AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 28, 1998
REGISTRATION STATEMENT NO. 333-67129
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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
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RECKSON ASSOCIATES REALTY CORP. AND
RECKSON OPERATING PARTNERSHIP, L.P.
(Exact name of each registrant as specified in its charter)
RECKSON ASSOCIATES REALTY CORP. - MARYLAND RECKSON ASSOCIATES REALTY CORP. - 11-3233650
RECKSON OPERATING PARTNERSHIP, L.P. - DELAWARE RECKSON OPERATING PARTNERSHIP, L.P. -11-3233647
(State or other jurisdiction (I.R.S. employer identification number)
of incorporation or organization)
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-6900
(Address, including zip code, and telephone number, including area code,
of each registrant's principal executive office)
DONALD J. RECHLER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-6900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPY TO:
THOMAS R. SMITH, JR., ESQ.
EDWARD F. PETROSKY, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER, 58TH FLOOR
NEW YORK, N.Y. 10048
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
From time to time after this Registration Statement becomes effective.
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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, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or interest reinvestment plans, please check the
following box.|X|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.|X|
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CALCULATION OF REGISTRATION FEE
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Title of Class of Proposed Maximum Amount of
Securities to be Registered(1) Aggregate Offering Registration Fee
Price(1)
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Debt Securities(2)(3)............ $260,000,000(5) $72,280(6)(7)
Guarantees(4)....................
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(1) Estimated solely for purposes of calculating the registration fee.
(2) The Debt Securities will be issued by Reckson Operating Partnership,
L.P.
(3) Or, in the event of the issuance of original issue discount
securities, such higher principal amount as may be sold for
an aggregate initial offering price not to exceed $260,000,000.
(4) Debt Securities not rated investment grade at the time of issuance by
at least one nationally recognized statistical rating organization
will be accompanied by Guarantees to be issued by Reckson Associates
Realty Corp. None of the proceeds from the sale of the Debt
Securities will be received by Reckson Associates Realty Corp. for
the issuance of the Guarantees. Pursuant to Rule 457(n) under the
Securities Act, no separate filing fee for the Guarantees is
required.
(5) An aggregate amount of common stock, common stock warrants, preferred
stock, depositary shares and preferred stock warrants equal to
$145,506,908 and $599,232,746 may be issued by Reckson Associates
Realty Corp. under registration statement no. 333-28015 and
registration statement no. 333-46883, respectively, and registration
fees of approximately $44,093 and $176,774 were paid in respect
thereof.
(6) Calculated pursuant to Rule 457(o) under the Securities Act.
(7) Previously paid.
Pursuant to Rule 429 under the Securities Act, the prospectus
included in this Registration Statement is a combined prospectus and relates
to registration statement no. 333-28015 and registration statement no.
333-46883 previously filed by Reckson Associates Realty Corp. on Form S-3 in
respect of its common stock, common stock warrants, preferred stock,
depositary shares and preferred stock warrants and declared effective on
September 29, 1997 and March 25, 1998, respectively. This registration
statement, which is a new registration statement, also constitutes
post-effective amendment no. 1 to registration statement no. 333-28015 and
registration statement no. 333-46883 and such post-effective amendment no. 1
shall hereafter become effective concurrently with the effectiveness of this
registration statement in accordance with Section 8(c) of the Securities Act.
EACH REGISTRANT HEREBY AMENDS 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 WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
Securities and Exchange Commission. These securities may not be sold or may
offers to buy be accepted prior to the time the reistration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by 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.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 28, 1998
PROSPECTUS
- ----------
$744,739,654
RECKSON ASSOCIATES REALTY CORP.
COMMON STOCK, COMMON STOCK WARRANTS,
PREFERRED STOCK, DEPOSITARY SHARES AND PREFERRED STOCK WARRANTS
$260,000,000
RECKSON OPERATING PARTNERSHIP, L.P.
DEBT SECURITIES
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Reckson Associates Realty Corp. may offer shares of its common stock,
shares of its preferred stock, depositary shares representing interests in
preferred stock, and warrants to purchase common stock or preferred stock, in
an aggregate initial public offering price not to exceed $744,739,654. Reckson
Associates' common stock is listed on the New York Stock Exchange under the
symbol "RA."
Reckson Operating Partnership, L.P. may offer one or more series of
its debt securities, in an aggregate initial public offering price not to
exceed $260,000,000. If any debt securities are not rated investment grade by
at least one nationally recognized statistical rating organization at the time
of issuance, such debt securities will be fully and unconditionally guaranteed
by Reckson Associates as to payment of principal, premium, if any, and
interest.
We may offer the securities at prices and on terms to be set forth in
one or more supplements to this prospectus. The securities may be offered
directly, through agents on our behalf or through underwriters or dealers.
The terms of the securities may include such limitations on ownership
and restrictions on transfer thereof as may be appropriate to preserve the
status of Reckson Associates as a real estate investment trust for United
States federal income tax purposes.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A
DESCRIPTION OF RISKS THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE
SECURITIES.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is ___________ __, 1998.
RISK FACTORS
This prospectus contains forward-looking statements which involve
risks and uncertainties. Our actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed below. An
investment in the securities involves various risks. Prospective investors
should carefully consider the following information in conjunction with the
other information contained in this prospectus and the related prospectus
supplement before purchasing the securities offered by such prospectus
supplement. References in this prospectus to "Reckson," and the use of the
words "us," "we," "our," and terms of similar import, include Reckson
Associates Realty Corp., the Operating Partnership, Reckson FS Limited
Partnership, an entity 100% owned by the Operating Partnership and Reckson
Management Group, Inc. and Reckson Construction Group, Inc., entities in which
the Operating Partnership owns a 97% non-voting interest, as well as our
predecessors.
WE ARE DEPENDENT ON THE NEW YORK TRI-STATE AREA MARKET DUE TO LIMITED
GEOGRAPHIC DIVERSIFICATION AND OUR FINANCIAL RESULTS MAY SUFFER AS A RESULT OF
A DECLINE IN ECONOMIC CONDITIONS IN SUCH AREA
A decline in the economic conditions in the Tri-State New York area
and for commercial real estate could adversely affect our business, financial
condition and results of operations. All of our properties are located in the
New York Tri-State area, although our organizational documents do not restrict
us from owning properties outside of this area. Each of our four markets are
located in the suburbs of New York City and may be similarly affected by
economic changes in this area. A significant downturn in the financial
services industry and related industries would likely have a negative effect
on these markets and on the performance of our properties.
The following is a breakdown of our office and industrial properties
for each of our four markets at September 30, 1998:
ANNUAL BASE
NUMBER OF PROPERTIES SQUARE FOOTAGE RENT(1)
------------------- -------------- -----------
Long Island
Office 23 3,671,413 $68,553,425
Industrial 94 5,638,435 36,521,033
Westchester
Office 25 3,298,623 57,216,768
Industrial 4 256,948 2,111,591
New Jersey
Office 17 1,993,999 32,833,174
Industrial 28 4,205,687 17,268,188
Connecticut
Office 8 1,123,188 21,311,122
Industrial 1 452,414 2,885,181
(1) Represents base rents from leases in place as of September 30, 1998,
for the period October 1, 1998 through September 30, 1999, excluding
the reimbursement by tenants of electrical costs.
DEBT SERVICING AND REFINANCING, INCREASES IN INTEREST RATES, FINANCIAL
COVENANTS AND ABSENCE OF LIMITATION OF DEBT COULD ADVERSELY AFFECT OUR ECONOMIC
PERFORMANCE
INFORMATION ABOUT OUR DEBT. As of September 30, 1998:
our total debt (including our proportionate share of indebtedness of joint
ventures and net of the minority partners' interests) was approximately
$814,396,086
the weighted-average maturity of our debt was 4.8 years
our Debt Ratio (as described below) was 36.9%
our debt-to-equity ratio (as measured by comparing the total debt of the
Operating Partnership to the value of the outstanding common stock of
Reckson Associates and the common units of limited partnership interest of
the Operating Partnership, each based upon the market value of the common
stock, and the liquidation preference of the preferred stock of Reckson
Associates and the preferred units of limited partnership interest in the
Operating Partnership, excluding all units of general partnership interest
owned by Reckson Associates), was 1:1.71
approximately 54% of our debt was variable rate debt
DEPENDENCE UPON DEBT FINANCING; RISK OF INABILITY TO SERVICE OR
REFINANCE DEBT. In order to qualify as a real estate investment trust, or
REIT, for federal income tax purposes, Reckson Associates is required to
distribute at least 95% of its taxable income. As a result, we are more
reliant on debt or equity financings than many other companies that are not
REITs and, therefore, are able to retain more of their income.
We are subject to risks normally associated with debt financing. Our
cash flow could be insufficient to meet required payments of principal and
interest. We may not be able to refinance existing indebtedness, which in
virtually all cases requires substantial principal payments at maturity, or
the terms of such refinancing might not be as favorable as the terms of the
existing indebtedness. We may not be able to refinance any indebtedness we
incur or to otherwise obtain funds by selling assets or raising equity to make
required payments on maturing indebtedness.
RISING INTEREST RATES COULD ADVERSELY AFFECT CASH FLOW. Outstanding
advances under the credit facilities of the Operating Partnership bear
interest at variable rates. In addition, we may incur indebtedness in the
future that also bears interest at a variable rate or we may be required to
refinance our debt at higher rates. Accordingly, increases in interest rates
could increase our interest expense, which could adversely affect our ability
to pay distributions to the stockholders of Reckson Associates and to service
the indebtedness of the Operating Partnership.
REQUIREMENTS OF CREDIT FACILITIES COULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION AND OUR ABILITY TO MAKE DISTRIBUTIONS. The Operating
Partnership has obtained a three-year unsecured credit facility from The Chase
Manhattan Bank, Union Bank of Switzerland and PNC Bank, National Association,
which provides for a maximum borrowing amount of up to $500 million. The
Operating Partnership has also obtained a separate $50 million one-year
unsecured credit facility from Chase. The ability of the Operating Partnership
to borrow under the credit facilities is subject to certain financial
covenants, including covenants relating to limitations on unsecured and
secured borrowings, minimum interest and fixed charge coverage ratios, a
minimum equity value and a maximum dividend payout ratio. The credit
facilities also contain financial covenants limiting the distributions that
the Operating Partnership may make to Reckson Associates. Although the
Operating Partnership presently is in compliance with such covenants, there is
no assurance that the Operating Partnership will continue to be in compliance
and that it will be able to service its indebtedness and continue to pay
distributions to Reckson Associates for stockholders.
NO LIMITATION ON DEBT. Currently, we have a policy of incurring debt
only if upon such incurrence our Debt Ratio would be 50% or less. For these
purposes, Debt Ratio is defined as the total debt of the Operating Partnership
as a percentage of the market value of outstanding shares of common stock and
preferred stock of Reckson Associates, including the conversion of outstanding
partnership units in the Operating Partnership, plus total debt. Under this
policy, we could incur additional debt if our stock price increases, even if
we may not have a corresponding increase in our ability to repay such debt. As
described above, our credit facilities contain financial covenants which limit
the ability of the Operating Partnership to incur additional indebtedness.
However, our organizational documents do not contain any limitation on the
amount of indebtedness we may incur. Accordingly, the Board of Directors could
alter or eliminate this policy and would do so, for example, if it were
necessary in order for Reckson Associates to continue to qualify as a REIT. If
this policy were changed, we could become more highly leveraged, resulting in
higher interest payments that could adversely affect our ability to pay
distributions to our stockholders and could increase the risk of default on
our existing indebtedness.
OUR ACQUISITION, DEVELOPMENT AND CONSTRUCTION ACTIVITIES COULD RESULT IN LOSSES
We intend to acquire existing office and industrial properties to the
extent that such acquisitions are on advantageous terms and meet our
investment criteria. Since the IPO of Reckson Associates in June 1995, we have
acquired 63 office properties with aggregate square footage of approximately
8.5 million and 44 industrial properties with aggregate square footage of
approximately 4.3 million (excluding our investment in the Morris Companies).
Acquisitions of commercial properties entail risks, such as the risk that
investments will fail to perform as expected. Many of the properties that we
acquire require significant additional investment and upgrades and are subject
to the risk that estimates of the cost of improvements to bring such
properties up to standards established for the intended market position may
prove inaccurate.
In addition, we may make joint venture investments in real estate
assets with Reckson Strategic Venture Partners, LLC ("RSVP"). Reckson Service
Industries, Inc. ("RSI") owns 100% of the common ownership interests of RSVP
and, accordingly, controls RSVP. We completed a spin-off distribution of 100%
of the common stock of RSI in June 1998. RSVP was formed as a "research and
development" vehicle to identify and invest in real estate companies that
don't operate in our office and industrial markets. Such investments may
involve various types of real estate assets and may involve different risks
than those in our office and industrial sectors. As of December 22, 1998, we
had made a joint venture investment with RSVP of $10.1 million in the area of
privatization of government occupied office buildings and correctional
facilities. In addition to the risks of conflicts of interest and investments
in joint ventures described below, this investment includes the following
risks:
o dependence upon the continued outsourcing of real estate
functions by governmental entities
o the ability to compete effectively in bidding on specific
projects
o significant government regulation and/or oversight
We also intend to continue the selective development and construction
of office and industrial properties in accordance with our development and
underwriting policies as opportunities arise. Since the IPO of Reckson
Associates, we have developed or re-developed five properties comprising
approximately 694,000 square feet. Our development and construction activities
include the risks that:
o we may abandon development opportunities after expending
resources to determine feasibility
o construction costs of a project may exceed our original
estimates occupancy rates and rents at a newly completed
property may not be sufficient to make the property profitable
o financing may not be available to us on favorable terms for
development of a property
o we may not complete construction and lease-up on schedule,
resulting in increased debt service expense and construction
costs
Our development activities are also subject to risks relating to the
inability to obtain, or delays in obtaining, all necessary zoning, land-use,
building, occupancy and other required governmental permits and
authorizations. If any of the above occur, our ability to pay distributions to
our stockholders and service our indebtedness could be adversely affected. In
addition, new development activities, regardless of whether or not they are
ultimately successful, typically require a substantial portion of management's
time and attention.
REAL ESTATE INVESTMENT RISKS COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS
GENERAL RISKS. Our property's revenues and value may be adversely
affected by a number of factors, including:
o the national, state and local economic climate and real estate
conditions, such as oversupply of or reduced demand for space
and changes in market rental rates
o our ability to provide adequate management, maintenance and
insurance
o defaults by our tenants or their failure to pay rent on a timely
basis
o the need to periodically renovate, repair and relet our space
increasing operating costs,including real estate taxes and
utilities, which may not be passed through to tenants
A significant portion of our expenses of real estate investments,
such as mortgage payments, real estate taxes, insurance and maintenance costs,
are generally not reduced when circumstances cause a decrease in income from
our properties. In addition, our real estate values and income from properties
are also affected by such factors as compliance with laws, including tax laws,
interest rate levels and the availability of financing.
BECAUSE REAL ESTATE INVESTMENTS ARE ILLIQUID, WE MAY NOT BE ABLE TO
SELL PROPERTIES WHEN APPROPRIATE. Real estate investments generally cannot be
sold quickly. We may not be able to vary our portfolio promptly in response to
economic or other conditions. In addition, provisions of the Internal Revenue
Code limit a REIT's ability to sell properties in some situations when it may
be economically advantageous to do so, thereby adversely affecting returns to
our stockholders.
COMPETITION IN OUR MARKETS IS SIGNIFICANT. The competition for
tenants in the office and industrial markets in the New York Tri-State area is
significant and includes properties owned by other REITs, local privately-held
companies, institutional investors and other owners. In addition, there is
significant competition for acquisitions in our markets from the same types of
competitors. In addition, many users of industrial space in our markets own
the buildings that they occupy.
INCREASING OPERATING COSTS COULD ADVERSELY AFFECT CASH FLOW. Our
properties are subject to operating risks common to commercial real estate,
any and all of which may adversely affect occupancy or rental rates. Our
properties are subject to increases in our operating expenses such as
cleaning, electricity, heating, ventilation and air conditioning ("HVAC");
elevator repair and maintenance; insurance and administrative costs; and other
costs associated with security, landscaping, repairs and maintenance of our
properties. While our tenants generally are currently obligated to pay a
portion of these costs, there is no assurance that tenants will agree to pay
such costs upon renewal or that new tenants will agree to pay such costs. If
operating expenses increase, the local rental market may limit the extent to
which rents may be increased to meet increased expenses without at the same
time decreasing occupancy rates. While we have cost saving measures at each of
our properties, if any of the above occurs, our ability to pay distributions
to our stockholders and service our indebtedness could be adversely affected.
SOME POTENTIAL LOSSES ARE NOT COVERED BY INSURANCE. We carry
comprehensive liability, fire, extended coverage and rental loss insurance on
all of our properties. However, losses arising from acts of war or relating to
pollution are not generally insured because they are either uninsurable or not
economically insurable. If an uninsured loss or a loss in excess of insured
limits should occur, we could lose our capital invested in a property, as well
as any future revenue from such property. We would remain obligated on any
mortgage indebtedness or other obligations related to such property.
INVESTMENTS IN MORTGAGE DEBT COULD LEAD TO LOSSES. We may invest in
mortgages secured by office or industrial properties. We may acquire such
properties through foreclosure proceedings or negotiated settlements. In
addition to the risks associated with investments in commercial properties,
investments in mortgage indebtedness present additional risks, including the
risk that the fee owners of such properties may not make payments of interest
on a current basis and we may not realize our anticipated return or sustain
losses relating to such investments.
o PROPERTY OWNERSHIP THROUGH PARTNERSHIPS AND JOINT VENTURES COULD LIMIT OUR
CONTROL OF SUCH INVESTMENTS
The Operating Partnership owns a 60% general partner interest in Omni
Partners, L.P. (the "Omni Partnership"), the partnership that owns the Omni, a
575,000 square foot office building located in our Nassau West Corporate
Center office park. Odyssey Partners, L.P. and an affiliate of Odyssey own the
remaining 40% interest. Through our partnership interest, we act as managing
partner and have the sole authority to conduct the business and affairs of the
Omni Partnership subject to the limitations set forth in the amended and
restated agreement of limited partnership of Omni Partners, L.P. (the "Omni
Partnership Agreement"). These limitations include Odyssey's right to
negotiate under certain circumstances a refinancing of the mortgage debt
encumbering the Omni and the right to approve any sale of the Omni made on or
before March 13, 2007 (the "Acquisition Date"). The Operating Partnership will
continue to act as the sole managing partner of the Omni Partnership unless
certain conditions specified in the Omni Partnership Agreement shall occur.
Upon the occurrence of any of such conditions the Operating Partnership's
general partnership interest shall convert to a limited partnership interest
and an affiliate of Odyssey shall be the sole managing partner, or at the
option of Odyssey, the Operating Partnership shall be a co-managing partner
with an affiliate of Odyssey. In addition, on the Acquisition Date, the
Operating Partnership will have the right to purchase Odyssey's interest in
the Omni Partnership at a price (the "Option Price") based on 90% of its fair
market value. If the Operating Partnership fails to exercise such option,
Odyssey has the right to require the Operating Partnership to purchase
Odyssey's interest in the Omni Partnership on the Acquisition Date at the
Option Price. The Operating Partnership has the right to extend the
Acquisition Date until March 13, 2012. The Option Price shall apply to the
payment of all sums due under a loan made by the Operating Partnership in
March 1997 to Odyssey in the amount of approximately $17 million. The Odyssey
loan matures on the Acquisition Date, subject to the Operating Partnership's
right to extend the Acquisition Date as set forth above, and is secured by a
pledge of all of Odyssey's right, title and interest in the Omni Partnership.
All distributions of net cash flow which Odyssey is otherwise entitled to
shall apply to all interest due under the Odyssey loan. All distributions from
a sale or refinancing of the Omni which Odyssey is otherwise entitled to will
be applied to the interest and principal outstanding under the Odyssey loan.
In addition, we may acquire either a limited partnership interest in
a property partnership or an interest in a property partnership with shared
responsibility for managing the affairs of a property partnership. Therefore,
we will not be in a position to exercise sole decision-making authority
regarding the property partnership or joint venture. In that regard, the
Operating Partnership owns a 60% managing member interest in a limited
liability company that owns 520 White Plains Road, a 171,761 square foot
office building located in Tarrytown, New York. The remaining 40% member
interest is held by Tarrytown Corporate Center III, L.P. ("TCC"), a
partnership affiliated with the Halpern organization, the organization from
which we acquired eight Class A office properties for approximately $86
million in February 1996. The member agreement governing the joint venture
arrangement requires us to obtain the consent of TCC prior to engaging in
activities such as entering into or modifying a lease for more than 25,000
rentable square feet, financing or refinancing indebtedness encumbering the
property and selling or otherwise transferring the property.
Partnership or joint venture investments may involve risks not
otherwise present for investments made solely by us, including the possibility
that our partners or co-venturer might become bankrupt, that such partners or
co-venturer might at any time have different interests or goals than we do,
and that such partners or co-venturer may take action contrary to our
instructions, requests, policies or objectives. This includes our policy with
respect to maintaining our qualification as a REIT. Other risks of such
investments include impasse on decisions, such as a sale, because neither the
partner or co-venturer nor us would have full control over the partnership or
joint venture. Consequently, actions by such partner or co-venturer might
result in subjecting properties owned by the partnership or joint venture to
additional risk. There is no limitation under our organizational documents as
to the amount of available funds that may be invested in partnerships or joint
ventures.
o ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND MAY BE COSTLY
Federal, state and local laws and regulations relating to the
protection of the environment may require a current or previous owner or
operator of real estate to investigate and clean up hazardous or toxic
substances or petroleum product releases at such property. An owner of real
estate is liable for the costs of removal or remediation of certain hazardous
or toxic substances on or in such property. These laws often impose such
liability without regard to whether the owner knew of, or caused, the presence
of such contaminants. Clean-up costs and the owner's liability generally are
not limited under such enactments and could exceed the value of the property
and/or the aggregate assets of the owner. The presence of or the failure to
properly remediate such substances may adversely affect the owner's ability to
sell or rent such property or to borrow using such property as collateral.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances may also be liable for the clean-up costs of such substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by such person. Even if more than one person was responsible for the
contamination, each person covered by the environmental laws may be held
responsible for the clean-up costs incurred. In addition, third parties may
sue the owner or operator of a site for damages and costs resulting from
environmental contamination emanating from that site.
Environmental laws also govern the presence, maintenance and removal
of asbestos-containing materials ("ACMs"). Such laws impose liability for
release of ACMs into the air and third parties may seek recovery from owners
or operators of real properties for personal injury associated with ACMs. In
connection with the ownership (direct or indirect), operation, management and
development of real properties, we may be considered an owner or operator of
such properties. Having arranged for the disposal or treatment of contaminants
we may be potentially liable for removal, remediation and other costs,
including governmental fines and injuries to persons and property.
All of our office properties and all of our industrial properties
have been subjected to a Phase I or similar environmental site assessment
after April 1, 1994 that were completed by independent environmental
consultant companies, except for the property located at 35 Pinelawn Road
which was originally developed by us and subjected to a Phase I in April 1992.
These Phase I or similar environmental site assessments involved general
inspections without soil sampling, ground water analysis or radon testing and,
for our properties constructed in 1978 or earlier, survey inspections to
ascertain the existence of ACMs. These environmental site assessments have not
revealed any environmental liability that would have a material adverse effect
on our business.
o FAILURE TO QUALIFY AS A REIT WOULD BE COSTLY
Reckson Associates has operated (and intends to operate) so as to
qualify as a REIT under the Internal Revenue Code beginning with our taxable
year ended December 31, 1995. Although our management believes that Reckson
Associates is organized and operate in such a manner, no assurance can be
given that Reckson Associates will qualify or remain qualified as a REIT.
If Reckson Associates fails to qualify as a REIT in any taxable year,
Reckson Associates will be subject to federal income tax (including any
applicable alternative minimum tax) on its taxable income at regular corporate
rates. Moreover, unless entitled to relief under certain statutory provisions,
Reckson Associates also will be disqualified from treatment as a REIT for the
four taxable years following the year during which qualification was lost.
This treatment would significantly reduce net earnings available to service
indebtedness, make investments or pay distributions to shareholders because of
the additional tax liability to Reckson Associates for the years involved.
Also, Reckson Associates would not then be required to pay distributions to
its shareholders.
o CONFLICTS OF INTEREST COULD RESULT IN DECISIONS NOT IN OUR BEST INTERESTS
TAX CONSEQUENCES UPON SALE OR REFINANCING. Holders of units of
limited partnership of the Operating Partnership or co-owners of properties
not owned entirely by us may suffer different and more adverse tax
consequences than we will upon the sale or refinancing of our properties. We
may have different objectives from these co-owners and holders of limited
partnership units regarding the appropriate pricing and timing of any sale or
refinancing of such properties. While Reckson Associates, as the sole general
partner of the Operating Partnership, has the exclusive authority as to
whether and on what terms to sell or refinance each property owned solely by
the Operating Partnership, the directors and officers of Reckson Associates
who hold limited partnership units may seek to influence us not to sell or
refinance the properties, even though such a sale might otherwise be
financially advantageous to us, or may seek to influence us to refinance a
property with a higher level of debt.
WE MAY HAVE POTENTIAL CONFLICTS WITH RSI. Donald J. Rechler serves as
our Chairman of the Board and our Chief Executive Officer and Chairman of the
Board of RSI. Scott H. Rechler serves as our President and our Chief Operating
Officer and President and Chief Executive Officer of RSI and is a director of
Reckson Associates and RSI. Michael Maturo serves as Executive Vice President,
Treasurer and Chief Financial Officer of Reckson Associates and RSI and is a
director of RSI. Furthermore, Roger Rechler, Gregg Rechler and Mitchell
Rechler are executive officers of Reckson Associates and Roger Rechler and
Mitchell Rechler are directors of Reckson Associates, while all three
individuals are members of the management advisory committee and directors of
RSI. Although each of the individuals referred to above is committed to the
success of Reckson Associates, they are also committed to the success of RSI.
As of September 30, 1998, our senior management and directors beneficially
owned approximately 15% of the outstanding common stock of Reckson Associates,
with a total market value, based on the New York Stock Exchange closing price
of $23 per share on such date, of approximately $178.4 million, and
approximately 29% of the outstanding common stock of RSI, with a total market
value, at a stock price of $2 per share on such date, of approximately $14.3
million. In calculating the ownership of stock of Reckson Associates, we have
assumed the conversion of all limited partnership units in the Operating
Partnership into shares of common stock and the exercise of all vested stock
options. There is a risk that the common membership of management, members of
the Boards of Directors and ownership of Reckson Associates and RSI will lead
to conflicts of interest in the fiduciary duties owed to stockholders by
common directors and officers in connection with transactions between the two
companies, as well as a conflict in allocating management time.
The Operating Partnership and RSI have entered into an intercompany
agreement (the "Reckson Intercompany Agreement") to formalize their
relationship and to limit conflicts of interest. The Reckson Intercompany
Agreement was not negotiated at arms' length as it was negotiated while RSI
was a wholly-owned subsidiary of the Operating Partnership. Under the Reckson
Intercompany Agreement, RSI granted the Operating Partnership a right of first
opportunity to make any REIT-qualified investment that becomes available to
RSI. In addition, if a REIT-qualified investment opportunity becomes available
to an affiliate of RSI, including RSVP, 100% of the common ownership interest
of which is indirectly owned by RSI, the Reckson Intercompany Agreement
requires such affiliate to allow the Operating Partnership to participate in
such opportunity to the extent of RSI's interest.
Under the Reckson Intercompany Agreement, the Operating Partnership
granted RSI a right of first opportunity to provide to the Operating
Partnership and its tenants any type of services for occupants of office,
industrial and other property types that we may not be permitted to provide
under Federal tax laws ("Commercial Services"). RSI will provide services to
the Operating Partnership at rates and on terms as attractive as either the
best available for comparable services in the market or those offered by RSI
to third parties. In addition, the Operating Partnership will give RSI access
to its tenants with respect to Commercial Services that may be provided to
such tenants.
Under the Reckson Intercompany Agreement, subject to certain
conditions, the Operating Partnership granted RSI a right of first refusal to
become the lessee of any real property acquired by the Operating Partnership
if the Operating Partnership determines that, because the operation of such
property may involve the performance of non-customary services that under the
Internal Revenue Code a REIT may not generally provide, it is required to
enter into a "master" lease arrangement. Pursuant to such an arrangement, the
Operating Partnership would own the property, but lease it entirely to a
single lessee that would operate the property.
With respect to services that RSI will provide to the Operating
Partnership, management will have a conflict of interest in determining the
market rates to charge the Operating Partnership for such services. In
addition, management will have a conflict of interest in determining whether
the Operating Partnership or RSI would pursue a REIT-qualified investment
opportunity outside of our core business strategy of investing in office and
industrial properties in the New York Tri-State area. Furthermore, the
Operating Partnership and RSI may structure investments so that joint ventures
between the Operating Partnership and RSVP may pursue the portion of
investments generating REIT-qualified income and RSVP will pursue directly the
other portion of such investments. RSVP and RSVP-Reckson Operating Partnership
joint ventures may have conflicts of interest in the structuring, valuation,
management and disposition of such investments.
In June 1998, the Operating Partnership established a credit facility
with RSI (the "RSI Facility") in the amount of $100 million for RSI's service
sector operations and other general corporate purposes. In addition, in June
1998, the Operating Partnership also established a credit facility with RSI
(the "RSVP Facility", and together with the RSI Facility, the "RSI Credit
Facilities") for the funding of investments of up to $100 million by RSI in
RSVP. Advances under the RSVP Facility in excess of $25 million in respect of
any single platform will be subject to approval by the Board of Directors of
Reckson Associates, while advances under the RSI Facility in excess of $10
million in respect of any single investment in Commercial Services, as well as
advances for investments in opportunities in non-Commercial Services, will be
subject to approval by the Board of Directors of Reckson Associates, or a
committee thereof. Each RSI Credit Facility has a term of five years and
advances thereunder will be recourse obligations of RSI. Interest will accrue
on advances made under the RSI Credit Facilities at a rate equal to the
greater of (i) the prime rate plus 2% and (ii) 12% per annum, with the rate on
amounts that are outstanding for more than one year increasing annually at a
rate of 4% of the prior year's rate. Prior to maturity, interest will be
payable quarterly but only to the extent of net cash flow and on an
interest-only basis and will be prepayable without penalty at the option of
RSI. As long as there are outstanding advances under the RSI Credit
Facilities, RSI will be prohibited from paying dividends on any shares of its
capital stock. The RSI Credit Facilities are subject to certain other
covenants and prohibit advances thereunder to the extent such advances could,
in our determination endanger our status as a REIT. The terms of the RSI
Credit Facilities were not negotiated at arms' length and thus may not reflect
terms that could have been obtained from independent third parties. Additional
indebtedness may be incurred by subsidiaries of RSI. As of September 30, 1998,
borrowings under the RSI Credit Facilities aggregated approximately $6.6
million.
POLICIES WITH RESPECT TO CONFLICTS OF INTEREST MAY NOT BE SUCCESSFUL.
We have adopted policies designed to eliminate or minimize conflicts of
interest. These policies include the approval by of all transactions in which
directors or officers of Reckson Associates have a conflicting interest by a
majority of the directors who are neither officers nor affiliated with us (the
"Independent Directors"). These policies do not prohibit sales of assets to or
from affiliates, but would require any such sales to be approved by the
Independent Directors. However, there is no assurance that these policies will
be successful and, if they are not successful, decisions could be made that
might fail to reflect fully the interests of all of our stockholders.
LIMITS ON OWNERSHIP AND CHANGES IN CONTROL MAY DETER CHANGES IN MANAGEMENT AND
THIRD PARTY ACQUISITION PROPOSALS
OWNERSHIP LIMIT. To maintain our qualification as a REIT, five or
fewer individuals (as defined in the Internal Revenue Code of 1986, as amended
(the "Code"), to include certain entities) may not own, directly or
indirectly, more than 50% in value of our outstanding capital stock during the
last half of a taxable year (other than the first year). In order to protect
against the risk of losing REIT status, our charter limits ownership of our
issued and outstanding common stock by any single stockholder to 9.0% of the
lesser of the number or value of the outstanding shares of common stock. It
also will limit ownership of Reckson's issued and outstanding Class B Common
Stock to be issued in the Tower transaction described below by any single
stockholder to 9% in value of the outstanding shares of Reckson's common stock
and limits ownership of Reckson's issued and outstanding 7-5/8% Series A
Convertible Cumulative Preferred Stock (the "Series A Preferred") to 9% in
value of the outstanding shares of all of Reckson's capital stock. In
addition, a stockholder may not acquire shares of the Series A Preferred that
would result in such stockholder's owning in excess of 20% of the lesser of
the number or value of outstanding shares of Series A Preferred. We may also
impose limitations on the ownership of issued and outstanding preferred stock.
See "Restrictions on Ownership of Capital Stock," "Description of Common Stock
- - Restrictions on Ownership" and "Description of Preferred Stock-Restrictions
on Ownership." Such provisions may delay, defer or prevent a change of control
of Reckson Associates or other transaction by a third party without the
consent of the Board of Directors even if a change of control were in the best
interests of the stockholders of Reckson Associates.
STAGGERED BOARD. The Board of Directors of Reckson Associates is
divided into three classes. The terms of the Class I, Class II and Class III
directors expire in 1999, 2000 and 2001, respectively. Directors are chosen
for a three-year term. These provisions may deter changes in control because
of the increased time period necessary for a third party to acquire control of
management through positions on the Board of Directors of Reckson Associates.
REQUIRED CONSENT OF HOLDERS OF UNITS FOR CERTAIN TRANSACTIONS. Under
the terms of the Operating Partnership's partnership agreement, through June
2, 2000, the Operating Partnership may not sell, transfer or otherwise dispose
of all or substantially all of its assets (whether by way of sale or by
merger, sale or consolidation into another person) without the consent of the
holders of 85% of the outstanding common limited partnership units. This
voting requirement could delay, defer or prevent a change in control of
Reckson Associates.
FUTURE ISSUANCES OF COMMON STOCK. The charter of Reckson Associates
authorizes the Board of Directors to issue additional shares of common stock
without stockholder approval. Reckson Associates may also issue shares of
common stock in exchange for limited partnership units pursuant to the
Operating Partnership's partnership agreement. The Board of Directors has also
authorized the issuance of shares of Class B exchangeable common stock in
connection with the Tower transaction. Such shares will be entitled to an
initial annual dividend of $2.24 per share subject to adjustment annually.
Issuance of common stock or Class B exchangeable common stock could have the
effect of diluting existing common stockholders' interests in Reckson
Associates.
PREFERRED STOCK. The charter of Reckson Associates authorizes the
Board of Directors to issue up to 25 million shares of preferred stock, of
which 9,200,000 shares of our Series A preferred stock have been issued (8,000
shares of which have been converted to shares of common stock), to reclassify
unissued shares of capital stock, and to establish the preferences, conversion
and other rights, voting powers, restrictions, limitations and restrictions on
ownership, limitations as to dividends or other distributions, qualifications,
and terms and conditions of redemption for each such class or series of any
capital stock issued. Although the Board of Directors has no such intention at
the present time, it could establish a series of preferred stock that could,
depending on the terms of such series, delay, defer or prevent a transaction
or a change in control of Reckson Associates that might involve a premium
price for the common stock or otherwise be in the best interest of the
stockholders of Reckson Associates.
LIMITATIONS ON ACQUISITION OF AND CHANGES IN CONTROL PURSUANT TO
MARYLAND LAW. The Maryland General Corporation Law (the "MGCL") contains
provisions referred to as the "control share acquisition statute" which
eliminate the voting rights of shares acquired in a Maryland corporation in
such quantities so as to constitute "control shares," as defined under the
MGCL. The MGCL also contains provisions referred to as the "business
combination statute" which generally limit business combinations between a
Maryland corporation and any 10% owners of the corporation's stock or any
affiliate thereof. These provisions may have the effect of inhibiting a third
party from making an acquisition proposal for Reckson Associates or of
delaying, deferring or preventing a change in control of Reckson Associates
under circumstances that otherwise could provide the holders of shares of
common stock with the opportunity to realize a premium over the
then-prevailing market price of such shares. However, as permitted by the
MGCL, the bylaws of Reckson Associates contain a provision exempting any and
all acquisitions by any person of shares of capital stock of Reckson
Associates from the control share acquisition statute. In addition, the Board
of Directors adopted a resolution exempting Reckson Associates from the
provisions of the business combination statute. Reckson Associates may amend
or eliminate such provisions at any time.
RISKS OF TOWER TRANSACTION
As further described below under the caption "Reckson Associates and
the Operating Partnership", on December 9, 1998, we agreed to purchase,
through Metropolitan Partners LLC, 100% of the outstanding common stock of
Tower Realty Trust, Inc. for a combination of cash and securities, including
Reckson Associates' Class B exchangeable common stock. We control Metropolitan
and own 100% of the common member interest therein. The Tower transaction is
subject to the following risks:
o Tower stockholders may fail to approve the acquisition
o if stockholders of Reckson Associates fail to approve the
issuance of the Class B exchangeable common stock, we will incur
additional indebtedness, thereby increasing our various debt
ratios
o the Tower portfolio may not perform as we anticipate
o we may not be able to effectively integrate Tower's operations
we have not previously owned and operated properties in the New
York City market
RISK OF IMPACT OF YEAR 2000 ISSUE ON OUR OPERATIONS AND FINANCIAL RESULTS
Some of our older computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer
programs have time-sensitive software that recognizes a date using "00" as the
year 1900 rather than the year 2000. This could cause a system failure or
miscalculation causing disruptions of operations, including, among other
things, a temporary inability to process transactions, or engage in similar
normal business activities.
Our year 2000 project is estimated to be completed not later than
July 31, 1999, which is prior to any anticipated impact on our operating
systems. Additionally, we have received assurances from our contractors that
all of our building management and mechanical systems are currently year 2000
compliant or will be made compliant prior to any impact on those systems.
However, we cannot guarantee that all contractors will comply with their
assurances and therefore we may not be able to determine year 2000 compliance
of those contractors. At that time, we will determine the extent to which we
will be able to replace non compliant contractors. We believe that with
modifications to existing software and conversion to new software, the year
2000 issue will not pose significant operational problems for our computer
systems. However, if such modifications and conversions are not made, or are
not completed timely, the year 2000 issue could have a material impact on our
operations.
To date, we have expended approximately $250,000 and expect to expend
an additional one million dollars in connection with upgrading building
management, mechanical and computer systems. The costs of the project and the
date on which we believe we will complete the year 2000 modifications are
based on our management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued availability of
certain resources and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially
from those anticipated. Specific factors that might cause such material
differences include, but are not limited to the availability and costs of
personnel trained in this area, the ability to locate and correct all relevant
computer codes, and similar uncertainties.
THE MARKET VALUE OF SECURITIES COULD DECREASE
EFFECT OF EARNINGS AND CASH DISTRIBUTIONS. The market value of the
equity securities of a REIT may be based primarily upon the market's
perception of the REIT's growth potential and its current and future cash
distributions, and may be secondarily based upon the real estate market value
of the underlying assets. For that reason, the equity securities of Reckson
Associates may trade above or below net asset value. For the year ended
December 31, 1997, Reckson Associates distributed approximately 70.7% of its
FFO to stockholders. Although we may retain operating cash flow for investment
or working capital purposes, which increases the value of our underlying
assets, this may not correspondingly increase the market price of the equity
securities. Our failure to meet the market's expectation with regard to future
earnings and cash distributions likely would adversely affect the market price
of the equity securities of Reckson Associates.
ADVERSE IMPACT OF RISING INTEREST RATES. One factor which influences
the price of the securities is the dividend or interest rate on such
securities relative to market interest rates. Rising interest rates may lead
potential buyers of equity securities of Reckson Associates to expect a higher
dividend rate, which would adversely affect the market price of such
securities. In addition, rising interest rates would result in increased
expense, thereby adversely affecting cash flow and the ability of the
Operating Partnership to service its indebtedness.
WE MAY NOT BE ABLE TO PAY ON GUARANTEES
The guarantee of the Operating Partnership's debt securities by
Reckson Associates should not be viewed by investors as enhancing the credit
of such debt securities. The Operating Partnership conducts all of Reckson
Associates' operations, and the only asset of Reckson Associates is its
interest in the Operating Partnership. As a result, if the Operating
Partnership is unable to meet its obligations on the debt securities, Reckson
Associates will not have any assets from which to pay on its guarantees of
such debt securities.
CERTAIN TRANSACTIONS BY THE OPERATING PARTNERSHIP OR RECKSON ASSOCIATES COULD
ADVERSELY AFFECT DEBT HOLDERS
Except with respect to a covenant limiting the incurrence of
indebtedness, a covenant requiring a certain percentage of unencumbered assets
and a traditional merger covenant, the Indenture does not contain any
provisions that would protect holders of debt securities in the event of (i) a
highly leveraged or similar transaction involving the Operating Partnership,
the management of the Operating Partnership or Reckson Associates, or any
affiliate of any such party, (ii) a change of control, or (iii) certain
reorganizations, restructuring, mergers or similar transactions involving the
Operating Partnership or Reckson Associates.
ORGANIZATIONAL CHART
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| Reckson |
| Associates |
| Realty Corp. |
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/ Reckson \
/ Operating \
/ Partnership, L.P. \
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| Reckcon | | | | | | |
| Management | | | | Reckson | | |
| Group Inc. | | Reckson FS | | Morris | | Joint |
| and Reckson | | Limited | | Industrial | | Venture |
| Construction | | Partnership | | Trust | | |
| Group Inc. | | | | | | |
- ----------------- ---------------- --------------- -------------
AVAILABLE INFORMATION
Reckson Associates is, and as a result of filing the registration
statement of which this prospectus is a part, the Operating Partnership will
be, subject to the informational requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and in accordance therewith Reckson
Associates files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission") and the Operating
Partnership will file reports with the Commission. Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as the regional offices of the
Commission at 7 World Trade Center (13th Floor), New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such information can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Such materials can also be inspected at the
office of the New York Stock Exchange, 20 Broad Street, New York, New York
10005, the exchange on which Reckson Associates' common stock and Series A
preferred stock is listed. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
We have filed with the Commission a registration statement on Form
S-3 under 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 have been omitted in accordance with the
rules and regulations of the Commission. For further information regarding us
and the securities, reference is made to the registration statement, including
the exhibits filed as a part thereof, and the documents incorporated by
reference in this prospectus. Statements made in this prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the registration statement or to an Exchange
Act report, reference is made to such exhibit for a more complete description
of the matter involved, and each such statement shall be deemed qualified in
its entirety by such reference. Copies of the registration statement and the
exhibits may be inspected, without charge, at the offices of the Commission,
or obtained at prescribed rates from the Public Reference Section of the
Commission at the address set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by Reckson Associates with
the Commission pursuant to the Exchange Act are incorporated by reference in
this prospectus:
SEC FILINGS (FILE NO. 1-13762) PERIOD
- ----------------------------- ------
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q Quarters ended March 31, 1998, June
30, 1998 and September 30, 1998
Current Reports on Form 8-K Filed February 18, 1997, May 15,
1997, June 12, 1997, (including
Form 8-K/A) August 7, 1997,
September 9, 1997, October 21,
1997, January 26, 1998, February
10, 1998, February 12,1998, March
24, 1998, March 25, 1998, April 6,
1998, July 22, 1998, August 14,
1998, November 2, 1998, November 9,
1998 and December 22, 1998
Registration Statement on Form 8-A Filed May 9, 1995 (as amended)
Registration Statement on Form 8-A Filed April 9, 1998
We also incorporate by reference each of the following documents that
we will file with the Commission after the date of this prospectus until the
particular offering is completed or after the date of the initial registration
statement and prior to effectiveness of the registration statement:
o Reports filed under Section 13(a) and (c) of the Exchange Act;
o Definitive proxy or information statements filed under Section
14 of the Exchange Act in connection with any subsequent
stockholders' meeting; and
o Any reports filed under Section 15(d) of the Exchange Act.
Reckson Associates and the Operating Partnership will provide a copy
of any or all of such documents (exclusive of exhibits unless such exhibits
are specifically incorporated by reference therein), without charge, to each
person to whom this prospectus is delivered, upon written or oral request to
Reckson Associates Realty Corp., 225 Broadhollow Road, Melville, New York
11747, Attn: Jason M. Barnett, Senior Vice President and General Counsel,
telephone number (516) 694-6900.
RECKSON ASSOCIATES AND THE OPERATING PARTNERSHIP
Reckson Associates was incorporated in September 1994 and commenced
operations effective with the completion of its initial public offering (the
"IPO") on June 2, 1995. Reckson Associates, together with the Operating
Partnership, was formed for the purpose of continuing the commercial real
estate business of the predecessors of Reckson Associates, its affiliated
partnerships and other entities. For more than 40 years, we have been engaged
in the business of owning, developing, acquiring, constructing, managing and
leasing suburban office and industrial properties in the New York metropolitan
area. Based on industry surveys, we believe that we are one of the largest
owners and managers of Class A suburban office and industrial properties in
the New York City Metropolitan Tri-State area of New York, New Jersey and
Connecticut (the "New York Tri-State area"). When we refer to Class A office
buildings in this prospectus, we mean well maintained, high quality buildings
that achieve rental rates that are at the higher end of the range of rental
rates for office properties in the particular market. We operate as a
self-managed REIT with in-house capabilities in property management,
development, construction and acquisitions. As of September 30, 1998, we owned
and controlled, directly or indirectly, 202 properties (the "Properties")
encompassing approximately 20.7 million rentable square feet, all of which we
manage. The Properties consist of 73 Class A suburban office properties
encompassing approximately 10.1 million rentable square feet, 127 industrial
properties encompassing approximately 10.6 million rentable square feet and
two 10,000 square foot retail properties. In addition, as of September 30,
1998, we owned or had contracted to acquire approximately 852 acres of land
(including approximately 400 acres under option) that may present future
development opportunities. In addition, we have invested $17 million in a note
receivable secured by the interest of Odyssey Partners, L.P. in Omni Partners,
L.P.
The office properties are Class A suburban office buildings that are
well-located, well-maintained and professionally managed. In addition, these
properties are modern or have been modernized to compete with newer buildings
in their markets. We believe that these properties achieve among the highest
rent and occupancy rates within their markets. The majority of the office
properties are located in eleven planned office parks and are tenanted by,
among others, national service firms, such as telecommunications firms, "big
five" accounting firms, securities brokerage houses, insurance companies and
health care providers. The industrial properties are utilized for
distribution, warehousing, research and development and light
manufacturing/assembly activities and are located primarily in three planned
industrial parks.
On December 8, 1998, Reckson Associates, the Operating Partnership,
Metropolitan and Tower, executed a merger agreement pursuant to which Tower
will be merged into Metropolitan, with Metropolitan surviving the merger.
Concurrently with the merger, the Tower operating partnership will be merged
with and into a subsidiary of Metropolitan. The consideration to be issued in
the mergers will be comprised of (i) 25% cash and (ii) 75% of shares of
Reckson Associates' Class B exchangeable common stock, or in certain
circumstances described below, shares of such Class B common stock and
unsecured notes of the Operating Partnership. We control Metropolitan and own
100% of the common equity interests, while Crescent Real Estate Equities
Company owns a preferred equity interest in Metropolitan. The merger agreement
replaces a previously existing merger agreement among Reckson, Crescent,
Metropolitan and Tower relating to the acquisition by Metropolitan, which at
that time was a 50/50 joint venture between Reckson Associates and Crescent.
Pursuant to the terms of the merger agreement, holders of shares of
outstanding common stock of Tower, and outstanding units of limited
partnership interest of the Tower operating partnership will have the option
to elect to receive cash or shares of Class B common stock, subject to
proration. Under the terms of the transaction, Metropolitan will effectively
pay for each share of Tower common stock and each unit of limited partnership
interest of the Tower operating partnership: (i) $5.75 (in cash) and (ii)
0.6273 of a share of Class B common stock. The shares of Class B common stock
are entitled to receive an initial annual dividend of $2.24 per share, which
is subject to adjustment annually. We may redeem any or all of the Class B
common stock in exchange for an equal number of shares of Reckson Associates'
common stock at any time following the four year, six-month anniversary of the
issuance of Class B common stock. It is anticipated that Reckson Associates'
Board of Directors will recommend to Reckson Associates' stockholders the
approval of a proposal to issue a number of shares of Class B Common Stock
equal to 75% of the sum of (i) the number of outstanding shares of the Tower
common stock and (ii) the number of units of limited partnership interest of
the Tower operating partnership, in each case, at the effective time of the
mergers. If Reckson Associates' stockholders do not approve the issuance of
the Class B common stock as proposed, the merger agreement provides that
approximately one-third of the consideration that was to be paid in the form
of Class B common stock will be replaced by senior unsecured notes of the
Operating Partnership, which notes will bear interest at the rate of 7% per
annum and have a term of ten years. In addition, if Reckson Associates'
stockholders do not approve the issuance of Class B common stock as proposed
and Reckson Associates' Board of Directors does not recommend, or withdraws or
amends or modifies in any material respect its recommendation for, approval of
such proposal, then the total principal amount of notes to be issued and
distributed in the merger will be increased by $15 million.
Simultaneously with the execution of the merger agreement,
Metropolitan purchased from Tower approximately 2.2 million shares of Series A
convertible preferred stock of Tower, for an aggregate purchase price of $40
million. If the merger agreement is not consummated and a court of competent
jurisdiction issues a final, non-appealable judgment determining that Reckson
Associates and Metropolitan are obligated to consummate the merger but have
failed to do so, or determining that Reckson Associates and Metropolitan
failed to use their reasonable best efforts to take all actions necessary to
cause certain closing conditions to be satisfied, Metropolitan is obligated to
return to Tower $30 million of such Series A preferred stock.
In connection with the new merger agreement, Tower, Reckson
Associates, Crescent and Metropolitan have exchanged mutual releases for any
claims relating to the previous merger agreement.
Our executive offices are located at 225 Broadhollow Road, Melville,
New York 11747 and our telephone number at that location is (516) 694-6900. At
October 20, 1998, we had approximately 240 employees.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement,
the net proceeds to Reckson Associates or the Operating Partnership, as the
case may be, from the sale of the securities offered by the applicable
prospectus supplement will be used for the repayment of existing indebtedness,
the development or acquisition of additional properties as suitable
opportunities arise and the renovation, expansion and improvement of our
existing properties, in each case, as described in detail in such prospectus
supplement depending on the circumstances at the time of the related offering,
and for other general corporate purposes.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the consolidated ratios of earnings to
fixed charges and preferred stock dividends of Reckson Associates and the
Operating Partnership for the periods shown:
June 3, January 1,
Nine Months 1995 1995
Ended Year Ended To To
September 30, December 31 December 31, June 2, Year Ended December 31,
1998 1997 1996 1995 1995 1994 1993
-------------- ---- ---- ----------- ------------ ---- ----
Reckson Associates:
- ------------------
Ratio of Earnings to 2.12x 2.77x 2.72x 2.71x 1.02x(1) 0.97x(1)(3) 0.65x(1)(3)
Fixed Charges
Plus Preferred 1.92x(2) -- -- -- -- -- --
Dividend Requirements
Operating Partnership:
- ---------------------
Ratio of Earnings to 2.13x 2.78x 2.71x 2.71x 1.02x(1) 0.97x(1)(3) 0.65x(1)(3)
Fixed Charges
Plus Preferred 1.93x(2) -- -- -- -- -- --
Dividend Requirements
(1) Prior to completion of the IPO on June 2, 1995, our predecessors
operated in a manner as to minimize net taxable income to the
owners. The IPO and the related formation transactions permitted us
to deleverage our properties significantly, resulting in a
significantly improved ratio of earnings to fixed charges.
(2) Neither Reckson Associates nor the Operating Partnership had
preferred stock outstanding prior to April 1998.
(3) The excess of fixed charges over earnings amounted to approximately
$493,000 and $10,105,000 for the years ended December 31, 1994 and
1993, respectively.
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. The ratio of earnings to combined fixed charges and
preferred dividends were computed by dividing earnings by the aggregate of
fixed charges and preferred dividends. For this purpose, earnings consist of
income from continuing operations before minority interest, fixed charges and
preferred dividends. Fixed charges consist of interest expense (including
interest costs capitalized) and the amortization of debt issuance costs plus
preferred dividends.
