
Securities by the Company to the Trustee in satisfaction of the Company's
sinking fund obligation) any Subordinated Debt Securities if (a) any principal,
premium or interest with respect to Senior Indebtedness is not paid within any
applicable grace period (including at maturity) or (b) any other default on
Senior Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms, unless, in either case, the default
has been cured or waived and such acceleration has been rescinded, such Senior
Indebtedness has been paid in full in cash, or the Company and the Trustee
receive written notice approving such payment from the representatives of each
issue of "Designated Senior Indebtedness" (which will include the Bank
Indebtedness, the Mortgage Loan and any other specified issue of Senior
Indebtedness of at least $100 million). During the continuance of any default
(other than a default described in clause (a) or (b) above) with respect to any
Senior Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Company may not pay the Subordinated Debt Securities for a period (the "Payment
Blockage Period") commencing on the receipt by the Company and the Trustee of
written notice of such default from the representative of any Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period (a
"Blockage Notice"). The Payment Blockage Period may be terminated before its
expiration by written notice to the Trustee and the Company from the person who
gave the Blockage Notice, by repayment in full in cash of the Senior
Indebtedness with respect to which the Blockage Notice was given, or because the
default giving rise to the Payment Blockage Period is no longer continuing.
Unless the holders of such Senior Indebtedness shall have accelerated the
maturity thereof, the Company may resume payments on the Subordinated Debt
Securities after the expiration of the Payment Blockage Period. Not more than
one Blockage Notice may be given in any period of 360 consecutive days unless
the first Blockage Notice within such 360-day period is given by or on behalf of
holders of Designated Senior Indebtedness other than the Bank Indebtedness, in
which case, the representative of the Bank Indebtedness may give another
Blockage Notice within such period. In no event, however, may the total number
of days during which any Payment Blockage Period or Periods is in effect exceed
179 days in the aggregate during any period of 360
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consecutive days. After all Senior Indebtedness is paid in full and until the
Subordinated Debt Securities are paid in full, holders of the Subordinated Debt
Securities shall be subrogated to the rights of holders of Senior Indebtedness
to receive distributions applicable to Senior Indebtedness.
By reason of such subordination, in the event of insolvency, creditors of
the Company who are holders of Senior Indebtedness, as well as certain general
creditors of the Company, may recover more, ratably, than the holders of the
Subordinated Debt Securities.
EVENTS OF DEFAULT AND REMEDIES
The following events are defined in the Indenture as "Events of Default"
with respect to a series of Debt Securities:
(a) Default in the payment of any installment of interest on any Debt
Securities of that series or any payment with respect to the related
coupons, if any, as and when the same shall become due and payable (whether
or not, in the case of Subordinated Debt Securities, such payment shall be
prohibited by reason of the subordination provisions described above) and
continuance of such default for a period of 30 days;
(b) Default in the payment of principal or premium with respect to any
Debt Securities of that series as and when the same shall become due and
payable, whether at maturity, upon redemption, by declaration, upon required
repurchase, or otherwise (whether or not, in the case of Subordinated Debt
Securities, such payment shall be prohibited by reason of the subordination
provisions described above);
(c) Default in the payment of any sinking fund payment with respect to
any Debt Securities of that series as and when the same shall become due and
payable;
(d) Failure on the part of the Company to comply with the provisions of
the Indenture relating to consolidations, mergers and sales of assets;
(e) Failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the Debt
Securities of that series, in any resolution of the Board authorizing the
issuance of that series of Debt Securities, in the Indenture with respect to
such series, or in any supplemental Indenture with respect to such series
(other than a covenant a default in the performance of which is otherwise
specifically dealt with) continuing for a period of 60 days after the date
on which written notice specifying such failure and requiring the Company to
remedy the same shall have been given to the Company by the Trustee or to
the Company and the Trustee by the holders of at least 25% in aggregate
principal amount of the Debt Securities of that series at the time
outstanding;
(f) Indebtedness of the Company or any subsidiary of the Company is not
paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default, the total amount of
such Indebtedness unpaid or accelerated exceeds $20 million or the United
States dollar equivalent thereof at the time, and such default remains
uncured or such acceleration is not rescinded for 10 days after the date on
which written notice specifying such failure and requiring the Company to
remedy the same shall have been given to the Company by the Trustee or to
the Company and the Trustee by the holders of at least 25% in aggregate
principal amount of the Debt Securities of that series at the time
outstanding;
(g) The Company or any of its "Significant Subsidiaries" (defined as any
subsidiary of the Company that would be a "significant subsidiary" as
defined in Rule 405 under the Securities Act as in effect on the date of the
Indenture) shall (1) voluntarily commence any proceeding or file any
petition seeking relief under the United States Bankruptcy Code or other
federal or state bankruptcy, insolvency or similar law, (2) consent to the
institution of, or fail to controvert within the time and in
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the manner prescribed by law, any such proceeding or the filing of any such
petition, (3) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the Company or any
such Significant Subsidiary or for a substantial part of its property, (4)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (5) make a general assignment for the
benefit of creditors, (6) admit in writing its inability or fail generally
to pay its debts as they become due, (7) take corporate action for the
purpose of effecting any of the foregoing, or (8) take any comparable action
under any foreign laws relating to insolvency;
(h) The entry of an order or decree by a court having competent
jurisdiction for (1) relief with respect to the Company or any of its
Significant Subsidiaries or a substantial part of any of their property
under the United States Bankruptcy Code or any other federal or state
bankruptcy, insolvency, or similar law, (2) the appointment of a receiver,
trustee, custodian, sequestrator, or similar official for the Company or any
such Significant Subsidiary or for a substantial part of any of their
property (except any decree or order appointing such official of any
Significant Subsidiary pursuant to a plan under which the assets and
operations of such Significant Subsidiary are transferred to or combined
with another Significant Subsidiary or Subsidiaries of the Company or to the
Company), or (3) the winding-up or liquidation of the Company or any such
Significant Subsidiary (except any decree or order approving or ordering the
winding-up or liquidation of the affairs of a Significant Subsidiary
pursuant to a plan under which the assets and operations of such Significant
Subsidiary are transferred to or combined with another Significant
Subsidiary or Subsidiaries of the Company or to the Company), and such order
or decree shall continue unstayed and in effect for 60 consecutive days, or
any similar relief is granted under any foreign laws and the order or decree
stays in effect for 60 consecutive days;
(i) Any judgment or decree for the payment of money in excess of $20
million or the United States dollar equivalent thereof at the time is
entered against the Company or any Subsidiary of the Company by a court of
competent jurisdiction, which judgment is not covered by insurance, and is
not discharged and either (1) an enforcement proceeding has been commenced
by any creditor upon such judgment or decree or (2) there is a period of 60
days following the entry of such judgment or decree during which such
judgment or decree is not discharged or waived or the execution thereof
stayed and, in either case, such default continues for 10 days after the
date on which written notice specifying such failure and requiring the
Company to remedy the same shall have been given to the Company by the
Trustee or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the Debt Securities of that series at the time
outstanding; and
(j) Any other Event of Default provided with respect to Debt Securities
of that series.
An Event of Default with respect to one series of Debt Securities is not
necessarily an Event of Default for another series.
If an Event of Default described in clause (a), (b), (c), (d), (e), (f), (i)
or (j) above occurs and is continuing with respect to any series of Debt
Securities, unless the principal and interest with respect to all the Debt
Securities of such series shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Debt Securities of such series then outstanding may declare the principal amount
(or, if Original Issue Discount Debt Securities, such portion of the principal
amount as may be specified in such series) of and interest on all the Debt
Securities of such series due and payable immediately. If an Event of Default
described in clause (g) or (h) above occurs, unless the principal and interest
with respect to all the Debt Securities of all series shall have become due and
payable, the principal amount (or, if any series are Original Issue Discount
Debt Securities, such portion of the principal amount as may be specified in
such series) of and interest on all Debt Securities of all series then
outstanding shall become and be immediately due and payable without any
declaration or other act an the part of the Trustee or any holder of Debt
Securities.
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If an Event of Default occurs and is continuing, the Trustee shall be
entitled and empowered to institute any action or proceeding for the collection
of the sums so due and unpaid or to enforce the performance of any provision of
the Debt Securities of the affected series or the Indenture, to prosecute any
such action or proceeding to judgment or final decree, and to enforce any such
judgment or final decree against the Company or any other obligor on the Debt
Securities of such series. In addition, if there shall be pending proceedings
for the bankruptcy or reorganization of the Company or any other obligor on the
Debt Securities, or if a receiver, trustee, or similar official shall have been
appointed for its property, the Trustee shall be entitled and empowered to file
and prove a claim for the whole amount of principal, premium, and interest (or,
in the case of Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of such series) owing and
unpaid with respect to the Debt Securities. No holder of any Debt Security or
coupon of any series shall have any right to institute any action or proceeding
upon or under or with respect to the Indenture, for the appointment of a
receiver or trustee, or for any other remedy, unless (a) such holder previously
shall have given to the Trustee written notice of an Event of Default with
respect to Debt Securities of that series and of the continuance thereof, (b)
the holders of not less than 25% in aggregate principal amount of the
outstanding Debt Securities of that series shall have made written request to
the Trustee to institute such action or proceeding with respect to such Event of
Default and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and (c) the Trustee, for 60 days after its receipt of such notice,
request, and offer of indemnity shall have failed to institute such action or
proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to the provisions of the Indenture.
Prior to the acceleration of the maturity of the Debt Securities of any
series, the holders of a majority in aggregate principal amount of the Debt
Securities of that series at the time outstanding may, on behalf of the holders
of all Debt Securities and any related coupons of that series, waive any past
default or Event of Default and its consequences for that series, except (a) a
default in the payment of the principal, premium or interest with respect to
such Debt Securities or (b) a default with respect to a provision of the
Indenture that cannot be amended without the consent of each holder affected
thereby. In case of any such waiver, such default shall cease to exist, any
Event of Default arising therefrom shall be deemed to have been cured for all
purposes, and the Company, the Trustee, and the holders of the Debt Securities
of that series shall be restored to their former positions and rights under the
Indenture.
The Trustee shall, within 90 days after the occurrence of a default known to
it with respect to a series of Debt Securities, give to the holders of the Debt
Securities of such series notice of all uncured defaults with respect to such
series known to it, unless such defaults shall have been cured or waived before
the giving of such notice; provided, however, that except in the case of default
in the payment of principal, premium, or interest with respect to the Debt
Securities of such series or in the making of any sinking fund payment with
respect to the Debt Securities of such series, the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interest of the holders of such Debt Securities.
MODIFICATION OF THE INDENTURE
The Company and the Trustee may enter into supplemental Indentures without
the consent of the holders of Debt Securities for one or more of the following
purposes:
(a) To evidence the succession of another person to the Company pursuant
to the provisions of the Indenture relating to consolidations, mergers, and
sales of assets and the assumption by such successor of the covenants,
agreements, and obligations of the Company in the Indenture and in the Debt
Securities;
(b) To surrender any right or power conferred upon the Company by the
Indenture, to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions for the
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protection of the holders of all or any series of Debt Securities as the
Board shall consider to be for the protection of the holders of such Debt
Securities, and to make the occurrence, or the occurrence and continuance,
of a default in any of such additional covenants, restrictions, conditions,
or provisions a default or an Event of Default under the Indenture
(provided, however, that with respect to any such additional covenant,
restriction, condition or provision, such supplemental Indenture may provide
for a period of grace after default, which may be shorter or longer than
that allowed in the case of other defaults, may provide for an immediate
enforcement upon such default, may limit the remedies available to the
Trustee upon such default, or may limit the right of holders of a majority
in aggregate principal amount of any or all series of Debt Securities to
waive such default);
(c) To cure any ambiguity or to correct or supplement any provision
contained in the Indenture, in any supplemental Indenture, or in any Debt
Securities that may be defective or inconsistent with any other provision
contained therein, to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee, or to make such other provisions in regard
to matters or questions arising under the Indenture as shall not adversely
affect the interests of any holders of Debt Securities of any series;
(d) To modify or amend the Indenture in such a manner as to permit the
qualification of the Indenture or any supplemental Indenture under the Trust
Indenture Act as then in effect;
(e) To add to or change any of the provisions of the Indenture to
provide that Bearer Securities may be registerable as to principal, to
change or eliminate any restrictions on the payment of principal or premium
with respect to Registered Securities or of principal, premium or interest
with respect to Bearer Securities, or to permit Registered Securities to be
exchanged for Bearer Securities, so long as any such action does not
adversely affect the interests of the holders of Debt Securities or any
coupons of any series in any material respect or permit or facilitate the
issuance of Debt Securities of any series in uncertificated form;
(f) To comply with the provisions of the Indenture relating to
consolidations, mergers and sales of assets;
(g) In the case of Subordinated Debt Securities, to make any change in
the provisions of the Indenture relating to subordination that would limit
or terminate the benefits available to any holder of Senior Indebtedness
under such provisions (but only if such holder of Senior Indebtedness
consents to such change);
(h) To add guarantees with respect to the Debt Securities or to secure
the Debt Securities;
(i) To make any change that does not adversely affect the rights of any
holder;
(j) To add to, change or eliminate any of the provisions of the
Indenture with respect to one or more series of Debt Securities, so long as
any such addition, change or elimination not otherwise permitted under the
Indenture shall (1) neither apply to any Debt Security of any series created
prior to the execution of such supplemental Indenture and entitled to the
benefit of such provision nor modify the rights of the holders of any such
Debt Security with respect to such provision or (2) become effective only
when there is no such Debt Security outstanding;
(k) To evidence and provide for the acceptance of appointment by a
successor or separate Trustee with respect to the Debt Securities of one or
more series and to add to or change any of the provisions of the Indenture
as shall be necessary to provide for or facilitate the administration of the
Indenture by more than one Trustee; and
(l) To establish the form or terms of Debt Securities and coupons of any
series, as described under "Description of Debt Securities--General" above.
With the consent of the holders of a majority in aggregate principal amount
of the outstanding Debt Securities of each series affected thereby, the Company
and the Trustee may from time to time and at any
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time enter into a supplemental Indenture for the purpose of adding any
provisions to, changing in any manner, or eliminating any of the provisions of
the Indenture or of any supplemental Indenture or modifying in any manner the
rights of the holder of the Debt Securities of such series; provided, however,
that without the consent of the holders of each Debt Security so affected, no
such supplemental Indenture shall (a) reduce the percentage in principal amount
of Debt Securities of any series whose holders must consent to an amendment, (b)
reduce the rate of or extend the time for payment of interest on any Debt
Security or coupon or reduce the amount of any payment to be made with respect
to any coupon, (c) reduce the principal of or extend the stated maturity of any
Debt Security, (d) reduce the premium payable upon the redemption of any Debt
Security or change the time at which any Debt Security may or shall be redeemed,
(e) make any Debt Security payable in a currency other than that stated in the
Debt Security, (f) in the case of any Subordinated Debt Security or coupons
appertaining thereto, make any change in the provisions of the Indenture
relating to subordination that adversely affects the rights of any holder under
such provisions, (g) release any security that may have been granted with
respect to the Debt Securities, (h) make any change in the provisions of the
Indenture relating to waivers of defaults or amendments that require unanimous
consent, (i) change any obligation of the Company provided for in the Indenture
to pay additional interest with respect to Bearer Securities, or (j) limit the
obligation of the Company to maintain a paying agency outside the United States
for payment on Bearer Securities or limit the obligation of the Company to
redeem certain Bearer Securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into any person, or
convey, transfer or lease all or substantially all of its assets, unless the
following conditions have been satisfied:
(a) Either (1) the Company shall be the continuing person in the case of
a merger or (2) the resulting, surviving or transferee person, if other than
the Company (the "Successor Company"), shall be a corporation organized and
existing under the laws of the United States, any State, or the District of
Columbia and shall expressly assume all of the obligations of the Company
under the Debt Securities and coupons and the Indenture;
(b) Immediately after giving effect to such transaction (and treating
any indebtedness that becomes an obligation of the Successor Company or any
subsidiary of the Company as a result of such transaction as having been
incurred by the Successor Company or such subsidiary at the time of such
transaction), no default or Event of Default would occur or be continuing;
(c) The Successor Company waives any right to redeem any Bearer Security
under circumstances in which the Successor Company would be entitled to
redeem such Bearer Security but the Company would not have been so entitled
to redeem if the consolidation, merger, conveyance, transfer, or lease had
not occurred; and
(d) The Company shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger, or transfer complies with the Indenture.
SATISFACTION AND DISCHARGE OF THE INDENTURE; DEFEASANCE
The Indenture shall generally cease to be of any further effect with respect
to a series of Debt Securities if (a) the Company has delivered to the Trustee
for cancellation all Debt Securities of such series (with certain limited
exceptions) or (b) all Debt Securities and coupons of such series not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year, and the Company shall have
deposited with the Trustee as trust funds the entire amount sufficient to pay at
maturity or upon redemption all such Debt Securities and coupons (and if, in
either case, the Company shall also pay or cause to be paid all other sums
payable under the Indenture by the Company).
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<PAGE>
In addition, the Company shall have a "legal defeasance option" (pursuant to
which it may terminate, with respect to the Debt Securities of a particular
series, all of its obligations under such Debt Securities and the Indenture with
respect to such Debt Securities) and a "covenant defeasance option" (pursuant to
which it may terminate, with respect to the Debt Securities of a particular
series, its obligations with respect to such Debt Securities under certain
specified covenants contained in the Indenture). If the Company exercises its
legal defeasance option with respect to a series of Debt Securities, payment of
such Debt Securities may not be accelerated because of an Event of Default. If
the Company exercises its covenant defeasance option with respect to a series of
Debt Securities, payment of such Debt Securities may not be accelerated because
of an Event of Default related to the specified covenants.
The Company may exercise its legal defeasance option or its covenant
defeasance option with respect to the Debt Securities of a series only if (a)
the Company irrevocably deposits in trust with the Trustee cash or U.S.
Government Obligations (as defined in the Indenture) for the payment of
principal, premium and interest with respect to such Debt Securities to maturity
or redemption, as the case may be, (b) the Company delivers to the Trustee a
certificate from a nationally recognized firm of independent accountants
expressing their opinion that the payments of principal and interest when due
and without reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in such
amounts as will be sufficient to pay the principal, premium and interest when
due with respect to all the Debt Securities of such series to maturity or
redemption, as the case may be, (c) 123 days pass after the deposit is made and
during the 123-day period no default described in clause (g) or (h) under
"Description of Debt Securities--Events of Default and Remedies" with respect to
the Company occurs that is continuing at the end of such period, (d) no Default
has occurred and is continuing on the date of such deposit and after giving
effect thereto, (e) the deposit does not constitute a default under any other
agreement binding on the Company and, in the case of Subordinated Debt
Securities, is not prohibited by the provisions of the Indenture relating to
subordination, (f) the Company delivers to the Trustee an opinion of counsel to
the effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940, (g) the Company shall have delivered to the Trustee an opinion of counsel
addressing certain federal income tax matters relating to the defeasance, and
(h) the Company delivers to the Trustee an officers' certificate and an opinion
of counsel, each stating that all conditions precedent to the defeasance and
discharge of the Debt Securities of such series as contemplated by the Indenture
have been complied with.
The Trustee shall hold in trust cash or U.S. Government Obligations
deposited with it as described above and shall apply the deposited cash and the
proceeds from deposited U.S. Government Obligations to the payment of principal,
premium, and interest with respect to the Debt Securities and coupons of the
defeased series. In the case of Subordinated Debt Securities and coupons related
thereto, the money and U.S. Government Obligations so held in trust will not be
subject to the subordination provisions of the Indenture.
THE TRUSTEE
The Company may appoint a separate Trustee for any series of Debt
Securities. As used herein in the description of a series of Debt Securities,
the term "Trustee" refers to the Trustee appointed with respect to such series
of Debt Securities.
The Company may maintain banking and other commercial relationships with the
Trustee and its affiliates in the ordinary course of business, and the Trustee
may own Debt Securities.
17
<PAGE>
DESCRIPTION OF STOCK
The following is a summary of certain features of the Company's stock. This
summary does not purport to be complete and is subject to and is qualified in
its entirety by reference to the Charter and Bylaws, copies of which are
exhibits to the Registration Statement of which this Prospectus is a part. See
"Available Information."
GENERAL
Under the Charter, the Company is authorized to issue a total of 200 million
shares of stock, consisting of 175 million shares of Common Stock, par value
$.001 per share, and 25 million shares of Preferred Stock, par value $.001 per
share. The Company is a Maryland corporation. Under Maryland law, stockholders
generally are not responsible for the corporation's debts or obligations.
COMMON STOCK
All the shares of Common Stock offered by this Prospectus will be duly
authorized, fully paid and nonassessable. They will also be subject to the
ownership and transfer restrictions contained in the Charter (described under
"--Restrictions on Ownership and Transfer").
Subject to the preferential rights of any other shares or series of stock
and the REIT ownership provisions set forth in the Charter, holders of shares of
Common Stock are entitled to receive dividends on shares if, as and when
authorized and declared by the Board out of assets legally available for
distribution. Under the MGCL, a dividend or other distribution may not be made
if after giving effect to it (a) the corporation would not be able to pay its
debts as they become due in the usual course of business or (b) the
corporation's total assets would be less than the corporation's total
liabilities plus (unless the corporation's charter provides otherwise, which the
Charter does not) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights upon dissolution are
superior to those receiving the distribution. Holders of shares of Common Stock
also are entitled to share ratably in the assets of the Company legally
available for distribution to its stockholders in the event of the Company's
liquidation, dissolution or winding-up after payment of, or adequate provision
for, all known debts and liabilities of the Company.
Subject to the REIT ownership provisions set forth in the Charter, 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. Except
as otherwise required by law or except as provided with respect to the Series B
Preferred Stock or any other class or series of stock, the holders of shares of
Common Stock possess the exclusive voting power of the Company. There is no
cumulative voting for the election of directors of the Company, which means that
the holders of a majority of the outstanding shares of Common Stock will be able
to elect all the directors for whom such holders vote, and the holders of the
remaining shares of Common Stock will not be able to elect any directors. As
explained under "-- Preferred Stock," the holders of shares of Series B
Preferred Stock will have certain rights to elect directors.
Holders of shares of Common Stock have no conversion, sinking fund or
redemption rights or any preemptive rights to subscribe for any additional
securities of the Company. All shares of Common Stock have equal distribution,
liquidation and other rights, and have no preference or exchange rights.
Under the Maryland General Corporation Law (the "MGCL"), a corporation
generally cannot dissolve, amend its charter, merge, sell all or substantially
all of its assets, engage in a share exchange or engage in similar transactions
outside the ordinary course of business unless approved by the affirmative vote
of holders of at least two-thirds of the shares entitled to vote on the matter
or such lesser percentage (but not less than a majority of all of the votes to
be cast on the matter) as is set forth in the corporation's charter. The Charter
provides that, subject to the rights of any series of Preferred Stock then
outstanding,
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<PAGE>
such extraordinary transactions may be approved by the affirmative vote of a
majority of all of the votes entitled to be cast on such matters.
The transfer agent and registrar for the shares of Common Stock is First
Chicago Trust Company of New York.
PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which a
Prospectus Supplement may relate. Specific terms of any series of Preferred
Stock offered by a Prospectus Supplement will be described in the Prospectus
Supplement relating to such series. The description set forth below is subject
to and qualified in its entirety by reference to the articles supplementary
establishing a particular series of Preferred Stock, which will be filed with
the SEC in connection with the offering of such series.
Under the Charter, the Board is authorized, without further stockholder
action, to provide for the issuance of up to 25 million shares of Preferred
Stock in one or more series (of which 2,272,727 shares are currently classified
as Series B Preferred Stock). Shares of Preferred Stock may be issued from time
to time, in one or more series, as authorized by the Board, subject to the
rights of holders of any series of Preferred Stock then outstanding. Prior to
the issuance of shares of each series, the Board is required by the MGCL and the
Charter to fix (subject to the express terms of any class or series of the
Company stock outstanding at the time and the ownership and transfer
restrictions contained in the Charter, described under "--Restrictions on
Transfer and Ownership") the terms, preferences, conversion, other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption for each series. Such
rights, powers, restrictions and limitations could include the right to receive
specified dividend payments and payments on liquidation prior to any such
payments being made to the holders of shares of Common Stock. The Board could
also authorize the issuance of shares of Preferred Stock with terms and
conditions that could have the effect of discouraging a takeover or other
transaction in which holders of shares of Common Stock might receive a premium
for their shares over the then market price of such shares.
The rights, preferences, privileges, and restrictions, including dividend
rights, voting rights, conversion rights, terms of redemption, and liquidation
preferences, of the Preferred Stock of each series will be fixed or designated
by the Board pursuant to the articles supplementary. The specific terms of a
particular series of Preferred Stock offered hereby will be described in a
Prospectus Supplement relating to such series and will include the following:
(a) the maximum number of shares to constitute the series and the distinctive
designation thereof; (b) the annual dividend rate, if any, on shares of the
series (or the method of calculating such rate), whether such rate is fixed or
variable or both, the date or dates from which dividends will begin to accrue or
accumulate, and whether dividends will be cumulative; (c) whether the shares of
the series will be redeemable and, if so, the price at and the terms and
conditions on which such shares may be redeemed, including the time during which
such shares may be redeemed and any accumulated dividends thereon that the
holders of such shares shall be entitled to receive upon the redemption thereof;
(d) the liquidation preference, if any, applicable to shares of the series; (e)
whether the shares of the series will be subject to operation of a retirement or
sinking fund and, if so, the extent to and manner in which any such fund shall
be applied to the purchase or redemption of such shares for retirement or for
other corporate purposes, and the terms and provisions relating to the operation
of such fund; (f) the terms and conditions, if any, on which the shares of the
series will be convertible into, or exchangeable for, shares of any other class
or classes of capital stock of the Company or another corporation or any series
of any other class or classes, or of any other series of the same class,
including the price or rate of conversion or exchange and the method, if any, of
adjusting the same; (g) the voting rights, if any, on the shares of the series;
and (h) any other preferences and relative, participating, optional, or other
special rights or qualifications, limitations, or restrictions thereof.
The Preferred Stock will, when issued, be fully paid and nonassessable.
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<PAGE>
The transfer agent, registrar, and dividend disbursement agent for a series
of Preferred Stock will be selected by the Company and will be described in the
applicable Prospectus Supplement. The registrar for shares of Preferred Stock
will send notices to stockholders of any meetings at which holders of the
Preferred Stock have the right to elect directors of the Company or to vote on
any other matter.
DESIGNATED PREFERRED STOCK
In connection with the formation and initial capitalization of the Company,
the Company issued a total of one million shares of Series A Preferred to the
Merged Trusts and Trust 83. These shares were cancelled or redeemed in
connection with the Merger and no shares of the Series A Preferred Stock are
outstanding.
The Company issued a total of 2,272,727 shares of Series B Preferred Stock
for a total purchase price of $35 million or $15.40 per share on February 23,
1996. The Board has established the rights, powers, restrictions and limitations
of the Series B Preferred Stock. The holders of shares of Series B Preferred
Stock are entitled to receive cumulative dividends: (a) for the first eight
quarterly dividend periods after issuance, in an amount per share equal to the
greater of (i) $0.31 per quarter or (ii) 103% (as adjusted from time to time by
the Board as the conversion price of the Series B Preferred Stock is adjusted
from time to time) of the quarterly dividend payable per share of Common Stock
during that period (determined as of the date on which the applicable Common
Stock dividend is authorized) and (b) beginning with the ninth quarterly
dividend period after issuance, in an amount per share equal to the greater of
(i) the quarterly dividend payable on the Series B Preferred Stock for the
eighth quarterly dividend period after issuance or (ii) the dividend paid per
share of Common Stock (determined as of the date on which the Common Stock
dividend for the corresponding Common Stock dividend period is authorized and as
adjusted from time to time by the Board as the conversion price of the Series B
Preferred Stock is adjusted from time to time). If the annual dividend rate is
$1.24 per share on the Series B Preferred Stock, the total dividend would equal
approximately $2.8 million per year.
The holders of shares of Series B Preferred Stock also are entitled to a
liquidation preference of $15.40 per share (equivalent to the initial purchase
price) plus accumulated unpaid dividends if the Company is liquidated or sold
prior to the redemption or conversion of those shares. The rights of holders of
Series B Preferred Stock to cumulative dividends and the liquidation preference
are senior to the rights of holders of Common Stock to dividends or any
distributions upon liquidation or sale of the Company.
Each share of Series B Preferred Stock is convertible at the option of its
holder at any time into shares of Common Stock at a conversion price of $15.40
per share of Common Stock (the "Conversion Price") (equivalent to an initial
conversion rate of one share of Common Stock per share of Series B Preferred),
subject to adjustment to reflect stock dividends, splits, combinations and
issuances of stock by reclassification of Common Stock. In addition, if the
Company issues for cash or other consideration shares of Common Stock or any
security convertible into or exchangeable or exercisable for Common Stock (other
than securities issued to directors, officers or employees of the Company and
securities issued in connection with property acquisitions that are approved by
the Investment Committee of the Board and the designee, if any, of the Series B
Preferred Stock then sitting on the Board) at a price, including any additional
consideration payable upon any such conversion, exchange or exercise (before
deduction of any reasonable and customary discounts, commissions, fees and other
expenses of issuance and marketing) that is less than $16.00 as adjusted from
time to time by the Board upon certain other adjustments to the conversion
price, there will be a reduction in the conversion price of the Series B
Preferred Stock equal to the amount by which $16.00 (as adjusted) exceeds the
purchase, exchange or conversion price. If the Company engages in more than one
such issuance, the amount of the adjustment to the Conversion Price will be
equal to the greatest individual reduction. However, such adjustments will not
be cumulative. The number of shares of Common Stock actually issuable upon the
conversion of the Series B Preferred Stock will be determined by dividing the
total liquidation preference of such shares (plus all unpaid accumulated
dividends, except any dividends accumulated on shares of Series B Preferred
Stock presented for
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<PAGE>
conversion after the end of the last-completed quarterly dividend period) by the
conversion price in effect at that time.
At any time on or after January 1, 1999 and on or before December 31, 2004,
the Company, at its option, may convert the outstanding shares of Series B
Preferred Stock, in whole but not in part, into shares of Common Stock at the
then effective conversion price per share (currently equivalent to an initial
conversion rate of one share of Common Stock per share of Series B Preferred
Stock), subject to certain adjustments, so long as: (a) the average closing
price of Common Stock on the NYSE during any 20 trading days in a period of 30
consecutive trading days ending on the trading day immediately preceding the
date the Company provides notice of exercise of its right to convert the Series
B Preferred Stock meets or exceeds the following percentages of the
then-applicable Conversion Price (the "Conversion Price Premium"):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
1999.............................................................................. 115.0%
2000.............................................................................. 119.0
2001.............................................................................. 123.0
2002.............................................................................. 127.5
2003 and 2004..................................................................... 132.0
</TABLE>
and (b) the closing price of the Common Stock on the trading day immediately
preceding the date the Company provides notice of exercise of this option equals
or exceeds the applicable Conversion Price Premium.
At any time on or after January 1, 1999 and on or before December 31, 2004,
the Company, at its option, may redeem the Series B Preferred Stock, in whole or
in part (but in no event for a total consideration that is less than $1
million), for a per share cash price as follows:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- --------------------------------------------------------------------------------- -----------
<S> <C>
1999............................................................................. $ 16.95
2000............................................................................. 17.35
2001............................................................................. 17.80
2002............................................................................. 18.25
2003 and 2004.................................................................... 18.70
</TABLE>
plus, in each case, accumulated unpaid dividends to and including the date fixed
for redemption. If the Company exercises its right to redeem the Series B
Preferred Stock, the holder's conversion right will terminate five days before
the redemption date.
The holders of Series B Preferred Stock vote together with the holders of
the Common Stock on an as-converted basis on all matters submitted to a vote of
the Company's common stockholders. In addition, for so long as Ameritech and OTR
collectively hold shares of Series B Preferred Stock representing on an
as-converted basis more than 15% of the publicly-traded shares of Common Stock
(excluding shares owned by Hunt, USAA, officers and directors of the Company or
Ameritech and OTR and as otherwise defined in the agreement with Ameritech and
OTR), the holders of Series B Preferred Stock will be entitled to require the
Company to increase the size of the Board by one person (there currently are
nine Company directors) and to elect that additional director. That percentage
will be reduced to one-half of the then-effective percentage in the event of a
partial redemption or conversion of the Series B Preferred Stock. (The
applicable percentage is referred to in this Prospectus as the "Minimum
Ownership Level".) At the Company's next annual meeting following any such
election, the size of the Board will be reduced to nine persons and, at that
meeting and each succeeding annual meeting for so long as Ameritech and OTR
collectively hold shares of Series B Preferred Stock representing on an
as-converted basis more than the Minimum Ownership Level and the holders of the
Series B Preferred Stock elect to exercise such right, the holders of the Series
B Preferred Stock, voting as a separate class, will be entitled to elect one
director to
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<PAGE>
serve on the Board by majority vote. If dividends on the Series B Preferred
Stock are in arrears for six consecutive quarterly dividend periods, and
Ameritech and OTR collectively hold all the outstanding shares of Series B
Preferred Stock, then the Board will be increased by two (in addition to the
director referred to previously), and Ameritech will have the right to designate
one such director and OTR will have the right to designate the other such
director. If Ameritech and OTR do not then hold all of the outstanding shares of
Series B Preferred Stock, then the holders of a majority of the Series B
Preferred Stock voting separately as a class will have the right to elect one
director to serve on the Board until all such dividend arrearages are
eliminated. According to Ameritech's Form 13D dated October 10, 1997, Ameritech
stated that it does not currently intend to exercise its right to appoint a
director. At the next annual meeting of stockholders of the Company after the
election of such director or directors if necessary, the size of the Board will
be reduced to: (a) nine persons if one director is so elected; and (b) ten
directors if two directors are so elected. In either case, that shall be the
maximum membership of the Board until such time as all arrearages in dividends
shall have been paid. The Company may not amend the provisions of the Series B
Preferred Stock without the affirmative vote of holders of at least 75% of the
outstanding shares of Series B Preferred Stock. The holders of the Series B
Preferred Stock also have the right to approve certain extraordinary corporate
transactions by a majority vote, including a merger in which the Company is not
the surviving entity and any sale of all or substantially all of the Company's
assets.
The Company has agreed in connection with the Stock Purchase Agreement with
Ameritech and OTR that until such time as Ameritech and OTR cease to hold shares
of Series B Preferred Stock (or Common Stock in the event of a conversion of
Series B Preferred) representing on an as-converted basis in the aggregate at
least the Minimum Ownership Level, the Company is subject to a number of
operating covenants, including: (a) the Company may not repurchase more than $5
million of Common Stock in the aggregate; (b) the Company may not incur debt
that, at the time the debt is incurred, would result in the Company having a
debt-to-total-debt-and-equity-capitalization ratio above 60%; (c) the Company
may engage in transactions with affiliates only with the approval of a majority
of its disinterested directors and upon terms no less favorable than those that
could be obtained in an arms' length transaction and, if the value of any such
transaction exceeds 10% of the fair market value of the Company's assets as
determined by the Board, the Company must obtain a third-party appraisal or
other confirmation that such transaction is on terms no less favorable to the
Company than those that could be obtained in an arm's-length transaction; (d)
the Company must continue to qualify as a real estate operating company; and (e)
until such time as the market value of the Company's publicly traded shares
exceeds $250 million for at least 60 consecutive days, the Company may not
engage in any issuances of equity securities in private placements unless, after
the private placement, the market value of the Company's publicly-traded shares
(as defined herein) would equal or exceed 50% of the Company's total equity
capitalization and unless the purchasers in any such private placement agree to
certain restrictions on the transfer of the stock purchased in the private
placement for a period of one year.
