As filed with the Securities and Exchange Commission on May 2, 2011.
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TERRENO REALTY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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Maryland
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27-1262675
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(State or Other Jurisdiction of
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(I.R.S. Employer
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Incorporation or Organization)
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Identification Number)
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16 Maiden Lane, Fifth Floor
San Francisco, CA 94108
(415) 655-4580
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
W. Blake Baird
Chairman and Chief Executive Officer
16 Maiden Lane, Fifth Floor
San Francisco, CA 94108
(415) 655-4580
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)
With copies to
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Gilbert G. Menna
Suzanne D. Lecaroz
Goodwin Procter LLP
Exchange Place
Boston, Massachusetts 02109
(617) 570-1000
Approximate date of commencement of proposed sale to the public:
From time to time
after this registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
o
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest reinvestment plans, check the
following
box.
þ
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.
o
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.
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If this Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box.
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If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check the following
box.
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Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum
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Amount of
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Aggregate Offering
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Registration
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Title of Securities Being Registered
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Price(1)(2)(3)
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Fee (4)
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Common stock, $0.01 par value per share
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Preferred stock, $0.01 par value per share
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Debt Securities(3)
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$
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250,000,000
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$
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29,025
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(1)
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As permitted by General Instruction II.D of Form S-3 under the Securities Act of 1933,
as amended, or the Securities Act, the fee table does not specify by each class of
securities to be registered information as to the amount to be registered, proposed
maximum offering price per share, and proposed maximum aggregate offering price.
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(2)
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There is being registered hereunder an indeterminate principal amount of debt securities
and an indeterminate number of shares of common stock and shares of preferred stock.
Pursuant to Rule 457(i) of the Securities Act, this includes such indeterminate number
of shares of common stock as may be issued upon conversion of or exchange for any shares
of preferred stock that provide for conversion or exchange into other such securities.
Separate consideration may or may not be received for the shares of common stock or
shares of preferred stock issuable upon conversion of or exchange for shares of
preferred stock. Pursuant to Rule 416(a) under the Securities Act, there is also being
registered such indeterminate number of our shares of common stock as may be issued from
time to time with respect to shares being registered hereunder as a result of share
splits, share dividends or similar transactions.
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(3)
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If any debt securities are issued at an original issue discount, then the offering price
shall be in such greater principal amount as may be sold for an aggregate initial
offering price of up to the proposed maximum aggregate offering price.
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(4)
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Calculated pursuant to Rule 457(o) of the rules and regulations under the Securities Act.
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The Registrant hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities, and it is not soliciting an offer to
buy these securities in any jurisdiction where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED MAY 2, 2011
PRELIMINARY PROSPECTUS
TERRENO REALTY CORPORATION
$250,000,000
Common Stock
Preferred Stock
Debt Securities
We may offer, issue and sell from time to time, together or separately, the securities
described in this prospectus, at an aggregate public offering price that will not exceed
$250,000,000.
This prospectus describes some of the general terms that apply to the securities. We will
provide the specific terms of any securities we may offer in supplements to this prospectus. You
should read this prospectus and any applicable prospectus supplement carefully before you invest.
We may also authorize one or more free writing prospectuses to be provided to you in connection
with the offering. The prospectus supplement and any free writing prospectus also may add, update
or change information contained or incorporated in this prospectus.
We may offer and sell these securities to or through one or more underwriters, dealers or
agents, or directly to purchasers on a continuous or delayed basis. The prospectus supplement for
each offering of securities will describe the plan of distribution for that offering. For general
information about the distribution of securities offered, see “Plan of Distribution” in this
prospectus. The prospectus supplement also will set forth the price to the public of the securities
and the net proceeds that we expect to received from the sale of such securities.
Our common stock is listed on the New York Stock Exchange, or the NYSE, under the symbol
“TRNO.” On April 29, 2011, the closing price of our common stock on the NYSE was $16.96.
Investing in our securities involves risks. You should carefully read and consider “Risk
Factors” included in our most recent Annual Report on Form 10-K and on page 4 of this
prospectus and in the applicable prospectus supplement before investing in our securities.
We impose certain restrictions on the ownership and transfer of our capital stock. You should
read the information under the section entitled “Description of Capital Stock— Restrictions on
Transfer” in this prospectus for a description of these restrictions.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is
, 2011.
TABLE OF CONTENTS
You should rely only on the information contained in or incorporated by reference into this
prospectus, any applicable prospectus supplement or any applicable free writing prospectus. We have
not authorized any other person to provide you with different or additional information. If anyone
provides you with different or additional information, you should not rely on it. This prospectus
and any applicable prospectus supplement do not constitute an offer to sell, or a solicitation of
an offer to purchase, any securities in any jurisdiction to or from any person to whom or from whom
it is unlawful to make such offer or solicitation in such jurisdiction. You should assume that the
information appearing in this prospectus, any applicable prospectus supplement, any applicable free
writing prospectus and the documents incorporated by reference herein or therein is accurate only
as of their respective dates or on the date or dates which are specified in these documents. Our
business, financial condition, results of operations and prospects may have changed since those
dates.
ABOUT THIS PROSPECTUS
This prospectus is part of a “shelf” registration statement on Form S-3 that we have filed
with the Securities and Exchange Commission, or the SEC. By using a shelf registration statement,
we may sell, at any time and from time to time, in one or more offerings, any combination of the
securities described in this prospectus for up to a total dollar amount of $250,000,000. The
exhibits to our registration statement and documents incorporated by reference contain the full
text of certain contracts and other important documents that we have summarized in this prospectus
or that we may summarize in a prospectus supplement. Since these summaries may not contain all the
information that you may find important in deciding whether to purchase the securities we offer,
you should review the full text of these documents. The registration statement and the exhibits and
other documents can be obtained from the SEC as indicated under the sections entitled “Where You
Can Find More Information” and “Incorporation of Certain Documents By Reference.”
This prospectus only provides you with a general description of the securities we may offer,
which is not meant to be a complete description of each security. Each time we sell securities, we
will provide a prospectus supplement that contains specific information about the terms of those
securities. The prospectus supplement may also add, update or change information contained in this
prospectus. If there is any inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information in the prospectus supplement. You should
read carefully both this prospectus and any prospectus supplement together with the additional
information described under the sections entitled “Where You Can Find More Information” and
“Incorporation of Certain Documents By Reference.”
Unless otherwise indicated or the context requires otherwise, in this prospectus and any
prospectus supplement hereto, references to “our company,” “we,” “us” and “our” mean Terreno Realty
Corporation and its consolidated subsidiaries.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SEC rules allow us to incorporate by reference information into this prospectus. This means
that we can disclose important information to you by referring you to another document. Any
information referred to in this way is considered part of this prospectus from the date we file
that document. Any reports filed by us with the SEC after the date of this prospectus and before
the date that the offering of securities by means of this prospectus is terminated will
automatically update and, where applicable, supersede any information contained in this prospectus
or incorporated by reference into this prospectus. We incorporate by reference into this prospectus
the following documents or information filed with the SEC (other than, in each case, documents or
information deemed to have been furnished and not filed in accordance with SEC rules):
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our Annual Report on Form 10-K for the fiscal year ended December 31,
2010 filed with the SEC on February 24, 2011;
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the information specifically incorporated by reference into our Annual
Report on Form 10-K for the year ended December 31, 2010 from our
Definitive Proxy Statement on Schedule 14A filed with the SEC on March
11, 2011;
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each of our Current Reports on Form 8-K/A filed on December
6, 2010 and our Current Reports on Form 8-K filed on January 5, 2011, March 31, 2011
and May 2, 2011; and
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the description of our shares of common stock included in our
registration statement on Form 8-A filed on January 14, 2010, and all
reports filed for the purpose of updating such description.
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All documents that we file (but not those that we furnish) pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, after the date
of the initial registration statement of which this prospectus is a part and prior to the
effectiveness of the registration statement shall be deemed to be incorporated by reference into
this prospectus and will automatically update and supersede the information in this prospectus, and
any previously filed documents. All documents that we file (but not those that we furnish) pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this prospectus
and prior to the termination of the offering of any of the securities covered under this prospectus
shall be deemed to be incorporated by reference into this prospectus and will
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automatically update and supersede the information in this prospectus, the applicable
prospectus supplement and any previously filed documents.
We will provide without charge to each person, including any beneficial owner, to whom this
prospectus is delivered, upon his or her written or oral request, a copy of any or all documents
referred to above that have been or may be incorporated by reference into this prospectus,
excluding exhibits to those documents unless they are specifically incorporated by reference into
those documents. Requests for those documents should be directed to us as follows: Terreno Realty
Corporation, 16 Maiden Lane, Fifth Floor, San Francisco, California, Attn: Chief Financial Officer,
Telephone: (415) 655-4580.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act, and, in accordance with
those requirements, file annual, quarterly and current reports, proxy statements and other
information with the SEC. Such reports, proxy statements and other information, as well as this
registration statement and the exhibits and schedules thereto, can be inspected at the public
reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of
such materials may be obtained at prescribed rates. Information about the operation of the public
reference facilities may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a
website that contains reports, proxy statements and other information regarding registrants,
including us, that file such information electronically with the SEC. The address of the SEC’s
website is http://www.sec.gov. Copies of these documents may be available on our website at
www.terreno.com. Our internet website and the information contained therein or connected thereto
are not incorporated into this prospectus or any amendment or supplement thereto.
We have filed with the SEC a registration statement on Form S-3 under the Securities Act with
respect to the securities offered by this prospectus. This prospectus, which forms a part of the
registration statement, does not contain all of the information set forth in the registration
statement and its exhibits and schedules, certain parts of which are omitted in accordance with the
SEC’s rules and regulations. For further information about us and the securities, we refer you to
the registration statement and to such exhibits and schedules. You may review a copy of the
registration statement at the SEC’s public reference room in Washington, D.C. as well as through
the SEC’s website. Please be aware that statements in this prospectus referring to a contract or
other document are summaries and you should refer to the exhibits that are part of the registration
statement for a copy of the contract or document.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or
the Securities Act, and Section 21E of the Exchange Act. We caution investors that forward-looking
statements are based on management’s beliefs and on assumptions made by, and information currently
available to, management. When used, the words “anticipate”, “believe”, “estimate”, “expect”,
“intend”, “may”, “might”, “plan”, “project”, “result”, “seek”, “should”, “will”, and similar
expressions which do not relate solely to historical matters are intended to identify
forward-looking statements. These statements are subject to risks, uncertainties, and assumptions
and are not guarantees of future performance, which may be affected by known and unknown risks,
trends, uncertainties, and factors that are beyond our control. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may
vary materially from those anticipated, estimated, or projected. We expressly disclaim any
responsibility to update our forward-looking statements, whether as a result of new information,
future events, or otherwise, except as required by law. Accordingly, investors should use caution
in relying on past forward-looking statements, which are based on results and trends at the time
they are made, to anticipate future results or trends.
Some of the risks and uncertainties that may cause our actual results, performance, or
achievements to differ materially from those expressed or implied by forward-looking statements
include, among others, the following:
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the factors included in our Annual Report on Form 10-K filed on February 24, 2011,
including those set forth under the headings “Risk Factors”, and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”;
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our limited operating history;
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our ability to identify and acquire industrial properties on terms favorable to us;
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general volatility of the capital markets and the market price of our common stock;
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adverse economic or real estate conditions or developments in the industrial real
estate sector and/or in the markets in which we acquire properties;
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our dependence on key personnel and our reliance on third parties to property manage
our industrial properties;
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general economic conditions;
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our dependence upon tenants;
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our inability to comply with the laws, rules and regulations applicable to
companies, and in particular, public companies;
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our inability to manage our growth effectively;
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tenant bankruptcies and defaults on or non-renewal of leases by tenants;
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decreased rental rates or increased vacancy rates;
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increased interest rates and operating costs;
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declining real estate valuations and impairment charges;
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our expected leverage, our failure to obtain necessary outside financing, and future
debt service obligations;
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estimates related to our ability to make distributions to our stockholders;
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our failure to successfully hedge against interest rate increases;
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our failure to successfully operate acquired properties;
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our failure to qualify or maintain our status as a real estate investment trust, or
REIT, and possible adverse changes to tax laws;
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uninsured or underinsured losses relating to our properties;
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environmental uncertainties and risks related to natural disasters;
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financial market fluctuations; and
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changes in real estate and zoning laws and increases in real property tax rates.
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OUR COMPANY
Terreno Realty Corporation is an internally managed Maryland corporation focused on acquiring,
owning and operating industrial real estate located in six major coastal U.S. markets: Los Angeles
Area; Northern New Jersey/New York City; San Francisco Bay Area; Seattle Area; Miami Area; and
Washington, D.C./Baltimore. We were formed as a Maryland corporation in November 2009 and intend
to elect to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable
year ended December 31, 2010. We invest in several types of industrial real estate, including
warehouse/distribution, flex (including light industrial and R&D) and trans-shipment. We target
functional buildings in infill locations that may be shared by multiple tenants and that cater to
customer demand within the various submarkets in which we operate. Infill locations are geographic
locations surrounded by high concentrations of already developed land and existing buildings. As of
December 31, 2010, we owned a total of 33 buildings in five of the above markets aggregating
approximately 2.4 million square feet.
Our principal executive offices are located at 16 Maiden Lane, Fifth Floor, San Francisco,
California 94108. Our telephone number is (415) 655-4580. We maintain a website at
www.terreno.com
. Information on our website is not, and should not be interpreted to be, part of
this prospectus.
RISK FACTORS
Investing in our securities involves risks. Before purchasing the securities offered by this
prospectus you should carefully consider the risk factors incorporated by reference in this
prospectus from our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the
SEC on February 24, 2011, as well as the risks, uncertainties and additional information (i) set
forth in our SEC reports on Forms 10-K, 10-Q and 8-K and in the other documents incorporated by
reference in this prospectus that we file with the SEC after the date of this prospectus and which
are deemed incorporated by reference in this prospectus, and (ii) the information contained in any
applicable prospectus supplement. For a description of these reports and documents, and information
about where you can find them, see “Where You Can Find More Information” and “Incorporation of
Certain Documents By Reference.” The risks and uncertainties we discuss in this prospectus and in
the documents incorporated by reference in this prospectus are those that we currently believe may
materially affect our company. Additional risks not presently known or that are currently deemed
immaterial could also materially and adversely affect our financial condition, results of
operations, business and prospects.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, we intend to use the net proceeds from
the offering of securities under this prospectus for general corporate purposes, including funding
our investment activity, the repayment of outstanding indebtedness, working capital and other
general purposes. Further details relating to the use of the net proceeds from the offering of
securities under this prospectus will be set forth in the applicable prospectus supplement. Pending
such uses, we anticipate that we will invest the net proceeds in interest-bearing securities
consistent with maintaining our qualification as a REIT.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for the periods shown:
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For the Period
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February 16, 2010
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(commencement of
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operations) through
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December 31, 2010
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Ratio of earnings to fixed charges
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(1
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(1)
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The ratio of earnings to fixed charges was less than one-to-one for
the period from February 16, 2010 (commencement of operations) through
December 31, 2010. The total fixed charges amount for that period was
$554,000 and the total earnings amount was $(4,836,000). The amount of
the deficiency, or the amount of fixed charges in excess of earnings,
was approximately $5,390,000.
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We have computed the ratio of earnings to fixed charges by dividing earnings by fixed charges.
For the purposes of computing these ratios, “earnings” have been calculated by adding fixed charges
to income (loss) before income taxes and “fixed charges” as the sum of
interest expense and an imputed
interest factor included in rental expense. As of April 29, 2011, we did not have any shares of preferred
stock outstanding.
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DESCRIPTION OF THE SECURITIES WE MAY OFFER
This prospectus contains summary descriptions of our shares of common stock, shares of
preferred stock and debt securities that we may offer from time to time. As further described in
this prospectus, these summary descriptions are not meant to be complete descriptions of each
security. The particular terms of any security will be described in the accompanying prospectus
supplement and other offering material. The accompanying prospectus supplement may add, update or
change the terms and conditions of the securities as described in this prospectus
DESCRIPTION OF CAPITAL STOCK
The following summary of our capital stock does not purport to be complete and is subject to
and qualified in its entirety by reference to Maryland law and to our charter and bylaws, copies of
which are filed as exhibits to the registration statement of which this prospectus forms a part.
See “Where You Can Find More Information”.
General
Our charter provides that we may issue up to 400,000,000 shares of common stock and
100,000,000 shares of preferred stock, both having par value $0.01 per share. As of April 29, 2011,
9,290,960 shares of common stock were issued and outstanding and no shares of preferred stock were
issued and outstanding. Our board of directors, without any action on the part of our stockholders,
may establish the terms of any stock to be issued and, with the approval of a majority of the
entire board, may amend our charter from time to time to increase or decrease the aggregate number
of authorized shares of stock or the number of shares of stock of any class or series. Under
Maryland law, our stockholders generally are not personally liable for our debts and obligations
solely as a result of their status as stockholders.
Common Stock
All shares of our common stock have equal rights as to earnings, assets, dividends and voting.
Subject to our charter restrictions on the transfer and ownership of our stock and the preferential
rights of holders of any other class or series of our stock, distributions may be paid to the
holders of our common stock if, as and when authorized by our board of directors and declared by us
out of funds legally available therefor. Shares of our common stock generally have no preemptive,
appraisal, preferential exchange, conversion, sinking fund or redemption rights and are freely
transferable, except where their transfer is restricted by federal and state securities laws, by
contract or by the restrictions in our charter. In the event of our liquidation, dissolution or
winding up, each share of our common stock would be entitled to share ratably in all of our assets
that are legally available for distribution after payment of or adequate provision for all of our
known debts and other liabilities and subject to any preferential rights of holders of our
preferred stock, if any preferred stock is outstanding at such time, and our charter restrictions
on the transfer and ownership of our stock. Subject to our charter restrictions on the transfer and
ownership of our stock and except as may otherwise be specified in the terms of any class or series
of common stock, each share of our common stock entitles the holder to one vote on all matters
submitted to a vote of stockholders, including the election of directors. Except as may be provided
with respect to any other class or series of stock, the holders of our common stock will possess
exclusive voting power. In an uncontested election, a director is elected if he or she receives
more “for” votes than “against” or “withheld” votes, and there is no cumulative voting in the
election of directors, which means that holders of a majority of the outstanding shares of common
stock can elect all of our directors.
Preferred Stock
Our board of directors may authorize the issuance of shares of our preferred stock in one
or more series and may determine, with respect to any such series, the rights, preferences,
privileges and restrictions of the shares of preferred stock of that series, including:
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distribution rights;
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conversion rights;
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voting rights;
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redemption rights and terms of redemptions; and
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liquidation preferences.
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The preferred stock we may offer from time to time under this prospectus, when issued,
will be duly authorized, fully paid and nonassessable, and holders of shares of our preferred stock
will not have any preemptive rights.
The issuance of shares of our preferred stock could have the effect of delaying,
deferring or preventing a change in control or other transaction that might involve a premium price
for shares of our common stock or otherwise be in the best interests of our shareholders. In
addition, any shares of our preferred stock that we issue could rank senior to our shares of common
stock with respect to the payment of distributions, in which case we could not pay any
distributions on our common shares until full distributions have been paid with respect to such
shares of our preferred stock.
The rights, preferences, privileges and restrictions of each series of shares of our
preferred stock will be fixed by articles supplementary relating to the series. We will describe
the specific terms of the particular series of shares of our preferred stock in the prospectus
supplement relating to that series, which terms will include:
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the designation and par value of the shares of our preferred stock;
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the voting rights, if any, of the shares of our preferred stock;
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the number of shares of our preferred stock offered, the liquidation preference per share of our preferred
stock and the offering price of the shares of our preferred stock;
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the distribution rate(s), period(s) and payment date(s) or method(s) of calculation applicable to the
shares of our preferred stock;
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whether distributions will be cumulative or non-cumulative and, if cumulative, the date(s) from which
distributions on the shares of our preferred stock will cumulate;
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the procedures for any auction and remarketing for the shares of our preferred stock, if applicable;
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the provision for a sinking fund, if any, for the shares of our preferred stock;
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the provision for, and any restriction on, redemption, if applicable, of the shares of our preferred stock;
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the provision for, and any restriction on, repurchase, if applicable, of the shares of our preferred stock;
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the terms and provisions, if any, upon which the shares of our preferred stock will be convertible into
common shares, including the conversion price (or manner or calculation) and conversion period;
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the terms under which the rights of the shares of our preferred stock may be modified, if applicable;
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the relative ranking and preferences of the shares of our preferred stock as to distribution rights and
rights upon the liquidation, dissolution or winding up of our affairs;
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any limitation on issuance of any other series of shares of our preferred stock, including any series of
shares of our preferred stock ranking senior to or on parity with the series of shares of our preferred
stock as to distribution rights and rights upon the liquidation, dissolution or winding up of our affairs;
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any listing of the shares of our preferred stock on any securities exchange;
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if appropriate, a discussion of any additional material U.S. federal income tax considerations
applicable to the shares of our preferred stock;
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information with respect to book-entry procedures, if applicable;
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in addition to those restrictions described below, any other restrictions on the ownership and
transfer of the shares of our preferred stock; and
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any additional rights, preferences, privileges or restrictions of the shares of our preferred stock.
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Power to Reclassify Shares of Our Stock
Our charter authorizes our board of directors to classify and reclassify any unissued shares
of stock into other classes or series of stock, including preferred stock. Prior to the issuance of
shares of each class or series, the board of directors is required by Maryland law and by our
charter to set, subject to our charter restrictions on the transfer and ownership of our stock and
the terms of any outstanding class or series of our stock, the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms or conditions of redemption for each class or series. Thus, the board of
directors could authorize the issuance of shares of common stock or preferred stock with terms and
conditions which could have the effect of delaying, deferring or preventing a transaction or a
change in control that might involve a premium price for holders of our common stock or that
stockholders may believe is in their best interests. No shares of our preferred stock were
outstanding as of April 29, 2011.
Power to Increase Authorized Stock and Issue Additional Shares of Our Common Stock and Preferred
Stock
We believe that the power of our board of directors to increase the number of authorized
shares of stock, issue additional authorized but unissued shares of our common stock or preferred
stock and to classify or reclassify unissued shares of our common stock or preferred stock and
thereafter to cause us to issue such classified or reclassified shares of stock will provide us
with increased flexibility in structuring possible future financings and acquisitions and in
meeting other needs which might arise. Shares of additional classes or series of stock, as well as
of common stock, will be available for issuance without further action by our stockholders, unless
stockholder consent is required by the rules of any stock exchange or automated quotation system on
which our securities may be listed or traded. Although our board of directors does not intend to do
so, it could authorize us to issue a class or series that could, depending upon the terms of the
particular class or series, delay, defer or prevent a transaction or a change of control of our
company that might involve a premium price for our stockholders or otherwise be in their best
interest.
Restrictions on Transfer
In order for us to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the
“Code”), our 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 (other than the
first year for which an election to be a REIT has been made). Also, not more than 50% of the value
of the outstanding shares of stock may be owned, directly or indirectly, by five or fewer
“individuals” (as defined in the Code to include certain entities) during the last half of a
taxable year (other than the first year for which an election to be a REIT has been made).
Our charter contains restrictions on the ownership and transfer of our stock. The relevant
sections of our charter provide that, commencing with the last day of the first half of the second
taxable year for which we have elected to be classified as REIT, no individual (as defined under
the Code to include certain entities) may actually or constructively own more than 9.8% in value of
the aggregate of our outstanding shares of stock or more than 9.8% in value or number of shares,
whichever is more restrictive, of the outstanding shares of our common stock. Subject to the
exceptions described below, our charter further prohibits any person or entity from beneficially or
constructively owning shares in excess of these limits. We refer to these restrictions as the
“ownership limits” and we sometimes refer to the restrictions on ownership by a person or entity
separately as the “related party tenant limit.” We refer to a person or entity that would, but for
the restrictions in our charter, have beneficially or constructively owned shares of our stock in
violation of the ownership limit or the other restrictions on ownership and transfer of our stock
described below and, if appropriate in the context, any person or entity that would have been the
record owner of such shares as a “prohibited owner.”
The beneficial and constructive ownership rules under the Code are complex and may cause stock
owned actually or constructively by a group of related individuals and/or entities to be owned
constructively by one individual or entity. As a result, the acquisition of less than 9.8% in value
of our outstanding stock or less than 9.8% in value or number of our common shares (or the
acquisition of an interest in an entity that owns, actually or constructively, our stock) by an
individual or entity could, nevertheless, cause that individual or entity, or another individual or
entity, to own constructively in excess of
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9.8% in value of our outstanding stock or 9.8% in value or number of our outstanding common
shares and thereby violate the applicable ownership limit.
Our charter provides that, subject to our directors’ duties under applicable law, upon
request, our board of directors will, prospectively or retroactively, waive the related party
tenant limit with respect to a particular stockholder, and establish a different ownership
limitation for the stockholder, unless such stockholder’s increased ownership of our stock would
result in us failing to qualify as a REIT or our board of directors determines in its sole judgment
that such stockholder’s increased ownership could result in any of our rental income to fail to
qualify as such for REIT testing purposes as a result of the “related party tenant” rules that
apply to REITs. As a condition of such waiver, our board of directors may require certain
representations and undertakings from the stockholder and/or an opinion of counsel or IRS ruling
satisfactory to our board of directors with respect to preserving our REIT status.
Our board of directors may from time to time increase the ownership limits for one or more
persons or entities and decrease the ownership limits for all other persons and entities unless,
after giving effect to such modification of the ownership limits, five or fewer individuals could
beneficially own more than 49.9% in value of our outstanding stock or we would otherwise fail to
qualify as a REIT. Any such decrease in the ownership limits will not apply to any person or entity
whose ownership of our stock exceeds the decreased ownership limits until the person’s or entity’s
ownership of our stock equals or falls below the decreased ownership limits, but any further
acquisition of our stock by such a person or entity will violate the decreased ownership limits.
Our charter provisions further prohibit:
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any person from transferring shares of our stock if such transfer
would result in shares of our stock being beneficially owned by fewer
than 100 persons (determined without reference to any rules of
attribution); and
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any person from owning shares of our stock if such ownership would
result in our failing to qualify as a REIT for federal income tax
purposes.
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Any person who acquires or attempts or intends to acquire beneficial or constructive ownership
of shares of our stock that will or may violate the ownership limits or any of the other foregoing
limitations on transferability and ownership will be required to give notice immediately to us and
provide us with such other information as we may request in order to determine the effect of such
transfer on our status as a REIT. The foregoing provisions on transferability and ownership will
not apply if our board of directors determines that it is no longer in our best interests to
attempt to qualify, or to continue to qualify, as a REIT or that compliance with any or all of the
restrictions on ownership and transfer of our stock is no longer required in order for us to
qualify as a REIT, but only to the extent thereof.
Pursuant to our charter, if any purported transfer of our stock or any other event would
otherwise result in any person violating the ownership limit or such other limit as established by
our board of directors or would result in our failing to qualify as a REIT, then that number of
shares in excess of the ownership limit or causing us to fail to qualify as a REIT (rounded up to
the nearest whole share) will be automatically transferred to, and held by, a trust for the
exclusive benefit of one or more charitable organizations selected by us. The automatic transfer
will be effective as of the close of business on the business day prior to the date of the
violative transfer or other event that results in a transfer to the trust. Any dividend or other
distribution paid to the prohibited owner, prior to our discovery that the shares had been
automatically transferred to a trust as described above must be repaid to the trustee upon demand
for distribution to the beneficiary of the trust. If the transfer to the trust as described above
is not automatically effective, for any reason, to prevent violation of the applicable ownership
limit or our failing to qualify as a REIT, then our charter provides that the transfer of the
shares resulting in such violation will be void. If any transfer would result in shares of our
stock being beneficially owned by fewer than 100 persons, then any such purported transfer will be
void and of no force or effect.
Shares of our stock transferred to the trustee are deemed to be offered for sale to us or our
designee at a price per share equal to the lesser of (i) the price per share in the transaction
that resulted in such transfer to the trust (or, in the case of a devise or gift, the market price
at the time of such devise or gift) and (ii) the market price on the date we accept, or our
designee accepts, such offer. We may reduce the amount so payable to the trustee by the amount of
any dividends or other distributions paid to the prohibited owner and owed by the prohibited owner
to the trustee as described above and pay such amount to the trustee for distribution to the
beneficiary of the trust. We have the right to accept such offer until the trustee has sold the
shares of our stock held in the trust as discussed below. Upon a sale to us, the interest of the
charitable beneficiary in the shares sold terminates and the trustee must distribute the net
proceeds of the sale to the prohibited owner and any dividends or other distributions held by the
trustee with respect to such stock to the charitable beneficiary.
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If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of
the transfer of shares to the trust, sell the shares to a person or entity designated by the
trustee who could own the shares without violating the ownership limits or other restrictions on
ownership and transfer of our stock. After that, the trustee must distribute to the prohibited
owner an amount equal to the lesser of (i) the price paid by the prohibited owner for the shares
or, if the prohibited owner did not give value for the shares in connection with the event causing
the shares to be held in trust (e.g., in the cause of a gift, devise or other such transaction),
the market price of the shares on the day of the event causing the shares to be held in the trust,
and (ii) the sales proceeds (net of commissions and other expenses of sale) received by the trustee
for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of
any dividends or other distributions paid to the prohibited owner and owed by the prohibited owner
to the trustee as described above. Any net sales proceeds in excess of the amount payable to the
prohibited owner will be immediately paid to the charitable beneficiary, together with any
dividends or other distributions thereon. In addition, if prior to discovery by us that shares of
our stock have been transferred to a trust, such shares of stock are sold by a prohibited owner,
then such shares shall be deemed to have been sold on behalf of the trust and to the extent that
the prohibited owner received an amount for or in respect of such shares that exceeds the amount
that such prohibited owner was entitled to receive, such excess amount shall be paid to the trustee
upon demand. The prohibited owner has no rights in the shares held by the trustee.
The trustee shall be designated by us and shall be unaffiliated with us and with any
prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust
for the beneficiary, all dividends and other distributions paid by us with respect to the shares,
and may also exercise all voting rights with respect to the shares.
Subject to Maryland law, effective as of the date that the shares have been transferred to the
trust, the trustee shall have the authority, at the trustee’s sole discretion:
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to rescind as void any vote cast by a prohibited owner prior to our
discovery that the shares have been transferred to the trust; and
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to recast the vote in accordance with the desires of the trustee
acting for the benefit of the beneficiary of the trust.
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However, if we have already taken irreversible corporate action, then the trustee may not
rescind and recast the vote.
In addition, if our board of directors determines in good faith that a proposed transfer or
other event has occurred that would result in a violation of the restrictions on ownership and
transfer of our stock set forth in our charter, our board of directors will take such action as it
deems advisable to refuse to give effect to or to prevent such transfer or other event, including,
but not limited to, causing the company to redeem shares of common stock or preferred stock,
refusing to give effect to the transfer on our books or instituting proceedings to enjoin the
transfer.
Every owner of 5% or more (or such lower percentage as required by the Code or the regulations
promulgated thereunder) of the outstanding shares of our stock, upon request following the end of
each of our taxable years, must give us written notice stating the person’s name and address, the
number of shares of each class and series of our stock that the person beneficially owns and a
description of the manner in which the shares are held. Each such owner must also provide us with
any additional information that we request in order to determine the effect, if any, of such
beneficial ownership on our qualification as a REIT and to ensure compliance with the ownership
limits. In addition, any person or entity that is a beneficial owner or constructive owner of
shares of our stock and any person or entity (including the stockholder of record) who is holding
shares of our stock for a beneficial owner or constructive owner shall, on request, disclose to us
in writing such information as we may request in order to determine our status as a REIT and to
comply with requirements of any taxing authority or governmental authority or to determine such
compliance.
All certificates representing shares of our common stock bear a legend referring to the
restrictions described above.
Stock Exchange Listing
Our shares of common stock are listed on the NYSE under the symbol “TRNO”.
Transfer Agent and Registrar
Our transfer agent and registrar for our shares of common stock is Computershare Trust
Company, N.A.
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DESCRIPTION OF DEBT SECURITIES
General
The debt securities offered by this prospectus will be our direct unsecured general
obligations. This prospectus describes certain general terms of the debt securities (the “Debt
Securities”) offered through this prospectus. When we offer to sell a particular series of Debt
Securities, we will describe the specific terms of that series in a prospectus supplement or any
free writing prospectus and the terms, if any, on which a series of Debt Securities may be
convertible into or exchangeable for other securities. To the extent the information contained in
the prospectus supplement or any free writing prospectus differs from this summary description, you
should rely on the information in the prospectus supplement.
The Debt Securities will be issued under an open-ended Indenture (for Debt Securities) between
us and a trustee to be elected by us at or about the time we offer our Debt Securities. The
open-ended Indenture (for Debt Securities) is incorporated by reference into the registration
statement of which this prospectus is a part and is filed as an exhibit to the registration
statement. In this prospectus we refer to the Indenture (for Debt Securities) as the “Debt
Securities Indenture.” We refer to the trustee under any Debt Securities Indenture as the “Debt
Securities Trustee.”
The prospectus supplement or any free writing prospectus applicable to a particular series of
Debt Securities may state that a particular series of Debt Securities will be our subordinated
obligations. The form of Debt Securities Indenture referred to above includes optional provisions
(designated by brackets (“[ ]”)) that we would expect to appear in a separate Debt Securities
Indenture for subordinated debt securities in the event we issue subordinated debt securities. In
the following discussion, we refer to any of our subordinated obligations as the “Subordinated Debt
Securities.” Unless the applicable prospectus supplement or any free writing prospectus provides
otherwise, we will use a separate Debt Securities Indenture for any Subordinated Debt Securities
that we may issue. Our Debt Securities Indenture will be qualified under the Trust Indenture Act of
1939, as amended, and you should refer to the Trust Indenture Act for the provisions that apply to
the Debt Securities.