DESCRIPTION OF DEBT SECURITIES
The debt securities of the Operating Partnership covered by this
prospectus (the "Debt Securities") will be issued under an Indenture (the
"Indenture") among the Operating Partnership, Reckson Associates and the
trustee named therein (the "Trustee"). The Indenture has been filed as an
exhibit to the Registration Statement of which this prospectus is a part and
is available for inspection at the corporate trust office of the trustee or as
described above under "Available Information." The Indenture is subject to,
and governed by, the Trust Indenture Act of 1939, as amended (the "TIA"). The
statements made hereunder relating to the Indenture and the Debt Securities to
be issued thereunder are summaries of the material provisions thereof and do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all provisions of the Indenture and such Debt
Securities. All section references appearing herein are to sections of the
Indenture, and capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Operating Partnership and will rank equally with all other unsecured and
unsubordinated indebtedness of the Operating Partnership. 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 in or pursuant to
authority granted by a resolution of the Board of Directors of Reckson
Associates as sole general partner of the Operating Partnership, or as
established 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 issuances of additional
Debt Securities of such series.
The Indenture provides that there may be 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 a
Trustee may be taken by each such Trustee with respect to, and only with
respect to, the one or more series of Debt Securities for which it is Trustee
under the Indenture.
Reference is made to the prospectus supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including:
(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 percentage of the principal amount 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 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 any such date shall be
determined, the person 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, if any)
and interest, if any, on such Debt Securities will be payable, such
Debt Securities may be surrendered for registration of transfer or
exchange and notices or demands to or upon the Operating Partnership
in respect of such Debt Securities and the Indenture may be served;
(8) the date or dates on which or the period or periods within which,
the price or prices at which and the terms and conditions upon which
such Debt Securities may be redeemed, as a whole or in part, at the
option of the Operating Partnership, if the Operating Partnership is
to have such an option;
(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
date or dates on which or the period or periods within which, the
price or prices at which and the 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, 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 a currency,
currencies, currency unit or units or composite currency or
currencies) and the manner in which such amounts shall be determined;
(12) any additional events of default or covenants of such Debt
Securities;
(13) _____ whether such Debt Securities will be issued in
certificated and/or book-entry form;
(14) whether such Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if other
than $1,000 and any integral multiple thereof and, if in bearer form,
the denominations thereof if other than $5,000 and terms and
conditions relating thereto;
(15) whether such Debt Securities will be fully and unconditionally
guaranteed by Reckson Associates pursuant to the Guarantees (the
"Guaranteed Securities");
(16) if the defeasance and covenant defeasance provisions described
herein are to be inapplicable or any modification of such provisions;
(17) if such Debt Securities are to be issued upon the exercise of
debt warrants, the time, manner and place for such Debt Securities to
be authenticated and delivered;
(18) whether and under what circumstances the Operating Partnership
will pay 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;
(19) _____ if other than the Trustee, the identity of each security
registrar and/or paying agent; and
(20) _____ any other material terms of such Debt Securities.
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities"). If material or applicable,
special U.S. federal income tax, accounting and other considerations
applicable to Original Issue Discount Securities will be described in the
applicable prospectus supplement.
Except with respect to a covenant limiting the incurrence of
indebtedness, a covenant requiring a certain percentage of unencumbered assets
and a traditional merger covenant, the Indenture does not contain any other
provisions that would limit the ability of the Operating Partnership or
Reckson Associates to incur indebtedness or that would afford Holders of the
Debt Securities protection in the case of any of the following events:
o a highly leveraged or similar transaction involving the
Operating Partnership, the management of the Operating
Partnership or Reckson Associates, or any affiliate of any such
party;
o a change of control; or
o a reorganization, restructuring, merger or similar transaction
involving the Operating Partnership or Reckson Associates that
may adversely affect the Holders of the Debt Securities.
In addition, subject to the covenants referred to above, the
Operating Partnership or Reckson Associates may, in the future, enter into
certain transactions, such as the sale of all or substantially all of its
assets or the merger or consolidation of the Operating Partnership or Reckson
Associates, that would increase the amount of the Operating Partnership's
indebtedness or substantially reduce or eliminate the Operating Partnership's
assets, which may have an adverse effect on the Operating Partnership's
ability to service its indebtedness, including the Debt Securities. In
addition, restrictions on ownership and transfers of Reckson Associates'
common stock and preferred stock which are designed to preserve its status as
a REIT may act to prevent or hinder a change of control. See "Description of
Common Stock--Restrictions on Ownership" and "Description of Preferred
Stock--Restrictions on Ownership."
GUARANTEES
Reckson Associates will fully and unconditionally guarantee the due
and punctual payment of principal of, premium, if any, and interest on any
Debt Securities not rated investment grade by at least one nationally
recognized statistical rating organization at the time of issuance by the
Operating Partnership, whether at a maturity date, by declaration of
acceleration, call for redemption or otherwise.
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable prospectus supplement,
the Debt Securities of any series which are registered securities, other than
registered securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Debt Securities which are bearer securities, other
than bearer securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $5,000.
Unless otherwise specified in the applicable prospectus supplement,
the principal of (and premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee
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 Security Register or by wire transfer of funds to
such Person at an account maintained within the United States.
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("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, notice whereof 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
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the Trustee referred to
above. 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 thereof at the corporate trust office
of the Trustee referred to above. Every Debt Security surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by
a written instrument of transfer. No service charge will be made for any
registration of transfer or exchange of any Debt Securities, but the Trustee
or 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 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 the Trustee shall be required
to:
o issue, register the transfer of or exchange any Debt Security if
such Debt Security may be among those selected for redemption
during a period beginning at the opening of business 15 days
before selection of the Debt Securities to be redeemed and
ending at the close of business on the day of such selection;
o register the transfer of or exchange any Registered Security so
selected for redemption in whole or in part, except, in the case
of any Registered Security to be redeemed in part, the portion
thereof not to be redeemed;
o exchange any Bearer Security so selected for redemption except
that such a Bearer Security may be exchanged for a Registered
Security of that series and like tenor, PROVIDED that such
Registered Security shall be simultaneously surrendered for
redemption; or
o issue, register the transfer of or exchange any Security which
has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so
repaid.
MERGER, CONSOLIDATION OR SALE
The Operating Partnership or, with respect to the Guaranteed
Securities, Reckson Associates may consolidate with, or sell, lease or convey
all or substantially all of its assets to, or merge with or into, any other
entity, provided that the following conditions are met:
o the Operating Partnership or Reckson Associates, as the case may
be, shall be the continuing entity, or the successor entity (if
other than the Operating Partnership or Reckson Associates, as
the case may be) formed by or resulting from any such
consolidation or merger or which shall have received the
transfer of such assets shall expressly assume payment of the
principal of (and premium, if any) and interest on all the Debt
Securities and the due and punctual performance and observance
of all of the covenants and conditions contained in the
Indenture and, if applicable, the Guarantees;
o immediately after giving effect to 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
o an officer's certificate and legal opinion covering such
conditions shall be delivered to the Trustee.
CERTAIN COVENANTS
LIMITATIONS ON INCURRENCE OF DEBT. The Operating Partnership will
not, and will not permit any Subsidiary (as defined below) to, incur any
Indebtedness (as defined below), other than Permitted Debt (as defined below),
if, immediately after giving effect to the incurrence of such additional
Indebtedness, the aggregate principal amount of all outstanding Indebtedness
of the Operating Partnership, and of its Subsidiaries determined at the
applicable proportionate interest of the Operating Partnership in each such
Subsidiary, determined in accordance with GAAP (as defined below), is greater
than 60% of the sum of (i) the Total Assets (as defined below) as of the end
of the calendar quarter covered in the Operating Partnership's Annual Report
on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most
recently filed with the Commission prior to the incurrence of such additional
Indebtedness or, if the Operating Partnership is not then subject to the
reporting requirements of the Exchange Act, as of its most recent calendar
quarter and (ii) any increase in the Total Assets since the end of such
quarter, including, without limitation, any increase in Total Assets resulting
from the incurrence of such additional Indebtedness (the Total Assets adjusted
by such increase are referred to as the "Adjusted Total Assets").
The Operating Partnership will not, and will not permit any
Subsidiary to, incur any Indebtedness, other than Permitted Debt, if, for the
period consisting of the four consecutive fiscal quarters most recently ended
prior to the date on which such additional Indebtedness is to be incurred, the
ratio of Consolidated Income Available for Debt Service (as defined below) to
the Annual Service Charge (as defined below) shall have been less than 1.5 to
1, on a pro forma basis after giving effect to the incurrence of such
Indebtedness and to the application of the proceeds therefrom, and calculated
on the assumption that (i) such Indebtedness and any other Indebtedness
incurred by the Operating Partnership or its Subsidiaries since the first day
of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the beginning of
such period, (ii) the repayment or retirement of any other Indebtedness by the
Operating Partnership or its Subsidiaries since the first day of such
four-quarter period had been incurred, repaid or retained at the beginning of
such period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of borrowings under such facility during such
period), (iii) any income earned as a result of any increase in Adjusted Total
Assets since the end of such four-quarter period had been earned, on an
annualized basis, for such period, and (iv) in the case of an acquisition or
disposition by the Operating Partnership or any of its Subsidiaries of any
asset or group of assets since the first day of such four-quarter period,
including, without limitation, by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related repayment of
Indebtedness had occurred as of the first day of such period with the
appropriate adjustments with respect to such acquisition or disposition being
included in such pro forma calculation of Consolidated Income Available for
Debt Service to the Annual Service Charge.
The Operating Partnership will not, and will not permit any
Subsidiary to, incur any Indebtedness secured by any Lien (as defined below)
of any kind upon any of the property of the Operating Partnership or any of
its Subsidiaries (the "Secured Debt") if, immediately after giving effect to
the incurrence of such additional Secured Debt, the aggregate principal amount
of all outstanding Secured Debt of the Operating Partnership, and of its
Subsidiaries determined at the applicable proportionate interest of the
Operating Partnership in each such Subsidiary, is greater than 40% of the
Adjusted Total Assets.
MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Operating Partnership
will maintain Total Unencumbered Assets (as defined below) of not less than
150% of the aggregate principal amount of all outstanding Unsecured Debt.
EXISTENCE. Except as permitted under "Merger, Consolidation or Sale,"
the Operating Partnership is required to do or cause to be done all things
necessary to preserve and keep in full force and effect their 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 and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities.
MAINTENANCE OF PROPERTIES. The Operating Partnership is required to
cause all of its material properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and to cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Operating
Partnership may be necessary so that the business carried on 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 for value their respective
properties in the ordinary course of business.
INSURANCE. The Operating Partnership is required to, and is required
to cause each of its Subsidiaries to, keep all of its insurable properties
insured against loss or damage at least equal to their then full insurable
value with financially sound and reputable insurance companies.
PAYMENT OF TAXES AND OTHER CLAIMS. The Operating Partnership is
required 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 them or any Subsidiary or upon their income,
profits or property or that of 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 by appropriate proceedings.
PROVISION OF FINANCIAL INFORMATION. The Holders of Debt Securities
will be provided with copies of the annual reports and quarterly reports of
the Operating Partnership. Whether or not the Operating Partnership is subject
to Section 13 or 15(d) of the Exchange Act and for so long as any Debt
Securities are outstanding, the Operating Partnership will, to the extent
permitted under the Exchange Act, be required to file with the Commission the
annual reports, quarterly reports and other documents which the Operating
Partnership would have been required to file with the Commission pursuant to
such Section 13 or 15(d) (the "Financial Statements") if the Operating
Partnership were so subject, such documents to be filed with the Commission on
or prior to the respective dates (the "Required Filing Dates") by which the
Operating Partnership would have been required so to file such documents if
the Operating Partnership were so subject. The Operating Partnership will also
in any event (x) within 15 days of each Required Filing Date (i) transmit by
mail to all Holders of Debt Securities, as their names and addresses appear in
the Security Register, without cost to such Holders, copies of the annual
reports and quarterly reports which the Operating Partnership would have been
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Operating Partnership were subject to such Sections and
(ii) file with the Trustee copies of the annual reports, quarterly reports and
other documents which the Operating Partnership would have been required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
if the Operating Partnership were subject to such Sections and (y) if filing
such documents by the Operating Partnership with the Commission is not
permitted under the Exchange Act, promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective Holder.
As used herein and in the prospectus supplement:
"ANNUAL SERVICE CHARGE" as of any date means the amount which is
expensed or capitalized in any 12-month period for interest on Indebtedness.
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" for any period means
Consolidated Net Income of the Operating Partnership and its Subsidiaries (i)
plus amounts which have been deducted for (a) interest on Indebtedness of the
Operating Partnership and its Subsidiaries, (b) provision for taxes of the
Operating Partnership and its Subsidiaries based on income, (c) amortization
of debt discount, (d) depreciation and amortization, (e) the effect of any
noncash charge resulting from a change in accounting principles in determining
Consolidated Net Income for such period, (f) amortization of deferred charges,
and (g) provisions for or realized losses on properties and (ii) less amounts
which have been included for gains on properties.
"GAAP" means such accounting principles as are generally accepted in
the United States of America as of the date or time of any required
computation.
"INDEBTEDNESS" means any indebtedness, whether or not contingent, in
respect of (i) borrowed money evidenced by bonds, notes, debentures or similar
instruments, (ii) indebtedness secured by any mortgage, pledge, lien, charge,
encumbrance or any security interest existing on property, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued or amounts representing the balance deferred
and unpaid of the purchase price of any property except any such balance that
constitutes an accrued expense or trade payable or (iv) any lease of property
as lessee which would be reflected on a balance sheet as a capitalized lease
in accordance with GAAP, in the case of items of indebtedness under (i)
through (iii) above to the extent that any such items (other than letters of
credit) would appear as a liability on a balance sheet in accordance with
GAAP, and also includes, to the extent not otherwise included, any obligation
to be liable for, or to pay, as obligor, guarantor or otherwise (other than
for purposes of collection in the ordinary course of business), indebtedness
of another Person.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of
any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person. A Capital Lease is a
lease to which the lessee is required concurrently to recognize the
acquisition of an asset and the incurrence of a liability in accordance with
GAAP.
"PERMITTED DEBT" means Indebtedness of the Operating Partnership or
any Subsidiary owing to any Subsidiary or the Operating Partnership; PROVIDED
that any such Indebtedness is made pursuant to an intercompany note and is
subordinated in right of payment to the Securities; PROVIDED FURTHER that any
disposition, pledge or transfer of any such Indebtedness to a Person (other
than the Operating Partnership or another Subsidiary) shall be deemed to be an
incurrence of such Indebtedness by the Operating Partnership or a Subsidiary,
as the case may be, and not Permitted Debt.
"SIGNIFICANT SUBSIDIARY" means each significant subsidiary (as
defined in Regulation S-X promulgated under the Securities Act) of the
Operating Partnership.
"SUBSIDIARY" means any entity of which the Operating Partnership or
one or more other Subsidiaries owns or controls, directly or indirectly, more
than 50% of the shares of Voting Stock.
"TOTAL ASSETS" as of any date means the sum of (i) the Undepreciated
Real Estate Assets, (ii) all other assets of the Operating Partnership, and of
its Subsidiaries determined at the applicable proportionate interest of the
Operating Partnership in each such Subsidiary, determined in accordance with
GAAP (but excluding intangibles and accounts receivable) and (iii) the cost of
any property of the Operating Partnership, or any Subsidiary thereof, in which
the Operating Partnership, or such Subsidiary, as the case may be, has a firm,
non-contingent purchase obligation.
"TOTAL UNENCUMBERED ASSETS" means the sum of (i) those Undepreciated
Real Estate Assets not subject to a Lien on a consolidated basis, (ii) all
other assets of the Operating Partnership, and of its Subsidiaries determined
at the applicable proportionate interest of the Operating Partnership in each
such Subsidiary, which are not subject to a Lien determined in accordance with
GAAP (but excluding intangibles and accounts receivable) and (iii) the cost of
any property of the Operating Partnership, or any Subsidiary thereof, in which
the Operating Partnership, or such Subsidiary, as the case may be, has a firm,
non-contingent purchase obligation and which is not subject to a Lien.
"UNDEPRECIATED REAL ESTATE ASSETS" means as of any date the cost
(original cost plus capital improvements) of real estate assets of the Issuer
and its Subsidiaries on such date, before depreciating and amortization,
determined on a consolidated basis in accordance with GAAP.
"UNSECURED DEBT" means Indebtedness of the Operating Partnership or
any Subsidiary which is not secured by any mortgage, lien, charge, pledge or
security interest of any kind upon any of the properties owned by the
Operating Partnership or any of its Subsidiaries.
"VOTING Stock" means stock having general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees, provided that stock that carries only the right to vote
conditionally on the happening of an event shall not be considered Voting
Stock.
ADDITIONAL COVENANTS. Any additional or different covenants of the
Operating Partnership or Reckson Associates with respect to any series of Debt
Securities will be set forth in the prospectus supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder:
a. default for 30 days in the payment of any installment of
interest on any Debt Security of such series;
b. default in the payment of the principal of (or premium, if any,
on) any Debt Security of such series at its maturity;
c. default in making any sinking fund payment as required for any
Debt Security of such series;
d. default in the performance of any other covenant of the
Operating Partnership or Reckson Associates contained in the
Indenture (other than a covenant added to the Indenture solely
for the benefit of a series of Debt Securities issued thereunder
other than such series), such default having continued for 60
days after written notice as provided in the Indenture;
e. the Operating Partnership, Reckson Associates (if the Debt
Securities of such series are Guaranteed Securities), any
Subsidiary in which the Operating Partnership has invested, or
is committed or otherwise obligated to invest, at least
$20,000,000 in capital or any entity in which the Operating
Partnership is the general partner shall fail to pay any
principal of, premium or interest on or any other amount payable
in respect of, any recourse Indebtedness that is outstanding in
a principal or notional amount of at least $20,000,000 (or the
equivalent thereof in one or more other currencies), either
individually or in the aggregate (but excluding Indebtedness
outstanding hereunder), of the Operating Partnership and its
consolidated Subsidiaries, taken as a whole, when the same
becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any,
specified in any agreement or instrument relating to such
Indebtedness, or any other event shall occur or condition shall
exist under any agreement or instrument evidencing, securing or
otherwise relating to any such Indebtedness and shall continue
after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of,
the maturity of such Indebtedness or otherwise to cause, or to
permit the holder or holders thereof (or a trustee or agent on
behalf of such holders) to cause such Indebtedness to mature
prior to its stated maturity;
f. one or more final, non-appealable judgments or orders for the
payment of money aggregating $20,000,000 (or the equivalent
thereof in one or more other currencies) or more are rendered
against one or more of the Operating Partnership, Reckson
Associates (if the Debt Securities of such series are Guaranteed
Securities), any Subsidiary in which the Operating Partnership
has invested, or is committed or otherwise obligated to invest,
at least $20,000,000 in capital and any entity in which the
Operating Partnership is the general partner and remain
unsatisfied and either (i) enforcement proceedings shall have
been commenced by any creditor upon any such judgment or order
or (ii) there shall be a period of at least 60 days after entry
thereof during which a stay of enforcement of any such judgment
or order, by reason of a pending appeal or otherwise, shall not
be in effect; PROVIDED, HOWEVER, that any such judgment or order
shall not give rise to an Event of Default under this clause if
and for so long as (A) the amount of such judgment or order is
covered by a valid and binding policy of insurance between the
defendant and the insurer covering full payment thereof and (B)
such insurer has been notified, and has not disputed the claim
made for payment, of the amount of such judgement or order; or
g. certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the
Operating Partnership, Reckson Associates or any Significant
Subsidiary or any of their respective property;
h. any other Event of Default provided with respect to a
particular series of Debt Securities.
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 Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of that series may 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 all of the Debt Securities
of that series to be due and payable immediately by written notice thereof to
the Operating Partnership and Reckson Associates (and to the Trustee if given
by the Holders). However, at any time after such a declaration of acceleration
with respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) has been made, but before
a judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of not less than a majority in principal amount of
Outstanding Debt Securities of such series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) may rescind and annul
such declaration and its consequences if (a) the Operating Partnership or
Reckson Associates shall have deposited with the Trustee all required payments
of the principal of (and premium, if any) and interest on the Debt Securities
of such series (or of all Debt Securities then outstanding under the
Indenture, as the case may be), plus certain fees, expenses, disbursements and
advances of the Trustee and (b) all Events of Default, other than the
non-payment of accelerated principal of (or specified portion thereof), or
premium (if any) or interest on the Debt Securities of such series (or of all
Debt Securities then Outstanding under the Indenture, as the case may be) have
been cured or waived as provided in the Indenture. The Indenture also provides
that the Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) may waive any past
default with respect to such series and its consequences, except a default (x)
in the payment of the principal of (or premium, if any) or interest on any
Debt Security of such series or (y) 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 Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture unless such default
has been cured or waived; PROVIDED, HOWEVER, that the Trustee may withhold
notice to the Holders of any series of Debt Securities of any default with
respect to such series (except a default in the payment of the principal of
(or premium, 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 the 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 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 reasonable indemnity. 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, if any) and
interest on such Debt Securities at the respective due dates thereof.
Subject to provisions in the Indenture relating to its duties in case
of default, the Trustee is under no obligation to exercise any of its rights
or powers under the Indenture at the request or direction of any Holders of
any series of Debt Securities then Outstanding under the Indenture, unless
such Holders shall have offered to the Trustee thereunder reasonable security
or indemnity. The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon
the Trustee. However, the Trustee may refuse to follow any direction which is
in conflict with any law or the Indenture, 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 and Reckson Associates must deliver a certificate of an officer
certifying to the Trustee 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 will be permitted to be
made only with the consent of the Holders of not less than a majority in
principal amount of all Outstanding Debt Securities or series of Outstanding
Debt Securities which are 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 premium (if any) or any
installment of interest on, any such Debt Security, reduce the principal
amount of, or the rate or amount of interest on, or any premium 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, change the place of payment, or the coin or currency, for
payment of principal of, premium, if any, or interest on any such Debt
Security or impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security; (b) 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; (c) modify or affect
in any manner adverse to the Holders the terms and conditions of the
obligations of Reckson Associates in respect of the payment of principal (and
premium, if any) and interest on any Guaranteed Securities; or (d) 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.
In addition to the Operating Partnership's obligation to pay the
principal of, and premium (if any) and interest on, the Debt Securities, the
Indenture contains several other affirmative and negative covenants as
described under "--Certain Covenants." None of the Operating Partnership,
Reckson Associates and the Trustee may waive compliance with such other
covenants unless the Holders of not less than a majority in principal amount
of a series of Outstanding Debt Securities consent to such waiver.
Modifications and amendments of the Indenture will be permitted to be
made by the Operating Partnership, Reckson Associates and the Trustee without
the consent of any Holder of Debt Securities for any of the following
purposes:
1. to evidence the succession of another Person to the Operating
Partnership as obligor or Reckson Associates as guarantor under
the Indenture;
2. to add to the covenants of the Operating Partnership or Reckson
Associates 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 or Reckson Associates in the
Indenture;
3. to add Events of Default for the benefit of the Holders of all
or any series of Debt Securities;
4. 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;
5. to amend or supplement any provisions of the Indenture, PROVIDED
that no such amendment or supplement shall materially adversely
affect the interests of the Holders of any Debt Securities then
Outstanding;
6. to secure the Debt Securities;
7. to establish the form or terms of Debt Securities of any series;
8. 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;
9. 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 in any
material respect; or
10. 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 Debt Securities of any series in any material
respect.
In addition, with respect to Guaranteed Securities, without the
consent of any Holder of Debt Securities, Reckson Associates, or a subsidiary
thereof, may directly assume the due and punctual payment of the principal of,
any premium and interest on all the Guaranteed Securities and the performance
of every covenant of the Indenture on the part of the Operating Partnership to
be performed or observed. Upon any such assumption, Reckson Associates or such
subsidiary shall succeed to, and be substituted for and may exercise every
right and power of, the Operating Partnership under the Indenture with the
same effect as if Reckson Associates or such subsidiary had been the issuer of
the Guaranteed Securities and the Operating Partnership shall be released from
all obligations and covenants with respect to the Guaranteed Securities. No
such assumption shall be permitted unless Reckson Associates has delivered to
the Trustee (i) an officers' certificate and an opinion of counsel, stating,
among other things, that the Guarantee and all other covenants of Reckson
Associates in the Indenture remain in full force and effect and (ii) an
opinion of independent counsel that the Holders of Guaranteed Securities shall
have no materially adverse United States federal tax consequences as a result
of such assumption, and that, if any Debt Securities are then listed on the
New York Stock Exchange, that such Debt Securities shall not be delisted as a
result of such assumption.
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, the Indenture
provides that:
1. 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;
2. the principal amount of a Debt Security denominated in a foreign
currency that shall be deemed Outstanding shall be the U.S.
dollar equivalent, determined on the issue date for such Debt
Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the U.S. dollar equivalent on
the issue date of such Debt Security of the amount determined as
provided in (1) above);
3. 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
4. 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 Trustee, and also, upon request, by the Operating
Partnership, Reckson Associates (in respect of a series of Guaranteed
Securities) or the Holders of at least 10% 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 will be permitted to 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 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, any action to be taken at a
meeting of Holders of Debt Securities of any series with respect to any action
that the Indenture expressly provides may be 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 taken at a meeting at which a
quorum is present by the affirmative vote of Holders of such specified
percentage in principal amount of the Outstanding Debt Securities of such
series.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership may discharge certain obligations to
Holders of any series of Debt Securities that have not already been delivered
to the 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 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, 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 these provisions are made
inapplicable to the Debt Securities of or within any series pursuant to the
Indenture, the Operating Partnership may elect either (a) to defease and
discharge itself and Reckson Associates (if such Debt Securities are
Guaranteed Securities) 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 release itself and Reckson
Associates (if such Debt Securities are Guaranteed Securities) from their
obligations with respect to such Debt Securities under certain sections of the
Indenture (including the restrictions described under "Certain Covenants")
and, if provided pursuant to the Indenture, their obligations with respect to
any other covenant, and any omission to comply with such obligations shall not
constitute a default or an Event of Default with respect to such Debt
Securities ("covenant defeasance"), in either case upon the irrevocable
deposit by the Operating Partnership or Reckson Associates with the 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, 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 or Reckson Associates has delivered to the
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, must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable United States
federal income tax law.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which
issued the foreign currency in which the 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 or Reckson Associates 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 shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any) and
interest 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 Conversion Event 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 or (ii) the euro both within the European
Monetary System and for the settlement of transactions by public institutions
of or within the European Community. Unless otherwise provided in the
applicable prospectus supplement, all payments of principal of (and premium,
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 "Event of Default, Notice and
Waiver" with respect to sections no longer applicable to such Debt Securities
or described in clause (h) 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
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 and Reckson Associates (if such
Debt Securities are Guaranteed Securities) would remain liable to make payment
of such amounts due at the time of acceleration.
GOVERNING LAW
The Indenture and the Notes shall be governed by the laws of the
State of New York.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any Debt Securities are
convertible into debt securities of the Operating Partnership or exchangeable
for equity securities of Reckson Associates will be set forth in the
applicable prospectus supplement. Such terms will include the number or
principal amount of securities into which such debt securities are convertible
or for which such debt securities are exchangeable, the conversion or exchange
price (or manner of calculation thereof), the conversion or exchange period,
provisions as to whether conversion or exchange will be at the option of the
holders of such debt securities, Reckson Associates or the Operating
Partnership, the events requiring an adjustment of the conversion or exchange
price (or the manner of calculation thereof) and any provisions affecting
conversion or exchange in the event of the redemption of such debt securities.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities") that will
be deposited with, or on behalf of, a depositary (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.
DESCRIPTION OF COMMON STOCK
GENERAL
The charter of Reckson Associates (the "Charter") provides that
Reckson Associates may issue up to 100 million shares of common stock, $.01
par value per share. Each outstanding share of common stock will entitle the
holder to one vote on all matters presented to stockholders for a vote and
cumulative voting is not permitted. Holders of the common stock do not have
preemptive rights. On October 31, 1998, there were 40,033,913 shares of common
stock outstanding.
The Board of Directors of Reckson Associates has authorized the
issuance of Class B exchangeable common stock in connection with the Tower
transaction. See "Reckson Associates and The Operating Partnership." The
shares of Class B common stock will be entitled to receive an annual dividend
of $2.24 per share, payable quarterly, for the first four full quarters
immediately following their issuance. The cash dividend on the Class B common
stock will be subject to adjustment annually, beginning on the first
anniversary of the end of the quarter following the issuance of the Class B
common stock, by a percentage equal to 70% of the cumulative percentage change
in Reckson Associates' FFO per share above the FFO per share during the year
prior to issuance. The shares of Class B common stock will be convertible at
any time, at the option of the holder, into an equal number of shares of
common stock of Reckson Associates, subject to customary antidilution
adjustments. Reckson Associates, at its option, may redeem any or all of the
Class B common stock in exchange for an equal number of shares of its common
stock at any time following the four year, six-month anniversary of the
issuance of the Class B common stock. The Class B common stock will rank PARI
PASSU with the common stock.
All shares of common stock offered hereby have been duly authorized,
and will be fully paid and nonassessable. Subject to the preferential rights
of any other shares or series of stock and to the provisions of the Charter
regarding Excess Stock (as defined under "Restrictions on Ownership of Capital
Stock"), holders of shares of common stock are entitled to receive dividends
on such stock if, as and when authorized and declared by the Board of
Directors of Reckson Associates out of assets legally available therefor and
to share ratably in the assets of Reckson Associates 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 Reckson Associates.
Subject to the provisions of the Charter regarding Excess Stock, each
outstanding share of common stock and Class B 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 provided with respect to any other class
or series of stock, the holders of such shares 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 and Class B common stock can elect all of the directors then standing
for election and the holders of the remaining shares will not be able to elect
any directors.
Holders of shares of common stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any other securities. Subject to the provisions of the
Charter regarding Excess Stock, shares of common stock will have equal
dividend, liquidation and other rights.
CERTAIN PROVISIONS OF THE CHARTER
Under the MGCL, a Maryland corporation generally cannot dissolve,
amend its charter, merge, sell all or substantially all of its assets, engage
in a share exchange or engage in similar transactions outside the ordinary
course of business unless approved by the affirmative vote of 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
entitled to be cast on the matter) is set forth in the corporation's charter.
The Charter does not provide for a lesser percentage in such situations. In
addition, the Operating Partnership's partnership agreement provides that for
the five-year period following the completion of the IPO (I.E. through June 2,
2000), the Operating Partnership may not sell, transfer or otherwise dispose
of all or substantially all of its assets [or engage in any other similar
transaction] (regardless of the form of such transaction) without the consent
of the holders of 85% of all outstanding limited partnership units.
The Charter authorizes the Board of Directors of Reckson Associates
to reclassify any unissued shares of common stock into other classes or series
of classes of capital stock and to establish the number of shares in each
class or series and to set the preferences, conversion and other rights,
voting powers, restrictions, limitations and restrictions on ownership,
limitations as to dividends or other distributions, qualifications and terms
or conditions of redemption for each such class or series.
The Board of Directors is divided into three classes of directors,
each class constituting approximately one-third of the total number of
directors, with the classes serving staggered terms. At each annual meeting of
stockholders, the class of directors to be elected at such meeting will be
elected for a three-year term and the directors in the other two classes will
continue in office. We believe that classified directors will help to assure
the continuity and stability of the Board of Directors and our business
strategies and policies as determined by the Board. The use of a staggered
board may delay or defer a change in control of Reckson Associates or removal
of incumbent management.
RESTRICTIONS ON OWNERSHIP
In order to qualify as a REIT under the Code, not more than 50% in
value of the outstanding common stock of Reckson Associates may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code)
during the last half of a taxable year and the common 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 taxable
year). To satisfy the above ownership requirements and certain other
requirements for qualification as a REIT, the Board of Directors has adopted,
and the stockholders prior to the IPO approved, a provision in the Charter
restricting the ownership or acquisition of shares of common stock. See
"Restrictions on Ownership of Capital Stock."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American
Stock Transfer & Trust Company.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The Charter of Reckson Associates provides that Reckson Associates
may issue up to 25 million shares of preferred stock, $.01 par value per
share. On October 31, 1998 there were 9,192,000 shares of 7-5/8% Series A
Convertible Cumulative preferred stock outstanding. Dividends on the Series A
Preferred Stock are payable quarterly in arrears at an annual rate of 7-5/8%
of the liquidation preference of $25 per share. The Series A Preferred Stock
is convertible at any time at the option of the holder at a conversion price
of $28.51 per share of common stock, subject to adjustment in certain
circumstances. On or after April 13, 2003, the shares of Series A Preferred
Stock will be redeemable, in whole or in part, at the option of Reckson
Associates.
In connection with the acquisition of the Cappelli portfolio, the
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership was supplemented (the "Supplements") to establish a series of
25,000 preferred units of limited partnership interest of the Operating
Partnership designated as Series B preferred units, a series of 11,518
preferred units designated as Series C preferred units and a series of 6,000
preferred units designated as Series D preferred units. Each of the Series B,
C and D preferred units have a liquidation preference of $1,000 per unit.
Distributions on each Series B, C and D preferred unit are payable in arrears
quarterly in an amount equal to the greater of: (i) $17.50 or (ii) the
quarterly distribution attributable to each Series B, C and D preferred unit
if such unit was converted into common stock, subject to a maximum increase of
5% of the distributions on the Series B, C or D preferred units over the
immediately preceding year. The distribution amount due on all Series B, C or
D preferred units may be reduced during any period which certain Cappelli
indebtedness remains subject to a prepayment premium or prepayment penalty.
Commencing two years after the issuance of each of the Series B, C or D
preferred units, the distribution amount may be adjusted to reflect increases
or decreases in the dividends on the common stock of Reckson Associates.
The holders of Series B, C or D preferred units have the right to
convert their preferred units into common stock at a price per share of
$32.51, $29.39 or $29.12, respectively. The holders of Series B preferred
units also have the right to convert their units into Series C preferred
units, at any time through April 21, 2000. Each Series B, C or D preferred
unit is exchangeable, at the option of its holder, for shares of the preferred
stock of Reckson Associates with a liquidation preference equal to the
liquidation preference of the Series B, C or D preferred units and otherwise
with the same terms as the Series B, C or D preferred units other than the
conversion and exchange rights referred to above. The Operating Partnership,
with regard to any notice of such an exchange, may elect to redeem all of the
Series B, C or D preferred units that are the subject of the exchange for cash
in an amount equal to the stated value of such Series B, C or D preferred
units plus any accrued distributions thereon.
The statements made hereunder relating to the preferred stock are
summaries of the material terms thereof and do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, the
applicable provisions of the Charter and Bylaws and any applicable articles
supplementary to the Charter designating terms of a series of preferred stock
(a "Designating Amendment").
The issuance of preferred stock could adversely affect the voting
power, dividend rights and other rights of holders of common stock. Although
the Board of Directors has no such intention at the present time, it could
establish a series of preferred stock that could, depending on the terms of
such series, delay, defer or prevent a transaction or a change in control of
Reckson Associates that might involve a premium price for the common stock or
otherwise be in the best interest of the holders thereof. Management believes
that the availability of preferred stock will provide us with increased
flexibility in structuring possible future financing and acquisitions and in
meeting other needs that might arise.
TERMS
Subject to the limitations prescribed by the Charter, the Board of
Directors is authorized to fix the number of shares constituting each series
of preferred stock and the designations and powers, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof, including such provisions as may be
desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution of the Board of Directors. The preferred
stock will, when issued, be fully paid and nonassessable and will have no
preemptive rights.
Reference is made to the prospectus supplement relating to the series
of preferred stock offered thereby for the specific terms thereof, including:
o The title and stated value of such preferred stock;
o The number of shares of such preferred stock, the liquidation
preference per share of such preferred stock and the offering
price of such preferred stock;
o The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such preferred
stock;
o The date from which dividends on such preferred stock shall
accumulate, if applicable;
o The procedures for any auction and remarketing, if any, for such
preferred stock;
o The provision for a sinking fund, if any, for such preferred
stock;
o The provisions for redemption, if applicable, of such preferred
stock;
o Any listing of such preferred stock on any securities exchange;
o The terms and conditions, if applicable, upon which such
preferred stock may or will be convertible into our common
stock, including the conversion price or manner of calculation
thereof;
o The relative ranking and preferences of such preferred stock as
to dividend rights and rights upon liquidation, dissolution or
winding up of the affairs of Reckson Associates;
o Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to
preserve the status of Reckson Associates as a REIT;
o A discussion of material federal income tax considerations
applicable to such preferred stock; and
o Any other specific terms, preferences, rights, limitations or
restrictions of such preferred stock.
RANK
Unless otherwise specified in the applicable prospectus supplement,
the preferred stock will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of Reckson Associates, rank:
i. senior to the common stock and to all classes or series of
equity securities issued by Reckson Associates the terms of
which provide that such equity securities shall rank junior to
such preferred stock;
ii. on a parity with all classes or series of equity securities
issued by Reckson Associates, including the Series A preferred
stock, other than those referred to in clauses (i) and (iii);
and
iii. junior to all classes or series of equity securities issued by
Reckson Associates which the terms of such preferred stock
provide will rank senior to it. The term "equity securities"
does not include convertible debt securities.
DIVIDENDS
Unless otherwise specified in the applicable prospectus supplement,
the preferred stock will have the rights with respect to payment of dividends
set forth below.
Holders of the preferred stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of Reckson
Associates, out of assets of Reckson Associates legally available for payment,
cash dividends in such amounts and on such dates as will be set forth in, or
pursuant to, the applicable prospectus supplement. Each such dividend shall be
payable to holders of record as they appear on the stock transfer books of
Reckson Associates on such record dates as shall be fixed by the Board of
Directors of Reckson Associates.
Dividends on any series of 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 Reckson
Associates fails to declare a dividend payable on a dividend payment date on
any series of preferred stock for which dividends are non-cumulative, then the
holders of such series of preferred stock will have no right to receive a
dividend in respect of the related dividend period and Reckson Associates will
have no obligation to pay the dividend accrued for such period, whether or not
dividends on such series of preferred stock are declared payable on any future
dividend payment date.
If preferred stock of any series is outstanding, no full dividends
will be declared or paid or set apart for payment on any of the capital stock
of Reckson Associates 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 set apart for such
payment 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 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 and such other series of preferred stock (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) 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
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, no dividends (other than in shares of common stock or other
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 or other distribution shall be declared or made upon the common stock,
or any other of the capital stock of Reckson Associates 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 capital stock
of Reckson Associates 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 Reckson Associates except (1) by conversion into or exchange for other
capital stock of Reckson Associates ranking junior to the preferred stock of
such series as to dividends and upon liquidation or (2) redemption's for the
purpose of preserving the status of Reckson Associates as a REIT).
REDEMPTION
If so provided in the applicable prospectus supplement, the preferred
stock will be subject to mandatory redemption or redemption at the option of
Reckson Associates, 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 Reckson Associates will redeem 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 accumulated 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 capital stock
of Reckson Associates, the terms of such preferred stock may provide that, if
no such 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 capital stock of Reckson Associates pursuant to
conversion provisions specified in the applicable prospectus supplement.
Notwithstanding the foregoing, unless (i) if such series of preferred
stock has a cumulative dividend, full cumulative dividends on all shares of
any 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 such series of preferred stock does not have a cumulative
dividend, full dividends on the preferred stock of any 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 any series of preferred stock shall be redeemed unless
all outstanding preferred stock of such series is simultaneously redeemed;
PROVIDED, HOWEVER, that the foregoing shall not prevent the purchase or
acquisition of preferred stock of such series to preserve the status of
Reckson Associates as a REIT or pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding 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
any 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 any 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, Reckson Associates 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 stock of Reckson Associates 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 preferred stock of such series to preserve the
status of Reckson Associates as a REIT or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding 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 Reckson Associates 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 lot or in any
other reasonable manner.
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. Each notice shall state:
o the redemption date;
o the number of shares and series of the preferred stock to be
redeemed;
o the redemption price;
o the place or places where certificates for such preferred stock
are to be surrendered for payment of the redemption price;
o that dividends on the shares to be redeemed will cease to
accumulate on such redemption date; and
o the date upon which the holder's conversion rights, if any, as
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 Reckson Associates 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
accumulate on such preferred stock, and all rights of the holders of such
preferred stock 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 Reckson Associates (referred to herein as a
"liquidation"), 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
Reckson Associates ranking junior to the preferred stock of such series in the
distribution of assets upon any liquidation, dissolution or winding up of
Reckson Associates, the holders of such preferred stock shall be entitled to
receive out of assets of Reckson Associates legally available for distribution
to shareholders liquidating distributions in the amount of the liquidation
preference per share (set forth in the applicable prospectus supplement), plus
an amount equal to all dividends accumulated and unpaid thereon (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). After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of preferred stock will have no rights or claim to any
remaining assets. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of Reckson
Associates are insufficient to pay the amount of the liquidating distributions
on all outstanding preferred stock of such series and the corresponding
amounts payable on all shares of other classes or series of capital stock of
Reckson Associates ranking on a parity with such preferred stock in the
distribution of assets, then the holders of such 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.
The consolidation or merger of Reckson Associates with or into any
other entity, or the merger of another entity with or into Reckson Associates,
or a statutory share exchange by Reckson Associates, or the sale, lease or
conveyance of all or substantially all of the property or business of Reckson
Associates, shall not be deemed to constitute a liquidation, dissolution or
winding up of Reckson Associates.
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.
Whenever dividends on any series of preferred stock shall be in
arrears for six or more quarterly periods, the holders of such preferred stock
(voting separately as a class with all other series of preferred stock upon
which like voting rights have been conferred and are exercisable) will be
entitled to vote for the election of two additional directors of Reckson
Associates at a special meeting called by the holders of record of at least
ten percent (10%) of any series of preferred stock so in arrears, unless such
request is received less than 90 days before the date fixed for the next
annual or special meeting of the stockholders, or at the next annual meeting
of stockholders, and at each subsequent annual meeting until (i) if such
series of preferred stock has a cumulative dividend, all dividends accumulated
on such shares of preferred stock for the past dividend periods and the then
current dividend period shall have been fully paid or declared and a sum
sufficient for the payment thereof set aside for payment or (ii) if such
series of preferred stock does not have a cumulative dividend, four quarterly
dividends shall have been fully paid or declared and a sum sufficient for the
payment thereof set aside for payment. In such cases, the entire Board of
Directors of Reckson Associates will be increased by two directors.
Unless provided otherwise for any series of preferred stock, so long
as any shares of such preferred stock remain outstanding, Reckson Associates
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
senior to such preferred stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of Reckson
Associates, or reclassify any authorized capital stock of Reckson Associates
into such stock, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such stock; or (ii)
amend, alter or repeal the provisions of the Charter 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 such series of preferred stock
remains outstanding with the terms thereof materially unchanged, taking into
account that upon the occurrence of an Event Reckson Associates 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
powers of holders of such series 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 of preferred stock
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 of Reckson Associates, 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 or consent would otherwise
be required shall be effected, all outstanding shares of such series of
preferred stock shall have been converted, 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 shares of common stock will be set forth in the
applicable prospectus supplement. 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 of Reckson Associates, the events requiring an adjustment
of the conversion price and provisions affecting conversion in the event of
the redemption of the preferred stock.
SHAREHOLDER LIABILITY
As discussed below under "Description of Common Stock-- General,"
applicable Maryland law provides that no shareholder, including holders of
preferred stock, shall be personally liable for the acts and obligations of
Reckson Associates and that the funds and property of Reckson Associates shall
be the only recourse for such acts or obligations.
RESTRICTIONS ON OWNERSHIP
As discussed below under "Restrictions on Ownership of Capital
Stock," for Reckson Associates to qualify as a REIT under the Code, not more
than 50% in value of the outstanding capital stock of Reckson Associates 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.
Therefore, the Designating Amendment for each series of preferred stock may
contain provisions restricting the ownership and transfer of such preferred
stock. The applicable prospectus supplement will specify any additional
ownership limitation relating to a series of preferred stock.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement,
the Registrar and Transfer Agent for the preferred stock will be American
Stock Transfer & Trust Company.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Reckson Associates may issue receipts ("Depositary Receipts") for
Depositary Shares, each of which will represent a fractional interest or a
share of a particular series of a class of preferred stock, as specified in
the applicable prospectus supplement. Preferred stock of each series of each
class represented by Depositary Shares will be deposited under a separate
Deposit Agreement (each, a "Deposit Agreement") among Reckson Associates, the
depositary named therein (such depositary or its successor, the "Preferred
Stock Depositary") and the holders from time to time of the Depositary
Receipts. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest
of a share of the particular series of a class of preferred stock represented
by the Depositary Shares evidenced by such Depositary Receipt, to all the
rights and preferences of the preferred stock represented by such Depositary
Shares, including dividend, voting, conversion, redemption and liquidation
rights.
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the preferred stock by Reckson Associates to the
Preferred Stock Depositary, Reckson Associates will cause the Preferred Stock
Depositary to issue, on our behalf, the Depositary Receipts. Copies of the
applicable form of Deposit Agreement and Depositary Receipt may be obtained
from Reckson Associates upon request.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or
other cash distributions received in respect of the preferred stock to the
record holders of the Depositary Receipts evidencing the related Depositary
Shares in proportion to the number of such Depositary Receipts owned by such
holder, subject to certain obligations of holders to file proofs, certificates
and other information and to pay certain charges and expenses to the Preferred
Stock Depositary.
In the event of a distribution other than in cash, the Preferred
Stock Depositary will distribute property received by it to the record holders
of Depositary Receipts entitled thereto, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred Stock Depositary, unless the Preferred
Stock Depositary determines that it is not feasible to make such distribution,
in which case the Preferred Stock Depositary may, with the approval of Reckson
Associates, sell such property and distribute the net proceeds from such sale
to such holders.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust
office of the Preferred Stock Depositary (unless the related Depositary Shares
have previously been called for redemption), the holders thereof will be
entitled to delivery at such office, to or upon such holder's order, of the
number of whole or fractional shares of preferred stock and any money or other
property represented by the Depositary Shares evidenced by such Depositary
Receipts. Holders of Depositary Receipts will be entitled to receive whole or
fractional shares of the related preferred stock on the basis of the
proportion of preferred stock represented by each Depositary Share as
specified in the applicable prospectus supplement, but holders of such
preferred stock will not thereafter be entitled to receive Depositary Shares
therefor. 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 shares of preferred stock to be withdrawn, the Preferred Stock
Depositary will deliver to such holder at the same time a new Depositary
Receipt evidencing such excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever Reckson Associates redeems preferred stock held by the
Preferred Stock Depositary, the Preferred Stock Depositary will redeem as of
the same redemption date the number of Depositary Shares representing the
preferred stock so redeemed, provided Reckson Associates shall have paid in
full to the Preferred Stock Depositary the redemption price of the preferred
stock to be redeemed plus an amount equal to any accrued and unpaid dividends
thereon to the date fixed for redemption. The redemption price per Depositary
Share will be equal to the redemption price and any other amounts per share
payable with respect to the preferred stock. If less than all the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be
selected by the Preferred Stock Depositary by lot.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of
the holders of the Depositary Receipts evidencing the Depositary Shares so
called for redemption will cease, except the right to receive any moneys
payable upon such redemption and any money or other property to which the
holders of such Depositary Receipts were entitled upon such redemption upon
surrender thereof to the Preferred Stock Depositary.
VOTING OF THE UNDERLYING PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the
preferred stock are entitled to vote, the Preferred Stock Depositary will mail
the information contained in such notice of meeting to the record holders of
the Depositary Receipts evidencing the Depositary Shares which represent such
preferred stock. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the
record date for the preferred stock) will be entitled to instruct the
Preferred Stock Depositary as to the exercise of the voting rights pertaining
to the amount of preferred stock represented by such holder's Depositary
Shares. The Preferred Stock Depositary will vote the amount of preferred stock
represented by such Depositary Shares in accordance with such instructions,
and we will agree to take all reasonable action which may be deemed necessary
by the Preferred Stock Depositary in order to enable the Preferred Stock
Depositary to do so. The Preferred Stock Depositary will abstain from voting
the amount of preferred stock represented by such Depositary Shares to the
extent it does not receive specific instructions from the holders of
Depositary Receipts evidencing such Depositary Shares.
LIQUIDATION PREFERENCE
In the event of liquidation, dissolution or winding up of Reckson
Associates, whether voluntary or involuntary, each holder of a Depositary
Receipt will be entitled to the fraction of the liquidation preference
accorded each share of preferred stock represented by the Depositary Share
evidenced by such Depositary Receipt, as set forth in the applicable
prospectus supplement.
CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, are not convertible into common stock
or any other securities or property of Reckson Associates. Nevertheless, if so
specified in the applicable prospectus supplement relating to an offering of
Depositary Shares, the Depositary Receipts may be surrendered by holders
thereof to the Preferred Stock Depositary with written instructions to the
Preferred Stock Depositary to instruct Reckson Associates to cause conversion
of the preferred stock represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of common stock, other preferred stock
of Reckson Associates or other shares of capital stock of Reckson Associates,
and Reckson Associates has agreed that upon receipt of such instructions and
any amounts payable in respect thereof, it will cause the conversion thereof
utilizing the same procedures as those provided for delivery of preferred
stock to effect such conversion. If the Depositary Shares evidenced by a
Depositary Receipt are to be converted in part only, one or more new
Depositary Receipts will be issued for any Depositary Shares not to be
converted. No fractional shares of common stock will be issued upon
conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by Reckson Associates equal to the
value of the fractional interest based upon the closing price of the common
stock on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the preferred stock and any provision of the Deposit Agreement may
at any time be amended by agreement between Reckson Associates and the
Preferred Stock Depositary. However, any amendment that materially and
adversely alters the rights of the holders of Depositary Receipts will not be
effective unless such amendment has been approved by the existing holders of
at least a majority of the Depositary Shares evidenced by the Depositary
Receipts then outstanding.
The Deposit Agreement may be terminated by Reckson Associates upon
not less than 30 days' prior written notice to the Preferred Stock Depositary
if (i) such termination is to preserve the status of Reckson Associates as a
REIT or (ii) a majority of each class of preferred stock affected by such
termination consents to such termination, whereupon the Preferred Stock
Depositary shall 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. In addition, the
Deposit Agreement will automatically terminate if (i) all outstanding
Depositary Shares 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 Reckson Associates and such
distribution shall have been distributed to the holders of Depositary Receipts
evidencing the Depositary Shares representing such preferred stock or (iii)
each related share of preferred stock shall have been converted into capital
stock of Reckson Associates not so represented by Depositary Shares.
CHARGES OF PREFERRED SHARES DEPOSITARY
Reckson Associates will pay all transfer and other taxes and
governmental charges arising solely from the existence of the Deposit
Agreement. In addition, Reckson Associates will pay the fees and expenses of
the Preferred Stock Depositary in connection with the performance of its
duties under the Deposit Agreement. However, holders of Depositary Receipts
will pay the fees and expenses of the Preferred Stock Depositary for any
duties requested by such holders to be performed which are outside of those
expressly provided for in the Deposit Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering
to Reckson Associates notice of its election to do so, and Reckson Associates
may at any time remove the Preferred Stock Depositary, any such resignation or
removal to take effect upon the appointment of a successor Preferred Stock
Depositary. A successor Preferred Shares Depositary must be appointed within
60 days after delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from Reckson Associates which are
received by the Preferred Stock Depositary with respect to the related
preferred stock.
Neither Reckson Associates nor the Preferred Stock Depositary will be
liable if the Preferred Stock Depositary is prevented from or delayed in, by
law or any circumstances beyond its control, performing its obligations under
the Deposit Agreement. The obligations of Reckson Associates and the Preferred
Stock Depositary under the Deposit Agreement will be limited to performing
specified duties thereunder in good faith and without negligence, gross
negligence or willful misconduct, and Reckson Associates and the Preferred
Stock Depositary will not be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Receipts, Depositary Shares or
preferred stock represented thereby unless satisfactory indemnity is
furnished. Reckson Associates and the Preferred Stock Depositary may rely on
written advice of counsel or accountants, or information provided by persons
presenting the preferred stock represented thereby for deposit, holders of
Depositary Receipts or other persons believed to be competent to give such
information, and on documents believed to be genuine and signed by a proper
party.
If the Preferred Stock Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and from Reckson Associates, on the other hand, the Preferred Stock
Depositary shall be entitled to act on such claims, requests or instructions
received from Reckson Associates.
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK
EXCESS STOCK
The Charter provides that Reckson Associates may issue up to 75
million shares of excess stock, par value $.01 per share ("Excess Stock"). For
a description of Excess Stock, see "--Restrictions on Ownership" below.
