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Filed pursuant to 424(b)(3)
Registration Statement No. 333-117842
PROSPECTUS
$1,014,165,320
FIRST INDUSTRIAL REALTY TRUST, INC.
and
FIRST INDUSTRIAL, L.P.
First Industrial Realty Trust, Inc. may offer the following securities for
sale through this prospectus from time to time:
o shares of common stock;
o shares of preferred stock; and
o shares of preferred stock represented by depositary shares.
First Industrial, L.P., the operating partnership of First Industrial
Realty Trust, Inc., may offer up to $500,000,000 of unsecured non-convertible
investment grade debt securities for sale through this prospectus from time to
time.
We will provide the specific terms of the securities that we are offering
in one or more supplements to this prospectus. Any supplement may also add,
update or change information contained in this prospectus. You should read both
this prospectus and any prospectus supplement together with the additional
information described under "Where You Can Find More Information" before
investing in our securities. The aggregate of the offering prices of securities
covered by this prospectus will not exceed $1,014,165,320.
The common stock of First Industrial Realty Trust, Inc. is listed on the
New York Stock Exchange under the symbol "FR."
We may sell offered securities through agents, to or through underwriters
or through dealers, directly to purchasers or through a combination of these
methods of sale. See "Plan of Distribution" for more information.
This prospectus may not be used to consummate sales of offered securities
unless accompanied by a prospectus supplement.
Investing in the securities of First Industrial Realty Trust, Inc. or the
Operating Partnership involves risks that are described in the "Risk Factors"
section beginning on page 3 of this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is August 30, 2004.
TABLE OF CONTENTS
Page
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ABOUT THIS PROSPECTUS........................................................1
THE COMPANY AND THE OPERATING PARTNERSHIP....................................1
RISK FACTORS.................................................................3
RATIOS OF EARNINGS TO FIXED CHARGES..........................................4
USE OF PROCEEDS..............................................................4
PLAN OF DISTRIBUTION.........................................................5
DESCRIPTION OF DEBT SECURITIES...............................................8
DESCRIPTION OF PREFERRED STOCK..............................................21
DESCRIPTION OF DEPOSITARY SHARES............................................28
DESCRIPTION OF COMMON STOCK.................................................32
CERTAIN PROVISIONS OF MARYLAND LAW AND THE Company'S ARTICLES OF
INCORPORATION AND BYLAWS..................................................34
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK..................................37
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS..............................38
Forward-looking STATEMENTS..................................................41
WHERE YOU CAN FIND MORE INFORMATION.........................................41
DOCUMENTS INCORPORATED BY REFERENCE.........................................42
EXPERTS.....................................................................43
LEGAL MATTERS...............................................................43
____________________
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or any prospectus supplement or
to make representations as to matters not stated in this prospectus or any
prospectus supplement. You must not rely on unauthorized information. This
prospectus and any prospectus supplement are not an offer to sell these
securities or our solicitation of your offer to buy the securities in any
jurisdiction where that would not be permitted or legal. The delivery of this
prospectus or any prospectus supplement at any time does not create an
implication that the information contained herein or therein is correct as of
any time subsequent to their respective dates.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement First Industrial Realty
Trust, Inc. (the "Company") and First Industrial, L.P. (the "Operating
Partnership") filed with the Securities and Exchange Commission, or SEC,
utilizing the "shelf" registration process, relating to the common stock,
preferred stock, depositary shares and debt securities described in this
prospectus. Under this shelf registration process, the Company and the Operating
Partnership may sell any combination of the securities described in this
prospectus in one or more offerings up to a total amount of $1,014,165,320.
This prospectus provides you with a general description of the securities
the Company and the Operating Partnership may offer. Each time the Company or
the Operating Partnership sells securities, it will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with the additional information described under
the heading "Where You Can Find More Information."
As used in this prospectus, "we," "us" and "our" refer to the Company and
its subsidiaries, including the Operating Partnership, unless the context
otherwise requires.
THE COMPANY AND THE OPERATING PARTNERSHIP
The Company is a real estate investment trust, or REIT, subject to Sections
856 through 860 of the Internal Revenue Code of 1986. The Company and its
consolidated partnerships, corporations and limited liability companies are a
self-administered and fully integrated real estate company which owns, manages,
acquires, sells and develops industrial real estate.
As of March 31, 2004, our portfolio consisted of the following types of
properties:
o 416 light industrial properties -- Light industrial properties
generally are of less than 100,000 square feet, have a ceiling height
of 16 to 21 feet, are comprised of 5% to 50% office space, contain
less than 50% of manufacturing space and have a land use ratio of 4:1.
The land use ratio is the ratio of the total property area to that not
occupied by the building.
o 130 bulk warehouse properties -- Bulk warehouse buildings generally
are of more than 100,000 square feet, have a ceiling height of at
least 22 feet, are comprised of 5% to 15% office space, contain less
than 25% of manufacturing space and have a land use ratio of 2:1.
o 160 R&D/flex properties -- Research and development/flex buildings
generally are of less than 100,000 square feet, have a ceiling height
of less than 16 feet, are comprised of 50% or more of office space,
contain less than 25% of manufacturing space and have a land use ratio
of 4:1.
o 87 regional warehouse properties -- Regional warehouses generally are
of less than 100,000 square feet, have a ceiling height of at least 22
feet, are comprised of 5% to 15% of office space, contain less than
25% of manufacturing space and have a land use ratio of 2:1.
o 32 manufacturing properties -- Manufacturing properties are a diverse
category of buildings that generally have a ceiling height of 10 to 18
feet, are comprised of 5% to 15% of office space, contain more than
50% of manufacturing space and have a land use ratio of 4:1.
These properties contain approximately 58.5 million square feet of gross
leaseable area located in 22 states.
Our interests in our properties and land parcels are held through
partnerships, corporations and limited liability companies controlled by the
Company, including the Operating Partnership, of which the Company is the sole
general partner. As of March 31, 2004, the Company held approximately 86.1% of
the outstanding limited partnership units of the Operating Partnership. At that
date, approximately 13.9% of the outstanding limited part-
nership units were held by outside investors, including certain members of the
management of the Company. Each limited partnership unit, other than those held
by the Company, may be exchanged for one share of the Company common stock,
subject to adjustments. Upon each exchange, the number of limited partnership
units held by the Company, and its ownership percentage of the Operating
Partnership, increases. As of March 31, 2004, the Company also owned preferred
general partnership interests in the Operating Partnership with an aggregate
liquidation priority of $250.0 million.
We utilize an operating approach that combines the effectiveness of
decentralized, locally based property management, acquisition, sales and
development functions with the cost efficiencies of centralized acquisition,
sales and development support, capital markets expertise, asset management and
fiscal control systems. At March 31, 2004, we had 331employees.
We have grown and will seek to continue to grow through the development of
industrial properties and acquisition of additional industrial properties.
The Company is a Maryland corporation organized on August 10, 1993, and
which completed its initial public offering in June 1994. The Operating
Partnership is a Delaware limited partnership organized in November 1993. Our
principal executive offices are located at 311 S. Wacker Drive, Suite 4000,
Chicago, Illinois 60606, telephone number (312) 344-4300. Our website is
http://www.firstindustrial.com. The information on our website is not a part of,
and is not incorporated by reference into, this prospectus.
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RISK FACTORS
Your investment in any of our securities involves certain risks. Prior to
making a decision about investing in our securities, and in consultation with
your own financial and legal advisers, you should carefully consider, among
other matters, the following risk factor, as well as those incorporated by
reference in this prospectus, including our most recent Annual Report on Form
10-K, and those included in the applicable prospectus supplement regarding risks
particular to each type or series of securities that we are offering under that
prospectus supplement.
The Company might fail to qualify or remain qualified as a REIT.
We intend to operate so as to qualify as a REIT under the Internal Revenue
Code of 1986 (the "Code") Although we believe that we are organized and will
operate in a manner so as to qualify as a REIT, qualification as a REIT involves
the satisfaction of numerous requirements, some of which must be met on a
recurring basis. These requirements are established under highly technical and
complex Code provisions of which there are only limited judicial or
administrative interpretations, and involve the determination of various factual
matters and circumstances not entirely within our control.
We (through one of our subsidiary partnerships) entered into certain
development agreements in 2000 through 2003, the performance of which has been
completed. Under these agreements, we provided services to unrelated third
parties and certain payments were made by the unrelated third parties for
services provided by certain contractors hired by us. We believe that these
payments were properly characterized by us as reimbursements for costs incurred
by us on behalf of the third parties and do not constitute gross income and did
not prevent us from satisfying the gross income requirements of the REIT
provisions (the "gross income tests"). We have brought this matter to the
attention of the Internal Revenue Service, or IRS. The IRS has not challenged or
expressed any interest in challenging our view on this matter. If the IRS were
to challenge such position and were successful, we might be found not to have
satisfied the gross income tests in one or more of our taxable years. If we were
found not to have satisfied the gross income tests, we could be subject to a
penalty tax as further discussed under "Certain U.S. Federal Income Tax
Considerations" below. However, such noncompliance should not adversely affect
our status as a REIT as long as such noncompliance was due to reasonable cause
and not to willful neglect, and certain other requirements are met. Although
this cannot be assured, we believe that the risk of losing our REIT status as a
result of these development agreements is remote.
If we were to fail to qualify as a REIT in any taxable year, we would be
subject to federal income tax, including any applicable alternative minimum tax,
on our taxable income at corporate rates. This could result in a discontinuation
or substantial reduction in dividends to stockholders and in cash to pay
interest and principal on debt securities that we issue. Unless entitled to
relief under certain statutory provisions, we also would be disqualified from
electing treatment as a REIT for the four taxable years following the year
during which we failed to qualify as a REIT. See "Certain U.S. Federal Income
Tax Considerations" below.
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RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratios of earnings to fixed charges and preferred dividend
requirements for the three months ended March 31, 2004 and for the years ended
December 31, 2003, 2002, 2001, 2000 and 1999 were 1.02x, 1.13x, 1.11x, 1.42x,
1.47x and 1.61x, respectively. For purposes of computing the ratios of earnings
to fixed charges and preferred stock dividends, earnings have been calculated by
adding fixed charges (excluding capitalized interest) to income from continuing
operations before minority interest allocable to continuing operations. Fixed
charges consist of interest cost, whether expensed or capitalized and
amortization of deferred financing costs.
The Operating Partnership's ratios of earnings to fixed charges for the
three months ended March 31, 2004 and for the years ended December 31, 2003,
2002, 2001, 2000 and 1999 were 1.35x, 1.42x, 1.69x, 2.06x, 2.08x and 2.30x,
respectively. For purposes of computing the ratios of earnings to fixed charges,
earnings have been calculated by adding fixed charges (excluding capitalized
interest) to income from continuing operations. Fixed charges consist of
interest cost, whether expensed or capitalized and amortization of deferred
financing costs.
The ratios set forth above for the five years ended December 31, 2003 are
subject to adjustment as a result of the adoption of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long Lived Assets" ("FAS 144"), as
described in Note 3 to the consolidated financial statements in 2003 Annual
Report on Form 10-K of the Operating Partnership and of the Company for the year
ended December 31, 2003 and in Note 2 to the consolidated financial statements
in Quarterly Report on Form 10-Q of the Operating Partnership and of the Company
for the quarter ended March 31, 2004. As a result, the adjustment required by
FAS 144 will reduce income from continuing operations and the ratios of earnings
to fixed charges reported above will not agree to the ratios reported in 2003
Annual Report on Form 10-K of the Operating Partnership and of the Company.
USE OF PROCEEDS
Unless otherwise described in the applicable prospectus supplement, the
Company and the Operating Partnership intend to use the net proceeds from the
sale of securities offered by this prospectus and the applicable prospectus
supplement for general corporate purposes, which may include the acquisition and
development of additional properties, the repayment of outstanding debt, the
redemption of the Company's preferred stock or the improvement of certain
properties already in the Company's portfolio. Any proceeds from the sale of
common stock, preferred stock or depositary shares by the Company will be
invested in the Operating Partnership, which will use the proceeds for the same
purposes.
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PLAN OF DISTRIBUTION
The Company and/or the Operating Partnership may sell offered securities in
any one or more of the following ways from time to time:
o through agents;
o to or through underwriters;
o through dealers;
o directly to purchasers; or
o through a combination of these methods of sale.
The prospectus supplement relating to the offered securities will set forth
the terms of the offering and of the offered securities, including:
o the name or names of any underwriters, dealers or agents;
o the purchase price of the offered securities and the proceeds to the
Company and/or the Operating Partnership from such sale;
o any underwriting discounts and commission or agency fees and other
items constituting underwriters' or agents' compensation;
o any initial public offering price; and
o any discounts or concessions allowed or reallowed or paid to dealers
and any securities exchange on which such offered securities may be
listed.
Any initial public offering price, discounts or concessions allowed or reallowed
or paid to dealers may be changed from time to time.
The distribution of the offered securities may be effected from time to
time in one or more transactions:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to prevailing market prices; or
o at negotiated prices.