We have summarized selected provisions of the Debt Securities Indenture below. Each Debt
Securities Indenture will be independent of any other Debt Securities Indenture unless otherwise
stated in a prospectus supplement or any free writing prospectus. The summary that follows is not
complete and the summary is qualified in its entirety by reference to the provisions of the
applicable Debt Securities Indenture. You should consult the applicable Debt Securities, Debt
Securities Indenture, any supplemental indentures, officers’ certificates and other related
documents for more complete information on the Debt Securities. These documents appear as exhibits
to, or are incorporated by reference into, the registration statement of which this prospectus is a
part, or will appear as exhibits to other documents that we will file with the SEC, which will be
incorporated by reference into this prospectus. In the summary below, we have included references
to applicable section numbers of the Debt Securities Indenture so that you can easily locate these
provisions.
Ranking
Our Debt Securities that are not designated Subordinated Debt Securities will be effectively
subordinated to all secured indebtedness that we have outstanding from time to time to the extent
of the value of the collateral securing such secured indebtedness. Our Debt Securities that are
designated Subordinated Debt Securities will be subordinate to all outstanding secured indebtedness
as well as Debt Securities that are not designated Subordinated Debt Securities. As of December 31,
2010, we had $17.7 million in mortgage debt and no secured, senior unsecured or subordinated
indebtedness outstanding. The Debt Securities Indenture does not limit the amount of secured
indebtedness that we may issue or incur.
We conduct substantially all of our operations, and make substantially all of our investments,
through our wholly owned subsidiary, Terreno Realty LLC, and its subsidiaries. Our ability to meet
our financial obligations with respect to any future Debt Securities, and cash needs generally, is
dependent on our operating cash flow, our ability to access various sources of short- and long-term
liquidity, including our bank facilities, the capital markets and distributions from our
subsidiaries. Holders of our Debt Securities will effectively have a junior position to claims of
creditors of our subsidiaries, including trade creditors, debt holders, secured creditors, taxing
authorities and guarantee holders.
Provisions of a Particular Series
The Debt Securities may from time to time be issued in one or more series. You should consult
the prospectus
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supplement or free writing prospectus relating to any particular series of Debt
Securities for the following information:
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the title of the Debt Securities;
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any limit on aggregate principal amount of the Debt Securities or the series of which they
are a part;
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the date(s), or method for determining the date(s), on which the principal of the Debt
Securities will be payable;
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the rate, including the method of determination if applicable, at which the Debt Securities
will bear interest, if any, and
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the date from which any interest will accrue;
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the dates on which we will pay interest;
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our ability to defer interest payments and any related restrictions
during any interest deferral period; and
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the record date for any interest payable on any interest payment date;
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the principal of, premium, if any, and interest on the Debt Securities will be payable;
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you may register transfer of the Debt Securities;
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you may exchange the Debt Securities; and
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you may serve notices and demands upon us regarding the Debt Securities;
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the security registrar for the Debt Securities and whether the
principal of the Debt Securities is payable without presentment or
surrender of them;
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the terms and conditions upon which we may elect to redeem any Debt
Securities, including any replacement capital or similar covenants
limiting our ability to redeem any Subordinated Debt Securities;
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the denominations in which we may issue Debt Securities, if other than
$1,000 and integral multiples of $1,000;
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the terms and conditions upon which the Debt Securities must be
redeemed or purchased due to our obligations pursuant to any sinking
fund or other mandatory redemption or tender provisions, or at the
holder’s option, including any applicable exceptions to notice
requirements;
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the currency, if other than United States currency, in which payments
on the Debt Securities will be payable;
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the terms according to which elections can be made by us or the holder
regarding payments on the Debt Securities in currency other than the
currency in which the Debt Securities are stated to be payable;
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if payments are to be made on the Debt Securities in securities or
other property, the type and amount of the securities and other
property or the method by which the amount shall be determined;
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the manner in which we will determine any amounts payable on the Debt
Securities that are to be determined with reference to an index or
other fact or event ascertainable outside the applicable Debt
Securities Indenture;
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if other than the entire principal amount, the portion of the
principal amount of the Debt Securities payable upon declaration of
acceleration of their maturity;
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any addition to the events of default applicable to any Debt
Securities and any additions to our covenants for the benefit of the
holders of the Debt Securities;
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the terms applicable to any rights to convert Debt Securities into or
exchange them for other of our securities or those of any other
entity;
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whether we are issuing Debt Securities as global securities, and if so,
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any limitations on transfer or exchange rights or the right to obtain the registration of transfer;
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any limitations on the right to obtain definitive certificates for the Debt Securities; and
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any other matters incidental to the Debt Securities;
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whether we are issuing the Debt Securities as bearer securities;
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any limitations on transfer or exchange of Debt Securities or the right to obtain
registration of their transfer, and the terms and amount of any service charge
required for registration of transfer or exchange;
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any exceptions to the provisions governing payments due on legal holidays, or any
variations in the definition of business day with respect to the Debt Securities;
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any collateral security, assurance, guarantee or other credit enhancement
applicable to the Debt Securities;
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any other terms of the Debt Securities not in conflict with the provisions of the
applicable Debt Securities Indenture; and
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the material U.S. federal income tax consequences applicable to the Debt Securities.
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For more information, see Section 3.01 of the applicable Debt Securities Indenture.
Debt Securities may be sold at a substantial discount below their principal amount. You should
consult the applicable prospectus supplement or free writing prospectus for a description of
certain material U.S. federal income tax considerations that may apply to Debt Securities sold at
an original issue discount or denominated in a currency other than dollars.
Unless the applicable prospectus supplement or free writing prospectus states otherwise, the
covenants contained in the applicable Debt Securities Indenture will not afford holders of Debt
Securities protection in the event we have a change in control or are involved in a
highly-leveraged transaction.
Subordination
The applicable prospectus supplement or free writing prospectus may provide that a series of
Debt Securities will be Subordinated Debt Securities, subordinate and junior in right of payment to
all of our Senior Indebtedness, as defined below. If so, we will issue these securities under a
separate Debt Securities Indenture for Subordinated Debt Securities (a “Subordinated Debt
Securities Indenture”). For more information, see Article XV of the form of Debt Securities
Indenture.
Unless the applicable prospectus supplement or free writing prospectus states otherwise, no
payment of principal of,
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including redemption and sinking fund payments, or any premium or interest
on, the Subordinated Debt Securities may be made if:
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there occur certain acts of bankruptcy, insolvency, liquidation, dissolution or other winding up of our company;
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any Senior Indebtedness is not paid when due;
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any applicable grace period with respect to other defaults with respect to any Senior Indebtedness has ended, the default has not been cured or waived and the maturity of such Senior Indebtedness has been accelerated because of the default; or
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the maturity of the Subordinated Debt Securities of any series has been accelerated because of a default and Senior Indebtedness is then outstanding.
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Upon any distribution of our assets to creditors upon any dissolution, winding-up, liquidation
or reorganization, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all principal of, and any premium and interest due or to become due on, all
outstanding Senior Indebtedness must be paid in full before the holders of the Subordinated Debt
Securities are entitled to payment. For more information, see Section 15.02 of the applicable Debt
Securities Indenture. The rights of the holders of the Subordinated Debt Securities will be
subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions
applicable to Senior Indebtedness until all amounts owing on the Subordinated Debt Securities are
paid in full. For more information, see Section 15.04 of the applicable Debt Securities Indenture.
Unless the applicable prospectus supplement or free writing prospectus states otherwise, the
term “Senior Indebtedness” means all obligations (other than non-recourse obligations and the
indebtedness issued under the Subordinated Debt Securities Indenture) of, or guaranteed or assumed
by, us:
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for borrowed money (including both senior and subordinated indebtedness for
borrowed money, but excluding the Subordinated Debt Securities);
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for the payment of money relating to any lease that is capitalized on our
consolidated balance sheet in accordance with generally accepted accounting
principles; or
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indebtedness evidenced by bonds, debentures, notes or other similar instruments.
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In the case of any such indebtedness or obligations, Senior Indebtedness includes amendments,
renewals, extensions, modifications and refundings, whether existing as of the date of the
Subordinated Debt Securities Indenture or subsequently incurred by us.
Unless the applicable prospectus supplement or free writing prospectus states otherwise, an
applicable Subordinated Debt Securities Indenture will not limit the aggregate amount of Senior
Indebtedness that we may issue.
Form, Exchange and Transfer
Unless the applicable prospectus supplement or free writing prospectus states otherwise, we
will issue Debt Securities only in fully registered form without coupons and in denominations of
$1,000 and integral multiples of that amount. For more information, see Sections 2.01 and 3.02 of
the applicable Debt Securities Indenture.
Holders may present Debt Securities for exchange or for registration of transfer, duly
endorsed or accompanied by a duly executed instrument of transfer, at the office of the security
registrar or at the office of any transfer agent we may designate. Exchanges and transfers are
subject to the terms of the applicable Debt Securities Indenture and applicable limitations for
global securities. We may designate ourselves the security registrar.
No charge will be made for any registration of transfer or exchange of Debt Securities, but we
may require payment of a sum sufficient to cover any tax or other governmental charge that the
holder must pay in connection with the transaction. Any transfer or exchange will become effective
upon the security registrar or transfer agent, as the case may be, being
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satisfied with the
documents of title and identity of the person making the request. For more information, see Section
3.05 of the applicable Debt Securities Indenture.
The applicable prospectus supplement or free writing prospectus will state the name of any
transfer agent, in addition to the security registrar initially designated by us, for any Debt
Securities. We may at any time designate additional transfer agents or withdraw the designation of
any transfer agent or make a change in the office through which any transfer agent acts. We must,
however, maintain a transfer agent in each place of payment for the Debt Securities of each series.
For more information, see Section 6.02 of the applicable Debt Securities Indenture.
We will not be required to:
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issue, register the transfer of, or exchange any Debt Securities or
any tranche of any Debt Securities during a period beginning at the
opening of business 15 days before the day of mailing of a notice of
redemption of any Debt Securities called for redemption and ending at
the close of business on the day of mailing; or
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register the transfer of, or exchange any Debt Securities selected for
redemption except the unredeemed portion of any Debt Securities being
partially redeemed.
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For more information, see Section 3.05 of the applicable Debt Securities Indenture.
Payment and Paying Agents
Unless the applicable prospectus supplement or free writing prospectus states otherwise, we
will pay interest on a Debt Security on any interest payment date to the person in whose name the
Debt Security is registered at the close of business on the regular record date for the interest
payment. For more information, see Section 3.07 of the applicable Debt Securities Indenture.
Unless the applicable prospectus supplement or free writing prospectus provides otherwise, we
will pay principal and any premium and interest on Debt Securities at the office of the paying
agent whom we will designate for this purpose. Unless the applicable prospectus supplement or free
writing prospectus states otherwise, the corporate trust office of the Debt Securities Trustee in
New York City will be designated as our sole paying agent for payments with respect to Debt
Securities of each series. Any other paying agents initially designated by us for the Debt
Securities of a particular series will be named in the applicable prospectus supplement or free
writing prospectus. We may at any time add or delete paying agents or change the office through
which any paying agent acts. We must, however, maintain a paying agent in each place of payment for
the Debt Securities of a particular series. For more information, see Section 6.02 of the
applicable Debt Securities Indenture.
All money we pay to a paying agent for the payment of the principal and any premium or
interest on any Debt Security that remains unclaimed at the end of two years after payment is due
will be repaid to us. After that date, the holder of that Debt Security shall be deemed an
unsecured general creditor and may look only to us for these payments. For more information, see
Section 6.03 of the applicable Debt Securities Indenture.
Covenants
We will set forth in the applicable prospectus supplement or free writing prospectus any
restrictive covenants applicable to any issue of Debt Securities.
Redemption
You should consult the applicable prospectus supplement or free writing prospectus for any
terms regarding optional or mandatory redemption of Debt Securities. Except for any provisions in
the applicable prospectus supplement or free writing prospectus regarding Debt Securities
redeemable at the holder’s option, Debt Securities may be redeemed only upon notice by mail not
less than 30 nor more than 60 days prior to the redemption date. Further, if less than all of the
Debt Securities of a series, or any tranche of a series, are to be redeemed, the Debt Securities to
be redeemed will be selected by the method provided for the particular series. In the absence of a
selection provision, the Debt Securities Trustee will select a fair and appropriate method of
selection. For more information, see Sections 4.03 and 4.04 of the applicable Debt Securities
Indenture.
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A notice of redemption we provide may state:
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that redemption is conditioned upon receipt by the paying agent on or
before the redemption date of money sufficient to pay the principal of
and any premium and interest on the Debt Securities; and
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that if the money has not been received, the notice will be
ineffective and we will not be required to redeem the Debt Securities.
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For more information, see Section 4.04 of the applicable Debt Securities Indenture.
Consolidation, Merger and Sale of Assets
Unless the applicable prospectus supplement or free writing prospectus provides otherwise, we
may not consolidate with or merge into any other person, nor may we transfer or lease substantially
all of our assets and property to any person, unless:
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the corporation formed by the consolidation or into which we are
merged, or the person that acquires by conveyance or transfer, or that
leases, substantially all of our property and assets:
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is organized and validly existing under the laws of
any domestic jurisdiction; and
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expressly assumes by supplemental indenture(s) our
obligations on the Debt Securities and under the
applicable Debt Securities Indenture(s);
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immediately after giving effect to the transaction, no event of
default, and no event that would become an event of default, has
occurred and is continuing; and
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we have delivered to the Debt Securities Trustee an officer’s
certificate and opinion of counsel as provided in the applicable Debt
Securities Indenture(s).
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For more information, see Section 11.01 of the applicable Debt Securities Indenture.
Events of Default
Unless the applicable prospectus supplement or free writing prospectus states otherwise,
“event of default” under the applicable Debt Securities Indenture with respect to Debt Securities
of any series means any of the following:
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failure to pay any interest due on any Debt Security of that series
within 30 days after it becomes due;
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failure to pay principal or premium, if any, when due on any Debt
Security of that series;
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failure to make any required sinking fund payment on any Debt
Securities of that series;
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breach of or failure to perform any other covenant or warranty in the
applicable Debt Securities Indenture with respect to Debt Securities
of that series for 60 days (subject to extension under certain
circumstances for another 120 days) after we receive notice from the
Debt Securities Trustee, or we and the Debt Securities Trustee receive
notice from the holders of at least 33% in principal amount of the
Debt Securities of that series outstanding under the applicable Debt
Securities Indenture according to the
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provisions of the applicable Debt Securities Indenture;
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certain events of bankruptcy, insolvency or reorganization; and
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any other event of default set forth in the applicable prospectus
supplement or free writing prospectus.
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For more information, see Section 8.01 of the applicable Debt Securities Indenture.
An event of default with respect to a particular series of Debt Securities does not
necessarily constitute an event of default with respect to the Debt Securities of any other series
issued under the applicable Debt Securities Indenture.
If an event of default with respect to a particular series of Debt Securities occurs and is
continuing, either the Debt Securities Trustee or the holders of at least 33% in principal amount
of the outstanding Debt Securities of that series (or such other percentage set forth in the
applicable prospectus supplement or free writing prospectus) may declare the principal amount of
all of the Debt Securities of that series to be due and payable immediately. If the Debt Securities
of that series are discount securities or similar Debt Securities, only the portion of the
principal amount as specified in the applicable prospectus supplement or free writing prospectus
may be immediately due and payable. If an event of default occurs and is continuing with respect to
all series of Debt Securities issued under a Debt Securities Indenture, the Debt Securities Trustee
or the holders of at least 33% in principal amount of the outstanding Debt Securities of all series
issued under that Debt Securities Indenture (or such other percentage set forth in the applicable
prospectus supplement or free writing prospectus), considered together, may declare an acceleration
of the principal amount of all series of Debt Securities issued under that Debt Securities
Indenture. Unless the applicable prospectus supplement or free writing prospectus states otherwise,
there is no automatic acceleration, even in the event of our bankruptcy or insolvency.
The applicable prospectus supplement or free writing prospectus may provide, with respect to a
series of Debt Securities to which a credit enhancement is applicable, that the provider of the
credit enhancement may, if a default has occurred and is continuing with respect to the series,
have all or any part of the rights with respect to remedies that would otherwise have been
exercisable by the holder of that series.
Unless the applicable prospectus supplement or free writing prospectus states otherwise, at
any time after a declaration of acceleration with respect to the Debt Securities of a particular
series, and before a judgment or decree for payment of the money due has been obtained, the event
of default giving rise to the declaration of acceleration will, without further action, be deemed
to have been waived, and the declaration and its consequences will be deemed to have been rescinded
and annulled, if:
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we have paid or deposited with the Debt Securities Trustee a sum sufficient to pay:
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all overdue interest on all Debt Securities of the particular series;
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the principal of and any premium on any Debt Securities of that series
that have become due otherwise than by the declaration of acceleration
and any interest at the rate prescribed in the Debt Securities;
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interest upon overdue interest at the rate prescribed in the Debt
Securities, to the extent payment is lawful; and
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all amounts due to the Debt Securities Trustee under the applicable
Debt Securities Indenture; and
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any other event of default with respect to the Debt Securities of the
particular series, other than the failure to pay the principal of the
Debt Securities of that series that has become due solely by the
declaration of acceleration, has been cured or waived as provided in
the applicable Debt Securities Indenture.
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For more information, see Section 8.02 of the applicable Debt Securities Indenture.
The applicable Debt Securities Indenture includes provisions as to the duties of the Debt
Securities Trustee in case an event of default occurs and is continuing. Consistent with these
provisions, the Debt Securities Trustee will be under no obligation to exercise any of its rights
or powers at the request or direction of any of the holders unless those holders have offered to
the Debt Securities Trustee reasonable indemnity against the costs, expenses and liabilities that
may be incurred by it in compliance with such request or direction. For more information, see
Section 9.03 of the applicable Debt Securities Indenture. Subject to these provisions for
indemnification, the holders of a majority in principal amount of the outstanding Debt Securities
of any series may direct the time, method and place of conducting any proceeding for any remedy
available to the Debt Securities Trustee, or exercising any trust or power conferred on the Debt
Securities Trustee, with respect to the Debt Securities of that series. For more information, see
Section 8.12 of the applicable Debt Securities Indenture.
No holder of Debt Securities may institute any proceeding regarding the applicable Debt
Securities Indenture, or for the appointment of a receiver or a trustee, or for any other remedy
under the applicable Debt Securities Indenture unless:
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the holder has previously given to the Debt Securities Trustee written
notice of a continuing event of default of that particular series;
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the holders of a majority in principal amount of such Debt Securities
of that series have made a written request to the Debt Securities
Trustee, and have offered reasonable indemnity to the Debt Securities
Trustee, to institute the proceeding as trustee; and
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the Debt Securities Trustee has failed to institute the proceeding,
and has not received from the holders of a majority in principal
amount of the outstanding Debt Securities of that series a direction
inconsistent with the request, within 60 days after notice, request
and offer of reasonable indemnity.
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For more information, see Section 8.07 of the applicable Debt Securities Indenture.
The preceding limitations do not apply, however, to a suit instituted by a holder of a Debt
Security for the enforcement of payment of the principal of or any premium or interest on the Debt
Securities on or after the applicable due date stated in the Debt Securities. For more information,
see Section 8.08 of the applicable Debt Securities Indenture.
We must furnish annually to the Debt Securities Trustee a statement by an appropriate officer
as to that officer’s knowledge of our compliance with all conditions and covenants under each of
the Debt Securities Indentures for Debt Securities. Our compliance is to be determined without
regard to any grace period or notice requirement under the respective Debt Securities Indentures.
For more information, see Section 6.06 of the applicable Debt Securities Indenture.
Modification and Waiver
We and the Debt Securities Trustee, without the consent of the holders of the Debt Securities,
may enter into one or more supplemental indentures amending or modifying a Debt Securities
Indenture for any of the following purposes:
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to evidence the assumption by any permitted successor of our covenants
in the applicable Debt Securities Indenture and the Debt Securities;
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to add one or more covenants or other provisions for the benefit of
the holders of outstanding Debt Securities or to surrender any right
or power conferred upon us by the applicable Debt Securities
Indenture;
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to add any additional events of default;
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to change or eliminate any provision of the applicable Debt Securities
Indenture or add any new provision to it, but if this action would
adversely affect the interests of the holders of any particular series
of Debt Securities in any material respect, the action will not become
effective with respect to that series while any Debt Securities of
that series
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remain outstanding under the applicable Debt Securities
Indenture;
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to provide collateral security for the Debt Securities;
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to establish the form or terms of Debt Securities according to the
provisions of the applicable Debt Securities Indenture;
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to evidence the acceptance of appointment of a successor Debt
Securities Trustee under the applicable Debt Securities Indenture with
respect to one or more series of the Debt Securities and to add to or
change any of the provisions of the applicable Debt Securities
Indenture as necessary to provide for trust administration under the
applicable Debt Securities Indenture by more than one trustee;
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to provide for the procedures required to permit the use of a
non-certificated system of registration for any series of Debt
Securities;
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to change any place where:
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the principal of and any premium and
interest on any Debt Securities are
payable;
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any Debt Securities may be
surrendered for registration of
transfer or exchange; or
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notices and demands to or upon us
regarding Debt Securities and the
applicable Debt Securities
Indentures may be served; or
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to cure any ambiguity or inconsistency, but only by means of changes
or additions that will not adversely affect the interests of the
holders of Debt Securities of any series in any material respect.
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For more information, see Section 12.01 of the applicable Debt Securities Indenture.
The holders of at least a majority in aggregate principal amount of the outstanding Debt
Securities of any series may waive:
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compliance by us with certain provisions of the applicable
Debt Securities Indenture (see Section 6.07 of the applicable
Debt Securities Indenture); and
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any past default under the applicable Debt Securities
Indenture, except a default in the payment of principal,
premium, or interest and certain covenants and provisions of
the applicable Debt Securities Indenture that cannot be
modified or amended without consent of the holder of each
outstanding Debt Security of the series affected (see Section
8.13 of the applicable Debt Securities Indenture).
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The Trust Indenture Act of 1939 may be amended after the date of the applicable Debt
Securities Indenture to require changes to the Debt Securities Indenture. In this event, the Debt
Securities Indenture will be deemed to have been amended so as to effect the changes, and we and
the Debt Securities Trustee may, without the consent of any holders, enter into one or more
supplemental indentures to evidence or effect the amendment. For more information, see Section
12.01 of the applicable Debt Securities Indenture.
Except as provided in this section, the consent of the holders of a majority in aggregate
principal amount of the outstanding Debt Securities issued pursuant to a Debt Securities Indenture,
considered as one class, is required to change in any manner the applicable Debt Securities
Indenture pursuant to one or more supplemental indentures. If less than all of the series of Debt
Securities outstanding under a Debt Securities Indenture are directly affected by a proposed
supplemental indenture, however, only the consent of the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of all series directly affected, considered as
one class, will be required. Furthermore, if the Debt Securities of any
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series have been issued in
more than one tranche and if the proposed supplemental indenture directly affects the rights of the holders of one or more, but not all, tranches, only the consent of the holders of a majority
in aggregate principal amount of the outstanding Debt Securities of all tranches directly affected,
considered as one class, will be required. In addition, an amendment or modification:
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may not, without the consent of the holder of each outstanding Debt Security affected:
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change the maturity of the principal of, or any installment of
principal of or interest on, any Debt Securities;
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reduce the principal amount or the rate of interest, or the amount of
any installment of interest, or change the method of calculating the
rate of interest;
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reduce any premium payable upon the redemption of the Debt Securities;
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reduce the amount of the principal of any Debt Security originally
issued at a discount from the stated principal amount that would be
due and payable upon a declaration of acceleration of maturity;
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change the currency or other property in which a Debt Security or
premium or interest on a Debt Security is payable; or
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impair the right to institute suit for the enforcement of any payment
on or after the stated maturity, or in the case of redemption, on or
after the redemption date, of any Debt Securities;
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may not reduce the percentage of principal amount requirement for consent of the holders for any supplemental
indenture, or for any waiver of compliance with any provision of or any default under the applicable Debt Securities
Indenture, or reduce the requirements for quorum or voting, without the consent of the holder of each outstanding Debt
Security of each series or tranche affected; and
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may not modify provisions of the applicable Debt Securities Indenture relating to supplemental indentures, waivers of
certain covenants and waivers of past defaults with respect to the Debt Securities of any series, or any tranche of a
series, without the consent of the holder of each outstanding Debt Security affected.
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A supplemental indenture will be deemed not to affect the rights under the applicable Debt
Securities Indenture of the holders of any series or tranche of the Debt Securities if the
supplemental indenture:
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changes or eliminates any covenant or other provision of the
applicable Debt Securities Indenture expressly included solely for the
benefit of one or more other particular series of Debt Securities or
tranches thereof; or
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modifies the rights of the holders of Debt Securities of any other
series or tranches with respect to any covenant or other provision.
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For more information, see Section 12.02 of the applicable Debt Securities Indenture.
If we solicit from holders of the Debt Securities any type of action, we may at our option by
board resolution fix in advance a record date for the determination of the holders entitled to vote
on the action. We shall have no obligation, however, to do so. If we fix a record date, the action
may be taken before or after the record date, but only the holders of record at the close of
business on the record date shall be deemed to be holders for the purposes of determining whether
holders of the requisite proportion of the outstanding Debt Securities have authorized the action.
For that purpose, the outstanding Debt Securities shall be computed as of the record date. Any
holder action shall bind every future holder of the same security and the holder of every security
issued upon the registration of transfer of or in exchange for or in lieu of the security in
respect of anything done or permitted by the Debt Securities Trustee or us in reliance on that
action, whether or
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not notation of the action is made upon the security. For more information, see
Section 1.04 of the applicable Debt Securities Indenture.
Defeasance
Unless the applicable prospectus supplement or free writing prospectus provides otherwise, any
Debt Security, or portion of the principal amount of a Debt Security, will be deemed to have been
paid for purposes of the applicable Debt Securities Indenture, and, at our election, our entire
indebtedness in respect of the Debt Security, or portion thereof, will be deemed to have been
satisfied and discharged, if we have irrevocably deposited with the Debt Securities Trustee or any
paying agent other than us, in trust money, certain eligible obligations, as defined in the
applicable Debt Securities Indenture, or a combination of the two, sufficient to pay principal of
and any premium and interest due and to become due on the Debt Security or portion thereof. For
more information, see Section 7.01 of the applicable Debt Securities Indenture. For this purpose,
unless the applicable prospectus supplement or free writing prospectus provides otherwise, eligible
obligations include direct obligations of, or obligations unconditionally guaranteed by, the United
States, entitled to the benefit of full faith and credit of the United States, and certificates,
depositary receipts or other instruments that evidence a direct ownership interest in those
obligations or in any specific interest or principal payments due in respect of those obligations.
Resignation, Removal of Debt Securities Trustee; Appointment of Successor
The Debt Securities Trustee may resign at any time by giving written notice to us or may be
removed at any time by an action of the holders of a majority in principal amount of outstanding
Debt Securities delivered to the Debt Securities Trustee and us. No resignation or removal of the
Debt Securities Trustee and no appointment of a successor trustee will become effective until a
successor trustee accepts appointment in accordance with the requirements of the applicable Debt
Securities Indenture. So long as no event of default or event that would become an event of default
has occurred and is continuing, and except with respect to a Debt Securities Trustee appointed by
an action of the holders, if we have delivered to the Debt Securities Trustee a resolution of our
board of directors appointing a successor trustee and the successor trustee has accepted the
appointment in accordance with the terms of the applicable Debt Securities Indenture, the Debt
Securities Trustee will be deemed to have resigned and the successor trustee will be deemed to have
been appointed as trustee in accordance with the applicable Debt Securities Indenture. For more
information, see Section 9.10 of the applicable Debt Securities Indenture.
Notices
We will give notices to holders of Debt Securities by mail to their addresses as they appear
in the Debt Security Register. For more information, see Section 1.06 of the applicable Debt
Securities Indenture.
Title
The Debt Securities Trustee and its agents, and we and our agents, may treat the person in
whose name a Debt Security is registered as the absolute owner of that Debt Security, whether or
not that Debt Security may be overdue, for the purpose of making payment and for all other
purposes. For more information, see Section 3.08 of the applicable Debt Securities Indenture.
Governing Law
The Debt Securities Indentures and the Debt Securities, including any Subordinated Debt
Securities Indentures and Subordinated Debt Securities, will be governed by, and construed in
accordance with, the law of the State of New York. For more information, see Section 1.12 of the
applicable Debt Securities Indenture.
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GLOBAL SECURITIES
We may issue some or all of our securities of any series as global securities. We will
register each global security in the name of a depositary identified in the applicable prospectus
supplement. The global securities will be deposited with a depositary or nominee or custodian for
the depositary and will bear a legend regarding restrictions on exchanges and registration of
transfer as discussed below and any other matters to be provided pursuant to the indenture.
As long as the depositary or its nominee is the registered holder of a global security, that
person will be considered the sole owner and holder of the global security and the securities
represented by it for all purposes under the securities and the indenture. Except in limited
circumstances, owners of a beneficial interest in a global security:
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will not be entitled to have the global security or any securities
represented by it registered in their names;
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will not receive or be entitled to receive physical delivery of
certificated securities in exchange for the global security; and
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will not be considered to be the owners or holders of the global
security or any securities represented by it for any purposes under
the securities or the indenture.
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We will make all payments of principal and any premium and interest on a global security to
the depositary or its nominee as the holder of the global security. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of securities in definitive
form. These laws may impair the ability to transfer beneficial interests in a global security.
Ownership of beneficial interests in a global security will be limited to institutions having
accounts with the depositary or its nominee, called “participants” for purposes of this discussion,
and to persons that hold beneficial interests through participants. When a global security is
issued, the depositary will credit on its book-entry, registration and transfer system the
principal amounts of securities represented by the global security to the accounts of its
participants. Ownership of beneficial interests in a global security will be shown only on, and the
transfer of those ownership interests will be effected only through, records maintained by:
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the depositary, with respect to participants’ interests; or
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any participant, with respect to interests of persons held by the
participants on their behalf.
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Payments by participants to owners of beneficial interests held through the participants will
be the responsibility of the participants. The depositary may from time to time adopt various
policies and procedures governing payments, transfers, exchanges and other matters relating to
beneficial interests in a global security. None of the following will have any responsibility or
liability for any aspect of the depositary’s or any participant’s records relating to, or for
payments made on account of, beneficial interests in a global security, or for maintaining,
supervising or reviewing any records relating to those beneficial interests:
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us or our affiliates;
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the trustee under any indenture; or
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any agent of any of the above.
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CERTAIN PROVISIONS OF MARYLAND LAW AND OUR CHARTER AND BYLAWS
The following summary of certain provisions of Maryland law and of our charter and bylaws does
not purport to be complete and is subject to and qualified in its entirety by reference to Maryland
law and to our charter and bylaws, copies of which are filed as exhibits to the registration
statement of which this prospectus forms a part. See “Where You Can Find More Information”.
The MGCL and our charter and bylaws contain provisions that could make it more difficult for a
potential acquirer to acquire us by means of a tender offer, proxy contest or otherwise. These
provisions are expected to discourage certain coercive takeover practices and inadequate takeover
bids and to encourage persons seeking to acquire control of us to negotiate first with our board of
directors. We believe that the benefits of these provisions outweigh the potential disadvantages of
discouraging any such acquisition proposals because, among other things, the negotiation of such
proposals may improve their terms.
Board of Directors; Vacancies; Removals
Our charter provides that the number of directors will be set only by a majority of our entire
board of directors within specified limits set forth in our bylaws. Our bylaws provide that a
majority of our entire board of directors may at any time increase or decrease the number of
directors. However, the number of directors may never be less than the minimum number required by
the MGCL, which is one, nor, unless our bylaws are amended, more than 11. Because our board of
directors and our stockholders have the power to amend this provision of our bylaws, either our
board of directors or our stockholders, by a vote of a majority of the votes entitled to be cast by
holders of outstanding shares of our common stock, could modify this provision of our bylaws to
change that range. Our bylaws also provide that, in an uncontested election, a director is elected
if he or she receives more “for” votes than “against” or “withheld” votes to serve until our next
annual meeting of stockholders and until his or her successor is duly elected and qualifies. Under
our corporate governance guidelines, any director who fails to be elected by a majority vote is
required to tender his or her resignation to our board of directors, subject to acceptance. Our
nominating and corporate governance committee will make a recommendation to our board of directors
on whether to accept or reject the resignation, or whether other action should be taken. Our board
of directors will then act on our nominating and corporate governance committee’s recommendation
and publicly disclose its decision and the rationale behind it within 90 days from the date of the
certification of election results. If the resignation is not accepted, the director will continue
to serve until the next annual meeting and until the director’s successor is duly elected and
qualifies. The director who tenders his or her resignation will not participate in our board’s
decision.
Our charter provides that, subject to the rights, if any, of holders of any class or series of
preferred stock to elect or remove one or more directors, a director may be removed only for cause,
as defined in our charter, and then only by the affirmative vote of at least a majority of the
votes entitled to be cast generally in the election of directors. This provision precludes
stockholders from removing incumbent directors without cause and filling the vacancies created by
such removal with their own nominees.