RESTRICTIONS ON OWNERSHIP
In order for Reckson Associates to qualify as a REIT under the Code,
among other things, not more than 50% in value of the outstanding capital
stock of Reckson Associates may be owned, directly or indirectly, by five or
fewer individuals (defined in the Code to include certain entities) during the
last half of a taxable year (other than the first year) (the "Five or Fewer
Requirement"), and such shares of capital stock must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months
(other than the first year) or during a proportionate part of a shorter
taxable year. Pursuant to the Code, common stock held by certain types of
entities, such as pension trusts qualifying under Section 401(a) of the Code,
United States investment companies registered under the Investment Company Act
of 1940, partnerships, trusts and corporations, will be attributed to the
beneficial owners of such entities for purposes of the Five or Fewer
Requirement (I.E., the beneficial owners of such entities will be counted as
shareholders of Reckson Associates).
In order to protect Reckson Associates against the risk of losing its
status as a REIT due to a concentration of ownership among stockholders, the
Charter, subject to certain exceptions, provides that no stockholder may own,
or be deemed to own by virtue of the attribution provisions of the Code, more
than 9.0% (the "Ownership Limit") of the aggregate number or value of the
outstanding shares of common stock. Reckson Associates may also impose
limitations on the ownership of preferred stock. See "Description of Preferred
Stock - Restrictions on Ownership." Any transfer of shares of stock that would
result in a violation of the Ownership Limit or that would result in
disqualification as a REIT, including any transfer that results in shares of
capital stock being owned by fewer than 100 persons or results in Reckson
Associates being "closely held" within the meaning of Section 856(h) of the
Code, shall be null and void, and the intended transferee will acquire no
rights to the shares of capital stock. The foregoing restrictions on
transferability and ownership will not apply if the Board of Directors
determines that it is no longer in the best interests of Reckson Associates to
attempt to qualify, or to continue to qualify, as a REIT. The Board of
Directors may, in its sole discretion, waive the Ownership Limit if evidence
satisfactory to the Board of Directors and tax counsel is presented that the
changes in ownership will not then or in the future jeopardize REIT status and
the Board of Directors otherwise decides that such action is in the best
interests of Reckson Associates.
Shares of capital stock owned, or deemed to be owned, or transferred
to a stockholder in excess of the Ownership Limit will automatically be
converted into shares of Excess Stock that will be transferred, by operation
of law, to the trustee of a trust for the exclusive benefit of one or more
charitable organizations described in Section 170(b)(1)(A) and 170(c) of the
Code (the "Charitable Beneficiary"). The trustee of the trust will be deemed
to own the Excess Stock for the benefit of the Charitable Beneficiary on the
date of the violative transfer to the original transferee-stockholder. Any
dividend or distribution paid to the original transferee-stockholder of Excess
Stock prior to our discovery that capital stock has been transferred in
violation of the provisions of the Charter shall be repaid to the trustee upon
demand. Any dividend or distribution authorized and declared but unpaid shall
be rescinded as void AB INITIO with respect to the original
transferee-stockholder and shall instead be paid to the trustee of the trust
for the benefit of the Charitable Beneficiary. Any vote cast by an original
transferee-stockholder of shares of capital stock constituting Excess Stock
prior to the discovery by us that shares of capital stock have been
transferred in violation of the provisions of the Charter shall be rescinded
as void AB INITIO. While the Excess Stock is held in trust, the original
transferee-stockholder will be deemed to have given an irrevocable proxy to
the trustee to vote the capital stock for the benefit of the Charitable
Beneficiary. The trustee of the trust may transfer the interest in the trust
representing the Excess Stock to any person whose ownership of the shares of
capital stock converted into such Excess Stock would be permitted under the
Ownership Limit. If such transfer is made, the interest of the Charitable
Beneficiary shall terminate and the proceeds of the sale shall be payable to
the original transferee-stockholder and to the Charitable Beneficiary as
described herein. The original transferee-stockholder shall receive the lesser
of (i) the price paid by the original transferee-stockholder for the shares of
capital stock that were converted into Excess Stock or, if the original
transferee-stockholder did not give value for such shares (E.G., the stock was
received through a gift, devise or other transaction), the average closing
price for the class of shares from which such shares of capital stock were
converted for the ten trading days immediately preceding such sale or gift,
and (ii) the price received by the trustee from the sale or other disposition
of the Excess Stock held in trust. The trustee may reduce the amount payable
to the original transferee-stockholder by the amount of dividends and
distributions relating to the shares of Excess Stock which have been paid to
the original transferee-stockholder and are owed by the original
transferee-stockholder to the trustee. Any proceeds in excess of the amount
payable to the original transferee-stockholder shall be paid by the trustee to
the Charitable Beneficiary. Any liquidation distributions relating to Excess
Stock shall be distributed in the same manner as proceeds of a sale of Excess
Stock. If the foregoing transfer restrictions are determined to be void or
invalid by virtue of any legal decision, statute, rule or regulations, then
the original transferee-stockholder of any shares of Excess Stock may be
deemed, at the option of Reckson Associates, to have acted as an agent for
Reckson Associates in acquiring the shares of Excess Stock and to hold the
shares of Excess Stock for Reckson Associates.
In addition, Reckson Associates will have the right, for a period of
90 days during the time any shares of Excess Stock are held in trust, to
purchase all or any portion of the shares of Excess Stock at the lesser of (i)
the price initially paid for such shares by the original
transferee-stockholder, or if the original transferee-stockholder did not give
value for such shares (E.G., the shares were received through a gift, devise
or other transaction), the average closing price for the class of stock from
which such shares of Excess Stock were converted for the ten trading days
immediately preceding such sale or gift, and (ii) the average closing price
for the class of stock from which such shares of Excess Stock were converted
for the ten trading days immediately preceding the date Reckson Associates
elects to purchase such shares. Reckson Associates may reduce the amount
payable to the original transferee-stockholder by the amount of dividends and
distributions relating to the shares of Excess Stock which have been paid to
the original transferee-stockholder and are owed by the original
transferee-stockholder to the trustee. Reckson Associates may pay the amount
of such reductions to the trustee for the benefit of the Charitable
Beneficiary. The 90-day period begins on the later date of which notice is
received of the violative transfer if the original transferee-stockholder
gives notice to Reckson Associates of the transfer or, if no such notice is
given, the date the Board of Directors determines that a violative transfer
has been made.
These restrictions will not preclude settlement of transactions
through the New York Stock Exchange.
All certificates representing shares of stock will bear a legend
referring to the restrictions described above.
Each stockholder shall upon demand be required to disclose to Reckson
Associates in writing any information with respect to the direct, indirect and
constructive ownership of the capital stock of Reckson Associates as the Board
of Directors deems necessary to comply with the provisions of the Code
applicable to REITs, to comply with the requirements of any taxing authority
or governmental agency or to determine any such compliance.
The Ownership Limit may have the effect of delaying, deferring or
preventing a change in control of Reckson Associates unless the Board of
Directors determines that maintenance of REIT status is no longer in the best
interests of Reckson Associates.
DESCRIPTION OF WARRANTS
Reckson Associates may issue Warrants for the purchase of common
stock or preferred stock. Warrants may be issued independently or together
with any securities and may be attached to or separate from such securities.
Each series of Warrants will be issued under a separate warrant agreement
(each, a "Warrant Agreement") to be entered into between Reckson Associates
and a warrant agent specified therein ("Warrant Agent"). The Warrant Agent
will act solely for Reckson Associates in connection with the Warrants of such
series and will not assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of Warrants.
The applicable prospectus supplement will describe the following
terms, where applicable, of the Warrants in respect of which this prospectus
is being delivered:
o the title of such Warrants;
o the aggregate number of such Warrants;
o the price or prices at which such Warrants will be issued;
o the currencies in which the price or prices of such Warrants may
be payable;
o the designation, amount and terms of the Securities purchasable
upon exercise of such Warrants;
o the designation and terms of the other Securities, if any, with
which such Warrants are issued and the number of such Warrants
issued with each such security;
o if applicable, the date on and after which such Warrants
and the Securities purchasable upon exercise of such Warrants
will be separately transferable;
o the price or prices at which and currency or currencies in which
the ecurities purchasable upon exercise of such Warrants may
may be purchased;
o the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire;
o the minimum or maximum amount of such Warrants which may be
exercised at any one time;
o information with respect to book-entry procedures, if any;
o a discussion of material federal income tax considerations; and
o any other material terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise
of such Warrants.
FEDERAL INCOME TAX CONSIDERATIONS
We believe Reckson Associates has operated, and Reckson Associates
intends to continue to operate, in such a manner as to qualify as a REIT under
the Code, but no assurance can be given that Reckson Associates will at all
times so qualify. Based on various assumptions and factual representations
made by us regarding our operations, in the opinion of Brown & Wood LLP, our
counsel, commencing with our taxable year ended December 31, 1995, Reckson
Associates has been organized in conformity with the requirements for
qualification as a REIT under the Code, and the proposed method of operating
Reckson Associates will enable it to meet the requirements for qualification
and taxation as a REIT. Such qualification depends upon our ability to meet
the various requirements imposed under the Code through actual operations, as
discussed below. Brown & Wood LLP will not review our operations, and no
assurance can be given that actual operations will meet these requirements.
The opinion of Brown & Wood LLP is not binding on the IRS or any court. The
opinion of Brown & Wood LLP is based upon existing law, IRS regulations and
currently published administrative positions of the IRS and judicial
decisions, which are subject to change either prospectively or retroactively.
The provisions of the Code pertaining to REITs are highly technical
and complex. The following is a brief and general summary of certain
provisions that currently govern Reckson Associates and its stockholders'
federal income tax treatment. For the particular provisions that govern
Reckson Associates and its stockholders' federal income tax treatment,
reference is made to Sections 856 through 860 of the Code and the regulations
thereunder. The following summary is qualified in its entirety by such
reference.
Under the Code, if certain requirements are met in a taxable year, a
REIT generally will not be subject to federal income tax with respect to
income that it distributes to its stockholders. If Reckson Associates fails to
qualify during any taxable year as a REIT, unless certain relief provisions
are available, it will be subject to tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates, which could
have a material adverse effect upon its stockholders. See "Risk Factors-Risks
of Failure to Qualify as a REIT."
In any year in which Reckson Associates qualifies to be taxed as a
REIT, distributions made to its stockholders out of current or accumulated
earnings and profits will be taxed to stockholders as ordinary income except
that distributions of net capital gains designated by Reckson Associates as
capital gain dividends will be taxed as long-term capital gain income to the
stockholders. To the extent that distributions exceed current or accumulated
earnings and profits, they will constitute a return of capital, rather than
dividend or capital gain income, and will reduce the basis for the
stockholder's common stock or preferred stock with respect to which the
distribution is paid or, to the extent that they exceed such basis, will be
taxed in the same manner as gain from the sale of that common stock or
preferred stock. Beginning in 1998, Reckson Associates may elect to retain
long-term capital gains and pay corporate-level income tax on them and treat
the retained gains as if they had been distributed to stockholders. In such
case, each stockholder would include in income, as long-term capital gain, its
proportionate share of the undistributed gains and would be deemed to have
paid its proportionate share of the tax paid by Reckson Associates with
respect thereto. In addition, the basis for a stockholder's common stock or
preferred stock would be increased by the amount of the undistributed
long-term capital gain included in its income, less the amount of the tax it
is deemed to have paid with respect thereto.
Investors are urged to consult their own tax advisors with respect to
the appropriateness of an investment in the securities offered hereby and with
respect to the tax consequences arising under federal law and the laws of any
state, municipality or other taxing jurisdiction, including tax consequences
resulting from such investor's own tax characteristics. In particular, foreign
investors should consult their own tax advisors concerning the tax
consequences of an investment in Reckson Associates, including the possibility
of United States income tax withholding on our distributions.
PLAN OF DISTRIBUTION
Reckson Associates and the Operating Partnership may sell the
securities to one or more underwriters for public offering and sale by them or
may sell the securities to investors directly or through agents. Any such
underwriter or agent involved in the offer and sale of the securities will be
named in the applicable prospectus supplement.
Underwriters may offer and sell the securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. Reckson Associates and the
Operating Partnership also may, from time to time, authorize underwriters
acting as their agents to offer and sell the securities upon the terms and
conditions as are set forth in the applicable prospectus supplement. In
connection with the sale of securities, underwriters may be deemed to have
received compensation from Reckson Associates or the Operating Partnership in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of securities for whom they may act as agent.
Underwriters may sell securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agent.
Any underwriting compensation paid by Reckson Associates or the
Operating Partnership to underwriters or agents in connection with the
offering of securities, and any discounts, concessions for commissions allowed
by underwriters to participating dealers, will be set forth in the applicable
prospectus supplement. Underwriters, dealers and agents participating in the
distribution of the securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. Underwriters, dealers and agents may be
entitled, under agreements entered into with Reckson Associates and the
Operating Partnership, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act.
If so indicated in the applicable prospectus supplement, Reckson
Associates and the Operating Partnership will authorize dealers acting as
their agents to solicit offers by certain institutions to purchase securities
from them at the public offering price set forth in such prospectus supplement
pursuant to Delayed Delivery Contracts ("Contracts") providing for payment and
delivery on the date or dates stated in such prospectus supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to the approval of Reckson Associates and the
Operating Partnership. Contracts will not be subject to any conditions except
that the purchase by an institution of the securities covered by its Contracts
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with, and perform services for, Reckson Associates and
the Operating Partnership and its subsidiaries in the ordinary course of
business.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby and
certain legal matters described under "Federal Income Tax Considerations" will
be passed upon for Reckson Associates and the Operating Partnership by Brown &
Wood LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the
consolidated financial statements and schedule of Reckson Associates Realty
Corp. as of December 31, 1997 and December 31, 1996 and for the years then
ended and for the period June 3, 1995 to December 31, 1995 and the combined
financial statements of the Reckson Group for the period January 1, 1995 to
June 2, 1995 included in our Annual Report on Form 10-K for the year ended
December 31, 1997; and the combined statement of revenues and certain expenses
of the New Jersey Portfolio (as defined therein) for the year ended December
31, 1996, the combined statement of revenues and certain expenses for the
Hauppauge Portfolio (as defined therein) for the year ended December 31, 1996
and the statement of revenues and certain expenses of the Uniondale Office
Property (as defined therein), for the year ended December 31, 1996, appearing
in the Company's Form 8-K, dated February 18, 1997; and the statement of
revenues and certain expenses of 710 Bridgeport Avenue (as defined therein),
for the year ended December 31, 1996 and the statement of revenues and certain
expenses of the Shorthills Office Center (as defined therein), for the year
ended December 31, 1996 appearing in the Company's Form 8-K dated June 12,
1997; and the statement of revenues and certain expenses of Garden City Plaza
for the year ended December 31, 1996, appearing in the Company's Form 8-K
dated September 9, 1997, and the statement of revenues and certain expenses of
the Christiana Office Property (as defined therein) for the year ended June30,
1997, appearing in the Company's Form 8-K dated February 10, 1998, and the
statement of revenues and certain expenses of the Stamford Office Property (as
defined therein) for the year ended December 31, 1997, appearing in the
Company's Form 8-K dated March 24, 1998; and the statement of revenues and
certain expenses of the Cappelli Portfolio for the year ended December 31,
1997, appearing in the Company's Form 8-K dated April 6, 1998, incorporated in
this Registration Statement by reference. These consolidated and combined
financial statements are incorporated by reference in reliance on their
reports, given on their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the
consolidated financial statements and schedule of Reckson Operating
Partnership, L.P. as of December 31, 1997 and December 31, 1996 and for the
years then ended and for the period June 3, 1995 to December 31, 1995 and the
combined financial statements of Reckson Group for the period January 1, 1995
to June 2, 1995 as set forth in their report, which is included in this
Registration Statement. These financial statements are included in reliance on
their report, given on their authority as experts in accounting and auditing.
RECKSON OPERATING PARTNERSHIP, L.P.
AND
THE RECKSON GROUP
PAGE
Selected Financial Data.......................................................
Management's Discussion and Analysis of Financial Condition and Results
of Operations.................................................................
CONSOLIDATED FINANCIAL STATEMENTS.............................................
Report of Independent Auditors................................................
Consolidated Balance Sheets as of September 30, 1998 (unaudited),
December 31, 1997 and December 31, 1996.......................................
Consolidated Statements of Income for the nine months ended
September 30, 1998, and 1997 (unaudited), the years ended December 31,
1997, 1996 and for the period from June 3, 1995 to December 31, 1995 and
the Combined Statement of Income for the period from January 1, 1995 to
June 2, 1995..................................................................
Consolidated Statements of Partners' Capital for the nine months
ended September 30, 1998 (unaudited), the years ended December 31, 1997,
1996 and for the period from June 3, 1995 to December 31, 1995
and the Combined Statement of Owners' (Deficit) for the period from
January 1, 1995 to June 2, 1995...............................................
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1998, and 1997 (unaudited), the years ended December 31,
1997, 1996 and for the period from June 3, 1995 to December 31, 1995
and the Combined Statement of Cash Flows for the period January 1, 1995
to June 2, 1995...............................................................
Notes to Consolidated Financial Statements....................................
Schedule III - Real Estate and Accumulated Depreciation.......................
F-1
SELECTED FINANCIAL DATA
(in thousands except unit and property data)
Reckson Operating Partnership, L.P. Reckson Group
----------------------------------------------------------------- ------------------------
For the nine months ended For the year ended For the year ended
-------------------------- ------------------- -----------------------
for the
for the Period
Period January 1,
June 3, 1995 1995 to
September 30, September 30, December 31, December 31, to December June 2,
1998 1997 1997 1996 31, 1995(1) 1995(1) 1994 1993
-------- ------------- ------------ ------------ ------------ ------------ -------- --------
OPERATING DATA:
Revenues.................. $192,924 $108,186 $153,348 $96,030 $38,455 $20,889 $56,931 $60,347
Total expenses........... 145,525 75,830 107,639 70,935 27,892 20,695 55,685 67,580
Income (loss) before
distribution to preferred
unit holders, minority
interests and
extraordinary items 47,399 32,356 45,709 25,095 10,563 194 1,246 (7,233)
Minority interests........ 1,938 724 920 915 246 --- --- ---
Extraordinary items - gain
(loss) (1,993) (2,808) (2,808) (1,259) (6,022) --- 4,434 41,190
Preferred distributions... 9,202 --- --- --- --- --- --- ---
Net income available to
common unit holders..... 34,266 28,824 41,981 22,921 4,295 194 5,680 33,957
PER UNIT DATA: (2)
Net income per common unit:
General Partner......... $ .73 $ .74 $ 1.06 $ .87 $ .22
Limited Partners'....... $ .73 $ .75 $ 1.03 $ .86 $ .19
Weighted average common units
outstanding
General Partner........39,284,000 31,810,000 32,727,000 19,928,000 14,678,000
Limited Partners'...... 7,715,000 6,970,000 7,016,000 6,503,000 5,648,000
BALANCE SHEET DATA:
(PERIOD END)
Real estate, before accumulated
depreciation............$1,700,264 $ 793,762 $1,015,282 $519,504 $290,712 --- $162,192 ---
Total assets.............. 1,772,237 852,195 1,113,105 543,391 242,540 --- 132,035 ---
Mortgage notes payable.... 239,989 180,593 180,023 161,513 98,126 --- 180,286 ---
Credit facility........... 443,250 33,000 210,250 108,500 40,000 --- --- ---
Senior unsecured notes.... 150,000 150,000 150,000 --- --- --- --- ---
Market value of equity (3) 1,395,584 1,104,059 1,141,592 653,606 303,943 --- --- ---
Total market capitalization
including debt (3 and 4).2,209,980 1,454,573 1,668,800 921,423 426,798 --- --- ---
OTHER DATA:
Funds from operations (5).. $72,030 $49,388 $69,619 $40,938 $17,190 --- --- ---
Total square feet (at end of
period)................ 20,661 11,662 13,645 8,800 5,430 4,529 4,529 4,529
Number of properties (at
end of period)......... 202 136 155 110 81 72 72 72
(1) Represents certain financial information on a consolidated historical
basis for Reckson Operating Partnership, L. P., and on a combined
historical basis for the Reckson Group.
(2) Based on the weighted average units outstanding for the period then
ended.
(3) Based on the market value of the Operating Partnership's common units,
the stated value of the Operating Partnership's preferred units and
the number of units outstanding at the end of the period.
(4) Debt amount is net of minority partners' proportionate share of Omni
debt plus the Company's share of joint venture debt.
(5) See "Management's Discussion and Analysis" for a discussion of funds
from operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the
accompanying Consolidated Financial Statements of Reckson Operating Partnership,
L. P. (the "Operating Partnership") and the combined financial statements of the
Reckson Group and related notes.
The Operating Partnership considers certain statements set forth herein
to be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, with respect to the Operating Partnership's
expectations for future periods. Certain forward-looking statements, including,
without limitation, statements relating to the timing and success of
acquisitions, the financing of the Operating Partnership's operations, the
ability to lease vacant space and the ability to renew of relet space under
expiring leases, involve certain risks and uncertainties. Although the Operating
Partnership believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, the actual results may differ
materially from those set forth in the forward-looking statements and the
Operating Partnership can give no assurance that its expectation will be
achieved. Certain factors that might cause the results of the Operating
Partnership to differ materially from those indicated by such forward-looking
statements include, among other factors, general economic conditions, general
real estate industry risks, tenant default and bankruptcies, loss of major
tenants, the impact of competition and acquisition, redevelopment and
development risks, the ability to finance business opportunities and local real
estate risks such as an oversupply of space or a reduction in demand for real
estate in the Operating Partnership's real estate markets. Consequently, such
forward-looking statements should be regarded solely as reflections of the
Operating Partnership's current operating and development plans and estimates.
These plans and estimates are subject to revisions from time to time as
additional information becomes available, and actual results may differ from
those indicated in the referenced statements.
Overview and Background
The Reckson Group (the" Predecessor") to Reckson Associates Realty
Corp. (the "Company"), was engaged in the ownership, management, operation,
leasing and development of commercial real estate properties, principally office
and industrial buildings, and also owned certain undeveloped land located
primarily on Long Island, New York. The Operating Partnership commenced
operations on June 2, 1995 and is the successor to the operations of the Reckson
Group. The sole general partner in the Operating Partnership, the Company is a
self administered and self managed Real Estate Investment Trust ("REIT"). During
June 1995 the Company contributed approximately $162 million in cash to the
Operating Partnership in exchange for an approximate 73% general partnership
interest. As a result, the Operating Partnership owned or had an interest in 72
properties (including one joint venture property).
At September 30, 1998, the Operating Partnership's portfolio of real
estate properties included 73 office buildings containing approximately 10.1
million square feet, 127 industrial buildings containing approximately 10.6
million square feet and two retail properties containing approximately 20,000
square feet.
Subsequent to June 2, 1995, the Operating Partnership has acquired or
contracted to acquire approximately $ 1.3 billion of Class A suburban office and
industrial properties encompassing approximately 12.8 million square feet
located in the New York City Tri-State Area of Long Island, Westchester,
Southern Connecticut and Northern New Jersey. In that regard, the Operating
Partnership has acquired 13 office Properties and 32 industrial Properties
encompassing approximately 2.1 million and 2.5 million square feet,
respectively, located on Long Island for an aggregate purchase price of
approximately $300 million. In February 1996, the Operating Partnership
established its Westchester Division with the acquisition of an eight building
935,000 square foot Class A office portfolio and associated management and
construction operations for an aggregate purchase price of approximately $79
million. Since its initial investment in Westchester the Operating Partnership
has acquired 17 office properties encompassing approximately 2.4 million square
feet and three industrial properties encompassing approximately 163,000 square
feet for an aggregate purchase price of approximately $305 million. In October
1996, the Operating Partnership established its Southern Connecticut Division
with the purchase of Landmark Square, a six building office complex encompassing
approximately 800,000 square feet located in Stamford, Connecticut for an
aggregate purchase price of approximately $77 million. Since its initial
investment in Southern Connecticut the Company has acquired two office
properties and one industrial property encompassing approximately 317,000 and
452,414 square feet, respectively, for a purchase price of approximately $89
million. In May 1997, the Operating Partnership acquired five Class A suburban
office properties encompassing approximately 496,000 square feet located in
Northern New Jersey for an aggregate purchase price of approximately $56.9
million and, in connection with this acquisition, established its Northern New
Jersey Division. Since its initial investment in Northern New Jersey the
Operating Partnership has acquired 12 office properties encompassing
approximately 1.5 million square feet and seven industrial properties
encompassing approximately 1.1 million square feet for an aggregate purchase
price of approximately $232 million. Additionally, the Operating Partnership has
invested approximately $12 million for approximately 81 acres of land located in
Long Island, approximately 39 acres of land located in Westchester and 668 acres
of land located in New Jersey which allows for approximately 7.7 million square
feet of future development opportunities. In addition, the Operating Partnership
has invested approximately $47.3 million in certain mortgage indebtedness
encumbering four Class A office properties on Long Island, encompassing
approximately 577,000 square feet, a 400 acre parcel of land located in New
Jersey and in a note receivable secured by a partnership interest in Omni
Partners, L. P., owner of a 575,000 square foot, class A office property located
in Uniondale, New York. In October 1997, the Operating Partnership entered into
an agreement to invest up to $150 million in the Morris Companies, a New Jersey
developer and owner of "Big Box" warehouse facilities. The Morris Companies'
properties include 23 industrial buildings encompassing approximately 4.0
million square feet. In connection with the transaction the Morris Companies
contributed 100% of their interests in certain industrial properties to Reckson
Morris Operating Partnership, L. P. ("RMI") in exchange for operating
partnership units in RMI. As of September 30, 1998, the Operating Partnership
has invested approximately $93.4 million for an approximate 76.4% controlling
interest in RMI.
During 1997, the Company formed Reckson Service Industries, Inc.
("RSI") and Reckson Strategic Venture Partners, LLC ("RSVP"). The Operating
Partnership owned a 95% non voting common stock interest in RSI through June 10,
1998. On June 11, 1998, the Operating Partnership distributed its 95% common
stock interest in RSI of approximately $3 million to its partners. Additionally,
during June 1998, the Operating Partnership established a credit facility with
RSI (the"RSI Facility") in the amount of $100 million for RSI's service sector
operations and other general corporate purposes. In addition, the Operating
Partnership has approved the funding of investments of up to $100 million with
or in RSVP (the "RSVP Commitment"), through RSVP-controlled joint venture
REIT-qualified investments or advances made to RSI under terms similar to the
RSI Facility. As of September 30, 1998, approximately $16.7 million had been
invested through the RSVP Commitment, of which $10.1 million represents RSVP
controlled joint venture investments and $6.6 million represents advances to RSI
under the RSVP Commitment. Such amounts have been included in investment in real
estate joint ventures and investments in and advances to affiliates,
respectively, on the Operating Partnership's balance sheet. RSI serves as the
managing member of RSVP. RSI invests in operating companies that generally
provide commercial services to properties owned by the Operating Partnership and
its tenants and third parties. RSVP was formed to provide the Operating
Partnership with a research and development vehicle to invest in alternative
real estate sectors. RSVP invests primarily in real estate and real estate
related operating companies generally outside of the Operating Partnership's
core office and industrial focus. RSVP's strategy is to identify and acquire
interests in established entrepreneurial enterprises with experienced management
teams in market sectors which are in the early stages of their growth cycle or
offer unique circumstances for attractive investments as well as a platform for
future growth.
The Operating Partnership and RSI have entered into an intercompany
agreement (the "Reckson Intercompany Agreement") to formalize their relationship
and to limit conflicts of interest. Under the Reckson Intercompany Agreement,
RSI granted the Operating Partnership a right of first opportunity to make any
REIT -qualified investment that becomes available to RSI. In addition, if a
REIT-qualified investment opportunity becomes available to an affiliate of RSI,
including RSVP, the Reckson Intercompany Agreement requires such affiliate to
allow the Operating Partnership to participate in such opportunity to the extent
of RSI's interest.
Under the Reckson Intercompany Agreement, the Operating Partnership
granted RSI a right of first opportunity to provide commercial services to the
Operating Partnership and its tenants. RSI will provide services to the
Operating Partnership at rates and on terms as attractive as either the best
available for comparable services in the market or those offered by RSI to third
parties. In addition, the Operating Partnership will give RSI access to its
tenants with respect to commercial services that may be provided to such tenants
and, under the Reckson Intercompany Agreement, subject to certain conditions,
the Operating Partnership granted RSI a right of first refusal to become the
lessee of any real property acquired by the Operating Partnership if the
Operating Partnership determines that, consistent with the Company's status as a
REIT, it is required to enter into a "master" lease agreement.
On December 8, 1998, the Company, the Operating Partnership,
Metropolitan Partners, LLC, a Delaware limited liability company
("Metropolitan") and Tower Realty Trust Inc., a Maryland corporation ("Tower"),
executed a merger agreement pursuant to which Tower will be merged into
Metropolitan, with Metropolitan surviving the merger. Concurrently with the
merger, the Tower operating partnership will be merged with and into a
subsidiary of Metropolitan. The consideration to be issued in the mergers will
be comprised of (i) 25% cash and (ii) 75% of shares of the Company's Class B
exchangeable common stock, or in certain circumstances described below, shares
of such Class B common stock and unsecured notes of the Operating Partnership.
The Operating Partnership controls Metropolitan and owns 100% of the common
equity interests, while Crescent Real Estate Equities Company, a Texas real
estate investment trust ("Crescent"), owns a preferred equity interest in
Metropolitan. The merger agreement replaces a previously existing merger
agreement among Reckson, Crescent, Metropolitan and Tower relating to the
acquisition by Metropolitan, which at that time was a 50/50 joint venture
between the Operating Partnership and Crescent.
Pursuant to the terms of the merger agreement, holders of shares of
outstanding common stock of Tower, and outstanding units of limited partnership
interest of the Tower operating partnership will have the option to elect to
receive cash or shares of Class B common stock, subject to proration. Under the
terms of the transaction, Metropolitan will effectively pay for each share of
Tower common stock and each unit of limited partnership interest of the Tower
operating partnership: (i) $5.75 (in cash) and (ii) 0.6273 of a share of Class B
common stock. The shares of Class B common stock are entitled to receive an
initial annual dividend of $2.24 per share, which is subject to adjustment
annually. The Company may redeem any or all of the Class B common stock in
exchange for an equal number of shares of the Company's common stock at any time
following the four year, six month anniversary of the issuance of Class B common
stock. It is anticipated that the Company's Board of Directors will recommend to
the Company's stockholders the approval of a proposal to issue a number of
shares of Class B Common Stock equal to 75% of the sum of (i) the number of
outstanding shares of the Tower common stock and (ii) the number of units of
limited partnership interest of the Tower operating partnership, in each case,
at the effective time of the mergers. If the Company's stockholders do not
approve the issuance of the Class B common stock as proposed, the merger
agreement provides that approximately one-third of the consideration that was to
be paid in the form of Class B common stock will be replaced by senior unsecured
notes of the Operating Partnership, which notes will bear interest at the rate
of 7% per annum and have a term of ten years. In addition, if the Company's
stockholders do not approve the issuance of Class B common stock as proposed and
the Company's Board of Directors does not recommend, or withdraws or amends or
modifies in any material respect its recommendation for, approval of such
proposal, then the total principal amount of notes to be issued and distributed
in the merger will be increased by $15 million.
Simultaneously with the execution of the merger agreement, Metropolitan
purchased from Tower approximately 2.2 million shares of Series A convertible
preferred stock of Tower, for an aggregate purchase price of $40 million. If the
merger agreement is not consummated and a court of competent jurisdiction issues
a final, non-appealable judgment determining that the Company and Metropolitan
are obligated to consummate the merger but have failed to do so, or determining
that the Company and Metropolitan failed to use their reasonable best efforts to
take all actions necessary to cause certain closing conditions to be satisfied,
Metropolitan is obligated to return to Tower $30 million of such Series A
preferred stock.
In connection with the new merger agreement, Tower, the Company,
Crescent and Metropolitan have exchanged mutual releases for any claims relating
to the previous merger agreement.
On August 27, 1998 the Operating Partnership announced the formation of
a joint venture with RSVP and the Dominion Group, an Oklahoma-based,
privately-owned group of companies that focuses on the development, acquisition
and ownership of government occupied office buildings and correctional
facilities. The new venture, Dominion Properties LLC (the "Venture"), is owned
by Dominion Venture Group LLC, and by a subsidiary of the Operating Partnership.
The Venture will engage primarily in acquiring, developing and/or owning
government-occupied office buildings and privately operated correctional
facilities. Under the Venture's operating agreement, RSVP is to invest up to
$100 million, some of which may be invested by the Operating Partnership ( the
"RSVP Capital"). The initial contribution of RSVP Capital was approximately $39
million of which approximately $10.1 million was invested by a subsidiary of the
Operating Partnership. The Operating Partnership's subsidiary funded its capital
contribution through the RSVP Commitment. In addition, the Operating Partnership
advanced approximately $2.9 million to RSI through the RSVP Commitment for its
investment in the joint venture.
The market capitalization of the Operating Partnership at September 30,
1998 was approximately $2.2 billion. The Operating Partnership's market
capitalization is calculated based on the value of the Operating Partnership's
common units (which, for this purpose, is assumed to be the same per unit as the
value of a share of the Company's common stock) and the stated values of the
Operating Partnership's preferred units and the $814.4 million (including its
share of joint venture debt and net of minority partners' interest) of debt
outstanding at September 30, 1998. As a result, the Operating Partnership's
total debt to total market capitalization ratio at September 30, 1998 equaled
approximately 36.9%.
Results of Operations
Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30,
1997:
The Operating Partnership's total revenues increased by $84.7 million
or 78.3% for the nine months ended September 30, 1998 as compared to the 1997
period. The growth in total revenues is substantially attributable to the
Operating Partnership's acquisition of 92 properties comprising approximately
11.9 million square feet. Property operating revenues, which include base rents
and tenant escalations and reimbursements ("Property Operating Revenues")
increased by $81.7 million or 80.2% for the nine months ended September 30, 1998
as compared to the 1997 period. The 1998 increase in Property Operating Revenues
is comprised of $1.9 million attributable to increases in rental rates and
changes in occupancies and $79.8 million attributable to acquisitions of
properties. The remaining balance of the increase in total revenues in 1998 is
primarily attributable to interest income on the Operating Partnership's
investments in mortgage notes and notes receivable. The Operating Partnership's
base rent was increased by the impact of the straight-line rent adjustment by
$5.7 million for the nine months ended September 30, 1998 as compared to $3.5
million for the 1997 period.
Property operating expenses, real estate taxes and ground rents
("Property Expenses") increased by $26.1 million for the nine months ended
September 30, 1998 as compared to the 1997 period. These increases are primarily
due to the acquisition of properties. Gross operating margins (defined as
Property Operating Revenues less Property Expenses, taken as a percentage of
Property Operating Revenues) for 1998 and 1997 were 66.0% and 64.3%,
respectively. The increase in gross operating margins reflects increases
realized in rental rates, the Operating Partnership's ability to realize certain
operating efficiencies as a result of operating a larger portfolio of properties
with a concentration of properties in office and industrial parks or in its
established sub-markets and increased ownership of net leased properties
including the impact of the RMI properties.
Marketing, general and administrative expenses increased by $4.5
million for the nine months ended September 30, 1998 as compared to the 1997
period. The increase is due to the increased costs of managing the acquisition
properties, the costs of opening the Operating Partnership's Northern New Jersey
division, costs associated with the management of the RMI assets, and the
increase in corporate management and administrative costs associated with the
growth of the Operating Partnership. Marketing, general and administrative
expenses as a percentage of total revenues were 5.4% for the nine months ended
September 30, 1998 as compared to 5.6% for the 1997 period.
Interest expense increased by $ 20.1 million for the nine months ended
September 30, 1998 as compared to the 1997 period. The increase is attributable
to an increase in mortgage debt including the refinancing of the Omni in the
amount of $58 million in August 1997, the assumption of approximately $14.8
million of mortgage indebtedness in connection with the Operating Partnership's
investment in RMI, the assumption of approximately $45.1 million of mortgage
indebtedness in connection with the Cappelli acquisition, increased cost
attributable to an increased average balance on the Operating Partnership's
credit facilities and interest on the Operating partnership's $150 million of
senior unsecured notes (the "Senior Unsecured Notes"). The weighted average
balance outstanding on the Operating Partnership's credit facilities was $348.0
million for the nine months ended September 30, 1998 as compared to $102.2
million for the 1997 period.
An extraordinary item resulted in a $2.0 million loss for the nine
months ended September 30, 1998. The extraordinary item was attributable to the
write off of certain deferred loan costs incurred in connection with the
Operating Partnership's secured credit facilities which were substantially
modified and restated in July 1998.
Comparisons for the Years Ended December 31, 1997 to 1996 and December 31, 1996
to 1995:
For discussion purposes, the results of operations for the year ended
December 31, 1995 combine the operating results of the Predecessor (excluding
results of properties not transferred to the Operating Partnership) for the
period January 1, 1995 to June 2, 1995.
The Operating Partnership's total revenues increased by $57.3 million
or 60% from 1996 to 1997 and $36.7 million or 62% from 1995 to 1996. The growth
in total revenues is substantially attributable to the Operating Partnership's
acquisition of 46 properties comprising approximately 4.9 million square feet in
1997 and 29 properties comprising approximately 3.3 million square feet in 1996
and nine properties comprising approximately 900,000 square feet in 1995.
Property Operating Revenues, increased by $51 million or 55% from 1996 to 1997
and by $35.6 million or 62% from 1995 to 1996. The 1997 increase in Property
Operating Revenues is comprised of $2.1 million attributable to increases in
rental rates and changes in occupancies and $48.9 million attributable to
acquisitions of properties. The 1996 increase in Property Operating Revenues is
comprised of $6.6 million attributable to increases in rental rates and changes
in occupancies and $29 million attributable to acquisitions of properties. The
remaining balance of the increase in total revenues in 1997 is primarily
attributable to interest income on the Operating Partnership's investments in
mortgage notes and notes receivable. The increase from 1996 to 1997 was offset
by a decrease in the equity in earnings of service companies as a result of the
management and construction companies focusing most of their resources on the
Operating Partnership's core portfolio and redevelopment opportunities rather
than third party services. The Operating Partnership base rent was increased by
the impact of the straight-line rent adjustment by $4.5 million in 1997, $3.8
million in 1996 and $2.8 million in 1995.
Property Expenses increased by $16.8 million from 1996 to 1997 and by
$12.9 million from 1995 to 1996. These increases are primarily due to the
acquisition of properties. Gross operating margins for 1997, 1996 and 1995 were
64.7%, 63.4% and 63.2%, respectively. The increases in gross operating margins
reflects increases realized in rental rates, the Operating Partnership's ability
to realize certain operating efficiencies as a result of operating a larger
portfolio of properties with concentrations of properties in office and
industrial parks or in its established sub-markets, and to a lesser extent
increased ownership of net leased properties.
Marketing, general and administrative expenses were $8.0 million in
1997, $5.9 million in 1996 and $3.7 million in 1995. The increase in marketing,
general and administrative expenses is due to the increased costs of managing
the acquisition properties, the cost of opening and maintaining the Company's
Westchester, Southern Connecticut and Northern New Jersey divisions and the
increase in corporate management and administrative costs associated with the
growth of the Company. Marketing, general and administrative expenses as a
percentage of total revenues were 5.2% in 1997, 6.1% in 1996 and 6.3% in 1995.
Interest expense was $21.6 million in 1997, $13.3 million in 1996 and
$12.9 million in 1995. The increase of $8.3 million from 1996 to 1997 is
attributable to an increase in mortgage debt including a $50 million mortgage
note incurred in connection with the acquisition of Landmark Square in October
1996, the refinancing of Omni in the amount of $58 million in August 1997,
increased interest cost attributable to an increased average balance on the
Operating Partnership's credit facilities and interest on the Operating
Partnership's $150 million of senior unsecured notes. The weighted average
balance outstanding on the Operating Partnership's credit facilities was $103.2
million for 1997, $71.2 million for 1996 and $24.8 million for the period from
June 3, 1995 to December 31, 1995.
Included in amortization expense is amortized finance costs of $.80
million in 1997, $.53 million in 1996 and $.52 million for the period June 3,
1995 to December 31, 1995. The increase of $.27 million from 1996 to 1997 was
the result of the amortization of financing costs associated with the Unsecured
Credit Facility, the Landmark Square mortgage, the Omni refinanced mortgage and
the Senior Unsecured Notes.
Extraordinary items resulted in a $2.8 million loss in 1997, a $1.3
million loss in 1996 and a $6.0 million loss for the period June 3, 1995 to
December 31, 1995. In 1997, the extraordinary items were attributable to the
write off of certain deferred loan costs incurred in connection with the
Operating Partnership's secured credit facility which was terminated in April
1997. In 1996, the extraordinary item was attributable to the write-off of
certain deferred loan costs incurred in connection with the secured credit
facility which was substantially modified and restated in February 1996.
Liquidity and Capital Resources
Summary of Cash Flows
Net cash provided by operating activities totaled $73.4 million in
1997, $40.9 million in 1996 and $19.0 million in 1995. Increases for each year
were primarily attributable to the growth in cash flow provided by the
acquisition of properties and to a lesser extent from interest income from
mortgage notes and notes receivable.
Net cash used by investing activities totaled $547 million in 1997,
$273.7 million in 1996 and $79.0 million in 1995. Cash used in investing
activities related primarily to investments in real estate properties including
development costs and investments in mortgage notes and notes receivable.
Net cash provided by financing activities totaled $482.9 million in
1997, $238.3 million in 1996 and $62.7 million in 1995. Cash provided by
financing activities during 1997 and 1996 was primarily attributable to proceeds
from general partner contributions and draws on the Company's credit facilities
and additionally, in 1997, proceeds from the issuance of the Senior Unsecured
Notes.
Investing Activities
During 1997, the Operating Partnership acquired (i) on Long Island,
five office properties encompassing an aggregate of approximately 881,000 square
feet for approximately $87.5 million and 15 industrial properties encompassing
approximately 968,000 square feet for approximately $43.5 million; (ii) in
Westchester, eight office properties encompassing approximately 830,000 square
feet for approximately $109.4 million and three industrial properties
encompassing approximately 163,000 square feet for approximately $8.0 million;
(iii) in Connecticut, one industrial property encompassing 452,000 square feet
for approximately $27.0 million and (iv) in Northern New Jersey, five Class A
office properties including Executive Hill Office Park encompassing
approximately 496,000 square feet for approximately $56.9 million. Additionally,
in New Jersey the Operating Partnership acquired eight office properties
encompassing approximately 1.5 million square feet for $153 million and one
industrial property encompassing approximately 128,000 square feet for $2.8
million. During 1997, the Operating Partnership invested $29 million in mortgage
notes receivable encumbering one Class A office property, one industrial
property and a 400 acre parcel of land. In addition, on March 13, 1997, the
Operating Partnership loaned $17 million to its minority partner in Omni, its
flagship Long Island office property, and effectively increased its economic
interest in the property owning partnership.
Financing Activities
During June 1995, the Company contributed approximately $162 million in
cash to the Operating Partnership in exchange for 7,438,000 units representing
an approximate 73% general partnership interest. During 1996 and 1997 the
Company contributed approximately $437 million in cash to the Operating
Partnership in exchange for 22,421,200 additional units. Proceeds from the
contributions were primarily used to repay borrowings under the credit
facilities and to fund the purchase of commercial real estate properties.
During the nine months ended September 30, 1998, the Company
contributed approximately $44.4 million in cash to the Operating Partnership in
exchange for 1,884,896 units. Proceeds from the contributions were used to repay
borrowings under the credit facilities.
Additionally, during April 1998, the Company contributed approximately
$221 million to the Operating Partnership in exchange for 9,200,000 Series A
preferred units. The Series A preferred units have a liquidation preference of
$25 per unit, a distribution rate of 7.625 % and are convertible to the
Operating Partnership's common units at a conversion rate of .8769 common units
for each preferred unit. Net proceeds from the contribution were used to repay
borrowings under credit facilities.
On January 7, 1997, the Operating Partnership issued 101,902 (pre
split) (approximately $4.3 million) units in connection with the acquisition of
a 147,281 square foot office property located in Farmingdale, New York.
During August 1997, the Operating Partnership refinanced approximately
$43 million of mortgage debt on its Omni office property with a $58 million
fixed rate mortgage loan. The loan which matures on September 1, 2007 has a
fixed rate of 7.72%.
On August 28, 1997, the Operating Partnership sold $150 million of 7.2%
Senior Unsecured Notes due August 2007. The net proceeds of the Senior Unsecured
Notes were used to repay borrowings under the unsecured credit facilities and
for the acquisitions of properties.
During 1997, the Operating Partnership paid distributions of $1.54 per
unit (representing distributions for five quarters).
On January 6, 1998, the Operating Partnership issued 532,011($12.5
million) units in connection with the acquisition of one office property and one
industrial property.
On April 21, 1998, the Operating Partnership issued 25,000 Series B
preferred units at a stated value of $1,000 per unit and 11,518 Series C
preferred units at a stated value of $1,000 per unit in connection with the
acquisition of the Cappelli Portfolio. The Series B preferred units have a
current distribution rate of 6.25% and are convertible to common units at a
conversion price of approximately $32.51 for each preferred unit. The Series C
preferred units have a current distribution rate of 6.25% and are convertible to
common units at a conversion price of approximately $29.39 for each preferred
unit.
Additionally, on April 21, 1998, in connection with the acquisition of
155 Passaic Avenue in Fairfield, New Jersey, the Operating Partnership issued
1,979 (approximately $50,000) units.
On July 2, 1998, the Operating Partnership issued 6,000 Series D
preferred units at a stated value of $1,000 per unit in connection with the
acquisition of the remaining 50% interest in 360 Hamilton Avenue located in
White Plains, New York. The Series D preferred units have a current distribution
rate of 6.25% and are convertible to common units at a conversion price of
approximately $29.12 for each preferred unit
On August 13, 1998, the Operating Partnership issued 50,072
(approximately $1.2 million) units in connection with the acquisition of two
office properties located in Parsippany, New Jersey.
As of September 30, 1998, the Operating Partnership had a three year
$500 million unsecured revolving credit facility (the "Credit Facility") with
Chase Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of
the credit facility bank group. Interest rates on borrowings under the Credit
Facility are priced off of LIBOR plus a sliding scale ranging from 112.5 basis
points to 137.5 basis points based on the leverage ratio of the Operating
Partnership. Upon the Operating Partnership receiving an investment grade rating
on its senior unsecured debt by two rating agencies, the pricing is adjusted
based off of LIBOR plus a scale ranging from 65 basis points to 90 basis points
depending upon the rating. The Credit Facility replaced the Operating
Partnership's existing $250 million unsecured credit facility and $200 million
unsecured bridge facility. As a result, certain deferred loan costs incurred in
connection with those facilities were written off. Such amount has been
reflected as an extraordinary loss on the Operating Partnership's statement of
operations. The Operating Partnership utilizes the Credit Facility primarily to
finance the acquisitions of properties and other real estate investments, fund
its development activities and for working capital purposes. At September 30,
1998, the Operating Partnership had availability under the Credit Facility to
borrow an additional $49.1 million (net of $7.7 million of outstanding undrawn
letters of credit).
The Operating Partnership's indebtedness at September 30, 1998 totaled
$814.4 million (including its share of joint venture debt and net of the
minority partners' interests) and was comprised of $442.2 million outstanding
under the Credit Facility, $150 million of Senior Unsecured Notes and
approximately $222.2 million of mortgage indebtedness. Based on the Operating
Partnership's total market capitalization of approximately $2.2 billion at
September 30, 1998, (calculated based on the value of the Operating
Partnership's common units(which, for this purpose, is assumed to be the same
per unit as the value of a share of the Company's common stock), the stated
value of the Operating Partnership's preferred units), the Operating
partnership's debt represented approximately 36.9% of its total market
capitalization.
Historically, rental revenue has been the principal source of funds to
pay operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures of the Operating Partnership. In addition,
construction, management, maintenance, leasing and property management fees have
provided sources of cash flow. The Operating Partnership expects to meet its
short-term liquidity requirements generally through its net cash provided by
operating activities along with the Credit Facility previously discussed. The
Operating Partnership expects to meet certain of its financing requirements
through long-term secured and unsecured borrowings and the issuance of debt
securities and additional equity securities of the Operating Partnership. The
Operating Partnership will refinance existing mortgage indebtedness or
indebtedness under the Credit Facility at maturity or retire such debt through
the issuance of additional debt securities or additional equity securities. The
Operating Partnership anticipates that the current balance of cash and cash
equivalents and cash flows from operating activities, together with cash
available from borrowings and equity offerings, will be adequate to meet the
capital and liquidity requirements of the Operating Partnership in both the
short- and long-term.
At September 30, 1998 the Operating Partnership had four office
buildings totaling approximately 700,000 square feet and one industrial building
totaling approximately 130,000 square feet under construction whereby the
Operating Partnership anticipates to incur development costs of approximately
$84.3 million.
Inflation
Certain office leases provide for fixed base rent increases or indexed
escalations. In addition, certain office leases provide for separate escalations
of real estate taxes and electric costs over a base amount. The industrial
leases also generally provide for fixed base rent increases, direct pass through
of certain operating expenses and separate real estate tax escalation over a
base amount. The Operating Partnership believes that inflationary increases in
expenses will generally be offset by contractual rent increases and expense
escalations described above.
The Credit Facility bears interest at a variable rate, which will be
influenced by changes in short-term interest rates, and is sensitive to
inflation.
Impact of Year 2000
Some of the Operating Partnership's older computer programs were
written using two digits rather than four to define the applicable year. As a
result, those computer programs have time-sensitive software that recognizes a
date using "00" as the year 1900 rather than the year 2000. This could cause a
system failure or miscalculation causing disruptions of operations, including,
among other things, a temporary inability to process transactions, or engage in
similar normal business activities.
The Operating Partnership has completed an assessment to modify or
replace portions of its software so that its computer systems will function
properly with respect to dates in the year 2000 and thereafter. Currently, the
entire property management system is year 2000 compliant and has been thoroughly
tested. Since the Operating Partnership's accounting software is maintained and
supported by an unaffiliated third party, the total year 2000 project cost as it
relates to the accounting software is estimated to be minimal.
The year 2000 project is estimated to be completed not later than July
31, 1999, which is prior to any anticipated impact on its operating systems.
Additionally, the Operating Partnership has received assurances from its
contractors that all of the Operating Partnership's building management and
mechanical systems are currently year 2000 compliant or will be made compliant
prior to any impact on those systems. However, the Operating Partnership cannot
guarantee that all contractors will comply with their assurances and therefore,
the Operating Partnership may not be able to determine year 2000 compliance of
those contractors. At that time, the Operating Partnership will determine the
extent to which the Operating Partnership will be able to replace non compliant
contractors. The Operating Partnership believes that with modifications to
existing software and conversions to new software, the year 2000 issue will not
pose significant operational problems for its computer systems. However, if such
modifications and conversions are not made, or are not completed timely, the
year 2000 issue could have a material impact on the operations of the Operating
Partnership.
To date, the Operating Partnership has expended approximately $250,000
and expects to expend an additional one million dollars in connection with
upgrading building management, mechanical and computer systems. The costs of the
project and the date on which the Operating Partnership believes it will
complete the year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources and other factors. However,
there can be no guarantee that these estimates will be achieved and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and costs of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
In a "worst case scenario", the Operating Partnership believes that
failure of the building management and mechanical systems to operate properly
would result in inconveniences to the building tenants which might include no
elevator service, lighting or entry and egress. In this case, the management of
the Operating Partnership would manually override such systems in order for
normal operations to resume. Additionally, in a "worst case scenario" of the
failure of the third party to deliver, on a timely basis, the necessary upgrades
to the accounting software, the Operating Partnership would be required to
process transactions, such as the issuance of disbursements, manually until an
alternative system was implemented.
If the Operating Partnership is not successful in implementing their
year 2000 compliance plan, the Operating Partnership may suffer a material
adverse impact on their consolidated results of operations and financial
condition. Because of the importance of addressing the year 2000 issue, the
Operating Partnership expects to develop contingency plans if they determine
that the compliance plans will not be implemented by July 31, 1999.