Offers to purchase offered securities may be solicited by agents designated
by the Company and/or the Operating Partnership from time to time. Any agent
involved in the offer or sale of the offered securities in respect of which this
prospectus is delivered will be named, and any commissions payable by the
Company and/or the Operating Partnership to the agent will be set forth, in the
applicable prospectus supplement. Underwriters and agents in any distribution
contemplated hereby, including but not limited to at-the-market equity
offerings, may from time to time include Banc One Capital Markets, Inc., Brinson
Patrick Securities Corporation and/or Cantor Fitzgerald & Co. Underwriters or
agents could make sales in sales deemed to be an "at-the-market" offering as
defined in Rule 415 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), including sales made directly on the New York Stock
Exchange, or NYSE, the existing trading market for our common stock, or sales
made to or through a market maker other than on an exchange. At-the-market
offerings made pursuant to this prospectus and
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any accompanying prospectus supplement may not exceed 10% of the aggregate
market value of our outstanding voting securities held by non-affiliates on a
date within 60 days prior to the filing of the registration statement of which
this prospectus is a part. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a reasonable best efforts basis for the
period of its appointment. Any agent may, and if acting as agent in an at-the
market equity offering will, be deemed to be an underwriter, as that term is
defined in the Securities Act, of the offered securities.
If offered securities are sold by means of an underwritten offering, the
Company and/or the Operating Partnership will execute an underwriting agreement
with an underwriter or underwriters, and the names of the specific managing
underwriter or underwriters, as well as any other underwriters, and the terms of
the transaction, including commissions, discounts and any other compensation of
the underwriters and dealers, if any, will be set forth in the prospectus
supplement which will be used by the underwriters to make resales of the offered
securities. If underwriters are utilized in the sale of the offered securities,
the offered securities may 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 fixed public offering prices or at varying prices
determined by the underwriters at the time of sale. Offered securities may be
offered to the public either through underwriting syndicates represented by
managing underwriters or directly by the managing underwriters. If any
underwriter or underwriters are utilized in the sale of the offered securities,
unless otherwise indicated in the prospectus supplement, the underwriting
agreement will provide that the obligations of the underwriters are subject to
certain conditions precedent and that the underwriters with respect to a sale of
offered securities will be obligated to purchase all such offered securities of
a series if any are purchased.
The Company and/or the Operating Partnership may grant to the underwriters
options to purchase additional offered securities to cover over-allotments, if
any, at the public offering price, with additional underwriting discounts or
commissions, as may be set forth in the prospectus supplement relating thereto.
If the Company and/or the Operating Partnership grant any over-allotment option,
the terms of the over-allotment option will be set forth in the prospectus
supplement relating to the offered securities.
If a dealer is utilized in the sales of offered securities in respect of
which this prospectus is delivered, the Company and/or the Operating Partnership
will sell the offered securities to the dealer as principal. The dealer may then
resell the offered securities to the public at varying prices to be determined
by the dealer at the time of resale. Any dealer may be deemed to be an
underwriter, as that term is defined in the Securities Act, of the offered
securities so offered and sold. The name of the dealer and the terms of the
transaction will be set forth in the related prospectus supplement.
Offers to purchase offered securities may be solicited directly by the
Company and/or the Operating Partnership and the sale may be made by the Company
and/or the Operating Partnership directly to institutional investors or others,
who may be deemed to be underwriters within the meaning of the Securities Act
with respect to any resale thereof. The terms of any such sales will be
described in the related prospectus supplement.
Offered securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more remarketing firms, acting as principals for their
own accounts or as agents for the Company and/or the Operating Partnership. Any
remarketing firm will be identified and the terms of its agreements, if any,
with the Company and/or the Operating Partnership and its compensation will be
described in the applicable prospectus supplement. Remarketing firms may be
deemed to be underwriters, as that term is defined in the Securities Act, in
connection with the offered securities remarketed thereby.
Agents, underwriters, dealers and remarketing firms may be entitled under
relevant agreements entered into with the Company and/or the Operating
Partnership to indemnification by the Company and/or the Operating Partnership
against certain civil liabilities, including liabilities under the Securities
Act, that may arise from any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact in
this prospectus, any supplement or amendment hereto, or in the registration
statement of which this prospectus forms a part, or to contribution with respect
to payments which the agents, underwriters, dealers or remarketing firms may be
required to make. The terms of any such indemnification or contribution will be
described in the related prospectus supplement.
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If so indicated in the prospectus supplement, the Company and/or the
Operating Partnership will authorize underwriters or other persons acting as
agents to solicit offers by certain institutions to purchase offered securities
from the Company and/or the Operating Partnership, pursuant to contracts
providing for payments and delivery on a future date. Institutions with which
these contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases these institutions must be approved by
the Company and/or the Operating Partnership. The obligations of any purchaser
under any contract will be subject to the condition that the purchase of the
offered securities shall not at the time of delivery be prohibited under the
laws of the jurisdiction to which the purchaser is subject. The underwriters and
other agents will not have any responsibility in respect of the validity or
performance of these contracts.
Each series of offered securities will be a new issue and, other than the
common stock of the Company, which is listed on the NYSE, will have no
established trading market. The Company and/or the Operating Partnership may
elect to list any series of offered securities on an exchange or automated
quotation system, and in the case of the common stock of the Company, on any
additional exchange, but, unless otherwise specified in the applicable
prospectus supplement, the Company and/or the Operating Partnership will not be
obligated to do so. No assurance can be given as to the liquidity of the trading
market for any of the offered securities.
Underwriters, dealers, agents and remarketing firms may engage in
transactions with, or perform services for, the Company and/or the Operating
Partnership and their subsidiaries in the ordinary course of business.
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DESCRIPTION OF DEBT SECURITIES
The debt securities will be issued under an indenture, dated as of May 13,
1997, between the Operating Partnership and U.S. Bank National Association
(formerly known as First Trust National Association), as trustee, which has been
incorporated by reference as an exhibit to the registration statement of which
this prospectus is a part, subject to such amendments or supplements as may be
adopted from time to time. The indenture is subject to and governed by the Trust
Indenture Act of 1939, as amended. The statements made under this heading
relating to the debt securities and the indenture are summaries only, do not
purport to be complete and are qualified in their entirety by reference to the
debt securities and the indenture. All material terms of the debt securities and
the indenture, other than those disclosed in the applicable prospectus
supplement, are described in this prospectus.
The debt securities to be offered under this prospectus and in any
applicable prospectus supplement will be "investment grade" securities, meaning
that at the time of the offering of the debt securities, at least one nationally
recognized statistical rating organization, as defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), will have rated the debt
securities in one of its generic rating categories that signifies investment
grade. Typically the four highest rating categories, within which there may be
sub-categories or gradations indicating relative standing, signify investment
grades. An investment grade rating is not a recommendation to buy, sell or hold
securities, is subject to revision or withdrawal at any time by the assigning
entity and should be evaluated independently of any other rating.
Terms
General. The debt securities will be direct unsecured obligations of the
Operating Partnership. The indebtedness represented by the debt securities will
rank equally with all other unsecured and unsubordinated indebtedness of the
Operating Partnership. No partner, whether limited or general, including the
Company, of the Operating Partnership has any obligation for the payment of
principal of, or premium, if any, or interest, if any, on, or any other amount
with respect to, the debt securities. The particular terms of the debt
securities offered by a prospectus supplement, including any applicable federal
income tax considerations, will be described in the applicable prospectus
supplement, along with any applicable modifications of or additions to the
general terms of the debt securities as described in this prospectus and in the
indenture. For a description of the terms of any series of debt securities, you
should read both the prospectus supplement relating to the debt securities and
the description of the debt securities in this prospectus.
Except as set forth in any prospectus supplement, the debt securities may
be issued without limit as to aggregate principal amount, in one or more series,
in each case as established from time to time by the Operating Partnership or as
set forth in the indenture or in one or more supplemental indentures to the
indenture. All debt securities of one series need not be issued at the same time
and, unless otherwise provided, a series may be reopened, without the consent of
the holders of the debt securities of such series, for issuance of additional
debt securities of such series.
The indenture provides that the Operating Partnership may, but need not,
designate more than one trustee, each with respect to one or more series of debt
securities. Any trustee under the indenture may resign or be removed with
respect to one or more series of debt securities, and a successor trustee may be
appointed to act with respect to the series. In the event that two or more
persons are acting as trustee with respect to different series of debt
securities, each trustee shall be a trustee of a trust under the indenture
separate and apart from the trust administered by any other trustee. In that
event and except as otherwise indicated in this prospectus, any action described
in this prospectus to be taken by each trustee may be taken by each such trustee
with respect to, and only with respect to, the one or more series of debt
securities for which it is trustee under the indenture.
The following summaries set forth general terms and provisions of the
indenture and the debt securities. The prospectus supplement relating to the
applicable series of debt securities will contain further terms of the debt
securities, including the following specific terms:
o The title of the debt securities;
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o The aggregate principal amount of the debt securities and any limit on
the aggregate principal amount;
o The price, expressed as a percentage of the principal amount thereof,
at which the debt securities will be issued and, if other than the
principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of maturity;
o The date or dates, or the method for determining the date or dates, on
which the principal of the debt securities will be payable;
o The rate or rates, which may be fixed or variable, or the method by
which the rate or rates shall be determined, at which the debt
securities will bear interest, if any;
o The date or dates, or the method for determining the date or dates,
from which any interest will accrue, the dates on which any interest
will be payable, the record dates for interest payment dates, or the
method by which the dates shall be determined, the persons to whom the
interest will be payable, and the basis upon which interest shall be
calculated if other than that of a 360-day year of twelve 30-day
months;
o The place or places where the principal of and premium or make-whole
amount, if any, and interest, if any, on the debt securities will be
payable, where the debt securities may be surrendered for registration
of transfer or exchange and where notices or demands to or upon the
Operating Partnership in respect of the debt securities and the
indenture may be served;
o The period or periods, if any, within which, the price or prices at
which, and the other terms and conditions upon which, the debt
securities may, under any optional or mandatory redemption provisions,
be redeemed, as a whole or in part, at the option of the Operating
Partnership;
o The obligation, if any, of the Operating Partnership to redeem, repay
or purchase the debt securities under any sinking fund or analogous
provision or at the option of a holder thereof, and the period or
periods within which, the price or prices at which, and the other
terms and conditions upon which, the debt securities will be redeemed,
repaid or purchased, as a whole or in part, pursuant to such
obligation;
o If other than U.S. dollars, the currency or currencies in which the
debt securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
o Whether the amount of payments of principal of and premium or
make-whole amount, if any, including any amount due upon redemption,
if any, or interest, if any, on the debt securities may be determined
with reference to an index, formula or other method, which index,
formula or method may, but need not, be based on the yield on or
trading price of other securities, including United States Treasury
securities, or on a currency, currencies, currency unit or units, or
composite currency or currencies, and the manner in which such amounts
shall be determined;
o Whether the principal of and premium or make-whole amount, if any, or
interest on the debt securities of the series are to be payable, at
the election of the Operating Partnership or a holder of debt
securities, in a currency or currencies, currency unit or units or
composite currency or currencies other than that in which the debt
securities are denominated or stated to be payable, the period or
periods within which, and the terms and conditions upon which, that
election may be made, and the time and manner of, and identity of the
exchange rate agent with responsibility for, determining the exchange
rate between the currency or currencies, currency unit or units or
composite currency or currencies in which the debt securities are
denominated or stated to be payable and the currency or currencies,
currency unit or units or composite currency or currencies in which
the debt securities are to be so payable;
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o Provisions, if any, granting special rights to the holders of debt
securities of the series upon the occurrence of such events as may be
specified;
o Any deletions from, modifications of or additions to the events of
default or covenants of the Operating Partnership with respect to debt
securities of the series, whether or not such events of default or
covenants are consistent with the events of default or covenants
described herein;
o Whether and under what circumstances the Operating Partnership will
pay any additional amounts on the debt securities in respect of any
tax, assessment or governmental charge and, if so, whether the
Operating Partnership will have the option to redeem the debt
securities in lieu of making such payment;
o Whether debt securities of the series are to be issuable as registered
securities, bearer securities (with or without coupons) or both, any
restrictions applicable to the offer, sale or delivery of bearer
securities and the terms upon which bearer securities of the series
may be exchanged for registered securities of the series and vice
versa, if permitted by applicable laws and regulations, whether any
debt securities of the series are to be issuable initially in
temporary global form and whether any debt securities of the series
are to be issuable in permanent global form with or without coupons
and, if so, whether beneficial owners of interests in any such
permanent global security may exchange such interests for debt
securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in the indenture, and, if
registered securities of the series are to be issuable as a global
security, the identity of the depository for such series;
o The date as of which any bearer securities of the series and any
temporary global security representing outstanding debt securities of
the series shall be dated if other than the date of original issuance
of the first security of the series to be issued;
o The person to whom any interest on any registered security of the
series shall be payable, if other than the person in whose name that
security, or one or more predecessor securities, is registered at the
close of business on the regular record date for such interest, the
manner in which, or the person to whom, any interest on any bearer
security of the series shall be payable, if otherwise than upon
presentation and surrender of the coupons appertaining thereto as they
severally mature, and the extent to which, or the manner in which, any
interest payable on a temporary global security on an interest payment
date will be paid if other than in the manner provided in the
indenture;
o Whether the debt securities will be issued in certificated or
book-entry form;
o The applicability, if any, of the defeasance and covenant defeasance
provisions of the indenture to the debt securities of the series;
o If the debt securities of the series are to be issuable in definitive
form, whether upon original issue or upon exchange of a temporary
security of the series, only upon receipt of certain certificates or
other documents or satisfaction of other conditions, then the form
and/or terms of the certificates, documents or conditions; and
o Any other terms of the series, not inconsistent with the Trust
Indenture Act of 1939, as amended.
