AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1997
REGISTRATION NO. 333-29879
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST INDUSTRIAL REALTY TRUST, INC. FIRST INDUSTRIAL, L.P.
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
MARYLAND DELAWARE
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
36-3935116 36-3924586
(I.R.S. Employer Identification Number) (I.R.S. Employer Identification Number)
311 S. WACKER DRIVE, SUITE 4000
CHICAGO, ILLINOIS 60606
(312) 344-4300
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
MICHAEL T. TOMASZ
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FIRST INDUSTRIAL REALTY TRUST, INC.
311 S. WACKER DRIVE, SUITE 4000
CHICAGO, ILLINOIS 60606
(312) 344-4300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
GERALD S. TANENBAUM, ESQ. ROBERT E. KING, JR., ESQ.
ROGER ANDRUS, ESQ. ROGERS & WELLS
CAHILL GORDON & REINDEL 200 PARK AVENUE
80 PINE STREET NEW YORK, NEW YORK 10166
NEW YORK, NEW YORK 10005 (212) 878-8000
(212) 701-3000
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING AGGREGATE OFFERING REGISTRATION
BEING REGISTERED(1)(2) REGISTERED(3)(4)(5)(6) PRICE PER UNIT(7) PRICE(3)(4)(5)(7)(8) FEE(9)(10)
First Industrial Realty Trust, Inc.
Common Stock(11)......................
Preferred Stock....................... $300,000,000 N.A. $300,000,000
Depositary Shares..................... $151,515
First Industrial, L.P.
Debt Securities....................... $200,000,000 N.A. $200,000,000
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(1) This Registration Statement also covers securities which may be issued by
the Registrants under contracts pursuant to which the counterparty may be
required to purchase Common Stock, Preferred Stock, Depositary Shares or
Debt Securities.
(2) Subject to footnotes (4) and (5), there is being registered hereunder (a) an
indeterminate amount of Preferred Stock, Depositary Shares and Common Stock
as may be sold, from time to time, by First Industrial Realty Trust, Inc.
and (b) an indeterminate amount of Debt Securities as may be sold, from time
to time, by First Industrial, L.P. There is also being registered hereunder
up to $300,000,000 of Common Stock that may be issued upon conversion of an
aggregate of up to $300,000,000 of Preferred Stock and Depositary Shares
registered hereunder.
(3) In no event will the aggregate maximum offering price of all securities
registered under this Registration Statement exceed $500,000,000. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(4) In no event will the aggregate maximum offering price of Common Stock,
Preferred Stock and Depositary Shares registered under this Registration
Statement exceed $300,000,000.
(5) In no event will the aggregate maximum offering price of Debt Securities
registered under this Registration Statement exceed $200,000,000.
(6) $69,525,320 of Common Stock registered on Form S-3, File No. 333-13225 and
$100,000,000 of Debt Securities registered on Form S-3, File No. 333-21873,
as to which filing fees of $19,708 and $30,303, respectively, were
previously paid and are being applied to this Registration Statement with
respect to such shares and Debt Securities, respectively, are being carried
forward pursuant to Rule 429 of the rules and regulations under the
Securities Act of 1933, as amended.
(7) The proposed maximum offering price per unit (a) has been omitted pursuant
to instruction II.D. of Form S-3 and (b) will be determined, from time to
time, by the Registrants in connection with the issuance by the Registrants
of the securities registered hereunder.
(8) In U.S. dollars or, the equivalent thereof, denominated in one or more
foreign currencies or units of two or more foreign currencies or composite
currencies (such as European Currency Units).
(9) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
(10) Previously paid.
(11) Includes rights to purchase Junior Participating Preferred Stock of the
Comapny (the "Rights"). Since no separate consideration is paid for the
Rights, the registration fee therefor is included in the fee for the Common
Stock.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT CONTAINS A COMBINED PROSPECTUS THAT ALSO RELATES TO $69,525,320 OF
COMMON STOCK REGISTERED ON FORM S-3, FILE NO. 333-13225, WHICH WAS DECLARED
EFFECTIVE ON OCTOBER 4, 1996 (THE "PREVIOUSLY REGISTERED COMMON STOCK"), AND
$100,000,000 OF DEBT SECURITIES REGISTERED ON FORM S-3, FILE NO. 333-21873,
WHICH WAS DECLARED EFFECTIVE ON APRIL 30, 1997 (THE "PREVIOUSLY REGISTERED DEBT
SECURITIES"), WHICH HAVE NOT BEEN OFFERED OR SOLD AS OF THE DATE OF THE FILING
OF THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT. THIS REGISTRATION
STATEMENT CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 2 TO REGISTRATION STATEMENT
FILE NO. 333-13225 AND CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT FILE NO. 333-21873, PURSUANT TO WHICH THE TOTAL AMOUNT OF
UNSOLD PREVIOUSLY REGISTERED COMMON STOCK AND PREVIOUSLY REGISTERED DEBT
SECURITIES, REGISTERED ON REGISTRATION STATEMENT FILE NO. 333-13225 AND
REGISTRATION STATEMENT FILE NO. 333-21873, RESPECTIVELY, MAY BE OFFERED AND SOLD
BY THE COMPANY AS COMMON STOCK OR DEBT SECURITIES, AS THE CASE MAY BE.
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EXPLANATORY NOTE
This Registration Statement relates to securities which may be offered from
time to time by First Industrial Realty Trust, Inc. (the "Company") and First
Industrial, L.P., a majority-owned subsidiary of the Company (the "Operating
Partnership"). This Registration Statement contains a form of base prospectus
(the "Base Prospectus") relating to both the Company and the Operating
Partnership which will be used in connection with an offering of securities by
the Company or the Operating Partnership. The specific terms of the securities
to be offered will be set forth in a Prospectus Supplement relating to such
securities. To the extent securities of the Operating Partnership, which are
limited to unsecured non-convertible investment grade debt securities, are
offered pursuant to the enclosed Base Prospectus, the Base Prospectus will
include the financial statements and other information listed on the Index to
Financial Statements and Other Information set forth on page F-1 of the Base
Prospectus.
SUBJECT TO COMPLETION, DATED SEPTEMBER 23, 1997
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
$669,525,320
FIRST INDUSTRIAL REALTY TRUST, INC.
Common Stock, Preferred Stock and Depositary Shares
FIRST INDUSTRIAL, L.P.
Debt Securities
First Industrial Realty Trust, Inc. (the "Company") may from time to time
offer in one or more series (i) shares of common stock, par value $.01 per share
("Common Stock"), (ii) shares of preferred stock, par value $.01 per share
("Preferred Stock"), and (iii) shares of Preferred Stock represented by
depositary shares ("Depositary Shares"), with an aggregate public offering price
of up to $669,525,320, in amounts, at prices and on terms to be determined at
the time of offering. First Industrial, L.P. (the "Operating Partnership") may
from time to time offer in one or more series unsecured non-convertible
investment grade debt securities ("Debt Securities"), with an aggregate public
offering price of up to $300,000,000, in amounts, at prices and on terms to be
determined at the time of offering. The Common Stock, Preferred Stock,
Depositary Shares and Debt Securities (collectively, the "Securities") may be
offered, separately or together, in separate series in amounts, at prices and on
terms to be set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Common Stock, any initial
public offering price; (ii) in the case of Preferred Stock, the specific title
and stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and any initial public offering price; (iii) in the case of
Depositary Shares, the fractional share of Preferred Stock represented by each
such Depositary Share; and (iv) in the case of Debt Securities, the specific
title, aggregate principal amount, currency, form (which may be registered or
bearer, or certificated or global), authorized denominations, maturity, rate (or
manner of calculation thereof) and time of payment of interest, terms for
redemption at the option of the Operating Partnership or repayment at the option
of the holder, terms for sinking fund payments, covenants and any initial public
offering price. In addition, such specific terms may include limitations on
direct or beneficial ownership and restrictions on transfer of the Securities,
in each case as may be consistent with the Company's Amended and Restated
Articles of Incorporation (the "Articles of Incorporation") or otherwise
appropriate to preserve the status of the Company as a real estate investment
trust ("REIT") for federal income tax purposes. See "Description of Preferred
Stock--Restrictions on Ownership" and "Restrictions on Transfers of Capital
Stock."
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities covered
by such Prospectus Supplement, not contained in this Prospectus.
The Securities may be offered directly to one or more purchasers, through
agents designated from time to time by the Company or the Operating Partnership
or to or through underwriters or dealers. If any agents or underwriters are
involved in the sale of any of the Securities, their names, and any applicable
purchase price, fee, commission or discount arrangement between or among them,
will be set forth, or will be calculable from the information set forth, in an
accompanying Prospectus Supplement. No Securities may be sold by the Company or
the Operating Partnership without delivery of a Prospectus Supplement describing
the method and terms of the offering of such series of Securities. See "Plan of
Distribution."
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE SECURITIES, SEE "RISK FACTORS" COMMENCING ON PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1997
AVAILABLE INFORMATION
The Company and the Operating Partnership are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, the Company files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission") and the Operating Partnership files reports and other information
with the Commission. Such reports, proxy statements and other information can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission at 7 World Trade
Center, 13th Floor, New York, New York 10048 and at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material also can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C 20549 at prescribed rates.
In addition, the Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. Securities of the
Company are listed on the New York Stock Exchange (the "NYSE"), and all such
material filed by the Company with the NYSE also can be inspected at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.
The Company and the Operating Partnership have filed with the Commission a
registration statement on Form S-3 (together with all amendments and exhibits,
the "Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information
concerning the Company, the Operating Partnership and the Securities, reference
is made to the Registration Statement. Statements contained in this Prospectus
as to the contents of any contract or other document are not necessarily
complete, and in each instance, reference is made to the copy of such contract
or document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company (File No. 1-13102)
and the Operating Partnership (File No. 333-21873) with the Commission are
incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the year ended December
31, 1996;
(b) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, as amended by Form 10-Q/A No. 1 filed May 30, 1997;
(c) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, as amended by Form 10-Q/A No. 1 filed August 26, 1997;
(d) the Company's Current Report on Form 8-K filed February 12, 1997, as
amended by Form 8-K/A No. 1 filed April 10, 1997;
(e) the Company's Current Report on Form 8-K filed May 13, 1997;
(f) the Company's Current Report on Form 8-K filed June 6, 1997;
(g) the Company's Current Report on Form 8-K filed July 15, 1997, as
amended by Form 8-K/A No. 1 filed September 4, 1997;
(h) the Company's Current Report on Form 8-K filed September 11, 1997;
(i) the Company's Current Report on Form 8-K filed September 19, 1997;
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(j) the description of the Common Stock included in the Company's
Registration Statement on Form 8-A dated June 23, 1994;
(k) the Operating Partnership's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997;
(l) the Operating Partnership's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, as amended by Form 10-Q/A No. 1 filed August
26, 1997;
(m) the Operating Partnership's Current Report on Form 8-K filed May 13,
1997;
(n) the Operating Partnership's Current Report on Form 8-K filed May 15,
1997;
(o) the Operating Partnership's Current Report on Form 8-K filed June
13, 1997; and
(p) the Operating Partnership's Current Report on Form 8-K filed July
15, 1997, as amended by Form 8-K/A No. 1 filed September 4, 1997.
All documents filed by the Company or the Operating Partnership pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the Securities
offered hereby 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.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
document subsequently filed with the Commission which also is incorporated or
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company and the Operating Partnership will provide without charge to
each person, including any beneficial owner, to whom this Prospectus is
delivered, upon the written or oral request of such person, a copy of any or all
of the information incorporated by reference herein (not including the exhibits
to the information that is incorporated by reference herein, unless such
exhibits are specifically incorporated by reference into the information that is
incorporated by reference herein). Requests for such copies should be directed
to: First Industrial Realty Trust, Inc., Attn: Investor Relations, 311 S. Wacker
Drive, Suite 4000, Chicago, Illinois 60606, telephone (312) 344-4300.
Certain information, including, but not limited to, information relating to
the Operating Partnership's principal security holders, management, executive
compensation, certain relationships and related transactions and legal
proceedings that would be required to be disclosed in a prospectus included in a
registration statement on Form S-11 has been omitted from this Prospectus,
because such information is not materially different from the information
contained in the Company's periodic reports, proxy statements and other
information filed by the Company with the Commission.
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THE COMPANY AND THE OPERATING PARTNERSHIP
UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES IN THIS PROSPECTUS TO
THE "COMPANY" REFER TO FIRST INDUSTRIAL REALTY TRUST, INC. AND ITS SUBSIDIARIES,
INCLUDING FIRST INDUSTRIAL, L.P. (THE "OPERATING PARTNERSHIP"), AND ALL
REFERENCES IN THIS PROSPECTUS TO THE "OTHER REAL ESTATE PARTNERSHIPS" REFER TO
ALL PARTNERSHIP SUBSIDIARIES OF FIRST INDUSTRIAL REALTY TRUST, INC. OTHER THAN
THE OPERATING PARTNERSHIP. UNLESS OTHERWISE INDICATED, ALL INFORMATION REGARDING
PROPERTIES RELATES TO PROPERTIES OWNED AND IN SERVICE AS OF JUNE 30, 1997.
The Company is a REIT which owns, manages, acquires and develops bulk
warehouse and light industrial properties. Markets in which the Company operates
include the following metropolitan areas: Atlanta, Georgia; Chicago, Illinois;
Cincinnati, Ohio; Cleveland, Ohio; Columbus, Ohio; Dayton, Ohio; Des Moines,
Iowa; Detroit, Michigan; Grand Rapids, Michigan; Indianapolis, Indiana;
Milwaukee, Wisconsin; Minneapolis/St. Paul, Minnesota; Nashville, Tennessee; and
St. Louis, Missouri, as well as the regional areas of Central Pennsylvania, Long
Island, New York and New Jersey. As of June 30, 1997, the Company owned 453
in-service properties containing an aggregate of approximately 39.1 million
square feet of gross leasable area ("GLA") which was approximately 96% leased to
over 1,300 tenants. The Company is a self-administered and fully integrated
industrial real estate company.
The Company is the sole general partner of, and, as of June 30, 1997, held
approximately 88.0% of the outstanding units of partnership interest ("Units")
in, the Operating Partnership. As of such date, approximately 12.0% of the
outstanding Units were held by outside investors, including certain members of
the Company's management. Each Unit, other than those held by the Company, may
be exchanged by the holder thereof for one share (subject to certain
adjustments) of Common Stock. With each such exchange, the number of Units owned
by the Company, and, therefore, the Company's percentage interest in the
Operating Partnership, will increase.
Substantially all of the Company's assets are held through the Operating
Partnership and the Other Real Estate Partnerships. The Operating Partnership
owns a 99% limited partnership interest, and wholly owned subsidiaries of First
Industrial Realty Trust, Inc. own a 1% general partnership interest, in each of
the Other Real Estate Partnerships, except that in the case of one Other Real
Estate Partnership, First Industrial Securities L.P. ("Securities L.P."), the
general partner thereof also owns a preferred limited partnership interest the
terms of which mirror the terms of the Company's outstanding 9 1/2% Series A
Preferred Stock, par value $.01 per share ("Series A Preferred Stock"). See
"Description of Preferred Stock--Outstanding Preferred Stock."
The Company was incorporated in Maryland in August 1993. The Operating
Partnership was formed in Delaware in November 1993. The Company's and the
Operating Partnership's executive offices are located at 311 S. Wacker Drive,
Suite 4000, Chicago, Illinois 60606, and their telephone number is (312)
344-4300.
RISK FACTORS
In evaluating an investment in the Securities, investors should consider the
following factors, in addition to other matters set forth or incorporated in
this Prospectus and in any applicable Prospectus Supplement.
REAL ESTATE INVESTMENT CONSIDERATIONS
GENERAL
Income from real property investments, and the Company's resulting ability
to make expected distributions to stockholders, may be adversely affected by the
general economic climate, local conditions such as oversupply or a reduction in
demand in the area, the attractiveness of the properties to tenants, tenant
defaults, zoning or other regulatory restrictions, competition from other
available real estate, the ability of the Company to provide adequate
maintenance and insurance and increased operating costs (including insurance
premiums and real estate taxes). The Company's income would also be adversely
4
affected if tenants were unable to pay rent or the Company were unable to rent
properties on favorable terms. In addition, certain expenditures associated with
real estate investment (such as real estate taxes and maintenance costs)
generally are not reduced when circumstances cause a reduction in income from
the investment. Furthermore, real estate investments are relatively illiquid
and, therefore, will tend to limit the ability of the Company to vary its
portfolio promptly in response to changes in economic or other conditions.
RENEWAL OF LEASES AND RELETTING OF SPACE
The Company will be subject to the risks that, upon expiration of leases,
the leases may not be renewed, the space subject to such leases may not be relet
or the terms of renewal or reletting (including the cost of required
renovations) may be less favorable than expiring lease terms. If the Company
were unable promptly to renew a significant number of expiring leases or
promptly to relet the space covered by such leases, or if the rental rates upon
such renewal or reletting were significantly lower than the then current rates,
the Company's funds from operations and ability to make expected distributions
to stockholders might be adversely affected. Leases with respect to
approximately 3.4 million, 6.6 million and 7.0 million square feet of GLA expire
in 1997, 1998 and 1999, respectively.
POTENTIAL ENVIRONMENTAL LIABILITY
Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate may be liable for the costs of clean-up of
certain conditions relating to the presence of hazardous or toxic materials on,
in or emanating from the property, and any related damages to natural resources.
Such laws often impose liability without regard to whether the owner or operator
knew of, or was responsible for, the presence of hazardous or toxic materials.
The presence of such materials, or the failure to address such conditions
properly, may adversely affect the ability to rent or sell the property or to
borrow using the property as collateral. Persons who dispose of or arrange for
the disposal or treatment of hazardous or toxic materials may also be liable for
the costs of clean-up of such materials, or for related natural resource
damages, at or from an off-site disposal or treatment facility, whether or not
such facility is owned or operated by such persons. No assurance can be given
that existing environmental assessments with respect to any of the Company's
properties reveal all environmental liabilities, that any prior owner or
operator of any of the properties did not create any material environmental
condition not known to the Company or that a material environmental condition
does not otherwise exist as to any one or more properties.
LIMITED GEOGRAPHIC CONCENTRATION
Approximately 68% of the Properties owned by the Company as of June 30, 1997
are located in the midwest region of the United States. A fundamental element of
the Company's growth strategy is to acquire additional properties in its current
markets. Consequently, the Company may be dependent upon the demand for
industrial space in those markets. The Company's revenues and the value of its
properties may be affected by a number of factors in its current markets,
including the local economic climate (which may be adversely impacted by
business layoffs or downsizing, industry slowdowns, changing demographics and
other factors) and local real estate conditions (such as oversupply of, or
reduced demand for, properties). Therefore, the Company's performance and its
ability to make distributions to stockholders will likely be dependent, to a
significant extent, on the economic conditions in its current markets.
TAX RISKS
CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
The Company intends to operate so as to qualify as a REIT under the Internal
Revenue Code of 1986, as amended (the "Code"). Although the Company believes
that it is 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) established under highly technical
and
5
complex Code provisions of which there are only limited judicial or
administrative interpretations, and involves the determination of various
factual matters and circumstances not entirely within the Company's control. If
the Company were to fail to qualify as a REIT in any taxable year, the Company
would be subject to federal income tax (including any applicable alternative
minimum tax) on its taxable income at corporate rates and, unless entitled to
relief under certain statutory provisions, the Company also would be
disqualified from treatment as a REIT for the four taxable years that follow.
See "Federal Income Tax Considerations."
EFFECT OF DISTRIBUTION REQUIREMENTS
The Company could, in certain instances, have taxable income without
sufficient cash to enable the Company to meet the distribution requirements of
the REIT provisions of the Code. Accordingly, the Company could be required to
borrow funds or sell properties on adverse terms in order to meet such
distribution requirements. In addition, because the Company must distribute to
its stockholders at least 95% of its REIT taxable income each year, the
Company's ability to accumulate capital may be limited. Thus, it may be more
dependent on outside sources of financing, such as debt financing or issuances
of additional capital stock, in connection with future acquisitions. See
"Federal Income Tax Considerations."
RESTRICTIONS ON TRANSFER OF SHARES
As noted below under "Description of Preferred Stock--Restrictions on
Ownership" and "Restrictions on Transfers of Capital Stock," in order to
maintain its qualification as a REIT under the Code, no more than 50% in value
of the outstanding capital stock of the Company 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. Accordingly, the
Company's Articles of Incorporation contain, and the Designating Amendment for
each series of Preferred Stock may contain, provisions restricting the ownership
and transfer of the Company's capital stock.
RISKS ASSOCIATED WITH DEBT FINANCING AND LEVERAGE; COLLATERALIZATION AND CROSS-
COLLATERALIZATION
GENERAL
Where possible, the Company intends to continue to use leverage to increase
the rate of return on its investments and to allow the Company to make more
investments than it otherwise could. Such use of leverage presents an additional
element of risk in the event that the cash flow from the Company's properties is
insufficient to meet both debt payment obligations and the distribution
requirements of the REIT provisions of the Code. To the extent the Operating
Partnership determines to obtain additional debt financing in the future, it may
do so through mortgages on some or all of its properties. These mortgages may be
on recourse, non-recourse or crossed-collateralized bases. Holders of
indebtedness which is so secured will have a claim against these properties
which is senior to the claim of holders of Debt Securities. In addition, to the
extent indebtedness is crossed-collateralized, lenders may seek to foreclose
upon properties which are not the primary collateral for their loan, which may,
in turn, result in acceleration of other indebtedness secured by properties.
Foreclosure of properties would result in a loss of income and asset value to
the Operating Partnership and the Company.
BALLOON PAYMENTS
The Operating Partnership is required to make lump-sum or "balloon" payments
pursuant to the terms of certain of its indebtedness, including the Operating
Partnership's $100,000,000 aggregate principal amount 7.15% Notes due 2027 (the
"2027 Notes"), the Operating Partnership's $100,000,000 aggregate principal
amount 7 3/8% Notes due 2011 (the "Trust Notes"), the Operating Partnership's
$150,000,000 aggregate principal amount 7.60% Notes due 2007 (the "2007 Notes")
and a $200,000,000 unsecured revolving credit facility (the "Acquisition
Facility") under which the Company, through the Operating
6
Partnership, may borrow to finance the acquisition of additional properties and
for other corporate purposes, including working capital. The holders of the 2027
Notes have the right to require the Operating Partnership to redeem their 2027
Notes, in whole or in part, on May 15, 2002. The trust to which the Trust Notes
were issued must exercise its right to require the Operating Partnership to
redeem the Trust Notes on May 15, 2004 if the holder of a call option with
respect to the Trust Notes fails to give written notice on or before May 1, 2004
that it intends to exercise such option. The Acquisition Facility provides for
the repayment of principal in a lump-sum or "balloon" payment at maturity in
2000 (subject to successive one-year extensions at the Operating Partnership's
option, subject to certain conditions). The Company's ability to make required
payments of principal on outstanding indebtedness, whether at maturity or
otherwise, may depend on its ability either to refinance the applicable
indebtedness or to sell properties. The Company has no commitments to refinance
the 2027 Notes, the Trust Notes, the 2007 Notes or the Acquisition Facility.
Certain other existing debt obligations of the Company are secured by its
properties, and therefore such obligations will permit the lender to foreclose
on those properties in the event of a default.
NO LIMITATION ON DEBT IN ORGANIZATIONAL DOCUMENTS
The Operating Partnership has no separate policy regarding the amount of
debt it may incur, but rather is encompassed by the Company's policy in this
regard. The Company currently has a policy of maintaining a ratio of debt to
total market capitalization (I.E., total consolidated debt of the Company
(excluding the Company's $300 million mortgage loan (the "1994 Defeased Mortgage
Loan") which was defeased in April 1997) as a percentage of the aggregate market
value of all outstanding shares of Common Stock, assuming the exchange of all
Units for Common Stock, plus the aggregate stated value of all outstanding
shares of preferred stock, plus total consolidated debt (excluding 1994 Defeased
Mortgage Loan)) which generally will not exceed 50% and a coverage ratio
(computed as total revenues (excluding interest income on U.S. government
securities collateralizing the 1994 Defeased Mortgage Loan) minus property
expenses and general and administrative expenses divided by interest expense
(excluding interest on the 1994 Defeased Mortgage Loan accruing after the date
of defeasance) plus dividends on preferred stock) of at least 2.0:1. As of June
30, 1997, the Company's ratio of debt to total market capitalization was 29.6%,
and for the twelve months ended June 30, 1997, the Company's coverage ratio was
3.12. However, the organizational documents of the Company do not contain any
limitation on the amount or percentage of indebtedness the Company may incur and
the Company's Board of Directors has the power to alter the current policy.
Accordingly, the Company could become more highly leveraged, resulting in an
increase in debt service that could adversely affect the Company's ability to
make expected distributions to stockholders and in an increased risk of default
on its obligations. In addition, except as may be set forth in any Prospectus
Supplement, the Debt Securities will not contain any provision that would afford
holders of Debt Securities protection in the event of a highly leveraged
transaction or change in control of the Operating Partnership or the Company.
RISING INTEREST RATES
The Acquisition Facility bears interest at a floating rate. Increases in the
interest rate payable on balances outstanding under the Acquisition Facility
would have an adverse effect on the Company's cash available for distribution.
LIMITS ON CHANGES IN CONTROL
GENERAL
Certain provisions of the Articles of Incorporation may have the effect of
delaying, deferring or preventing a third party from making an acquisition
proposal for the Company and thus inhibit a change in control of the Company and
limit the opportunity for stockholders to receive a premium for their Common
Stock over then-prevailing market prices. See "Certain Provisions of Maryland
Law and the Company's Articles of Incorporation and Bylaws." These provisions
include the following:
7
RISKS ASSOCIATED WITH PREFERRED STOCK
Under its Articles of Incorporation, the Company has authority to issue up
to 10,000,000 shares of Preferred Stock, par value $.01 per share (of which
1,650,000 shares of Series A Preferred Stock, 40,000 shares of the Company's
8 3/4% Series B Preferred Stock (the "Series B Preferred Stock") and 20,000
shares of the Company's 8 5/8% Series C Preferred Stock ( the "Series C
Preferred Stock") were outstanding on September 19, 1997), on such terms as may
be authorized by the Board of Directors of the Company. The Board of Directors
has also reserved 1,000,000 shares of Junior Participating Preferred Stock, par
value $.01 per share (the "Junior Participating Preferred Stock"), of the
Company for issuance pursuant to a shareholder rights plan adopted by the Board
of Directors. The shareholder rights plan may discourage a third party from
making an acquisition proposal and thus inhibit a change in control of the
Company. See "Description of Common Stock--Shareholder Rights Plan."
MARYLAND BUSINESS COMBINATION LAW
Under the Maryland General Corporation Law, as amended ("MGCL"), certain
"business combinations" (including certain issuances of equity securities)
between a Maryland corporation, such as the Company, and any person who
beneficially owns 10% or more of the voting power of the corporation's shares
(an "Interested Stockholder") or, in certain circumstances, an associate or an
affiliate thereof (as defined in the MGCL) are prohibited for five years after
the most recent date on which the Interested Stockholder becomes an Interested
Stockholder. Thereafter, any such business combination must be recommended by
the board of directors and approved by two super-majority stockholder votes
unless, among other conditions, the corporation's common stockholders receive a
minimum price (as defined in the MGCL) for their shares, in cash or in the same
form as previously paid by the Interested Stockholder for its shares. The
provisions of the MGCL do not apply to business combinations that are approved
or exempted by the Board of Directors prior to the time that the Interested
Stockholder becomes an Interested Stockholder. In addition, the Company's
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 the Board of Directors of the Company, or any entity
controlled by Mr. Shidler, unless Mr. Shidler is an Interested Stockholder
without taking into account Mr. Shidler's ownership of shares of Common Stock of
the Company and the right to acquire shares in an aggregate amount which does
not exceed the number of shares which Mr. Shidler owned and had the right to
acquire (including through the exchange of Units) at the time of the
consummation of the Company's initial public offering.
MARYLAND CONTROL SHARE ACQUISITION STATUTE
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights, except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares owned by the acquiror, by officers of the corporation and by
directors who are also employees of the corporation. If voting rights with
respect to control shares have not been approved at a meeting of stockholders,
then, subject to certain conditions and limitations, the issuer may redeem any
or all of such control shares for fair value. 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 Company's Bylaws contain a provision exempting
any and all acquisitions of the Company's shares of capital stock from the
control shares provisions of the MGCL. There can be no assurance that this
provision will not be amended or eliminated in the future.
CLASSIFIED BOARD OF DIRECTORS
The Company's directors are divided into three classes by its Articles of
Incorporation, with terms expiring over a three year period. The classified
board provision could make it more difficult and time
8
consuming to remove the incumbent directors, thus discouraging a third party
from attempting to take control of the Company.
RISKS ASSOCIATED WITH DILUTION
To the extent the Company issues Common Stock, the ownership interest of
existing stockholders would be diluted.
RISKS ASSOCIATED WITH POSSIBLE CONFLICTS OF INTEREST
COMPETITION FROM OTHER BUSINESS INTERESTS OF CERTAIN OFFICERS AND DIRECTORS
Entities affiliated with or controlled by certain officers and directors of
the Company hold equity interests in industrial properties not owned by the
Company. Some of these properties may compete with properties owned by the
Company. There can be no assurance that decisions by officers and directors of
the Company will fully represent the interests of stockholders of the Company
rather than such individuals and their affiliates.
TAX CONSEQUENCES TO CERTAIN OFFICERS AND DIRECTORS
Certain officers and directors of the Company own Units which may be
exchanged for Common Stock. Prior to the exchange of Units for Common Stock,
officers and directors of the Company who own Units may suffer different and
more adverse tax consequences than holders of Common Stock upon the sale of
certain of the Company's properties, the refinancing of debt associated with
those properties or in connection with a proposed tender offer or merger
involving the Company and, therefore, such individuals and the Company, as
partners in the Operating Partnership, may have different objectives regarding
the appropriate terms of any such transaction.
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 of
additional properties, the repayment of outstanding debt 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 such proceeds for the
above-described purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratios of earnings to fixed charges plus preferred dividend
requirements for the years ended December 31, 1996, 1995 and 1994 and the six
months ended June 30, 1997 and 1996 were 1.88, 1.56 and 1.33 and 2.11 and 1.77,
respectively. The Operating Partnership's ratios of earnings to fixed charges
for the years ended December 31, 1996, 1995 and 1994 and the six months ended
June 30, 1997 and 1996 were 6.96, 2.68 and 1.65 and 2.55 and 7.82, 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 (loss) (excluding interest income on securities collateralizing the
defeasance of the 1994 Mortgage Loan) before disposition of interest rate
protection agreement, gain on sales of properties, minority interest and
extraordinary items. Fixed charges consist of interest costs (excluding interest
on the defeased 1994 Mortgage Loan accruing after the date of defeasance),
whether expensed or capitalized, and amortization of interest rate protection
agreements and deferred financing costs.
With respect to the Company and the Operating Partnership, earnings were
inadequate to cover fixed charges by approximately $3.4 million and $4.3 million
for the years ended December 31, 1993 and 1992,
9
respectively, which periods were prior to the Company's initial public offering.
No preferred stock of the Company was outstanding during such years.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an indenture (the "Indenture"),
dated as of May 13, 1997, between the Operating Partnership and First Trust
National Association, as trustee (the "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 "TIA"). The statements made under this heading relating to
the Debt Securities and the Indenture are summaries of certain provisions
thereof, do not purport to be complete and are qualified in their entirety by
reference to the Indenture and such Debt Securities. All material terms of the
Debt Securities and the Indenture, other than those disclosed in the applicable
Prospectus Supplement, are described in this Prospectus.
Capitalized terms used herein and not defined shall have the meanings
assigned to them in the Indenture.
The Debt Securities to be offered hereby and in any applicable Prospectus
Supplement will be "investment grade" securities, meaning at the time of the
offering of such Debt Securities, at least one nationally recognized statistical
rating organization (as defined in the Exchange Act) will have rated such Debt
Securities in one of its generic rating categories which 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 will be described in the
applicable Prospectus Supplement, along with any applicable modifications of or
additions to the general terms of the Debt Securities as described herein and in
the Indenture and any applicable federal income tax considerations. Accordingly,
for a description of the terms of any series of Debt Securities, reference must
be made to both the Prospectus Supplement relating thereto and the description
of the Debt Securities set forth in this Prospectus.
Except as set forth in any Prospectus Supplement, the Debt Securities may be
issued without limit as to aggregate principal amount, in one or more series, in
each case as established from time to time by the Operating Partnership or as
set forth in the Indenture or in one or more indentures supplemental to the
Indenture. All Debt Securities of one series need not be issued at the same time
and, unless otherwise provided, a series may be reopened, without the consent of
the holders of the Debt Securities of such series, for issuance of additional
Debt Securities of such series.
The Indenture provides that the Operating Partnership may, but need not,
designate more than one Trustee thereunder, each with respect to one or more
series of Debt Securities. Any Trustee under the Indenture may resign or be
removed with respect to one or more series of Debt Securities, and a successor
Trustee may be appointed to act with respect to such series. In the event that
two or more persons are acting as Trustee with respect to different series of
Debt Securities, each such Trustee shall be a Trustee of a trust under the
Indenture separate and apart from the trust administered by any other Trustee,
and, except as otherwise indicated herein, any action described herein to be
taken by each Trustee may be taken
10
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 certain general terms and provisions of
the Indenture and the Debt Securities. The Prospectus Supplement relating to the
series of Debt Securities being offered will contain further terms of such Debt
Securities, including the following specific terms:
(1) The title of such Debt Securities;
(2) The aggregate principal amount of such Debt Securities and any limit on
such aggregate principal amount;
(3) The price (expressed as a percentage of the principal amount thereof)
at which such Debt Securities will be issued and, if other than the
principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof;
(4) The date or dates, or the method for determining such date or dates, on
which the principal of such Debt Securities will be payable;
(5) The rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(6) The date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment
dates, or the method by which such dates shall be determined, the
persons to whom such interest shall be payable, and the basis upon
which interest shall be calculated if other than that of a 360-day year
of twelve 30-day months;
(7) The place or places where the principal of (and premium or Make-Whole
Amount, if any) and interest, if any, on such Debt Securities will be
payable, where such Debt Securities may be surrendered for registration
of transfer or exchange and where notices or demands to or upon the
Operating Partnership in respect of such Debt Securities and the
Indenture may be served;
(8) The period or periods, if any, within which, the price or prices at
which and the other terms and conditions upon which such Debt
Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed, as a whole or in part, at the option of the
Operating Partnership;
(9) The obligation, if any, of the Operating Partnership to redeem, repay
or purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a holder thereof, and the
period or periods within which, the price or prices at which and the
other terms and conditions upon which such Debt Securities will be
redeemed, repaid or purchased, as a whole or in part, pursuant to such
obligation;
(10) If other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
(11) Whether the amount of payments of principal of (and premium or
Make-Whole Amount, if any, including any amount due upon redemption, if
any) or interest, if any, on such Debt Securities may be determined
with reference to an index, formula or other method (which index,
formula or method may, but need not be, based on the yield on or
trading price of other securities, including United States Treasury
securities, or on a currency, currencies, currency unit or units, or
composite currency or currencies) and the manner in which such amounts
shall be determined;
(12) Whether the principal of (and premium or Make-Whole Amount, if any) or
interest on the Debt Securities of the series are to be payable, at the
election of the Operating Partnership or a holder thereof, in a
currency or currencies, currency unit or units or composite currency or
currencies other than that in which such Debt Securities are
denominated or stated to be payable, the
11
period or periods within which, and the terms and conditions upon
which, such election may be made, and the time and manner of, and
identity of the exchange rate agent with responsibility for,
determining the exchange rate between the currency or currencies,
currency unit or units or composite currency or currencies in which
such Debt Securities are denominated or stated to be payable and the
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are to be so payable;
(13) Provisions, if any, granting special rights to the holders of Debt
Securities of the series upon the occurrence of such events as may be
specified;
(14) 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;
(15) Whether and under what circumstances the Operating Partnership will pay
any additional amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether the Operating
Partnership will have the option to redeem such Debt Securities in lieu
of making such payment;
(16) Whether Debt Securities of the series are to be issuable as Registered
Securities, Bearer Securities (with or without coupons) or both, any
restrictions applicable to the offer, sale or delivery of Bearer
Securities and the terms upon which Bearer Securities of the series may
be exchanged for Registered Securities of the series and vice versa (if
permitted by applicable laws and regulations), whether any Debt
Securities of the series are to be issuable initially in temporary
global form and whether any Debt Securities of the series are to be
issuable in permanent global form with or without coupons and, if so,
whether beneficial owners of interests in any such permanent global
Security may exchange such interests for Debt Securities of such series
and of like tenor of any authorized form and denomination and the
circumstances under which any such exchanges may occur, if other than
in the manner provided in the Indenture, and, if Registered Securities
of the series are to be issuable as a Global Security, the identity of
the depository for such series;
(17) The date as of which any Bearer Securities of the series and any
temporary Global Security representing outstanding Debt Securities of
the series shall be dated if other than the date of original issuance
of the first Security of the series to be issued;
(18) The Person to whom any interest on any Registered Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, the
manner in which, or the Person to whom, any interest on any Bearer
Security of the series shall be payable, if otherwise than upon
presentation and surrender of the coupons appertaining thereto as they
severally mature, and the extent to which, or the manner in which, any
interest payable on a temporary Global Security on an Interest Payment
Date will be paid if other than in the manner provided in the
Indenture;
(19) Whether such Debt Securities will be issued in certificated or book
entry form;
(20) The applicability, if any, of the defeasance and covenant defeasance
provisions of the Indenture to the Debt Securities of the series;
(21) If the Debt Securities of such series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary
Security of such series) only upon receipt of certain certificates or
other documents or satisfaction of other conditions, then the form
and/or terms of such certificates, documents or conditions; and
(22) Any other terms of the series (which terms shall not be inconsistent
with the provisions of the Indenture).
12
If so provided in the applicable Prospectus Supplement, the Debt Securities
may be issued at a discount below their principal amount and provide for less
than the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof ("Original Issue Discount Securities"). In
such cases, all material U.S. federal income tax, accounting and other
considerations applicable to Original Issue Discount Securities will be
described in the applicable Prospectus Supplement.
Except as 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
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 described in the applicable Prospectus Supplement, the Debt
Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof. Where Debt Securities of any series are issued in
bearer form, the special restrictions and considerations, including special
offering restrictions and special federal income tax considerations, applicable
to any such Debt Securities and to payment on and transfer and exchange of such
Debt Securities will be described in the applicable Prospectus Supplement.
Bearer Debt Securities will be transferable by delivery.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium or Make-Whole Amount, if any) and interest
on any series of Debt Securities will be payable at the corporate trust office
of the applicable Trustee, the address of which will be stated in the applicable
Prospectus Supplement; provided that, at the option of the Operating
Partnership, payment of interest may be made by check mailed to the address of
the person entitled thereto as it appears in the applicable register for such
Debt Securities or by wire transfer of funds to such person at an account
maintained within the United States.
Unless otherwise specified 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 ("Defaulted Interest") will
forthwith cease to be payable to the holder on the applicable Regular Record
Date and may either be paid to the Person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, in which case notice thereof shall be given to the holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be paid
at any time in any other lawful manner, all as more completely described in the
Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for any
authorized denomination of other Debt Securities of the same series and of a
like aggregate principal amount and tenor upon surrender of such Debt Securities
at the corporate trust office of the applicable Trustee or at the office of any
transfer agent designated by the Operating Partnership for such purpose. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable Trustee or at the office of any transfer agent designated by the
Operating Partnership for such purpose. Every Debt Security in registered form
surrendered for registration of transfer or exchange must be duly endorsed or
accompanied by a written instrument of transfer, and the person requesting such
action must provide evidence of title and identity satisfactory to the
applicable Trustee or transfer agent. No service charge will be made for any
13
registration of transfer or exchange of any Debt Securities, but the Operating
Partnership may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. If the applicable
Prospectus Supplement refers to any transfer agent (in addition to the
applicable Trustee) initially designated by the Operating Partnership with
respect to any series of Debt Securities, the Operating Partnership may at any
time rescind the designation of any such transfer agent or approve a change in
the location through which any such transfer agent acts, except that the
Operating Partnership will be required to maintain a transfer agent in each
place of payment for such series. The Operating Partnership may at any time
designate additional transfer agents with respect to any series of Debt
Securities.
Neither the Operating Partnership nor any Trustee shall be required to (a)
issue, register the transfer of or exchange Debt Securities of any series during
a period beginning at the opening of business 15 days before the selection of
any Debt Securities for redemption and ending at the close of business on (i) if
such Debt Securities are issuable only as Registered Securities, the day of the
mailing of the relevant notice of redemption and (ii) if such Debt Securities
are issuable as Bearer Securities, the day of the first publication of the
relevant notice of redemption or, if such Debt Securities are also issuable as
Registered Securities and there is no publication, the mailing of the relevant
notice of redemption; (b) register the transfer of or exchange any Debt
Security, or portion thereof, so selected for redemption, in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part; (c)
exchange any Bearer Security so selected for redemption except that, to the
extent provided with respect to such Bearer Security, such Bearer Security may
be exchanged for a Registered Security of that series and of like tenor,
PROVIDED that such Registered Security shall be simultaneously surrendered for
redemption; or (d) issue, register the transfer of or exchange any Debt Security
that has been surrendered for repayment at the option of the holder, except the
portion, if any, of such Debt Security not to be so repaid.
Payment in respect of Debt Securities in bearer form will be made in the
currency and in the manner designated in the applicable Prospectus Supplement,
subject to any applicable laws and regulations, at such paying agencies outside
the United States as the Operating Partnership may appoint from time to time.
The paying agents outside the United States, if any, initially appointed by the
Operating Partnership for a series of Debt Securities will be named in the
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, if Debt Securities of a series are issuable in registered form, the
Operating Partnership will be required to maintain at least one paying agent in
each place of payment for such series and if Debt Securities of a series are
issuable in bearer form, the Operating Partnership will be required to maintain
at least one paying agent in a place of payment outside the United States where
Debt Securities of such series and any coupons appertaining thereto may be
presented and surrendered for payment.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Operating Partnership may, without the
consent of the holders of any outstanding Debt Securities, consolidate with, or
sell, lease or convey all or substantially all of its assets to, or merge with
or into, any other entity provided that (a) either the Operating Partnership
shall be the continuing entity, or the successor entity (if other than the
Operating Partnership) formed by or resulting from any such consolidation or
merger or which shall have received the transfer of such assets is organized
under the laws of any domestic jurisdiction and expressly assumes the Operating
Partnership's obligations to pay principal of (and premium or Make-Whole Amount,
if any) and interest on all of the Debt Securities and the due and punctual
performance and observance of all of the covenants and conditions contained in
the Indenture; (b) immediately after giving effect to such transaction and
treating any indebtedness that becomes an obligation of the Operating
Partnership or any subsidiary as a result thereof as having been incurred by the
Operating Partnership or such subsidiary at the time of such transaction, no
Event of Default under the Indenture, and no event which, after notice or the
lapse of time, or both, would become such an Event of Default, shall have
occurred and be continuing; and (c) an officers' certificate and legal opinion
covering such conditions shall be delivered to 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 the preservation thereof 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 will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Operating
Partnership may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, that the Operating Partnership and its subsidiaries shall not be
prevented from selling or otherwise disposing of their properties for value in
the ordinary course of business.