Funds From Operations
Management believes that funds from operations ("FFO") is an
appropriate measure of performance of an equity REIT. FFO is defined by the
National Association of Real Estate Investment Trusts (NAREIT) as net income or
loss, excluding gains or losses from debt restructurings and sales of
properties, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. FFO does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles and is not indicative of cash available to fund cash
needs. FFO should not be considered as an alternative to net income as an
indicator of the Operating Partnership's operating performance or as an
alternative to cash flow as a measure of liquidity. (See Selected Financial
Data). In March 1995, NAREIT issued a "White Paper" analysis to address certain
interpretive issues under its definition of FFO. The White Paper provides that
amortization of deferred financing costs and depreciation of non-rental real
estate assets are no longer to be added back to net income to arrive at FFO.
Since all companies and analysts do not calculate FFO in a similar
fashion, the Operating Partnership's calculation of FFO presented herein may not
be comparable to similarly titled measures as reported by other companies.
The following table presents the Operating Partnership's FFO calculation (in
thousands):
Nine Months Ended
-----------------------
Year Ended
--------------- June 3,
1995 to
September 30, 1998 September 30, 1997 December 31, December 31, December 31,
1997 1996 1995
------------- ------------- ------------- ------------ ------------
(unaudited) (unaudited)
Income before extraordinary
items.................... $ 36,259 $31,632 $44,789 $24,180 $10,317
Less:
Extraordinary loss....... 1,993 2,808 2,808 1,259 6,022
-------- ------- ------- -------- --------
Net Income.................. 34,266 28,824 41,981 22,921 4,295
Adjustment for Funds From
Operations:
Add:
Depreciation and
Amortization........... 36,822 18,755 26,834 17,429 7,233
Minority interests in
consolidated
partnerships........... 1,938 724 920 915 246
Extraordinary loss....... 1,993 2,808 2,808 1,259 6,022
Less:
Gain on sale of property. --- --- 672 --- ---
Amount distributed to minority
partners in consolidated
partnerships............ 2,989 1,723 2,252 1,586 606
-------- ------ ------- ------- -------
Funds From Operations (FFO).. $ 72,030 $ 49,388 $69,619 $40,938 $17,190
======== ========= ======= ======= ----- =======
Weighted average units
outstanding ............ 46,999 38,780 39,743 26,431 20,326
======== ========= ======= ======= =======
REPORT OF INDEPENDENT AUDITORS
To the Partners
Reckson Operating Partnership, L. P.
We have audited the accompanying consolidated balance sheets of Reckson
Operating Partnership, L. P. (the "Operating Partnership") as of December 31,
1997 and 1996, and the related consolidated statements of income, partners'
capital, and cash flows for the years then ended and for the period from June 3,
1995 (commencement of operations) to December 31, 1995 and the related combined
statement of income, owners' (deficit) and cash flows for the period January 1,
1995 to June 2, 1995 of the Reckson Group. We have also audited the financial
statement schedule listed in the Index. These financial statements and financial
statement schedule are the responsibility of the Operating Partnership's
management. Our responsibility is to express an opinion on these financial
statements and 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 consolidated financial position of Reckson
Operating Partnership, L. P. at December 31, 1997 and 1996, and the consolidated
results of operations and cash flows for the years then ended and for the period
June 3, 1995 (commencement of operations) to December 31, 1995 and the combined
results of operations and cash flows for the period January 1, 1995 to June 2,
1995 of the Reckson Group in conformity with generally accepted accounting
principles. Also, 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 set forth
therein.
ERNST & YOUNG LLP
New York, New York
February 13, 1998,
except for Note 13 as
to which the date is December 8, 1998
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
September 30, December 31,
------------ -------------------------------
1998 1997 1996
------------ -------------- ----------------
(unaudited)
ASSETS
Commercial real estate properties, at cost- (Notes 2, 3, 5, 7 and 8 )
Land......................................................................... $ 211,520 $ 138,526 $ 45,259
Buildings and improvements................................................... 1,350,773 818,229 457,403
Developments in progress:
Land......................................................................... 68,165 29,309 5,637
Development costs............................................................ 64,191 25,164 8,469
Furniture, fixtures and equipment............................................... 5,615 4,054 2,736
---------- --------- --------
1,700,264 1,015,282 519,504
Less accumulated depreciation............................................. (145,632) (111,068) (88,602)
---------- --------- --------
1,554,632 904,214 430,902
Investments in real estate joint ventures....................................... 15,169 7,223 5,437
Investment in mortgage notes and notes receivable (Note 8)...................... 93,045 104,509 51,837
Cash and cash equivalents (Note 12)............................................. 2,948 21,676 12,321
Tenant receivables.............................................................. 4,725 4,975 1,732
Investments in and advances to affiliates (Note 7).............................. 48,537 18,090 3,826
Deferred rent receivable........................................................ 21,923 14,973 12,573
Prepaid expenses and other assets (Note 7)...................................... 8,717 13,705 6,225
Contract and land deposits and pre-acquisition costs............................ 1,208 7,559 7,100
Deferred lease and loan costs, less accumulated amortization of $16,939,
$14,844 and $12,915 respectively................................................ 21,333 16,181 11,438
----------- ---------- ---------
Total Assets................................................................. $1,772,237 $1,113,105 $ 543,391
=========== ========== ==========
LIABILITIES
Mortgage notes payable (Note 2)................................................. $ 239,989 $ 180,023 $161,513
Credit facilities (Notes 3 and 12).............................................. 443,250 210,250 108,500
Senior unsecured notes ( Note 4)................................................ 150,000 150,000 ---
Accrued expenses and other liabilities (Note 5)................................. 35,849 30,799 15,867
Dividends and distributions payable............................................. 19,636 120 9,442
Affiliate payables (Note 7)..................................................... 1,434 1,764 1,128
---------- ---------- --------
Total Liabilities............................................................ 890,158 572,956 296,450
---------- ---------- --------
Commitments and other comments (Notes 9, 10 and 12)............................. --- --- ---
Minority interest in consolidated partnerships 35,851 7,697 10,264
---------- ---------- --------
PARTNERS' CAPITAL (NOTE 6)
Preferred Capital, 9,234,518, -, and - units outstanding, respectively.......... 263,126 --- ---
General Partner's Capital, 40,033,193, 37,770,158 and 24,356,354 units
outstanding, respectively....................................................... 444,725 446,702 184,798
Limited Partners' Capital, 7,764,630, 7,218,688 and 6,763,010 units
outstanding, respectively........................................................ 138,377 85,750 51,879
---------- --------- --------
Total Partners' Capital...................................................... 846,228 532,452 236,677
---------- --------- --------
Total Liabilities and Partners' Capital................................... $ 1,772,237 $ 1,113,105 $ 543,391
============ =========== =========
(see accompanying notes to financial statements)
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENTS OF INCOME
AND RECKSON GROUP
COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT UNIT DATA)
Reckson Operating Partnership, L. P. Reckson Group
----------------------------------------------------------------------------------- -------------
for the nine months ended for the year ended
------------------------------- -------------------
For the Period For the Period
June 3, 1995 to January 1,
September 30, September 30, December 31, 1995 to
1998 1997 December 31, 1997 December 31, 1996 1995 June 2, 1995
------------- -------------- ----------------- ----------------- ------------- --------------
(unaudited) (unaudited)
REVENUES (Note 10):
Base rents...................... $162,846 $ 91,179 $128,778 $82,150 $32,661 $16,413
Tenant escalations and
reimbursements................ 20,776 10,736 14,981 10,628 5,246 2,907
Construction revenues - net..... --- --- --- --- --- 432
Management revenues............. --- --- --- --- --- 589
Equity in earnings of service
companies..................... 623 208 55 1,031 100 ---
Equity in earnings of real
estate joint ventures......... 578 326 459 266 --- ---
Interest income on mortgage notes
and notes receivable.......... 5,536 3,675 5,437 --- --- ---
Investment and other income
(Note 8)...................... 2,565 2,062 3,638 1,955 448 548
-------- --------- -------- ------ ------- ------
Total Revenues............... 192,924 108,186 153,348 96,030 38,455 20,889
-------- --------- -------- ------ ------- ------
EXPENSES:
Property operating expenses..... 35,506 20,857 28,943 18,959 7,144 3,985
Real estate taxes............... 25,626 14,569 20,579 13,935 5,755 3,390
Ground rents.................... 1,279 918 1,269 1,107 579 234
Marketing, general and
administrative................ 10,479 6,024 8,026 5,933 1,850 1,858
Interest........................ 34,537 14,471 21,585 13,331 5,331 7,622
Depreciation and amortization... 38,098 18,991 27,237 17,670 7,233 3,606
------- --------- ------- ------ ------ ------
Total Expenses.................. 145,525 75,830 107,639 70,935 27,892 20,695
------- --------- ------- ------ ------ ------
Income before distributions to
preferred unit holders,
minority interests and
extraordinary items........... 47,399 32,356 45,709 25,095 10,563 194
Preferred unit distributions.... (9,202) --- --- --- --- ---
Minority partners' interest in
consolidated partnerships
income........................ (1,938) (724) (920) (915) (246) ---
------- -------- ------- ------- ------- -----
Income before extraordinary
items.......................... 36,259 31,632 44,789 24,180 10,317 194
Extraordinary items - (loss)
on extinguishment
of debts. (Notes 1 and 3)..... (1,993) (2,808) (2,808) (1,259) (6,022) ---
------- ---------- ------- ------- ------- ------
Net income available to common
unit holders.................. $ 34,266 $ 28,824 $ 41,981 $ 22,921 $4,295 $194
======= ======= ======= ======= ======= ======
Net Income:
General Partner............. $ 28,627 $ 23,622 $ 34,742 $ 17,325 $ 3,200
Limited Partners'........... 5,639 5,202 7,239 5,596 1,095
---------- --------- --------- ------- ----------
Total........................... $ 34,266 $ 28,824 $ 41,981 $ 22,921 $ 4,295
========== ========== ========== ============ ==========
Net income per common unit:
General Partner.............. $ .73 $ .74 $ 1.06 $ .87 $ .22
Limited Partners'............ $ .73 $ .75 $ 1.03 $ .86 $ .19
Weighted average common units
outstanding:
General Partner.............. 39,284,000 31,810,000 32,727,000 19,928,000 14,678,000
Limited Partners'............ 7,715,000 6,970,000 7,016,000 6,503,000 5,648,000
(see accompanying notes to financial statements)
RECKSON OPERATING PARTNERSHIP, L. P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
AND RECKSON GROUP
COMBINED STATEMENT OF OWNER'S (DEFICIT)
(IN THOUSANDS)
General Partner's Limited Partners' Total
Capital Capital Partners' Capital
----------------- ----------------- -----------------
OWNERS' DEFICIT, DECEMBER 31, 1994............. $ (73,492) $ --- $ (73,492)
Net income..................................... 194 --- 194
Distributions.................................. (4,399) --- (4,399)
Contributions.................................. 119 --- 119
Adjustment to unrealized gain on
available-for-sale securities............... 95 --- 95
----------------- ---------------- -------------
OWNERS' DEFICIT, JUNE 2, 1995.................. (77,483) --- (77,483)
Deficit not contributed by the Owners of
Reckson Group................................ 7,776 --- 7,776
Initial capital contribution June 2, 1995 162,011 --- 162,011
Established of Minority Interests in the
Operating Partnership ....................... (25,651) 25,651 ---
Net Income..................................... 3,200 1,095 4,295
Contributions.................................. --- 3,237 3,237
Distributions.................................. (9,960) (3,835) (13,795)
------------------ ---------------- ------------
BALANCE DECEMBER 31, 1995...................... 59,893 26,148 86,041
Net Income..................................... 17,325 5,596 22,921
Contributions.................................. 131,716 27,881 159,597
Distributions.................................. (24,136) (7,746) (31,882)
------------------ ----------------- -------------
BALANCE DECEMBER 31, 1996...................... 184,798 51,879 236,677
Net Income..................................... 34,742 7,239 41,981
Contributions.................................. 267,827 35,339 303,166
Distributions.................................. (40,665) (8,707) (49,372)
------------------ ----------------- -------------
BALANCE DECEMBER 31, 1997...................... 446,702 85,750 532,452
Net Income..................................... 28,627 5,639 34,266
Contributions.................................. 273,125 55,064 328,189
Distributions.................................. (41,679) (8,076) (49,755)
Contribution of a 1% interest in Reckson FS
Limited Partnership.......................... 1,076 --- 1,076
----------------- ----------------- -------------
BALANCE SEPTEMBER 30, 1998 (UNAUDITED) $ 707,851 $ 138,377 $ 846,228
================= ================= =============
(see accompanying notes to financial statements)
Reckson Operating Partnership, L. P. Consolidated Statements of Cash Flows
and Reckson Group
Combined Statement of Cash Flows (in thousands)
Reckson Group
-------------
Reckson Operating Partnership, L. P.
---------------------------------------------------------------------------
For the nine months ended For the year ended
----------------------------- ------------------
For the Period
June 3, 1995 For the Period
to January 1, 1995
December 31, December 31, December 31, to
September 30, 1998 September 30, 1997 1997 1996 1995 June 2, 1995
------------ ------------- ------------ ------------ ----------- ------------
(unaudited) (unaudited)
Net Income................................. $ 34,266 $ 28,824 $ 41,981 $ 22,921 $ 4,295 $ 194
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization........... 38,098 18,991 27,237 17,670 7,233 3,606
Extraordinary loss on extinguishment
of debts.............................. 1,993 2,808 2,808 1,259 6,022 ---
Minority partners' interest in consolidated
partnerships 1,938 724 920 915 246 ---
Gain on sale of interest in Reckson Executive
Centers,
LLC (9) --- --- --- --- ---
Gain on sales of property and securities.... (43) --- (672) --- --- (134)
Distribution from and share of net loss
(income) from investments in
partnerships............................. 379 290 408 191 --- (303)
Deferred rents receivable................... (6,950) (3,478) (4,500) (3,837) --- ---
Equity in earnings of service
companies.................................. (623) (208) (55) (931) (100) ---
Equity in earnings of real estate
joint ventures............................ (578) (326) (459) (266) --- ---
Changes in operating assets and liabilities:
Escrow reserves............................. 236 34 --- --- --- ---
Prepaid expenses and other assets........... 3,463 (8,602) (1,931) (619) (286) 417
Tenant and affiliate receivables............ 249 (639) (1,183) (256) (2,438) 302
Accrued expenses and other liabilities...... 12,970 3,693 11,240 4,716 2,396 (2,463)
------ ------ ------- ------ ------- -------
Net cash provided by operating activities... 85,389 42,111 75,794 41,763 17,368 1,619
------ ------ ------- ------ ------- -------
Cash Flows from Investing Activities:
Increase in escrow reserves................. (640) --- --- --- --- ---
Cash from contributed net assets............ --- --- --- --- 629 ---
Purchases of commercial real estate
properties................................ (485,320) (229,708) (429,379) (181,130) (49,241) ---
Interest receivables........................ 2,146 (1,304) (2,392) (870) --- ---
Repayment of notes payable - affiliates..... --- --- --- --- (6,000) ---
Cash paid in exchange for partnership net
assets.................................... --- --- --- --- (16,075) ---
Investment in mortgage notes and notes
receivable................................ 12,257 (32,381) (50,282) (50,892) --- ---
Contract deposits and
preacquisition costs...................... 6,351 (72) (1,303) (6,668) (810) ---
Additions to developments in progress....... (77,883) (10,074) (40,367) (8,427) (2,567) ---
Additions to commercial real estate
properties................................ (15,507) (10,275) (12,038) (12,441) (2,326) (814)
Payment of leasing costs.................... (6,254) (2,977) (5,417) (5,028) (1,672) (125)
Investment in securities.................... --- --- (1,756) --- --- ---
Additions to furniture, fixtures and
equipment................................. (1,649) (856) (1,159) (115) (21) (13)
Investments in and advances to real estate
joint ventures............................ (7,760) (1,575) (1,734) (5,832) (232) ---
Investment in service companies 15 15 (4,241) (3,170) --- ---
Distributions from partnership investments.. --- --- --- --- --- 115
Contributions to partnership investments.... --- --- --- --- --- (244)
Proceeds from sales of properties and
securities................................ 809 --- 725 --- --- 371
------- ------ ------ ------- ------ ----
Net cash (used in) investing activities..... (573,435) (289,207) (549,343) (274,573) (78,315) (710)
-------- ---------- -------- --------- ------- -----
Cash Flows from Financing Activities:
Proceeds from borrowings.................... --- --- --- 54,402 40,779 14,004
Principal payments on borrowings............ (4,006) (1,054) (1,624) (380) (151,230) (13,088)
Proceeds from issuance of senior unsecured
notes, net of issuance costs.............. --- 147,420 147,420 --- --- ---
Proceeds from mortgage refinancing, net of
refinancing costs......................... --- --- 20,134 --- --- ---
Payment of loan costs and prepayment
penalties................................. (3,557) (3,536) (2,403) (2,525) (9,138) (268)
Investments in and advances to affiliates... (32,218) (4,584) (20,182) (2,952) 383 (1,060)
Proceeds from unsecured credit facilities... 345,000 208,500 421,000 144,500 40,000 ---
Principal payments on unsecured credit
facilities................................ (112,000) (284,000) (319,250) (76,000) --- ---
Contributions............................... 314,430 215,185 299,991 145,317 151,427 ---
Distributions .............................. (36,484) (31,558) (53,327) (22,546) (3,835) ---
Distributions to minority partners in
consolidated partnerships................. (1,847) (2,957) (8,855) (1,492) (633) ---
Deferred offering costs..................... --- --- --- --- --- (400)
Distributions to Predecessor Owners......... --- --- --- --- --- (4,280)
--------- -------- -------- -------- ------- -------
Net cash provided by (used in) financing
activities................................ 469,318 243,416 482,904 238,324 67,753 (5,092)
--------- --------- -------- -------- ------- -------
Net increase (decrease) in cash and cash
equivalents............................... (18,728) (3,680) 9,355 5,514 6,806 (4,183)
Cash and cash equivalents at beginning of
period.................................... 21,676 12,321 12,321 6,807 1 7,041
---------- -------- -------- -------- -------- -------
Cash and cash equivalents at end of period..... $2,948 $ 8,641 $21,676 $12,321 $6,807 $2,858
========== ======== ======== ======== ======== =======
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest.... $29,411 $15,620 $20,246 $13,261 $4,700 $8,600
========== ======== ======== ======== ======== =======
(see accompanying notes to financial statements)
RECKSON OPERATING PARTNERSHIP, L. P.
AND
RECKSON GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Significant Accounting Policies
Description of Business
Reckson Operating Partnership, L. P. (the "Operating Partnership") and
the Reckson Group (the "Predecessor") are engaged in the ownership, management,
operation, leasing and development of commercial real estate properties,
principally office and industrial buildings and also own certain undeveloped
land (collectively, the "Properties") located in the New York City tri-state
area.
Organization and Formation of the Operating Partnership
The Operating Partnership commenced operations on June 2, 1995 and is
the successor to the operations of the Reckson Group. The sole general partner
in the Operating Partnership, Reckson Associates Realty Corp. (the "Company") is
a self administered and self managed Real Estate Investment Trust ("REIT").
During June, 1995, the Company contributed approximately $162 million in cash to
the Operating Partnership in exchange for an approximate 73% general partnership
interest.
The Operating Partnership executed various option and purchase
agreements whereby it issued 2,758,960 units in the Operating Partnership
("Units") to the continuing investors and assumed approximately $163 million
(net of the Omni mortgages) of indebtedness in exchange for interests in certain
property partnerships, fee simple and leasehold interests in properties and
development land, certain business assets of the executive center entities and
100% of the non-voting preferred stock of the management and construction
companies.
As of September 30, 1998, the Operating Partnership owned and operated
73 office properties comprising approximately 10.1 million square feet, 127
industrial properties comprising approximately 10.6 million square feet and two
retail properties comprising approximately 20,000 square feet, located in the
New York "Tri-State" area. In addition, the Operating Partnership owned or had
contracted to acquire approximately 852 acres of land (including 400 acres under
option) in 17 separate parcels of which the Operating Partnership can develop
1.6 million square feet of industrial space and 6.6 million square feet of
office space. The Operating Partnership also has invested approximately $47.3
million in certain mortgage notes encumbering four Class A office properties
encompassing approximately 577,000 square feet and a 400 acre parcel of land and
in a note receivable secured by a partnership interest in Omni Partners, L.P.,
owner of the Omni, a 575,000 square foot Class A office property located in
Uniondale, New York (unaudited).
During 1997, the Company formed Reckson Service Industries, Inc.
("RSI") and Reckson Strategic Venture Partners, LLC ("RSVP"). The Operating
Partnership owned a 95% non voting common stock interest in RSI through June 10,
1998. On June 11, 1998, the Operating Partnership distributed its 95% common
stock interest in RSI of approximately $3 million to its partners. Additionally,
during June 1998, the Operating Partnership established a credit facility with
RSI (the"RSI Facility") in the amount of $100 million for RSI's service sector
operations and other general corporate purposes. In addition, the Operating
Partnership has approved the funding of investments of up to $100 million with
or in RSVP (the "RSVP Commitment"), through RSVP-controlled joint venture
REIT-qualified investments or advances made to RSI under terms similar to the
RSI Facility. As of September 30, 1998, approximately $16.7 million had been
invested through the RSVP Commitment, of which $10.1 million represents RSVP
controlled joint venture investments and $6.6 million represents advances to RSI
under the RSVP Commitment. Such amounts have been included in investment in real
estate joint ventures and investments in and advances to affiliates,
respectively, on the accompanying balance sheet. RSI serves as the managing
member of RSVP. RSI invests in operating companies that generally provide
commercial services to properties owned by the Operating Partnership and its
tenants and third parties. RSVP was formed to provide the Operating Partnership
with a research and development vehicle to invest in alternative real estate
sectors. RSVP invests primarily in real estate and real estate related operating
companies generally outside of the Operating Partnership's core office and
industrial focus. RSVP's strategy is to identify and acquire interests in
established entrepreneurial enterprises with experienced management teams in
market sectors which are in the early stages of their growth cycle or offer
unique circumstances for attractive investments as well as a platform for future
growth (unaudited).
In October 1997, the Operating Partnership entered into an agreement to
invest up to $150 million in the Morris Companies, a New Jersey developer and
owner of "Big Box" warehouse facilities. The Morris Companies' properties
include 23 industrial buildings encompassing approximately 4.0 million square
feet. In connection with the transaction the Morris Companies contributed 100%
of their interests in certain industrial properties to Reckson Morris Operating
Partnership, L. P. ("RMI") in exchange for operating partnership units in RMI.
On January 6, 1998, the Operating Partnership acquired an approximately 70%
controlling interest in RMI for approximately $65 million. At September 30,
1998, the Operating Partnership had invested an additional $28.4 million and
increased its controlling interest to approximately 76.4%. In addition, at
September 30, 1998, the Operating Partnership had advanced approximately $25.8
million to the Morris Companies primarily to fund certain construction costs
related to development properties to be contributed to RMI. Such amounts have
been included in investment in mortgage notes and notes receivable on the
accompanying balance sheet. Subsequent to September 30, 1998, the Morris
Companies repaid approximately $4.7 million of the advances (unaudited).
Basis of Presentation and Summary of Significant Accounting Policies
The accompanying consolidated financial statements include the
consolidated financial position of the Operating Partnership and its
subsidiaries. The Operating Partnership's investment in RMI is reflected in the
accompanying financial statements on a consolidated basis with a reduction for
minority partner interest. The operating results of the service businesses
currently conducted by Reckson Management Group, Inc., ("RMG"), and Reckson
Construction Group, Inc., are reflected in the accompanying financial statements
on the equity method of accounting. The operating results of Reckson Executive
Centers, L.L.C., ("REC"), a service business of the Operating Partnership were
reflected in the accompanying financial statements on the equity method of
accounting through March 31, 1998. On April 1, 1998, the Operating Partnership
sold its 9.9% interest in REC to RSI for $200,000 (unaudited). Additionally, the
operating results of RSI were reflected in the accompanying financial statements
on the equity method of accounting through June 10, 1998. On June 11, 1998 the
Operating Partnership distributed its 95% common stock interest in RSI to its
partners (unaudited). The Operating Partnership also invests in real estate
joint ventures where it may own less than a controlling interest, such
investments are also reflected in the accompanying financial statements on the
equity method of accounting. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.
The accompanying interim unaudited financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosure normally included in the
financial statements prepared in accordance with generally accepted accounting
principles may have been condensed or omitted pursuant to such rules and
regulations, although management believes that the disclosures are adequate to
make the information presented not misleading. The unaudited financial
statements as of September 30 1998 and for the nine month periods ended
September 30, 1998 and 1997 include, in the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the financial information set forth herein. The results of operations for
the interim period are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998.
During 1997 the Financial Accounting Standards Board ("FASB") issued
statement No. 130, "Reporting Comprehensive Income" ("SFAS 130") which is
effective for fiscal years beginning after December 15, 1997. SFAS 130
established standards for reporting comprehensive income and its components in a
full set of general-purpose financial statements. SFAS 130 requires that all
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The adoption
of this standard had no impact on the Operating Partnership's financial position
or results of operations. Additionally in June 1997, the FASB also issued SFAS
No. 131 "Disclosures about segments of an Enterprise and Related Information"
("SFAS 131") which is effective for fiscal years beginning after December 15,
1997. SFAS 131 establishes standards for reporting information about operating
segments in annual financial statements and in interim financial reports. It
also establishes standards for related disclosures about products and services,
geographic areas and major customers. The adoption of this standard had no
impact on the Operating Partnership's financial position or results of
operations.
The following table presents the minority partners' interest in the consolidated
partnerships income:
September 30, December 31,
------------------ --------------------------
1998 1997 1996 1995
------------------ --------------------------
(unaudited)
Omni Partners, L. P............................. 40% 40% 40% 40%
Reckson Morris Operating Partnership, L. P.(1).. 24% --- --- ---
Reckson FS Limited Partnership (2).............. --- 1% 1% 1%
- --------------
(1) Approximate
(2) On May 26, 1998, the general partner of Reckson FS Limited
Partnership transferred and assigned its 1% general partnership interest to the
Operating Partnership in exchange for 101,970 units of general partnership
interest (unaudited).
The Reckson Group was not a legal entity but rather a combination of
partnerships, an "S" corporation and affiliated real estate management and
construction corporations which were under the common control of Reckson
Associates (a general partnership) and affiliated entities. All significant
intercompany transactions and balances were eliminated in combination. The
Reckson Group used the equity method of accounting for investments in less than
50% owned entities and majority owned entities where control was temporary.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Real Estate
Depreciation is computed utilizing the straight-line method over the
estimated useful lives of ten to thirty years for buildings and improvements and
five to ten years for furniture, fixtures and equipment. Tenant improvements,
which are included in buildings and improvements, are amortized on a
straight-line basis over the term of the related leases.
Cash Equivalents
The Operating Partnership considers highly liquid investments with a
maturity of three months or less when purchased, to be cash equivalents.
Deferred Costs
Lease fees and loan costs are capitalized and amortized over the life
of the related lease or loan.
Income Taxes
No provision has been made for income taxes in the accompanying
consolidated financial statements since such taxes, if any, are the
responsibility of the individual partners.
Revenue Recognition
Minimum rental income is recognized on a straight-line basis over the
term of the lease. The excess of rents recognized over amounts contractually due
are included in deferred rents receivable on the accompanying balance sheets.
Contractually due but unpaid rents are included in tenant receivables on the
accompanying balance sheets. Certain lease agreements provide for reimbursement
of real estate taxes, insurance, common area maintenance costs and indexed
rental increases, which are recorded on an accrual basis.
The Operating Partnership records interest income on investments in
mortgage notes and notes receivable on an accrual basis of accounting. The
Operating Partnership does not accrue interest on impaired loans where, in the
judgment of management, collection of interest according to the contractual
terms is considered doubtful. Among the factors the Operating Partnership
considers in making an evaluation of the collectibility of interest are, the
status of the loan, the value of the underlying collateral, the financial
condition of the borrower and anticipated future events. Loan discounts are
amortized over the life of the real estate using the constant interest method.
Net Income Per Common Partnership Unit
Net income per common partnership unit is determined by allocating net
income after preferred distributions to the general and limited partners' based
on their weighted average common partnership units outstanding during the
respective periods presented.
Distributions to Preferred Unit Holders
Preferred unit holders are entitled to distributions based on the
stated rates of return (subject to adjustment) for the units.
Capitalized Interest
Interest incurred on borrowings used to fund the property development
and construction are capitalized as developments in progress and allocated to
the individual property costs once construction is completed
Construction Operations
Construction operations are accounted for utilizing the completed
contract method. Under this method, costs and related billings are deferred
until the contract is substantially complete. Estimated losses on uncompleted
contracts are recorded in the period that management determines that a loss may
be incurred.
Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year presentation.
2. Mortgage Notes Payable
At December 31, 1997, there are thirteen mortgage notes payable with an
aggregate outstanding principal amount of approximately $180 million. Properties
with an aggregate carrying value at December 31, 1997 of approximately $225
million are pledged as collateral against the mortgage notes payable. In
addition, $59.2 million of the $180 million are recourse to the Operating
Partnership. The mortgage notes bear interest at rates ranging from 6.82% to
9.25%, and mature between 1999 and 2012. The weighted average interest rate on
the outstanding mortgage notes payable at December 31, 1997 is 7.71%. Certain of
the mortgage notes payable are guaranteed by certain minority partners in the
Operating Partnership.
Scheduled principal repayments during the next five years and thereafter are as
follows (in thousands):
Year Ended December 31,
----------------------------
1998....................... $2,327
1999....................... 2,368
2000....................... 33,788
2001....................... 2,336
2002....................... 26,978
Thereafter................. 112,226
-------------
$180,023
=============
On April 21,1998, in connection with the acquisitions of the Capelli
portfolio, the Operating Partnership assumed approximately $45.1 million of
mortgage indebtedness which bear interest at rates ranging from 8.5% to 9.25%
and which encumber two properties (unaudited).
On May 21, 1998, the Company satisfied the mortgage note encumbering
one property in the amount of approximately $1.9 million. Additionally, on
October 27, 1998 the Operating Partnership refinanced a $10.0 million mortgage
note encumbering one property with a $21.4 million mortgage note. The new
mortgage note bears a fixed rate of interest of 6.45% and matures on October 26,
2005 (unaudited).
As of September 30, 1998, the Company had approximately $240 million of
fixed rate mortgage notes which mature at various times between 1999 and 2012.
The notes are secured by 22 properties and have a weighted average interest rate
of 7.94% (unaudited).
3. Credit Facilities
As of December 31, 1997, the Operating Partnership had a three-year
$250 million unsecured credit facility from Chase Manhattan Bank and Union Bank
of Switzerland (the "Unsecured Credit Facility"). The Operating Partnership's
ability to borrow thereunder was subject to the satisfaction of certain
customary financial covenants. In addition, borrowings under the Unsecured
Credit Facility bear interest at a floating rate equal to one, two, three or six
month LIBOR (at the Operating Partnership's election) plus a spread ranging from
1.125% to 1.5% based on the Operating Partnership's leverage ratio.
In addition, the Operating Partnership obtained a $200 million
unsecured credit facility (the "Bridge Facility") which matured on July 15,
1998. The Bridge Facility was provided by the two lead members of the Unsecured
Credit Facility bank group and served as interim financing while the Operating
Partnership seeked to expand the availability under the Unsecured Credit
Facility (unaudited).
On July 23, 1998, the Operating Partnership obtained a three year $500
million unsecured revolving credit facility (the "Credit Facility") with Chase
Manhattan Bank, Union Bank of Switzerland and PNC Bank as co-managers of the
credit facility bank group. Interest rates on borrowings under the Credit
Facility are priced off of LIBOR plus a sliding scale ranging from 112.5 basis
points to 137.5 basis points based on the leverage ratio of the Operating
Partnership. Upon the Operating Partnership receiving an investment grade rating
on its senior unsecured debt by two rating agencies, the pricing is adjusted
based off of LIBOR plus a scale ranging from 65 basis points to 90 basis points
depending upon the rating. The Credit Facility replaced the Operating
Partnership's Unsecured Credit Facility and Bridge Facility. As a result,
certain deferred loan costs incurred in connection with those facilities were
written off. Such amount is reflected as an extraordinary loss in the
accompanying statement of operations (unaudited).
The Operating Partnership capitalized interest incurred on borrowings
to fund certain development costs in the amount of $2,351,201 and $800,434 for
the years ended December 31, 1997 and 1996, respectively.
For the nine months ended September 30, 1998 and 1997, the Operating
Partnership capitalized interest incurred on borrowings to fund certain
development costs in the amount of approximately $5.1 million and $1.5 million,
respectively (unaudited).
4. Senior Unsecured Notes
On August 28, 1997, the Operating Partnership sold $150 million of
10-year senior unsecured notes in a privately placed transaction. The senior
unsecured notes were priced at par with interest at 110 basis points over the
10- year treasury note for an all in coupon of 7.2%. Interest is payable
semiannually with principal and unpaid interest due on August 28, 2007.
5. Land Leases
The Operating Partnership leases, pursuant to noncancellable operating
leases, the land on which seven of its buildings were constructed. The leases,
which contain renewal options, expire between 2018 and 2080. The leases contain
provisions for scheduled increases in the minimum rent and one of the leases
additionally provides for adjustments to rent based upon the fair market value
of the underlying land at specified intervals. Minimum ground rent is recognized
on a straight-line basis over the terms of the leases. The excess of amounts
recognized over amounts contractually due is $1,948,000 and $1,676,000 at
December 31, 1997 and 1996, respectively. These amounts are included in accrued
expenses and other liabilities on the accompanying balance sheets. Future
minimum lease commitments relating to the land leases as of December 31, 1997
are as follows (in thousands):
1998............................... $1,093
1999............................... 1,202
2000............................... 1,203
2001............................... 1,212
2002............................... 1,212
Thereafter......................... 42,114
-----------------
$48,036
=================
The excess of amounts recognized over amounts contractually due at
September 30, 1998 is approximately $2,223,000 (unaudited).
6. Partners' Capital
The Operating Partnership made loans to certain senior officers to
purchase units at market prices ranging from $12.13 per unit to $21.94 per unit.
The loans bear interest at rates ranging between 8% to 8.5% and are secured by
the units purchased. Such loans will be forgiven ratably at each anniversary of
employment over a four to five year period. The loan balances of $215,400
(unaudited), $325,500 and $250,000 at September 30, 1998, December 31, 1997 and
1996, respectively have been included as a reduction of the general partner's
capital on the accompanying consolidated balance sheets.
On April 21, 1998, the Operating Partnership issued 25,000 Series B
preferred units of limited partnership interest at a stated value of $1,000 per
unit and 11,518 Series C preferred units of limited partnership interest at a
stated valued of $1,000 per unit in connection with the acquisition of the
Cappelli portfolio. The Series B preferred units have a current distribution
rate of 6.25% and are convertible to common units at a conversion price of
approximately $32.51 for each preferred unit. The Series C preferred units have
a current distribution rate of 6.25% and are convertible to common units at a
conversion price of approximately $29.39 for each preferred unit (unaudited).
During the nine months ended September 30, 1998, the Operating
Partnership issued 1,884,896 units of general partnership interest to the
Company in exchange for approximately $44.4 million. The proceeds were used to
repay borrowings under the credit facilities (unaudited).
Additionally, during the nine months ended September 30, 1998, the
Operating Partnership issued 9,200,000 Series A preferred units of general
partnership interest to the Company in exchange for approximately $221 million.
The Series A preferred units have a liquidation preference of $25 per unit, a
distribution rate of 7.625% and are convertible to common units at a conversion
rate of .8769 common units for each preferred unit (unaudited).
On July 2, 1998, the Operating Partnership issued 6,000 Series D
preferred units of limited partnership interest at a stated value of $1,000 per
unit in connection with the acquisition of the remaining 50% interest in
360 Hamilton Avenue located in White Plains, New York. The Series D preferred
units have a current distribution rate of 6.25% and are convertible to common
units at a conversion price of approximately $29.12 for each preferred unit
(unaudited).
7. Related Party Transactions
The Operating Partnership, through its subsidiaries and affiliates,
provides management, leasing and other tenant related services to the
Properties. Certain executive officers of the Company have continuing ownership
interests in the unconsolidated service companies.
The Operating Partnership in connection with its formation, was granted
options, exercisable over a 10 year period to acquire six properties owned by
the Predecessor (the "Reckson Option Properties") and four properties in which
the Predecessor owns a non-controlling minority interest (the "Other Option
Properties" and, together with the Reckson Option Properties, the "Option
Properties") at a purchase price equal to the lesser of (i) a fixed purchase
price and (ii) the Net Operating Income, as defined, attributable to such Option
Property during the 12 month period preceding the exercise of the option divided
by a capitalization rate of 11.5%, but the purchase price shall in no case be
less than the outstanding balance of the mortgage debt encumbering the Option
Property on the acquisition date.
During 1996, the Operating Partnership acquired three of the Reckson
Option Properties for an aggregate purchase price of approximately $26 million.
In connection with the purchase of two of the Option Properties the Operating
Partnership issued 271,228 common units at prices ranging from $16.38 per unit
to $18.50 per unit (split adjusted) as partial consideration in the
transactions. Such units were issued to certain members of management and
entities whose partners included members of management.
During 1997, the Operating Partnership acquired one of the Reckson
Option Properties for a purchase price of approximately $9 million. In
connection with the purchase, the Operating Partnership issued 203,804 common
units at a price of $21 per unit (split adjusted) as partial consideration in
the transaction. Such units were issued to certain members of management and
entities whose partners include members of management.
The Operating Partnership made construction loan advances to fund
certain redevelopment and leasing costs relating to one of the Other Option
Properties. At December 31, 1997 and 1996, advances due the Operating
Partnership were approximately $4,200,000 and $2,940,000, respectively. Such
amounts bear interest at the rate of 11% per annum and are due on demand. In
January 1998, the outstanding advances including accrued and unpaid interest
were repaid in full.
At December 31, 1997, the Operating Partnership had made investments in
or loans to RSI and RSVP aggregating approximately $4.3 million and $7.4
million, respectively in connection with start up costs and certain initial
investments. Such amounts have been included in investments in and advances to
affiliates on the accompanying balance sheet.
On March 23, 1998, the Company sold approximately $5.9 million of
common stock to RSI at the market closing price of $25 per share. The Operating
Partnership loaned RSI the $5.9 million to execute this transaction. Such amount
was repaid to the Operating Partnership by RSI during August 1998 (unaudited).
On June 11, 1998, the Operating Partnership distributed its 95% voting
common stock interest in RSI of approximately $3 million to its partners.
Additionally, during June 1998, the Operating Partnership established the RSI
Facility in the amount of $100 million for RSI's service sector operations and
other general corporate purposes. The Operating Partnership also established the
RSVP Commitment which is a credit facility with RSI for the funding of
investments of up to $100 million with or in RSVP (unaudited).
8. Commercial Real Estate Investments
During the period from June 3, 1995 to December 31, 1996 the Operating
Partnership acquired 22 office properties encompassing approximately 2.8 million
square feet and 16 industrial properties encompassing approximately 1.4 million
square feet for an aggregate purchase price of approximately $273 million.
During 1997, the Operating Partnership acquired five office properties
encompassing approximately 881,000 square feet and 15 industrial properties
encompassing approximately 968,000 square feet on Long Island for an aggregate
purchase price of approximately $131 million.
During 1997, the Operating Partnership acquired eight office properties
encompassing approximately 830,000 square feet and three industrial properties
encompassing approximately 163,000 square feet in Westchester for an aggregate
purchase price of approximately $117 million. In addition, the Operating
Partnership acquired approximately 32 acres of land located in Westchester for a
purchase price of approximately $8 million.
During 1997, the Operating Partnership acquired one industrial property
encompassing approximately 452,000 square feet in Connecticut for a purchase
price of approximately $27 million.
During 1997, the Operating Partnership acquired 13 office properties
encompassing approximately 1.5 million square feet and one industrial property
encompassing approximately 128,000 square feet in New Jersey for an aggregate
purchase price of approximately $156 million. In addition, the Operating
Partnership acquired approximately 303 acres of land located in New Jersey for
an aggregate purchase price of approximately $16.2 million.
In October 1997, the Operating Partnership sold 671 Old Willets Path in
Hauppauge, New York for approximately $725,000 and recorded a gain on the sale
of approximately $672,000.
During January, 1998, the Operating Partnership acquired two office
properties and five industrial properties encompassing 325,000 and 775,000
square feet, respectively for aggregate purchase prices of approximately $27.6
million and $32.1 million, respectively. In addition, the Operating Partnership
acquired approximately 99 acres of land for approximately $3.39 million which
allows for approximately 730,000 square feet of development opportunities. These
acquisitions were financed with proceeds from the credit facilities and the
issuance of 513,259 ($12 million) common units (unaudited).
During February 1998, the Operating Partnership acquired approximately
25 acres of land and a vacant 165,000 square foot building for approximately
$3.43 million. The Operating Partnership is currently repositioning these
properties which will allow for approximately 483,000 square feet of future
development opportunities (unaudited).
Additionally, on February 6, 1998 the Operating Partnership completed
its acquisition of a 351,000 square foot office building located in Lake
Success, New York for approximately $9.3 million. The Operating Partnership had
previously acquired an approximate 68% first mortgage interest in the property
for approximately $25.7 million for a total acquisition of $35 million. The
acquisition was financed with proceeds from a draw under the credit facilities
(unaudited).
On March 20, 1998, the Operating Partnership acquired a 250,000 square
foot office building located in Short Hills, New Jersey for approximately $67
million. The acquisition was financed with proceeds from a draw under the credit
facilities (unaudited).
On April 3, 1998, the Operating Partnership completed its acquisition
of approximately 33.6 acres of vacant land located in Huntington Township, New
York, which allows for approximately 495,000 square feet of future development
opportunities for approximately $8.5 million (of which $6.4 million had been
previously paid) (unaudited).
On April 21, 1998, the Operating Partnership acquired a portfolio of
six office properties encompassing approximately 980,000 square feet in
Westchester County, New York from Cappelli Enterprises and affiliated entities
("Cappelli") for a purchase price of approximately $173 million. The Cappelli
acquisition includes a five building, 850,000 square foot Class A office park in
Valhalla and Court House Square, a 130,000 square foot Class A office building
located in White Plains. The Operating Partnership also obtained an option from
Cappelli to acquire the remaining 50% interest in 360 Hamilton Avenue, a 365,000
square foot vacant office tower in downtown White Plains for $10 million of
which $4 million was paid at closing of the portfolio acquisition. In addition,
the Operating Partnership received an option from Cappelli to acquire the
remaining development parcels within the Valhalla office park on which up to
875,000 square feet of office space can be developed. During April 1998, the
Operating Partnership made mortgage loans to Cappelli totaling $18 million (the
"Cappelli Notes") which are secured by the development parcels. The loans bear
interest at 10% per annum and mature on April 14, 1999. This acquisition was
financed in part through proceeds from a draw under the credit facilities, the
issuance of 36,518 (approximately $36.5 million) preferred operating partnership
units, and the assumption of approximately $45.1 million of mortgage debt. On
July 2, 1998, Cappelli exercised his option to sell the remaining 50% interest
in 360 Hamilton Avenue located in downtown White Plains, New York to the
Operating Partnership for $10 million (of which $4 million had been previously
paid) plus the return of his capital contributions of approximately $1.5
million. As a result, the Operating Partnership now owns 100% of the property.
The acquisition was financed in part through proceeds from a draw under the
credit facilities, the issuance of 6,000 ($6.0 million) preferred operating
partnership units, and the assumption of approximately $2 million of additional
mortgage debt. On September 11, 1998, the Operating Partnership issued and
advanced to Cappelli $14 million under a liquidity loan (the "Cappelli Liquidity
Loan") which allows for up to a maximum borrowing of approximately $16.7
million. The Cappelli Liquidity Loanbears interest at 10.5% per annum and is
secured by Cappelli's right, title and interest in the preferred units. The
advance under the Cappelli Liquidity Loan was used to repay a portion of the
advances under the Cappelli Notes. At September 30, 1998, there was
approximately $18 million outstanding under the Cappelli Notes and Liquidity
Loan. Such amounts have been included in investments in mortgage notes and notes
receivable on the accompanying balance sheet (unaudited).
Additionally, on April 21, 1998, the Operating Partnership acquired a
84,500 square foot office building located in Fairfield, New Jersey for $3.4
million. The acquisition was financed in part with proceeds from a draw under
the credit facilities and the issuance of 1,979 (approximately $50,000) common
units (unaudited).
On May 1, 1998, the Operating Partnership, under a master lease, leased
a 120,000 square foot office building located in Hicksville, New York. The lease
which expires in the year 2018 requires fixed monthly rental payments subject to
annual increases and for the pass through to the Operating Partnership of all
operating expenses and real estate taxes relating to the property. The Operating
Partnership is currently looking to sublet the property to one to two tenants
(unaudited).
On June 19, 1998, the Operating Partnership acquired a 210,000 square
foot industrial property located in West Caldwell, New Jersey for $9.4 million.
The acquisition was financed with proceeds from a draw under the credit
facilities (unaudited).
On June 24, 1998, the Operating Partnership acquired approximately 19.3
acres of land located in Melville, New York for approximately $5.5 million. The
acquisition was financed with proceeds from a draw under the credit facilities
(unaudited).
On July 1, 1998, the Operating Partnership acquired Stamford Towers
located in Stamford, Connecticut for approximately $61.3 million. Stamford
Towers is a Class A office complex consisting of two eleven story towers
totaling approximately 325,000 square feet. The acquisition was financed through
a draw under the credit facilities (unaudited).
On July 29, 1998, the Operating Partnership acquired approximately 15.2
acres of land located in East Hanover Township, New Jersey for approximately
$2.8 million. This acquisition provides the Operating Partnership with
approximately 115,000 square feet of future development opportunities
(unaudited).
During the three months ended September 30, 1998, RMI purchased two
industrial properties encompassing approximately 427,000 square feet for
approximately $24.6 million and one development property encompassing
approximately 60,000 square feet for approximately $1.8 million which allows for
approximately 130,000 additional square feet of future development opportunities
These acquisitions were financed through draws under the Credit Facility.
Additionally, on July 30, 1998, the Morris Companies contributed a 40,000 square
foot industrial property to RMI in exchange for approximately $36,000 of
operating partnership units of RMI net of the Operating Partnership's
satisfaction of an existing mortgage on the property in the amount of
approximately $2 million (unaudited).
On August 13, 1998, the Operating Partnership acquired two office
properties located in Parsippany, New Jersey for approximately $20 million. The
properties aggregate approximately 189,000 square feet and are located on an 18
acre site. This acquisition was financed with proceeds from a draw under the
Credit Facility and issuance of 50,072 (approximately $1.2 million) common units
(unaudited).
On August 27, 1998 the Operating Partnership announced the formation of
a joint venture with RSVP and the Dominion Group, an Oklahoma-based,
privately-owned group of companies that focuses on the development, acquisition
and ownership of government occupied office buildings and correctional
facilities. The new venture, Dominion Properties LLC (the "Venture"), is owned
by Dominion Venture Group LLC, and by a subsidiary of the Operating Partnership.
The Venture will engage primarily in acquiring, developing and/or owning
government-occupied office buildings and privately operated correctional
facilities. Under the Venture's operating agreement, RSVP is to invest up to
$100 million, some of which may be invested by the Operating Partnership ( the
"RSVP Capital"). The initial contribution of RSVP Capital was approximately $39
million of which approximately $10.1 million was invested by a subsidiary of the
Operating Partnership. The Operating Partnership's subsidiary funded its capital
contribution through the RSVP Commitment. In addition, the Operating Partnership
advanced approximately $2.9 million to RSI through the RSVP Commitment for its
investment in the joint venture (unaudited).
On September 24, 1998, the Operating Partnership acquired a 35,000
square foot industrial property located in Bohemia, New York for approximately
$1.3 million (unaudited).
In addition, the Operating Partnership has invested approximately $30.3
million in certain mortgage indebtedness encumbering four Class A office
properties encompassing approximately 577,000 square feet and a 400 acre parcel
of land located in New Jersey. In addition, the Operating Partnership loaned
approximately $17 million to its minority partner in Omni, its flagship Long
Island office property, and effectively increased its economic interest in the
property owning partnership (unaudited).
9. Fair Value of Financial Instruments
The following disclosures of estimated fair value at December 31, 1997
and 1996 were determined by management, using available market information and
appropriate valuation methodologies. Considerable judgment is necessary to
interpret market data and develop estimated fair value. The use of different
market assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts.
Disclosure about fair value of financial instruments is based on
pertinent information available to management as of December 31, 1997. Although
management is not aware of any factors that would significantly affect the
reasonable fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and current
estimates of fair value may differ significantly from the amounts presented
herein.
Cash equivalents and variable rate debt are carried at amounts which
reasonably approximate their fair values.
Mortgage notes payable have an estimated aggregate fair value which
approximates its carrying value. Estimated fair value is based on interest rates
currently available to the Operating Partnership for issuance of debt with
similar terms and remaining maturities.
10. Rental Income
The Properties are being leased to tenants under operating leases. The
minimum rental amount due under certain leases are generally either subject to
scheduled fixed increases or indexed escalations. In addition, the leases
generally also require that the tenants reimburse the Operating Partnership for
increases in certain operating costs and real estate taxes above base year
costs.
Included in base rents and tenant escalations and reimbursements in the
accompanying statements of operations are amounts from Reckson Executive
Centers, LLC, a service business of the Operating Partnership through March 31,
1998 and, a related party as follows (in thousands):
Tenant
For the Periods Escalations and
Base Rents Reimbursements
---------- ---------------
Nine months ended September 30, 1998 (unaudited).... $1,946 $283
Year ended December 31, 1997........................ $2,154 $441
Year ended December 31, 1996........................ $1,898 $417
June 3, 1995 to December 31, 1995................... $1,095 $100
January 1, 1995 to June 2, 1995..................... $675 $48
Expected future minimum rents to be received over the next five years
and thereafter from leases in effect at December 31, 1997 are as follows (in
thousands):
Reckson
Executive
Centers, LLC Other Tenants Total
------------ ------------- -----
1998............................................ $2,561 $156,909 $159,470
1999............................................ 2,634 147,473 150,107
2000............................................ 1,549 133,814 135,363
2001............................................ 787 109,767 110,554
2002............................................ 820 94,112 94,932
Thereafter...................................... 3,814 206,336 210,150
---------- ----------- -----------
$12,165 $848,411 $860,576
========== =========== ===========
11. Non-Cash Investing and Financing Activities
Additional supplemental disclosures of non-cash investing and financing
activities are as follows (in thousands):
(1) During 1996, the Operating Partnership purchased eight office properties
located in Westchester County and associated management and construction
operations as follows:
Cash Paid...................................... $58,533
Issuance of 677,534 common units............... 9,527
Purchase price holdback........................ 1,700
Mortgage assumed............................... 9,366
----------
Total purchase price........................... $79,126
==========
(2) During 1996, the Operating Partnership acquired three of the Reckson
Option Properties as follows:
Debt assumed and repaid........................ $21,750
Issuance of 271,228 common units............... 4,516
----------
Total purchase price........................... $26,266
==========
(3) In January 1997, the Operating Partnership acquired one of the Reckson
Option Properties as follows:
Mortgage assumed............................... $4,667
Issuance of 203,804 common units............... 4,280
Cash paid...................................... 61
----------
Total purchase price........................... $9,008
==========
(4) In November 1997, the Operating Partnership purchased a 181,000 square
foot industrial building located in Hauppauge, New York as follows:
Mortgage assumed and repaid.................... $3,037
Issuance of 62,905 common units................ 1,578
Cash paid...................................... 10
----------
Total purchase price........................... $4,625
==========
(5) In December 1997, the Operating Partnership purchased a 92,000 square
foot industrial building located in Elmsford, New York as follows:
Issuance of 183,469 common units................ $4,700
==========
On January 2, 1998, the Operating Partnership issued an additional
18,752 common units in connection with the acquisition of a 92,000 square foot
industrial building located in Elmsford, New York for an additional non cash
investment of approximately $.48 million (unaudited).
On January 6, 1998, the Operating Partnership acquired 51 Charles
Lindbergh Boulevard in Uniondale, New York which included the issuance of
513,259 common units for a total non cash investment of $12 million.
Additionally, in connection with the Operating Partnership's investment in the
Morris Companies, the Operating Partnership assumed approximately $10.8 million
of indebtedness net of minority partners interest (unaudited).