Our bylaws empower our stockholders to fill vacancies on our board of directors that are
caused by the removal of a director. Our board of directors may also fill vacancies that are caused
by an increase in the number of directors, the death, resignation or removal of a director. Any
director appointed by our board of directors to fill a vacancy on the board will hold office until
the next annual meeting of our stockholders and until his or her successor is duly elected and
qualifies. However, our corporate governance guidelines will require an individual elected by our
board of directors to fill a vacancy created by the removal of a director by our stockholders to
tender his or her resignation if a special meeting to approve such election is requested by our
stockholders and held in accordance with the provisions of our bylaws prior to the next annual
meeting of stockholders and the director’s election is not approved by our stockholders at the
special meeting.
Action by Stockholders
Under the MGCL, stockholder action can be taken only at an annual or special meeting of
stockholders or by unanimous written consent in lieu of a meeting unless the charter provides for a
lesser percentage (which our charter currently does not). These provisions, combined with the
requirements of our bylaws regarding advance notice of nominations and other business to be
considered at a meeting of stockholders and the calling of a stockholder-requested special meeting
of stockholders discussed below, may have the effect of delaying consideration of a stockholder
proposal.
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Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals
Our bylaws provide that, with respect to an annual meeting of stockholders, nominations of
individuals for election to the board of directors and the proposal of business to be considered by
stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by or at the
direction of the board of directors or (iii) by a stockholder who was a stockholder of record both
at the time of giving of notice by such stockholder as provided for in our bylaws and at the time
of the annual meeting and who is entitled to vote at the meeting in the election of each individual
so nominated or on any such other business and who has complied with the advance notice procedures
and provided the information required by our bylaws. With respect to special meetings of
stockholders, only the business specified in the notice of the meeting may be brought before the
meeting. Nominations of individuals for election to the board of directors at a special meeting may
be made only (i) by or at the direction of the board of directors (ii) by the stockholder that has
requested that the special meeting be called for the purpose of electing directors and has complied
with the procedures and provided the information required by our bylaws in connection with such
request or (iii) provided that the special meeting has been called for the purpose of electing
directors, by a stockholder who was a stockholder of record both at the time of giving of notice by
such stockholder as provided for in our bylaws and at the time of the special meeting, and who is
entitled to vote at the meeting in the election of each individual so nominated and who has
complied with the advance notice provisions and provided the information required by our bylaws.
The purpose of requiring stockholders to give us advance notice of nominations and other
business is to afford our board of directors a meaningful opportunity to consider the
qualifications of the proposed nominees and the advisability of any other proposed business and, to
the extent deemed necessary or desirable by our board of directors, to inform stockholders and make
recommendations about such qualifications or business, as well as to provide a more orderly
procedure for conducting meetings of stockholders. Although our bylaws do not give our board of
directors any power to disapprove stockholder nominations for the election of directors or
proposals recommending certain action, they may have the effect of precluding a contest for the
election of directors or the consideration of stockholder proposals if proper procedures are not
followed and of discouraging or deterring a third party from conducting a solicitation of proxies
to elect its own slate of directors or to approve its own proposal without regard to whether
consideration of such nominees or proposals might be harmful or beneficial to us and our
stockholders.
Calling of Special Meetings of Stockholders
Our bylaws provide that special meetings of stockholders may be called by our board of
directors and certain of our officers. Additionally, our bylaws provide that, subject to the
satisfaction of certain procedural and informational requirements by the stockholders requesting
the meeting, a special meeting of stockholders to act on any matter that may properly be considered
at a meeting of stockholders shall be called by the secretary of the corporation upon the written
request of stockholders entitled to cast a majority of all the votes entitled to be cast on such
matter at such meeting.
Approval of Extraordinary Corporate Action; Amendment of Charter and Bylaws
Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter,
merge, consolidate, sell all or substantially all of its assets or engage in a share exchange,
unless recommended by our board of directors and approved by the affirmative vote of stockholders
entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a
Maryland corporation may provide in its charter for approval of these matters by a lesser
percentage, but not less than a majority of all of the votes entitled to be cast on the matter. As
permitted by Maryland law, any of these actions may be approved by the affirmative vote of the
stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter.
Our bylaws may be amended by our board of directors or by a vote of a majority of the votes
entitled to be cast by holders of outstanding shares of our common stock, except for the provisions
of our bylaws regarding advance notice of nominations and other business to be considered at a
meeting of stockholders or the calling of a stockholder-requested special meeting of stockholders,
which may be amended only by our board of directors, and except the following bylaw provisions,
each of which may be amended only with the affirmative vote of a majority of the votes cast on such
an amendment by holders of outstanding shares of common stock:
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provisions opting out of the control share acquisition statute; and
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provisions prohibiting our board or directors without the approval of
a majority of the
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votes entitled to be the cast by holders of
outstanding shares of our common stock, from revoking altering or
amending any resolution, or adopting any resolution inconsistent with
any previously-adopted resolution of our board of directors, that
exempts any business combination between us and any other person or
entity from the business combination provisions of the MGCL.
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In addition, any amendment to the provisions governing amendments of our bylaws requires the
approval of a majority of the votes entitled to be cast by holders of outstanding shares of our
common stock.
No Stockholder Rights Plan
We have no stockholder rights plan. In the future, we do not intend to adopt a stockholder
rights plan unless our stockholders approve in advance the adoption of a plan or, if adopted by our
board of directors, we submit the stockholder rights plan to our stockholders for a ratification
vote within 12 months of adoption or the plan will terminate.
No Appraisal Rights
As permitted by the MGCL, our charter provides that stockholders will not be entitled to
exercise appraisal rights unless a majority of our entire board of directors determines that
appraisal rights will apply, with respect to all or any classes and series of stock, to one or more
transactions occurring after the date of such determination in connection with which holders of
such shares would otherwise be entitled to exercise appraisal rights. This is in addition to
Maryland law provisions that generally eliminate appraisal rights for exchange-listed securities.
Business Combinations
Under the MGCL, certain “business combinations” (including a merger, consolidation, share
exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity
securities) between a Maryland corporation and an interested stockholder (defined as any person who
beneficially owns 10% or more of the voting power of the corporation’s shares or an affiliate of
the corporation who, at any time within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of the
corporation), or an affiliate of an interested stockholder are prohibited for five years after the
most recent date on which the interested stockholder becomes an interested stockholder. A person is
not an interested stockholder under the statute if the board of directors approved in advance the
transaction by which the person otherwise would have become an interested stockholder. Our board of
directors may provide that its approval is subject to compliance with any terms and conditions
determined by it.
Any such business combination entered into after the five-year prohibition must be recommended
by the board of directors of such corporation and approved by the affirmative vote of at least (a)
80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the
corporation and (b) two-thirds of the votes entitled to be cast by holders of voting stock of the
corporation other than shares held by the interested stockholder with whom (or with whose
affiliate) the business combination is to be effected, unless, among other conditions, the
corporation’s common stockholders receive a minimum price (as defined in the MGCL) for their shares
and the consideration is received in cash or in the same form as previously paid by the interested
stockholder for its shares.
These provisions of the MGCL do not apply, however, to business combinations that are approved
or exempted by a board of directors prior to the time that the interested stockholder becomes an
interested stockholder. Our board of directors has adopted a resolution exempting any business
combination between us and any other person or entity from the business combination provisions of
the MGCL. Our bylaws provide that this resolution or any other resolution of our board of directors
exempting any business combination from the business combination provisions of the MGCL may only be
revoked, altered or amended, and our board of directors may only adopt any resolution inconsistent
with any such resolution, with the affirmative vote of a majority of the votes cast on the matter
by holders of outstanding shares of common stock.
Control Share Acquisitions
The MGCL provides that “control shares” of a Maryland corporation acquired in a “control share
acquisition” have no voting rights except to the extent approved at a special meeting by the
affirmative vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of
stock of a corporation in respect of which any of the following persons is entitled to exercise or
direct the exercise of the voting power of shares of stock of the corporation in the election of
directors: (i) a person who makes or proposes to make a control share acquisition, (ii) an officer
of the corporation or (iii) an employee of
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the corporation who is also a director of the
corporation. “Control shares” are voting shares of stock which, if aggregated
with all other such shares of stock previously acquired by the acquiror or in respect of which
the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of
a revocable proxy), would entitle the acquiror to exercise voting power in electing directors
within one of the following ranges of voting power: (i) one-tenth or more but less than one-third,
(ii) one-third or more but less than a majority, or (iii) a majority or more of all voting power.
Control shares do not include shares the acquiring person is then entitled to vote as a result of
having previously obtained stockholder approval. A “control share acquisition” means the
acquisition of control shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition, upon satisfaction of
certain conditions (including an undertaking to pay expenses), may compel our board of directors to
call a special meeting of stockholders to be held within 50 days of demand to consider the voting
rights of the shares. If no request for a meeting is made, the corporation may itself present the
question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person does not deliver
an acquiring person statement as required by the statute, then, subject to certain conditions and
limitations, the corporation may redeem any or all of the control shares (except those for which
voting rights have previously been approved) for fair value determined, without regard to the
absence of voting rights for the control shares, as of the date of the last control share
acquisition by the acquiror or of any meeting of stockholders at which the voting rights of such
shares are considered and not approved. If voting rights for control shares are approved at a
stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to
vote, all other stockholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the highest price per share
paid by the acquiror in the control share acquisition.
The control share acquisition statute does not apply (a) to shares acquired in a merger,
consolidation or share exchange if the corporation is a party to the transaction or (b) to
acquisitions approved or exempted by the charter or bylaws of the corporation.
Our bylaws exempt any and all acquisitions of shares of our stock from the control share
acquisition statute, and this provision of our bylaws may not be amended without the affirmative
vote of a majority of the votes cast on the matter by holders of outstanding shares of our common
stock.
Certain Elective Provisions of Maryland Law
Title 3, Subtitle 8 of the MGCL permits a Maryland corporation with a class of equity
securities registered under the Exchange Act and at least three independent directors to elect to
be subject, by provision in its charter or bylaws or a resolution of its board of directors and
notwithstanding any contrary provision in the charter or bylaws, to any of (1) a classified board,
(2) a two-thirds vote requirement for removing a director, (3) a requirement that the number of
directors be fixed only by vote of the directors, (4) a requirement that a vacancy on the board be
filled only by the remaining directors and for the remainder of the full term of the class of
directors in which the vacancy occurred, or (5) a majority requirement for the calling of a special
meeting of stockholders. We have not elected to be governed by these specific provisions. However,
at the completion of this offering we expect to have four independent directors and a class of
equity securities registered under the Exchange Act, so our board of directors could elect to
provide for any of the foregoing provisions.
Indemnification and Limitation of Directors’ and Officers’ Liability
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 actual receipt of an improper benefit or profit in money,
property or services or active and deliberate dishonesty that is established by a final judgment
and is material to the cause of action. Our charter contains a provision that eliminates such
liability to the maximum extent permitted by Maryland law.
Our charter authorizes us, to the maximum extent that Maryland law in effect from time to time
permits, to indemnify any present or former director or officer or any individual who, while a
director or officer of our company and at our request, serves or has served another corporation,
real estate investment trust, partnership, limited liability company, joint venture, trust,
employee benefit plan or other enterprise as a director, officer, partner, member, manager or
trustee, from and against any claim or liability to which that individual may become subject or
which that individual may incur by reason of his or her service in any such capacity and to pay or
reimburse his or her reasonable expenses in advance of final disposition of a proceeding. Our
bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to time, to
indemnify and, without requiring a preliminary determination of the ultimate entitlement to
indemnification, pay or reimburse
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reasonable expenses in advance of final disposition of a proceeding to:
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any present or former director or officer who is made or threatened to
be made a party to the proceeding by reason of his or her service in
that capacity; or
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any individual who, while a director or officer of our company and at
our request, serves or has served another corporation, real estate
investment trust, partnership, limited liability company, joint
venture, trust, employee benefit plan or any other enterprise as a
director, officer, partner, member, manager or trustee of such
corporation, real estate investment trust, partnership, limited
liability company, joint venture, trust, employee benefit plan or
other enterprise and who is made or threatened to be made a party to
the proceeding by reason of his or her service in that capacity.
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Our charter and bylaws also permit us to indemnify and advance expenses to any person who
served a predecessor of ours in any of the capacities described above and to any employee or agent
of our company or a predecessor of our company.
The MGCL requires a corporation (unless its charter provides otherwise, which our 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 or she is made or threatened to be made a party by reason of
his or her 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 or are threatened to be made a party by reason of their service in those or other
capacities unless it is established that:
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the act or omission of the director or officer was material to the
matter giving rise to the proceeding; and
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was committed in bad faith; or
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was the result of active and deliberate dishonesty;
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the director or officer actually received an improper personal benefit
in money, property or services; or
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in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
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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. A court may order indemnification if it determines that
the director or officer is fairly and reasonably entitled to indemnification, even though the
director or officer did not meet the prescribed standard of conduct, was adjudged liable to the
corporation or was adjudged liable on the basis that personal benefit was improperly received.
However, indemnification 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, is
limited to expenses.
In addition, the MGCL permits a corporation to advance reasonable expenses to a director or
officer upon the corporation’s receipt of:
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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 corporation; and
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a written undertaking by the director or officer or on the director’s
or officer’s behalf to repay the amount paid or reimbursed by the
corporation if it is ultimately determined that the director or
officer did not meet the standard of conduct.
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Insofar as the foregoing provisions permit indemnification of directors, officers or persons
controlling us for liability arising under the Securities Act, we have been informed that in the
opinion of the SEC, this indemnification is against public
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policy as expressed in the Securities Act and is therefore unenforceable.
We have entered into an indemnification agreement with each of our executive officers and
directors whereby we indemnify such executive officers and directors to the fullest extent
permitted by Maryland law against all expenses and liabilities, subject to limited exceptions.
These indemnification agreements also provide that upon an application for indemnity by an
executive officer or director to a court of appropriate jurisdiction, such court may order us to
indemnify such executive officer or director.
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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a summary of material United States federal income tax considerations
associated with an investment in our capital stock that may be relevant to you as a stockholder,
Goodwin Procter LLP has acted as our counsel, has reviewed this summary, and is of the opinion that
the discussion contained herein is accurate in all material respects. The statements made in this
section of the prospectus are based upon current provisions of the Code and Treasury Regulations
promulgated thereunder, published administrative positions of the Internal Revenue Service, or the
IRS, and judicial decisions, all of which are subject to change, either prospectively or
retroactively. We cannot assure you that any changes will not modify the conclusions expressed in
counsel’s opinions described herein. This summary does not address all possible tax considerations
that may be material to an investor and does not constitute legal or tax advice. Moreover, this
summary does not deal with all tax aspects that might be relevant to you, as a prospective holder
of capital stock in light of your personal circumstances, nor does it deal with particular types of
stockholders that are subject to special treatment under the federal income tax laws, such as
insurance companies, holders whose shares are acquired through the exercise of stock options or
otherwise as compensation, tax-exempt organizations except as provided below, financial
institutions or broker-dealers, regulated investment companies, traders in securities that elect to
use a mark-to-market method of accounting for their security holdings, persons liable for the
alternative minimum tax, persons that hold securities as part of a straddle or a hedging or
conversion transaction, a U.S. stockholder (as defined below) whose functional currency is not the
U.S. dollar, foreign corporations or persons who are not citizens or residents of the United States
except as provided below, or others who are subject to special treatment under the Code. The Code
provisions governing the federal income tax treatment of REITs and their stockholders are highly
technical and complex, and this summary is qualified in its entirety by the express language of
applicable Code provisions, Treasury Regulations promulgated thereunder and administrative and
judicial interpretations thereof.
This discussion is not intended to be, and should not be construed as, tax advice. We urge you, as
a prospective stockholder, to consult your tax advisor regarding the specific tax consequences to
you of a purchase of shares, ownership and sale of the shares and of our election to be taxed as a
REIT, including the federal, state, local, foreign and other tax consequences of such purchase,
ownership, sale and election and of potential changes in applicable tax laws.
REIT Qualification
We intend to elect to be taxed as a REIT under the Code commencing with our taxable year ended
December 31, 2010. A REIT generally is not subject to United States federal income tax on the
income that it distributes to stockholders if it meets the applicable REIT distribution
requirements and other requirements for qualification.
We believe that we have been organized and operated in conformity with the requirements for
qualification and taxation as a REIT under the Code beginning with our taxable year ended December
31, 2010, and that our intended manner of operation will enable us to continue to meet the
requirements for qualification and taxation as a REIT for federal income tax purposes. In the
opinion of Goodwin Procter LLP, commencing with our taxable year ended December 31, 2010,
we have been organized and operated in conformity with the requirements for qualification and
taxation as a REIT, and our current and proposed methods of operation will enable us to meet the
requirements for qualification and taxation as a REIT under the Code for subsequent taxable years.
It must be emphasized that this opinion is based on various assumptions and representations as to
factual matters, including representations made by us in a factual certificate provided by one of
our officers. Goodwin Procter LLP will have no obligation to update its opinion subsequent
to its date. Moreover, our qualification and taxation as a REIT depend upon our ability to meet the
various qualification tests imposed under the Code discussed below, including through actual annual
(or in some cases quarterly) operating results, requirements relating to income, asset ownership,
distribution levels and diversity of share ownership and the various other REIT qualification
requirements imposed under the Code, the results of which will not be monitored by Goodwin Procter
LLP. Accordingly, no assurance can be given that our actual results of operation for any particular
taxable year will satisfy those requirements. Given the complex nature of the REIT qualification
requirements, the ongoing importance of factual determinations and the possibility of future
changes in our circumstances, we cannot provide any assurance that our actual operating results
will satisfy the requirements for taxation as a REIT under the Code for any particular taxable
year.
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Taxation as a REIT
If we qualify for taxation as a REIT, we generally will not be subject to federal corporate
income tax on our net income that is distributed currently to our stockholders. This treatment substantially
eliminates “double taxation” (that is, taxation at both the corporate and stockholder levels) that
generally results from an investment in a corporation. However, we will be subject to federal
income tax as follows:
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We will be taxed at regular corporate rates on any undistributed “REIT taxable income”.
REIT taxable income is the taxable income of the REIT, subject to specified adjustments,
including a deduction for dividends paid.
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Under some circumstances, we may be subject to the “alternative minimum tax” on our items
of tax preference.
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If we have net income from the sale or other disposition of “foreclosure property” that
is held primarily for sale to customers in the ordinary course of business, or other
nonqualifying income from foreclosure property, we will be subject to tax at the highest
corporate rate on this income.
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Our net income from “prohibited transactions” will be subject to a 100% tax. In general,
prohibited transactions are sales or other dispositions of property held primarily for sale
to customers in the ordinary course of business, other than foreclosure property.
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If we fail to satisfy either the 75% gross income test or the 95% gross income test
discussed below, but nonetheless maintain our qualification as a REIT because other
requirements are met, we will be subject to a tax equal to the greater of (1) the amount by
which 75% of our gross income exceeds the amount of our income qualifying under the 75% test
for the taxable year or (2) the amount by which 95% of our gross income exceeds the amount
of our income qualifying for the 95% income test for the taxable year, multiplied by a
fraction intended to reflect our profitability.
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If we fail to satisfy any of the asset tests (other than a failure by a de minimis amount
of the 5% or 10% asset tests) and we qualify for and satisfy certain cure provisions, then
we will have to pay an excise tax equal to the greater of (1) $50,000 and (2) an amount
determined by multiplying (x) the net income generated during a specified period by the
assets that caused the failure by (y) the highest federal income tax rate applicable to
corporations.
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If we fail to satisfy any REIT requirements other than the income test or asset test
requirements and we qualify for a reasonable cause exception, then we may retain our REIT
qualification, but we will have to pay a penalty equal to $50,000 for each such failure.
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We will be subject to a 4% excise tax on the excess of the required distribution over the
sum of amounts actually distributed and amounts retained for which federal income tax was
paid, if we fail to distribute during each calendar year at least the sum of:
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85% of our REIT ordinary income for the year;
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(2)
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95% of our REIT capital gain net income for the year; and
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any undistributed taxable income from prior taxable years.
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We will be subject to a 100% penalty tax on some payments we receive (or on certain
expenses deducted by a taxable REIT subsidiary) if arrangements among us, our tenants and
our taxable REIT subsidiaries are not comparable to similar arrangements among unrelated
parties.
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If we should acquire any asset from a “C” corporation in a carry-over basis transaction
and we subsequently recognize gain on the disposition of such asset during the ten-year
recognition period beginning on the date on which we acquired the asset, then, to the extent
of any built-in gain, such gain will be subject to tax at the highest regular corporate
rate. Built-in gain means the excess of (a) the fair market value of the asset as of the
beginning of the applicable recognition period over (b) the adjusted basis in such asset as
of the beginning of such recognition period.
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Income earned by our taxable REIT subsidiaries, if any, will be subject to tax at regular
corporate rates.
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We may be required to pay penalties to the IRS in certain circumstances, including if we
fail to meet recordkeeping requirements intended to monitor our compliance with rules
relating to the composition of our stockholders.
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Requirements for Qualification as a REIT
We intend to elect to be taxed as a REIT under the Code commencing with our taxable year ended
December 31, 2010 and do not intend to revoke such election for any subsequent taxable years. In
order to qualify as a REIT, we must meet the requirements discussed below, relating to our
organization, sources of income, nature of assets and distributions of income to stockholders.
The Code defines a REIT as a corporation, trust or association:
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that is managed by one or more trustees or directors;
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the beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest;
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(3)
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that would be taxable as a domestic corporation, but for Sections 856 through
859 of the Code;
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(4)
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that is neither a financial institution nor an insurance company subject to
applicable provisions of the Code;
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(5)
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the beneficial ownership of which is held by 100 or more persons;
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(6)
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during the last half of each taxable year, not more than 50% in value of the
outstanding shares of which is owned directly or indirectly by five or fewer
individuals, as defined in the Code to include specified entities;
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(7)
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that makes an election to be taxable as a REIT, or has made this election for
a previous taxable year which has not been revoked or terminated, and satisfies all
relevant filing and other administrative requirements established by the IRS that must
be met to elect and maintain REIT status;
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(8)
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that uses a calendar year for federal income tax purposes and complies with
the recordkeeping requirements of the Code and regulations promulgated thereunder; and
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(9)
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that meets other applicable tests, described below, regarding the nature of
its income and assets and the amount of its distributions.
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Conditions (1), (2), (3) and (4) above must be met during the entire taxable year and condition (5)
above must be met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. For purposes of determining stock
ownership under condition (6) above, a supplemental unemployment compensation benefits plan, a
private foundation and a portion of a trust permanently set aside or used exclusively for
charitable purposes generally are each considered an individual. A trust that is a qualified trust
under Code Section 401(a) generally is not considered an individual, and beneficiaries of a
qualified trust are treated as holding shares of a REIT in proportion to their actuarial interests
in the trust for purposes of condition (6) above.
We believe that we have satisfied and will continue to satisfy the above ownership
requirements. In addition, our charter restricts ownership and transfers of our stock that would
violate these requirements, although these restrictions may not be effective in all circumstances
to prevent a violation. To monitor its compliance with condition (6) above, a REIT is required to
send annual letters to its stockholders requesting information regarding the actual ownership of
its shares. If we comply with the annual letters requirement and we do not know or, exercising
reasonable diligence, would not have known of our failure to meet condition (6) above, then we will
be treated as having met condition (6) above.
To qualify as a REIT, we cannot have at the end of any taxable year any undistributed earnings
and profits that are attributable to a non-REIT taxable year. We believe that we have not had any
non-REIT earnings and profits at the end of any taxable year and we intend to distribute any
non-REIT earnings and profits that we accumulate before the end of any taxable year in which we
accumulate such earnings and profits.
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Qualified REIT Subsidiaries and Disregarded Entities.
We hold our assets through a limited
liability company, which is a disregarded entity because we own 100% of the interests in it,
directly or through other disregarded entities. If we own a corporate subsidiary that is a
“qualified REIT subsidiary”, or if we own 100% of the membership interests in a limited liability
company or other unincorporated entity that does not elect to be treated as a corporation for
federal income tax purposes, the separate existence of that subsidiary, limited liability company
or other unincorporated entity generally will be
disregarded for federal income tax purposes. Generally, a qualified REIT subsidiary is a
corporation, other than a taxable REIT subsidiary (discussed below), all of the stock of which is
owned by the REIT. A limited liability company or other unincorporated entity 100% owned by a
single member that does not elect to be treated as a corporation for federal income tax purposes
generally is disregarded as an entity separate from its owner for federal income tax purposes. All
assets, liabilities and items of income, deduction and credit of the qualified REIT subsidiary or
disregarded entity will be treated as assets, liabilities and items of income, deduction and credit
of its owner. Thus, in applying the requirements in this section, our qualified REIT subsidiaries
and disregarded entities will be ignored and all assets, liabilities and items of income, deduction
and credit of these subsidiaries will be treated as ours. Neither a qualified REIT subsidiary nor a
disregarded entity will be subject to federal corporate income taxation, although such entities may
be subject to state and local taxation in some states.
Ownership of Partnership Interests by a REIT
. A REIT that is a partner in a partnership (or a
member in a limited liability company or other entity that is treated as a partnership for federal
income tax purposes) will be deemed to own its proportionate share of the assets of the partnership
and will be deemed to earn its proportionate share of the partnership’s income. The assets and
gross income of the partnership retain the same character in the hands of the REIT for purposes of
the gross income and asset tests applicable to REITs as described below. Thus, our proportionate
share of the assets and items of income of any entity taxable as a partnership for federal income
tax purposes in which we hold an interest will be treated as our assets and liabilities and our
items of income for purposes of applying the requirements described in this prospectus. The assets,
liabilities and items of income of any partnership in which we own an interest include such
entity’s share of the assets and liabilities and items of income with respect to any partnership in
which it holds an interest.
Taxable REIT Subsidiaries.
In the future we may own subsidiaries that have elected to be treated
as “taxable REIT subsidiaries” for federal income tax purposes, although we do not currently own
any taxable REIT
subsidiaries. A taxable REIT subsidiary of a REIT is a corporation in
which the REIT directly or indirectly owns stock and that elects, together with the REIT, to be
treated as a taxable REIT subsidiary under Section 856(l) of the Code. The election can be revoked
at any time as long as the REIT and the taxable REIT subsidiary revoke such election jointly. In
addition, if a taxable REIT subsidiary owns, directly or indirectly, securities representing more
than 35% of the vote or value of a subsidiary corporation (other than a REIT), that subsidiary will
also be treated as a taxable REIT subsidiary. A taxable REIT subsidiary is a corporation subject to
federal income tax, and state and local income tax where applicable, as a regular “C” corporation.
Generally, a taxable REIT subsidiary can perform some impermissible tenant services without causing
us to receive impermissible tenant services income under the REIT income tests. Other than certain
activities related to operating or managing a lodging or health care facility, a taxable REIT
subsidiary also can recognize income that would be subject to the 100% prohibited transaction tax,
or income that would be nonqualifying income under the gross income tests, if earned by a REIT.
However, several provisions regarding the arrangements between a REIT and its taxable REIT
subsidiaries ensure that a taxable REIT subsidiary will be subject to an appropriate level of
federal income taxation. For example, a taxable REIT subsidiary is limited in its ability to deduct
interest payments made to us in excess of a certain amount. In addition, we will be obligated to
pay a 100% penalty tax on some payments that we receive or on certain expenses deducted by the
taxable REIT subsidiary if the economic arrangements among us, our tenants and the taxable REIT
subsidiary are not comparable to similar arrangements among unrelated parties.
Income Tests Applicable to REITs.
To qualify as a REIT, we must satisfy two gross income tests.
First, at least 75% of our gross income, excluding gross income from prohibited transactions and
certain other income and gains described below, for each taxable year must be derived directly or
indirectly from investments relating to real property or mortgages on real property, including
“rents from real property” (which includes certain of our expenses that are paid or reimbursed by
tenants), gains on the disposition of real estate assets, dividends paid by another REIT and
interest on obligations secured by mortgages on real property or on interests in real property, or
from temporary investments of new capital in stock or debt securities during the one-year period
following our receipt of new capital that we raise through equity offerings or issuance of debt
obligations with at least a five-year term. Second, at least 95% of our gross income, excluding
gross income from
32
prohibited transactions and certain other income and gains described below, for
each taxable year must be derived from any combination of income qualifying under the 75% test and
dividends, interest, and gain from the sale or disposition of stock or securities.
Rents received by us will qualify as rents from real property in satisfying the gross income
requirements for a REIT described
above only if several conditions are met. First, the amount of rent must not be based in whole or
in part on the income or profits of any person. However, an amount received or accrued generally
will not be excluded from the term “rents from real property” solely by reason of being based on a
fixed percentage or percentages of receipts or sales. Second, rents received from a “related party
tenant” will not qualify as rents from real property in satisfying the gross income tests unless
the tenant is a taxable REIT subsidiary and at least 90% of the property is leased to unrelated
tenants and the rent paid by the taxable REIT subsidiary is substantially comparable to the rent
paid by the unrelated tenants for comparable space. A tenant is a related party tenant if the REIT,
or an actual or constructive owner of 10% or more of the REIT, actually or constructively owns 10%
or more of the tenant. Third, if rent attributable to personal property, leased in connection with
a lease of real property, is greater than 15% of the total rent received under the lease, then the
portion of rent attributable to the personal property will not qualify as rents from real property.
Generally, for rents to qualify as rents from real property for the purpose of satisfying the gross
income tests, we may provide directly only a de minimis amount of services, unless those services
are “customarily furnished or rendered” in connection with the rental of real property and not
otherwise considered “rendered to the occupant”. Accordingly, we may not provide “impermissible
services” to tenants (except through an independent contractor from whom we derive no revenue and
that meets other requirements or through a taxable REIT subsidiary) without giving rise to
“impermissible tenant service income”. Impermissible tenant service income is deemed to be at least
150% of our direct cost of providing the service. If the impermissible tenant service income
exceeds 1% of our total income from a property, then all of the income from that property will fail
to qualify as rents from real property. If the total amount of impermissible tenant service income
from a property does not exceed 1% of our total income from the property, the services will not
“taint” the other income from the property (that is, it will not cause the rent paid by tenants of
that property to fail to qualify as rents from real property), but the impermissible tenant service
income will not qualify as rents from real property.
Any gain we realize on the sale of any property held as inventory or other property held primarily
for sale to customers in the ordinary course of business will be treated as income from a
prohibited transaction that is subject to a 100% penalty tax, unless such property has been held by
us for at least two years and certain other requirements are satisfied or the gain is realized in a
taxable REIT subsidiary. Under existing law, whether property is held as inventory or primarily for
sale to customers in the ordinary course of a trade or business is a question of fact that depends
on all the facts and circumstances of a particular transaction. We generally intend to hold our
properties for investment with a view to long-term appreciation, to engage in the business of
acquiring, developing, owning and operating properties, and to make occasional sales of properties,
consistent with our investment objectives. We cannot provide any assurance, however, that the IRS
might not contend that one or more of these sales are subject to the 100% penalty tax.
For purposes of the gross income tests, temporary investment income generally constitutes
qualifying income if such income is earned as a result of investing new capital raised through the
issuance of our common stock or certain long-term debt obligations in stock and debt obligations,
but only during the one-year period beginning on the date we receive the new capital. If we are
unable to invest sufficient amount of the net proceeds of any offering of our stock or debt
securities in real estate assets, as detailed below, within such one-year period, we could fail the
75% gross income test.
If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may
nevertheless qualify as a REIT for that year if we are entitled to relief under the Code. These
relief provisions generally will be available if our failure to meet the tests is due to reasonable
cause and not due to willful neglect and, following our identification of such failure for any
taxable year, we file a schedule describing each item of our gross income described in the gross
income tests in accordance with the applicable Treasury Regulations. It is not possible, however,
to state whether in all circumstances we would be entitled to the benefit of these relief
provisions. For example, if we fail to satisfy the gross income tests because nonqualifying income
that we intentionally incur exceeds the limits on nonqualifying income, the IRS could conclude that
the failure to satisfy the tests was not due to reasonable cause. If these relief provisions are
inapplicable to a particular set of circumstances involving us, we will fail to qualify as a REIT.
As discussed under “— Taxation as a REIT”, even if these relief provisions apply, a tax would be
imposed based on the amount of nonqualifying income.
Asset Tests Applicable to REITs
. At the close of each quarter of our taxable year, we must satisfy
four tests relating to the nature of our assets:
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(1)
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at least 75% of the value of our total assets must be represented by real estate
assets, cash, cash items and government securities. Real estate assets include, for this
purpose, stock or debt instruments held for less than one year purchased with the
proceeds of an offering of our shares or publicly offered long-term debt;
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(2)
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not more than 25% of our total assets may be represented by securities other than
those in the 75% asset class;
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(3)
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except for investments in qualified REIT subsidiaries, taxable REIT subsidiaries,
equity interests in REITs or other securities that qualify as “real estate assets” for
purposes of the test described in clause (1), the value of any one issuer’s securities
owned by us may not exceed 5% of the value of our total assets; we may not own more than
10% of the total voting power of any one issuer’s outstanding securities; and we may not
own more than 10% of the total value of the outstanding securities of any one issuer; and
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(4)
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not more than 25% of our total assets may be represented by securities of one or
more taxable REIT subsidiaries.