INSURANCE. The Indenture requires the Operating Partnership to cause each
of its and its subsidiaries' insurable properties to be insured against loss or
damage at least equal to their then full insurable value with insurers of
recognized responsibility and, if described in the applicable Prospectus
Supplement, having a specified rating from a recognized insurance rating
service.
PAYMENT OF TAXES AND OTHER CLAIMS. The Indenture requires the Operating
Partnership to pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges levied or imposed upon it or any subsidiary or upon the income, profits
or property of the Operating Partnership or any subsidiary and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien upon the property of the Operating Partnership or any subsidiary; PROVIDED,
HOWEVER, that the Operating Partnership shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Unless otherwise provided in the applicable Prospectus Supplement, the
Indenture provides that the following events are "Events of Default" with
respect to any series of Debt Securities issued thereunder: (a) default in the
payment of any interest on any Debt Security of such series when such interest
becomes due and payable that continues for a period of 30 days; (b) default in
the payment of the principal of (or premium or Make-Whole Amount, if any, on)
any Debt Security of such series when due and payable; (c) default in making any
sinking fund payment as required for any Debt Security of such series; (d)
default in the performance, or breach, of any other covenant or warranty of the
Operating Partnership in the Indenture with respect to the Debt Securities of
such series and continuance of such default or breach for a period of 60 days
after written notice as provided in the Indenture; (e) default under any bond,
debenture, note, mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any indebtedness for money
borrowed by the Operating Partnership (or by any subsidiary the repayment of
which the Operating Partnership has guaranteed or for which the 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
15
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; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Operating Partnership or any Significant
Subsidiary; and (g) any other event of default provided with respect to a
particular series of Debt Securities. The term "Significant Subsidiary" has the
meaning ascribed to such term in Regulation S-X promulgated under the Securities
Act.
If an Event of Default under 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 (or, if the Debt Securities of that series are
Original Issue Discount Securities or indexed securities, such portion of the
principal amount as may be specified in the terms thereof) of, and premium or
Make-Whole Amount, if any, on, all the Debt Securities of that series to be due
and payable immediately by written notice thereof to the Operating Partnership
(and to the applicable Trustee if given by the holders); PROVIDED, that in the
case of an Event of Default described under clause (f) of the preceding
paragraph, acceleration is automatic. However, at any time after such a
declaration of acceleration with respect to Debt Securities of such series has
been made, but before a judgment or decree for payment of the money due has been
obtained by the applicable Trustee, the holders of not less than a majority in
principal amount of outstanding Debt Securities of such series may rescind and
annul such declaration and its consequences if (a) the Operating Partnership
shall have deposited with the applicable Trustee all required payments of the
principal of (and premium or Make-Whole Amount, if any) and interest on the Debt
Securities of such series, plus certain fees, expenses, disbursements and
advances of the applicable Trustee, and (b) all Events of Default, other than
the non-payment of accelerated principal (or specified portion thereof and the
premium or Make-Whole Amount, if any), with respect to Debt Securities of such
series have been cured or waived as provided in the Indenture. The Indenture
will also provide that the holders of not less than a majority in principal
amount of the outstanding Debt Securities of any series may waive any past
default with respect to such series and its consequences, except a default (i)
in the payment of the principal of (or premium or Make-Whole Amount, if any) or
interest on any Debt Security of such series or (ii) in respect of a covenant or
provision contained in the 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 such Trustee may
withhold notice to the holders of any series of Debt Securities of any default
with respect to such series (except a default in the payment of the principal of
(or premium or Make-Whole Amount, if any) or interest on any Debt Security of
such series or in the payment of any sinking fund installment in respect of any
Debt Security of such series) if specified responsible officers of such Trustee
consider such withholding to be in the interest of such holders.
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 such
series, as well as an offer of indemnity reasonably satisfactory to it. This
provision will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and premium
or Make-Whole Amount, if any) and interest on such Debt Securities at the
respective due dates or redemption dates thereof.
The 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
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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 such Trustee in personal liability or which may be unduly prejudicial to
the holders of Debt Securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the Operating
Partnership will be required to deliver to each Trustee a certificate, signed by
one of several specified officers of the Company, stating whether or not such
officer has knowledge of any default under the Indenture and, if so, specifying
each such default and the nature and status thereof.
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; PROVIDED, HOWEVER, that no such modification or
amendment may, without the consent of the holder of each such Debt Security
affected thereby, (a) change the stated maturity of the principal of, or any
installment of interest (or premium or Make-Whole Amount, if any) on, any such
Debt Security; (b) reduce the principal amount of, or the rate or amount of
interest on, or any premium or Make-Whole Amount payable on redemption of, any
such Debt Security, or reduce the amount of principal of an Original Issue
Discount Security that would be due and payable upon declaration of acceleration
of the maturity thereof or would be provable in bankruptcy, or adversely affect
any right of repayment of the holder of any such Debt Security; (c) change the
place of payment, or the coin or currency, for payment of principal of (or
premium or Make-Whole Amount, if any) or interest on any such Debt Security; (d)
impair the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security; (e) reduce the above-stated percentage of
outstanding Debt Securities of any series necessary to modify or amend the
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 (f) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the required percentage to
effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the holder of such Debt Security.
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series, waive, insofar as that series is concerned, compliance by the
Operating Partnership with certain restrictive covenants of the 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: (a)
to evidence the succession of another person to the Operating Partnership as
obligor under the Indenture; (b) to add to the covenants of the Operating
Partnership for the benefit of the holders of all or any series of Debt
Securities or to surrender any right or power conferred upon the Operating
Partnership in the Indenture; (c) to add events of default for the benefit of
the holders of all or any series of Debt Securities; (d) to add or change any
provisions of 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; (e) 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 which are entitled to the benefit of such provision; (f)
to secure the Debt Securities; (g) to establish
17
the form or terms of Debt Securities of any series; (h) to provide for the
acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee; (i)
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
(j) to supplement any of the provisions of the Indenture to the extent necessary
to permit or facilitate defeasance and discharge of any series of such Debt
Securities, PROVIDED that such action shall not adversely affect the interests
of the holders of the 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, (a) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (b) the principal amount of
any Debt Security denominated in a foreign currency that shall be deemed
Outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount of such Debt Security (or, in
the case of an Original Issue Discount Security, the U.S. dollar equivalent on
the issue date of such Debt Security of the amount determined as provided in (a)
above), (c) the principal amount of an indexed security that shall be deemed
Outstanding shall be the principal face amount of such indexed security at
original issuance, unless otherwise provided with respect to such indexed
security pursuant to the Indenture, and (d) Debt Securities owned by the
Operating Partnership or any other obligor upon the Debt Securities or any
affiliate of the Operating Partnership or of such other obligor shall be
disregarded.
The 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 such series, in any such 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; PROVIDED, HOWEVER, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting or adjourned meeting duly reconvened at which a
quorum is present by the affirmative vote of the holders of such specified
percentage in principal amount of the outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of holders of
Debt Securities of any series duly held in accordance with the Indenture will be
binding on all holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
outstanding Debt Securities of a series; PROVIDED, HOWEVER, that if any action
is to be taken at such meeting with respect to a consent or waiver which may be
given by the holders of not less than a specified percentage in principal amount
of the outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the outstanding
Debt Securities of such series will constitute a quorum.
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: (a) there
18
shall be no minimum quorum requirement for such meeting, and (b) the principal
amount of the outstanding Debt Securities of such series that vote in favor of
such request, demand, authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under the Indenture.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise indicated in the applicable Prospectus Supplement, the
Operating Partnership will be permitted, at its option, to discharge certain
obligations to holders of any series of Debt Securities issued under 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 such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium or Make-Whole Amount, if any) and interest to the date of such deposit
(if such Debt Securities have become due and payable) or to the stated maturity
or redemption date, as the case may be.
The Indenture provides that, unless otherwise indicated in the applicable
Prospectus Supplement, the Operating Partnership may elect either (a) to defease
and be discharged from any and all obligations with respect to such Debt
Securities (except for the obligation to pay additional amounts, if any, upon
the occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities, and to hold moneys for payment in trust)
("defeasance") or (b) to be released from certain obligations with respect to
such 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 such Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Operating Partnership with the applicable Trustee, in
trust, of an amount, in such currency or currencies, currency unit or units or
composite currency or currencies in which such Debt Securities are payable at
stated maturity, or Government Obligations (as defined below), or both,
applicable to such Debt Securities, which through the scheduled payment of
principal and interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium or Make-Whole Amount, if
any) and interest on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Operating Partnership has delivered to the applicable Trustee an
opinion of counsel (as specified in the Indenture) to the effect that the
holders of such Debt Securities will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to U.S. federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred, and such opinion of counsel,
in the case of defeasance, will be required to refer to and be based upon a
ruling received from the Internal Revenue Service or a change in applicable
United States federal income tax law occurring after the date of the Indenture.
In the event of such defeasance, the holders of such Debt Securities would
thereafter be able to look only to such trust fund for payment of principal (and
premium or Make-Whole Amount, if any) and interest.
"Government Obligations" means securities that are (a) direct obligations of
the United States of America or the government which issued the foreign currency
in which the Debt Securities of a particular series are payable, for the payment
of which its full faith and credit is pledged or (b) obligations of a person
19
controlled or supervised by and acting as an agency or instrumentality of the
United States of America or such government which issued the foreign currency in
which the Debt Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Operating Partnership has deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security will be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium or Make-Whole Amount, if any) and interest on such Debt Security as
they become due out of the proceeds yielded by converting the amount so
deposited in respect of such Debt Security into the currency, currency unit or
composite currency in which such Debt Security becomes payable as a result of
such election or such cessation of usage based on the applicable market exchange
rate. "Conversion Event" means the cessation of use of (i) a currency, currency
unit or composite currency both by the government of the country which issued
such currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community, (ii) the
ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities or
(iii) any currency unit or composite currency other than the ECU for the
purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium or
Make-Whole Amount, if any) and interest on any Debt Security that is payable in
a foreign currency that ceases to be used by its government of issuance shall be
made in U.S. dollars.
In the event the Operating Partnership effects covenant defeasance with
respect to any Debt Securities and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default other than the Event
of Default described in clause (d) under "--Events of Default, Notice and
Waiver" with respect to specified sections of the Indenture (which sections
would no longer be applicable to such Debt Securities) or described in clause
(g) under "--Events of Default, Notice and Waiver" with respect to any other
covenant as to which there has been covenant defeasance, the amount in such
currency, currency unit or composite currency in which such Debt Securities are
payable, and Government Obligations on deposit with the applicable Trustee, will
be sufficient to pay amounts due on such Debt Securities at the time of their
stated maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Operating Partnership would remain liable to make payment of such
amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
20
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.
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 (the "Global
Securities") that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the applicable Prospectus Supplement relating to
such series. Global Securities may be issued in either registered or bearer form
and in either temporary or permanent form. The specific terms of the depositary
arrangement with respect to a series of Debt Securities will be described in the
applicable Prospectus Supplement relating to such series.
PAYMENT AND PAYING AGENTS
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium or Make-Whole Amount, if any) and interest
on any series of Debt Securities will be payable at the corporate trust office
of the Trustee, the address of which will be stated in the applicable Prospectus
Supplement; provided that, at the option of the Operating Partnership, payment
of interest may be made by check mailed to the address of the person entitled
thereto as it appears in the applicable register for such Debt Securities or by
wire transfer of funds to such person at an account maintained within the United
States.
All moneys paid by the Operating Partnership to a paying agent or a Trustee
for the payment of the principal of or any premium, Make-Whole Amount or
interest on any Debt Security which remain unclaimed at the end of two years
after such principal, premium, Make-Whole Amount or interest has become due and
payable will be repaid to the Operating Partnership, and the holder of such Debt
Security thereafter may look only to the Operating Partnership for payment
thereof.
DESCRIPTION OF PREFERRED STOCK
The description of the Preferred Stock set forth below does not purport to
be complete and is qualified in its entirety by reference to the Company's
Amended and Restated Articles of Incorporation, as amended (the "Articles of
Incorporation"), and Amended and Restated Bylaws (the "Bylaws"). All material
terms of the Preferred Shares, except those disclosed in the applicable
Prospectus Supplement, are described in this Prospectus.
GENERAL
Under the Articles of Incorporation, the Company has authority to issue 10
million shares of 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
Board of Directors of the Company. Prior to issuance of shares of each series,
the Board of Directors is required by the Maryland General Corporation Law
("MGCL") and the 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 ("Excess Stock"), 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 such
shares as may be permitted by Maryland law. Such rights, powers, restrictions
and limitations could include the right to receive specified dividend payments
and payments on liquidation prior to any such 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 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
21
of Common Stock might believe to be in their best interests or in which holders
of some, or a majority, of the shares of Common Stock might receive a premium
for their shares over the then market price of such shares of Common Stock.
OUTSTANDING PREFERRED STOCK
At September 19, 1997, the Company had outstanding 1,650,000 shares of
Series A Preferred Stock, 40,000 shares of Series B Preferred Stock and 20,000
shares of Series C Preferred Stock, constituting all of the Company's then
outstanding Preferred Stock. The terms of the Series A Preferred Stock, Series B
Preferred Stock and Series C 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 A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock, and for cumulative quarterly dividends at the rate of
$2.375, $218.75 and $215.625, respectively, per share per year. On and after
November 17, 2000, May 14, 2002 and June 6, 2007, the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, respectively, are subject
to redemption, in each case in whole or in part, at the option of the Company,
at a cash redemption price of $25.00 per share, $2,500.00 per share and
$2,500.00 per share, respectively, plus accrued and unpaid dividends. The Series
A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock rank on
a parity as to payment of dividends and amounts upon liquidation, however, the
Series A Preferred Stock has the benefit of the Guarantee Agreement, as
described below.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C 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 such distributions junior to the Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, liquidating
distributions in the amount of $25.00 per share, $2,500.00 per share and
$2,500.00 per share, respectively, plus all accrued and unpaid dividends.
The Series A Preferred Stock is entitled to the benefits of a Guarantee and
Payment Agreement between Securities L.P. and its general partner, First
Industrial Securities Corporation (each a subsidiary of the Company), for the
benefit of American National Bank and Trust Company of Chicago as Guarantee
Agent thereunder (the "Guarantee Agreement") pursuant to which Securities L.P.
has guaranteed, subject to the terms of the Guarantee Agreement, dividends on,
and redemption and liquidation payments with respect to, the Series A Preferred
Stock. No other Preferred Stock of the Company is or will be entitled to the
benefits of the Guarantee Agreement and the Series B Preferred Stock and Series
C Preferred Stock do not have the benefit of any such guarantee.
Except as expressly required by law and in certain 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
other series of Preferred Stock ranking on a parity therewith (collectively,
"Parity Preferred Stock"), voting as a single class, is required to authorize
another class of shares senior to such Parity 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, the Articles of Incorporation, including the Articles
Supplementary relating to such series of Preferred Stock, if such action would
materially and adversely alter or change the rights, preferences or privileges
of such series of Preferred Stock.
FUTURE SERIES OF PREFERRED STOCK
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable
22
provisions of the Articles of Incorporation and Bylaws and any applicable
amendment to the Articles of Incorporation designating terms of a series of
Preferred Stock (a "Designating Amendment").
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including:
(1) The title and stated value of such Preferred Stock;
(2) The number of shares of such Preferred Stock offered, the liquidation
preference per share and the offering price of such Preferred Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to such Preferred Stock;
(4) The date from which dividends on such Preferred Stock shall accumulate,
if applicable;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) The provision for a sinking fund, if any, for such Preferred Stock;
(7) The provision for redemption, if applicable, of such Preferred Stock;
(8) Any listing of such Preferred Stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred Stock
will be convertible into Common Stock, including the conversion price
(or manner of calculation thereof);
(10) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(11) A discussion of federal income tax considerations applicable to such
Preferred Stock;
(12) The relative ranking and preference of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company;
(13) Any limitations on issuance of any series of Preferred Stock ranking
senior to or on a parity with such series of Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company; and
(14) Any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will, with respect to dividend rights and rights upon liquidation, dissolution
or winding up of the Company, rank (i) senior to all classes or series of Common
Stock, and to all equity securities ranking junior to such Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of the Company; (ii) on a parity with all equity securities issued by the
Company the terms of which specifically provide that such equity securities rank
on a parity with the Preferred Stock with respect to dividend rights or rights
upon liquidation, dissolution or winding up of the Company; and (iii) junior to
all equity securities issued by the Company the terms of which specifically
provide that such equity securities rank senior to the Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of the Company. The term "equity securities" does not include convertible debt
securities.
DIVIDENDS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of assets
of the Company legally available for payment, cash dividends at such rates and
on such dates as will be set forth in the applicable Prospectus Supplement.
23
Each such dividend shall be payable to holders of record as they appear on the
share transfer books of the Company on such record dates as shall be fixed by
the Board of Directors of the Company.
Dividends on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are non-cumulative, then the holders of such
series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date.
If Preferred Stock of any series is outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of the Company of
any other series ranking, as to dividends, on a parity with or junior to the
Preferred Stock of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for such payment on the Preferred Stock of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for such payment on the Preferred Stock of such series. When
dividends are not paid in full (or a sum sufficient for such full payment is not
so set apart) upon Preferred Stock of any series and the shares of any other
series of Preferred Stock ranking on a parity as to dividends with the Preferred
Stock of such series, all dividends declared upon Preferred Stock of such series
and any other series of Preferred Stock ranking on a parity as to dividends with
such Preferred Stock shall be declared PRO RATA so that the amount of dividends
declared per share of Preferred Stock of such series and such other series of
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Stock of such series (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend) and such
other series of Preferred Stock bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof is set apart for payment for the then current dividend
period, no dividends (other than in shares of Common Stock or other shares of
capital stock ranking junior to the Preferred Stock of such series as to
dividends and upon liquidation) shall be declared or paid or set aside for
payment nor shall any other distribution be declared or made upon the Common
Stock, or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock of such series as to dividends or upon
liquidation, nor shall any shares of Common Stock, or any other shares of
capital stock of the Company ranking junior to or on a parity with the Preferred
Stock of such series as to dividends or upon liquidation be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such shares) by the
Company (except by conversion into or exchange for other capital stock of the
Company ranking junior to the Preferred Stock of such series as to dividends and
upon liquidation).
Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains payable.
24
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock does not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of shares of capital stock of the Company, the terms of
such Preferred Stock may provide that, if no such shares of capital stock shall
have been issued or to the extent the net proceeds from any issuance are
insufficient to pay in full the aggregate redemption price then due, such
Preferred Stock shall automatically and mandatorily be converted into the
applicable shares of capital stock of the Company pursuant to conversion
provisions specified in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of Preferred Stock has
a cumulative dividend, full cumulative dividends on all shares of such series of
Preferred Stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period, and (ii) if a
series of Preferred Stock does not have a cumulative dividend, full dividends on
all shares of the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, no shares of such
series of Preferred Stock shall be redeemed unless all outstanding shares of
Preferred Stock of such series are simultaneously redeemed; PROVIDED, HOWEVER,
that the foregoing shall not prevent the purchase or acquisition of Preferred
Stock of such series to preserve the REIT status of the Company or pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of Preferred Stock of such series. In addition, unless (i) if such series
of Preferred Stock has a cumulative dividend, full cumulative dividends on all
outstanding shares of such series of Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for all past dividend periods and the then
current dividend period, and (ii) if such series of Preferred Stock does not
have a cumulative dividend, full dividends on the Preferred stock of such series
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for the then current
dividend period, the Company shall not purchase or otherwise acquire directly or
indirectly any shares of Preferred Stock of such series (except by conversion
into or exchange for capital shares of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation); PROVIDED,
HOWEVER, that the foregoing shall not prevent the purchase or acquisition of
shares of Preferred Stock of such series to preserve the REIT status of the
Company or pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of Preferred Stock of such series.
If fewer than all of the outstanding shares of Preferred Stock of any series
are to be redeemed, the number of shares to be redeemed will be determined by
the Company and such shares may be redeemed pro rata from the holders of record
of such shares in proportion to the number of such shares held or for which
redemption is requested by such holder (with adjustments to avoid redemption of
fractional shares) or by any other equitable manner determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of
25
shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all the shares of Preferred Stock of any series are to
be redeemed, the notice mailed to each such holder thereof shall also specify
the number of shares of Preferred Stock to be redeemed from each such holder. If
notice of redemption of any Preferred Stock has been given and if the funds
necessary for such redemption have been set aside by the Company in trust for
the benefit of the holders of any Preferred Stock so called for redemption, then
from and after the redemption date dividends will cease to accrue on such
Preferred Stock, and all rights of the holders of such shares will terminate,
except the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Stock or any other class or series of capital
stock of the Company ranking junior to the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up of the Company, the
holders of each series of Preferred Stock shall be entitled to receive out of
assets of the Company legally available for distribution to stockholders
liquidating distributions in the amount of the liquidation preference per share,
if any, set forth in the applicable Prospectus Supplement, plus an amount equal
to all dividends accrued and unpaid thereon (which shall not include any
accumulation in respect of unpaid noncumulative dividends for prior dividend
periods). After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Preferred Stock will have no right or
claim to any of the remaining assets of the Company. In the event that, upon any
such voluntary or involuntary liquidation, dissolution or winding up, the
available assets of the Company are insufficient to pay the amount of the
liquidating distributions on all outstanding shares of Preferred Stock and the
corresponding amounts payable on all shares of other classes or series of
capital stock of the Company ranking on a parity with the Preferred Stock in the
distribution of assets, then the holders of the Preferred Stock and all other
such classes or series of capital stock shall share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of the Company shall be distributed among
the holders of any other classes or series of capital stock ranking junior to
the Preferred Stock upon liquidation, dissolution or winding up, according to
their respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
the Company with or into any other corporation, trust or entity, or the sale,
lease or conveyance of all or substantially all of the property or business of
the Company, shall not be deemed to constitute a liquidation, dissolution or
winding up of the Company.
VOTING RIGHTS
Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock of a series remain outstanding, the Company will not,
without the affirmative vote or consent of the holders of at least two-thirds of
the shares of such series of Preferred Stock outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such series voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any class or series of capital stock ranking prior to such
series of Preferred Stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up or reclassify
any authorized capital stock of the Company into such shares, or create,
authorize or issue any obligation or security convertible into or
26
evidencing the right to purchase any such shares; or (ii) amend, alter or repeal
the provisions of the Company's Articles of Incorporation or the Designating
Amendment for such series of Preferred Stock, whether by merger, consolidation
or otherwise (an "Event"), so as to materially and adversely affect any right,
preference, privilege or voting power of such series of Preferred Stock or the
holders thereof; PROVIDED, HOWEVER, with respect to the occurrence of any of the
Events set forth in (ii) above, so long as the Preferred Stock remains
outstanding with the terms thereof materially unchanged, taking into account
that upon the occurrence of an Event the Company may not be the surviving
entity, the occurrence of any such Event shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting power of holders
of Preferred Stock, and PROVIDED FURTHER that (x) any increase in the amount of
the authorized Preferred Stock or the creation or issuance of any other series
of Preferred Stock, or (y) any increase in the amount of authorized shares of
such series or any other series of Preferred Stock, in each case ranking on a
parity with or junior to the Preferred Stock of such series with respect to
payment of dividends or the distribution of assets upon liquidation, dissolution
or winding up, shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into Common Stock will be set forth in the applicable Prospectus
Supplement relating thereto. Such terms will include the number of shares of
Common Stock into which the shares of Preferred Stock are convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such series of Preferred Stock.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by 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.
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 such 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
27
the Prospectus Supplement. The shares of Preferred Stock represented by the
Depositary Shares will be deposited with a Depositary (the "Depositary") named
in the applicable Prospectus Supplement, under a Deposit Agreement (the "Deposit
Agreement"), among the Company, the Depositary and the holders of the Depositary
Receipts. Certificates evidencing Depositary Shares ("Depositary Receipts") 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 certain actions such as
filing proof of residence and paying certain 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, the Articles of Incorporation and
the form of Designating Amendment for the applicable series of Preferred Stock.
All material terms of the Depository 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 such 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 such 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
entitled thereto, in proportion, as nearly as may be practicable, to the number
of Depositary Shares owned by such holders on the relevant record date, unless
the Depositary determines (after consultation with the Company) that it is not
feasible to make such distribution, in which case the Depositary may (with the
approval of the Company) adopt any other method for such distribution as it
deems equitable and appropriate, including the sale of such property (at such
place or places and upon such terms as it may deem equitable and appropriate)
and distribution of the net proceeds from such sale to such 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, such 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
Preferred Stock so redeemed. The Depositary will mail the notice of redemption
promptly upon receipt of such 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.
28
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 such notice of meeting to the record holders of the Depositary Receipts as of
the record date for such meeting. Each such 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 such
record holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote such Preferred Stock represented by such Depositary Shares
in accordance with such 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 such 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 such holder at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares. Holders of Preferred Stock thus withdrawn will not thereafter be
entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Receipts evidencing Depositary Shares therefor.
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 (other
than any change in fees) of Depositary Shares will not be effective unless such
amendment has been approved by at least a majority of the Depositary Shares then
outstanding. No such amendment 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 such 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 (i)
such termination is necessary to preserve the Company's status as a REIT or (ii)
a majority of each series of Preferred Stock affected by such termination
consents to such termination, whereupon such Depositary will be required to
deliver or make available to each holder of Depositary Receipts, upon surrender
of the Depositary Receipts held by such holder, such number of whole or
fractional shares of Preferred Stock as are represented by the Depositary Shares
evidenced by such Depositary Receipts together with any other property held by
such Depositary with respect to such Depositary Receipts. The Company will agree
that if the Deposit Agreement is terminated to preserve the Company's 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 (i)
all outstanding Depositary Shares thereunder shall have been redeemed, (ii)
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 such distribution shall have been distributed to the holders of
Depositary Receipts evidencing the
29
Depositary Shares representing such Preferred Stock or (iii) each share of the
related Preferred Stock shall have been converted into stock of the Company not
so 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 certain 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 such Depositary
Receipt if such charges are not paid.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Receipts all
reports and communications from the Company which are delivered to the
Depositary and which 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 such other places as it may from time to time deem advisable, any reports and
communications received from the Company which 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
thereunder, 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 such 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 shall receive conflicting claims, requests or
instructions from any holders of Depositary Receipts, on the one hand, and the
Company, on the other hand, the Depositary shall be entitled to act on such
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 such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such 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 of America 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 such Depositary
Shares. Accordingly, such owners will be entitled to
30
take into account, for Federal income tax purposes, income and deductions to
which they would be entitled if they were holders of such Preferred Stock. In
addition, (i) no gain or loss will be recognized for Federal income tax purposes
upon the withdrawal of Preferred Stock in exchange for Depositary Shares, (ii)
the tax basis of each share of Preferred Stock to an exchanging owner of
Depositary Shares will, upon such exchange, be the same as the aggregate tax
basis of the Depositary Shares exchanged therefor, and (iii) the holding period
for Preferred Stock in the hands of an exchanging owner of Depositary Shares
will include the period during which such person owned such Depositary Shares.
DESCRIPTION OF COMMON STOCK
The description of the Company's Common Stock set forth below does not
purport to be complete and is qualified in its entirety by reference to the
Articles of Incorporation and the Bylaws. All material terms of the Company's
Common Stock are included in this Prospectus.
GENERAL
Under the Articles of Incorporation, the Company has authority to issue 100
million shares of Common Stock, par value $.01 per share. Under Maryland law,
stockholders generally are not responsible for the corporation's debts or
obligations. At September 19, 1997, the Company had outstanding 30,824,783
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 the Articles of Incorporation regarding Excess Stock, holders of shares of
Common Stock will be entitled to receive dividends on shares of Common Stock if,
as and when authorized and declared by the Board of Directors of the Company out
of assets legally available therefor and to share ratably in the assets of the
Company legally available for distribution to its stockholders in the event of
its liquidation, dissolution or winding up after payment of, or adequate
provision for, all known debts and liabilities of the Company.
Subject to the provisions of the 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, the holders of Common Stock will
possess the exclusive voting power. There is no cumulative voting in the
election of Directors, which means that the holders of a majority of the
outstanding shares of Common Stock can elect all of the Directors then standing
for election, and the holders of the remaining shares of Common Stock will not
be able to elect any Directors.
Holders of Common Stock have no conversion, sinking fund or redemption
rights, or preemptive rights to subscribe for any securities of the Company.
Subject to the provisions of the 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.
Pursuant to the MGCL, a corporation generally cannot dissolve, amend its
Articles of Incorporation, merge, sell all or substantially all of its assets,
engage in a share exchange or engage in similar transactions outside the
ordinary course of business unless approved by the affirmative vote of
stockholders holding at least two-thirds of the shares entitled to vote on the
matter unless a lesser percentage (but not less than a majority of all of the
votes to be cast on the matter) is set forth in the corporation's Articles of
Incorporation. The Articles of Incorporation do not provide for a lesser
percentage in such situations.
31
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50% in
value of its outstanding capital stock may be owned, directly or indirectly, by
five or fewer individuals (as defined in the Code to include certain entities)
during the last half of a taxable year. To assist the Company in meeting this
requirement, the Company may take certain actions to limit the beneficial
ownership, directly or indirectly, by individuals of the Company's outstanding
equity securities. See "Restrictions on Transfers of Capital Stock."
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is First Chicago Trust
Company of New York, New York.
SHAREHOLDER RIGHTS PLAN
On September 4, 1997, the Board of Directors adopted a shareholder rights
plan (the "Shareholder Rights Plan"). Under such plan, one right will be
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 Junior Participating Preferred Stock
of the Company 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). The Company has designated
1,000,000 shares as Junior Participating Preferred Stock and has reserved such
shares for issuance under the Shareholder Rights Plan. The rights are redeemable
by the Company at a price of $.001 per right. If not exercised or redeemed, all
rights expire on October 20, 2007. The description and terms of the rights are
set forth in a Shareholder Rights Agreement between the Company and First
Chicago Trust Company of New York.
CERTAIN PROVISIONS OF MARYLAND LAW AND
THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The following summary of certain provisions of Maryland law and the
Company's Articles of Incorporation and Bylaws does not purport to be complete
and is qualified by reference to Maryland law and the Company's Articles of
Incorporation and Bylaws.
BUSINESS COMBINATIONS
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and an Interested Stockholder 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. Thereafter, any such business combination must be recommended by
the board of directors of the corporation and approved by the affirmative vote
of at least (a) 80% of the vote entitled to be cast by holders of outstanding
voting shares of the corporation and (b) two-thirds of the vote entitled to be
cast by holders of outstanding voting shares of the corporation other than
shares held by the Interested Stockholder with whom the business combination is
to be effected, unless, 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 time that the Interested
Stockholder becomes an Interested Stockholder. The Articles of Incorporation
exempt from these provisions of the MGCL any business combination in which there
is no Interested
32
Stockholder other than Mr. Shidler or any entity controlled by Mr. Shidler
unless Mr. Shidler is an Interested Stockholder without taking into account Mr.
Shidler's ownership of shares of the Company's Common Stock and the right to
acquire shares of the Company's Common Stock in an aggregate amount which does
not exceed the number of shares of the Company's Common Stock which Mr. Shidler
owned and had the right to acquire (including through the exchange of Units) at
the time of the consummation of the Company's initial public offering.
CONTROL SHARE ACQUISITIONS
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquiror or by officers or directors who
are 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; (i) one-fifth or
more but less than one-third, (ii) one-third or more but less than a majority,
or (iii) a majority of all voting power. Control shares do not include shares
the acquiring person is then entitled to vote as a result of having previously
obtained stockholder approval. A "control share acquisition" means the
acquisition of control shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition may
compel the board of directors, upon satisfaction of certain conditions
(including an undertaking to pay expenses), to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself
present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by statute, then
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to voting rights, as of
the date of the last control share acquisition or of any meeting of stockholders
at which the voting rights of such 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 shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the Company's Articles
of Incorporation or Bylaws.
The Company's Bylaws contain a provision exempting any and all acquisitions
of the Company's shares of capital stock from the control shares provisions of
the MGCL. There can be no assurance that this provision will not be amended or
eliminated in the future.
AMENDMENT OF ARTICLES OF INCORPORATION
The Company's Articles of Incorporation, including its 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.
33
MEETINGS OF STOCKHOLDERS
The Company's 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 the Board of Directors. Special meetings of stockholders may be
called by (i) the Company's Chairman of the Board or the Company's President,
(ii) a majority of the Board of Directors or (iii) stockholders holding at least
25% of the outstanding capital stock of the Company entitled to vote at the
meeting.
The Company's 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 the
Company 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.
The purpose of requiring stockholders to give the Company advance notice of
nominations and other business is to afford the 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 the 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 the
Company's Bylaws do not give the 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, without regard to whether consideration of the nominees or
proposal might be harmful or beneficial to the Company and its stockholders.
CLASSIFICATION OF THE BOARD OF DIRECTORS
The Company's Bylaws provide that the number of directors of the Company may
be established by the Board of Directors but may not be fewer than the minimum
number required by Maryland law nor more than nine. 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. Pursuant to the terms of the Articles of Incorporation, the
directors are divided into three classes. One class holds office for a term
expiring at the annual meeting of stockholders to be held in 1998, and the other
two classes hold office for terms expiring at the annual meetings of
stockholders to be held in 1999 and 2000, 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. The Company believes
that classification of the Board of Directors will help to assure the continuity
and stability of the Company's business strategies and policies as determined by
the 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 the Company, even though such an attempt might be beneficial to the
Company and its stockholders. At least two annual meetings of stockholders,
instead of one, will generally be required to effect a change in a majority of
the Board of Directors. Thus, the classified board provision could increase the
likelihood that incumbent directors will retain their positions. Holders of
34
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.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
For the Company to qualify as a REIT under the Code, among other things, not
more than 50% in value of its outstanding capital stock may be owned, directly
or indirectly, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year, and such capital stock
must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months or during a proportionate part of a shorter tax year.
See "Certain Federal Income Tax Considerations." To ensure that the Company
remains a qualified REIT, the Articles of Incorporation, subject to certain
exceptions, provide that no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than an aggregate of 9.9% in value of
the Company's 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 the
disqualification of the Company as a REIT, including any transfer that results
in the capital stock being owned by fewer than 100 persons or results in the
Company being "closely held" within the meaning of Section 856(h) of the Code,
shall be null and void, and the intended transferee will acquire no rights to
the 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 that will be transferred, by operation of law, to the
Company 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 the
Company 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 such interest to such
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, the Company will have the right, for a period of
90 days during the time any Excess Stock is held by the Company in trust, and,
with respect to Excess Stock resulting from the attempted transfer of Preferred
Stock, at any time when any outstanding shares of Preferred Stock of such 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 the Articles of Incorporation) of the capital stock
on the date the Company exercises its 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 the Company of
the transfer or, if no such notice is given, the date the Board of Directors
determines that a violative transfer has been made.
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES OF THE OPERATING PARTNERSHIP
The following is a discussion of certain investment, financing, conflicts of
interest and other policies of the Operating Partnership. These policies have
been determined by the Board of Directors of the Company, which is the General
Partner of the Operating Partnership, and generally may be amended or revised
from time to time by the Board of Directors without a vote of stockholders.
35
INVESTMENT POLICIES
It is the Company's policy that First Industrial Realty Trust, Inc. ("First
Industrial") will only engage in business activities through the Operating
Partnership and its subsidiaries. For the purpose of these policies, the term
"subsidiaries" when used with respect to the Operating Partnership includes
partnerships in which the Operating Partnership owns a majority of the economic
interests and Securities L.P.
INVESTMENTS IN REAL ESTATE OR INTERESTS IN REAL ESTATE. The Operating
Partnership's investment objectives are to increase cash flow and the value of
its properties, to acquire established income-producing industrial properties
with cash flow growth potential and, in limited circumstances, to develop
build-to-suit properties or undertake redevelopment projects. Additionally,
where prudent and possible, the Operating Partnership will seek to expand and
upgrade both its existing properties and any newly acquired properties. The
Operating Partnership's business will be focused solely on industrial
properties. The Operating Partnership's policy is to acquire assets primarily
for generation of current income and long-term value appreciation; however,
where appropriate, the Operating Partnership may sell certain properties.
The Operating Partnership expects to pursue its investment objectives
through the direct and indirect ownership of properties and the ownership of
interests in other entities. The Operating Partnership currently expects that it
will make further investments in the Company's current markets and will expand
into other markets within the Company's operating region as investment
opportunities the Operating Partnership considers attractive become available.
The Operating Partnership believes that opportunities exist to acquire, on
attractive terms, established properties which do not pose the risks of
development.
The Operating Partnership also may participate with other entities in
property ownership through joint ventures or other types of co-ownership. Equity
investments may be subject to existing mortgage financing and other
indebtedness, or such financing or indebtedness may be incurred in connection
with acquiring investments. Any such financing or indebtedness will have
priority over the Company's equity interest in such property.
INVESTMENTS IN REAL ESTATE MORTGAGES. While the Operating Partnership will
emphasize equity real estate investments in industrial properties, it may, in
its discretion, invest in mortgage loans and other interests related to
industrial properties. The Operating Partnership does not presently intend to
invest to a significant extent in mortgage loans, but may do so subject to the
investment restrictions applicable to REITs. The mortgage loans in which the
Operating Partnership may invest may be either first mortgage loans or junior
mortgage loans, and may or may not be insured by a government agency.
SECURITIES OF OR INTERESTS IN PERSONS PRIMARILY ENGAGED IN REAL ESTATE
ACTIVITIES AND OTHER ISSUERS. Subject to the ownership limitations and gross
income tests necessary for REIT qualification, the Operating Partnership also
may invest in securities of entities engaged in real estate activities or
securities of other issuers, including for the purpose of exercising control
over such entities. The Operating Partnership may acquire all or substantially
all of the securities or assets of other REITs or similar entities where such
investments would be consistent with the Operating Partnership's investment
policies. In any event, the Operating Partnership does not intend that its
investments in securities will require it to register as an "investment company"
under the Investment Company Act of 1940, and the Operating Partnership would
intend to divest securities before any such registration would be required.
FINANCING POLICIES
It is the Company's policy that First Industrial shall not incur
indebtedness other than short-term trade, employee compensation, dividends
payable or similar indebtedness that will be paid in the ordinary course of
business, and that indebtedness shall instead be incurred by the Operating
Partnership to the extent necessary to fund the business activities conducted by
the Operating Partnership and its subsidiaries.
36
The Operating Partnership has no separate policy regarding the amount of
debt it may incur, but rather is encompassed by the Company's policy in this
regard. The Company currently has a policy of maintaining a ratio of debt to
total market capitalization (I.E., total consolidated debt of the Company
(excluding the 1994 Defeased Mortgage Loan which was defeased in April 1997) as
a percentage of the aggregate market value of all outstanding shares of Common
Stock, assuming the exchange of all Units for Common Stock, plus the aggregate
stated value of all outstanding shares of preferred stock, plus total
consolidated debt (excluding the 1994 Defeased Mortgage Loan)) which generally
will not exceed 50% and a coverage ratio (computed as total revenues (excluding
interest income on U.S. government securities collateralizing the 1994 Defeased
Mortgage Loan) minus property expenses and general and administrative expenses
divided by interest expense (excluding interest on the 1994 Defeased Mortgage
Loan accruing after the date of defeasance) plus dividends on preferred stock)
of at least 2.0:1. As of June 30, 1997, the Company's ratio of debt to total
market capitalization was 29.6%, and for the twelve months ended June 30, 1997,
the Company's coverage ratio was 3.12. However, the organizational documents of
the Company do not contain any limitation on the amount or percentage of
indebtedness the Company may incur and the Company's Board of Directors has the
power to alter the current policy. Accordingly, the Company could become more
highly leveraged, resulting in an increase in debt service that could adversely
affect the Company's ability to make expected distributions to stockholders and
in an increased risk of default on its obligations. In addition, except as may
be set forth in any Prospectus Supplement, the Debt Securities will not contain
any provision that would afford holders of Debt Securities protection in the
event of a highly leveraged transaction or change in control of the Operating
Partnership or the Company.
To the extent that the Board of Directors determines to obtain additional
debt financing, the Company intends to do so generally through mortgages on its
properties and lines of credit, but also may do so through the issuance of debt
securities. These mortgages may be recourse, non-recourse or cross-
collateralized and may contain cross-default provisions. The Company does not
have a policy limiting the number or amount of mortgages that may be placed on
any particular property, but mortgage financing instruments usually limit
additional indebtedness on such properties. Future credit facilities and lines
of credit may be used for the purpose of making acquisitions or capital
improvements or providing working capital to the Company or meeting the taxable
income distribution requirements for REITs under the Code if the Company has
taxable income without receipt of cash sufficient to enable the Company to meet
such distribution requirements.
In the future, the Company may seek to extend, expand, reduce or renew its
acquisition facility, or obtain new credit facilities or lines of credit or
issue debt securities, subject to its general policy on debt capitalization.
POLICIES WITH RESPECT TO OTHER ACTIVITIES
The Operating Partnership may, but does not presently intend to, make
investments other than as previously described. The Operating Partnership has
authority to offer Units and other equity or debt securities in exchange for
property and to repurchase or otherwise reacquire Units or any other securities
and may engage in such activities in the future. The Operating Partnership also
may make loans to joint ventures in which it participates. The Operating
Partnership will not engage in trading, underwriting or the agency distribution
or sale of securities of other issuers. At all times, the Operating Partnership
intends to make investments in such a manner as to be consistent with the
requirements of the Code for the Company to qualify as a REIT unless, because of
circumstances or changes in the Code (or the regulations promulgated
thereunder), the Company's Board of Directors determines that it is no longer in
the best interests of the Company to continue to have the Company qualify as a
REIT. The Company's policies with respect to such activities may be reviewed and
modified from time to time by the Company's directors without notice to or the
vote of the stockholders.
37
PROPERTIES OF THE OPERATING PARTNERSHIP
AND THE OTHER REAL ESTATE PARTNERSHIPS
GENERAL
The Operating Partnership and the Other Real Estate Partnerships
collectively owned, as of June 30, 1997, 453 in service properties (208 of which
were owned by the Operating Partnership and 245 of which were owned by the Other
Real Estate Partnerships) containing an aggregate of approximately 39.1 million
square feet of GLA in 16 states (18.1 million square feet of which comprised the
properties owned by the Operating Partnership and 21.0 million square feet of
which comprised the properties owned by the Other Real Estate Partnerships) with
a diverse base of 1,340 tenants (742 of which were tenants of the Operating
Partnership and 598 of which were tenants of the Other Real Estate Partnerships)
engaged in a wide variety of businesses, including manufacturing, retailing,
wholesale trade, distribution and professional services. The properties are
generally located in business parks which have convenient access to interstate
highways and rail and air transportation. The median age of the properties is
approximately 14 years. The Operating Partnership and the Other Real Estate
Partnerships maintain insurance coverage on their respective properties which
the Operating Partnership believes to be adequate.