On April 21, 1998, in connection with the acquisition of the Cappelli
portfolio, the Operating Partnership assumed approximately $45.1 million of
indebtedness. Additionally, in connection with the acquisition of 155 Passaic
Avenue in Fairfield, New Jersey, the Operating Partnership issued 1,979 common
units for a total non cash investment of approximately $50,000 (unaudited).
On June 11, 1998, the Operating Partnership distributed its 95% common
stock interest in RSI of approximately $3 million to its partners (unaudited).
On July 2, 1998, in connection with the acquisition of 360 Hamilton
Avenue located in White Plains, New York, the Operating Partnership issued 6,000
Series D preferred units for a total non cash investment of $6.0 million
(unaudited).
On August 13, 1998, in connection with the acquisition of two office
properties located in Parsippany, New Jersey, the Operating Partnership issued
50,072 OP Units for a total non cash investment of approximately $1.2 million
(unaudited).
12. Commitments and Other Comments
At December 31, 1996, the Operating Partnership had restricted cash of
$1.8 million which collateralized an outstanding letter of credit for an equal
amount.
At December 31, 1997, the Operating Partnership had outstanding undrawn
letters of credit against the Unsecured Credit Facility of approximately $4
million.
At September 30, 1998 the Operating Partnership had outstanding undrawn
letters of credit against the Credit Facility of approximately $7.7 million
(unaudited).
During June 1998, the Operating Partnership established the RSI
Facility in the amount of $100 million for RSI's service sector operations and
other general corporate purposes. The Operating Partnership also established the
RSVP Commitment which is a credit facility with RSI for the funding of
investments of up to $100 million with or in RSVP (unaudited).
As of September 30, 1998, the Operating Partnership made investments in
and advances to RMG of approximately $29.5 million. Such investments and
advances were used by RMG in connection with RMG's acquisition of an approximate
64% ownership interest in an executive office suite business. Concurrently with
RMG's investment RSI received an option to purchase at cost, including carrying
expenses, RMG's interest. RMG is owned 97% by the Company and 3% by an entity
owned by certain officers of the Company (unaudited).
On November 9, 1998, RSI exercised its option. In addition, RSI assumed
the outstanding debt plus accrued interest owing to the Operating Partnership
(unaudited).
13. Subsequent Event
On December 8, 1998, the Company, the Operating Partnership,
Metropolitan Partners, LLC, a Delaware limited liability company
("Metropolitan") and Tower Realty Trust Inc., a Maryland corporation ("Tower"),
executed a merger agreement pursuant to which Tower will be merged into
Metropolitan, with Metropolitan surviving the merger. Concurrently with the
merger, the Tower operating partnership will be merged with and into a
subsidiary of Metropolitan. The consideration to be issued in the mergers will
be comprised of (i) 25% cash and (ii) 75% of shares of the Company's Class B
exchangeable common stock, or in certain circumstances described below, shares
of such Class B common stock and unsecured notes of the Operating Partnership.
The Operating Partnership controls Metropolitan and owns 100% of the common
equity interests, while Crescent Real Estate Equities Company, a Texas real
estate investment trust ("Crescent"), owns a preferred equity interest in
Metropolitan. The merger agreement replaces a previously existing merger
agreement among Reckson, Crescent, Metropolitan and Tower relating to the
acquisition by Metropolitan, which at that time was a 50/50 joint venture
between the Operating Partnership and Crescent.
Pursuant to the terms of the merger agreement, holders of shares of
outstanding common stock of Tower, and outstanding units of limited partnership
interest of the Tower operating partnership will have the option to elect to
receive cash or shares of Class B common stock, subject to proration. Under the
terms of the transaction, Metropolitan will effectively pay for each share of
Tower common stock and each unit of limited partnership interest of the Tower
operating partnership: (i) $5.75 (in cash) and (ii) 0.6273 of a share of Class B
common stock. The shares of Class B common stock are entitled to receive an
initial annual dividend of $2.24 per share, which is subject to adjustment
annually. The Company may redeem any or all of the Class B common stock in
exchange for an equal number of shares of the Company's common stock at any time
following the four year, six month anniversary of the issuance of Class B common
stock. It is anticipated that the Company's Board of Directors will recommend to
the Company's stockholders the approval of a proposal to issue a number of
shares of Class B Common Stock equal to 75% of the sum of (i) the number of
outstanding shares of the Tower common stock and (ii) the number of units of
limited partnership interest of the Tower operating partnership, in each case,
at the effective time of the mergers. If the Company's stockholders do not
approve the issuance of the Class B common stock as proposed, the merger
agreement provides that approximately one-third of the consideration that was to
be paid in the form of Class B common stock will be replaced by senior unsecured
notes of the Operating Partnership, which notes will bear interest at the rate
of 7% per annum and have a term of ten years. In addition, if the Company's
stockholders do not approve the issuance of Class B common stock as proposed and
the Company's Board of Directors does not recommend, or withdraws or amends or
modifies in any material respect its recommendation for, approval of such
proposal, then the total principal amount of notes to be issued and distributed
in the merger will be increased by $15 million.
Simultaneously with the execution of the merger agreement, Metropolitan
purchased from Tower approximately 2.2 million shares of Series A convertible
preferred stock of Tower, for an aggregate purchase price of $40 million. If the
merger agreement is not consummated and a court of competent jurisdiction issues
a final, non-appealable judgment determining that the Company and Metropolitan
are obligated to consummate the merger but have failed to do so, or determining
that the Company and Metropolitan failed to use their reasonable best efforts to
take all actions necessary to cause certain closing conditions to be satisfied,
Metropolitan is obligated to return to Tower $30 million of such Series A
preferred stock.
In connection with the new merger agreement, Tower, the Company,
Crescent and Metropolitan have exchanged mutual releases for any claims relating
to the previous merger agreement.
14. Quarterly Financial Data (Unaudited)
The following summary represents the Operating Partnership's results of
operations for the first, second and third quarters of 1998 and each quarter
during 1997 and 1996 (in thousands, except unit data):
1998
-----------------------------------------------------
First Quarter Second Quarter Third Quarter
-----------------------------------------------------
Total revenues............. $ 55,062 $66,267 $ 71,595
=========== ======= =========
Income before distributions to
preferred unit holders, minority
interests and extraordinary
items...................... $ 12,387 $17,664 $ 17,348
Preferred distributions..... --- (4,168) (5,034)
Minority partners' interest in
consolidated partnerships
income...................... (561) (712) (665)
Extraordinary (loss)........ - - (1,993)
----------- -------- -------
Net income available to common
unit holders. $ 11,826 $12,784 $9,656
=========== ========= =======
Net income:
General Partner.......... $ 9,835 $ 10,022 $ 8,770
Limited Partners'........ 1,991 2,762 886
----------- --------- ------
Total....................... $ 11,826 $ 12,784 $ 9,656
=========== ========= ======
Net income per common unit:
General Partner.......... $ .26 $ .25 $ .22
Limited Partners'........ $ .26 $ .36 $ .11
Weighted average common units
outstanding:
General Partner.......... 38,182,577 39,636,815 40,011,627
Limited Partners'........ 7,709,228 7,694,349 7,741,227
1997
-------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
--------------- -------------- ------------- -----------------
Total revenues..................... $31,670 $36,188 $40,328 $45,162
=============== ============== ============= =================
Income before, minority interests and
extraordinary items............. $8,806 $12,006 $11,544 $13,353
Minority partners' interest in consolidated
partnerships income............. (268) (228) (228) (196)
Extraordinary (loss)............... --- (2,362) (446) --
--------------- -------------- ------------- -----------------
Net income......................... $8,538 $9,416 $10,870 $13,157
=============== ============== ============= =================
Net Income:
General Partner................. $6,760 $7,823 $ 9,039 $11,120
Limited Partners'............... 1,778 1,593 1,831 2,037
--------------- -------------- ------------- ----------------
Total.............................. $8,538 $9,416 $10,870 $13,157
=============== ============== ============= ================
Net income per unit:
General Partner................. $ .25 $ .23 $ .26 $ .31
Limited Partners'............... $ .26 $ .23 $ .26 $ .29
Weighted average common units outstanding:
General Partner................. 26,569,162 34,298,137 34,477,050 35,445,213
Limited Partners'............... 6,960,428 6,974,814 6,974,031 7,153,848
1996
-------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
--------------- -------------- -------------- -----------------
Total revenues........................... $19,065 $22,686 $24,712 $29,567
=============== ============== ============== =================
Income before, minority interests and
extraordinary items................... $4,907 $ 6,414 $ 6,397 $ 7,377
Minority partners' interest in consolidated
partnership income ................... (261) (263) (194) (197)
Extraordinary (loss)..................... (1,259) --- --- ---
--------------- -------------- -------------- ------------------
Net income............................... $3,387 $6,151 $ 6,203 $ 7,180
=============== ============== ============== ==================
Net Income:
General Partner....................... $2,403 $4,658 $ 4,687 $ 5,577
Limited Partners'..................... 984 1,493 1,516 1,603
--------------- -------------- -------------- ------------------
Total.................................... $3,387 $6,151 $ 6,203 $ 7,180
=============== ============== ============== ==================
Net income per unit:
General Partner....................... $ .16 $ .23 $ .22 $ .24
Limited Partners'..................... $ .16 $ .23 $ .23 $ .24
Weighted average units outstanding:
General Partner........................ 14,889,612 20,349,210 20,880,474 23,541,600
Limited Partners'.................... 6,064,498 6,486,304 6,721,226 6,737,124
Reckson Operating Partnership, L. P.
Schedule III-Real Estate and Accumulated Depreciation
December 31, 1997
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Cost Capitalized
Subsequent to Gross Amount at Which
Initial Cost Acquisition Carried at Close of Period
------------ ---------------- --------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements
----------- ----------- ---- ------------- ---- ------------- ---- -------------
Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an
industrial park)............... B $1,940 $9,955 $--- $8,789 $1,940 $18,744
Airport International Plaza
New York (17 buildings
industrial park)............... 2,616/C 1,263 13,608 --- 9,670 1,263 23,278
County Line Industrial Cent
Huntington, New York
(3 buildings in an industry
park).......................... B 628 3,686 --- 2,438 628 6,124
32 Windsor Place,
Islip, New York................ B 32 321 --- 46 32 367
42 Windsor Place,
Islip, New York................ B 48 327 --- 542 48 869
505 Walt Whitman Rd.,
Huntington, New York........... B 140 42 --- 52 140 94
1170 Northern Blvd., N.
Great Neck, New York........... B 30 99 --- 31 30 130
50 Charles Lindbergh Blvd.,
Mitchel Field, New York ....... 15,479 A 12,089 --- 3,526 --- 15,615
200 Broadhollow Road,
Melville, New York............. 6,649 338 3,354 --- 2,362 338 5,716
48 South Service Road,
Melville, New York............. B 1,652 10,245 --- 3,351 1,652 13,596
395 North Service Road,
Melville, New York............. 9,917 A 15,551 --- 6,475 --- 22,026
6800 Jericho Turnpike,
Syosset, New York.............. 15,001 582 6,566 --- 5,941 582 12,507
6900 Jericho Turnpike,
Syosset, New York.............. 5,279 385 4,228 --- 1,674 385 5,902
300 Motor Parkway,
Hauppauge, New York............ B 276 1,136 --- 828 276 1,964
88 Duryea Road,
Melville, New York............. B 200 1,565 --- 616 200 2,181
210 Blydenburgh Road,
Islandia, New York............. B 11 158 --- 159 11 317
208 Blydenburgh Road,
Islandia, New York............. B 12 192 --- 145 12 337
71 Hoffman Lane,
Islandia, New York............. B 19 260 --- 172 19 432
933 Motor Parkway,
Smithtown, New York............ B 106 375 --- 361 106 736
Column F Column G Column H Column I
-------- -------- -------- --------
Life on which
Accumulated Date of Date of Depreciation
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -------------
Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an 1961- 1961-
industrial park)............... $20,684 $11,432 1979 1979 10-30 years
Airport International Plaza
New York (17 buildings 1970- 1970-
industrial park)............... 24,541 12,463 1988 1988 10-30 years
County Line Industrial Cent
Huntington, New York
(3 buildings in an industry 1975- 1975-
park).......................... 6,752 3,721 1979 1979 10-30 years
32 Windsor Place,
Islip, New York................ 399 294 1971 1971 10-30 years
42 Windsor Place,
Islip, New York................ 917 615 1972 1972 10-30 years
505 Walt Whitman Rd.,
Huntington, New York........... 234 60 1950 1968 10-30 years
1170 Northern Blvd., N.
Great Neck, New York........... 160 115 1947 1962 10-30 years
50 Charles Lindbergh Blvd.,
Mitchel Field, New York ....... 15,615 7,347 1984 1984 10-30 years
200 Broadhollow Road,
Melville, New York............. 6,054 3,151 1981 1981 10-30 years
48 South Service Road,
Melville, New York............. 15,248 5,895 1986 1986 10-30 years
395 North Service Road,
Melville, New York............. 22,026 8,849 1988 1988 10-30 years
6800 Jericho Turnpike,
Syosset, New York.............. 13,089 7,338 1977 1978 10-30 years
6900 Jericho Turnpike,
Syosset, New York.............. 6,287 2,898 1982 1982 10-30 years
300 Motor Parkway,
Hauppauge, New York............ 2,240 1,101 1979 1979 10-30 years
88 Duryea Road,
Melville, New York............. 2,381 1,027 1980 1980 10-30 years
210 Blydenburgh Road,
Islandia, New York............. 328 243 1969 1969 10-30 years
208 Blydenburgh Road,
Islandia, New York............. 349 284 1969 1969 10-30 years
71 Hoffman Lane,
Islandia, New York............. 451 345 1970 1970 10-30 years
933 Motor Parkway,
Smithtown, New York............ 842 490 1973 1973 10-30 years
Reckson Operating Partnership, L. P.
Schedule III-Real Estate and Accumulated Depreciation
December 31, 1997 (continued)
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Cost Capitalized
Subsequent to Gross Amount at Which
Initial Cost Acquisition Carried at Close of Period
------------ ---------------- --------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements
----------- ----------- ---- ------------- ---- ------------- ---- -------------
65 and 85 South Service Road
Plainview, New York............ B 40 218 --- 10 40 228
333 Earl Ovington Blvd., 57,839 A 67,221 --- 15,556 --- 82,777
Mitchel Field, New York (Omni)
135 Fell Court
Islip, New York................ B 462 1,265 --- 48 462 1,313
40 Cragwood Road, B
South Plainfield, New Jersey 708 7,131 17 3,664 725 10,795
110 Marcus Drive,
Huntington, New York........... B 390 1,499 --- 13 390 1,512
333 East Shore Road,
Great Neck, New York........... B A 564 --- 128 --- 692
310 East Shore Road,
Great Neck, New York........... 2,322 485 2,009 --- 265 485 2,274
70 Schmitt Blvd.,
Farmingdale, New York.......... 425 727 3,408 --- 15 727 3,423
19 Nicholas Drive,
Yaphank, New York.............. B 160 7,399 --- --- 160 7,399
1516 Motor Parkway,
Hauppauge, New York............ B 603 6,722 --- 13 603 6,735
125 Baylis Road,
Melville, New York............. B 1,601 8,626 --- 422 1,601 9,048
35 Pinelawn Road,
Melville, New York............. B 999 7,073 --- 1,354 999 8,427
520 Broadhollow Road,
Melville, New York............. B 457 5,572 --- 1,404 457 6,976
1660 Walt Whitman Road,
Melville, New York............. B 370 5,072 --- 389 370 5,461
70 Maxess Road,
Melville, New York............. 1,863 708 1,859 96 3,806 804 5,665
85 Nicon Court,
Hauppauge, New York............ B 797 2,818 --- 54 797 2,872
104 Parkway Drive So.,
Hauppauge, New York............ B 54 804 --- 130 54 934
20 Melville Park Rd.,
Melville, New York............. B 391 2,650 --- 96 391 2,746
105 Price Parkway,
Hauppauge, New York............ B 2,030 6,327 --- 311 2,030 6,638
48 Harbor Park Drive,
Hauppauge, New York............ B 1,304 2,247 --- 89 1,304 2,336
125 Ricefield Lane,
Hauppauge, New York............ B 13 852 --- 330 13 1,182
Column F Column G Column H Column I
-------- -------- -------- --------
Life on which
Accumulated Date of Date of Depreciation
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -------------
65 and 85 South Service Road
Plainview, New York............ 268 221 1961 1961 10-30 years
333 Earl Ovington Blvd., 82,777 12,371 1990 1995 10-30 years
Mitchel Field, New York (Omni)
135 Fell Court
Islip, New York................ 1,775 238 1965 1992 10-30 years
40 Cragwood Road,
South Plainfield, New Jersey 11,520 5,957 1970 1983 10-30 years
110 Marcus Drive,
Huntington, New York........... 1,902 1,113 1980 1980 10-30 years
333 East Shore Road,
Great Neck, New York........... 692 430 1976 1976 10-30 years
310 East Shore Road,
Great Neck, New York........... 2,759 1,215 1981 1981 10-30 years
70 Schmitt Blvd.,
Farmingdale, New York.......... 4,150 267 1965 1995 10-30 years
19 Nicholas Drive,
Yaphank, New York.............. 7,559 597 1989 1995 10-30 years
1516 Motor Parkway,
Hauppauge, New York............ 7,338 560 1981 1995 10-30 years
125 Baylis Road,
Melville, New York............. 10,649 654 1980 1995 10-30 years
35 Pinelawn Road,
Melville, New York............. 9,426 701 1980 1995 10-30 years
520 Broadhollow Road,
Melville, New York............. 7,433 736 1978 1995 10-30 years
1660 Walt Whitman Road,
Melville, New York............. 5,831 419 1980 1995 10-30 years
70 Maxess Road,
Melville, New York............. 6,469 193 1967 1995 10-30 years
85 Nicon Court,
Hauppauge, New York............ 3,669 191 1984 1995 10-30 years
104 Parkway Drive So.,
Hauppauge, New York............ 988 54 1985 1996 10-30 years
20 Melville Park Rd.,
Melville, New York............. 3,137 105 1965 1996 10-30 years
105 Price Parkway,
Hauppauge, New York............ 8,668 342 1969 1996 10-30 Years
48 Harbor Park Drive,
Hauppauge, New York............ 3,640 116 1976 1996 10-30 Years
125 Ricefield Lane,
Hauppauge, New York............ 1,195 95 1973 1996 10-30 Years
Reckson Operating Partnership, L. P.
Schedule III-Real Estate and Accumulated Depreciation
December 31, 1997 (continued)
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Cost Capitalized
Subsequent to Gross Amount at Which
Initial Cost Acquisition Carried at Close of Period
------------ ---------------- --------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements
----------- ----------- ---- ------------- ---- ------------- ---- -------------
110 Ricefield Lane,
Hauppauge, New York............ B 33 1,043 --- 52 33 1,095
120 Ricefield Lane,
Hauppauge, New York............ B 16 1,051 --- 30 16 1,081
135 Ricefield Lane,
Hauppauge, New York............ B 24 906 --- 473 24 1,379
30 Hub Drive,
Huntington, New York........... B 469 1,571 --- 246 469 1,817
60 Charles Lindbergh,
Mitchel Field, New York ....... B A 20,800 --- 1,344 --- 22,144
155 White Plains Rod.,
Tarrytown, New York............ B 1,613 2,542 --- 595 1,613 3,137
2 Church Street,
Tarrytown, New York ........... B 232 1,307 --- 385 232 1,692
235 Main Street,
Tarrytown, New York............ B 955 5,375 --- 562 955 5,937
245 Main Street,
Tarrytown, New York............ B 1,294 7,284 --- 790 1,294 8,074
505 White Plains Road,
Tarrytown, New York............ B 236 1,332 --- 163 236 1,495
555 White Plains Road,
Tarrytown, New York............ B 712 4,133 13 2,658 725 6,791
560 White Plains Road,
Tarrytown, New York............ B 1,553 8,756 --- 1,688 1,553 10,444
580 White Plains Road,
Tarrytown, New York............ 8,811 2,591 14,595 --- 1,347 2,591 15,942
660 White Plains Road,
Tarrytown, New York............ B 3,929 22,640 --- 1,738 3,929 24,378
Landmark Square,
Stamford, CT................... 49,291 11,603 64,466 --- 6,216 11,603 70,682
110 Bi-County Blvd.,
Farmingdale, New York.......... 4,531 2,342 6,665 --- 124 2,342 6,789
RREEF Portfolio,
Hauppauge, New York
(10 additional buildings in
Vanderbuilt Industrial Park) ... B 930 20,619 --- 523 930 21,142
275 Broadhollow Road,
Melville, New York.............. B 5,250 11,761 --- 464 5,250 12,225
One Eagle Rock, East
Hanover, New Jersey............. B 803 7,563 --- 21 803 7,584
710 Bridgeport Avenue,
Shelton, CT..................... B 5,405 21,620 --- 440 5,405 22,060
101 JFK Expressway,
Short Hills, New Jersey ........ B 7,745 43,889 --- 263 7,745 44,152
Column F Column G Column H Column I
-------- -------- -------- --------
Life on which
Accumulated Date of Date of Depreciation
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -------------
110 Ricefield Lane,
Hauppauge, New York............ 1,128 68 1980 1996 10-30 Years
120 Ricefield Lane,
Hauppauge, New York............ 1,097 44 1983 1996 10-30 Years
135 Ricefield Lane,
Hauppauge, New York............ 1,403 116 1981 1996 10-30 Years
30 Hub Drive,
Huntington, New York........... 2,286 93 1976 1996 10-30 Years
60 Charles Lindbergh,
Mitchel Field, New York ....... 22,144 1,249 1989 1996 10-30 Years
155 White Plains Rod.,
Tarrytown, New York............ 4,750 133 1963 1996 10-30 Years
2 Church Street,
Tarrytown, New York ........... 1,924 94 1979 1996 10-30 Years
235 Main Street,
Tarrytown, New York............ 6,892 374 1974 1996 10-30 Years
245 Main Street,
Tarrytown, New York............ 9,368 507 1983 1996 10-30 Years
505 White Plains Road,
Tarrytown, New York............ 1,731 109 1974 1996 10-30 Years
555 White Plains Road,
Tarrytown, New York............ 7,516 588 1972 1996 10-30 Years
560 White Plains Road,
Tarrytown, New York............ 11,997 837 1980 1996 10-30 Years
580 White Plains Road,
Tarrytown, New York............ 18,533 1,108 1977 1996 10-30 Years
660 White Plains Road,
Tarrytown, New York............ 28,307 1,603 1983 1996 10-30 Years
Landmark Square,
Stamford, CT................... 82,285 2,764 1973-1984 1996 10-30 years
110 Bi-County Blvd.,
Farmingdale, New York.......... 9,131 233 1984 1997 10-30 Years
RREEF Portfolio,
Hauppauge, New York
(10 additional buildings in
Vanderbuilt Industrial Park) ... 22,072 570 1974-1982 1997 10-30 Years
275 Broadhollow Road,
Melville, New York.............. 17,475 300 1970 1997 10-30 Years
One Eagle Rock, East
Hanover, New Jersey............. 8,387 179 1986 1997 10-30 Years
710 Bridgeport Avenue,
Shelton, CT..................... 27,465 506 1971-1979 1977 10-30 Years
101 JFK Expressway,
Short Hills, New Jersey ........ 51,897 978 1981 1997 10-30 Years
Continued-
Reckson Operating Partnership, L. P.
Schedule III-Real Estate and Accumulated Depreciation
December 31, 1997 (continued)
(In thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Cost Capitalized
Subsequent to Gross Amount at Which
Initial Cost Acquisition Carried at Close of Period
------------ ---------------- --------------------------
Buildings and Buildings and Buildings and
Description Encumbrance Land Improvements Land Improvements Land Improvements
----------- ----------- ---- ------------- ---- ------------- ---- -------------
C>
10 Rooney Circle,
West Orange, New Jersey ....... B 1,302 4,615 --- 408 1,302 5,023
Executive Hill Office Park,
West Orange, New Jersey ....... B 7,629 31,288 --- 410 7,629 31,698
3 University Plaza,
Hackensack, New Jersey......... B 7,894 11,846 --- 110 7,894 11,956
400 Garden City Plaza,
Garden City, New York.......... B 13,986 10,127 --- 225 13,986 10,352
425 Rabro Drive,
Hauppauge, New York............ B 665 3,489 --- 63 665 3,552
One Paragon Drive,
Montvale, New Jersey........... B 2,773 9,901 --- 91 2,773 9,992
90 Merrick Avenue,
East Meadow, New York.......... B A 19,193 --- 332 --- 19,525
150 Motor Parkway,
Hauppauge, New York............ B 1,114 20,430 --- 839 1,114 21,269
390 Motor Parkway,
Hauppauge, New York............ B 240 4,459 --- 202 240 4,661
Royal Executive Park,
Ryebrook, New York..... ....... B 18,343 55,028 --- 479 18,343 55,507
120 White Plains Road,
Tarrytown, New York............ B 3,355 24,605 --- --- 3,355 24,605
University Square,
Princeton, New Jersey.......... B 8,045 8,888 --- 19 8,045 8,907
100 Andrews Road,
Hicksville, New York........... B 2,812 1,711 --- 5,155 2,812 6,866
2 Macy Road,
Harrison, New York............. B 642 2,131 --- 19 642 2,150
80-100 Grasslands,
Elmsford, New York............. B 1,609 6,823 --- 106 1,609 6,929
65 Marcus Drive,
Melville, New York............. B 295 1,966 --- 865 295 2,831
Land held for development......... B 29,309 --- --- --- 29,309 ---
Development in progress........... B 5,492 10,757 --- 8,915 5,492 19,672
Other property.................... B --- --- --- 1,998 --- 1,998
----------- -------- ----------- ------- ----------- -------- -----------
Total............................ 180,023 173,201 $722,268 $126 $115,633 $173,327 $837,901
----------- -------- ----------- ------- ----------- -------- -----------
----------- -------- ----------- ------- ----------- -------- -----------
Column F Column G Column H Column I
-------- -------- -------- --------
Life on which
Accumulated Date of Date of Depreciation
Total Depreciation Construction Acquired is Computed
----- ------------ ------------ -------- -------------
10 Rooney Circle,
West Orange, New Jersey ....... 6,325 119 1971 1997 10-30 Years
Executive Hill Office Park,
West Orange, New Jersey ....... 39,327 504 1978-1984 1997 10-30 Years
3 University Plaza,
Hackensack, New Jersey......... 19,850 167 1985 1997 10-30 Years
400 Garden City Plaza,
Garden City, New York.......... 24,338 139 1989 1997 10-30 Years
425 Rabro Drive,
Hauppauge, New York............ 4,217 49 1980 1997 10-30 Years
One Paragon Drive,
Montvale, New Jersey........... 12,765 86 1980 1997 10-30 Years
90 Merrick Avenue,
East Meadow, New York.......... 19,525 135 1985 1997 10-30 Years
150 Motor Parkway,
Hauppauge, New York............ 22,383 151 1984 1997 10-30 Years
390 Motor Parkway,
Hauppauge, New York............ 4,901 32 1980 1997 10-30 Years
Royal Executive Park,
Ryebrook, New York..... ....... 73,850 195 1983-1986 1997 10-30 Years
120 White Plains Road,
Tarrytown, New York............ 27,960 68 1984 1997 10-30 Years
University Square,
Princeton, New Jersey.......... 16,952 25 1987 1997 10-30 Years
100 Andrews Road,
Hicksville, New York........... 9,678 137 1954 1996 10-30 Years
2 Macy Road,
Harrison, New York............. 2,792 8 1962 1997 10-30 Years
80-100 Grasslands,
Elmsford, New York............. 8,538 24 1989/1964 1997 10-30 Years
65 Marcus Drive,
Melville, New York............. 3,126 28 1968 1996 10-30 Years
Land held for development......... 29,309 --- N/A variouss N/A
Development in progress........... 25,164 ---
Other property.................... 1,998 89
---------- -- --------
Total............................. $1,011,228 $ 108,652
========== ===========
- ---------------------------
A These land parcels are leased (see Note 4).
B There are no encumbrances on these properties.
C The Encumbrance of $2,616 is related to one property.
The aggregate cost for Federal Income Tax purposes was approximately $932.4 million at December 31, 1997.
Reckson Operating Partnership, L. P.
And Reckson Group
Schedule III-Real Estate and Accumulated Depreciation (continued)
(in thousands)
The changes in real estate for each of the periods in the three years
ended December 31, 1997 are as follows:
January 1, 1997 January 1, 1996 June 3, 1995 January 1, 1995
to to to to
December 31, 1997 December 31, 1996 December 31, 1995 June 2, 1995
----------------- ----------------- ----------------- ----------------
Real estate balance at beginning of
period................................... $516,768 $288,056 $216,333 $159,693
Improvements................................ 37,778 15,174 3,768 814
Disposal, including write-off of fully
depreciated building improvements........ (154) (936) (3,174) ---
Properties not contributed to the
Operating Partnership ................... --- --- --- (15,133)
Consolidation of Omni (1)................... --- --- --- 70,959
Acquisitions................................ 456,836 214,474 55,054 ---
Cash paid in exchange for properties........ --- --- 16,075 ---
---------- -------- -------- ----------
Balance at end of period.................... $1,011,228 $516,768 $288,056 $216,333
---------- -------- -------- ----------
---------- -------- -------- ----------
The changes in accumulated depreciation, exclusive of amounts relating to equipment, autos, furniture and fixtures, for each of
the periods in the three years ended December 31, 1997 are as follows:
January 1, 1997 January 1, 1996 June 3, 1995 January 1, 1995
to to to to
December 31, 1997 December 31, 1996 December 31, 1995 June 2, 1995
----------------- ----------------- ----------------- ----------------
Balance at beginning of period............... $86,344 $72,499 $69,841 $71,596
Depreciation for period...................... 22,442 14,781 5,832 2,453
Disposal, including write-off of fully
depreciated building improvements........... (134) (936) (3,174) ---
Properties not contributed to the
Operating Partnership....................... --- --- --- (7,946)
Consolidation of Omni........................ --- --- --- 3,738
---------- -------- -------- --------
Balance at end of period..................... $108,652 $86,344 $72,499 $69,841
========= ======== ======== ========
(1) The Omni was consolidated as a result of the Operating Partnership purchasing a controlling interest as part of the
Formation Transactions.
========================================================= =================================================
----------------------
RECKSON
ASSOCIATES
REALTY CORP.
TABLE OF CONTENTS
Prospectus
Risk Factors..................................2
Available Information .......................14
Incorporation of Certain Documents by
Reference....................................15
Reckson Associates and The Operating
Partnership..................................16
Use of Proceeds..............................18
Description of Debt Securities...............20
Description of Common Stock..................37
Description of Preferred Stock...............39
Description of Depositary Shares.............47
Restrictions on Ownership of Capital Stock...51
Description of Warrants......................53
Federal Income Tax Considerations............54
Plan of Distribution.........................55
Legal Matters................................56
Experts......................................56
Part II........................................
Information Not Required In Prospectus.........
Signatures.....................................
========================================================= =================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14..OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the estimated expenses in connection with
the issuance and distribution of the Registrant's securities being registered
hereby, other than underwriting discounts and commissions, all of which will
be borne by the Registrant:
Securities and Exchange Commission registration fee.............. $72,280
Printing and engraving expenses.................................. 200,000
Legal fees and expenses.......................................... 150,000
Accounting fees and expenses..................................... 40,000
Blue Sky fees and expenses....................................... 20,000
Trustee's fees................................................... 10,000
Miscellaneous.................................................... 57,720
--------
Total $550,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Maryland General Corporation Law, as amended from time to time
(the "MGCL"), permits a Maryland corporation to include in its Charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Charter of the
Company contains such a provision which eliminates such liability to the
maximum extent permitted by Maryland law.
The Charter of the Company authorizes the Company, to the maximum
extent permitted by Maryland law, to obligate itself to indemnify and to pay
or reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any present or former director or officer or (b) any
individual who, while a director of the Company and at the request of the
Company, serves or has served another corporation, real estate investment
trust, partnership, joint venture, trust, employee benefit plan or any other
enterprise as a director, officer, partner or trustee of such corporation,
real estate investment trust, partnership, joint venture, trust, employee
benefit plan or other enterprise and who is made a party to the proceeding by
reason of his or her service in that capacity. The Bylaws of the Company
obligate it, to the maximum extent permitted by Maryland law, to indemnify and
to pay or reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any present or former director or officer who is made a
party to the proceeding by reason of his service in that capacity or (b) any
individual who, while a director of the Company and at the request of the
Company, serves or has served another corporation, real estate investment
trust, partnership, joint venture, trust, employee benefit plan or any other
enterprise as a director, officer, partner or trustee of such corporation,
real estate investment trust, partnership, joint venture, trust, employee
benefit plan or other enterprise and who is made a party to the proceeding by
reason of his service in that capacity. The Charter and Bylaws also permit the
Company to indemnify and advance expenses to any person who served a
predecessor of the Company in any of the capacities described above and to any
employee or agent of the Company or a predecessor of the Company.
The MGCL requires a corporation (unless its charter provides
otherwise, which the Company's Charter does not) to indemnify a director or
officer who has been successful, on the merits or otherwise, in the defense of
any proceeding to which he is made a party by reason of his service in that
capacity. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection
with any proceeding to which they may be made a party by reason of their
service in those or other capacities unless it is established that (a) the act
or omission of the director or officer was material to the matter giving rise
to the proceeding and (i) was committed in bad faith or (ii) was the result of
active and deliberate dishonesty, (b) the director or officer actually
received an improper personal benefit in money, property or services or (c) in
the case of any criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful. However, under the
MGCL, a Maryland corporation may not indemnify for an adverse judgment in a
suit by or in the right of the corporation or for a judgment of liability on
the basis that personal benefit was improperly received, unless in either case
a court orders indemnification and then only for expenses. In addition, the
MGCL permits a corporation to advance reasonable expenses, upon the
corporation's receipt of (a) a written affirmation by the director or officer
of his good faith belief that he has met the standard of conduct necessary for
indemnification by the Company and (b) a written statement by or on his behalf
to repay the amount paid or reimbursed by the Corporation if it shall
ultimately be determined that the standard of conduct was not met.
The Company has entered into indemnification agreements with each of
its executive officers and directors. The indemnification agreements require,
among other matters, that the Company indemnify its executive officers and
directors to the fullest extent permitted by law and advance to the executive
officers and directors all related expenses, subject to reimbursement if it is
subsequently determined that indemnification is not permitted. Under these
agreements, the Company must also indemnify and advance all expenses incurred
by executive officers and directors seeking to enforce their rights under the
indemnification agreements and may cover executive officers and directors
under the Company's directors' and officers' liability insurance. Although
indemnification agreements offer substantially the same scope of coverage
afforded the Bylaws, they provide greater assurance to directors and executive
officers that indemnification will be available, because, as contracts, they
cannot be modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights they provide.
The Partnership Agreement of the Operating Partnership contains
provisions indemnifying its partners and their officers and directors to the
fullest extent permitted by the Delaware Limited Partnership Act.
ITEM 16. EXHIBITS.
1 ___ Form of Underwriting Agreement.(1)
4.1 ___ Form of Common Stock Certificate.(2)
4.2 ___ Form of Designating Amendment for Preferred Stock.(1)
4.3 ___ Form of Preferred Stock Certificate.(1)
4.4 ___ Form of Warrant Agreement.(1)
4.5 ___ Form of Warrant.(1)
4.6 ___ Form of Indenture
5 ___ Opinion of Brown & Wood LLP as to the legality of
the Securities.(1)
8 ___ Opinion of Brown & Wood LLp as to tax matters.
12.1 ___ Calculation of Reckson Associates Realty Corp.
Ratios of Earnings to Combined Fixed Charges.
12.2 ___ Calculation of Reckson Associates Realty Corp.
Ratios of Earnings to Fixed Charges and Preferred
Dividends
12.3 ___ Calculation of Reckson Operating Partnership L.P.
Ratios of Earnings to Combined Fixed Charges.
12.4 ___ Calculation of Reckson Operating Partnership L.P.
Ratios of Earnings to Fixed Charges and Preferred
Dividends
23.1 ___ Consent of Brown & Wood LLP (included in Exhibits
5 and 8).
23.2 ___ Consent of Ernst & Young LLP.
24 ___ Power of attorney (included on the signature page
of this Registration Statement)
- ---------------
(1) To be filed by amendment or incorporated by reference in connection
with the offering of Securities.
(2) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) Each Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to
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 (1)(i) and
(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of etermining any liability under the
ecurities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of such
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, partners and
controlling persons of a Registrant pursuant to the foregoing provisions, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by a Registrant of expenses incurred or paid by a director,
officer, partner or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer, partner or controlling person in connection with the securities being
registered, the applicable Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(d) Each registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305 (b)(2) of the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Reckson
Associates Realty Corp. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Huntington, State
of New York, on December 28, 1998.
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Scott H. Rechler
------------------------------
Scott H. Rechler
President
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
Donald J. Rechler* Chairman of the Board, Chief Executive
-------------------- Officer and Director (Principal Executive
Donald J. Rechler Officer)
/s/ Scott H. Rechler President, Chief Operating Officer and December 28, 1998
-------------------- Director
Scott H. Rechler
Michael Maturo* Executive Vice President, Treasurer and
-------------------- Chief Financial Officer (Principal
Michael Maturo Financial Officer and Principal Accounting
Officer)
Roger M. Rechler* Vice-Chairman of the Board and Director
--------------------
Roger M. Rechler
Mitchell D. Rechler* Executive Vice President and Director
--------------------
Mitchell D. Rechler
Harvey R. Blau* Director
--------------------
Harvey R. Blau
Leonard Feinstein* Director
--------------------
Leonard Feinstein
Herve A. Kevenides* Director
--------------------
Herve A. Kevenides
John V.N. Klein* Director
--------------------
John V.N. Klein
Lewis S. Ranieri* Director
--------------------
Lewis S. Ranieri
____________________ Director
Conrad D. Stephenson
* /s/ Scott H. Rechler December 28, 1998
--------------------
Attorney-in-Fact
EXHIBIT INDEX
EXHIBITS DESCRIPTION PAGE
-------- ----------- ----
1 -- Form of Underwriting Agreement.(1)
4.1 -- Form of Common Stock Certificate.(2)
4.2 -- Form of Designating Amendment for Preferred Stock.(1)
4.3 -- Form of Preferred Stock Certificate.(1)
4.4 -- Form of Warrant Agreement.(1)
4.5 -- Form of Warrant.(1)
4.6 -- Form of Indenture
5 -- Opinion of Brown & Wood LLP as to the legality of the
Securities.(1)
8 -- Opinion of Brown & Wood LLP as to tax matters.
12.1 -- Calculation of Reckson Associates Realty Corp. Ratios of
Earnings to Combined Fixed Charges.
12.2 -- Calculation of Reckson Associates Realty Corp. Ratios of
Earnings to Fixed Charges and Preferred Dividends
12.3 -- Calculation of Reckson Operating Partnership L.P. Ratios of
Earnings to Combined Fixed Charges.
12.4 -- Calculation of Reckson Operating Partnership L.P. Ratios of
Earnings to Fixed Charges and Preferred Dividends
23.1 -- Consent of Brown & Wood LLP (included in Exhibits 5 and 8).
23.2 -- Consent of Ernst & Young LLP.
24 -- Power of attorney (included on the signature page of this
Registration Statement)
- -----------------
(1) To be filed by amendment or incorporated by reference in connection
with the offering of Securities.
(2) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
EXHIBIT 4.6
RECKSON OPERATING PARTNERSHIP, L.P.,
ISSUER
and
RECKSON ASSOCIATES REALTY CORP.,
GUARANTOR
to
------------------------------------,
TRUSTEE
---------------
INDENTURE
---------------
Dated as of __________ ___, 199_
Debt Securities
Reconciliation and tie between
Trust Indenture Act of 1939 (the "Trust Indenture Act")
and Indenture
Trust Indenture
Act Section Indenture Section
ss.310(a)(1) 607
(a)(2) 607
(b) 608
ss.312(a) 701
(b) 702
(c) 702
ss.313(a) 703
(b)(2) 703
(c) 703
(d) 703
ss.314(a) 704
(c)(1) 102
(c)(2) 102
(e) 102
(f) 102
ss.316(a) (last sentence) 101
(a)(1)(A) 502, 512
(a)(1)(B) 513
(b) 508
ss.317(a)(1) 503
(a)(2) 504
(b) 1003
ss.318(a) 108
- ------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to
and including 317 are a part of and govern every qualified indenture,
whether or not physically contained herein.
Table of Contents
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions......................................................2
Act.........................................................................2
Additional Amounts..........................................................2
Affiliate...................................................................2
Annual Service Charge.......................................................3
Authenticating Agent........................................................3
Authorized Newspaper........................................................3
Bearer Security.............................................................3
Board of Directors..........................................................3
Board Resolution............................................................3
Business Day................................................................3
Code........................................................................3
Commission..................................................................3
Common Stock................................................................4
Consolidated Income Available for Debt Service..............................4
Consolidated Net Income.....................................................4
Conversion Event............................................................4
Corporate Trust Office......................................................4
Corporation.................................................................4
Coupon......................................................................4
Currency....................................................................4
CUSIP number................................................................4
Defaulted Interest..........................................................5
Dollars.....................................................................5
Euro........................................................................5
European Monetary System....................................................5
European Union..............................................................5
Event of Default............................................................5
Exchange Act................................................................5
Foreign Currency............................................................5
GAAP........................................................................5
General Partner.............................................................5
Government Obligations......................................................5
Guarantee...................................................................6
Guaranteed Securities.......................................................6
Guarantor...................................................................6
Guarantor's Board of Directors..............................................6
Guarantor's Board Resolution................................................6
Guarantor's Officers' Certificate...........................................6
Guarantor Request...........................................................6
Holder......................................................................6
Indebtedness................................................................6
Indenture...................................................................7
Independent Public Accountants..............................................7
Indexed Security............................................................7
Interest....................................................................7
Interest Payment Date.......................................................7
Issuer......................................................................7
Issuer Request..............................................................7
Judgment Currency...........................................................8
Legal Holiday...............................................................8
Lien........................................................................8
Maturity....................................................................8
New York Banking Day........................................................8
Office......................................................................8
Officers' Certificate.......................................................8
Opinion of Counsel..........................................................8
Original Issue Discount Security............................................8
Outstanding.................................................................9
Paying Agent...............................................................10
Permitted Debt.............................................................10
Person.....................................................................10
Place of Payment...........................................................10
Predecessor Security.......................................................10
Redemption Date............................................................10
Redemption Price...........................................................11
Registered Security........................................................11
Regular Record Date........................................................11
Required Currency..........................................................11
Responsible Officer........................................................11
Security...................................................................11
Security Register..........................................................11
Special Record Date........................................................11
Stated Maturity............................................................11
Subsidiary.................................................................11
Total Assets...............................................................12
Total Unencumbered Assets....................................................12
Trust Indenture Act..........................................................12
Trustee......................................................................12
Undepreciated Real Estate Assets.............................................12
United States................................................................12
United States Alien..........................................................12
Unsecured Debt...............................................................13
U.S. Depository..............................................................13
Vice President...............................................................13
Voting Stock.................................................................13
Section 102. Compliance Certificates and Opinions............................13
Section 103. Form of Documents Delivered to Trustee..........................13
Section 104. Acts of Holders.................................................14
Section 105. Notices, etc., to Trustee and Issuer and Guarantor..............16
Section 106. Notice to Holders of Securities; Waiver.........................16
Section 107. Language of Notices.............................................17
Section 108. Conflict with Trust Indenture Act...............................17
Section 109. Effect of Headings and Table of Contents........................17
Section 110. Successors and Assigns..........................................17
Section 111. Separability Clause.............................................18
Section 112. Benefits of Indenture...........................................18
Section 113. Governing Law...................................................18
Section 114. Legal Holidays..................................................18
Section 115. Counterparts....................................................18
Section 116. Judgment Currency...............................................18
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally.................................................19
Section 202. Form of Trustee's Certificate of Authentication.................19
Section 203. Securities in Global Form.......................................20
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series............................21
Section 302. Currency; Denominations.........................................24
Section 303. Execution, Authentication, Delivery and Dating..................25
Section 304. Temporary Securities............................................27
Section 305. Registration, Transfer and Exchange.............................27
Section 306. Mutilated, Destroyed, Lost and Stolen Securities................31
Section 307. Payment of Interest and Certain Additional Amounts;
Rights to Interest and Certain Additional Amounts
Preserved......................................................32
Section 308. Persons Deemed Owners...........................................34
Section 309. Cancellation....................................................34
Section 310. Computation of Interest.........................................35
ARTICLE FOUR
SATISFACTION AND DISCHARGE OF INDENTURE
Section 401. Satisfaction and Discharge......................................35
Section 402. Defeasance and Covenant Defeasance..............................37
Section 403. Application of Trust Money......................................41
ARTICLE FIVE
REMEDIES
Section 501. Events of Default...............................................41
Section 502. Acceleration of Maturity; Rescission and Annulment..............43
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.....................................................44
Section 504. Trustee May File Proofs of Claim................................45
Section 505. Trustee May Enforce Claims without Possession of
Securities or Coupons..........................................46
Section 506. Application of Money Collected..................................46
Section 507. Limitations on Suits............................................46
Section 508. Unconditional Right of Holders to Receive Principal
and any Premium, Interest and Additional Amounts...............47
Section 509. Restoration of Rights and Remedies..............................47
Section 510. Rights and Remedies Cumulative..................................47
Section 511. Delay or Omission Not Waiver....................................48
Section 512. Control by Holders of Securities................................48
Section 513. Waiver of Past Defaults.........................................48
Section 514. Waiver of Stay or Extension Laws................................49
Section 515. Undertaking for Costs...........................................49
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee.......................................49
Section 602. Notice of Defaults..............................................51
Section 603. Not Responsible for Recitals or Issuance of Securities..........51
Section 604. May Hold Securities.............................................51
Section 605. Money Held in Trust.............................................51
Section 606. Compensation and Reimbursement..................................52
Section 607. Corporate Trustee Required; Eligibility.........................52
Section 608. Resignation and Removal; Appointment of Successor...............53
Section 609. Acceptance of Appointment by Successor..........................54
Section 610. Merger, Conversion, Consolidation or Succession to Business.....55
Section 611. Appointment of Authenticating Agent.............................56
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE, GUARANTOR AND ISSUER
Section 701. Issuer and the Guarantor to Furnish Trustee Names
and Addresses of Holders.......................................58
Section 702. Preservation of Information; Communications to Holders..........58
Section 703. Reports by Trustee..............................................58
Section 704. Reports by Issuer and Guarantor.................................59
ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Issuer May Consolidate, Etc., Only on Certain Terms.............60
Section 802. Successor Person Substituted for Issuer.........................60
Section 803. Guarantor May Consolidate, Etc., Only on Certain Terms..........61
Section 804. Successor Person Substituted for Guarantor......................61
Section 805. Assumption by Guarantor.........................................61
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of Holders..............62
Section 902. Supplemental Indentures with Consent of Holders.................63
Section 903. Execution of Supplemental Indentures............................65
Section 904. Effect of Supplemental Indentures...............................65
Section 905. Reference in Securities to Supplemental Indentures..............65
Section 906. Conformity with Trust Indenture Act.............................65
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, any Premium, Interest and
Additional Amounts.............................................65
Section 1002. Maintenance of Office or Agency.................................66
Section 1003. Money for Securities Payments to Be Held in Trust...............67
Section 1004. Additional Amounts..............................................68
Section 1005. Limitation on Incurrance of Debt................................70
Section 1006. Maintenance of Total Unencumbered Assets........................70
Section 1007. Maintenance of Properties.......................................71
Section 1008. Insurance.......................................................71
Section 1009. Existence.......................................................71
Section 1010. Payment of Taxes and Other Claims...............................71
Section 1011. Provision of Financial Information..............................72
Section 1012. Waiver of Certain Covenants.....................................72
Section 1013. Issuer Statement as to Compliance; Notice of
Certain Defaults...............................................72
Section 1014. Guarantor Statement as to Compliance; Notice of
Certain Defaults...............................................72
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article........................................73
Section 1102. Election to Redeem; Notice to Trustee...........................73
Section 1103. Selection by Trustee of Securities to be Redeemed...............74
Section 1104. Notice of Redemption............................................74
Section 1105. Deposit of Redemption Price.....................................75
Section 1106. Securities Payable on Redemption Date...........................75
Section 1107. Securities Redeemed in Part.....................................76
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article........................................76
Section 1202. Satisfaction of Sinking Fund Payments with Securities...........77
Section 1203. Redemption of Securities for Sinking Fund.......................77
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. Applicability of Article........................................78
ARTICLE FOURTEEN
SECURITIES IN FOREIGN CURRENCIES
Section 1401. Applicability of Article........................................78
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1501. Purposes for Which Meetings May Be Called.......................79
Section 1502. Call, Notice and Place of Meetings..............................79
Section 1503. Persons Entitled to Vote at Meetings............................79
Section 1504. Quorum; Action..................................................80
Section 1505. Determination of Voting Rights; Conduct and Adjournment
of Meetings....................................................80
Section 1506. Counting Votes and Recording Action of Meetings.................81
ARTICLE SIXTEEN
GUARANTEE
Section 1601. Guarantee.......................................................82
INDENTURE, dated as of _________ __, 199_ (the "Indenture"), among
RECKSON OPERATING PARTNERSHIP, L.P., a limited partnership duly organized and
existing under the laws of Delaware (hereinafter called the "Issuer"), having
its principal executive office located at 225 Broadhollow Road, Melville, NY
11747, RECKSON ASSOCIATES REALTY CORP., a corporation duly organized and
existing under the laws of the Maryland (hereinafter called the "Guarantor" or
the "General Partner"), having its principal executive office at 225
Broadhollow Road, Melville, NY 11747, and _____________________, a __________
trust company duly organized and existing under the laws of the _________ of
_____________ (hereinafter called the "Trustee"), having its Corporate Trust
Office located at __________________________.
RECITALS
The execution and delivery by the Issuer of this Indenture to provide
for the issuance from time to time of the Issuer's senior unsecured
debentures, notes or other evidences of Indebtedness (hereinafter called the
"Securities"), unlimited as to principal amount, to bear such rates of
interest, to mature at such time or times, to be issued in one or more series
and to have such other provisions as shall be fixed as hereinafter provided,
has been duly authorized.
All things necessary to make this Indenture a valid agreement of the
Issuer, in accordance with its terms, have been done.
For value received, the execution and delivery by the Guarantor of
this Indenture to provide for the issuance of the Guarantee provided for
herein has been duly authorized. All things necessary to make this Indenture a
valid agreement of the Guarantor, in accordance with its terms, have been
done.
This Indenture is subject to the provisions of the Trust Indenture
Act of 1939, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder that are required to be part of
this Indenture and, to the extent applicable, shall be governed by such
provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as herein defined) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders
of the Securities or of any series thereof and any Coupons (as herein defined)
as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. DEFINITIONS.
Except as otherwise expressly provided in or pursuant to this
Indenture or unless the context otherwise requires, for all purposes of this
Indenture:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles and, except as otherwise herein expressly provided,
the terms "generally accepted accounting principles" or "GAAP" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted at the date of such
computation;
(4) the words "herein", "hereof", "hereto" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(5) the word "or" is always used inclusively (for example, the phrase
"A or B" means "A or B or both", not "either A or B but not both").
Certain terms used principally in certain Articles hereof are defined
in those Articles.
"ACT," when used with respect to any Holders, has the meaning
specified in Section 104.
"ADDITIONAL AMOUNTS" means any additional amounts which are required
hereby or by any Security, under circumstances specified herein or therein, to
be paid by the Issuer in respect of certain taxes, assessments or other
governmental charges imposed on Holders specified therein and which are owing
to such Holders.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have the meanings correlative to
the foregoing.
"ANNUAL SERVICE CHARGE" as of any date means the amount which is
expensed or capitalized in any 12-month period for interest on Indebtedness.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee
pursuant to Section 611 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"AUTHORIZED NEWSPAPER" means a newspaper, in an official language of
the place of publication or in the English language, customarily published on
each day that is a Business Day in the place of publication, whether or not
published on days that are Legal Holidays in the place of publication, and of
general circulation in each place in connection with which the term is used or
in the financial community of each such place. Where successive publications
are required to be made in Authorized Newspapers, the successive publications
may be made in the same or in different newspapers in the same city meeting
the foregoing requirements and in each case on any day that is a Business Day
in the place of publication.