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Securities for purposes of the asset tests may include debt securities
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However, the 10% value test
does not apply to certain “straight debt” and other excluded securities, as described in the Code
including, but not limited to, any loan to an individual or estate, any obligation to pay rents
from real property and any security issued by a REIT. In addition, (a) a REIT’s interest as a
partner in a partnership is not considered a security for purposes of applying the 10% value test
to securities issued by the partnership; (b) any debt instrument issued by a partnership (other
than straight debt or another excluded security) will not be considered a security issued by the
partnership if at least 75% of the partnership’s gross income is derived from sources that would
qualify for the 75% gross income test; and (c) any debt instrument issued by a partnership (other
than straight debt or another excluded security) will not be considered a security issued by the
partnership to the extent of the REIT’s interest as a partner in the partnership. In general,
straight debt is defined as a written, unconditional promise to pay on demand or at a specific date
a fixed principal amount, and the interest rate and payment dates on the debt must not be
contingent on profits or the discretion of the debtor. In addition, straight debt may not contain a
convertibility feature.
As provided above, stock or debt securities attributable to the temporary investment of new capital
that we raise through the issuance of our stock or debt securities constitute good assets for
purposes of the 75% asset test, but only during the one-year period beginning on the date we
receive the new capital. We intend to invest the net proceeds of this offering in interest-bearing
short-term U.S. government and government agency securities. If we are unable to invest sufficient
amount of the net proceeds of any offering of our stock or debt securities in real estate assets,
we could be limited to investing all or a portion of any remaining funds in cash or cash
equivalents.
After initially meeting the asset tests at the close of any quarter, we will not lose our status as
a REIT if we fail to satisfy any of the asset tests (other than the 10% voting limitation) at the
end of a later quarter solely by reason of changes in the relative values of our assets. If the
failure to satisfy any such asset tests results from an acquisition of securities or other property
during a quarter, the failure can be cured by disposition of sufficient non-qualifying assets
within 30 days after the close of that quarter.
Moreover, if we fail to satisfy any of the asset tests at the end of a calendar quarter during a
taxable year and such failure is not cured within 30 days as described above, we will not lose our
REIT status if one of the following additional exceptions applies: (A) the failure is due to a
violation of the 5% or 10% asset tests and is “de minimis” (for this purpose, a “de minimis”
failure is one that arises from our ownership of assets the total value of which does not exceed
the lesser of 1% of the total value of our assets at the end of the quarter in which the failure
occurred and $10 million) and we either dispose of the assets that caused the failure or otherwise
satisfy the asset tests within six months after the last day of the quarter in which our
identification of the failure occurred; or (B) the failure is due to a violation of any of the
asset tests (other than a “de minimis” violations of the 5% or 10% asset tests) and all of the
following requirements are satisfied: (i) the failure is due to reasonable cause and not willful
neglect, (ii) we file a schedule in accordance with Treasury Regulations providing a description of
each asset that caused the failure, (iii) we either dispose of the assets that caused the failure
or otherwise satisfy the asset tests within six months after the last day of the quarter in which
our identification of the failure occurred, and (iv) we pay an excise tax equal to the greater of
(x) $50,000 and (y) an amount determined by multiplying the net income generated during a specified
period by the assets that caused the failure by the highest federal income tax applicable to
corporations.
Foreclosure Property
. Foreclosure property is real property (including interests in real property)
and any personal property incident to such real property (1) that is acquired by a REIT as a result
of the REIT having bid on the property at foreclosure, or having otherwise reduced the property to
ownership or possession by agreement or process of law, after there was a default (or default was
imminent) on a lease of the property or a mortgage loan held by the REIT and secured by the
property, (2) for
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which the related loan or lease was made, entered into or acquired by the REIT at
a time when default was not imminent or anticipated and (3) for which such REIT makes an election
to treat the property as foreclosure property. REITs generally are subject to tax at the maximum
corporate rate (currently 35%) on any net income from foreclosure property, including any gain from
the disposition of the foreclosure property, other than income that would otherwise be qualifying
income for purposes of the 75% gross income test. Any gain from the sale of property for which a
foreclosure property election has been made will not be subject to the 100% tax on gains from
prohibited transactions described above, even if the property is held
primarily for sale to customers in the ordinary course of a trade or business.
Hedging Transactions
. We may enter into hedging transactions with respect to one or more of our
assets or liabilities. Hedging transactions could take a variety of forms, including interest rate
swaps or cap agreements, options, futures contracts, forward rate agreements or similar financial
instruments. Except to the extent as may be provided by future Treasury Regulations, any income
from a hedging transaction which is clearly identified as such before the close of the day on which
it was acquired, originated or entered into, including gain from the disposition or termination of
such a transaction, will not constitute gross income for purposes of the 95% and 75% income tests
if such hedging transaction is entered into (i) in the normal course of our business primarily to
manage risk of interest rate or price changes or currency fluctuations with respect to indebtedness
incurred or to be incurred by us to acquire or carry real estate assets or (ii) primarily to manage
the risk of currency fluctuations with respect to any item of income or gain that would be
qualifying income under the 75% or 95% income tests (or any property which generates such income or
gain). To the extent we enter into other types of hedging transactions, the income from those
transactions is likely to be treated as nonqualifying income for purposes of both of the 75% and
95% gross income tests. We intend to structure any hedging transactions in a manner that does not
jeopardize our ability to qualify as a REIT.
Annual Distribution Requirements Applicable to REITs.
To qualify as a REIT, we are required to
distribute dividends, other than capital gain dividends, to our stockholders each year in an amount
at least equal to (1) the sum of (a) 90% of our REIT taxable income, computed without regard to the
dividends paid deduction and our net capital gain, and (b) 90% of the net income, after tax, from
foreclosure property, minus (2) the sum of certain specified items of noncash income. In addition,
if we recognize any built-in gain, we will be required, under Treasury Regulations, to distribute
at least 90% of the built-in gain, after tax, recognized on the disposition of the applicable
asset. See “— Taxation as a REIT” for a discussion of the possible recognition of built-in gain.
These distributions must be paid either in the taxable year to which they relate, or in the
following taxable year if declared before we timely file our tax return for the prior year and if
paid with or before the first regular dividend payment date after the declaration is made.
We believe that we have made and we intend to continue to make timely distributions sufficient to
satisfy the annual distribution requirements.
It is possible that we, from time to time, may choose to retain cash to fund capital projects or
future operations or may not have sufficient cash or other liquid assets to meet this distribution
requirement or to distribute such greater amount as may be necessary to avoid income and excise
taxation, in part due to timing differences between (a) the actual receipt of income and the actual
payment of deductible expenses and (b) the inclusion of such income and the deduction of such
expenses in arriving at our taxable income, or as a result of nondeductible expenses such as
principal amortization or capital expenditures in excess of noncash deductions. In such event, we
may find it necessary to arrange for borrowings or pay taxable stock dividends in order to meet the
distribution requirement.
Under some circumstances, we may be able to rectify a failure to meet the distribution requirement
for a year by paying dividends to stockholders in a later year, which may be included in our
deduction for dividends paid for the earlier year. We will refer to such dividends as “deficiency
dividends”. Thus, we may be able to avoid being taxed on amounts distributed as deficiency
dividends. We will, however, be required to pay interest based upon the amount of any deduction
taken for deficiency dividends.
To the extent that we do not distribute (and are not deemed to have distributed, as described
below) all of our net capital gain or distribute at least 90%, but less than 100%, of our REIT
taxable income, as adjusted, we will be subject to tax on these retained amounts at regular
corporate tax rates.
In addition, we will be subject to a 4% excise tax on the excess of the required distribution over
the sum of amounts actually distributed and amounts retained for which federal income tax was paid,
if we fail to distribute during each calendar year at least the sum of:
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(1)
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85% of our REIT ordinary income for the year;
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(2)
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95% of our REIT capital gain net income for the year; and
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(3)
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any undistributed taxable income from prior taxable years.
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A REIT may elect to retain rather than distribute all or a portion of its net capital gains and pay
the tax on the gains. In that
case, a REIT may elect to have its stockholders include their proportionate share of the
undistributed net capital gains in income as long-term capital gains and receive a credit for their
share of the tax paid by the REIT. For purposes of the 4% excise tax described above, any such
retained amounts would be treated as having been distributed.
Record-Keeping Requirements
. We are required to comply with applicable record-keeping requirements.
Failure to comply could result in monetary fines.
Failure to Qualify as a REIT
. If we fail to satisfy any REIT requirements (other than the income
test or asset test requirements, with respect to which specific cure provisions apply), we
generally will be eligible for relief from REIT disqualification if the failure is due to
reasonable cause and not willful neglect and we pay a penalty of $50,000 with respect to such
failure. It is not possible to state whether in all circumstances we would be entitled to such
statutory relief. If we fail to qualify for taxation as a REIT in any taxable year and a relief
provision does not apply, we will be subject to tax on our taxable income at regular corporate
rates, including any applicable alternative minimum tax. Distributions to stockholders in any year
in which we fail to qualify as a REIT will not be deductible by us nor will they be required to be
made. In such event, to the extent of current or accumulated earnings and profits, all
distributions to stockholders will be taxable as dividend income. Subject to limitations of the
Code, corporate stockholders may be eligible for the dividends received deduction and non-corporate
stockholders may be eligible to treat the dividends received from us as qualified dividend income
taxable as net capital gains under the provisions of Section 1(h)(11) of the Code, for taxable
years beginning before January 1, 2013. Unless we are entitled to relief under specific statutory
provisions, we also will be disqualified from electing to be taxed as a REIT for the four taxable
years following the year during which qualification was lost.
Taxation of U.S. Stockholders
When we refer to a U.S. stockholder, we mean a beneficial owner of a share of our capital stock
that is, for United States federal income tax purposes:
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(1)
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a citizen or resident, as defined in Code Section 7701(b), of the United States;
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(2)
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a corporation, or other entity treated as a corporation for federal income tax
purposes, created or organized under the laws of the United States, any state or the
District of Columbia;
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(3)
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an estate the income of which is subject to federal income taxation regardless of its
source; or
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(4)
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a trust that is subject to the primary supervision of a United States court and the
control of one or more United States persons or that has a valid election in effect under
the applicable Treasury Regulations to be treated as a United States person under the Code.
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Generally, in the case of a partnership (or other entity treated as such for federal income tax
purposes) that holds our capital stock, any partner that would be a U.S. stockholder if it held the
capital stock directly is also a U.S. stockholder. A “non-U.S. stockholder” is a holder, including
any partner in a partnership that holds our capital stock, that is not a U.S. stockholder.
Distributions by Us.
So long as we qualify as a REIT, distributions to U.S. stockholders out of our
current or accumulated earnings and profits that are not designated as capital gain dividends will
be taxable as dividend income and will not be eligible for the dividends received deduction
generally available for corporations and generally will not be eligible for treatment as qualified
dividend income by non-corporate stockholders except with respect to the portion of any
distribution (a) that represents income from dividends we receive from a TRS or a corporation in
which we own shares (but only if such dividends would be eligible for the lower rate on dividends
if paid by the corporation to its individual stockholders), or (b) that is equal to the sum of our
real estate investment trust taxable income (taking into account the dividends paid deduction
available to us) for our previous taxable year and certain net built-in gain with respect to
property acquired from a C corporation in certain transactions in which we must adopt the basis of
the asset in the hands of the C corporation for such previous taxable year and less any taxes
imposed on us for such previous taxable year. Distributions in excess of our current and
accumulated earnings and profits will not be taxable to a U.S. stockholder to the extent that the
distributions do not
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exceed the adjusted tax basis of the stockholder’s shares. Rather, such
distributions will reduce the adjusted basis of such shares, but not below zero. Distributions in
excess of current and accumulated earnings and profits that exceed the U.S. stockholder’s adjusted
basis in its shares will be treated as gain from the sale or exchange of such shares taxable as
capital gains in the amount of such excess if the shares are held as a capital asset. If we declare
a dividend in October, November or December of any year with a record date in one of these months
and pay the dividend on or before January 31 of the following year, we will be treated as having
paid the dividend, and the stockholder will be treated as having received the
dividend, on December 31 of the year in which the dividend was declared. This discussion applies
equally to distributions payable in cash and taxable stock distributions.
We may elect to designate distributions of our net capital gain as “capital gain dividends”.
Capital gain dividends are taxed to stockholders as gain from the sale or exchange of a capital
asset held for more than one year, to the extent that they do not exceed our actual net capital
gain for the taxable year, without regard to how long the U.S. stockholder has held its shares. If
we designate any portion of a dividend as a capital gain dividend, a U.S. stockholder will receive
an IRS Form 1099-DIV indicating the amount that will be taxable to the stockholder as capital gain.
Corporate stockholders, however, may be required to treat up to 20% of capital gain dividends as
ordinary income.
Instead of paying capital gain dividends, we may choose to retain all or part of our net capital
gain and designate such amount as “undistributed capital gain”. We will be subject to tax at
regular corporate rates on any undistributed capital gains. A U.S. stockholder:
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(1)
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will include in its income as long-term capital gains its proportionate share of
such undistributed capital gains; and
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(2)
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will be deemed to have paid its proportionate share of the tax paid by us on such
undistributed capital gains and receive a credit or a refund to the extent that the tax
paid by us exceeds the U.S. stockholder’s tax liability on the undistributed capital
gains.
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A U.S. stockholder will increase the basis in its capital stock by the difference between the
amount of capital gain included in its income with respect to such stock and the amount of tax it
is deemed to have paid. Our earnings and profits will be adjusted appropriately.
We will classify portions of any designated capital gain dividend or undistributed capital gains as
either:
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(1)
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a 15% rate gain distribution, which would be taxable to non-corporate U.S.
stockholders at a maximum rate of 15% (for taxable years beginning before January 1,
2013); or
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(2)
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an “unrecaptured Section 1250 gain” distribution, which would be taxable to non-
corporate U.S. stockholders at a maximum rate of 25%.
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We must determine the maximum amounts that we may designate as 15% and 25% rate capital gain
dividends by performing the computation required by the Code as if the REIT were an individual
whose ordinary income were subject to a marginal tax rate in excess of 25%.
Distributions made by us and gain arising from the sale or exchange by a U.S. stockholder of shares
of our capital stock will not be treated as passive activity income, and as a result, U.S.
stockholders generally will not be able to apply any “passive losses” against this income or gain.
In addition, taxable distributions from our company generally will be treated as investment income
for purposes of the investment interest limitations. A U.S. stockholder may elect to treat capital
gain dividends and capital gains from the disposition of shares of our capital stock as investment
income for purposes of the investment interest limitation, in which case the applicable capital
gains will be taxed at ordinary income rates. We will notify stockholders regarding the portions of
distributions for each year that constitute ordinary income, return of capital and capital gain.
U.S. stockholders may not include in their own income tax returns any net operating losses or
capital losses of our company. Our operating or capital losses would be carried over for potential
offset against our future income, subject to applicable limitations.
We may make distributions to U.S. stockholders that are paid in common stock or preferred stock and
are intended to be treated as dividends for U.S. federal income tax purposes. In that event, our
U.S. stockholders would generally have taxable income with respect to such distributions of our
common stock or preferred stock and may have tax liability on account of such distributions in
excess of cash (if any) that is received.
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Sales of Shares.
Upon any taxable sale or other disposition of shares, a U.S. stockholder will
recognize gain or loss for federal income tax purposes in an amount equal to the difference
between:
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(1)
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the amount of cash and the fair market value of any property received on the sale
or other disposition; and
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(2)
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the holder’s adjusted basis in the shares for tax purposes.
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This gain or loss will be a capital gain or loss if the shares have been held by the U.S.
stockholder as a capital asset. The applicable tax rate will depend on the stockholder’s holding
period in the shares (generally, if an asset has been held for more than one year it will produce
long-term capital gain) and the stockholder’s tax bracket. The IRS has the authority to prescribe,
but has not yet prescribed, regulations that would apply a capital gain tax rate of 25% (which is
generally higher than the long-term capital gain tax rates for non-corporate stockholders) to a
portion of capital gain realized by a non-corporate stockholder on the sale of REIT shares that
would correspond to the REIT’s “unrecaptured Section 1250 gain”. Stockholders are urged to consult
with their own tax advisors with respect to their capital gain tax liability. A corporate U.S.
stockholder will be subject to tax at a maximum rate of 35% on capital gain from the sale of our
capital stock. In general, any loss recognized by a U.S. stockholder upon the sale or other
disposition of shares that have been held for six months or less, after applying the holding period
rules, will be treated as a long-term capital loss, to the extent of distributions received by the
U.S. stockholder from us that were required to be treated as long-term capital gains. All or a
portion of any loss realized upon a taxable disposition of shares may be disallowed if other shares
are purchased within 30 days before or after the date of disposition.
Medicare Tax
. For taxable years beginning after December 31, 2012, a U.S. person that is an
individual or estate, or a trust that does not fall into a special class of trusts that is exempt
from such tax, is subject to a 3.8% tax on the lesser of (1) the U.S. person’s “net investment
income” for the relevant taxable year and (2) the excess of the U.S. person’s modified gross income
for the taxable year over a certain threshold (which in the case of individuals will be between
$125,000 and $250,000, depending on the individual’s circumstances). Net investment income
generally would include dividends on our stock and gain from the sale of our stock. If you are a
U.S. person that is an individual, estate or trust, you are urged to consult your tax advisors
regarding the applicability of this tax to your income and gains in respect of your investment in
our common or preferred stock.
Taxation of Tax-Exempt Stockholders
Except as provided below, if a tax-exempt stockholder has not held its capital stock as “debt
financed property” within the meaning of the Code, dividend income from our company will not be
unrelated business taxable income, referred to as UBTI. Similarly, gain from the sale of shares
will not constitute UBTI unless the tax-exempt stockholder has held its shares as debt financed
property within the meaning of the Code or is a dealer with respect to our shares.
For tax-exempt stockholders that are social clubs, voluntary employee benefit associations,
supplemental unemployment benefit trusts or qualified group legal services plans exempt from
federal income taxation under Section 501(c)(7), (c)(9), (c)(17) or (c)(20) of the Code,
respectively, income from an investment in our shares will constitute UBTI; however, an
organization exempt under Section 501(c)(9), (c)(17) or (c)(20) of the Code may reduce UBTI if it
properly sets aside or reserves such amounts for certain purposes specified in the Code. These
tax-exempt stockholders should consult their own tax advisors concerning these “set aside” and
reserve requirements.
In addition, a portion of the dividends paid by a “pension-held REIT” are treated as UBTI if
received by any trust which is described in Section 401(a) of the Code, is tax-exempt under Section
501(a) of the Code and holds more than 10%, by value, of the interests in the pension-held REIT.
Tax-exempt pension funds that are described in Section 401(a) of the Code are referred to below as
“pension trusts”.
A REIT is a pension-held REIT if the following conditions apply:
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(1)
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it qualified as a REIT only by reason of Section 856(h)(3) of the Code,
which provides that stock owned by a pension trust will be treated, for purposes of
determining if the REIT is closely held, as owned by the beneficiaries of the trust
rather than by the trust itself; and
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(2)
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either (a) at least one pension trust holds more than 25% of the value
of the REIT’s stock, or (b) a group of pension trusts each individually holding
more than 10% of the value of the REIT’s stock, collectively owns more than 50% of
the value of the REIT’s stock.
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The percentage of any pension-held REIT dividend treated as UBTI is equal to the ratio of the UBTI
earned by the REIT, treating the REIT as if it were a pension trust and therefore subject to tax on
UBTI, to the total gross income of the REIT. An exception applies where such percentage is less
than 5% for any taxable year.
The rules described above under the heading “— Taxation of U.S. Stockholders — Distributions by
Us” concerning the
inclusion of our designated undistributed capital gain in the income of our stockholders will apply
to tax-exempt stockholders. Thus, tax-exempt stockholders will be allowed a credit or refund of the
tax deemed paid by them in respect of the includible gain.
U.S. Taxation of Non-U.S. Stockholders
Distributions by Us
. Distributions by us to a non-U.S. stockholder that are neither attributable to
gain from sales or exchanges by us of “U.S. real property interests” nor designated by us as
capital gains dividends will be treated as dividends of ordinary income to the extent that they are
made out of our current or accumulated earnings and profits. These distributions ordinarily will be
subject to withholding of federal income tax on a gross basis at a rate of 30%, or a lower rate as
permitted under an applicable income tax treaty, unless the dividends are treated as effectively
connected with the conduct by the non-U.S. stockholder of a U.S. trade or business or are
attributable to a permanent establishment that the non-U.S. stockholder maintains in the United
States if that is required by an applicable income tax treaty as a condition for subjecting the
non-U.S. stockholder to U.S. taxation on a net income basis. Under some treaties, however, lower
withholding rates generally applicable to dividends do not apply to dividends from REITs. Dividends
that are effectively connected with a U.S. trade or business or are attributable to a permanent
establishment that the non-U.S. stockholder maintains in the United States if that is required by
an applicable income tax treaty, will be subject to tax on a net basis, that is, after allowance
for deductions, at graduated rates, in the same manner as such dividends are taxable to U.S.
stockholders, and are generally not subject to withholding. Applicable certification and disclosure
requirements must be satisfied to obtain a reduced rate of withholding under an applicable income
tax treaty or to be exempt from withholding under the effectively connected income exemption. Any
dividends received by a corporate non-U.S. stockholder that is engaged in a U.S. trade or business
also may be subject to an additional branch profits tax at a 30% rate, or lower applicable treaty
rate.
Distributions in excess of our current and accumulated earnings and profits that exceed the
non-U.S. stockholder’s basis in its capital stock will be taxable to a non-U.S. stockholder as gain
from the sale of our stock, which is discussed below. Distributions in excess of our current or
accumulated earnings and profits that do not exceed the adjusted basis of the non-U.S. stockholder
in its capital stock will reduce the non-U.S. stockholder’s adjusted basis in its capital stock,
but not below zero, and will not be subject to federal income tax, but will be subject to U.S.
withholding tax as described below.
We expect to withhold U.S. income tax at the rate of 30% on any dividend distributions (including
distributions that later may be determined to have been in excess of current and accumulated
earnings and profits) made to a non-U.S. stockholder unless:
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(1)
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a lower treaty rate applies and the non-U.S. stockholder files with us an IRS Form
W-8BEN evidencing eligibility for that reduced treaty rate; or
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(2)
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the non-U.S. stockholder files with us an IRS Form W-8ECI claiming that the
distribution is income effectively connected with such non-U.S. stockholder’s trade or
business within the U.S.
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We may be required to withhold at least 10% of any distribution in excess of our current and
accumulated earnings and profits, even if a lower treaty rate applies and the non-U.S. stockholder
is not liable for tax on the receipt of that distribution. However, a non-U.S. stockholder may seek
a refund of these amounts from the IRS if the non-U.S. stockholder’s U.S. tax liability with
respect to the distribution is less than the amount withheld.
Distributions to a non-U.S. stockholder that are designated by us at the time of the distribution
as capital gain dividends, other than those arising from the disposition of a U.S. real property
interest, generally should not be subject to federal income taxation unless:
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(1)
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the investment in our capital stock is effectively connected with the non-U.S.
stock- holder’s U.S. trade or business or is attributable to a permanent establishment
that the non-U.S. stockholder maintains in the United States if that is required by an
applicable income tax treaty, in which case the non-U.S. stockholder will be subject to
the same treatment as U.S. stockholders with respect to any gain, except that a
stockholder that is a foreign
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corporation also may be subject to the 30% branch profits tax; or
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(2)
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the non-U.S. stockholder is a nonresident alien individual who is present in the
U.S. for 183 days or more during the taxable year and has a “tax home” in the U.S., in
which case the nonresident alien individual will be subject to a 30% tax on the
individual’s capital gains.
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Under the Foreign Investment in Real Property Tax Act, which is referred to as “FIRPTA”, subject to
the exception discussed below for 5% or smaller holders of regularly traded classes of stock,
distributions to a non-U.S. stockholder that are attributable to gain from sales or exchanges by us
of U.S. real property interests, whether or not designated as a capital gain dividend, will cause
the non-U.S. stockholder to be treated as recognizing gain that is income effectively connected
with a U.S. trade or business. Non-U.S. stockholders will be taxed on this gain at the same rates
applicable to U.S. stockholders, subject to a special alternative minimum tax in the case of
nonresident alien individuals. Also, this gain may be subject to the 30% branch profits tax in the
hands of a non-U.S. stockholder that is a corporation.
We will be required to withhold and remit to the IRS 35% of any distributions to non-U.S.
stockholders that are designated as capital gain dividends, including any distributions that could
have been designated as capital gain dividends. Distributions can be designated as capital gains to
the extent of our net capital gain for the taxable year of the distribution. The amount withheld is
creditable against the non-U.S. stockholder’s federal income tax liability. A non-U.S. stockholder
who receives distributions attributable to gain from a sale or exchange by us of U.S. real property
interests will be required to file a federal income tax return for the taxable year.
Any distribution by a REIT to a non-U.S. stockholder with respect to a class of stock that is
regularly traded on an established securities market in the United States will not be subject to
FIRPTA (or the 35% FIRPTA withholding tax) if such non-U.S. stockholder did not own more than 5% of
such class at any time during the one year period ending on the date of the distribution. However,
such a distribution will be subject to the general withholding rules discussed above which
generally impose a withholding tax equal to 30% of the gross amount of each dividend distribution
(unless reduced by treaty). Our common stock is regularly traded on an established securities
market in the United States. Any preferred stock we issue may or may not be regularly traded on an
established securities market in the United States.
Although the law is not clear on the matter, it appears that amounts designated by us as
undistributed capital gains generally should be treated with respect to non-U.S. stockholders in
the same manner as actual distributions by us of capital gain dividends. Under that approach,
non-U.S. stockholders would be able to offset as a credit against their federal income tax
liability resulting therefrom an amount equal to their proportionate share of the tax paid by us on
the undistributed capital gains, and to receive from the IRS a refund to the extent their
proportionate share of this tax paid by us exceeds their actual federal income tax liability.
As described above, we may make distributions that are paid in common stock or preferred stock and
are intended to be treated as dividends for U.S. Federal income tax purposes. Such distributions,
accordingly, would be treated in a manner consistent with the discussion under this heading “U.S.
Taxation of Non-U.S. Stockholders — Distributions by Us.” If we are required to withhold an amount
in excess of any cash distributed along with the common or preferred shares, we may retain and sell
some of the common or preferred shares that would otherwise be distributed in order to satisfy our
withholding obligations.
Sale of Stock
. Gain recognized by a non-U.S. stockholder upon the sale or exchange of our capital
stock generally would not be subject to U.S. taxation unless:
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(1)
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the investment in our capital stock is effectively connected with the non-U.S.
stock- holder’s U.S. trade or business, in which case the non-U.S. stockholder will be
subject to the same treatment as U.S. stockholders with respect to any gain;
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(2)
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the non-U.S. stockholder is a nonresident alien individual who is present in the
U.S. for 183 days or more during the taxable year and has a tax home in the U.S., in
which case the nonresident alien individual will be subject to a 30% tax on the
individual’s net capital gains for the taxable year; or
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(3)
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our capital stock constitutes a U.S. real property interest within the meaning of
FIRPTA, as described below.
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Our capital stock will not constitute a U.S. real property interest if we are a domestically
controlled qualified investment entity. We will be a domestically controlled qualified investment
entity if, at all times during a specified testing period, we
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are a REIT and less than 50% in value
of our stock is held directly or indirectly by non-U.S. stockholders. We cannot guarantee that we
will be a domestically controlled qualified investment entity.
Even if we are a domestically controlled qualified investment entity, upon disposition of our
stock, a non-U.S. stockholder may be treated as having gain from the sale or exchange of a U.S.
real property interest if the non-U.S. stockholder (1) disposes of an interest in our stock during
the 30-day period preceding the ex-dividend date of a distribution, any portion of
which, but for the disposition, would have been treated as gain from sale or exchange of a U.S.
real property interest and (2) directly or indirectly acquires, enters into a contract or option to
acquire, or is deemed to acquire, other shares of our stock within 30 days before or after such
ex-dividend date. This rule does not apply if the exception for distributions to 5% or smaller
holders of regularly traded classes of stock is satisfied.
Even if we do not qualify as a domestically controlled qualified investment entity at the time a
non-U.S. stockholder sells its capital stock, our stock sold by such stockholder would not be
considered a U.S. real property interest if:
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(1)
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the class or series of stock sold is considered regularly traded under applicable
Treasury Regulations on an established securities market; and
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(2)
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the selling non-U.S. stockholder owned, actually or constructively, 5% or less in
value of the outstanding class or series of stock being sold throughout the shorter of
the five-year period ending on the date of the sale or exchange or the taxpayer’s holding
period with respect to such stock.
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Our common stock is regularly traded on an established securities market in the United States. Any
preferred stock we issue may or may not be regularly traded on an established securities market in
the United States.
If gain on the sale or exchange of our common stock were subject to taxation under FIRPTA, a
non-U.S. stockholder would be subject to regular U.S. income tax with respect to any gain in the
same manner as a taxable U.S. stockholder, subject to any applicable alternative minimum tax and
special alternative minimum tax in the case of nonresident alien individuals.
Information Reporting and Backup Withholding Tax Applicable to Stockholders
U.S. Stockholders.
In general, information reporting requirements will apply to distributions on
our capital stock and payments of the proceeds of the sale of our capital stock to some
stockholders, unless an exception applies. Further, the payee will be subject to backup withholding
on any payments if:
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(1)
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the payee fails to furnish a taxpayer identification number, or TIN, to the payor
or to establish an exemption from backup withholding;
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(2)
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the IRS notifies the payor that the TIN furnished by the payee is incorrect;
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(3)
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there has been a notified payee under-reporting with respect to interest,
dividends, or original issue discount described in Section 3406(c) of the Code; or
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(4)
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the payee fails to certify under the penalty of perjury that the payee is not
subject to backup withholding under the Code.
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Some stockholders, including corporations and tax exempt organizations, will be exempt from backup
withholding. Any amounts withheld under the backup withholding rules from a payment to a
stockholder will be allowed as a credit against the stockholder’s federal income tax and may
entitle the stockholder to a refund, provided that the required information is furnished to the
IRS.
Non-U.S. Stockholders
. Generally, information reporting will apply to payments of distributions on
our capital stock, and backup withholding may apply, unless the payee certifies that it is not a
U.S. person or otherwise establishes an exemption.
The payment of the proceeds from the disposition of our capital stock to or through the U.S. office
of a U.S. or foreign broker will be subject to information reporting and, possibly, backup
withholding unless the non-U.S. stockholder certifies as to its non-U.S. status or otherwise
establishes an exemption, provided that the broker does not have actual knowledge that the
stockholder is a U.S. person or that the conditions of any other exemption are not, in fact,
satisfied. The proceeds of the disposition by a non-U.S. stockholder of our capital stock to or
through a foreign office of a broker generally will not be
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subject to information reporting or
backup withholding. However, if the broker is a U.S. person, a controlled foreign corporation for
U.S. tax purposes or a foreign person 50% or more of whose gross income from all sources for
specified periods is from activities that are effectively connected with a U.S. trade or business,
information reporting generally will apply unless the broker has documentary evidence as to the
non-U.S. stockholder’s foreign status and has no actual knowledge to the contrary. Any amount
withheld under the backup withholding rules from a payment to a stockholder will be allowed as a
credit against such stockholder’s U.S. federal income tax liability (which might entitle such
stockholder to a refund), provided that the required information is furnished to the IRS.
Applicable Treasury Regulations provide presumptions regarding the status of stockholders when
payments to the stockholders cannot be reliably associated with appropriate documentation provided
to the payer. Because the application of the these Treasury Regulations varies depending on the
stockholder’s particular circumstances, you are urged to consult your tax advisor regarding the
information reporting requirements applicable to you.
Legislative or Other Actions Affecting REITs
The rules dealing with federal income taxation are constantly under review by persons involved in
the legislative process and by the IRS and the U.S. Treasury Department. No assurance can be given
as to whether, when, or in what form, the federal income tax laws applicable to us and our
stockholders may be enacted. Changes to the federal tax laws and interpretations of federal tax
laws could adversely affect an investment in our capital stock.
Additional U.S. Federal Income Tax Withholding Rules
Additional U.S. federal income tax withholding rules apply to certain payments made after December
31, 2012 to foreign financial institutions and certain other non-U.S. entities. A withholding tax
of 30% would apply to dividends and the gross proceeds of a disposition of our capital stock paid
to certain foreign entities unless various information reporting requirements are satisfied. For
these purposes, a foreign financial institution generally is defined as any non-U.S. entity that
(i) accepts deposits in the ordinary course of a banking or similar business, (ii) as a substantial
portion of its business, holds financial assets for the account of others, or (iii) is engaged or
holds itself out as being engaged primarily in the business of investing, reinvesting, or trading
in securities, partnership interests, commodities, or any interest in such assets. Prospective
investors are encouraged to consult their tax advisors regarding the implications of these rules
with respect to their investment in our capital stock as well as the status of any related federal
regulations.
Taxation of Holders of Our Debt Securities
The tax consequences of owning any debt securities that we may issue, including any fixed interest
securities, zero coupon debt securities, original issue discount debt securities, floating rate
debt securities, convertible or exchangeable debt securities, or indexed debt securities that we
offer will be discussed in the applicable prospectus supplement.
Other Tax Consequences
Our company and its stockholders may be subject to state and local taxation in various state or
local jurisdictions, including those in which it or they transact business or reside. The state and
local tax treatment of our company and its stockholders may not conform to the federal income tax
consequences discussed above. Consequently, prospective investors should consult their own tax
advisors regarding the effect of state and local tax laws on an investment in our securities. To
the extent that we and any of our subsidiaries are required to pay federal, state or local taxes,
we will have less cash available for distribution to stockholders.