RESTRICTIONS ON OWNERSHIP AND TRANSFER
For the Company to qualify as a REIT under the Code, beginning with calendar
year 1996, generally not more than 50% of the value of its outstanding stock may
be owned, directly or indirectly, by five or fewer individuals (as defined in
the Code to include certain entities), and its outstanding stock must be
beneficially owned by at least 100 persons. See "Federal Income Tax
Considerations--REIT Qualification" To help the Company meet these requirements
and otherwise maintain its REIT status, the Charter includes three basic
protective provisions affecting the ownership and transfer of the Company's
issued and outstanding shares of any class or series of Common Stock or
Preferred Stock ("Equity Stock"): (a) a general prohibition against actual or
constructive ownership by any person (other than persons designated by the Board
as "Excepted Holders", described further below) of more than 8.5% of the lesser
of the number or value of the outstanding shares of any class or series of
Equity Stock; (b) a prohibition against ownership of Equity Stock that would
cause the Company to be "closely held" or to otherwise fail to qualify as a REIT
(such as ownership that would result in the Company being treated as owning an
interest
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<PAGE>
in a tenant if income derived by the Company from that tenant would cause the
Company to fail to satisfy any of the REIT gross income requirements); and (c) a
prohibition against transfers that would result in the Equity Stock being owned
by less than 100 persons. In addition, in January, 1996, the Company issued
shares of Common Stock that, prior to the end of that month, were held by 100
individuals in order to meet the 100-person requirement.
These ownership restrictions took effect on February 23, 1996 and may be
terminated if the Board determines that it is no longer in the best interests of
the Company to attempt to, or continue to, qualify as a REIT or that compliance
with the ownership limits and restrictions on transfer is no longer required in
order for the Company to qualify as a REIT.
These restrictions on ownership and transfer may have the effect of
precluding acquisition of control of the Company or otherwise limit the
opportunity for stockholders to receive a premium for their shares of Common
Stock that might otherwise exist if an investor attempted to assemble a block of
shares of Common Stock in excess of the 8.5% ownership limit or the higher
ownership limits set for certain stockholders. See "Risk Factors--Limits on
Ownership and Changes in Control May Deter Changes in Management and Third Party
Acquisition Proposals."
TRANSFERS IN TRUST. The Charter provides that, upon any attempted transfer
of Equity Stock (including warrants or options to acquire Equity Stock) that
would cause any person to be treated as owning Equity Stock in violation of the
ownership restrictions (other than the prohibition against transfers that would
result in less than 100 owners), the number of shares that would cause the
violation are automatically transferred to a trustee for the benefit of a
charitable beneficiary as "Shares-in-Trust." The person who otherwise would have
been considered the owner (the "Prohibited Owner") will have no rights or
economic interest in those shares. For these purposes, potentially violative
"ownership" is evaluated by taking into account the broad constructive ownership
rules of Sections 544 and 318 of the Code, with certain modifications. In
addition, a "transfer" that is subject to these restrictions includes any
issuance, sale, transfer, gift, assignment, devise or other disposition as well
as any other event that causes any person to have or acquire ownership (applying
the constructive ownership rules) of Equity Stock.
The trustee is entitled to vote all Shares-in-Trust and to receive all
distributions on Shares-in-Trust, and will hold such distributions for the
benefit of the charitable beneficiary. If any distributions with respect to
Shares-in-Trust are paid to the Prohibited Owner before the Company discovers
the violation of the ownership limit, the Prohibited Owner must pay that amount
to the trustee. Distributions on Shares-in-Trust will be used by the trustee
first to pay any expenses of the trust, second to pay any expenses of the
Company incurred in connection with the trust and third to pay any excess to the
charitable beneficiary. The Prohibited Owner is not to receive any benefit from
distributions.
The trustee is obligated to sell the Shares-in-Trust promptly to a person
who would not cause a violation of the ownership restrictions (at which time the
shares will cease to be Shares-in-Trust) and to distribute the net sale proceeds
first to pay any expenses of the trust, second to pay any expenses of the
Company incurred in connection with the trust, third to pay the Prohibited Owner
an amount intended to ensure that the Prohibited Owner will not realize any
appreciation in value of the shares and fourth to pay any excess to the
charitable beneficiary. If a Prohibited Owner sells Shares-in-Trust before the
Company discovers the transfer, such shares are deemed to have been sold on
behalf of the trust. To the extent that the Prohibited Owner received more in
that sale than the Prohibited Owner would otherwise be entitled to receive under
these provisions, the excess must immediately be delivered to the trustee.
COMPANY PURCHASE RIGHT. The Company also will have the right to purchase
all or any portion of the Shares-in-Trust, and the Shares-in-Trust are deemed to
have been offered to the Company, at the lesser of: (a) the price per share paid
for such shares in the transaction that created the Shares-in-Trust (or if no
price was paid, the market price at the time of that event); and (b) the market
price on the date the Company or its designee accepts the offer. This purchase
right exists for a period of 90 days after the later of: (a) the date of the
purported transfer that created the Shares-in-Trust, if the Company receives
notice
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<PAGE>
of the event; and (b) the date the Company determines in good faith that a
purported transfer creating Shares-in-Trust has occurred, if the Company does
not receive notice of the event. The Company may not, however, exercise this
right after the trustee has sold the Shares-in-Trust to a person whose ownership
will not cause a violation of the ownership restrictions.
REPORTING OF TRANSFERS AND OWNERSHIP. To assist in the enforcement of the
ownership restrictions, the Charter requires any person who acquires or attempts
to acquire Equity Stock in violation of the ownership restrictions (or who would
own shares of Equity Stock but for the automatic transfer to the trust) to give
the Company immediate written notice of that event. In the case of a proposed or
attempted violative transfer, the purported transferee must give at least 15
days' prior written notice of the event and provide any other information the
Company requests in order to determine whether such transfer affects the
Company's REIT status.
In addition, the Charter generally requires every person who owns more than
5% (or such lower percentage as is required under the applicable Treasury
Regulations) of the number or value of the outstanding shares of any class or
series of the Equity Stock to give the Company written notice, within 30 days
after the close of each taxable year, stating the owner's name and address, the
number of shares of each class or series of Equity Stock owned and a description
of how the shares are held. These owners must generally provide any additional
information the Company requests in order to determine whether such ownership
affects the Company's REIT status and to ensure compliance with the ownership
restrictions. All remaining owners must generally provide ownership information
upon request. The Charter allows the Board to determine the information that
must be delivered by each owner of Equity Stock.
TRANSFERS VOID. The Charter also provides that if, for any reason, a
transfer to the trust described above would not effectively prevent the
Prohibited Owner from violating the ownership restrictions, then the purported
transfer is void ab initio and the Prohibited Owner does not acquire any rights
in the excess Equity Stock.
EXCEPTED HOLDERS. In order to permit ownership in excess of the specified
8.5% ownership limit for persons who will not jeopardize the Company's REIT
status, the Charter permits the Board to designate certain "Excepted Holders."
Excepted Holders must supply appropriate representations and undertakings
designed to protect the Company's REIT status (such as information establishing
that the Excepted Holder is treated as a "look-through" entity in applying the
REIT stock ownership tests and that the deemed ownership of the Company shares
through the entity will be appropriately dispersed so as not to jeopardize the
Company's REIT status). Each Excepted Holder will be subject to a separate
ownership limit as specified by the Board.
The only current Excepted Holders (and their respective Excepted Holder
Limits for Common Stock) are Ameritech (29%), Prudential (29%), Hunt (23.7%),
USAA (20%), OTR (8.5%), and Morgan Stanley (1,600,000 shares), six of the
principal shareholders of the Company. Ameritech, Prudential, Hunt, USAA, OTR
and Morgan Stanley have entered into separate "Excepted Holder Agreements" with
the Company under which they have given representations and undertakings
designed to protect the Company's REIT status. Prudential has represented and
covenanted to the Company that the shares that it beneficially owns, including
shares held on behalf of certain insurance company separate accounts, will be
treated as being held proportionately by its policyholders. USAA has represented
and covenanted to the Company that shares that it owns will be treated as held
proportionately by the shareholders of its ultimate parent corporation and that
no individual will be treated as owning more than the "basic" 8.5% ownership
limit. Hunt's shares are held by a partnership that also has represented and
covenanted to the Company that the shares it owns will be held so that no
individual will be treated as owning more than the basic 8.5% ownership limit,
except that up to 15.3% of the lesser of the number or value of any outstanding
class of Equity Stock may be treated as owned by one individual and such
individual's family as defined in Code Section 544(a)(2). Accordingly, under the
basic 8.5% ownership limit and the existing Excepted Holder
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Limits, no five or fewer individuals would be permitted to own more than 49.3%
of the outstanding Equity Stock. One individual, owning through Hunt, may own up
to 15.3%.
The Excepted Holder Agreements with Ameritech and OTR permit Ameritech and
OTR to own up to 100% of the outstanding shares of Series B Preferred Stock and
permit Ameritech to own up to 29% of the outstanding shares of Common Stock and
OTR to own up to 8.5% of the outstanding shares of Common Stock. The Excepted
Holder Agreement with Morgan Stanley permits Morgan Stanley acting on its own
behalf and on behalf of its clients accounts over which it has investment
discretion to own shares of Common Stock equal to the greater of 1,600,000
shares or 8.5% of the outstanding shares of Common Stock. These agreements and
the Hunt and USAA Excepted Holder Agreement also provide for certain adjustments
to the ownership limits if the Company engages in certain types of redemptions
or repurchases of Common Stock. Ameritech and OTR have represented and
covenanted that they are "qualified trusts" entitled to "look-through" treatment
in applying the REIT ownership restrictions and that none of their beneficiaries
has been treated as owning a significant portion of the shares it owns.
Under the Excepted Holder Agreements, the Excepted Holders have made
representations with respect to their actual or constructive ownership of
interests in tenants of the Company. These representations are designed to
assist the Company to qualify as a REIT. A breach of any of these
representations, except as determined by the Board with respect to a particular
Excepted Holder, may result in certain shares of Equity Stock held by such
Excepted Holder becoming Shares-in-Trust. The Excepted Holder Agreement entered
into with Prudential and Ameritech provide that a tenant ownership issue of this
type will be resolved other than through the creation of Shares-in-Trust.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Company has adopted a dividend reinvestment and stock purchase plan
designed to provide holders of Common Stock with a convenient and economical
means to reinvest all or a portion of their cash dividends in shares of Common
Stock and to acquire additional shares of Common Stock through voluntary
purchases. First Chicago Trust Company of New York, which serves as the
Company's transfer agent, administers the dividend reinvestment and stock
purchase plan.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities,
Preferred Stock or Common Stock. Warrants may be issued independently or
together with Debt Securities, Preferred Stock, or Common Stock offered by any
Prospectus Supplement and may be attached to or separate from any such Offered
Securities. Each series of Warrants will be issued under a separate warrant
agreement (a "Warrant Agreement") to be entered into between the Company and a
bank or trust company, as warrant agent (the "Warrant Agent"). The Warrant Agent
will act solely as an agent of the Company in connection with the Warrants and
will not assume any obligation or relationship of agency or trust for or with
any holders or beneficial owners of Warrants. The following summary of certain
provisions of the Warrants does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the provisions of the Warrant
Agreement that will be filed with the SEC in connection with the offering of
such Warrants.
DEBT WARRANTS
The Prospectus Supplement relating to a particular issue of Debt Warrants
will describe the terms of such Debt Warrants, including the following: (a) the
title of such Debt Warrants; (b) the offering price of such Debt Warrants, if
any; (c) the aggregate number of such Debt Warrants; (d) the designation and
terms of the Debt Securities purchasable upon exercise of such Debt Warrants;
(e) if applicable, the designation and terms of the Debt Securities with which
such Debt Warrants are issued and the number of such Debt Warrants issued with
each such Debt Security; (f) if applicable, the date from and after which such
Debt Warrants and any Debt Securities issued therewith will be separately
transferable; (g) the principal amount of Debt Securities purchasable upon
exercise of a Debt Warrant and the price at which such principal
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amount of Debt Securities may be purchased upon exercise (which price may be
payable in cash, securities, or other property); (h) the date on which the right
to exercise such Debt Warrants shall commence and the date on which such right
shall expire; (i) if applicable, the minimum or maximum amount of such Debt
Warrants that may be exercised at any one time; (j) whether the Debt Warrants
represented by the Debt Warrant certificates or Debt Securities that may be
issued upon exercise of the Debt Warrants will be issued in registered or bearer
form; (k) information with respect to book-entry procedures, if any; (l) the
currency or currency units in which the offering price, if any, and the exercise
price are payable; (m) if applicable, a discussion of material United States
federal income tax considerations; (n) the antidilution provisions of such Debt
Warrants, if any; (o) the redemption or call provisions, if any, applicable to
such Debt Warrants; and (p) any additional terms of the Debt Warrants, including
terms, procedures, and limitations relating to the exchange and exercise of such
Debt Warrants.
STOCK WARRANTS
The Prospectus Supplement relating to any particular issue of Preferred
Stock Warrants or Common Stock Warrants will describe the terms of such
Warrants, including the following: (a) the title of such Warrants; (b) the
offering price for such Warrants, if any; (c) the aggregate number of such
Warrants; (d) the designation and terms of the Common Stock or Preferred Stock
purchasable upon exercise of such Warrants; (e) if applicable, the designation
and terms of the Offered Securities with which such Warrants are issued and the
number of such Warrants issued with each such Offered Security; (f) if
applicable, the date from and after which such Warrants and any Offered
Securities issued therewith will be separately transferable; (g) the number of
shares of Common Stock or Preferred Stock purchasable upon exercise of a Warrant
and the price at which such shares may be purchased upon exercise (which price
may be payable in cash, securities, or other property); (h) the date on which
the right to exercise such Warrants shall commence and the date on which such
right shall expire; (i) if applicable, the minimum or maximum amount of such
Warrants that may be exercised at any one time; (j) the currency or currency
units in which the offering price, if any, and the exercise price are payable;
(k) if applicable, a discussion of material United States federal income tax
considerations; (l) the antidilution provisions of such Warrants, if any; (m)
the redemption or call provisions, if any, applicable to such Warrants; and (n)
any additional terms of the Warrants, including terms, procedures, and
limitations relating to the exchange and exercise of such Warrants.
OUTSTANDING WARRANTS
The Company issued 553,000 Merger Warrants on April 8, 1996. Each Merger
Warrant entitles the holder to receive one share of Common Stock upon its
exercise. The Merger Warrants are listed for trading on the American Stock
Exchange. The Merger Warrants are exercisable during the period May 23, 1997
through February 24, 1999. The exercise price of the Merger Warrants is $16.23
(the average of the closing prices of the Common Stock for the first 20 trading
days after the Merger).
The exercise price of the Merger Warrants and the number of shares of Common
Stock issuable upon exercise of the Merger Warrants are subject to adjustment in
the event of stock dividends, stock splits, subdivisions, reclassifications,
reorganizations, consolidations and mergers. If a holder of Merger Warrants
fails to exercise his or her Merger Warrants before their expiration, those
warrants will expire and the holder will have no further rights with respect to
Merger Warrants. A holder of Merger Warrants will not have any rights,
privileges or liabilities of a stockholder of the Company prior to exercise of
the Merger Warrants, including the rights to vote and to receive distributions.
On February 23, 1996, the Company issued a warrant to purchase shares of
Common Stock to USAA (the "USAA Warrant"). The USAA Warrant was issued as
consideration for the grant by USAA to the Company of the USAA Option. The USAA
Warrant has an exercise price of $14.60 per share and covers 184,900 shares of
Common Stock. On April 3, 1966, USAA sold the USAA Warrant to an affiliate of
Morgan Stanley for $300,000.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder and
relationship, if any, with the Company and (a) the number of shares of Common
Stock beneficially owned by each Selling Stockholder as of December 10, 1997,
(assuming no shares have been sold under this Prospectus as of such date), (b)
the maximum number of shares of Common Stock which may be offered for the
account of such Selling Stockholder under the Prospectus, and (c) the amount and
percentage of Common Stock to be owned by the Selling Stockholder assuming the
sale of all the Common Stock which may be offered hereunder.
<TABLE>
<CAPTION>
AMOUNT AND
PERCENTAGE OF
SHARES OF MAXIMUM COMMON STOCK
COMMON STOCK NUMBER OF SHARES BENEFICIALLY OWNED
BENEFICIALLY OF COMMON STOCK AFTER THE
OWNED PRIOR TO WHICH MAY BE OFFERING(1)
NAME OF SELLING STOCKHOLDER AND RELATIONSHIP TO COMPANY OFFERING SOLD HEREUNDER AMOUNT - %
- ---------------------------------------------------------- -------------- ----------------- -------------------
<S> <C> <C> <C>
Hunt Acquisitions Partners, Ltd.(2) ...................... 1,027,582 1,027,582 --
1445 Ross at Field Dallas, Texas 75202
The Prudential Insurance Company of America(3) . 7,491,650 7,491,650 --
8 Campus Drive Parsippany, New Jersey 07054
The Prudential Variable Contract Real Property 506,894 506,894 --
Partnership ............................................
8 Campus Drive Parsippany, New Jersey 07054
Strategic Performance Fund--II, Inc. ..................... 1,013,788 1,013,788 --
8 Campus Drive Parsippany, New Jersey 07054
Multi-Market Special Investment Fund II .................. 493,642 493,642 --
J.P. Morgan Investment Management, Inc. 522 Fifth Avenue
New York, New York 10036
Commingled Trust Fund Special Situation Investments--Real 493,642 493,642 --
Estate .................................................
J.P. Morgan Investment Management, Inc. 522 Fifth Avenue
New York, New York 10036
USAA Real Estate Company ................................. 1,148,430 1,148,430 --
8000 Robert F. McDermott Freeway
Suite 600 San Antonio, Texas 98230
State Street Bank and Trust Company, as Trustee for --
Ameritech Pension Trust(4) ............................. 8,888,598 8,888,598
One Enterprise Drive
Solomon Willard Building (W6C)
North Quincy, Massachusetts 02171
OTR(5) ................................................... 649,351 649,351 --
275 East Broad Street
Columbus, Ohio 43215
</TABLE>
- ------------------------
(1) Assumes the sale of all shares of Common Stock registered hereunder,
although none of the Selling Stockholders are under any obligation known to
the Company to sell any shares of Common Stock.
(2) Also reporting beneficial ownership of the same shares are Ray L. Hunt and
RLH Investments, Inc. Their address is the same as that of Hunt.
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<PAGE>
(3) Includes 3,689,947 shares of Common Stock held by The Prudential Insurance
Company of America on behalf of three insurance company separate accounts.
(4) Assumes that Ameritech converts all its shares of Series B Preferred Stock
into shares of Common Stock on a one-share-for-one-share basis (the initial
conversion rate).
(5) Assumes that OTR converts all its shares of Series B Preferred Stock into
shares of Common Stock on a one-share-for-one-share basis (the initial
conversion rate).
The Company and the Selling Stockholders are parties to various agreements
(the "Registration Rights Agreements"), a copies of which are incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part, pursuant to which the Company agreed, among other things, to register
the offer and sale of the Selling Stockholder Offered Securities under the
Securities Act, and the Selling Stockholders and the Company agreed to indemnify
each other against certain liabilities, including liabilities under the
Securities Act in connection with the sale of the shares pursuant to a
registered public offering contemplated by the Registration Rights Agreements.
Pursuant to the Registration Rights Agreements, the Selling Stockholders are
required to pay the underwriting discounts and commissions and expenses of their
legal counsel and accountants associated with the offering contemplated hereby,
and the Company is generally required to pay all of the other expenses directly
associated with the offering, including, without limitation, the cost of
registering the shares offered hereby, including applicable registration and
filing fees, printing expenses and applicable expenses for legal counsel and
accountants incurred by the Company. The Company may from time to time grant
registration rights to other stockholders of the Company. The names of and other
information regarding any such stockholders will be set forth in a Prospectus
Supplement pursuant to which any Selling Stockholder Offered Securities of such
stockholders are offered for sale.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in or outside the United States
through underwriters, brokers or dealers, directly to one or more purchasers, or
through agents. Any of the Selling Stockholders may sell any of the Selling
Stockholder Offered Securities through underwriters, either separately or in
connection with offerings of Offered Securities by the Company or through
brokers or dealers either separately in connection with block trades by the
Selling Stockholders or in connection with offerings of Offered Securities by
the Company. The Prospectus Supplement with respect to the Offered Securities
will set forth the terms of the offering of the Offered Securities, including
the name or names of any underwriters, dealers, or agents, the purchase price of
the Offered Securities and the proceeds to the Company from such sale, any
delayed delivery arrangements, any underwriting discounts and other items
constituting underwriters' compensation, the initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers, and any
securities exchanges on which the Offered Securities may be listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering, and if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters or agents to purchase the Offered Securities will be subject to
conditions precedent and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased. The initial public offering
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<PAGE>
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
The Company may also sell the Offered Securities pursuant to one or more
standby agreements with one or more underwriters in connection with the call for
redemption of a specified class or series of any securities of the Company or
any subsidiary of the Company. In such a standby agreement, the underwriter or
underwriters would agree either (a) to purchase from the Company up to the
number of shares of Common Stock that would be issuable upon conversion of all
of the shares of such class or series of securities of the Company or its
subsidiary at an agreed price per share of Common Stock or (b) to purchase from
the Company up to a specified dollar amount of Offered Securities at an agreed
price per Offered Security which price may be fixed or may be established by
formula or other method and which may or may not relate to market prices of the
Common Stock or any other security of the Company then outstanding. The
underwriter or underwriters would also agree, if applicable, to convert into
Common Stock or other security of the Company any securities of such class or
series held or purchased by the underwriter or underwriters. The underwriter or
underwriters may assist in the solicitation of conversions by holders of such
class or series of securities.
If dealers are used in the sale of Offered Securities with respect to which
this Prospectus is delivered, the Company, or with respect to any block trades
the Selling Stockholders, will sell such Offered Securities to the dealers as
principals. The dealers may then resell such Offered Securities to the public at
varying prices to be determined by such dealers at the time of resale. The name
of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time at fixed prices, which may be
changed, or at varying prices determined at the time of sale. Any agent involved
in the offer or sale of the Offered Securities with respect to which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement relating
thereto. Unless otherwise indicated in the Prospectus Supplement, any such agent
will be acting on a best efforts basis for the period of its appointment.
In connection with the sale of the Offered Securities, underwriters or
agents may receive compensation from the Company or the Selling Stockholders or
from purchasers of Offered Securities for whom they may act as agents in the
form of discounts, concessions, or commissions. Underwriters, agents, and
dealers participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts or commissions received by them
from the Company or the Selling Stockholders and any profit on the resale of the
Offered Securities by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
Upon the Company's being notified by the Selling Stockholder of any change
in the identity of the Selling Stockholder or that any material arrangement has
been entered into with an underwriter, broker or dealer for the sale of any
Selling Stockholder Offered Securities through a secondary distribution, or a
purchase by a broker or dealer, a Prospectus Supplement will be filed, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing (a) the
names of such brokers or dealers; (b) the number of Selling Stockholder Offered
Securities to be sold; (c) the price at which such Selling Stockholder Offered
Securities are being sold; (d) the commissions paid or the discounts or
concessions allowed to such brokers or dealers; (e) where applicable, that such
broker or dealer did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus, as supplemented or amended;
(f) any change in the identity of the Selling Stockholder, and (g) other facts
material to the transaction.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to
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<PAGE>
those conditions set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company and/or the Selling
Stockholders against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments that such agents,
dealers, or underwriters may be required to make with respect thereto. Agents,
dealers, and underwriters may be customers of, engage in transactions with, or
perform services for the Company and/or the Selling Stockholders in the ordinary
course of business.
The Offered Securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be a market for the Offered
Securities.
CERTAIN PROVISIONS OF MARYLAND LAW AND OF THE CHARTER AND BYLAWS
The following summary of certain provisions of Maryland law and of the
Charter and Bylaws does not purport to be complete and is subject to and
qualified in its entirety by reference to Maryland law and the Charter and
Bylaws, copies of which are exhibits to the Registration Statement of which this
Prospectus is a part. See "Additional Information."
BOARD OF DIRECTORS
The Company's Organizational Documents specify that the initial number of
directors is nine and allow a majority of the entire Board to increase or
decrease the number of directors within a range of three to 15. The tenure of
office of a sitting director will not be affected by any decrease in the number
of directors. These provisions are in accord with Section 2-402 of the MGCL,
which fixes the minimum number of directors at three and allows a range to be
specified in a corporation's bylaws. As described below (see "--Amendment to
Organizational Documents"), the Bylaws may be amended only by the Board, not by
its stockholders. The Board could, therefore, amend the Bylaws to increase or
decrease the number of directors within the specified range, without stockholder
approval, but could not reduce the number of directors below three. The holders
of shares of Series B Preferred Stock are entitled to require, at least
temporarily, that the Board be expanded and be entitled to fill the additional
position or positions on the Board. See "Description of Stock--Preferred Stock."
As permitted by the MGCL, the Charter provides that, subject to the rights
of the holders of any series of Preferred Stock then outstanding, the Company's
stockholders may remove any director, with or without cause, by the affirmative
vote of a majority of all votes entitled to be cast for the election of
directors. If the stockholders of any class or series are entitled separately to
elect one or more directors, a majority vote of all votes of that class or
series is required in order to remove without cause a director elected by that
class or series.
MERGERS, CONSOLIDATIONS AND SALES OF ASSETS
In general, under the MGCL, any proposed merger or consolidation of the
Company with another company or companies, or any sale of all or substantially
all the assets of the Company, must be approved by the affirmative vote of
two-thirds of all the votes entitled to be cast on the matter or such lesser
percentage (subject to a specified minimum) as is set forth in the corporation's
charter. The Charter provides that such transactions may be approved by the
affirmative vote of a majority of all votes entitled to be cast on such matters.
BUSINESS COMBINATIONS
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities)
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between a Maryland corporation and any person who beneficially owns 10% or more
of the voting power of the corporation's shares or an affiliate of the
corporation who, at any time within the two-year period prior to the date in
question, was the beneficial owner of ten percent or more of the voting power of
the then-outstanding voting stock of the corporation (an "Interested
Stockholder") or an affiliate of such Interested Stockholder are prohibited for
five years after the most recent date on which the Interested Stockholder
becomes an Interested Stockholder. Thereafter, any such business combination
must be recommended by the board of directors of such corporation and approved
by the affirmative vote of at least (i) 80% of the votes entitled to be cast by
holders of outstanding shares of voting stock of the corporation and (ii)
two-thirds of the votes entitled to be cast by holders of voting stock of the
corporation other than shares held by the Interested Stockholder with whom (or
with whose affiliate) the business combination is to be effected, unless, among
other conditions, the corporation's common stockholders receive a minimum price
(as defined in the MGCL) for their shares and the consideration is received in
cash or in the same form as previously paid by the Interested Stockholder for
its shares. These provisions of the MGCL do not apply, however, to business
combinations that are approved or exempted by the board of directors of the
corporation prior to the time that the Interested Stockholder becomes an
Interested Stockholder. Hunt, RLH Corporation (and its affiliates), Ray L. Hunt
(and his affiliates), USAA, United States Automobile Association (and its direct
and indirect subsidiaries), Ameritech and Prudential, beneficially own more than
10% of the Company's voting shares and would, therefore, be Interested
Stockholders under the business combination provisions of the MGCL. However,
pursuant to the statute, the Company has exempted any business combinations
involving these stockholders and affiliates and, consequently, the five-year
prohibition and the super-majority vote requirements will not apply to business
combinations between any of them and the Company. As a result, these
stockholders and affiliates may be able to enter into business combinations with
the Company that may not be in the best interest of its stockholders without
compliance by the Company with the super-majority vote requirements and the
other provisions of the statute.
CONTROL SHARE ACQUISITIONS
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror, by officers or by directors who
are employees of the corporation. "Control Shares" are voting shares of stock
which, if aggregated with all other such shares of stock previously acquired by
the acquiror or in respect of which the acquiror is able to exercise or direct
the exercise of voting power (except solely by virtue of a revocable proxy),
would entitle the acquiror to exercise voting power in electing directors within
one of the following ranges of voting power: (a) one-fifth or more but less than
one-third; (b) one-third or more but less than a majority; or (c) a majority or
more of all voting power. Control Shares do not include shares the acquiring
person is then entitled to vote as a result of having previously obtained
stockholder approval. A "control share acquisition" means the acquisition of
Control Shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of directors of the corporation to call a special meeting
of stockholders to be held within 50 days of demand to consider the voting
rights of the shares. If no request for a meeting is made, the corporation may
itself present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the Control Shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to the absence of
voting rights for the Control Shares, as of the date of the last control share
acquisition by the acquiror or of any meeting of stockholders at which the
voting rights of such shares are considered and not approved. If voting rights
for
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<PAGE>
control shares are approved at a stockholders meeting and the acquiror becomes
entitled to vote a majority of the shares entitled to vote, all other
stockholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition.
The control share acquisition statute does not apply (a) to shares acquired
in a merger, consolidation or share exchange if the corporation is a party to
the transaction or (b) to acquisitions approved or exempted by the charter or
bylaws of the corporation.
As permitted by the MGCL, the Bylaws exempt any acquisitions of shares of
the Company's stock by Hunt, RLH Corporation (and its affiliates), Ray L. Hunt
(and his affiliates), USAA and United States Automobile Association (and its
direct and indirect subsidiaries), Ameritech and Prudential. There can be no
assurance that such provision will not be amended or eliminated at any time in
the future.
RELATED PARTY TRANSACTIONS
Although it is the Company's policy not to engage in transactions with its
directors or officers, the Charter does not place specific restrictions on
related party transactions. The Company is subject to the provisions of the MGCL
concerning "interested director transactions," that is, transactions between the
Company and a member of the Board or between the Company and another
corporation, firm or other entity in which any of its directors is a director or
has a material financial interest. Under the MGCL, a contract or transaction
between a corporation and any of its directors, or between a corporation and any
other corporation, firm or other entity in which any of its directors is a
director or has a material financial interest, is not void or voidable solely
for this reason, or solely because the director is present at or participates in
the meeting of the board or committee that authorizes the contract or
transaction, or solely because his or her votes are counted for such purpose,
if:
1. The fact of the common directorship or interest is disclosed or known to
the board of directors or the committee, and the board or committee authorizes,
approves or ratifies the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even if the disinterested directors
constitute less than a quorum;
2. The fact of the common directorship or interest is disclosed or known to
the stockholders entitled to vote thereon, and the contract or transaction is
authorized, approved or ratified by a majority of the votes cast by the
stockholders entitled to vote, excluding the votes of shares owned by the
interested director or other interested party; or
3. The contract or transaction is fair and reasonable to the corporation.
SPECIAL MEETINGS OF STOCKHOLDERS
The Bylaws provide that special meetings of the Company's stockholders may
be called: (a) by the Chairman of the Board, the President or the Board; or (b)
upon the written request of stockholders holding not less than 10% of all the
votes entitled to be cast at the meeting. The request must state the purpose of
the meeting and the matters proposed to be acted on at the meeting. Upon payment
by the requesting stockholders of the cost of preparing and mailing notice of
the meeting, the Secretary of the Company must give notice to each stockholder
entitled to notice. Unless requested by stockholders entitled to cast a majority
of the votes entitled to be cast at the meeting, a special meeting need not be
called to consider any matter that is substantially the same as one voted on at
any special meeting during the preceding 12 months. Under the Bylaws, if the
Company calls a special meeting for the purpose of electing one or more
directors, any stockholder of record at the time the notice is given who is
entitled to vote at the meeting may nominate a person or persons for election by
giving notice containing specified information to the Secretary not earlier than
the 90th day before the meeting and not later than the later of the 60th day
before the meeting or the 10th day after the day on which a public announcement
is first
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made of the date of the meeting and the nominees proposed by the Board. Only
persons nominated in accordance with procedures specified in the Bylaws are
eligible to serve as directors and only the business specified in the notice of
the meeting may be conducted at the meeting.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS
The Bylaws establish procedures for nominations or other business brought by
stockholders at annual meetings. Under these procedures, a stockholder entitled
to vote in the election of directors generally may nominate one or more persons
for election to the Board or propose other business at an annual meeting only if
the stockholder gives notice to the Secretary of the Company not less than 60
nor more than 90 days before the first anniversary of the preceding year's
annual meeting. If, however, the date of the annual meeting is advanced by more
than 30 days or delayed by more than 60 days from the anniversary date, to be
timely, notice by the stockholder must be delivered not earlier than the 90th
day before such annual meeting and not later than the close of business on the
later of the 60th day before such annual meeting or the tenth day following the
day on which public announcement of the date of such meeting was first made.
Such notice must contain specified information. For example, in the case of a
nomination by a stockholder, the notice must include the information about each
nominee that is required to be disclosed pursuant to the proxy rules under the
Exchange Act. The Company's next stockholders' meeting is expected to take place
in mid-1997.
AMENDMENTS TO ORGANIZATIONAL DOCUMENTS
Section 2-604 of the MGCL and Article 7 of the Charter govern amendments to
the Charter. After the Board proposes a charter amendment, the affirmative vote
of the holders of a majority of the outstanding voting stock, voting together as
a single class, is required to amend the Charter. The Bylaws provide that the
Board has the exclusive power to adopt, alter or repeal any provision of the
Bylaws, except for the provision relating to the application of the control
share acquisition provisions of the MGCL, which may not be amended or repealed,
in whole or in part, without the prior written consent of Ray L. Hunt (or any
affiliate of Ray L. Hunt), USAA, Ameritech and Prudential. See "Certain
Provisions of Maryland Law and of the Charter and Bylaws--Control Share
Acquisitions."
LIABILITY AND INDEMNIFICATION OF CERTAIN PERSONS
The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (i) actual receipt of an improper benefit or profit in money,
property or services or (ii) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Charter contains
such a provision which eliminates such liabilities to the maximum extent
permitted by Maryland law.
The MGCL requires a corporation (unless its charter provides otherwise,
which the Charter does not), to indemnify a director or officer who has been
successful on the merits or otherwise, in defense of any proceeding to which he
is made a party by reason of his service in that capacity. The MGCL permits a
corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service in those or other capacities unless it
is established that (a) the act or omission of the director or officer was
material to the matter giving rise to the proceeding and (i) was committed in
bad faith or (ii) was a result of an active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of a criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission was
unlawful. However, a Maryland corporation may not indemnify for any adverse
judgment in a suit by or in the right of a corporation. In addition, the MGCL
requires the Company, as a condition to advancing expenses, to obtain (a) a
written affirmation by the director or
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officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by the Company as authorized by the Bylaws and (b)
a written statement by or on his behalf to repay the amount paid or reimbursed
by the Company if it shall ultimately be determined that the standard of conduct
was not met.
The Charter obligates the Company to the maximum extent permitted by
Maryland law to indemnify and to pay or reimburse reasonable expenses in advance
of final disposition of a proceeding to (a) any present or former director or
officer of the Company or (b) any individual who, while a director of the
Company and at the request of the Company, serves or has served as a director,
officer, partner or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise. The Charter also permits the
Company to indemnify and advance expenses to any person who served a predecessor
of the Company in any other capacity as described above and to any employee or
agent of the Company or a predecessor of the Company.
The Company has entered into indemnification agreements with each of its
officers and directors. The indemnification agreements require, among other
matters, that the Company indemnify its executive officers and directors to the
fullest extent permitted by law and advance to the officers all related
expenses, subject to reimbursement, if it is subsequently determined that
indemnification is not permitted. Under these agreements, the Company must also
indemnify and advance all expenses incurred by executive officers and directors
seeking to enforce their rights under the indemnification agreements and may
cover executive officers and directors under the Company's directors' and
officers' liability insurance. Although the indemnification agreement offers
substantially the same scope of coverage afforded by law, it provides greater
assurance to directors and executive officers that indemnification will be
available, because, as a contract, it cannot be modified unilaterally in the
future by the Board of Directors or stockholders to eliminate the rights it
provides. It is the position of the SEC that indemnification of directors and
officers for liability under the Securities Act is against public policy and
unenforceable pursuant to Section 14 of the Securities Act.
COMMON STOCK
Article 4 of the Charter authorizes the Company to issue up to 175 million
shares of Common Stock, of which 13,596,370 shares were outstanding at March 31,
1997. The holders of shares of Common Stock have the right to vote on all
matters for which a common stockholder is entitled to vote at all meetings of
the stockholders of the Company, and will be entitled to one vote for each share
of Common Stock entitled to vote at such a meeting. Common Stock is subject to
ownership limits and restrictions on transfer. See "Description of Stock."