"BEARER SECURITY" means any Security in the form established pursuant
to Section 201 which is payable to bearer.
"BOARD OF DIRECTORS" means the board of directors of the General
Partner or any committee of that board duly authorized to act hereunder.
"BOARD RESOLUTION" means a copy of one or more resolutions, certified
by the Secretary or an Assistant Secretary of the General Partner to have been
duly adopted by the Board of Directors and to be in full force and effect on
the date of such certification, delivered to the Trustee.
"BUSINESS DAY", with respect to any Place of Payment or other
location, means, unless otherwise specified with respect to any Securities
pursuant to Section 301, any day other than a Saturday, Sunday or other day on
which banking institutions in such Place of Payment or other location are
authorized or obligated by law, regulation or executive order to close.
"CODE" means the Internal Revenue Code of 1986, as amended, together
with its predecessor.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"COMMON STOCK" includes any stock of any class of the General Partner
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up
of the General Partner and which is not subject to redemption by the General
Partner.
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" for any period means
Consolidated Net Income of the Issuer and its Subsidiaries (i) plus amounts
which have been deducted for (a) interest on Indebtedness of the Issuer and
its Subsidiaries, (b) provision for taxes of the Issuer and its Subsidiaries
based on income, (c) amortization of debt discount, (d) depreciation and
amortization, (e) the effect of any noncash charge resulting from a change in
accounting principles in determining Consolidated Net Income for such period,
(f) amortization of deferred charges, and (g) provisions for or realized
losses on properties and (ii) less amounts which have been included for gains
on properties.
"CONSOLIDATED NET INCOME" for any period means the amount of
consolidated net income (or loss) of the Issuer and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
"CONVERSION EVENT" means the cessation of use of (i) a Foreign
Currency both by the government of the country or the confederation which
issued such Foreign Currency and for the settlement of transactions by a
central bank or other public institutions of or within the international
banking community or (ii) the Euro both within the European Monetary System
and for the settlement of transactions by public institutions of or within the
European Community.
"CORPORATE TRUST OFFICE" means the principal corporate trust office
of the Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of original execution of this
Indenture is located at ___________________________.
"CORPORATION" includes corporations and limited liability companies
and, except for purposes of Article Eight, associations, companies and
business trusts.
"COUPON" means any interest coupon appertaining to a Bearer Security.
"CURRENCY," with respect to any payment, deposit or other transfer in
respect of the principal of or any premium or interest on or any Additional
Amounts with respect to any Security, means Dollars or the Foreign Currency,
as the case may be, in which such payment, deposit or other transfer is
required to be made by or pursuant to the terms hereof or such Security and,
with respect to any other payment, deposit or transfer pursuant to or
contemplated by the terms hereof or such Security, means Dollars.
"CUSIP NUMBER" means the alphanumeric designation assigned to a
Security by Standard & Poor's Corporation, CUSIP Service Bureau.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DOLLARS" or "$" means a dollar or other equivalent unit of legal
tender for payment of public or private debts in the United States of America.
"EURO" means the European Currency Units as defined and revised from
time to time by the Council of the European Community.
"EUROPEAN MONETARY SYSTEM" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the
European Community.
"EUROPEAN UNION" means the European Community, the European Coal and
Steel Community and the European Atomic Energy Community.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FOREIGN CURRENCY" means any currency, currency unit or composite
currency, including, without limitation, the Euro, issued by the government of
one or more countries other than the United States of America or by any
recognized confederation or association of such governments.
"GAAP" means such accounting principles as are generally accepted in
the United States of America as of the date or time of any computation
required hereunder.
"GENERAL PARTNER" means Reckson Associates Realty Corp., as the sole
general partner of the Issuer.
"GOVERNMENT OBLIGATIONS" means securities which are (i) direct
obligations of the United States of America or the other government or
governments in the confederation which issued the Foreign Currency in which
the principal of or any premium or interest on such Security or any Additional
Amounts in respect thereof shall be payable, in each case where the payment or
payments thereunder are supported by the full faith and credit of such
government or governments or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America or such other government or governments, in each case where the
timely payment or payments thereunder are unconditionally guaranteed as a full
faith and credit obligation by the United States of America or such other
government or governments, and which, in the case of (i) or (ii), are not
callable or redeemable at the option of the issuer or issuers 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 or other amount with respect to 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 or other amount with respect to the Government Obligation
evidenced by such depository receipt.
"GUARANTEE" means the unconditional guarantee of the payment of the
principal of or any premium or interest on or any Additional Amounts with
respect to the Guaranteed Securities by the Guarantor, as more fully set forth
in Article Sixteen.
"GUARANTEED SECURITIES" means a series of Securities made subject to
a Guarantee (as set forth in Article Sixteen) pursuant to Section 301.
"GUARANTOR" means the Person named as the "Guarantor" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantor" shall mean such successor Person.
"GUARANTOR'S BOARD OF DIRECTORS" means the board of directors of the
Guarantor or any committee of that board duly authorized to act generally or
in any particular respect for the Guarantor hereunder.
"GUARANTOR'S BOARD RESOLUTION" means a copy of one or more
resolutions, certified by the Secretary or an Assistant Secretary of the
Guarantor to have been duly adopted by the Guarantor's Board of Directors and
to be in full force and effect on the date of such certification, delivered to
the Trustee.
"GUARANTOR'S OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman, the President or a Vice President and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, that
complies with the requirements of Section 14(e) of the Trust Indenture Act and
is delivered to the Trustee.
"GUARANTOR REQUEST" and "GUARANTOR ORDER" mean, respectively, a
written request or order signed in the name of the Guarantor by the Chairman,
the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, and
delivered to the Trustee.
"HOLDER," in the case of any Registered Security, means the Person in
whose name such Security is registered in the Security Register and, in the
case of any Bearer Security, means the bearer thereof and, in the case of any
Coupon, means the bearer thereof.
"INDEBTEDNESS" means any indebtedness, whether or not contingent, in
respect of (i) borrowed money evidenced by bonds, notes, debentures or similar
instruments, (ii) indebtedness secured by any mortgage, pledge, lien, charge,
encumbrance or any security interest existing on property, (iii) the
reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued or amounts representing the balance deferred
and unpaid of the purchase price of any property except any such balance that
constitutes an accrued expense or trade payable or (iv) any lease of property
as lessee which would be reflected on a balance sheet as a capitalized lease
in accordance with GAAP, in the case of items of indebtedness under (i)
through (iii) above to the extent that any such items (other than letters of
credit) would appear as a liability on a balance sheet in accordance with
GAAP, and also includes, to the extent not otherwise included, any obligation
to be liable for, or to pay, as obligor, guarantor or otherwise (other than
for purposes of collection in the ordinary course of business), indebtedness
of another Person.
"INDENTURE" means this instrument as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and, with respect to any
Security, by the terms and provisions of such Security and any Coupon
appertaining thereto established pursuant to Section 301 (as such terms and
provisions may be amended pursuant to the applicable provisions hereof).
"INDEPENDENT PUBLIC ACCOUNTANTS" means accountants or a firm of
accountants that, with respect to the Issuer and the Guarantor and any other
obligor under the Securities or the Coupons, are independent public
accountants within the meaning of the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder, who may be
the independent public accountants regularly retained by the Issuer or the
Guarantor or who may be other independent public accountants. Such accountants
or firm shall be entitled to rely upon any Opinion of Counsel as to the
interpretation of any legal matters relating to this Indenture or certificates
required to be provided hereunder.
"INDEXED SECURITY" means a Security the terms of which provide that
the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"INTEREST", with respect to any Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity and, when used with respect to a Security which provides for
the payment of Additional Amounts pursuant to Section 1004, includes such
Additional Amounts.
"INTEREST PAYMENT DATE", with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"ISSUER" means the Person named as the "Issuer" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Issuer" shall mean such successor Person, and any other obligor upon the
Securities.
"ISSUER REQUEST" and "ISSUER ORDER" mean, respectively, a written
request or order, as the case may be, signed in the name of the Issuer by the
Chairman of the Board of Directors, a Vice Chairman, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the General Partner acting in its capacity as the
general partner of the Issuer, and delivered to the Trustee.
"JUDGMENT CURRENCY" has the meaning specified in Section 116.
"LEGAL HOLIDAY" means a day that is not a Business Day.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of
any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person. A Capital Lease is a
lease to which the lessee is required concurrently to recognize the
acquisition of an asset and the incurrence of a liability in accordance with
GAAP.
"MATURITY", with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and
payable as provided in or pursuant to this Indenture, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption or
repurchase, notice of option to elect repayment or otherwise, and includes the
Redemption Date.
"NEW YORK BANKING DAY" has the meaning specified in Section 116.
"OFFICE" OR "AGENCY", with respect to any Securities, means an office
or agency of the Issuer or the Guarantor maintained or designated in a Place
of Payment for such Securities pursuant to Section 1002 or any other office or
agency of the Issuer maintained or designated for such Securities pursuant to
Section 1002 or, to the extent designated or required by Section 1002 in lieu
of such office or agency, the Corporate Trust Office of the Trustee.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board, a Vice Chairman, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the General Partner in its capacity as sole managing general partner of the
Issuer, that complies with the requirements of Section 314(e) of the Trust
Indenture Act and is delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
an employee of or counsel for the Issuer or the Guarantor, as the case may be,
or other counsel who shall be reasonably acceptable to the Trustee, that, if
required by the Trust Indenture Act, complies with the requirements of Section
314(e) of the Trust Indenture Act.
"ORIGINAL ISSUE DISCOUNT SECURITY" means a Security issued pursuant
to this Indenture which provides for declaration of an amount less than the
principal face amount thereof to be due and payable upon acceleration pursuant
to Section 502.
"OUTSTANDING", when used with respect to any Securities, means, as of
the date of determination, all such Securities theretofore authenticated and
delivered under this Indenture, except:
(a) any such Security theretofore cancelled by the Trustee or the
Security Registrar or delivered to the Trustee or the Security
Registrar for cancellation;
(b) any such Security for whose payment at the Maturity thereof
money in the necessary amount has been theretofore deposited
pursuant hereto (other than pursuant to Section 402) with the
Trustee or any Paying Agent (other than the Issuer or the
Guarantor) in trust or set aside and segregated in trust by the
Issuer or the Guarantor (if the Issuer shall act as its own, or
authorize the Guarantor to act as, Paying Agent) for the Holders
of such Securities and any Coupons appertaining thereto,
PROVIDED that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture
or provision therefor satisfactory to the Trustee has been made;
(c) any such Security with respect to which the Issuer or the
Guarantor has effected defeasance pursuant to the terms hereof,
except to the extent provided in Section 402; and
(d) any such Security which has been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, unless
there shall have been presented to the Trustee proof
satisfactory to it that such Security is held by a bona fide
purchaser in whose hands such Security is a valid obligation of
the Issuer.
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present
at a meeting of Holders of Securities for quorum purposes, (i) the principal
amount of an Original Issue Discount Security that may be counted in making
such determination and that shall be deemed to be Outstanding for such
purposes shall be equal to the amount of the principal thereof that pursuant
to the terms of such Original Issue Discount Security would be declared (or
shall have been declared to be) due and payable upon a declaration of
acceleration thereof pursuant to Section 502 at the time of such
determination, and (ii) the principal amount of any Indexed Security that may
be counted in making such determination and that shall be deemed outstanding
for such purpose shall be equal to the principal face amount of such Indexed
Security at original issuance, unless otherwise provided in or pursuant to
this Indenture, and (iii) the principal amount of a Security denominated in a
Foreign Currency shall be the Dollar equivalent, determined on the date of
original issuance of such Security, of the principal amount (or, in the case
of an Original Issue Discount Security, the Dollar equivalent on the date of
original issuance of such Security of the amount determined as provided in (i)
above) of such Security, and (iv) Securities owned by the Issuer, the
Guarantor or any other obligor upon the Securities or any Affiliate of the
Issuer, the Guarantor or such other obligor, shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee shall
be protected in making any such determination or relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee knows to be so owned
shall be so disregarded. Securities so owned which shall have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee (A) the pledgee's right so to act with respect to
such Securities and (B) that the pledgee is not the Issuer, the Guarantor or
any other obligor upon the Securities or any Coupons appertaining thereto or
an Affiliate of the Issuer, the Guarantor or such other obligor.
"PAYING AGENT" means any Person authorized by the Issuer to pay the
principal of, or any premium or interest on, or any Additional Amounts with
respect to, any Security or any Coupon on behalf of the Issuer.
"PERMITTED DEBT" means Indebtedness of the Issuer or any Subsidiary
owing to any Subsidiary or the Issuer; PROVIDED that any such Indebtedness is
made pursuant to an intercompany note and is subordinated in right of payment
to the Securities; PROVIDED FURTHER that any disposition, pledge or transfer
of any such Indebtedness to a Person (other than the Issuer or another
Subsidiary) shall be deemed to be an incurrence of such Indebtedness by the
Issuer or a Subsidiary, as the case may be, and not Permitted Debt as defined
herein.
"PERSON" means any individual, Corporation, partnership, joint
venture, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"PLACE OF PAYMENT," with respect to any Security, means the place or
places where the principal of, or any premium or interest on, or any
Additional Amounts with respect to such Security are payable as provided in or
pursuant to this Indenture or such Security.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same Indebtedness as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a lost, destroyed, mutilated or stolen Security or
any Security to which a mutilated, destroyed, lost or stolen Coupon appertains
shall be deemed to evidence the same Indebtedness as the lost, destroyed,
mutilated or stolen Security or the Security to which a mutilated, destroyed,
lost or stolen Coupon appertains.
"REDEMPTION DATE", with respect to any Security or portion thereof to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture or such Security.
"REDEMPTION PRICE", with respect to any Security or portion thereof
to be redeemed, means the price at which it is to be redeemed as determined by
or pursuant to this Indenture or such Security.
"REGISTERED SECURITY" means any Security established pursuant to
Section 201 which is registered in the Security Register.
"REGULAR RECORD DATE" for the interest payable on any Registered
Security on any Interest Payment Date therefor means the date, if any,
specified in or pursuant to this Indenture or such Security as the "Regular
Record Date".
"REQUIRED CURRENCY" has the meaning specified in Section 116.
"RESPONSIBLE OFFICER" means any officer of the Trustee in its
Corporate Trust Office and also means, with respect to a particular corporate
trust matter, any other officer of the Trustee to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"SECURITY" or "SECURITIES" means any note or notes, bond or bonds,
debenture or debentures, or any other evidences of Indebtedness, as the case
may be, authenticated and delivered under this Indenture; PROVIDED, HOWEVER,
that, if at any time there is more than one Person acting as Trustee under
this Indenture, "Securities", with respect to any such Person, shall mean
Securities authenticated and delivered under this Indenture, exclusive,
however, of Securities of any series as to which such Person is not Trustee.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on
any Registered Security means a date fixed by the Trustee pursuant to Section
307.
"STATED MATURITY", with respect to any Security or any installment of
principal thereof or interest thereon or any Additional Amounts with respect
thereto, means the date established by or pursuant to this Indenture or such
Security as the fixed date on which the principal of such Security or such
installment of principal or interest is, or such Additional Amounts are, due
and payable.
"SUBSIDIARY" means any entity of which at the time of determination
the Issuer or one or more subsidiaries owns or controls directly or indirectly
more than 50% of the shares of Voting Stock.
"TOTAL ASSETS" as of any date means the sum of (i) the Undepreciated
Real Estate Assets, (ii) all other assets of the Issuer, and of its
Subsidiaries determined at the applicable proportionate interest of the Issuer
in each such Subsidiary, determined in accordance with GAAP (but excluding
intangibles and accounts receivable) and (iii) the cost of any property of the
Issuer, or any Subsidiary thereof, in which the Issuer, or such Subsidiary, as
the case may be, has a firm, non-contingent purchase obligation.
"TOTAL UNENCUMBERED ASSETS" means the sum of (i) those Undepreciated
Real Estate Assets not subject to a Lien on a consolidated basis, (ii) all
other assets of the Issuer, and of its Subsidiaries determined at the
applicable proportionate interest of the Issuer in each such Subsidiary, which
are not subject to a Lien determined in accordance with GAAP (but excluding
intangibles and accounts receivable) and (iii) the cost of any property of the
Issuer, or any Subsidiary thereof, in which the Issuer, or such Subsidiary, as
the case may be, has a firm, non-contingent purchase obligation and which is
not subject to a Lien.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean each Person
who is then a Trustee hereunder; PROVIDED, HOWEVER, that if at any time there
is more than one such Person, "Trustee" shall mean each such Person and as
used with respect to the Securities of any series shall mean the Trustee with
respect to the Securities of such series.
"UNDEPRECIATED REAL ESTATE ASSETS" means as of any date the cost
(original cost plus capital improvements) of real estate assets of the Issuer
and its Subsidiaries on such date, before depreciation and amortization,
determined on a consolidated basis in accordance with GAAP.
"UNITED STATES," except as otherwise provided in or pursuant to this
Indenture or any Security, means the United States of America (including the
states thereof and the District of Columbia), its territories and possessions
and other areas subject to its jurisdiction.
"UNITED STATES ALIEN," except as otherwise provided in or pursuant to
this Indenture or any Security, means any Person who, for United States
Federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
Federal income tax purposes, a foreign corporation, a non-resident alien
individual or a non-resident alien fiduciary of a foreign estate or trust.
"UNSECURED DEBT" means Indebtedness of the Issuer or any Subsidiary
which is not secured by any mortgage, lien, charge, pledge or security
interest of any kind upon any of the properties owned by the Issuer or any of
its Subsidiaries.
"U.S. DEPOSITORY" or "DEPOSITORY" means, with respect to any Security
issuable or issued in the form of one or more global Securities, the Person
designated as U.S. Depository or Depository by the Issuer in or pursuant to
this Indenture, which Person must be, to the extent required by applicable law
or regulation, a clearing agency registered under the Securities Exchange Act
of 1934, as amended, and, if so provided with respect to any Security, any
successor to such Person. If at any time there is more than one such Person,
"U.S. Depository" or "Depository" shall mean, with respect to any Securities,
the qualifying entity which has been appointed with respect to such
Securities.
"VICE PRESIDENT," when used with respect to a vice president of the
General Partner acting in its capacity as the sole managing general partner of
the Issuer, or with respect to the Guarantor or the Trustee, means any vice
president, whether or not designated by a number or a word or words added
before or after the title "Vice President".
"VOTING STOCK" means stock of a Corporation of the class or classes
having general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of such Corporation
provided that, for the purposes hereof, stock which carries only the right to
vote conditionally on the happening of an event shall not be considered voting
stock whether or not such event shall have happened.
Section 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided in this Indenture, upon any
application or request by the Issuer or the Guarantor to the Trustee to take
any action under any provision of this Indenture, the Issuer or the Guarantor,
as the case may be, shall furnish to the Trustee an Officers' Certificate or a
Guarantor's Officers' Certificate, as the case may be, stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent, if any,
have been complied with, except that in the case of any such application or
request as to which the furnishing of such documents or any of them is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need
be furnished.
Section 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Issuer or the
Guarantor may be based, insofar as it relates to legal matters, upon an
Opinion of Counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the opinion with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of
the Issuer or the Guarantor, as the case may be, stating that the information
with respect to such factual matters is in the possession of the Issuer or the
Guarantor, as the case may be, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture or any Security, they may, but need not, be
consolidated and form one instrument.
Section 104. ACTS OF HOLDERS.
(1) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by or pursuant to this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing. If, but only if, Securities of a series
are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant to
this Indenture to be given or taken by Holders of Securities of such series
may, alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions of Article
Fifteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Issuer and the Guarantor.
Such instrument or instruments and any such record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act"
of the Holders signing such instrument or instruments or so voting at any such
meeting. Proof of execution of any such instrument or of a writing appointing
any such agent, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 315 of
the Trust Indenture Act) conclusive in favor of the Trustee and the Issuer and
the Guarantor and any agent of the Trustee or the Issuer and the Guarantor, if
made in the manner provided in this Section. The record of any meeting of
Holders of Securities shall be proved in the manner provided in Section 1506.
Without limiting the generality of this Section 104, unless otherwise
provided in or pursuant to this Indenture, a Holder, including a U.S.
Depository that is a Holder of a global Security, may make, give or take, by a
proxy, or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other Act provided in or
pursuant to this Indenture to be made, given or taken by Holders, and a U.S.
Depository that is a Holder of a global Security may provide its proxy or
proxies to the beneficial owners of interests in any such global Security
through such U.S. Depository's standing instructions and customary practices.
The Trustee shall fix a record date for the purpose of determining
the Persons who are beneficial owners of interest in any permanent global
Security held by a U.S. Depository entitled under the procedures of such U.S.
Depository to make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization, direction, notice, consent,
waiver or other Act provided in or pursuant to this Indenture to be made,
given or taken by Holders. If such a record date is fixed, the Holders on such
record date or their duly appointed proxy or proxies, and only such Persons,
shall be entitled to make, give or take such request, demand, authorization,
direction, notice, consent, waiver or other Act, whether or not such Holders
remain Holders after such record date. No such request, demand, authorization,
direction, notice, consent, waiver or other Act shall be valid or effective if
made, given or taken more than 90 days after such record date.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient and in accordance with such reasonable rules as the Trustee
may determine; and the Trustee may in any instance require further proof with
respect to any of the matters referred to in this Section.
(3) The ownership, principal amount and serial numbers of Registered
Securities held by any Person, and the date of the commencement and the date
of the termination of holding the same, shall be proved by the Security
Register.
(4) The ownership, principal amount and serial numbers of Bearer
Securities held by any Person, and the date of the commencement and the date
of the termination of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed, as depositary, by any
trust company, bank, banker or other depositary reasonably acceptable to the
Issuer and the Guarantor, wherever situated, if such certificate shall be
deemed by the Issuer and the Trustee to be satisfactory, showing that at the
date therein mentioned such Person had on deposit with such depositary, or
exhibited to it, the Bearer Securities therein described; or such facts may be
proved by the certificate or affidavit of the Person holding such Bearer
Securities, if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee, the Guarantor and the Issuer may assume that such
ownership of any Bearer Security continues until (1) another certificate or
affidavit bearing a later date issued in respect of the same Bearer Security
is produced, or (2) such Bearer Security is produced to the Trustee by some
other Person, or (3) such Bearer Security is surrendered in exchange for a
Registered Security, or (4) such Bearer Security is no longer Outstanding. The
ownership, principal amount and serial numbers of Bearer Securities held by
the Person so executing such instrument or writing and the date of the
commencement and the date of the termination of holding the same may also be
proved in any other manner which the Issuer and the Trustee deem sufficient.
(5) If the Issuer or the Guarantor shall solicit from the Holders of
any Registered Securities any request, demand, authorization, direction,
notice, consent, waiver or other Act, the Issuer or the Guarantor, as the case
may be, may at its option (but is not obligated to), by Board Resolution or
Guarantor's Board Resolution, as the case may be, fix in advance a record date
for the determination of Holders of Registered Securities entitled to give
such request, demand, authorization, direction, notice, consent, waiver or
other Act. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of Registered
Securities of record at the close of business on such record date shall be
deemed to be Holders for the purpose of determining whether Holders of the
requisite proportion of Outstanding Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding Securities shall be
computed as of such record date; provided that no such authorization,
agreement or consent by the Holders of Registered Securities shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
(6) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or suffered to be done by the Trustee, any Security
Registrar, any Paying Agent, the Guarantor or the Issuer in reliance thereon,
whether or not notation of such Act is made upon such Security.
Section 105. NOTICES, ETC., TO TRUSTEE AND ISSUER AND GUARANTOR.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, the Guarantor or the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office, or
(2) the Issuer or the Guarantor by the Trustee or any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Issuer or the Guarantor, as the case may be, addressed to the attention
of its Treasurer at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Issuer or the Guarantor, as
the case may be.
Section 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided in or pursuant to this
Indenture, where this Indenture provides for notice to Holders of Securities
of any event,
(1) such notice shall be sufficiently given to Holders of Registered
Securities if in writing and mailed, first-class postage prepaid, to each
Holder of a Registered Security affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
notice; and
(2) such notice shall be sufficiently given to Holders of Bearer
Securities, if any, if published in an Authorized Newspaper in The City
of New York and, if such Securities are then listed on any stock exchange
outside the United States, in an Authorized Newspaper in such city as the
Issuer shall advise the Trustee that such stock exchange so requires, on
a Business Day at least twice, the first such publication to be not
earlier than the earliest date and the second such publication not later
than the latest date prescribed for the giving of such notice.
In any case where notice to Holders of Registered Securities is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of Registered
Securities or the sufficiency of any notice to Holders of Bearer Securities
given as provided herein. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given or provided.
In the case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearers Securities as
provided above, then such notification to Holders of Bearer Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither failure to give
notice by publication to Holders of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of any
notice mailed to Holders of Registered Securities as provided above.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
Section 107. LANGUAGE OF NOTICES.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that, if the Issuer or the Guarantor, as the case may
be, so elects, any published notice may be in an official language of the
country of publication.
Section 108. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with any
duties under any required provision of the Trust Indenture Act imposed hereon
by Section 318(c) thereof, such required provision shall control.
Section 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 110. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Issuer shall
bind its successors and assigns, whether so expressed or not. All covenants
and agreements in this Indenture by the Guarantor shall bind its successors
and assigns, whether so expressed or not.
Section 111. SEPARABILITY CLAUSE.
In case any provision in this Indenture, any Security or any Coupon
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 112. BENEFITS OF INDENTURE.
Nothing in this Indenture, any Security or any Coupon, express or
implied, shall give to any Person, other than the parties hereto, any Security
Registrar, any Paying Agent and their successors hereunder and the Holders of
Securities or Coupons, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
Section 113. GOVERNING LAW.
This Indenture, the Securities and any Coupons shall be governed by
and construed in accordance with the laws of the State of New York applicable
to agreements made or instruments entered into and, in each case, performed in
said state.
Section 114. LEGAL HOLIDAYS.
Unless otherwise specified in or pursuant to this Indenture or any
Securities, in any case where any Interest Payment Date, Stated Maturity or
Maturity of any Security, or the last date on which a Holder has the right to
convert or exchange Securities of a series that are convertible or
exchangeable, shall be a Legal Holiday at any Place of Payment, then
(notwithstanding any other provision of this Indenture, any Security or any
Coupon other than a provision in any Security or Coupon that specifically
states that such provision shall apply in lieu hereof) payment need not be
made at such Place of Payment on such date, and such Securities need not be
converted or exchanged on such date but such payment may be made, and such
Securities may be converted or exchanged, on the next succeeding day that is a
Business Day at such Place of Payment with the same force and effect as if
made on the Interest Payment Date or at the Stated Maturity or Maturity or on
such last day for conversion or exchange, and no interest shall accrue on the
amount payable on such date or at such time for the period from and after such
Interest Payment Date, Stated Maturity, Maturity or last day for conversion or
exchange, as the case may be, to the next succeeding Business Day.
Section 115. COUNTERPARTS.
This Indenture may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
Section 116. JUDGMENT CURRENCY.
The Issuer agrees, to the fullest extent that it may effectively do
so under applicable law, that (a) if for the purpose of obtaining judgment in
any court it is necessary to convert the sum due in respect of the principal
of, or premium or interest, if any, or Additional Amounts on the Securities of
any series (the "Required Currency") into a currency in which a judgment will
be rendered (the "Judgment Currency"), the rate of exchange used shall be the
rate at which in accordance with normal banking procedures the Trustee could
purchase in The City of New York the Required Currency with the Judgment
Currency on the New York Banking Day preceding that on which a final
unappealable judgment is given and (b) its obligations under this Indenture to
make payments in the Required Currency (i) shall not be discharged or
satisfied by any tender, or any recovery pursuant to any judgment (whether or
not entered in accordance with clause (a)), in any currency other than the
Required Currency, except to the extent that such tender or recovery shall
result in the actual receipt, by the payee, of the full amount of the Required
Currency expressed to be payable in respect of such payments, (ii) shall be
enforceable as an alternative or additional cause of action for the purpose of
recovering in the Required Currency the amount, if any, by which such actual
receipt shall fall short of the full amount of the Required Currency so
expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Legal Holiday in The
City of New York.
ARTICLE TWO
SECURITIES FORMS
Section 201. FORMS GENERALLY.
Each Registered Security, Bearer Security, Coupon and temporary or
permanent global Security issued pursuant to this Indenture shall be in the
form established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
or pursuant to this Indenture or any indenture supplemental hereto and may
have such letters, numbers or other marks of identification and such legends
or endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Security or Coupon as evidenced by their execution
of such Security or Coupon.
Unless otherwise provided in or pursuant to this Indenture or any
Securities, the Securities shall be issuable in registered form without
Coupons and shall not be issuable upon the exercise of warrants.
Definitive Securities and definitive Coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Issuer executing such
Securities or Coupons, as evidenced by their execution of such Securities or
Coupons.
Section 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Subject to Section 611, the Trustee's certificate of authentication
shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
-----------------------------------,
as Trustee
By______________________
Authorized Officer
Section 203. SECURITIES IN GLOBAL FORM.
Unless otherwise provided in or pursuant to this Indenture or any
Securities, the Securities shall not be issuable in temporary or permanent
global form. If Securities of a series shall be issuable in global form, any
such Security may provide that it or any number of such Securities shall
represent the aggregate amount of all Outstanding Securities of such series
(or such lesser amount as is permitted by the terms thereof) from time to time
endorsed thereon and may also provide that the aggregate amount of Outstanding
Securities represented thereby may from time to time be increased or reduced
to reflect exchanges. Any endorsement of any Security in global form to
reflect the amount, or any increase or decrease in the amount, or changes in
the rights of Holders, of Outstanding Securities represented thereby shall be
made in such manner and by such Person or Persons as shall be specified
therein or in the Issuer Order to be delivered pursuant to Section 303 or 304
with respect thereto. Subject to the provisions of Section 303 and, if
applicable, Section 304, the Trustee shall deliver and redeliver any Security
in permanent global form in the manner and upon instructions given by the
Person or Persons specified therein or in the applicable Issuer Order. If an
Issuer Order pursuant to Section 303 or 304 has been, or simultaneously is,
delivered, any instructions by the Issuer with respect to a Security in global
form shall be in writing but need not be accompanied by or contained in an
Officers' Certificate and need not be accompanied by an Opinion of Counsel.
Notwithstanding the provisions of Section 307, unless otherwise
specified in or pursuant to this Indenture or any Securities, payment of
principal of, any premium and interest on, and any Additional Amounts in
respect of, any Security in temporary or permanent global form shall be made
to the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided
in the preceding paragraph, the Issuer, the Trustee and any agent of the
Issuer and the Trustee shall treat as the Holder of such principal amount of
Outstanding Securities represented by a global Security (i) in the case of a
global Security in registered form, the Holder of such global Security in
registered form, or (ii) in the case of a global Security in bearer form, the
Person or Persons specified pursuant to Section 301.
ARTICLE THREE
THE SECURITIES
Section 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued in one or more series.
With respect to any Securities to be authenticated and delivered
hereunder, there shall be established in or pursuant to a Board Resolution and
set forth in an Officers' Certificate, or established in one or more
indentures supplemental hereto,
(1) the title of the Securities of the series (which shall
distinguish the Securities of such series from all other series of
Securities);
(2) any limit upon the aggregate principal amount of the Securities
of the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 905 or 1107);
(3) the percentage of the principal amount at which the Securities of
the series will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of maturity thereof;
(4) the date or dates, or the method by which such date or dates will
be determined, on which the principal of the Securities of the series
shall be payable;
(5) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue or
the method by which such date or dates shall be determined, the Interest
Payment Dates on which such interest will be payable and the Regular
Record Date, if any, for the interest payable on any Registered Security
on any Interest Payment Date, or the method by which such date shall be
determined, the person 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;
(6) the place or places, if any, other than or in addition to the
City of _________, ________________, where the principal of (and premium,
if any), interest, if any, on, and Additional Amounts, if any, payable in
respect of, Securities of the series shall be payable, any Registered
Securities of the series may be surrendered for registration of transfer
or exchange and notices or demands to or upon the Issuer in respect of
the Securities of the series and this Indenture may be served;
(7) the period or periods within which, the price or prices at which,
the currency or currencies, currency unit or units or composite currency
or currencies in which, and other terms and conditions upon which
Securities of the series may be redeemed, in whole or in part, at the
option of the Issuer, if the Issuer is to have the option;
(8) the obligation, if any, of the Issuer to redeem, repay or
purchase Securities of the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the period
or periods within which or the date or dates on which, the price or
prices at which, the currency or currencies, currency unit or units or
composite currency or currencies in which, and other terms and conditions
upon which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Securities of the
series shall be issuable and, if other than denominations of $5,000 and
any integral multiple thereof, the denomination or denominations in which
any Bearer Securities of the series shall be issuable;
(10) _____ if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(11) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series that shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
502 or the method by which such portion shall be determined;
(12) if other than Dollars, the Foreign Currency or Currencies in
which payment of the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the Securities of the series shall be
payable or in which the Securities of the series shall be denominated;
(13) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on the Securities of the series may be
determined with reference to an index, formula or other method (which
index, formula or method may be based, without limitation, on one or more
currencies, currency units, composite currencies, commodities, equity
indices or other indices), and the manner in which such amounts shall be
determined;
(14) whether the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the Securities of the series are to be
payable, at the election of the Issuer or a Holder thereof, in a currency
or currencies, currency unit or units or composite currency or currencies
other than that in which such Securities are denominated or stated to be
payable, the period or periods within which, and the terms and conditions
upon which, such election may be made, and the time and manner of, and
identity of the exchange rate agent with responsibility for, determining
the exchange rate between the currency or currencies, currency unit or
units or composite currency or currencies in which such Securities are
denominated or stated to be payable and the currency or currencies,
currency unit or units or composite currency or currencies in which such
Securities are to be so payable;
(15) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be
specified;
(16) any deletions from, modifications of or additions to the Events
of Default or covenants of the Issuer with respect to Securities of the
series, whether or not such Events of Default or covenants are consistent
with the Events of Default or covenants set forth herein;
(17) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities (with or without coupons) or
both, any restrictions applicable to the offer, sale or delivery of
Bearer Securities and the terms upon which Bearer Securities of the
series may be exchanged for Registered Securities of the series and vice
versa (if permitted by applicable laws and regulations), whether any
Securities of the series are to be issuable initially in temporary global
form and whether any Securities of the series are to be issuable in
permanent global form with or without coupons and, if so, whether
beneficial owners of interests in any such permanent global Security may
exchange such interests for Securities of such series and of like tenor
of any authorized form and denomination and the circumstances under which
any such exchanges may occur, if other than in the manner provided in
Section 305, and, if Registered Securities of the series are to be
issuable as a global Security, the identity of the depositary for such
series;
(18) the date as of which any Bearer Securities of the series and any
temporary global Security representing Outstanding Securities of the
series shall be dated if other than the date of original issuance of the
first Security of the series to be issued;
(19) the Person to whom any interest on any Registered Security of
the series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, the
manner in which, or the Person to whom, any interest on any Bearer
Security of the series shall be payable, if otherwise than upon
presentation and surrender of the coupons appertaining thereto as they
severally mature, and the extent to which, or the manner in which, any
interest payable on a temporary global Security on an Interest Payment
Date will be paid if other than in the manner provided in Section 304;
(20) if the Securities of such series are to be Guaranteed
Securities;
(21) if either or both of Section 402(2) relating to defeasance or
Section 402(3) relating to covenant defeasance shall not be applicable to
the Securities of such series or any provisions in modification of, in
addition to or in lieu of any of the provisions of Article Four;
(22) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, then
the form and/or terms of such certificates, documents or conditions;
(23) if the Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Securities to
be authenticated and delivered;
(24) whether and under what circumstances the Issuer will pay
Additional Amounts on the Securities of the series to any Holder who is
not a United States person (including any modification to the definition
of such term) in respect of any tax, assessment or governmental charge
and, if so, whether the Issuer will have the option to redeem such
Securities rather than pay such Additional Amounts (and the terms of any
such option);
(25) with respect to any Securities that provide for optional
redemption or prepayment upon the occurrence of certain events (such as a
change of control of the Issuer), (i) the possible effects of such
provisions on the market price of the Issuer's or the General Partner's
securities or in deterring certain mergers, tender offers or other
takeover attempts, and the intention of the Issuer to comply with the
requirements of Rule 14e-1 under the Exchange Act and any other
applicable securities laws in connection with such provisions; (ii)
whether the occurrence of the specified events may give rise to
cross-defaults on other indebtedness such that payment on such Securities
may be effectively subordinated; and (iii) the existence of any
limitation on the Issuer's financial or legal ability to repurchase such
Securities upon the occurrence of such an event (or, if true, the lack of
assurance that such a repurchase can be effected) and the impact, if any,
under the Indenture of such a failure, including whether and under what
circumstances such a failure may constitute an Event of Default; and
(26) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and all Coupons, if any,
appertaining to Bearer Securities of such series shall be substantially
identical except as to Currency of payments due thereunder, denomination and
the rate of interest, or method of determining the rate of interest, if any,
Maturity, and the date from which interest, if any, shall accrue and except as
may otherwise be provided by the Issuer in or pursuant to the Board Resolution
and set forth in the Officers' Certificate or in any indenture or indentures
supplemental hereto pertaining to such series of Securities. The terms of the
Securities of any series may provide, without limitation, that the Securities
shall be authenticated and delivered by the Trustee on original issue from
time to time upon telephonic or written order of persons designated in the
Officers' Certificate or supplemental indenture (telephonic instructions to be
promptly confirmed in writing by such person) and that such persons are
authorized to determine, consistent with such Officers' Certificate or any
applicable supplemental indenture, such terms and conditions of the Securities
of such series as are specified in such Officers' Certificate or supplemental
indenture. All Securities of any one series need not be issued at the same
time and, unless otherwise so provided by the Issuer, a series may be reopened
for issuances of additional Securities of such series or to establish
additional terms of such series of Securities.
If any of the terms of the Securities of any series shall be
established by action taken by or pursuant to a Board Resolution, the Board
Resolution shall be delivered to the Trustee at or prior to the delivery of
the Officers' Certificate setting forth the terms of such series.
Section 302. CURRENCY; DENOMINATIONS.
Unless otherwise provided in or pursuant to this Indenture, the
principal of, any premium and interest on and any Additional Amounts with
respect to the Securities shall be payable in Dollars. Unless otherwise
provided in or pursuant to this Indenture, Registered Securities denominated
in Dollars shall be issuable in registered form without Coupons in
denominations of $1,000 and any integral multiple thereof, and the Bearer
Securities denominated in Dollars shall be issuable in the denomination of
$5,000. Securities not denominated in Dollars shall be issuable in such
denominations as are established with respect to such Securities in or
pursuant to this Indenture.
Section 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Securities shall be executed on behalf of the Issuer by the General
Partner acting in its capacity as sole managing general partner of the Issuer
by the General Partner's Chairman of the Board, one of its Vice Chairmen, its
President, its Treasurer or one of its Vice Presidents under its corporate
seal reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. Coupons shall be executed on behalf of the Issuer by the General
Partner acting in its capacity as sole managing general partner of the Issuer
by the General Partner's Treasurer or any Assistant Treasurer. The signature
of any of these officers on the Securities or any Coupons appertaining thereto
may be manual or facsimile.
Securities and any Coupons appertaining thereto bearing the manual or
facsimile signatures of individuals who were at any time the proper officers
of the Issuer shall bind the Issuer, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such
Securities or Coupons.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Securities, together with any Coupons
appertaining thereto, executed by the Issuer, to the Trustee for
authentication and, provided that the Board Resolution and Officers'
Certificate or supplemental indenture or indentures with respect to such
Securities referred to in Section 301 and an Issuer Order for the
authentication and delivery of such Securities have been delivered to the
Trustee, the Trustee in accordance with the Issuer Order and subject to the
provisions hereof and of such Securities shall authenticate and deliver such
Securities. In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities and any
Coupons appertaining thereto, the Trustee shall be entitled to receive, and
(subject to Sections 315(a) through 315(d) of the Trust Indenture Act) shall
be fully protected in relying upon,
(1) an Opinion of Counsel to the effect that:
(a) the form or forms and terms of such Securities and Coupons, if
any, have been established in conformity with the provisions of this
Indenture;
(b) all conditions precedent to the authentication and delivery of
such Securities and Coupons, if any, appertaining thereto, have been
complied with and that such Securities, and Coupons, when completed by
appropriate insertions, executed under the Issuer's corporate seal and
attested by duly authorized officers of the Issuer, delivered by duly
authorized officers of the Issuer to the Trustee for authentication
pursuant to this Indenture, and authenticated and delivered by the
Trustee and issued by the Issuer in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute legally
valid and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms, except as enforcement thereof may
be subject to or limited by bankruptcy, insolvency, reorganization,
moratorium, arrangement, fraudulent conveyance, fraudulent transfer or
other similar laws relating to or affecting creditors' rights generally,
and subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and will
entitle the Holders thereof to the benefits of this Indenture, including
the Guarantee; such Opinion of Counsel need express no opinion as to the
availability of equitable remedies;
(c) all laws and requirements in respect of the execution and
delivery by the Issuer of such Securities and Coupons, if any, have been
complied with; and
(d) this Indenture has been qualified under the Trust Indenture Act;
and
(2) an Officers' Certificate and a Guarantor's Officers' Certificate,
in each case stating that, to the best knowledge of the Persons executing such
certificate, no event which is, or after notice or lapse of time would become,
an Event of Default with respect to any of the Securities shall have occurred
and be continuing.
If all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver an Opinion of Counsel and an Officers'
Certificate at the time of issuance of each Security, but such opinion and
certificate, with appropriate modifications, shall be delivered at or before
the time of issuance of the first Security of such series. After any such
first delivery, any separate request by the Issuer that the Trustee
authenticate Securities of such series for original issue will be deemed to be
a certification by the Issuer that all conditions precedent provided for in
this Indenture relating to authentication and delivery of such Securities
continue to have been complied with.
The Trustee shall not be required to authenticate or to cause an
Authenticating Agent to authenticate any Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee or if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken.
Each Registered Security shall be dated the date of its
authentication. Each Bearer Security and any Bearer Security in global form
shall be dated as of the date specified in or pursuant to this Indenture.
No Security or Coupon appertaining thereto shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Security a certificate of authentication substantially
in the form provided for in Section 202 or 611 executed by or on behalf of the
Trustee or by the Authenticating Agent by the manual signature of one of its
authorized officers. Such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Except as permitted by Section 306 or
307, the Trustee shall not authenticate and deliver any Bearer Security unless
all Coupons appertaining thereto then matured have been detached and
cancelled.
Section 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Issuer may
execute and deliver to the Trustee and, upon Issuer Order, the Trustee shall
authenticate and deliver, in the manner provided in Section 303, temporary
Securities in lieu thereof which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized in or pursuant to this
Indenture, in bearer form with one or more Coupons or without Coupons and with
such appropriate insertions, omissions, substitutions and other variations as
the officers of the Issuer executing such Securities may determine, as
conclusively evidenced by their execution of such Securities. Such temporary
Securities may be in global form.
Except in the case of temporary Securities in global form, which
shall be exchanged in accordance with the provisions thereof, if temporary
Securities are issued, the Issuer shall cause definitive Securities to be
prepared without unreasonable delay. After the preparation of definitive
Securities of the same series and containing terms and provisions that are
identical to those of any temporary Securities, such temporary Securities
shall be exchangeable for such definitive Securities upon surrender of such
temporary Securities at an Office or Agency for such Securities, without
charge to any Holder thereof. Upon surrender for cancellation of any one or
more temporary Securities (accompanied by any unmatured Coupons appertaining
thereto), the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities
of authorized denominations of the same series and containing identical terms
and provisions; PROVIDED, HOWEVER, that no definitive Bearer Security, except
as provided in or pursuant to this Indenture, shall be delivered in exchange
for a temporary Registered Security; and PROVIDED, FURTHER, that a definitive
Bearer Security shall be delivered in exchange for a temporary Bearer Security
only in compliance with the conditions set forth in or pursuant to this
Indenture. Unless otherwise provided in or pursuant to this Indenture with
respect to a temporary global Security, until so exchanged the temporary
Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of such series.
Section 305. REGISTRATION, TRANSFER AND EXCHANGE.
With respect to the Registered Securities of each series, if any, the
Issuer shall cause to be kept a register (each such register being herein
sometimes referred to as the "Security Register") at an Office or Agency for
such series in which, subject to such reasonable regulations as it may
prescribe, the Issuer or the Guarantor shall provide for the registration of
the Registered Securities of such series and of transfers of the Registered
Securities of such series. Such Office or Agency shall be the "Security
Registrar" for that series of Securities. Unless otherwise specified in or
pursuant to this Indenture or the Securities, the Trustee shall be the initial
Security Registrar for each series of Securities. The Issuer shall have the
right to remove and replace from time to time the Security Registrar for any
series of Securities; provided that no such removal or replacement shall be
effective until a successor Security Registrar with respect to such series of
Securities shall have been appointed by the Issuer and shall have accepted
such appointment by the Issuer. In the event that the Trustee shall not be or
shall cease to be Security Registrar with respect to a series of Securities,
it shall have the right to examine the Security Register for such series at
all reasonable times. There shall be only one Security Register for each
series of Securities.
Upon surrender for registration of transfer of any Registered
Security of any series at any Office or Agency for such series, the Issuer
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered
Securities of the same series denominated as authorized in or pursuant to this
Indenture, of a like aggregate principal amount bearing a number not
contemporaneously outstanding and containing identical terms and provisions.
At the option of the Holder, Registered Securities of any series may
be exchanged for other Registered Securities of the same series containing
identical terms and provisions, in any authorized denominations, and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged
at any Office or Agency for such series. Whenever any Registered Securities
are so surrendered for exchange, the Issuer shall execute, and the Trustee
shall authenticate and deliver, the Registered Securities which the Holder
making the exchange is entitled to receive.
If provided in or pursuant to this Indenture, with respect to
Securities of any series, at the option of the Holder, Bearer Securities of
such series may be exchanged for Registered Securities of such series
containing identical terms, denominated as authorized in or pursuant to this
Indenture and in the same aggregate principal amount, upon surrender of the
Bearer Securities to be exchanged at any Office or Agency for such series,
with all unmatured Coupons and all matured Coupons in default thereto
appertaining. If the Holder of a Bearer Security is unable to produce any such
unmatured Coupon or Coupons or matured Coupon or Coupons in default, such
exchange may be effected if the Bearer Securities are accompanied by payment
in funds acceptable to the Issuer, the Guarantor (if such Bearer Securities
are Guaranteed Securities) and the Trustee in an amount equal to the face
amount of such missing Coupon or Coupons, or the surrender of such missing
Coupon or Coupons may be waived by the Issuer, the Guarantor (if such Bearer
Securities are Guaranteed Securities) and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and
any Paying Agent harmless. If thereafter the Holder of such Bearer Security
shall surrender to any Paying Agent any such missing Coupon in respect of
which such a payment shall have been made, such Holder shall be entitled to
receive the amount of such payment; PROVIDED, HOWEVER, that, except as
otherwise provided in Section 1002, interest represented by Coupons shall be
payable only upon presentation and surrender of those Coupons at an Office or
Agency for such series located outside the United States. Notwithstanding the
foregoing, in case a Bearer Security of any series is surrendered at any such
Office or Agency for such series in exchange for a Registered Security of such
series and like tenor after the close of business at such Office or Agency on
(i) any Regular Record Date and before the opening of business at such Office
or Agency on the relevant Interest Payment Date, or (ii) any Special Record
Date and before the opening of business at such Office or Agency on the
related date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the Coupon relating to such Interest Payment Date or
proposed date of payment, as the case may be (or, if such Coupon is so
surrendered with such Bearer Security, such Coupon shall be returned to the
Person so surrendering the Bearer Security), and interest or Defaulted
Interest, as the case may be, shall not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of the
Registered Security issued in exchange for such Bearer Security, but shall be
payable only to the Holder of such Coupon when due in accordance with the
provisions of this Indenture.
If provided in or pursuant to this Indenture with respect to
Securities of any series, at the option of the Holder, Registered Securities
of such series may be exchanged for Bearer Securities upon such terms and
conditions as may be provided in or pursuant to this Indenture with respect to
such series.
Whenever any Securities are surrendered for exchange as contemplated
by the immediately preceding two paragraphs, the Issuer shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise provided in or
pursuant to this Indenture, any global Security shall be exchangeable for
definitive Securities only if (i) the Depository is at any time unwilling,
unable or ineligible to continue as Depository and a successor depository is
not appointed by the Issuer within 90 days of the date the Issuer is so
informed in writing, (ii) the Issuer executes and delivers to the Trustee an
Issuer Order to the effect that such global Security shall be so exchangeable,
or (iii) an Event of Default has occurred and is continuing with respect to
the Securities. If the beneficial owners of interests in a global Security are
entitled to exchange such interests for definitive Securities as the result of
an event described in clause (i), (ii) or (iii) of the preceding sentence,
then without unnecessary delay but in any event not later than the earliest
date on which such interests may be so exchanged, the Issuer shall deliver to
the Trustee definitive Securities in such form and denominations as are
required by or pursuant to this Indenture, and of the same series, containing
identical terms and in aggregate principal amount equal to the principal
amount of such global Security, executed by the Issuer. On or after the
earliest date on which such interests may be so exchanged, such global
Security shall be surrendered from time to time by the U.S. Depository or such
other Depository as shall be specified in the Issuer Order with respect
thereto, and in accordance with instructions given to the Trustee and the U.S.
Depository or such other Depository, as the case may be (which instructions
shall be in writing but need not be contained in or accompanied by an
Officers' Certificate or be accompanied by an Opinion of Counsel), as shall be
specified in the Issuer Order with respect thereto to the Trustee, as the
Issuer's agent for such purpose, to be exchanged, in whole or in part, for
definitive Securities as described above without charge. The Trustee shall
authenticate and make available for delivery, in exchange for each portion of
such surrendered global Security, a like aggregate principal amount of
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such global Security to be exchanged, which
(unless such Securities are not issuable both as Bearer Securities and as
Registered Securities, in which case the definitive Securities exchanged for
the global Security shall be issuable only in the form in which the Securities
are issuable, as provided in or pursuant to this Indenture) shall be in the
form of Bearer Securities or Registered Securities, or any combination
thereof, as shall be specified by the beneficial owner thereof, but subject to
the satisfaction of any certification or other requirements to the issuance of
Bearer Securities; provided, however, that no such exchanges may occur during
a period beginning at the opening of business 15 days before any selection of
Securities of the same series to be redeemed and ending on the relevant
Redemption Date; and PROVIDED, FURTHER, that (unless otherwise provided in or
pursuant to this Indenture) no Bearer Security delivered in exchange for a
portion of a global Security shall be mailed or otherwise delivered to any
location in the United States. Promptly following any such exchange in part,
such global Security shall be returned by the Trustee to such Depository or
the U.S. Depository, as the case may be, or such other Depository or U.S.
Depository referred to above in accordance with the instructions of the Issuer
referred to above. If a Registered Security is issued in exchange for any
portion of a global Security after the close of business at the Office or
Agency for such Security where such exchange occurs on or after (i) any
Regular Record Date for such Security and before the opening of business at
such Office or Agency on the next Interest Payment Date, or (ii) any Special
Record Date for such Security and before the opening of business at such
Office or Agency on the related proposed date for payment of interest or
Defaulted Interest, as the case may be, interest shall not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of such Registered Security, but shall be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
Person to whom interest in respect of such portion of such global Security
shall be payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Issuer and the Guarantor,
respectively, evidencing the same debt and entitling the Holders thereof to
the same benefits under this Indenture as the Securities surrendered upon such
registration of transfer or exchange.
Every Registered Security presented or surrendered for registration
of transfer or for exchange or redemption shall (if so required by the Issuer
or the Security Registrar for such Security) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Security Registrar for such Security duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange, or redemption of Securities, but the Issuer may require payment of a
sum sufficient to cover any tax or other governmental charge.
Except as otherwise provided in or pursuant to this Indenture, the
Issuer shall not be required (i) to issue, register the transfer of or
exchange any Securities during a period beginning at the opening of business
15 days before the day of the selection for redemption of Securities of like
tenor and the same series under Section 1103 and ending at the close of
business on the day of such selection, or (ii) to register the transfer of or
exchange any Registered Security so selected for redemption in whole or in
part, except in the case of any Security to be redeemed in part, the portion
thereof not to be redeemed, or (iii) to exchange any Bearer Security so
selected for redemption except, to the extent provided with respect to such
Bearer Security, that such Bearer Security may be exchanged for a Registered
Security of like tenor and the same series, provided that such Registered
Security shall be immediately surrendered for redemption with written
instruction for payment consistent with the provisions of this Indenture or
(iv) to issue, register the transfer of or exchange any Security which, in
accordance with its terms, has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Security not to be so repaid.