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus from time to time in one or more
transactions, including without limitation:
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through underwriters or dealers;
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directly to investors;
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in “at the market” offerings, within the meaning of Rule 415(a)(4) of
the Securities Act to or through a market maker or into an existing
trading market on an exchange or otherwise;
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to investors through agents;
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in block trades;
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through a combination of any of these methods; or
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through any other method permitted by applicable law and described in
a prospectus supplement.
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In addition, we may issue the securities as a dividend or distribution to our existing
stockholders or other securityholders.
The prospectus supplement with respect to any offering of securities will include the
following information:
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the terms of the offering;
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the names of any underwriters or agents;
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the name or names of any managing underwriter or underwriters;
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the purchase price or initial public offering price of the securities;
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the net proceeds from the sale of the securities;
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any delayed delivery arrangements;
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any underwriting discounts, commissions and other items constituting
underwriters’ compensation;
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any discounts or concessions allowed or reallowed or paid to dealers;
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any commissions paid to agents; and
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any securities exchange on which the securities may be listed.
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Sale through Underwriters or Dealers
If underwriters are used in the sale, the underwriters may resell the securities from time to
time in one or more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Underwriters may offer securities to the
public either through underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. Unless we inform you otherwise in the
applicable prospectus supplement, the obligations of the underwriters to purchase the securities
will be subject to certain conditions, and the underwriters will be obligated to purchase all of
the offered securities if they purchase any of them. The underwriters may change from time to time
any initial public offering price and any discounts or concessions allowed or reallowed or paid to
dealers.
We will describe the name or names of any underwriters, dealers or agents and the purchase
price of the securities in a prospectus supplement relating to the securities.
In connection with the sale of the securities, underwriters may receive compensation from us
or from purchasers of the securities, for whom they may act as agents, in the form of discounts,
concessions or commissions. Underwriters may sell the securities to or through dealers, and these
dealers may receive compensation in the form of discounts, concessions or
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commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents, which is not
expected to exceed that customary in the types of transactions involved. Underwriters, dealers and
agents that participate in the distribution of the securities may be deemed to be underwriters, and
any discounts or commissions they receive from us, and any profit on the resale of the securities
they realize may be deemed to be underwriting discounts and commissions, under the Securities Act.
The prospectus supplement will identify any underwriter or agent and will describe any compensation
they receive from us.
Underwriters could make sales in privately negotiated transactions and/or any other method
permitted by law, including sales deemed to be an “at-the-market” offering, sales made directly on
the NYSE, the existing trading market for our shares of common stock, or sales made to or through a
market maker other than on an exchange. The name of any such underwriter or agent involved in the
offer and sale of our shares of common stock, the amounts underwritten, and the nature of its
obligations to take our shares of common stock will be described in the applicable prospectus
supplement.
Unless otherwise specified in the prospectus supplement, each series of the securities will be
a new issue with no established trading market, other than our shares of common stock, which are
currently listed on the NYSE. We currently intend to list any shares of common stock sold pursuant
to this prospectus on the NYSE. We may elect to list any series of shares of preferred stock on an
exchange, but are not obligated to do so. It is possible that one or more underwriters may make a
market in a series of the securities, but underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, we can give no assurance about
the liquidity of the trading market for any of the securities.
Under agreements we may enter into, we may indemnify underwriters, dealers, and agents who
participate in the distribution of the securities against certain liabilities, including
liabilities under the Securities Act, or contribute with respect to payments that the underwriters,
dealers or agents may be required to make.
In compliance with the guidelines of the Financial Industry Regulatory Authority, Inc.
(“FINRA”), the maximum aggregate discounts, commissions, agency fees or other items constituting
underwriting compensation to be received by any FINRA member or independent broker-dealer will not
exceed 8% of the aggregate offering price of the securities offered pursuant to this prospectus and
any applicable prospectus supplement.
To facilitate the offering of securities, certain persons participating in the offering may
engage in transactions that stabilize, maintain, or otherwise affect the price of the securities.
This may include over-allotments or short sales of the securities, which involve the sale by
persons participating in the offering of more securities than we sold to them. In these
circumstances, these persons would cover such over-allotments or short positions by making
purchases in the open market or by exercising their over-allotment option, if any. In addition,
these persons may stabilize or maintain the price of the securities by bidding for or purchasing
securities in the open market or by imposing penalty bids, whereby selling concessions allowed to
dealers participating in the offering may be reclaimed if securities sold by them are repurchased
in connection with stabilization transactions. The effect of these transactions may be to stabilize
or maintain the market price of
the securities at a level above that which might otherwise prevail in the open market. These
transactions may be discontinued at any time. From time to time, we may engage in transactions
with these underwriters, dealers, and agents in the ordinary course of business.
If indicated in the prospectus supplement, we may authorize underwriters or other persons
acting as our agents to solicit offers by institutions to purchase securities from us pursuant to
contracts providing for payment and delivery on a future date. Institutions with which we may make
these delayed delivery contracts include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and others. The obligations of
any purchaser under any such delayed delivery contract will be subject to the condition that the
purchase of the securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which the purchaser is subject. The underwriters and other agents will not have any
responsibility with regard to the validity or performance of these delayed delivery contracts.
Direct Sales and Sales through Agents
We may sell the securities directly. In this case, no underwriters or agents would be
involved. We may also sell the securities through agents designated by us from time to time. In the
applicable prospectus supplement, we will name any agent involved in the offer or sale of the
offered securities, and we will describe any commissions payable to the agent. Unless we inform you
otherwise in the applicable prospectus supplement, any agent will agree to use its reasonable best
44
efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others who may be deemed to
be underwriters within the meaning of the Securities Act with respect to any sale of those
securities. We will describe the terms of any sales of these securities in the applicable
prospectus supplement.
Remarketing Arrangements
Securities may also be offered and sold, if so indicated in the applicable prospectus
supplement, in connection with a remarketing upon their purchase, in accordance with a redemption
or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as
principals for their own accounts or as agents for us. Any remarketing firm will be identified and
the terms of its agreements, if any, with us and its compensation will be described in the
applicable prospectus supplement.
Delayed Delivery Contracts
If we so indicate in the applicable prospectus supplement, we may authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to purchase securities
from us at the public offering price under delayed delivery contracts. These contracts would
provide for payment and delivery on a specified date in the future. The contracts would be subject
only to those conditions described in the applicable prospectus supplement. The applicable
prospectus supplement will describe the commission payable for solicitation of those contracts.
General Information
We may have agreements with the underwriters, dealers, agents and remarketing firms to
indemnify them against certain civil liabilities, including liabilities under the Securities Act,
or to contribute with respect to payments that the underwriters, dealers, agents or remarketing
firms may be required to make. Underwriters, dealers, agents and remarketing firms may be customers
of, engage in transactions with or perform services for us in the ordinary course of their
businesses.
In compliance with Financial Industry Regulatory Authority, or FINRA, guidelines, the maximum
commission or discount to be received by any FINRA member or independent broker dealer may not
exceed 8% of the aggregate amount of the securities offered pursuant to this prospectus or any
applicable prospectus supplement.
45
LEGAL MATTERS
The validity of the securities offered by means of this prospectus and certain U.S. federal
income tax matters have been passed upon for us by Goodwin Procter LLP.
EXPERTS
The consolidated financial statements, and the related financial statement schedules, as of
December 31, 2009 and December 31, 2010, and for the period from February 16, 2010 (commencement of
operations) to December 31, 2010 incorporated in this prospectus by reference from our Annual
Report on Form 10-K, and the effectiveness of our internal control over financial reporting, have
been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated
in their reports, which are incorporated herein by reference. Such financial statements and
financial statement schedules have been so incorporated in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
The statements of revenues and certain expenses of 130 Interstate for the year ended December 31,
2009, the statements of revenues and certain expenses of Middlebrook for the year ended December
31, 2009, the statements of revenues and certain expenses of Belleville for the year ended December
31, 2009, the statements of revenues and certain expenses of Warm Springs I and II for the year
ended December 31, 2009, the statements of revenues and certain expenses of Fortune/Qume for the
year ended December 31, 2009, the statements of revenues and certain expenses of 238/242 Lawrence
for the year ended December 31, 2009 and the statements of revenues and certain expenses of Maltese
for the year ended December 31, 2009 (collectively, the “Historical Summaries”), incorporated by
reference in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their reports, which are incorporated herein by reference.
Such Historical Summaries have been so incorporated in reliance upon the reports of such firm given
on the authority of such firm as experts in accounting and auditing.
46
$250,000,000
Common Stock
Preferred Stock
Debt Securities
PROSPECTUS
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14.
Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses of the sale and distribution of the
securities being registered, all of which are being borne by the Registrant.
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SEC registration fee
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$
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29,025
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FINRA filing fee
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25,500
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Printing fees
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10,000
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Legal fees and expenses
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75,000
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Accounting fees and expenses
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10,000
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Miscellaneous expenses
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15,000
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Total
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$
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164,525
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All amounts in the table above, except the SEC registration fee and FINRA filing fee, are
estimated. These amounts do not include expenses of preparing and printing any accompanying
prospectus supplements, listing fees, trustee fees and expenses, transfer agent fees and other
expenses related to offerings of particular securities from time to time. Estimated fees and
expenses associated with future offerings will be provided in the applicable prospectus supplement.
Item 15.
Indemnification and Limitation of Directors’ and Officers’ Liability
Our charter contains a provision permitted under the Maryland General Corporation Law that
eliminates each director’s and officer’s personal liability to us or our stockholders for monetary
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 that is established by a final
judgment and is material to the cause of action. In addition, to the maximum extent permitted under
the Maryland General Corporation Law, our charter authorizes us to obligate our company and our
bylaws require us to indemnify any present or former director or officer or any individual who,
while a director or officer and at our request, serves or has served another corporation, real
estate investment trust, partnership, limited liability company, joint venture, trust, employee
benefit plan or other enterprise as a director, officer, partner, member, manager or trustee, from
and against any claim or liability to which that individual may become subject or which that
individual may incur by reason of his or her service in any of the foregoing capacities, and to pay
or reimburse his or her reasonable expenses in advance of final disposition of a proceeding,
without requiring a preliminary determination of the ultimate entitlement to indemnification. Our
charter and bylaws also permit us to indemnify and advance expenses to any individual who served
any predecessor of us in any of the capacities described above and any employee or agent of us or
any predecessor of us.
Maryland law requires a Maryland corporation (unless its charter provides otherwise,
which our charter does not) to indemnify a director or officer who has been successful in the
defense of any proceeding to which he or she is made or threatened to be made a party by reason of
his or her service in that capacity. Maryland law permits a Maryland 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 or threatened to 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. A Maryland corporation may not indemnify a director or officer who has been adjudged
liable in a suit by or in the right of the corporation or in which the director or officer was
adjudged liable to the corporation or on the basis that a personal benefit was improperly received.
A court may order indemnification if it determines that the director is fairly and reasonably
entitled to indemnification, even though the director did not meet the prescribed standard of
conduct, was adjudged liable to the corporation or was adjudged liable on the basis that personal
benefit was improperly received; however, indemnification 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, is limited to expenses.
II-1
In addition, Maryland law permits a corporation to advance reasonable expenses to a
director or officer upon the corporation’s receipt of (a) a written affirmation by the director or
officer of his or her good faith belief that he or she has met the standard of conduct necessary
for indemnification by the corporation and (b) a written undertaking by him or her or on his or her
behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined
that the standard of conduct was not met.
We entered into indemnification agreements with each of our executive officers and
directors whereby we indemnify such executive officers and directors to the fullest extent
permitted by Maryland law against all expenses and liabilities, subject to limited exceptions.
These indemnification agreements also provide that upon an application for indemnity by an
executive officer or director to a court of appropriate jurisdiction, such court may order us to
indemnify such executive officer or director.
Item 16.
Exhibits.
The list of exhibits following the signature page of this Registration Statement on Form S-3
is incorporated herein by reference.
Item 17.
Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(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 20 percent change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such
information in the registration statement;
Provided, however,
That paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the information required to be included in a post-effective amendment by those paragraphs
is contained in reports filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement, or is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial
bona fide
offering thereof.
(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.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(i) If the registrant is relying on Rule 430B:
II-2
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed prospectus
was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act of 1933
shall be deemed to be part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness or the
date of the first contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed to be a new
effective date of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering of such
securities at that time shall be deemed to be the initial
bona fide
offering thereof.
Provided, however
, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus that
is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such effective date.
(5) That, for the purpose of determining liability of the registrant under the Securities Act
of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser, if the securities are
offered or sold to such purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of
the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide
offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a trustee, officer or
controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-3
(d) The undersigned 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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and
has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of San Francisco, state of California, on May 2, 2011.
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TERRENO REALTY CORPORATION
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/s/ W. Blake Baird
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W. Blake Baird
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Chairman of the Board and
Chief Executive Officer
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KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints W. Blake Baird and Michael A. Coke and each of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments to this
registration statement, and any additional related registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (including post-effective amendments to the
registration statement and any such related registration statements), and to file the same, with
all exhibits thereto, and any other documents in connection therewith, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof
Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities indicated on May 2, 2011.
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Signature
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Title
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/s/ W. Blake Baird
W.
Blake Baird
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Chairman, Chief Executive Officer and Director
(principal executive officer)
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/s/ Michael A. Coke
Michael
A. Coke
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President, Chief Financial Officer and Director
(principal financial and accounting officer)
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/s/ LeRoy E. Carlson
LeRoy E. Carlson
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Director
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/s/ Peter J. Merlone
Peter J. Merlone
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Director
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/s/ Douglas M. Pasquale
Douglas M. Pasquale
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Director
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/s/ Dennis Polk
Dennis Polk
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Director
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II-5
EXHIBIT INDEX
The following exhibits are filed as part of, or incorporated by reference into, this
Registration Statement on Form S-3:
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Exhibit
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Number
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Exhibit Description
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1.1**
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Form of Underwriting Agreement
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3.1
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Articles of Amendment and Restatement of Registrant (previously filed as Exhibit
3.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 on
January 6, 2010 and incorporated herein by reference)
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3.2
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Amended and Restated Bylaws of Registrant (previously filed as Exhibit 3.2 to
Amendment No. 2 to the Company’s Registration Statement on Form S-11 on January 6,
2010 and incorporated herein by reference)
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4.1
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Specimen Common Stock Certificate of Registrant (previously filed as Exhibit 4.1 to
Amendment No. 3 to the Company’s Registration Statement on Form S-11 on January 15,
2010 and incorporated herein by reference)
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4.2**
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Articles Supplementary with respect to any shares of preferred stock issued
pursuant to this Registration Statement
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4.3*
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Indenture (for [Subordinated] Debt Securities) (open-ended)
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5.1*
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Opinion of Goodwin Procter LLP as to the legality of the securities being registered
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8.1*
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Opinion of Goodwin Procter LLP as to certain tax matters
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12.1*
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Statement of computation of ratios of earnings to fixed charges
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23.1*
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Consent of Deloitte & Touche LLP
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23.2*
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Consent of Goodwin Procter LLP (included in Exhibit 5.1)
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23.3*
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Consent of Goodwin Procter LLP (included in Exhibit 8.1)
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24.1*
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Power of Attorney (included on signature page)
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25.1***
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Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of the Trustee under the Indenture (for Debt Securities)
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25.2***
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Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of the Trustee under the Indenture (for Subordinated Debt Securities)
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*
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Filed herewith
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**
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To be filed by amendment or as an exhibit to a report filed under the Securities Exchange Act of 1934, and
incorporated herein by reference.
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***
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To be filed, if necessary, separately under the electronic form type 305B2.
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II-6
Exhibit 4.3
TERRENO REALTY CORPORATION
TO
__________________,
Trustee
Indenture
(For [Subordinated]* Debt Securities)
Dated as of ___________, 20__
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*
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Bracketed language will be inserted in the Indenture under which subordinated Debt
Securities will be issued.
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TABLE OF CONTENTS†
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Page
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RECITAL OF THE COMPANY
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1
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
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1
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Section 1.01.
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Definitions
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1
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Section 1.02.
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Compliance Certificates and Opinions
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6
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Section 1.03.
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Form of Documents Delivered to Trustee
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7
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Section 1.04.
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Acts of Holders
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7
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Section 1.05.
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Notices, Etc. to Trustee and Company
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8
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Section 1.06.
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Notice to Holders of Debt Securities; Waiver
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9
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Section 1.07.
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Conflict with Trust Indenture Act
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9
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Section 1.08.
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Effect of Headings and Table of Contents
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10
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Section 1.09.
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Successors and Assigns
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10
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Section 1.10.
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Separability Clause
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10
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Section 1.11.
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Benefits of Indenture
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10
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Section 1.12.
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Governing Law
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10
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Section 1.13.
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Legal Holidays
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10
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ARTICLE II DEBT SECURITY FORMS
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10
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Section 2.01.
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Forms Generally
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10
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Section 2.02.
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Form of Trustee’s Certificate of Authentication
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11
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Section 2.03.
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Debt Securities Issuable in the Form of a Global Security
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11
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ARTICLE III THE DEBT SECURITIES
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13
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Section 3.01.
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Amount Unlimited; Issuable in Series
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13
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Section 3.02.
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Denominations
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15
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Section 3.03.
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Execution, Authentication, Delivery and Dating
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15
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Section 3.04.
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Temporary Debt Securities
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17
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Section 3.05.
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Registration, Registration of Transfer and Exchange
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18
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Section 3.06.
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Mutilated, Destroyed, Lost and Stolen Debt Securities
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19
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Section 3.07.
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Payment of Interest and Additional Interest; Interest Rights Preserved
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19
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Section 3.08.
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Persons Deemed Owners
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20
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Section 3.09.
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Cancellation by Debt Security Registrar
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20
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Section 3.10.
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Computation of Interest
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21
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Section 3.11.
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Payment to be in Proper Currency
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21
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Section 3.12.
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[Extension of Interest Payment]*
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21
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ARTICLE IV REDEMPTION OF DEBT SECURITIES
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21
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Section 4.01.
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Applicability of Article
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21
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Section 4.02.
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Election to Redeem; Notice to Trustee
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21
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Section 4.03.
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Selection of Debt Securities to be Redeemed
|
|
|
21
|
|
|
Section 4.04.
|
|
Notice of Redemption
|
|
|
22
|
|
|
Section 4.05.
|
|
Debt Securities Payable on Redemption Date
|
|
|
23
|
|
|
Section 4.06.
|
|
Debt Securities Redeemed in Part
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
ARTICLE V SINKING FUNDS
|
|
|
23
|
|
|
Section 5.01.
|
|
Applicability of Article
|
|
|
23
|
|
|
Section 5.02.
|
|
Satisfaction of Sinking Fund Payments with Debt Securities
|
|
|
24
|
|
|
Section 5.03.
|
|
Redemption of Debt Securities for Sinking Fund
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VI COVENANTS
|
|
|
25
|
|
|
Section 6.01.
|
|
Payment of Principal, Premium and Interest
|
|
|
25
|
|
|
|
|
|
|
†
|
|
This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
|
|
|
|
*
|
|
Bracketed language will be inserted in the Indenture under which subordinated Debt Securities
will be issued.
|
i
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
Section 6.02.
|
|
Maintenance of Office or Agency
|
|
|
25
|
|
|
Section 6.03.
|
|
Money for Debt Securities Payments to be Held in Trust
|
|
|
25
|
|
|
Section 6.04.
|
|
Corporate Existence
|
|
|
26
|
|
|
Section 6.05.
|
|
Maintenance of Properties
|
|
|
26
|
|
|
Section 6.06.
|
|
Annual Officer's Certificate as to Compliance
|
|
|
27
|
|
|
Section 6.07.
|
|
Waiver of Certain Covenants
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VII SATISFACTION AND DISCHARGE
|
|
|
27
|
|
|
Section 7.01.
|
|
Satisfaction and Discharge of Debt Securities
|
|
|
27
|
|
|
Section 7.02.
|
|
Satisfaction and Discharge of Indenture
|
|
|
29
|
|
|
Section 7.03.
|
|
Application of Trust Money
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VIII EVENTS OF DEFAULT; REMEDIES
|
|
|
30
|
|
|
Section 8.01.
|
|
Events of Default
|
|
|
30
|
|
|
Section 8.02.
|
|
Acceleration of Maturity; Rescission and Annulment
|
|
|
31
|
|
|
Section 8.03.
|
|
Collection of Indebtedness and Suits for Enforcement by Trustee
|
|
|
32
|
|
|
Section 8.04.
|
|
Trustee May File Proofs of Claim
|
|
|
32
|
|
|
Section 8.05.
|
|
Trustee May Enforce Claims without Possession of Debt Securities
|
|
|
33
|
|
|
Section 8.06.
|
|
Application of Money Collected
|
|
|
33
|
|
|
Section 8.07.
|
|
Limitation on Suits
|
|
|
33
|
|
|
Section 8.08.
|
|
Unconditional Right of Holders to Receive Principal, Premium and Interest
|
|
|
34
|
|
|
Section 8.09.
|
|
Restoration of Rights and Remedies
|
|
|
34
|
|
|
Section 8.10.
|
|
Rights and Remedies Cumulative
|
|
|
34
|
|
|
Section 8.11.
|
|
Delay or Omission Not Waiver
|
|
|
34
|
|
|
Section 8.12.
|
|
Control by Holders of Debt Securities
|
|
|
34
|
|
|
Section 8.13.
|
|
Waiver of Past Defaults
|
|
|
35
|
|
|
Section 8.14.
|
|
Undertaking for Costs
|
|
|
35
|
|
|
Section 8.15.
|
|
Waiver of Stay or Extension Laws
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
ARTICLE IX THE TRUSTEE
|
|
|
36
|
|
|
Section 9.01.
|
|
Certain Duties and Responsibilities
|
|
|
36
|
|
|
Section 9.02.
|
|
Notice of Defaults
|
|
|
37
|
|
|
Section 9.03.
|
|
Certain Rights of Trustee
|
|
|
37
|
|
|
Section 9.04.
|
|
Not Responsible for Recitals or Issuance of Debt Securities
|
|
|
38
|
|
|
Section 9.05.
|
|
May Hold Debt Securities
|
|
|
38
|
|
|
Section 9.06.
|
|
Money Held in Trust
|
|
|
38
|
|
|
Section 9.07.
|
|
Compensation and Reimbursement
|
|
|
38
|
|
|
Section 9.08.
|
|
Disqualification; Conflicting Interests
|
|
|
39
|
|
|
Section 9.09.
|
|
Corporate Trustee Required; Eligibility
|
|
|
39
|
|
|
Section 9.10.
|
|
Resignation and Removal; Appointment of Successor
|
|
|
39
|
|
|
Section 9.11.
|
|
Acceptance of Appointment by Successor
|
|
|
41
|
|
|
Section 9.12.
|
|
Merger, Conversion, Consolidation or Succession to Business
|
|
|
41
|
|
|
Section 9.13.
|
|
Preferential Collection of Claims Against Company
|
|
|
42
|
|
|
Section 9.14.
|
|
Co-Trustees and Separate Trustees
|
|
|
42
|
|
|
Section 9.15.
|
|
Appointment of Authenticating Agent
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
ARTICLE X HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY
|
|
|
44
|
|
|
Section 10.01.
|
|
Lists of Holders
|
|
|
44
|
|
|
Section 10.02.
|
|
Reports by Trustee and Company
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XI CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
|
|
|
45
|
|
|
Section 11.01.
|
|
Company May Consolidate, Etc., Only on Certain Terms
|
|
|
45
|
|
|
Section 11.02.
|
|
Successor Corporation Substituted
|
|
|
45
|
|
|
|
|
|
|
†
|
|
This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
|
|
|
|
*
|
|
Bracketed language will be inserted in the Indenture under which subordinated Debt Securities
will be issued.
|
ii
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
ARTICLE XII SUPPLEMENTAL INDENTURES
|
|
|
45
|
|
|
Section 12.01.
|
|
Supplemental Indentures Without Consent of Holders
|
|
|
45
|
|
|
Section 12.02.
|
|
Supplemental Indentures With Consent of Holders
|
|
|
47
|
|
|
Section 12.03.
|
|
Execution of Supplemental Indentures
|
|
|
48
|
|
|
Section 12.04.
|
|
Effect of Supplemental Indentures
|
|
|
48
|
|
|
Section 12.05.
|
|
Conformity With Trust Indenture Act
|
|
|
48
|
|
|
Section 12.06.
|
|
Reference in Debt Securities to Supplemental Indentures
|
|
|
48
|
|
|
Section 12.07.
|
|
Modification without Supplemental Indenture
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XIII MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
|
|
|
49
|
|
|
Section 13.01.
|
|
Purposes for which Meetings may be Called
|
|
|
49
|
|
|
Section 13.02.
|
|
Call, Notice and Place of Meetings
|
|
|
49
|
|
|
Section 13.03.
|
|
Persons Entitled to Vote at Meetings
|
|
|
49
|
|
|
Section 13.04.
|
|
Quorum; Action
|
|
|
50
|
|
|
Section 13.05.
|
|
Attendance at Meetings; Determination of Voting Rights; Conduct and
Adjournment of Meetings
|
|
|
50
|
|
|
Section 13.06.
|
|
Counting Votes and Recording Action of Meetings
|
|
|
51
|
|
|
Section 13.07.
|
|
Action Without Meeting
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XIV IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS
|
|
|
51
|
|
|
Section 14.01.
|
|
Liability Solely Corporate
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XV [SUBORDINATION OF SECURITIES]*
|
|
|
52
|
|
|
Section 15.01.
|
|
Securities Subordinate to Senior Indebtedness
|
|
|
52
|
|
|
Section 15.02.
|
|
Payment Over of Proceeds of Securities
|
|
|
52
|
|
|
Section 15.03.
|
|
Disputes with Holders of Certain Senior Indebtedness
|
|
|
53
|
|
|
Section 15.04.
|
|
Subrogation
|
|
|
54
|
|
|
Section 15.05.
|
|
Unconditional Obligation of the Company
|
|
|
54
|
|
|
Section 15.06.
|
|
Priority of Senior Indebtedness Upon Maturity
|
|
|
54
|
|
|
Section 15.07.
|
|
Trustee as Holder of Senior Indebtedness
|
|
|
55
|
|
|
Section 15.08.
|
|
Notice to Trustee to Effectuate Subordination
|
|
|
55
|
|
|
Section 15.09.
|
|
Modification, Extension, Etc. of Senior Indebtedness
|
|
|
55
|
|
|
Section 15.10.
|
|
Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness
|
|
|
55
|
|
|
Section 15.11.
|
|
Paying Agents other than the Trustee
|
|
|
55
|
|
|
Section 15.12.
|
|
Rights of Holders of Senior Indebtedness Not Impaired
|
|
|
56
|
|
|
Section 15.13.
|
|
This Article Not To Prevent Events of Default
|
|
|
56
|
|
|
Section 15.14.
|
|
Effect of Subordination Provisions; Termination
|
|
|
56
|
|
|
|
|
|
|
†
|
|
This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
|
|
|
|
*
|
|
Bracketed language will be inserted in the Indenture under which subordinated Debt Securities
will be issued.
|
iii
TERRENO REALTY CORPORATION
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF __________, 20_____
|
|
|
|
|
|
|
Trust Indenture Act Section
|
|
|
|
Indenture Section
|
|
|
|
|
|
|
|
§310 (a)(1)
|
|
|
|
9.09
|
|
(a)(2)
|
|
|
|
9.09
|
|
(a)(3)
|
|
|
|
9.14
|
|
(a)(4)
|
|
|
|
Not Applicable
|
|
(b)
|
|
|
|
9.08, 9.10
|
|
§311 (a)
|
|
|
|
9.13
|
|
(b)
|
|
|
|
9.13
|
|
(c)
|
|
|
|
9.13
|
|
§312 (a)
|
|
|
|
10.01
|
|
(b)
|
|
|
|
10.01
|
|
(c)
|
|
|
|
10.01
|
|
§313 (a)
|
|
|
|
10.02
|
|
(b)
|
|
|
|
10.02
|
|
(c)
|
|
|
|
10.02
|
|
(d)
|
|
|
|
10.02
|
|
§314 (a)
|
|
|
|
10.02
|
|
(a)(4)
|
|
|
|
6.06
|
|
(b)
|
|
|
|
Not Applicable
|
|
(c)(1)
|
|
|
|
1.02
|
|
(c)(2)
|
|
|
|
1.02
|
|
(c)(3)
|
|
|
|
Not Applicable
|
|
(d)
|
|
|
|
Not Applicable
|
iv
|
|
|
|
|
|
|
Trust Indenture Act Section
|
|
|
|
Indenture Section
|
|
|
|
|
|
|
|
(e)
|
|
|
|
1.02
|
|
§315 (a)
|
|
|
|
9.01, 9.03
|
|
(b)
|
|
|
|
9.02
|
|
(c)
|
|
|
|
9.01
|
|
(d)
|
|
|
|
9.01
|
|
(e)
|
|
|
|
8.14
|
|
§316 (a)
|
|
|
|
8.12, 8.13
|
|
(a)(1)(A)
|
|
|
|
8.02, 8.12
|
|
(a)(1)(B)
|
|
|
|
813
|
|
(a)(2)
|
|
|
|
Not Applicable
|
|
(b)
|
|
|
|
8.08
|
|
(c)
|
|
|
|
1.04(g)
|
|
§317 (a)(1)
|
|
|
|
8.03
|
|
(a)(2)
|
|
|
|
8.04
|
|
(b)
|
|
|
|
6.03
|
|
§318 (a)
|
|
|
|
1.07
|
v
INDENTURE (FOR [SUBORDINATED]* DEBT SECURITIES
), dated as of
,
20
, between
TERRENO REALTY CORPORATION, a corporation duly organized and existing under the laws of the State
of Maryland (herein called the “
Company
”), having its principal office at 16 Maiden Lane, Fifth
Floor, San Francisco, California, and [TRUSTEE], a
,
having its principal corporate trust office at
,
as Trustee (herein called the “
Trustee
”).
RECITAL OF THE COMPANY
The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time to time of certain of its
[subordinated]
*
debentures, notes or
other evidences of indebtedness (herein called the “
Debt Securities
”), in an unlimited aggregate
principal amount, to be issued in one or more series as contemplated herein; and all acts necessary
to make this Indenture a valid agreement of the Company have been performed.
For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires, capitalized terms used herein shall have the meanings assigned to them
in
Article I
of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Debt Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Debt Securities or of series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01.
Definitions
.
For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article and include the plural as well as the singular;
(b) all terms used herein without definition
that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States, and, except as
otherwise herein expressly provided, the term “generally accepted accounting principles” with
respect to any computation required or permitted hereunder shall mean such accounting principles as
are generally accepted in the United States at the date of such computation or, at the election of
the Company from time to time, at the date of the execution and delivery of this Indenture;
provided
,
however
, that in determining generally accepted accounting principles applicable to the
Company, the Company shall, to the extent required, conform to any order, rule or regulation of any
administrative agency, regulatory authority or other governmental body having jurisdiction over the
Company; and
(d) the words “herein,”
“hereof” and “hereunder” and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other subdivision.
Certain terms, used principally in
Article IX
, are defined in that Article.
“
Act
” when used with respect to any
Holder of a Debt Security, has the meaning specified in
Section 1.04
.
|
|
|
|
|
*
|
|
Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
|
“
Additional Interest
” means the interest, if any, that shall accrue on any interest on the
Debt Securities of any series, the payment of which has not been made on the applicable Interest
Payment Date and which shall accrue at the rate per annum specified or determined as specified in
such Debt Security.
“
Affiliate
” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For the
purposes of this definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.
“
Authenticating Agent
” means any Person (other than the Company or an Affiliate of the
Company) authorized by the Trustee pursuant to
Section 9.15
to act on behalf of the Trustee
to authenticate one or more series of Debt Securities or Tranche thereof.
“
Authorized Officer
” means the Chief Executive Officer, the President, the Chief Financial
Officer, any Vice President, the Treasurer or any other duly authorized officer of the Company.
“
Board of Directors
” means either the board of directors of the Company or any committee
thereof duly authorized to act or any director or directors and/or officer or officers of the
Company to whom that board or committee shall have duly delegated its authority in respect of
matters relating to this Indenture.
“
Board Resolution
” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification, and delivered to the Trustee.
“
Business Day
,” when used with respect to a Place of Payment or any other particular location
specified in the Debt Securities or this Indenture, means any day, other than a Saturday or Sunday,
which is not a day on which banking institutions or trust companies in such Place of Payment or
other location are generally authorized or required by law, regulation or executive order to remain
closed, except as may be otherwise specified as contemplated by
Section 3.01
.
“
Commission
” means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act, or, if at any time after the date of execution and delivery of this
Indenture such Commission is not existing and performing the duties now assigned to it under the
Trust Indenture Act, then the body, if any, performing such duties at such time.
“
Company
” means the Person named as the “Company” in the first paragraph of this Indenture
until a successor Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Company” shall mean such successor Person.
“
Company Request
” or “
Company Order
” means a written request or order signed in the name of
the Company by an Authorized Officer and delivered to the Trustee.
“
Corporate Trust Office
” means the office of the Trustee at which at any particular time this
Indenture shall be principally administered, which office at the date of execution and delivery of
this Indenture is located at
____________.
“
Corporation
” means a real estate investment trust, corporation, association, company, limited
liability company, joint stock company or business trust.
“
Debt Securities
” has the meaning stated in the first recital of this Indenture and more
particularly means any securities authenticated and delivered under this Indenture.
“
Debt Security Register
” and “
Debt Security Registrar
” have the respective meanings specified
in
Section 3.05
.
|
|
|
|
|
*
|
|
Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
|
2
“
Defaulted Interest
” has the meaning specified in
Section 3.07
.