PREFERRED STOCK
Article 4 of the Charter authorizes the Company to issue up to 25 million
shares of Preferred Stock, of which 2,272,727 shares of Series B Preferred Stock
are presently outstanding. Preferred Stock, like Common Stock, is subject to
ownership limits and restrictions on transfer. See "Description of Stock--
Restrictions on Ownership and Transfer."
Subject to any limitations imposed by the NYSE and the rights of the holders
of shares of Series B Preferred Stock, the Company may, without stockholder
approval, issue shares of Preferred Stock in classes and series, and may
establish from time to time the number of shares to be included in each such
class or series, and fix the designation, powers, preferences and the rights of
the shares of each such class or series and the qualifications, limitations and
restrictions of each. Except as otherwise provided by law, the holders of the
Preferred Stock have and will have only such voting rights as are provided for
or expressed in the resolutions of the Board relating to such Preferred Stock.
The Board believes it is desirable for the Company to have Preferred Stock
available for possible future financing and acquisition transactions, stock
dividends or distributions and other general corporate
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purposes. The availability of such shares for issuance in the future will give
the Company greater flexibility in obtaining financing or in acquiring
Properties by permitting such shares to be issued without the expense and delay
of a special stockholders' meeting.
The availability of Preferred Stock, however, entails risks. Under certain
circumstances, shares of Preferred Stock could be used to create voting
impediments or to frustrate persons seeking to effect a takeover, engage in
proxy contests, or otherwise gain control of the Company. The Board could
authorize holders of Preferred Stock to vote as a class, either separately or
with the holders of Common Stock, and with voting rights that are the same as or
different from the voting rights of Common Stock, on the election of directors,
or approval of a merger, sale or exchange of assets by the Company or any other
extraordinary corporate transaction. See "Description of Stock--Preferred Stock"
for a description of the voting rights of the Series B Preferred Stock. In
addition, the shares of Preferred Stock could be privately placed with
purchasers who might side with the Board in opposing a hostile takeover bid.
Such uses could enhance the Board's ability to deal with attempts to gain
control of, or impose transactions upon, the Company that the Board believes are
coercive, unfair or otherwise not in the best interests of the Company and all
of its stockholders, but which certain stockholders may find attractive. It is
also possible that the dividend requirements and sinking fund, conversion or
redemption provisions, if any, which may be fixed by the Board for any class or
series of Preferred Stock at the time of issuance may have an adverse effect on
the availability of earnings for distribution to holders of Common Stock or for
other corporate purposes.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the material federal income tax
considerations affecting the Company and holders of Common Stock. Vinson &
Elkins L.L.P., counsel to the Company, has reviewed the following discussion and
is of the opinion that it fairly summarizes the material federal income tax
considerations to a holder of the Common Stock based on current law. This
discussion is directed principally at stockholders who are individual United
States citizens or residents. No attempt has been made to comment on all federal
income tax consequences of the ownership of Common Stock. The summary does not
address considerations that may be relevant to particular stockholders,
including stockholders who are subject to special treatment under the federal
income tax laws (such as insurance companies, financial institutions or
broker-dealers), nor does it address any tax consequences under the laws of any
state, local or foreign jurisdiction. No rulings will be sought from the IRS or
any other tax authorities concerning the federal, state, local or other tax
considerations relevant to the Company's operations or REIT status, or to the
purchase, ownership or disposition of Common Stock. Because the following is
only a summary, it is qualified in its entirety by the applicable provisions of
the Code and the regulations adopted under the Code, court decisions, and the
rulings and other pronouncements of the IRS, all of which are subject to change,
possibly with retroactive effect.
EACH PROSPECTIVE STOCKHOLDER OF THE COMPANY IS ADVISED TO CONSULT HIS OR HER
OWN TAX ADVISOR ABOUT THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF THE OWNERSHIP OR DISPOSITION OF SHARES OF COMMON STOCK,
PARTICULARLY IN LIGHT OF THAT STOCKHOLDER'S SPECIFIC CIRCUMSTANCES.
FEDERAL INCOME TAXATION OF THE COMPANY
The Company believes that since its formation, it has been organized and
operated in a manner that permits it to satisfy the various requirements for
taxation as a REIT under the applicable provisions of the Code. The rules
governing REIT's are highly technical and require ongoing compliance with a
variety of tests that depend, among other things, on operating results. While
the Company believes it has satisfied these tests since its formation and plans
to use its best efforts to do so on a continuing basis, no assurance can be
given that such requirements will be met or that the Company will qualify as a
REIT for any particular year.
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In the opinion of Vinson & Elkins L.L.P., commencing with the Company's
initial taxable year ended December 31, 1995, if the Company is organized and
operated as described in this Prospectus, the Company will be able to qualify as
a REIT. It must be emphasized that this opinion is based and conditioned on
various assumptions and representations of the Company and its officers that are
described below. The Company's qualification as a REIT depends upon its ability
to meet, through actual annual operating results, the various qualification
tests imposed under the Code that are discussed below, the results of which will
not be monitored or reviewed by Vinson & Elkins L.L.P. While the Company expects
to satisfy these tests and plans to use its best efforts to do so, no assurance
can be given that actual operations will meet these requirements and that the
Company will qualify as a REIT for any particular year. The opinion of Vinson &
Elkins L.L.P. is not binding on the IRS or any court. The opinion of Vinson &
Elkins L.L.P. is based upon existing law, IRS regulations and currently
published administrative positions of the IRS and judicial decisions, all of
which are subject to change either prospectively or retroactively.
If the Company qualifies for taxation as a REIT, it generally will not be
subject to Federal corporate income tax on that portion of its ordinary income
or net capital gain that is currently distributed to stockholders. The REIT
provisions of the Code generally allow a REIT to deduct dividends paid to its
stockholders. This deduction for dividends paid to stockholders substantially
eliminates the Federal "double taxation" on earnings (once at the corporate
level and once again at the stockholder level) that usually results from
investments in a corporation.
Even if the Company qualifies for taxation as a REIT, however, the Company
may be subject to Federal income or excise tax, including the following: First,
the Company will be taxed at regular corporate rates on its undistributed REIT
taxable income, including undistributed net capital gain. Second, under certain
circumstances, the Company may be subject to the "alternative minimum tax."
Third, if the Company has net income from the sale or other disposition of
"foreclosure property" (which is, in general, property acquired by the Company
by foreclosure or otherwise on default on a loan secured by such 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 dispositions of property held primarily for sale to customers in the
ordinary course of business, other than foreclosure property), 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 either of the 75% or 95% test,
multiplied by a fraction intended to reflect the Company's profitability. Sixth,
if the Company fails to distribute during a year at least the sum of (a) 85% of
its REIT ordinary income for such year, (b) 95% of its REIT capital gain net
income for such year and (c) any undistributed taxable income from prior years,
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 acquire any asset from a C corporation (i.e., a corporation generally
subject to full corporate-level tax) in a carryover-basis transaction and the
Company subsequently recognizes gain on the disposition of such asset during the
ten-year period beginning on the date on which the asset was acquired by the
Company, then, to the extent of the excess of the fair market value of the asset
over its adjusted basis upon its acquisition by the Company, such gain will be
subject to tax at the highest regular corporate rate, pursuant to guidelines
issued by the IRS.
REQUIREMENTS FOR QUALIFICATION
The Code defines a REIT as a corporation, trust or association: (a) that is
managed by one or more directors or trustees, (b) the beneficial ownership of
which is evidenced by transferable shares or by transferable certificates of
beneficial interest, (c) that would be taxable as a domestic corporation but for
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the REIT provisions of the Code, (d) that is neither a financial institution nor
an insurance company subject to certain provisions of the Code, (e) the
beneficial ownership of which is held by 100 or more persons, and (f) during the
last half of each taxable year not more than 50% in value of the outstanding
stock 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). The Company expects to meet each of these
requirements. In addition, certain other tests, described below, regarding the
nature of its income and assets also must be satisfied, which the Company
anticipates. The Code provides that conditions (a) through (d), inclusive, must
be met during the entire taxable year and that conditions (e) and (f) must be
met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. Conditions (e) and
(f) (the "100-Stockholder Requirement" and "Five-or-Fewer Requirement") do not
apply for the first taxable year for which an election is made to be taxed as a
REIT. For purposes of conditions (e) and (f), pension funds and certain other
tax-exempt entities are treated as individuals, subject to a "look-through"
exception in the case of conditions (f).
To protect against violations of the stock ownership requirements, the
Charter provides that no person (other than an "Excepted Holder") is permitted
to own, applying certain constructive ownership tests, more than 8.5% of the
lesser of the number or value of the outstanding shares of any class of the
Company's stock (the "Ownership Limit"). An Excepted Holder is a person who the
Board has determined will be permitted to hold shares in excess of the Ownership
Limit, based upon appropriate representations and undertakings designed to
protect the Company's REIT status (such as information establishing that the
Excepted Holder is treated as a "look-through" entity in applying the REIT stock
ownership tests and that the deemed ownership of the Company shares through it
will be appropriately dispersed so as not to jeopardize the Company's REIT
status). Each Excepted Holder will be subject to a separate ownership limit as
specified by the Board. Attempted transfers of shares of the Company's stock
that would violate the ownership limits (or related restrictions contained in
the Charter or Excepted Holder Agreements) generally will cause the number of
shares in excess of the limit to be transferred automatically to a trust for the
benefit of a charitable beneficiary rather than to the purported transferee.
To monitor the Company's compliance with the share ownership requirements,
the Company is required to maintain records disclosing the actual ownership of
its stock. To do so, the Company must demand written statements each year from
the record holders of 5% or more of its shares. (If the Company were to have
less than 2,000 record stockholders, the demand would have to be made to record
holders of smaller percentages of the shares.) In those statements, the record
holders are to disclose who actually owns the shares (that is, the persons
required to include the Company's dividends in their gross incomes). The Company
must maintain a list of those persons who fail or refuse to comply with this
demand. Such stockholders must submit a statement with their tax returns
disclosing the actual ownership of the shares of stock and certain other
information.
GROSS INCOME TESTS. In order to qualify as a REIT for a particular year,
the Company also must meet three tests governing the sources of its gross income
that are designed to ensure that the Company earns its income principally from
passive real estate investments. In evaluating a REIT's income under the income
tests, the REIT will be treated as receiving its proportionate share of the
income produced by any partnership in which the REIT invests, and any such
income will retain the character that it has in the hands of the partnership.
The Company may, from time to time, own and operate a number of its properties
through "qualified REIT subsidiaries." The Code provides that a qualified REIT
subsidiary is not treated as a separate corporation, and all of its assets,
liabilities and items of income, deduction and credit are treated as assets,
liabilities and such items of the REIT.
SEVENTY-FIVE PERCENT GROSS INCOME TEST. At least 75% of a REIT's gross
income for each taxable year must be derived from specified classes of income
that principally are real estate related. The key permitted categories are: (a)
rents from real property; (b) interest on loans secured by real property; (c)
gain from the sale of real property or real property loans (excluding gain from
the sale of property that is held primarily for sale to customers in the
ordinary course of a trade or business, which is referred to below as
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"dealer property"); (d) income from the operation and gain from the sale of
certain property acquired in connection with the foreclosure of a mortgage
securing that property or upon a default on a lease of the property
("foreclosure property"); (e) distributions on, or gain from the sale of, shares
of other REITs; and (f) "qualified temporary investment income" (described
below).
In evaluating the Company's compliance with the 75% income test (as well as
the 95% income test described below), gross income does not include gross income
from "prohibited transactions." A prohibited transaction is a sale of dealer
property, not including foreclosure property and certain dealer property held by
the Company for at least four years.
The Company expects that substantially all of its operating gross income
from its properties will be considered rent from real property. Rent from real
property is qualifying income for purposes of the 75% income test only if
certain conditions are satisfied. Rent from real property includes charges for
services customarily rendered to tenants, and rent attributable to personal
property leased together with the real property so long as the personal property
rent is less than 15% of the total rent. The Company does not expect to earn
material amounts of income from services rendered to tenants or from personal
property.
Rent from real property generally does not include rent based on the income
or profits derived from the property, unless the computation is based only on a
fixed percentage of receipts or sales. Also excluded is rent received from a
person or corporation in which the Company (or any of its 10% or greater owners)
owns a 10% or greater interest. The Company does not expect to earn income in
these two excluded categories.
A third exclusion covers amounts received with respect to real property if
the Company furnishes services to the tenants or manages or operates the
property, other than through an "independent contractor" from whom the Company
does not derive any income. The obligation to operate through an independent
contractor generally does not apply, however, if any services provided by the
Company are "usually or customarily rendered" in connection with the rental of
space for occupancy only and are not considered rendered primarily for the
convenience of the tenant (applying standards that govern in evaluating whether
rent from real property would be unrelated business taxable income when received
by a tax-exempt owner of the property). The Company generally will directly
operate and manage its properties without using an "independent contractor,"
although independent contractors may be employed to perform certain day-to-day
property management duties, such as collection of rents and routine maintenance.
The Company believes that the only material services to be provided to tenants
will be those usually or customarily rendered in connection with the rental of
space for occupancy only. The Company does not provide services that might be
considered rendered primarily for the convenience of the tenants. The Company
believes that substantially all its income from the properties will be
qualifying income under the 75% income test.
A portion of the proceeds of the Offering may be invested in
interest-bearing accounts and an investment fund or funds that invest
substantially all their assets in diversified portfolios of U.S. dollar-
denominated "money market" instruments (such as bank certificates of deposit and
bankers acceptances, commercial paper and repurchase agreements) and obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities. The interest and dividend income earned on those funds should
be includable under the 75% income test as "qualified temporary investment
income" (which includes income earned on stock or debt instruments acquired with
the proceeds of a stock offering, not including amounts received under a
dividend reinvestment plan). Qualified temporary investment income treatment
only applies during the one-year period beginning when a REIT receives the new
capital.
Upon the Company's ultimate sale of its properties, any gains realized are
expected to constitute qualifying income, as gain from the sale of real property
(not involving a prohibited transaction).
NINETY-FIVE PERCENT GROSS INCOME TEST. In addition to earning 75% of its
gross income from the sources listed above, at least an additional 20% of the
Company's gross income for each taxable year must
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come either from those sources, or from dividends, other interest or gains from
the sale or other disposition of stock or other securities that do not
constitute dealer property. This test permits a REIT to earn a significant
portion of its income from traditional "passive" investment sources that are not
necessarily real estate related. The term "interest" (under both the 75% and 95%
tests) does not include amounts that are based on the income or profits of any
person, unless the computation is based only on a fixed percentage of receipts
or sales.
THIRTY PERCENT GROSS INCOME TEST. For taxable years ending on or before
December 31, 1997, the Company also must earn less than 30% of its gross income
in each taxable year from the sale or other disposition of: (a) real property
and loans secured by real property held for less than four years (other than
foreclosure property and involuntary conversions); (b) stock or securities held
for less than one year; and (c) property in a prohibited transaction. The 30%
income test does not have a reasonable cause exception as do the 75% and 95%
income tests. Consequently, a failure to meet the 30% income test would
terminate the Company's status as a REIT automatically. The thirty percent gross
income test was repealed by the Taxpayer Relief Act of 1997 (the "1997 Act") for
tax years beginning after August 5, 1997.
FAILING THE BASIC GROSS INCOME TESTS. As a result of the 75% and 95% tests,
REITs generally are not permitted to earn more than 5% of their gross income
from active sources (such as brokerage commissions or other fees for services
rendered). While the Company does not anticipate that it will earn substantial
amounts of nonqualifying income, if nonqualifying income exceeds 5% of the
Company's gross income, the Company could lose its status as a REIT. If a REIT
fails to meet either the 75% or 95% income tests during any taxable year, it may
still qualify as a REIT for that year if the failure was due to reasonable cause
and certain relief provisions apply, although a special penalty tax may be owed.
See "--Federal Income Taxation of the Company."
ASSET TESTS. In order to qualify as a REIT for a particular year, on the
last day of each calendar quarter the Company also must meet two tests
concerning the nature of its investments. First, at least 75% of the value of
the Company's total assets generally must consist of real estate assets, cash,
cash items (including receivables) and government securities. For this purpose,
"real estate assets" include interests in real property, interests in loans
secured by mortgages on real property or by interests in real property, shares
in other REITs, certain options, and for the one-year period following receipt
of new capital, stock and debt instruments acquired with that new capital. Real
estate assets do not include mineral, oil or gas royalty interests. Second,
although the balance of the Company's assets generally may be invested without
restriction, except for securities that are considered real estate assets, the
Company will not be permitted to own: (a) securities of any one nongovernmental
issuer that represent more than 5% of the value of the Company's total assets;
or (b) more than 10% of the outstanding voting securities of any single issuer.
A REIT may, however, own 100% of the stock of a qualified REIT subsidiary, in
which case the assets, liabilities and items of income, deduction and credit of
the subsidiary are treated as those of the REIT. The Company may, from time to
time, hold certain properties through qualified REIT subsidiaries. In evaluating
a REIT's assets, if the REIT invests in a partnership, it is deemed to own its
proportionate share of the assets of the partnership.
The Company anticipates that it will comply with these asset tests. As was
described above, for a temporary period, some of the proceeds of the Offering
may be invested principally in interest-bearing accounts and an investment fund
or funds that invest substantially all their assets in diversified portfolios of
U.S. dollar-denominated "money market" instruments (such as bank certificates of
deposit and bankers acceptances, commercial paper and repurchase agreements) and
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, which should constitute qualifying assets, at least during
the initial one-year period following the Offering. Substantially all of the
Company's other investments will be in properties that should represent
qualifying real estate assets.
ANNUAL DISTRIBUTION REQUIREMENT. To maintain REIT status, the Company
generally must distribute to its stockholders in each taxable year at least 95%
of its net ordinary income (capital gain is not required
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to be distributed). More precisely, the Company must distribute an amount equal
to: (a) 95% of the sum of (i) its "REIT Taxable Income" before the deduction for
dividends paid and excluding any net capital gain and (ii) any net income from
foreclosure property less the tax on such income, minus (b) certain limited
categories of "excess non-cash income." REIT Taxable Income is defined to be the
taxable income of the REIT, computed as if it were an ordinary corporation, with
certain modifications. For example, net income from foreclosure property and net
income from prohibited transactions are excluded. In addition, the REIT may
carry over, but not carry back, a net operating loss for 15 years after the year
in which it was incurred.
A REIT may satisfy the 95% distribution test with dividends paid during the
taxable year and with certain dividends paid after the end of the taxable year.
Dividends paid in January that were declared during the last calendar quarter of
the prior year and were payable to stockholders of record during the last
calendar quarter of that prior year are treated as paid on December 31 of the
prior year (both for the Company and its stockholders). Because dividends that
are paid in a subsequent year and fail to meet this test will be subject to a
nondeductible 4% excise tax, the Company anticipates distributing its fourth
quarter dividends within the taxable year, or by January 31 of the following
year. Dividends declared before the due date of the Company's tax return for the
taxable year (including extensions) also will be treated as paid in the prior
year (although subject to the excise tax) if they are paid: (a) within 12 months
of the end of such taxable year; and (b) no later than the Company's next
regular distribution payment. Dividends that are paid after the close of a
taxable year and do not qualify under the rule governing payments made in
January will be taxable to the stockholders in the year paid, even though they
may be taken into account by the Company for a prior year.
The Company will be taxed at regular corporate rates to the extent that it
retains any portion of its taxable income. For example, if the Company only
distributes the required 95% of its taxable income, it would be taxed on the
retained 5%. The Company currently intends to distribute sufficient income to
satisfy the annual 95% distribution requirement. Under certain circumstances,
however, the Company may not have sufficient cash or other liquid assets to meet
the distribution requirement. This could arise because of competing demands for
the Company's funds, or due to timing differences between tax reporting and cash
receipts and disbursements (income may have to be reported before cash is
received, or expenses may have to be paid before a deduction is allowed).
Although the Company does not anticipate difficulties in meeting this
requirement, no assurance can be given that the necessary funds will be
available. If the Company fails to make a required distribution, it would lose
its REIT status.
If the Company fails to meet the 95% distribution requirement because of an
adjustment to the Company's taxable income by the IRS, the Company may be able
to cure the failure retroactively by paying to its stockholders a "deficiency
dividend" (as well as paying applicable interest and penalties to the IRS)
within a specified period.
SPECIAL DISTRIBUTION REQUIREMENT; BUILT-IN GAIN RULES. The Code and
regulations provide that a corporation may be taxed as a REIT only if it has no
earnings and profits accumulated in any non-REIT year (including amounts
attributable to entities merged into the REIT). The Company expects to be
treated as a REIT from inception and does not believe that it inherited any
earnings and profits from any of the Merged Trusts that were accumulated during
any non-REIT years. Pursuant to IRS Notice 88-19, if a REIT acquires the assets
of a C corporation in a tax-free transaction, unless the REIT makes a special
election to recognize any built-in gain over a ten-year period, the C
corporation is treated as having disposed of the assets in a taxable transaction
immediately before the transfer to the REIT. Due to the REIT status of the
Merged Trusts, the Company does not believe that these requirements apply to the
Company or the Merged Trusts. If the IRS were to challenge successfully the REIT
status of one or more of the Merged Trusts during any period prior to the
Merger, depending upon the specific circumstances, the rules applicable to
transfers from C corporations to REITs might adversely affect the Company's
ability to qualify as a REIT.
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FAILURE TO QUALIFY AS A REIT
For any taxable year in which the Company fails to qualify as a REIT, it
would be taxed at the usual corporate rates on all of its taxable income.
Distributions to its stockholders would not be deductible in computing that
taxable income and distributions would no longer be required under the Code. Any
corporate level taxes generally would reduce the amount of cash available to the
Company for distribution to its stockholders or for reinvestment. Because the
stockholders would continue to be taxable on the distributions they receive, the
net after-tax yield to the stockholders from their investment in the Company
likely would be reduced substantially. As a result, the Company's failure to
qualify as a REIT during any taxable year could have a material adverse effect
on the Company and its stockholders. If the Company loses its REIT status,
unless certain relief provisions apply, the Company would not be eligible to
elect REIT status again until the fifth taxable year that begins after the first
year for which the Company's election was terminated.
If, after forfeiting its REIT status, the Company later qualifies and elects
to be taxed as a REIT again, the Company may face additional adverse tax
consequences. Prior to the end of the year in which the Company sought to
qualify again as a REIT, the Company would be required to make distributions
sufficient to eliminate any earnings and profits accumulated during its period
of non-REIT status. Moreover, under IRS Notice 88-19, immediately prior to the
effectiveness of the election to return to REIT status, the Company would be
treated as having disposed of all of its assets in a taxable transaction,
triggering taxable gain with respect to the Company's appreciated assets. In
that event, however, under current law the Company would be permitted to elect
an alternative treatment under which those gains would be taken into account
only as and when they actually were recognized upon sales of the appreciated
property occurring within a ten-year period (certain proposed legislation might
eliminate this alternative treatment, in which case the Company might choose to
remain a C corporation). The Company would be required to distribute at least
95% of any such recognized gains, but it would not receive the benefit of a
dividends-paid deduction to reduce those taxable gains. Thus, any such gains on
appreciated assets would be subject to double taxation (that is, at the
corporate level as well as the stockholder level).
TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS
Distributions generally will be taxable to stockholders as ordinary income
to the extent of the Company's earnings and profits. Dividends declared during
the last quarter of a calendar year and actually paid during January of the
immediately following calendar year will generally be treated as if received by
the stockholders on December 31 of the calendar year during which they were
declared. Distributions paid to stockholders will not constitute passive
activity income and, as a result, generally cannot be offset by losses from
passive activities of a stockholder who is subject to the passive activity
rules.
Distributions designated by the Company as capital gains dividends generally
will be taxed as long-term capital gains to stockholders to the extent that the
distributions do not exceed the Company's actual net capital gain for the
taxable year. Corporate stockholders may be required to treat up to 20% of any
such capital gains dividends as ordinary income. Distributions by the Company,
whether characterized as ordinary income or as capital gains, are not eligible
for the 70% dividends received deduction for corporations. Stockholders are not
permitted to deduct losses or loss carryforwards of the Company. Future
regulations may require that stockholders take into account, for purposes of
computing their individual alternative minimum tax liability, certain tax
preference items of the Company.
The Company may generate cash in excess of its net earnings. If the Company
distributes cash to stockholders in excess of the Company's current and
accumulated earnings and profits, the excess cash will be deemed to be a
nontaxable return of capital to each stockholder to the extent of the adjusted
tax basis of the stockholder's shares, and the distribution will reduce the
stockholder's basis (but not below zero). Distributions in excess of the
adjusted tax basis will be treated as gain from the sale or exchange of the
shares. A stockholder who has received a distribution in excess of the current
and accumulated earnings
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and profits of the Company may, upon the sale of the shares, realize a higher
taxable gain or a smaller loss because the basis of the shares as reduced by
that distribution will be used for purposes of computing the amount of the gain
or loss.
For taxable years beginning after December 31, 1997, the Company may
designate a certain amount as undistributed capital gains upon which the Company
must pay tax within 30 days after the close of such year, and the amount
designated must also be reported by the Company's stockholders as long-term
capital gains for their tax years in which the last day of the Company's tax
year falls. Such designation must be made in a written notice mailed to the
stockholders within 60 days of the close of the Company's taxable year (or
mailed to its stockholders with its annual report for the taxable year). The
stockholders are treated as having paid the capital gains tax imposed on the
Company on the designated amounts and are allowed a credit or refund for the tax
deemed paid. Stockholders can increase the adjusted bases of their shares by the
difference between the designated amounts included in their long-term capital
gains and tax deemed paid with respect to their shares. The Company's earnings
and profits will be adjusted for any such undistributed capital gains in
accordance with regulations to be prescribed by the IRS.
Generally, gain or loss realized by a stockholder upon the sale of shares
will be reportable as capital gain or loss. If a stockholder receives a capital
gain dividend from the Company and sells the shares before holding them for more
than six months, any loss incurred on the sale or exchange of the shares is
treated as a long-term capital loss to the extent of the corresponding capital
gain dividend received.
In any year in which the Company fails to qualify as a REIT, its
stockholders generally will continue to be treated in the same fashion described
above, except that the Company dividends will not be eligible for treatment as
capital gains dividends, corporate stockholders will qualify for the dividends
received deduction and the stockholders will not be required to report any share
of the Company's tax preference items.
BACKUP WITHHOLDING
The Company will report to its stockholders and the IRS the amount of
dividends paid during each calendar year and the amount of tax withheld, if any.
If a stockholder is subject to backup withholding, the Company will be required
to deduct and withhold from any dividends payable to that stockholder a tax of
31%. These rules may apply: (i) when a stockholder fails to supply a correct
taxpayer identification number; (ii) when the IRS notifies the Company that the
stockholder is subject to the rules or has furnished an incorrect taxpayer
identification number; or (iii) in the case of corporations or others within
certain exempt categories, when they fail to demonstrate that fact when
required. A stockholder who does not provide a correct taxpayer identification
number may also be subject to penalties imposed by the IRS. Any amount withheld
as backup withholding may be creditable against the stockholder's federal income
tax liability. The Company also may be required to withhold a portion of capital
gain distributions made to stockholders who fail to certify their non-foreign
status to the Company.
TAXATION OF DOMESTIC TAX-EXEMPT STOCKHOLDERS
In 1993, the federal income tax laws were changed to facilitate investments
by pension funds in REITs. As described above, a corporation cannot be a REIT if
more than 50% of the value of its stock is owned by five or fewer individuals at
any time during the last half of a taxable year. In applying this test, pension
trusts (and certain other tax-exempt stockholders) formerly were treated as
single individuals. Beginning in 1994, however, a qualified pension trust
generally has not been considered a single individual in evaluating a REIT's
ownership. Instead, beneficiaries of the pension trust are treated as holding
the pension trust's stock investment in the REIT in proportion to their
actuarial interests in the pension trust.
In general, a tax-exempt entity that is a stockholder of the Company will
not be subject to tax on distributions from the Company or gain realized on the
sale of shares. In Revenue Ruling 66-106, the IRS ruled that a REIT's
distributions to a tax-exempt employees' pension trust did not constitute
unrelated
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business taxable income. However, when the law was changed to relax the stock
ownership restrictions applicable to pension plan investors, a related change
was made for unrelated business income tax purposes. This provision applies only
if a REIT is a "Pension-Held REIT." In that case, those pension trusts owning
more than 10% of the value of the REIT's stock may be required to report a
portion of any dividends they receive from the REIT as unrelated business
taxable income. One aspect of the definition of a Pension-Held REIT requires
that either one pension trust must own more than 25% of the value of the REIT's
stock, or one or more pension trusts (each of which owns more than 10%) must own
in the aggregate more than 50% of the value of the REIT's stock. The Company
intends to operate such that, if it were classified as a Pension-Held REIT,
these provisions would not cause its stockholders that are pension trusts to
receive dividends that would be considered unrelated business taxable income,
however there can be no assurance that the Company will be able to operate in
such a manner. A tax-exempt entity, however, may be subject to the unrelated
business income tax on dividends from or gain on the Company's shares to the
extent that the tax-exempt entity financed the acquisition of its shares with
"acquisition indebtedness" within the meaning of the Code.
For social clubs, voluntary employee benefit associations, supplemental
unemployment benefit trusts and qualified group legal services plans exempt from
federal income taxation under Sections 501(c)(7), (9), (17) and (20) of the
Code, respectively, income from an investment in the Company will constitute
unrelated business taxable income unless the organization is able to deduct
amounts properly set aside or placed in reserve for certain purposes so as to
offset the unrelated business taxable income generated by the investment in the
Company. These investors must consult their own tax advisors concerning the "set
aside" and reserve requirements.
TAXATION OF FOREIGN STOCKHOLDERS
The rules governing United States income, gift and estate taxation of
foreign entities and individuals who are neither citizens nor residents of the
U.S. are complex. They depend not only upon U.S. tax principles, but also upon
the treaties, if any, between the U.S. and the countries of the foreign
investors. The following discussion is only a summary of certain U.S. federal
income tax considerations potentially affecting foreign stockholders of the
Company, who must consult with their own advisors to evaluate all relevant tax
considerations.
The character of distributions on the Company's shares generally will be
determined in the same fashion for foreign stockholders as for domestic
stockholders (that is, a distribution may be categorized as a taxable ordinary
income dividend paid out of the Company's current or accumulated earnings and
profits, a nontaxable return of capital, a distribution in excess of the
stockholder's basis that is taxable as gain from sale of the shares or a capital
gain dividend). See "--Taxation of Taxable Domestic Stockholders."
If income or gain from the shares is effectively connected with a U.S. trade
or business conducted by a foreign stockholder ("effectively connected income"),
it generally will be subject to regular U.S. income taxes at graduated rates
rather than to the withholding tax described below. Foreign stockholders whose
income from the shares is effectively connected income may file an IRS Form 4224
with the Company certifying to that effect. Such income may be subject to the
alternative minimum tax, and a special alternative minimum tax may apply to
nonresident alien individuals. Foreign corporate stockholders receiving
effectively connected income from the shares also may be subject to an
additional 30% branch profits tax, unless certain exemptions apply.
Foreign stockholders whose income from the shares is not effectively
connected income generally will be subject to withholding at a 30% rate on
ordinary income dividends paid by the Company, unless an applicable tax treaty
reduces that rate. For this purpose, however, ordinary income distributions will
be presumed to represent dividends paid out of earnings and profits, rather than
nontaxable returns of capital
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or capital gains. If such a distribution is later determined to have exceeded
earnings and profits, an affected foreign stockholder may claim a refund for
excess withholdings.
Any distributions that are attributable to gain from the sale of United
States real property interests (whether or not specifically designated as
capital gain dividends) will be subject to the Foreign Investment in Real
Property Tax Act ("FIRPTA"). Under FIRPTA, those distributions will be treated
as gains that are effectively connected income and generally will be taxed at
regular U.S. capital gains tax rates. As a means of collecting this tax, the
Treasury Regulations require the Company to withhold 35% of any distributions to
foreign stockholders that the Company could designate as capital gains
dividends. If the amount of the FIRPTA withholding exceeds the applicable tax,
the foreign stockholder may obtain a refund.
Gain from the sale of shares generally will not be subject to U.S. taxation.
The sale of shares generally will not be subject to FIRPTA because the Company
should qualify as a "domestically-controlled REIT" (only a minority, if any, of
the Company's stockholders are expected to be foreign stockholders). If any
capital gain dividends or gains from the sale of shares constitute effectively
connected income, however, regular U.S. taxes may apply as described above. If a
nonresident alien stockholder is present in the U.S. for 183 days or more during
the year for which the gains are reportable and has a "tax home" in the U.S., a
30% tax may apply to the capital gains.
Upon the death of a foreign individual stockholder, the stockholder's shares
will be treated as part of the stockholder's U.S. estate for purposes of the
U.S. estate tax, except as may be otherwise provided in an applicable estate tax
treaty.
POSSIBLE TAX LAW CHANGES
The anticipated income tax treatment described in this Prospectus may be
changed, perhaps retroactively, by legislative, administrative or judicial
action at any time. Congress at any time may consider changes to the tax laws,
and any such legislation may affect the treatment of real estate investments, in
general, or REITs in particular. The 1997 Act made a number of statutory changes
generally designed to make it easier for taxpayers to comply with the
highly-technical REIT rules. The Clinton administration has also proposed
certain legislation that has not been enacted that would require immediate
recognition of built-in gains of certain large C corporations (with a stock
value in excess of $5 million) that elect to be taxed as REITs (potentially
applicable if a REIT loses its REIT status and then seeks to requalify) or of
large C corporations the assets of which are acquired by REITs in tax-free
transactions (effectively repealing the ability to elect under IRS Notice 88-19
to report any such built-in gains only to the extent that they are recognized
when and if the appreciated assets are sold during a ten-year period). No
prediction can be made as to whether these or any other changes to the REIT tax
rules will be implemented, or whether any changes that might take effect would
adversely affect the Company's ability to qualify as a REIT or the treatment of
the Company's stockholders.
STATE AND LOCAL TAXES
The Company will be subject to the taxing jurisdiction of each state in
which it owns properties or otherwise engages in business. Stockholders also may
be subject to state or local taxes in various jurisdictions, including those in
which they reside or transact business. The state or local tax treatment may
differ from the federal income tax treatment described above. As a general
matter, however, stockholders receiving dividends from the Company are likely to
be taxable on those amounts only in their states of residence. Because of the
potential diversity of the state and local rules, this Prospectus does not
include a discussion of state or local taxation of the Company or the
stockholders, nor is any representation made as to the tax status of the Company
or the stockholders in any state or local jurisdiction. All stockholders must
consult their own tax advisors concerning the possible application of any state
or local tax laws.
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EXPERTS
The consolidated financial statements and related schedules of the Company
included in the Company's annual report on Form 10-K for the year ended December
31, 1996 and the combined statements of revenues and certain expenses for the
Prudential Property Transaction for the year ended December 31, 1996, for the
Ameritech Property Transaction--Group A Properties for the years ended December
31, 1996, 1995 and 1994, for the Ameritech Property Transaction--Group B
Properties for the years ended December 31, 1996 and 1995, for the Ameritech
Property Transaction--Group C Properties for the year ended December 31, 1996,
for the Acquired Properties for the year ended December 31, 1996 and for the
Portfolio Acquisitions for the year ended December 31, 1996 incorporated by
reference herein and in the Registration Statement have been audited by Arthur
Andersen LLP, independent public accountants, to the extent and for the periods
indicated in their reports, and have been incorporated by reference herein and
in the Registration Statement in reliance upon the authority of that firm as
experts in accounting and auditing.
LEGAL MATTERS
The legality of the Offered Securities will be passed upon for the Company
by Ballard Spahr Andrews & Ingersoll, Baltimore, Maryland. Certain legal matters
described under "Federal Income Tax Considerations" will be passed upon for the
Company by Vinson & Elkins L.L.P., Dallas, Texas.
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GLOSSARY
"AMERITECH" means State Street Bank and Trust Company, as trustee for the
Ameritech Pension Trust (or any successor trustee).
"ASSET PURCHASE" means the sale by Trust 83 to the Company of all of Trust
83's properties (except the Charleston Business Park property) and certain other
assets, in accordance with the Amended and Restated Asset Purchase Agreement
between the Company and Trust 83 dated as of November 10, 1995.