The Operating Partnership and the Other Real Estate Partnerships classify
their properties into two industrial categories: bulk warehouse and light
industrial. The bulk warehouse properties are generally used for bulk storage of
materials and manufactured goods and the light industrial properties are
generally used for the design, assembly, packaging and distribution of goods
and, in some cases, the provision of services.
The Operating Partnership and the Other Real Estate Partnerships compete
with numerous commercial developers, real estate companies and other owners of
real estate in seeking properties for acquisition and land for development. In
addition, many of the properties owned by the Operating Partnership and the
Other Real Estate Partnerships are located in areas that include other bulk
warehouse and light industrial properties which compete for the same tenants as
the Operating Partnership and the Other Real Estate Parterships.
The following table summarizes certain information as of June 30, 1997 with
respect to properties owned by the Operating Partnership. Information in the
table excludes properties under development at June 30, 1997.
BULK WAREHOUSE LIGHT INDUSTRIAL TOTAL GLA AS
-------------------------- -------------------------- ----------------------------------------- A % OF
NUMBER OF NUMBER OF NUMBER OF AVERAGE TOTAL
METROPOLITAN AREA GLA PROPERTIES GLA PROPERTIES GLA PROPERTIES OCCUPANCY PORTFOLIO
- ------------------ --------- --------------- --------- --------------- --------- --------------- ------------- -----------
Atlanta........... 2,338,856 8 294,264 4 2,633,120 12 92% 15%
Chicago........... 1,632,052 7 898,541 8 2,530,593 15 100% 14%
Cincinnati........ 951,080 3 111,375 5 1,062,455 8 85% 6%
Cleveland......... -- -- 102,500 1 102,500 1 100% (2)
Columbus.......... 1,353,334 3 56,849 1 1,410,183 4 100% 8%
Dayton............ -- -- 322,746 6 322,746 6 100% 2%
Detroit........... 959,215 24 499,076 13 1,458,291 37 96% 8%
Indianapolis...... 1,169,586 6 1,073,780 26 2,243,366 32 89% 12%
Long Island....... 924,385 8 1,703,182 30 2,627,567 38 95% 15%
Milwaukee......... -- -- 331,155 7 331,155 7 95% 2%
Minneapolis/St.
Paul............. 534,527 6 1,275,015 19 1,809,542 25 91% 10%
Nashville......... 538,811 3 -- -- 538,811 3 100% 3%
New Jersey........ 344,176 3 459,786 13 803,962 16 96% 4%
St. Louis......... 198,413 3 -- -- 198,413 3 38% 1%
Other(1).......... -- -- 25,254 1 25,254 1 0% (2)
--
--------- --------- --- --------- --- ----- -----
10,944,435 74 7,153,523 134 18,097,958 208 94% 100%
--
--
--------- --------- --- --------- --- ----- -----
--------- --------- --- --------- --- ----- -----
- ------------------------------
(1) Green Bay, WI.
(2) Less than 1%.
38
The following table summarizes certain information as of June 30, 1997 with
respect to properties owned by the Other Real Estate Partnerships. Information
in the table excludes properties under development at June 30, 1997.
BULK WAREHOUSE LIGHT INDUSTRIAL TOTAL GLA AS
-------------------------- -------------------------- ----------------------------------------- A % OF
NUMBER OF NUMBER OF NUMBER OF AVERAGE TOTAL
METROPOLITAN AREA GLA PROPERTIES GLA PROPERTIES GLA PROPERTIES OCCUPANCY PORTFOLIO
- ------------------ --------- --------------- --------- --------------- --------- --------------- ------------- -----------
Atlanta........... 985,501 9 213,467 5 1,198,968 14 97% 6%
Central
Pennsylvania(1).. 2,773,519 17 843,508 14 3,617,027 31 99% 17%
Chicago........... 1,602,121 13 528,740 8 2,130,861 21 97% 10%
Des Moines........ 878,992 5 -- -- 878,992 5 100% 4%
Detroit........... 1,533,058 34 2,034,239 47 3,567,297 81 99% 17%
Grand Rapids...... 2,786,591 22 40,400 3 2,826,991 25 96% 13%
Indianapolis...... 976,273 1 -- -- 976,273 1 98% 5%
Milwaukee......... -- -- 133,173 3 133,173 3 100% (3)
Minneapolis/St.
Paul............. 1,330,460 10 1,877,406 25 3,207,866 35 97% 15%
Nashville......... 760,229 4 -- -- 760,229 4 100% 4%
St. Louis......... 674,682 12 385,713 3 1,060,395 15 99% 5%
Other(2).......... 301,355 4 378,603 6 679,958 10 100% 3%
--------- --- --------- --- --------- --- ----- -----
14,602,781 131 6,435,249 114 21,038,030 245 98% 100%
--------- --- --------- --- --------- --- ----- -----
--------- --- --------- --- --------- --- ----- -----
- ------------------------------
(1) Includes the Harrisburg, Allentown and Reading markets.
(2) Includes Denton, TX; Wichita, KS; West Lebanon, NH and Abilene, TX.
(3) Less than 1%.
As of June 30, 1997, 25 properties owned by the Operating Partnership were
subject to encumbrances securing indebtedness thereof and 219 properties owned
by the Other Real Estate Partnerships, including 192 properties encumbered by a
$300 million mortgage loan which was defeased in April 1997, were subject to
encumbrances securing indebtedness thereof.
TENANT AND LEASE INFORMATION
As of June 30, 1997, the Operating Partnership and the Other Real Estate
Partnerships had a diverse base of 1,340 tenants (742 of which were tenants of
the Operating Partnership and 598 of which were tenants of the Other Real Estate
Partnerships), engaged in a wide variety of businesses including manufacturing,
retailing, wholesale trade, distribution and professional services. Most leases
have an initial term of between three and five years and provide for periodic
rental increases that are either fixed or based on changes in the Consumer Price
Index. Industrial tenants typically have net or semi-net leases and pay as
additional rent their percentage of the property's operating costs, including
the costs of common area maintenance, property taxes and insurance. As of June
30, 1997, approximately 94% and 98% of the GLA of the properties owned by the
Operating Partnership and the Other Real Estate Partnerships, respectively, was
leased, and no single tenant or group of related tenants accounted for more than
2.4% of the Operating Partnership's rent revenues or more than 2.8% of the Other
Real Estate Partnerships' rent revenues, nor did any single tenant or group of
related tenants occupy more than 3.9% of the total GLA of the Operating
Partnership or more than 3.7% of the total GLA of the Other Real Estate
Partnerships.
39
The following table shows scheduled lease expirations for all leases for the
properties owned by the Operating Partnership as of June 30, 1997.
PERCENTAGE OF PERCENTAGE OF TOTAL
GLA SUBJECT TO GLA ANNUAL BASE RENT ANNUAL BASE RENT
NUMBER OF EXPIRING REPRESENTED BY UNDER EXPIRING REPRESENTED BY
YEAR OF EXPIRATION(1) LEASES EXPIRING LEASES(2) EXPIRING LEASES LEASES(3) EXPIRING LEASES
- ----------------------- ------------------- ----------------- --------------- ----------------- -------------------
1997................... 121 1,639,593 9.7% $ 7,303 9.7%
1998................... 191 2,574,474 15.2% 11,730 15.5%
1999................... 166 3,829,447 22.6% 19,869 26.3%
2000................... 122 2,723,832 16.1% 10,859 14.4%
2001................... 79 1,977,695 11.7% 8,230 10.9%
2002................... 52 935,566 5.5% 4,842 6.4%
2003................... 14 457,154 2.7% 1,590 2.1%
2004................... 13 868,776 5.1% 2,803 3.7%
2005................... 7 324,838 1.9% 2,317 3.1%
2006................... 8 325,111 1.9% 1,217 1.6%
Thereafter............. 10 1,287,105 7.6% 4,770 6.3%
--- ----------------- ------- -------- -------
Total................ 783 16,943,591 100.0% $ 75,530 100.0%
--- ----------------- ------- -------- -------
--- ----------------- ------- -------- -------
- ------------------------------
(1) Lease expirations as of June 30, 1997, assuming tenants do not exercise
existing renewal, termination or purchase options.
(2) Does not include existing vacancies of 1,154,367 aggregate square feet.
(3) In thousands, reflects monthly base rent provided for under the terms of
each expiring lease as in effect at June 30, 1997, multiplied by 12, and
does not take into account contractual rent escalations.
The following table shows scheduled lease expirations for all leases for the
properties owned by the Other Real Estate Partnerships as of June 30, 1997.
PERCENTAGE OF PERCENTAGE OF TOTAL
GLA SUBJECT TO GLA ANNUAL BASE RENT ANNUAL BASE RENT
NUMBER OF EXPIRING REPRESENTED BY UNDER EXPIRING REPRESENTED BY
YEAR OF EXPIRATION(1) LEASES EXPIRING LEASES(2) EXPIRING LEASES LEASES(3) EXPIRING LEASES
- ----------------------- ------------------- ----------------- --------------- ----------------- -------------------
1997................... 79 1,765,600 8.6% $ 6,803 8.0%
1998................... 150 4,069,147 19.7% 17,287 20.3%
1999................... 123 3,206,603 15.6% 13,965 16.4%
2000................... 106 3,571,364 17.3% 15,764 18.5%
2001................... 65 3,352,695 16.2% 11,793 13.8%
2002................... 35 1,515,855 7.3% 6,300 7.4%
2003................... 17 1,215,330 5.9% 4,877 5.7%
2004................... 7 472,983 2.3% 1,852 2.2%
2005................... 7 759,013 3.7% 3,130 3.7%
2006................... 6 272,980 1.3% 1,354 1.6%
Thereafter............. 9 433,163 2.1% 2,027 2.4%
--- ----------------- ------- -------- -------
Total................ 604 20,634,733 100.0% $ 85,152 100.0%
--- ----------------- ------- -------- -------
--- ----------------- ------- -------- -------
- ------------------------------
(1) Lease expirations as of June 30, 1997, assuming tenants do not exercise
existing renewal, termination or purchase options.
(2) Does not include existing vacancies of 403,297 aggregate square feet.
(3) In thousands, reflects monthly base rent provided for under the terms of
each expiring lease as in effect at June 30, 1997, multiplied by 12, and
does not take into account contractual rent escalations.
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. The discussion is based
on current law and does not purport to deal with all aspects of federal income
taxation that may be relevant to investors subject to special treatment under
the federal income tax laws, such as tax-exempt investors, dealers in securities
or foreign persons. The
40
provisions of the Code pertaining to REITs are highly technical and complex and
sometimes involve mixed questions of fact and law. In addition, this section
does not discuss foreign, state or local taxation. In the opinion of Cahill
Gordon & Reindel, the conclusions of law expressed in this summary are correct
in all material respects. Prospective investors should consult their own tax
advisors regarding the federal, state, local, foreign and other tax consequences
specific to them of holding and disposing of the Securities.
TAXATION OF THE COMPANY
In the opinion of Cahill Gordon & Reindel, commencing with its taxable year
ended December 31, 1994, the Company has been organized in conformity with the
requirements for qualification as a REIT under the Code, the Company's method of
operation has enabled it to meet the requirements for qualification as a REIT
under the Code, and, provided that the Company continues to satisfy the various
requirements applicable under the Code to REITs, as described herein, it will
continue to so qualify. Cahill Gordon & Reindel's opinion is based on various
assumptions and is conditioned upon certain representations as to factual
matters made by the Company and, the Operating Partnership and the Other Real
Estate Partnerships (such partnerships being hereinafter collectively referred
to as the "Partnerships"). Moreover, such qualification and taxation as a REIT
depend upon the Company's 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. Accordingly,
no assurance can be given that the actual results of the Company's operation for
any one taxable year will satisfy such requirements.
To qualify as a REIT under the Code for a taxable year, the Company must
meet certain organizational and operational requirements, which generally
require it to be a passive investor in operating real estate and to avoid
excessive concentration of ownership of its capital stock. Initially, its
principal activities must be real estate related. Generally, at least 75% of the
value of the total assets of the Company at the end of each calendar quarter
must consist of real estate assets, cash or governmental securities. The Company
may not own more than 10% of the outstanding voting securities of any
corporation and the value of any one issuer's securities may not exceed 5% of
the Company's gross assets; shares of qualified REITs, qualified temporary
investments and shares of certain wholly owned subsidiary corporations are
exempt from these prohibitions. The Company holds assets through certain wholly
owned subsidiary corporations and holds Preferred Stock interests in certain
corporations that provide property management services to third parties; in the
opinion of Cahill Gordon & Reindel, based on certain factual representations,
these holdings do not violate the prohibition on ownership of voting securities.
Additionally, gross income from the sale or other disposition of stock and
securities held for less than one year and of real property held for less than
four years must constitute less than 30% of the gross income for each taxable
year of a REIT. 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 gain from the sale of real
property not held primarily for sale to customers in the ordinary course of
business, dividends on REIT shares, interest on loans secured by mortgages on
real property, certain rents from real property and 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 income or receipts and, subject to certain limited exceptions, the REIT
may not manage 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. Substantially all of the Company's assets are held through
the 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.
The Company must satisfy certain ownership restrictions that limit (i)
concentration of ownership of the Company's capital stock by a few individuals
and (ii) ownership by the Company of its tenants. The
41
outstanding capital stock of the Company must be held by at least 100
stockholders. No more than 50% in
value of the 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 other
entities at any time during the last half of the Company's taxable year.
Accordingly, the Articles of Incorporation contain certain restrictions
regarding the transfer of Common Stock, Preferred Stock and any other
outstanding securities convertible into Common Stock when necessary to maintain
the Company's 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 the Articles of
Incorporation will be effective in maintaining the Company's REIT status. See
"Restrictions on Transfers of Capital Stock."
So long as the Company qualifies for taxation as a REIT and distributes at
least 95% of its REIT taxable income (computed without regard to net capital
gain or the dividends paid deduction) for its taxable year to its stockholders
annually, the Company itself will not be subject to federal income tax on that
portion of such income distributed to stockholders. The Company will be taxed at
regular corporate rates on all income not distributed to stockholders. The
Company's policy is to distribute at least 95% of its taxable income. REITs also
may incur taxes for certain other activities or to the extent distributions do
not satisfy certain other requirements.
Failure of the Company to qualify during any taxable year as a REIT could,
unless certain relief provisions were available, have a material adverse effect
upon its stockholders. If disqualified for taxation as a REIT for a taxable
year, the Company also would be disqualified for taxation as a REIT for the next
four taxable years, unless the failure were considered to be due to reasonable
cause and not willful neglect. The Company would be subject to federal income
tax at corporate rates on all of its taxable income and would not be able to
deduct the dividends paid, which could result in a discontinuation of or
substantial reduction in dividends to stockholders. Dividends also would be
subject to the regular tax rules applicable to dividends received by
stockholders of corporations. Should the failure to qualify as a REIT be
determined to have occurred retroactively in an earlier tax year of the Company,
the imposition of a substantial federal income tax liability on the Company
attributable to any nonqualifying tax years may adversely affect the Company's
ability to pay dividends. In the event that the Company fails to meet certain
income tests applicable to REITs, it may, generally, nonetheless retain its
qualification as a REIT if it pays a 100% tax on the amount by which it failed
to meet the relevant income test so long as such failure was considered to be
due to reasonable cause and not willful neglect. Any such taxes would adversely
affect the Company's ability to pay dividends and distributions.
The Taxpayer Relief Act of 1997 (the "1997 Act") which was recently signed
into law by President Clinton on August 5, 1997, modified many of the provisions
relating to the requirements for qualification as, and the taxation of, a REIT.
Among other things, the 1997 Act (i) replaced the rule that disqualifies a REIT
for any year in which the REIT fails to comply with Treasury regulations to
ascertain its ownership with an intermediate penalty for failing to do so; (ii)
permits a REIT to render a de minimis amount of impermissible services to
tenants, or in connection with the management of property, and still treat
amounts received with respect to that property as rents form real property;
(iii) permits a REIT to elect to retain and pay income tax on net long-term
capital gains; (iv) repealed a rule that required that less than 30% of a REIT's
gross income be derived from gain from the sale or other disposition of stock or
securities held for less than one year, certain real property held for less than
four years, and property that is sold or disposed of in a prohibited
transaction; (v) lengthened the original grace period for foreclosure property
from two years after the REIT acquired the property to a period ending on the
last day of the third full taxable year following the election; (vi) treat
income from all hedges that reduce the interest rate risk of REIT laibilities,
not just interest rate swaps and caps, as qualifying income under the 95% gross
income test; and (vii) permits any corporation wholly-owned by a REIT to be
treated as a qualified subsidiary, regardless of whether the corporation has
always been owned by a REIT. The changes are effective for taxable years
beginning after the date of enactment.
42
PLAN OF DISTRIBUTION
The Company and the Operating Partnership may sell Securities through
underwriters or dealers, directly to one or more purchasers, through agents or
through a combination of any such methods of sale. Any underwriter or agent
involved in the offer and sale of the Securities will be named in the applicable
Prospectus Supplement.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company, from the Operating Partnership or from
purchasers of Securities, for whom they may act as agents, in the form of
discounts, concessions or commissions. Underwriters may sell Securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents. Underwriters, dealers and
agents that participate in the distribution of Securities may be deemed to be
underwriters under the Securities Act, and any discounts or commissions they
receive from the Company or the Operating Partnership and any profit on the
resale of Securities they realize may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company or the Operating
Partnership will be described, in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Stock, which is listed on the NYSE. Any shares of Common
Stock sold pursuant to a Prospectus Supplement will be listed on the NYSE,
subject to official notice of issuance. The Company or the Operating Partnership
may elect to list any series of Debt Securities, Preferred Stock or Depositary
Shares on an exchange, but neither is obligated to do so. It is possible that
one or more underwriters may make a market in a series of Securities, but will
not be obligated to do so and may discontinue any market making at any time
without notice. Therefore, no assurance can be given as to the liquidity of the
trading market for the Securities.
Under agreements into which the Company or the Operating Partnership may
enter, underwriters, dealers and agents who participate in the distribution of
Securities may be entitled to indemnification by the Company or the Operating
Partnership against certain liabilities, including liabilities under the
Securities Act.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, or be tenants of, the Company or the Operating Partnership in the
ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Company or the
Operating Partnership will authorize underwriters or other persons acting as the
Company's or the Operating Partnership's agents to solicit offers by certain
institutions to purchase Securities from the Company or the Operating
Partnership pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such 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 such
institutions must be approved by the Company or the Operating Partnership, as
the case may be. The obligations of any purchaser under any such contract will
be subject to the condition that the purchase of the Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
In order to comply with the securities laws of certain states, if
applicable, the Securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states Securities may not be sold unless they have been registered or qualified
for sale in the
43
applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of Securities offered hereby may not engage in
market making activities with respect to the Securities for a period of two
business days prior to the commencement of such distribution.
LEGAL MATTERS
Certain legal matters, including the legality of the Securities covered by
this Prospectus and certain tax matters, will be passed upon for the Company by
Cahill Gordon & Reindel (a partnership including a professional corporation),
New York, New York, and for any underwriters, dealers or agents by Rogers &
Wells, New York, New York. Cahill Gordon & Reindel and Rogers & Wells will rely
as to all matters of Maryland law on the opinion of McGuire Woods Battle &
Boothe LLP, Baltimore, Maryland.
EXPERTS
The financial statements and schedule thereto of the Company and the
Contributing Businesses, the financial statements of the Acquisition Properties
(as defined in the Company's Current Report on Form 8-K filed February 12,
1997), the financial statements of the Lazarus Burman Properties (as defined in
the Company's Current Report on Form 8-K filed February 12, 1997, as amended by
Form 8-K/A No. 1 filed April 10, 1997) and the financial statements of the Punia
Acquisition Properties (as defined in each of the Company's and the Operating
Partnership's Current Report on Form 8-K filed July 15, 1997 as amended by Form
8-K/A No. 1 each filed September 4, 1997), each incorporated by reference in
this Prospectus or elsewhere in the Registration Statement, and the financial
statements and schedule thereto of the Operating Partnership and the
Contributing Businesses and the financial statements of the Other Real Estate
Partnerships included in this Prospectus, to the extent and for the periods
indicated in their reports, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, and are included or incorporated herein in reliance
upon the authority of said firm as experts in giving said reports.
44
FIRST INDUSTRIAL, L.P. AND CONTRIBUTING BUSINESSES
AND
OTHER REAL ESTATE PARTNERSHIPS
INDEX TO FINANCIAL STATEMENTS AND OTHER INFORMATION
PAGE
-----------
FIRST INDUSTRIAL, L.P. AND CONTRIBUTING BUSINESSES
FINANCIAL STATEMENTS
Report of Independent Accountants......................................................................... F-2
Balance Sheets of First Industrial, L.P. (the "Operating Partnership") as of December 31, 1996 and 1995... F-3
Statements of Operations of the Operating Partnership for the Years Ended December 31, 1996 and 1995 and
for the Period July 1, 1994 to December 31, 1994 and Combined Statement of Operations of the
Contributing Businesses for the Period January 1, 1994 to June 30, 1994................................. F-4
Statements of Changes in Partners' Capital of the Operating Partnership for the Years Ended December 31,
1996 and 1995 and for the Period July 1, 1994 to December 31, 1994 and Combined Statement of Changes in
Net Deficit of the Contributing Businesses for the Period January 1, 1994 to June 30, 1994.............. F-5
Statements of Cash Flows of the Operating Partnership for the Years Ended December 31, 1996 and 1995 and
for the Period July 1, 1994 to December 31, 1994 and Combined Statement of Cash Flows of the
Contributing Businesses for the Period January 1, 1994 to June 30, 1994................................. F-6
Notes to Financial Statements............................................................................. F-7
Schedule III: Real Estate and Accumulated Depreciation.................................................... F-19
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Unaudited Pro Forma Balance Sheet of the Operating Partnership as of December 31, 1996.................... F-24
Unaudited Pro Forma Statement of Operations of the Operating Partnership for the Year Ended December 31,
1996.................................................................................................... F-25
Notes to Unaudited Pro Forma Financial Statements......................................................... F-26
OTHER INFORMATION
Management's Discussion and Analysis of Financial Condition and Results of Operations..................... F-28
Selected Financial Data................................................................................... F-32
OTHER REAL ESTATE PARTNERSHIPS
FINANCIAL STATEMENTS
Report of Independent Accountants......................................................................... F-33
Combined Balance Sheets of the Other Real Estate Partnerships as of December 31, 1996 and 1995............ F-34
Combined Statements of Operations of the Other Real Estate Partnerships for the Years Ended December 31,
1996 and 1995 and for the Period July 1, 1994 to December 31, 1994...................................... F-35
Combined Statements of Changes in Partners' Capital of the Other Real Estate Partnerships for the Years
Ended December 31, 1996 and 1995 and for the Period July 1, 1994 to December 31, 1994................... F-36
Combined Statements of Cash Flows of the Other Real Estate Partnerships for the Years Ended December 31,
1996 and 1995 and for the Period July 1, 1994 to December 31, 1994...................................... F-37
Notes to Combined Financial Statements.................................................................... F-38
OTHER INFORMATION
Selected Financial Data................................................................................... F-45
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of First Industrial, L.P.
We have audited the financial statements and the financial statement
schedule of First Industrial, L.P. (the "Operating Partnership") and the
combined financial statements of the Contributing Businesses as listed on page
F-1 of this Prospectus. These financial statements and the financial statement
schedule are the responsibility of the Operating Partnership's and the
Contributing Businesses' (as defined in Note 2 hereof) management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Operating Partnership as
of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years ended December 31, 1996 and 1995 and for the period July 1,
1994 through December 31, 1994 and of the Contributing Businesses for the period
January 1, 1994 to June 30, 1994, in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedule referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 12, 1997
F-2
FIRST INDUSTRIAL, L.P.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
ASSETS
Assets:
Investment in Real Estate:
Land............................................................................. $ 55,425 $ 14,253
Buildings and Improvements....................................................... 291,942 81,384
Furniture, Fixtures and Equipment................................................ -- 362
Construction in Progress......................................................... 6,414 393
Less: Accumulated Depreciation................................................... (8,133) (4,852)
------------ ------------
Net Investment in Real Estate.................................................. 345,648 91,540
Investment in Other Real Estate Partnerships....................................... 258,411 241,918
Cash and Cash Equivalents.......................................................... 4,295 6,493
Restricted Cash.................................................................... -- 2,557
Tenant Accounts Receivable, Net.................................................... 1,021 533
Deferred Rent Receivable........................................................... 1,280 676
Interest Rate Protection Agreements, Net........................................... 1,723 664
Deferred Financing Costs, Net...................................................... 1,140 2,269
Prepaid Expenses and Other Assets, Net............................................. 8,604 9,410
------------ ------------
Total Assets................................................................... $ 622,122 $ 356,060
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable............................................................. $ 45,578 $ --
Construction Loans Payable......................................................... -- 4,873
Acquisition Facilities Payable..................................................... 4,400 48,235
Promissory Notes Payable........................................................... 9,919 --
Accounts Payable and Accrued Expenses.............................................. 8,770 5,735
Rents Received in Advance and Security Deposits.................................... 1,942 494
Distributions Payable.............................................................. 16,281 9,954
------------ ------------
Total Liabilities.............................................................. 86,890 69,291
------------ ------------
Commitments and Contingencies........................................................ -- --
Partners' Capital:
General Partner................................................................ 496,169 269,357
Limited Partners............................................................... 39,063 17,412
------------ ------------
Total Partners' Capital........................................................ 535,232 286,769
------------ ------------
Total Liabilities and Partners' Capital........................................ $ 622,122 $ 356,060
------------ ------------
------------ ------------
The accompanying notes are an integral part of the financial statements.
F-3
FIRST INDUSTRIAL, L.P.
STATEMENTS OF OPERATIONS
AND CONTRIBUTING BUSINESSES
COMBINED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
THE OPERATING PARTNERSHIP CONTRIBUTING
---------------------------------------- BUSINESSES
SIX MONTHS -------------
YEAR ENDED YEAR ENDED ENDED SIX MONTHS
DECEMBER 31, DECEMBER 31, DECEMBER 31, ENDED
1996 1995 1994 JUNE 30, 1994
------------ ------------ ------------ -------------
Revenues:
Rental Income........................................ $ 29,166 $ 22,094 $ 7,731 $ 18,041
Tenant Recoveries and Other Income................... 8,421 5,348 1,873 4,775
------------ ------------ ------------ -------------
Total Revenues................................... 37,587 27,442 9,604 22,816
------------ ------------ ------------ -------------
Expenses:
Real Estate Taxes.................................... 6,109 4,863 1,485 3,273
Repairs and Maintenance.............................. 1,071 848 213 1,225
Property Management.................................. 1,153 904 195 677
Utilities............................................ 1,047 235 82 570
Insurance............................................ 271 279 81 184
Other................................................ 284 349 64 107
General and Administrative........................... 4,014 3,792 1,047 795
Interest............................................. 4,685 6,581 807 9,868
Interest (affiliated)................................ -- -- -- 1,905
Amortization of Interest Rate Protection Agreements
and Deferred Financing Costs....................... 196 222 187 858
Depreciation and Other Amortization.................. 6,310 5,087 1,916 4,744
------------ ------------ ------------ -------------
Total Expenses................................... 25,140 23,160 6,077 24,206
------------ ------------ ------------ -------------
Income (Loss) Before Gain on Sales of Properties,
Management and Construction Loss, Equity in Income of
Other Real Estate Partnerships and Extraordinary
Item................................................. 12,447 4,282 3,527 (1,390)
Gain on Sales of Properties............................ 4,344 -- -- --
------------ ------------ ------------ -------------
Income (Loss) Before Management and Construction Loss,
Equity in Income of Other Real Estate Partnerships
and Extraordinary Item............................... 16,791 4,282 3,527 (1,390)
Management and Construction Loss....................... -- -- -- (81)
------------ ------------ ------------ -------------
Income (Loss) Before Equity in Income of Other Real
Estate Partnerships and Extraordinary Item........... 16,791 4,282 3,527 (1,471)
Equity in Income of Other Real Estate Partnerships..... 20,130 7,841 6,767 --
------------ ------------ ------------ -------------
Income (Loss) Before Extraordinary Item................ 36,921 12,123 10,294 (1,471)
Extraordinary Loss..................................... (2,273) -- -- (1,449)
------------ ------------ ------------ -------------
Net Income (Loss)...................................... $ 34,648 $ 12,123 $ 10,294 $ (2,920)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
The accompanying notes are an integral part of the financial statements.
F-4
FIRST INDUSTRIAL, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
AND CONTRIBUTING BUSINESSES
COMBINED STATEMENT OF CHANGES
IN NET DEFICIT
(DOLLARS IN THOUSANDS)
THE OPERATING CONTRIBUTING
PARTNERSHIP BUSINESSES
--------------------- ------------
GENERAL LIMITED NET
TOTAL PARTNER PARTNERS DEFICIT
---------- ---------- --------- ------------
Balance at December 31, 1993.................................... $ (37,548) $ 216 $ -- $ (37,764)
Contributions................................................. 343,501 324,705 -- 18,796
Distributions................................................. (29,011) -- -- (29,011)
Net Loss...................................................... (2,920) -- -- (2,920)
Acquisition and Contribution of Contributing Businesses'
Interests................................................... 18,112 (53,869) 21,082 50,899
---------- ---------- --------- ------------
Balance at June 30, 1994........................................ 292,134 271,052 21,082 --
---------- ---------- --------- ------------
Contributions................................................. 30,412 30,412 -- --
Distributions................................................. (19,296) (17,843) (1,453) --
Net Income.................................................... 10,294 9,519 775 --
---------- ---------- --------- ------------
Balance at December 31, 1994.................................... 313,544 293,140 20,404 --
---------- ---------- --------- ------------
Distributions................................................. (38,898) (36,003) (2,895) --
Unit Conversions.............................................. -- 1,005 (1,005) --
Net Income.................................................... 12,123 11,215 908 --
---------- ---------- --------- ------------
Balance at December 31, 1995.................................... 286,769 269,357 17,412 --
---------- ---------- --------- ------------
Contributions................................................. 268,133 244,269 23,864 --
Distributions................................................. (54,318) (50,418) (3,900) --
Unit Conversions.............................................. -- 943 (943) --
Net Income.................................................... 34,648 32,018 2,630 --
---------- ---------- --------- ------------
Balance at December 31, 1996.................................... $ 535,232 $ 496,169 $ 39,063 $ --
---------- ---------- --------- ------------
---------- ---------- --------- ------------
The accompanying notes are an integral part of the financial statements.
F-5
FIRST INDUSTRIAL, L.P.
STATEMENTS OF CASH FLOWS
AND CONTRIBUTING BUSINESSES
COMBINED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
THE OPERATING PARTNERSHIP CONTRIBUTING
----------------------------------------- BUSINESSES
SIX MONTHS -------------
YEAR ENDED YEAR ENDED ENDED SIX MONTHS
DECEMBER 31, DECEMBER 31, DECEMBER 31, ENDED
1996 1995 1994 JUNE 30, 1994
------------ ------------- ------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss).................................... $ 34,648 $ 12,123 $ 10,294 $ (2,920)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided by Operating Activities:
Depreciation....................................... 5,115 4,092 1,532 4,661
Amortization of Interest Rate Protection Agreements
and Deferred Financing Costs..................... 196 222 187 858
Other Amortization................................. 1,195 995 384 83
Equity in Income of Other Real Estate
Partnerships..................................... (20,130) (7,841) (6,767) --
Provision for Bad Debts............................ 35 158 -- --
Gain on Sales of Properties........................ (4,344) -- -- --
Extraordinary Items................................ 2,273 -- -- 1,449
(Increase) Decrease in Accounts Receivable and
Other Assets..................................... (965) (3,903) 1,223 (4,544)
Increase in Deferred Rent Receivable............... (1,179) (606) (457) (92)
Increase (Decrease) in Accounts Payable, Accrued
Expenses, Rents Received in Advance and Security
Deposits......................................... (498) 2,295 (16,695) 7,692
Increase in Organization Costs..................... (32) (115) -- (1,466)
(Increase) Decrease in Restricted Cash............. 2,557 (3,238) -- (810)
------------ ------------- ------------ -------------
Net Cash Provided by Operating Activities........ 18,871 4,182 (10,299) 4,911
------------ ------------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of and Additions to Investment in Real
Estate............................................. (221,282) (67,605) (62,449) (367,257)
Proceeds from Sale of Investment in Real Estate...... 14,972 -- -- --
(Increase) Decrease in Restricted Cash............... -- -- -- (7,500)
Contributions to Investment in Other Real Estate
Partnerships....................................... (25,473) (6,664) (4,051) --
Distributions from Investment in Other Real Estate
Partnerships....................................... 29,110 33,363 5,148 --
------------ ------------- ------------ -------------
Net Cash Used in Investing Activities............ (202,673) (40,906) (61,352) (374,757)
------------ ------------- ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions........................................ 244,269 -- 30,412 348,243
Distributions........................................ (47,991) (38,592) (9,648) (29,011)
Proceeds from Mortgage Loans Payable................. 36,750 -- -- 381,743
Repayments on Mortgage Loans Payable................. (589) -- -- (268,935)
Proceeds from Acquisition Facilities Payable......... 103,523 83,943 48,700 5,000
Repayments on Acquisition Facilities Payable......... (147,358) (2,958) -- --
Proceeds from Construction Loans Payable............. -- 4,873 -- --
Repayment of Construction Loans Payable.............. (4,873) -- -- --
Repayment of Notes Payable........................... -- -- -- (34,553)
Cost of Debt Issuance and Interest Rate Protection
Agreements......................................... (1,768) (4,084) (3,232) (28,335)
Prepayment Fee....................................... (359) -- -- --
------------ ------------- ------------ -------------
Net Cash Provided by Financing Activities........ 181,604 43,182 66,232 374,152
------------ ------------- ------------ -------------
Net Increase (Decrease) in Cash and Cash
Equivalents........................................ (2,198) 6,458 (5,419) 4,306
Cash and Cash Equivalents, Beginning of Period....... 6,493 35 5,454 2,812
------------ ------------- ------------ -------------
Cash and Cash Equivalents, End of Period............. $ 4,295 $ 6,493 $ 35 $ 7,118
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
The accompanying notes are an integral part of the financial statements.
F-6
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
1. ORGANIZATION AND FORMATION
First Industrial, L.P. (the "Operating Partnership") was organized as a
limited partnership in the state of Delaware on November 23, 1993. The sole
general partner is First Industrial Realty Trust, Inc. (the "Company") with an
approximate 92.4% ownership interest at December 31, 1996. The limited partners
owned approximately a 7.6% aggregate ownership interest at December 31, 1996.
The Company is a real estate investment trust (REIT) as defined in the Internal
Revenue Code. The Company's operations are conducted primarily through the
Operating Partnership. As of December 31, 1996, the Operating Partnership
directly owned 137 in-service properties, containing an aggregate of
approximately 12.7 million square feet (unaudited) of gross leasable area
("GLA"), as well as a 99% limited partnership interest (subject in one case as
described below to a preferred limited partnership interest) in First Industrial
Financing Partnership, L.P. (the "Financing Partnership"), First Industrial
Securities, L.P. (the "Securities Partnership"), First Industrial Mortgage
Partnership, L.P. (the "Mortgage Partnership"), First Industrial Pennsylvania
Partnership, L.P. (the "Pennsylvania Partnership"), First Industrial Harrisburg,
L.P. (the "Harrisburg Partnership"), First Industrial Indianapolis, L.P. (the
"Indianapolis Partnership") and First Industrial Development Services Group,
L.P. (together, the "Other Real Estate Partnerships"). On a combined basis, as
of December 31, 1996, the Other Real Estate Partnerships owned 242 in-service
properties containing an aggregate of approximately 20.0 million square feet
(unaudited) of GLA. Of the 242 properties owned by the Other Real Estate
Partnerships, 195 were owned by the Financing Partnership, 19 were owned by the
Securities Partnership, 23 were owned by the Mortgage Partnership, one was owned
by the Pennsylvania Partnership, three were owned by the Harrisburg Partnership
and one was owned by the Indianapolis Partnership.
The general partners of the Other Real Estate Partnerships are separate
corporations, each with a one percent general partnership interest. Each general
partner of the Other Real Estate Partnerships is a wholly owned subsidiary of
the Company. The general partner of the Securities Partnership, First Industrial
Securities Corporation, also owns a preferred limited partnership interest which
entitles it to receive a fixed quarterly distribution, and results in it being
allocated income in the same amount, equal to the fixed quarterly dividend the
Company pays on its 9.5% Series A Preferred Stock.
Profits, losses and distributions of the Operating Partnership are allocated
to the general partner and the limited partners in accordance with the
provisions contained within its restated and amended partnership agreement.
On June 30, 1994, the Company completed its initial public offering of
15,175,000 shares of $.01 par value common stock (the "Initial Offering") and,
in July 1994, issued an additional 1,400,000 shares pursuant to an
over-allotment option. The proceeds per share in the Initial Offering and the
over-allotment option was $23.50, resulting in gross offering proceeds of
approximately $389,512. Net of underwriters' discount and total offering
expenses, the Company received approximately $355,217 in proceeds from the
Initial Offering and the over-allotment option. The net proceeds received from
the Initial Offering and subsequent equity offerings (See Note 6) are reflected
in the Operating Partnership's financial statements as contributions. On June
30, 1994, the Company (through the Financing Partnership) borrowed $300,000 (the
"1994 Mortgage Loan") from an institutional lender. The net proceeds from the
Initial Offering and the 1994 Mortgage Loan were used primarily to acquire
properties, repay indebtedness and pay certain fees and expenses. The Company
and the Operating Partnership began operations on July 1, 1994.
F-7
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2. BASIS OF PRESENTATION
The accompanying financial statements as of December 31, 1996 and 1995 and
for the years ended December 31, 1996 and 1995 and for the six month period
ended December 31, 1994 present the ownership and operating results of the
properties owned directly by the Operating Partnership. Such financial
statements present the Operating Partnership's limited partnership interests in
each of the Other Real Estate Partnerships under the equity method of
accounting.
The combined statements of operations, changes in partners' capital and net
deficit and cash flows for the six months ended June 30, 1994 reflect the
operations, equity and deficit and cash flows of the properties and business
contributed by The Shidler Group and the properties and business contributed by
three other contributing businesses (together, the "Contributing Businesses") at
or prior to the consummation of the Initial Offering.
Purchase accounting has been applied when ownership interests in properties
were acquired for cash. The historical cost basis of properties has been carried
over when the Contributing Businesses ownership interests were exchanged for
units in the Operating Partnership (the "Units") and purchase accounting has
been used for all other properties that were acquired for Units.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In order to conform with generally accepted accounting principles,
management, in preparation of the Operating Partnership's financial statements,
is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities as
of December 31, 1996 and 1995, and the reported amounts of revenues and expenses
for the years ended December 31, 1996 and 1995 and the six months ended December
31, 1994 and June 30, 1994. Actual results could differ from those estimates.
REVENUE RECOGNITION:
Rental income is recognized on a straight-line method under which
contractual rent increases are recognized evenly over the lease term. Tenant
recovery income includes payments from tenants for taxes, insurance and other
property operating expenses and is recognized as revenues in the same period the
related expenses are incurred by the Operating Partnership.
The Operating Partnership provides an allowance for doubtful accounts
against the portion of tenant accounts receivable which is estimated to be
uncollectible. Accounts receivable in the consolidated balance sheets are shown
net of an allowance for doubtful accounts of $221 and $186 as of December 31,
1996 and December 31, 1995, respectively.
INVESTMENT IN REAL ESTATE AND DEPRECIATION:
Effective January 1, 1995, the Operating Partnership adopted Financial
Accounting Standards Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Real estate
assets are carried at the lower of depreciated cost or fair value as determined
by the Operating Partnership. The Operating Partnership reviews its properties
on a quarterly basis for impairment and provides a provision if impairments are
determined. First, to determine if impairment may exist, the Operating
Partnership reviews its properties and identifies those which have had either an
event
F-8
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of change or event of circumstances warranting further assessment of
recoverability. Then, the Operating Partnership estimates the fair value of
those properties on an individual basis by capitalizing the expected net
operating income and discounting the expected cash flows of the properties. Such
amounts are then compared to the property's depreciated cost to determine
whether an impairment exists.
Interest expense, real estate taxes and other directly related expenses
incurred during construction periods are capitalized and depreciated commencing
with the date placed in service, on the same basis as the related assets.
Depreciation expense is computed using the straight-line method based on the
following useful lives:
YEARS
-----------
Buildings and Improvements....................................................... 31.5 to 40
Land Improvements................................................................ 15
Furniture, Fixtures and Equipment................................................ 5 to 10
Construction expenditures for tenant improvements and leasing commissions
are capitalized and amortized over the terms of each specific lease. Maintenance
and repairs are charged to expense when incurred. Expenditures for improvements
are capitalized.
When assets are sold or retired, their costs and related accumulated
depreciation are removed from the accounts with the resulting gains or losses
reflected in net income or loss.
INVESTMENT IN OTHER REAL ESTATE PARTNERSHIPS:
Investment in Other Real Estate Partnerships represents the Operating
Partnership's limited partnership interests in the Other Real Estate
Partnerships. The Operating Partnership accounts for its Investment in Other
Real Estate Partnerships under the equity method of accounting. Under the equity
method of accounting, the Operating Partnership's share of earnings or losses of
the Other Real Estate Partnerships is reflected in income as earned and
contributions or distributions increase or decrease, respectively, the Operating
Partnership's Investment in Other Real Estate Partnerships as paid or received,
respectively.
CASH AND CASH EQUIVALENTS:
Cash and Cash Equivalents include all cash and liquid investments with an
initial maturity of three months or less. The carrying amount approximates fair
value due to the short maturity of these investments.
INCOME TAXES:
In accordance with partnership taxation, each of the partners are
responsible for reporting their shares of taxable income or loss.
The Operating Partnership is subject to certain state and local income,
excise and franchise taxes. The provision for such state and local taxes has
been reflected in general and administrative expense in the statement of
operations and has not been separately stated due to its insignificance.
F-9
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The Operating Partnership's financial instruments include short-term
investments, tenant accounts receivable, accounts payable, other accrued
expenses, construction loans payable, acquisition facilities payable and
promissory notes payable. The fair values of these financial instruments were
not materially different from their carrying or contract values. The Operating
Partnership's financial instruments also include mortgage loans for which the
fair value was not materially different from its carrying value. The
determination of the fair value of the mortgage loans was made using available
market information and appropriate valuation techniques. The Operating
Partnership's financial instruments also include interest rate protection
agreements as described in the next paragraph.
DERIVATIVE FINANCIAL INSTRUMENTS:
The Operating Partnership's interest rate protection agreements (together,
the "Agreements") are used to hedge the interest rate on the 1994 Mortgage Loan.
As such, receipts or payments resulting from the Agreements are recognized as
adjustments to equity in income of Other Real Estate Partnerships (specifically,
the Financing Partnership). The credit risks associated with the Agreements are
controlled through the evaluation and monitoring of the creditworthiness of the
counterparty. In the event that the counterparty fails to meet the terms of the
Agreements, the Operating Partnership's exposure is limited to the current value
of the interest rate differential, not the notional amount, and the Operating
Partnership's carrying balance of the Agreements on the balance sheet. The
Agreements have been executed with a creditworthy financial institution. As
such, the Operating Partnership considers the risk of nonperformance to be
remote. In the event that the Operating Partnership terminates the Agreements,
the Operating Partnership would recognize a gain (loss) from the disposition of
the Agreements equal to the amount of cash received or paid at termination less
the carrying balance of the Agreements on the Operating Partnership's balance
sheet.