“
Depositary
” shall mean, with respect to Debt Securities of any series, for which the Company
shall determine that such Debt Securities will be issued as a Global Security, The Depository Trust
Company, New York, New York, another clearing agency or any successor registered as a clearing
agency under the Exchange Act or other applicable statute or regulation, which, in each case, shall
be designated by the Company pursuant to
Section 2.03(c)
.
“
Discount Debt Security
” means any Debt Security that provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to
Section 8.02
.
“
Dollar
” or “
$
” means a dollar or other equivalent unit in such coin or currency of the United
States as at the time shall be legal tender for the payment of public and private debts.
“
Eligible Obligations
” means:
(a) with respect to Debt Securities denominated in Dollars, Government Obligations; or
(b) with respect to Debt Securities denominated in a currency other than Dollars or in a
composite currency, such other obligations or instruments as shall be specified with respect to
such Debt Securities, as contemplated by
Section 3.01
.
“
Event of Default
” has the meaning specified in
Section 8.01
.
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
“
Global Security
” means, with respect to the Debt Securities, a Debt Security executed by the
Company and delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction,
all in accordance with this Indenture, which shall be registered in the name of the Depositary or
its nominee.
“
Governmental Authority
” means the government of the United States or of any state or
territory thereof or of the District of Columbia or of any county, municipality or other political
subdivision of any thereof, or any department, agency, authority or other instrumentality of any of
the foregoing.
“
Government Obligations
” means:
(a) direct obligations of, or obligations the timely payment of principal of and interest on
which are unconditionally guaranteed by, the United States entitled to the benefit of the full
faith and credit thereof; and
(b) certificates, depositary receipts or other instruments that evidence a direct ownership
interest in obligations described in clause (a) above or in any specific interest or principal
payments due in respect thereof;
provided
,
however
, that the custodian of such obligations or
specific interest or principal payments shall be a bank or trust company (which may include the
Trustee or any Paying Agent) subject to federal or state supervision or examination with a combined
capital and surplus of at least $100,000,000; and
provided
,
further
, that except as may be
otherwise required by law, such custodian shall be obligated to pay to the holders of such
certificates, depositary receipts or other instruments the full amount received by such custodian
in respect of such obligations or specific payments and shall not be permitted to make any
deduction therefrom.
“
Holder
” means a Person in whose name a Debt Security is registered in the Debt Security
Register.
“
Indenture
” means this instrument as originally executed and delivered and as it may from time
to time be supplemented or amended by one or more indentures or Officer’s Certificates supplemental
hereto entered into pursuant to the applicable provisions hereof and shall include the terms of
particular series of Debt Securities established as contemplated by
Section 3.01
.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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3
“
Interest
” with respect to a Discount Debt Security means interest, if any, borne by such Debt
Security at a Stated Interest Rate.
“
Interest Payment Date
,” when used with respect to any Debt Security, means the Stated
Maturity of an installment of interest on such Debt Security.
“
Maturity
,” when used with respect to any Debt Security, means the date on which the principal
of such Debt Security or an installment of principal becomes due and payable as provided in such
Debt Security or in this Indenture, whether at the Stated Maturity, by declaration of acceleration,
upon call for redemption or otherwise.
“
Officer’s Certificate
” means a certificate signed by an Authorized Officer and delivered to
the Trustee.
“
Opinion of Counsel
” means a written opinion of counsel, who may be counsel for the Company,
or other counsel acceptable to the Trustee.
“
Outstanding
,” when used with respect to Debt Securities, means, as of the date of
determination, all Debt Securities theretofore authenticated and delivered under this Indenture,
except:
(a) Debt Securities theretofore canceled by the Trustee or the Debt Security Registrar or
delivered to the Trustee or the Debt Security Registrar for cancellation;
(b) Debt Securities deemed to have been paid in accordance with
Section 7.01
; and
(c) Debt Securities that have been paid pursuant to
Section 3.06
or in exchange for or
in lieu of which other Debt Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Debt Securities in respect of which there shall have been presented
to the Trustee proof satisfactory to it and the Company that such Debt Securities are held by a
bona fide purchaser or purchasers in whose hands such Debt Securities are valid obligations of the
Company;
provided
,
however
, that in determining whether or not the Holders of the requisite principal amount
of the Debt Securities Outstanding under this Indenture, or the Outstanding Debt Securities of any
series or Tranche, have given any request, demand, authorization, direction, notice, consent or
waiver hereunder or whether or not a quorum is present at a meeting of Holders of Debt Securities,
(x) Debt Securities owned by the Company or any other obligor upon the Debt Securities or any
Affiliate of the Company or of such other obligor (unless the Company, such Affiliate or such
obligor owns all Debt Securities Outstanding under this Indenture, or all Outstanding Debt
Securities of each such series and each such Tranche, as the case may be, determined without regard
to this clause (x)) shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver or upon any such determination as to the
presence of a quorum, only Debt Securities that the Trustee knows to be so owned shall be so
disregarded;
provided
,
however
, that Debt Securities so owned that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee’s right so to act with respect to such Debt Securities and that the pledgee is not the
Company or any other obligor upon the Debt Securities or any Affiliate of the Company or of such
other obligor; and
(y) the principal amount of a Discount Debt Security that shall be deemed to be Outstanding
for such purposes shall be the amount of the principal thereof that would be due and payable as of
the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant
to
Section 8.02
;
provided
,
further
, that, in the case of any Debt Security the principal of which is payable from
time to time without presentment or surrender, the principal amount of such Debt Security that
shall be deemed to be Outstanding at any time for all purposes of this Indenture shall be the
original principal amount thereof less the aggregate amount of principal thereof theretofore paid.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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4
“
Paying Agent
” means any Person, including the Company, authorized by the Company to pay the
principal of and premium, if any, or interest (including Additional Interest), if any, on any Debt
Securities on behalf of the Company.
“
Periodic Offering
” means an offering of Debt Securities of a series from time to time any or
all of the specific terms of which Debt Securities, including without limitation the rate or rates
of interest (including Additional Interest), if any, thereon, the Stated Maturity or Maturities
thereof and the redemption provisions, if any, with respect thereto, are to be determined by the
Company or its agents upon the issuance of such Debt Securities.
“
Person
” means any individual, Corporation, partnership, joint venture, trust or
unincorporated organization or any Governmental Authority.
“
Place of Payment
,” when used with respect to the Debt Securities of any series, or Tranche
thereof, means the place or places, specified as contemplated by
Section 3.01
, at which,
subject to
Section 6.02
, principal of and premium, if any, and interest (including
Additional Interest), if any, on the Debt Securities of such series or Tranche are payable.
“
Predecessor Debt Security
” of any particular Debt Security means every previous Debt Security
evidencing all or a portion of the same debt as that evidenced by such particular Debt Security;
and, for the purposes of this definition, any Debt Security authenticated and delivered under
Section 3.06
in exchange for or in lieu of a mutilated, destroyed, lost or stolen Debt
Security shall be deemed (to the extent lawful) to evidence the same debt as the mutilated,
destroyed, lost or stolen Debt Security.
“
Redemption Date
,” when used with respect to any Debt Security to be redeemed, means the date
fixed for such redemption by or pursuant to this Indenture.
“
Redemption Price
,” when used with respect to any Debt Security to be redeemed, means the
price at which it is to be redeemed pursuant to this Indenture.
“
Regular Record Date
” for the interest payable on any Interest Payment Date on the Debt
Securities of any series means the date specified for that purpose as contemplated by
Section
3.01
.
“
Required Currency
” has the meaning specified in
Section 3.11
.
“
Responsible Officer
,” when used with respect to the Trustee, means the officer of the Trustee
at its Corporate Trust Office assigned by the Trustee to administer this Indenture, and any other
duly authorized officer of the Trustee to whom a matter arising under this Indenture may be
referred.
[“
Senior Indebtedness
” means all (i) obligations (other than non-recourse obligations and the
indebtedness issued under this Indenture) of, or guaranteed or assumed by, the Company for borrowed
money, including both senior and subordinated indebtedness for borrowed money (other than the Debt
Securities), or for the payment of money relating to any lease that is capitalized on the
consolidated balance sheet of the Company and its subsidiaries in accordance with generally
accepted accounting principles as in effect from time to time, (ii) indebtedness evidenced by
bonds, debentures, notes or other similar instruments, (iii) obligations with respect to letters of
credit, bankers’ acceptances or similar facilities issued for the account of the Company, (iv)
obligations issued or assumed as the deferred purchase price of property or services, but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of business, (v)
obligations for claims, as defined in Section 101(5) of the United States Bankruptcy Code of 1978,
as amended, in respect of derivative products such as interest and foreign exchange rate contracts,
commodity contracts and similar arrangements; and (vi) obligations of the type referred to in each
of the preceding clauses (i) through (v) of another Person, the payment of which the Company has
guaranteed or is responsible or liable for directly or indirectly, as obligor or otherwise; and in
each case, amendments, renewals, extensions, modifications and refundings of any such indebtedness
or obligations, whether existing as of the date of this Indenture or subsequently incurred by the
Company.]*
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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5
“
Special Record Date
” for the payment of any Defaulted Interest on the Debt Securities of any
series means a date fixed by the Trustee pursuant to
Section 3.07
.
“
Stated Interest Rate
” means a rate (whether fixed or variable) at which an obligation by its
terms is stated to bear interest. Any calculation or other determination to be made under this
Indenture by reference to the Stated Interest Rate on a Debt Security shall be made without regard
to the effective interest cost to the Company of such Debt Security and without regard to the
Stated Interest Rate on, or the effective cost to the Company of, any other indebtedness in respect
of which the Company’s obligations are evidenced or secured in whole or in part by such Debt
Security.
“
Stated Maturity
,” when used with respect to any obligation or any installment of principal
thereof or interest thereon, means the date on which the principal of such obligation or such
installment of principal or interest is stated to be due and payable (without regard to any
provisions for redemption, prepayment, acceleration, purchase or extension).
“
Tranche
” means a group of Debt Securities that (a) are of the same series and (b) have
identical terms except as to principal amount.
“
Trust Indenture Act
” means the Trust Indenture Act of 1939, as amended, as in force and
effect as of the date of execution of this Indenture;
provided
,
however
, that in the event the
Trust Indenture Act of 1939 is succeeded by another statute or is amended after such date, “Trust
Indenture Act” shall mean such successor statute or the Trust Indenture Act of 1939, as so amended,
to the extent such successor statute or amendment is applicable to this Indenture or to the actions
of the Company or the Trustee under or pursuant to this Indenture.
“
Trustee
” means the Person named as the “Trustee” in the first paragraph of this Indenture
until a successor Trustee shall have become such with respect to one or more series of Debt
Securities pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall
mean or include each Person who is then a Trustee hereunder, and if at any time there is more than
one such Person, “Trustee” as used with respect to the Debt Securities of any series shall mean the
Trustee with respect to Debt Securities of that series.
“
United States
” means the United States of America, its territories, its possessions and other
areas subject to its political jurisdiction.
Section 1.02.
Compliance Certificates and Opinions
.
Except as otherwise expressly provided in this Indenture, upon any application or request by
the Company to the Trustee to take any action under any provision of this Indenture, the Company
shall furnish to the Trustee an Officer’s Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture shall include:
(a) a statement that each Person signing such certificate or opinion has read such covenant or
condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such Person, such Person has made such
examination or investigation as is necessary to enable such Person to express an informed opinion
as to whether or not such covenant or condition has been complied with; and
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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6
(d) a statement as to whether, in the opinion of each such Person, such condition or covenant
has been complied with.
Section 1.03.
Form of Documents Delivered to Trustee
.
In any case where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which such officer’s certificate or opinion are
based are erroneous. Any such certificate or 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 Company stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this Indenture, they may,
but need not, be consolidated and form one instrument.
Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officer’s
Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other
inadvertent or unintentional error or omission shall be discovered therein, a new document or
instrument may be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates of the actual
execution and/or delivery thereof, such substitute document or instrument shall be deemed to have
been executed and/or delivered as of the date or dates required with respect to the document or
instrument for which it is substituted. Anything in this Indenture to the contrary
notwithstanding, if any such corrective document or instrument indicates that action has been taken
by or at the request of the Company which could not have been taken had the original document or
instrument not contained such error or omission, the action so taken shall not be invalidated or
otherwise rendered ineffective but shall be and remain in full force and effect (except to the
extent that such action was a result of willful misconduct or bad faith or had or could be expected
to have a material adverse effect on the Holders of any Debt Securities issued hereunder).
Without limiting the generality of the foregoing, any Debt Securities issued under the
authority of such defective document or instrument shall nevertheless be the valid obligations of
the Company entitled to the benefits of this Indenture equally and ratably with all other
Outstanding Debt Securities.
Section 1.04.
Acts of Holders
.
(a) Any request, demand, authorization, direction, notice, consent, election, waiver or other
action provided by this Indenture to be made, 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 or, alternatively, may be embodied in and evidenced
by the record of Holders voting in favor thereof, either in person or by proxies duly appointed in
writing, at any meeting of Holders duly called and held in accordance with the provisions of
Article XIII
, 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 Company. 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 and 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 Debt Security, shall be sufficient for any purpose of this Indenture and (subject
to
Section 9.01
) conclusive in
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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7
favor of the Trustee and the Company, if made in the manner
provided in this Section. The record of any meeting of Holders shall be proved in the manner
provided in
Section 13.06
.
(b) The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof or may be proved in
any other manner that the Trustee and the Company deem sufficient. Where such execution is by a
signer acting in a capacity other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The principal amount (except as otherwise contemplated in clause (y) of the proviso to the
definition of Outstanding) and serial numbers of Debt Securities held by any Person, and the date
of holding the same, shall be proved by the Debt Security Register.
(d) Any request, demand, authorization, direction, notice, consent, election, waiver or other
Act of a Holder shall bind every future Holder of the same Debt Security and the Holder of every
Debt Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company
in reliance thereon, whether or not notation of such action is made upon such Debt Security.
(e) Until such time as written instruments shall have been delivered to the Trustee with
respect to the requisite percentage of principal amount of Debt Securities for the action
contemplated by such instruments, any such instrument executed and delivered by or on behalf of a
Holder may be revoked with respect to any or all of such Debt Securities by written notice by such
Holder or any subsequent Holder, proven in the manner in which such instrument was proven.
(f) Debt Securities of any series, or any Tranche thereof, authenticated and delivered after
any Act of Holders may, and shall if required by the Trustee, bear a notation in form approved by
the Trustee as to any action taken by such Act of Holders. If the Company shall so determine, new
Debt Securities of any series, or any Tranche thereof, so modified as to conform, in the opinion of
the Trustee and the Company, to such action may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Debt Securities of such
series or Tranche.
(g) If the Company shall solicit from Holders any request, demand, authorization, direction,
notice, consent, waiver or other Act, the Company may, at its option, fix in advance a record date
for the determination of Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no obligation to do so. If such a
record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or
other Act may be given before or after such record date, but only the Holders of record at the
close of business on the record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of the Outstanding Debt 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 Debt Securities shall be computed as of the record date.
Section 1.05.
Notices, Etc. to Trustee and Company
.
Any request, demand, authorization, direction, notice, consent, election, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with, the Trustee by any Holder or by the Company, or the Company by the
Trustee or by any Holder, shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and delivered personally to an officer or other responsible
employee of the addressee, or transmitted by facsimile transmission or other direct written
electronic means to such telephone number or other electronic communications address as the parties
hereto shall from time to time designate, or transmitted by certified or registered mail, charges
prepaid, to the applicable address set opposite such party’s name below or to such other address as
either party hereto may from time to time designate:
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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If to the Trustee, to:
[Trustee]
[Address]
Attention:
Telephone:
Facsimile:
If to the Company, to:
Terreno Realty Corporation
16 Maiden Lane, Fifth Floor
San Francisco, CA 94108
Attention:
Telephone:
Facsimile:
With copy to:
Attention:
Telephone:
Facsimile:
Any communication contemplated herein shall be deemed to have been made, given, furnished and
filed if personally delivered, on the date of delivery, if transmitted by facsimile transmission or
other direct written electronic means, upon date of receipt of the transmission, and if transmitted
by certified or registered mail, on the date of receipt.
Section 1.06.
Notice to Holders of Debt Securities; Waiver
.
Except as otherwise expressly provided herein, where this Indenture provides for notice to
Holders of any event, such notice shall be sufficiently given, and shall be deemed given, to
Holders if in writing and mailed, first-class postage prepaid, to each Holder affected by such
event, at the address of such Holder as it appears in the Debt Security Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the giving of such notice.
In 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 to Holders 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 any case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.
Any notice required by this Indenture may be waived in writing by the Person entitled to
receive such notice, either before or after the event otherwise to be specified therein, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
Section 1.07.
Conflict with Trust Indenture Act
.
If any provision of this Indenture limits, qualifies or conflicts with another provision
hereof that is required or deemed to be included in this Indenture by, or is otherwise governed by,
any of the provisions of the Trust Indenture Act, such other provision shall control; and if any
provision hereof otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall
control.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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Section 1.08.
Effect of Headings and Table of Contents
.
The Article and Section headings in this Indenture and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.09.
Successors and Assigns
.
All covenants and agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
Section 1.10.
Separability Clause
.
In case any provision in this Indenture or the Debt Securities 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 1.11.
Benefits of Indenture
.
Nothing in this Indenture or the Debt Securities, express or implied, shall give to any
Person, other than the parties hereto, their successors hereunder, the Holders, [and so long as the
notice described in
Section 15.14
hereof has not been given, the holders of Senior
Indebtedness,]* any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 1.12.
Governing Law
.
This Indenture and the Debt Securities shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of law principles thereof, except to
the extent that the law of any other jurisdiction shall be mandatorily applicable.
Section 1.13.
Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Debt
Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of the Debt Securities other than a provision in Debt Securities of
any series, or any Tranche thereof, or in the indenture supplemental hereto, Board Resolution or
Officer’s Certificate that establishes the terms of the Debt Securities of such series or Tranche,
which specifically states that such provision shall apply in lieu of this Section)
payment of interest or principal and premium, if any, need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment
with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at
the Stated Maturity, and, if such payment is made or duly provided for on such Business Day, no
interest shall accrue on the amount so payable for the period from and after such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be, to such Business Day.
ARTICLE II
DEBT SECURITY FORMS
Section 2.01.
Forms Generally
.
The definitive Debt Securities of each series shall be in substantially the form or forms
thereof established in the indenture supplemental hereto establishing such series or in a Board
Resolution establishing such series, or in an Officer’s Certificate pursuant to such supplemental
indenture or Board Resolution, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Debt Securities, as evidenced
by their execution of the Debt Securities. If the form or forms of Debt Securities of any series
are established in a Board Resolution or in an Officer’s Certificate pursuant to an indenture
supplement hereto or to a Board Resolution, such Board Resolution and Officer’s
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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Certificate, if
any, shall be delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by
Section 3.03
for the authentication and delivery of such Debt Securities.
Unless otherwise specified as contemplated by
Sections 3.01
or
12.01(g)
, the
Debt Securities of each series shall be issuable in registered form without coupons. The
definitive Debt Securities shall be produced in such manner as shall be determined by the officers
executing such Debt Securities, as evidenced by their execution thereof.
Section 2.02.
Form of Trustee’s Certificate of Authentication
.
The Trustee’s certificate of authentication
shall be in substantially the form set forth
below:
This is one of the Debt Securities of the series
designated therein referred to in the
within-mentioned Indenture.
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By:
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Authorized Representative
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Section 2.03.
Debt Securities Issuable in the Form of a Global Security
.
(a) If the Company shall establish pursuant
to
Section 3.01
that the Debt Securities
of a particular series are to be issued in whole or in part in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall, in accordance with
Section
3.03
and the Company Order delivered to the Trustee thereunder, authenticate and deliver such
Global Security or Securities, which (i) shall represent, and shall be denominated in an amount
equal to the aggregate principal amount of the Outstanding Debt Securities of such series to be
represented by such Global Security or Securities, (ii) may provide that the aggregate amount of
Outstanding Debt Securities represented thereby may from time to time be increased or reduced to
reflect exchanges, (iii) shall be registered in the name of the Depositary for such Global Security
or Securities or its nominee, (iv) shall be delivered by the Trustee to the Depositary or pursuant
to the Depositary’s instruction and (v) shall bear a legend in accordance with the requirements of
the Depositary. The Trustee shall enter into any agreement with the Depositary related to such
Global Securities as the Company may direct in such Company Order.
(b) Notwithstanding any other provision of
this Section or of
Section 3.05
, except as
contemplated by the provisions of paragraph (c) below, unless the terms of a Global Security
expressly permit such Global Security to be exchanged in whole or in part for individual Debt
Securities, a Global Security may be transferred, in whole but not in part and in the manner
provided in
Section 3.05
, only to a nominee of the Depositary for such Global Security, or
to the Depositary, or to a successor Depositary for such Global Security selected or approved by
the Company, or to a nominee of such successor Depositary.
(c) (1) If at any time the Depositary
for a Global Security notifies the Company that it is
unwilling or unable to continue as the Depositary for such Global Security or if at any time the
Depositary for the Debt Securities for such series shall no longer be eligible or in good standing
under the Exchange Act, or other applicable statute or regulation, the Company shall appoint a
successor Depositary with respect to such Global Security. If a successor Depositary for such
Global Security is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such ineligibility, the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of Debt Securities of such series in
the form of definitive certificates in exchange for such Global Security, will authenticate and
deliver Debt Securities of such series in the form of definitive certificates of like tenor and
terms in an aggregate principal amount equal to the principal amount of the Global Security in
exchange for such Global Security. Such Debt Securities will be issued to and registered in the
name of such Person or Persons as are specified by the Depositary.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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11
(2) To the extent legally permitted and subject to the rules and regulations of the
acting Depositary, the Company may at any time and in its sole discretion determine that the
Debt Securities of any series issued or issuable in the form of one or more Global
Securities shall no longer be represented by such Global Security or Securities. In any
such event the Company will execute, and the Trustee, upon receipt of a Company Request for
the authentication and delivery of Debt Securities in the form of definitive certificates in
exchange in whole or in part for such Global Security, will authenticate and deliver without
service charge to each Person specified by the Depositary Debt Securities in the form of
definitive certificates of like tenor and terms in an aggregate principal amount equal to
the principal amount of such Global Security representing such series, or the aggregate
principal amount of such Global Securities representing such series, in exchange for such
Global Security or Securities.
(3) If specified by the Company pursuant to
Section 3.01
with respect to Debt
Securities issued or issuable in the form of a Global Security, the Depositary for such
Global Security may surrender such Global Security in exchange in whole or in part for Debt
Securities in the form of definitive certificates of like tenor and terms on such terms as
are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and
the Trustee shall authenticate and deliver, without service charge, (A) to each Person
specified by such Depositary a new Debt Security or Securities of the same series of like
tenor and terms and any authorized denomination as requested by such Person in an aggregate
principal amount equal to and in exchange for such Person’s beneficial interest in the
Global Security and (B) to such Depositary a new Global Security of like tenor and terms and
in an authorized denomination equal to the difference, if any, between the principal amount
of the surrendered Global Security and the aggregate principal amount of Debt Securities
delivered to Holders thereof.
(4) In any exchange provided for in any of the preceding three subparagraphs, the
Company shall execute and the Trustee shall authenticate and deliver Debt Securities in the
form of definitive certificates in authorized denominations. Upon the exchange of the
entire principal amount of a Global Security for Debt Securities in the form of definitive
certificates, such Global Security shall be canceled by the Trustee. Except as provided in
the immediately preceding subparagraph, Debt Securities issued in exchange for a Global
Security pursuant to this Section shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, acting pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the Trustee. Provided
that the Company and the Trustee have so agreed, the Trustee shall deliver such Debt
Securities to the Persons in whose names the Debt Securities are so to be registered.
(5) Any endorsement of a Global Security to reflect the principal amount thereof, or
any increase or decrease in such principal amount, or changes in the rights of Holders of
Outstanding Debt Securities represented thereby shall be made in such manner and by such
Person or Persons as shall be specified in or pursuant to any applicable letter of
representations or other arrangement entered into with, or procedures of, the Depositary
with respect to such Global Security or in the Company Order delivered or to be delivered
pursuant to
Section 3.03
with respect thereto. Subject to the provisions of
Section 3.03
, the Trustee shall deliver and redeliver any such Global Security in
the manner and upon instructions given by the Person or Persons specified in or pursuant to
any applicable letter of representations or other arrangement entered into with, or
procedures of, the Depositary with respect to such Global Security or in any applicable
Company Order. If a Company Order pursuant to
Section 3.03
is so delivered, any
instructions by the Company with respect to such Global Security contained therein shall be
in writing but need not be accompanied by or contained in an Officer’s Certificate and need
not be accompanied by an Opinion of Counsel.
(6) The Depositary or, if there be one, its nominee, shall be the Holder of a Global
Security for all purposes under this Indenture; and beneficial owners with respect to such
Global Security shall hold their interests pursuant to applicable procedures of such
Depositary. The Company, the Trustee and the Debt Security Registrar shall be entitled to
deal with such Depositary for all purposes of this Indenture relating to such Global
Security (including the payment of principal, premium, if any, and interest (including
Additional Interest) and the giving of instructions or directions by or to the beneficial
owners of such Global Security as the sole Holder of such Global Security, and shall have no
obligations to the
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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beneficial owners thereof (including any direct or indirect participants
in such Depositary). None of the Company, the Trustee, any Paying Agent or the Debt
Security Registrar shall 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 in or pursuant to any applicable letter of representations or other arrangement
entered into with, or procedures of, the Depositary with respect to such Global Security or
for maintaining, supervising or reviewing any records relating to such beneficial ownership
interests.
ARTICLE III
THE DEBT SECURITIES
Section 3.01.
Amount Unlimited; Issuable in Series
.
The aggregate principal amount of Debt Securities that may be authenticated and delivered
under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. Subject to the last paragraph of
this Section, prior to the authentication and delivery of Debt Securities of any series there shall
be established by specification in a supplemental indenture or in a Board Resolution, or in an
Officer’s Certificate pursuant to a supplemental indenture or a Board Resolution:
(a) the title of the Debt Securities of such series (which shall distinguish the Debt
Securities of such series from Debt Securities of all other series);
(b) any limit upon the aggregate principal amount of the Debt Securities of such 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 Debt
Securities of the series pursuant to
Section 3.04
,
3.05
,
3.06
,
4.06
or
12.06
and, except for any Debt Securities that, pursuant to
Section 3.03
, are
deemed never to have been authenticated and delivered hereunder);
(c) the Person or Persons (without specific identification) to whom interest on Debt
Securities of such series, or any Tranche thereof, shall be payable on any Interest Payment Date,
if other than the Persons in whose names such Debt Securities (or one or more Predecessor Debt
Securities) are registered at the close of business on the Regular Record Date for such interest;
(d) the date or dates on which the principal of the Debt Securities of such series, or any
Tranche thereof, is payable or any formulary or other method or other means by which such date or
dates shall be determined, by reference to an index or other fact or event ascertainable outside of
this Indenture or otherwise (without regard to any provisions for redemption, prepayment,
acceleration, purchase or extension);
(e) the rate or rates at which the Debt Securities of such series, or any Tranche thereof,
shall bear interest, if any (including the rate or rates at which overdue principal shall bear
interest, if different from the rate or rates at which such Debt Securities shall bear interest
prior to Maturity, (ii) and, if applicable, the rate or rates at which overdue premium shall bear
interest, if any, and (iii) the rate or rates and the extent to which Additional Interest, if any,
shall be payable), the period or periods during which such rate or rates shall be applicable, or
any formulary or other method or other means by which such rate or rates, and any period or
periods, shall be determined, by reference to an index or other fact or event ascertainable outside
of this Indenture or otherwise; the date or dates from which such interest shall accrue; the
Interest Payment Dates on which such interest shall be payable and the Regular Record Date, if any,
for the interest payable on such Debt Securities on any Interest Payment Date[; the right of the
Company, if any, to extend the interest payment periods and the duration of any such extension as
contemplated by
Section 3.12
]*; and the basis of computation of interest, if other than as
provided in
Section 3.10
;
(f) the place or places at which or methods by which (1) the principal of and premium, if any,
and interest (including Additional Interest), if any, on Debt Securities of such series, or any
Tranche thereof, shall be payable, (2) registration of transfer of Debt Securities of such series,
or any Tranche thereof, may be effected, (3)
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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13
exchanges of Debt Securities of such series, or any
Tranche thereof, may be effected and (4) notices and demands to or upon the Company in respect of
the Debt Securities of such series, or any Tranche thereof, and this Indenture may be served; the
Debt Security Registrar for such series; and if such is the case, that the principal of such Debt
Securities shall be payable without presentment or surrender thereof;
(g) the period or periods within which, or the date or dates on which, the price or prices at
which and the terms and conditions upon which the Debt Securities of such series, or any Tranche
thereof, may be redeemed, in whole or in part, at the option of the Company and any restrictions on
such redemptions, including but not limited to a restriction on a partial redemption by the Company
of the Debt Securities of any series, or any Tranche thereof, resulting in delisting of such Debt
Securities from any national exchange;
(h) the obligation or obligations, if any, of the Company to redeem or purchase the Debt
Securities of such series, or any Tranche thereof, pursuant to any sinking fund or other mandatory
redemption or tender provisions 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 and the terms and
conditions upon which such Debt Securities shall be redeemed or purchased, in whole or in part,
pursuant to such obligation, and applicable exceptions to the requirements of Section 4.04 in the
case of mandatory redemption or redemption at the option of the Holder;
(i) the denominations in which Debt Securities of such series, or any Tranche thereof, shall
be issuable if other than denominations of $1,000 and any integral multiple thereof;
(j) the currency or currencies, including composite currencies, in which payment of the
principal of and premium, if any, and interest (including Additional Interest), if any, on the Debt
Securities of such series, or any Tranche thereof, shall be payable (if other than in Dollars);
(k) if the principal of or premium, if any, or interest (including Additional Interest), if
any, on the Debt Securities of such series, or any Tranche thereof, are to be payable, at the
election of the Company or a Holder thereof, in a coin or currency other than that in which the
Debt Securities are stated to be payable, the period or periods within which and the terms and
conditions upon which, such election may be made;
(l) if the principal of or premium, if any, or interest (including Additional Interest), if
any, on the Debt Securities of such series, or any Tranche thereof, are to be payable, or are to be
payable at the election of the Company or a Holder thereof, in securities or other property, the
type and amount of such securities or other
property, or the formulary or other method or other means by which such amount shall be
determined, and the period or periods within which, and the terms and conditions upon which, any
such election may be made;
(m) if the amount payable in respect of principal of or premium, if any, or interest, if any,
on the Debt Securities of such series, or any Tranche thereof, may be determined with reference to
an index or other fact or event ascertainable outside this Indenture, the manner in which such
amounts shall be determined to the extent not established pursuant to clause (e) of this paragraph;
(n) if other than the principal amount thereof, the portion of the principal amount of Debt
Securities of such series, or any Tranche thereof, that shall be payable upon declaration of
acceleration of the Maturity thereof pursuant to
Section 8.02
;
(o) any Events of Default, in addition to those specified in
Section 8.01
, with
respect to the Debt Securities of such series, and any covenants of the Company for the benefit of
the Holders of the Debt Securities of such series, or any Tranche thereof, in addition to those set
forth in
Article VI
;
(p) the terms, if any, pursuant to which the Debt Securities of such series, or any Tranche
thereof, may be converted into or exchanged for shares of beneficial interest or other securities
of the Company or any other Person;
(q) the obligations or instruments, if any, that shall be considered to be Eligible
Obligations in respect of the Debt Securities of such series, or any Tranche thereof, denominated
in a currency other than Dollars or in a
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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composite currency, and any additional or alternative
provisions for the reinstatement of the Company’s indebtedness in respect of such Debt Securities
after the satisfaction and discharge thereof as provided in
Section 7.01
;
(r) whether the Debt Securities of the series shall be issued in whole or in part in the form
of a Global Security or Securities; the terms and conditions, if any, upon which such Global
Security or Securities may be exchanged in whole or in part for certificated Debt Securities of
such series and of like tenor of any authorized denomination and the circumstances under which such
exchange may occur, if other than in the manner provided for in
Section 2.03
; the
Depositary for such Global Security or Securities; and the form of any legend or legends to be
borne by any such Global Security in addition to or in lieu of the legend referred to in
Section 2.03
;
(s) if the Debt Securities of such series, or any Tranche thereof, are to be issuable in
bearer form, any and all matters incidental thereto that are not specifically addressed in a
supplemental indenture as contemplated by
Section 12.01(g)
;
(t) to the extent not established pursuant to clause (r) of this paragraph, any limitations on
the rights of the Holders of the Debt Securities of such series, or any Tranche thereof, to
transfer or exchange such Debt Securities or to obtain the registration of transfer thereof; and if
a service charge will be made for the registration of transfer or exchange of Debt Securities of
such series, or any Tranche thereof, the amount or terms thereof;
(u) any exceptions to
Section 1.13
, or variation in the definition of Business Day,
with respect to the Debt Securities of such series, or any Tranche thereof;
(v) any collateral security, assurance or guarantee for such series of Debt Securities;
(w) any credit enhancement applicable to the Debt Securities of such series; and
(x) any other terms of the Debt Securities of such series, or any Tranche thereof, not
inconsistent with the provisions of this Indenture.