"BOARD" means the board of directors of the Company.
"BYLAWS" means the Second Amended and Restated Bylaws of the Company.
"CHARTER" means the Third Amended and Restated Articles of Incorporation of
the Company.
"CODE" means the Internal Revenue Code of 1986, as amended, together with
its predecessor.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's common stock, par value $.001 per share.
"COMPANY" means Meridian Industrial Trust, Inc., a Maryland corporation.
"CONSOLIDATION TRANSACTIONS" means the Merger and the Asset Purchase.
"CONTROL SHARE" means voting shares of stock that, if aggregated with all
other such shares of stock previously acquired by the acquiror thereof or in
respect of which the acquiror is able to exercise or direct the exercise of
voting power (except solely by virtue of a revocable proxy) would entitle the
acquiror to exercise voting power in electing directors within any of the
following ranges of voting power: (i) one-fifth or more but less than one-third;
(ii) one-third or more but less than a majority; or (iii) a majority of all
voting power. Control Shares do not include shares the acquiring person is then
entitled to vote as a result of having previously obtained stockholder approval.
"CONTROL SHARE LAW" means Sections 3-701 through 3-709 of the MGCL.
"CONVERSION PRICE" means the price at which the Series B Preferred Stock may
be converted into Common Stock at the option of the holder.
"EQUITY STOCK" means Common and Preferred Stock of the Company.
"EXCEPTED HOLDERS" means a person whom the Board has determined will be
permitted to hold shares in excess of the Ownership Limit, based upon
appropriate representations and undertakings designed to protect the Company's
REIT status.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FIRPTA" means the Foreign Investment in Real Property Act.
"FIVE OR FEWER REQUIREMENT" means the requirement under the Code that not
more than 50% in value of the Company's outstanding shares of capital stock may
be owned, directly or indirectly, by five or fewer individuals (as defined in
the Code) during the last half of a taxable year (other than the first year).
"FUNDS FROM OPERATION" means, in accordance with the resolution adopted by
the Board of Governors of NAREIT, net income (loss) (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustment from unconsolidated partnerships and joint ventures.
"HUNT" means Hunt Acquisitions Partners, Ltd., a Delaware limited
partnership.
"HUNT REALTY" means Hunt Realty Corporation, a Delaware corporation.
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"INDEPENDENT DIRECTOR" means a director of the Company who is not an
officer, full-time employee or member of the immediate family of an officer in
full-time employment of the Company.
"INTERESTED STOCKHOLDER LAW" means the provisions of the MGCL (Sections
3-601 through 3-604) that place restrictions on transactions between Maryland
corporations and stockholders who have acquired 10% or more of a corporation's
stock.
"INTERESTED STOCKHOLDERS" means, in accordance with the MGCL, any person who
owns 10% or more of the voting power of a corporation's shares.
"IRS" means the Internal Revenue Service.
"LIBOR" means the London Interbank Offered Rate.
"MERGED TRUSTS" means Trust IV, Trust VI and Trust VII all of which were
merged into the Company on February 23, 1996.
"MERGER" means the merger of Trusts IV, VI and VII into the Company in
accordance with the Merger Agreement and applicable law.
"MERGER AGREEMENT" means the Amended and Restated Agreement and Plan of
Merger dated as of November 10, 1995 among the Merged Trusts and the Company.
"MERGER WARRANTS" means the warrants to purchase shares of Common Stock to
be issued by the Company to the holders of Trust VI common stock and Trust VII
common stock in connection with the Merger.
"MORTGAGE LOAN" means the Loan Administration Agreement between the
Prudential Insurance Company of America and the Company, as amended.
"MGCL" means the Maryland General Corporation Law, as amended from time to
time.
"NYSE" means the New York Stock Exchange.
"ORGANIZATIONAL DOCUMENTS" means the Charter and Bylaws.
"OTR" means OTR, an Ohio general partnership acting on behalf of and as
nominee for The State Teachers Retirement Board of Ohio.
"OWNERSHIP LIMIT" means the restriction contained in the Charter providing
that, subject to certain exceptions, no holder may own, or be deemed to own by
virtue of the attribution provisions of the Code, more than 8.5% of the lesser
of the number or value of the outstanding shares of any class of the Company's
stock.
"PREFERRED STOCK" means all series of preferred stock of the Company.
"PREFERRED STOCK PRIVATE PLACEMENT" means the private placement of shares of
the Series B Preferred Stock to Ameritech and OTR.
"PROHIBITED OWNER" means the person who would otherwise be considered the
owner of Shares-in-Trust had such shares not been transferred to a trustee
because such owner violated the Ownership Limit.
"PROPERTIES" means all of the properties owned by the Company.
"PROSPECTUS" means this prospectus.
"RECAPITALIZATION" means the May 31, 1995 closing of the transactions under
the stock purchase agreements between Hunt and each of the Merged Trusts and the
stock purchase agreements between USAA and each of the Merged Trusts, and the
concurrent restructuring or retirement of the Trusts' indebtedness.
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"REFINANCING" means (i) the retirement of certain Trust indebtedness that
took place when the Consolidation Transactions closed using the net proceeds of
the Preferred Stock Private Placement and (ii) the availability of funds under
the Unsecured Credit Facility.
"REIT" means a real estate investment trust meeting the requirements of
Sections 856 through 860 of the Code.
"REIT TAXABLE INCOME" means taxable income of a REIT, computed as if it were
an ordinary corporation, with certain modifications.
"RULE 144" means Rule 144 adopted by the SEC under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES A PREFERRED STOCK" means the Series A Preferred Stock, par value
$.001 per share of the Company that was redeemed or canceled in the Merger.
"SERIES B PREFERRED STOCK" means the Series B Preferred Stock, par value
$.001 per share, of the Company issued in the Preferred Stock Private Placement.
"SHARES-IN-TRUST" means shares of Equity Stock (including warrants or
options to acquire Equity Stock) that would be automatically transferred to a
trustee for the benefit of a charitable beneficiary because they would cause a
person to be treated as owning Equity Stock in violation of the Company's
Ownership Limit.
"STOCK PLAN" means the Amended and Restated Employee and Director Incentive
Stock Plan of the Company.
"TRUST 83" means Meridian Point Realty Trust '83, a California business
trust.
"TRUST IV" means Meridian Point Realty Trust IV Co., a Missouri corporation
that merged into the Company on February 23, 1996.
"TRUST VI" means Meridian Point Realty Trust VI Co., a Missouri corporation
that merged into the Company on February 23, 1996.
"TRUST VII" means Meridian Point Realty Trust VII Co., a Missouri
corporation that merged into the Company on February 23, 1996.
"TRUSTS" means Trust VI, Trust VI, Trust VII and Trust 83, collectively.
"USAA" means USAA Real Estate Company, a Delaware corporation which is an
indirect, wholly-owned subsidiary of United Services Automobile Association, a
reciprocal interinsurance exchange formed under the Texas Insurance Code.
"USAA OPTION" means the option USAA granted to the Company to purchase
certain industrial property located in Lakeland, Florida and the right of first
refusal to purchase certain land and improvements located in Chicago, Illinois.
"USAA WARRANT" means the warrant to purchase shares of Common Stock that the
Company issued to USAA as consideration for the USAA Option.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN A PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. NEITHER THIS PROSPECTUS NOR ANY
PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY SUCH
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT ANY INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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Available Information..................................................... 2
Incorporation by Reference................................................ 2
The Company............................................................... 4
Use of Proceeds........................................................... 4
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.......... 4
Description of Debt Securities............................................ 5
Description of Stock...................................................... 18
Description of Warrants................................................... 25
Selling Stockholders...................................................... 27
Plan of Distribution...................................................... 28
Certain Provisions of Maryland Law and of the Charter and Bylaws.......... 30
Federal Income Tax Considerations......................................... 35
Experts................................................................... 45
Legal Matters............................................................. 45
Glossary.................................................................. 46
</TABLE>
[LOGO]
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
---------------------
PROSPECTUS
---------------------
DECEMBER , 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the securities registered hereby, which will be
borne by the Company:
<TABLE>
<S> <C>
SEC registration fee............................................ $ 181,818
Printing and duplicating expenses............................... 125,000
Legal fees and expenses......................................... 150,000
Blue sky fees and expenses (including legal fees)............... 25,000
Accounting fees and expenses.................................... 100,000
Rating agency fees.............................................. 225,000
Trustee and transfer agent fees (including counsel fees)........ 50,000
Miscellaneous expenses.......................................... 93,182
---------
Total....................................................... $1,000,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF TRUSTEES AND OFFICERS
The Maryland General Corporation Law ("MGCL") permits a Maryland corporation
to include in its charter a provision limiting the liability of its directors
and officers to the corporation and its stockholders for money damages except
for liability resulting from (a) actual receipt of improper benefit or profit in
money, property or services or (b) active and deliberate dishonesty established
by a final judgment as being material to the cause of action. The Company's
Charter (the "Charter") contains such a provision which eliminates such
liabilities to the maximum extent permitted by Maryland law.
The MGCL requires a corporation (unless its charter provides otherwise,
which the Charter does not) to indemnify a director or officer who has been
successful on the merits or otherwise, in defense of any proceeding to which he
is made a party by reason of his service in that capacity. The MGCL permits a
corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service in those or other capacities unless it
is established that (a) the act or omission of the director or officer was
material to the matter giving rise to the proceeding and (i) was committed in
bad faith or (ii) was the result of an active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of a criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission was
unlawful. However, under the MGCL, a Maryland corporation may not indemnify for
any adverse judgment in a suit by or in the right of a corporation. In addition,
the MGCL requires the Company, as a condition to advancing expenses, to obtain
(a) a written affirmation by the director or officer of his good faith belief
that he has met the standard of conduct necessary for indemnification by the
Company as authorized by the Company's bylaws and (b) a written statement by or
on his behalf to repay the amount paid or reimbursed by the Company if it shall
ultimately be determined that the standard of conduct was not met.
The Charter obligates the Company to the maximum extent permitted by
Maryland law to indemnify and to pay or reimburse reasonable expenses in advance
of final disposition of a proceeding to (a) any present or former director or
officer of the Company or (b) any individual who, while a director of the
Company and at the request of the Company, serves or has served as a director,
officer, partner or trustee of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise from and against any claim or
liability which such person may become subject or which such person may incur by
reason of his or her status as a current or former director or officer of the
Company. The Charter also
II-1
<PAGE>
permits the Company to indemnify and advance expenses to any person who served a
predecessor of the Company in any of the capacities described above and to any
employee or agent of the Company or a predecessor of the Company.
The Company has entered into indemnification agreements with each of its
officers and directors. The indemnification agreements require, among other
matters, that the Company indemnify its executive officers and directors to the
fullest extent permitted by law and advance to the officers all related
expenses, subject to reimbursement, if it is subsequently determined that
indemnification is not permitted. Under these agreements, the Company must also
indemnify and advance all expenses incurred by executive officers and directors
seeking to enforce their rights under the indemnification agreements and may
cover executive officers and directors under the Company's directors' and
officers' liability insurance. Although the indemnification agreement offers
substantially the same scope of coverage afforded by law, it provides greater
assurance to directors and executive officers that indemnification will be
available, because, as a contract, it cannot be modified unilaterally in the
future by the Board of Directors of the Company or its stockholders to eliminate
the rights it provides.
It is the position of the SEC that indemnification of directors and officers
for liability under the Securities Act is against public policy and
unenforceable pursuant to Section 14 of the Securities Act.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ --------------------------------------------------------------------------
<S> <C> <C>
1.1+ -- Underwriting Agreement.
4.1 -- The Company's Third Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-11, Registration No. 333-02322).
4.2 -- Second Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997.
4.3 -- Amendment to Second Amended and Restated Bylaws adopted January 26, 1996
(incorporated by reference to Exhibit 3.2 to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1997.
4.4 -- Second Amendment to Second Amended and Restated Bylaws adopted September
17, 1997 (incorporated by reference to Exhibit 3.3 to the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1997).
4.5 -- Form of Certificate of Common Stock, par value $.001 per share, of the
Company (incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-11, Registration No. 333-02322).
4.6** -- Form of Indenture.
4.7+ -- Form of Senior Debt Security.
4.8+ -- Form of Subordinated Debt Security.
4.9+ -- Form of Deposit Agreement.
4.10+ -- Form of Depositary Receipt.
4.11+ -- Form of Warrant Agreement.
4.12+ -- Form of Warrant Certificate.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ --------------------------------------------------------------------------
<S> <C> <C>
4.13 -- Amended and Restated Investor Rights Agreement dated as of February 23,
1996 by and among the Company, Hunt, USAA, Ameritech and OTR
(incorporated by reference to Exhibit 10.5 to the Company's Registration
Statement on Form S-11, Registration No. 333-02322)
4.14 -- Registration Rights Agreement dated September 24, 1997, by and among the
Company, Prudential, Strategic Performance Fund-II, Inc. and The
Prudential Variable Contract Real Property Partnership (incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997).
4.15 -- Amended and Restated Registration Rights Agreement dated September 24,
1997, by and between the Company and Prudential on behalf of certain
insurance company separate accounts (incorporated by reference to
Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997).
4.16 -- Registration Rights Agreement dated September 30, 1997, between the
Company and Ameritech (incorporated by reference to Exhibit 10.6 to the
Company's Quarterly Report on Form 10-Q for the period ended September
30, 1997).
5* -- Opinion of Ballard Spahr Andrews & Ingersoll
8** -- Opinion of Vinson & Elkins L.L.P. regarding certain tax matters.
12** -- Computation of consolidated ratios of earnings to combined fixed charges
and Preferred Stock dividends.
23.1** -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Ballard Spahr Andrews & Ingersoll (included in the opinion
filed as Exhibit 5 to this Registration Statement).
23.3 -- Consent of Vinson & Elkins L.L.P. (included in the opinion filed as
Exhibit 8 to this Registration Statement).
24.0 -- Power of Attorney of directors and officers (included in the signature
pages to this Registration Statement).
25.0+ -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of
trustee.
</TABLE>
- ------------------------
* Previously filed.
** Filed herewith.
+ To be filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) 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;
(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
II-3
<PAGE>
Registration Statement; notwithstanding the foregoing, any increase or
decrease in the 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 a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange
Act that are incorporated by reference in the Registration Statement.
(b) 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.
(c) 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 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.
The undersigned registrant hereby undertakes 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to Trustees, officers and controlling persons of the registrant
pursuant to the provisions set forth or described in Item 15 of this
Registration Statement, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a Trustee, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
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 amendment no. 1 to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of San Francisco, California, on December
10, 1997.
<TABLE>
<S> <C> <C>
MERIDIAN INDUSTRIAL TRUST, INC.
By: /s/ ALLEN J. ANDERSON
-----------------------------------------
Allen J. Anderson
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 1 to the registration statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------------------------------------------- ------------------------------------------- ----------------------
<C> <S> <C>
/s/ ALLEN J. ANDERSON Chairman and Chief Executive Officer December 10, 1997
----------------------------------- (Principal Executive Officer)
Allen J. Anderson
/s/ MILTON K. REEDER President (Principal Financial Officer) December 10, 1997
-----------------------------------
Milton K. Reeder
/s/ JAIME SUAREZ Treasurer and Controller (Controller December 10, 1997
----------------------------------- and Principal Accounting Officer)
Jaime Suarez
/s/ C.E. CORNUTT* Director December 10, 1997
-----------------------------------
C.E. "Doc" Cornutt
/s/ T. PATRICK DUNCAN* Director December 10, 1997
-----------------------------------
T. Patrick Duncan
/s/ PETER O. HANSON* Director December 10, 1997
-----------------------------------
Peter O. Hanson
/s/ JOHN S. MOODY* Director December 10, 1997
-----------------------------------
John S. Moody
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------------------------------------------- ------------------------------------------- ----------------------
/s/ KENNETH N. STENSBY* Director December 10, 1997
-----------------------------------
Kenneth N. Stensby
<C> <S> <C>
/s/ LEE W. WILSON* Director December 10, 1997
-----------------------------------
Lee W. Wilson
*By: /s/ ALLEN J. ANDERSON
-------------------------------
Allen J. Anderson
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ --------------------------------------------------------------------------
<S> <C> <C>
1.1+ -- Underwriting Agreement.
4.1 -- The Company's Third Amended and Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-11, Registration No. 333-02322).
4.2 -- Second Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997.
4.3 -- Amendment to Second Amended and Restated Bylaws adopted January 26, 1996
(incorporated by reference to Exhibit 3.2 to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1997.
4.4 -- Second Amendment to Second Amended and Restated Bylaws adopted September
17, 1997 (incorporated by reference to Exhibit 3.3 to the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1997).
4.5 -- Form of Certificate of Common Stock, par value $.001 per share, of the
Company (incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-11, Registration No. 333-02322).
4.6** -- Form of Indenture.
4.7+ -- Form of Senior Debt Security.
4.8+ -- Form of Subordinated Debt Security.
4.9+ -- Form of Deposit Agreement.
4.10+ -- Form of Depositary Receipt.
4.11+ -- Form of Warrant Agreement.
4.12+ -- Form of Warrant Certificate.
4.13 -- Amended and Restated Investor Rights Agreement dated as of February 23,
1996 by and among the Company, Hunt, USAA, Ameritech and OTR
(incorporated by reference to Exhibit 10.5 to the Company's Registration
Statement on Form S-11, Registration No. 333-02322).
4.14 -- Registration Rights Agreement dated September 24, 1997, by and among the
Company, Prudential, Strategic Performance Fund-II, Inc. and The
Prudential Variable Contract Real Property Partnership (incorporated by
reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1997).
4.15 -- Amended and Restated Registration Rights Agreement dated September 24,
1997, by and between the Company and Prudential on behalf of certain
insurance company separate accounts (incorporated by reference to
Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997).
4.16 -- Registration Rights Agreement dated September 30, 1997, between the
Company and Ameritech (incorporated by reference to Exhibit 10.6 to the
Company's Quarterly Report on Form 10-Q for the period ended September
30, 1997).
5* -- Opinion of Ballard Spahr Andrews & Ingersoll
8** -- Opinion of Vinson & Elkins L.L.P. regarding certain tax matters.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ --------------------------------------------------------------------------
<S> <C> <C>
12** -- Computation of consolidated ratios of earnings to combined fixed charges
and Preferred Stock dividends.
23.1** -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Ballard Spahr Andrews & Ingersoll (included in the opinion
filed as Exhibit 5 to this Registration Statement).
23.3 -- Consent of Vinson & Elkins L.L.P. (included in the opinion filed as
Exhibit 8 to this Registration Statement).
24.0 -- Power of Attorney of directors and officers (included in the signature
pages to this Registration Statement).
25.0+ -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of
trustee.
</TABLE>
- ------------------------
* Previously filed.
** Filed herewith.
+ To be filed.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
MERIDIAN INDUSTRIAL TRUST, INC.
AND
-------------------------------------------------------,
AS TRUSTEE
----------
INDENTURE
DATED AS OF , 1997
-----------------
----------
DEBT SECURITIES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
Section 1.01 Certain Terms Defined. . . . . . . . . . . . . . . . . . . . . .1
Section 1.02 Incorporation by Reference of Trust Indenture Act. . . . . . . 10
Section 1.03 Rules of Construction. . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 2
DEBT SECURITIES
Section 2.01 Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.02 Form of Trustee's Certificate of Authentication. . . . . . . . 12
Section 2.03 Principal Amount; Issuable in Series . . . . . . . . . . . . . 12
Section 2.04 Execution of Debt Securities . . . . . . . . . . . . . . . . . 15
Section 2.05 Authentication and Delivery of Debt Securities . . . . . . . . 16
Section 2.06 Denomination of Debt Securities. . . . . . . . . . . . . . . . 18
Section 2.07 Registration of Transfer and Exchange. . . . . . . . . . . . . 18
Section 2.08 Temporary Debt Securities. . . . . . . . . . . . . . . . . . . 20
Section 2.09 Mutilated, Destroyed, Lost or Stolen Debt Securities . . . . . 21
Section 2.10 Cancellation of Surrendered Debt Securities. . . . . . . . . . 22
Section 2.11 Provisions of the Indenture and Debt Securities for the Sole
Benefit of the Parties and the Holders . . . . . . . . . . . . 22
Section 2.12 Payment of Interest; Interest Rights Preserved . . . . . . . . 23
Section 2.13 Securities Denominated in Foreign Currencies . . . . . . . . . 24
Section 2.14 Wire Transfers . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.15 Securities Issuable in the Form of a Global Security . . . . . 25
Section 2.16 Medium Term Securities . . . . . . . . . . . . . . . . . . . . 27
Section 2.17 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.18 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 3
REDEMPTION OF DEBT SECURITIES
Section 3.01 Applicability of Article . . . . . . . . . . . . . . . . . . . 30
Section 3.02 Tax Redemption; Special Tax Redemption . . . . . . . . . . . . 30
Section 3.03 Notice of Redemption; Selection of Debt Securities . . . . . . 30
Section 3.04 Payment of Debt Securities Called for Redemption . . . . . . . 32
Section 3.05 Mandatory and Optional Sinking Funds . . . . . . . . . . . . . 33
Section 3.06 Redemption of Debt Securities for Sinking Fund . . . . . . . . 34
(i)
<PAGE>
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
Section 4.01 Payment of Principal of, and Premium, If Any, and Interest
on, Debt Securities. . . . . . . . . . . . . . . . . . . . . . 35
Section 4.02 Maintenance of Offices or Agencies for Registration of
Transfer, Exchange and Payment of Debt Securities. . . . . . . 36
Section 4.03 Appointment to Fill a Vacancy in the Office of Trustee . . . . 37
Section 4.04 Duties of Paying Agents, etc.. . . . . . . . . . . . . . . . . 37
Section 4.05 Statement by Officers as to Default. . . . . . . . . . . . . . 38
Section 4.06 Payment of Additional Interest . . . . . . . . . . . . . . . . 38
Section 4.07 Further Instruments and Acts . . . . . . . . . . . . . . . . . 40
Section 4.08 Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.09 Maintenance of Properties. . . . . . . . . . . . . . . . . . . 40
Section 4.10 Payment of Taxes and Other Claims. . . . . . . . . . . . . . . 40
Section 4.11 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . 41
Section 4.12 Limitation on Sale and Leaseback Transactions. . . . . . . . . 41
ARTICLE 5
HOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 5.01 Company to Furnish Trustee Information as to Names and
Addresses of Holders; Preservation of Information. . . . . . . 42
Section 5.02 Communications to Holders. . . . . . . . . . . . . . . . . . . 43
Section 5.03 Reports by Company . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.04 Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.05 Record Dates for Action by Holders . . . . . . . . . . . . . . 44
ARTICLE 6
REMEDIES OF THE TRUSTEE AND
HOLDERS IN EVENT OF DEFAULT
Section 6.01 Events of Default. . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.02 Collection of Indebtedness by Trustee, etc.. . . . . . . . . . 48
Section 6.03 Application of Moneys Collected by Trustee . . . . . . . . . . 49
Section 6.04 Limitation on Suits by Holders . . . . . . . . . . . . . . . . 50
Section 6.05 Remedies Cumulative; Delay or Omission in Exercise of
Rights Not a Waiver of Default . . . . . . . . . . . . . . . . 51
Section 6.06 Rights of Holders of Majority in Principal Amount of
Debt Securities to Direct Trustee and to Waive Default . . . . 51
Section 6.07 Trustee to Give Notice of Defaults Known to It, but May
Withhold Such Notice in Certain Circumstances. . . . . . . . . 52
(ii)
<PAGE>
Section 6.08 Requirement of an Undertaking To Pay Costs in Certain
Suits under the Indenture or Against the Trustee . . . . . . . 52
ARTICLE 7
CONCERNING THE TRUSTEE
Section 7.01 Certain Duties and Responsibilities. . . . . . . . . . . . . . 52
Section 7.02 Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . 54
Section 7.03 Trustee Not Liable for Recitals in Indenture or in Debt
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.04 Trustee, Paying Agent or Registrar May Own Debt Securities . . 55
Section 7.05 Moneys Received by Trustee to Be Held in Trust . . . . . . . . 55
Section 7.06 Compensation and Reimbursement . . . . . . . . . . . . . . . . 55
Section 7.07 Right of Trustee to Rely on an Officers' Certificate Where
No Other Evidence Specifically Prescribed. . . . . . . . . . . 56
Section 7.08 Separate Trustee; Replacement of Trustee . . . . . . . . . . . 56
Section 7.09 Successor Trustee by Merger. . . . . . . . . . . . . . . . . . 58
Section 7.10 Eligibility; Disqualification. . . . . . . . . . . . . . . . . 58
Section 7.11 Preferential Collection of Claims Against Company. . . . . . . 58
Section 7.12 Compliance with Tax Laws . . . . . . . . . . . . . . . . . . . 58
ARTICLE 8
CONCERNING THE HOLDERS
Section 8.01 Evidence of Action by Holders. . . . . . . . . . . . . . . . . 59
Section 8.02 Proof of Execution of Instruments and of Holding of Debt
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8.03 Who May Be Deemed Owner of Debt Securities . . . . . . . . . . 60
Section 8.04 Instruments Executed by Holders Bind Future Holders. . . . . . 60
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.01 Purposes for Which Supplemental Indenture May Be Entered
into Without Consent of Holders. . . . . . . . . . . . . . . . 61
Section 9.02 Modification of Indenture with Consent of Holders of Debt
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.03 Effect of Supplemental Indentures. . . . . . . . . . . . . . . 65
Section 9.04 Debt Securities May Bear Notation of Changes by
Supplemental Indentures. . . . . . . . . . . . . . . . . . . . 65
Section 9.05 Payment for Consent. . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE 10
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 10.01 Consolidations and Mergers of the Company. . . . . . . . . . . 66
(iii)
<PAGE>
Section 10.02 Rights and Duties of Successor Corporation . . . . . . . . . . 66
ARTICLE 11
SATISFACTION AND DISCHARGE;
INDENTURE; DEFEASANCE; UNCLAIMED MONEYS
Section 11.01 Applicability of Article . . . . . . . . . . . . . . . . . . . 67
Section 11.02 Satisfaction and Discharge of Indenture; Defeasance. . . . . . 67
Section 11.03 Conditions of Defeasance . . . . . . . . . . . . . . . . . . . 68
Section 11.04 Application of Trust Money . . . . . . . . . . . . . . . . . . 69
Section 11.05 Repayment to Company . . . . . . . . . . . . . . . . . . . . . 70
Section 11.06 Indemnity for U.S. Government Obligations. . . . . . . . . . . 70
Section 11.07 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE 12
SUBORDINATION OF DEBT SECURITIES
Section 12.01 Applicability of Article; Agreement To Subordinate . . . . . . 70
Section 12.02 Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . 70
Section 12.03 Default on Senior Indebtedness . . . . . . . . . . . . . . . . 71
Section 12.04 Acceleration of Payment of Debt Securities . . . . . . . . . . 72
Section 12.05 When Distribution Must Be Paid Over. . . . . . . . . . . . . . 72
Section 12.06 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 12.07 Relative Rights. . . . . . . . . . . . . . . . . . . . . . . . 72
Section 12.08 Subordination May Not Be Impaired by Company . . . . . . . . . 73
Section 12.09 Rights of Trustee and Paying Agent . . . . . . . . . . . . . . 73
Section 12.10 Distribution or Notice to Representative . . . . . . . . . . . 73
Section 12.11 Article Not to Prevent Defaults or Limit Right to
Accelerate . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 12.12 Trust Moneys Not Subordinated. . . . . . . . . . . . . . . . . 73
Section 12.13 Trustee Entitled to Rely . . . . . . . . . . . . . . . . . . . 73
Section 12.14 Trustee to Effectuate Subordination. . . . . . . . . . . . . . 74
Section 12.15 Trustee Not Fiduciary for Holders of Senior Indebtedness . . . 74
Section 12.16 Reliance by Holders of Senior Indebtedness on
Subordination Provisions . . . . . . . . . . . . . . . . . . . 74
ARTICLE 13
MISCELLANEOUS PROVISIONS
Section 13.01 Successors and Assigns of Company Bound by Indenture . . . . . 75
Section 13.02 Acts of Board, Committee or Officer of Successor
Company Valid. . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 13.03 Required Notices or Demands. . . . . . . . . . . . . . . . . . 75
Section 13.04 Indenture and Debt Securities to Be Construed in
Accordance with the Laws of the State of New York. . . . . . . 76
Section 13.05 Officers' Certificate and Opinion of Counsel to Be
Furnished upon Application or Demand by the Company. . . . . . 76
(iv)
<PAGE>
Section 13.06 Payments Due on Legal Holidays . . . . . . . . . . . . . . . . 76
Section 13.07 Provisions Required by Trust Indenture Act to Control. . . . . 77
Section 13.08 Computation of Interest on Debt Securities . . . . . . . . . . 77
Section 13.09 Rules by Trustee, Paying Agent and Registrar . . . . . . . . . 77
Section 13.10 No Recourse Against Others . . . . . . . . . . . . . . . . . . 77
Section 13.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 13.12 Effect of Headings . . . . . . . . . . . . . . . . . . . . . . 77
Section 13.13 Indenture May Be Executed in Counterparts. . . . . . . . . . . 77
(v)
<PAGE>
INDENTURE dated as of __________, 1997, between Meridian Industrial
Trust, Inc., a corporation incorporated and existing under the laws of the
State of Maryland (hereinafter sometimes called the "Company"), and
____________________________________, a __________________ (hereinafter
sometimes called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures,
notes, bonds or other evidences of indebtedness to be issued in one or more
series unlimited as to principal amount (herein called the "Debt
Securities"), as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH
That in order to declare the terms and conditions upon which the Debt
Securities are authenticated, issued and delivered, and in consideration of
the premises, and of the purchase and acceptance of the Debt Securities by
the holders thereof, the Company and the Trustee covenant and agree with each
other, for the benefit of the respective Holders from time to time of the
Debt Securities or any series thereof, as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 CERTAIN TERMS DEFINED. The terms defined in this Section
1.01 (except as herein otherwise expressly provided or unless the context
otherwise requires) for all purposes of this Indenture and of any Indenture
supplemental hereto shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in
the Trust Indenture Act or which are by reference therein defined in the
Securities Act (except as herein otherwise expressly provided or unless the
context otherwise requires), shall have the meanings assigned to such terms
in the Trust Indenture Act and in the Securities Act as in force as of the
date of original execution of this Indenture.
"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 Person means the power to direct
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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.
"AUTHORIZED NEWSPAPER" means a newspaper in an official language of the
country of publication customarily published at least once a day, and
customarily published for at least five days in each calendar week, and of
general circulation in such city or cities specified pursuant to Section 2.03
with respect to the Debt Securities of any series. Where successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the same
city meeting the foregoing requirements and in each case on any business day
in such city.
"ATTRIBUTABLE DEBT" in respect of a Sale and Leaseback Transaction means,
at the time of determination, the then present value (discounted at the
actual rate of interest of such transaction) of the obligation of the lessee
for net rental payments during the remaining term of the lease included in
such Sale and Leaseback Transaction (including any period for which such
lease has been extended or may, at the option of the lessor, be extended).
"BANK INDEBTEDNESS" means any and all amounts payable under or in respect
of the Credit Agreement, as supplemented amended or modified from time to
time, including principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not a claim for post-filing
interest is allowed in such proceedings), fees, charges, expenses,
reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"BEARER HOLDER" means, with respect to any Bearer Security or Coupon, the
bearer thereof.
"BEARER SECURITY" means any Debt Security (with or without Coupons),
title to which passes by delivery only, but does not include any Coupons.
"BOARD OF DIRECTORS" means either the Board of Directors of the Company
or any duly authorized committee or subcommittee of such Board, except as the
context may otherwise require.
"BUSINESS DAY" means, when used with respect to any Place of Payment
specified pursuant to Section 2.03, any day that is not a Saturday, a Sunday
or a legal holiday or a day on which banking institutions or trust companies
in such Place of Payment are authorized or obligated by law to close, except
as otherwise specified pursuant to Section 2.03.
"CAPITAL STOCK" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests (including partnership interests) in (however designated) equity of
such Person, including any Preferred Stock, but excluding any debt securities
convertible into such equity.
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"COMMON STOCK" means the capital stock, par value $.001 per share, of the
Company, which stock is currently listed on the New York Stock Exchange.
"COMPANY" means Meridian Industrial Trust, Inc., a Maryland corporation,
and, subject to the provisions of Article 10, shall also include its
successors and assigns.
"COMPANY ORDER" means a written order of the Company, signed by its
Chairman of the Board, Vice Chairman, President or any Vice President and by
its Treasurer, Secretary, any Assistant Treasurer or any Assistant Secretary.
"CONSOLIDATED", when used with respect to any of the terms defined in
this Indenture, refers to such terms as reflected in a consolidation of the
accounts of the Company and its Subsidiaries in accordance with GAAP.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" or other similar term means the
office of the Trustee at which the corporate trust business of the Trustee
shall, at any particular time, be principally administered in the United
States of America, except that with respect to the presentation of Debt
Securities for payment or for registration of transfer and exchange, such
term shall also mean the office of the Trustee or the Trustee's agent in the
Borough of Manhattan, the city and state of New York, at which at any
particular time its corporate agency business shall be conducted.
"COUPON" means any interest coupon appertaining to any Bearer Security.
"COUPON SECURITY" means any Bearer Security authenticated and delivered
with one or more Coupons appertaining thereto.
"CREDIT AGREEMENT" means the Third Amended and Restated Revolving Credit
Agreement dated as of ___________, 1997, among the Company and Bank Boston,
N.A., as Agent, and the other banks thereto, as supplemented, amended or
modified from time to time.
"CURRENCY" means Dollars or Foreign Currency.
"DEBT SECURITY" or "DEBT SECURITIES" has the meaning stated in the first
recital of this Indenture and more particularly means any debt security or
debt securities, as the case may be, of any series authenticated and
delivered under this Indenture.
"DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"DEFAULTED INTEREST" has the meaning specified in Section 2.17.
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"DEPOSITARY" means, unless otherwise specified by the Company pursuant to
either Section 2.03 or 2.15, with respect to registered Debt Securities of
any series issuable or issued in whole or in part in the form of one or more
Global Securities, The Depository Trust Company, New York, New York, or any
successor thereto registered as a clearing agency under the Exchange Act or
other applicable statutes or regulations.
"DESIGNATED SENIOR INDEBTEDNESS" means (a) the Bank Indebtedness and (b)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $100
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of this Indenture and has been designated as
"Designated Senior Indebtedness" for purposes of this Indenture in an
Officers' Certificate received by the Trustee.
"DISQUALIFIED STOCK" of a Person means Redeemable Stock of such Person as
to which the maturity, mandatory redemption, conversion or exchange or
redemption at the option of the holder thereof occurs, or may occur, on or
prior to the first anniversary of the earliest Stated Maturity of the Debt
Securities.
"DOLLAR" or "$" means such currency of the United States as at the time
of payment is legal tender for the payment of public and private debts.
"DOLLAR EQUIVALENT" means, with respect to any monetary amount in a
Foreign Currency, at any time for the determination thereof, the amount of
Dollars obtained by converting such Foreign Currency involved in such
computation into Dollars at the spot rate for the purchase of Dollars with
the applicable Foreign Currency as quoted by ____________________________
(unless another comparable financial institution is designated by the
Company) in New York, New York at approximately 11:00 a.m. (New York time) on
the date two business days prior to such determination.
"EUROPEAN CURRENCY UNITS" has the meaning assigned to it from time to
time by the Council of the European Communities.
"EUROPEAN COMMUNITIES" means the European Economic Community, the
European Coal and Steel Community and the European Atomic Energy Community.
"EVENT OF DEFAULT" has the meaning specified in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FOREIGN CURRENCY" means a currency issued by the government of any
country other than the United States or a composite currency the value of
which is determined by reference to the values of the currencies of any group
of countries.
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<PAGE>
"FUNDED DEBT" means Indebtedness of the Company and its Significant
Subsidiaries, whether incurred, assumed or guaranteed, which by its terms
matures more than one year from the date of creation thereof, or which is
extendable or renewable at the sole option of the obligor so that it may
become payable more than one year from such date.