Section 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security or a Security with a mutilated Coupon
appertaining to it is surrendered to the Trustee, subject to the provisions of
this Section 306, the Issuer shall execute and the Trustee shall authenticate
and deliver in exchange therefor a new Security of the same series containing
identical terms and of like principal amount and bearing a number not
contemporaneously outstanding, with Coupons appertaining thereto corresponding
to the Coupons, if any, appertaining to the surrendered Security.
If there be delivered to the Issuer, the Guarantor (if the Security
is a Guaranteed Security) and to the Trustee (i) evidence to their
satisfaction of the destruction, loss or theft of any Security or Coupon, and
(ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice
to the Issuer, the Guarantor (if the Security is a Guaranteed Security) or the
Trustee that such Security or Coupon has been acquired by a bona fide
purchaser, the Issuer shall execute and, upon the Issuer's request the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Security or in exchange for the Security
to which a destroyed, lost or stolen Coupon appertains with all appurtenant
Coupons not destroyed, lost or stolen, a new Security of the same series
containing identical terms and of like principal amount and bearing a number
not contemporaneously outstanding, with Coupons corresponding to the Coupons,
if any, appertaining to such destroyed, lost or stolen Security or to the
Security to which such destroyed, lost or stolen Coupon appertains.
Notwithstanding the foregoing provisions of this Section 306, in case
any mutilated, destroyed, lost or stolen Security or Coupon has become or is
about to become due and payable, the Issuer in its discretion may, instead of
issuing a new Security, pay such Security or Coupon; PROVIDED, HOWEVER, that
payment of principal of, any premium or interest on or any Additional Amounts
with respect to any Bearer Securities shall, except as otherwise provided in
Section 1002, be payable only at an Office or Agency for such Securities
located outside the United States and, unless otherwise provided in or
pursuant to this Indenture, any interest on Bearer Securities and any
Additional Amounts with respect to such interest shall be payable only upon
presentation and surrender of the Coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security, with any Coupons appertaining thereto issued
pursuant to this Section in lieu of any destroyed, lost or stolen Security, or
in exchange for a Security to which a destroyed, lost or stolen Coupon
appertains shall constitute a separate obligation of the Issuer and the
Guarantor (if the Security is a Guaranteed Security), whether or not the
destroyed, lost or stolen Security and Coupons appertaining thereto or the
destroyed, lost or stolen Coupon shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of such series and any
Coupons, if any, duly issued hereunder.
The provisions of this Section, as amended or supplemented pursuant
to this Indenture with respect to particular Securities or generally, shall be
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities or Coupons.
Section 307. PAYMENT OF INTEREST AND CERTAIN ADDITIONAL AMOUNTS;
RIGHTS TO INTEREST AND CERTAIN ADDITIONAL AMOUNTS
PRESERVED.
Unless otherwise provided in or pursuant to this Indenture, any
interest on and any Additional Amounts with respect to any Registered Security
which shall be payable, and are punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name such Security
(or one or more Predecessor Securities) is registered as of the close of
business on the Regular Record Date for such interest. Unless otherwise
provided in or pursuant to this Indenture, in case a Bearer Security is
surrendered in exchange for a Registered Security after the close of business
at an Office or Agency for such Security on any Regular Record Date therefor
and before the opening of business at such Office or Agency on the next
succeeding Interest Payment Date therefor, such Bearer Security shall be
surrendered without the Coupon relating to such Interest Payment Date and
interest shall not be payable on such Interest Payment Date in respect of the
Registered Security issued in exchange for such Bearer Security, but shall be
payable only to the Holder of such Coupon when due in accordance with the
provisions of this Indenture.
Unless otherwise provided in or pursuant to this Indenture, any
interest on and any Additional Amounts with respect to any Registered Security
which shall be payable, but shall not be punctually paid or duly provided for,
on any Interest Payment Date for such Registered Security (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder
thereof on the relevant Regular Record Date by virtue of having been such
Holder; and such Defaulted Interest may be paid by the Issuer or the Guarantor
(if the Registered Security is a Guaranteed Security), at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Issuer or the Guarantor (if the Registered Security is a
Guaranteed Security) may elect to make payment of any Defaulted Interest
to the Person in whose name such Registered Security (or a Predecessor
Security thereof) shall be registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Issuer or the Guarantor (if
the Registered Security is a Guaranteed Security) shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be
paid on such Registered Security and the date of the proposed payment,
and at the same time the Issuer or the Guarantor (if the Registered
Security is a Guaranteed Security), as the case may be, shall deposit
with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior to
the date of the proposed payment, such money when so deposited to be held
in trust for the benefit of the Person entitled to such Defaulted
Interest as in this Clause provided. Thereupon, the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Issuer or the Guarantor, as the case may be, of such
Special Record Date and, in the name and at the expense of the Issuer or
the Guarantor, as the case may be, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
to be mailed, first-class postage prepaid, to the Holder of such
Registered Security (or a Predecessor Security thereof) at his address as
it appears in the Security Register not less than 10 days prior to such
Special Record Date. The Trustee may, in its discretion, in the name and
at the expense of the Issuer or the Guarantor, as the case may be, cause
a similar notice to be published at least once in an Authorized Newspaper
of general circulation in the Borough of Manhattan, The City of New York,
but such publication shall not be a condition precedent to the
establishment of such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having
been mailed as aforesaid, such Defaulted Interest shall be paid to the
Person in whose name such Registered Security (or a Predecessor Security
thereof) shall be registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
clause (2). In case a Bearer Security is surrendered at the Office or
Agency for such Security in exchange for a Registered Security after the
close of business at such Office or Agency on any Special Record Date and
before the opening of business at such Office or Agency on the related
proposed date for payment of Defaulted Interest, such Bearer Security
shall be surrendered without the Coupon relating to such Defaulted
Interest and Defaulted Interest shall not be payable on such proposed
date of payment in respect of the Registered Security issued in exchange
for such Bearer Security, but shall be payable only to the Holder of such
Coupon when due in accordance with the provisions of this Indenture.
(2) The Issuer or the Guarantor (if the Security is a Guaranteed
Security) may make payment of any Defaulted Interest in any other lawful
manner not inconsistent with the requirements of any securities exchange
on which such Security may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Issuer or the
Guarantor, as the case may be, to the Trustee of the proposed payment
pursuant to this Clause, such payment shall be deemed practicable by the
Trustee.
Unless otherwise provided in or pursuant to this Indenture or the
Securities of any particular series pursuant to the provisions of this
Indenture, at the option of the Issuer, interest on Registered Securities that
bear interest may be paid by mailing a check to the address of the Person
entitled thereto as such address shall appear in the Security Register or by
transfer to an account maintained by the payee with a bank located in the
United States.
Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
In the case of any Registered Security of any series that is
convertible, which Registered Security is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Registered Security with respect to which the Stated Maturity is prior to
such Interest Payment Date), interest with respect to which the Stated
Maturity is on such Interest Payment Date shall be payable on such Interest
Payment Date notwithstanding such conversion, and such interest (whether or
not punctually paid or duly provided for) shall be paid to the Person in whose
name that Registered Security (or one or more predecessor Registered
Securities) is registered at the close of business on such Regular Record
Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Registered Security which is converted, interest
with respect to which the Stated Maturity is after the date of conversion of
such Registered Security shall not be payable.
Section 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Registered Security for registration of
transfer, the Issuer, the Guarantor (if the Registered Security is a
Guaranteed Security), the Trustee and any agent of the Issuer or the Guarantor
(if the Registered Security is a Guaranteed Security) or the Trustee may treat
the Person in whose name such Registered Security is registered in the
Security Register as the owner of such Registered Security for the purpose of
receiving payment of principal of, any premium and (subject to Sections 305
and 307) interest on and any Additional Amounts with respect to such
Registered Security and for all other purposes whatsoever, whether or not any
payment with respect to such Registered Security shall be overdue, and neither
the Issuer, nor the Guarantor, the Trustee or any agent of the Issuer, the
Guarantor or the Trustee shall be affected by notice to the contrary.
The Issuer, the Guarantor (if the Bearer Security is a Guaranteed
Security), the Trustee and any agent of the Issuer, the Guarantor (if the
Bearer Security is a Guaranteed Security) or the Trustee may treat the bearer
of any Bearer Security or the bearer of any Coupon as the absolute owner of
such Security or Coupon for the purpose of receiving payment thereof or on
account thereof and for all other purposes whatsoever, whether or not any
payment with respect to such Security or Coupon shall be overdue, and neither
the Issuer, nor the Guarantor, the Trustee or any agent of the Issuer, the
Guarantor or the Trustee shall be affected by notice to the contrary.
No Holder of any beneficial interest in any global Security held on
its behalf by a Depository shall have any rights under this Indenture with
respect to such global Security, and such Depository may be treated by the
Issuer, the Trustee, and any agent of the Issuer, the Guarantor (if the global
Security is a Guaranteed Security) or the Trustee as the owner of such global
Security for all purposes whatsoever. None of the Issuer, the Guarantor (if
the global Security is a Guaranteed Security), the Trustee, any Paying Agent
or the Security Registrar will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of a global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Section 309. CANCELLATION.
All Securities and Coupons surrendered for payment, redemption,
registration of transfer, exchange or conversion or for credit against any
sinking fund payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee, and any such Securities and Coupons, as
well as Securities and Coupons surrendered directly to the Trustee for any
such purpose, shall be cancelled promptly by the Trustee. The Issuer or the
Guarantor (if the Security is a Guaranteed Security) may at any time deliver
to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Issuer or the Guarantor (if the Security is a
Guaranteed Security) may have acquired in any manner whatsoever, and all
Securities so delivered shall be cancelled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by or
pursuant to this Indenture. All cancelled Securities and Coupons held by the
Trustee shall be destroyed by the Trustee, unless by an Issuer Order or
Guarantor Order the Issuer or the Guarantor, as the case may be, directs their
return to it.
Section 310. COMPUTATION OF INTEREST.
Except as otherwise provided in or pursuant to this Indenture or in
any Security, interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE OF INDENTURE
Section 401. SATISFACTION AND DISCHARGE.
Upon the direction of the Issuer by an Issuer Order or of the
Guarantor by a Guarantor Order (if the applicable series of Securities is a
series of Guaranteed Securities), this Indenture shall cease to be of further
effect with respect to any series of Securities specified in such Issuer Order
or Guarantor Order and any Coupons appertaining thereto, and the Trustee, on
receipt of an Issuer Order or a Guarantor Order, at the expense of the Issuer
and the Guarantor, shall execute proper instruments acknowledging satisfaction
and discharge of this Indenture as to such series, when
(1) either
(a) all Securities of such series theretofore authenticated and
delivered and all Coupons appertaining thereto (other than (i) Coupons
appertaining to Bearer Securities of such series surrendered in exchange
for Registered Securities of such series and maturing after such exchange
whose surrender is not required or has been waived as provided in Section
305, (ii) Securities and Coupons of such series which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 306, (iii) Coupons appertaining to Securities of such
series called for redemption and maturing after the relevant Redemption
Date whose surrender has been waived as provided in Section 1107, and
(iv) Securities and Coupons of such series for whose payment money has
theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 1003) have been delivered to the Trustee
for cancellation; or
(b) all Securities of such series and, in the case of (i) or
(ii) below, any Coupons appertaining thereto not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) _____ will become due and payable at their Stated Maturity
within one year, or
(iii) if redeemable at the option of the Issuer, are to be
called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Issuer and the Guarantor (if
the Securities of such series are Guaranteed Securities),
and the Issuer or the Guarantor (if the Securities of such series are
Guaranteed Securities), in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose, money in the Currency in which such Securities
are payable in an amount sufficient to pay and discharge the entire
indebtedness on such Securities and any Coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation, including the
principal of, any premium and interest on, and any Additional Amounts
with respect to such Securities and any Coupons appertaining thereto, to
the date of such deposit (in the case of Securities which have become due
and payable) or to the Maturity thereof, as the case may be;
(2) ______ the Issuer or the Guarantor (if the Securities of such
series are Guaranteed Securities) has paid or caused to be paid all other
sums payable hereunder by the Issuer and the Guarantor with respect to
the Outstanding Securities of such series and any Coupons appertaining
thereto; and
(3) ______ the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel and the Guarantor has delivered to
the Trustee a Guarantor's Officers' Certificate (if the Securities of
such series are Guaranteed Securities), each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture as to such series have been complied with.
In the event there are Securities of two or more series hereunder,
the Trustee shall be required to execute an instrument acknowledging
satisfaction and discharge of this Indenture only if requested to do so with
respect to Securities of such series as to which it is Trustee and if the
other conditions thereto are met.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to any series of Securities, the obligations of the Issuer and the
Guarantor to the Trustee under Section 605 and, if money shall have been
deposited with the Trustee pursuant to subclause (b) of clause (1) of this
Section, the obligations of the Issuer and the Trustee with respect to the
Securities of such series under Sections 305, 306, 403, 1002 and 1003, with
respect to the payment of Additional Amounts, if any, with respect to such
Securities as contemplated by Section 1004 (but only to the extent that the
Additional Amounts payable with respect to such Securities exceed the amount
deposited in respect of such Additional Amounts pursuant to Section
401(1)(b)), and with respect to any rights to exchange such Securities into
other securities shall survive.
Section 402. DEFEASANCE AND COVENANT DEFEASANCE.
(1) Unless pursuant to Section 301, either or both of (i) defeasance
of the Securities of or within a series under clause (2) of this Section 402
shall not be applicable with respect to the Securities of such series or (ii)
covenant defeasance of the Securities of or within a series under clause (3)
of this Section 402 shall not be applicable with respect to the Securities of
such series, then such provisions, together with the other provisions of this
Section 402 (with such modifications thereto as may be specified pursuant to
Section 301 with respect to any Securities), shall be applicable to such
Securities and any Coupons appertaining thereto, and the Issuer may at its
option by Board Resolution, at any time, with respect to such Securities and
any Coupons appertaining thereto, elect to have Section 402(2) or Section
402(3) be applied to such Outstanding Securities and any Coupons appertaining
thereto upon compliance with the conditions set forth below in this Section
402.
(2) Upon the Issuer's exercise of the above option applicable to this
Section 402(2) with respect to any Securities of or within a series, each of
the Issuer and the Guarantor (if such Securities are Guaranteed Securities)
shall be deemed to have been discharged from its obligations with respect to
such Outstanding Securities and any Coupons appertaining thereto and under the
Guarantee in respect thereof (if applicable), respectively, on the date the
conditions set forth in clause (4) of this Section 402 are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Issuer and the Guarantor (if such Securities are Guaranteed Securities) shall
be deemed to have paid and discharged the entire Indebtedness represented by
such Outstanding Securities and any Coupons appertaining thereto, and under
the Guarantee in respect thereof (if such Securities are Guaranteed
Securities), which shall thereafter be deemed to be "Outstanding" only for the
purposes of clause (5) of this Section 402 and the other Sections of this
Indenture referred to in clauses (i) and (ii) below, and to have satisfied all
of its other obligations under such Securities and any Coupons appertaining
thereto, and under the Guarantee in respect thereof (if such Securities are
Guaranteed Securities), and this Indenture insofar as such Securities and any
Coupons appertaining thereto, and the Guarantee in respect thereof (if such
Securities are Guaranteed Securities), are concerned (and the Trustee, at the
expense of the Issuer and the Guarantor (if such Securities are Guaranteed
Securities), shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of such Outstanding Securities and any
Coupons appertaining thereto to receive, solely from the trust fund described
in clause (4) of this Section 402 and as more fully set forth in such Section,
payments in respect of the principal of (and premium, if any) and interest, if
any, on, and Additional Amounts, if any, with respect to, such Securities and
any Coupons appertaining thereto when such payments are due, and any rights of
such Holder to convert or exchange such Securities into Common Stock or other
securities, (ii) the obligations of the Issuer, the Guarantor (if the
Securities are Guaranteed Securities) and the Trustee with respect to such
Securities under Sections 305, 306, 1002 and 1003 and with respect to the
payment of Additional Amounts, if any, on such Securities as contemplated by
Section 1004 (but only to the extent that the Additional Amounts payable with
respect to such Securities exceed the amount deposited in respect of such
Additional Amounts pursuant to Section 401(4)(a) below), and with respect to
any rights to exchange such Securities into other securities, (iii) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and
(iv) this Section 402. The Issuer may exercise its option under this Section
402(2) notwithstanding the prior exercise of its option under clause (3) of
this Section 402 with respect to such Securities and any Coupons appertaining
thereto.
(3) Upon the Issuer's exercise of the above option applicable to this
Section 402(3) with respect to any Securities of or within a series, each of
the Issuer and the Guarantor (if the Securities are Guaranteed Securities)
shall be released from its obligations under Sections 1005 to 1011, inclusive,
and to the extent specified pursuant to Section 301, any other covenant
applicable to such Securities, with respect to such Outstanding Securities and
any Coupons appertaining thereto, and the Guarantee in respect thereof (if the
Securities are Guaranteed Securities), on and after the date the conditions
set forth in clause (4) of this Section 402 are satisfied (hereinafter,
"covenant defeasance"), and such Securities and any Coupons appertaining
thereto shall thereafter be deemed to be not "Outstanding" for the purposes of
any direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with any such covenant, but shall
continue to be deemed "Outstanding" for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to such Outstanding
Securities and any Coupons appertaining thereto, the Issuer and the Guarantor
(if applicable) may omit to comply with, and shall have no liability in
respect of, any term, condition or limitation set forth in any such Section or
such other covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such Section or such other covenant or by
reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a default or an Event of Default under Section 501(4) or 501(9)
or otherwise, as the case may be, but, except as specified above, the
remainder of this Indenture and such Securities and Coupons appertaining
thereto and the Guarantee in respect thereof (if the Securities are Guaranteed
Securities) shall be unaffected thereby.
(4) The following shall be the conditions to application of clause
(2) or (3) of this Section 402 to any Outstanding Securities of or within a
series and any Coupons appertaining thereto and the Guarantee (if the
Securities are Guaranteed Securities) in respect thereof:
(a) The Issuer or the Guarantor shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 607 who shall agree to comply with the
provisions of this Section 402 applicable to it) as trust funds in trust
for the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of such
Securities and any Coupons appertaining thereto, (1) an amount in Dollars
or in such Foreign Currency in which such Securities and any Coupons
appertaining thereto are then specified as payable at Stated Maturity, or
(2) Government Obligations applicable to such Securities and Coupons
appertaining thereto (determined on the basis of the Currency in which
such Securities and Coupons appertaining thereto are then specified as
payable at Stated Maturity) which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment
of principal of (and premium, if any) and interest, if any, on such
Securities and any Coupons appertaining thereto, money in an amount, or
(3) a combination thereof, in any case, in an amount, sufficient, without
consideration of any reinvestment of such principal and interest, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, (y) the principal of (and
premium, if any) and interest, if any, on such Outstanding Securities and
any Coupons appertaining thereto on the Stated Maturity of such principal
or installment of principal or interest and (z) any mandatory sinking
fund payments or analogous payments applicable to such Outstanding
Securities and any Coupons appertaining thereto on the day on which such
payments are due and payable in accordance with the terms of this
Indenture and of such Securities and any Coupons appertaining thereto.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Issuer or the
Guarantor (if the Securities are Guaranteed Securities) is a party or by
which it is bound.
(c) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to such Securities
and any Coupons appertaining thereto shall have occurred and be
continuing on the date of such deposit and, with respect to defeasance
only, at any time during the period ending on the 91st day after the date
of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(d) In the case of an election under clause (2) of this Section 402,
the Issuer or the Guarantor shall have delivered to the Trustee an
Opinion of Counsel stating that (i) the Issuer or the Guarantor (if the
Securities are Guaranteed Securities) has received from the Internal
Revenue Service a letter ruling, or there has been published by the
Internal Revenue Service a Revenue Ruling, or (ii) there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that, the
Holders of such Outstanding Securities and any Coupons appertaining
thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred.
(e) In the case of an election under clause (3) of this Section 402,
the Issuer or the Guarantor shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Outstanding
Securities and any Coupons appertaining thereto will not recognize
income, gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred.
(f) The Issuer or the Guarantor (if the Securities are Guaranteed
Securities) shall have delivered to the Trustee an Officers' Certificate
(if applicable) or a Guarantor's Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent to the defeasance or
covenant defeasance under clause (2) or (3) of this Section 402 (as the
case may be) have been complied with.
(g) Notwithstanding any other provisions of this Section 402(4), such
defeasance or covenant defeasance shall be effected in compliance with
any additional or substitute terms, conditions or limitations which may
be imposed on the Issuer or the Guarantor (if the Securities are
Guaranteed Securities) in connection therewith pursuant to Section 301.
(5) Subject to the provisions of the last paragraph of Section 1003,
all money and Government Obligations (or other property as may be provided
pursuant to Section 301) (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this
Section 402(5) and Section 403, the "Trustee") pursuant to clause (4) of
Section 402 in respect of any Outstanding Securities of any series and any
Coupons appertaining thereto shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and any Coupons
appertaining thereto and this Indenture, to the payment, either directly or
through any Paying Agent (including the Issuer acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Securities and any
Coupons appertaining thereto of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest and Additional
Amounts, if any, but such money need not be segregated from other funds except
to the extent required by law.
Unless otherwise specified in or pursuant to this Indenture or any
Security, if, after a deposit referred to in Section 402(4)(a) has been made,
(a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 301 or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 402(4)(a) has been made in respect of such Security, or
(b) a Conversion Event occurs in respect of the Foreign Currency in which the
deposit pursuant to Section 402(4)(a) has been made, the indebtedness
represented by such Security and any Coupons appertaining thereto shall be
deemed to have been, and will be, fully discharged and satisfied through the
payment of the principal of (and premium, if any), and interest, if any, on,
and Additional Amounts, if any, with respect to, such Security as the same
becomes due out of the proceeds yielded by converting (from time to time as
specified below in the case of any such election) the amount or other property
deposited in respect of such Security into the Currency in which such Security
becomes payable as a result of such election or Conversion Event based on (x)
in the case of payments made pursuant to clause (a) above, the applicable
market exchange rate for such Currency in effect on the second Business Day
prior to each payment date, or (y) with respect to a Conversion Event, the
applicable market exchange rate for such Foreign Currency in effect (as nearly
as feasible) at the time of the Conversion Event.
The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge, imposed on or assessed against the Government Obligations
deposited pursuant to this Section 402 or the principal or interest received
in respect thereof other than any such tax, fee or other charge which by law
is for the account of the Holders of such Outstanding Securities and any
Coupons appertaining thereto.
Anything in this Section 402 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon Issuer
Request, or the Guarantor, as the case may be, upon the Guarantor Request, any
money or Government Obligations (or other property and any proceeds therefrom)
held by it as provided in clause (4) of this Section 402 which, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect a
defeasance or covenant defeasance, as applicable, in accordance with this
Section 402.
Section 403. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money and Government Obligations deposited with the Trustee pursuant to
Section 401 or 402 shall be held in trust and applied by it, in accordance
with the provisions of the Securities, the Coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Issuer
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, interest and Additional Amounts
for whose payment such money has or Government Obligations have been deposited
with or received by the Trustee; but such money and Government Obligations
need not be segregated from other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
Section 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Securities
of any series, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body), unless such event is specifically deleted or modified in
or pursuant to the supplemental indenture, Board Resolution or Officers'
Certificate establishing the terms of such Series pursuant to this Indenture:
(1) default in the payment of any interest on or any Additional
Amounts payable in respect of any Security of such series when such interest
becomes or such Additional Amounts become due and payable, and continuance of
such default for a period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of such series when it becomes due and payable at its Maturity; or
(3) default in the deposit of any sinking fund payment when and as
due by the terms of a Security of such series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Issuer or the Guarantor (if the Securities of such series are
Guaranteed Securities) in this Indenture or the Securities (other than a
covenant or warranty a default in the performance or the breach of which is
elsewhere in this Section specifically dealt with or which has been expressly
included in this Indenture solely for the benefit of a series of Securities
other than such series), and continuance of such default or breach for a
period of 60 days after there has been given, by registered or certified mail,
to the Issuer and the Guarantor (if the Securities of such series are
Guaranteed Securities) by the Trustee or to the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities of
such series, a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) the entry by a court having competent jurisdiction of:
(a) a decree or order for relief in respect of the Issuer, the
Guarantor (if the Securities of such series are Guaranteed Securities) or
any "significant subsidiary" of the Issuer or the Guarantor in Article 1,
Section 1-02 of Regulation S-X under the Securities Act of 1933, as
amended ("Significant Subsidiary") in an involuntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law
and such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or
(b) a decree or order adjudging the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) or any Significant
Subsidiary to be insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of the Issuer, the
Guarantor (if the Securities of such series are Guaranteed Securities) or
any Significant Subsidiary and such decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or
(c) a final and non-appealable order appointing a custodian,
receiver, liquidator, assignee, trustee or other similar official of the
Issuer, the Guarantor (if the Securities of such series are Guaranteed
Securities) or any Significant Subsidiary or of any substantial part of
the property of the Issuer, the Guarantor (if the Securities of such
series are Guaranteed Securities) or any Significant Subsidiary, as the
case may be, or ordering the winding up or liquidation of the affairs of
the Issuer, the Guarantor (if the Securities of such series are
Guaranteed Securities) or any Significant Subsidiary; or
(6) the commencement by the Issuer, the Guarantor (if the Securities
of such series are Guaranteed Securities) or any Significant Subsidiary of a
voluntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or of a voluntary proceeding seeking to be
adjudicated insolvent or the consent by the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) or any Significant
Subsidiary to the entry of a decree or order for relief in an involuntary
proceeding under any applicable bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any insolvency proceedings against
it, or the filing by the Issuer, the Guarantor (if the Securities of such
series are Guaranteed Securities) or any Significant Subsidiary of a petition
or answer or consent seeking reorganization or relief under any applicable
law, or the consent by the Issuer, the Guarantor (if the Securities of such
series are Guaranteed Securities) or any Significant Subsidiary to the filing
of such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or similar official of the Issuer, the
Guarantor (if the Securities of such series are Guaranteed Securities) or any
Significant Subsidiary or any substantial part of the property of the Issuer,
the Guarantor (if the Securities of such series are Guaranteed Securities) or
any Significant Subsidiary or the making by the Issuer, the Guarantor (if the
Securities of such series are Guaranteed Securities) or any Significant
Subsidiary of an assignment for the benefit of creditors, or the taking of
corporate action by the Issuer, the Guarantor (if the Securities of such
series are Guaranteed Securities) or any Significant Subsidiary in furtherance
of any such action; or
(7) the Issuer, the Guarantor (if the Securities of such series are
Guaranteed Securities) or any Subsidiary in which the Issuer has invested at
least $20,000,000 in capital shall fail to pay any principal of, premium or
interest on or any other amount payable in respect of, any recourse
Indebtedness that is outstanding in a principal or notional amount of at least
$20,000,000 (or the equivalent thereof in one or more other currencies),
either individually or in the aggregate (but excluding Indebtedness
outstanding hereunder), of the Issuer and its consolidated Subsidiaries, taken
as a whole, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
any agreement or instrument relating to such Indebtedness, or any other event
shall occur or condition shall exist under any agreement or instrument
evidencing, securing or otherwise relating to any such Indebtedness and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness or otherwise to cause, or to permit the holder or holders thereof
( or a trustee or agent on behalf of such holders) to cause such Indebtedness
to mature prior to its stated maturity; or
(8) one or more final, non-appealable judgments or orders for the
payment of money aggregating $20,000,000 (or the equivalent thereof in one or
more other currencies) or more are rendered against one or more of the Issuer,
the Guarantor (if the Securities of such series are Guaranteed Securities) and
any Subsidiary in which the Issuer has invested at least $20,000,000 in
capital and remain unsatisfied and either (i) enforcement proceedings shall
have been commenced by any creditor upon any such judgment or order or (ii)
there shall be a period of at least 60 days after entry thereof during which a
stay of enforcement of any such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; PROVIDED, HOWEVER, that any such
judgment or order shall not give rise to an Event of Default under this
subsection (8) if and for so long as (A) the amount of such judgment or order
is covered by a valid and binding policy of insurance between the defendant
and the insurer covering full payment thereof and (B) such insurer has been
notified, and has not disputed the claim made for payment, of the amount of
such judgement or order; or
(9) any other Event of Default provided in or pursuant to this
Indenture with respect to Securities of such series.
Section 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Securities of any series at
the time Outstanding (other than an Event of Default specified in clause (5)
or (6) of Section 501) occurs and is continuing, then the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of such series may declare the principal (or, if any Securities are Original
Issue Discount Securities or Indexed Securities, such portion of the principal
as may be specified in the terms thereof) of all the Securities of such
series, or such lesser amount as may be provided for in the Securities of such
series, to be due and payable immediately, by a notice in writing to the
Issuer and the Guarantor (if the Securities are Guaranteed Securities) (and to
the Trustee if given by the Holders), and upon any such declaration such
principal or such lesser amount shall become immediately due and payable.
If an Event of Default specified in clause (5) or (6) of Section 501
occurs, all unpaid principal of and accrued interest on the Outstanding
Securities of that series (or such lesser amount as may be provided for in the
Securities of such series) shall IPSO FACTO become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of any Security of that series.
At any time after Securities of any series have been accelerated and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of not less
than a majority in principal amount of the Outstanding Securities of such
series, by written notice to the Issuer, the Guarantor (if the Securities are
Guaranteed Securities) and the Trustee, may rescind and annul such declaration
and its consequences if
(1) the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) has paid or deposited with the Trustee a sum of money sufficient
to pay
(a) all overdue installments of any interest on and Additional
Amounts with respect to all Securities of such series and any Coupon
appertaining thereto,
(b) the principal of and any premium on any Securities of such series
which have become due otherwise than by such declaration of acceleration
and interest thereon and any Additional Amounts with respect thereto at
the rate or rates borne by or provided for in such Securities,
(c) to the extent that payment of such interest or Additional Amounts
is lawful, interest upon overdue installments of any interest and
Additional Amounts at the rate or rates borne by or provided for in such
Securities, and
(d) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due the Trustee
under Section 606; and
(2) all Events of Default with respect to Securities of such series,
other than the non-payment of the principal of, any premium and interest on,
and any Additional Amounts with respect to Securities of such series which
shall have become due solely by such declaration of acceleration, shall have
been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Issuer covenants and the Guarantor (if the Securities are
Guaranteed Securities) covenants, in each case, that if
(1) default is made in the payment of any installment of interest on
or any Additional Amounts with respect to any Security or any Coupon
appertaining thereto when such interest or Additional Amounts shall have
become due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of or any premium
on any Security at its Maturity,
the Issuer or the Guarantor (if the Securities are Guaranteed Securities), as
the case may be shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities and any Coupons appertaining
thereto, the whole amount of money then due and payable with respect to such
Securities and any Coupons appertaining thereto, with interest upon the
overdue principal, any premium and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installments of
interest and Additional Amounts at the rate or rates borne by or provided for
in such Securities, and, in addition thereto, such further amount of money as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due to the Trustee under
Section 606.
If the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) fails to pay the money it is required to pay the Trustee pursuant
to the preceding paragraph forthwith upon the demand of the Trustee, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the money so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the
same against the Issuer or the Guarantor (if the Securities are Guaranteed
Securities) or any other obligor upon such Securities and any Coupons
appertaining thereto and collect the monies adjudged or decreed to be payable
in the manner provided by law out of the property of the Issuer or the
Guarantor (if the Securities are Guaranteed Securities) or any other obligor
upon such Securities and any Coupons appertaining thereto, wherever situated.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series and any Coupons appertaining thereto by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or such Securities or in aid of the exercise of
any power granted herein or therein, or to enforce any other proper remedy.
Section 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Issuer, the Guarantor (if the Securities
are Guaranteed Securities) or any other obligor upon the Securities or the
property of the Issuer, the Guarantor (if the Securities are Guaranteed
Securities) or such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Issuer or the
Guarantor (if the Securities are Guaranteed Securities) for the payment of any
overdue principal, premium, interest or Additional Amounts) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Securities of such series, of the
principal and any premium, interest and Additional Amounts owing and
unpaid in respect of the Securities and any Coupons appertaining thereto
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents or counsel) and of the Holders of Securities or
any Coupons allowed in such judicial proceeding, and
(2) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities or any Coupons to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders of Securities or any Coupons, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and any
other amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security or any Coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or Coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or any Coupon in any such proceeding.
Section 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES OR COUPONS.
All rights of action and claims under this Indenture or any of the
Securities or Coupons may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or Coupons or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery or judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, shall be for the ratable benefit of each and every Holder of a
Security or Coupon in respect of which such judgment has been recovered.
Section 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, or any
premium, interest or Additional Amounts, upon presentation of the Securities
or Coupons, or both, as the case may be, and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities and any Coupons for principal and any premium, interest
and Additional Amounts in respect of which or for the benefit of
which such money has been collected, ratably, without preference or
priority of any kind, according to the aggregate amounts due and
payable on such Securities and Coupons for principal and any premium,
interest and Additional Amounts, respectively;
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
Section 507. LIMITATIONS ON SUITS.
No Holder of any Security of any series or any Coupons appertaining
thereto shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of such
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of such series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of such
series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture or any Security to affect, disturb or prejudice
the rights of any other such Holders or Holders of Securities of any other
series, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such
Holders.
Section 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND
ANY PREMIUM, INTEREST AND ADDITIONAL AMOUNTS.
Notwithstanding any other provision in this Indenture, the Holder of
any Security or Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of, any premium and
(subject to Sections 305 and 307) interest on, and any Additional Amounts with
respect to such Security or payment of such Coupon, as the case may be, on the
respective Stated Maturity or Maturities therefor specified in such Security
or Coupon (or, in the case of redemption, on the Redemption Date or, in the
case of repayment at the option of such Holder if provided in or pursuant to
this Indenture, on the date such repayment is due) and to institute suit for
the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
Section 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Security or a Coupon has instituted
any proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Issuer, the Guarantor (if the Security is a Guaranteed Security), the
Trustee and each such Holder shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and each such
Holder shall continue as though no such proceeding had been instituted.
Section 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or Coupons in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to each and every Holder of a Security or a Coupon
is intended to be exclusive of any other right or remedy, and every right and
remedy, to the extent permitted by law, shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not, to the extent permitted by law,
prevent the concurrent assertion or employment of any other appropriate right
or remedy.
Section 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security
or Coupon to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to any Holder of a Security or a Coupon
may be exercised from time to time, and as often as may be deemed expedient,
by the Trustee or by such Holder, as the case may be.
Section 512. CONTROL BY HOLDERS OF SECURITIES.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Securities of such series and any Coupons appertaining thereto, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture or with the Securities of any series,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) such direction is not unduly prejudicial to the rights of the
other Holders of Securities of such series not joining in such action.
Section 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series on behalf of the Holders of all the
Securities of such series and any Coupons appertaining thereto may waive any
past default hereunder with respect to such series and its consequences,
except a default
(1) in the payment of the principal of, any premium or interest on,
or any Additional Amounts with respect to, any Security of such series or
any Coupons appertaining thereto, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. WAIVER OF STAY OR EXTENSION LAWS.
The Issuer covenants and the Guarantor covenants, in each case, that
(to the extent that it may lawfully do so) it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Issuer and the Guarantor each expressly waives (to the
extent that it may lawfully do so) all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 515. UNDERTAKING FOR COSTS
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any party litigant in such
suit of any undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 515 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest, if any, on or
Additional Amounts, if any, with respect to any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date, and, in the case of repayment, on
or after the date for repayment) or for the enforcement of the right, if any,
to convert or exchange any Security into Common Stock or other securities in
accordance with its terms.
ARTICLE SIX
THE TRUSTEE
Section 601. CERTAIN RIGHTS OF TRUSTEE.
Subject to Sections 315(a) through 315(d) of the Trust Indenture Act:
(1) _ the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or an Issuer Order or of the
Guarantor mentioned herein shall be sufficiently evidenced by a Guarantor
Request or Guarantor Order (in each case, other than delivery of any
Security, together with any Coupons appertaining thereto, to the Trustee
for authentication and delivery pursuant to Section 303 which shall be
sufficiently evidenced as provided therein) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution or
by the Guarantor's Board of Directors may be sufficiently evidenced by a
Guarantor's Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence shall be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate or,
if such matter pertains to the Guarantor, a Guarantor's Officers'
Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by or pursuant to this Indenture at the
request or direction of any of the Holders of Securities of any series or
any Coupons appertaining thereto pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, coupon or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall determine
to make such further inquiry or investigation, it shall be entitled to
examine, during business hours and upon reasonable notice, the books,
records and premises of the Issuer and the Guarantor, personally or by
agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care
by it hereunder; and
(8) subject to the provisions of Section 602 hereof and Sections
315(a) through 315(d) of the Trust Indenture Act, the Trustee shall not
be charged with knowledge of any Event of Default described in Section
501(4), (5), (6), (7) or (8) hereof unless a Responsible Officer of the
Trustee shall have actual knowledge of such Event of Default.
Section 602. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series entitled to receive reports pursuant
to Section 703(3), notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that,
except in the case of a default in the payment of the principal of (or
premium, if any), or interest, if any, on, or Additional Amounts or any
sinking fund or purchase fund installment with respect to, any Security of
such series, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the best interest
of the Holders of Securities and Coupons of such series; and PROVIDED,
FURTHER, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "DEFAULT" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
Section 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, and in any Coupons shall be taken as
the statements of the Issuer or the Guarantor (if the Securities are
Guaranteed Securities), as the case may be, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities or the Coupons, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility on Form T-1 supplied to
the Issuer are true and accurate, subject to the qualifications set forth
therein. Neither the Trustee nor any Authenticating Agent shall be accountable
for the use or application by the Issuer of the Securities or the proceeds
thereof.
Section 604. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other Person that may be an agent of the Trustee or the
Guarantor or the Issuer, in its individual or any other capacity, may become
the owner or pledgee of Securities or Coupons and, subject to Sections 310(b)
and 311 of the Trust Indenture Act, may otherwise deal with the Issuer or the
Guarantor with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other Person.
Section 605. MONEY HELD IN TRUST.
Except as provided in Section 403 and Section 1003, money held by the
Trustee in trust hereunder need not be segregated from other funds except to
the extent required by law and shall be held uninvested. The Trustee shall be
under no liability for interest on any money received by it hereunder except
as otherwise agreed in writing with the Issuer or the Guarantor.
Section 606. COMPENSATION AND REIMBURSEMENT.
The Issuer and the Guarantor jointly and severally agree:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by the Trustee hereunder (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustee's
negligence or bad faith; and
(3) to indemnify the Trustee and its agents for, and to hold them
harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any
of their powers or duties hereunder, except to the extent that any such
loss, liability or expense was due to the Trustee's negligence or bad
faith.
As security for the performance of the obligations of the Issuer and
the Guarantor under this Section, the Trustee shall have a Lien prior to the
Securities of any series upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the payment of principal of,
and premium or interest on or any Additional Amounts with respect to
Securities or any Coupons appertaining thereto.
Any compensation or expense incurred by the Trustee after a default
specified by Section 501 is intended to constitute an expense of
administration under any then applicable bankruptcy or insolvency law.
"Trustee" for purposes of this Section 606 shall include any predecessor
Trustee but the negligence or bad faith of any Trustee shall not affect the
rights of any other Trustee under this Section 606.
Section 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder that is a
Corporation, organized and doing business under the laws of the United States
of America, any state thereof or the District of Columbia, eligible under
Section 310(a)(1) of the Trust Indenture Act to act as trustee under an
indenture qualified under the Trust Indenture Act and that has a combined
capital and surplus (computed in accordance with Section 310(a)(2) of the
Trust Indenture Act) of at least $50,000,000 subject to supervision or
examination by Federal or state authority. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(1) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee pursuant to Section 609.
(2) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Issuer and the
Guarantor (if the Securities are Guaranteed Securities). If the instrument of
acceptance by a successor Trustee required by Section 609 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to such
series.
(3) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee
and the Issuer and the Guarantor (if the Securities are Guaranteed
Securities).
(4) If at any time:
(a) the Trustee shall fail to comply with the obligations imposed
upon it under Section 310(b) of the Trust Indenture Act with respect to
Securities of any series after written request therefor by the Issuer,
the Guarantor (if the Securities are Guaranteed Securities) or any Holder
of a Security of such series who has been a bona fide Holder of a
Security of such series for at least six months, or
(b) the Trustee shall cease to be eligible under Section 607 and
shall fail to resign after written request therefor by the Issuer, the
Guarantor (if the Securities are Guaranteed Securities) or any such
Holder, or
(c) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer, by or pursuant to a Board Resolution,
or the Guarantor (if the Securities are Guaranteed Securities), by or pursuant
to a Guarantor's Board Resolution, may remove the Trustee with respect to all
Securities or the Securities of such series, or (ii) subject to Section 315(e)
of the Trust Indenture Act, any Holder of a Security who has been a bona fide
Holder of a Security of such series for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities of
such series and the appointment of a successor Trustee or Trustees.
(1) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Issuer, by or
pursuant to a Board Resolution, and the Guarantor (if the Securities are
Guaranteed Securities), by or pursuant to a Guarantor's Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one
Trustee with respect to the Securities of any particular series) and shall
comply with the applicable requirements of Section 609. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series
shall be appointed by Act of the Holders of a majority in principal amount of
the Outstanding Securities of such series delivered to the Issuer, the
Guarantor (if the Securities are Guaranteed Securities) and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 609, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee appointed by
the Issuer and the Guarantor (if the Securities are Guaranteed Securities). If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Issuer and the Guarantor (if the Securities are
Guaranteed Securities) or the Holders of Securities and accepted appointment
in the manner required by Section 609, any Holder of a Security who has been a
bona fide Holder of a Security of such series for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
(2) The Issuer shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Registered Securities, if any, of such series as
their names and addresses appear in the Security Register and, if Securities
of such series are issued as Bearer Securities, by publishing notice of such
event once in an Authorized Newspaper in each Place of Payment located outside
the United States. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
Section 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(1) Upon the appointment hereunder of any successor Trustee with
respect to all Securities, such successor Trustee so appointed shall execute,
acknowledge and deliver to the Issuer, the Guarantor and the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties hereunder of the retiring Trustee;
but, on the request of the Issuer, the Guarantor or such successor Trustee,
such retiring Trustee, upon payment of its charges, shall execute and deliver
an instrument transferring to such successor Trustee all the rights, powers
and trusts of the retiring Trustee and, subject to Section 1003, shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder, subject nevertheless to its claim, if
any, provided for in Section 606.
(2) Upon the appointment hereunder of any successor Trustee with
respect to the Securities of one or more (but not all) series, the Issuer, the
Guarantor (if any of such series of Securities is a series of Guaranteed
Securities), the retiring Trustee and such successor Trustee shall execute and
deliver an indenture supplemental hereto wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as shall
be necessary or desirable to transfer and confirm to, and to vest in, such
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee, and (3) shall add to or change
any of the provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust, that
each such Trustee shall be trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such
Trustee and that no Trustee shall be responsible for any notice given to, or
received by, or any act or failure to act on the part of any other Trustee
hereunder, and, upon the execution and delivery of such supplemental
indenture, the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein, such retiring Trustee shall have no
further responsibility for the exercise of rights and powers or for the
performance of the duties and obligations vested in the Trustee under this
Indenture with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates other than as hereinafter
expressly set forth, and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates; but, on
request of the Issuer, the Guarantor, if applicable, or such successor
Trustee, such retiring Trustee, upon payment of its charges with respect to
the Securities of that or those series to which the appointment of such
successor relates and subject to Section 1003 shall duly assign, transfer and
deliver to such successor Trustee, to the extent contemplated by such
supplemental indenture, the property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, subject to its claim, if any,
provided for in Section 606.
(3) Upon request of any Person appointed hereunder as a successor
Trustee, the Issuer and the Guarantor shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor
Trustee all such rights, powers and trusts referred to in paragraph (1) or (2)
of this Section, as the case may be.
(4) No Person shall accept its appointment hereunder as a successor
Trustee unless at the time of such acceptance such successor Person shall be
qualified and eligible under this Article.
Section 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS.
Any Corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any Corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any Corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated but not delivered by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Securities so authenticated with the
same effect as if such successor Trustee had itself authenticated such
Securities.
Section 611. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint one or more Authenticating Agents acceptable
to the Issuer with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of that
or those series issued upon original issue, exchange, registration of
transfer, partial redemption or partial repayment or pursuant to Section 306,
and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Issuer and the
Guarantor and, except as provided in or pursuant to this Indenture, shall at
all times be a corporation that would be permitted by the Trust Indenture Act
to act as trustee under an indenture qualified under the Trust Indenture Act,
is authorized under applicable law and by its charter to act as an
Authenticating Agent and has a combined capital and surplus (computed in
accordance with Section 310(a)(2) of the Trust Indenture Act) of at least
$50,000,000. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect specified in this Section.
Any Corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any Corporation succeeding to all or substantially
all of the corporate agency or corporate trust business of an Authenticating
Agent, shall be the successor of such Authenticating Agent hereunder, PROVIDED
such Corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee, the Guarantor and the Issuer. The Trustee may
at any time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent, the Guarantor and the Issuer.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Issuer and the
Guarantor and shall (i) mail written notice of such appointment by first-class
mail, postage prepaid, to all Holders of Registered Securities, if any, of the
series with respect to which such Authenticating Agent shall serve, as their
names and addresses appear in the Security Register, and (ii) if Securities of
the series are issued as Bearer Securities, publish notice of such appointment
at least once in an Authorized Newspaper in the place where such successor
Authenticating Agent has its principal office if such office is located
outside the United States. Any successor Authenticating Agent, upon acceptance
of its appointment hereunder, shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as if originally
named as an Authenticating Agent. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Issuer agrees and the Guarantor agrees to pay each Authenticating
Agent from time to time reasonable compensation for its services under this
Section. If the Trustee makes such payments, it shall be entitled to be
reimbursed for such payments, subject to the provisions of Section 606.
The provisions of Sections 308, 603 and 604 shall be applicable to
each Authenticating Agent.
If an Authenticating Agent is appointed with respect to one or more
series of Securities pursuant to this Section, the Securities of such series
may have endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication in
substantially the following form:
This is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.
--------------------------------------,
As Trustee
By_______________________
As Authenticating Agent
By_______________________
Authorized Officer
If all of the Securities of any series may not be originally issued
at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Issuer wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested in writing (which writing need
not be accompanied by or contained in an Officers' Certificate by the Issuer),
shall appoint in accordance with this Section an Authenticating Agent having
an office in a Place of Payment designated by the Issuer with respect to such
series of Securities.
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE, GUARANTOR AND ISSUER
Section 701. ISSUER AND THE GUARANTOR TO FURNISH TRUSTEE NAMES AND
ADDRESSES OF HOLDERS.
In accordance with Section 312(a) of the Trust Indenture Act, the
Issuer and the Guarantor (with respect to Securities of each series that are
Guaranteed Securities) shall furnish or cause to be furnished to the Trustee
(1) semi-annually with respect to Securities of each series, a list, in each
case in such form as the Trustee may reasonably require, of the names and
addresses of Holders as of the applicable date, and
(2) at such other times as the Trustee may request in writing, within 30 days
after the receipt by the Issuer or the Guarantor (with respect to
Securities of each series that are Guaranteed Securities) of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished,
PROVIDED, HOWEVER, that so long as the Trustee is the Security Registrar no
such list shall be required to be furnished.
Section 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
The Trustee shall comply with the obligations imposed upon it
pursuant to Section 312 of the Trust Indenture Act.
Every Holder of Securities or Coupons, by receiving and holding the
same, agrees with the Issuer, the Guarantor and the Trustee that neither the
Issuer, the Guarantor, the Trustee, any Paying Agent or any Security Registrar
shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Holders of Securities in accordance with
Section 312(c) of the Trust Indenture Act, regardless of the source from which
such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
Section 703. REPORTS BY TRUSTEE.
(1) Within 60 days after September 15 of each year commencing with
the first September 15 following the first issuance of Securities pursuant to
Section 301, if required by Section 313(a) of the Trust Indenture Act, the
Trustee shall transmit, pursuant to Section 313(c) of the Trust Indenture Act,
a brief report dated as of such September 15 with respect to any of the events
specified in said Section 313(a) which may have occurred since the later of
the immediately preceding September 15 and the date of this Indenture.
(2) The Trustee shall transmit the reports required by Section 313(a)
of the Trust Indenture Act at the times specified therein.
(3) Reports pursuant to this Section shall be transmitted in the
manner and to the Persons required by Sections 313(c) and 313(d) of the Trust
Indenture Act.
Section 704. REPORTS BY ISSUER AND GUARANTOR.
The Issuer and the Guarantor, pursuant to Section 314(a) of the Trust
Indenture Act, shall:
(1) file with the Trustee, within 15 days after the Issuer or the
Guarantor, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Issuer or the Guarantor, as the case may be, may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Issuer or the Guarantor, as the case may be, is not required to file
information, documents or reports pursuant to either of said Sections, then it
shall file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Issuer or the Guarantor, as the case may be, with the conditions and
covenants of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit within 30 days after the filing thereof with the
Trustee, in the manner and to the extent provided in Section 313(c) of the
Trust Indenture Act, such summaries of any information, documents and reports
required to be filed by the Issuer or the Guarantor pursuant to paragraphs (1)
and (2) of this Section as may be required by rules and regulations prescribed
from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Issuer with or into any other
Person or Persons (whether or not affiliated with the Issuer), or successive
consolidations or mergers in which either the Issuer will be the continuing
entity or the Issuer or its successor or successors shall be a party or
parties, or shall prevent any conveyance, transfer or lease of all or
substantially all of the property of the Issuer, to any other Person (whether
or not affiliated with the Issuer); PROVIDED, HOWEVER, that:
(1) in case the Issuer shall consolidate with or merge into another
Person or convey, transfer or lease all or substantially all of its properties
and assets to any Person, the entity formed by such consolidation or into
which the Issuer is merged or the Person which acquires by conveyance or
transfer, or which leases, all or substantially all of the properties of the
Issuer shall be a Person organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia and shall
expressly assume, by an indenture (or indentures, if at such time there is
more than one Trustee) supplemental hereto, executed by the successor Person
and the Guarantor and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of, any premium and
interest on and any Additional Amounts with respect to all the Securities and
the performance of every obligation in this Indenture and the Outstanding
Securities on the part of the Issuer to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default or event which, after notice or lapse of time, or both, would become
an Event of Default, shall have occurred and be continuing; and
(3) either the Issuer or the successor Person shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
No such consolidation, merger, conveyance, transfer or lease shall be
permitted by this Section unless prior thereto the Guarantor shall have
delivered to the Trustee a Guarantor's Officers' Certificate and an Opinion of
Counsel, each stating that the Guarantor's obligations hereunder shall remain
in full force and effect thereafter.
Section 802. SUCCESSOR PERSON SUBSTITUTED FOR ISSUER.
Upon any consolidation by the Issuer with or merger of the Issuer
into any other Person or any conveyance, transfer or lease of all or
substantially all of the properties and assets of the Issuer to any Person in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Issuer is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Issuer under this Indenture with the same effect as if
such successor Person had been named as the Issuer herein; and thereafter,
except in the case of a lease, the predecessor Person shall be released from
all obligations and covenants under this Indenture, the Securities and the
Coupons.
Section 803. GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Guarantor with or into any other
Person or Persons (whether or not affiliated with the Guarantor), or
successive consolidations or mergers in which either the Guarantor will be the
continuing entity or the Guarantor or its successor or successors shall be a
party or parties, or shall prevent any conveyance, transfer or lease of all or
substantially all of the property of the Guarantor, to any other Person
(whether or not affiliated with the Guarantor); PROVIDED, HOWEVER, that:
(1) in case the Guarantor shall consolidate with or merge into
another Person or convey, transfer or lease all or substantially all of its
properties and assets to any Person, the entity formed by such consolidation
or into which the Guarantor is merged or the Person which acquires by
conveyance or transfer, or which leases, all or substantially all of the
properties and assets of the Guarantor shall be a Person organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia and shall expressly assume, by an indenture (or
indentures, if at such time there is more than one Trustee) supplemental
hereto, executed and delivered by the Issuer and the successor Person to the
Trustee, in form satisfactory to the Trustee, the obligation of the Guarantor
under the Guarantee and the performance of every other covenant of this
Indenture on the part of the Guarantor to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(3) each of the Guarantor and the successor Person has delivered to
the Trustee a Guarantor's Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
and such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with.