[The Debt Securities of each series, or any Tranche thereof, shall be subordinated in the
right of payment to Senior Indebtedness as provided in
Article XV
.]*
With respect to Debt Securities of a series subject to a Periodic Offering, the indenture
supplemental hereto or the Board Resolution that establishes such series, or the Officer’s
Certificate pursuant to such supplemental indenture or Board Resolution, as the case may be, may
provide general terms or parameters for Debt Securities of such series and provide either that the
specific terms of Debt Securities of such series, or any Tranche thereof, shall be specified in a
Company Order or that such terms shall be determined by the Company or its agents in accordance
with procedures specified in a Company Order as contemplated by clause (b) of the third paragraph
of
Section 3.03
.
Section 3.02.
Denominations
.
Unless otherwise provided as contemplated by
Section 3.01
with respect to any series
of Debt Securities, or any Tranche thereof, the Debt Securities of each series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 3.03.
Execution, Authentication, Delivery and Dating
.
Unless otherwise provided as contemplated by
Section 3.01
with respect to any series
of Debt Securities, or any Tranche thereof, the Debt Securities shall be executed on behalf of the
Company by an Authorized Officer and may have the corporate seal of the Company affixed thereto or
reproduced thereon attested by any other Authorized Officer. The signature of any or all of these
officers on the Debt Securities may be manual or facsimile.
Debt Securities bearing the manual or facsimile signatures of individuals who were at the time
of execution Authorized Officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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15
have ceased to hold such offices prior to the authentication and
delivery of such Debt Securities or did not hold such offices at the date of such Debt Securities.
The Trustee shall authenticate and deliver Debt Securities of a series, for original issue, at
one time or from time to time in accordance with the Company Order referred to below, upon receipt
by the Trustee of:
(a) the instrument or instruments establishing the form or forms and terms of such series, as
provided in
Sections 2.01
and
3.01
;
(b) a Company Order requesting the authentication and delivery of such Debt Securities and, to
the extent that the terms of such Debt Securities shall not have been established in an indenture
supplemental hereto or in a Board Resolution, or in an Officer’s Certificate pursuant to a
supplemental indenture or Board Resolution, all as contemplated by
Sections 2.01
and
3.01
, either (i) establishing such terms or (ii) in the case of Debt Securities of a series
subject to a Periodic Offering, specifying procedures, acceptable to the Trustee, by which such
terms are to be established (which procedures may provide, to the extent acceptable to the Trustee,
for authentication and delivery pursuant to oral or electronic instructions from the Company or any
agent or agents thereof, which oral instructions are to be promptly confirmed electronically or in
writing), in either case in accordance with the instrument or instruments delivered pursuant to
clause (a) above;
(c) the Debt Securities of such series, executed on behalf of the Company by an Authorized
Officer;
(d) an Opinion of Counsel to the effect that:
(i) the form or forms of such Debt Securities have been duly authorized by the Company
and have been established in conformity with the provisions of this Indenture;
(ii) the terms of such Debt Securities have been duly authorized by the Company and
have been established in conformity with the provisions of this Indenture; and
(iii) assuming authentication and delivery by the Trustee and subject to any conditions
specified in such Opinion of Counsel, such Debt Securities will have been duly issued under
this Indenture and will be legal, valid and binding obligations of the Company, enforceable
in accordance with their terms, subject, as to enforcement, to laws relating to or affecting
generally the enforcement of creditors’ rights, including, without limitation, bankruptcy
and insolvency laws and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
provided
,
however
, that, with respect to Debt Securities of a series subject to a Periodic
Offering, the Trustee shall be entitled to receive such Opinion of Counsel only once at or prior to
the time of the first authentication of such Debt Securities (provided that such Opinion of Counsel
addresses the authentication and delivery of all Debt Securities of such series) and that in lieu
of the opinions described in clauses (ii) and (iii) above Counsel may opine that:
(x) when the terms of such Debt Securities shall have been established pursuant to a Company
Order or Orders or pursuant to such procedures (acceptable to the Trustee) as may be specified from
time to time by a Company Order or Orders, all as contemplated by and in accordance with the
instrument or instruments delivered pursuant to clause (a) above, such terms will have been duly
authorized by the Company and will have been established in conformity with the provisions of this
Indenture; and
(y) such Debt Securities, when authenticated and delivered by the Trustee in accordance with
this Indenture and the Company Order or Orders or specified procedures referred to in paragraph (x)
above and issued and delivered by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will have been duly issued under this Indenture and will constitute
valid and legally binding obligations of the Company, entitled to the benefits provided by the
Indenture, and enforceable in accordance with their terms, subject, as to enforcement, to laws
relating to or affecting generally the enforcement of creditors’ rights, including, without
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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limitation, bankruptcy and insolvency laws and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
With respect to Debt Securities of a series subject to a Periodic Offering, the Trustee may
conclusively rely, as to the authorization by the Company of any of such Debt Securities, the form
and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the
Opinion of Counsel and other documents delivered pursuant to
Sections 2.01
and
3.01
and this Section, as applicable, at or prior to the time of the first authentication of Debt
Securities of such series unless and until such opinion or other documents have been superseded or
revoked or expire by their terms. In connection with the authentication and delivery of Debt
Securities of a series subject to a Periodic Offering, the Trustee shall be entitled to assume that
the Company’s instructions to authenticate and deliver such Debt Securities do not violate any
rules, regulations or orders of any Governmental Authority having jurisdiction over the Company.
If the form or terms of the Debt Securities of any series have been established by or pursuant
to a Board Resolution or an Officer’s Certificate as permitted by
Sections 2.01
or
3.01
, the Trustee shall not be required to authenticate such Debt Securities if the
issuance of such Debt Securities pursuant to this Indenture will materially or adversely affect the
Trustee’s own rights, duties or immunities under the Debt Securities and this Indenture or
otherwise in a manner that is not reasonably acceptable to the Trustee.
Unless otherwise specified as contemplated by
Section 3.01
with respect to any series
of Debt Securities, or any Tranche thereof, each Debt Security shall be dated the date of its
authentication.
Unless otherwise specified as contemplated by
Section 3.01
with respect to any series
of Debt Securities, or any Tranche thereof, no Debt Security shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on such Debt Security
a certificate of authentication substantially in the form provided for herein executed by the
Trustee or its agent by manual signature, and such certificate upon any Debt Security shall be
conclusive evidence, and the only evidence, that such Debt Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the
foregoing, if any Debt Security shall have been authenticated and delivered hereunder to the
Company, or any Person acting on its behalf,
but shall never have been issued and sold by the Company, and the Company shall deliver such
Debt Security to the Debt Security Registrar for cancellation as provided in
Section 3.09
together with a written statement (which need not comply with
Section 1.02
and need not be
accompanied by an Opinion of Counsel) stating that such Debt Security has never been issued and
sold by the Company, for all purposes of this Indenture such Debt Security shall be deemed never to
have been authenticated and delivered hereunder and shall never be entitled to the benefits hereof.
Section 3.04.
Temporary Debt Securities
.
Pending the preparation of definitive Debt Securities of any series, or any Tranche thereof,
the Company may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Debt Securities that are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the definitive Debt
Securities in lieu of which they are issued, with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Debt Securities may determine, as
evidenced by their execution of such Debt Securities;
provided
,
however
, that temporary Debt
Securities need not recite specific redemption, sinking fund, conversion or exchange provisions.
Unless otherwise specified as contemplated by
Section 3.01
with respect to the Debt
Securities of any series, or any Tranche thereof, after the preparation of definitive Debt
Securities of such series or Tranche, the temporary Debt Securities of such series or Tranche shall
be exchangeable, without charge to the Holder thereof, for definitive Debt Securities of such
series or Tranche, upon surrender of such temporary Debt Securities at the office or agency of the
Company maintained pursuant to
Section 6.02
in a Place of Payment for such Debt Securities.
Upon such surrender of temporary Debt Securities, the Company shall, except as aforesaid, execute
and the Trustee shall authenticate and deliver in exchange therefor definitive Debt Securities of
the same series and Tranche, of authorized denominations and of like tenor and aggregate principal
amount.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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Until exchanged in full as hereinabove provided, temporary Debt Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive Debt Securities of the
same series and Tranche and of like tenor authenticated and delivered hereunder.
Section 3.05.
Registration, Registration of Transfer and Exchange
.
The Company shall cause to be kept in each office designated pursuant to
Section 6.02
,
with respect to the Debt Securities of each series or any Tranche thereof, a register (all
registers kept in accordance with this Section being collectively referred to as the “
Debt Security
Register
”) in which, subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Debt Securities of such series or Tranche and the registration of
transfer thereof. The Company shall designate one Person to maintain the Debt Security Register
for the Debt Securities of each series on a consolidated basis, and such Person is referred to
herein, with respect to such series, as the “
Debt Security Registrar
.” Anything herein to the
contrary notwithstanding, the Company may designate one or more of its offices as an office in
which the Debt Security Register shall be maintained, and the Company may designate itself the Debt
Security Registrar with respect to one or more of such series. The Debt Security Register shall be
open for inspection by the Trustee and the Company at all reasonable times.
Except as otherwise specified as contemplated by
Section 3.01
with respect to the Debt
Securities of any series, or any Tranche thereof, upon surrender for registration of transfer of
any Debt Security of such series or Tranche at the office or agency of the Company maintained
pursuant to
Section 6.02
in a Place of Payment for such series or Tranche, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Debt Securities of the same series and Tranche, of
authorized denominations and of like tenor and aggregate principal amount.
Except as otherwise specified as contemplated by
Section 3.01
with respect to the Debt
Securities of any series, or any Tranche thereof, any Debt Security of such series or Tranche may
be exchanged at the option of the Holder for one or more new Debt Securities of the same series and
Tranche, of authorized denominations and of like tenor and aggregate principal amount, upon
surrender of the Debt Securities to be exchanged at any such office or agency. Whenever any Debt
Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Debt Securities that the Holder making the exchange is entitled to
receive.
All Debt Securities delivered upon any registration of transfer or exchange of Debt Securities
shall be valid obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Debt Securities surrendered upon such registration of
transfer or exchange.
Every Debt Security presented or surrendered for registration of transfer or for exchange
shall (if so required by the Company, the Trustee or the Debt Security Registrar) be duly endorsed
or shall be accompanied by a written instrument of transfer in form satisfactory to the Company,
the Trustee or the Debt Security Registrar, as the case may be, duly executed by the Holder thereof
or his attorney duly authorized in writing.
Unless otherwise specified as contemplated by
Section 3.01
with respect to Debt
Securities of any series, or any Tranche thereof, no service charge shall be made for any
registration of transfer or exchange of Debt Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed in connection with
any registration of transfer or exchange of Debt Securities, other than exchanges pursuant to
Section 3.04
,
4.06
or
12.06
not involving any transfer.
The Company shall not be required to execute or to provide for the registration of transfer of
or the exchange of (a) Debt Securities of any series, or any Tranche thereof, during a period of 15
days immediately preceding the day the mailing of a notice of redemption of the Debt Securities of
such series or Tranche is to be made or (b) any Debt Security so selected for redemption in whole
or in part, except the unredeemed portion of any Debt Security being redeemed in part.
None of the Company, the Trustee, any Paying Agent or the Debt Security Registrar will have any
responsibility or liability for any aspect of the records relating to or payments made on
account of beneficial
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ownership interests of a Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Section 3.06.
Mutilated, Destroyed, Lost and Stolen Debt Securities
.
If any mutilated Debt Security is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Debt Security of the same
series, and of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and the Trustee (a) evidence to their satisfaction
of the ownership of and the destruction, loss or theft of any Debt Security and (b) such security
or indemnity as may be reasonably required by them to save each of them and any agent of either of
them harmless, then, in the absence of notice to the Company or the Trustee that such Debt Security
is held by a Person purporting to be the owner of such Debt Security, the Company shall execute and
the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Debt
Security, a new Debt Security of the same series and Tranche, and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing, in case any such mutilated, destroyed, lost or stolen Debt
Security has become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debt Security, pay such Debt Security.
Upon the issuance of any new Debt Security under this Section, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee)
connected therewith.
Every new Debt Security of any series issued pursuant to this Section in lieu of any
destroyed, lost or stolen Debt Security shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Debt Security shall be at
any time enforceable by anyone other than the Holder of such new Debt Security, and any such new
Debt Security shall be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Debt Securities of such series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Debt Securities.
Section 3.07.
Payment of Interest and Additional Interest; Interest Rights Preserved
.
Unless otherwise specified as contemplated by
Section 3.01
with respect to the Debt
Securities of any series, or any Tranche thereof, interest and Additional Interest, if any, on any
Debt Security that is payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date for such interest.
[Subject to
Section 3.12
]* any interest on any Debt Security of any series that is
payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein
called “
Defaulted Interest
”) shall forthwith cease to be payable to the Holder on the related
Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose
names the Debt Securities of such series (or their respective Predecessor Debt Securities) are
registered at the close
of business on a date (herein called a “
Special Record Date
”) for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Debt Security of
such series and the date of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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deposit prior to the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest, which shall be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall promptly cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Debt Securities of such series at the address of such Holder as it
appears in the Debt Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Debt
Securities of such series (or their respective Predecessor Debt Securities) are registered at the
close of business on such Special Record Date.
(b) The Company may make payment of any Defaulted Interest on the Debt Securities of any
series in any other lawful manner not inconsistent with the requirements of any securities exchange
on which such Debt Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 3.05
, each Debt
Security delivered under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Debt Security shall carry the rights to interest (including any Additional
Interest) accrued and unpaid, and to accrue, that were carried by such other Debt Security.
Section 3.08.
Persons Deemed Owners
.
Prior to due presentment of a Debt Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Debt
Security is registered as the absolute owner of such Debt Security for the purpose of receiving
payment of principal of and premium, if any, and (subject to
Sections 3.05
and
3.07
) interest, if any, on such Debt Security and for all other purposes whatsoever,
whether or not such Debt Security is overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the contrary.
Section 3.09.
Cancellation by Debt Security Registrar
.
All Debt Securities surrendered for payment, redemption, registration of transfer or exchange
shall, if surrendered to any Person other than the Debt Security Registrar, be delivered to the
Debt Security Registrar and, if not theretofore canceled, shall be promptly canceled by the Debt
Security Registrar. The Company may at any time deliver to the Debt Security Registrar for
cancellation any Debt Securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever or which the Company shall not have issued and sold, and
all Debt Securities so delivered shall be promptly canceled by the Debt Security Registrar. No
Debt Securities shall be authenticated in lieu of or in exchange for any Debt Securities canceled
as provided in this Section, except as expressly permitted by this Indenture. All certificates
representing canceled Debt Securities held by the Debt Security Registrar shall be disposed of in
accordance with the customary practices of the Debt Security
Registrar at the time in effect, and the Debt Security Registrar shall not be required to
destroy any such certificates. The Debt Security Registrar, if other than the Trustee, shall
promptly deliver a certificate of disposition with respect to such disposed certificates to the
Trustee and the Company unless, by a Company Order, similarly delivered, the Company shall direct
that canceled Debt Securities be returned to it. The Debt Security Registrar shall promptly
deliver evidence of any cancellation of a Debt Security in accordance with this Section to the
Trustee and the Company. If the Trustee is the entity acting as Debt Security Registrar, it shall
promptly deliver to the Company a certificate of disposition with respect to any certificates
disposed of and/or evidence of any cancellation of a Debt Security, in each case in accordance with
this Section, if so requested by a Company Order.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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Section 3.10.
Computation of Interest
.
Except as otherwise specified as contemplated by
Section 3.01
for Debt Securities of
any series, or any Tranche thereof, interest on the Debt Securities of each series shall be
computed on the basis of a 360-day year consisting of twelve 30-day months and on the basis of the
actual number of days elapsed within any month in relation to the deemed 30 days of such month.
Section 3.11.
Payment to be in Proper Currency
.
In the case of the Debt Securities of any series, or any Tranche thereof, denominated in any
currency other than Dollars or in a composite currency (the “
Required Currency
”), except as
otherwise specified with respect to such Debt Securities as contemplated by
Section 3.01
,
the obligation of the Company to make any payment of the principal thereof, or the premium or
interest thereon, shall not be discharged or satisfied by any tender by the Company, or recovery by
the Trustee, in any currency other than the Required Currency, except to the extent that such
tender or recovery shall result in the Trustee timely holding the full amount of the Required
Currency then due and payable. If any such tender or recovery is in a currency other than the
Required Currency, the Trustee may take such actions as it considers appropriate to exchange such
currency for the Required Currency. The costs and risks of any such exchange, including without
limitation the risks of delay and exchange rate fluctuation, shall be borne by the Company, the
Company shall remain fully liable for any shortfall or delinquency in the full amount of Required
Currency then due and payable, and in no circumstances shall the Trustee be liable therefor except
in the case of its negligence or willful misconduct.
Section 3.12.
[Extension of Interest Payment]*
.
[The Company shall have the right at any time, so long as the Company is not in default in the
payment of interest on the Debt Securities of any series hereunder, to extend interest payment
periods on all Debt Securities of one or more series, or Tranches thereof, if so specified as
contemplated by
Section 3.01
with respect to such Debt Securities and upon such terms as
may be specified as contemplated by
Section 3.01
with respect to such Debt Securities.]*
ARTICLE IV
REDEMPTION OF DEBT SECURITIES
Section 4.01.
Applicability of Article
.
Debt Securities of any series, or any Tranche thereof, that are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as
contemplated by
Section 3.01
for Debt Securities of such series or Tranche) in accordance
with this Article.
Section 4.02.
Election to Redeem; Notice to Trustee
.
The election of the Company to redeem any Debt Securities shall be evidenced by a Board
Resolution and/or an Officer’s Certificate. The Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee in writing of such Redemption Date and of the principal amount of such
Debt Securities to be redeemed. In the case of any redemption of Debt Securities (a) prior to the
expiration of any restriction on such redemption provided in the terms of such Debt Securities or
elsewhere in this Indenture or (b) pursuant to an election of the Company that is subject to a
condition specified in the terms of such Debt Securities, the Company shall furnish the Trustee
with an Officer’s Certificate evidencing compliance with such restriction or condition.
Section 4.03.
Selection of Debt Securities to be Redeemed
.
If less than all the Debt Securities of any series, or any Tranche thereof, are to be
redeemed, the particular Debt Securities to be redeemed shall be selected by the Trustee from the
Outstanding Debt Securities of such series or Tranche not previously called for redemption, by such
method as shall be provided for any particular series, or, in
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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the absence of any such provision, by such method of random selection as the Trustee shall deem
fair and appropriate and which may, in any case, provide for the selection for redemption of
portions (equal to the minimum authorized denomination for Debt Securities of such series or
Tranche or any integral multiple thereof) of the principal amount of Debt Securities of such series
or Tranche of a denomination larger than the minimum authorized denomination for Debt Securities of
such series or Tranche;
provided
,
however
, that if, as indicated in an Officer’s Certificate, the
Company shall have offered to purchase all or any principal amount of the Debt Securities then
Outstanding of any series, or any Tranche thereof, and less than all of such Debt Securities as to
which such offer was made shall have been tendered to the Company for such purchase, the Trustee,
if so directed by Company Order, shall select for redemption all or any principal amount of such
Debt Securities that have not been so tendered.
If the Debt Securities are then held in the form of a Global Security, the Debt Securities to
be redeemed shall be selected in accordance with the customary procedures of the Depositary.
The Trustee shall promptly notify the Company and the Debt Security Registrar in writing of
the Debt Securities selected for redemption and, in the case of any Debt Securities selected to be
redeemed in part, 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 Debt Securities shall relate, in the case of any Debt Securities
redeemed or to be redeemed only in part, to the portion of the principal amount of such Debt
Securities that has been or is to be redeemed.
Section 4.04.
Notice of Redemption
.
Notice of redemption shall be given in the manner provided in Section 1.06 to the Holders of
the Debt Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption
Date.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Debt Securities of any series or Tranche are to be redeemed, the
identification of the particular Debt Securities to be redeemed and the portion of the principal
amount of any Debt Security to be redeemed in part,
(d) that on the Redemption Date, the Redemption Price, together with accrued interest
(including Additional Interest), if any, to the Redemption Date, will become due and payable upon
each such Debt Security to be redeemed and, if applicable and provided that the Redemption Price is
received by the Paying Agent or Agents on or prior to the Redemption Date, that interest (including
any Additional Interest) thereon will cease to accrue on and after said date,
(e) the place or places where such Debt Securities are to be surrendered for payment of the
Redemption Price and accrued interest, if any, unless it shall have been specified as contemplated
by Section 3.01 with respect to such Debt Securities that such surrender shall not be required,
(f) that the redemption is for a sinking or other fund, if such is the case, and
(g) such other matters as the Company shall deem desirable or appropriate (including CUSIP
numbers with respect to such Debt Securities, if the Company shall so elect, in which event such
notice of redemption may contain a disclaimer as to the correctness of such numbers either as
printed on the Debt Securities or on such notice of redemption).
Unless otherwise specified with respect to any Debt Securities in accordance with
Section
3.01
, with respect to any notice of redemption of Debt Securities at the election of the
Company, unless, upon the giving of
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such notice, such Debt Securities shall be deemed to have been paid in accordance with
Section
7.01
, such notice may state that such redemption shall be conditional upon the receipt by the
Paying Agent or Agents for such Debt Securities, on or prior to the date fixed for such redemption,
of money sufficient to pay the principal of and premium, if any, and interest (including Additional
Interest), if any, on such Debt Securities and that if such money shall not have been so received
such notice shall be of no force or effect and the Company shall not be required to redeem such
Debt Securities. In the event that such notice of redemption contains such a condition and such
money is not so received, the redemption shall not be made and within a reasonable time thereafter
notice shall be given, in the manner in which the notice of redemption was given, that such money
was not so received and such redemption was not required to be made, and the Paying Agent or Agents
for the Debt Securities otherwise to have been redeemed shall promptly return to the Holders
thereof any of such Debt Securities that had been surrendered for payment upon such redemption.
Notice of redemption of Debt Securities to be redeemed at the election of the Company, and any
notice of non-satisfaction of a condition for redemption as aforesaid, shall be given by the
Company or, at the Company’s request, by the Debt Security Registrar in the name and at the expense
of the Company. Notice of mandatory redemption of Debt Securities shall be given by the Debt
Security Registrar in the name and at the expense of the Company.
Section 4.05.
Debt Securities Payable on Redemption Date
.
Notice of redemption having been given as aforesaid, and the conditions, if any, set forth in
such notice having been satisfied, the Debt Securities or portions thereof 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, in the case of an unconditional notice of redemption, the Company
shall default in the payment of the Redemption Price and accrued interest (including Additional
Interest), if any) such Debt Securities or portions thereof, if interest-bearing,
shall cease to bear interest. Upon surrender of any such Debt Security for redemption in
accordance with such notice, such Debt Security or portion thereof shall be paid by the Company at
the Redemption Price, together with accrued interest (including Additional Interest), if any, to
the Redemption Date;
provided
,
however
, that no such surrender shall be a condition to such payment
if so specified as contemplated by
Section 3.01
with respect to such Debt Security; and
provided, further, that except as otherwise specified as contemplated by
Section 3.01
with
respect to such Debt Security, any installment of interest on any Debt Security the Stated Maturity
of which installment is on or prior to the Redemption Date shall be payable to the Holder of such
Debt Security, or one or more Predecessor Debt Securities, registered as such at the close of
business on the related Regular Record Date according to the terms of such Debt Security and
subject to the provisions of
Section 3.07
.
Section 4.06.
Debt Securities Redeemed in Part
.
Upon the surrender of any Debt Security that is to be redeemed only in part at a Place of
Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Debt Security, without service charge,
a new Debt Security or Debt Securities of the same series and Tranche, of any authorized
denomination requested by such Holder and of like tenor and in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Debt Security so surrendered.
ARTICLE V
SINKING FUNDS
Section 5.01.
Applicability of Article
.
The provisions of this Article shall be applicable to any sinking fund for the retirement of
the Debt Securities of any series, or any Tranche thereof, except as otherwise specified as
contemplated by
Section 3.01
for Debt Securities of such series or Tranche.
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The minimum amount of any sinking fund payment provided for by the terms of Debt Securities of
any series, or any Tranche thereof, is herein referred to as a “mandatory sinking fund payment,”
and any payment in excess of such minimum amount provided for by the terms of Debt Securities of
any series, or any Tranche thereof, is herein referred to as an “optional sinking fund payment.” If
provided for by the terms of Debt Securities of any series, or any Tranche thereof, the cash amount
of any sinking fund payment may be subject to reduction as provided in
Section 5.02
. Each
sinking fund payment shall be applied to the redemption of Debt Securities of the series or Tranche
in respect of which it was made as provided for by the terms of such Debt Securities.
Section 5.02.
Satisfaction of Sinking Fund Payments with Debt Securities
.
The Company (a) may deliver to the Trustee Outstanding Debt Securities (other than any
previously called for redemption) of a series or Tranche in respect of which a mandatory sinking
fund payment is to be made and (b) may apply as a credit Debt Securities of such series or Tranche
that have been purchased by the Company or redeemed either at the election of the Company pursuant
to the terms of such Debt Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, in each case in satisfaction of all or any
part of such mandatory sinking fund payment;
provided
,
however
, that no Debt Securities shall be
applied in satisfaction of a mandatory sinking fund payment if such Debt Securities shall have been
previously so applied. Debt Securities so applied shall be received and credited for such purpose
by the Trustee at the Redemption Price specified in such Debt Securities for redemption through
operation of the sinking fund and the amount of such mandatory sinking fund payment shall be
reduced accordingly.
Section 5.03.
Redemption of Debt Securities for Sinking Fund
.
Not less than 45 days prior to each sinking fund payment date for the Debt Securities of any
series, or any Tranche thereof, the Company shall deliver to the Trustee an Officer’s Certificate
specifying:
(a) the amount of the next succeeding mandatory sinking fund payment for such series or
Tranche;
(b) the amount, if any, of the optional sinking fund payment to be made together with such
mandatory sinking fund payment;
(c) the aggregate sinking fund payment;
(d) the portion, if any, of such aggregate sinking fund payment that is to be satisfied by the
payment of cash; and
(e) the portion, if any, of such aggregate sinking fund payment that is to be satisfied by
delivering and crediting Debt Securities of such series or Tranche pursuant to
Section 5.02
and stating the basis for such credit and that such Debt Securities have not previously been so
credited, and, if it has not already done so, the Company shall also deliver to the Trustee any
Debt Securities to be so delivered.
If the Company shall not have delivered such Officer’s Certificate and, to the extent
applicable, all such Debt Securities, on or prior to the 45th day prior to such sinking fund
payment date, the sinking fund payment for such series or Tranche in respect of such sinking fund
payment date shall be made entirely in cash in the amount of the mandatory sinking fund payment.
Not less than 30 days before each such sinking fund payment date the Trustee shall select the Debt
Securities to be redeemed upon such sinking fund payment date in the manner specified in
Section 4.03
and the Debt Security Registrar shall cause notice of the redemption thereof
to be given in the name of and at the expense of the Company in the manner provided in
Section
4.04
. Such notice having been duly given, the redemption of such Debt Securities shall be made
upon the terms and in the manner stated in
Sections 4.05
and
4.06
.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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ARTICLE VI
COVENANTS
Section 6.01.
Payment of Principal, Premium and Interest
.
The Company shall pay the principal of and premium, if any, and interest, if any, on the Debt
Securities of each series in accordance with the terms of such Debt Securities and this Indenture.
Section 6.02.
Maintenance of Office or Agency
.
The Company shall maintain in each Place of Payment for the Debt Securities of each series, or
any Tranche thereof, an office or agency where payment of such Debt Securities shall be made, where
the registration of transfer or exchange of such Debt Securities may be effected and where notices
and demands to or upon the Company in respect of such Debt Securities and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of each such office or agency and prompt notice to the Holders of any such
change in the manner specified in
Section 1.06
. If at any time the Company shall fail to
maintain any such required office or agency in respect of Debt Securities of any series, or any
Tranche thereof, or shall fail to furnish the Trustee with the address thereof, payment of such
Debt Securities shall be made, registration of transfer or exchange thereof may be effected and
notices and demands in respect thereof
may be served at the Corporate Trust Office of the Trustee, and the Company hereby appoints
the Trustee as its agent for all such purposes in any such event.
The Company may also from time to time designate one or more other offices or agencies with
respect to the Debt Securities of one or more series, or any Tranche thereof, for any or all of the
foregoing purposes and may from time to time rescind such designations;
provided
,
however
, that,
unless otherwise specified as contemplated by
Section 3.01
with respect to the Debt
Securities of such series or Tranche no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency for such purposes in each Place of
Payment for such Debt Securities in accordance with the requirements set forth above. The Company
shall give prompt written notice to the Trustee, and prompt notice to the Holders in the manner
specified in
Section 1.06
, of any such designation or rescission and of any change in the
location of any such other office or agency.
Anything herein to the contrary notwithstanding, any office or agency required by this Section
may be maintained at an office of the Company, in which event the Company shall perform all
functions to be performed at such office or agency.
Section 6.03.
Money for Debt Securities Payments to be Held in Trust
.
If the Company shall at any time act as its own Paying Agent with respect to the Debt
Securities of any series, or any Tranche thereof, it shall, on or before each due date of the
principal of and premium, if any, and interest (including Additional Interest), if any, on any of
such Debt Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and premium or interest (including Additional Interest) so
becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein
provided. The Company shall promptly notify the Trustee of any failure by the Company (or any
other obligor on such Debt Securities) to make any payment of principal of or premium, if any, or
interest (including Additional Interest), if any, on such Debt Securities.
Whenever the Company shall have one or more Paying Agents for the Debt Securities of any
series, or any Tranche thereof, it shall, on or before each due date of the principal of and
premium, if any, and interest (including Additional Interest), if any, on such Debt Securities,
deposit with such Paying Agents sums sufficient (without duplication) to pay the principal and
premium or interest (including Additional Interest) so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium or interest (including
Additional Interest), and (unless such Paying Agent is the Trustee) the Company shall promptly
notify the Trustee of any failure by it so to act.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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The Company shall cause each Paying Agent for the Debt Securities of any series, or any
Tranche thereof, other than the Company or 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:
(a) hold all sums held by it for the payment of the principal of and premium, if any, or
interest (including Additional Interest), if any, on such Debt Securities in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(b) give the Trustee notice of any failure by the Company (or any other obligor upon such Debt
Securities) to make any payment of principal of or premium, if any, or interest, (including
Additional Interest) if any, on such Debt Securities; and
(c) 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 and furnish to
the Trustee such information as it possesses regarding the names and addresses of the Persons
entitled to such sums.
The Company may at any time pay, or by Company Order direct any Paying Agent to pay, to the
Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying
Agent and, if so stated in a Company Order delivered to the Trustee, in accordance with the
provisions of
Article VII
; 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 money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of and premium, if any, or interest (including Additional
Interest), if any, on any Debt Security and remaining unclaimed for two years after such principal
and premium, if any, or interest (including Additional Interest) has become due and payable shall
be paid to the Company on Company Request, or, if then held by the Company, shall be discharged
from such trust; and, upon such payment or discharge, the Holder of such Debt Security shall, as an
unsecured general creditor and not as a Holder of an Outstanding Debt Security, look only to the
Company for payment of the amount so due and payable and remaining unpaid, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such payment to the Company, may at the expense of the Company
cause to be mailed, on one occasion only, notice to such Holder 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 mailing, any unclaimed balance of such money then remaining will be paid to the Company.
Section 6.04.
Corporate Existence
.
Subject to the rights of the Company under
Article XI
, the Company shall do or cause
to be done all things necessary to preserve and keep in full force and effect its corporate
existence.
Section 6.05.
Maintenance of Properties
.
The Company shall cause (or, with respect to property owned in common with others, make
reasonable effort to cause) all its properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and shall cause (or, with respect
to property owned in common with others, make reasonable effort to cause) to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of
the Company, may be necessary so that the business carried on in connection therewith may be
properly conducted; provided, however, that nothing in this Section shall prevent the Company from
discontinuing, or causing the discontinuance of, the operation and maintenance of any of its
properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of
its business.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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26
Section 6.06.
Annual Officer’s Certificate as to Compliance
.
Not later than _______________ in each year, commencing _______________, the Company shall
deliver to the Trustee an Officer’s Certificate, which need not comply with
Section 1.02
,
executed by the principal executive officer, the principal financial officer or the principal
accounting officer of the Company, stating whether, to such officer’s knowledge, the Company is in
compliance with all conditions and covenants under this Indenture, such compliance to be determined
without regard to any period of grace or requirement of notice under this
Indenture, and making any other statements as may be required by the provisions of Section
314(a)(4) of the Trust Indenture Act.
Section 6.07.
Waiver of Certain Covenants
.
The Company may omit in any particular instance to comply with any term, provision or
condition set forth in (a)
Section 6.02
or any additional covenant or restriction specified
with respect to the Debt Securities of any series, or any Tranche thereof, as contemplated by
Section 3.01
if before the time for such compliance the Holders of at least a majority in
aggregate principal amount of the Outstanding Debt Securities of all series and Tranches with
respect to which compliance with
Section 6.02
or such additional covenant or restriction is
to be omitted, considered as one class, shall, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such term, provision or condition and (b)
Sections 6.04
,
6.05
,
6.06
or
Article XI
if before the time for such
compliance the Holders of at least a majority in principal amount of Debt Securities Outstanding
under this Indenture shall, by Act of such Holders, either waive such compliance in such instance
or generally waive compliance with such term, provision or condition; but, in the case of (a) or
(b), 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
Company and the duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
ARTICLE VII
SATISFACTION AND DISCHARGE
Section 7.01.