"GAAP" means generally accepted accounting principles in the United
States as in effect as of the date on which the Debt Securities of the
applicable series are issued, including those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting
profession. All ratios and computations based on GAAP contained in this
Indenture shall be computed in conformity with GAAP consistently applied.
"GLOBAL SECURITY" means with respect to any series of Debt Securities
issued hereunder, a Debt Security which is executed by the Company and
authenticated and delivered by the Trustee to the Depositary or pursuant to
the Depositary's instruction, all in accordance with this Indenture and any
Indentures supplemental hereto, or resolution of the Board of Directors and
set forth in an Officers' Certificate, which shall be registered in the name
of the Depositary or its nominee and which shall represent, and shall be
denominated in an amount equal to the aggregate principal amount of, all the
Outstanding Debt Securities of such series or any portion thereof, in either
case having the same terms, including, without limitation, the same original
issue date, date or dates on which principal is due and interest rate or
method of determining interest.
"GUARANTEE" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of
any other Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation of such
other Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(b) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness or other obligation of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part); PROVIDED,
HOWEVER, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"HOLDER," "HOLDER OF DEBT SECURITIES" or other similar terms means, with
respect to a Registered Security, the Registered Holder and, with respect to
a Bearer Security or a Coupon, the Bearer Holder.
"INCUR" means issue, assume, Guarantee, incur or otherwise become liable
for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed
5
<PAGE>
to be incurred by such Subsidiary at the time it becomes a Subsidiary. The
terms "Incurred", "Incurrence" and "Incurring" shall each have a correlative
meaning.
"INDEBTEDNESS" of any Person means, without duplication, notes, bonds,
debentures or other evidences of indebtedness for borrowed money and all
indebtedness under purchase money mortgages or other purchase money liens or
conditional sales or similar title retention agreements, in each case where
such indebtedness has been created, incurred, assumed or guaranteed by such
Person or where such person is otherwise liable therefor, and indebtedness
for borrowed money secured by any mortgage, pledge or other lien or
encumbrance upon property owned by such Person even though such Person has
not assumed or become liable for the payment of such indebtedness.
"INDENTURE" means this instrument as originally executed, or, if amended
or supplemented as herein provided, as so amended or supplemented and shall
include the form and terms of particular series of Debt Securities as
contemplated hereunder, whether or not a supplemental Indenture is entered
into with respect thereto.
"INTEREST" includes, when used with respect to a Bearer Security, any
additional interest payable on such Bearer Security pursuant to Section 3.02
or 4.06.
"LIEN" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or
other), or preference, priority or other security or similar agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any agreement to give or grant a Lien or any lease, conditional
sale or other title retention agreement having substantially the same
economic effect as any of the foregoing).
"NET TANGIBLE ASSETS" means the total amounts of assets (less
depreciation and valuation reserves and other reserves and items deductible
from gross book value of specific asset accounts under generally accepted
accounting principles) which under GAAP would be included on a balance sheet
after deducting therefrom (a) all liability items except Funded Debt and
stockholders' equity and (b) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, which in
each case would be so included on such balance sheet.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the
Board, the Vice Chairman, the President or any Vice President and by the
Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary of
the Company. Each such certificate shall include the statements provided for
in Section 13.05, if applicable.
"OPINION OF COUNSEL" means an opinion in writing signed by legal counsel
for the Company (which counsel may be an employee of the Company), or outside
counsel for the Company. Each such opinion shall include the statements
provided for in Section 13.05, if applicable.
6
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"ORIGINAL ISSUE DISCOUNT DEBT SECURITY" means any Debt 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 6.01.
"OUTSTANDING", when used with respect to any series of Debt Securities,
means, as of the date of determination, all Debt Securities of that series
theretofore authenticated and delivered under this Indenture, except:
(a) Debt Securities of that series theretofore canceled by the
Trustee or delivered to the Trustee for cancelation;
(b) Debt Securities of that series for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any paying agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
paying agent) for the Holders of such Debt Securities; PROVIDED, that, if
such Debt 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; and
(c) Debt Securities of that series which have been paid pursuant to
Section 2.09 or in exchange for or in lieu of which other Debt Securities
have been authenticated and delivered pursuant to this Indenture, other
than any such Debt Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Debt Securities
are held by a bona fide purchaser in whose hands such Debt Securities are
valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debt Securities of any series have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Debt Securities owned by the Company or any other obligor upon the
Debt Securities or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Debt Securities which the Trustee knows to be so owned shall be so
disregarded. Debt Securities so owned 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 Debt
Securities and that the pledgee is not the Company or any other obligor upon
the Debt Securities or an Affiliate of the Company or of such other obligor.
In determining whether the Holders of the requisite principal amount of
Outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, the principal amount of an
Original Issue Discount Debt Security that shall be deemed to be Outstanding
for such purposes shall be the amount of the principal thereof that would be
due and payable as of the date of such determination upon a declaration of
acceleration of the maturity thereof pursuant to Section 6.01. In determining
whether the Holders of the requisite principal amount of the Outstanding Debt
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<PAGE>
Securities of any series have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, the principal amount of a
Debt Security denominated in one or more foreign currencies or currency units
that shall be deemed to be Outstanding for such purposes shall be the Dollar
Equivalent, determined in the manner provided as contemplated by Section 2.03
on the date of original issuance of such Debt Security, of the principal
amount (or, in the case of any Original Issue Discount Security, the Dollar
Equivalent on the date of original issuance of such Security of the amount
determined as provided in the preceding sentence above) of such Debt Security.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"PLACE OF PAYMENT" means, when used with respect to the Debt Securities
of any series, the place or places where the principal of, and premium, if
any, and interest on, the Debt Securities of that series are payable as
specified pursuant to Section 2.03.
"PREFERRED STOCK", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"REDEEMABLE STOCK" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any
event (a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (b) is convertible or exchangeable for Indebtedness
(other than Preferred Stock) or Disqualified Stock or (c) is redeemable at
the option of the holder thereof, in whole or in part.
"REGISTERED HOLDER" means the Person in whose name a Registered Security
is registered in the Debt Security Register (as defined in Section 2.07(a)).
"REGISTERED SECURITY" means any Debt Security registered as to principal
and interest in the Debt Security Register (as defined in Section 2.07(a)).
"REGISTRAR" has the meaning set forth in Section 2.07(a).
"REPRESENTATIVE" means the trustee, agent or representative (if any) for
an issue of Senior Indebtedness.
"RESPONSIBLE OFFICER", when used with respect to the Trustee, means any
Account Manager or any officer within the Institutional Trust Group of the
Trustee, including any Vice President, any Second Vice President, any trust
officer or any other officer of the Trustee performing functions similar to
those performed by the persons who at the time shall be such officers, and
any other officer
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of the Trustee to whom corporate trust matters are referred because of his
knowledge of and familiarity with the particular subject.
"SALE AND LEASEBACK TRANSACTION" has the meaning set forth in Section
4.12.
"SECURED INDEBTEDNESS" means any Indebtedness of the Company secured by a
Lien.
"SECURITIES ACT" means the Securities Act of 1933.
"SENIOR FUNDED DEBT" means all Funded Debt, except Funded Debt the
payment of which is subordinated to the payment of the Debt Securities.
"SENIOR INDEBTEDNESS" means, as to any series of Debt Securities
subordinated pursuant to the provisions of Article 12, (a) Bank Indebtedness,
and (b) any other Indebtedness of the Company identified as Senior
Indebtedness in the resolution of the Board of Directors and accompanying
Officers' Certificate or supplemental Indenture setting forth the terms,
including as to Subordination, of such series.
"SIGNIFICANT SUBSIDIARY" means a Subsidiary of any Person that would be a
"significant subsidiary" as defined in Rule 405 under the Securities Act as
in effect on the date of this Indenture.
"STATED MATURITY" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"SUBSIDIARY" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total
voting power of shares of Capital Stock 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 (a) such Person, (b) such Person and one or more Subsidiaries
of such Person or (c) one or more Subsidiaries of such Person.
"TRUSTEE" initially means ____________________________ and any other
Person or Persons appointed as such from time to time pursuant to Section
7.08, and, subject to the provisions of Article 7, includes its or their
successors and assigns. If at any time there is more than one such Person,
"Trustee" as used with respect to the Debt Securities of any series shall
mean the Trustee with respect to the Debt Securities of that series.
"TRUST INDENTURE ACT" (except as herein otherwise expressly provided)
means the Trust Indenture Act of 1939 as in force at the date of this
Indenture as originally executed and, to the extent required by law, as
amended after the date of this Indenture as originally executed.
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<PAGE>
"UNITED STATES" means 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 ALIEN" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more members of which is, for United States
Federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are (a) direct
obligations of the United States of America 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, the payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof.
"YIELD TO MATURITY" means the yield to maturity, calculated at the time
of issuance of a series of Debt Securities, or, if applicable, at the most
recent redetermination of interest on such series and calculated in
accordance with accepted financial practice.
Section 1.02 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This
Indenture is subject to the mandatory provisions of the Trust Indenture Act
which are incorporated by reference in and made a part of this Indenture.
The following Trust Indenture Act terms have the following meanings:
"indenture securities" means the Debt Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the Debt Securities.
All other Trust Indenture Act terms used in this Indenture that are
defined by the Trust Indenture Act, reference to another statute or defined
by rules of the Securities and Exchange Commission have the meanings assigned
to them by such definitions.
Section 1.03 RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
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(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the plural
include the singular;
(f) if the applicable series of Debt Securities are subordinated
pursuant to Article 12, unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its nature
as unsecured Indebtedness;
(g) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in accordance
with GAAP; and
(h) the principal amount of any Preferred Stock shall be the greater of
(i) the maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock.
ARTICLE 2
DEBT SECURITIES
Section 2.01 FORMS GENERALLY. The Debt Securities and Coupons, if any,
of each series shall be in substantially the form established without the
approval of any Holder by or pursuant to a resolution of the Board of
Directors or in one or more Indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as the Company may deem appropriate (and, if not contained in
a supplemental Indenture entered into in accordance with Article 9, as are
not prohibited by the provisions of this Indenture) or as may be required or
appropriate to comply with any law or with any rules made pursuant thereto or
with any rules of any securities exchange on which such series of Debt
Securities may be listed, or to conform to general usage, or as may,
consistently herewith, be determined by the officers executing such Debt
Securities and Coupons, as evidenced by their execution of the Debt
Securities and Coupons.
The definitive Debt Securities of each series and Coupons, if any, shall
be printed, lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the officers executing
such Debt Securities and Coupons, as evidenced by their execution of such
Debt Securities and Coupons.
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Each Bearer Security and each Coupon shall bear a legend substantially to
the following effect: "Any United States Person who holds this obligation
will be subject to limitations under the United States Federal income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of
the Internal Revenue Code."
Section 2.02 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The
Trustee's Certificate of Authentication on all Debt Securities authenticated
by the Trustee shall be in substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
,
As Trustee
By
----------------------------------------
Authorized Signature
Section 2.03 PRINCIPAL AMOUNT; ISSUABLE IN SERIES. The aggregate
principal amount of Debt Securities which may be issued, executed,
authenticated, delivered and outstanding under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There shall be
established, without the approval of any Holders, in or pursuant to a
resolution of the Board of Directors and set forth in an Officers'
Certificate, or established in one or more Indentures supplemental hereto,
prior to the issuance of Debt Securities of any series any or all of the
following:
(a) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of the series from all other Debt Securities);
(b) any limit upon the aggregate principal amount of the Debt Securities
of the series which may be authenticated and delivered under this Indenture
(except for Debt Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Debt Securities of the
series pursuant to this Article 2);
(c) the date or dates on which the principal and premium, if any, of the
Debt Securities of the series are payable;
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(d) the rate or rates (which may be fixed or variable) at which the Debt
Securities of the series shall bear interest, if any, or the method of
determining such rate or rates, the date or dates from which such interest shall
accrue, the interest payment dates on which such interest shall be payable, or
the method by which such date will be determined, in the case of Registered
Securities, the record dates for the determination of Holders thereof to whom
such interest is payable; and the basis upon which interest will be calculated
if other than that of a 360-day year of twelve thirty-day months;
(e) the place or places, if any, in addition to or instead of the
corporate trust office of the Trustee (in the case of Registered Securities) or
the principal London office of the Trustee (in the case of Bearer Securities),
where the principal of, and premium, if any, and interest on, Debt Securities of
the series shall be payable;
(f) the price or prices at which, the period or periods within which and
the terms and conditions upon which Debt Securities of the series may be
redeemed, in whole or in part, at the option of the Company or otherwise;
(g) whether Debt Securities of the series are to be issued as Registered
Securities or Bearer Securities or both, and, if Bearer Securities are to be
issued, whether Coupons will be attached thereto, whether Bearer Securities of
the series may be exchanged for Registered Securities of the series and the
circumstances under which and the places at which any such exchanges, if
permitted, may be made;
(h) if any Debt Securities of the series are to be issued as Bearer
Securities or as one or more Global Securities representing individual Bearer
Securities of the series, (i) whether the provisions of Sections 3.02 and 4.06
or other provisions for payment of additional interest or tax redemptions shall
apply and, if other provisions shall apply, such other provisions; (ii) whether
interest in respect of any portion of a temporary Bearer Security of the series
(delivered pursuant to Section 2.08) payable in respect of any interest payment
date prior to the exchange of such temporary Bearer Security for definitive
Bearer Securities of the series shall be paid to any clearing organization with
respect to the portion of such temporary Bearer Security held for its account
and, in such event, the terms and conditions (including any certification
requirements) upon which any such interest payment received by a clearing
organization will be credited to the Persons entitled to interest payable on
such interest payment date; and (iii) the terms upon which a temporary Bearer
Security may be exchanged for one or more definitive Bearer Securities of the
series;
(i) the obligation, if any, of the Company to redeem, purchase or repay
Debt Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, and the price or prices at
which and the period or periods within which and the terms and conditions upon
which Debt Securities of the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligations;
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(j) the terms, if any, upon which the Debt Securities of the series may be
convertible into or exchanged for Common Stock, Preferred Stock (which may be
represented by depositary shares), other Debt Securities or warrants for Common
Stock, Preferred Stock or Indebtedness or other securities of any kind of the
Company or any other obligor and the terms and conditions upon which such
conversion or exchange shall be effected, including the initial conversion or
exchange price or rate, the conversion or exchange period and any other
provision in addition to or in lieu of those described herein;
(k) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Debt Securities of the series shall be
issuable;
(l) if the amount of principal of or any premium or interest on Debt
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined;
(m) if the principal amount payable at the Stated Maturity of Debt
Securities of the series will not be determinable as of any one or more dates
prior to such Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined); and the manner of determining the equivalent thereof in the
currency of the United States of America for purposes of the definition of
Dollar Equivalent;
(n) any changes or additions to Article 11, including the addition of
additional covenants that may be subject to the covenant defeasance option
pursuant to Section 11.02(b)(ii);
(o) if other than such coin or Currency of the United States as at the
time of payment is legal tender for payment of public and private debts, the
coin or Currency or Currencies or units of two or more Currencies in which
payment of the principal of, and premium, if any, and interest on, Debt
Securities of the series shall be payable;
(p) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.01 or
provable in bankruptcy pursuant to Section 6.02;
(q) the terms, if any, of the transfer, mortgage, pledge or assignment as
security for the Debt Securities of the series of any properties, assets,
moneys, proceeds, securities or other collateral, including whether certain
provisions of the Trust Indenture Act are applicable and any corresponding
changes to provisions of this Indenture as currently in effect;
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(r) any addition to or change in the Events of Default with respect to the
Debt Securities of the series and any change in the right of the Trustee or the
Holders to declare the principal of, and premium and interest on, such Debt
Securities due and payable;
(s) if the Debt Securities of the series shall be issued in whole or in
part in the form of a Global Security or Securities, the terms and conditions,
if any, upon which such Global Security or Securities may be exchanged in whole
or in part for other individual Debt Securities in definitive registered form;
and the Depositary for such Global Security or Securities and the form of any
legend or legends to be borne by any such Global Security or Securities in
addition to or in lieu of the legend referred to in Section 2.15;
(t) any trustees, authenticating or paying agents, transfer agents or
registrars;
(u) the applicability of, and any addition to or change in the covenants
and definitions currently set forth in this Indenture or in the terms currently
set forth in Article 10, including conditioning any merger, conveyance, transfer
or lease permitted by Article 10 upon the satisfaction of an Indebtedness
coverage standard by the Company and the Successor Company (as defined in
Article 10);
(v) the terms, if any, of any Guarantee of the payment of principal of,
and premium, if any, and interest on, Debt Securities of the series and any
corresponding changes to the provisions of this Indenture as currently in
effect;
(w) the subordination, if any, of the Debt Securities of the series
pursuant to Article 12 and any changes or additions to Article 12;
(x) with regard to Debt Securities of the series that do not bear
interest, the dates for certain required reports to the Trustee; and
(y) any other terms of the Debt Securities of the series (which terms
shall not be prohibited by the provisions of this Indenture).
All Debt Securities of any one series and the Coupons, if any, appertaining
thereto shall be substantially identical except as to denomination and except as
may otherwise be provided in or pursuant to such resolution of the Board of
Directors and as set forth in such Officers' Certificate or in any such
Indenture supplemental hereto.
Section 2.04 EXECUTION OF DEBT SECURITIES. The Debt Securities and the
Coupons, if any, shall be signed on behalf of the Company by its Chairman of the
Board, its Vice Chairman, its President or a Vice President and by its
Secretary, an Assistant Secretary, a Treasurer or an Assistant Treasurer. Such
signatures upon the Debt Securities and Coupons may be the manual or facsimile
signatures of the present or any future such authorized officers and may be
imprinted or otherwise reproduced on the Debt Securities and Coupons. The seal
of the Company, if any, may be in the
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form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Debt Securities and Coupons.
Only such Debt Securities and Coupons as shall bear thereon a certificate
of authentication substantially in the form hereinbefore recited, signed
manually by the Trustee, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. Such certificate by the Trustee upon
any Debt Security or Coupon executed by the Company shall be conclusive evidence
that the Debt Security or Coupon so authenticated has been duly authenticated
and delivered hereunder.
In case any officer of the Company who shall have signed any of the Debt
Securities or Coupons shall cease to be such officer before the Debt Securities
or Coupons so signed shall have been authenticated and delivered by the Trustee,
or disposed of by the Company, such Debt Securities or Coupons nevertheless may
be authenticated and delivered or disposed of as though the Person who signed
such Debt Securities or Coupons had not ceased to be such officer of the
Company; and any Debt Security or Coupon may be signed on behalf of the Company
by such Persons as, at the actual date of the execution of such Debt Security or
Coupon, shall be the proper officers of the Company, although at the date of
such Debt Security or Coupon or of the execution of this Indenture any such
Person was not such officer.
Section 2.05 AUTHENTICATION AND DELIVERY OF DEBT SECURITIES. At any time
and from time to time after the execution and delivery of this Indenture, the
Company may deliver Debt Securities, with appropriate Coupons, if any, of any
series executed by the Company to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Debt Securities and
Coupons to or upon a Company Order. In authenticating such Debt Securities and
Coupons, and accepting the additional responsibilities under this Indenture in
relation to such Debt Securities and Coupons, the Trustee shall be entitled to
receive, and (subject to Section 7.01) shall be fully protected in relying upon:
(a) a copy of any resolution or resolutions of the Board of Directors,
certified by the Secretary or Assistant Secretary of the Company, authorizing
the terms of issuance of any series of Debt Securities and Coupons;
(b) an executed supplemental Indenture, if any;
(c) an Officers' Certificate; and
(d) an Opinion of Counsel prepared in accordance with Section 13.05 which
shall also state:
(i) that the form of such Debt Securities and Coupons has been
established by or pursuant to a resolution of the Board of Directors or by
a supplemental Indenture as permitted by Section 2.01 in conformity with
the provisions of this Indenture;
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(ii) that the terms of such Debt Securities and Coupons have been
established by or pursuant to a resolution of the Board of Directors or by
a supplemental Indenture as permitted by Section 2.03 in conformity with
the provisions of this Indenture;
(iii) that such Debt Securities and Coupons, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms except as (A) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and (B) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability;
(iv) that the Company has the corporate power to issue such Debt
Securities and Coupons and has duly taken all necessary corporate action
with respect to such issuance;
(v) that the issuance of such Debt Securities and Coupons will not
contravene the charter or by-laws of the Company or result in any material
violation of any of the terms or provisions of any law or regulation or of
any indenture, mortgage or other material agreement known to such counsel
by which the Company is bound;
(vi) that authentication and delivery of such Debt Securities and
Coupons and the execution and delivery of any supplemental Indenture will
not violate the terms of this Indenture; and
(vii) such other matters as the Trustee may reasonably request.
Such Opinion of Counsel need express no opinion as to whether a court in
the United States would render a money judgment in a currency other than that of
the United States.
The Trustee shall have the right to decline to authenticate and deliver any
Debt Securities or Coupons under this Section 2.05 if the Trustee, being advised
by counsel, determines that such action may not lawfully be taken or if the
Trustee shall determine in good faith by its board of directors or trustees,
executive committee or a trust committee of directors, trustees or vice
presidents that such action would expose the Trustee to personal liability to
existing Holders.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate Debt Securities and Coupons, if any, of any series.
Unless limited by the terms of such appointment, an authenticating agent may
authenticate Debt Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as any Registrar, paying
agent or agent for service of notices and demands.
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Unless otherwise provided in the form of Debt Security for any series, each
Debt Security shall be dated the date of its authentication.
Section 2.06 DENOMINATION OF DEBT SECURITIES. Unless otherwise provided
in the form of Debt Security for any series, the Debt Securities of each series
shall be issuable only as Registered Securities in such denominations as shall
be specified or contemplated by Section 2.03. In the absence of any such
specification with respect to the Debt Securities of any series, the Debt
Securities of such series shall be issuable in denominations of $1,000 and any
integral multiple thereof.
Section 2.07 REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company shall keep or cause to be kept a register for each series
of Registered Securities issued hereunder (hereinafter collectively referred to
as the "Debt Security Register"), in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Registered Securities and the transfer of Registered Securities as in this
Article 2 provided. At all reasonable times the Debt Security Register shall be
open for inspection by the Trustee. Subject to Section 2.15, upon due
presentment for registration of transfer of any Registered Security at any
office or agency to be maintained by the Company in accordance with the
provisions of Section 4.02, the Company shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Registered Security or Registered Securities of authorized denominations for a
like aggregate principal amount. In no event may Registered Securities,
including Registered Securities received in exchange for Bearer Securities, be
exchanged for Bearer Securities.
Unless and until otherwise determined by the Company by resolution of the
Board of Directors, the register of the Company for the purpose of registration,
exchange or registration of transfer of the Registered Securities shall be kept
at the corporate trust office of the Trustee and, for this purpose, the Trustee
shall be designated "Registrar".
Registered Securities of any series (other than a Global Security, except
as set forth below) may be exchanged for a like aggregate principal amount of
Registered Securities of the same series of other authorized denominations.
Subject to Section 2.15, Registered Securities to be exchanged shall be
surrendered at the office or agency to be maintained by the Company as provided
in Section 4.02, and the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor the Registered Security or
Registered Securities which the Holder making the exchange shall be entitled to
receive.
At the option of the Holder of Bearer Securities of any series, except as
otherwise specified as contemplated by Section 2.03(h) or 2.03(i) with respect
to a Global Security representing Bearer Securities, Bearer Securities of such
series may be exchanged for Registered Securities (if the Debt Securities of
such series are issuable as Registered Securities) or Bearer Securities of the
same series, of any authorized denomination or denominations, of like tenor and
aggregate principal amount,
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upon surrender of the Bearer Securities to be exchanged at the office or
agency of the Company maintained for such purpose, with all unmatured Coupons
and all matured Coupons in Default thereto appertaining; PROVIDED, HOWEVER,
that delivery of a Bearer Security shall occur only outside the United
States. If such Holder is unable to produce any such unmatured Coupon or
Coupons in Default, such exchange may be effected if such Holder's Bearer
Securities are accompanied by payment in funds acceptable to the Company and
the Trustee in an amount equal to the face amount of such missing Coupon or
Coupons, or the surrender of such missing Coupon or Coupons may be waived by
the Company 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 such Holder 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 2.12,
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.
Whenever any Debt Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debt
Securities that the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, the exchange of Bearer Securities for
Registered Securities will be subject to the provisions of United States income
tax laws and regulations applicable to Debt Securities in effect at the time of
such exchange.
(b) All Registered Securities presented or surrendered for registration of
transfer, exchange or payment shall (if so required by the Company, the Trustee
or the Registrar) be duly endorsed or be accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Company, the Trustee and
the Registrar, duly executed by the Registered Holder or his attorney duly
authorized in writing.
All Debt Securities issued in exchange for or upon transfer of Debt
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture as the Debt
Securities surrendered for such exchange or transfer.
No service charge shall be made for any exchange or registration of
transfer of Debt Securities (except as provided by Section 2.09), but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, other than those
expressly provided in this Indenture to be made at the Company's own expense or
without expense or without charge to the Holders.
The Company shall not be required (i) to issue, register the transfer of or
exchange any Debt Securities for a period of 15 days next preceding any mailing
of notice of redemption of Debt Securities of such series or (ii) to register
the transfer of or exchange any Debt Securities selected, called or being called
for redemption; PROVIDED, HOWEVER, that, if specified pursuant to Section 2.03,
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any Bearer Securities of any series that are exchangeable for Registered
Securities and that are called for redemption pursuant to Section 3.02 may, to
the extent permitted by applicable law, be exchanged for one or more Registered
Securities of such series during the period preceding the redemption date
therefor.
Prior to the due presentation for registration of transfer of any Debt
Security, the Company, the Trustee, any paying agent or any Registrar may deem
and treat the Person in whose name a Debt Security is registered as the absolute
owner of such Debt Security for the purpose of receiving payment of principal
of, and premium, if any, and interest on, such Debt Security and for all other
purposes whatsoever, whether or not such Debt Security is overdue, and none of
the Company, the Trustee, any paying agent or Registrar shall be affected by
notice to the contrary.
None of the Company, the Trustee, any agent of the Trustee, any paying
agent or any Registrar will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial ownership
interests of a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Section 2.08 TEMPORARY DEBT SECURITIES. Pending the preparation of
definitive Debt Securities of any series, the Company may execute and the
Trustee shall authenticate and deliver temporary Debt Securities (printed,
lithographed, photocopied, typewritten or otherwise produced) of any authorized
denomination, and substantially in the form of the definitive Debt 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 omissions,
insertions and variations as may be appropriate for temporary Debt Securities
and Coupons, all as may be determined by the Company with the concurrence of the
Trustee. Temporary Debt Securities and Coupons may contain such reference to
any provisions of this Indenture as may be appropriate. Every temporary Debt
Security shall be executed by the Company and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Debt Securities.
If temporary Debt Securities of any series are issued, the Company will
cause definitive Debt Securities of such series to be prepared without
unreasonable delay. Except as otherwise specified as contemplated by
Section 2.03(h)(iii) with respect to a series of Debt Securities issuable as
Bearer Securities or as one or more Global Securities representing individual
Bearer Securities of the series, (a) after the preparation of definitive Debt
Securities of such series, the temporary Debt Securities of such series shall be
exchangeable for definitive Debt Securities of such series upon surrender of the
temporary Debt Securities of such series at the office or agency of the Company
at a Place of Payment for such series, without charge to the Holder thereof,
except as provided in Section 2.07 in connection with a transfer and except that
a Person receiving definitive Bearer Securities shall bear the cost of
insurance, postage, transportation and the like unless otherwise specified
pursuant to Section 2.03, and (b) upon surrender for cancelation of any one or
more temporary Debt Securities of any series (accompanied by any unmatured
Coupons appertaining thereto), the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Debt Securities of the same series of authorized denominations and of
like tenor;
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PROVIDED, HOWEVER, that no definitive Bearer Security shall be delivered in
exchange for a temporary Registered Security; and PROVIDED, FURTHER, HOWEVER,
that delivery of a Global Security representing individual Bearer Securities
or a Bearer Security shall occur only outside the United States. Until so
exchanged, temporary Debt Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Debt
Securities of such series, except as otherwise specified as contemplated by
Section 2.03(h)(ii) with respect to the payment of interest on Global
Securities in temporary form.
Unless otherwise specified pursuant to Section 2.03, the Company will
execute and deliver each definitive Global Security representing individual
Bearer Securities and each Bearer Security to the Trustee at its principal
office in London or such other place outside the United States specified
pursuant to Section 2.03.
Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Debt Securities represented
thereby pursuant to Section 2.07 or this Section 2.08, the temporary Global
Security shall be endorsed by the Trustee to reflect the reduction of the
principal amount evidenced thereby, whereupon the principal amount of such
temporary Global Security shall be reduced for all purposes by the amount so
exchanged and endorsed.
Section 2.09 MUTILATED, DESTROYED, LOST OR STOLEN DEBT SECURITIES. If
(a) any mutilated Debt Security or any mutilated Coupon with the Coupon Security
to which it appertains (and all unmatured Coupons attached thereto) is
surrendered to the Trustee at its corporate trust office (in the case of
Registered Securities) or at its principal London office (in the case of Bearer
Securities) or (b) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debt Security or any
Coupon, and there is delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them and any paying agent
harmless, and neither the Company nor the Trustee receives notice that such Debt
Security or Coupon has been acquired by a bona fide purchaser, then the Company
shall execute and, upon a Company Order, the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Debt Security or in exchange for the Coupon Security to which such
mutilated, destroyed, lost or stolen Coupon appertained, a new Debt Security of
the same series of like tenor, form, terms and principal amount, bearing a
number not contemporaneously Outstanding, and, in the case of a Coupon Security,
with such Coupons attached thereto that neither gain nor loss in interest shall
result from such exchange or substitution. Upon the issuance of any substituted
Debt Security, the Company 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 connected therewith. In case any Debt Security or Coupon
which has matured or is about to mature or which has been called for redemption
shall become mutilated or be destroyed, lost or stolen, the Company may, instead
of issuing a substituted Debt Security or Coupon, pay or authorize the payment
of the same (without surrender thereof except in the case of a mutilated Debt
Security or Coupon) if the applicant for such payment shall furnish the Company
and the Trustee with such security or indemnity as either may require to save it
harmless from all risk, however remote, and, in case of destruction, loss or
theft, evidence to the satisfaction of the Company and the Trustee of
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the destruction, loss or theft of such Debt Security or Coupon and of the
ownership thereof; PROVIDED, HOWEVER, that payment of principal of, and
premium, if any, and interest on, Bearer Securities or Coupons shall, except
as otherwise provided in Section 2.12, be payable only at an office or agency
located outside the United States.
Every substituted Debt Security of any series, with its Coupons, if any,
issued pursuant to the provisions of this Section 2.09 by virtue of the fact
that any Debt Security or Coupon is destroyed, lost or stolen shall constitute
an original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Debt Security or Coupon shall be found at any time,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Debt Securities of that series and
Coupons, if any, duly issued hereunder. All Debt Securities and Coupons, if
any, shall be held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debt Securities or Coupons, and shall
preclude any and all other rights or remedies, notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
Section 2.10 CANCELLATION OF SURRENDERED DEBT SECURITIES. All Debt
Securities surrendered for payment, redemption, registration of transfer or
exchange and all Coupons surrendered for payment or exchange shall, if
surrendered to the Company or any paying agent or a Registrar, be delivered to
the Trustee for cancellation by it, or if surrendered to the Trustee, shall be
canceled by it, and no Debt Securities or Coupons shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Indenture. All canceled Debt Securities and Coupons held by the Trustee shall
be destroyed (subject to the record retention requirements of the Exchange Act)
and certification of their destruction delivered to the Company, unless
otherwise directed. On request of the Company, the Trustee shall deliver to the
Company canceled Debt Securities and Coupons held by the Trustee. If the
Company shall acquire any of the Debt Securities or Coupons, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented thereby unless and until the same are delivered or
surrendered to the Trustee for cancellation. The Company may not issue new Debt
Securities or Coupons to replace Debt Securities or Coupons it has redeemed,
paid or delivered to the Trustee for cancellation.
Section 2.11 PROVISIONS OF THE INDENTURE AND DEBT SECURITIES FOR THE SOLE
BENEFIT OF THE PARTIES AND THE HOLDERS. Nothing in this Indenture or in the
Debt Securities or Coupons, expressed or implied, shall give or be construed to
give to any Person, other than the parties hereto, the Holders or any Registrar
or paying agent, any legal or equitable right, remedy or claim under or in
respect of this Indenture, or under any covenant, condition or provision herein
contained; all its covenants, conditions and provisions being for the sole
benefit of the parties hereto, the Holders and any Registrar and paying agents.
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Section 2.12 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
(a) 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 such Registered Security is registered at the close of
business on the regular record date for such interest notwithstanding the
cancellation of such Registered Security upon any transfer or exchange
subsequent to the regular record date. In case a Coupon 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 Coupon 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 Coupon Security, but will be
payable only to the Holder of such Coupon when due in accordance with the
provisions of this Indenture. Payment of interest on Registered Securities
shall be made at the corporate trust office of the Trustee (except as otherwise
specified pursuant to Section 2.03), or at the option of the Company, by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Debt Security Register or, if provided pursuant to Section 2.03
and in accordance with arrangements satisfactory to the Trustee, at the option
of the Registered Holder by wire transfer to an account designated by the
Registered Holder.
(b) No interest shall be payable with respect to a Bearer Security or
Coupon unless such certification requirements as are specified pursuant to
Section 2.03(h)(ii) are satisfied with respect to such Bearer Security or
Coupon. Interest on any Coupon Security that is payable and is punctually paid
or duly provided for on any interest payment date shall be paid to the Holder of
the Coupon that has matured on such interest payment date upon surrender of such
Coupon on such interest payment date at the principal London office of the
Trustee or at such other Place of Payment outside the United States specified
pursuant to Section 2.03.
Interest on any Bearer Security (other than a Coupon Security) that is
payable and is punctually paid or duly provided for on any interest payment date
shall be paid to the Holder of the Bearer Security upon presentation of such
Bearer Security and notation thereon on such interest payment date at the
principal London office of the Trustee or at such other Place of Payment outside
the United States specified pursuant to Section 2.03.
Unless otherwise specified pursuant to Section 2.03, at the direction of
the Holder of any Bearer Security or Coupon payable in Dollars, and subject to
applicable laws and regulations, payments in respect of such Bearer Security or
Coupon will be made by check drawn on a bank in New York, New York or, in
accordance with arrangements satisfactory to the Trustee, by wire transfer to a
Dollar account maintained by such Holder with a bank outside the United States.
If such payment at the offices of all paying agents outside the United States
becomes illegal or is effectively precluded because of the imposition of
exchange controls or similar restrictions on the full payment or receipt of such
amounts in Dollars, then, to the extent permitted by United States tax law, the
Company will appoint an office or agent in the United States at which such
payment may be made.
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Unless otherwise specified pursuant to Section 2.03, at the direction of the
Holder of any Bearer Security or Coupon payable in a Foreign Currency,
payment on such Bearer Security or Coupon will be made by a check drawn on a
bank outside the United States or, in accordance with arrangements
satisfactory to the Trustee, by wire transfer to an appropriate account
maintained by such Holder outside the United States. Except as provided in
this paragraph, no payment on any Bearer Security or Coupon will be made by
mail to an address in the United States or by transfer to an account in the
United States.
(c) Subject to the foregoing provisions of this Section 2.12 and
Section 2.17, each Debt Security of a particular series delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Debt Security of the same series shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debt
Security.
Section 2.13 SECURITIES DENOMINATED IN FOREIGN CURRENCIES.
(a) Except as otherwise specified pursuant to Section 2.03 for Bearer
Securities of any series, payment of the principal of, and premium, if any, and
interest on, Bearer Securities of such series denominated in any Currency will
be made in such Currency.
(b) Except as otherwise specified pursuant to Section 2.03 for Registered
Securities of any series, payment of the principal of, and premium, if any, and
interest on, Registered Securities of such series will be made in Dollars.
(c) For the purposes of calculating the principal amount of Debt
Securities of any series denominated in a Foreign Currency or in units of two or
more Foreign Currencies (including European Currency Units) for any purpose
under this Indenture, the principal amount of such Debt Securities at any time
Outstanding shall be deemed to be the Dollar Equivalent of such principal amount
as of the date of any such calculation.