At December 31, 1996, the fair market value of the Agreements was
approximately $3.8 million, which was greater than the $1.7 million net book
value by approximately $2.1 million. The fair market value was determined by a
third party evaluation and is based on estimated discounted future cash flows.
DEFERRED FINANCING COSTS:
Deferred financing costs include fees and costs incurred to obtain long-term
financing. These fees and costs are being amortized over the terms of the
respective loans. Accumulated amortization of deferred financing costs was $32
and $957 at December 31, 1996 and 1995, respectively. Unamortized deferred
financing fees are written-off when debt is retired before the maturity date
(see Note 12).
4. INVESTMENT IN OTHER REAL ESTATE PARTNERSHIPS
The Investment in Other Real Estate Partnerships reflects the Operating
Partnership's 99% limited partnership equity interest in the entities described
in Note 1 to these financial statements.
Summarized financial information as derived from the audited financial
statements of the Other Real Estate Partnerships is shown below.
F-10
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
4. INVESTMENT IN OTHER REAL ESTATE PARTNERSHIPS (CONTINUED)
Combined Balance Sheets:
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
ASSETS
Assets:
Investment in Real Estate, Net....................................... $ 613,685 $ 597,227
Other Assets......................................................... 48,602 45,938
------------ ------------
Total Assets..................................................... $ 662,287 $ 643,165
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable............................................... $ 346,504 $ 346,850
Other Liabilities.................................................... 13,326 10,714
------------ ------------
Total Liabilities................................................ 359,830 357,564
------------ ------------
Partners' Capital........................................................ 302,457 285,601
------------ ------------
Total Liabilities and Partners' Capital.......................... $ 662,287 $ 643,165
------------ ------------
------------ ------------
Combined Statements of Operations:
SIX MONTH
PERIOD
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------ ------------ ------------
Total Revenues............................................ $ 102,322 $ 79,032 $ 36,953
------------ ------------ ------------
Property Expenses......................................... 28,933 20,824 9,733
Interest Expense.......................................... 24,268 22,010 9,781
Amortization of Interest Rate Protection Agreements and
Deferred Financing Costs................................ 3,090 4,216 2,717
Depreciation and Other Amortization....................... 21,737 17,177 7,886
Disposition of Interest Rate Protection Agreement......... -- 6,410 --
------------ ------------ ------------
Net Income................................................ $ 24,294 $ 8,395 $ 6,836
------------ ------------ ------------
------------ ------------ ------------
5. MORTGAGE LOANS, ACQUISITION FACILITIES, CONSTRUCTION LOANS AND PROMISSORY
NOTES PAYABLE
MORTGAGE LOANS:
On March 20, 1996, the Operating Partnership entered into a $36,750 mortgage
loan (the "CIGNA Loan") that is collateralized by seven properties in
Indianapolis, Indiana and three properties in Cincinnati, Ohio. The CIGNA Loan
bears interest at a fixed interest rate of 7.5% and provides for monthly
principal and interest payments based on a 25-year amortization schedule. The
CIGNA Loan will mature on April 1, 2003. The outstanding mortgage loan balance
at December 31, 1996 was approximately $36,363. Interest payable related to the
CIGNA Loan was $0 at December 31, 1996.
F-11
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
5. MORTGAGE LOANS, ACQUISITION FACILITIES, CONSTRUCTION LOANS AND PROMISSORY
NOTES PAYABLE (CONTINUED)
On March 20, 1996, the Operating Partnership assumed a $6,424 mortgage loan
and a $2,993 mortgage loan (together, the "Assumed Loans") that are
collateralized by 13 properties in Indianapolis, Indiana and one property in
Indianapolis, Indiana, respectively. The Assumed Loans bear interest at a fixed
rate of 9.25% and provide for monthly principal and interest payments based on a
16.75-year amortization schedule. The Assumed Loans will mature on January 1,
2013. At December 31, 1996, the outstanding mortgage loan balances under the
$6,424 mortgage loan and $2,993 mortgage loan were approximately $6,286 and
$2,929, respectively. Interest payable related to the Assumed Loans was $0 at
December 31, 1996.
ACQUISITION FACILITIES:
On June 30, 1994, the Operating Partnership entered into a three-year,
$100,000 collateralized revolving credit facility (the "1994 Acquisition
Facility"). During the quarter ended June 30, 1995, the capacity of the 1994
Acquisition Facility was increased to $150,000. The Operating Partnership could
borrow under the facility to finance the acquisition of additional properties
and for other purposes, including to obtain additional working capital. The
Company had guaranteed repayment of the 1994 Acquisition Facility. Borrowings
under the 1994 Acquisition Facility bore interest at a floating rate equal to
LIBOR plus 2.0% or a "Corporate Base Rate" plus .5%, at the Operating
Partnership's election. Effective July 12, 1996, the lenders reduced the
interest rate to LIBOR plus 1.75%. Under the 1994 Acquisition Facility, LIBOR
contracts were entered into by the Operating Partnership as draws were made.
Borrowings under the 1994 Acquisition Facility at December 31, 1995 were
$36,941. Interest payable related to the 1994 Acquisition Facility was $488 at
December 31, 1995. In December 1996, the Operating Partnership terminated the
1994 Acquisition Facility (see Note 12) and entered into a $200 million
unsecured revolving credit facility (the "1996 Unsecured Acquisition Facility")
which initially bears interest at LIBOR plus 1.10% or a "Corporate Base Rate"
plus .25% and provides for interest only payments until the maturity date. At
December 31, 1996, borrowings under the 1996 Acquisition Facility bore interest
at a weighted average interest rate of 8.25%. The borrowings under the 1996
Unsecured Acquisition Facility were converted to an interest rate of 6.6% on
January 7, 1997. The Operating Partnership may borrow under the facility to
finance the acquisition of additional properties and for other purposes,
including to obtain additional working capital. The 1996 Unsecured Acquisition
Facility matures in April 2000. Borrowings under the 1996 Unsecured Acquisition
Facility at December 31, 1996 were $4,400. Interest payable related to the 1996
Unsecured Acquisition Facility was $3 at December 31, 1996. The 1996 Unsecured
Acquisition Facility contains certain financial covenants relating to debt
service coverage, market value net worth, distribution payout ratio and total
funded indebtedness.
In December 1995, the Operating Partnership entered into a $24,219
collateralized revolving credit facility (the "1995 Acquisition Facility"). The
1995 Acquisition Facility was paid off in full and retired in February 1996 with
a portion of the proceeds of the February 1996 Equity Offering (hereinafter
defined). The 1995 Acquisition Facility was collateralized by six properties and
bore interest at a floating rate of LIBOR plus 2.45%. As of December 31, 1995,
borrowings under the 1995 Acquisition Facility were $11,294 and bore interest at
a rate of 8.3%. Interest payable related to the 1995 Acquisition Facility was
$27 at December 31, 1995. The Operating Partnership terminated the 1995
Acquisition Facility in February 1996 (See Note 12).
F-12
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
5. MORTGAGE LOANS, ACQUISITION FACILITIES, CONSTRUCTION LOANS AND PROMISSORY
NOTES PAYABLE (CONTINUED)
In May 1996, the Operating Partnership entered into a $10,000 collateralized
revolving credit facility (the "1996 Credit Line"). The 1996 Credit Line was
collateralized by three properties. The Company had guaranteed repayment of the
1996 Credit Line. Borrowings under the 1996 Credit Line bore interest at a
floating rate from LIBOR plus 2.45% to LIBOR plus 2.75%, depending on the term
of the interest rate option. The 1996 Credit Line would have matured on December
14, 1998. The Operating Partnership terminated the 1996 Credit Line in November
1996 (See Note 12).
In September 1996, the Operating Partnership entered into a $40,000
revolving credit facility (the "1996 Acquisition Facility"). The Operating
Partnership could have borrowed under the facility to finance the acquisition of
additional properties and for other purposes, including to obtain additional
working capital. The Company had guaranteed the repayment of the 1996
Acquisition Facility. The 1996 Acquisition Facility would have matured on March
31, 1997. Borrowings under the 1996 Acquisition Facility bore interest at a
floating rate equal to LIBOR plus 2.0% or a "Corporate Base Rate" plus .5%, at
the Operating Partnership's election. The Operating Partnership terminated the
1996 Acquisition Facility in November 1996 (See Note 12).
CONSTRUCTION LOANS:
In 1995, the Operating Partnership entered into two construction loans
(together, the "Construction Loans") with commercial banks providing total
funding commitments of $5,860. Both construction loans were paid off in full and
retired in February 1996 with a portion of the proceeds of the February 1996
Equity Offering (hereinafter defined) (See Note 12). At December 31, 1995, the
Operating Partnership had borrowed $4,873 under such construction loans which
were collateralized by two properties held by the Operating Partnership. Such
borrowings bore interest at LIBOR plus 2.0% and provided for interest only
payments.
PROMISSORY NOTES PAYABLE:
On September 30, 1996, the Operating Partnership entered into a $6,489
promissory note and a $3,430 promissory note (together, the "Promissory Notes")
as partial consideration for the purchase of two properties in Columbus, Ohio.
The $6,489 promissory note was collateralized by a letter of credit pledged by
the Operating Partnership in the amount of $2,715. The $3,430 promissory note
was collateralized by a letter of credit pledged by the Operating Partnership in
the amount of $967. Both promissory notes bore interest at 8% and matured on
January 6, 1997, at which time they were repaid and the letters of credit were
released. Interest payable related to both promissory notes was $68 at December
31, 1996.
F-13
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
5. MORTGAGE LOANS, ACQUISITION FACILITIES, CONSTRUCTION LOANS AND PROMISSORY
NOTES PAYABLE (CONTINUED)
The following is a schedule of mortgage principal payments and maturities of
the mortgage loans, acquisition facilities and promissory notes for the next
five years ending December 31, and thereafter:
AMOUNT
---------
1997............................................................................... $ 10,663
1998............................................................................... 877
1999............................................................................... 950
2000............................................................................... 5,430
2001............................................................................... 1,117
Thereafter....................................................................... 40,860
---------
Total $ 59,897
---------
---------
6. PARTNERS' CAPITAL
On February 2, 1996, the Company issued 5,175,000 shares of $.01 par value
common stock (the "February 1996 Equity Offering"). The net proceeds of $106,343
received from the February 1996 Equity Offering are reflected in the Operating
Parnership's financial statements as contributions.
On October 25, 1996, the Company issued 5,750,000 shares of $.01 par value
common stock (the "October 1996 Equity Offering"). The net proceeds of $137,697
received from the October 1996 Equity Offering are reflected in the Operating
Parnership's financial statements as contributions.
7. SALES OF REAL ESTATE
In 1996, the Operating Partnership sold a property located in suburban
Detroit, Michigan, three properties located in Huntsville, Alabama, one property
located in Grand Rapids, Michigan, and one property located in Atlanta, Georgia.
Gross proceeds from these sales were approximately $15.0 million. The gain on
sales was approximately $4.3 million.
8. RELATED PARTY TRANSACTIONS
The Operating Partnership leases office space in Chicago, Illinois from an
affiliate of The Shidler Group at an aggregate annual cost of approximately
$131.
On December 5, 1994, the Operating Partnership purchased for approximately
$.9 million, five acres of land from a partnership in which an officer and
director of the Company owns approximately a 2.5% general partner interest.
The Operating Partnership often obtains title insurance coverage for its
properties from an entity which an independent director of the Company became
the President, Chief Executive Officer and a director of in 1996.
F-14
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
9. EMPLOYEE BENEFIT PLANS
In September 1994, the Board of Directors approved and the Company adopted a
401(k)/Profit Sharing Plan on behalf of the employees of the Operating
Partnership. Under the Company's 401(k)/Profit Sharing Plan, all eligible
employees may participate by making voluntary contributions. The Operating
Partnership may make, but is not required to make, matching contributions. For
the years ended December 31, 1996 and 1995, the Operating Partnership did not
make any matching contributions. In March 1996, the Board of Directors approved
and the Company adopted a Deferred Income Plan (the "Plan") on behalf of the
employees of the Operating Partnership. Under the Plan, 138,500 unit awards were
granted, providing the recipients with deferred income benefits which vest over
three years in quarterly installments. The expense related to these deferred
income benefits is included in general and administrative expenses in the
statements of operations. In the first quarter of 1997, approximately $141 was
paid to the recipients under the Plan.
10. FUTURE RENTAL REVENUES
The Operating Partnership's properties are leased to tenants under net and
semi-net operating leases. Minimum lease payments receivable, excluding tenant
reimbursements of expenses, under noncancelable operating leases in effect as of
December 31, 1996 are approximately as follows:
1997.............................................................. $ 36,864
1998.............................................................. 31,207
1999.............................................................. 25,706
2000.............................................................. 17,384
2001.............................................................. 13,020
Thereafter........................................................ 35,684
---------
Total $ 159,865
---------
---------
F-15
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
11. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information:
CONTRIBUTING
THE OPERATING PARTNERSHIP BUSINESSES
---------------------------------------- ------------
SIX MONTHS SIX MONTHS
YEAR ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30,
1996 1995 1994 1994
------------ ------------ ------------ ------------
Interest paid, net of capitalized interest............ $ 5,069 $ 6,255 $ 678 $ 13,697
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Interest capitalized.................................. $ 501 $ 266 $ 20 $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Supplemental schedule of noncash investing and financing
activities:
Distribution payable on Units......................... $ 16,281 $ 9,954 $ 9,648 $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Sale of interest rate protection agreements........... $ -- $ 4,380 $ -- $ --
Purchase of interest rate protection agreements....... -- (4,380) -- --
------------ ------------ ------------ ------------
$ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
In conjunction with the property acquisitions, the
following assets and liabilities were assumed:
Purchase of real estate............................... $ 252,991 $ 63,855 $ 66,230 $ 372,642
Mortgage loans........................................ (9,417) -- -- --
Promissory notes...................................... (9,919) -- -- --
Units................................................. (23,863) -- -- --
Accounts receivable................................... -- 153 80 2,453
Accounts payable and accrued expenses................. (2,626) (1,115) (991) (4,642)
Acquisitions of interests in properties............... -- -- -- (4,281)
------------ ------------ ------------ ------------
Acquisition of real estate............................ $ 207,166 $ 62,893 $ 65,319 $ 366,172
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
In conjunction with the capitalization of the Other Real Estate Partnerships
in 1995, the following assets and liabilities were contributed:
Land............................................................... $ 20,151
Building and improvements.......................................... 115,192
Accumulated depreciation........................................... (3,446)
Restricted cash.................................................... 802
Deferred rent receivable........................................... 387
Deferred financing costs........................................... 854
Prepaid expenses and other assets.................................. 579
Acquisition facilities payable..................................... (81,450)
Accounts payable and accrued expenses.............................. (513)
---------
Investment in affiliates....................................... $ 52,556
---------
---------
F-16
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
12. EXTRAORDINARY ITEMS
Upon consummation of the Initial Offering, certain Contributing Businesses'
loans were paid off and the related unamortized deferred financing fees totaling
$1,449 were written off. The write-off is shown as an extraordinary loss in the
combined statement of operations of the Contributing Businesses for the six
months ended June 30, 1994.
In 1996, the Operating Partnership terminated the 1994 Acquisition Facility,
the 1995 Acquisition Facility, the 1996 Acquisition Facility, the Construction
Loans and the 1996 Credit Line before their contractual maturity date. The
resulting write-off of unamortized deferred financing costs and prepayment fee
incurred to retire the above mentioned loans is shown as an extraordinary loss
in the statement of operations for the year ended December 31, 1996.
13. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Operating Partnership is involved in
legal actions arising from the ownership of its properties. In management's
opinion, the liabilities, if any, that may ultimately result from such legal
actions are not expected to have a materially adverse effect on the financial
position, operations or liquidity of the Operating Partnership.
Nine properties have leases granting the tenants options to purchase the
property. Such options are exercisable at various times and at appraised fair
market value or at a fixed purchase price generally in excess of the Operating
Partnership's purchase price. The Operating Partnership has not received notice
for the exercise of any tenant purchase options.
The Operating Partnership has committed to the construction of two light
industrial and five bulk warehouse properties totaling approximately 1.0 million
square feet (unaudited). The estimated total construction costs are
approximately $27.4 million (unaudited). The Operating Partnership is not acting
as the general contractor for these construction projects.
The Operating Partnership is the guarantor of the 1994 Mortgage Loan.
14. SUBSEQUENT EVENTS (UNAUDITED)
On January 9, 1997, the Operating Partnership purchased a 482,400 square
foot bulk warehouse located in Indianapolis, Indiana for approximately $7.1
million.
On January 31, 1997, the Operating Partnership purchased 10 bulk warehouses
and 29 light industrial properties located in Long Island, New York and northern
New Jersey totaling 2,733,414 square feet for approximately $138.8 million.
On February 20, 1997, the Operating Partnership purchased a 58,746 square
foot light industrial property in Dayton, Ohio. The purchase price for the
property was approximately $1.5 million.
On March 4, 1997, the Operating Partnership declared a distribution of $.505
per unit payable on April 21, 1997 to unitholders of record on March 31, 1997.
On March 21, 1997, the Operating Partnership purchased a 179,400 square foot
bulk warehouse in Taylor, Michigan for approximately $5.1 million.
On March 28, 1997, the Operating Partnership purchased a 84,956 square foot
light industrial property in Buffalo Grove, Illinois for approximately $4.1
million.
F-17
FIRST INDUSTRIAL, L.P.
NOTES TO FINANCIAL STATEMENTS
AND CONTRIBUTING BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
14. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
On March 31, 1997, the Operating Partnership purchased a 112,082 square foot
light industrial property in New Brighton, Minnesota for approximately $3.2
million.
On March 31, 1997, the Operating Partnership purchased a 79,675 square foot
light industrial property in Brooklyn Park, Minnesota for approximately $4.4
million.
On April 3, 1997, the Operating Partnership purchased a 49,190 square foot
light industrial property in Eden Prairie, Minnesota for approximately $2.1
million.
On April 4, 1997, the Operating Partnership purchased a 243,000 square foot
bulk warehouse property in Columbus, Ohio for approximately $5.4 million.
On April 4, 1997, the Operating Partnership borrowed $309.8 million from an
institutional lender (the "Defeasance Loan"). The Defeasance Loan is unsecured,
bears interest at LIBOR plus 1% and matures July 1, 1999, unless extended by the
Operating Partnership, subject to certain conditions, for an additional two-year
period, thereby maturing July 1, 2001. The gross proceeds from the Defeasance
Loan were contributed to the Financing Partnership, which used the gross
proceeds to defease (as defined by the terms of the 1994 Mortgage Loan
agreement) the 1994 Mortgage Loan.
15. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following Pro Forma Condensed Statements of Operations for the years
ended December 31, 1996 and 1995 are presented as if the acquisition of 128
properties between January 1, 1995 and December 31, 1996 and the February 1996
Equity Offering and the October 1996 Equity Offering had occurred at January 1,
1995, and therefore include pro forma information. The pro forma information is
based upon historical information and does not purport to present what actual
results would have been had such transactions, in fact, occurred at January 1,
1995, or to project results for any future period.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995
------------ ------------
Total Revenues....................................................................... $ 52,283 $ 57,918
Property Expenses.................................................................... 13,914 16,723
General and Administrative Expense................................................... 4,014 3,792
Interest Expense..................................................................... 4,991 7,811
Depreciation and Amortization........................................................ 8,695 10,059
------------ ------------
Income Before Gain on Sales of Properties, Equity in Income of Other Real Estate
Partnerships and Extraordinary loss................................................. 20,669 19,533
Gain on Sales of Properties.......................................................... 4,344 --
------------ ------------
Income Before Equity in Income of Other Real Estate Partnerships..................... 25,013 19,533
Equity in Income of Other Real Estate Partnerships................................... 20,130 7,841
------------ ------------
Income Before Extraordinary Loss..................................................... $ 45,143 $ 27,374
------------ ------------
------------ ------------
F-18
FIRST INDUSTRIAL, L.P.
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
GROSS
AMOUNT
CARRIED
AT CLOSE
COSTS OF PERIOD
(F) CAPITALIZED 12/31/96
INITIAL COST SUBSEQUENT TO ---------
LOCATION (E) ---------------------- ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION LAND
- ---------------------------- ---------------------------- ------------- --------- ----------- ------------- ---------
ATLANTA
700 Westlake Parkway Atlanta, GA $ 213 $ 1,551 $ 509 $ 223
800 Westlake Parkway Atlanta, GA 450 2,645 350 479
900 Westlake Parkway Atlanta, GA 266 0 1 267
4050 Southmeadow Parkway Atlanta, GA 401 2,813 157 425
4051 Southmeadow Parkway Atlanta, GA 697 3,486 686 726
4071 Southmeadow Parkway Atlanta, GA 750 4,460 714 828
4081 Southmeadow Parkway Atlanta, GA 1,012 5,450 611 1,157
1875 Rockdale Industrial Atlanta, GA
Blvd. 386 2,264 30 386
1605 Indian Brook Way Gwinnett, GA 1,008 3,800 1,180 1,012
3312 N. Berkeley Lake Road Duluth, GA 2,937 16,644 777 3,045
5015 Oakbrook Parkway Atlanta, GA 1,183 0 3,271 1,247
]5570 Tulane Drive (c) Atlanta, GA 527 2,984 129 546
3495 Bankhead Highway (c) Atlanta, GA 983 5,568 148 1,003
755 Selig Drive Atlanta, GA 143 808 88 155
CHICAGO
305-311 Era Drive Northbrook, IL 200 1,154 133 205
700-714 Landwehr Road Northbrook, IL 357 2,052 101 357
4330 South Racine Avenue Chicago, IL 448 1,893 239 468
13040 S. Crawford Ave. Alsip, IL 1,073 6,193 24 1,073
12241 Melrose Street Franklin Park, IL 332 1,931 1,066 469
7200 S Leamington Bedford Park, IL 798 4,595 159 818
12301-12325 S Laramie Ave Alsip, IL 650 3,692 424 659
6300 W Howard Street Niles, IL 743 4,208 343 782
301 Hintz Wheeling, IL 160 905 71 167
301 Alice Wheeling, IL 218 1,236 58 225
410 W 169th Street South Holland, IL 462 2,618 124 476
CINCINNATI
9900-9970 Princeton Cincinnati, OH (a) 545 3,088 616 566
2940 Highland Avenue Cincinnati, OH (a) 1,717 9,730 415 1,770
4700-4750 Creek Road Cincinnati, OH (a) 1,080 6,118 267 1,109
4860 Duff Drive Cincinnati, OH 67 378 8 68
4866 Duff Drive Cincinnati, OH 67 379 7 68
4884 Duff Drive Cincinnati, OH 104 591 13 106
4890 Duff Drive Cincinnati, OH 104 592 12 106
9636-9643 Interocean Drive Cincinnati, OH 123 695 14 125
ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
BUILDING ADDRESS IMPROVEMENTS TOTAL 12/31/96 RENOVATED LIVES (YEARS)
- ---------------------------- ------------- --------- ------------- ----------- -----------------
ATLANTA
700 Westlake Parkway $ 2,050 $ 2,273 $ 165 1990 (g)
800 Westlake Parkway 2,966 3,445 204 1991 (g)
900 Westlake Parkway 0 267 0
4050 Southmeadow Parkway 2,946 3,371 203 1991 (g)
4051 Southmeadow Parkway 4,143 4,869 295 1989 (g)
4071 Southmeadow Parkway 5,096 5,924 351 1991 (g)
4081 Southmeadow Parkway 5,916 7,073 394 1989 (g)
1875 Rockdale Industrial
Blvd. 2,294 2,680 142 1966 (g)
1605 Indian Brook Way 4,976 5,988 138 1995 (g)
3312 N. Berkeley Lake Road 17,313 20,358 395 1969 (g)
5015 Oakbrook Parkway 3,207 4,454 0 (i)
]5570 Tulane Drive (c) 3,094 3,640 6 1996 (g)
3495 Bankhead Highway (c) 5,696 6,699 12 1986 (g)
755 Selig Drive 884 1,039 0 (i)
CHICAGO
305-311 Era Drive 1,282 1,487 83 1978 (g)
700-714 Landwehr Road 2,153 2,510 139 1978 (g)
4330 South Racine Avenue 2,112 2,580 1,135 1978 (g)
13040 S. Crawford Ave. 6,217 7,290 362 1976 (g)
12241 Melrose Street 2,860 3,329 175 1969 (g)
7200 S Leamington 4,734 5,552 128 1950 (g)
12301-12325 S Laramie Ave 4,107 4,766 105 1975 (g)
6300 W Howard Street 4,512 5,294 110 1956/1964 (g)
301 Hintz 969 1,136 24 1960 (g)
301 Alice 1,287 1,512 32 1965 (g)
410 W 169th Street 2,728 3,204 56 1974 (g)
CINCINNATI
9900-9970 Princeton 3,683 4,249 70 1970 (g)
2940 Highland Avenue 10,092 11,862 209 1969/1974 (g)
4700-4750 Creek Road 6,356 7,465 132 1960 (g)
4860 Duff Drive 385 453 1 1979 (g)
4866 Duff Drive 385 453 1 1979 (g)
4884 Duff Drive 602 708 1 1979 (g)
4890 Duff Drive 602 708 1 1979 (g)
9636-9643 Interocean Drive 707 832 1 1983 (g)
F-19
FIRST INDUSTRIAL, L.P.
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
GROSS
AMOUNT
CARRIED
AT CLOSE
COSTS OF PERIOD
(F) CAPITALIZED 12/31/96
INITIAL COST SUBSEQUENT TO ---------
LOCATION (E) ---------------------- ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION LAND
- ---------------------------- ---------------------------- ------------- --------- ----------- ------------- ---------
CLEVELAND
6675 Parkland Blvd Cleveland, OH $ 548 $ 3,103 $ 154 $ 569
COLUMBUS
6911 Americana Parkway Columbus, OH 314 1,777 74 321
3800 Lockbourne Industrial Columbus, OH
Parkway 1,133 6,421 165 1,153
3800 Groveport Road Columbus, OH 2,145 12,154 173 2,163
DAYTON
6094-6104 Executive Blvd Dayton, OH 181 1,025 66 186
6202-6220 Executive Blvd Dayton, OH 268 1,521 86 275
6268-6294 Executive Blvd Dayton, OH 255 1,444 85 261
5749-5753 Executive Blvd Dayton, OH 50 282 37 53
6230-6266 Executive Blvd Dayton, OH 271 1,534 72 279
DETROIT
21477 Bridge Street Southfield, MI 244 1,386 214 253
46750 Port Street Plymouth, MI 360 33 1,072 361
32450 N Avis Drive Madison Heights, MI 281 1,590 50 286
32200 N Avis Drive Madison Heights, MI 408 2,311 39 411
32440-32442 Industrial Drive Madison Heights, MI 120 679 81 123
32450 Industrial Drive Madison Heights, MI 65 369 18 66
11813 Hubbard Livonia, MI 177 1,001 34 180
11844 Hubbard Livonia, MI 189 1,069 61 191
11866 Hubbard Livonia, MI 189 1,073 24 191
12050-12300 Hubbard (c) Livonia, MI 425 2,410 42 428
12707 Eckles Road Plymouth Township, MI 255 1,445 106 267
9300-9328 Harrison Rd Romulus, MI 147 834 50 154
9330-9358 Harrison Rd Romulus, MI 81 456 29 84
28420-28448 Highland Rd Romulus, MI 143 809 48 149
28450-28478 Highland Rd Romulus, MI 81 461 28 85
28421-28449 Highland Rd Romulus, MI 109 617 37 114
28451-28479 Highland Rd Romulus, MI 107 608 36 112
28825-28909 Highland Rd Romulus, MI 70 395 24 73
28933-29017 Highland Rd Romulus, MI 112 634 38 117
28824-28908 Highland Rd Romulus, MI 134 760 43 140
28932-29016 Highland Rd Romulus, MI 123 694 40 128
9710-9734 Harrison Rd Romulus, MI 125 706 41 130
9740-9772 Harrison Rd Romulus, MI 132 749 43 138
9840-9868 Harrison Rd Romulus, MI 144 815 46 150
9800-9824 Harrison Rd Romulus, MI 117 664 40 123
29265-29285 Airport Dr Romulus, MI 140 794 46 147
29185-29225 Airport Dr Romulus, MI 140 792 46 146
29149-29165 Airport Dr Romulus, MI 216 1,225 70 226
29101-29115 Airport Dr Romulus, MI 130 738 43 136
29031-29045 Airport Dr Romulus, MI 124 704 41 130
29050-29062 Airport Dr Romulus, MI 127 718 42 133
29120-29134 Airport Dr Romulus, MI 161 912 52 168
29200-29214 Airport Dr Romulus, MI 170 963 55 178
9301-9339 Middlebelt Rd Romulus, MI 124 703 41 130
38200 Plymouth Livonia, MI 2,700 0 2,617 2,753
ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
BUILDING ADDRESS IMPROVEMENTS TOTAL 12/31/96 RENOVATED LIVES (YEARS)
- ---------------------------- ------------- --------- ------------- ----------- -----------------
CLEVELAND
6675 Parkland Blvd $ 3,236 $ 3,805 $ 20 1991 (g)
COLUMBUS
6911 Americana Parkway 1,844 2,165 38 1980 (g)
3800 Lockbourne Industrial
Parkway 6,566 7,719 54 1986 (g)
3800 Groveport Road 12,309 14,472 102 1986 (g)
DAYTON
6094-6104 Executive Blvd 1,086 1,272 16 1975 (g)
6202-6220 Executive Blvd 1,600 1,875 23 1976 (g)
6268-6294 Executive Blvd 1,523 1,784 22 1989 (g)
5749-5753 Executive Blvd 316 369 4 1975 (g)
6230-6266 Executive Blvd 1,598 1,877 13 1979 (g)
DETROIT
21477 Bridge Street 1,591 1,844 66 1986 (g)
46750 Port Street 1,104 1,465 1 1996 (g)
32450 N Avis Drive 1,635 1,921 37 1974 (g)
32200 N Avis Drive 2,347 2,758 53 1973 (g)
32440-32442 Industrial Drive 757 880 19 1979 (g)
32450 Industrial Drive 386 452 9 1979 (g)
11813 Hubbard 1,032 1,212 23 1979 (g)
11844 Hubbard 1,128 1,319 25 1979 (g)
11866 Hubbard 1,095 1,286 25 1979 (g)
12050-12300 Hubbard (c) 2,449 2,877 56 1981 (g)
12707 Eckles Road 1,539 1,806 16 1990 (g)
9300-9328 Harrison Rd 877 1,031 4 1978 (g)
9330-9358 Harrison Rd 482 566 2 1978 (g)
28420-28448 Highland Rd 851 1,000 4 1979 (g)
28450-28478 Highland Rd 485 570 2 1979 (g)
28421-28449 Highland Rd 649 763 3 1980 (g)
28451-28479 Highland Rd 639 751 3 1980 (g)
28825-28909 Highland Rd 416 489 2 1981 (g)
28933-29017 Highland Rd 667 784 3 1982 (g)
28824-28908 Highland Rd 797 937 3 1982 (g)
28932-29016 Highland Rd 729 857 3 1982 (g)
9710-9734 Harrison Rd 742 872 3 1987 (g)
9740-9772 Harrison Rd 786 924 3 1987 (g)
9840-9868 Harrison Rd 855 1,005 4 1987 (g)
9800-9824 Harrison Rd 698 821 3 1987 (g)
29265-29285 Airport Dr 833 980 3 1983 (g)
29185-29225 Airport Dr 832 978 3 1983 (g)
29149-29165 Airport Dr 1,285 1,511 5 1984 (g)
29101-29115 Airport Dr 775 911 3 1985 (g)
29031-29045 Airport Dr 739 869 3 1985 (g)
29050-29062 Airport Dr 754 887 3 1986 (g)
29120-29134 Airport Dr 957 1,125 4 1986 (g)
29200-29214 Airport Dr 1,010 1,188 4 1985 (g)
9301-9339 Middlebelt Rd 738 868 3 1983 (g)
38200 Plymouth 2,564 5,317 0
F-20
FIRST INDUSTRIAL, L.P.
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
GROSS
AMOUNT
CARRIED
AT CLOSE
COSTS OF PERIOD
(F) CAPITALIZED 12/31/96
INITIAL COST SUBSEQUENT TO ---------
LOCATION (E) ---------------------- ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION LAND
- ---------------------------- ---------------------------- ------------- --------- ----------- ------------- ---------
INDIANAPOLIS
1445 Brookville Way Indianpolis, IN (a) $ 459 $ 2,603 $ 242 $ 475
1440 Brookville Way Indianpolis, IN (a) 665 3,770 219 684
1240 Brookville Way Indianpolis, IN (a) 247 1,402 128 258
1220 Brookville Way Indianpolis, IN (a) 223 40 30 226
1345 Brookville Way Indianpolis, IN (b) 586 3,321 239 601
1350 Brookville Way Indianpolis, IN (a) 205 1,161 77 211
1315 Sadlier Circle E Dr Indianpolis, IN (b) 57 322 39 61
1341 Sadlier Circle E Dr Indianpolis, IN (b) 131 743 50 136
1322-1438 Sadlier Circle E Indianpolis, IN
Dr (b) 145 822 75 152
1327-1441 Sadlier Circle E Indianpolis, IN
Dr (b) 218 1,234 88 225
1304 Sadlier Circle E Dr Indianpolis, IN (b) 71 405 46 75
1402 Sadlier Circle E Dr Indianpolis, IN (b) 165 934 66 170
1504 Sadlier Circle E Dr Indianpolis, IN (b) 219 1,238 70 225
1311 Sadlier Circle E Dr Indianpolis, IN (b) 54 304 60 57
1365 Sadlier Circle E Dr Indianpolis, IN (b) 121 688 49 126
1352-1354 Sadlier Circle E Indianpolis, IN
Dr (b) 178 1,008 90 188
1338 Sadlier Circle E Dr Indianpolis, IN (b) 81 460 48 85
1327 Sadlier Circle E Dr Indianpolis, IN (b) 52 295 31 56
1428 Sadlier Circle E Dr Indianpolis, IN (b) 21 117 23 23
1230 Brookville Way Indianpolis, IN (a) 103 586 40 109
6951 E 30th St Indianpolis, IN 256 1,449 91 265
6701 E 30th St Indianpolis, IN 78 443 40 82
6737 E 30th St Indianpolis, IN 385 2,181 122 398
6555 E 30th St Indianpolis, IN 840 4,760 129 855
2432-2436 Shadeland Indianpolis, IN 212 1,199 167 229
8402-8440 E 33rd St Indianpolis, IN 222 1,260 35 227
8520-8630 E 33rd St Indianpolis, IN 326 1,848 50 333
8710-8768 E 33rd St Indianpolis, IN 175 993 30 184
3316-3346 N. Pagosa Court Indianpolis, IN 325 1,842 50 332
3331 Raton Court Indianpolis, IN 138 802 22 141
MILWAUKEE
6523 N. Sydney Place Milwaukee, WI 172 976 140 176
8800 W Bradley Milwaukee, WI 375 2,125 130 388
1435 North 113th St Wauwatosa, WI 300 1,699 79 309
MINNEAPOLIS
6701 Parkway Circle Brooklyn Center, MN 350 2,131 343 377
6601 Shingle Creek Parkway Brooklyn Center, MN 411 2,813 484 502
10120 W 76th Street Eden Prairie, MN 315 1,804 85 315
7615 Golden Triangle Eden Prairie, MN 268 1,532 255 268
7625 Golden Triangle Eden Prairie, MN 415 2,375 133 415
2605 Fernbrook Lane North Plymouth, MN 443 2,533 263 445
12155 Nicollet Ave. Burnsville, MN 286 0 1,673 287
73rd Avenue North Brooklyn Park, MN 504 2,856 73 512
1905 W Country Road C Roseville, MN 402 2,278 64 409
2730 Arthur Street Roseville, MN 824 4,671 76 832
10205 51st Avenue North Plymouth, MN 180 1,020 68 187
4100 Peavey Road Chaska, MN 399 2,261 124 415
11300 Hamshire Ave South Bloomington, MN 527 2,985 125 541
375 Rivertown Drive Woodbury, MN 1,083 6,135 266 1,119
5205 Highway 169 Plymouth, MN 446 2,525 331 473
6451-6595 Citywest Parkway Eden Prairie, MN 525 2,975 110 538
7100-7198 Shady Oak Rd (d) Eden Prairie, MN 1,118 6,333 146 1,135
7500-7546 Washington Square Eden Prairie, MN 229 1,300 28 233
ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
BUILDING ADDRESS IMPROVEMENTS TOTAL 12/31/96 RENOVATED LIVES (YEARS)
- ---------------------------- ------------- --------- ------------- ----------- -----------------
INDIANAPOLIS
1445 Brookville Way $ 2,829 $ 3,304 $ 61 1989 (g)
1440 Brookville Way 3,970 4,654 81 1990 (g)
1240 Brookville Way 1,519 1,777 32 1990 (g)
1220 Brookville Way 67 293 1 1990 (g)
1345 Brookville Way 3,545 4,146 74 1992 (g)
1350 Brookville Way 1,232 1,443 25 1994 (g)
1315 Sadlier Circle E Dr 357 418 7 1970/1992 (g)
1341 Sadlier Circle E Dr 788 924 16 1971/1992 (g)
1322-1438 Sadlier Circle E
Dr 890 1,042 18 1971/1992 (g)
1327-1441 Sadlier Circle E
Dr 1,315 1,540 28 1992 (g)
1304 Sadlier Circle E Dr 447 522 9 1971/1992 (g)
1402 Sadlier Circle E Dr 995 1,165 20 1970/1992 (g)
1504 Sadlier Circle E Dr 1,302 1,527 27 1971/1992 (g)
1311 Sadlier Circle E Dr 361 418 8 1971/1992 (g)
1365 Sadlier Circle E Dr 732 858 15 1971/1992 (g)
1352-1354 Sadlier Circle E
Dr 1,088 1,276 22 1970/1992 (g)
1338 Sadlier Circle E Dr 504 589 10 1971/1992 (g)
1327 Sadlier Circle E Dr 322 378 7 1971/1992 (g)
1428 Sadlier Circle E Dr 138 161 3 1971/1992 (g)
1230 Brookville Way 620 729 13 1995 (g)
6951 E 30th St 1,531 1,796 32 1995 (g)
6701 E 30th St 479 561 10 1992 (g)
6737 E 30th St 2,290 2,688 47 1995 (g)
6555 E 30th St 4,874 5,729 71 1969/1981 (g)
2432-2436 Shadeland 1,349 1,578 16 1968 (g)
8402-8440 E 33rd St 1,290 1,517 8 1977 (g)
8520-8630 E 33rd St 1,891 2,224 12 1976 (g)
8710-8768 E 33rd St 1,014 1,198 7 1979 (g)
3316-3346 N. Pagosa Court 1,885 2,217 12 1977 (g)
3331 Raton Court 821 962 5 1979 (g)
MILWAUKEE
6523 N. Sydney Place 1,112 1,288 29 1978 (g)
8800 W Bradley 2,242 2,630 32 1982 (g)
1435 North 113th St 1,769 2,078 11 1993 (g)
MINNEAPOLIS
6701 Parkway Circle 2,447 2,824 178 1987 (g)
6601 Shingle Creek Parkway 3,206 3,708 243 1985 (g)
10120 W 76th Street 1,889 2,204 87 1987 (g)
7615 Golden Triangle 1,787 2,055 123 1987 (g)
7625 Golden Triangle 2,508 2,923 150 1987 (g)
2605 Fernbrook Lane North 2,794 3,239 168 1987 (g)
12155 Nicollet Ave. 1,672 1,959 48 1995 (g)
73rd Avenue North 2,921 3,433 54 1995 (g)
1905 W Country Road C 2,335 2,744 44 1993 (g)
2730 Arthur Street 4,739 5,571 89 1995 (g)
10205 51st Avenue North 1,081 1,268 20 1990 (g)
4100 Peavey Road 2,369 2,784 34 1988 (g)
11300 Hamshire Ave South 3,096 3,637 38 1983 (g)
375 Rivertown Drive 6,365 7,484 53 1996 (g)
5205 Highway 169 2,829 3,302 26 1960 (g)
6451-6595 Citywest Parkway 3,072 3,610 25 1984 (g)
7100-7198 Shady Oak Rd (d) 6,462 7,597 40 1982 (g)
7500-7546 Washington Square 1,324 1,557 3 1975 (g)
F-21
FIRST INDUSTRIAL, L.P.
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
GROSS
AMOUNT
CARRIED
AT CLOSE
COSTS OF PERIOD
(F) CAPITALIZED 12/31/96
INITIAL COST SUBSEQUENT TO ---------
LOCATION (E) ---------------------- ACQUISITION
BUILDING ADDRESS (CITY/STATE) ENCUMBRANCES LAND BUILDINGS OR COMPLETION LAND
- ---------------------------- ---------------------------- ------------- --------- ----------- ------------- ---------
7550-7588 Washington Square Eden Prairie, MN $ 153 $ 867 $ 19 $ 156
5240-5300 Valley Industrial Eden Prairie, MN
Blvd S 362 2,049 73 370
6656 Wedgewood Road Maple Grove, MN 219 -- 109 219
NASHVILLE
3099 Barry Drive Portland, TN 418 2,368 49 424
3150 Barry Drive Portland, TN 941 5,333 326 987
5599 Highway 31 West Portland, TN 564 3,196 62 571
ST. LOUIS
2337 Centerline Drive St. Louis, MO (b) 239 1,370 110 239
6951 N Hanley (c) Hazelwood, MO 405 2,295 93 417
------------- --------- ----------- ------------- ---------
$45,578 $ 53,570 $ 272,934 $ 27,277 $ 55,425
------------- --------- ----------- ------------- ---------
------------- --------- ----------- ------------- ---------
ACCUMULATED
BUILDING AND DEPRECIATION YEAR BUILT/ DEPRECIABLE
BUILDING ADDRESS IMPROVEMENTS TOTAL 12/31/96 RENOVATED LIVES (YEARS)
- ---------------------------- ------------- --------- ------------- ----------- -----------------
7550-7588 Washington Square $ 883 $ 1,039 $ 2 1973 (g)
5240-5300 Valley Industrial
Blvd S 2,114 2,484 4 1975 (g)
6656 Wedgewood Road 109 328 7 1989 (g)
NASHVILLE
3099 Barry Drive 2,411 2,835 15 1995 (g)
3150 Barry Drive 5,613 6,600 35 1993 (g)
5599 Highway 31 West 3,251 3,822 20 1995 (g)
ST. LOUIS
2337 Centerline Drive 1,480 1,719 88 1967 (g)
6951 N Hanley (c) 2,376 2,793 5 1965 (g)
------------- --------- -------------
$ 298,356 $ 353,781 $ 8,133
------------- --------- -------------
------------- --------- -------------
- ------------------------
NOTES:
(a) Collateralizes the CIGNA Loan.