If so provided in the applicable prospectus supplement, the debt securities
may be issued at a discount below their principal amount and provide for less
than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof. In such cases, all material U.S. federal
income tax, accounting and other considerations applicable to such original
issue discount securities will be described in the applicable prospectus
supplement.
-10-
Except as may be set forth in any prospectus supplement, the indenture does
not contain any provisions that would limit the ability of the Operating
Partnership to incur indebtedness or that would afford holders of debt
securities protection in the event of a highly leveraged or similar transaction
involving the Operating Partnership or in the event of a change of control.
Restrictions on ownership and transfers of the common stock and preferred stock
of the Company under its Articles of Incorporation are designed to preserve the
Company's status as a REIT and, therefore, may act to prevent or hinder a change
of control. See "Restrictions on Transfers of Capital Stock." Reference is made
to the applicable prospectus supplement for information with respect to any
deletions from, modifications of, or additions to, the events of default or
covenants of the Operating Partnership that are described below, including any
addition of a covenant or other provision providing event risk or similar
protection.
Denomination, Interest, Registration and Transfer
Unless otherwise provided in the applicable prospectus supplement, the debt
securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof. Where debt securities of any series are issued in
bearer form, the special restrictions and considerations, including special
offering restrictions and special federal income tax considerations, applicable
to those debt securities and to payment on and transfer and exchange of those
debt securities will be described in the applicable prospectus supplement.
Bearer debt securities will be transferable by delivery.
Unless otherwise provided in the applicable prospectus supplement, any
interest not punctually paid or duly provided for on any interest payment date
with respect to a debt security in registered form, or "defaulted interest,"
will immediately cease to be payable to the holder on the applicable regular
record date and may either be paid to the person in whose name the debt security
is registered at the close of business on a special record date for the payment
of the defaulted interest to be fixed by the trustee, in which case notice
thereof shall be given to the holder of the debt security not less than 10 days
prior to the special record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which such debt securities are listed, all as more completely described in the
indenture.
Subject to certain limitations imposed upon debt securities issued in
book-entry form, the debt securities of any series will be exchangeable for any
authorized denomination of other debt securities of the same series and of a
like aggregate principal amount and tenor upon surrender of the debt securities
at the corporate trust office of the applicable trustee or at the office of any
transfer agent designated by the Operating Partnership for such purpose. In
addition, subject to certain limitations imposed upon debt securities issued in
book-entry form, the debt securities of any series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable trustee or at the office of any transfer agent designated by the
Operating Partnership for that purpose. Every debt security in registered form
surrendered for registration of transfer or exchange must be duly endorsed or
accompanied by a written instrument of transfer, and the person requesting that
action must provide evidence of title and identity satisfactory to the
applicable trustee or transfer agent. No service charge will be made for any
registration of transfer or exchange of any debt securities, but the Operating
Partnership may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. If the applicable
prospectus supplement refers to any transfer agent, in addition to the
applicable trustee, initially designated by the Operating Partnership with
respect to any series of debt securities, the Operating Partnership may at any
time rescind the designation of any such transfer agent or approve a change in
the location through which any such transfer agent acts, except that the
Operating Partnership will be required to maintain a transfer agent in each
place of payment for that series. The Operating Partnership may at any time
designate additional transfer agents with respect to any series of debt
securities.
Neither the Operating Partnership nor any trustee shall be required to
o issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before the selection of any debt securities for redemption and ending
at the close of business on
- if the debt securities are issuable only as registered
securities, the day of the mailing of the relevant notice of
redemption, and
-11-
- if the debt securities are issuable as bearer securities, the day
of the first publication of the relevant notice of redemption or,
if the debt securities are also issuable as registered securities
and there is no publication, the mailing of the relevant notice
of redemption;
o register the transfer of or exchange any debt security, or portion
thereof, so selected for redemption, in whole or in part, except the
unredeemed portion of any debt security being redeemed in part;
o exchange any bearer security selected for redemption except that, to
the extent provided with respect to the bearer security, the bearer
security may be exchanged for a registered security of that series and
of like tenor, provided that the registered security shall be
simultaneously surrendered for redemption; or
o issue, register the transfer of or exchange any debt security that has
been surrendered for repayment at the option of the holder, except the
portion, if any, of the debt security not to be so repaid.
Payment in respect of debt securities in bearer form will be made in the
currency and in the manner designated in the applicable prospectus supplement,
subject to any applicable laws and regulations, at such paying agencies outside
the United States as the Operating Partnership may appoint from time to time.
The paying agents outside the United States, if any, initially appointed by the
Operating Partnership for a series of debt securities will be named in the
applicable prospectus supplement. Unless otherwise provided in the applicable
prospectus supplement, the Operating Partnership may at any time designate
additional paying agents or rescind the designation of any paying agents, except
that
o if debt securities of a series are issuable in registered form, the
Operating Partnership will be required to maintain at least one paying
agent in each place of payment for such series, and
o if debt securities of a series are issuable in bearer form, the
Operating Partnership will be required to maintain at least one paying
agent in a place of payment outside the United States where debt
securities of such series and any coupons appertaining thereto may be
presented and surrendered for payment.
Merger, Consolidation or Sale of Assets
The indenture provides that the Operating Partnership may, without the
consent of the holders of any outstanding debt securities, consolidate with, or
sell, lease or convey all or substantially all of its assets to, or merge with
or into, any other entity, provided that
o either the Operating Partnership shall be the continuing entity, or
the successor entity, if other than the Operating Partnership, formed
by or resulting from any such consolidation or merger or which shall
have received the transfer of such assets shall be organized under the
laws of any domestic jurisdiction and expressly assume the Operating
Partnership's obligations to pay principal of and premium or
make-whole amount, if any, and interest on all of the debt securities
and the due and punctual performance and observance of all of the
covenants and conditions contained in the indenture;
o immediately after giving effect to such transaction and treating any
indebtedness that becomes an obligation of the Operating Partnership
or any subsidiary as a result thereof as having been incurred by the
Operating Partnership or such subsidiary at the time of such
transaction, no event of default under the indenture, and no event
which, after notice or the lapse of time, or both, would become an
event of default, shall have occurred and be continuing; and
o an officers' certificate and legal opinion covering those conditions
shall be delivered to each trustee.
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Certain Covenants
The applicable prospectus supplement will describe any material covenants
in respect of a series of debt securities that are not described in this
prospectus. Unless otherwise indicated in the applicable prospectus supplement,
the debt securities will include the following covenants of the Operating
Partnership:
Existence. Except as permitted under "--Merger, Consolidation or Sale of
Assets," the indenture requires the Operating Partnership to do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights and franchises; provided, however, that the Operating
Partnership shall not be required to preserve any right or franchise if it
determines that its preservation is no longer desirable in the conduct of its
business.
Maintenance of properties. The indenture requires the Operating Partnership
to cause all of its material properties used or useful in the conduct of its
business or the business of any subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and to cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Operating
Partnership may be necessary so that the business carried on may be properly and
advantageously conducted at all times; provided, however, that the Operating
Partnership and its subsidiaries shall not be prevented from selling or
otherwise disposing of their properties for value in the ordinary course of
business.
Insurance. The indenture requires the Operating Partnership to cause each
of its and its subsidiaries' insurable properties to be insured against loss or
damage in an amount at least equal to their then full insurable value with
insurers of recognized responsibility. If described in the applicable prospectus
supplement, such insurer will be required to have a specified rating from a
recognized insurance rating service.
Payment of taxes and other claims. The indenture requires the Operating
Partnership to pay or discharge or cause to be paid or discharged, before the
same shall become delinquent,
o all taxes, assessments and governmental charges levied or imposed upon
it or any subsidiary or upon the income, profits or property of the
Operating Partnership or any subsidiary; and
o all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Operating
Partnership or any subsidiary;
provided, however, that the Operating Partnership shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith.
Events of Default, Notice and Waiver
Unless otherwise provided in the applicable prospectus supplement, the
indenture provides that the following events are "events of default" with
respect to any series of debt securities issued thereunder:
(1) default in the payment of any interest on any debt security of such
series, when such interest becomes due and payable that continues for
a period of 30 days;
(2) default in the payment of the principal of, or premium or make-whole
amount, if any, on, any debt security of such series when due and
payable;
(3) default in making any sinking fund payment as required for any debt
security of such series;
(4) default in the performance, or breach, of any other covenant or
warranty of the Operating Partnership in the indenture with respect to
the debt securities of such series and continuance of such default or
breach for a period of 60 days after written notice as provided in the
indenture;
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(5) default under any bond, debenture, note, mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the
Operating Partnership, or by any subsidiary the repayment of which the
Operating Partnership has guaranteed or for which the Operating
Partnership is directly responsible or liable as obligor or guarantor,
having an aggregate principal amount outstanding of at least
$10,000,000, whether such indebtedness now exists or shall hereafter
be created, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which
it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been
rescinded or annulled, within a period of 10 days after written notice
to the Operating Partnership as provided in the indenture;
(6) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of the Operating
Partnership or any significant subsidiary; and
(7) any other event of default provided with respect to a particular
series of debt securities.
The term "significant subsidiary" has the meaning ascribed to that term in
Regulation S-X promulgated under the Securities Act.
If an event of default under the indenture with respect to debt securities
of any series at the time outstanding occurs and is continuing, then in every
such case the applicable trustee or the holders of not less than 25% in
principal amount of the debt securities of that series will have the right to
declare the principal amount of, or, if the debt securities of that series are
original issue discount securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof, and premium or
make-whole amount, if any, on, all the debt securities of that series to be due
and payable immediately by written notice thereof to the Operating Partnership,
and to the applicable trustee if given by the holders; provided that in the case
of an event of default described under the sixth clause of the preceding
paragraph, acceleration is automatic. However, at any time after such a
declaration of acceleration with respect to debt securities of the series has
been made, but before a judgment or decree for payment of the money due has been
obtained by the applicable trustee, the holders of not less than a majority in
principal amount of outstanding debt securities of the series may rescind and
annul such declaration and its consequences if
o the Operating Partnership shall have deposited with the applicable
trustee all required payments of the principal of, and premium or
make-whole amount, if any, and interest on the debt securities of the
series, plus certain fees, expenses, disbursements and advances of the
applicable trustee, and
o all events of default, other than the non-payment of accelerated
principal, or a specified portion thereof of, and the premium or
make-whole amount, if any, on debt securities of the series have been
cured or waived as provided in the indenture.
The indenture also provides that the holders of not less than a majority in
principal amount of the outstanding debt securities of any series may waive any
past default with respect to such series and its consequences, except a default
o in the payment of the principal of or premium or make-whole amount, if
any, or interest on any debt security of the series, or
o in respect of a covenant or provision contained in the indenture that
cannot be modified or amended without the consent of the holder of
each outstanding debt security affected thereby.
The indenture requires each trustee to give notice to the holders of debt
securities within 90 days of a default under the indenture unless such default
shall have been cured or waived; provided, however, that the trustee may
withhold notice to the holders of any series of debt securities of any default
with respect to the series, except a default in the payment of the principal of,
or premium or make-whole amount, if any, or interest on any debt security of the
series or in the payment of any sinking fund installment in respect of any debt
security of the series if speci-
-14-
fied responsible officers of the trustee determine in good faith that such
withholding is in the interest of such holders.
The indenture provides that no holders of debt securities of any series may
institute any proceedings, judicial or otherwise, with respect to the indenture
or for any remedy thereunder, except in the case of failure of the applicable
trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an event of default from the holders of not
less than 25% in principal amount of the outstanding debt securities of the
series, as well as an offer of indemnity reasonably satisfactory to it. This
provision will not prevent, however, any holder of debt securities from
instituting suit for the enforcement of payment of the principal of and premium
or make-whole amount, if any, and interest on the debt securities at their
respective due dates or redemption dates.
The indenture provides that, subject to provisions in the indenture
relating to its duties in case of default, a trustee will be under no obligation
to exercise any of its rights or powers under the indenture at the request or
direction of any holders of any series of debt securities then outstanding under
the indenture, unless such holders shall have offered to the trustee thereunder
reasonable security or indemnity. The holders of not less than a majority in
principal amount of the outstanding debt securities of any series, or of all
debt securities then outstanding under the indenture, as the case may be, shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the applicable trustee, or of exercising any trust
or power conferred upon such trustee. However, a trustee may refuse to follow
any direction which is in conflict with any law or the indenture, which may
involve the trustee in personal liability or which may be unduly prejudicial to
the holders of debt securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to deliver to each trustee a certificate, signed by
one of several specified officers of the Company, stating whether or not such
officer has knowledge of any default under the indenture and, if so, specifying
each default and the nature and status thereof.