In the event any Foreign Currency or currencies or units of two or more
Currencies in which any payment with respect to any series of Debt Securities
may be made ceases to be a freely convertible Currency on Currency markets in
the United States, for any date thereafter on which payment of principal of, or
premium, if any, or interest on, the Debt Securities of a series is due, the
Company shall select the Currency of payment for use on such date, all as
provided in the Debt Securities of such series. In such event, the Company
shall, as provided in the Debt Securities of such series, notify the Trustee of
the Currency which it has selected to constitute the funds necessary to meet the
Company's obligations on such payment date and of the amount of such Currency to
be paid. Such amount shall be determined as provided in the Debt Securities of
such series. The payment to the Trustee with respect to such payment date shall
be made by the Company solely in the Currency so selected.
Section 2.14 WIRE TRANSFERS. Notwithstanding any other provision to the
contrary in this Indenture, the Company may make any payment of monies required
to be deposited with the Trustee
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on account of principal of, or premium, if any, or interest on, the Debt
Securities (whether pursuant to optional or mandatory redemption payments,
interest payments or otherwise) by wire transfer in immediately available
funds to an account designated by the Trustee on or before the date such
moneys are to be paid to the Holders of the Debt Securities in accordance
with the terms hereof.
Section 2.15 SECURITIES ISSUABLE IN THE FORM OF A GLOBAL SECURITY.
(a) If the Company shall establish pursuant to Sections 2.01 and 2.03 that
the Debt Securities of a particular series are to be issued in whole or in part
in the form of one or more Global Securities, then the Company shall execute and
the Trustee or its agent shall, in accordance with Section 2.05, authenticate
and deliver, such Global Security or Securities, which (i) shall represent, and
shall be denominated in an amount equal to the aggregate principal amount of,
the Outstanding Debt Securities of such series to be represented by such Global
Security or Securities, or such portion thereof as the Company shall specify in
an Officer's Certificate, (ii) shall be registered in the name of the Depositary
for such Global Security or Securities or its nominee, (iii) shall be delivered
by the Trustee or its agent to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
'Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented hereby, this Global Security 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 any such nominee to a successor Depositary or a nominee
of such successor Depositary', or such other legend as may then be required by
the Depositary for such Global Security or Securities.
(b) Notwithstanding any other provision of this Section 2.15 or of
Section 2.07 to the contrary, and subject to the provisions of paragraph (c)
below, unless the terms of a Global Security expressly permit such Global
Security to be exchanged in whole or in part for definitive Debt Securities in
registered form, a Global Security may be transferred, in whole but not in part
and in the manner provided in Section 2.07, only by the Depositary to a nominee
of the Depositary for such Global Security, or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary, or by the Depositary or a
nominee of the Depositary to a successor Depositary for such Global Security
selected or approved by the Company, or to a nominee of such successor
Depositary.
(c) (i) If at any time the Depositary for a Global Security or
Securities notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security or Securities or if at any time the
Depositary for the Debt Securities for such series shall no longer be eligible
or in good standing under the Exchange Act or other applicable statute, rule or
regulation, the Company shall appoint a successor Depositary with respect to
such Global Security or Securities. If a successor Depositary for such Global
Security or Securities is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the Company
shall execute, and the Trustee or its agent, upon receipt of a Company Order for
the authentication and delivery of such individual Debt Securities of such
series in exchange for such Global Security, will authenticate and deliver,
individual Debt Securities of such series of like tenor
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and terms in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such Global Security
or Securities.
(ii) The Company may at any time and in its sole discretion
determine that the Debt Securities of any series or portion thereof issued or
issuable in the form of one or more Global Securities shall no longer be
represented by such Global Security or Securities. In such event the Company
will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of individual Debt Securities of such series in
exchange in whole or in part for such Global Security, will authenticate and
deliver individual Debt Securities of such series of like tenor and terms in
definitive form in an aggregate principal amount equal to the principal amount
of such series or portion thereof in exchange for such Global Security or
Securities.
(iii) If specified by the Company pursuant to Sections 2.01 and 2.03
with respect to Debt Securities issued or issuable in the form of a Global
Security, the Depositary for such Global Security may surrender such Global
Security in exchange in whole or in part for individual Debt Securities of such
series of like tenor and terms in definitive form on such terms as are
acceptable to the Company, the Trustee and such Depositary. Thereupon the
Company shall execute, and the Trustee or its agent upon receipt of a Company
Order for the authentication and delivery of definitive Debt Securities of such
series shall authenticate and deliver, without service charge, (A) to each
Person specified by such Depositary a new Debt Security or Securities of the
same series of like tenor and terms and of any authorized denomination as
requested by such Person in aggregate principal amount equal to and in exchange
for such Person's beneficial interest in the Global Security; and (B) to such
Depositary a new Global Security of like tenor and terms and in an authorized
denomination equal to the difference, if any, between the principal amount of
the surrendered Global Security and the aggregate principal amount of Debt
Securities delivered to Holders thereof.
(iv) In any exchange provided for in any of the preceding three
paragraphs, the Company will execute and the Trustee or its agent will
authenticate and deliver individual Debt Securities. In case a Coupon 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 special record date and before the opening of business
(at such office or agency) on the related proposed date of payment of Defaulted
Interest, such Coupon 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 Coupon Security, but will be payable only to the Holder of
such Coupon when due in accordance with the provisions of this Indenture. Upon
the exchange of the entire principal amount of a Global Security for individual
Debt Securities, such Global Security shall be canceled by the Trustee or its
agent. Except as provided in the preceding paragraph, Registered Securities
issued in exchange for a Global Security pursuant to this Section 2.15 shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee or the
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Registrar. The Trustee or the Registrar shall deliver such Registered
Securities to the Persons in whose names such Registered Securities are so
registered.
(v) Payments in respect of the principal of and interest on any
Debt Securities registered in the name of the Depositary or its nominee will be
payable to the Depositary or such nominee in its capacity as the registered
owner of such Global Security. The Company and the Trustee may treat the Person
in whose name the Debt Securities, including the Global Security, are registered
as the owner thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. None of the Company, the Trustee, any Registrar,
the paying agent or any agent of the Company or the Trustee will have any
responsibility or liability for (A) any aspect of the records relating to or
payments made on account of the beneficial ownership interests of the Global
Security by the Depositary or its nominee or any of the Depositary's direct or
indirect participants, or for maintaining, supervising or reviewing any records
of the Depositary, its nominee or any of its direct or indirect participants
relating to the beneficial ownership interests of the Global Security, (B) the
payments to the beneficial owners of the Global Security of amounts paid to the
Depositary or its nominee, or (C) any other matter relating to the actions and
practices of the Depositary, its nominee or any of its direct or indirect
participants. None of the Company, the Trustee or any such agent will be liable
for any delay by the Depositary, its nominee, or any of its direct or indirect
participants in identifying the beneficial owners of the Debt Securities, and
the Company and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Depositary or its nominee for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the Debt Securities to be issued).
The Trustee shall deliver individual Bearer Securities issued in exchange
for a Global Security pursuant to this Section 2.15 to the Persons and in such
authorized denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee; PROVIDED, HOWEVER, that individual Bearer Securities shall
be delivered in exchange for a Global Security only in accordance with the
procedures as may be specified pursuant to Section 2.03.
Notwithstanding the foregoing, the exchange of Bearer Securities for
Registered Securities will be subject to the provisions of United States income
tax laws and regulations applicable to debt Securities in effect at the time of
such exchange.
Section 2.16 MEDIUM TERM SECURITIES. Notwithstanding any contrary
provision herein, if all Debt Securities of a series are not to be originally
issued at one time, it shall not be necessary for the Company to deliver to the
Trustee an Officers' Certificate, resolutions of the Board of Directors,
supplemental Indenture, Opinion of Counsel or written order or any other
document otherwise required pursuant to Section 2.01, 2.03, 2.05 or 13.05 at or
prior to the time of authentication of each Debt Security of such series if such
documents are delivered to the Trustee or its agent at or prior to the
authentication upon original issuance of the first such Debt Security of such
series to be issued; PROVIDED, that any subsequent request by the Company to the
Trustee to authenticate Debt Securities of such series upon original issuance
shall constitute a representation and warranty by the
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Company that, as of the date of such request, the statements made in the
Officers' Certificate delivered pursuant to Section 2.05 or 13.05 shall be
true and correct as if made on such date and that the Opinion of Counsel
delivered at or prior to such time of authentication of an original issuance
of Debt Securities shall specifically state that it shall relate to all
subsequent issuances of Debt Securities of such series that are identical to
the Debt Securities issued in the first issuance of Debt Securities of such
series.
A Company Order delivered by the Company to the Trustee in the
circumstances set forth in the preceding paragraph may provide that Debt
Securities which are the subject thereof will be authenticated and delivered by
the Trustee or its agent on original issue from time to time upon the telephonic
or written order of Persons designated in such Company Order (any such
telephonic instructions to be promptly confirmed in writing by such Person) and
that such Persons are authorized to determine, consistent with the Officers'
Certificate, supplemental Indenture or resolution of the Board of Directors
relating to such written order, such terms and conditions of such Debt
Securities as are specified in such Officers' Certificate, supplemental
Indenture or such resolution.
Section 2.17 DEFAULTED INTEREST.
(a) Any interest on any Debt Security of a particular series which is
payable, but is not punctually paid or duly provided for, on the dates and in
the manner provided in the Debt Securities of such series and in this Indenture
(herein called "Defaulted Interest") shall, if such Debt Security is a
Registered Security, forthwith cease to be payable to the Registered Holder
thereof on the relevant record date by virtue of having been such Registered
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities of such series 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 Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each such Registered Security of
such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
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 Company of such special record date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed, first
class postage pre-paid, to each Holder thereof at its address as it appears
in the
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Security Register, not less than 10 days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the special
record date therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Registered Securities of such
series are registered at the close of business on such special record date.
In case a Coupon Security of any such 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 special
record date and before the opening of business (at such office or agency)
on the related proposed date of payment of Defaulted Interest, such Coupon
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 Coupon Security, but will be payable only to the Holder of such Coupon
when due in accordance with the provisions of this Indenture.
(ii) The Company may make payment of any Defaulted Interest on the
Registered Securities of such series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Registered Securities of such series may be listed, and upon such notice as
may be required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
(b) Any Defaulted Interest payable in respect of Bearer Securities of any
series shall be payable pursuant to such procedures as may be satisfactory to
the Trustee in such manner that there is no discrimination between the Holders
of Registered Securities (if any) and Bearer Securities of such series, and
notice of the payment date therefor shall be given by the Trustee, in the name
and at the expense of the Company, in the manner provided in Section 13.03 not
more than 25 days and not less than 20 days prior to the date of the proposed
payment.
Section 2.18 JUDGMENTS. The Company may provide pursuant to Section 2.03
for Debt Securities of any series that (a) the obligation, if any, of the
Company to pay the principal of, and premium, if any, and interest on, the Debt
Securities of any series in a Foreign Currency or Dollars (the "Designated
Currency") as may be specified pursuant to Section 2.03 is of the essence and
agrees that, to the fullest extent possible under applicable law, judgments in
respect of Debt Securities of such series shall be given in the Designated
Currency; (b) the obligation of the Company to make payments in the Designated
Currency of the principal of, and premium, if any, and interest on, such Debt
Securities shall, notwithstanding any payment in any other Currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the Designated Currency that the Holder receiving such payment may, in
accordance with normal banking procedures, purchase with the sum paid in such
other Currency (after any premium and cost of exchange) on the business day in
the country of issue of the Designated Currency or in the international banking
community (in the case of a composite currency) immediately following the day on
which such Holder receives such payment; (c) if the amount in the Designated
Currency that may be so purchased for any reason falls short of the amount
originally due, the Company shall pay
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such additional amounts as may be necessary to compensate for such shortfall;
and (d) any obligation of the Company not discharged by such payment shall be
due as a separate and independent obligation and, until discharged as
provided herein, shall continue in full force and effect.
ARTICLE 3
REDEMPTION OF DEBT SECURITIES
Section 3.01 APPLICABILITY OF ARTICLE. The provisions of this Article
shall be applicable to the Debt Securities of any series which are redeemable
before their Stated Maturity except as otherwise specified as contemplated by
Section 2.03 for Debt Securities of such series.
Section 3.02 TAX REDEMPTION; SPECIAL TAX REDEMPTION. Unless otherwise
specified pursuant to Section 2.03, Bearer Securities of any series may be
redeemed at the option of the Company in whole, but not in part, at any time, on
giving not less than 30 or more than 60 days' notice in accordance with
Section 3.03 (which notice shall be irrevocable), at the redemption price
thereof (calculated without premium), if the Company has or will become
obligated to pay additional interest on such Bearer Securities pursuant to
Section 4.06 as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or any change in
the application or official interpretation of such laws, regulations or rulings,
which change or amendment becomes effective on or after the date on which any
Person (including any Person acting as underwriter, broker or dealer) agrees to
purchase any of such Bearer Securities pursuant to their original issuance, and
such obligation cannot be avoided by the Company taking reasonable measures
available to it; PROVIDED, that no such notice of redemption shall be given
earlier than 90 days prior to the earliest date on which the Company would be
obligated to pay such additional interest were a payment in respect of the
Bearer Securities of that series then due. Prior to the publication of any
notice of redemption pursuant to this Section 3.02, the Company shall deliver to
the Trustee (a) an Officers' Certificate stating that the Company is entitled to
effect such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of the Company so to redeem have occurred and
(b) an Opinion of Counsel to the effect that the Company has or will become
obligated to pay such additional interest as a result of such change or
amendment.
Section 3.03 NOTICE OF REDEMPTION; SELECTION OF DEBT SECURITIES. In case
the Company shall desire to exercise the right to redeem all or, as the case may
be, any part of the Debt Securities of any series in accordance with their
terms, a resolution of the Board of Directors of the Company or a supplemental
Indenture, the Company shall fix a date for redemption and shall give notice of
such redemption at least 30 and not more than 60 days prior to the date fixed
for redemption to the Holders of Debt Securities of such series so to be
redeemed as a whole or in part, in the manner provided in Section 13.03. The
notice if given in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the Holder receives such notice. In any
case, failure to give such notice or any defect in the notice to the Holder of
any Debt Security of a series
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designated for redemption as a whole or in part shall not affect the validity
of the proceedings for the redemption of any other Debt Security of such
series.
Each such notice of redemption shall specify the date fixed for redemption,
the redemption price at which Debt Securities of such series are to be redeemed,
the Place or Places of Payment that payment will be made upon presentation and
surrender of such Debt Securities, that any interest accrued to the date fixed
for redemption will be paid as specified in said notice, that the redemption is
for a sinking fund payment (if applicable), that, unless otherwise specified in
such notice, Coupon Securities of any series, if any, surrendered for redemption
must be accompanied by all Coupons maturing subsequent to the date fixed for
redemption, failing which the amount of any such missing Coupon or Coupons will
be deducted from the redemption price, if the Bearer Securities of any series
are to be redeemed and any Registered Securities of such series are not to be
redeemed, and if such Bearer Securities may be exchanged for Registered
Securities not subject to redemption on the applicable redemption date pursuant
to Section 2.15(c) or otherwise, the last date on which such exchanges may be
made, that, if the Company defaults in making such redemption payment or if the
Debt Securities of that series are subordinated pursuant to the terms of
Article 12, the paying agent is prohibited from making such payment pursuant to
the terms of this Indenture, that on and after said date any interest thereon or
on the portions thereof to be redeemed will cease to accrue, that in the case of
Original Issue Discount Securities original issue discount will cease to accrue
after the date fixed for redemption, the terms of the Debt Securities of that
series pursuant to which the Debt Securities of that series are being redeemed
and that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Debt Securities of
that series. If less than all the Debt Securities of a series are to be
redeemed the notice of redemption shall specify the CUSIP numbers of the Debt
Securities of that series to be redeemed. In case any Debt Security of a series
is to be redeemed in part only, the notice of redemption shall state the portion
of the principal amount thereof to be redeemed and shall state that on and after
the date fixed for redemption, upon surrender of such Debt Security, a new Debt
Security or Debt Securities of that series in principal amount equal to the
unredeemed portion thereof, and in the case of a Bearer Security with
appropriate Coupons, if any, will be issued.
At least 60 days before the redemption date (unless the Trustee consents to
a shorter period), the Company shall give notice to the Trustee of the
redemption date, the principal amount of Debt Securities to be redeemed and the
series and terms of the Debt Securities pursuant to which such redemption will
occur. Such notice shall be accompanied by an Officers' Certificate and an
Opinion of Counsel from the Company to the effect that such redemption will
comply with the conditions herein. If fewer than all the Debt Securities of a
series are to be redeemed, the record date relating to such redemption shall be
selected by the Company and given to the Trustee, which record date shall be not
less than 15 days after the date of notice to the Trustee.
On or prior to the redemption date for any Registered Securities, the
Company shall deposit with the Trustee or with a paying agent (or, if the
Company is acting as its own paying agent, segregate and hold in trust) an
amount of money in the Currency in which such Debt Securities are denominated
(except as provided pursuant to Section 2.03) sufficient to pay the redemption
price of
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such Registered Securities or any portions thereof that are to be redeemed on
that date. In the case of any redemption pertaining to Bearer Securities or
Coupon Securities, the Company shall, no later than the business day prior to
such redemption date, deposit with the Trustee or with a paying agent (other
than the Company) an amount of money in the Currency in which such Debt
Securities are denominated (except as provided pursuant to Section 2.03)
sufficient to pay the redemption price of such Bearer or Coupon Securities or
any portion thereof that are to be redeemed on the redemption date.
If less than all the Debt Securities of like tenor and terms of a series
are to be redeemed (other than pursuant to mandatory sinking fund redemptions)
the Trustee shall select, in such manner as in its sole discretion it shall deem
appropriate and fair, the Debt Securities of that series or portions thereof (in
multiples of $1,000) to be redeemed. In any case where more than one Registered
Security of such series is registered in the same name, the Trustee in its
discretion may treat the aggregate principal amount so registered as if it were
represented by one Registered Security of such series. The Trustee shall
promptly notify the Company in writing of the Debt Securities selected for
redemption and, in the case of any Debt Securities selected for partial
redemption, the principal amount thereof to be redeemed. If any Debt Security
called for redemption shall not be so paid upon surrender thereof on such
redemption date, the principal, premium, if any, and interest shall bear
interest until paid from the redemption date at the rate borne by the Debt
Securities of that series. If less than all the Debt Securities of unlike tenor
and terms of a series are to be redeemed, the particular Debt Securities to be
redeemed shall be selected by the Company. Provisions of this Indenture that
apply to Debt Securities called for redemption also apply to portions of Debt
Securities called for redemption.
Section 3.04 PAYMENT OF DEBT SECURITIES CALLED FOR REDEMPTION. If notice
of redemption has been given as provided in Section 3.03, the Debt Securities or
portions of Debt Securities of the series with respect to which such notice has
been given shall become due and payable on the date and at the Place or Places
of Payment stated in such notice at the applicable redemption price, together
with any interest accrued to the date fixed for redemption, and on and after
said date (unless the Company shall default in the payment of such Debt
Securities at the applicable redemption price, together with any interest
accrued to said date) any interest on the Debt Securities or portions of Debt
Securities of any series so called for redemption shall cease to accrue, any
original issue discount in the case of Original Issue Discount Securities shall
cease to accrue and any Coupons for such interest appertaining to any Coupon
Securities to be redeemed, except to the extent described below, shall be void.
On presentation and surrender of such Debt Securities at the Place or Places of
Payment in said notice specified, the said Debt Securities or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
redemption price, together with any interest accrued thereon to the date fixed
for redemption.
If any Coupon Security surrendered for redemption shall not be accompanied
by all Coupons appertaining thereto maturing on or after the applicable
redemption date, the redemption price for such Coupon Security may be reduced by
an amount equal to the face amount of all such missing Coupons. If thereafter
the Holder of such Coupon shall surrender to any paying agent outside the
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United States 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. The surrender of such missing Coupon or
Coupons may be waived by the Company 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.
Any Debt Security that is to be redeemed only in part shall be surrendered
at the corporate trust office or such other office or agency of the Company as
is specified pursuant to Section 2.03 (in the case of Registered Securities) and
at the principal London office of the Trustee or such other office or agency of
the Company outside the United States as is specified pursuant to Section 2.03
(in the case of Bearer Securities) with, if the Company, the Registrar or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company, the Registrar and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing, and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Debt Security without service charge, a new Debt Security or Debt
Securities of the same series, of like tenor and form, 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 Debt Security
so surrendered, and, in the case of a Coupon Security, with appropriate Coupons
attached; except that if a Global Security is so surrendered, the Company shall
execute, and the Trustee shall authenticate and deliver to the Depositary for
such Global Security, 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. In the case of a Debt Security
providing appropriate space for such notation, at the option of the Holder
thereof, the Trustee, in lieu of delivering a new Debt Security or Debt
Securities as aforesaid, may make a notation on such Debt Security of the
payment of the redeemed portion thereof.
Section 3.05 MANDATORY AND OPTIONAL SINKING FUNDS. The minimum amount of
any sinking fund payment provided for by the terms of Debt Securities of any
series, resolution of the Board of Directors or a supplemental Indenture 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 Debt Securities of
any series, resolution of the Board of Directors or a supplemental Indenture is
herein referred to as an "optional sinking fund payment".
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Debt Securities of a series in cash, the Company may at its
option (a) deliver to the Trustee Debt Securities of that series (together with
the unmatured Coupons, if any, appertaining thereto) theretofore purchased or
otherwise acquired by the Company or (b) receive credit for the principal amount
of Debt Securities of that series which have been redeemed either at the
election of the Company pursuant to the terms of such Debt Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Debt Securities, resolution or supplemental Indenture; PROVIDED,
that such Debt Securities have not been previously so credited. Such Debt
Securities shall be received and credited for such purpose by the Trustee at the
redemption price specified in such Debt Securities, resolution or supplemental
Indenture for
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redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.
Section 3.06 REDEMPTION OF DEBT SECURITIES FOR SINKING FUND. Not less
than 60 days prior to each sinking fund payment date for any series of Debt
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, any resolution or supplemental Indenture,
the portion thereof, if any, which is to be satisfied by payment of cash in the
Currency in which the Debt Securities of such series are denominated (except as
provided pursuant to Section 2.03) and the portion thereof, if any, which is to
be satisfied by delivering and crediting Debt Securities of that series pursuant
to this Section 3.06 (which Debt Securities, if not previously redeemed, will
accompany such certificate) and whether the Company intends to exercise its
right to make any permitted optional sinking fund payment with respect to such
series. Such certificate shall also state that no Event of Default has occurred
and is continuing with respect to such series. Such certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Company to deliver such
certificate (or to deliver the Debt Securities and Coupons, if any, specified in
this paragraph) shall not constitute a Default, but such failure shall require
that the sinking fund payment due on the next succeeding sinking fund payment
date for that series shall be paid entirely in cash and shall be sufficient to
redeem the principal amount of such Debt Securities subject to a mandatory
sinking fund payment without the option to deliver or credit Debt Securities as
provided in this Section 3.06 and without the right to make any optional sinking
fund payment, if any, with respect to such series.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made in cash
which shall equal or exceed $100,000 (or a lesser sum if the Company shall so
request) with respect to the Debt Securities of any particular series shall be
applied by the Trustee on the sinking fund payment date on which such payment is
made (or, if such payment is made before a sinking fund payment date, on the
sinking fund payment date following the date of such payment) to the redemption
of such Debt Securities at the redemption price specified in such Debt
Securities, resolution or supplemental Indenture for operation of the sinking
fund together with any accrued interest to the date fixed for redemption. Any
sinking fund moneys not so applied or allocated by the Trustee to the redemption
of Debt Securities shall be added to the next cash sinking fund payment received
by the Trustee for such series and, together with such payment, shall be applied
in accordance with the provisions of this Section 3.06. Any and all sinking
fund moneys with respect to the Debt Securities of any particular series held by
the Trustee on the last sinking fund payment date with respect to Debt
Securities of such series and not held for the payment or redemption of
particular Debt Securities shall be applied by the Trustee, together with other
moneys, if necessary, to be deposited sufficient for the purpose, to the payment
of the principal of the Debt Securities of that series at its Stated Maturity.
The Trustee shall select the Debt Securities to be redeemed upon such
sinking fund payment date in the manner specified in the last paragraph of
Section 3.03 and the Company shall cause notice
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of the redemption thereof to be given in the manner provided in Section 3.03
except that the notice of redemption shall also state that the Debt
Securities are being redeemed by operation of the sinking fund. Such notice
having been duly given, the redemption of such Debt Securities shall be made
upon the terms and in the manner stated in Section 3.04.
At least one business day before each sinking fund payment date, the
Company shall pay to the Trustee (or, if the Company is acting as its own paying
agent, the Company shall segregate and hold in trust) in cash a sum in the
Currency in which the Debt Securities of such series are denominated (except as
provided pursuant to Section 2.03) equal to any interest accrued to the date
fixed for redemption of Debt Securities or portions thereof to be redeemed on
such sinking fund payment date pursuant to this Section 3.06.
The Trustee shall not redeem any Debt Securities of a series with sinking
fund moneys or mail any notice of redemption of such Debt Securities by
operation of the sinking fund for such series during the continuance of a
Default in payment of interest on such Debt Securities or of any Event of
Default (other than an Event of Default occurring as a consequence of this
paragraph) with respect to such Debt Securities, except that if the notice of
redemption of any such Debt Securities shall theretofore have been mailed in
accordance with the provisions hereof, the Trustee shall redeem such Debt
Securities if cash sufficient for that purpose shall be deposited with the
Trustee for that purpose in accordance with the terms of this Article 3. Except
as aforesaid, any moneys in the sinking fund for such series at the time when
any such Default or Event of Default shall occur and any moneys thereafter paid
into such sinking fund shall, during the continuance of such Default or Event of
Default, be held as security for the payment of such Debt Securities; PROVIDED,
HOWEVER, that in case such Event of Default or Default shall have been cured or
waived as provided herein, such moneys shall thereafter be applied on the next
sinking fund payment date for such Debt Securities on which such moneys may be
applied pursuant to the provisions of this Section 3.06.
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
Section 4.01 PAYMENT OF PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST
ON, DEBT SECURITIES. The Company, for the benefit of each series of Debt
Securities, will duly and punctually pay or cause to be paid the principal of,
and premium, if any, and interest on, each of the Debt Securities and pay any
Coupons at the place, at the respective times and in the manner provided herein,
in the Debt Securities and in the Coupons. Each installment of interest on the
Debt Securities may at the Company's option be paid by mailing checks for such
interest payable to the Person entitled thereto pursuant to Section 2.07(a) to
the address of such Person as it appears on the Debt Security Register. Any
interest due on Coupon Securities on or before the Stated Maturity of the
related Debt Security, other than additional interest, if any, payable as
provided in Section 4.06 in respect of principal of, or premium, if any, on such
a Debt Security, shall be payable only upon
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presentation and surrender of the several Coupons for such interest
installments as are evidenced thereby as they severally mature.
Principal, premium and interest of Debt Securities of any series shall be
considered paid on the date due if on such date the Trustee or any paying agent
holds in accordance with this Indenture money sufficient to pay in the Currency
in which the Debt Securities of such series are denominated (except as provided
pursuant to Section 2.03) all principal, premium and interest then due and, in
the case of Debt Securities subordinated pursuant to the terms of Article 12,
the Trustee or such paying agent, as the case may be, is not prohibited from
paying such money to the Holders on that date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Debt Securities and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Section 4.02 MAINTENANCE OF OFFICES OR AGENCIES FOR REGISTRATION OF
TRANSFER, EXCHANGE AND PAYMENT OF DEBT SECURITIES. The Company will maintain in
each Place of Payment for any series of Debt Securities and Coupons, if any, an
office or agency where Debt Securities and Coupons of such series (but, except
as otherwise provided in Section 2.12, unless such Place of Payment is located
outside the United States, not Bearer Securities or Coupons) may be presented or
surrendered for payment, where Debt Securities of such series may be surrendered
for transfer or exchange and where notices and demands to or upon the Company in
respect of the Debt Securities and Coupons of such series and this Indenture may
be served. So long as any Bearer Securities of any series remain outstanding,
the Company will maintain for such purposes one or more offices or agencies
outside the United States in such city or cities specified pursuant to
Section 2.03 and, if any Bearer Securities are listed on a securities exchange
that requires an office or agency for the payment of principal of, and premium,
if any, or interest on, such Bearer Securities in a location other than the
location of an office or agency specified pursuant to Section 2.03, the Company
will maintain for such purposes an office or agency in such location so long as
any Bearer Securities are listed on such securities exchange and such exchange
so requires. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company 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 (in the case of Registered Securities) and at the
principal London office of the Trustee (in the case of Bearer Securities), and
the Company hereby appoints the Trustee as its agent to receive all
presentations, surrenders, notices and demands.
The Company may also from time to time designate different or additional
offices or agencies to be maintained for such purposes (in or outside of such
Place of Payment), and may from time to time rescind any such designation;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligations described in the preceding paragraph.
The Company will give prompt written notice to the Trustee of any such
additional designation or
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rescission of designation and any change in the location of any such
different or additional office or agency.
Section 4.03 APPOINTMENT TO FILL A VACANCY IN THE OFFICE OF TRUSTEE. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 7.10, a Trustee, so that there
shall at all times be a Trustee hereunder with respect to each series of Debt
Securities.
Section 4.04 DUTIES OF PAYING AGENTS, ETC. (a) The Company shall cause
each paying agent, if any, other than the Trustee, to execute and deliver to the
Trustee an instrument in which such agent shall agree with the Trustee, subject
to the provisions of this Section 4.04,
(i) that it will hold all sums held by it as such agent for the
payment of the principal of, and premium, if any, or interest on, the Debt
Securities of any series and the payment of any related Coupons (whether
such sums have been paid to it by the Company or by any other obligor on
the Debt Securities or Coupons of such series) in trust for the benefit of
the Holders of the Debt Securities and Coupons of such series;
(ii) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Debt Securities or Coupons of such
series) to make any payment of the principal of, and premium, if any, or
interest on, the Debt Securities of such series or any payment on any
related Coupons when the same shall be due and payable; and
(iii) that it will at any time during the continuance of an Event of
Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held by it as such agent.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, and premium, if any, or interest on,
the Debt Securities and Coupons, if any, of any series, set aside, segregate and
hold in trust for the benefit of the Holders of the Debt Securities and Coupons
of such series a sum sufficient to pay such principal, premium, if any, or
interest so becoming due. The Company will promptly notify the Trustee of any
failure by the Company to take such action or the failure by any other obligor
on such Debt Securities or Coupons to make any payment of the principal of, and
premium, if any, or interest on, such Debt Securities or Coupons when the same
shall be due and payable.
(c) Anything in this Section 4.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it or any paying agent, as required by
this Section 4.04, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such paying agent.
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(d) Whenever the Company shall have one or more paying agents with respect
to any series of Debt Securities and Coupons, it will, prior to each due date of
the principal of, and premium, if any, or interest on, any Debt Securities of
such series, deposit with any such paying agent a sum sufficient to pay the
principal, premium or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled thereto, and (unless any such paying agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
(e) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
the provisions of Section 11.05.
Section 4.05 STATEMENT BY OFFICERS AS TO DEFAULT. The Company will
deliver to the Trustee, on or before a date not more than four months after the
end of each fiscal year of the Company (currently on a calendar year basis)
ending after the date hereof, an Officers' Certificate stating, as to each
officer signing such certificate, that (a) in the course of his performance of
his duties as an officer of the Company he would normally have knowledge of any
Default, (b) whether or not to the best of his knowledge any Default occurred
during such year and (c) if to the best of his knowledge the Company is in
Default, specifying all such Defaults and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with
Section 314(a)(4) of the Trust Indenture Act.
Section 4.06 PAYMENT OF ADDITIONAL INTEREST. Unless otherwise provided
pursuant to Section 2.03, the provisions of this Section 4.06 shall be
applicable to Bearer Securities of any series.
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of any Bearer Security or Coupon
that is a United States Alien such amounts as may be necessary so that every net
payment on such Bearer Security or Coupon, after deduction or withholding for or
on account of any present or future tax, assessment or other governmental charge
imposed upon or as a result of such payment by the United States (or any
political subdivision or taxing authority thereof or therein), will not be less
than the amount provided in such Bearer Security or Coupon to be then due and
payable. However, the Company will not be required to make any such payment of
additional interest for or on account of:
(a) any tax, assessment or other governmental charge that would not
have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such Holder,
if such Holder is a partnership or corporation) and the United States,
including such Holder (or such fiduciary, settlor, beneficiary, Person
holding a power, member or shareholder) being or having been a citizen or
resident thereof or being or having been engaged in trade or business or
present therein or having or having had a permanent establishment therein
or (ii) such Holder's past or present status for United States Federal
income tax purposes as a personal holding company, foreign personal holding
company or private foundation or other
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tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States Federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge that would not
have been imposed but for the presentation by the Holder of a Bearer
Security or Coupon for payment more than 15 days after the date on which
such payment became due and payable or on which payment thereof was duly
provided for, whichever occurs later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on a
Bearer Security or Coupon;
(e) any tax, assessment or other governmental charge that would not
have been imposed but for a failure to comply with applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the Holder or beneficial owner of a Bearer Security or
Coupon if, without regard to any tax treaty, such compliance is required by
statute or regulation of the United States as a precondition to relief or
exemption from such tax, assessment or other governmental charge; or
(f) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company or that is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall additional interest be paid with respect to a payment on a Bearer
Security or Coupon to a Holder that is a fiduciary or partnership or other than
the sole beneficial owner of such payment to the extent a beneficiary or settlor
with respect to such fiduciary or a member of such partnership or a beneficial
owner would not have been entitled to the additional interest had such
beneficiary, settlor, member or beneficial owner been the Holder of such Bearer
Security or Coupon.
Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of, or premium, if any, or interest on, any Debt Security or
payment with respect to any Coupon of any series, such mention shall be deemed
to include mention of the payment of additional interest provided for in the
terms of such Debt Securities and this Section 4.06 to the extent that, in such
context, additional interest is, was or would be payable in respect thereof
pursuant to the provisions of this Section 4.06 and express mention of the
payment of additional interest (if applicable) in any provisions hereof shall
not be construed as excluding additional interest in those provisions hereof
where such express mention is not made.
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If the payment of additional interest becomes required in respect of the
Debt Securities or Coupons of a series, at least ten days prior to the first
interest payment date with respect to which such additional interest will be
payable (or if the Debt Securities of that series will not bear interest prior
to its Stated Maturity, the first day on which a payment of principal, and
premium, if any, is made and on which such additional interest will be payable),
and at least ten days prior to each date of payment of principal, and premium,
if any, or interest if there has been any change with respect to the matters set
forth in the below-mentioned Officers' Certificate, the Company will furnish the
Trustee and each paying agent with an Officers' Certificate that shall specify
by country the amount, if any, required to be withheld on such payments to
Holders of Debt Securities or Coupons that are United States Aliens, and the
Company will pay to the Trustee or such paying agent the additional interest, if
any, required by the terms of such Debt Securities and this Section 4.06. The
Company 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 omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section 4.06.
Section 4.07 FURTHER INSTRUMENTS AND ACTS. The Company will, upon
request of the Trustee, execute and deliver such further instruments and do such
further acts as may reasonably be necessary or proper to carry out more
effectively the purposes of this Indenture.