(b) Collateralizes the Assumed Loans.
(c) Comprised of 2 properties.
(d) Comprised of 3 properties.
(e) See description of encumbrances in Note 4 to Notes to Financial Statements.
(f) Initial cost for each respective property is total acquisition costs
associated with its purchase.
(g) Depreciation is computed based upon the following estimated lives:
Buildings, Improvements 31.5 to 40 years
Tenant Improvements, Leasehold Improvements Life of lease
Furniture, Fixtures and equipment 5 to 10 years
(h) At December 31, 1996, the aggregate cost of land and buildings and equipment
for federal income tax purpose was approximately $326,284.
(i) These properties represent property developments that haven't been placed in
service.
F-22
FIRST INDUSTRIAL, L.P. AND CONTRIBUTING BUSINESSES
SCHEDULE III:
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
The changes in total real estate assets for three years ended December 31,
1996 are as follows:
1996 1995 1994
---------- ---------- ----------
Balance, Beginning of Year................................................... $ 96,392 $ 163,168 $ 209,177
Transfer of Assets Between Contributing Businesses........................... -- -- (496,147)
Transfer of Assets Between Other Real Estate Partnerships.................... -- (135,343) --
Disposition of Real Estate Assets............................................ (11,890) -- --
Acquisition, Construction Costs and Improvements............................. 269,279 68,567 450,138
---------- ---------- ----------
Balance, End of Year......................................................... $ 353,781 $ 96,392 $ 163,168
---------- ---------- ----------
---------- ---------- ----------
The changes in accumulated depreciation for three years ended December 31,
1996 are as follows:
1996 1995 1994
---------- ---------- ----------
Balance, Beginning of Year................................................... $ 4,852 $ 4,112 $ 38,015
Transfer of Assets Between Contributing Businesses........................... -- -- (38,022)
Transfer of Assets Between Other Real Estate Partnerships.................... -- (3,352) --
Disposition of Real Estate Assets............................................ (1,834) -- --
Depreciation for Year........................................................ 5,115 4,092 4,119
---------- ---------- ----------
Balance, End of Year......................................................... $ 8,133 $ 4,852 $ 4,112
---------- ---------- ----------
---------- ---------- ----------
F-23
FIRST INDUSTRIAL, L.P.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
FIRST INDUSTRIAL,
L.P. LAZARUS BURMAN FIRST INDUSTRIAL,
(HISTORICAL) PROPERTIES L.P.
NOTE 2(A) NOTE 2 (B) PRO FORMA
------------------ --------------- ------------------
ASSETS
ASSETS:
Investment in Real Estate:
Land................................................... $ 55,425 $ 20,826 $ 76,251
Buildings and Improvements............................. 291,942 118,014 409,956
Construction in Progress............................... 6,414 -- 6,414
Less: Accumulated Depreciation......................... (8,133) -- (8,133)
-------- --------------- --------
Net Investment in Real Estate........................ 345,648 138,840 484,488
-------- --------------- --------
Investment in Other Real Estate Partnerships............. 258,411 -- 258,411
Cash and Cash Equivalents................................ 4,295 -- 4,295
Tenant Accounts Receivable, Net.......................... 1,021 -- 1,021
Deferred Rent Receivable................................. 1,280 -- 1,280
Interest Rate Protection Agreements, Net................. 1,723 -- 1,723
Deferred Financing Costs, Net............................ 1,140 -- 1,140
Prepaid Expenses and Other Assets, Net................... 8,604 -- 8,604
-------- --------------- --------
Total Assets......................................... $ 622,122 $ 138,840 $ 760,962
-------- --------------- --------
-------- --------------- --------
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Mortgage Loans Payable................................... $ 45,578 $ 4,505 $ 50,083
Acquisition Facilities Payable........................... 4,400 86,476 90,876
Promissory Notes Payable................................. 9,919 -- 9,919
Accounts Payable and Accrued Expenses.................... 8,770 -- 8,770
Rents Received in Advance and Security Deposits.......... 1,942 -- 1,942
Distributions Payable.................................... 16,281 -- 16,281
-------- --------------- --------
Total Liabilities.................................... 86,890 90,981 177,871
-------- --------------- --------
Commitments and Contingencies.............................. -- -- --
PARTNERS' CAPITAL:
General Partner...................................... 496,169 -- 496,169
Limited Partners..................................... 39,063 47,859 86,922
-------- --------------- --------
Total Partners' Capital.............................. 535,232 47,859 583,091
-------- --------------- --------
Total Liabilities and Partners' Capital.............. $ 622,122 $ 138,840 $ 760,962
-------- --------------- --------
-------- --------------- --------
The accompanying notes are an integral part of the unaudited pro forma financial
statements.
F-24
FIRST INDUSTRIAL, L.P.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
AGGREGATE
FIRST 1996 LAZARUS
INDUSTRIAL, ACQUISITION BURMAN
L.P. PROPERTIES PRO FORMA PROPERTIES PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS (HISTORICAL) ADJUSTMENTS
NOTE 3(A) NOTE 3(B) NOTE 3(C) SUBTOTAL NOTE 3(D) NOTE 3(E)
--------------- ----------- ------------- --------- ----------- -------------
Revenues:
Rental Income.......................... $ 29,166 $ 12,953 $ -- $ 42,119 $ 18,606 $ --
Tenant Recoveries and Other Income..... 8,421 1,743 -- 10,164 4,636 --
------- ----------- ------------- --------- ----------- -------------
Total Revenues................... 37,587 14,696 -- 52,283 23,242 --
------- ----------- ------------- --------- ----------- -------------
Expenses:
Real Estate Taxes...................... 6,109 2,178 -- 8,287 4,767 --
Repairs and Maintenance................ 1,071 813 -- 1,884 1,477 --
Property Management.................... 1,153 567 -- 1,720 732 --
Utilities.............................. 1,047 273 -- 1,320 959 --
Insurance.............................. 271 147 -- 418 275 --
Other.................................. 284 1 -- 285 457 --
General and Administrative............. 4,014 -- -- 4,014 -- --
Interest............................... 4,685 -- 306 4,991 -- 6,101
Amortization of Interest Rate
Protection Agreements, and Deferred
Financing Costs...................... 196 -- -- 196 -- --
Depreciation and Other Amortization.... 6,310 -- 2,189 8,499 -- 2,950
------- ----------- ------------- --------- ----------- -------------
Total Expenses................... 25,140 3,979 2,495 31,614 8,667 9,051
------- ----------- ------------- --------- ----------- -------------
Income Before Gain on Sales of
Properties, Equity in Income of Other
Real Estate Partnerships and
Extraordinary Item...................... 12,447 10,717 (2,495) 20,669 14,575 (9,051)
Gain on Sales of Properties.............. 4,344 -- -- 4,344 -- --
------- ----------- ------------- --------- ----------- -------------
Income Before Equity in Income of Other
Real Estate Partnerships and
Extraordinary Item...................... 16,791 10,717 (2,495) 25,013 14,575 (9,051)
Equity in Income of Other Real Estate
Partnerships............................ 20,130 -- -- 20,130 -- --
------- ----------- ------------- --------- ----------- -------------
Income Before Extraordinary Item......... $ 36,921 $ 10,717 $ (2,495) $ 45,143 $ 14,575 $ (9,051)
------- ----------- ------------- --------- ----------- -------------
------- ----------- ------------- --------- ----------- -------------
FIRST
INDUSTRIAL,
L.P.
PRO FORMA
---------------
Revenues:
Rental Income.......................... $ 60,725
Tenant Recoveries and Other Income..... 14,800
-------
Total Revenues................... 75,525
-------
Expenses:
Real Estate Taxes...................... 13,054
Repairs and Maintenance................ 3,361
Property Management.................... 2,452
Utilities.............................. 2,279
Insurance.............................. 693
Other.................................. 742
General and Administrative............. 4,014
Interest............................... 11,092
Amortization of Interest Rate
Protection Agreements, and Deferred
Financing Costs...................... 196
Depreciation and Other Amortization.... 11,449
-------
Total Expenses................... 49,332
-------
Income Before Gain on Sales of
Properties, Equity in Income of Other
Real Estate Partnerships and
Extraordinary Item...................... 26,193
Gain on Sales of Properties.............. 4,344
-------
Income Before Equity in Income of Other
Real Estate Partnerships and
Extraordinary Item...................... 30,537
Equity in Income of Other Real Estate
Partnerships............................ 20,130
-------
Income Before Extraordinary Item......... $ 50,667
-------
-------
The accompanying notes are an integral part of the unaudited pro forma financial
statements.
F-25
FIRST INDUSTRIAL, L.P.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma balance sheet and pro forma statement
of operations for First Industrial, L.P. (the "Operating Partnership") reflect
the historical financial position of the Operating Partnership as of December
31, 1996, the historical operations for the year ended December 31, 1996, the
acquisition of 111 properties between January 1, 1996 and December 31, 1996 (the
"Aggregate 1996 Acquisition Properties") and the acquisition of 39 properties on
January 31, 1997 (the "Lazarus Burman Properties"). The accompanying unaudited
pro forma balance sheet and pro forma statement of operations exclude the other
properties acquired between December 31, 1996 and April 29, 1997. The pro forma
financial statements would not be materially different if such other properties
acquired between December 31, 1996 and April 29, 1997 were included in the pro
forma financial statements. The accompanying unaudited pro forma financial
statements have been prepared based upon certain pro forma adjustments to the
historical December 31, 1996 financial statements of the Operating Partnership.
The unaudited pro forma balance sheet as of December 31, 1996 has been prepared
as if the Lazarus Burman Properties had been acquired on December 31, 1996. The
unaudited pro forma statement of operations for the year ended December 31, 1996
have been prepared as if the Aggregate 1996 Acquisition Properties and the
Lazarus Burman Properties had been acquired on January 1, 1996 or the lease
commencement date if the property was developed during 1996 and as if the
5,175,000 Operating Partnership units (the "Units") issued on February 2, 1996
(the "February 1996 Capital Contribution") and the 5,750,00 Units issued on
October 25, 1996 (the "October 1996 Capital Contribution") had been issued on
January 1, 1996.
2. PRO FORMA ASSUMPTIONS - BALANCE SHEET
(a) The historical balance sheet reflects the financial position of the
Operating Partnership as of December 31, 1996 as reported in this
Prospectus.
(b) Represents the purchase of the Lazarus Burman Properties as if the
acquisition had occurred on December 31, 1996. The Lazarus Burman Properties
were acquired in a purchase transaction for approximately $138.8 million
which was funded with $86.4 million in cash through borrowings under the
Operating Partnership's $200 million unsecured revolving credit facility
(the "1996 Unsecured Acquisition Facility"), the assumption of $4.5 million
of mortgage debt and the issuance of 1,595,282 Units valued in the aggregate
at $47.9 million.
3. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS - STATEMENT OF OPERATIONS
(a) The historical operations reflect the income from continuing operations of
the Operating Partnership for the year ended December 31, 1996 as reported
in this Prospectus.
(b) Represents the operations of the Aggregate 1996 Acquisition Properties for
the period January 1, 1996 through their respective acquisition dates or the
lease commencement date if the property was developed.
(c) In connection with the acquisition of certain properties which are included
in the Aggregate 1996 Acquisition Properties, the Operating Partnership
assumed two mortgage loans totaling $9.4 million (the "Assumed
Indebtedness") and also entered into a new mortgage loan in the amount of
$36.8 million (the "CIGNA Loan"). The interest expense adjustment reflects
interest on the Assumed Loans and the CIGNA Loan as if such indebtedness was
outstanding beginning January 1, 1996. The interest expense adjustment also
reflects an increase in the acquisition facility borrowings at LIBOR plus 2%
for borrowings under the Operating Partnership's $150 million secured
revolving credit facility or LIBOR plus 1.1% for borrowings under the 1996
Unsecured Acquisition Facility for the
F-26
assumed earlier purchase of certain properties which are included in the
Aggregate 1996 Acquisition Properties, offset by a reduction in interest
expense related to the assumed earlier repayment of $59.4 million and $84.2
million of acquisition facility borrowings on January 1, 1996 from the
proceeds of the February 1996 Capital Contribution and the October 1996
Capital Contribution, respectively.
The depreciation and other amortization adjustment reflects the incremental
depreciation and other amortization expense for the Aggregate 1996
Acquisition Properties from January 1, 1996 through their respective
acquisition date.
(d) The historical operations reflect the operations of the Lazarus Burman
Properties for the year ended December 31, 1996.
(e) In connection with the purchase of the Lazarus Burman Properties, the
Operating Partnership assumed two mortgage loans totaling $4.5 million (the
"Lazarus Burman Mortgage Loans"). The interest expense adjustment reflects
interest on the Lazarus Burman Mortgage Loans as if such indebtedness was
outstanding beginning January 1, 1996. The interest expense adjustment also
reflects an increase in the acquisition facility borrowings at LIBOR plus
1.1% for borrowings under the Operating Partnership's 1996 Unsecured
Acquisition Facility for the assumed earlier purchase of the Lazarus Burman
Properties.
The depreciation and other amortization adjustment reflects the incremental
depreciation and other amortization expense for the Lazarus Burman
Properties from January 1, 1996 through December 31, 1996.
F-27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the historical
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
RESULTS OF OPERATIONS
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
At December 31, 1996, the Operating Partnership owned 137 in-service
properties containing approximately 12.7 million square feet of GLA, compared to
30 in-service properties with approximately 3.5 million square feet of GLA at
December 31, 1995. During 1996, the Operating Partnership acquired 111
properties containing approximately 9.4 million square feet of GLA, completed
development of two properties totaling .2 million square feet of GLA and sold
six properties totaling .4 million square feet of GLA.
Revenues increased in 1996 over 1995 by $10.1 million or 37.0% due primarily
to the properties acquired after December 31, 1994. Revenues from properties
owned prior to January 1, 1995 increased in 1996 over 1995 by $.5 million or
7.4% due primarily to a lease termination fee, an increase in rental rates and
an increase in tenant recovery income.
Property expenses, which include real estate taxes, repairs and maintenance,
property management, utilities, insurance and other expenses, increased in 1996
over 1995 by $2.5 million or 32.9% due primarily to properties acquired after
December 31, 1994. For properties owned prior to January 1, 1995, property
expenses remained unchanged.
General and administrative expense increased in 1996 over 1995 by $.2
million due primarily to the additional expenses associated with managing the
Operating Partnership's growing operations (including additional professional
fees relating to additional properties owned and personnel to manage and expand
the Operating Partnership's business).
Interest expense decreased from $6.6 million in 1995 to $4.7 million in
1996. The average outstanding debt balance was approximately $24.2 million lower
in 1996 due to capital contributions from the general partner of the Operating
Partnership that were used to pay down debt.
Depreciation and amortization increased in 1996 over 1995 by $1.2 million
due primarily to the additional depreciation and amortization related to the
properties acquired after December 31, 1994.
The $4.3 million gain on sales of properties in 1996 resulted from the sale
of three properties located in Huntsville, Alabama, one property located in
Detroit, Michigan, one property located in Grand Rapids, Michigan and one
property located in Atlanta, Georgia. Gross proceeds for these property sales
totaled approximately $15.0 million.
Equity in income of Other Real Estate Partnerships increased in 1996 over
1995 by $12.3 million or 156.7% due primarily to four of the Other Real Estate
Partnerships having a full year of operations in 1996 compared to a partial year
of operations in 1995 as well as one of the Other Real Estate Partnerships
incurring a loss from the disposition of an interest rate protection agreement
in 1995.
The $2.3 million extraordinary loss in 1996 represents the write-off of
unamortized deferred financing costs and a prepayment fee for loans that were
paid off in full and retired in 1996.
F-28
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
The results of operations for the year ended December 31, 1994 include the
operations of the Contributing Businesses from January 1, 1994 through June 30,
1994 and the operations of the Operating Partnership from July 1, 1994 through
December 31, 1994.
At December 31, 1995, the Operating Partnership owned 30 in-service
properties containing approximately 3.5 million square feet of GLA, compared to
50 in-service properties with approximately 4.9 million square feet of GLA at
December 31, 1994. During 1995, the Operating Partnership acquired 17 properties
containing approximately 2.0 million square feet of GLA. The Operating
Partnership also completed the development of three properties totaling
approximately .3 million square feet of GLA. In addition, the Operating
Partnership also contributed 40 properties with approximately 3.7 million square
feet of GLA to the Other Real Estate Partnerships.
Revenues decreased in 1995 over 1994 by $5.0 million or 15.4% due primarily
to the Contributing Businesses' properties that were contributed to the Other
Real Estate Partnerships, the operating results of which are accounted for by
the Operating Partnership under the equity method of accounting. Revenues from
properties owned prior to January 1, 1994 remained unchanged.
Property expenses, which include real estate taxes, repairs and maintenance,
property management, utilities, insurance and other expenses, decreased in 1995
over 1994 by $.7 million or 8.3% due primarily to the Contributing Businesses'
properties that were contributed to the Other Real Estate Partnerships. For
properties owned prior to January 1, 1994, property expenses remained unchanged.
General and administrative expense increased in 1995 over 1994 by $2.0
million due primarily to the additional expenses of the Company associated with
being a public company and to the additional expenses associated with managing
the Operating Partnership's growing operations (including additional
professional fees relating to additional properties owned and personnel to
manage and expand the Operating Partnership's and the Other Real Estate
Partnership's business).
Interest expense decreased from $12.6 million in 1994 to $6.6 million in
1995. The decrease results primarily from lower average debt levels in 1995.
Depreciation and amortization decreased in 1995 over 1994 by $2.4 million
due primarily to the Contributing Businesses' properties that were contributed
to the Other Real Estate Partnerships of the Operating Partnership which are
accounted for under the equity method of accounting.
Equity in income of Other Real Estate Partnerships increased in 1995 over
1994 by $1.1 million or 15.9% due primarily to one of the Other Real Estate
Partnerships having a full year of operations in 1995 compared to a partial year
of operations in 1994 which was partially offset by a loss from the disposition
of an interest rate protection agreement in 1995.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Operating Partnership's unrestricted cash and cash
equivalents totaled $4.3 million.
Net cash provided by operating activities was $18.9 million for the year
ended December 31, 1996 compared to $4.2 million for the year ended December 31,
1995 and $(5.3) million for the year ended December 31, 1994. The increases are
primarily due to the factors discussed in "Results of Operations" above.
Net cash used in investing activities was $202.7 million for the year ended
December 31, 1996 compared to $40.9 million and $436.1 million for the years
ended December 31, 1995 and December 31, 1994, respectively. The majority of the
cash used in investing activities was for acquisition of additional properties.
F-29
Net cash provided by financing activities for the year ended December 31,
1996 increased to $181.6 million from $43.2 million for the year ended December
31, 1995, reflecting capital contributions from the general partner and proceeds
from the CIGNA Loan, offset in part by increased distributions, repayment of the
Construction Loans, and a net pay down on the Operating Partnership's
acquisition facilities. Net cash provided by financing activities for the year
ended December 31, 1995 was $43.2 million, compared to $440.4 million for the
year ended December 31, 1994, reflecting primarily debt and equity transactions
relating to the Company's Initial Offering in June 1994 and an increase in
indebtedness due to the properties acquired subsequent to the Initial Offering.
The ratio of earnings to fixed charges was 6.96 for the year ended December
31, 1996 compared to 2.56 for the year ended December 31, 1995 and 1.65 for the
year ended December 31, 1994. The increases are primarily due to increased
income from continuing operations resulting from additional properties acquired
by the Operating Partnership and increased equity in income of the Other Real
Estate Partnerships, as discussed in "Results of Operations" above.
In 1996, the Operating Partnership acquired 111 industrial properties
comprising approximately 9.4 million square feet of GLA for a total purchase
price of approximately $237 million, completed the development of two build-to
suit properties comprising approximately .2 million square feet of GLA at a cost
of approximately $9.0 million and sold six properties comprising approximately
.4 million square feet of GLA for $15 million. The acquisitions and developments
were financed in part by proceeds from capital contributions from the general
partner of the Operating Partnership, borrowings under the Operating
Partnership's acquisition facilities and by new mortgage debt.
The Operating Partnership has committed to the construction of two light
industrial and five bulk warehouse properties totaling approximately 1.0 million
square feet. The estimated total construction costs are approximately $27.4
million. These developments are expected to be funded with cash flow from
operations as well as borrowings under the 1996 Unsecured Acquisition Facility.
In 1996, the Operating Partnership paid a quarterly distribution of $.4875
per unit related to each of the first, second and third quarters. In addition,
the Operating Partnership paid a fourth quarter 1996 distribution of $.505 per
unit on January 20, 1997. The total distributions paid to the Operating
Partnership's partners related to 1996 totaled $54.3 million.
On February 2, 1996, the Company completed an offering of 5.175 million
shares (inclusive of the underwriters' over-allotment option) of common stock at
a purchase price of $22 per share. The net proceeds of $106.3 million were
contributed to the Operating Partnership and used to repay outstanding
borrowings totaling $59.4 million and to fund acquisitions closed subsequently
in the first quarter of 1996.
On October 25, 1996, the Company completed an offering of 5.75 million
shares (inclusive of the underwriters' over-allotment option) of common stock at
a purchase price of $25.50 per share. The net proceeds of $137.7 million were
contributed to the Operating Partnership and used to repay outstanding
borrowings totaling $84.2 million and to fund acquisitions closed in the fourth
quarter of 1996.
On March 20, 1996, the Operating Partnership entered into a $36.7 million
mortgage loan (the "CIGNA Loan") that is collateralized by seven properties in
Indianapolis, Indiana and three properties in Cincinnati, Ohio. The CIGNA Loan
bears interest at a fixed interest rate of 7.5% and provides for monthly
principal and interest payments based on a 25-year amortization schedule. The
CIGNA Loan will mature on April 1, 2003. The CIGNA Loan may be prepaid only
after April 30, 1999, in exchange for the greater of a 1% premium or a yield
maintenance premium.
On March 20, 1996, the Operating Partnership, assumed an approximately $6.4
million mortgage loan and an approximately $3.0 million mortgage loan (together,
the "Assumed Loans") that are collateralized by 13 properties in Indianapolis,
Indiana and one property in Indianapolis, Indiana, respectively. The Assumed
Loans bear interest at a fixed rate of 9.25% and provide for monthly principal
and interest payments based on a 16.75-year amortization schedule. The Assumed
Loans will mature on January 1,
F-30
2013. The Assumed Loans may be prepaid only after December 22, 1999, in exchange
for the greater of a 1% premium or a yield maintenance premium.
In 1997, the Operating Partnership obtained investment grade ratings on its
senior unsecured debt from Moody's Investors Service, Standard & Poor's, Duff &
Phelps Credit Rating Co. and Fitch Investors Service, Inc.
In December 1996, the Operating Partnership terminated its $150 million 1994
Acquisition Facility and entered into a $200 million 1996 Unsecured Acquisition
Facility. Borrowings under the 1996 Unsecured Acquisition Facility will be used
to finance the acquisitions and development of additional properties and for
other purposes, including to obtain working capital. It is the Operating
Partnership's intent to, from time to time, replace borrowings under the 1996
Unsecured Acquisition Facility with long term sources of capital as the
Operating Partnership deems appropriate.
The Operating Partnership has considered its short-term (one year or less)
liquidity needs and the adequacy of its estimated cash flow from operations and
other expected liquidity sources to meet these needs. The Operating Partnership
believes that its principal short-term liquidity needs are to fund normal
recurring expenses, debt service requirements and the minimum distribution
required by the Company to maintain the Company's REIT qualification under the
Internal Revenue Code. The Operating Partnership anticipates that these needs
will be met with cash flows provided by operating activities.
The Operating Partnership expects to meet long-term (greater than one year)
liquidity requirements such as property acquisitions, scheduled debt maturities,
major renovations, expansions and other non-recurring capital improvements
through long-term unsecured indebtedness and capital contributions from the
general partner of the Operating Partnership. The Operating Partnership may
finance the acquisition or development of additional properties through
borrowings under the 1996 Unsecured Acquisition Facility. At December 31, 1996,
borrowings under the 1996 Unsecured Acquisition Facility bore interest at a
weighted average interest rate of 8.25%. The borrowings under the 1996 Unsecured
Acquisition Facility were converted to an interest rate of 6.6% on January 7,
1997. As of March 20, 1997, the Operating Partnership had $68.1 million
available in additional borrowings under the 1996 Unsecured Acquisition
Facility. While the Operating Partnership may sell properties if property or
market conditions make it desirable, the Operating Partnership does not expect
to sell assets in the foreseeable future to satisfy its liquidity requirements.
In April 1997, the Operating Partnership incurred the $309.8 million
Defeasance Loan, the proceeds of which were contributed to the Financing
Partnership and used by it to defease (as defined by the terms of the 1994
Mortgage Loan agreement) the 1994 Mortgage Loan.
INFLATION
For the last several years, inflation has not had a significant impact on
the Operating Partnership because of the relatively low inflation rates in the
Operating Partnership's markets of operation. Most of the Operating
Partnership's leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Operating Partnership's exposure to increases in costs and
operating expenses resulting from inflation. In addition, many of the
outstanding leases expire within five years which may enable the Operating
Partnership to replace existing leases with new leases at higher base rentals if
rents of existing leases are below the then-existing market rate.
F-31
FIRST INDUSTRIAL, L.P. AND CONTRIBUTING BUSINESSES
SELECTED FINANCIAL DATA(1)
(IN THOUSANDS, EXCEPT PROPERTY DATA)
CONTRIBUTING
BUSINESSES
FIRST INDUSTRIAL, L.P. (COMBINED)
---------------------------------------------------------------------------- -----------
SIX MONTH SIX MONTH
PERIOD PERIOD
SIX MONTHS SIX MONTHS YEAR ENDED YEAR ENDED ENDED ENDED
ENDED ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30,
JUNE 30, 1997 JUNE 30, 1996 1996 1995 1994 1994
--------------- -------------- ------------- ------------- ------------- -----------
STATEMENTS OF OPERATIONS
DATA:
Total Revenues.............. $ 40,278 $ 15,203 $ 37,587 $ 27,442 $ 9,604 $ 22,816
Property Expenses........... 12,183 4,448 9,935 7,478 2,120 6,036
General and Administrative
Expense................... 2,642 2,058 4,014 3,792 1,047 795
Interest Expense............ 9,107 1,908 4,685 6,581 807 11,773
Amortization of Interest
Rate Protection Agreements
and Deferred Financing
Costs..................... 8 50 196 222 187 858
Depreciation and Other
Amortization.............. 6,243 2,684 6,310 5,087 1,916 4,744
Management and Construction
Income (Loss), Net........ -- -- -- -- -- (81)
Disposition of Interest Rate
Protection Agreements..... 4,038 -- -- -- -- --
Gain on Sales of
Properties................ 460 4,320 4,344 -- -- --
Equity in Income of Other
Real Estate
Partnerships.............. 8,030 9,619 20,130 7,841 6,767 --
--------------- -------------- ------------- ------------- ------------- -----------
Income (Loss) Before
Extraordinary Items....... 22,623 17,994 $ 36,921 $ 12,123 $ 10,294 $ (1,471)
Extraordinary Gain (Loss)... (3,428) (821) (2,273) -- -- (1,449)
--------------- -------------- ------------- ------------- ------------- -----------
Net Income.................. $ 19,195 $ 17,173 $ 34,648 $ 12,123 $ 10,294 $ (2,920)
--------------- -------------- ------------- ------------- ------------- -----------
--------------- -------------- ------------- ------------- ------------- -----------
BALANCE SHEET DATA (AT END
OF PERIOD):
Net Investment In Real
Estate.................... $ 574,680 $ 215,946 $ 345,648 $ 91,540 $ 159,056 $ 556,902
Investment in Other
Real Estate
Partnerships.............. 586,472 254,030 258,411 241,918 208,274 --
Total Assets................ $ 1,212,600 $ 485,881 $ 622,122 $ 356,060 $ 375,220 $ 616,767
Mortgage Loans/Acquisition
Facilities Payable, Senior
Unsecured Debt, Promissory
Notes Payable and
Construction Loans
Payable................... $ 453,841 $ 65,621 $ 59,897 $ 53,108 $ 48,700 $ 305,000
Mortgage Loans
(Affiliated).............. -- -- -- -- --
Total Liabilities........... 494,731 86,747 86,890 69,291 61,676 323,703
Partners' Capital/(Net
Deficit).................. $ 717,869 $ 399,134 $ 535,232 $ 286,769 $ 313,544 $ 269,326
OTHER DATA:
Cash Flows From:
Operating Activities...... $ 7,769 $ 7,475 $ 18,871 $ 4,182 $ (10,299) $ 4,911
Investing Activities...... (507,511) (98,623) (202,673) (40,906) (61,352) (374,757)
Financing Activities...... 502,875 86,272 181,604 43,182 66,232 374,152
Gross Leasable Area at End
of Period................. 18,097,958 8,208,903 12,650,986 3,488,921 4,857,281 17,393,813
Total Properties at End of
Period.................... 208 78 137 30 50 226
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1993 1992
------------- -------------
STATEMENTS OF OPERATIONS
DATA:
Total Revenues.............. $ 33,237 $ 31,145
Property Expenses........... 8,832 7,308
General and Administrative
Expense................... 1,416 1,699
Interest Expense............ 18,187 18,350
Amortization of Interest
Rate Protection Agreements
and Deferred Financing
Costs..................... 997 1,644
Depreciation and Other
Amortization.............. 7,105 6,328
Management and Construction
Income (Loss), Net........ (99) 136
Disposition of Interest Rate
Protection Agreements..... -- --
Gain on Sales of
Properties................ -- --
Equity in Income of Other
Real Estate
Partnerships.............. -- --
------------- -------------
Income (Loss) Before
Extraordinary Items....... $ (3,399) $ (4,048)
Extraordinary Gain (Loss)... -- 2,340
------------- -------------
Net Income.................. $ (3,399) $ (1,708)
------------- -------------
------------- -------------
BALANCE SHEET DATA (AT END
OF PERIOD):
Net Investment In Real
Estate.................... $ 171,162 $ 160,735
Investment in Other
Real Estate
Partnerships.............. -- --
Total Assets................ $ 189,789 $ 175,693
Mortgage Loans/Acquisition
Facilities Payable, Senior
Unsecured Debt, Promissory
Notes Payable and
Construction Loans
Payable................... $ 179,568 $ 168,559
Mortgage Loans
(Affiliated).............. 7,624 7,951
Total Liabilities........... 227,553 208,569
Partners' Capital/(Net
Deficit).................. $ (37,764) $ (32,876)
OTHER DATA:
Cash Flows From:
Operating Activities...... $ 8,700 $ 1,877
Investing Activities...... (17,124) (2,317)
Financing Activities...... 9,093 1,250
Gross Leasable Area at End
of Period................. 6,376,349 5,883,730
Total Properties at End of
Period.................... 124 118
- ------------------------
(1) The selected financial data includes the combined statements of the
Contributing Businesses for the period prior to July 1, 1994 and the
financial statements of First Industrial, L.P., for the periods after June
30, 1994.
F-32
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of the Other
Real Estate Partnerships
We have audited the combined financial statements of the Other Real Estate
Partnerships as listed on page F-1 of this Prospectus. These financial
statements are the responsibility of the Other Real Estate Partnerships'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of the Other Real
Estate Partnerships as of December 31, 1996 and 1995, and the combined results
of their operations and their cash flows for the years ended December 31, 1996
and 1995 and for the period July 1, 1994 through December 31, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 12, 1997
F-33
OTHER REAL ESTATE PARTNERSHIPS
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
ASSETS
Assets:
Investment in Real Estate:
Land............................................................................. $ 97,965 $ 94,974
Buildings and Improvements....................................................... 588,993 564,488
Furniture, Fixtures and Equipment................................................ 1,662 1,662
Construction in Progress......................................................... 8,389 --
Less: Accumulated Depreciation................................................... (83,324) (63,897)
------------ ------------
Net Investment in Real Estate.................................................. 613,685 597,227
Cash and Cash Equivalents.......................................................... 3,314 1,880
Restricted Cash.................................................................... 11,837 9,175
Tenant Accounts Receivable, Net.................................................... 3,637 2,028
Deferred Rent Receivable........................................................... 7,010 7,000
Interest Rate Protection Agreements, Net........................................... 6,653 7,865
Deferred Financing Costs, Net...................................................... 6,302 7,153
Prepaid Expenses and Other Assets, Net............................................. 9,849 10,837
------------ ------------
Total Assets................................................................... $ 662,287 $ 643,165
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable............................................................. $ 346,504 $ 346,850
Accounts Payable and Accrued Expenses.............................................. 9,144 7,084
Rents Received in Advance and Security Deposits.................................... 4,182 3,630
------------ ------------
Total Liabilities.............................................................. 359,830 357,564
------------ ------------
Commitments and Contingencies........................................................ -- --
Partners' Capital.................................................................... 302,457 285,601
------------ ------------
Total Liabilities and Partners' Capital........................................ $ 662,287 $ 643,165
------------ ------------
------------ ------------
The accompanying notes are an integral part of the financial statements.
F-34
OTHER REAL ESTATE PARTNERSHIPS
COMBINED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
SIX MONTHS
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------ ------------ ------------
Revenues:
Rental Income....................................................... $ 79,947 $ 61,428 $ 29,152
Tenant Recoveries and Other Income.................................. 22,375 17,604 7,801
------------ ------------ ------------
Total Revenues.................................................... 102,322 79,032 36,953
------------ ------------ ------------
Expenses:
Real Estate Taxes................................................... 17,261 12,135 5,924
Repairs and Maintenance............................................. 4,337 3,024 1,369
Property Management................................................. 3,558 2,635 1,162
Utilities........................................................... 2,535 1,825 740
Insurance........................................................... 605 624 304
Other............................................................... 637 581 234
Interest............................................................ 24,268 22,010 9,781
Amortization of Interest Rate Protection Agreements and Deferred
Financing Costs................................................... 3,090 4,216 2,717
Depreciation and Other Amortization................................. 21,737 17,177 7,886
Disposition of Interest Rate Protection Agreement................... -- 6,410 --
------------ ------------ ------------
Total Expenses.................................................... 78,028 70,637 30,117
------------ ------------ ------------
Net Income............................................................ $ 24,294 $ 8,395 $ 6,836
------------ ------------ ------------
------------ ------------ ------------
The accompanying notes are an integral part of the financial statements.
F-35
OTHER REAL ESTATE PARTNERSHIPS
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(DOLLARS IN THOUSANDS)
TOTAL
------------
Balance at June 30, 1994............................................................................ $ --
Contributions....................................................................................... 209,270
Distributions....................................................................................... (5,200)
Net Income.......................................................................................... 6,836
------------
Balance at December 31, 1994........................................................................ 210,906
------------
Contributions....................................................................................... 100,468
Distributions....................................................................................... (34,168)
Net Income.......................................................................................... 8,395
------------
Balance at December 31, 1995........................................................................ 285,601
------------
Contributions....................................................................................... 25,874
Distributions....................................................................................... (33,312)
Net Income.......................................................................................... 24,294
------------
Balance at December 31, 1996........................................................................ $ 302,457
------------
------------
The accompanying notes are an integral part of the financial statements.
F-36
OTHER REAL ESTATE PARTNERSHIPS
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
SIX MONTHS
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------ ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................................. $ 24,294 $ 8,395 $ 6,836
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities:
Depreciation.............................................................. 19,427 15,232 7,174
Amortization of Interest Rate Protection Agreements and Deferred Financing
Costs................................................................... 3,090 4,216 2,717
Other Amortization........................................................ 2,310 1,945 712
Provision for Bad Debts................................................... 65 194 120
Loss from Disposition of Interest Rate Protection Agreement............... -- 6,410 --
Increase in Accounts Receivable and Other Assets.......................... (2,956) (3,339) (5,818)
Decrease (Increase) in Deferred Rent Receivable........................... 308 (978) (665)
Increase (Decrease) in Accounts Payable, Accrued Expenses, Rents Received
in Advance and Security Deposits........................................ 2,424 (2,931) (14,614)
Increase in Organization Costs............................................ (37) (27) --
(Increase) Decrease in Restricted Cash.................................... (4,275) 546 (12,155)
------------ ------------- -------------
Net Cash Provided by (Used in) Operating Activities......................... 44,650 29,663 (15,693)
------------ ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of and Additions to Investment in Real Estate.................... (35,697) (19,341) (235,076)
Decrease (Increase) in Restricted Cash.................................... 1,613 3,749 (927)
------------ ------------- -------------
Net Cash Used in Investing Activities....................................... (34,084) (15,592) (236,003)
------------ ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions............................................................. 25,556 47,915 236,645
Distributions............................................................. (33,312) (34,168) (5,200)
Proceeds from Mortgage Loans Payable...................................... -- 46,850 300,000
Repayments on Mortgage Loans Payable...................................... (346) -- (241,672)
Repayments on Acquisition Facility Payable................................ -- (81,450) --
Cost of Debt Issuance and Interest Rate Protection Agreements............. (1,030) (289) (29,126)
------------ ------------- -------------
Net Cash (Used in) Provided by Financing Activities......................... (9,132) (21,142) 260,647
------------ ------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents........................ 1,434 (7,071) 8,951
Cash and Cash Equivalents, Beginning of Period.............................. 1,880 8,951 --
------------ ------------- -------------
Cash and Cash Equivalents, End of Period.................................... $ 3,314 $ 1,880 $ 8,951
------------ ------------- -------------
------------ ------------- -------------
The accompanying notes are an integral part of the financial statements.
F-37
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. ORGANIZATION AND FORMATION
First Industrial, L.P. (the "Operating Partnership") was organized as a
limited partnership in the state of Delaware on November 23, 1993. The sole
general partner is First Industrial Realty Trust, Inc. (the "Company") with an
approximate 92.4% ownership interest at December 31, 1996. The limited partners
owned approximately a 7.6% aggregate ownership interest at December 31, 1996.
The Company is a real estate investment trust (REIT) as defined in the Internal
Revenue Code. The Company's operations are conducted primarily through the
Operating Partnership. As of December 31, 1996, the Operating Partnership
directly owned 137 in-service properties, containing an aggregate of
approximately 12.7 million square feet (unaudited) of gross leasable area
("GLA"), as well as a 99% limited partnership interest (subject in one case as
described below to a preferred limited partnership interest) in First Industrial
Financing Partnership, L.P. (the "Financing Partnership"), First Industrial
Securities, L.P. (the "Securities Partnership"), First Industrial Mortgage
Partnership, L.P. (the "Mortgage Partnership"), First Industrial Pennsylvania
Partnership, L.P. (the "Pennsylvania Partnership"), First Industrial Harrisburg,
L.P. (the "Harrisburg Partnership"), First Industrial Indianapolis, L.P. (the
"Indianapolis Partnership") and First Industrial Development Services Group,
L.P. (together, the "Other Real Estate Partnerships"). On a combined basis, as
of December 31, 1996, the Other Real Estate Partnerships owned 242 in-service
properties containing an aggregate of approximately 20.0 million square feet
(unaudited) of GLA. Of the 242 properties owned by the Other Real Estate
Partnerships, 195 were owned by the Financing Partnership, 19 were owned by the
Securities Partnership, 23 were owned by the Mortgage Partnership, one was owned
by the Pennsylvania Partnership, three were owned by the Harrisburg Partnership
and one was owned by the Indianapolis Partnership.
The general partners of the Other Real Estate Partnerships are separate
corporations, each with a one percent general partnership interest. Each general
partner of the Other Real Estate Partnerships is a wholly-owned subsidiary of
the Company. The general partner of the Securities Partnership, First Industrial
Securities Corporation, also owns a preferred limited partnership interest which
entitles it to receive a fixed quarterly distribution, and results in it being
allocated income in the same amount, equal to the fixed quarterly dividend the
Company pays on its 9.5% Series A Preferred Stock.
Profits, losses and distributions of the Other Real Estate Partnerships are
allocated to the general partners and the limited partner in accordance with the
provisions contained within the partnership agreement of each of the Other Real
Estate Partnerships.
2. BASIS OF PRESENTATION
The Combined Balance Sheets as of December 31, 1996 and 1995 and the
Combined Statements of Operations, Changes in Partners Capital and Cash Flows
for the years ended December 31, 1996 and 1995 and for the six months ended
December 31, 1994 reflect the operations, capital, and cash flows of the Other
Real Estate Partnerships on a combined basis.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In order to conform with generally accepted accounting principles,
management, in preparation of the Other Real Estate Partnerships' financial
statements, is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities as of December 31, 1996 and 1995, and the reported amounts of
revenues and expenses for the years ended
F-38
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
December 31, 1996 and 1995 and the six months ended December 31, 1994. Actual
results could differ from those estimates.
REVENUE RECOGNITION:
Rental income is recognized on a straight-line method under which
contractual rent increases are recognized evenly over the lease term. Tenant
recovery income includes payments from tenants for taxes, insurance and other
property operating expenses and is recognized as revenues in the same period the
related expenses are incurred by the Other Real Estate Partnerships.
The Other Real Estate Partnerships provide an allowance for doubtful
accounts against the portion of tenant accounts receivable which is estimated to
be uncollectible. Accounts receivable in the combined balance sheets are shown
net of an allowance for doubtful accounts of $379 and $314 as of December 31,
1996 and December 31, 1995, respectively.
INVESTMENT IN REAL ESTATE AND DEPRECIATION:
Effective January 1, 1995, the Other Real Estate Partnerships adopted
Financial Accounting Standards Statement No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Real estate
assets are carried at the lower of depreciated cost or fair value as determined
by the Other Real Estate Partnerships. The Other Real Estate Partnerships review
their properties on a quarterly basis for impairment and provide a provision if
impairments are determined. First, to determine if impairment may exist, the
Other Real Estate Partnerships review their properties and identify those which
have had either an event of change or event of circumstances warranting further
assessment of recoverability. Then, the Other Real Estate Partnerships estimate
the fair value of those properties on an individual basis by capitalizing the
expected net operating income and discounting the expected cash flows of the
properties. Such amounts are then compared to the property's depreciated cost to
determine whether an impairment exists.
Interest expense, real estate taxes and other directly related expenses
incurred during construction periods are capitalized and depreciated commencing
with the date placed in service, on the same basis as the related assets.
Depreciation expense is computed using the straight-line method based on the
following useful lives:
YEARS
-----------
Buildings and Improvements....................................................... 31.5 to 40
Land Improvements................................................................ 15
Furniture, Fixtures and Equipment................................................ 5 to 10
Construction expenditures for tenant improvements and leasing commissions
are capitalized and amortized over the terms of each specific lease. Maintenance
and repairs are charged to expense when incurred. Expenditures for improvements
are capitalized.
When assets are sold or retired, their costs and related accumulated
depreciation are removed from the accounts with the resulting gains or losses
reflected in net income or loss.
F-39
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS:
Cash and Cash Equivalents include all cash and liquid investments with an
initial maturity of three months or less. The carrying amount approximates fair
value due to the short maturity of these investments.
INCOME TAXES:
In accordance with partnership taxation, each of the partners are
responsible for reporting their shares of taxable income or loss. Accordingly,
no provision has been made in the accompanying combined financial statements for
federal, state or local income taxes.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The Other Real Estate Partnerships' financial instruments include short-term
investments, tenant accounts receivable, accounts payable, other accrued
expenses and mortgage loans payable. The fair values of these financial
instruments were not materially different from their carrying or contract
values. The Other Real Estate Partnerships' financial instruments also include
interest rate protection agreements (see Note 4).