Modification of the Indenture
Modifications and amendments of the indenture are permitted to be made only
with the consent of the holders of not less than a majority in principal amount
of all outstanding debt securities issued under the indenture affected by such
modification or amendment. However, no modification or amendment may, without
the consent of the holder of each such debt security affected thereby,
o change the stated maturity of the principal of, or any installment of
interest, or premium or make-whole amount, if any, on, any debt
security;
o reduce the principal amount of, or the rate or amount of interest on,
or any premium or make-whole amount payable on redemption of, any such
debt security, or reduce the amount of principal of an original issue
discount security that would be due and payable upon declaration of
acceleration of the maturity thereof or would be provable in
bankruptcy, or adversely affect any right of repayment of the holder
of any debt security;
o change the place of payment, or the coin or currency, for payment of
principal of or premium or make-whole amount, if any, or interest on
any debt security;
o impair the right to institute suit for the enforcement of any payment
on or with respect to any debt security;
o reduce the above-stated percentage of outstanding debt securities of
any series necessary to modify or amend the indenture, to waive
compliance with certain provisions thereof or certain defaults and
consequences thereunder or to reduce the quorum or voting requirements
set forth in the indenture; or
o modify any of the foregoing provisions or any of the provisions
relating to the waiver of certain past defaults or certain covenants,
except to increase the required percentage to effect such action or to
-15-
provide that certain other provisions may not be modified or waived
without the consent of the holder of the debt security.
The holders of a majority in aggregate principal amount of the outstanding
debt securities of each series may, on behalf of all holders of debt securities
of that series, waive, insofar as that series is concerned, compliance by the
Operating Partnership with certain restrictive covenants of the indenture.
Modifications and amendments of the indenture are permitted to be made by
the Operating Partnership and the respective trustee thereunder without the
consent of any holder of debt securities for any of the following purposes:
o to evidence the succession of another person to the Operating
Partnership as obligor under the indenture;
o to add to the covenants of the Operating Partnership for the benefit
of the holders of all or any series of debt securities or to surrender
any right or power conferred upon the Operating Partnership in the
indenture;
o to add events of default for the benefit of the holders of all or any
series of debt securities;
o to add or change any provisions of the indenture to facilitate the
issuance of, or to liberalize certain terms of, debt securities in
bearer form, or to permit or facilitate the issuance of debt
securities in uncertificated form, provided that such action shall not
adversely affect the interests of the holders of the debt securities
of any series in any material respect;
o to change or eliminate any provisions of the indenture, provided that
any such change or elimination shall become effective only when there
are no debt securities outstanding of any series created prior thereto
that are entitled to the benefit of such provision;
o to secure the debt securities;
o to establish the form or terms of debt securities of any series;
o to provide for the acceptance of appointment by a successor trustee or
facilitate the administration of the trusts under the indenture by
more than one trustee;
o to cure any ambiguity, defect or inconsistency in the indenture,
provided that such action shall not adversely affect the interests of
holders of debt securities of any series issued under the indenture in
any material respect; or
o to supplement any of the provisions of the indenture to the extent
necessary to permit or facilitate defeasance and discharge of any
series of the debt securities, provided that such action shall not
adversely affect the interests of the holders of the outstanding debt
securities of any series in any material respect.
The indenture provides that in determining whether the holders of the
requisite principal amount of outstanding debt securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of debt
securities,
o the principal amount of an original issue discount security that shall
be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such
determination upon declaration of acceleration of the maturity
thereof,
-16-
o the principal amount of any debt security denominated in a foreign
currency that shall be deemed outstanding shall be the U.S. dollar
equivalent, determined on the issue date for the debt security, of the
principal amount of the debt security, or, in the case of an original
issue discount security, the U.S. dollar equivalent on the issue date
of the debt security of the amount determined as provided in the
subparagraph immediately above,
o the principal amount of an indexed security that shall be deemed
outstanding shall be the principal face amount of such indexed
security at original issuance, unless otherwise provided with respect
to such indexed security pursuant to the indenture, and
o debt securities owned by the Operating Partnership or any other
obligor upon the debt securities or any affiliate of the Operating
Partnership or of such other obligor shall be disregarded.
The indenture contains provisions for convening meetings of the holders of
debt securities of a series. A meeting will be permitted to be called at any
time by the applicable trustee, and also, upon request, by the Operating
Partnership or the holders of at least 25% in principal amount of the
outstanding debt securities of the series, in any case upon notice given as
provided in the indenture. Except for any consent that must be given by the
holder of each debt security affected by certain modifications and amendments of
the indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding debt
securities of that series. However, except as referred to above, any resolution
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the holders of a
specified percentage, which is less than a majority, in principal amount of the
outstanding debt securities of a series may be adopted at a meeting or adjourned
meeting or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding debt securities of that series. Any resolution passed or
decision taken at any meeting of holders of debt securities of any series duly
held in accordance with the indenture will be binding on all holders of debt
securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding debt securities
of a series. However, if any action is to be taken at the meeting with respect
to a consent or waiver that may be given by the holders of not less than a
specified percentage in principal amount of the outstanding debt securities of a
series, the persons holding or representing such specified percentage in
principal amount of the outstanding debt securities of the series will
constitute a quorum.
Notwithstanding the foregoing provisions, the indenture provides that if
any action is to be taken at a meeting of holders of debt securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver and other action that the indenture expressly provides may be
made, given or taken by the holders of a specified percentage in principal
amount of all outstanding debt securities affected thereby, or of the holders of
such series and one or more additional series:
o there shall be no minimum quorum requirement for such meeting and
o the principal amount of the outstanding debt securities of the series
that vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction,
notice, consent, waiver or other action has been made, given or taken
under the indenture.
Discharge, Defeasance and Covenant Defeasance
Unless otherwise provided in the applicable prospectus supplement, the
Operating Partnership will be permitted, at its option, to discharge certain
obligations to holders of any series of debt securities issued under the
indenture that have not already been delivered to the applicable trustee for
cancellation and that either have become due and payable or will become due and
payable within one year, or scheduled for redemption within one year, by
irrevocably depositing with the applicable trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which the debt securities are payable in an amount sufficient to
pay the entire indebtedness on the debt securities in respect of principal, and
premium or make-whole amount, if any, and
-17-
interest to the date of such deposit, if the debt securities have become due and
payable, or to the stated maturity or redemption date, as the case may be.
The indenture provides that, unless otherwise provided in the applicable
prospectus supplement, the Operating Partnership may elect either
o to defease and be discharged from any and all obligations with respect
to the debt securities, except for the obligation to pay additional
amounts, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on the debt
securities and the obligations to register the transfer or exchange of
the debt securities, to replace temporary or mutilated, destroyed,
lost or stolen debt securities, to maintain an office or agency in
respect of the debt securities, and to hold moneys for payment in
trust, or "defeasance," or
o to be released from certain obligations with respect to the debt
securities under the indenture, including the restrictions described
under "--Certain Covenants" or, if provided in the applicable
prospectus supplement, its obligations with respect to any other
covenant, and any omission to comply with such obligations shall not
constitute an event of default with respect to the debt securities, or
"covenant defeasance,"
in either case upon the irrevocable deposit by the Operating Partnership with
the applicable trustee, in trust, of an amount, in such currency or currencies,
currency unit or units or composite currency or currencies in which the debt
securities are payable at stated maturity, or government obligations as defined
below, or both, applicable to the debt securities, which through the scheduled
payment of principal and interest in accordance with their terms will provide
money in an amount sufficient to pay the principal of and premium or make-whole
amount, if any, and interest on the debt securities, and any mandatory sinking
fund or analogous payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Operating Partnership has delivered to the applicable trustee an
opinion of counsel, as specified in the indenture, to the effect that the
holders of the debt securities will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to U.S. federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and the opinion of counsel,
in the case of defeasance, will be required to refer to and be based upon a
ruling received from the IRS or a change in applicable U.S. federal income tax
law occurring after the date of the indenture. In the event of such defeasance,
the holders of the debt securities would thereafter be able to look only to such
trust fund for payment of principal, and premium or make-whole amount, if any,
and interest.
"Government obligations" means securities that are
o direct obligations of the United States or the government which issued
the foreign currency in which the debt securities of a particular
series are payable, for the payment of which its full faith and credit
is pledged or
o obligations of a person controlled or supervised by and acting as an
agency or instrumentality of the United States or such government
which issued the foreign currency in which the debt securities of the
series are payable, the payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States or such
other government,
which, in either case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such government obligation or a
specific payment of interest on or principal of any such government obligation
held by such custodian for the account of the holder of a depository receipt,
provided that, except as required by law, the custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the government
obligation or the specific payment of interest on or principal of the government
obligation evidenced by such depository receipt.
-18-
Unless otherwise provided in the applicable prospectus supplement, if after
the Operating Partnership has deposited funds and/or government obligations to
effect defeasance or covenant defeasance with respect to debt securities of any
series,
o the holder of a debt security of the series is entitled to, and does,
elect pursuant to the indenture or the terms of the debt security to
receive payment in a currency, currency unit or composite currency
other than that in which such deposit has been made in respect of the
debt security, or
o a conversion event, as defined below, occurs in respect of the
currency, currency unit or composite currency in which such deposit
has been made,
the indebtedness represented by the debt security will be deemed to have been,
and will be, fully discharged and satisfied through the payment of the principal
of and premium or make-whole amount, if any, and interest on the debt security
as they become due out of the proceeds yielded by converting the amount so
deposited in respect of the debt security into the currency, currency unit or
composite currency in which the debt security becomes payable as a result of
such election or such cessation of usage based on the applicable market exchange
rate.
"Conversion event" means the cessation of use of
o a currency, currency unit or composite currency both by the government
of the country which issued such currency and for the settlement of
transactions by a central bank or other public institutions of or
within the international banking community,
o the European Currency Unit both within the European Monetary System
and for the settlement of transactions by public institutions of or
within the European Communities or
o any currency unit or composite currency other than the European
Currency Unit for the purposes for which it was established.
Unless otherwise provided in the applicable prospectus supplement, all payments
of principal of and premium or make-whole amount, if any, and interest on any
debt security that is payable in a foreign currency that ceases to be used by
its government of issuance shall be made in U.S. dollars.
In the event the Operating Partnership effects covenant defeasance with
respect to any debt securities and the debt securities are declared due and
payable because of the occurrence of any event of default, other than the event
of default described in clause (4) under "--Events of Default, Notice and
Waiver" with respect to specified sections of the indenture, which sections
would no longer be applicable to the debt securities, or described in clause (7)
under "--Events of Default, Notice and Waiver" with respect to any other
covenant as to which there has been covenant defeasance, the amount in such
currency, currency unit or composite currency in which the debt securities are
payable, and government obligations on deposit with the applicable trustee, will
be sufficient to pay amounts due on the debt securities at the time of their
stated maturity but may not be sufficient to pay amounts due on the debt
securities at the time of the acceleration resulting from such event of default.
However, the Operating Partnership would remain liable to make payment of those
amounts due at the time of acceleration.
The applicable prospectus supplement may further describe the provisions,
if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the debt
securities of or within a particular series.
No Conversion Rights
The debt securities will not be convertible into or exchangeable for any
capital stock of the Company or equity interest in the Operating Partnership.
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Global Securities
The debt securities of a series may be issued in whole or in part in
book-entry form consisting of one or more global securities that will be
deposited with, or on behalf of, a depositary identified in the applicable
prospectus supplement relating to the series. Global securities may be issued in
either registered or bearer form and in either temporary or permanent form. The
specific terms of the depositary arrangement with respect to a series of debt
securities will be described in the applicable prospectus supplement relating to
the series.
The Trustee
U.S. Bank National Trust is the trustee under the indenture. From time to
time, we have and may in the future enter into other transactions with the
trustee.
Payment and Paying Agents
Unless otherwise provided in the applicable prospectus supplement, the
principal of and applicable premium or make-whole amount, if any, and interest
on any series of debt securities will be payable at the corporate trust office
of the trustee, the address of which will be stated in the applicable prospectus
supplement. However, at the option of the Operating Partnership, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register for the debt securities or by
wire transfer of funds to such person at an account maintained within the United
States.
All moneys paid by the Operating Partnership to a paying agent or a trustee
for the payment of the principal of or any premium, make-whole amount or
interest on any debt security which remain unclaimed at the end of two years
after such principal, premium, make-whole amount or interest has become due and
payable will be repaid to the Operating Partnership, and the holder of the debt
security thereafter may look only to the Operating Partnership for payment
thereof.
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DESCRIPTION OF PREFERRED STOCK
The following is a summary of the material terms of our preferred stock.
You should also read our articles of incorporation and bylaws, which are
incorporated by reference to the registration statement of which this prospectus
is a part. All material terms of the preferred stock, except those disclosed in
the applicable prospectus supplement, are described in this prospectus.
General
Under our articles of incorporation, the Company has authority to issue 10
million shares of its preferred stock, par value $.01 per share. The preferred
stock may be issued from time to time, in one or more series, as authorized by
the Company's board of directors. Prior to issuance of shares of each series,
the Company's board of directors is required by the MGCL and our articles of
incorporation to fix for each series, subject to the provisions of the articles
of incorporation regarding excess stock, par value $.01 per share, the terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms or
conditions of redemption of those shares as may be permitted by Maryland law.