Section 4.08 EXISTENCE. Subject to Article 10, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises; PROVIDED,
HOWEVER, that the Company 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 Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
Section 4.09 MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
Section 4.10 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (b) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the
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Company or any Subsidiary; PROVIDED, HOWEVER, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
Section 4.11 LIMITATION ON LIENS. So long as any of the Debt Securities
are Outstanding, the Company will not, and will not permit any Significant
Subsidiary to, issue, assume, incur or guarantee any Indebtedness secured by
a Lien on or with respect to any material property of the Company or any
Significant Subsidiary, or upon any shares of capital stock or Indebtedness
of any Significant Subsidiary, whether now owned or leased or hereafter
acquired, without in any such case effectively providing that the Debt
Securities shall be secured equally and ratably with (or prior to) such
Indebtedness, except that the foregoing restrictions shall not apply to: (a)
Liens existing as of the date of this Indenture, (b) Liens to secure the
payment of all or any part of the purchase price or cost of construction or
improvements in respect of property or properties acquired by the Company or
a Significant Subsidiary after the date of this Indenture securing
Indebtedness incurred prior to, at the time of, or within 270 days after, the
acquisition of any such property or the completion of any such construction
or improvements and which secure Indebtedness not in excess of the amount
expended in the acquisition of, or construction or improvements on, such
properties, (c) Liens upon any property owned or leased by any Significant
Subsidiary when it becomes a Significant Subsidiary, (d) Liens existing on
any property at the time of its acquisition by the Company or a Significant
Subsidiary (including acquisition through merger or consolidation),(e) Liens
securing Indebtedness of a Significant Subsidiary to the Company or to another
Significant Subsidiary and (f) the extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses (a) through (e), or of any
Indebtedness secured thereby, but only if the principal amount of
Indebtedness secured by the Lien immediately prior thereto is not increased
and the Lien is not extended to other property. Notwithstanding the foregoing,
the Company or any Significant Subsidiary may issue, assume, incur or
guarantee Indebtedness secured by Liens which otherwise would be subject to
the foregoing restrictions, in an aggregate amount which, together with all
other such Indebtedness outstanding secured by Liens as provided above (not
including Indebtedness excluded as provided in clauses (a) through (f) above)
and all Attributable Debt in respect of Sale and Leaseback Transactions which
would not be permitted by either clause (a), (b) or (c) in Section 4.12, does
not exceed [ ]% of Consolidated Net Tangible Assets.
Section 4.12 LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. So long as
any of the Debt Securities are Outstanding, the Company will not, nor will it
permit any Significant Subsidiary to, enter into any arrangement with any Person
(other than the Company or a Significant Subsidiary) providing for the leasing
by the Company or any Significant Subsidiary of any material property, whether
now owned or hereafter acquired, which has been or is to be sold or transferred
by the Company or such Significant Subsidiary to such Persons with the intention
of taking back a lease on such property (a "Sale and Leaseback Transaction")
unless (a) such transaction involves a lease or right to possession or use for a
temporary period not to exceed three years following such sale, by the end of
which it is intended that the use of such property by the lessee will be
discontinued, (b) the Company or such Significant Subsidiary would, on the
effective date of such transaction, be
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entitled to issue, assume or guarantee Indebtedness secured by a Lien on such
property at least equal in an amount to the Attributable Debt in respect
thereof, without equally and ratably securing the Debt Securities as set
forth in this Indenture, or (c) if the proceeds of such sale (i) are equal to
or greater than the fair market value (as determined by the Board of
Directors of the Company) of such property and (ii) are applied within 270
days after the receipt of the proceeds of sale or transfer to either the
purchase or acquisition of fixed assets or equipment used in the operation of
the business or the construction of fixed improvements on real property or to
the repayment of Debt Securities or Senior Funded Debt of the Company or any
Significant Subsidiary. The preceding restrictions shall not apply to any
Sale and Leaseback Transaction between the Company and a Significant
Subsidiary or between Significant Subsidiaries. Notwithstanding the
foregoing, the Company or any Significant Subsidiary may enter into Sale and
Leaseback Transactions in addition to any permitted by the two immediately
preceding sentences and without any obligation to retire any Debt Securities
or other Indebtedness, provided that, at the time of entering into such Sale
and Leaseback Transactions, and after giving effect thereto, the amount of
Attributable Debt in respect of such Sale and Leaseback Transaction, together
with all such other Attributable Debt outstanding and all Indebtedness
outstanding secured by Liens (not including Indebtedness excluded as provided
in clauses (a) through (f) in Section 4.11), does not exceed [ ]% of
Consolidated Net Tangible Assets.
ARTICLE 5
HOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 5.01 COMPANY TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND
ADDRESSES OF HOLDERS; PRESERVATION OF INFORMATION. The Company covenants and
agrees that it will furnish or cause to be furnished to the Trustee with respect
to the Registered Securities of each series:
(a) not more than 15 days after each record date with respect to
the payment of interest, if any, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Registered Holders as
of such record date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list
of similar form and contents 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 shall be the Registrar, such
lists shall not be required to be furnished.
The Company shall also be required to furnish to the Trustee at all such
times set forth above all information in the possession or control of the
Company or any of its paying agents other than the Trustee as to the names and
addresses of the Bearer Holders of all series; PROVIDED, HOWEVER, that the
Company shall have no obligation to investigate any matter relating to any
Bearer Holders.
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The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders
(i) contained in the most recent list furnished to it as provided in this
Section 5.01 or (ii) received by it in the capacity of paying agent or Registrar
(if so acting) hereunder.
The Trustee may destroy any list furnished to it as provided in this
Section 5.01 upon receipt of a new list so furnished.
Section 5.02 COMMUNICATIONS TO HOLDERS. Holders may communicate pursuant
to Section 312(b) of the Trust Indenture Act with other Holders with respect to
their rights under this Indenture or the Debt Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of
Section 312(c) of the Trust Indenture Act.
Section 5.03 REPORTS BY COMPANY.
(a) The Company covenants and agrees, and any obligor hereunder shall
covenant and agree, to file with the Trustee and the Holders (in the manner and
to the extent provided in Section 5.04), within 15 days after the Company or
such obligor, as the case may be, is required to file the same with the
Securities and Exchange 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 said Commission may from time to time by rules and regulations
prescribe) which the Company or such obligor, as the case may be, may be
required to file with said Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act; or, if the Company or such obligor, as the case may be, is not
required to file information, documents or reports pursuant to either of such
Sections, then to file with the Trustee, the Holders (in the manner and to the
extent provided in Section 5.04) and said Commission, in accordance with rules
and regulations prescribed from time to time by said Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act 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.
(b) The Company covenants and agrees, and any obligor hereunder shall
covenant and agree, to file with the Trustee, the Holders (in the manner and to
the extent provided in Section 5.04) and the Securities and Exchange Commission,
in accordance with the rules and regulations prescribed from time to time by
said Commission, such additional information, documents, and reports with
respect to compliance by the Company or such obligor, as the case may be, with
the conditions and covenants provided for in this Indenture as may be required
from time to time by such rules and regulations.
Section 5.04 REPORTS BY TRUSTEE. As promptly as practicable after each
January 1 beginning with the January 1 following the date of this Indenture, and
in any event prior to February 15 in each year, the Trustee shall mail to each
Holder a brief report dated as of that complies with
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Section 313(a) of the Trust Indenture Act. The Trustee also shall comply
with Section 313(b) of the Trust Indenture Act.
Reports pursuant to this Section 5.04 shall be transmitted by mail:
(a) to all Registered Holders, as the names and addresses of such
Holders appear in the Debt Security Register;
(b) to such Bearer Holders of any series as have, within two years
preceding such transmission, filed their names and addresses with the
Trustee for such series for that purpose; and
(c) except in the cases of reports under Section 313(b)(2) of the
Trust Indenture Act, to each Holder of a Debt Security of any series whose
name and address appear in the information preserved at the time by the
Trustee in accordance with Section 5.02.
A copy of each report at the time of its mailing to Holders shall be filed
with the Securities and Exchange Commission and each stock exchange (if any) on
which the Debt Securities of any series are listed. The Company agrees to
notify promptly the Trustee whenever the Debt Securities of any series become
listed on any stock exchange and of any delisting thereof.
Section 5.05 RECORD DATES FOR ACTION BY HOLDERS. If the Company shall
solicit from the holders of Debt Securities of any series any action (including
the making of any demand or request, the giving of any direction, notice,
consent or waiver or the taking of any other action), the Company may, at its
option, by resolution of the Board of Directors, fix in advance a record date
for the determination of Holders of Debt Securities entitled to take such
action, but the Company shall have no obligation to do so. Any such record date
shall be fixed at the Company's discretion. If such a record date is fixed,
such action may be sought or given before or after the record date, but only the
Holders of Debt Securities of record at the close of business on such record
date shall be deemed to be Holders of Debt Securities for the purpose of
determining whether Holders of the requisite proportion of Debt Securities of
such series Outstanding have authorized or agreed or consented to such action,
and for that purpose the Debt Securities of such series Outstanding shall be
computed as of such record date.
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ARTICLE 6
REMEDIES OF THE TRUSTEE AND
HOLDERS IN EVENT OF DEFAULT
Section 6.01 EVENTS OF DEFAULT. If any one or more of the following
shall have occurred and be continuing with respect to Debt Securities of any
series (each of the following, an "Event of Default"):
(a) default in the payment of any installment of interest upon any
Debt Securities of that series or any payment with respect to the related
Coupons, if any, as and when the same shall become due and payable, whether
or not such payment shall be prohibited by Article 12, if applicable, and
continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of or premium, if any,
on any Debt Securities of that series as and when the same shall become due
and payable, whether at maturity, upon redemption, by declaration, upon
required repurchase or otherwise, whether or not such payment shall be
prohibited by Article 12, if applicable; or
(c) default in the payment of any sinking fund payment with respect
to any Debt Securities of that series as and when the same shall become due
and payable; or
(d) failure on the part of the Company to comply with Article 10;
or
(e) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the
Debt Securities of that series, in any resolution of the Board of Directors
authorizing the issuance of that series of Debt Securities, in this
Indenture with respect to such series or in any supplemental Indenture with
respect to such series (other than a covenant a default in the performance
of which is elsewhere in this Section specifically addressed), continuing
for a period of 60 days after the date on which written notice specifying
such failure and requiring the Company to remedy the same shall have been
given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Debt Securities of that series at the time
Outstanding; or
(f) Indebtedness of the Company or any Subsidiary of the Company is
not paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default, the total amount
of such Indebtedness unpaid or accelerated exceeds $20,000,000 or its
Dollar Equivalent at the time and such default remains uncured or such
acceleration is not rescinded for 10 days after the date on which written
notice specifying such failure and requiring the Company to remedy the same
shall have been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the
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Trustee by the Holders of at least 25% in aggregate principal amount of the
Debt Securities of that series at the time Outstanding; or
(g) the Company or any of its Significant Subsidiaries shall
(i) voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code or any other Federal or State
bankruptcy, insolvency or similar law, (ii) consent to the institution of,
or fail to controvert within the time and in the manner prescribed by law,
any such proceeding or the filing of any such petition, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator
or similar official for the Company or any such Significant Subsidiary or
for a substantial part of its property, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) admit in
writing its inability or fail generally to pay its debts as they become
due, (vii) take corporate action for the purpose of effecting any of the
foregoing, or (viii) take any comparable action under any foreign laws
relating to insolvency; or
(h) the entry of an order or decree by a court having competent
jurisdiction in the premises for (i) relief in respect of the Company or
any of its Significant Subsidiaries or a substantial part of any of their
property under Title 11 of the United States Code or any other Federal or
State bankruptcy, insolvency or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator or similar official for the
Company or any such Significant Subsidiary or for a substantial part of any
of their property (except any decree or order appointing such official of
any Significant Subsidiary pursuant to a plan under which the assets and
operations of such Significant Subsidiary are transferred to or combined
with another Subsidiary or Subsidiaries of the Company or to the Company)
or (iii) the winding-up or liquidation of the Company or any such
Significant Subsidiary (except any decree or order approving or ordering
the winding up or liquidation of the affairs of a Significant Subsidiary
pursuant to a plan under which the assets and operations of such
Significant Subsidiary are transferred to or combined with another
Subsidiary or Subsidiaries of the Company or to the Company); and such
order or decree shall continue unstayed and in effect for 60 consecutive
days; or any similar relief is granted under any foreign laws and the order
or decree stays in effect for 60 consecutive days; or
(i) any judgment or decree for the payment of money in excess of
$20,000,000 or its Dollar Equivalent at the time is entered against the
Company or any Subsidiary of the Company by a court or courts of competent
jurisdiction, which judgment is not covered by insurance, and is not
discharged and either (i) an enforcement proceeding has been commenced by
any creditor upon such judgment or decree or (ii) there is a period of
60 days following the entry of such judgment or decree during which such
judgment or decree is not discharged, waived or the execution thereof
stayed and, in the case of (i) or (ii), such default continues for 10 days
after the date on which written notice specifying such failure and
requiring the Company to remedy the same shall have been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of
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at least 25% in aggregate principal amount of the Debt Securities of that
series at the time Outstanding; or
(j) any other Event of Default provided with respect to Debt
Securities of that series;
then and in each and every case that an Event of Default described in
clause (a), (b), (c), (d), (e), (f), (i) or (j) with respect to Debt Securities
of that series at the time Outstanding occurs and is continuing, unless the
principal of and interest on all the Debt Securities of that series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Debt Securities of that series
then Outstanding hereunder, by notice in writing to the Company (and to the
Trustee if given by Holders), may declare the principal of (or, if the Debt
Securities of that series are Original Issue Discount Debt Securities, such
portion of the principal amount as may be specified in the terms of that series)
and interest on all the Debt Securities of that series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Debt
Securities or Coupons appertaining thereto of that series contained to the
contrary notwithstanding. If an Event of Default described in clause (g) or (h)
occurs, then and in each and every such case, unless the principal of and
interest on all the Debt Securities shall have become due and payable, the
principal of (or, if any Debt Securities are Original Issue Discount Debt
Securities, such portion of the principal amount as may be specified in the
terms thereto) and interest on all the Debt Securities then Outstanding
hereunder shall IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders, anything in
this Indenture or in the Debt Securities contained to the contrary
notwithstanding.
The Holders of a majority in principal amount of the Debt Securities of a
particular series by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
already rendered and if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of
acceleration. Upon any such rescission, the parties hereto shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the parties hereto shall continue as though no such
proceeding had been taken.
In case the Trustee or any Holder shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee or such Holder, then and in
every such case the parties hereto shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the parties hereto shall continue as though no such proceeding had been taken.
The foregoing Events of Default shall constitute Events of Default whatever
the reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of
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law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (c), (d), (e), (f), (i) or (j), its status and
what action the Company is taking or proposes to take with respect thereto.
Section 6.02 COLLECTION OF INDEBTEDNESS BY TRUSTEE, ETC. If an Event of
Default occurs and is continuing, the Trustee, in its own name and as trustee of
an express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and unpaid
or enforce the performance of any provision of the Debt Securities of the
affected series or this Indenture, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Company or any other obligor upon the Debt Securities,
and the Coupons, if any, appertaining thereto, of such series (and collect, in
the manner provided by law out of the property of the Company or any other
obligor upon the Debt Securities and Coupons of such series wherever situated,
the moneys adjudged or decreed to be payable).
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor upon the Debt Securities and
Coupons, if any, of any series under Title 11 of the United States Code or any
other Federal or State bankruptcy, insolvency or similar law, or in case a
receiver, trustee or other similar official shall have been appointed for its
property, or in case of any other similar judicial proceedings relative to the
Company or any other obligor upon the Debt Securities of any series, its
creditors or its property, the Trustee, irrespective of whether the principal of
Debt Securities and Coupons, if any, 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 pursuant to the provisions of this
Section 6.02, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal, premium, if any, and interest (or, if the Debt Securities
of such series are Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of such series) owing and
unpaid in respect of the Debt Securities and Coupons of such series, 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 reasonable compensation to
the Trustee, its agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities Incurred, and all advances made, by the Trustee except
as a result of its negligence or bad faith) and of the Holders thereof allowed
in any such judicial proceedings relative to the Company, or any other obligor
upon the Debt Securities and Coupons of such series, its creditors or its
property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of such Holders and of the Trustee on their behalf, and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of such Holders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to such
Holders, to pay to the Trustee such amount as shall be
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sufficient to cover reasonable compensation to the Trustee, its agents,
attorneys and counsel, and all other reasonable expenses and liabilities
Incurred, and all advances made, by the Trustee except as a result of its
negligence or bad faith.
All rights of action and of asserting claims under this Indenture, or under
any of the Debt Securities and the Coupons, if any, appertaining thereto, of any
series, may be enforced by the Trustee without the possession of any such Debt
Securities or Coupons, or the production thereof in any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment (except for any amounts payable to the Trustee pursuant
to Section 7.06) shall be for the ratable benefit of the Holders of all the Debt
Securities or Coupons in respect of which such action was taken.
In case of an Event of Default hereunder the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Section 6.03 APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys or
other property collected by the Trustee pursuant to Section 6.02 with respect to
Debt Securities and Coupons, if any, of any series shall be applied, after
giving effect to the provisions of Article 12, if applicable, in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys or other property, upon presentation of the several Debt Securities
or Coupons of such series in respect of which moneys or other property have been
collected, and the notation thereon of the payment, if only partially paid, and
upon surrender thereof if fully paid:
FIRST: To the payment of all money due the Trustee pursuant to
Section 7.06;
SECOND: In case the principal of the Outstanding Debt Securities in
respect of which such moneys have been collected shall not have become due,
to the payment of interest on the Debt Securities or Coupons of such series
in the order of the maturity of the installments of such interest, with
interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest at the rate or Yield to
Maturity (in the case of Original Issue Discount Debt Securities) borne by
the Debt Securities or Coupons of such series, such payments to be made
ratably to the Persons entitled thereto, without discrimination or
preference;
THIRD: In case the principal of the Outstanding Debt Securities in
respect of which such moneys have been collected shall have become due, by
declaration or otherwise, to the payment of the whole amount then owing and
unpaid upon the Debt Securities or Coupons of such series for principal and
premium, if any, and interest, with interest on the overdue
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principal and premium, if any, and (to the extent that such interest has
been collected by the Trustee) upon overdue installments of interest at the
rate or Yield to Maturity (in the case of Original Issue Discount Debt
Securities) borne by the Debt Securities or Coupons of such series; and, in
case such moneys shall be insufficient to pay in full the whole amount so
due and unpaid upon the Debt Securities and Coupons of such series, then to
the payment of such principal and premium, if any, and interest, without
preference or priority of principal and premium, if any, over interest, or
of interest over principal and premium, if any, or of any installment of
interest over any other installment of interest, or of any Debt Security or
Coupon of such series over any Debt Security or Coupon of such series,
ratably to the aggregate of such principal and premium, if any, and
interest; and
FOURTH: The remainder, if any, shall be paid to the Company, its
successors or assigns, or to whomsoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.03. At least 15 days before such record
date, the Company shall mail to each Holder and the Trustee a notice that states
the record date, the payment date and amount to be paid.
Section 6.04 LIMITATION ON SUITS BY HOLDERS. No Holder of any Debt
Security or Coupon of any series shall have any right by virtue or by availing
of any provision of this Indenture to institute any action or proceeding at law
or in equity or in bankruptcy or otherwise, upon or under or with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless such Holder previously shall have given to the
Trustee written notice of an Event of Default with respect to Debt Securities of
that same series and of the continuance thereof and unless the Holders of not
less than 25% in aggregate principal amount of the Outstanding Debt Securities
of that series shall have made written request upon the Trustee to institute
such action or proceedings in respect of such Event of Default in its own name
as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
Incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action or proceedings and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 6.06; it being
understood and intended, and being expressly covenanted by the Holder of every
Debt Security or Coupon with every other Holder and the Trustee, that no one or
more Holders shall have any right in any manner whatever by virtue or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any Holders, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all such Holders. For the protection and enforcement of the
provisions of this Section 6.04, each and every Holder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision in this Indenture, however, the right
of any Holder of any Debt Security or Coupon to receive payment of the principal
of, and premium, if any, and
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(subject to Section 2.12) interest on, such Debt Security or Coupon, on or
after the respective due dates expressed in such Debt Security, and to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of
such Holder.
Section 6.05 REMEDIES CUMULATIVE; DELAY OR OMISSION IN EXERCISE OF
RIGHTS NOT A WAIVER OF DEFAULT. All powers and remedies given by this
Article 6 to the Trustee or to the Holders shall, to the extent permitted by
law, be deemed cumulative and not exclusive of any other powers and remedies
available to the Trustee or the Holders, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the
Trustee or of any Holder to exercise any right or power accruing upon any
Default occurring and continuing as aforesaid, shall impair any such right or
power, or shall be construed to be a waiver of any such Default or an
acquiescence therein; and, subject to the provisions of Section 6.04, every
power and remedy given by this Article 6 or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders.
Section 6.06 RIGHTS OF HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF DEBT
SECURITIES TO DIRECT TRUSTEE AND TO WAIVE DEFAULT. The Holders of a majority
in aggregate principal amount of the Debt Securities of any series at the
time Outstanding 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
Debt Securities of such series; PROVIDED, HOWEVER, that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture, and that subject to the provisions of Section 7.01, the Trustee
shall have the right to decline to follow any such direction if the Trustee,
being advised by counsel, shall determine that the action so directed may not
lawfully be taken, or if the Trustee shall by a responsible officer or
officers determine that the action so directed would involve it in personal
liability or would be unjustly prejudicial to Holders of Debt Securities of
such series not taking part in such direction; and PROVIDED, FURTHER,
HOWEVER, that nothing in this Indenture contained shall impair the right of
the Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by such Holders. Prior to the acceleration
of the maturity of the Debt Securities of any series, as provided in Section
6.01, the Holders of a majority in aggregate principal amount of the Debt
Securities of that series at the time Outstanding may on behalf of the
Holders of all the Debt Securities and any related Coupons of that series
waive any past Default or Event of Default and its consequences for that
series specified in the terms thereof as contemplated by Section 2.03, except
(a) a Default in the payment of the principal of, and premium, if any, or
interest on, any of the Debt Securities or in the payment of any related
Coupon and (b) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Holder affected thereby. In
case of any such waiver, such Default shall cease to exist, any Event of
Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, and the Company, the Trustee and the Holders of
the Debt Securities of that series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
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Section 6.07 TRUSTEE TO GIVE NOTICE OF DEFAULTS KNOWN TO IT, BUT MAY
WITHHOLD SUCH NOTICE IN CERTAIN CIRCUMSTANCES. The Trustee shall, within 90
days after the occurrence of a Default known to it with respect to a series
of Debt Securities or Coupons, if any, give to the Holders thereof, in the
manner provided in Section 13.03, notice of all Defaults with respect to such
series known to the Trustee, unless such Defaults shall have been cured or
waived before the giving of such notice; PROVIDED, that, except in the case
of Default in the payment of the principal of, or premium, if any, or
interest on, any of the Debt Securities or Coupons of such series or in the
making of any sinking fund payment with respect to the Debt Securities of
such series, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a committee of
directors or responsible officers of the Trustee in good faith determine that
the withholding of such notice is in the interests of the Holders thereof.
Section 6.08 REQUIREMENT OF AN UNDERTAKING TO PAY COSTS IN CERTAIN
SUITS UNDER THE INDENTURE OR AGAINST THE TRUSTEE. All parties to this
Indenture agree, and each Holder of any Debt Security or Coupon 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 in the manner and to the extent
provided in the Trust Indenture Act, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 6.08 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 ten percent in principal amount of the Outstanding
Debt Securities of that 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 Debt Security or Coupon on or after the due date for such
payment expressed in such Debt Security or Coupon.
ARTICLE 7
CONCERNING THE TRUSTEE
Section 7.01 CERTAIN DUTIES AND RESPONSIBILITIES. The Trustee, prior
to the occurrence of an Event of Default and after the curing or waiving of
all Events of Default which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture.
In case an Event of Default has occurred (which has not been cured or
waived), the Trustee shall 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.
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 wilful misconduct, except that:
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(a) this subsection shall not be construed to limit the effect of
the first paragraph of this Section 7.01;
(b) prior to the occurrence of an Event of Default with respect to
the Debt Securities of a series and after the curing or waiving of all
Events of Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect
to Debt Securities and Coupons, if any, of any series shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties
and obligations with respect to such series as are specifically set
forth in this Indenture, and no implied covenants or obligations with
respect to such series shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
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 the Trustee
shall examine the evidence furnished to it pursuant to Section 5.03 to
determine whether or not such evidence conforms to the requirement of
this Indenture;
(c) the Trustee shall not be liable for an 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; and
(d) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it with respect to Debt Securities of any
series in good faith in accordance with the direction of the Holders of not
less than a majority in aggregate principal amount of the Outstanding Debt
Securities of that 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 Debt Securities of such series.
None of the provisions of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any Personal financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
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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.
Section 7.02 CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided
in Section 7.01:
(a) 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 or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Company Order (unless
other evidence in respect thereof be herein specifically prescribed); and
any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel, and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders of Debt Securities or Coupons of any series
pursuant to the provisions of this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be Incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken 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;
(f) prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, 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, approval or other paper or
document, unless requested in writing to do so by the Holders of a majority
in aggregate principal amount of the then Outstanding Debt Securities of a
series affected by such matter; PROVIDED, HOWEVER, 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 not, in the opinion of the Trustee, 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 costs, expenses or liabilities as
a condition to so proceeding. The reasonable expense of
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every such investigation shall be paid by the Company or, if paid by the
Trustee, shall be repaid by the Company upon demand;
(g) 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 by it with due
care hereunder; and
(h) if any property other than cash shall at any time be subject to
a Lien in favor of the Holders, the Trustee, if and to the extent
authorized by a receivership or bankruptcy court of competent jurisdiction
or by the supplemental instrument subjecting such property to such Lien,
shall be entitled to make advances for the purpose of preserving such
property or of discharging tax Liens or other prior Liens or encumbrances
thereon.
Section 7.03 TRUSTEE NOT LIABLE FOR RECITALS IN INDENTURE OR IN DEBT
SECURITIES. The recitals contained herein, in the Debt Securities (except
the Trustee's certificate of authentication) and in any Coupons shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Debt Securities or Coupons, if any, of any series, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Debt Securities and perform its obligations hereunder, and
that the statements made by it or to be made by it in a Statement of
Eligibility and Qualification on Form T-1 supplied to the Company are true
and accurate. The Trustee shall not be accountable for the use or
application by the Company of any of the Debt Securities or of the proceeds
thereof.
Section 7.04 TRUSTEE, PAYING AGENT OR REGISTRAR MAY OWN DEBT
SECURITIES. The Trustee or any paying agent or Registrar, in its individual
or any other capacity, may become the owner or pledgee of Debt Securities or
Coupons and, subject to the provisions of the Trust Indenture Act relating to
conflicts of interest and preferential claims, may otherwise deal with the
Company with the same rights it would have if it were not Trustee, paying
agent or Registrar.
Section 7.05 MONEYS RECEIVED BY TRUSTEE TO BE HELD IN TRUST. Subject
to the provisions of Section 11.05, all moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes
for which they were received, but 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 moneys received by it hereunder. So long as no
Event of Default shall have occurred and be continuing, all interest allowed
on any such moneys shall be paid from time to time to the Company upon a
Company Order.
Section 7.06 COMPENSATION AND REIMBURSEMENT. The Company covenants and
agrees to pay in Dollars to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation for all services rendered by it
hereunder (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and, except as otherwise
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expressly provided herein, the Company will pay or reimburse in Dollars the
Trustee upon its request for all reasonable expenses, disbursements and
advances Incurred or made by the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents, attorneys and counsel and of all
Persons not regularly in its employ) except any such expense, disbursement or
advances as may arise from its negligence or bad faith. The Company also
covenants to indemnify in Dollars the Trustee for, and to hold it harmless
against, any loss, liability or expense Incurred without negligence, wilful
misconduct or bad faith on the part of the Trustee, arising out of or in
connection with the acceptance or administration of this trust or trusts
hereunder, including the reasonable costs and expenses of defending itself
against any claim of liability in connection with the exercise or performance
of any of its powers or duties hereunder. The obligations of the Company
under this Section 7.06 to compensate and indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture. The Company and the Holders
agree that such additional indebtedness shall be secured by a Lien prior to
that of the Debt Securities and Coupons, if any, upon all property and funds
held or collected by the Trustee, as such, except funds held in trust for the
payment of principal of, and premium, if any, or interest on, particular Debt
Securities and Coupons.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency, reorganization or other
similar law.
Section 7.07 RIGHT OF TRUSTEE TO RELY ON AN OFFICERS' CERTIFICATE WHERE
NO OTHER EVIDENCE SPECIFICALLY PRESCRIBED. Except as otherwise provided in
Section 7.01, whenever in the administration of the provisions of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on
the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered or omitted by it
under the provisions of this Indenture upon the faith thereof.
Section 7.08 SEPARATE TRUSTEE; REPLACEMENT OF TRUSTEE. The Company
may, but need not, appoint a separate Trustee for any one or more series of
Debt Securities. The Trustee may resign with respect to one or more or all
series of Debt Securities at any time by giving notice to the Company. The
Holders of a majority in principal amount of the Debt Securities of a
particular series
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may remove the Trustee for such series and only such series by so notifying
the Trustee and may appoint a successor Trustee. The Company shall remove
the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) The Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Trustee
or its property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount of the Debt Securities of a particular series
and such Holders do not reasonably promptly appoint a successor Trustee, or
if a vacancy exists in the office of Trustee for any reason (the Trustee in
such event being referred to herein as the retiring Trustee), the Company
shall promptly appoint a successor Trustee. No resignation or removal of the
Trustee and no appointment of a successor Trustee shall become effective
until the acceptance of appointment by the successor Trustee in accordance
with the applicable requirements of this Section 7.08.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under
this Indenture. The successor Trustee shall mail a notice of its succession
to Holders of Debt Securities of each applicable series. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the Lien provided for in Section 7.06.
If a successor Trustee does not take office within 60 days after the
retiring Trustee gives notice of resignation or is removed, the retiring
Trustee or the Holders of 25% in principal amount of the Debt Securities of
any applicable series may petition any court of competent jurisdiction for
the appointment of a successor Trustee for the Debt Securities of such series.
If the Trustee fails to comply with Section 7.10, any Holder of Debt
Securities of any applicable series may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee for the Debt Securities of such series.
Notwithstanding the replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.06 shall continue for the
benefit of the retiring Trustee.
In the case of the appointment hereunder of a separate or successor
trustee with respect to the Debt Securities of one or more series, the
Company, any retiring Trustee and each successor or separate Trustee with
respect to the Debt Securities of any applicable series shall execute and
deliver an Indenture supplemental hereto (a) which shall contain such
provisions as shall be deemed
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necessary or desirable to confirm that all the rights, powers, trusts and
duties of any retiring Trustee with respect to the Debt Securities of any
series as to which any such retiring Trustee is not retiring shall continue
to be vested in such retiring Trustee and (b) that 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 separate, retiring or successor 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.
Section 7.09 SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Debt Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Debt Securities
so authenticated; and in case at that time any of the Debt Securities shall
not have been authenticated, any successor to the Trustee may authenticate
such Debt Securities either in the name of any predecessor hereunder or in
the name of the successor to the Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Debt
Securities or in this Indenture provided that the certificate of the Trustee
shall have.
Section 7.10 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of Section 310(a) of the Trust Indenture Act.
The Trustee shall have a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition. No
obligor upon the Debt Securities or Coupons, if any, of a particular series
or Person directly or indirectly controlling, controlled by or under common
control with such obligor shall serve as Trustee upon the Debt Securities and
Coupons of such series. The Trustee shall comply with Section 310(b) of the
Trust Indenture Act; PROVIDED, HOWEVER, that there shall be excluded from the
operation of Section 310(b)(1) of the Trust Indenture Act this Indenture or
any indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding
if the requirements for such exclusion set forth in Section 310(b)(1) of the
Trust Indenture Act are met.
Section 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.
Section 7.12 COMPLIANCE WITH TAX LAWS. The Trustee hereby agrees to
comply with all U.S. Federal income tax information reporting and withholding
requirements applicable to it with
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respect to payments of premium (if any) and interest on the Debt Securities,
whether acting as Trustee, Registrar, paying agent or otherwise with respect
to the Debt Securities.
ARTICLE 8
CONCERNING THE HOLDERS
Section 8.01 EVIDENCE OF ACTION BY HOLDERS. Whenever in this Indenture
it is provided that the Holders of a specified percentage in aggregate
principal amount of the Debt Securities of any or all series may take action
(including the making of any demand or request, the giving of any direction,
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the Holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by Holders in Person or by agent or
proxy appointed in writing, (b) by the record of the Holders voting in favor
thereof at any meeting of Holders duly called and held in accordance with the
provisions of Section 5.02 or (c) by a combination of such instrument or
instruments and any such record of such a meeting of Holders.
Section 8.02 PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF DEBT
SECURITIES. Subject to the provisions of Sections 7.01, 7.02 and 13.11,
proof of the execution of any instrument by a Holder or his agent or proxy
shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee.
The ownership of Registered Securities of any series shall be proved by
the Debt Security Register or by a certificate of the Registrar for such
series.
The ownership of Bearer Securities shall be proved by production of such
Bearer Securities or by a certificate executed by any bank or trust company,
which certificate shall be dated and shall state on the date thereof a Bearer
Security bearing a specified identifying number or other mark was deposited
with or exhibited to the Person executing such certificate by the Person
named in such certificate, or by any other proof of possession reasonably
satisfactory to the Trustee. The holding by the Person named in any such
certificate of any Bearer Security specified therein shall be presumed to
continue for a period of one year unless at the time of determination of such
holding (a) another certificate bearing a later date issued in respect of the
same Bearer Security shall be produced, (b) such Bearer Security shall be
produced by some other Person, (c) such Bearer Security shall have been
registered on the Debt Security Register, if, pursuant to Section 2.03, such
Bearer Security can be so registered, or (d) such Bearer Security shall have
been canceled or paid.
The Trustee may require such additional proof of any matter referred to
in this Section 8.02 as it shall deem necessary.
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Section 8.03 WHO MAY BE DEEMED OWNER OF DEBT SECURITIES. Prior to due
presentment for registration of transfer of any Registered Security, the
Company, the Trustee, any paying agent and any Registrar may deem and treat
the Person in whose name any Registered Security shall be registered upon the
books of the Company as the absolute owner of such Registered Security
(whether or not such Registered Security shall be overdue and notwithstanding
any notation of ownership or other writing thereon) for the purpose of
receiving payment of or on account of the principal of and premium, if any,
and (subject to Section 2.03) interest on such Registered Security and for
all other purposes, and neither the Company nor the Trustee nor any paying
agent nor any Registrar shall be affected by any notice to the contrary; and
all such payments so made to any such Holder for the time being, or upon his
order, shall be valid and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Registered Security.
The Company, the Trustee and any paying agent may deem and treat the
Holder of any Bearer Security or Coupon as the absolute owner of such Bearer
Security or Coupon (whether or not such Debt Security shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of and
premium, if any, and (subject to Section 2.03) interest on such Bearer
Security or Coupon and for all other purposes, and neither the Company nor
the Trustee nor any paying agent shall be affected by any notice to the
contrary; and all such payments so made to any such Holder for the time
being, or upon his order, shall be valid and, to the extent of the sum or
sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Bearer Security or Coupon.
None of the Company, the Trustee, any paying agent or the 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 a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Section 8.04 INSTRUMENTS EXECUTED BY HOLDERS BIND FUTURE HOLDERS. At
any time prior to (but not after) the evidencing to the Trustee, as provided
in Section 8.01, of the taking of any action by the Holders of the percentage
in aggregate principal amount of the Debt Securities of any series specified
in this Indenture in connection with such action and subject to the following
paragraph, any Holder of a Debt Security which is shown by the evidence to be
included in the Debt Securities the Holders of which have consented to such
action may, by filing written notice with the Trustee at its corporate trust
office and upon proof of holding as provided in Section 8.02, revoke such
action so far as concerns such Debt Security. Except as aforesaid any such
action taken by the Holder of any Debt Security shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such Debt
Security and all past, present and future Holders of Coupons, if any,
appertaining thereto, and of any Debt Security issued upon transfer thereof
or in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon such Debt Security or such other Debt
Securities or Coupons. Any action taken by the Holders of the percentage in
aggregate principal amount of the Debt Securities of any series specified in
this
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Indenture in connection with such action shall be conclusively binding upon
the Company, the Trustee and the Holders of all the Securities and Coupons of
such series.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Registered Securities entitled to give
their consent or take any other action required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding
the immediately preceding paragraph, those Persons who were Holders of
Registered Securities at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to give such consent or to revoke
any consent previously given or to take any such action, whether or not such
Persons continue to be Holders of Registered Securities after such record
date. No such consent shall be valid or effective for more than 120 days
after such record date unless the consent of the Holders of the percentage in
aggregate principal amount of the Debt Securities of such series specified in
this Indenture shall have been received within such 120-day period.