DERIVATIVE FINANCIAL INSTRUMENTS:
The Other Real Estate Partnerships' interest rate protection agreements (the
"Agreements") are used to limit the interest rate on the 1994 Mortgage Loan
(hereinafter defined) to 7.2%. As such, receipts resulting from the Agreements
are recognized as adjustments to interest expense. The credit risks associated
with the Agreements are controlled through the evaluation and monitoring of the
creditworthiness of the counterparty. In the event that the counterparty fails
to meet the terms of the Agreements, the Financing Partnership's exposure is
limited to the current value of the interest rate differential, not the notional
amount, and the Financing Partnership's carrying value of the Agreements on the
balance sheet. The Agreements have been executed with a creditworthy financial
institution. As such, the Other Real Estate Partnerships consider the risk of
nonperformance to be remote. In the event that the Financing Partnership
terminates the Agreements, the Financing Partnership would recognize a gain
(loss) from the disposition of the Agreements equal to the amount of cash
received or paid at termination less the carrying value of the Agreements on the
Financing Partnership's balance sheet.
DEFERRED FINANCING COSTS:
Deferred financing costs include fees and costs incurred to obtain long-term
financing. These fees and costs are being amortized over the terms of the
respective loans. Accumulated amortization of deferred financing costs was
$4,517 and $2,636 at December 31, 1996 and 1995, respectively.
4. MORTGAGE LOANS
On June 30, 1994, the Financing Partnership borrowed $300,000 under a
mortgage loan (the "1994 Mortgage Loan"). The 1994 Mortgage Loan is
cross-collateralized by, among other things, first mortgage liens on the 195
properties owned by the Financing Partnership. The 1994 Mortgage Loan will
mature on June 30, 1999, unless extended by the Financing Partnership, subject
to certain conditions, for an
F-40
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
4. MORTGAGE LOANS (CONTINUED)
additional two-year period, thereby maturing on June 30, 2001. The Operating
Partnership has guaranteed certain obligations of the Financing Partnership
under the 1994 Mortgage Loan. The 1994 Mortgage Loan provides for interest only
payments which have been effectively limited to 7.2% through June 30, 1999 by
certain interest rate protection agreements. Interest payable related to the
1994 Mortgage Loan was $1,750 and $1,905 at December 31, 1996 and 1995,
respectively. Payments to the Financing Partnership under the interest rate
protection agreements during 1996, 1995 and 1994 totaled $0, $584 and $51,
respectively, which have been included as a component of interest expense.
In conjunction with obtaining the 1994 Mortgage Loan, the Financing
Partnership purchased an interest rate protection agreement which effectively
limited the interest rate during the initial five-year term of the 1994 Mortgage
Loan to 7.2% per annum. Prior to the subsequent replacement of this interest
rate protection agreement, its cost of $18,450 had been capitalized and was
being amortized over the five-year term of the agreement.
Effective July 1, 1995, the Financing Partnership replaced such interest
rate protection agreement with new interest rate protection agreements with a
notional value of $300,000, which effectively limit the annual interest rate on
the 1994 Mortgage Loan to 7.2% through June 30, 1999. As a result of the
replacement of the interest rate protection agreement, the Financing Partnership
incurred a one-time loss of $6,410, of which $6,288 represents the difference
between the unamortized cost of the replaced interest rate protection agreement
and the cost of the new agreements. The costs of the new interest rate
protection agreements have been capitalized and are being amortized over the
respective terms of the agreements. Under the terms of the new interest rate
protection agreements, certain collateral may be required to be set aside for
amounts that could become due under the agreements. Accumulated amortization on
the interest rate protection agreements was $1,819 and $607 as of December 31,
1996 and 1995, respectively.
At December 31, 1996, the fair market value of the interest rate protection
agreements was approximately $3,900. The fair market value was determined by a
third party evaluation and is based on estimated discounted future cash flows.
Under the terms of the 1994 Mortgage Loan, certain cash reserves are
required to be and have been set aside for payment of tenant improvements,
capital expenditures, interest, real estate taxes, insurance and potential
environmental costs. The amount of cash reserves for payment of potential
environmental costs was determined by the lender and was established at the
closing of the 1994 Mortgage Loan. The amounts included in the cash reserves
relating to payments of tenant improvements, capital expenditures, interest,
real estate taxes and insurance were determined by the lender and approximate
the next periodic payment of such items. At December 31, 1996 and 1995, these
reserves totaled $10,223 and $8,787, respectively, and are included in
Restricted Cash. Such cash reserves were invested in a money market fund at
December 31, 1996. The maturity of these investments is one day; accordingly,
cost approximates fair market value.
On December 29, 1995, the Mortgage Partnership borrowed $40,200 under a
mortgage loan (the "1995 Mortgage Loan"). In the first quarter of 1996, the
Mortgage Partnership made a one time paydown of $200 on the 1995 Mortgage Loan
decreasing the outstanding balance to $40,000. The 1995 Mortgage Loan matures on
January 11, 2026 and provides for interest only payments through January 11,
1998, after which monthly principal and interest payments are required based on
a 28-year amortization schedule. The
F-41
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
4. MORTGAGE LOANS (CONTINUED)
interest rate under the 1995 Mortgage Loan is fixed at 7.22% per annum through
January 11, 2003. After January 11, 2003, the interest rate adjusts through a
predetermined formula based on the applicable Treasury rate. Interest payable
related to the 1995 Mortgage Loan was $168 and $24 at December 31, 1996 and
1995, respectively. The 1995 Mortgage Loan is collateralized by 23 properties
held by the Mortgage Partnership.
Under the terms of the 1995 Mortgage Loan, certain cash reserves are
required to be and have been set aside for payments of security deposits,
capital expenditures, interest, real estate taxes and insurance. The amount of
cash reserves segregated for security deposits is adjusted as tenants turn over.
The amounts included in the cash reserves relating to payments of capital
expenditures, interest, real estate taxes and insurance were determined by the
lender and approximate the next periodic payment of such items. At December 31,
1996 and 1995, these reserves totaled $1,614 and $388, respectively, and are
included in Restricted Cash. Such cash reserves were invested in a money market
fund at December 31, 1996. The maturity of these investments is one day;
accordingly, cost approximates fair market value.
On December 14, 1995, the Harrisburg Partnership entered into a $6,650
mortgage loan (the "Harrisburg Mortgage Loan") that is collateralized by three
properties in Harrisburg, Pennsylvania. The Harrisburg Mortgage Loan bears
interest at a rate based on LIBOR plus 1.5% or prime plus 2.25%, at the
Company's option, and provides for interest only payments through May 31, 1996,
with monthly principal and interest payments required subsequently based on a
26.5-year amortization schedule. At December 31, 1996, the interest rate was
6.875%. The Harrisburg Mortgage Loan will mature on December 15, 2000. The
outstanding mortgage loan balance at December 31, 1996 and 1995 was
approximately $6,504 and $6,650, respectively. Interest payable related to the
Harrisburg Mortgage Loan was $39 and $0 at December 31, 1996 and 1995,
respectively.
The following is a schedule of mortgage principal payments and maturities of
the mortgage loans for the next five years ending December 31, and thereafter:
AMOUNT
----------
1997 $ 251
1998 686
1999 300,760
2000 6,298
2001 566
Thereafter 37,943
----------
Total $ 346,504
----------
----------
The 1994 Mortgage Loan matures in 1999 but may be extended at the Financing
Partnership's option, subject to certain conditions, for an additional two
years, thereby maturing on June 30, 2001.
F-42
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
5. FUTURE RENTAL REVENUES
The Other Real Estate Partnerships' properties are leased to tenants under
net and semi-net operating leases. Minimum lease payments receivable, excluding
tenant reimbursements of expenses, under noncancelable operating leases in
effect as of December 31, 1996 are approximately as follows:
1997 $ 79,638
1998 67,685
1999 53,070
2000 39,469
2001 24,893
Thereafter 62,247
---------
Total $ 327,002
---------
---------
6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information:
SIX MONTHS
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------ ------------ ------------
Interest paid, net of capitalized interest............................... $ 24,240 $ 21,993 $ 7,920
------------ ------------ ------------
------------ ------------ ------------
Interest capitalized..................................................... $ 0 $ 58 $ 30
------------ ------------ ------------
------------ ------------ ------------
Supplemental schedule of noncash investing and financing activities:
Sale of interest rate protection agreement............................... $ -- $ 8,472 $ --
Purchase of interest rate protection agreements.......................... -- (8,472) --
------------ ------------ ------------
$ -- $ -- $ --
------------ ------------ ------------
------------ ------------ ------------
In conjunction with the property acquisitions, the following assets, liabilities and capital were assumed:
Purchase of real estate, net............................................. $ -- $ 131,897 $ 496,147
Deferred rent receivable................................................. 318 387 --
Restricted cash.......................................................... -- 388 --
Deferred financing costs................................................. -- 854 --
Other assets............................................................. -- 993 --
Accounts receivable...................................................... -- -- 3,276
Accounts payable and accrued expenses.................................... -- (513) (29,949)
Mortgage loans........................................................... -- -- (241,672)
Acquisition facilities payable........................................... -- (81,450) --
Limited partnership interest............................................. (318) (52,556) --
------------ ------------ ------------
Acquisition of Real Estate............................................... $ -- $ -- $ 227,802
------------ ------------ ------------
------------ ------------ ------------
On June 30, 1994, the Other Real Estate Partnerships received the following
non-cash contributions:
Acquisition of interest in properties, net.................. $ (34,436)
Deferred rent receivable.................................... 4,743
Other assets, net........................................... 2,318
Contributions other, net.................................... 27,375
-----------
$ --
-----------
-----------
F-43
OTHER REAL ESTATE PARTNERSHIPS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Other Real Estate Partnerships are
involved in legal actions arising from the ownership of its properties. In
management's opinion, the liabilities, if any, that may ultimately result from
such legal actions are not expected to have a materially adverse effect on the
combined financial position, operations or liquidity of the Other Real Estate
Partnerships.
Sixteen properties have leases granting the tenants options to purchase the
property. Such options are exercisable at various times and at appraised fair
market value or at a fixed purchase price generally in excess of the Other Real
Estate Partnerships' purchase price. The Other Real Estate Partnerships have not
received notice for the exercise of any tenant purchase options.
8. SUBSEQUENT EVENTS (UNAUDITED)
On March 17, 1997, the Pennsylvania Partnership purchased a 312,500 square
foot bulk warehouse in York, Pennsylvania for approximately $8.4 million.
On March 24, 1997, the Pennsylvania Partnership purchased a 162,500 square
foot light industrial warehouse in Mechanicsburg, Pennsylvania for approximately
$3.4 million.
On April 4, 1997, the Operating Partnership borrowed $309.8 million from an
institutional lender (the "Defeasance Loan"). The Defeasance Loan is unsecured,
bears interest at LIBOR plus 1% and matures July 1, 1999, unless extended by the
Operating Partnership, subject to certain conditions, for an additional two-year
period, thereby maturing July 1, 2001. The gross proceeds from the Defeasance
Loan were contributed to the Financing Partnership which used the gross proceeds
to defease (as defined by the terms of the 1994 Mortgage Loan agreement) the
1994 Mortgage Loan.
F-44
OTHER REAL ESTATE PARTNERSHIPS
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PROPERTY DATA)
OTHER REAL ESTATE PARTNERSHIPS
----------------------------------------
SIX MONTH
PERIOD
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------ ------------ ------------
STATEMENTS OF OPERATIONS DATA:
Total Revenues........................................................ $ 102,322 $ 79,032 $ 36,953
Property Expenses..................................................... 28,933 20,824 9,733
Interest Expense...................................................... 24,268 22,010 9,781
Amortization of Interest Rate Protection Agreements and Deferred
Financing Costs...................................................... 3,090 4,216 2,717
Depreciation and Other Amortization................................... 21,737 17,177 7,886
Disposition of Interest Rate Protection Agreement..................... -- 6,410 --
------------ ------------ ------------
Net Income............................................................ $ 24,294 $ 8,395 $ 6,836
------------ ------------ ------------
------------ ------------ ------------
BALANCE SHEET DATA (AT END OF PERIOD):
Net Investment in Real Estate......................................... $ 613,685 $ 597,227 $ 461,238
Total Assets.......................................................... 662,287 643,165 524,042
Mortgage Loans Payable................................................ 346,504 346,850 300,000
Total Liabilities..................................................... 359,830 357,564 313,136
Partners' Capital..................................................... $ 302,457 $ 285,601 $ 210,906
OTHER DATA:
Cash Flows From:
Operating Activities................................................ $ 44,650 $ 29,663 $ (15,693)
Investing Activities................................................ (34,084) (15,592) (236,003)
Financing Activities................................................ (9,132) (21,142) 260,647
Gross Leasable Area at End of Period.................................. 20,049,083 19,073,834 14,312.040
Total Properties at End of Period..................................... 242 241 196
F-45
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with the
issuance and distribution of the securities registered hereby, which will be
borne by the Company:
Securities and Exchange Commission registration fee............. $ 151,515
NASD filing fee................................................. 30,500
Fees of Rating Agencies......................................... 412,500
Printing and duplicating expenses............................... 600,000
Legal fees and expenses......................................... 600,000
Blue sky fees and expenses...................................... 30,000
Accounting fees and expenses.................................... 75,000
Miscellaneous................................................... 100,000
---------
Total....................................................... $1,999,515
---------
---------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Articles of Incorporation and Amended and Restated
Bylaws provide certain limitations on the liability of the Company's directors
and officers for monetary damages to the Company. The Articles of Incorporation
and Bylaws obligate the Company to indemnify its directors and officers, and
permit the Company to indemnify its employees and other agents, against certain
liabilities incurred in connection with their service in such capacities. These
provisions could reduce the legal remedies available to the Company and its
stockholders against these individuals. The provisions of Maryland law provide
for the indemnification of officers and directors of a company under certain
circumstances.
The Fourth Amended and Restated Agreement of Limited Partnership of the
Operating Partnership contains provisions indemnifying the Company and its
officers, directors and stockholders to the fullest extent permitted by the
Delaware Revised Uniform Limited Partnership Act.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
4.1 Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit
3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No. 1-13102).
4.2 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 4.1 of the Company's
Registration Statement on Form S-3, File No. 333-03999).
4.3 Articles of Amendment to the Company's Articles of Incorporation dated June 20, 1994 (incorporated by
reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996,
File No. 1-13102).
4.4 Articles Supplementary relating to the Company's 9 1/2% Series A Cumulative Preferred Stock, $.01 par
value (incorporated by reference to Exhibit 3.4 of the Form 10-Q of the Company for the fiscal
quarter ended June 30, 1996, File No. 1-13102).
II-1
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
4.5 Articles of Amendment to the Company's Articles of Incorporation dated May 31, 1996 (incorporated by
reference to Exhibit 3.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996,
File No. 1-13102).
4.6 Articles Supplementary relating to the Company's 8 3/4% Series B Cumulative Preferred Stock, $.01 par
value (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the fiscal
quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File
No. 1-13102).
4.7 Deposit Agreement, dated May 14, 1997, by and among the Company, First Chicago Trust Company of New
York and holders from time to time of Depositary Receipts (incorporated by reference to Exhibit 4.3
of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as amended by Form
10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102).
4.8 Articles Supplementary relating to the Company's 8 5/8% Series C Cumulative Preferred Stock, $.01 par
value (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company dated June 6, 1997,
File No. 1-13102).
4.9 Deposit Agreement, dated June 6, 1997, by and among the Company, First Chicago Trust Company of New
York and holders from time to time of Depositary Receipts (incorporated by reference to Exhibit 4.3
of the Form 8-K of the Company dated June 6, 1997, File No. 1-13102).
4.10** Articles Supplementary relating to the Company's Junior Participating Preferred Stock, $.01 par value
4.11 Certificate of Limited Partnership of the Operating Partnership, as amended (incorporated by
reference to Exhibit 4.6 of the Registration Statement on Form S-3 of the Company and the Operating
Partnership, File No. 333-21873).
4.12 Fourth Amended and Restated Limited Partnership Agreement of the Operating Partnership (the
"Partnership Agreement") (incorporated by reference to Exhibit 10.1 of the Form 8-K of the Company
dated June 13, 1997, File No. 1-13102).
4.13 First Amendment to the Partnership Agreement (incorporated by reference to Exhibit 10.3 of the Form
10-Q/A No. 1 of the Company filed August 26, 1997).
4.14 Second Amendment to the Partnership Agreement (incorporated by reference to Exhibit 10.4 of the Form
10-Q/A No. 1 of the Company filed August 26, 1997).
4.15** Third Amendment to the Partnership Agreement.
4.16** Fourth Amendment to the Partnership Agreement.
4.17** Fifth Amendment to the Partnership Agreement.
4.18** Sixth Amendment to the Partnership Agreement.
4.19 Indenture, dated as of May 13, 1997, between the Operating Partnership and First Trust National
Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company for
the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30,
1997, File No. 1-13102).
II-2
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
4.20 Supplemental Indenture No. 1, dated as of May 13, 1997, between the Operating Partnership and First
Trust National Association as Trustee relating to $150 million of 7.60% Notes due 2007 and $100
million of 7.15% Notes due 2027 (incorporated by reference to Exhibit 4.2 of the Form 10-Q of the
Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company
filed May 30, 1997, file No. 1-13102).
4.21 Supplemental Indenture No. 2, dated as of May 22, 1997, between the Operating Partnership and First
Trust National Association as Trustee relating to $100 million of 7 3/8% Notes due 2011 (incorporated
by reference to exhibit 4.4 of the Form 10-Q of the Operating Partnership for the fiscal quarter
ended March 31, 1997, file No. 333-21873).
4.22 Trust Agreement, dated as of May 16, 1997, between the Operating Partnership and First Bank National
Association, as trustee (incorporated by reference to exhibit 4.5 of the Form 10-Q of the Operating
Partnership for the fiscal quarter ended March 31, 1997, file No. 333-21873).
4.23** Rights Agreement, dated as of September 16, 1997, between the Company and First Chicago Trust Company
of New York, as Rights Agent.
5* Opinion of Cahill Gordon & Reindel, counsel to the Registrants, as to the legality of the securities
being registered, together with the opinion of McGuire Woods Battle & Boothe LLP.
8* Opinion of Cahill Gordon & Reindel, counsel to the Registrants, as to certain tax matters.
12.1** Computation of ratios of earnings to fixed charges and preferred stock dividends of the Company.
12.2** Computation of ratios of earnings to fixed charges of the Operating Partnership.
23.1** Consent of Coopers & Lybrand L.L.P.
23.2* Consent of Cahill Gordon & Reindel (included in Exhibit 5 and Exhibit 8).
23.3* Consent of McGuire Woods Battle & Boothe LLP (included in Exhibit 5).
24* Power of Attorney (included on page II-5 of the Registration Statement as initially filed).
25 Statement of eligibility of Trustee on Form T-1 (incorporated by reference to Exhibit 25 of the
Registration Statement on Form S-3 of the Company and the Operating Partnership, File No. 333-21873).
27.1 Financial Data Schedule of the Company (incorporated by reference to Exhibit 27 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102).
27.2* Financial Data Schedule of the Operating Partnership.
- ------------------------
* Previously filed.
** Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
II-3
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b)
under the Securities Act of 1933 if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the undersigned registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The registrants hereby undertake that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the annual report
of either of the registrants pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the provisions described under Item 15 above, or
otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred
or paid by a director, officer, or controlling person of the registrants in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrants will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
(d) The undersigned registrants hereby undertake to file an application for the
purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act ("Act") in
accordance with the rules and regulations prescribed by the Commission under
section 305(b)(2) of the Act.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago, State of Illinois, on September 23,
1997.
FIRST INDUSTRIAL REALTY TRUST, INC.
By: /s/ MICHAEL J. HAVALA
-----------------------------------------
Name: Michael J. Havala
Title: Chief Financial Officer
FIRST INDUSTRIAL, L.P.
By: First Industrial Realty Trust, Inc.
By: /s/ MICHAEL J. HAVALA
-----------------------------------------
Name: Michael J. Havala
Title: Chief Financial Officer
II-5
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
*
- ------------------------------ Principal Executive September 23, 1997
Michael T. Tomasz Officer and Director
/s/ MICHAEL J. HAVALA
- ------------------------------ Principal Financial and September 23, 1997
Michael J. Havala Accounting Officer
*
- ------------------------------ Chief Operating Officer September 23, 1997
Michael W. Brennan and Director
*
- ------------------------------ Director September 23, 1997
Michael G. Damone
*
- ------------------------------ Director September 23, 1997
Kevin W. Lynch
*
- ------------------------------ Director September 23, 1997
John E. Rau
*
- ------------------------------ Chairman of the Board of September 23, 1997
Jay H. Shidler Directors
*
- ------------------------------ Director September 23, 1997
Robert J. Slater
*
- ------------------------------ Director September 23, 1997
J. Steven Wilson
II-6
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------------------------- ----------------------
*
--------------------------------- Director September 23, 1997
John L. Lesher
*By: /s/ MICHAEL J. HAVALA
---------------------------------------
Michael J. Havala
ATTORNEY-IN-FACT
II-7
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
- ---------- ------------------------------------------------------------------------------------------------- -----------
4.1 Amended and Restated Articles of Incorporation of the Company (incorporated by reference to
Exhibit 3.1 of the Form 10-Q of the Company for the fiscal quarter ended June 30, 1996, File No.
1-13102).
4.2 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 4.1 of the
Company's Registration Statement on Form S-3, File No. 333-03999).
4.3 Articles of Amendment to the Company's Articles of Incorporation dated June 20, 1994
(incorporated by reference to Exhibit 3.2 of the Form 10-Q of the Company for the fiscal quarter
ended June 30, 1996, File No. 1-13102).
4.4 Articles Supplementary relating to the Company's 9 1/2% Series A Cumulative Preferred Stock, $.01
par value (incorporated by reference to Exhibit 3.4 of the Form 10-Q of the Company for the
fiscal quarter ended June 30, 1996, File No. 1-13102).
4.5 Articles of Amendment to the Company's Articles of Incorporation dated May 31, 1996 (incorporated
by reference to Exhibit 3.3 of the Form 10-Q of the Company for the fiscal quarter ended June 30,
1996, File No. 1-13102).
4.6 Articles Supplementary relating to the Company's 8 3/4% Series B Cumulative Preferred Stock, $.01
par value (incorporated by reference to Exhibit 3.1 of the Form 10-Q of the Company for the
fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed May 30,
1997, File No. 1-13102).
4.7 Deposit Agreement, dated May 14, 1997, by and among the Company, First Chicago Trust Company of
New York and holders from time to time of Depositary Receipts (incorporated by reference to
Exhibit 4.3 of the Form 10-Q of the Company for the fiscal quarter ended March 31, 1997, as
amended by Form 10-Q/A No. 1 of the Company filed May 30, 1997, File No. 1-13102).
4.8 Articles Supplementary relating to the Company's 8 5/8% Series C Cumulative Preferred Stock, $.01
par value (incorporated by reference to Exhibit 4.1 of the Form 8-K of the Company dated June 6,
1997, File No. 1-13102).
4.9 Deposit Agreement, dated June 6, 1997, by and among the Company, First Chicago Trust Company of
New York and holders from time to time of Depositary Receipts (incorporated by reference to
Exhibit 4.3 of the Form 8-K of the Company dated June 6, 1997, File No. 1-13102).
4.10** Articles Supplementary relating to the Company's Junior Participating Preferred Stock, $.01 par
value
4.11 Certificate of Limited Partnership of the Operating Partnership, as amended (incorporated by
reference to Exhibit 4.6 of the Registration Statement on Form S-3 of the Company and the
Operating Partnership, File No. 333-21873).
4.12 Fourth Amended and Restated Limited Partnership Agreement of the Operating Partnership (the
"Partnership Agreement") (incorporated by reference to Exhibit 10.1 of the Form 8-K of the
Company dated June 13, 1997, File No. 1-13102).
4.13 First Amendment to the Partnership Agreement (incorporated by reference to Exhibit 10.3 of the
Form 10-Q/A No. 1 of the Company filed August 26, 1997).
4.14 Second Amendment to the Partnership Agreement (incorporated by reference to Exhibit 10.4 of the
Form 10-Q/A No. 1 of the Company filed August 26, 1997).
4.15** Third Amendment to the Partnership Agreement.
4.16** Fourth Amendment to the Partnership Agreement.
4.17** Fifth Amendment to the Partnership Agreement.
4.18** Sixth Amendment to the Partnership Agreement.
4.19 Indenture, dated as of May 13, 1997, between the Operating Partnership and First Trust National
Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Form 10-Q of the Company
for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of the Company filed
May 30, 1997, File No. 1-13102).
4.20 Supplemental Indenture No. 1, dated as of May 13, 1997, between the Operating Partnership and
First Trust National Association as Trustee relating to $150 million of 7.60% Notes due 2007 and
$100 million of 7.15% Notes due 2027 (incorporated by reference to Exhibit 4.2 of the Form 10-Q
of the Company for the fiscal quarter ended March 31, 1997, as amended by Form 10-Q/A No. 1 of
the Company filed May 30, 1997, file No. 1-13102).
4.21 Supplemental Indenture No. 2, dated as of May 22, 1997, between the Operating Partnership and
First Trust National Association as Trustee relating to $100 million of 7 3/8% Notes due 2011
(incorporated by reference to exhibit 4.4 of the Form 10-Q of the Operating Partnership for the
fiscal quarter ended March 31, 1997, file No. 333-21873).
4.22 Trust Agreement, dated as of May 16, 1997, between the Operating Partnership and First Bank
National Association, as trustee (incorporated by reference to exhibit 4.5 of the Form 10-Q of
the Operating Partnership for the fiscal quarter ended March 31, 1997, file No. 333-21873).
4.23** Rights Agreement, dated as of September 16, 1997, between the Company and First Chicago Trust
Company of New York, as Rights Agent.
5* Opinion of Cahill Gordon & Reindel, counsel to the Registrants, as to the legality of the
securities being registered, together with the opinion of McGuire Woods Battle & Boothe LLP.
8* Opinion of Cahill Gordon & Reindel, counsel to the Registrants, as to certain tax matters.
12.1** Computation of ratios of earnings to fixed charges and preferred stock dividends of the Company.
12.2** Computation of ratios of earnings to fixed charges of the Operating Partnership.
23.1** Consent of Coopers & Lybrand L.L.P.
23.2* Consent of Cahill Gordon & Reindel (included in Exhibit 5 and Exhibit 8).
23.3* Consent of McGuire Woods Battle & Boothe LLP (included in Exhibit 5).
24* Power of Attorney (included on page II-5 of the Registration Statement as initially filed).
25 Statement of eligibility of Trustee on Form T-1 (incorporated by reference to Exhibit 25 of the
Registration Statement on Form S-3 of the Company and the Operating Partnership, File No.
333-21873).
27.1 Financial Data Schedule of the Company (incorporated by reference to Exhibit 27 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, File No. 1-13102).
27.2* Financial Data Schedule of the Operating Partnership.
- ------------------------
* Previously filed.
** Filed herewith.
EXHIBIT 4.10
FIRST INDUSTRIAL REALTY TRUST, INC.
__________
Articles Supplementary of Board of Directors Classifying
and Designating a Series of Preferred Stock as
Junior Participating Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series
__________
First Industrial Realty Trust, Inc., a Maryland corporation, having
its principal office in the State of Maryland in the City of Baltimore (the
"Company"), hereby certifies to the State Department of Assessments and Taxation
of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the
Charter and Bylaws of the Company, the Board of Directors pursuant to
resolutions adopted on September 4 1997 (i) authorized the creation and issuance
of up to 1,000,000 shares of Junior Participating Preferred Stock which stock
was previously authorized but not issued and (ii) determined the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of the shares
of such series and the Dividend Rate payable on such series. Such preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, number of
shares and Dividend Rate are as follows:
Section 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred
Stock shall be designated the Junior Participating Preferred Stock (the
"Preferred Shares") and the number of shares which shall constitute such series
shall be
-2-
1,000,000 shares, par value $.01 per share. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of Preferred Shares to a number less than
the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Preferred Shares.
Section 2. DIVIDEND RIGHTS. (1) Subject to the rights of holders of
any shares of any series of Preferred Stock (or any similar stock) ranking prior
and superior to the Preferred Shares with respect to dividends, the holders of
Preferred Shares shall be entitled prior to the payment of any dividends on
shares ranking junior to the Preferred Shares to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of February, May,
August and November in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Preferred Shares, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions (other than a dividend payable in
shares of common stock, par value $0.01 per share, of the Company (the "Common
Stock") or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise)) declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Preferred Shares. In the event the Company shall at any
time (i) declare or pay any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of Preferred Shares were enti-
-3-
tled immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(2) The Company shall declare a dividend or distribution on the
Preferred Shares as provided in subparagraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Preferred Shares
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(3) Dividends shall begin to accrue and be cumulative on outstanding
Preferred Shares from the Quarterly Dividend Payment Date next preceding the
date of issue of such Preferred Shares, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of Preferred
Shares entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the Preferred
Shares in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of Preferred
Shares entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
-4-
Section 3. LIQUIDATION. (1) Upon any liquidation, dissolution or
winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Shares unless, prior thereto, the
holders of shares of Preferred Shares shall have received $1.00 per share
(the "Liquidation Preference"), plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment. Following the payment of the full amount of the Liquidation
Preference, no additional distributions shall be made to the holders of
shares of Preferred Shares unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stocks splits, stock
dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Liquidation Preference and the Common Adjustment in
respect of all outstanding Preferred Shares and shares of Common Stock,
respectively, holders of Preferred Shares and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with
respect to the Preferred Shares and Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Preferred Shares, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.
-5-
(C) In the event the Company shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 4. NO REDEMPTION. (1) Except as provided below, the
Preferred Shares shall not be redeemable.
(2) The Preferred Shares are subject to the provisions of Article IX
of the Charter, including, without limitation, the provisions for the redemption
of Excess Stock (as defined in such Article).
Section 5. VOTING RIGHTS. The holders of Preferred Shares shall have
the following voting rights:
(1) Subject to the provision for adjustment hereinafter set forth,
each Preferred Share shall entitle the holder thereof to 100 votes on all
matters voted on at a meeting of the stockholders of the Company. In the event
the Company shall at any time (i) declare or pay any dividend on Common Stock
payable in shares of Common Stock, or (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of
Preferred Shares were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided herein or by law, the holders of
Preferred Shares and the holders of shares of
-6-
Common Stock and any other capital stock of the Company having general voting
rights shall vote together as one voting group on all matters submitted to a
vote of stockholders of the Company.
(3) Except as set forth herein or as otherwise provided by law,
holders of Preferred Shares shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 6. CERTAIN RESTRICTIONS.
(1) Whenever quarterly dividends or other dividends or distributions
payable on the Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on Preferred Shares outstanding shall have been paid in full,
the Company shall not:
declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Shares;
declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Shares, except
dividends paid ratably on the Preferred Shares and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Preferred Shares, provided that the
Company may at any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of
-7-
any stock of the Company ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Preferred Shares; or
purchase or otherwise acquire for consideration any shares of
Preferred Shares or any shares of stock ranking on a parity with the
Preferred Shares, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company unless
the Company could, under subparagraph (A) of this Section 6, purchase or
otherwise acquire such shares at such time and in such manner.
Section 7. REACQUIRED SHARES. Any Preferred Shares purchased or otherwise
acquired by the Company in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein or in the Charter.
Section 8. MERGER, CONSOLIDATION, ETC. In case the Company shall
enter into any merger, consolidation, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each Preferred
Share shall at the same time be similarly exchanged or changed into an amount
per share (subject to the provision for adjustment hereinafter set forth) equal
to 100 times the aggregate amount of stock, securities, cash and/or any other
property
-8-
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Company shall at any
time (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change of
Preferred Shares shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 9. RANKING. The Preferred Shares shall rank, with respect
to the payment of dividends and distribution of assets, junior to all series of
any other class of the Company's Preferred Stock unless the terms of any such
series shall provide otherwise.
Section 10. AMENDMENT. The Charter, including the Articles
Supplementary establishing the rights and preferences of the Preferred Shares,
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Preferred Shares so as to affect
them adversely without the affirmative vote of the holders of a majority of the
outstanding shares of Preferred Shares, voting separately as one voting group.
Section 11. FRACTIONAL SHARES. Preferred Shares may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Preferred Shares.
-9-
IN WITNESS WHEREOF, the Company has caused these Articles
Supplementary to be signed in its name and on its behalf and attested to by the
undersigned on this 5th day of September, 1997 and the undersigned acknowledges
under the penalties of perjury that these Articles Supplementary are the
corporate act of said Company and that to the best of his knowledge, information
and belief, the matters and facts set forth herein are true in all material
respects.
FIRST INDUSTRIAL REALTY TRUST, INC.
By: /s/ Michael T. Tomasz
------------------------------
Name: Michael T. Tomasz
Title: President and Chief
Executive Officer
Attest:
/s/ Michael J. Havala
- -----------------------------------
Name: Michael J. Havala
Title: Chief Financial Officer and
Secretary
Exhibit 4.15
THIRD AMENDMENT TO
FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
FIRST INDUSTRIAL, L.P.
The undersigned, being the sole general partner of First Industrial, L.P.
(the "Partnership"), a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act and pursuant to the terms of that certain Fourth
Amended and Restated Limited Partnership Agreement, dated June 6, 1997 (as
amended by the first amendment thereto dated June 20, 1997 [the "First
Amendment"] and the second amendment thereto dated June 30, 1997 [the "Second
Amendment"], collectively, the "Partnership Agreement"), does hereby amend the
Partnership Agreement as follows:
Capitalized terms used but not defined in this Third Amendment shall have
the same meanings that are ascribed to them in the Partnership Agreement.
1. ADDITIONAL LIMITED PARTNERS. The Persons identified on SCHEDULE 1
hereto are hereby admitted to the Partnership as Additional Limited Partners
owning the number of Units and having made the Capital Contributions set forth
on such SCHEDULE 1. Such persons hereby adopt the Partnership Agreement.
2. SCHEDULE OF PARTNERS. EXHIBIT 1B to the Partnership Agreement is
hereby deleted in its entirety and replaced by EXHIBIT 1B hereto which
identifies the Partners following consummation of the transactions referred to
in Section 1 hereof.
3. PROTECTED AMOUNTS. In connection with the transactions consummated
pursuant to that certain Contribution Agreement (the "Contribution Agreement"),
dated June 30, 1997, by and between FR Acquisitions, Inc., a Maryland
corporation (it having assigned its entire right, title and interest in and to
the Contribution Agreement to the Partnership), and the other parties listed on
the signature pages of the Contribution Agreement, certain Protected Amounts are
being established for the Additional Limited Partners admitted pursuant to this
Third Amendment, which Protected Amounts are reflected on EXHIBIT 1D attached
hereto and shall be incorporated as part of EXHIBIT 1D of the Partnership
Agreement.
4. RATIFICATION. Except as expressly modified by this Third Amendment,
all of the provisions of the Partnership Agreement are affirmed and ratified and
remain in full force and effect.
Dated: July 18, 1997
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK;
SIGNATURE PAGE TO FOLLOW]
EXHIBIT 1B
SCHEDULE OF PARTNERS
--------------------
GENERAL PARTNER NUMBER OF UNITS
First Industrial Realty Trust, Inc. 30,135,617
LIMITED PARTNERS
Daniel R. Andrew, TR of the Daniel R.
Andrew Trust UA Dec 29 92 137,489
BK Columbus Venture 24,789
John E. de B Blockey, TR of the John E.
De B Blockey Trust 8,187
Michael W. Brennan 7,587
Edward Burger 9,261
National Discount Brokers
NBD Acct. # 4KB-432708 770
National Discount Brokers
NBD Acct. # 4KB-432690 770
LIMITED PARTNERS NUMBER OF UNITS
Henry D. Bullock & Terri D. Bullock TR
of the Henry D. & Terri D. Bullock
Trust UA Aug 28 92 12,551
Michael G Damone, TR of the Michael G.
Damone Trust UA Nov 4 69 144,296
Robert L. Denton 6,286
Henry E. Dietz Trust UA Jan 16 81 36,476
W. Allen Doane TR of the W. Allen
Doane Trust UA May 31, 91 4,416
Timothy Donohue 2,000
Farlow Road Associates Limited Partnership 2,751
Thelma C. Gretzinger Trust 450
Clay Hamlin & Lynn Hamlin JT TEN WROS 15,159
Highland Associates Limited Partnership 69,039
Robert W. Holman Jr. 150,134
Steven B. Hoyt 220,080
LIMITED PARTNERS NUMBER OF UNITS
Frederick K. Ito 3,880
Michael W. Jenkins 3,831
Peter Kepic 9,261
Paul T. Lambert 39,737
Lambert Investment Corporation 13,606
LGR Investment Fund Ltd 22,556
Duane Lund 617
Eileen Millar 2,880
Linda Miller 2,000
Peter Murphy 56,184
Anthony Muscatello 81,654
North Star Associates Limited Partnership 19,333
Arden O'Connor 63,845
LIMITED PARTNERS NUMBER OF UNITS
Peter O'Connor 66,181
Shidler Equities LP 254,541
Eduardo Paneque 2,000
Partridge Road Associates Limited
Partnership 2,751
James C. Reynolds 38,697
Shadeland Associates Limited Partnership 42,976
Shadeland Corporation 4,442
Jay H. Shidler 65,118
Jay H. Shidler & Wallette A. Shidler
TEN ENT 1,223
Michael B. Slade 2,829
Kevin Smith 13,571
Robert Stein 56,778
S. Larry Stein 56,778
LIMITED PARTNERS NUMBER OF UNITS
Jonathan Stott 130,026
Michael T. Tomasz 23,868
Mark S. Whiting 25,206
Holman/Shidler Investment Corporation 22,079
Joseph Dresner 149,531
The Milton Dresner Revocable Trust
dated October 22, 1976 149,531
The Jack Friedman Revocable Living Trust
dated March 23, 1978 26,005
Jernie Holdings Corp. 180,499
Fourbur Family Co., L.P. 50,478
Fourbur Co., L.L.C. 27,987
Jerome Lazarus 18,653
Constance Lazarus 417,961
Susan Burman 523,155
LIMITED PARTNERS NUMBER OF UNITS
Judith Draizin 331,742
Jan Burman 18,653
Danielle Draizin 6,538
Heather Draizin 6,538
Jason Draizin 13,078
Charles T. Andrews 754
Perry C. Caplan 1,388
Charles S. Cook and
Shelby H. Cook, tenants in the entirety 634
George L. Cramer, Jr. 2,262
Darwin B. Dosch 1,388
Charles F. Downs 1,508
Fitz & Smith Partnership 3,410
Dennis G. Goodwin and
Jeannie L. Goodwin, tenants in the entirety 6,166
LIMITED PARTNERS NUMBER OF UNITS
Internal Investment Company 3,016
Thomas J. Johnson, Jr. and
Sandra L. Johnson, tenants in the entirety 2,142
Nourhan Kailian 2,183
Craig R. Martin 754
Joseph Musti 1,508
Dean A. Nachtigall 10,076
Jack F. Ream 1,071
Glenn C. & Linda A. Rexroth 2,142
Andre G. Richard 1,508
Edward C. Roberts and
Rebecca S. Roberts, tenants in the entirety 8,308
W.F.O. Rosenmiller 634
Edward Jon Sarama 634
LIMITED PARTNERS NUMBER OF UNITS
David W. Smith, and
Doris L. Smith, tenants in the entirety 754
Gary L. Smith and
Joyce A. Smith, tenants in the entirety 1,508
SRS PARTNERSHIP 2,142
Barry L. Tracey 2,142
Malcolm Properties, L.L.C. 25,342
R.C.P. Associates,
a New Jersey limited partnership 3,060
The Worlds Fair V Associates,
a New Jersey general partnership 3,340
The Worlds Fair 25 Associates, a Limited
Partnership, a New Jersey limited
partnership 13,677
The Worlds Fair Office Associates,
a New Jersey general partnership 3,343
South Broad Company,
a New Jersey limited partnership 22,534
Gamma Three Associates Limited Partnership,
a New Jersey limited partnership 3,338
Ethel Road Associates,
a New Jersey limited partnership 29,511
Jayeff Associates Limited Partnership,
a New Jersey limited partnership 16,249
Suburban Roseland Associates, a Limited Partnership,
a New Jersey limited partnership 3,002
Worlds Fair Associates,
a New Jersey general partnership 6,134
Punia Company, L.L.C.,
a New Jersey limited liability company 7,117
New Land Associates Limited Partnership,
a New Jersey limited partnership 1,664
Worlds Fair Limited Partnership,
a New Jersey limited partnership 1,664
Montrose Kennedy Associates, 4,874
a New Jersey general partnership
EXHIBIT 1D
PROTECTED AMOUNTS
-----------------
Montrose Kennedy Associates,
a New Jersey general partnership $188,290
SCHEDULE 1
Additional
Limited Partners Number of Units Capital Contribution
- ---------------- --------------- --------------------
Montrose Kennedy Associates, a
New Jersey general partnership 4,874 $144,722.00
Exhibit 4.16
FOURTH AMENDMENT TO
FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
FIRST INDUSTRIAL, L.P.
As of July 31, 1997, the undersigned, being the sole general partner of
First Industrial, L.P. (the "PARTNERSHIP"), a limited partnership formed
under the Delaware Revised Uniform Limited Partnership Act and pursuant to
the terms of that certain Fourth Amended and Restated Limited Partnership
Agreement, dated June 6, 1997 (as amended by the first amendment thereto
dated June 20, 1997, the second amendment thereto dated June 30, 1997 and the
third amendment thereto dated July 18, 1997, collectively, the "PARTNERSHIP
AGREEMENT"), does hereby amend the Partnership Agreement as follows:
Capitalized terms used but not defined in this Fourth Amendment shall have
the same meanings that are ascribed to them in the Partnership Agreement.
1. ADDITIONAL LIMITED PARTNERS. The Persons identified on SCHEDULE 1
hereto are hereby admitted to the Partnership as Additional Limited Partners
owning the number of Units and having made the Capital Contributions set forth
on such SCHEDULE 1. Such persons hereby adopt the Partnership Agreement.
2. SCHEDULE OF PARTNERS. EXHIBIT 1B to the Partnership Agreement is
hereby deleted in its entirety and replaced by EXHIBIT 1B hereto which
identifies the Partners following consummation of the transactions referred to
in Section 1 hereof.
3. PROTECTED AMOUNTS. In connection with the transactions consummated
pursuant to that certain Contribution Agreement (the "CONTRIBUTION AGREEMENT"),
dated June 30, 1997, by and between FR Acquisitions, Inc., a Maryland
corporation (it having assigned its entire right, title and interest in and to
the Contribution Agreement to the Partnership), and the other parties listed on
the signature pages of the Contribution Agreement, certain Protected Amounts are
being established for the Additional Limited Partners admitted pursuant to this
Fourth Amendment, which Protected Amounts are reflected on EXHIBIT 1D attached
hereto and shall be incorporated as part of EXHIBIT 1D of the Partnership
Agreement.