These rights, powers, restrictions and limitations could include the right to
receive specified dividend payments and payments on liquidation prior to any
payments to holders of common stock or other capital stock of the Company
ranking junior to the preferred stock. The outstanding shares of preferred stock
are, and additional shares of preferred stock will be, when issued, fully paid
and nonassessable and will have no preemptive rights. The Company's board of
directors could authorize the issuance of shares of preferred stock with terms
and conditions that could have the effect of discouraging a takeover or other
transaction that holders of common stock might believe to be in their best
interests or in which holders of some, or a majority, of the shares of common
stock might receive a premium for their shares over the then market price of
those shares of common stock.
Outstanding Preferred Stock
At July 15, 2004, the Company had outstanding 20,000 shares of Series C
preferred stock, 500 shares of Series F preferred stock and 250 shares of Series
G preferred stock, constituting all of the Company's outstanding preferred
stock. The terms of the Series C, Series F and Series G preferred stock provide
for a preference as to the payment of dividends over shares of common stock and
any other capital stock ranking junior to the Series C, Series F and Series G
preferred stock. The terms of the Series C preferred stock provide for
cumulative quarterly dividends at the rate of $215.625 per share per year.
Through March 31, 2009 and March 31, 2014, respectively, the terms of the Series
F and Series G preferred stock provide for cumulative semi-annual dividends at
the rate of $6,236.00 and $7,236.00, respectively, per share per year. After
March 31, 2009 and March 31, 2014, respectively, the terms of the Series F and
Series G preferred stock provide for the reset of dividend rates, at the
Company's option, on a fixed or floating rate basis for fixed or floating rate
periods. Any such fixed rates and periods will be determined through a
remarketing procedure, with cumulative dividends payable semi-annually. Any such
floating rates during floating rate periods will equal 2.375% (the initial
credit spread), plus the greater of (i) the 3-month LIBOR Rate, (ii) the 10-year
Treasury CMT Rate and (iii) the 30-year Treasury CMT Rate (the adjustable rate),
reset quarterly, with cumulative dividends payable quarterly. On and after May
14, 2002, March 31, 2009 and March 31, 2014, respectively, the Series C, Series
F and Series G preferred stock are subject to redemption, in each case in whole
or in part, at the option of the Company, at a cash redemption price of
$2,500.00 per share, $100,000.00 per share and $100,000.00 per share,
respectively, plus accrued and unpaid dividends. The Series C, Series F and
Series G preferred stock rank on a parity as to payment of dividends and amounts
upon liquidation.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Series C, Series F and Series G
preferred stock will be entitled to receive out of the Company's assets
available for distribution to stockholders, before any distribution of assets is
made to holders of common stock or any other shares of capital stock ranking, as
to distributions, junior to the Series C, Series F and Series G preferred stock,
liquidating distributions in the amount of $2,500.00 per share, $100,000.00 per
share and $100,000.00 per share, respectively, plus all accrued and unpaid
dividends.
Except as expressly required by law and in some other limited
circumstances, the holders of the preferred stock are not entitled to vote. The
consent of holders of at least 66% of the outstanding preferred stock and any
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other series of preferred stock ranking on a parity with the outstanding
preferred stock, voting as a single class, is required to authorize another
class of shares senior to the outstanding preferred stock. The affirmative vote
or consent of the holders of at least 66% of the outstanding shares of each
series of preferred stock is required to amend or repeal any provision of, or
add any provision to, our articles of incorporation, including the articles
supplementary relating to that series of preferred stock, if that action would
materially and adversely alter or change the rights, preferences or privileges
of that series of preferred stock.
Future Series of Preferred Stock
The following is a description of the general terms and provisions of the
preferred stock to which any prospectus supplement may relate. The statements
below describing the preferred stock are in all respects subject to and
qualified in their entirety by reference to the applicable provisions of our
articles of incorporation and bylaws and any applicable amendment to our
articles of incorporation designating terms of a series of preferred stock.
Any prospectus supplement relating to a future series of the preferred
stock will contain specific terms, including:
(1) The title and stated value of the preferred stock;
(2) The number of shares of the preferred stock offered, the liquidation
preference per share and the offering price of the preferred stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation applicable to the preferred stock;
(4) The date from which dividends on the preferred stock shall accumulate,
if applicable;
(5) The procedures for any auction and remarketing, if any, for the
preferred stock;
(6) The provision for a sinking fund, if any, for the preferred stock;
(7) The provision for redemption, if applicable, of the preferred stock;
(8) Any listing of the preferred stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which the preferred
stock will be convertible into common stock, including the conversion
price or manner of calculation of the conversion price;
(10) Any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock;
(11) A discussion of federal income tax considerations applicable to the
preferred stock;
(12) The relative ranking and preference of the preferred stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company;
(13) Any limitations on issuance of any series of preferred stock ranking
senior to or on a parity with the series of preferred stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company; and
(14) Any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT.
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Unless otherwise specified in the prospectus supplement, the preferred
stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company, rank:
o senior to all classes or series of common stock, and to all equity
securities ranking junior to the preferred stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up
of the Company;
o on a parity with all equity securities issued by the Company the terms
of which specifically provide that those equity securities rank on a
parity with the preferred stock with respect to dividend rights or
rights upon liquidation, dissolution or winding up of the Company; and
o junior to all equity securities issued by the Company the terms of
which specifically provide that those equity securities rank senior to
the preferred stock with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Company
The term "equity securities" does not include convertible debt securities.
Dividends
Holders of the preferred stock of each series will be entitled to receive,
when, as and if declared by the Company's board of directors, out of the
Company's assets legally available for payment, cash dividends at rates and on
dates as will be set forth in the applicable prospectus supplement. Each
dividend shall be payable to holders of record as they appear on the share
transfer books of the Company on the record dates as shall be fixed by the
Company's board of directors.
Dividends on any series of the preferred stock may be cumulative or
non-cumulative, as provided in the applicable prospectus supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable prospectus supplement. If the Company's board of directors fails to
declare a dividend payable on a dividend payment date on any series of the
preferred stock for which dividends are non-cumulative, then the holders of that
series of the preferred stock will have no right to receive a dividend in
respect of the dividend period ending on that dividend payment date, and the
Company will have no obligation to pay the dividend accrued for that period,
whether or not dividends on that series are declared payable on any future
dividend payment date.
If preferred stock of any series is outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of the Company of
any other series ranking, as to dividends, on a parity with or junior to the
preferred stock of that series for any period unless:
o if that series of preferred stock has a cumulative dividend, full
cumulative dividends have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment is set apart for
that payment on the preferred stock of that series for all past
dividend periods and the then current dividend period; or
o if that series of preferred stock does not have a cumulative dividend,
full dividends for the then current dividend period have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for that payment on
the preferred stock of that series.
When dividends are not paid in full, or a sum sufficient for full payment is not
set apart, upon preferred stock of any series and the shares of any other series
of preferred stock ranking on a parity as to dividends with the preferred stock
of that series, all dividends declared upon preferred stock of that series and
any other series of preferred stock ranking on a parity as to dividends with
that preferred stock will be declared pro rata so that the amount of dividends
declared per share of preferred stock of that series and other series of
preferred stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the preferred stock of that series, which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if that preferred stock does not have a cumulative dividend, and the
other series of preferred stock bear to each other. No interest, or sum of money
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in lieu of interest, shall be payable in respect of any dividend payment or
payments on preferred stock of that series that may be in arrears.
Except as provided in the immediately preceding paragraph, unless:
o if a series of preferred stock has a cumulative dividend, full
cumulative dividends on the preferred stock of that series have been
or contemporaneously are declared and paid or declared and a sum
sufficient for that payment is set apart for payment for all past
dividend periods and the then current dividend period, and
o if a series of preferred stock does not have a cumulative dividend,
full dividends on the preferred stock of that series have been or
contemporaneously are declared and paid or declared and a sum
sufficient for that payment is set apart for payment for the then
current dividend period,
no dividends, other than in shares of common stock or other shares of capital
stock ranking junior to the preferred stock of that series as to dividends and
upon liquidation, shall be declared or paid or set aside for payment nor shall
any other distribution be declared or made upon the common stock, or any other
capital stock of the Company ranking junior to or on a parity with the preferred
stock of that series as to dividends or upon liquidation, nor shall any shares
of common stock, or any other shares of capital stock of the Company ranking
junior to or on a parity with the preferred stock of that series as to dividends
or upon liquidation be redeemed, purchased or otherwise acquired for any
consideration, or any moneys be paid to or made available for a sinking fund for
the redemption of any shares, by the Company, except by conversion into or
exchange for other capital stock of the Company ranking junior to the preferred
stock of that series as to dividends and upon liquidation.
Any dividend payment made on shares of a series of preferred stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of that series which remain payable.
Redemption
If provided in the applicable prospectus supplement, the preferred stock
will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in the applicable prospectus supplement.
The prospectus supplement relating to a series of preferred stock that is
subject to mandatory redemption will specify the number of shares of the
preferred stock that will be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends, which will
not, if that preferred stock does not have a cumulative dividend, include any
accumulation in respect of unpaid dividends for prior dividend periods, to the
date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable prospectus supplement. If the
redemption price for preferred stock of any series is payable only from the net
proceeds of the issuance of shares of capital stock of the Company, the terms of
that preferred stock may provide that, if no shares of capital stock shall have
been issued or to the extent the net proceeds from any issuance are insufficient
to pay in full the aggregate redemption price then due, the preferred stock will
automatically and mandatorily be converted into the applicable shares of capital
stock of the Company pursuant to conversion provisions specified in the
applicable prospectus supplement.
However, unless
o if a series of preferred stock has a cumulative dividend, full
cumulative dividends on all shares of that series of preferred stock
will have been or contemporaneously are declared and paid or declared
and a sum sufficient for that payment set apart for payment for all
past dividend periods and the then current dividend period and
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o if a series of preferred stock does not have a cumulative dividend,
full dividends on all shares of the preferred stock of that series
have been or contemporaneously are declared and paid or declared and a
sum sufficient for that payment set apart for payment for the then
current dividend period,
no shares of the series of preferred stock will be redeemed unless all
outstanding shares of preferred stock of that series are simultaneously
redeemed. However, the preceding shall not prevent the purchase or acquisition
of preferred stock of that series to preserve the REIT status of the Company or
pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of preferred stock of that series.
In addition, unless
o if the series of preferred stock has a cumulative dividend, full
cumulative dividends on all outstanding shares of that series of
preferred stock have been or contemporaneously are declared and paid
or declared and a sum sufficient for that payment set apart for
payment for all past dividend periods and the then current dividend
period and
o if the series of preferred stock does not have a cumulative dividend,
full dividends on the preferred stock of that series have been or
contemporaneously are declared and paid or declared and a sum
sufficient for that payment set apart for payment for the then current
dividend period,
The Company will not purchase or otherwise acquire directly or indirectly any
shares of preferred stock of that series, except by conversion into or exchange
for capital shares of the Company ranking junior to the preferred stock of that
series as to dividends and upon liquidation. However, the preceding shall not
prevent the purchase or acquisition of shares of preferred stock of that series
to preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of preferred
stock of that series.
If fewer than all of the outstanding shares of preferred stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company. Those shares may be redeemed ratably from the holders
of record of those shares in proportion to the number of those shares held or
for which redemption is requested by that holder, with adjustments to avoid
redemption of fractional shares, or by any other equitable manner determined by
the Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of preferred stock of
any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice shall state:
o the redemption date;
o the number of shares and series of the preferred stock to be redeemed;
o the redemption price;
o the place or places where certificates for the preferred stock are to
be surrendered for payment of the redemption price;
o that dividends on the shares to be redeemed will cease to accrue on
the redemption date; and
o the date upon which the holder's conversion rights, if any, as to
those shares shall terminate.
If fewer than all the shares of preferred stock of any series are to be
redeemed, the notice mailed to each holder of preferred stock shall also specify
the number of shares of preferred stock to be redeemed from each holder. If
notice of redemption of any preferred stock has been given and if the funds
necessary for the redemption have been set aside by the Company in trust for the
benefit of the holders of any preferred stock called for redemption,
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then from and after the redemption date dividends will cease to accrue on the
preferred stock called for redemption, and all rights of the holders of those
shares will terminate, except the right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any common stock or any other class or series of capital
stock of the Company ranking junior to the preferred stock in the distribution
of assets upon any liquidation, dissolution or winding up of the Company, the
holders of each series of preferred stock shall be entitled to receive out of
assets of the Company legally available for distribution to stockholders
liquidating distributions in the amount of the liquidation preference per share,
if any, set forth in the applicable prospectus supplement, plus an amount equal
to all dividends accrued and unpaid thereon, which shall not include any
accumulation in respect of unpaid noncumulative dividends for prior dividend
periods. After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of preferred stock will have no right or
claim to any of the Company's remaining assets. In the event that, upon any
voluntary or involuntary liquidation, dissolution or winding up, the Company's
available assets are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of preferred stock and the corresponding
amounts payable on all shares of other classes or series of capital stock of the
Company ranking on a parity with the preferred stock in the distribution of
assets, then the holders of the preferred stock and those other classes or
series of capital stock will share ratably in the distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
If liquidating distributions will have been made in full to all holders of
preferred stock, the Company's remaining assets will be distributed among the
holders of any other classes or series of capital stock ranking junior to the
preferred stock upon liquidation, dissolution or winding up, according to their
respective rights and preferences and in each case according to their respective
number of shares. For these purposes, the consolidation or merger of the Company
with or into any other corporation, trust or entity, or the sale, lease or
conveyance of all or substantially all of the property or business of the
Company, will not be deemed to constitute a liquidation, dissolution or winding
up of the Company
Voting Rights
Holders of the preferred stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable prospectus supplement.