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.01 PURPOSES FOR WHICH SUPPLEMENTAL INDENTURE MAY BE ENTERED
INTO WITHOUT CONSENT OF HOLDERS. The Company, when authorized by a
resolution of the Board of Directors, and the Trustee may from time to time
and at any time, without the consent of Holders, enter into an Indenture or
Indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof) for one
or more of the following purposes:
(a) to evidence the succession pursuant to Article 10 of another
Person to the Company, or successive successions, and the assumption by the
Successor Company (as defined in Section 10.01) of the covenants,
agreements and obligations of the Company in this Indenture and in the Debt
Securities;
(b) to surrender any right or power herein conferred upon the
Company, to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions for the protection of the Holders of
all or any series of Debt Securities and the Coupons, if any, appertaining
thereto (and if such covenants are to be for the benefit of less than all
series of Debt Securities, stating that such covenants are expressly being
included solely for the benefit of such series) as the Board of Directors
shall consider to be for the protection of the Holders of such Debt
Securities, and to make the occurrence, or the occurrence and continuance,
of a Default in any of such additional covenants, restrictions, conditions
or provisions a Default or an Event of Default permitting the enforcement
of all or any of the several remedies provided in this Indenture; PROVIDED,
that in respect of any such additional covenant, restriction, condition or
provision such supplemental Indenture may provide for a particular period
of grace after Default (which period may be shorter or
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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 any or all series of
Debt Securities to waive such default;
(c) to cure any ambiguity or to correct or supplement any provision
contained herein, in any supplemental Indenture or in any Debt Securities
of any series that may be defective or inconsistent with any other
provision contained herein, in any supplemental Indenture or in the Debt
Securities of such series; to convey, transfer, assign, mortgage or pledge
any property to or with the Trustee, or to make such other provisions in
regard to matters or questions arising under this Indenture as shall not
adversely affect the interests of any Holders of Debt Securities or Coupons
of any series;
(d) to modify or amend this Indenture in such a manner as to permit
the qualification of this Indenture or any Indenture supplemental hereto
under the Trust Indenture Act as then in effect, except that nothing herein
contained shall permit or authorize the inclusion in any Indenture
supplemental hereto of the provisions referred to in Section 316(a)(2) of
the Trust Indenture Act;
(e) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registerable as to principal, to
change or eliminate any restrictions on the payment of principal of, or
premium, if any, on, Registered Securities or of principal of, or premium,
if any, or interest on, Bearer Securities or to permit Registered
Securities to be exchanged for Bearer Securities; PROVIDED, that any such
action shall not adversely affect the interests of the Holders of Debt
Securities or any Coupons of any series in any material respect or permit
or facilitate the issuance of Debt Securities of any series in
uncertificated form;
(f) to comply with Article 10;
(g) in the case of any Debt Securities and Coupons, if any,
appertaining thereto subordinated pursuant to Article 12, and subject to
the penultimate paragraph of this Section 9.01, to make any change in
Article 12 that would limit or terminate the benefits available to any
holder of Senior Indebtedness (or Representatives therefor) under
Article 12;
(h) to add Guarantees with respect to the Debt Securities or to
secure the Debt Securities;
(i) to make any change that does not adversely affect the rights of
any Holder;
(j) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Debt Securities; provided,
however, that any such addition, change or elimination not otherwise
permitted under this Section 9.01 shall (i) neither
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(A) apply to any Debt Security of any series created prior to the execution
of such supplemental indenture and entitled to the benefit of such provision
nor (B) modify the rights of the Holder of any such Debt Security with
respect to such provision or (ii) shall become effective only when there is
no such Debt Security Outstanding;
(k) to evidence and provide for the acceptance of appointment
hereunder by a successor or separate Trustee with respect to the Debt
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; and
(l) to establish the form or terms of Debt Securities and Coupons,
if any, of any series as permitted by Sections 2.01 and 2.03.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental Indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee 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.
Any supplemental Indenture authorized by the provisions of this Section
9.01 may be executed by the Company and the Trustee without the consent of
the Holders of any of the Debt Securities or Coupons, if any, appertaining
thereto at the time Outstanding, notwithstanding any of the provisions of
Section 9.02.
In the case of Debt Securities or Coupons, if any, appertaining thereto
subordinated pursuant to Article 12, an amendment under this Section 9.01 may
not make any change that adversely affects the rights under Article 12 of any
holder of Senior Indebtedness then outstanding unless the holders of such
Senior Indebtedness (or any group or Representative thereof authorized to
give a consent) consent to such change.
After an amendment under this Section 9.01 becomes effective, the Company
shall mail to Holders of Debt Securities of each series affected thereby a
notice briefly describing such amendment. The failure to give such notice to
all such Holders, or any defect therein, shall not impair or affect the
validity of an amendment under this Section 9.01.
Section 9.02 MODIFICATION OF INDENTURE WITH CONSENT OF HOLDERS OF DEBT
SECURITIES. Without notice to any Holder but with the consent (evidenced as
provided in Section 8.01) of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such supplemental Indenture, the Company, when authorized by a
resolution of the Board of Directors, and the Trustee may from time to time
and at any time enter into an Indenture or Indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as in force
at the date of execution thereof) for the purpose of adding any
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provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of any supplemental Indenture or of modifying in any
manner the rights of the Holders of the Debt Securities of such series;
PROVIDED, that no such supplemental Indenture, without the consent of the
Holders of each Debt Security so affected, shall (a) reduce the percentage in
principal amount of Debt Securities of any series whose Holders must consent
to an amendment; (b) reduce the rate of or extend the time for payment of
interest on any Debt Security or Coupon or reduce the amount of any payment
to be made with respect to any Coupon; (c) reduce the principal of or extend
the Stated Maturity of any Debt Security; (d) reduce the premium payable upon
the redemption of any Debt Security or change the time at which any Debt
Security may or shall be redeemed in accordance with Article 3; (e) make any
Debt Security or Coupon payable in Currency other than that stated in the
Debt Security; (f) in the case of any Debt Security or Coupons, if any,
appertaining thereto subordinated pursuant to Article 12, make any change in
Article 12 that adversely affects the rights of any Holder under Article 12;
(g) release any security that may have been granted in respect of the Debt
Securities; (h) make any change in Section 6.06 or this Section 9.02; (i)
change any obligation of the Company to pay additional interest pursuant to
Section 4.06; or (j) limit the obligation of the Company to maintain a paying
agency outside the United States for payment on Bearer Securities as provided
in Section 4.02.
A supplemental Indenture which changes or eliminates any covenant or other
provision of this Indenture which has been expressly included solely for the
benefit of one or more particular series of Debt Securities and Coupons, if any,
or which modifies the rights of the Holders of Debt Securities and Coupons 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 Debt Securities
and Coupons, if any, of any other series.
Upon the request of the Company, accompanied by a copy of a resolution of
the Board of Directors authorizing the execution of any such supplemental
Indenture, and upon the filing with the Trustee of evidence of the consent of
Holders as aforesaid, the Trustee shall join with the Company in the execution
of such supplemental Indenture unless such supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion but shall not be obligated to enter
into such supplemental Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
Indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
In the case of any Debt Securities or Coupons, if any, appertaining
thereto, subordinated pursuant to Article 12, an amendment under this
Section 9.02 may not make any change that adversely affects the rights under
Article 12 of any holder of Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness (or any group or Representative thereof
authorized to give a consent) consent to such change.
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After an amendment under this Section 9.02 becomes effective, the Company
shall mail to Holders of Debt Securities of each series affected thereby a
notice briefly describing such amendment. The failure to give such notice to
all such Holders, or any defect therein, shall not impair or affect the validity
of an amendment under this Section 9.02.
Section 9.03 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental Indenture pursuant to the provisions of this Article 9, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the Holders
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental Indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
The Trustee, subject to the provisions of Sections 7.01 and 7.02, may
accept an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any such supplemental Indenture complies with the provisions of this
Article 9.
Section 9.04 DEBT SECURITIES MAY BEAR NOTATION OF CHANGES BY SUPPLEMENTAL
INDENTURES. Debt Securities and Coupons, if any, of any series authenticated
and delivered after the execution of any supplemental Indenture pursuant to the
provisions of this Article 9 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. New Debt Securities and Coupons of any series so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental Indenture may be prepared and executed by the Company,
authenticated by the Trustee and delivered in exchange for the Debt Securities
and Coupons of such series then Outstanding. Failure to make the appropriate
notation or to issue a new Debt Security or Coupon of such series shall not
affect the validity of such amendment.
Section 9.05 PAYMENT FOR CONSENT. Neither the Company nor any Affiliate
of the Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Debt Securities or Coupons, if any,
appertaining thereto unless such consideration is offered to be paid to all
Holders that so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
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ARTICLE 10
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 10.01 CONSOLIDATIONS AND MERGERS OF THE COMPANY. The Company
shall not consolidate with or merge with or into any Person, or convey, transfer
or lease all or substantially all its assets, unless: (a) either (i) the Company
shall be the continuing Person in the case of a merger or (ii) the resulting,
surviving or transferee Person if other than the Company (the "Successor
Company") shall be a corporation organized and existing under the laws of the
United States, any State thereof or the District of Columbia and the Successor
Company shall expressly assume, by an Indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Debt Securities and Coupons, if any,
according to their tenor, and this Indenture; (b) immediately after giving
effect to such transaction (and treating any Indebtedness which becomes an
obligation of the Successor Company or any Subsidiary of the Company as a result
of such transaction as having been Incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default or Event of Default
would occur or be continuing; (c) the Successor Company waives any right to
redeem any Bearer Security under circumstances in which the Successor Company
would be entitled to redeem such Bearer Security but the Company would not have
been so entitled to redeem if the consolidation, merger, conveyance, transfer or
lease had not occurred; and (d) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental Indenture (if any)
comply with this Indenture.
Section 10.02 RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In case of any
consolidation or merger, or conveyance or transfer of the assets of the Company
as an entirety or virtually as an entirety in accordance with Section 10.01, the
Successor Company shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein as the party of the first part, and
the predecessor corporation shall be relieved of any further obligation under
the Indenture and the Securities. The Successor Company thereupon may cause to
be signed, and may issue either in its own name or in the name of the Company,
any or all the Debt Securities issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee; and, upon the
order of the Successor Company, instead of the Company, and subject to all the
terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any Debt Securities and Coupons, if any,
appertaining thereto, which previously shall have been signed and delivered by
the officers of the Company to the Trustee for authentication, and any Debt
Securities and Coupons, if any, appertaining thereto, which the Successor
Company thereafter shall cause to be signed and delivered to the Trustee for
that purpose. All the Debt Securities and Coupons, if any, appertaining thereto
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Debt Securities and Coupons, if any, appertaining thereto
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all such Debt Securities and Coupons had been issued at the date of
the execution hereof.
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In case of any such consolidation, merger, sale or conveyance such changes
in phraseology and form (but not in substance) may be made in the Debt
Securities and Coupons, if any, appertaining thereto thereafter to be issued as
may be appropriate.
ARTICLE 11
SATISFACTION AND DISCHARGE;
INDENTURE; DEFEASANCE; UNCLAIMED MONEYS
Section 11.01 APPLICABILITY OF ARTICLE. If, pursuant to Section 2.03,
provision is made for the defeasance of Debt Securities of a series and if the
Debt Securities of such series are Registered Securities and denominated and
payable only in Dollars (except as provided pursuant to Section 2.03), then the
provisions of this Article 11 relating to defeasance of Debt Securities shall be
applicable except as otherwise specified pursuant to Section 2.03 for Debt
Securities of such series. Defeasance provisions, if any, for Debt Securities
denominated in a Foreign Currency or for Bearer Securities may be specified
pursuant to Section 2.03.
Section 11.02 SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE.
(a) If at any time (i) the Company shall have delivered to the Trustee for
cancellation all Debt Securities of any series theretofore authenticated and
delivered (other than (A) Coupons appertaining to Bearer Securities of such
series called for redemption and maturing after the relevant redemption date,
surrender of which has been waived, (B) any Debt Securities and Coupons of such
series which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.09 and (C) Debt Securities and Coupons
for whose payment money has theretofore been deposited in trust and thereafter
repaid to the Company as provided in Section 11.05) or (ii) all Debt Securities
and the Coupons, if any, of such series not theretofore delivered to the Trustee
for cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption, and the Company shall deposit with the Trustee as trust funds the
entire amount in the Currency in which such Debt Securities are denominated
(except as otherwise provided pursuant to Section 2.03) sufficient to pay at
maturity or upon redemption all Debt Securities of such series not theretofore
delivered to the Trustee for cancellation, including principal and premium, if
any, and interest due or to become due on such date of maturity or redemption
date, as the case may be, and if in either case the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then this
Indenture shall cease to be of further effect (except as to any surviving rights
of registration of transfer or exchange of such Debt Securities herein expressly
provided for and rights to receive payments of principal of, and premium, if
any, and interest on, such Debt Securities and any right to receive additional
interest as provided in Section 4.06) with respect to the Debt Securities of
such series, and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel and at the cost and
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expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture.
(b) Subject to Sections 11.02(c), 11.03 and 11.07, the Company at any time
may terminate, with respect to Debt Securities of a particular series, (i) all
its obligations under the Debt Securities of such series and this Indenture with
respect to the Debt Securities of such series ("legal defeasance option") or
(ii) its obligations with respect to the Debt Securities of such series under
clause (iii) of Section 10.01 and the related operation of Section 6.01(d) and
the operation of Sections 6.01(e), (f), (i) and (j) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Debt
Securities of the defeased series may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, payment of
the Debt Securities of the defeased series may not be accelerated because of an
Event of Default specified in Sections 6.01(d), (e), (f), (i) and (j) (except to
the extent covenants or agreements referenced in such Sections remain
applicable).
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations
in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.10, 11.05, 11.06 and 11.07
shall survive until the Debt Securities of the defeased series have been paid in
full. Thereafter, the Company's obligations in Sections 7.06, 11.05 and 11.06
shall survive.
Section 11.03 CONDITIONS OF DEFEASANCE. The Company may exercise its
legal defeasance option or its covenant defeasance option with respect to Debt
Securities of a particular series only if:
(a) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of, and
premium, if any, and interest on, the Debt Securities of such series to
maturity or redemption, as the case may be;
(b) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay the principal, premium and
interest when due on all the Debt Securities of such series to maturity or
redemption, as the case may be;
(c) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(g) or (h) with respect to the
Company occurs which is continuing at the end of the period;
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(d) no Default has occurred and is continuing on the date of such
deposit and after giving effect thereto;
(e) the deposit does not constitute a default under any other
agreement binding on the Company and, if the Debt Securities of such series
are subordinated pursuant to Article 12, is not prohibited by Article 12;
(f) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not constitute,
or is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(g) in the event of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from the Internal Revenue Service a ruling, or
(ii) since the date of this Indenture there has been a change in the
applicable Federal income tax law, in either case of the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders of
Debt Securities of such series 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;
(h) in the event of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of Debt Securities of such series 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; and
(i) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Debt Securities of such series as
contemplated by this Article 11 have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption of Debt Securities of such series at a future
date in accordance with Article 3.
Section 11.04 APPLICATION OF TRUST MONEY. The Trustee shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to this
Article 11. It shall apply the deposited money and the money from U.S.
Government Obligations through any paying agent and in accordance with this
Indenture to the payment of principal of, and premium, if any, and interest on,
the Debt Securities and Coupons, if any, of the defeased series. In the event
the Debt Securities and Coupons, if any, of the defeased series are subordinated
pursuant to Article 12, money and securities so held in trust are not subject to
Article 12.
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Section 11.05 REPAYMENT TO COMPANY. The Trustee and any paying agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and any
paying agent shall pay to the Company upon request any money held by them for
the payment of principal, premium or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to such money must look to the Company
for payment as general creditors.
Section 11.06 INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS. The Company
shall pay and shall indemnify the Trustee and the Holders against any tax, fee
or other change imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
Section 11.07 REINSTATEMENT. If the Trustee or any paying agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article 11 by reason of any legal proceeding or by reason of any order or
judgment of any court or government authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Debt Securities of the defeased series shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 11 until
such time as the Trustee or any paying agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article 11.
ARTICLE 12
SUBORDINATION OF DEBT SECURITIES
Section 12.01 APPLICABILITY OF ARTICLE; AGREEMENT TO SUBORDINATE. The
provisions of this Article 12 shall be applicable to the Debt Securities of any
series (Debt Securities of such series referred to in this Article 12 as
"Subordinated Debt Securities") designated, pursuant to Section 2.03, as
subordinated to Senior Indebtedness. Each Holder by accepting a Subordinated
Debt Security agrees that the Indebtedness evidenced by such Subordinated Debt
Security is subordinated in right of payment, to the extent and in the manner
provided in this Article 12, to the prior payment of all Senior Indebtedness and
that the subordination is for the benefit of and enforceable by the holders of
Senior Indebtedness. All provisions of this Article 12 shall be subject to
Section 12.12.
Section 12.02 LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment or
distribution of the assets of the Company to creditors upon a total or partial
liquidation or a total or partial dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(a) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of the Senior Indebtedness (including interest (if
any), accruing on or after the
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commencement of a proceeding in bankruptcy, whether or not allowed as a
claim against the Company in such bankruptcy proceeding) before Holders
of Subordinated Debt Securities shall be entitled to receive any payment
of principal of, or premium, if any, or interest on, the Subordinated Debt
Securities; and
(b) until the Senior Indebtedness is paid in full, any distribution
to which Holders of Subordinated Debt Securities would be entitled but for
this Article 12 shall be made to holders of Senior Indebtedness as their
interests may appear, except that such Holders may receive shares of stock
and any debt securities that are subordinated to Senior Indebtedness to at
least the same extent as the Subordinated Debt Securities.
Section 12.03 DEFAULT ON SENIOR INDEBTEDNESS. The Company may not pay the
principal of, or premium, if any, or interest on, the Subordinated Debt
Securities or make any deposit pursuant to Article 11 and may not repurchase,
redeem or otherwise retire (except, in the case of Subordinated Debt Securities
that provide for a mandatory sinking fund pursuant to Section 3.05, by the
delivery of Subordinated Debt Securities by the Company to the Trustee pursuant
to the first paragraph of Section 3.06) any Subordinated Debt Securities
(collectively, "pay the Subordinated Debt Securities") if (a) any principal,
premium or interest in respect of Senior Indebtedness is not paid within any
applicable grace period (including at maturity) or (b) any other default on
Senior Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (i) the default
has been cured or waived and any such acceleration has been rescinded or
(ii) such Senior Indebtedness has been paid in full in cash; PROVIDED, HOWEVER,
that the Company may pay the Subordinated Debt Securities without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative of each issue of Designated Senior Indebtedness.
During the continuance of any default (other than a default described in clause
(a) or (b) of the preceding sentence) with respect to any Senior Indebtedness
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company may
not pay the Subordinated Debt Securities for a period (a "Payment Blockage
Period") commencing upon the receipt by the Company and the Trustee of written
notice of such default from the Representative of any Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period (a
"Blockage Notice") and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) by
repayment in full in cash of such Designated Senior Indebtedness or
(iii) because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section 12.03), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Subordinated Debt Securities after such Payment Blockage Period. Not
more than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to any number of issues of
Senior Indebtedness during such period; PROVIDED, HOWEVER, that if any Blockage
Notice within such 360-day period is
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given by or on behalf of any holders of Designated Senior Indebtedness (other
than the Bank Indebtedness), the Representative of the Bank Indebtedness may
give another Blockage Notice within such period; PROVIDED, FURTHER, HOWEVER,
that in no event may the total number of days during which any Payment
Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any 360 consecutive day period. For purposes of this Section 12.03,
no default or event of default which existed or was continuing on the date of
the commencement of any Payment Blockage Period with respect to the Senior
Indebtedness initiating such Payment Blockage Period shall be, or be made,
the basis of the commencement of a subsequent Payment Blockage Period by the
Representative of such Senior Indebtedness, whether or not within a period of
360 consecutive days, unless such default or event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
Section 12.04 ACCELERATION OF PAYMENT OF DEBT SECURITIES. If payment of
the Subordinated Debt Securities is accelerated because of an Event of Default,
the Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness (or their Representatives) of the acceleration.
Section 12.05 WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution is
made to Holders of Subordinated Debt Securities that because of this Article 12
should not have been made to them, the Holders who receive such distribution
shall hold it in trust for holders of Senior Indebtedness and pay it over to
them as their interests may appear.
Section 12.06 SUBROGATION. After all Senior Indebtedness is paid in full
and until the Subordinated Debt Securities are paid in full, Holders of
Subordinated Debt Securities shall be subrogated to the rights of holders of
Senior Indebtedness to receive distributions applicable to Senior Indebtedness.
A distribution made under this Article 12 to holders of Senior Indebtedness
which otherwise would have been made to Holders of Subordinated Debt Securities
is not, as between the Company and such Holders, a payment by the Company on
Senior Indebtedness.
Section 12.07 RELATIVE RIGHTS. This Article 12 defines the relative
rights of Holders of Subordinated Debt Securities and holders of Senior
Indebtedness. Nothing in this Indenture shall:
(a) impair, as between the Company and Holders of either
Subordinated Debt Securities or Debt Securities, the obligation of the
Company, which is absolute and unconditional, to pay principal of, and
premium, if any, and interest on, the Subordinated Debt Securities and the
Debt Securities in accordance with their terms; or
(b) prevent the Trustee or any Holder of either Subordinated Debt
Securities or Debt Securities from exercising its available remedies upon a
Default, subject to the rights of holders of Senior Indebtedness to receive
distributions otherwise payable to Holders of Subordinated Debt Securities.
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Section 12.08 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of
any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Subordinated Debt Securities shall be impaired by
any act or failure to act by the Company or by its failure to comply with this
Indenture.
Section 12.09 RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
Section 12.03, the Trustee or any paying agent may continue to make payments on
Subordinated Debt Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two business days prior to the date of such payment, a responsible
officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article 12. The Company, the Registrar, any paying agent, a
Representative or a holder of Senior Indebtedness may give the notice; PROVIDED,
HOWEVER, that, if an issue of Senior Indebtedness has a Representative, only the
Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and any paying agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article 12 with respect to
any Senior Indebtedness which may at any time be held by it, to the same extent
as any other holder of Senior Indebtedness; and nothing in Article 7 shall
deprive the Trustee of any of its rights as such holder. Nothing in this
Article 12 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.06.
Section 12.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
Section 12.11 ARTICLE 12 NOT TO PREVENT DEFAULTS OR LIMIT RIGHT TO
ACCELERATE. The failure to make a payment pursuant to the Debt Securities by
reason of any provision in this Article 12 shall not be construed as preventing
the occurrence of a Default. Nothing in this Article 12 shall have any effect
on the right of the Holders or the Trustee to accelerate the maturity of either
the Subordinated Debt Securities or the Debt Securities, as the case may be.
Section 12.12 TRUST MONEYS NOT SUBORDINATED. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Article 11 by the Trustee for the
payment of principal of, and premium, if any, and interest on, the Subordinated
Debt Securities or the Debt Securities shall not be subordinated to the prior
payment of any Senior Indebtedness or subject to the restrictions set forth in
this Article 12, and none of the Holders thereof shall be obligated to pay over
any such amount to the Company or any holder of Senior Indebtedness of the
Company or any other creditor of the Company.
Section 12.13 TRUSTEE ENTITLED TO RELY. Upon any payment or distribution
pursuant to this Article 12, the Trustee and the Holders shall be entitled to
rely (a) upon any order or decree of a court of competent jurisdiction in which
any proceedings of the nature referred to in Section 12.02
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are pending, (b) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to such
Holders or (c) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 12. In the event that the
Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article 12, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under
this Article 12, and, if such evidence is not furnished, the Trustee may
defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment. The provisions of Sections
7.01 and 7.02 shall be applicable to all actions or omissions of actions by
the Trustee pursuant to this Article 12.
Section 12.14 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder by
accepting a Subordinated Debt Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders of Subordinated Debt Securities
and the holders of Senior Indebtedness as provided in this Article 12 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 12.15 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Holders of Subordinated Debt Securities or
the Company or any other Person, money or assets to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 12 or otherwise.
Section 12.16 RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION
PROVISIONS. Each Holder by accepting a Subordinated Debt Security acknowledges
and agrees that the foregoing subordination provisions are, and are intended to
be, an inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Subordinated Debt Securities, to acquire and continue to hold,
or to continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
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<PAGE>
ARTICLE 13
MISCELLANEOUS PROVISIONS
Section 13.01 SUCCESSORS AND ASSIGNS OF COMPANY BOUND BY INDENTURE. All
the covenants, stipulations, promises and agreements in this Indenture contained
by or in behalf of the Company or the Trustee shall bind its successors and
assigns, whether so expressed or not.
Section 13.02 ACTS OF BOARD, COMMITTEE OR OFFICER OF SUCCESSOR COMPANY
VALID. Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any Successor Company.
Section 13.03 REQUIRED NOTICES OR DEMANDS. Except as otherwise
expressly provided in this Indenture, any notice or demand which by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the Holders to or on the Company may be given or served by
being deposited postage prepaid in a post office letter box in the United
States addressed (until another address is filed by the Company with the
Trustee) as follows: Quaker State Corporation, 225 East John Carpenter
Freeway, Irving, Texas 75062, Attention: Chief Financial Officer. Except as
otherwise expressly provided in this Indenture, any notice, direction,
request or demand by the Company or by any Holder to or upon the Trustee may
be given or made, for all purposes, by being deposited postage prepaid in a
post office letter box in the United States addressed to the corporate trust
office of the Trustee initially at _____________________________. The
Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any notice required or permitted to a Registered Holder by the Company or
the Trustee pursuant to the provisions of this Indenture shall be deemed to be
properly mailed by being deposited postage prepaid in a post office letter box
in the United States addressed to such Holder at the address of such Holder as
shown on the Debt Security Register. Any report pursuant to Section 313 of the
Trust Indenture Act shall be transmitted in compliance with subsection (c)
therein.
Any notice required or permitted to a Bearer Holder by the Company or the
Trustee pursuant to this Indenture shall be deemed to be properly given if
published on two separate business days in an Authorized Newspaper or Newspapers
in such Place or Places of Payment specified pursuant to Section 2.03, the first
such publication to be not earlier than the earliest date and not later than two
business days prior to the latest date prescribed for the giving of such notice.
Notwithstanding the foregoing, any notice to Holders of Floating Rate Debt
Securities regarding the determination of a periodic rate of interest, if such
notice is required pursuant to Section 2.03, shall be sufficiently given if
given in the manner specified pursuant to Section 2.03.
In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, then such
notification as shall be given with the approval of the Trustee shall constitute
sufficient notice for every purpose hereunder.
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In the event of suspension of publication of any Authorized Newspaper or by
reason of any other cause it shall be impracticable to give notice by
publication, then such notification as shall be given with the approval of the
Trustee shall constitute sufficient notice for every purpose hereunder.
Failure to mail a notice or communication to a Holder or any defect in it
or any defect in any notice by publication as to a Holder shall not affect the
sufficiency of such notice with respect to other Holders. If a notice or
communication is mailed or published in the manner provided above, it is
conclusively presumed duly given.
Section 13.04 INDENTURE AND DEBT SECURITIES TO BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. This Indenture, each Debt Security and
each Coupon shall be deemed to be New York contracts, and for all purposes shall
be construed in accordance with the laws of said State (without reference to
principles of conflicts of law).
Section 13.05 OFFICERS' CERTIFICATE AND OPINION OF COUNSEL TO BE FURNISHED
UPON APPLICATION OR DEMAND BY THE COMPANY. Upon any application or demand by
the Company to the Trustee to take any action under any of the provisions of
this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent 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 have been complied with, except that in the case of any such
application or demand as to which the furnishing of such document is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the Person making such
certificate or opinion has read such covenant or condition, (b) 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, (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
Section 13.06 PAYMENTS DUE ON LEGAL HOLIDAYS. In any case where the date
of maturity of interest on or principal of and premium, if any, on the Debt
Securities of a series or the date fixed for redemption or repayment of any Debt
Security or the making of any sinking fund payment shall not be a business day
at any Place of Payment for the Debt Securities of such series, then payment of
interest or principal and premium, if any, or the making of such sinking fund
payment need not be made on such date at such Place of Payment, but 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 date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date. If a record date
is not a business day, the record date shall not be affected.
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Section 13.07 PROVISIONS REQUIRED BY TRUST INDENTURE ACT TO CONTROL. If
and to the extent that any provision of this Indenture limits, qualifies or
conflicts with another provision included in this Indenture which is required to
be included in this Indenture by any of Sections 310 to 318, inclusive, of the
Trust Indenture Act, such required provision shall control.
Section 13.08 COMPUTATION OF INTEREST ON DEBT SECURITIES. Interest, if
any, on the Debt Securities shall be computed on the basis of a 360-day year of
twelve 30-day months, except as may otherwise be provided pursuant to
Section 2.03.
Section 13.09 RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee
may make reasonable rules for action by or a meeting of Holders. The Registrar
and any paying agent may make reasonable rules for their functions.
Section 13.10 NO RECOURSE AGAINST OTHERS. An incorporator or any past,
present or future director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Debt Securities, the Coupons or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Debt Security or Coupon, each Holder shall waive and release all such liability.
The waiver and release shall be part of the consideration for the issue of the
Debt Securities and Coupons.
Section 13.11 SEVERABILITY. In case any provision in this Indenture, the
Debt Securities or the Coupons 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 13.12 EFFECT OF HEADINGS. The article and section headings herein
and in the Table of Contents are for convenience only and shall not affect the
construction hereof.
Section 13.13 INDENTURE MAY BE EXECUTED IN COUNTERPARTS. This Indenture
may be executed in any number of counterparts, each of which shall be an
original; but such counterparts shall together constitute but one and the same
instrument.
The Trustee hereby accepts the trusts in this Indenture upon the terms and
conditions herein set forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed as of the date first written above.
MERIDIAN INDUSTRIAL TRUST, INC.
By:
-----------------------------------
Name:
Title:
--------------------------------------
By:
-----------------------------------
Name:
Title:
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[LETTERHEAD]
December 10, 1997
Meridian Industrial Trust, Inc.
455 Market Street, 17th Floor
San Francisco, CA 94105
Gentlemen:
You have requested our opinion concerning: (a) the ability of Meridian
Industrial Trust, Inc. (the "Company") to qualify as a real estate investment
trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code") and (b) the accuracy of the tax discussion in the
Prospectus contained in Amendment No. 1 to the Company's Registration Statement
on Form S-3 (Registration No. 333-24579) filed by the Company with the
Securities and Exchange Commission on or about December 11, 1997 (the
"Registration Statement") relating to the offering from time to time of up to
$600 million in initial offering price of various securities. Capitalized
terms used but not defined herein have the meanings specified in the
Registration Statement.
We have examined the Registration Statement and the Company's Charter,
and such other documents as we considered necessary or appropriate for
purposes of issuing our opinions. We also received certain representations
from officers of the Company. In rendering the opinions set forth below, we
have relied upon these representations, and the information presented in the
Registration Statement and other documents, without undertaking any
independent verification of the accuracy or completeness of those matters.
In our review, we have assumed that each representation and all other
information that we reviewed is true and correct in all material respects and
will remain true and correct, that all obligations imposed by any documents
on the parties have been or will be performed, that the Registration
Statement and the other information fairly describes the past and expected
future actions of the parties, and that the Company has been and will be
operated in a fashion consistent with the expectations described in the
Registration Statement and the representations. We have not made an
independent investigation of the accuracy or completeness of those matters
and have assumed that the information made available to us accurately and
completely describes all material facts relevant to our opinion.
<PAGE>
Meridian Industrial Trust, Inc.
December 10, 1997
Page 2
Based on the facts and representations referred to above, and subject to
the analysis, qualifications and assumptions presented under the heading
"Federal Income Tax Considerations" in the Registration Statement, it is our
opinion that:
(1) The Company has qualified as a REIT for its taxable years ending
December 31, 1995 and December 31, 1996.
(2) The Company is organized in conformity with the requirements for
qualification as a REIT and its method of operation has and will enable it
to continue to meet the requirements for qualification and taxation as a
REIT under the Code, provided the Company continues to meet the asset
composition, source of income, shareholder diversification, distribution,
record keeping, and other requirements of the Code necessary for the
Company to qualify as a REIT. No assurance can be given that the Company
will qualify as a REIT for any particular period, however, because that
determination involves factual determinations as to whether the Company
actually complies with the various requirements of the Code necessary for
the Company to qualify as a REIT, and in part may turn upon whether each
of the Merged Trusts previously complied with those requirements.
(3) The discussion in the Registration Statement under the heading
"Federal Income Tax Considerations" fairly summarizes the material federal
income tax considerations to a purchaser of the Common Stock.
Our opinions are based upon existing provisions of the Code, regulations
promulgated or proposed thereunder and interpretations thereof by the
Internal Revenue Service and the courts, all of which are subject to change
with prospective or retroactive effect, and our opinion could be adversely
affected or rendered obsolete by any such change.
We hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement and to the references to Vinson & Elkins L.L.P.
under the headings "Certain Federal Income Tax Consequences" and "Legal
Matters" in the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of the persons whose consent is
required under Section 7 of the 1933 Act and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
Vinson & Elkins L.L.P.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends
For the Nine Months Ended September 30, 1997,
For the Year Ended December 31, 1996 and
For the Period From May 18, 1995 (Inception) to December 31, 1995
(in thousands, except ratios)
<TABLE>
From
Nine Months May 18, 1995
Ended Year Ended to
September 30, December 31, December 31,
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
EARNINGS:
Income from operations before gain on sale of
properties and extraordinary item $13,832 $11,161 $(1,293)
Interest expense (1) 6,868 6,065 5
------- ------- -------
TOTAL EARNINGS $20,700 $17,226 $(2,288)
------- ------- -------
------- ------- -------
FIXED CHARGES:
Interest expense (1) $ 6,868 $ 6,065 5
Capitalized interest 1,143 561 -
Preferred Dividends 2,114 2,412 29
------- ------- -------
TOTAL FIXED CHARGES AND PREFERRED DIVIDENDS $10,125 $ 9,038 34
------- ------- -------
------- ------- -------
Ratio of earnings to fixed charges (excluding
preferred dividends) 2.58 2.60 - (2)
------- ------- -------
------- ------- -------
Ratio of earnings to combined fixed charges
and preferred dividends 2.04 1.91 - (2)
------- ------- -------
------- ------- -------
</TABLE>
Note:
(1) Includes amortization of deferred financing fees.
(2) Indicates a ratio of less than zero. The Company was incorporated on
May 18, 1995. Except for interest earned on its investments and general
and administrative expenses incurred and accrued, the Company had no other
activities prior to February 23, 1996, the date of the Merger.
<PAGE>
EXHIBIT 23.1
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the reference to our
firm under the caption "Experts" and to the incorporation by reference in the
Registration Statement and the related Prospectus of Meridian Industrial Trust,
Inc. on Form S-3 filed with the Securities and Exchange Commission on or about
December 10, 1997 of our report dated February 5, 1997 included in Meridian
Industrial Trust, Inc.'s Form 10-K for the year ended December 31, 1996, and our
reports dated June 30, 1997 on the Prudential Property Transaction for the year
ended December 31, 1996; on the Ameritech Property Transaction-- Group A
Properties for the years ended December 31, 1996, 1995 and 1994; on the
Ameritech Property Transaction--Group B Properties for the years ended December
31, 1996 and 1995; on the Ameritech Property Transaction--Group C Properties for
the year ended December 31, 1996; on the Acquired Properties for the year ended
December 31, 1996, and our report dated July 16, 1997 on the Portfolio
Acquisitions for the year ended December 31, 1996 all included in Meridian
Industrial Trust, Inc.'s Form 8-K filed October 9, 1997, Form 8-K filed October
15, 1997, and Form 8-K filed November 6, 1997, all as amended.
Arthur Andersen LLP
San Francisco, California
December 10, 1997