4. RATIFICATION. Except as expressly modified by this Fourth Amendment,
all of the provisions of the Partnership Agreement are affirmed and ratified and
remain in full force and effect.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK;
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the
date first written above.
FIRST INDUSTRIAL REALTY TRUST, INC.,
as sole general partner of the Partnership
By: /s/ Michael Havala
--------------------------------------
Name: Michael Havala
-------------------------------
Title: Chief Financial Officer
------------------------------
EXHIBIT 1B
SCHEDULE OF PARTNERS
--------------------
GENERAL PARTNER NUMBER OF UNITS
First Industrial Realty Trust, Inc. 30,141,117
LIMITED PARTNERS NUMBER OF UNITS
Daniel R. Andrew, TR of the Daniel R.
Andrew Trust UA Dec 29 92 137,489
Charles T. Andrews 754
BK Columbus Venture 24,789
Michael W. Brennan 7,587
National Discount Brokers NBD Acct.
# 4KB-432690 770
National Discount Brokers NBD Acct.
# 4KB-432708 770
Henry D. Bullock & Terri D. Bullock
TR of the Henry D. & Terri D. Bullock
Trust UA Aug 28 92 12,551
Edward Burger 9,261
Jan Burman 18,653
Susan Burman 523,155
Perry C. Caplan 1,388
Charles S. Cook and Shelby H. Cook,
tenants in the entirety 634
George L. Cramer, Jr. 2,262
LIMITED PARTNERS NUMBER OF UNITS
Michael G. Damone, TR of the Michael
G.Damone Trust UA Nov 4 69 144,296
Robert L. Denton 6,286
W. Allen Doane TR of the W. Allen
Doane Trust UA May 31, 91 4,416
Timothy Donohue 2,000
Darwin B. Dosch 1,388
Charles F. Downs 1,508
Danielle Draizin 6,538
Heather Draizin 6,538
Jason Draizin 13,078
Judith Draizin 331,742
Joseph Dresner 149,531
Ethel Road Associates, a New Jersey
limited partnership 29,511
Farlow Road Associates Limited
Partnership 2,751
Fitz & Smith Partnership 3,410
Fourbur Co., L.L.C. 27,987
Fourbur Family Co., L.P. 50,478
Gamma Three Associates Limited
Partnership, a New Jersey limited partnership 3,338
Dennis G. Goodwin and Jeannie L.
Goodwin, tenants in the entirety 6,166
LIMITED PARTNERS NUMBER OF UNITS
Clay Hamlin & Lynn Hamlin JT TEN WROS 15,159
Henry E. Dietz Trust UA Jan 16 81 36,476
Highland Associates Limited Partnership 69,039
Robert W. Holman Jr. 150,134
Holman/Shidler Investment Corporation 22,079
Steven B. Hoyt 22,000
Internal Investment Company 3,016
Frederick K. Ito 3,880
The Jack Friedman Revocable Living
Trust dated March 23, 1978 26,005
Jayeff Associates Limited Partnership, a
New Jersey limited partnership 16,249
Michael W. Jenkins 3,831
Jernie Holdings Corp. 180,499
John E. de Blockey, TR of the John E.
De B Blockey Trust 8,187
Thomas J. Johnson, Jr. and Sandra L.
Johnson, tenants in the entirety 2,142
Nourhan Kailian 2,183
Peter Kepic 9,261
Lambert Investment Corporation 13,606
Paul T. Lambert 39,737
Constance Lazarus 417,961
LIMITED PARTNERS NUMBER OF UNITS
Jerome Lazarus 18,653
LGR Investment Fund Ltd 22,556
Malcolm Properties, L.L.C. 25,342
Shidler Equities LP 254,541
Duane Lund 617
Craig R. Martin 754
Eileen Millar 2,880
Linda Miller 2,000
The Milton Dresner Revocable Trust
dated October 22, 1976 149,531
Montrose Kennedy Associates, a New
Jersey general partnership 4,874
Peter Murphy 56,184
Anthony Muscatello 81,654
Joseph Musti 1,508
Dean A. Nachtigall 10,076
New Land Associates Limited
Partnership, a New Jersey limited
partnership 1,664
North Star Associates Limited Partnership 19,333
Arden O'Connor 63,845
Peter O'Connor 66,181
Eduardo Paneque 2,000
Partridge Road Associates Limited
Partnership 2,751
LIMITED PARTNERS NUMBER OF UNITS
R.C.P. Associates, a New Jersey limited
partnership 3,060
Jack F. Ream 1,071
Glenn C. Rexroth & Linda A. Rexroth 2,142
James C. Reynolds 38,697
Andre G. Richard 1,508
Edward C. Roberts and Rebecca S.
Roberts, tenants in the entirety 8,308
W.F.O. Rosenmiller 634
Edward Jon Sarama 634
Shadeland Associates Limited Partnership 42,976
Shadeland Corporation 4,442
Jay H. Shidler 65,118
Jay H. Shidler & Wallette A. Shidler TEN ENT 1,223
Michael B. Slade 2,829
David W. Smith, and Doris L. Smith,
tenants in the entirety 754
Gary L. Smith and Joyce A. Smith,
tenants in the entirety 1,508
Kevin Smith 13,571
South Broad Company, a New Jersey
limited partnership 22,534
SRS PARTNERSHIP 2,142
Robert Stein 56,778
LIMITED PARTNERS NUMBER OF UNITS
S. Larry Stein 56,778
Jonathan Stott 130,026
Suburban Roseland Associates, a
Limited Partnership, a New Jersey
limited partnership 3,002
Thelma C. Gretzinger Trust 450
Michael T. Tomasz 23,868
Barry L. Tracey 2,142
Mark S. Whiting 25,206
Worlds Fair Associates, a New Jersey
general partnership 6,134
The Worlds Fair Office Associates,
a New Jersey general partnership 3,343
Worlds Fair Partners Limited Partnership,
a New Jersey limited partnership 1,664
The Worlds Fair V Associates, a New
Jersey general partnership 3,340
The Worlds Fair 25 Associates, a Limited
Partnership, a New Jersey limited partnership 13,677
Worlds Fair III Associates, a New Jersey
limited partnership 14,094
South Gold Company, a New Jersey general
partnership 53,000
Punia Company, L.L.C. 82,049
EXHIBIT 1D
PROTECTED AMOUNTS
-----------------
South Gold Company, a New Jersey $1,131,673
general partnership
Worlds Fair III Associates, a New $9,781,305
Jersey limited partnership
SCHEDULE 1
Additional
Limited Partners Number of Units Capital Contribution
- ---------------- --------------- --------------------
South Gold Company, a New Jersey 53,000 $1,558,203.47
general partnership
Worlds Fair III Associates, a New 14,094 $414,375.59
Jersey limited partnership
Punia Company, L.L.C. 82,049 $2,412,231.75
Exhibit 4.17
FIFTH AMENDMENT TO
FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
FIRST INDUSTRIAL, L.P.
As of August 1, 1997, the undersigned, being the sole general partner of
First Industrial, L.P. (the "PARTNERSHIP"), a limited partnership formed under
the Delaware Revised Uniform Limited Partnership Act and pursuant to the terms
of that certain Fourth Amended and Restated Limited Partnership Agreement, dated
June 6, 1997 (as amended by the first amendment thereto dated June 20, 1997, the
second amendment thereto dated June 30, 1997, the third amendment thereto dated
July 18, 1997 and the fourth amendment thereto dated July 31, 1997,
collectively, the "PARTNERSHIP AGREEMENT"), does hereby amend the Partnership
Agreement as follows:
Capitalized terms used but not defined in this Fourth Amendment shall have
the same meanings that are ascribed to them in the Partnership Agreement.
1. ADDITIONAL LIMITED PARTNERS. The Persons identified on SCHEDULE 1
hereto are hereby admitted to the Partnership as Additional Limited Partners
owning the number of Units and having made the Capital Contributions set forth
on such SCHEDULE 1. Such persons hereby adopt the Partnership Agreement.
2. SCHEDULE OF PARTNERS. EXHIBIT 1B to the Partnership Agreement is
hereby deleted in its entirety and replaced by EXHIBIT 1B hereto which
identifies the Partners following consummation of the transactions referred to
in Section 1 hereof.
3. PROTECTED AMOUNTS. In connection with the transactions consummated
pursuant to that certain Contribution Agreement (the "CONTRIBUTION AGREEMENT"),
dated June 30, 1997, by and between FR Acquisitions, Inc., a Maryland
corporation (it having assigned its entire right, title and interest in and to
the Contribution Agreement to the Partnership), and the other parties listed on
the signature pages of the Contribution Agreement, certain Protected Amounts are
being established for the Additional Limited Partners admitted pursuant to this
Fourth Amendment, which Protected Amounts are reflected on EXHIBIT 1D attached
hereto and shall be incorporated as part of EXHIBIT 1D of the Partnership
Agreement.
4. RATIFICATION. Except as expressly modified by this Fourth Amendment,
all of the provisions of the Partnership Agreement are affirmed and ratified and
remain in full force and effect.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK;
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the
date first written above.
FIRST INDUSTRIAL REALTY TRUST, INC.,
as sole general partner of the Partnership
By: /s/ Michael Havala
--------------------------------
Name: Michael Havala
-------------------------
Title: Chief Financial Officer
------------------------
2
EXHIBIT 1B
SCHEDULE OF PARTNERS
--------------------
GENERAL PARTNER NUMBER OF UNITS
First Industrial Realty Trust, Inc. 30,141,117
LIMITED PARTNERS NUMBER OF UNITS
Daniel R. Andrew, TR of the Daniel R.
Andrew Trust UA Dec 29 92 137,489
Charles T. Andrews 754
BK Columbus Venture 24,789
Michael W. Brennan 7,587
National Discount Brokers NBD Acct. # 4KB-432690 770
National Discount Brokers NBD Acct. # 4KB-432708 770
Henry D. Bullock & Terri D. Bullock TR of the
Henry D. & Terri D. Bullock Trust UA Aug 28 92 12,551
Edward Burger 9,261
Jan Burman 18,653
Susan Burman 523,155
Perry C. Caplan 1,388
Charles S. Cook and Shelby H. Cook, tenants in
the entirety 634
George L. Cramer, Jr. 2,262
3
LIMITED PARTNERS NUMBER OF UNITS
Michael G. Damone, TR of the Michael G.Damone
Trust UA Nov 4 69 144,296
Robert L. Denton 6,286
W. Allen Doane TR of the W. Allen Doane
Trust UA May 31, 91 4,416
Timothy Donohue 2,000
Darwin B. Dosch 1,388
Charles F. Downs 1,508
Danielle Draizin 6,538
Heather Draizin 6,538
Jason Draizin 13,078
Judith Draizin 331,742
Joseph Dresner 149,531
Ethel Road Associates, a New Jersey
limited partnership 29,511
Farlow Road Associates Limited Partnership 2,751
Fitz & Smith Partnership 3,410
Fourbur Co., L.L.C. 27,987
Fourbur Family Co., L.P. 50,478
Gamma Three Associates Limited Partnership,
a New Jersey limited partnership 3,338
Dennis G. Goodwin and Jeannie L. Goodwin,
tenants in the entirety 6,166
4
LIMITED PARTNERS NUMBER OF UNITS
Clay Hamlin & Lynn Hamlin JT TEN WROS 15,159
Henry E. Dietz Trust UA Jan 16 81 36,476
Highland Associates Limited Partnership 69,039
Robert W. Holman Jr. 150,134
Holman/Shidler Investment Corporation 22,079
Steven B. Hoyt 22,000
Internal Investment Company 3,016
Frederick K. Ito 3,880
The Jack Friedman Revocable Living Trust
dated March 23, 1978 26,005
Jayeff Associates Limited Partnership,
a New Jersey limited partnership 16,249
Michael W. Jenkins 3,831
Jernie Holdings Corp. 180,499
John E. de Blockey, TR of the John E.
De B Blockey Trust 8,187
Thomas J. Johnson, Jr. and Sandra L. Johnson,
tenants in the entirety 2,142
Nourhan Kailian 2,183
Peter Kepic 9,261
Lambert Investment Corporation 13,606
Paul T. Lambert 39,737
Constance Lazarus 417,961
5
LIMITED PARTNERS NUMBER OF UNITS
Jerome Lazarus 18,653
LGR Investment Fund Ltd 22,556
Malcolm Properties, L.L.C. 25,342
Shidler Equities LP 254,541
Duane Lund 617
Craig R. Martin 754
Eileen Millar 2,880
Linda Miller 2,000
The Milton Dresner Revocable Trust dated
October 22, 1976 149,531
Montrose Kennedy Associates, a New Jersey
general partnership 4,874
Peter Murphy 56,184
Anthony Muscatello 81,654
Joseph Musti 1,508
Dean A. Nachtigall 10,076
New Land Associates Limited Partnership, a
New Jersey limited partnership 1,664
North Star Associates Limited Partnership 19,333
Arden O'Connor 63,845
Peter O'Connor 66,181
Eduardo Paneque 2,000
Partridge Road Associates Limited Partnership 2,751
6
LIMITED PARTNERS NUMBER OF UNITS
R.C.P. Associates, a New Jersey
limited partnership 3,060
Jack F. Ream 1,071
Glenn C. Rexroth & Linda A. Rexroth 2,142
James C. Reynolds 38,697
Andre G. Richard 1,508
Edward C. Roberts and Rebecca S. Roberts,
tenants in the entirety 8,308
W.F.O. Rosenmiller 634
Edward Jon Sarama 634
Shadeland Associates Limited Partnership 42,976
Shadeland Corporation 4,442
Jay H. Shidler 65,118
Jay H. Shidler & Wallette A. Shidler TEN ENT 1,223
Michael B. Slade 2,829
David W. Smith, and Doris L. Smith, tenants
in the entirety 754
Gary L. Smith and Joyce A. Smith, tenants
in the entirety 1,508
Kevin Smith 13,571
South Broad Company, a New Jersey limited
partnership 22,534
South Gold Company, a New Jersey general
partnership 53,000
7
LIMITED PARTNERS NUMBER OF UNITS
SRS PARTNERSHIP 2,142
Robert Stein 56,778
S. Larry Stein 56,778
Jonathan Stott 130,026
Suburban Roseland Associates, a Limited
Partnership, a New Jersey limited partnership 3,002
Thelma C. Gretzinger Trust 450
Michael T. Tomasz 23,868
Barry L. Tracey 2,142
Mark S. Whiting 25,206
Worlds Fair Associates, a New Jersey
general partnership 6,134
The Worlds Fair Office Associates,
a New Jersey general partnership 3,343
Worlds Fair Partners Limited Partnership,
a New Jersey limited partnership 1,664
Worlds Fair III Associates, a New Jersey
limited partnership 14,094
The Worlds Fair V Associates, a New Jersey
general partnership 3,340
The Worlds Fair 25 Associates, a Limited
Partnership, a New Jersey limited partnership 13,677
Van Brunt Associates, a New Jersey limited
partnership 39,370
Punia Company, L.L.C. 8,642
8
EXHIBIT 1D
PROTECTED AMOUNTS
-----------------
Van Brunt Associates, a New $2,744,605
Jersey limited partnership
9
SCHEDULE 1
Additional
Limited Partners Number of Units Capital Contribution
- ---------------- --------------- --------------------
Van Brunt Associates, a New 39,370 $1,158,256.54
Jersey limited partnership
Punia Company, L.L.C. 8,642 $254,251.44
10
Exhibit 4.18
SIXTH AMENDMENT TO
FOURTH AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT OF
FIRST INDUSTRIAL, L.P.
As of August 29, 1997, the undersigned, being the sole general partner of
First Industrial, L.P. (the "PARTNERSHIP"), a limited partnership formed under
the Delaware Revised Uniform Limited Partnership Act and pursuant to the terms
of that certain Fourth Amended and Restated Limited Partnership Agreement, dated
June 6, 1997 (as amended by the first amendment thereto dated June 20, 1997, the
second amendment thereto dated June 30, 1997, the third amendment thereto dated
July 18, 1997, the fourth amendment thereto dated July 31, 1997 and the fifth
Amendment thereto dated August 1, 1997, collectively, the "PARTNERSHIP
AGREEMENT"), does hereby amend the Partnership Agreement as follows:
Capitalized terms used but not defined in this Sixth Amendment shall have
the same meanings that are ascribed to them in the Partnership Agreement.
1. ADDITIONAL LIMITED PARTNERS. The Persons identified on SCHEDULE 1
hereto are hereby admitted to the Partnership as Additional Limited Partners
owning the number of Units and having made the Capital Contributions set forth
on such SCHEDULE 1. Such persons hereby adopt the Partnership Agreement. The
General Partner hereby consents to the assignment of the Units of the Additional
Limited Partners identified as transferors on SCHEDULE 2 hereto to the parties
identified as transferees and in the amounts set forth on such SCHEDULE 2, and
to the admission to the Partnership as Substituted Limited Partners of such
transferees, and such transferees are hereby admitted to the Partnership as
Substituted Limited Partners.
2. SCHEDULE OF PARTNERS. EXHIBIT 1B to the Partnership Agreement is
hereby deleted in its entirety and replaced by EXHIBIT 1B hereto which
identifies the Partners following consummation of the transactions referred to
in Section 1 hereof.
3. PROTECTED AMOUNTS. In connection with the transactions consummated
pursuant to that certain Contribution Agreement (the "CONTRIBUTION AGREEMENT"),
dated June 30, 1997, by and between FR Acquisitions, Inc., a Maryland
corporation (it having assigned its entire right, title and interest in and to
the Contribution Agreement to the Partnership), and the other parties listed on
the signature pages of the Contribution Agreement, certain Protected Amounts are
being established for the Additional Limited Partners admitted pursuant to this
Sixth Amendment, which Protected Amounts are reflected on EXHIBIT 1D attached
hereto and shall be incorporated as part of EXHIBIT 1D of the Partnership
Agreement.
4. RATIFICATION. Except as expressly modified by this Sixth Amendment,
all of the provisions of the Partnership Agreement are affirmed and ratified and
remain in full force and effect.
IN WITNESS WHEREOF, the undersigned has executed this Sixth Amendment as of
the date first written above.
FIRST INDUSTRIAL REALTY TRUST, INC.,
as sole general partner of the Partnership
By: /s/ Michael Havala
------------------------------------
Name: Michael Havala
-----------------------------
Title: Chief Financial Officer
----------------------------
EXHIBIT 1B
SCHEDULE OF PARTNERS
--------------------
GENERAL PARTNER NUMBER OF UNITS
First Industrial Realty Trust, Inc. 30,151,117
LIMITED PARTNERS NUMBER OF UNITS
Daniel R. Andrew, TR of the Daniel R.
Andrew Trust UA Dec 29 92 137,489
Charles T. Andrews 754
BK Columbus Venture 24,789
Michael W. Brennan 7,587
Henry D. Bullock & Terri D. Bullock &
Shawn Stevenson TR of the Bullock Childrens
Education Trust UA Dec 20 94, FBO Benjamin
Dure Bullock 770
Henry D. Bullock & Terri D. Bullock &
Shawn Stevenson TR of the Bullock Childrens
Education Trust UA Dec 20 94, FBO Christine
Laurel Bullock 770
Henry D. Bullock & Terri D. Bullock TR of
the Henry D. & Terri D. Bullock Trust
UA Aug 28 92 12,551
Edward Burger 9,261
Jan Burman 18,653
Susan Burman 523,155
Perry C. Caplan 1,388
Charles S. Cook and Shelby H. Cook, tenants
in the entirety 634
LIMITED PARTNERS NUMBER OF UNITS
George L. Cramer, Jr. 2,262
Michael G. Damone, TR of the Michael
G.Damone Trust UA Nov 4 69 144,296
Robert L. Denton 6,286
W. Allen Doane TR of the W. Allen
Doane Trust UA May 31, 91 4,416
Timothy Donohue 2,000
Darwin B. Dosch 1,388
Charles F. Downs 1,508
Danielle Draizin 6,538
Heather Draizin 6,538
Jason Draizin 13,078
Judith Draizin 331,742
Joseph Dresner 149,531
Ethel Road Associates, a New Jersey
limited partnership 29,511
Farlow Road Associates Limited Partnership 2,751
Fitz & Smith Partnership 3,410
Fourbur Co., L.L.C. 27,987
Fourbur Family Co., L.P. 50,478
Gamma Three Associates Limited Partnership,
a New Jersey limited partnership
3,338
Dennis G. Goodwin and Jeannie L. Goodwin,
tenants in the entirety 6,166
LIMITED PARTNERS NUMBER OF UNITS
Clay Hamlin & Lynn Hamlin JT TEN WROS 15,159
Henry E. Dietz Trust UA Jan 16 81 36,476
Highland Associates Limited Partnership 69,039
Robert W. Holman Jr. 150,134
Holman/Shidler Investment Corporation 22,079
Steven B. Hoyt 220,000
Internal Investment Company 3,016
Frederick K. Ito 3,880
The Jack Friedman Revocable Living Trust
dated March 23, 1978 26,005
Jayeff Associates Limited Partnership,
a New Jersey limited partnership 16,249
Michael W. Jenkins 3,831
Jernie Holdings Corp. 180,499
John E. de Blockey, TR of the John E.
De B Blockey Trust 8,187
Thomas J. Johnson, Jr. and Sandra L. Johnson,
tenants in the entirety 2,142
Nourhan Kailian 2,183
Peter Kepic 9,261
Lambert Investment Corporation 13,606
Paul T. Lambert 39,737
Constance Lazarus 417,961
LIMITED PARTNERS NUMBER OF UNITS
Jerome Lazarus 18,653
LGR Investment Fund Ltd 22,556
Malcolm Properties, L.L.C. 25,342
Shidler Equities LP 254,541
Duane Lund 617
Craig R. Martin 754
Eileen Millar 2,880
Linda Miller 2,000
The Milton Dresner Revocable Trust dated
October 22, 1976 149,531
Montrose Kennedy Associates, a New Jersey
general partnership 4,874
Peter Murphy 56,184
Anthony Muscatello 81,654
Joseph Musti 1,508
Dean A. Nachtigall 10,076
New Land Associates Limited Partnership,
a New Jersey limited partnership 1,664
North Star Associates Limited Partnership 19,333
Arden O'Connor 63,845
Peter O'Connor 66,181
Eduardo Paneque 2,000
Partridge Road Associates Limited Partnership 2,751
LIMITED PARTNERS NUMBER OF UNITS
R.C.P. Associates, a New Jersey limited
partnership 3,060
Jack F. Ream 1,071
Glenn C. Rexroth & Linda A. Rexroth 2,142
James C. Reynolds 38,697
Andre G. Richard 1,508
Edward C. Roberts and Rebecca S. Roberts,
tenants in the entirety 8,308
W.F.O. Rosenmiller 634
Edward Jon Sarama 634
Shadeland Associates Limited Partnership 42,976
Shadeland Corporation 4,442
Jay H. Shidler 65,118
Jay H. Shidler & Wallette A. Shidler TEN ENT 1,223
Michael B. Slade 2,829
David W. Smith, and Doris L. Smith,
tenants in the entirety 754
Gary L. Smith and Joyce A. Smith,
tenants in the entirety 1,508
Kevin Smith 13,571
South Broad Company, a New Jersey
limited partnership 72,421
South Gold Company, a New Jersey
general partnership 53,000
LIMITED PARTNERS NUMBER OF UNITS
SRS PARTNERSHIP 2,142
Robert Stein 56,778
S. Larry Stein 56,778
Jonathan Stott 130,026
Suburban Roseland Associates, a Limited
Partnership, a New Jersey limited
partnership 3,002
Thelma C. Gretzinger Trust 450
Michael T. Tomasz 23,868
Barry L. Tracey 2,142
Mark S. Whiting 25,206
Worlds Fair Associates, a New Jersey
general partnership 6,134
The Worlds Fair Office Associates, a
New Jersey general partnership 3,343
Worlds Fair Partners Limited Partnership,
a New Jersey limited partnership 1,664
Worlds Fair III Associates, a New Jersey
limited partnership 14,094
The Worlds Fair V Associates, a New
Jersey general partnership 3,340
The Worlds Fair 25 Associates, a Limited
Partnership, a New Jersey limited partnership 13,677
Van Brunt Associates, a New Jersey
limited partnership 39,370
Punia Company, L.L.C. 1,995
LIMITED PARTNERS NUMBER OF UNITS
Princeton South at Lawrenceville One,
a New Jersey limited partnership 4,426
Princeton South at Lawrenceville, L.L.C.,
a New Jersey limited liability company 4,692
EXHIBIT 1D
PROTECTED AMOUNTS
-----------------
Princeton South at Lawrenceville $ 5,267,344
One, a New Jersey limited partnership
SCHEDULE 1
Additional
Limited Partners Number of Units Capital Contribution
- ---------------- --------------- --------------------
Princeton South at Lawrenceville 6,421 $191,282.31
One, a New Jersey limited partnership
South Broad Company, a New Jersey 49,887 $1,499,104.35
limited partnership
Princeton South at Lawrenceville, 4,692 N/A
L.L.C., a New Jersey limited liability
company
SCHEDULE 2
Transferror New Holder Units Capital Account
----------- ---------- ----- ---------------
Princeton South at Punia Company, L.L.C.,
Lawrenceville One, a a New Jersey limited
New Jersey limited liability company
partnership 1,995 $59,431.05
Exhibit 4.23
================================================================
FIRST INDUSTRIAL REALTY TRUST, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK, as Rights Agent
RIGHTS AGREEMENT
Dated as of
September 16, 1997
================================================================
TABLE OF CONTENTS
-----------------
PAGE
----
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Right Certificates 7
Section 4. Form of Right Certificates 10
Section 5. Countersignature and Registration 11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates 12
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 13
Section 8. Cancellation and Destruction of Right
Certificates 16
Section 9. Reservation and Availability of Shares of
Capital Stock 16
Section 10. Preferred Stock Record Date 18
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights 19
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares 29
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 30
-i-
PAGE
----
Section 14. Fractional Rights and Fractional Shares 33
Section 15. Rights of Action 34
Section 16. Agreement of Right Holders 35
Section 17. Right Certificate Holder Not Deemed a Stockholder36
Section 18. Concerning the Rights Agent 36
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 37
Section 20. Duties of Rights Agent 38
Section 21. Change of Rights Agent 41
Section 22. Issuance of New Right Certificates 42
Section 23. Redemption and Termination 42
Section 24. Exchange 44
Section 25. Notice of Certain Events 45
Section 26. Notices 46
Section 27. Supplements and Amendments 47
Section 28. Successors 48
Section 29. Determinations and Actions by the
Board of Directors 48
Section 30. Benefits of this Agreement 49
Section 31. Severability 49
Section 32. Governing Law 49
Section 33. Counterparts 50
-ii-
PAGE
----
Section 34. Descriptive Headings 50
EXHIBIT A Articles Supplementary, Description and
Certain Terms of Participating Preferred Stock A-1
EXHIBIT B Form of Right Certificate B-1
EXHIBIT C Summary of Rights to Purchase Preferred Stock C-1
-iii-
RIGHTS AGREEMENT
----------------
Rights Agreement, dated as of September 16, 1997 between First
Industrial Realty Trust, Inc., a Maryland corporation (the "Company"), and First
Chicago Trust Company of New York, a New York corporation (the "Rights Agent").
W I T N E S S E T H :
---------------------
WHEREAS, the Board of Directors of the Company on September 4, 1997
(the "Rights Dividend Declaration Date") authorized and declared a dividend
distribution (the "Distribution") of one Right for each outstanding share of the
Common Stock, $0.01 par value, of the Company (the "Common Stock") outstanding
at the close of business on October 19, 1997 (the "Record Date") and has
authorized and directed the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) in
respect of each share of Common Stock issued (whether originally issued or
delivered from the Company's treasury stock) between the Record Date and the
earlier of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined), each Right initially representing the right to purchase,
under certain circumstances, one one-hundredth of a share of Junior
Participating Preferred Stock of the Company having the rights, powers and
preferences set forth in the Articles Supplementary attached hereto as Exhibit
A, upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
-2-
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of securities of the Company constituting a Substantial Block (as such term is
hereinafter defined), but shall not include (i) the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any Person organized, appointed or established by the Company or
any Subsidiary of the Company for or pursuant to the terms of any such plan,
(ii) any Person who or which, together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of a Substantial Block solely as a
result of a change in the aggregate number of shares of Voting Stock outstanding
since the last date on which such Person acquired Beneficial Ownership of any
shares of the Voting Stock constituting all or a portion of such Substantial
Block; and (iii) any Person who or which, together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of a Substantial Block
in the good faith belief that such acquisition would not (x) cause such Person
and its Affiliates and Associates to become the Beneficial Owner of a
Substantial Block and such Person relied in good faith in computing the
percentage of its voting power on publicly filed reports or documents of the
Company which are inaccurate or out-of-date or (y) otherwise cause a
Distribution Date or the adjustment provided for in Section 11(a) to occur.
Notwithstanding clause (ii) or (iii) of the prior sentence, if any Person that
is not an Acquiring Person due to such clause (ii) or (iii) does not cease to be
the Beneficial Owner of a Substantial Block by the close of business on the
fifth Business Day after notice from the Company (the date of notice being the
first day) that such Person is the Beneficial Owner of a Substantial Block, such
Person shall, at the end of such five Business Day period, become an Acquiring
Person (and such clause (ii) or (iii) shall no longer apply to such Person).
For purposes of this definition, the determination
-3-
whether any Person acted in "good faith" shall be conclusively determined by the
Board of Directors of the Company, acting by a vote of those directors of the
Company whose approval would be required to redeem the Rights under Section 23.
(b) "Act" shall have the meaning set forth in Section 9(c) hereof.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date hereof.
(e) "Agreement" shall have the meaning set forth in the
introduction hereto.
(f) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, the right to acquire (whether such
right is exercisable immediately or only after the passage of time or upon
the occurrence of an event) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise, PROVIDED, HOWEVER, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (1) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (2) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Trig-
-4-
gering Event or (3) securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event, which Rights were acquired by
such Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) hereof ("Original Rights") or
pursuant to Section 11(i) or Section 22 hereof in connection with an
adjustment made with respect to Original Rights; or
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant
to any agreement, arrangement or understanding (whether or not in writing);
PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this subparagraph (ii) if
the agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (whether or
not in writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to subparagraph
(ii) of this paragraph (f)) or disposing of any securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the
-5-
"Beneficial Owner" of, or to "beneficially own," any securities acquired in a
bona fide firm commitment underwriting pursuant to an underwriting agreement
with the Company.
(g) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(h) "Certification" shall have the meaning set forth in Section 18
hereof.
(i) "close of business" on any given date shall mean 5:00 P.M., New
York City time, on such date, PROVIDED, HOWEVER, if such date is not a Business
Day it shall mean 5:00 P.M. on the next succeeding Business Day.
(j) "Common Stock" when used with reference to the Company shall
mean the Common Stock, $0.01 par value, of the Company. "Common Stock" when
used with reference to any Person other than the Company shall mean either
the capital stock with the greatest voting power of such other Person or, if
such Person is a Subsidiary of another Person, the equity securities or other
equity interest having power to control or direct the management of such
Person.
(k) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(l) "Company" shall have the meaning set forth in the introduction
hereto.
(m) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(n) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(o) "Distribution" shall have the meaning set forth in the recitals
hereto.
-6-
(p) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(q) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
(r) "Exchange Act" shall have the meaning set forth in the
definitions of "Affiliate" and "Associate" above.
(s) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(t) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(u) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(v) "Independent Director" shall mean any member of the Board of
Directors of the Company, while such person is a member of the Board, who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate and either (i) was a member of the Board on the date hereof, or (ii)
was recommended or elected to succeed the Independent Director by a majority of
the Independent Directors.
(w) "Original Rights" shall have the meaning set forth in the
definition of "Beneficial Owner" above.
(x) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(y) "Preferred Stock" shall mean the shares of Junior Participating
Preferred Stock, par value $0.01 per share, of the Company.
(z) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
-7-
(aa) "Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(bb) "Record Date" shall have the meaning set forth in the recitals
hereto.
(cc) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(dd) "Rights" shall have the meaning set forth in the recitals
hereto.
(ee) "Rights Agent" shall have the meaning set forth in the
introduction hereto.
(ff) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(gg) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals hereto.
(hh) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(ii) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(jj) "Section 13 Event" shall mean any event described in Section
13(a) hereof.
(kk) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, includes a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(ll) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(mm) "Subsidiary" shall mean, with reference to any Person, any
corporation (or other entity) of which an amount of voting securities (or
comparable ownership in-
-8-
terests) sufficient to elect at least a majority of the directors (or
comparable individuals) of such corporation (or other entity) is
beneficially owned or otherwise controlled, directly or indirectly, by such
Person.
(nn) "Substantial Block" shall mean a number of shares of the
Voting Stock which has 15% or more of the aggregate voting power of all
outstanding shares of Voting Stock.
(oo) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(pp) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(qq) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(rr) "Triggering Event" shall mean any Section 11(a)(ii) Event
or Section 13 Event.
(ss) "Voting Stock" shall mean the outstanding shares of Common
Stock, $0.01 par value, and any other shares of capital stock of the
Company which are entitled to vote generally in the election of directors.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company
hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company shall act as Co-Rights Agent and may
from time to time appoint such other Co-Rights Agents as it may deem
necessary or desirable upon ten calendar days' written notice to the Rights
Agent. In no event shall the Rights Agent have any duty to supervise or in
any way be liable for such Co-Rights Agents.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the
earlier of (i) the close of business on the tenth calendar day after the
Shares Acquisition Date (or, if the tenth calendar day after the Shares
Acquisition Date occurs before the Re-
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cord Date, the close of business on the Record Date) or (ii) the close of
business on the tenth calendar day (or such later date as may be determined by
action of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement of, or first public
announcement of the intent of any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any Person organized, appointed or established by the Company or
any Subsidiary of the Company or any Person organized, appointed or established
by the Company or any Subsidiary of the Company for or pursuant to the terms of
such plan) to commence, a tender or exchange offer if, upon consummation
thereof, such Person would be an Acquiring Person (the earlier of the dates in
subsections (i) and (ii) hereof being herein referred to as the "Distribution
Date") (x) the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for the Common Stock registered in
the names of the holders of the Common Stock (which certificates for the Common
Stock shall be deemed also to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Stock. As soon as
practicable after receipt by the Rights Agent of written notice from the Company
of the Distribution Date, the Rights Agent, at the Company's expense, will send
by first-class, postage prepaid mail, to each record holder of Common Stock as
of the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto, evidencing one Right for each share of the Common
Stock so held, subject to adjustment as provided herein. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) As soon as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Stock, in substantially the form attached hereto as Exhibit C (the "Summary
of Rights"), by first-class, postage prepaid mail, to each record holder of
Common Stock as of the close of business on the Record Date, at the address
of
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such holder shown on the records of the Company. With respect to certificates
for Common Stock outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates for Common Stock, and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any of the certificates
for Common Stock outstanding on the Record Date shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
(c) Rights shall be issued in respect of all shares of
Common Stock issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section
7), or, in certain circumstances provided in Section 22 hereof, after the
Distribution Date. Certificates representing such shares of Common Stock
shall have impressed on, printed on, written on or otherwise affixed to them
the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between First Industrial Realty
Trust, Inc. and First Chicago Trust Company of New York (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices of First
Industrial Realty Trust, Inc. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. First
Industrial Realty Trust, Inc. will mail to the holder of this certificate a
copy of the Rights Agreement as in effect on the date of mailing without
charge within five Business Days after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights beneficially owned by an Acquiring Person may become null and void.
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After the due execution of any supplement or amendment to this Agreement in
accordance with the terms hereof, the reference to this Agreement in the
foregoing legend shall mean the Agreement as so supplemented or amended. Until
the Distribution Date, the Rights associated with the Common Stock represented
by certificates containing the foregoing legend shall be evidenced by such
certificates alone, and the surrender for transfer of any of such certificates
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. In the event that the Company purchases
or acquires any shares of Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the shares of Common Stock which are no longer
outstanding. The failure to print the foregoing legend on any such Common Stock
certificate or any other defect therein shall not affect in any manner
whatsoever the application or interpretation of the provisions of Section 7(e)
hereof.
Section 4. FORM OF RIGHT CERTIFICATES. (a) The Right
Certificates (and the forms of election to purchase shares and of assignment
to be printed on the reverse thereof) shall be substantially the same as
Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or
to conform to usage. The Right Certificates shall be in machine-printable
format and in a form reasonably satisfactory to the Rights Agent. Subject to
the provisions of Section 11 and Section 22 hereof, the Right Certificates,
whenever distributed, shall be dated as of the Record Date, shall show the
date of countersignature, and on their face shall entitle the holders thereof
to purchase such number of shares of Preferred Stock (or following a
Triggering Event, Common Stock, other securities, cash or other assets, as
the case may be) as shall be set forth therein
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at the price per one one-hundredth of a share of Preferred Stock set forth
therein (the "Purchase Price"), but the number of such shares and the Purchase
Price shall be subject to adjustment as provided herein.
(b) Notwithstanding any other provision of this
Agreement, (i) any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (x) an
Acquiring Person or any Associate or Affiliate thereof, (y) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person became such, or (z) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom such Acquiring Person has
any continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding (whether or not in writing) which has as a primary purpose or
effect avoidance of Section 7(e) hereof, (ii) any Right Certificate issued at
any time to any nominee of such Acquiring Person, Associate or Affiliate, and
(iii) any Right Certificate issued pursuant to Section 6 or Section 11
hereof, upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the extent
feasible following the written instruction of the Company to the Rights
Agent) the following legend, modified as applicable to apply to such Person:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
an Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Right Certificate and the Rights
represented may be-
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come null and void in the circumstances specified in Section 7(e) of the
Rights Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right
Certificates shall be executed on behalf of the Company by one of its
authorized officers either manually or by facsimile signature. The Right
Certificates shall be countersigned by an authorized signatory of the Rights
Agent either manually or by facsimile signature and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent, issued and delivered with the same
force and effect as though the person who signed such Right Certificates had
not ceased to be such officer of the Company; and any Right Certificate may
be signed on behalf of the Company by any person who, at the actual date of
the execution of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of the execution
of this Rights Agreement any such person was not such an officer.
In case any authorized signatory of the Rights Agent who
shall have countersigned any of the Right Certificates shall cease to be such
signatory before delivery by the Company, such Right Certificates,
nevertheless, may be issued and delivered by the Company with the same force
and effect as though the person who countersigned such Right Certificates not
ceased to be such signatory; and any Right Certificate may be countersigned
on behalf of the Rights Agent by any person who, at the actual date of the
countersignature of such Right Certificate, shall be a proper signatory of
the Rights Agent to countersign such Right Certificate, although at the date
of the execution of this Rights Agreement any such person was not such a
signatory.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated for such purpose, books
for registration and transfer of the Right
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Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates, and the date of each of the Right
Certificates and the date of countersignature of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE
OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES. Subject to the provisions of Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to the
close of business on the Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock (or following a
Triggering Event, Common Stock, other securities, cash or other assets, as
the case may be) as the Right Certificate or Right Certificates surrendered
then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose,
along with a signature guarantee and such other and further documentation as
the Rights Agent may reasonably request. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate until the registered
holder shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Right Certificate and shall have
provided such additional evidence, as the Company shall reasonably request,
of the identity of the Beneficial Owner, Affiliates or Associates thereof or
of the holder, or of any other Person with which such holder or any of such
holder's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring,
holding, voting or disposing of
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securities of the Company. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 14 and Section 20(k) hereof, countersign and deliver
to the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment from a Right
Certificate holder of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, along
with a signature guarantee and such other further documentation as the Rights
Agent may reasonably request and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE;
EXPIRATION DATE OF RIGHTS. (a) Subject to Section 7(e) hereof, the
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein, including, without limitation,
the restrictions on exercisability set forth in Sections 9(c), 11(a)(iii),
23(b) and 24(b) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the designated office of the Rights Agent, together with payment of
the aggregate Purchase Price for the total number of one one-hundredths of
shares of Preferred Stock (or shares of Common Stock, other securities, cash
or other assets, as the case may be) as to which the Rights are then
exercisable, at or prior to the earliest of (i) the close of business on
October 19, 2007 (the "Final Expiration Date"),
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(ii) the time at which the Rights are exchanged as provided in Section 24, or
(iii) the time at which the Rights are redeemed as provided in Section 23
(such earliest date being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a
share of Preferred Stock pursuant to the exercise of a Right shall initially
be $125, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in accordance with paragraph
(c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed and completed accompanied by payment of the Purchase Price for
the number of one one-hundredths of shares of Preferred Stock (or shares of
Common Stock, other securities, cash or other assets, as the case may be) to
be purchased and an amount equal to any applicable transfer tax, the Rights
Agent shall thereupon, subject to Section 20(k), promptly (i) requisition
from any transfer agent of Preferred Stock certificates for the number of one
one-hundredths of shares of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of shares of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the depositary agent to
comply with such request, (iii) when appropriate, requisition from any
transfer agent of the Common Stock of the Company certificates for the total
number of shares of Common Stock to be paid in accordance with Section
11(a)(ii) and 11(a)(iii), (iv) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14, (v) promptly after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon
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the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (vi) when
appropriate, after receipt promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate. The payment of the then
Purchase Price may be made in cash or by certified bank check or bank draft
or money order payable to the order of the Company or the Rights Agent. In
the event that the Company is obligated to issue securities, distribute
property or pay cash pursuant to Section 11(a)(iii) hereof, the Company will
make all arrangements necessary so that cash, property or securities are
available for issuance, distribution or payment by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the-Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event,
any Rights beneficially owned by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person became such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is a part of a plan, arrangement or understanding
(whether or not in writing) which has as a primary purpose or
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effect the avoidance of this Section 7(e), shall become null and void without
any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side
of the Right Certificate surrendered for such exercise, and (ii) provided
such additional evidence of the identity of the Beneficial Owner, Affiliates
or Associates thereof or of the holder, or of any other Person with which
such holder or any of such holder's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of any securities of the
Company as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT
CERTIFICATES. All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered
to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent shall deliver all
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canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF
CAPITAL STOCK. (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock and/or other securities)
or out of its authorized and issued shares of Preferred Stock (and, following
the occurrence of a Triggering Event, out of its authorized and issued Common
Stock and/or other securities) held in its treasury, the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that will be sufficient to permit the exercise
in full of all outstanding Rights (it being understood that any of the
foregoing shares or securities may also be reserved for other purposes) or
will take such other steps as are appropriate to assure that the number of
such shares or securities (or their equivalents) sufficient to permit the
exercise in full of all outstanding Rights will be available upon such
exercise.