Unless provided otherwise for any series of preferred stock, so long as any
shares of preferred stock of a series remain outstanding, the Company will not,
without the affirmative vote or consent of the holders of at least two-thirds of
the shares of that series of preferred stock outstanding at the time, given in
person or by proxy, either in writing or at a meeting, each series voting
separately as a class:
o authorize or create, or increase the authorized or issued amount of,
any class or series of capital stock ranking prior to that series of
preferred stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized capital stock of the Company into those
shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any of those
shares; or
o amend, alter or repeal the provisions of our articles of incorporation
or the designating amendment for that series of preferred stock,
whether by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of
that series of preferred stock or the holders of that series of
preferred stock.
However, with respect to the occurrence of any of the events set forth in the
second subparagraph above, so long as the preferred stock remains outstanding
with its terms materially unchanged, taking into account that upon the
occurrence of an event, the Company may not be the surviving entity, the
occurrence of any such event shall not be deemed to materially and adversely
affect the rights, preferences, privileges or voting power of holders of
preferred stock. Further,
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o any increase in the amount of the authorized preferred stock or the
creation or issuance of any other series of preferred stock, or
o any increase in the amount of authorized shares of that series or any
other series of preferred stock, in each case ranking on a parity with
or junior to the preferred stock of that series with respect to
payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up,
will not be deemed to materially and adversely affect the rights, preferences,
privileges or voting powers.
These voting provisions will not apply if, at or prior to the time when the
act with respect to which that vote would otherwise be required shall be
effected, all outstanding shares of that series of preferred stock shall have
been redeemed or called for redemption and sufficient funds will have been
deposited in trust to effect the redemption.
Conversion Rights
The terms and conditions, if any, upon which any series of preferred stock
is convertible into common stock will be set forth in the applicable prospectus
supplement. The terms will include:
o the number of shares of common stock into which the shares of
preferred stock are convertible,
o the conversion price (or manner of calculating the conversion price),
o the conversion period,
o provisions as to whether conversion will be at the option of the
holders of the preferred stock or the Company,
o the events requiring an adjustment of the conversion price and
o provisions affecting conversion in the event of the redemption of that
series of preferred stock.
Restrictions on Ownership
For us to qualify as a REIT under the Code, not more than 50% in value of
our outstanding capital stock may be owned, directly or indirectly, by five or
fewer individuals, as defined in the Code to include certain entities, during
the last half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by individuals of the Company's outstanding
equity securities, including any preferred stock. Therefore, the designating
amendment for each series of preferred stock may contain provisions restricting
the ownership and transfer of the preferred stock. The applicable prospectus
supplement will specify any additional ownership limitation relating to a series
of preferred stock. See "Restrictions on Transfers of Capital Stock."
Transfer Agent
The transfer agent and registrar for the preferred stock will be set forth
in the applicable prospectus supplement.
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DESCRIPTION OF DEPOSITARY SHARES
The Company may, at its option, elect to offer depositary shares rather
than full shares of preferred stock. In the event that option is exercised, each
of the depositary shares will represent ownership of and entitlement to all
rights and preferences of a fraction of a share of preferred stock of a
specified series, including dividend, voting, redemption and liquidation rights.
The applicable fraction will be specified in the prospectus supplement. The
shares of preferred stock represented by the depositary shares will be deposited
with a depositary named in the applicable prospectus supplement, under a deposit
agreement, among the Company, the depositary and the holders of the depositary
receipts. Certificates evidencing depositary shares will be delivered to those
persons purchasing depositary shares in the offering. The depositary will be the
transfer agent, registrar and dividend disbursing agent for the depositary
shares. Holders of depositary receipts agree to be bound by the deposit
agreement, which requires holders to take actions such as filing proof of
residence and paying charges.
The summary of terms of the depositary shares contained in this prospectus
does not purport to be complete and is subject to, and qualified in its entirety
by, the provisions of the deposit agreement, our articles of incorporation and
the form of designating amendment for the applicable series of preferred stock.
All material terms of the depositary shares, except those disclosed in the
applicable prospectus supplement, are described in this prospectus.
Dividends
The depositary will distribute all cash dividends or other cash
distributions received in respect of the series of preferred stock represented
by the depositary shares to the record holders of depositary receipts in
proportion to the number of depositary shares owned by those holders on the
relevant record date, which will be the same date as the record date fixed by
the Company for the applicable series of preferred stock. The depositary,
however, will distribute only an amount as can be distributed without
attributing to any depositary share a fraction of one cent, and any balance not
so distributed will be added to and treated as part of the next sum received by
the depositary for distribution to record holders of depositary receipts then
outstanding.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
so entitled, in proportion, as nearly as may be practicable, to the number of
depositary shares owned by those holders on the relevant record date, unless the
depositary determines, after consultation with the Company, that it is not
feasible to make the distribution, in which case the depositary may, with the
Company's approval, adopt any other method for that distribution as it deems
equitable and appropriate, including the sale of the property, at a place or
places and upon terms that it may deem equitable and appropriate, and
distribution of the net proceeds from that sale to the holders.
No distribution will be made in respect of any depositary share to the
extent that it represents any preferred stock converted into excess stock.
Liquidation Preference
In the event of the liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or involuntary, the holders of each depositary
share will be entitled to the fraction of the liquidation preference accorded
each share of the applicable series of preferred stock, as set forth in the
prospectus supplement.
Redemption
If the series of preferred stock represented by the applicable series of
depositary shares is redeemable, those depositary shares will be redeemed from
the proceeds received by the depositary resulting from the redemption, in whole
or in part, of preferred stock held by the depositary. Whenever the Company
redeems any preferred stock held by the depositary, the depositary will redeem
as of the same redemption date the number of depositary shares representing the
redeemed preferred stock. The depositary will mail the notice of redemption
promptly upon receipt of notice from the Company and not less than 30 nor more
than 60 days prior to the date fixed for redemption of the preferred stock and
the depositary shares to the record holders of the depositary receipts.
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Voting
Promptly upon receipt of notice of any meeting at which the holders of the
series of preferred stock represented by the applicable series of depositary
shares are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts as of
the record date for the meeting. Each record holder of depositary receipts will
be entitled to instruct the depositary as to the exercise of the voting rights
pertaining to the number of shares of preferred stock represented by the record
holder's depositary shares. The depositary will endeavor, insofar as
practicable, to vote the preferred stock represented by depositary shares in
accordance with those instructions, and the Company will agree to take all
action which may be deemed necessary by the depositary in order to enable the
depositary to do so. The depositary will abstain from voting any of the
preferred stock to the extent that it does not receive specific instructions
from the holders of depositary receipts.
Withdrawal of Preferred Stock
Upon surrender of depositary receipts at the principal office of the
depositary, upon payment of any unpaid amount due the depositary, and subject to
the terms of the deposit agreement, the owner of the depositary shares evidenced
thereby is entitled to delivery of the number of whole shares of preferred stock
and all money and other property, if any, represented by the depositary shares.
Partial shares of preferred stock will not be issued. If the depositary receipts
delivered by the holder evidence a number of depositary shares in excess of the
number of depositary shares representing the number of whole shares of preferred
stock to be withdrawn, the depositary will deliver to that holder at the same
time a new depositary receipt evidencing the excess number of depositary shares.
Holders of preferred stock that is withdrawn will not thereafter be entitled to
deposit their shares under the deposit agreement or to receive depositary
receipts evidencing their depositary shares.
Amendment and Termination of Deposit Agreement
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time and from time to time be
amended by agreement between the Company and the depositary. However, any
amendment which materially and adversely alters the rights of the holders of
depositary shares, other than any change in fees, will not be effective unless
that amendment has been approved by at least a majority of the depositary shares
then outstanding. No amendment to the deposit agreement may impair the right,
subject to the terms of the deposit agreement, of any owner of any depositary
shares to surrender the depositary receipt evidencing its depositary shares with
instructions to the depositary to deliver to the holder the preferred stock and
all money and other property, if any, represented thereby, except in order to
comply with mandatory provisions of applicable law.
The deposit agreement will be permitted to be terminated by the Company
upon not less than 30 days' prior written notice to the applicable depositary
if:
o termination is necessary to preserve the Company's status as a REIT,
or
o a majority of each series of preferred stock affected by termination
consents to termination,
whereupon the depositary will be required to deliver or make available to each
holder of depositary receipts, upon surrender of the depositary receipts held by
that holder, the number of whole or fractional shares of preferred stock as is
represented by the depositary shares evidenced by those depositary receipts
together with any other property held by the depositary with respect to those
depositary receipts.
The Company will agree that if the deposit agreement is terminated to
preserve its status as a REIT, then the Company will use its best efforts to
list the preferred stock issued upon surrender of the related depositary shares
on a national securities exchange.
In addition, the deposit agreement will automatically terminate if:
o all outstanding depositary shares thereunder shall have been redeemed,
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o there shall have been a final distribution in respect of the related
preferred stock in connection with any liquidation, dissolution or
winding up of the Company and that distribution shall have been
distributed to the holders of depositary receipts evidencing the
depositary shares representing that preferred stock or
o each share of the related preferred stock shall have been converted
into stock of the Company not represented by depositary shares.
Charges of Depositary
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the depositary in connection with the initial deposit of the
preferred stock and initial issuance of the depositary shares, and redemption of
the preferred stock and all withdrawals of preferred stock by owners of
depositary shares. Holders of depositary receipts will pay transfer, income and
other taxes and governmental charges and other charges as are provided in the
deposit agreement to be for their accounts. In certain circumstances, the
depositary may refuse to transfer depositary shares, may withhold dividends and
distributions and sell the depositary shares evidenced by those depositary
receipts if those charges are not paid.
Miscellaneous
The depositary will forward to the holders of depositary receipts all
reports and communications from the Company that are delivered to the depositary
and that the Company is required to furnish to the holders of the preferred
stock. In addition, the depositary will make available for inspection by holders
of depositary receipts at the principal office of the depositary, and at other
places as it may from time to time deem advisable, any reports and
communications received from the Company that are received by the depositary as
the holder of preferred stock.
Neither the depositary nor the Company assumes any obligation or will be
subject to any liability under the deposit agreement to holders of depositary
receipts other than for its negligence or willful misconduct. Neither the
depositary nor the Company will be liable if it is prevented or delayed by law
or any circumstance beyond its control in performing its obligations under the
deposit agreement. The obligations of the Company and the depositary under the
deposit agreement will be limited to performance in good faith of their duties
under the deposit agreement, and they will not be obligated to prosecute or
defend any legal proceeding in respect of any depositary shares or preferred
stock unless satisfactory indemnity is furnished. The Company and the depositary
may rely on written advice of counsel or accountants, on information provided by
holders of the depositary receipts or other persons believed in good faith to be
competent to give that information and on documents believed to be genuine and
to have been signed or presented by the proper party or parties.
In the event the depositary receives conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and the
Company, on the other hand, the depositary shall be entitled to act on those
claims, requests or instructions received from the Company.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the depositary.
Any resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of that appointment. The successor depositary must
be appointed within 60 days after delivery of the notice for resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least
$150,000,000.
Federal Income Tax Consequences
Owners of depositary shares will be treated for Federal income tax purposes
as if they were owners of the preferred stock represented by depositary shares.
Accordingly, those owners will be entitled to take into account, for
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Federal income tax purposes, income and deductions to which they would be
entitled if they were holders of the preferred stock. In addition,
o no gain or loss will be recognized for Federal income tax purposes
upon the withdrawal of preferred stock in exchange for depositary
shares,
o the tax basis of each share of preferred stock to an exchanging owner
of depositary shares will, upon exchange, be the same as the aggregate
tax basis of the depositary shares exchanged therefor and
o the holding period for preferred stock in the hands of an exchanging
owner of depositary shares will include the period during which that
person owned those depositary shares.
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DESCRIPTION OF COMMON STOCK
The following is a summary of the material terms of our common stock. You
should read our articles of incorporation and bylaws, which are incorporated by
reference to the registration statement of which this prospectus is a part. All
material terms of the common stock, except those disclosed in the applicable
prospectus supplement, are described in this prospectus.
General
Under our articles of incorporation, the Company has authority to issue 100
million shares of its common stock, par value $.01 per share. Under Maryland
law, stockholders generally are not responsible for the corporation's debts or
obligations. At July 26, 2004 we had outstanding 41,255,440 shares of common
stock.
Terms
Subject to the preferential rights of any other shares or series of stock,
including preferred stock outstanding from time to time, and to the provisions
of our articles of incorporation regarding excess stock, common stock holders
will be entitled to receive dividends on shares of common stock if, as and when
authorized and declared by our board of directors out of assets legally
available for that purpose. Subject to the preferential rights of any other
shares or series of stock, including preferred stock outstanding from time to
time, and to the provisions of our articles of incorporation regarding excess
stock, common stockholders will share ratably in the assets of the Company
legally available for distribution to its stockholders in the event of its
liquidation, dissolution or winding up after payment of, or adequate provision
for, all known debts and liabilities of the Company. For a discussion of excess
stock, please see "Restrictions on Transfers of Capital Stock."