Section 804. SUCCESSOR PERSON SUBSTITUTED FOR GUARANTOR.
Upon any consolidation or merger or any conveyance, transfer or lease
of all or substantially all of the properties and assets of the Guarantor to
any Person in accordance with Section 803, the successor Person formed by such
consolidation or into which the Guarantor is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Guarantor under this
Indenture with the same effect as if such successor Person had been named as
the Guarantor herein, and thereafter, except in the case of a lease to another
Person, the predecessor Person shall be released from all obligations and
covenants under this Indenture.
Section 805. ASSUMPTION BY GUARANTOR.
The Guarantor, or a subsidiary thereof that is a Corporation, may
directly assume, by an indenture supplemental hereto, executed and delivered
to the Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of, any premium and interest on and any Additional
Amounts with respect to all the Guaranteed Securities and the performance of
every covenant of this Indenture on the part of the Issuer to be performed or
observed. Upon any such assumption, the Guarantor or such subsidiary shall
succeed to, and be substituted for and may exercise every right and power of,
the Issuer under this Indenture with the same effect as if the Guarantor or
such subsidiary had been named as the Issuer herein and the Issuer shall be
released from all obligations and covenants with respect to the Guaranteed
Securities. No such assumption shall be permitted unless the Guarantor has
delivered to the Trustee (i) a Guarantor's Officers' Certificate and an
Opinion of Counsel, each stating that such assumption and supplemental
indenture comply with this Article, and that all conditions precedent herein
provided for relating to such transaction have been complied with and that, in
the event of assumption by a subsidiary, the Guarantee and all other covenants
of the Guarantor herein remain in full force and effect and (ii) an opinion of
independent counsel that the Holders of Guaranteed Securities or related
Coupons (assuming such Holders are only taxed as residents of the United
States) shall have no materially adverse United States federal tax
consequences as a result of such assumption, and that, if any Securities are
then listed on the New York Stock Exchange, that such Securities shall not be
delisted as a result of such assumption.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Securities or Coupons, the
Issuer (when authorized by or pursuant to a Board Resolution), the Guarantor
(when authorized by a Guarantor's Board Resolution) and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following
purposes:
(1) to evidence the succession of another Person to the Issuer or the
Guarantor, and the assumption by any such successor of the covenants of the
Issuer or the Guarantor, as the case may be, contained herein and in the
Securities; or
(2) to add to the covenants of the Issuer or the Guarantor for the
benefit of the Holders of all or any series of Securities (as shall be
specified in such supplemental indenture or indentures) or to surrender any
right or power herein conferred upon the Issuer or the Guarantor; or
(3) to add any additional Events of Default with respect to all or
any series of Securities (as shall be specified in such supplemental
indenture); or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to change
or eliminate any restrictions on the payment of principal of, any premium or
interest on or any Additional Amounts with respect to Securities, to permit
Bearer Securities to be issued in exchange for Registered Securities, to
permit Bearer Securities to be exchanged for Bearer Securities of other
authorized denominations or to permit or facilitate the issuance of Securities
in uncertificated form, provided any such action shall not adversely affect
the interests of the Holders of Securities of any series or any Coupons
appertaining thereto in any material respect; or
(5) to add to, delete from or revise the conditions, limitations and
restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of Securities, as herein set forth; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series and
any Coupons appertaining thereto as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Section 609; or
(9) to cure any ambiguity or to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions with respect to matters or questions arising
under this Indenture which shall not adversely affect the interests of the
Holders of Securities of any series then Outstanding or any Coupons
appertaining thereto in any material respect; or
(10) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Article Four, PROVIDED that
any such action shall not adversely affect the interests of any Holder of a
Security of such series and any Coupons appertaining thereto or any other
Security or Coupon in any material respect; or
(11) to effect the assumption by the Guarantor or a subsidiary
thereof pursuant to Section 805; or
(12) to amend or supplement any provision contained herein or in any
supplemental indenture, PROVIDED that no such amendment or supplement shall
materially adversely affect the interests of the Holders of any Securities
then Outstanding.
Section 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Issuer, the
Guarantor (if the Securities are Guaranteed Securities) and the Trustee, the
Issuer (when authorized by or pursuant to an Issuer's Board Resolution), the
Guarantor (when authorized by or pursuant to a Guarantor's Board Resolution),
if applicable, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture or of the Securities of such series; PROVIDED, HOWEVER,
that no such supplemental indenture, without the consent of the Holder of each
Outstanding Security affected thereby, shall
(1) change the Stated Maturity of the principal of, or any premium or
installment of interest on or any Additional Amounts with respect to, any
Security, or reduce the principal amount thereof or the rate (or modify the
calculation of such rate) of interest thereon or any Additional Amounts with
respect thereto, or any premium payable upon the redemption thereof or
otherwise, or change the obligation of the Issuer to pay Additional Amounts
pursuant to Section 1004 (except as contemplated by Section 801(1) and
permitted by Section 901(1)), or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
the amount thereof provable in bankruptcy pursuant to Section 504, change the
redemption provisions or adversely affect the right of repayment at the option
of any Holder as contemplated by Article Thirteen, or change the Place of
Payment, Currency in which the principal of, any premium or interest on, or
any Additional Amounts with respect to any Security is payable, or impair the
right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date or, in the case of repayment at the option of the Holder, on
or after the date for repayment or in the case of change in control), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
reduce the requirements of Section 1504 for quorum or voting, or
(3) modify or effect in any manner adverse to the Holders the terms
and conditions of the obligations of the Guarantor in respect of the due and
punctual payments of principal of, or any premium or interest on or any
sinking fund requirements or Additional Amounts with respect to, Guaranteed
Securities, or
(4) modify any of the provisions of this Section, Section 513 or
Section 1012, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which shall have been included expressly and
solely for the benefit of one or more particular series of Securities, or
which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
As a condition to executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trust created by this Indenture, the Trustee
shall be entitled to receive, and (subject to Section 315 of the Trust
Indenture Act) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of a Security theretofore or thereafter authenticated and
delivered hereunder and of any Coupon appertaining thereto shall be bound
thereby.
Section 905. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Issuer shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
Section 906. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
ARTICLE TEN
COVENANTS
Section 1001. PAYMENT OF PRINCIPAL, ANY PREMIUM, INTEREST AND
ADDITIONAL AMOUNTS.
The Issuer covenants and agrees for the benefit of the Holders of the
Securities of each series that it will duly and punctually pay the principal
of, any premium and interest on and any Additional Amounts with respect to the
Securities of such series in accordance with the terms thereof, any Coupons
appertaining thereto and this Indenture. Any interest due on any Bearer
Security on or before the Maturity thereof, and any Additional Amounts payable
with respect to such interest, shall be payable only upon presentation and
surrender of the Coupons appertaining thereto for such interest as they
severally mature.
Section 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Issuer or the Guarantor (if any Guaranteed Securities are
Outstanding) shall maintain in each Place of Payment for any series of
Securities an Office or Agency where Securities of such series (but not Bearer
Securities, except as otherwise provided below, unless such Place of Payment
is located outside the United States) may be presented or surrendered for
payment, where Securities of such series may be surrendered for registration
of transfer or exchange, and where notices and demands to or upon the Issuer
or the Guarantor (if any Guaranteed Securities are Outstanding) in respect of
the Securities of such series relating thereto and this Indenture may be
served. If Securities of a series are issuable as Bearer Securities, the
Issuer or the Guarantor (if any Guaranteed Securities are Outstanding) shall
maintain, subject to any laws or regulations applicable thereto, an Office or
Agency in a Place of Payment for such series which is located outside the
United States where Securities of such series and any Coupons appertaining
thereto may be presented and surrendered for payment; PROVIDED, HOWEVER, that
if the Securities of such series are listed on The Stock Exchange of the
United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or
any other stock exchange located outside the United States and such stock
exchange shall so require, the Issuer or the Guarantor (if any Guaranteed
Securities are Outstanding) shall maintain a Paying Agent in London,
Luxembourg or any other required city located outside the United States, as
the case may be, so long as the Securities of such series are listed on such
exchange. The Issuer or the Guarantor (if any Guaranteed Securities are
Outstanding) will give prompt written notice to the Trustee of the location,
and any change in the location, of such Office or Agency. If at any time the
Issuer or the Guarantor shall fail to maintain any such required Office or
Agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, except that Bearer Securities of such
series and any Coupons appertaining thereto may be presented and surrendered
for payment at the place specified for the purpose with respect to such
Securities as provided in or pursuant to this Indenture, and the Issuer and
the Guarantor each hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
Except as otherwise provided in or pursuant to this Indenture, no
payment of principal, premium, interest or Additional Amounts with respect to
Bearer Securities shall be made at any Office or Agency in the United States
or by check mailed to any address in the United States or by transfer to an
account maintained with a bank located in the United States; PROVIDED,
HOWEVER, if amounts owing with respect to any Bearer Securities shall be
payable in Dollars, payment of principal of, any premium or interest on and
any Additional Amounts with respect to any such Security may be made at the
Corporate Trust Office of the Trustee or any Office or Agency designated by
the Issuer in the City of _______, ______________, if (but only if) payment of
the full amount of such principal, premium, interest or Additional Amounts at
all offices outside the United States maintained for such purpose by the
Issuer in accordance with this Indenture is illegal or effectively precluded
by exchange controls or other similar restrictions.
The Issuer or the Guarantor (if any Guaranteed Securities are
Outstanding) may also from time to time designate one or more other Offices or
Agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations; PROVIDED, HOWEVER, that no such designation or rescission
shall in any manner relieve the Issuer or the Guarantor of its obligation to
maintain an Office or Agency in each Place of Payment for Securities of any
series for such purposes. The Issuer or the Guarantor (if any Guaranteed
Securities are Outstanding) shall give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any
such other Office or Agency. Unless otherwise provided in or pursuant to this
Indenture, the Issuer and the Guarantor (with respect to any Guaranteed
Securities) each hereby designates as the Place of Payment for each series of
Securities the City of ________, _____________, and initially appoints
_________________________ as the Office or Agency of the Issuer or the
Guarantor (with respect to any Guaranteed Securities), as the case may be, in
the City of ____________, _______________ for such purpose. The Issuer or the
Guarantor, as the case may be, may subsequently appoint a different Office or
Agency in the City of _____________, _________________ for the Securities of
any series.
Unless otherwise specified with respect to any Securities pursuant to
Section 301, if and so long as the Securities of any series (i) are
denominated in a Foreign Currency or (ii) may be payable in a Foreign
Currency, or so long as it is required under any other provision of this
Indenture, then the Issuer will maintain with respect to each such series of
Securities, or as so required, at least one exchange rate agent.
Section 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Issuer shall at any time act as its own Paying Agent with
respect to any series of Securities, it shall, on or before each due date of
the principal of, any premium or interest on or Additional Amounts with
respect to any of the Securities of such series, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum in the currency or
currencies, currency unit or units or composite currency or currencies in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay
the principal or any premium, interest or Additional Amounts so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and shall promptly notify the Trustee of its action or
failure so to act.
Whenever the Issuer shall have one or more Paying Agents for any
series of Securities, it shall, on or prior to each due date of the principal
of, any premium or interest on or any Additional Amounts with respect to any
Securities of such series, deposit with any Paying Agent a sum (in the
currency or currencies, currency unit or units or composite currency or
currencies described in the preceding paragraph) sufficient to pay the
principal or any premium, interest or Additional Amounts so becoming due, such
sum to be held in trust for the benefit of the Persons entitled thereto, and
(unless such Paying Agent is the Trustee) the Issuer will promptly notify the
Trustee of its action or failure so to act.
The Issuer shall cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal of, any
premium or interest on or any Additional Amounts with respect to Securities of
such series in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as provided
in or pursuant to this Indenture;
(2) give the Trustee notice of any default by the Issuer or the
Guarantor (or any other obligor upon the Securities of such series) in the
making of any payment of principal, any premium or interest on or any
Additional Amounts with respect to the Securities of such series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
in trust by such Paying Agent.
The Issuer or the Guarantor (with Securities that are Guaranteed
Securities) may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Issuer Order
or Guarantor Order, as the case may be, direct any Paying Agent to pay, to the
Trustee all sums held in trust by the Issuer or such Paying Agent, such sums
to be held by the Trustee upon the same terms as those upon which such sums
were held by the Issuer or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such sums.
Except as otherwise provided herein or pursuant hereto, any money
deposited with the Trustee or any Paying Agent, or then held by the Issuer, in
trust for the payment of the principal of, any premium or interest on or any
Additional Amounts with respect to any Security of any series or any Coupon
appertaining thereto and remaining unclaimed for two years after such
principal or any such premium or interest or any such Additional Amounts shall
have become due and payable shall be paid to the Issuer on Issuer Request (or
if deposited by the Guarantor, paid to the Guarantor on Guarantor Request), or
(if then held by the Issuer) shall be discharged from such trust; and the
Holder of such Security or any Coupon appertaining thereto shall thereafter,
as an unsecured general creditor, look only to the Issuer and the Guarantor
(if the Securities are Guaranteed Securities) for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Issuer as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in an Authorized Newspaper in each Place of Payment for
such series or to be mailed to Holders of Registered Securities of such
series, or both, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication or mailing nor shall it be later than two years after such
principal and any premium or interest or Additional Amounts shall have become
due and payable, any unclaimed balance of such money then remaining will be
repaid to the Issuer or the Guarantor, as the case may be.
Section 1004. ADDITIONAL AMOUNTS.
If any Securities of a series provide for the payment of Additional
Amounts, the Issuer and the Guarantor (if the Securities are Guaranteed
Securities) agree to pay to the Holder of any such Security or any Coupon
appertaining thereto Additional Amounts as provided in or pursuant to this
Indenture or such Securities. Whenever in this Indenture there is mentioned,
in any context, the payment of the principal of or any premium or interest on,
or in respect of, any Security of any series or any Coupon or the net proceeds
received on the sale or exchange of any Security of any series, such mention
shall be deemed to include mention of the payment of Additional Amounts
provided by the terms of such series established hereby or pursuant hereto to
the extent that, in such context, Additional Amounts are, were or would be
payable in respect thereof pursuant to such terms, and express mention of the
payment of Additional Amounts (if applicable) in any provision hereof shall
not be construed as excluding Additional Amounts in those provisions hereof
where such express mention is not made.
Except as otherwise provided in or pursuant to this Indenture or the
Securities of the applicable series, if the Securities of a series provide for
the payment of Additional Amounts, at least 10 days prior to the first
Interest Payment Date with respect to such series of Securities (or if the
Securities of such series shall not bear interest prior to Maturity, the first
day on which a payment of principal is made), and at least 10 days prior to
each date of payment of principal or interest if there has been any change
with respect to the matters set forth in the below-mentioned Officers'
Certificate, the Issuer or the Guarantor, as the case may be, shall furnish to
the Trustee and the principal Paying Agent or Paying Agents, if other than the
Trustee, an Officers' Certificate instructing the Trustee and such Paying
Agent or Paying Agents whether such payment of principal of and premium, if
any, or interest on the Securities of such series shall be made to Holders of
Securities of such series or the Coupons appertaining thereto who are United
States Aliens without withholding for or on account of any tax, assessment or
other governmental charge described in the Securities of such series. If any
such withholding shall be required, then such Officers' Certificate shall
specify by country the amount, if any, required to be withheld on such
payments to such Holders of Securities or Coupons, and the Issuer and the
Guarantor (if the Securities are Guaranteed Securities) agree to pay to the
Trustee or such Paying Agent the Additional Amounts required by the terms of
such Securities. The Issuer and the Guarantor each covenant to indemnify the
Trustee and any Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by
any of them in reliance on any Officers' Certificate furnished pursuant to
this Section.
Section 1005. LIMITATIONS ON INCURRENCE OF DEBT.
(a) The Issuer will not, and will not permit any Subsidiary to, incur
any Indebtedness, other than Permitted Debt, if, immediately after giving
effect to the incurrence of such additional Indebtedness, the aggregate
principal amount of all outstanding Indebtedness of the Issuer, and of its
Subsidiaries determined at the applicable proportionate interest of the Issuer
in each such Subsidiary, determined in accordance with GAAP, is greater than
60% of the sum of (i) the Total Assets as of the end of the calendar quarter
covered in the Issuer's Annual Report on Form 10-K or Quarterly Report on Form
10-Q, as the case may be, most recently filed with the Commission prior to the
incurrence of such additional Indebtedness or, if the Issuer is not then
subject to the reporting requirements of the Exchange Act, as of its most
recent calendar quarter and (ii) any increase in the Total Assets since the
end of such quarter, including, without limitation, any increase in Total
Assets resulting from the incurrence of such additional Indebtedness (the
Total Assets adjusted by such increase are referred to as the "Adjusted Total
Assets").
(b) In addition to the limitation set forth in subsection (a) of this
Section 1005, the Issuer will not, and will not permit any Subsidiary to,
incur any Indebtedness, other than Permitted Debt, if, for the period
consisting of the four consecutive fiscal quarters most recently ended prior
to the date on which such additional Indebtedness is to be incurred, the ratio
of Consolidated Income Available for Debt Service to the Annual Service Charge
shall have been less than 1.5 to 1, on a pro forma basis after giving effect
to the incurrence of such Indebtedness and to the application of the proceeds
therefrom, and calculated on the assumption that (i) such Indebtedness and any
other Indebtedness incurred by the Issuer or its Subsidiaries since the first
day of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the beginning of
such period, (ii) the repayment or retirement of any other Indebtedness by the
Issuer or its Subsidiaries since the first day of such four-quarter period had
been incurred, repaid or retained at the beginning of such period (except
that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon the average daily
balance of such Indebtedness during such period), (iii) any income earned as a
result of any increase in Adjusted Total Assets since the end of such
four-quarter period had been earned, on an annualized basis, for such period,
and (iv) in the case of an acquisition or disposition by the Issuer or any of
its Subsidiaries of any asset or group of assets since the first day of such
four-quarter period, including, without limitation, by merger, stock purchase
or sale, or asset purchase or sale, such acquisition or disposition or any
related repayment of Indebtedness had occurred as of the first day of such
period with the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation of Consolidated
Income Available for Debt Service to the Annual Service Charge.
(c) In addition to the limitations set forth in subsections (a) and
(b) of this Section 1005, the Issuer will not, and will not permit any
Subsidiary to, incur any Indebtedness secured by any Lien of any kind upon any
of the property of the Issuer or any of its Subsidiaries (the "Secured Debt")
if, immediately after giving effect to the incurrence of such additional
Secured Debt, the aggregate principal amount of all outstanding Secured Debt
of the Issuer, and of its Subsidiaries determined at the applicable
proportionate interest of the Issuer in each such Subsidiary, is greater than
40% of the Adjusted Total Assets.
Section 1006. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS.
The Issuer will maintain Total Unencumbered Assets of not less than
150% of the aggregate principal amount of all outstanding Unsecured Debt
Section 1007. MAINTENANCE OF PROPERTIES.
The Issuer will cause all of its material properties used or useful
in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Issuer may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the
Issuer or any Subsidiary from selling or otherwise disposing for value any of
its properties in the ordinary course of its business.
Section 1008. INSURANCE.
The Issuer will, and will cause each of its Subsidiaries to, keep all
of its insurable properties insured against loss or damage at least equal to
their then full insurable value with financially sound and reputable insurers
of recognized responsibility.
Section 1009. EXISTENCE.
Subject to Article Eight, the Issuer shall do or cause to be done all
things necessary to preserve and keep in full force and effect its partnership
existence and that of each Subsidiary and their respective rights (charter and
statutory) and franchises; PROVIDED, HOWEVER, that the foregoing shall not
obligate the Issuer to preserve any such right or franchise if the Issuer or
any Subsidiary shall determine that the preservation thereof is no longer
desirable in the conduct of its business or the business of such Subsidiary
and that the loss thereof is not disadvantageous in any material respect to
any Holder.
Section 1010. PAYMENT OF TAXES AND OTHER CLAIMS.
The Issuer will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon them or any Subsidiary or upon the
income, profits or property of the Issuer or any Subsidiary, and (2) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a Lien upon the property of the Issuer or any Subsidiary; provided,
however, that the Issuer shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 1011. PROVISION OF FINANCIAL INFORMATION.
Whether or not the Issuer is subject to Section 13 or 15(d) of the
Exchange Act and for so long as any Securities are outstanding, the Issuer
will, to the extent permitted under the Exchange Act, file with the Commission
the annual reports, quarterly reports and other documents which the Issuer
would have been required to file with the Commission pursuant to such Section
13 or 15(d) (the "Financial Statements") if the Issuer were so subject, such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Issuer would have been required so
to file such documents if the Issuer were so subject.
In addition, if the Issuer is no longer required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act, the Issuer
will also in any event (x) within 15 days after each Required Filing Date (i)
transmit by mail to all Holders, as their names and addresses appear in the
Security Register, without cost to such Holders copies of the annual reports
and quarterly reports which the Issuer would have been required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act if the
Issuer were subject to such Sections, and (ii) file with the Trustee copies of
the annual reports, quarterly reports and other documents which the Issuer
would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Issuer were subject to such Sections and (y)
if filing such documents by the Issuer with the Commission is not permitted
under the Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such documents
to any prospective Holder.
Section 1012. WAIVER OF CERTAIN COVENANTS.
The Issuer or the Guarantor, as the case may be, may omit in any
particular instance to comply with any term, provision or condition set forth
in Sections 1005, 1006, 1007, 1008, 1009, 1010 or 1011 with respect to the
Securities of any series if before the time for such compliance the Holders of
at least a majority in principal amount of the Outstanding Securities of such
series, by Act of such Holders, either shall waive such compliance in such
instance or generally shall have waived compliance with such term, provision
or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Issuer and the
Guarantor and the duties of the Trustee in respect of any such term, provision
or condition shall remain in full force and effect.
Section 1013. ISSUER STATEMENT AS TO COMPLIANCE; NOTICE OF
CERTAIN DEFAULTS.
(1) The Issuer shall deliver to the Trustee, within 120 days after
the end of each fiscal year, a written statement (which need not be contained
in or accompanied by an Officers' Certificate) signed by the principal
executive officer, the principal financial officer or the principal accounting
officer of the General Partner acting in its capacity as the sole general
partner of the Issuer, stating that
(a) a review of the activities of the Issuer during such year and of
its performance under this Indenture has been made under his or her
supervision, and
(b) to the best of his or her knowledge, based on such review, (a)
the Issuer has complied with all the conditions and covenants imposed on it
under this Indenture throughout such year, or, if there has been a default in
the fulfillment of any such condition or covenant, specifying each such
default known to him or her and the nature and status thereof, and (b) no
event has occurred and is continuing which is, or after notice or lapse of
time or both would become, an Event of Default, or, if such an event has
occurred and is continuing, specifying each such event known to him and the
nature and status thereof.
(2) The Issuer shall deliver to the Trustee, within five days after
the occurrence thereof, written notice of any Event of Default or any event
which after notice or lapse of time or both would become an Event of Default
pursuant to clause (4) of Section 501.
Section 1014. GUARANTOR STATEMENT AS TO COMPLIANCE; NOTICE OF
CERTAIN DEFAULTS.
(1) The Guarantor shall deliver to the Trustee, within 120 days after
the end of each fiscal year, a written statement (which need not be contained
in or accompanied by an Officers' Certificate) signed by the principal
executive officer, the principal financial officer or the principal accounting
officer of the Guarantor, stating that
(a) a review of the activities of the Guarantor during such year and
of performance under this Indenture has been made under his or her
supervision, and
(b) to the best of his or her knowledge, based on such review, (a)
the Guarantor has complied with conditions and covenants imposed on it
under this Indenture throughout such year, or, if there has been a
default in the fulfillment of any such condition or covenant, specifying
each such default known to him or her and the nature and status thereof,
and (b) no event has occurred and is continuing which constitutes, or
which after notice or lapse of time or both would become, an Event of
Default, or, if such an event has occurred and is continuing, specifying
each such event known to him and the nature and status thereof.
(2) The Guarantor shall deliver to the Trustee, within five days
after the occurrence thereof, written notice of any event which after notice
or lapse of time or both would become an Event of Default pursuant to clause
(4) of Section 501.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. APPLICABILITY OF ARTICLE.
Redemption of Securities of any series at the option of the Issuer as
permitted or required by the terms of such Securities shall be made in
accordance with the terms of such Securities and (except as otherwise provided
herein or pursuant hereto) this Article.
Section 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Issuer to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Issuer of (a) less than all of the Securities of any
series or (b) all of the Securities of any series, with the same issue date,
interest rate or formula, Stated Maturity and other terms, the Issuer shall,
at least 60 days prior to the Redemption Date fixed by the Issuer (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Securities of such series
to be redeemed.
Section 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all of the Securities of any series with the same issue
date, interest rate or formula, Stated Maturity and other terms are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal amount of Registered
Securities of such series; PROVIDED, HOWEVER, that no such partial redemption
shall reduce the portion of the principal amount of a Registered Security of
such series not redeemed to less than the minimum denomination for a Security
of such series established herein or pursuant hereto.
The Trustee shall promptly notify the Issuer and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in part,
to the portion of the principal of such Securities which has been or is to be
redeemed.
Unless otherwise specified in or pursuant to this Indenture or the
Securities of any series, if any Security selected for partial redemption is
converted or exchanged for Common Stock or other securities in part before
termination of the conversion or exchange right with respect to the portion of
the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption.
Securities which have been converted or exchanged during a selection of
Securities to be redeemed shall be treated by the Trustee as Outstanding for
the purpose of such selection.
Section 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in Section
106, not less than 30 nor more than 60 days prior to the Redemption Date,
unless a shorter period is specified in the Securities to be redeemed, to the
Holders of Securities to be redeemed. Failure to give notice by mailing in the
manner herein provided to the Holder of any Registered Securities designated
for redemption as a whole or in part, or any defect in the notice to any such
Holder, shall not affect the validity of the proceedings for the redemption of
any other Securities or portion thereof.
Any notice that is mailed to the Holder of any Registered Securities
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Security or Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the Redemption
Date, upon surrender of such Security, the Holder of such Security will
receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that, on the Redemption Date, the Redemption Price shall become
due and payable upon each such Security or portion thereof to be redeemed,
and, if applicable, that interest thereon shall cease to accrue on and after
said date,
(6) the place or places where such Securities, together (in the case
of Bearer Securities) with all Coupons appertaining thereto, if any, maturing
after the Redemption Date, are to be surrendered for payment of the Redemption
Price and any accrued interest and Additional Amounts pertaining thereto,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all Coupons maturing subsequent to the date fixed for
redemption or the amount of any such missing Coupon or Coupons will be
deducted from the Redemption Price, unless security or indemnity satisfactory
to the Issuer, the Trustee and any Paying Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed and any
Registered Securities of such series are not to be redeemed, and if such
Bearer Securities may be exchanged for Registered Securities not subject to
redemption on the Redemption Date pursuant to Section 305 or otherwise, the
last date, as determined by the Issuer, on which such exchanges may be made,
(10) in the case of Securities of any series that are convertible or
exchangeable into Common Stock or other securities, the conversion or exchange
price or rate, the date or dates on which the right to convert or exchange the
principal of the Securities of such series to be redeemed will commence or
terminate and the place or places where such Securities may be surrendered for
conversion or exchange, and
(11) the CUSIP number or the Euroclear or the Cedel reference numbers
of such Securities, if any (or any other numbers used by a Depository to
identify such Securities).
A notice of redemption published as contemplated by Section 106 need
not identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Issuer shall be given by the Issuer or, at the Issuer's request, by the
Trustee in the name and at the expense of the Issuer.
Section 1105. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Issuer shall deposit, with
respect to the Securities of any series called for redemption pursuant to
Section 1104, with the Trustee or with a Paying Agent (or, if the Issuer is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money in the applicable Currency sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an
Interest Payment Date, unless otherwise specified pursuant to Section 301 or
in the Securities of such series) any accrued interest on and Additional
Amounts with respect thereto, all such Securities or portions thereof which
are to be redeemed on that date.
Section 1106. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Issuer shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest and the Coupons for
such interest appertaining to any Bearer Securities so to be redeemed, except
to the extent provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice, together with all
Coupons, if any, appertaining thereto maturing after the Redemption Date, such
Security shall be paid by the Issuer at the Redemption Price, together with
any accrued interest and Additional Amounts to the Redemption Date; PROVIDED,
HOWEVER, that, except as otherwise provided in or pursuant to this Indenture
or the Bearer Securities of such series, installments of interest on Bearer
Securities whose Stated Maturity is on or prior to the Redemption Date shall
be payable only upon presentation and surrender of Coupons for such interest
(at an Office or Agency located outside the United States except as otherwise
provided in Section 1002), and PROVIDED, FURTHER, that, except as otherwise
specified in or pursuant to this Indenture or the Registered Securities of
such series, installments of interest on Registered Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the Regular Record Dates therefor according to
their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date,
such Security may be paid after deducting from the Redemption Price an amount
equal to the face amount of all such missing Coupons, or the surrender of such
missing Coupon or Coupons may be waived by the Issuer and the Trustee if there
be furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to the Trustee or any Paying Agent any such missing
Coupon in respect of which a deduction shall have been made from the
Redemption Price, such Holder shall be entitled to receive the amount so
deducted; PROVIDED, HOWEVER, that any interest or Additional Amounts
represented by Coupons shall be payable only upon presentation and surrender
of those Coupons at an Office or Agency for such Security located outside of
the United States except as otherwise provided in Section 1002.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium, until paid,
shall bear interest from the Redemption Date at the rate prescribed therefor
in the Security.
Section 1107. SECURITIES REDEEMED IN PART.
Any Registered Security which is to be redeemed only in part shall be
surrendered at any Office or Agency for such Security (with, if the Issuer or
the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing) and the Issuer
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Registered Security or Securities
of the same series, containing identical terms and provisions, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered. If a Security in global form is so surrendered,
the Issuer shall execute, and the Trustee shall authenticate and deliver to
the U.S. Depository or other Depository for such Security in global form as
shall be specified in the Issuer Order with respect thereto to the Trustee,
without service charge, a new Security in global form in a denomination equal
to and in exchange for the unredeemed portion of the principal of the Security
in global form so surrendered.
ARTICLE TWELVE
SINKING FUNDS
Section 1201. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking
fund for the retirement of Securities of a series, except as otherwise
permitted or required in or pursuant to this Indenture or any Security of such
series issued pursuant to this Indenture.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount
provided for by the terms of Securities of such series is herein referred to
as an "optional sinking fund payment". If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 1202. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of Securities of such series and this Indenture.
Section 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Issuer may, in satisfaction of all or any part of any sinking
fund payment with respect to the Securities of any series to be made pursuant
to the terms of such Securities (1) deliver Outstanding Securities of such
series (other than any of such Securities previously called for redemption or
any of such Securities in respect of which cash shall have been released to
the Issuer), together in the case of any Bearer Securities of such series with
all unmatured Coupons appertaining thereto, and (2) apply as a credit
Securities of such series which have been redeemed either at the election of
the Issuer pursuant to the terms of such series of Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities, PROVIDED that such series of Securities have not been
previously so credited. Such Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly. If as a result of
the delivery or credit of Securities of any series in lieu of cash payments
pursuant to this Section 1202, the principal amount of Securities of such
series to be redeemed in order to exhaust the aforesaid cash payment shall be
less than $100,000, the Trustee need not call Securities of such series for
redemption, except upon Issuer Request, and such cash payment shall be held by
the Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, PROVIDED, HOWEVER, that the Trustee or such Paying Agent shall at the
request of the Issuer from time to time pay over and deliver to the Issuer any
cash payment so being held by the Trustee or such Paying Agent upon delivery
by the Issuer to the Trustee of Securities of that series purchased by the
Issuer having an unpaid principal amount equal to the cash payment requested
to be released to the Issuer.
Section 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 75 days prior to each sinking fund payment date for any
series of Securities, the Issuer shall deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion
thereof, if any, which is to be satisfied by delivering and crediting of
Securities of that series pursuant to Section 1202, and the optional amount,
if any, to be added in cash to the next ensuing mandatory sinking fund
payment, and will also deliver to the Trustee any Securities to be so credited
and not theretofore delivered. If such Officers' Certificate shall specify an
optional amount to be added in cash to the next ensuing mandatory sinking fund
payment, the Issuer shall thereupon be obligated to pay the amount therein
specified. Not less than 60 days before each such sinking fund payment date
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Issuer
in the manner provided in Section 1104. Such notice having been duly given,
the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. APPLICABILITY OF ARTICLE.
Securities of any series which are repayable at the option of the
Holders thereof before their Stated Maturity shall be repaid in accordance
with the terms of the Securities of such series. The repayment of any
principal amount of Securities pursuant to such option of the Holder to
require repayment of Securities before their Stated Maturity, for purposes of
Section 309, shall not operate as a payment, redemption or satisfaction of the
Indebtedness represented by such Securities unless and until the Issuer, at
its option, shall deliver or surrender the same to the Trustee with a
directive that such Securities be cancelled. Notwithstanding anything to the
contrary contained in this Section 1301, in connection with any repayment of
Securities, the Issuer may arrange for the purchase of any Securities by an
agreement with one or more investment bankers or other purchasers to purchase
such Securities by paying to the Holders of such Securities on or before the
close of business on the repayment date an amount not less than the repayment
price payable by the Issuer on repayment of such Securities, and the
obligation of the Issuer to pay the repayment price of such Securities shall
be satisfied and discharged to the extent such payment is so paid by such
purchasers.
ARTICLE FOURTEEN
SECURITIES IN FOREIGN CURRENCIES
Section 1401. APPLICABILITY OF ARTICLE.
Whenever this Indenture provides for (i) any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same Currency, or (ii)
any distribution to Holders of Securities, in the absence of any provision to
the contrary in the form of Security of any particular series or pursuant to
this Indenture or the Securities, any amount in respect of any Security
denominated in a Currency other than Dollars shall be treated for any such
action or distribution as that amount of Dollars that could be obtained for
such amount on such reasonable basis of exchange and as of the record date
with respect to Registered Securities of such series (if any) for such action,
determination of rights or distribution (or, if there shall be no applicable
record date, such other date reasonably proximate to the date of such action,
determination of rights or distribution) as the Issuer or the Guarantor may
specify in a written notice to the Trustee or, in the absence of such written
notice, as the Trustee may determine.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities of any series may be called at any
time and from time to time pursuant to this Article to make, give or take any
request, demand, authorization, direction, notice, consent, waiver or other
Act provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
Section 1502. CALL, NOTICE AND PLACE OF MEETINGS.
(1) The Trustee may at any time call a meeting of Holders of
Securities of any series for any purpose specified in Section 1501, to be held
at such time and at such place in the City of _____________, _____________,
or, if Securities of such series have been issued in whole or in part as
Bearer Securities, in London or in such place outside the United States as the
Trustee shall determine. Notice of every meeting of Holders of Securities of
any series, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given,
in the manner provided in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
(2) In case at any time the Issuer (by or pursuant to a Board
Resolution), the Guarantor (if the Securities are Guaranteed Securities), by
or pursuant to a Guarantor's Board Resolution or the Holders of at least 10%
in principal amount of the Outstanding Securities of any series shall have
requested the Trustee to call a meeting of the Holders of Securities of such
series for any purpose specified in Section 1501, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting, and
the Trustee shall not have mailed notice of or made the first publication of
the notice of such meeting within 21 days after receipt of such request
(whichever shall be required pursuant to Section 106) or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Issuer,
the Guarantor, if applicable, or the Holders of Securities of such series in
the amount above specified, as the case may be, may determine the time and the
place in the City of __________, _____________, or, if Securities of such
series are to be issued as Bearer Securities, in London for such meeting and
may call such meeting for such purposes by giving notice thereof as provided
in clause (1) of this Section.
Section 1503. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities
of such series, or (2) a Person appointed by an instrument in writing as proxy
for a Holder or Holders of one or more Outstanding Securities of such series
by such Holder or Holders. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders of Securities of any series
shall be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel, any representatives of the
Guarantor and its counsel and any representatives of the Issuer and its
counsel.
Section 1504. QUORUM; ACTION.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series. In the absence of a quorum within 30
minutes after the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved.
In any other case the meeting may be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such meeting. In the absence of a quorum at any such adjourned meeting,
such adjourned meeting may be further adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 1502(1), except that such notice need be
given only once not less than five days prior to the date on which the meeting
is scheduled to be reconvened. Notice of the reconvening of an adjourned
meeting shall state expressly the percentage, as provided above, of the
principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted only by the affirmative vote of the
Holders of a majority in principal amount of the Outstanding Securities of
that series; PROVIDED, HOWEVER, that, except as limited by the proviso to
Section 902, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other Act which this
Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of
the Outstanding Securities of a series may be adopted at a meeting or an
adjourned meeting duly reconvened and at which a quorum is present as
aforesaid by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Securities of such series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the Coupons
appertaining thereto, whether or not such Holders were present or represented
at the meeting.
Section 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS.
(1) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities of such series in regard to proof of the
holding of Securities of such series and of the appointment of proxies and in
regard to the appointment and duties of inspectors of votes, the submission
and examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it shall
deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner specified
in Section 104 and the appointment of any proxy shall be proved in the manner
specified in Section 104 or by having the signature of the person executing
the proxy witnessed or guaranteed by any trust company, bank or banker
authorized by Section 104 to certify to the holding of Bearer Securities. Such
regulations may provide that written instruments appointing proxies, regular
on their face, may be presumed valid and genuine without the proof specified
in Section 104 or other proof.
(2) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called
by the Issuer or by Holders of Securities as provided in Section 1502(2), in
which case the Issuer, the Guarantor or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the Persons entitled to vote a majority in
principal amount of the Outstanding Securities of such series represented at
the meeting.
(3) At any meeting, each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of Securities
of such series held or represented by him; PROVIDED, HOWEVER, that no vote
shall be cast or counted at any meeting in respect of any Security challenged
as not Outstanding and ruled by the chairman of the meeting to be not
Outstanding. The chairman of the meeting shall have no right to vote, except
as a Holder of a Security of such series or proxy.
(4) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be adjourned from
time to time by Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
Section 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in triplicate of all votes cast at the meeting. A record, at
least in triplicate, of the proceedings of each meeting of Holders of
Securities of any series shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors
of votes on any vote by ballot taken thereat and affidavits by one or more
persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was given as provided in Section 1502
and, if applicable, Section 1504. Each copy shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one
such copy shall be delivered to the Issuer and the Guarantor, and another to
the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
ARTICLE SIXTEEN
GUARANTEE
Section 1601. GUARANTEE.
The Guarantee set forth in this Article Sixteen shall only be in
effect with respect to Securities of a series to the extent such Guarantee is
made applicable to such series in accordance with Section 301. The Guarantor
hereby unconditionally guarantees to each Holder of a Guaranteed Security
authenticated and delivered by the Trustee the due and punctual payment of the
principal of, any premium and interest on, and any Additional Amounts with
respect to such Guaranteed Security, whether at maturity, by acceleration,
redemption, repayment or otherwise, in accordance with the terms of such
Security and of this Indenture. In case of the failure of the Issuer
punctually to pay any such principal, premium, interest or Additional Amounts,
the Guarantor hereby agrees to cause any such payment to be made punctually
when and as the same shall become due and payable, whether at maturity, upon
acceleration, redemption, repayment or otherwise, and as if such payment were
made by the Issuer.
The Guarantor hereby agrees that its obligations hereunder shall be
as principal and not merely as surety, and shall be absolute, irrevocable and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any Guaranteed Security or this Indenture,
any failure to enforce the provisions of any Guaranteed Security or this
Indenture, or any waiver, modification, consent or indulgence granted with
respect thereto by the Holder of such Guaranteed Security or the Trustee, the
recovery of any judgment against the Issuer or any action to enforce the same,
or any other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or guarantor. The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
merger, insolvency or bankruptcy of the Issuer, any right to require a
proceeding first against the Issuer, protest or notice with respect to any
such Guaranteed Security or the Indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be discharged except by
payment in full of the principal of, any premium and interest on, and any
Additional Amounts required with respect to, the Guaranteed Securities and the
complete performance of all other obligations contained in the Guaranteed
Securities.
This Guarantee shall continue to be effective or be reinstated, as
the case may be, if at any time payment on any Guaranteed Security, in whole
or in part, is rescinded or must otherwise be restored to the Issuer or the
Guarantor upon the bankruptcy, liquidation or reorganization of the Issuer or
otherwise.
The Guarantor shall be subrogated to all rights of the Holder of any
Guaranteed Security against the Issuer in respect of any amounts paid to such
Holder by the Guarantor pursuant to the provisions of this Guarantee;
PROVIDED, HOWEVER, that the Guarantor shall not be entitled to enforce, or to
receive any payments arising out of or based upon, such right of subrogation
until the principal of, any premium and interest on, and any Additional
Amounts required with respect to, all Guaranteed Securities shall have been
paid in full.
* * * * *
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and attested to, all as of the day and year first above
written.
Reckson Operating Partnership, L.P.,
as Issuer
By: Reckson Associates Realty Corp.,
as Managing General Partner
By_____________________________
Name:
Title:
Attest:
- ---------------------------
Name:
Title:
Reckson Associates Realty Corp.,
as Guarantor
By_____________________________
Name:
Title:
Attest:
- ---------------------------
Name:
Title:
-------------------------------,
as Trustee
By_____________________________
Name:
Title:
Attest:
- ---------------------------
Name:
Title:
STATE OF _________)
: ss.:
COUNTY OF ________)
On the _____ day of ________, 199_, before me personally came
_________ ___________, to me known, who, being by me duly sworn, did depose
and say that he is the ______________________ of Reckson Associates Realty
Corp., acting in its capacity as the managing general partner of Reckson
Operating Partnership, L.P., a Delaware limited partnership, one of the
persons described in and who executed the foregoing instrument; and that he
signed his name thereto by authority of the managing general partner of said
Operating Partnership.
----------------------------
Notary Public
[NOTARIAL SEAL]
STATE OF ___________)
: ss.:
COUNTY OF _________)
On the _____ day of _______, 199_, before me personally came ________
___________, to me known, who, being by me duly sworn, did depose and say that
he is the ____________________ of Reckson Associates Realty Corp., a Maryland
corporation, one of the persons described in and who executed the foregoing
instrument; and that he signed his name thereto by like authority.
----------------------------
Notary Public
[NOTARIAL SEAL]
STATE OF ________________)
: ss.:
COUNTY OF ______________)
On the _____ day of ____________, 199_, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he is a _____________ of ___________________________, a _________________
trust company organized and existing under the laws of the _____________ of
______________, one of the persons described in and who executed the foregoing
instrument; that he knows the seal of said Corporation; that the seal affixed
to said instrument is such trust company's seal; that it was so affixed by
authority of the Board of Directors of said trust company; and that he signed
his name thereto by like authority.
----------------------------
Notary Public
[NOTARIAL SEAL]
EXHIBIT 8
Brown & Wood LLP
One World Trade Center
New York, New York 10048
December 28, 1998
Reckson Associates Realty Corp.
Reckson Operating Partnership, L.P.
225 Broadhollow Road
Melville, New York 11747
Re: $260,000,000 Aggregate Principal Amount
of Debt Securities of Reckson Operating
Partnership, L.P. and Related Guarantees of
Reckson Associates Realty Corp.
-------------------------------------------
Ladies and Gentlemen:
You have requested our opinion concerning certain federal income tax
matters with respect to Reckson Associates Realty Corp. (the "Company") in
connection with the Form S-3 Registration Statement of the Company and Reckson
Operating Partnership, L.P. (the "Operating Partnership") to be filed by the
Company and the Operating Partnership with the Securities and Exchange
Commission on or about November 10, 1998 (the "Registration Statement").
This opinion is based, in part, upon various assumptions and
representations, including representations made by the Company as to factual
matters set forth in the Registration Statement, in registration statements on
Form S-11 and Form S-3 previously filed by the Company with the Securities and
Exchange Commission and in a letter delivered to us by the Company today. This
opinion is also based upon the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury Regulations promulgated thereunder and existing
administrative and judicial interpretations thereof, all as they exist at the
date of this interpretations are subject to change, in some circumstances with
retroactive effect. Any changes to the foregoing authorities might result in
modifications of our opinions contained herein.
Based on the foregoing, we are of the opinion that, commencing with
the Company's taxable year ended December 31, 1995, the Company has been
organized in conformity with the requirements for qualification as a real
estate investment trust (a "REIT") under the Code, and the proposed method of
operating of the Company will enable the Company to meet the requirements for
qualification and taxation as a REIT.
We express no opinion with respect to the transactions described
herein and in the Registration Statement other than those expressly set forth
herein. Furthermore, the Company's qualification as a REIT will depend upon
the Company's meeting, in its actual operations, the applicable asset
composition, source of income, shareholder diversification, distribution,
recordkeeping and other requirements of the Code and Treasury Regulations
necessary for a corporation to qualify as a REIT. We will not review these
operations and no assurance can be given that the actual operations of the
Company and its affiliates will meet these requirements or the representations
made to us with respect thereto.
This opinion is furnished to you for your use in connection with the
Registration Statement. We hereby consent to the filing of this opinion as
Exhibit 8 to the Registration Statement and to the use of our name in
connection with the material discussed therein under the caption "Federal
Income Tax Considerations."
Very truly yours,
/s/ Brown & Wood LLP
EXHIBIT 12.1
Reckson Associates Realty Corp.
Ratios of Earnings to Combined Fixed Charges
The following table sets forth the calculation of the Company's
consolidated ratios of earnings to fixed charges for the periods shown (in
Thousands):
===================================================================================================================================
For the Period from For the Period from For the Period from
January 1, 1998 June 3, 1995 January 1, 1995
To To to
Description September 30, 1998 1997 1996 December 31, 1995 June 2, 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
Interest $39,677 $23,936 $13,331 $5,331 $7,622 $17,426 $27,454
- -----------------------------------------------------------------------------------------------------------------------------------
Rent Expense 959 952 830 434 176 375 771
- -----------------------------------------------------------------------------------------------------------------------------------
Amortization of Debt
Issuance Costs 1,131 797 525 400 195 564 489
- -----------------------------------------------------------------------------------------------------------------------------------
41,767 25,685 14,686 6,165 7,993 18,365 28,714
- ----------------------------------- ---------------------- ------------- -------- ------------------------ ------------------------
Income from Continuing
Operations before Minority
Interest and Fixed Charges $88,534 $71,175 $39,876 $16,719 $8,187 $17,872 $18,609
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Earnings to Fixed
Charges 2.12 2.77 2.72 2.71 1.02 0.97 0.65
===================================================================================================================================
EXHIBIT 12.2
The following table sets forth the calculation of the Company's
consolidated Ratios of Earnings to fixed charges and preferred dividends for
the periods shown (in thousands)
For the nine months
Description ended September 30, 1998
------------------------
Interest $ 39,677
Rent Expense 959
Amortization of debt issuance costs 1,131
Preferred dividends 9,202
-----------
$ 50,969
===========
Income from continuing operations before minority
interests, fixed charges & preferred dividends $ 97,736
===========
Ratio of Earnings to fixed charges and preferred
dividends 1.92
====
EXHIBIT 12.3
Reckson Operating Partnership, L.P.
Ratios of Earnings to Combined Fixed Charges
The following table sets forth the calculation of the Operating
Partnership's consolidated ratios of earnings to fixed charges for the periods
shown (in Thousands):
===================================================================================================================================
For the Period from For the Period from For the Period from
January 1, 1998 June 3, 1995 January 1, 1995
To To to
Description September 30, 1998 1997 1996 December 31, 1995 June 2, 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
Interest $39,677 $23,936 $13,331 $5,331 $7,622 $17,426 $27,454
- -----------------------------------------------------------------------------------------------------------------------------------
Rent Expense 959 952 830 434 176 375 771
- -----------------------------------------------------------------------------------------------------------------------------------
Amortization of Debt
Issuance Costs 1,131 797 525 400 195 564 489
- -----------------------------------------------------------------------------------------------------------------------------------
41,767 25,685 14,686 6,165 7,993 18,365 28,714
- -----------------------------------------------------------------------------------------------------------------------------------
Income from Continuing
Operations before Minority
Interest and Fixed Charges $89,166 $71,394 $39,781 $16,728 $8,187 $17,872 $18,609
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Earnings to Fixed
Charges 2.13 2.78 2.71 2.71 1.02 0.97 0.65
===================================================================================================================================
EXHIBIT 12.4
The following table sets forth the calculation of the Operating
Partnership's consolidated Ratios of Earnings to fixed charges and preferred
dividends for the periods shown (in thousands)
For the nine months
Description ended September 30, 1998
------------------------
Interest $ 39,677
Rent Expense 959
Amortization of debt issuance costs 1,131
Preferred dividends 9,202
-----------
50,969
===========
Income from continuing operations before minority
interests, fixed charges & preferred dividends $ 98,368
===========
Ratio of Earnings to fixed charges and preferred
dividends 1.93
====
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) of Reckson Associates Realty Corp. (the
"Company") and Reckson Operating Partnership, L.P. (the "Operating
Partnership") for the registration of $744,739,654 of common stock, common
stock warrants, preferred stock, depositary shares and preferred stock
warrants with respect to the Company and $260,000,000 of debt securities with
respect to the Operating Partnership. We also consent to the inclusion of our
report herein dated February 13, 1998, except for Note 13, as to which the
date is December 8, 1998, with respect to the consolidated financial
statements and schedule of the Operating Partnership for the years ended
December 31, 1997 and 1996 and for the period June 3, 1995 to December 31,
1995 and the combined financial statements of the Reckson Group for the period
January 1, 1995 to June 2, 1995 and to the incorporation by reference of our
reports dated (i) February 13, 1998, except for Note 14, as to which the date
is February 18, 1998, with respect to the consolidated financial statements
and schedule of the Company included in its Annual Report (Form 10-K) for the
years ended December 31, 1997 and 1996 and for the period June 3, 1995 to
December 31, 1995 and the combined financial statements of the Reckson Group
for the period January 1, 1995 to June 2, 1995 filed with the Securities and
Exchange Commission, (ii) February 4, 1997, with respect to the combined
statement of revenues and certain expenses of the New Jersey Portfolio for the
year ended December 31, 1996, included in the Company's Form 8-K filed with
the Securities and Exchange Commission on February 19, 1997, (iii) January 16,
1997, with respect to the statement of revenues and certain expenses of the
Uniondale Office Property for the year ended December 31, 1996, included in
the Company's Form 8-K filed with the Securities and Exchange Commission on
February 19, 1997, (iv) January 17, 1997, with respect to the combined
statement of revenues and certain expenses of the Hauppauge Portfolio for the
year ended December 31, 1996, included in the Company's Form 8-K filed with
the Securities and Exchange Commission on February 19, 1997, (v) May 23, 1997
with respect to the statement of revenues and certain expenses of 710
Bridgeport Avenue for the year ended December 31, 1996, included in the
Company's Form 8-K filed with the Securities and Exchange Commission on June
12, 1997, (vi) May 16, 1997 with respect to the statement of revenues and
certain expenses of the Shorthills Office Center for the year ended December
31, 1996, included in the Company's Form 8-K filed with the Securities and
Exchange Commission on June 12, 1997, (vii) July 22, 1997 with respect to the
statement of revenues and certain expenses of Garden City Plaza for the year
ended December 31, 1996, included in the Company's Form 8-K filed with the
Securities and Exchange Commission on September 9, 1997, (viii) February 17,
1998 with respect to the statement of revenues and certain expenses of the
Stamford Office Property for the year ended December 31, 1997, included in the
Company's Form 8-K filed with the Securities and Exchange Commission on March
24, 1998, (ix) December 17, 1997, with respect to the statement of revenues
and certain expenses of the Christiana Office Property, for the year ended
June 30, 1997, included in the Company's Form 8-K filed with the Securities
and Exchange Commission on February 10, 1998, and (x) March 27, 1998, with
respect to the combined statement of revenues and certain expenses of the
Cappelli Portfolio, for the year ended December 31, 1997, included in the
Company's Form 8-K filed with the Securities and Exchange Commission on April
6, 1998.
Ernst & Young LLP
New York, New York
December 23, 1998
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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.