(b) So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable (but only to
the extent that it is reasonably likely that the Rights will be exercised),
all shares reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (X) (i) to
file, as soon as practicable following the first occurrence of a Section
11(a)(ii) Event, or as soon as required by law, as the case may be, a
registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) to cause
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such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date and (Y) (i) to
file appropriate applications with any state or federal regulatory bodies
having jurisdiction over the issuance of the securities (or assets)
purchaseable upon exercise of the Rights in order to obtain any approvals or
orders of such bodies as may be legally required, (ii) to cause such
approvals to be obtained or orders to be issued as soon as practicable after
such filing and (iii) to cause such approvals or orders to remain effective
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities (or assets), and (B) the Expiration Date, to
the extent not previously obtained. The Company will also take such action as
may be appropriate under the blue sky laws of the various states. The
Company may temporarily suspend, (X) for a period of time not to exceed
ninety (90) days after the date set forth in clause (X)(i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become
effective and (Y) for a period of time not in excess of 180 days after such
date (or for such longer period as is required by any applicable law, rule or
regulation of any appropriate regulatory bodies), the exercisability of the
Rights in order to obtain any such required regulatory body approvals or
orders. Upon any such suspension, the Company shall issue a public
announcement and shall give simultaneous written notice to the Rights Agent
stating that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement and notice to the Rights Agent at such time
as the suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualifications in such jurisdiction shall
have been obtained.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all
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shares of the Preferred Stock (and following the occurrence of a Triggering
Event, Common Stock and/or other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or delivery of
the Right Certificates or of any shares of the Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required (a) to pay any transfer
tax which may be payable in respect of any transfer involved in the transfer
or delivery of Right Certificates or the issuance or delivery of certificates
for the Preferred Stock (or Common Stock and/or other securities, as the case
may be) in a name other than that of the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or (b) to issue or
deliver any certificates for shares of the Preferred Stock (or Common Stock
and/or other securities, as the case may be) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each person in
whose name any certificate for any number of shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of record of such whole and/or fractional shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made and shall show
the date of countersignature; PROVIDED, HOWEVER, that if the date of such
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surrender and payment is a date upon which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF
SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of the Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive upon payment of the
Purchase Price then in effect the aggregate number and kind of shares of
capital stock
-23-
which, if such Right had been exercised immediately prior to such date and at a
time when the Preferred Stock (or Common Stock and/or other securities) transfer
books of the Company were open, he or she would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the
event any Person, alone or together with its Affiliates and Associates,
becomes an Acquiring Person except as the result of a transaction set forth
in Section 13(a) hereof, then, prior to the later of (x) the date on which
the Company's rights of redemption pursuant to Section 23(a) expire, or (y)
five (5) days after the date of the first occurrence of a Section 11(a)(ii)
Event, proper provision shall be made so that each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have a right to receive,
upon exercise thereof at the then current Purchase Price for the number of
one one-hundredths of a share of Preferred Stock for which such Right is then
exercisable in accordance with the terms of this Agreement, in lieu of shares
of Preferred Stock, such number of shares of the Common Stock of the Company
as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable and dividing that
product by (y) 50% of the Current Market Price per share of the Common Stock
of the Company (determined pursuant to Section 11(d)) on the date of the
occurrence of the event listed above in this subparagraph (ii) (such number
of shares are hereinafter referred to as the "Adjustment Shares") provided
that the Purchase Price and the number of Adjustment Shares shall be further
adjusted as provided in this Agreement to reflect any events occurring after
the date of such first occurrence.
-24-
(iii) In the event that the number of shares of Common
Stock which are authorized by the Company's Amended and Restated Articles of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights are not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the Adjustment Shares, upon
exercise of the Rights and payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or units of
shares, of preferred stock which a majority of the Independent Directors and
the Board of Directors of the Company have deemed to have the same value as
shares of Common Stock (such shares of preferred stock, "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other assets, or (6)
any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by a majority
of the Independent Directors and the Board of Directors of the Company based
upon the advice of a nationally recognized investment banking firm selected
by the Board of Directors of the Company; PROVIDED, HOWEVER, if the Company
shall not have made adequate provision to deliver value pursuant to clause
(B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's rights of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the Spread.
If the Board of Directors of the Company shall determine in good faith that
it is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights,
-25-
the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be extended,
the "Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences of
this Section 11(a)(iii), the Company (x) shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement and shall give simultaneous written notice to the Rights Agent
stating that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement and notice to the Rights Agent at such time
as the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market Price
(as determined pursuant to Section 11(d) hereof) per share of the Common
Stock on the Section 11(a)(ii) Trigger Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the Common Stock on such
date. The Company shall give the Rights Agent notice of the selection of any
Common Stock Equivalent under this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Stock (or securities
having substantially the same rights, privileges and preferences as the
shares of Preferred Stock ("Equivalent Preferred Stock") or convertible into
the Preferred Stock or Equivalent Preferred Stock) at a price per share of
the Preferred Stock or Equivalent Preferred Stock (or having a conversion
price per share, if a security convertible into the Preferred Stock or
Equivalent Preferred
-26-
Stock) less than the Current Market Price (as defined in Section 11(d) per share
of the Preferred Stock or Equivalent Preferred Stock, as the case may be) on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, of which the numerator shall be the
number of shares of Preferred Stock outstanding on such record date plus the
number of shares of Preferred Stock or Equivalent Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price and of which the denominator shall be the number of
shares of Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price
may be paid by delivery of consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of Preferred Stock (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular periodic cash dividend or a
dividend payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase
-27-
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the Current Market Price per share of
Preferred Stock (as defined in Section 11(d)) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Preferred Stock and of which the denominator shall be such Current Market
Price per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii), the "Current
Market Price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days (as such term is hereinafter defined in this
paragraph (d)) immediately prior to such date and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
ten (10) consecutive Trading Days immediately following such date; PROVIDED,
HOWEVER, that in the event that the Current Market Price per share of Common
Stock is determined during the period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the Rights) or (B) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of the requisite 30 Trading Day or 10 Trading Day period, as set
forth above after the ex-dividend date for such dividend or distribution or
the record date for such sub-
-28-
division, combination or reclassification, then, and in each such case, the
Current Market Price shall be appropriately adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of the Common Stock are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of the Common Stock are listed or
admitted to trading or, if the shares of the Common Stock are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then
in use, or, if on any such date the shares of the Common Stock are not quoted by
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Stock selected by
the Board of Directors of the Company. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such date
shall be as determined in good faith by the Independent Directors if the
Independent Directors constitute a majority of the Board of Directors or, in the
event the Independent Directors do not constitute a majority of the Board of
Directors, by an independent investment banking firm selected by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of the Common Stock are not listed or
admitted to trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in
-29-
the State of New York are not authorized or obligated by law or executive order
to close. If the Common Stock is not publicly held or not so listed or traded,
"Current Market Price" per share shall mean the fair value per share as
determined in good faith by the Independent Directors if the Independent
Directors constitute a majority of the Board of Directors or, in the event the
Independent Directors do not constitute a majority of the Board of Directors, by
an independent investment banking firm selected by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share of Preferred Stock shall be determined in
the same manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the Current Market
Price per share of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or
traded in any manner described in clause (i) of this Section 11(d), the
"Current Market Price" per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 100 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date
of this Agreement) multiplied by the Current Market Price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "Current Market Price" per share of the
Preferred Stock shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes. For all purposes of this Agreement, the "Current Market
Price" of one one-hundredths of a share of Preferred Stock shall be equal to
the "Current Market Price" of one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless
-30-
such adjustment would require an increase or decrease of at least 1% in such
price; PROVIDED, HOWEVER, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or one millionth of a share of Preferred Stock as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
shares of Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares
contained in Section 11(a) through (q), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment
as provided herein.
(h) Unless the Company shall have exercised its election
as provided in section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of shares (calculated to the nearest one-millionth) obtained by
-31-
(i) multiplying (x) the number of shares covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of shares of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after the adjustment of the Purchase
Price. The Company shall make a public announcement and shall give
simultaneous written notice to the Rights Agent of its election to adjust the
number of Rights, indicating the record date for the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or
any day thereafter, but, if the Right Certificates have been issued, shall be
at least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so
-32-
to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number of
shares which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of the then
stated value, if any, of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable such number of one
one-hundredths of a share of such Preferred Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised
after such record date the shares of Preferred Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; PROVIDED, HOWEVER, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments
-33-
expressly required by this Section 11, as and to the extent that the Board of
Directors of the Company shall determine to be advisable in order that any
consolidation or subdivision of shares of Preferred Stock, issuance wholly for
cash of any of shares of Preferred Stock at less than the Current Market Price,
issuance wholly for cash of the Preferred Stock or securities which by their
terms are convertible into or exchangeable for Preferred Stock, stock dividends
or issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23, 24 and 27
hereof, take (nor will it permit any of its Subsidiaries to take) any action
if at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(o) The Company covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(n)), (ii) merge with or into any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(n)), or (iii) sell or transfer (or permit any of its Subsidiaries to sell
or transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(n)) if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would consti-
-34-
tute, the "Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Record Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding,
or issued or delivered thereafter but prior to the Distribution Date, shall
be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each share of Common Stock immediately prior to such event by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(q) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date, the Company may, in lieu of making
any adjustment to the Purchase Price, the number of shares of Preferred Stock
eligible for purchase on exercise of each Right or the number of Rights
outstanding, which adjustment would otherwise be required by Section
11(a)(i), 11(b), 11(c), 11(h) or 11(i), make such other equitable adjustment
or adjustments thereto as the Board of Directors (whose determination shall
be conclusive) deems appropriate in the circumstances and not inconsistent
with the objectives of the Board of Directors in adopting this Agreement and
such Sections.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR
NUMBER OF SHARES. Whenever an adjustment is made as provided in Sections 11
and 13, the Company shall (a) promptly prepare a certificate setting forth
such adjustment, and a
-35-
brief statement of the facts accounting for such adjustment and the adjusted
Purchase Price, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 26. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER. (a) In the event that, following the Shares
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(n)) and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(n)) shall
consolidate, merge with and into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(n) hereof), then, and in each such case
proper provision shall be made so that (i) each holder of a Right (except as
provided in Section 7(e)) shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly issued, fully paid,
non-assessable and freely tradable shares of Common Stock of the Principal
Party (as hereinafter defined), not subject to any liens, encumbrances,
rights of call or first refusal, or other adverse claims as shall be equal to
the re-
-36-
sult obtained by (1) multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13 Event (or,
if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one one-hundredths of a share
for which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by (2) 50% of the Current
Market Price per share of the Common Stock of such Principal Party (determined
in the manner described in Section 11(d)) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 shall
thereafter apply to such Principal Party; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with Section 9) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(1) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so
-37-
issued, the Person that is the other party to the merger or consolidation;
and
(2) in the case of any transaction described in (z) of the first
sentence in this Section 13, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (x) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another corporation the Common Stock of which
is and has been so registered, "Principal Party" shall refer to such other
corporation; (y) if such Person is a Subsidiary, directly or indirectly, of more
than one corporation, the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such
corporations is the issuer of the Common Stock having the greatest market value.
(c) The Company shall not consummate any Section 13
Event unless all regulatory approvals for the consummation of such Section 13
Event and the exercise of the Rights in accordance with the terms of this
Agreement have been obtained and the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which are neither outstanding
nor reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a)
and (b) of this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on
-38-
an appropriate form, will use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and
will use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive Section 13
Events. In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, the Company shall pay to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
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respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock) upon exercise
of the Rights or to distribute certificates which evidence fractional shares
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares that are not
integral multiples of one one-hundredth of a share of Preferred Stock, the
Company may pay to the registered holders of Right Certificates at the time
the Rights evidenced thereby are exercised or exchanged as herein provided an
amount in cash equal to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-hundredth of a share of Preferred
Stock shall be one one-hundredth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii)) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event the
Company shall not be required to issue fractions of shares of Common Stock
upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Right Certificates at
the time
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such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one (1) share of Common Stock. For
purposes of this Section 14(c), the current market value of one share of Common
Stock shall be the closing price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as otherwise permitted by
this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in
respect of this Agreement are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of
the obligations hereunder of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of
a Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
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(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed, along with a signature
guarantee and such other and further documentation as the Rights Agent may
reasonably request;
(c) subject to Section 6 and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be required to
be affected by any notice to the contrary;
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
PROVIDED, HOWEVER, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.
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Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. No holder, as such, of any Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the
number of shares of Preferred Stock or any other securities of the Company
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in Section 25), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent (including the reasonable fees and
expenses of counsel), for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
in the premises.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney, endorse-
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ment, affidavit, letter, notice, direction, consent, instruction, adjustment
notice, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any action
taken or omitted by it in connection with its administration of this
Agreement in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the Form of Assignment and the
Form of Election to Purchase included as part of Exhibit B hereto (the
"Certification"), unless the Rights Agent shall have actual knowledge that,
as executed, the Certification is untrue or (ii) the non-execution or failure
to complete the Certification including, without limitation, any refusal to
honor any otherwise permissible assignment or election by reason of such
non-execution or failure.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation,
succeeding to the corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions
of Section 21. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the
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predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with the legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman
of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good
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faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct. The issuance or non-issuance
of a Right Certificate or Preferred Stock or other security issued in lieu
of Preferred Stock in accordance with instructions given to the Rights
Agent by the Company pursuant to Section 20(k) hereof or in accordance with
the terms hereof shall not constitute negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under
the provisions of Sections 11 or 13 or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice of
any such adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of
any shares of Preferred Stock or Common Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock or Common Stock will, when issued, be validly authorized and issued,
fully paid and nonassessable.
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(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any one of the
Chairman of the Board, the President, any Vice President, the Secretary or
the Treasurer of the Company, and is authorized to apply to such officers
for advice or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer. An application by the
Rights Agent for instructions may set forth in writing any action proposed
to be taken or omitted by the Rights Agent with respect to its duties and
obligations under this Agreement and the date on and/or after which such
action shall be taken, and the Rights Agent shall not be liable for any
action taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall not be
less than one Business Day after the Company receives such application)
without the consent of the Company unless prior to taking or omitting such
action, the Rights Agent has received written instructions in response to
application specifying the actions to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this
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Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either by itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct; PROVIDED, HOWEVER, reasonable
care was exercised in the selection thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
if, with respect to any Rights Certificate surrendered to the not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response, the Rights
Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting the Company. The Company
shall give the Rights Agent prompt written instructions as to the action to
be taken regarding the Rights Certificates involved. The Rights Agent
shall not be liable for acting in accordance with such instructions.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Preferred Stock and the Common Stock by
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registered or certified mail, and, at the Company's expense, to the holders
of the Right Certificates by first class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Preferred Stock and the Common
Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the Company shall become the
temporary Rights Agent and the registered holder of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be a corporation organized and doing business under
the laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking or trust institution in the State of New York), in good
standing, having a principal office in the State of New York, which is
authorized under such laws to exercise corporate trust powers and is subject
to supervision or examination by federal or state authority or which has at
the time of its appointment as Rights Agent a combined capital and surplus of
at least $25 million. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the Company shall
file notice thereof in writing with the predeces-
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sor Rights Agent and each transfer agent of the Preferred Stock and the
Common Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price and the number or
kind or class of shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common
Stock following the Distribution Date and prior to the redemption or
expiration the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of
the Company, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; PROVIDED, HOWEVER, that (i)
no such Right Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. REDEMPTION AND TERMINATION. (a) The Board
of Directors of the Company may, at its option, at any time prior to the
earlier of (x) the close of business on the tenth calendar day following the
Shares Acquisition Date (or if
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the Shares Acquisition Date shall have occurred prior to the Record Date, the
close of business on the tenth day following the Record Date), or (y) the
Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.001 per Right as appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"), and the Company may, at its option,
pay the Redemption Price either in shares of its Common Stock (valued at
their Current Market Price as defined in Section 11(d)(i) on the date of the
redemption), other securities, cash or other assets; PROVIDED, HOWEVER, that
if the Board of Directors of the Company authorizes redemption of the Rights
on or after the Shares Acquisition Date, then there must be Independent
Directors in office and such authorization shall require the concurrence of a
majority of the Independent Directors. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired.
(b) In deciding whether or not to exercise the Company's
right of redemption hereunder, the Board of Directors of the Company shall
act in good faith, in a manner they reasonably believe to be in the best
interests of the Company and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use under similar
circumstances, and they may consider the long-term and short-term effects of
any action upon employees, customers and creditors of the Company and upon
communities in which offices or other establishments of the Company are
located, and all other pertinent factors.
(c) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights, and without
any further action and without any notice, the right to exercise the Rights
will terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price for each Right held. Within 10 days after
the
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action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to the Rights Agent and to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in this
Section 23, and other than in connection with the repurchase of Common Stock
prior to the Distribution Date.
Section 24. EXCHANGE. (a) The Board of Directors of
the Company may, at its option (provided that there are then Independent
Directors in office and a majority of the Independent Directors concur), at
any time and from time to time on or after a Section 11(a)(ii) Event,
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
Section 24(a) and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. Promptly after the action of the Board of
Directors ordering an exchange of the Rights, the Company shall
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give notice of any such exchange to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights
Agent; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute shares of Preferred Stock (or
Equivalent Preferred Stock, as such term is defined in Section 11(b) hereof)
for shares of Common Stock exchangeable for the Rights, at the initial rate
of one one-hundredth of a share of Preferred Stock (or Equivalent Preferred
Stock) for each share of Common Stock, as appropriately adjusted to reflect
adjustments in the dividend rights of the Preferred Stock pursuant to the
terms thereof.
(d) In the event that there shall not be sufficient
shares of Common Stock or Preferred Stock issued, but not outstanding, or
authorized but unissued, to permit any exchange of Rights as contemplated in
accordance with this Section 24 or that any regulatory actions or approvals
are required in connection therewith, the Company shall take all such action
as may be necessary to authorize additional Common Stock or Preferred Stock
for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue
fractional shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock pursuant to this Section 24. In
lieu of such fractional shares of Common Stock, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares
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of Common Stock would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common Stock.
For the purposes of this Section 24(e), the current market value of a whole
share of Common Stock shall be the closing price of a share of Common Stock
(as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to
this Section 24.
(f) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute for any share of Common Stock
exchangeable for a Right (i) Common Stock Equivalents (ii) cash, (iii) debt
securities of the Company, (iv) other assets, or (v) any combination of the
foregoing, having an aggregate value which a majority of the Independent
Directors and the Board of Directors of the Company shall have determined in
good faith to be equal to the Current Market Price of one share of Common
Stock (determined pursuant to Section 11(d) hereof) on the Trading Date
immediately preceding the date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS. In case the
Company shall propose at any time following the Distribution Date (a) to pay
any dividend payable in stock of any class to the holders of Preferred Stock
or to make any other distribution to the holders of Preferred Stock (other
than a regular periodic cash dividend), or (b) to offer to the holders of
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (c) to effect any reclassification of
Preferred Stock (other than a reclassification involving only the subdivision
of outstanding Preferred Stock), or (d) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons (other than
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the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(n) hereof), or (e) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to the Rights Agent and to each holder of a Right, in accordance with
Section 26, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, distribution of rights or Rights,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Preferred Stock, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least twenty (20) days prior to the record
date for determining holders of the Preferred Stock for purposes of such action,
and in the case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Preferred Stock, whichever shall be the earlier.
In case a Section 11(a)(ii) Event shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give to
the Rights Agent and to each holder of a Right, to the extent feasible and in
accordance with Section 26, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) and all references in the preceding paragraph
to Preferred Stock shall be deemed to thereafter refer to Common Stock and/or
other securities, as the case may be.
Section 26. NOTICES. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the holder of
any Right Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
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First Industrial Realty Trust, Inc.
311 S. Wacker Drive
Suite 4000
Chicago, IL 60606
Attention: Mr. Michael Havala
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
First Chicago Trust Company of New York
525 Washington Blvd.
Suite 4660
Jersey City, NJ 07310
Attention: Tenders and Exchanges Administration
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the
earlier of the Distribution Date or the Shares Acquisition Date and subject
to the ultimate sentence of this Section 27, the Company may from time to
time supplement or amend this Agreement without the approval of any holders
of Right Certificates. From and after the earlier of the Distribution Date or
the Shares Acquisition Date, and subject to the penultimate sentence of this
Section 27, the Company may from time to time supplement or amend this
Agreement without the approval of any holders of Right Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
-56-
provisions herein, or (iii) to lengthen the time period during which the
Rights may be redeemed following the Shares Acquisition Date for up to an
additional twenty days beyond the time period set forth in Section 23(a)
(provided that any such lengthening shall be effective only if there are
Independent Directors and shall require the concurrence of a majority of such
Independent Directors), or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person). Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment unless the Rights Agent shall have
determined in good faith that such supplement or amendment would adversely
affect its interests under this Agreement. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment shall be made on or
after the Distribution Date which changes the Redemption Price, the Final
Expiration Date, the Purchase Price or the number of shares of Preferred
Stock for which a Right is then exercisable.
Section 28. SUCCESSORS. All the covenants and
provisions of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the provisions of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the
Company (and, where specifically provided for herein, the Independent
Directors) shall have the exclusive power and authority to administer this
Agreement and to
-57-
exercise all rights and powers specifically granted to the Board or the
Company (or, as expressly provided, the Independent Directors), or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement). All such
actions, calculations, interpretations and determinations (including, for the
purpose of clause (ii) below, all omissions with respect to the foregoing)
which are done or made by the Board (or, as provided for, by the Independent
Directors) in good faith, shall (i) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Right Certificates and all
other parties, and (ii) not subject the Board or the Independent Directors to
any liability to the holders of the Right Certificates.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. SEVERABILITY. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; PROVIDED, HOWEVER, that notwithstanding
anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board of Directors of the Company determines in
its good faith judgment that severing the invalid language from this
Agreement would adversely affect
-58-
the purpose or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the close of
business on the tenth day following the date of such determination by the
Board of Directors.
Section 32. GOVERNING LAW. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Maryland and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State
except that the rights, duties and obligations of the Rights Agent under this
Agreement shall be governed by the laws of the State of New York.
Section 33. COUNTERPARTS. This Agreement may be
executed in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings
of the several Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
-59-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[SEAL]
FIRST INDUSTRIAL REALTY TRUST, INC.
Attest
By: By:
------------------------- -------------------------
Name: Name:
Title: Title:
[SEAL]
Attest: First Chicago Trust Company of
New York, as Rights Agent
By: By:
------------------------- -------------------------
Name: Name:
Title: Title:
EXHIBIT A
Junior Participating Preferred Stock
(Liquidation Preference $1.00 Per Share)
ARTICLES SUPPLEMENTARY
FIRST INDUSTRIAL REALTY TRUST, INC.
____________________________
Articles Supplementary of Board of Directors Classifying
and Designating a Series of Preferred Stock as
Junior Participating Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series
____________________________
Dated as of September 5, 1997
EXHIBIT A
FIRST INDUSTRIAL REALTY TRUST, INC.
__________
Articles Supplementary of Board of Directors Classifying
and Designating a Series of Preferred Stock as
Junior Participating Preferred Stock
and Fixing Distribution and
Other Preferences and Rights of Such Series
__________
First Industrial Realty Trust, Inc., a Maryland corporation, having
its principal office in the State of Maryland in the City of Baltimore (the
"Company"), hereby certifies to the State Department of Assessments and Taxation
of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the
Charter and Bylaws of the Company, the Board of Directors pursuant to
resolutions adopted on September 4 1997 (i) authorized the creation and issuance
of up to 1,000,000 shares of Junior Participating Preferred Stock which stock
was previously authorized but not issued and (ii) determined the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of the shares
of such series and the Dividend Rate payable on such series. Such preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, number of
shares and Dividend Rate are as follows:
Section 1. NUMBER OF SHARES AND DESIGNATION. This class of Preferred
Stock shall be designated the Junior Participating Preferred Stock (the
"Preferred Shares") and the number of shares which shall constitute such series
shall be
-2-
1,000,000 shares, par value $.01 per share. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of Preferred Shares to a number less than
the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Preferred Shares.
Section 2. DIVIDEND RIGHTS. (1) Subject to the rights of holders of
any shares of any series of Preferred Stock (or any similar stock) ranking prior
and superior to the Preferred Shares with respect to dividends, the holders of
Preferred Shares shall be entitled prior to the payment of any dividends on
shares ranking junior to the Preferred Shares to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of February, May,
August and November in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Preferred Shares, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions (other than a dividend payable in
shares of common stock, par value $0.01 per share, of the Company (the "Common
Stock") or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise)) declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Preferred Shares. In the event the Company shall at any
time (i) declare or pay any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of Preferred Shares were enti-
-3-
tled immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(2) The Company shall declare a dividend or distribution on the
Preferred Shares as provided in subparagraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Preferred Shares
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(3) Dividends shall begin to accrue and be cumulative on outstanding
Preferred Shares from the Quarterly Dividend Payment Date next preceding the
date of issue of such Preferred Shares, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of Preferred
Shares entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the Preferred
Shares in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of Preferred
Shares entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
-4-
Section 3. LIQUIDATION. (1) Upon any liquidation, dissolution or
winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Shares unless, prior thereto, the
holders of shares of Preferred Shares shall have received $1.00 per share
(the "Liquidation Preference"), plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment. Following the payment of the full amount of the Liquidation
Preference, no additional distributions shall be made to the holders of
shares of Preferred Shares unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stocks splits, stock
dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Liquidation Preference and the Common Adjustment in
respect of all outstanding Preferred Shares and shares of Common Stock,
respectively, holders of Preferred Shares and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with
respect to the Preferred Shares and Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Preferred Shares, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.
-5-
(C) In the event the Company shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 4. NO REDEMPTION. (1) Except as provided below, the
Preferred Shares shall not be redeemable.
(2) The Preferred Shares are subject to the provisions of Article IX
of the Charter, including, without limitation, the provisions for the redemption
of Excess Stock (as defined in such Article).
Section 5. VOTING RIGHTS. The holders of Preferred Shares shall have
the following voting rights:
(1) Subject to the provision for adjustment hereinafter set forth,
each Preferred Share shall entitle the holder thereof to 100 votes on all
matters voted on at a meeting of the stockholders of the Company. In the event
the Company shall at any time (i) declare or pay any dividend on Common Stock
payable in shares of Common Stock, or (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of
Preferred Shares were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided herein or by law, the holders of
Preferred Shares and the holders of shares of
-6-
Common Stock and any other capital stock of the Company having general voting
rights shall vote together as one voting group on all matters submitted to a
vote of stockholders of the Company.
(3) Except as set forth herein or as otherwise provided by law,
holders of Preferred Shares shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 6. CERTAIN RESTRICTIONS.
(1) Whenever quarterly dividends or other dividends or distributions
payable on the Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on Preferred Shares outstanding shall have been paid in full,
the Company shall not:
declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Shares;
declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Shares, except
dividends paid ratably on the Preferred Shares and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Preferred Shares, provided that the
Company may at any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of
-7-
any stock of the Company ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Preferred Shares; or
purchase or otherwise acquire for consideration any shares of
Preferred Shares or any shares of stock ranking on a parity with the
Preferred Shares, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company unless
the Company could, under subparagraph (A) of this Section 6, purchase or
otherwise acquire such shares at such time and in such manner.
Section 7. REACQUIRED SHARES. Any Preferred Shares purchased or otherwise
acquired by the Company in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein or in the Charter.
Section 8. MERGER, CONSOLIDATION, ETC. In case the Company shall
enter into any merger, consolidation, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each Preferred
Share shall at the same time be similarly exchanged or changed into an amount
per share (subject to the provision for adjustment hereinafter set forth) equal
to 100 times the aggregate amount of stock, securities, cash and/or any other
property
-8-
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Company shall at any
time (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change of
Preferred Shares shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 9. RANKING. The Preferred Shares shall rank, with respect
to the payment of dividends and distribution of assets, junior to all series of
any other class of the Company's Preferred Stock unless the terms of any such
series shall provide otherwise.
Section 10. AMENDMENT. The Charter, including the Articles
Supplementary establishing the rights and preferences of the Preferred Shares,
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Preferred Shares so as to affect
them adversely without the affirmative vote of the holders of a majority of the
outstanding shares of Preferred Shares, voting separately as one voting group.
Section 11. FRACTIONAL SHARES. Preferred Shares may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Preferred Shares.
-9-
IN WITNESS WHEREOF, the Company has caused these Articles
Supplementary to be signed in its name and on its behalf and attested to by the
undersigned on this 5th day of September, 1997 and the undersigned acknowledges
under the penalties of perjury that these Articles Supplementary are the
corporate act of said Company and that to the best of his knowledge, information
and belief, the matters and facts set forth herein are true in all material
respects.
FIRST INDUSTRIAL REALTY TRUST, INC.
By: /s/ Michael T. Tomasz
------------------------------
Name: Michael T. Tomasz
Title: President and Chief
Executive Officer
Attest:
/s/ Michael J. Havala
- -----------------------------------
Name: Michael J. Havala
Title: Chief Financial Officer and
Secretary
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER OCTOBER 19, 2007 OR EARLIER IF NOTICE OF REDEMPTION
IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.](1)
FIRST INDUSTRIAL REALTY TRUST, INC.
Right Certificate
This certifies that , or registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of September 16, 1997 (the
"Rights Agreement") between First Industrial Realty Trust, Inc., a Maryland
corporation (the "Company"), and First Chicago Trust Company of New York, a
New York corporation (the "Rights Agent"), to purchase from the
- ----------------------------
(1) The portion of the legend in brackets shall be inserted on;y if
applicable.
Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M. (New York City time) on October
19, 2007 at the designated office of the Rights Agent, or its successors as
Rights Agent, in New York, New York, one one-hundredth of a fully paid non
assessable share of the Junior Participating Preferred Stock, par value $.01
per share(the "Preferred Stock"), of the Company, at a purchase price of $125
per one one-hundredth of a share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
and related certificate duly executed, along with a signature guarantee and
such other and further documentation as the Rights Agent may reasonably
request. The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of September 16, 1997, based on the Preferred Stock of the
Company as constituted at such date.
Upon the occurrence of a Triggering Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate
or Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Triggering
Event.
As provided in the Rights Agreement, the Purchase Price
and the number and kind of shares of Preferred Stock (or, in certain
circumstances, common stock and/or other securities) which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which
B-2
terms, provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights Agreement are on
file at the above-mentioned office of the Rights Agent, and at the executive
offices of the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the Rights Agent,
along with a signature guarantee and such other and further documentation as
the Rights Agent may reasonably request, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one
one-hundredths of a share of Preferred Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof, along with a
signature guarantee and such other and further documentation as the Rights
Agent may reasonably request, another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be (i) redeemed by the Company at a
redemption price of $.001 per Right or (ii) exchanged by the Company in whole
or in part for shares of common stock or Preferred Stock.
No fractional shares of Preferred Stock will be issued
upon the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such,
B-3
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or,
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the Rights Agent.
B-4
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of , .
[SEAL]
ATTEST: FIRST INDUSTRIAL REALTY TRUST, INC.
By: By:
------------------------- -------------------------
Name: Name:
Title: Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK, as Rights Agent
By:
-------------------------
Authorized Signature
Date:
B-5
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ___________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ____________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ________________, ____
--------------------------------
Signature
Signature Guaranteed:
--------------------------------------------------
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
B-6
CERTIFICATE
-----------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
--------------------------------
Signature
Signature Guaranteed:
--------------------------------------------------
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
NOTICE
------
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
B-7
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
First Industrial Realty Trust, Inc.:
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Right Certificate to purchase the
shares of the Preferred Stock issuable upon the exercise of such Rights (or
such other securities of the Company or of any other Person which may be
issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of:
Please insert social security or
other taxpayer identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and delivered to:
Please insert social security or
other taxpayer identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
--------------------------------
Signature
Signature Guaranteed:
--------------------------------------------------
B-8
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
B-9
CERTIFICATE
-----------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: ____________, ____ __________________________________
Signature
NOTICE
------
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.
B-10
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On September 4, 1997, the Board of Directors of First
Industrial Realty Trust, Inc. (the "Company") declared, a dividend
distribution of one Right for each outstanding share of Common Stock, $0.01
par value (the "Common Stock"), of the Company. The distribution is payable
on October 20, 1997 (the "Record Date"). Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Junior
Participating Preferred Stock (the "Preferred Stock"), at a price of $125 per
one one-hundredth of a share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between the Company and First Chicago Trust Company
of New York, as Rights Agent (the "Rights Agent").
Distribution Date; Transfer of Rights
- -------------------------------------
Until the earlier to occur of (i) ten calendar days
following the date (the "Shares Acquisition Date") of public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") acquired, or obtained the right to acquire, beneficial ownership of
Common Stock or other voting securities ("Voting Stock") that have 15% or
more of the voting power of the outstanding shares of Voting Stock or (ii)
ten calendar days (or such later date as may be determined by action of the
Board of Directors prior to the time any person or group of affiliated
persons becomes an Acquiring Person) following the commencement or
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in such person acquiring, or obtaining the
right to acquire, beneficial ownership of Voting Stock having 15% or more of
the voting power of the outstanding shares of Voting Stock (the earlier of
such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Company's Common Stock certificates
outstanding as of the Record Date, by such Common Stock certificates. The
Rights Agreement provides that, until the Distribution Date, the Rights will
be transferred with and only with the Company's
C-1
Common Stock. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuance of the Company's Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any of the Company's Common Stock certificates
outstanding as of the Record Date will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Company's Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire at the close of business on October 19, 2007,
unless earlier redeemed or exchanged by the Company as described below.
Exercise of Rights for Common Stock of the Company
- --------------------------------------------------
In the event that a Person becomes an Acquiring Person,
each holder of a Right will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise
price of the Right. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
Exercise of Rights for Shares of the Acquiring Company
- ------------------------------------------------------
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction, or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights
which previously have
C-2
been voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the Exercise Price of the Right.
Adjustments to Purchase Price
- -----------------------------
The Purchase Price payable, and the number of shares of
Preferred Stock (or Common Stock or other securities, as the case may be)
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred Stock, (ii)
upon the grant to holders of the Preferred Stock of certain rights or
warrants to subscribe for shares of the Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends out of
earnings or retained earnings or dividends payable in the Preferred Stock) or
of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until the earlier of (i) three years from the date of
the event giving rise to such adjustment and (ii) the time at which
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional shares will be issued (other than fractional shares
which are integral multiples of one one-hundredth of a share of Preferred
Stock) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the
date of exercise.
Redemption and Exchange of Rights
- ---------------------------------
At any time after the occurrence of the event set forth
under the heading "Exercise of Rights for Common Stock of the Company" above,
the Board of Directors (with the concurrence of a majority of the Independent
Directors) may exchange the Rights (other than Rights owned by the Acquiring
Person
c-3
which shall have become void), in whole or in part, at an exchange ratio of
one share of Common Stock (or a fraction of a share of Preferred Stock having
the same market value) per Right (subject to adjustment).
At any time prior to 5:00 P.M. New York City time on the
tenth calendar day following the Shares Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price of $.001 per Right
(the "Redemption Price"). Under certain circumstances set forth in the
Rights Agreement, the decision to redeem shall require that there be
Independent Directors in office and that a majority of the Independent
Directors concur in such decision. Immediately upon the action of the Board
of Directors of the Company electing to redeem the Rights with, if required,
the concurrence of the Independent Directors, the Company shall make
announcement thereof, and upon such action, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
Until a Right is exercised or exchanged, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
Terms of the Preferred Stock
- ----------------------------
The Preferred Stock will rank junior to all other series
of the Company's preferred stock with respect to payment of dividends and as
to distributions of assets in liquidation. Each share of Preferred Stock
will have a quarterly dividend rate per share equal to the greater of $1.00
or 100 times the per share amount of any dividend (other than a dividend
payable in shares of Common Stock or a subdivision of the Common Stock)
declared from time to time on the Common Stock, subject to certain
adjustments. The Preferred Stock will not be redeemable. In the event of
liquidation, the holders of the Preferred Stock will be entitled to receive a
preferred liquidation payment per share of $1.00 (plus accrued and unpaid
dividends) or, if greater, an amount equal to 100 times the payment to be
made per share of Common Stock, subject to certain adjustments. Generally,
each share of Preferred Stock will vote together with the Common Stock and
any other series of cumulative preferred stock entitled to vote in such
manner and will be entitled to 100 votes, subject to certain adjustments. 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 Preferred Stock will be
enti-
C-4
tled 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 foregoing
dividend, voting and liquidation rights of the Preferred Stock are protected
against dilution in the event that additional shares of Common Stock are
issued pursuant to a stock split or stock dividend or distribution. Because
of the nature of the Preferred Stock's dividend, voting, liquidation and
other rights, the value of the one one-hundredth of a share of Preferred
Stock purchasable with each Right is intended to approximate the value of one
share of Common Stock.
Amendments to Terms of the Rights
- ---------------------------------
Any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the Distribution
Date. After the Distribution Date, the provisions of the Rights Agreement
may be amended by the Board (in certain circumstances, with the concurrence
of the Independent Directors) in order to cure any ambiguity, defect or
inconsistency, or to make changes which do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person);
PROVIDED, HOWEVER, that no supplement or amendment may be made after the
Distribution Date which changes those provisions relating to the principal
economic terms of the Rights.
The term "Independent Directors" means any member of the
Board of Directors of the Company who either (i) was a member of the Board on
the date of the Rights Agreement or (ii) is subsequently elected to the Board
if such person is recommended or approved by a majority of the Independent
Directors, but shall not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement
on Form 8-A dated [ ], 1997. A copy of
C-5
the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
C-6
EX.12.1
FIRST INDUSTRIAL REALTY TRUST, INC.
COMPUTATION OF RATIOS OF EARNINGS TO
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS(A)
(DOLLARS IN THOUSANDS)
FOR THE
SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
Income (loss) (excluding interest
income on U.S. government
securities collateralizing the 1994
Defeased Mortgage Loan) before
disposition of interest rate
protection agreement, gain on sales
of properties, extraordinary items
and minority interest.............. $ 24,124 $ 15,544 $ 36,524 $ 19,756 $ 8,855 $ (3,399) $ (4,048)
Plus interest expense and
amortization of deferred financing
costs and interest rate protection
agreements......................... 22,701 15,571 32,240 33,029 26,461 19,184 19,994
--------- --------- --------- --------- --------- --------- ---------
Earnings (excluding interest income
on U.S. government securities
collateralizing the 1994 Defeased
Mortgage Loan) before disposition
of interest rate protection
agreements, gain on sales of
properties, extraordinary items,
minority interest and fixed
charges............................ $ 46,825 $ 31,115 $ 68,764 $ 52,785 $ 35,316 $ 15,785 $ 15,946
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Fixed charges and preferred stock
dividends (b)...................... $ 22,181 $ 17,619 $ 36,660 $ 33,821 $ 26,511 $ 19,197 $ 20,277
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to combined fixed
charges and preferred stock
dividends (c)...................... 2.11x 1.77x 1.88x 1.56x 1.33x --(c) --(c)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
- ------------------------
(a) The Company completed its initial public offering on June 30, 1994.
Information prior to the initial public offering includes the operations and
accounts of the Company's predecessor and information subsequent to the
initial public offering includes the historical operations and accounts of
the Company.
(b) There was no preferred stock outstanding prior to November, 1995.
(c) Earnings represent earnings (excluding interest income on U.S. government
securities collateralizing the 1994 Defeased Mortgage Loan) before
disposition of interest rate protection agreements, gain on sales of
properties, extraordinary items, minority interest and fixed charges. Fixed
charges consist of interest expenses (excluding interest on the 1994
Defeased Mortgage Loan accruing after the date of defeasance), capitalized
interest, and amortization of interest rate protection agreements and
FIRST INDUSTRIAL REALTY TRUST, INC.
COMPUTATION OF RATIOS OF EARNINGS TO
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS(A)
(DOLLARS IN THOUSANDS)
deferred financing costs. For the fiscal years ended December 31, 1993 and
1992, earnings were not sufficient to cover fixed charges. Additional
earnings of $3.4 million and $4.3 million, respectively would have been
required to achieve a ratio of 1.0 for such periods.
EX.12.2
FIRST INDUSTRIAL, L.P.
AND CONTRIBUTING BUSINESSES
COMPUTATION OF RATIOS OF EARNINGS TO
FIXED CHARGES (A)
(DOLLARS IN THOUSANDS)
FOR THE
SIX MONTHS ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before disposition of
interest rate protection
agreements, gain on sales of
properties and extraordinary
items.............................. $ 18,125 $ 13,674 $ 32,577 $ 12,123 $ 8,823 $ (3,399) $ (4,048)
Plus interest expense and
amortization of deferred financing
costs and interest rate protection
agreements......................... 9,115 1,958 4,881 6,803 13,625 19,184 19,994
--------- --------- --------- --------- --------- --------- ---------
Earnings before disposition of
interest rate protection
agreements, gain on sales of
properties, extraordinary items and
fixed charges...................... $ 27,240 $ 15,632 $ 37,458 $ 18,926 $ 22,448 $ 15,785 $ 15,946
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Fixed charges and preferred limited
partnership distributions (b)...... $ 10,678 $ 1,999 $ 5,382 $ 7,069 $ 13,645 $ 19,197 $ 20,277
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to fixed charges
(c)................................ 2.55x 7.82x 6.96x 2.68x 1.65x --(c) --(c)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
- ------------------------
(a) First Industrial Realty Trust, Inc., the general partner of First
Industrial, L.P. (the "Operating Partnership"), completed its initial public
offering on June 30, 1994. Information prior to the initial public offering
includes the operations and accounts of the Operating Partnership's
predecessors and information subsequent to the initial public offering
includes the historical operations and accounts of the Operating
Partnership.
(b) There were no preferred limited partnership distributions in respect of any
period prior to the fiscal quarter ending June 30, 1997.
(c) Earnings represent earnings before disposition of interest rate protection
agreements, gain on sales of properties, extraordinary items and fixed
charges. Fixed charges consist of interest expenses, capitalized interest
and amortization of interest rate protection agreements and deferred
financing costs. For the fiscal years ended December 31, 1993 and 1992,
earnings were not sufficient to cover fixed charges. Additional earnings of
$3.4 million and $4.3 million, respectively would have been required to
achieve a ratio of 1.0 for such periods.
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Amendment No. 1 to
Form S-3 (File No. 333-29879) dated September 23, 1997 of our reports dated
February 12, 1997 on our audits of the financial statements and the financial
statement schedule of First Industrial, L.P. (the "Operating Partnership") and
the combined financial statements of the Contributing Businesses and of the
combined financial statements of the Other Real Estate Partnerships and the
incorporation by reference in this registration statement on Amendment No. 1 to
Form S-3 (File No 333-29879) of our report dated February 12, 1997, on our
audits of the consolidated financial statements and the financial statement
schedule of First Industrial Realty Trust, Inc. (the "Company") and the combined
financial statements of the Contributing Businesses which is included in the
1996 Annual Report on Form 10-K, and our report dated February 11, 1997 on our
audit of the combined historical statements of revenues and certain expenses of
the Acquisition Properties which is included in the Company's Current Report on
Form 8-K filed February 12, 1997, and our report dated March 26, 1997 on our
audit of the combined historical statement of revenues and certain expenses of
the Lazarus Burman Properties which is included in the Company's Current Report
on Form 8-K filed February 12, 1997 as amended by Form 8-K/A No. 1 filed April
10, 1997, and our report dated July 30, 1997 on our audit of the combined
historical statement of revenues and certain expenses of the Punia Acquisition
Properties which is included in each of the Company's and Operating
Partnership's Current Report on Form 8-K filed July 15, 1997 as amended by Form
8-K/A No. 1 each filed September 4, 1997. We also consent to the reference to
our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
September 23, 1997