Subject to the provisions of our articles of incorporation regarding excess
stock, each outstanding share of common stock entitles the holder to one vote on
all matters submitted to a vote of stockholders, including the election of
directors, and, except as otherwise required by law or except as provided with
respect to any other class or series of stock, common stock holders will possess
the exclusive voting power. There is no cumulative voting in the election of
directors, which means that the holders of a majority of the outstanding shares
of common stock can elect all of the directors then standing for election, and
the holders of the remaining shares of common stock will not be able to elect
any directors.
Common stock holders have no conversion, sinking fund or redemption rights,
or preemptive rights to subscribe for any securities of the Company.
Subject to the provisions of our articles of incorporation regarding excess
stock, all shares of common stock will have equal dividend, distribution,
liquidation and other rights, and will have no preference, appraisal or exchange
rights.
Under the MGCL, a corporation generally cannot, subject to certain
exceptions, dissolve, amend its articles of incorporation, merge, sell all or
substantially all of its assets, engage in a share exchange or engage in similar
transactions outside the ordinary course of business unless approved by the
affirmative vote of stockholders holding at least two-thirds of the shares
entitled to vote on the matter unless the corporation's articles of
incorporation set forth a lesser percentage, which percentage shall not be less
than a majority of all of the votes to be cast on the matter. Our articles of
incorporation do not provide for a lesser percentage in such situations.
Restrictions on Ownership
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, actually or by attribution,
by five or fewer individuals, as defined in the Code to include certain
entities, during the last half of a taxable year. To assist us in meeting this
requirement, we may take certain actions to limit the beneficial ownership,
directly or indirectly, by individuals of our outstanding equity securities. See
"Restrictions on Transfers of Capital Stock."
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Transfer Agent
The transfer agent and registrar for the common stock is EquiServe Inc. and
its fully owned subsidiary, EquiServe Trust Company, Inc.
Shareholder Rights Plan
On September 4, 1997, the board of directors of the Company adopted a
shareholder rights plan. Under the shareholder rights plan, one right was
attached to each outstanding share of common stock at the close of business on
October 19, 1997, and one right will be attached to each share of common stock
thereafter issued. Each right entitles the holder to purchase, under certain
conditions, one one-hundredth of a share of our junior participating preferred
stock for $125.00. The rights may also, under certain conditions, entitle the
holders to receive common stock, or common stock of an entity acquiring the
Company, or other consideration, each having a value equal to twice the exercise
price of each right ($250.00). We have designated 1,000,000 shares as junior
participating preferred stock and have reserved such shares for issuance under
the shareholder rights plan. In the event of any merger, consolidation,
combination or other transaction in which shares of common stock are exchanged
for or changed into other stock or securities, cash and/or other property, each
share of junior participating preferred stock will be entitled to receive 100
times the aggregate amount of stock, securities, cash and/or other property into
which or for which each share of common stock is changed or exchanged, subject
to certain adjustments. The rights will expire on October 19, 2007, unless
redeemed earlier by the holders at $.001 per right or exchanged by the holder at
an exchange ratio of one share of common stock per right. The description and
terms of the rights are set forth in a shareholder rights agreement between us
and EquiServe Trust Company, N.A. (formerly First Chicago Trust Company of New
York).
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CERTAIN PROVISIONS OF MARYLAND LAW AND THE
COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The following summary of certain provisions of Maryland law is not complete
and is qualified by reference to Maryland law and our articles of incorporation
and bylaws, which are incorporated by reference to the registration statement of
which this prospectus is a part.
Business Combinations
Under the MGCL, certain "business combinations" (as defined in the MGCL)
between a Maryland corporation and an "Interested Stockholder" (as defined in
the MGCL) or, in certain circumstances, an associate or an affiliate thereof,
are prohibited for five years after the most recent date on which the Interested
Stockholder became an Interested Stockholder. Business combinations for the
purposes of the preceding sentence are defined by the MGCL to include certain
mergers, consolidations, share exchanges and asset transfers, some issuances and
reclassifications of equity securities, the adoption of a plan of liquidation or
dissolution or the receipt by an interested stockholder or its affiliate of any
loan advance, guarantee, pledge or other financial assistance or tax advantage
provided by the Company. After the five-year period, any such business
combination must be recommended by the board of directors of the corporation and
approved by the affirmative vote of at least
o 80% of the votes entitled to be cast by holders of outstanding shares
of voting stock the corporation and
o two-thirds of the votes entitled to be cast by holders of voting stock
of the corporation other than voting stock held by the Interested
Stockholder with whom the business combination is to be effected.
The super-majority vote requirements will not apply if, among other things, the
corporation's stockholders receive a minimum price (as defined in the MGCL) for
their shares and the consideration is received in cash or in the same form as
previously paid by the Interested Stockholder for its shares. These provisions
of Maryland law do not apply, however, to business combinations that are
approved or exempted by the board of directors of the corporation prior to the
most recent time that the Interested Stockholder becomes an Interested
Stockholder. Our articles of incorporation exempt from these provisions of the
MGCL any business combination in which there is no Interested Stockholder other
than Jay H. Shidler, the Chairman of our board of directors, or any entity
controlled by Mr. Shidler unless Mr. Shidler is an Interested Stockholder
without taking into account his ownership of shares of our common stock and the
right to acquire shares of our common stock in an aggregate amount that does not
exceed the number of shares of our common stock that he owned and had the right
to acquire, including through the exchange of limited partnership units of the
Operating Partnership, at the time of the consummation of our initial public
offering.
Control Share Acquisitions
The MGCL provides that "control shares" (as defined in the MGCL) of a
Maryland corporation acquired in a "control share acquisition" (as defined in
the MGCL) have no voting rights except to the extent approved by a vote of
two-thirds of the votes entitled to be cast on the matter, excluding shares of
stock owned by the acquiror or by officers or by directors who are also
employees of the corporation. "Control shares" are voting shares of stock that,
if aggregated with all other shares of stock previously acquired by that person,
would entitle the acquiror to exercise voting power in electing directors within
one of the following ranges of voting power:
o one-tenth or more but less than one-third,
o one-third or more but less than a majority or
o a majority of all voting power.
Control shares do not include shares the acquiring person is then entitled to
vote as a result of having previously obtained stockholder approval. A "control
share acquisition" means the acquisition of ownership of or power to direct the
voting power of control shares, subject to certain exceptions.
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A person who has made or proposes to make a control share acquisition may
compel the board of directors, upon satisfaction of certain conditions,
including an undertaking to pay certain expenses, to call a special meeting of
stockholders to be held within 50 days after receiving a 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 meeting of stockholders.
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 MGCL, 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. The corporation's redemption of the control shares will be for
fair value determined, without regard to the absence of voting rights, as of the
date of the last control share acquisition or of any meeting of stockholders at
which the voting rights of the control shares are considered and not approved.
If voting rights for control shares are approved at a stockholders meeting and
the acquiror becomes entitled to vote a majority of the shares entitled to vote,
all other stockholders may exercise appraisal rights. The fair value of the
shares as determined for purposes of the appraisal rights may not be less than
the highest price per share paid in the control share acquisition. Certain
limitations and restrictions otherwise applicable to the exercise of dissenters'
rights do not apply in the context of a control share acquisition.
The control share acquisition statute does not apply to
o shares acquired in a merger, consolidation or share exchange if the
corporation is a party to the transaction or
o acquisitions approved or exempted by our articles of incorporation or
bylaws.
Our bylaws contain a provision exempting any and all acquisitions of our
shares of capital stock from the control share provisions of the MGCL. There can
be no assurance that this bylaw provision will not be amended or eliminated in
the future.
Amendment of Articles of Incorporation
Our articles of incorporation, including the provisions on classification
of the board of directors discussed below, may be amended only by the
affirmative vote of the holders of not less than two-thirds of all of the votes
entitled to be cast on the matter.
Meetings of Stockholders
Our bylaws provide for annual meetings of stockholders to be held on the
third Wednesday in April or on any other day as may be established from time to
time by our board of directors. Special meetings of stockholders may be called
by
o our Chairman of the board or our President,
o a majority of the board of directors or
o stockholders holding at least 25% of our outstanding capital stock
entitled to vote at the meeting.
Our bylaws provide that any stockholder of record wishing to nominate a
director or have a stockholder proposal considered at an annual meeting must
provide written notice and certain supporting documentation to us relating to
the nomination or proposal not less than 75 days nor more than 180 days prior to
the anniversary date of the prior year's annual meeting or special meeting in
lieu thereof (the "Anniversary Date"). In the event that the annual meeting is
called for a date more than seven calendar days before the Anniversary Date,
stockholders generally must provide written notice within 20 calendar days after
the date on which notice of the meeting is mailed to stockholders or the date of
the meeting is publicly disclosed.
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The purpose of requiring stockholders to give us advance notice of
nominations and other business is to afford our board of directors a meaningful
opportunity to consider the qualifications of the proposed nominees or the
advisability of the other proposed business and, to the extent deemed necessary
or desirable by our board of directors, to inform stockholders and make
recommendations about the qualifications or business, as well as to provide a
more orderly procedure for conducting meetings of stockholders. Although our
bylaws do not give our board of directors any power to disapprove stockholder
nominations for the election of directors or proposals for action, they may have
the effect of precluding a contest for the election of directors or the
consideration of stockholder proposals if the proper procedures are not followed
and of discouraging or deterring a third party from conducting a solicitation of
proxies to elect its own slate of directors or to approve its own proposal. Our
bylaws may have those effects without regard to whether consideration of the
nominees or proposal might be harmful or beneficial to us and our stockholders.
Classification of the Board of Directors
Our bylaws provide that the number of our directors may be established by
the board of directors but may not be fewer than the minimum number required by
Maryland law nor more than twelve. Any vacancy will be filled, at any regular
meeting or at any special meeting called for that purpose, by a majority of the
remaining directors, except that a vacancy resulting from an increase in the
number of directors will be filled by a majority of the entire board of
directors. Under the terms of our articles of incorporation, our directors are
divided into three classes. One class holds office for a term expiring at the
annual meeting of stockholders to be held in 2002, and the other two classes
hold office for terms expiring at the annual meetings of stockholders to be held
in 2003 and 2004, respectively. As the term of each class expires, directors in
that class will be elected for a term of three years and until their successors
are duly elected and qualified. We believe that classification of our board of
directors will help to assure the continuity and stability of our business
strategies and policies as determined by our board of directors.
The classified board provision could have the effect of making the removal
of incumbent directors more time consuming and difficult, which could discourage
a third party from making a tender offer or otherwise attempting to obtain
control of us, even though such an attempt might be beneficial to us and our
stockholders. At least two annual meetings of stockholders, instead of one, will
generally be required to effect a change in a majority of our board of
directors. Thus, the classified board provision could increase the likelihood
that incumbent directors will retain their positions. Holders of shares of
common stock will have no right to cumulative voting for the election of
directors. Consequently, at each annual meeting of stockholders, the holders of
a majority of the shares of common stock will be able to elect all of the
successors of the class of directors whose term expires at that meeting.
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RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding capital stock may be owned,
actually or by attribution, by five or fewer individuals (as defined in the Code
to include certain entities) during the last half of a taxable year. Our capital
stock must also be beneficially owned by 100 or more persons during at least 335
days of a taxable year of 12 months or during a proportionate part of a shorter
tax year. See "Certain U.S. Federal Income Tax Considerations." To ensure that
we remain a qualified REIT, our articles of incorporation, subject to certain
exceptions, provide that no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than an aggregate of 9.9% in value of
our capital stock. Any transfer of capital stock or any security convertible
into capital stock that would create a direct or indirect ownership of capital
stock in excess of the ownership limit or that would result in our
disqualification as a REIT, including any transfer that results in the capital
stock being owned by fewer than 100 persons or results in us being "closely
held" within the meaning of Section 856(h) of the Code, shall be null and void,
and the intended transferee will acquire no rights to the capital stock.
Capital stock owned, or deemed to be owned, or transferred to a stockholder
in excess of the ownership limit will automatically be exchanged for shares of
"excess stock," as defined in our articles of incorporation, that will be
transferred, by operation of law, to us as trustee of a trust for the exclusive
benefit of the transferees to whom such capital stock may be ultimately
transferred without violating the ownership limit. While the excess stock is
held in trust, it will not be entitled to vote, it will not be considered for
purposes of any stockholder vote or the determination of a quorum for such vote,
and it will not be entitled to participate in the accumulation or payment of
dividends or other distributions. A transferee of excess stock may, at any time
such excess stock is held by us in trust, designate as beneficiary of the
transferee stockholder's interest in the trust representing the excess stock any
individual whose ownership of the capital stock exchanged into such excess stock
would be permitted under the ownership limit, and may transfer that interest to
the beneficiary at a price not in excess of the price paid by the original
transferee-stockholder for the capital stock that was exchanged into excess
stock. Immediately upon the transfer to the permitted beneficiary, the excess
stock will automatically be exchanged for capital stock of the class from which
it was converted.
In addition, we will have the right, for a period of 90 days during the
time any excess stock is held by us in trust, and, with respect to excess stock
resulting from the attempted transfer of our preferred stock, at any time when
any outstanding shares of preferred stock of the series are being redeemed, to
purchase all or any portion of the excess stock from the original
transferee-stockholder at the lesser of the price paid for the capital stock by
the original transferee-stockholder and the market price, as determined in the
manner set forth in our articles of incorporation, of the capital stock on the
date we exercise our option to purchase or, in the case of a purchase of excess
stock attributed to preferred stock which has been called for redemption, at its
stated value, plus all accumulated and unpaid dividends to the date of
redemption. The 90-day period begins on the date of the violative transfer if
the original transferee-stockholder gives notice to us of the transfer or, if no
such notice is given, the date the board of directors determines that a
violative transfer has been made.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
This section is a summary of the material federal income tax matters of
general application pertaining to REITs under the Code. This discussion is based
upon current law (which is subject to change, possibly on retroactive basis) and
does not purport to deal with federal income tax consequences to investors who
purchase our debt securities, common stock, preferred stock or preferred stock
represented by depositary shares (which consequences will be described in
applicable supplements to this prospectus). The provisions of the Code
pertaining to REITs are highly technical and complex and sometimes involve mixed
questions of fact and law. This section does not discuss U.S. federal estate or
gift taxation or state, local or foreign taxation.
You are advised to consult with your own tax advisor regarding the specific
U.S. federal, state, local and foreign tax consequences to you of the purchase,
ownership and sale of our stock.
In the opinion of Cahill Gordon & Reindel LLP:
o commencing with our taxable year ended December 31, 1994, we have been
organized and operated in conformity with the requirements for
qualification and taxation as a REIT under the Code and
o our current and proposed method of operation (as represented by us to
Cahill Gordon & Reindel LLP in a written certificate) will enable us
to continue to meet the requirements for qualification and taxation as
a REIT under the Code.
Cahill Gordon & Reindel LLP's opinion is based on various assumptions and
is conditioned upon certain representations made by us as to factual matters
with respect to us and certain partnerships, limited liability companies and
corporations through which we hold substantially all of our assets, including an
assumption that, if we ultimately were found not to have satisfied the gross
income requirements of the REIT provisions as a result of certain development
agreements entered into by us (as discussed in "Risk Factors" above), such
failure was due to reasonable cause and not due to willful neglect, and we have
otherwise satisfied all the requirements for relief under the Code (as discussed
in "Risk Factors" above). Moreover, our qualification and taxation as a REIT
depends upon our ability to meet, as a matter of fact, through actual annual
operating results, distribution levels, diversity of stock ownership and various
other qualification tests imposed under the Code discussed below, the results of
which will not be reviewed by Cahill Gordon & Reindel LLP. No assurance can be
given that the actual results of our operations for any particular taxable year
will satisfy those requirements.
To qualify as a REIT under the Code for a taxable year, we must meet
certain organizational and operational requirements, which generally require us
to be a passive investor in real estate and to avoid excessive concentration of
ownership of our capital stock. Generally, at least 75% of the value of our
total assets at the end of each calendar quarter must consist of real estate
assets, cash or governmental securities. We generally may not own securities
possessing more than 10% of the total voting power, or representing more than
10% of the total value, of the outstanding securities of any issuer, and the
value of any one issuer's securities may not exceed 5% of the value of our
assets. Shares of qualified REITs, qualified temporary investments and shares of
certain wholly owned subsidiary corporations known as "qualified REIT
subsidiaries" and "taxable REIT subsidiaries" are exempt from these
prohibitions. We hold assets through certain qualified REIT subsidiaries and
taxable REIT subsidiaries. In the opinion of Cahill Gordon & Reindel LLP, based
on certain factual representations, these holdings do not violate the
prohibitions in the REIT provisions on ownership of securities.
The 10% and 5% limitations described above will not apply to the ownership
of securities of a taxable REIT subsidiary. A REIT may own up to 100% of the
securities of a taxable REIT subsidiary subject only to the limitations that the
aggregate value of the securities of all taxable REIT subsidiaries owned by the
REIT does not exceed 20% of the value of the assets of the REIT, and the
aggregate value of all securities owned by the REIT (including the securities of
all taxable REIT subsidiaries, but excluding governmental securities) does not
exceed 25% of the value of the assets of the REIT. A taxable REIT subsidiary
generally is any corporation (other than another REIT and corporations involved
in certain lodging, healthcare, franchising and licensing activities) owned by a
REIT with respect to which the REIT and such corporation jointly elect that such
corporation shall be treated as a taxable REIT subsidiary.
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For each taxable year, at least 75% of a REIT's gross income must be
derived from specified real estate sources and 95% must be derived from such
real estate sources plus certain other permitted sources. Real estate income for
purposes of these requirements includes
o gain from the sale of real property not held primarily for sale to
customers in the ordinary course of business,
o dividends on REIT shares,
o interest on loans secured by mortgages on real property,
o certain rents from real property and
o certain income from foreclosure property.
For rents to qualify, they may not be based on the income or profits of any
person, except that they may be based on a percentage or percentages of gross or
receipts. Also, subject to certain limited exceptions, the REIT may not man-age
the property or furnish services to tenants except through an independent
contractor which is paid an arm's-length fee and from which the REIT derives no
income. However, a REIT may render a de minimis amount of otherwise
impermissible services to tenants, or in connection with the management of
property, without causing any income from the property (other than the portion
of the income attributable to the impermissible services) to fail to qualify as
rents from real property. In addition, a taxable REIT subsidiary may provide
certain services to tenants of the REIT, which services could not otherwise be
provided by the REIT or the REIT's other subsidiaries.
Substantially all of our assets are held through certain partnerships. In
general, in the case of a REIT that is a partner in a partnership, applicable
regulations treat the REIT as holding directly its proportionate share of the
assets of the partnership and as being entitled to the income of the partnership
attributable to such share based on the REIT's proportionate share of such
partnership capital.
We must satisfy certain ownership restrictions that limit the concentration
of ownership of our capital stock and the ownership by us of our tenants. Our
outstanding capital stock must be held by at least 100 stockholders during at
least 335 days of a taxable year or during a proportionate part of a taxable
year of less than 12 months. No more than 50% in value of our outstanding
capital stock, including in some circumstances capital stock into which
outstanding securities might be converted, may be owned actually or
constructively by five or fewer individuals or certain entities at any time
during the last half of any taxable year. Accordingly, our articles of
incorporation contain certain restrictions regarding the transfer of our common
stock, preferred stock and any other outstanding securities convertible into
stock when necessary to maintain our qualification as a REIT under the Code.
However, because the Code imposes broad attribution rules in determining
constructive ownership, no assurance can be given that the restrictions
contained in our articles of incorporation will be effective in maintaining our
REIT status. See "Restrictions on Transfers of Capital Stock" above.
So long as we qualify for taxation as a REIT, distribute at least 90% of
our REIT taxable income, computed without regard to net capital gain or the
dividends paid deduction, for each taxable year to our stockholders annually and
satisfy certain other distribution requirements, we will not be subject to
federal income tax on that portion of such income distributed to stockholders.
We will be taxed at regular corporate rates on all income not distributed to
stockholders. Our policy is to distribute at least 90% of our taxable income
annually. We may elect to pass through to our shareholders on a pro rata basis
any taxes paid by us on our undistributed net capital gain income for the
relevant tax year. REITs also may incur taxes for certain other activities or to
the extent distributions do not satisfy certain other requirements.
Our failure to qualify during any taxable year as a REIT could have a
material adverse effect upon our stockholders and might materially affect our
ability to pay interest and principal to the holders of our debt securities. If
disqualified for taxation as a REIT for a taxable year, we also would be unable
to elect to be taxed as a REIT for the next four taxable years, unless certain
relief provisions were available. We would be subject to federal income tax at
corporate rates on all of our taxable income and would not be able to deduct any
dividends paid, which could
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have a material adverse affect on our business and could result in a
discontinuation of or substantial reduction in dividends to stockholders and
might materially affect our ability to pay interest and principal to the holders
of our debt securities. Should the failure to qualify as a REIT be determined to
have occurred retroactively in one of our earlier tax years, the imposition of a
substantial federal income tax liability on us attributable to any nonqualifying
tax years may adversely affect our business and our ability to pay dividends to
our stockholders and interest and principal to the holders of our debt
securities.
In the event that we fail to meet certain gross income tests applicable to
REITs, we may nonetheless retain our qualification as a REIT if we pay a penalty
tax equal to the amount by which 90% or 75% of our gross income exceeds our
gross income qualifying under the 95% or 75% gross income test respectively
(whichever amount is greater) multiplied by a fraction intended to reflect our
profitability, so long as such failure was considered to be due to reasonable
cause and not willful neglect and certain other conditions are satisfied. Any
such taxes would adversely affect our ability to pay dividends and distributions
to our stockholders and interest and principal to the holders of our debt
securities.
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FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act, and Section 21E of the Exchange
Act. We intend such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995 and are including this statement for the purposes
of complying with those safe harbor provisions. Forward-looking statements,
which are based on certain assumptions and describe our future plans, strategies
and expectations, are generally identifiable by use of the words "believe,"
"expect," "intend," "anticipate," "estimate," "project" or similar expressions.
Our ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse
effect on our operations and future prospects on a consolidated basis include,
but are not limited to, changes in:
o economic conditions generally and the real estate market specifically,
o legislative/regulatory changes (including changes to laws governing
the taxation of real estate investment trusts),
o availability of financing,
o interest rate levels,
o competition,
o supply and demand for industrial properties in our current and
proposed market areas,
o potential environmental liabilities,
o slippage in development or lease-up schedules,
o tenant credit risks,
o higher-than-expected costs and
o changes in general accounting principles, policies and guidelines
applicable to real estate investment trusts.
These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements. Further information concerning us and our business, including
additional factors that could materially affect our financial results, is
included elsewhere in this prospectus and in the documents we incorporate by
reference, including the 2003 Annual Report on Form 10-K of the Operating
Partnership and the 2003 Annual Report on Form 10-K of the Company.
WHERE YOU CAN FIND MORE INFORMATION
The Company and the Operating Partnership are subject to the informational
requirements of the Exchange Act and files reports and other information with
the SEC. You may read and copy any of the Company's and the Operating
Partnership's reports and other materials filed with the SEC at the Public
Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. In addition, the SEC maintains a website that contains reports
and other information regarding registrants that file electronically with the
SEC at . The Company's common stock is listed on the NYSE and its filings with
the SEC can also be inspected and copied at the offices of the NYSE at 20 Broad
Street, New York, New York 10005.
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Whenever a reference is in made in this prospectus to any of our agreements
or other documents, please be aware that the reference herein is only a summary
and that you should refer to the exhibits that are part of the registration
statement filed with the SEC on Form S-3 for a copy of such agreement or other
document.
DOCUMENTS INCORPORATED BY REFERENCE
We incorporate by reference information we file with the SEC, which means
that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is an important part of
this prospectus and more recent information automatically updates and supersedes
more dated information contained or incorporated by reference in this
prospectus.
The Company (file no. 1-13102) filed the following documents with the SEC
and incorporates them by reference into this prospectus:
(1) Annual Report on Form 10-K for the year ended December 31, 2003, filed
March 15, 2004;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31, 2004,
filed May 10, 2004;
(3) Current Report on Form 8-K filed May 18, 2004;
(4) Current Report on Form 8-K filed May 27, 2004;
(5) Current Report on Form 8-K filed July 30, 2004; and
(6) Quarterly Report on Form 10-Q for the quarter ended June 30, 2004,
filed August 6, 2004.
The Operating Partnership (file no. 333-21873) filed the following
documents with the SEC and incorporates them by reference into this prospectus:
(1) Annual Report on Form 10-K for the year ended December 31, 2003, filed
March 15, 2004;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31, 2004,
filed May 10, 2004;
(3) Current Report on Form 8-K filed May 27, 2004;
(4) Current Report on Form 8-K filed June 8, 2004;
(5) Current Report on Form 8-K filed June 17, 2004;
(6) Current Report on Form 8-K filed July 30, 2004; and
(7) Quarterly Report on Form 10-Q for the quarter ended June 30, 2004,
filed August 6, 2004.
All documents filed by the Company and the Operating Partnership under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this prospectus and prior to the termination of this offering shall be deemed to
be incorporated by reference in this prospectus and made a part hereof from the
date of the filing of such documents.
We will provide, without charge, to each person to whom this prospectus is
delivered a copy of these filings upon written or oral request to First
Industrial Realty Trust, Inc., 311 S. Wacker Drive, Suite 4000, Chicago,
Illinois 60606, Attention: Investor Relations, telephone number (312) 344-4300.
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EXPERTS
The financial statements incorporated in this prospectus by reference to
the Company's Current Report on Form 8-K dated July 30, 2004 and the Operating
Partnership's Current Report on Form 8-K dated July 30, 2004 and the financial
statement schedules incorporated in this prospectus by reference to the Annual
Report on Form 10-K of the Company for the year ended December 31, 2003 and the
Annual Report on Form 10-K of the Operating Partnership for the year ended
December 31, 2003 have been so incorporated in reliance on the reports of
PricewaterhouseCoopers, LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
Certain legal matters will be passed upon for us by Cahill Gordon & Reindel
LLP, New York, New York. Cahill Gordon & Reindel LLP will rely as to all matters
of Maryland law on the opinion of McGuireWoods LLP, Baltimore, Maryland. If
counsel for any underwriter, dealer or agent passes on legal matters in
connection with an offering made by this prospectus, we will name that counsel
in the prospectus supplement relating to the offering.
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