Satisfaction and Discharge of Debt Securities
.
Any Debt Security or Debt Securities, or any portion of the principal amount thereof, shall be
deemed to have been paid for all purposes of this Indenture, and the entire indebtedness of the
Company in respect thereof shall be deemed to have been satisfied and discharged, if there shall
have been irrevocably deposited with the Trustee or any Paying Agent (other than the Company), in
trust:
(a) money in an amount that shall be sufficient, or
(b) in the case of a deposit made prior to the Maturity of such Debt Securities or portions
thereof, Eligible Obligations, which shall not contain provisions permitting the redemption or
other prepayment thereof at the option of the issuer thereof, the principal of and the interest on
that when due, without any regard to reinvestment thereof, will provide moneys which, together with
the money, if any, deposited with or held by the Trustee or such Paying Agent, shall be sufficient,
or
(c) a combination of (a) or (b) that shall be sufficient,
to pay when due the principal of and premium, if any, and interest (including Additional Interest),
if any, due and to become due on such Debt Securities or portions thereof on or prior to Maturity;
provided
,
however
, that in the case of the provision for payment or redemption of less than all the
Debt Securities of any series or Tranche, such Debt Securities or portions thereof shall have been
selected by the Trustee as provided herein and, in the case of a redemption, the notice requisite
to the validity of such redemption shall have been given or irrevocable authority shall have been
given by the Company to the Trustee to give such notice, under arrangements satisfactory to the
Trustee; and
provided
,
further
, that the Company shall have delivered to the Trustee and such
Paying Agent:
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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27
(x) if such deposit shall have been made prior to the Maturity of such Debt Securities, a Company
Order stating that the money and Eligible Obligations deposited in accordance with this Section
shall be held in trust, as provided in
Section 7.03
;
(y) if Eligible Obligations shall have been deposited, an Opinion of Counsel that the
obligations so deposited constitute Eligible Obligations and do not contain provisions permitting
the redemption or other prepayment at the option of the issuer thereof, and an opinion of an
independent public accountant of nationally recognized standing, selected by the Company, to the
effect that the requirements set forth in clause (b) above have been satisfied; and
(z) if such deposit shall have been made prior to the Maturity of such Debt Securities, an
Officer’s Certificate stating the Company’s intention that, upon delivery of such Officer’s
Certificate, its indebtedness in respect of such Debt Securities or portions thereof will have been
satisfied and discharged as contemplated in this Section.
If the Company shall make any deposit of money and/or Eligible Obligations with respect to any
Debt Securities, or any portion of the principal amount thereof, as contemplated by this section,
the Company shall not deliver an Officer’s Certificate described in clause (z) above unless the
Company shall also deliver to the Trustee, together with such Officer’s Certificate, an Opinion of
Counsel to the effect that, as a result of a change in law occurring after the date of this
Indenture, the Holders of such Debt Securities, or portions thereof, will not recognize income,
gain or loss for United States federal income tax purposes as a result of the satisfaction and
discharge of the Company’s indebtedness in respect thereof and will be subject to United States
federal income tax on the same amounts, at the same times and in the same manner as if such
satisfaction and discharge had not been effected.
Upon the deposit of money or Eligible Obligations, or both, in accordance with this Section,
together with the documents required by clauses (x), (y) and (z) above, the Trustee shall, upon
receipt of a Company Request, acknowledge in writing that the Debt Security or Debt Securities or
portions thereof with respect to which such deposit was made are deemed to have been paid for all
purposes of this Indenture and that the entire indebtedness of the Company in respect thereof has
been satisfied and discharged as contemplated in this Section. In the event that all of the
conditions set forth in the first paragraph of this Section shall have been satisfied in respect of
any Debt Securities or portions thereof except that, for any reason, the Officer’s Certificate
specified in clause (z) shall not have been delivered, such Debt Securities or portions thereof
shall nevertheless be deemed to have been paid for all purposes of this Indenture, and the Holders
of such Debt Securities or portions thereof shall nevertheless be no longer entitled to the
benefits of this Indenture or of any of the covenants of the Company under
Article VI
(except the covenants contained in
Sections 6.02
and
6.03
) or any other covenants
made in respect of such Debt Securities or portions thereof as contemplated by
Section
3.01
, but the indebtedness of the Company in respect of such Debt Securities or portions
thereof shall not be deemed to have been satisfied and discharged prior to Maturity for any other
purpose, and the Holders of such Debt Securities or portions thereof shall continue to be entitled
to look to the Company for payment of the indebtedness represented thereby; and, upon receipt of a
Company Request, the Trustee shall acknowledge in writing that such Debt Securities or portions
thereof are deemed to have been paid for all purposes of this Indenture.
If payment at Stated Maturity of less than all of the Debt Securities of any series, or any
Tranche thereof, is to be provided for in the manner and with the effect provided in this Section,
the Trustee shall select such Debt Securities, or portions of principal amount thereof, in the
manner specified by
Section 4.03
for selection for redemption of less than all the Debt
Securities of a series or Tranche.
In the event that Debt Securities that shall be deemed to have been paid for purposes of this
Indenture, and, if such is the case, in respect of which the Company’s indebtedness shall have
been satisfied and discharged, all as provided in this Section, do not mature and are not to
be redeemed within the 60 day period commencing with the date of the deposit of moneys or
Eligible Obligations, as aforesaid, the Company shall, as promptly as practicable, give a
notice, in the same manner as a notice of redemption with respect to such Debt Securities, to
the Holders of such Debt Securities to the effect that such deposit has been made and the
effect thereof.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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Notwithstanding that any Debt Securities shall be deemed to have been paid for purposes of
this Indenture, as aforesaid, the obligations of the Company and the Trustee in respect of such
Debt Securities under
Sections 3.04
,
3.05
,
3.06
,
4.04
,
5.03
(as to notice of redemption),
6.02
,
6.03
,
9.07
,
9.14
and
9.15
and this Article shall survive.
The Company shall pay, and shall indemnify the Trustee or any Paying Agent with which Eligible
Obligations shall have been deposited as provided in this Section against any tax, fee or other
charge imposed on or assessed against such Eligible Obligations or the principal or interest
received in respect of such Eligible Obligations, including, but not limited to, any such tax
payable by any entity deemed, for tax purposes, to have been created as a result of such deposit.
Anything herein to the contrary notwithstanding, (a) if, at any time after a Debt Security
would be deemed to have been paid for purposes of this Indenture, and, if such is the case, the
Company’s indebtedness in respect thereof would be deemed to have been satisfied or discharged,
pursuant to this Section (without regard to the provisions of this paragraph), the Trustee or any
Paying Agent, as the case may be, shall be required to return the money or Eligible Obligations, or
combination thereof, deposited with it as aforesaid to the Company or its representative under any
applicable federal or state bankruptcy, insolvency or other similar law, such Debt Security shall
thereupon be deemed retroactively not to have been paid and any satisfaction and discharge of the
Company’s indebtedness in respect thereof shall retroactively be deemed not to have been effected,
and such Debt Security shall be deemed to remain Outstanding and (b) any satisfaction and discharge
of the Company’s indebtedness in respect of any Debt Security shall be subject to the provisions of
the last paragraph of
Section 6.03
.
Section 7.02.
Satisfaction and Discharge of Indenture
.
This Indenture shall upon Company Request cease to be of further effect (except as hereinafter
expressly provided), and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(a) no Debt Securities remain Outstanding hereunder; and
(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company;
provided
,
however
, that if, in accordance with the last paragraph of
Section 7.01
, any Debt
Security, previously deemed to have been paid for purposes of this Indenture, shall be deemed
retroactively not to have been so paid, this Indenture shall thereupon be deemed retroactively not
to have been satisfied and discharged, as aforesaid, and to remain in full force and effect, and
the Company shall execute and deliver such instruments as the Trustee shall reasonably request to
evidence and acknowledge the same.
Notwithstanding the satisfaction and discharge of this Indenture as aforesaid, the obligations
of the Company and the Trustee under
Sections 3.04
,
3.05
,
3.06
,
4.04
,
5.03
(as to notice of redemption),
6.02
,
6.03
,
9.07
,
9.14
and
9.15
and this Article shall survive.
Upon satisfaction and discharge of this Indenture as provided in this Section, the Trustee
shall assign, transfer and turn over to the Company, subject to the lien provided by
Section
9.07
, any and all money, securities and other property then held by the Trustee for the benefit
of the Holders of the Debt Securities other than money and Eligible Obligations held by the Trustee
pursuant to Section 7.03.
Section 7.03.
Application of Trust Money
.
Neither the Eligible Obligations nor the money deposited pursuant to
Section 7.01
, nor
the principal or interest payments on any such Eligible Obligations, shall be withdrawn or used for
any purpose other than, and shall be held in trust for, the payment of the principal of, and
premium, if any, and interest (including Additional Interest), if any, on, the Debt Securities or
portions of principal amount thereof in respect of which such deposit was made, all subject,
however, to the provisions of
Section 6.03
;
provided
,
however
, that, so long as there shall
not have occurred and be continuing an Event of Default, or an event that, with the giving of
notice or the passage of time, would become an Event of Default, any cash received from such
principal or interest payments on such Eligible
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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Obligations, if not then needed for such purpose, shall, to the extent practicable, be invested in
Eligible Obligations of the type described in
Section 7.01(b)
maturing at such times and in
such amounts as shall be sufficient to pay when due the principal of and premium, if any, and
interest (including Additional Interest), if any, due and to become due on such Debt Securities or
portions thereof on and prior to the Maturity thereof, and interest earned from such reinvestment
shall be paid over to the Company as received, free and clear of any trust, lien or pledge under
this Indenture except the lien provided by
Section 9.07
; and
provided
,
further
, that, so
long as there shall not have occurred and be continuing an Event of Default, or an event that, with
the giving of notice or the passage of time, would become an Event of Default, any moneys held in
accordance with this Section on the Maturity of all such Debt Securities in excess of the amount
required to pay the principal of and premium, if any, and interest (including Additional Interest),
if any, then due on such Debt Securities shall be paid over to the Company free and clear of any
trust, lien or pledge under this Indenture except the lien provided by
Section 9.07
; and
provided
,
further
, that if an Event of Default, or an event that, with the giving of notice or the
passage of time, would become an Event of Default, shall have occurred and be continuing, moneys to
be paid over to the Company pursuant to this Section shall be held until such Event of Default, or
event that, with the giving of notice or the passage of time, would become an Event of Default,
shall have been waived or cured.
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01.
Events of Default
.
“
Event of Default
,” wherever used herein with respect to Debt Securities of any series, means
any one of the following events:
(a) failure to pay interest (including Additional Interest), if any, on any Debt Security of
such series within 30 days after the same becomes due and payable [(whether or not payment is
prohibited by the provisions of
Article XV
hereof);]* [
provided
,
however
, that a valid
extension of the interest payment period by the Company as contemplated in
Section 3.12
of
this Indenture shall not constitute a failure to pay interest for this purpose] *; or
(b) failure to pay the principal of or premium, if any, on any Debt Security of such series
when due and payable under this Indenture [(whether or not payment is prohibited by the provisions
of
Article XV
hereof)]*; or
(c) failure to make any sinking fund payment with respect to such series when due; or
(d) failure to perform or breach of any covenant or warranty of the Company in this Indenture
(other than a covenant or warranty a default in the performance of which or breach of which is
elsewhere in this Section specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of one or more series of Debt Securities other than such series)
for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee, or to the Company and the Trustee by the
Holders of at least 33% in principal amount of the Outstanding Debt 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, unless the Trustee, or the Trustee and the Holders
of a principal amount of Debt Securities of such series not less than the principal amount of Debt
Securities the Holders of which gave such notice, as the case may be, shall agree in writing to an
extension of such period prior to its expiration;
provided
,
however
, that the Trustee, or the
Trustee and the Holders of such principal amount of Debt Securities of such series, as the case may
be, shall be deemed to have agreed to an extension of such period for a maximum of one hundred
twenty (120) days if corrective action is initiated by the Company within such period and is being
diligently pursued; or
(e) the entry by a court having jurisdiction in the premises of (1) a decree or order for
relief in respect of the Company in an involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency, reorganization or other similar law or (2) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition by one or
more Persons other than the Company seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for the
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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30
Company or for any substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order for relief or any such other decree or order shall have
remained unstayed and in effect for a period of 90 consecutive days; or
(f) the commencement by the Company of a voluntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in a case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company
or of any substantial part of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts generally as they
become due, or the authorization of such action by the Board of Directors; or
(g) any other Event of Default specified with respect to Debt Securities of such series.
Section 8.02.
Acceleration of Maturity; Rescission and Annulment
.
If an Event of Default due to the default in payment of principal of, or premium, if any, or
interest (including Additional Interest) on, any series of Debt Securities or due to the default in
the performance or breach of any other covenant or warranty of the Company applicable to the Debt
Securities of such series but not applicable to all Outstanding Debt Securities shall have occurred
and be continuing, either the Trustee or the Holders of not less than 33% in principal amount of
the Debt Securities of such series may then declare the principal amount (or, if any of the Debt
Securities of such series are Discount Debt Securities, such portion of the principal amount as may
be specified in the terms thereof as contemplated by
Section 3.01
) of all Debt Securities
of such series and premium, if any, and interest (including Additional Interest) accrued thereon to
be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given
by the Holders). If an Event of Default due to default in the performance of any other of the
covenants or warranties herein applicable to all Outstanding Debt Securities or an Event of Default
specified in
Sections 8.01(e)
or
(f)
shall have occurred and be continuing, either
the Trustee or the Holders of not less than 33% in principal amount of all Debt Securities then
Outstanding (considered as one class), and not the Holders of the Debt Securities of any one of
such series, may declare the principal amount (or, if any of
the Debt Securities are Discount Debt Securities, such portion of the principal amount of such
Debt Securities as may be specified in the terms thereof as contemplated by
Section 3.01
)
of all Debt Securities and premium, if any, and interest accrued thereon to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders).
As a consequence of each such declaration (herein referred to as a declaration of acceleration)
with respect to Debt Securities of any series, the principal amount (or portion thereof in the case
of Discount Debt Securities) of such Debt Securities, premium, if any, and interest (including
Additional Interest) accrued thereon shall become due and payable immediately [(provided that the
payment of principal of such Debt Securities shall remain subordinated to the extent provided in
Article XV
hereof)]*.
With respect to a series of Debt Securities to which a credit enhancement is applicable, the
applicable supplemental indenture may provide that the provider of such credit enhancement may, if
default has occurred and is continuing with respect to such series, and subject to certain
conditions, have all the rights with respect to remedies that would otherwise have been exercisable
by the Holders of Debt Securities of that series.
At any time after such a declaration of acceleration with respect to Debt Securities of any
series shall have been made and before a judgment or decree for payment of the money due shall have
been obtained by the Trustee as hereinafter in this Article provided, the Event or Events of
Default giving rise to such declaration of acceleration shall, without further act, be deemed to
have been waived, and such declaration and its consequences shall, without further act, be deemed
to have been rescinded and annulled, if
(a) the Company shall have paid or deposited with the Trustee a sum sufficient to pay
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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(1) all overdue interest on all Debt Securities of such series;
(2) the principal of and premium, if any, on any Debt Securities of such series that
have become due otherwise than by such declaration of acceleration and interest (including
Additional Interest) thereon at the rate or rates prescribed therefor in such Debt
Securities;
(3) to the extent that payment of such interest is lawful, interest upon overdue
interest at the rate or rates prescribed therefor in such Debt Securities;
(4) all amounts due to the Trustee under
Section 9.07
; and
(b) any other Event or Events of Default with respect to Debt Securities of such series, other
than the non-payment of the principal of Debt Securities of such series that shall have become due
solely by reason of such declaration of acceleration, shall have been cured or waived as provided
in
Section 8.13
.
No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 8.03.
Collection of Indebtedness and Suits for Enforcement by Trustee
.
If an Event of Default described in clause (a), (b) or (c) of
Section 8.01
shall have
occurred and be continuing, the Company shall, upon demand of the Trustee, pay to it, for the
benefit of the Holders of the Debt Securities of the series with respect to which such Event of
Default shall have occurred, the whole amount then due and payable on such Debt Securities for
principal and premium, if any, and interest, if any, and, to the extent permitted by law, (i)
interest on premium, if any, (ii) interest on any overdue principal and (iii) Additional Interest,
at the rate or rates prescribed therefor in such Debt Securities, and, in addition thereto, such
further amount as shall be sufficient to cover any amounts due to the Trustee under
Section
9.07
.
If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its
own name and as trustee of an express trust, may institute a judicial proceeding for the collection
of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Debt Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of the property of the
Company or any other obligor upon such Debt Securities, wherever situated.
If an Event of Default with respect to Debt Securities of any series shall have occurred and
be continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders of Debt Securities of such series under the Indenture by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 8.04.
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
Company or any other obligor upon the Debt Securities or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the principal of the Debt
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 Company for the payment of
overdue principal or interest (including Additional Interest)) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal, premium, if any, and interest
(including Additional Interest), if any, owing and unpaid in respect of the Debt Securities and to
file such other papers or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for amounts due to the Trustee under
Section 9.07
) and of
the Holders allowed in such judicial proceeding, and
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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(b) to collect and receive any moneys or other property payable or deliverable on any such
claims and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amounts due it under
Section 9.07
.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Debt Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 8.05.
Trustee May Enforce Claims without Possession of Debt Securities
.
All rights of action and claims under this Indenture or the Debt Securities may be prosecuted
and enforced by the Trustee without the possession of any of the Debt Securities or the production
thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders in respect of which such judgment has been recovered.
Section 8.06.
Application of Money Collected
.
[Subject to the provisions of
Article XV
,]* any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal or premium, if any,
or interest (including Additional Interest), if any, upon presentation of the Debt Securities in
respect of which or for the benefit of which such money shall have been collected and the notation
thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 9.07
;
SECOND: To the payment of the amounts then due and unpaid upon the Debt Securities for
principal of and premium, if any, and interest (including Additional Interest), if any, 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 amounts due and payable on such Debt Securities for
principal, premium, if any, and interest (including Additional Interest), if any, respectively; and
THIRD: To the payment of the remainder, if any, to the Company, or to whomsoever may be
lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
Section 8.07.
Limitation on Suits
.
No Holder 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:
(a) such Holder shall have previously given written notice to the Trustee of a continuing
Event of Default with respect to the Debt Securities of such series;
(b) the Holders of not less than a majority in aggregate principal amount of the Outstanding
Debt Securities of all series in respect of which an Event of Default shall have occurred and be
continuing, considered as one class, 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;
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(c) such Holder or Holders shall have offered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity
shall have failed to institute any such proceeding; and
(e) no direction inconsistent with such written request shall have been given to the Trustee
during such 60-day period by the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of all series in respect of which an Event of Default shall have
occurred and be continuing, considered as one class;
it being understood and intended that no one or more of such Holders shall have any right in any
manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any
right under this Indenture, except in the manner herein provided and for the equal and ratable
benefit of all of such Holders.
Section 8.08.
Unconditional Right of Holders to Receive Principal, Premium and Interest
.
Notwithstanding any other provision in this Indenture, the Holder of any Debt Security shall
have the right, which is absolute and unconditional, to receive payment of the principal of and
premium, if any, and (subject to
Section 3.07
[and
3.12
]*) interest (including
Additional Interest), if any, on such Debt Security on the Stated Maturity or Maturities expressed
in such Debt Security (or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired without the consent
of such Holder.
Section 8.09.
Restoration of Rights and Remedies
.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, Trustee and such Holder shall
be restored severally and respectively to their former positions hereunder and thereafter all
rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had
been instituted.
Section 8.10.
Rights and Remedies Cumulative
.
Except as otherwise provided in the last paragraph of
Section 3.06
, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 8.11.
Delay or Omission Not Waiver
.
No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 8.12.
Control by Holders of Debt Securities
.
If an Event of Default shall have occurred and be continuing in respect of a series of Debt
Securities, the Holders of a majority in principal amount of the Outstanding Debt Securities of
such series shall have the right to
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direct the time, method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Debt
Securities of such series;
provided
,
however
, that if an Event of Default shall have occurred and
be continuing with respect to more than one series of Debt Securities, the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of all such series, considered as one
class, shall have the right to make such direction, and not the Holders of the Debt Securities of
any one of such series; and
provided
,
further
, that
(a) such direction shall not be in conflict with any rule of law or with this Indenture, and
may not involve the Trustee in personal liability in circumstances where indemnity would not in the
Trustee’s reasonable discretion be adequate, and
(b) the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Before proceeding to exercise any right or power hereunder at the direction of such Holders,
the Trustee shall be entitled to receive from such Holders reasonable security or indemnity against
the costs, expenses and liabilities that might be incurred by it in compliance with any such
direction.
Section 8.13.
Waiver of Past Defaults
.
The Holders of not less than a majority in principal amount of the Outstanding Debt Securities
of any series may on behalf of the Holders of all the Debt Securities of such series waive any past
default hereunder with respect to such series and its consequences, except a default
(a) in the payment of the principal of or premium, if any, or interest (including Additional
Interest), if any, on any Debt Security of such series, or
(b) in respect of a covenant or provision hereof that under
Section 12.02
cannot be
modified or amended without the consent of the Holder of each Outstanding Debt Security of such
series affected.
Upon any such waiver, such default shall cease to exist, and any and all Events 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 8.14.
Undertaking for Costs
.
The Company and the Trustee agree, and each Holder 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,
suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit instituted by the Company,
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 aggregate principal amount of the Outstanding Debt
Securities of all series in respect of which such suit may be brought, considered as one class, or
to any suit instituted by any Holder for the enforcement of the payment of the principal of or
premium, if any, or interest (including Additional Interest), if any, on any Debt Security on or
after the Stated Maturity or Maturities expressed in such Debt Security (or, in the case of
redemption, on or after the Redemption Date).
Section 8.15.
Waiver of Stay or Extension Laws
.
The Company covenants (to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any
stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any
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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.
ARTICLE IX
THE TRUSTEE
Section 9.01.
Certain Duties and Responsibilities
.
(a) The Trustee shall have and be subject to all the duties and responsibilities specified
with respect to an indenture trustee in the Trust Indenture Act, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(b) The Trustee, prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default that may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture. In case an Event of Default of which
a Responsible Officer of the Trustee has knowledge has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.
(c) No provision of this Indenture shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act or its own willful misconduct,
except that prior to the occurrence of an Event of Default and after the curing or waiving of all
Events of Default that may have occurred
(i) the duties and obligations of the Trustee shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable except for the performance
of, or failure to perform, such duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; but, in the case of any such certificates or opinions
that by any provision hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture.
(d) The Trustee shall not be liable with respect to any action taken or omitted to be taken by
it in good faith, in accordance with the direction of the Holders of Debt Securities pursuant to
Section 8.12
, relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture.
(e) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that
it is not reasonably assured of receiving (i) repayment of such funds or (ii) indemnity, in an
amount deemed adequate to the Trustee in its reasonable judgment, against such risk or liability.
(f) Notwithstanding anything contained in this Indenture to the contrary, the duties and
responsibilities of the Trustee under this Indenture shall be subject to the protections,
exculpations and limitations on liability afforded to the Trustee under the provisions of the Trust
Indenture Act, including those provisions of such Act deemed by such Act to be included herein.
(g) Whether or not therein expressly so provided, every provision of this Indenture relating
to the conduct or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
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Section 9.02.
Notice of Defaults
.
The Trustee shall give the Holders notice of any default hereunder with respect to the Debt
Securities of any series to the Holders of Debt Securities of such series of which it has knowledge
(within the meaning of
Section 9.03(h)
) in the manner and to the extent required to do so
by the Trust Indenture Act, unless such default shall have been cured or waived;
provided
,
however
,
that in the case of any default of the character specified in
Section 8.01(d)
, no such
notice to Holders shall be given until at least 60 days after the occurrence thereof. For the
purpose of this Section, the term “default” means any event that is, or after notice or lapse of
time, or both, would become, an Event of Default.
Section 9.03.
Certain Rights of Trustee
.
Subject to the provisions of
Section 9.01
and to the applicable provisions of the
Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be sufficiently evidenced
by a Company Request or Company Order, or as otherwise expressly provided herein, and any
resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officer’s Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any Holder pursuant to this Indenture, unless
such Holder shall have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness 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 (subject to applicable legal requirements) be entitled to examine, during
normal business hours, the books, records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder; and
(h) the Trustee shall not be charged with knowledge of any default or Event of Default with
respect to the Debt Securities of any series for which it is acting as Trustee unless either (1) a
Responsible Officer of the Trustee shall have knowledge of the default or Event of Default or (2)
written notice of such default or Event of Default shall have been given to the Trustee by the
Company, any other obligor on such Debt Securities or by any Holder of such Debt Securities.
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Section 9.04.
Not Responsible for Recitals or Issuance of Debt Securities
.
The recitals contained herein and in the Debt Securities (except the Trustee’s certificates of
authentication) shall be taken as the statements of the Company, and neither the Trustee nor any
Authenticating Agent assumes responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the Debt Securities.
Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by
the Company of Debt Securities or the proceeds thereof. The Trustee shall not incur any liability
for non-performance or breach of any obligation hereunder to the extent that the Trustee is delayed
in performing, unable to perform or breaches such obligation because of acts of God, war,
terrorism, fire, floods, electrical outages or other causes reasonably beyond its control;
provided, however
, that the Trustee shall use commercially reasonable efforts consistent with
accepted practices for corporate trustees to maintain performance without delay or resume
performance as soon as reasonably practicable under the circumstances.
Section 9.05.
May Hold Debt Securities
.
Each of the Trustee, any Authenticating Agent, any Paying Agent, any Debt Security Registrar
or any other agent of the Company, in its individual or any other capacity, may become the owner or
pledgee of Debt Securities and, subject to
Sections 9.08
and
9.13
, may otherwise
deal with the Company with the same rights it would have if it were not the Trustee, Authenticating
Agent, Paying Agent, Debt Security Registrar or such other agent.
Section 9.06.
Money Held in Trust
.
Money held by the Trustee in trust hereunder need not be segregated from other funds, except
to the extent required by law. The Trustee shall be under no liability for interest on investment
of any money received by it hereunder except as expressly provided herein or otherwise agreed with,
and for the sole benefit of, the Company.
Section 9.07.
Compensation and Reimbursement
.
The Company shall
(a) pay to the Trustee from time to time reasonable compensation for all services rendered by
it hereunder (which compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in
accordance with any provision of this Indenture, including the costs of collection (including the
reasonable compensation and the expenses and disbursements of its agents and counsel), except to
the extent that any such expense, disbursement or advance may be attributable to its negligence,
willful misconduct or bad faith; and
(c) indemnify the Trustee and hold it harmless from and against any and all losses, demands,
claims, liabilities, causes of action or expenses (including reasonable attorneys’ fees and
expenses) incurred by it arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder or the performance of its duties hereunder, including the reasonable
costs and expenses of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the extent any such
loss, demand, claim, liability, cause of action or expense may be attributable to its negligence,
willful misconduct or bad faith and may assume the defense of the Trustee with counsel acceptable
to the Trustee, unless the Trustee shall have been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those available to the
Company, in which case the Trustee may engage separate counsel, and the fees and expenses of such
counsel shall be assumed by the Company.
As security for the performance of the obligations of the Company under this Section, the
Trustee shall have a lien prior to the Debt Securities upon all property and funds held or
collected by the Trustee as such other than property and funds held in trust for the payment of
principal, premium, if any, and interest on Debt Securities. “
Trustee
” for purposes of this
Section shall include any predecessor Trustee;
provided
,
however
, that the
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negligence, willful
misconduct or bad faith of any Trustee hereunder shall not affect the rights of any other Trustee
hereunder. When a Trustee incurs expenses or renders services in connection with an Event of
Default specified in
Sections 8.01(e)
or
(f)
, the expenses (including the
reasonable charges and expenses of its counsel) and the compensation for the services are intended
to constitute expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law. The provisions of this Section shall survive termination of this
Indenture and the resignation or removal of the Trustee.
Section 9.08.
Disqualification; Conflicting Interests
.
If the Trustee shall have or acquire any conflicting interest within the meaning of the Trust
Indenture Act, it shall either eliminate such conflicting interest or resign to the extent, in the
manner and with the effect, and subject to the conditions, provided in the Trust Indenture Act and
this Indenture. For purposes of Section 310(b)(1) of the Trust Indenture Act and to the extent
permitted thereby, the Trustee shall not be deemed to have a conflicting interest by virtue of
being a Trustee under (i) this Indenture with respect to Debt Securities of one or more series or
(ii) any other indenture to which the Trustee and the Company are a party, if any, or with respect
to the securities issued thereunder, if any.
Section 9.09.
Corporate Trustee Required; Eligibility
.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the United States, any state
or territory thereof or the District of Columbia, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by federal or state authority, or
(b) if and to the extent permitted by the Commission by rule, regulation or order upon
application, a corporation or other Person organized and doing business under the laws of a foreign
government, authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000 or the Dollar equivalent of the applicable foreign
currency and subject to supervision or examination by authority of such foreign government or a
political subdivision thereof substantially equivalent to supervision or examination applicable to
United States institutional trustees,
and, in either case, qualified and eligible under this Article and the Trust Indenture Act. If
such corporation publishes reports of condition at least annually, pursuant to law or to the
requirements of such supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in this Article.
Section 9.10.
Resignation and Removal; Appointment of Successor
.
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements of
Section 9.11
.
(b) The Trustee may resign at any time with respect to the Debt Securities of one or more
series by giving written notice thereof to the Company. If the instrument of acceptance by a
successor Trustee required by
Section 9.11
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 the
Debt Securities of such series.
(c) The Trustee may be removed at any time with respect to the Debt Securities of any series
by Act of the Holders of a majority in principal amount of the Outstanding Debt Securities of such
series delivered to the Trustee and to the Company.
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(d) If at any time:
(1) the Trustee shall fail to comply with
Section 9.08
after written request
therefor by the Company or by any Holder who has been a bona fide Holder for at least six
months, or
(2) the Trustee shall cease to be eligible under
Section 9.09
and shall fail to
resign after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (x) the Company by a Board Resolution may remove the Trustee with respect
to all Debt Securities or (y) subject to
Section 8.14
, any Holder who has been a bona fide
Holder 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
Debt Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any cause (other than as contemplated in clause (y) in
Subsection (d) of this Section), with respect to the Debt Securities of one or more series, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Debt Securities of that or those series (it being understood that any such successor Trustee
may be appointed with respect to the Debt 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 Debt Securities of any particular
series) and shall comply with the applicable requirements of
Section 9.11
. If, within one
year after such resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Debt Securities of any series shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Debt Securities of such series
delivered to the Company 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 9.11
, become the successor Trustee with respect to the Debt Securities of such
series and to that extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Debt Securities of any series shall have been so appointed by
the Company or the Holders and accepted appointment in the manner required by
Section 9.11
,
any Holder who has been a bona fide Holder of a Debt Security of such series for at least six
months may, on behalf of itself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Debt Securities of such
series.
(f) So long as no event that is, or after notice or lapse of time, or both, would become, an
Event of Default shall have occurred and be continuing, and except with respect to a Trustee
appointed by Act of the Holders of a majority in principal amount of the Outstanding Debt
Securities pursuant to Subsection (e) of this Section, if the Company shall have delivered to the
Trustee (i) a Board Resolution appointing a successor Trustee, effective as of a date specified
therein, and (ii) an instrument of acceptance of such appointment, effective as of such date, by
such successor Trustee in accordance with
Section 9.11
, the Trustee shall be deemed to have
resigned as contemplated in Subsection (b) of this Section, the successor Trustee shall be deemed
to have been appointed by the Company pursuant to Subsection (e) of this Section and such
appointment shall be deemed to have been accepted as contemplated in
Section 9.11
, all as
of such date, and all other provisions of this Section and
Section 9.11
shall be applicable
to such resignation, appointment and acceptance except to the extent inconsistent with this
Subsection (f).
(g) The Company or, should the Company fail so to act promptly, the successor Trustee, at the
expense of the Company, shall give notice of each resignation and each removal of the Trustee with
respect to the Debt Securities of any series and each appointment of a successor Trustee with
respect to the Debt Securities of any series by mailing written notice of such event by first-class
mail, postage prepaid, to all Holders of Debt Securities
of such series as their names and addresses appear in the Debt Security Register. Each notice
shall include the name of the successor Trustee with respect to the Debt Securities of such series
and the address of its corporate trust office.
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Section 9.11.
Acceptance of Appointment by Successor
.
(a) In case of the appointment hereunder of a successor Trustee with respect to the Debt
Securities of all series, every such successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of all sums owed to it, execute
and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts
of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with respect to the Debt
Securities of one or more (but not all) series, the Company, the retiring Trustee and each
successor Trustee with respect to the Debt Securities of one or more series 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, each successor Trustee all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Debt 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 Debt 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 Debt Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee and (3) shall add to or change any of
the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee, upon payment of all sums owed to it, shall duly assign, transfer
and deliver to such successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Debt Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute any instruments that
fully vest in and confirm to such successor Trustee all such rights, powers and trusts referred to
in Subsection (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance
such successor Trustee shall be qualified and eligible under this Article.
Section 9.12.
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 the
corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the parties hereto. In
case any Debt 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 Debt Securities so authenticated with the same effect as if such successor Trustee
had itself authenticated such Debt Securities.
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*
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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Section 9.13.
Preferential Collection of Claims Against Company
.
If the Trustee shall be or become a creditor of the Company or any other obligor upon the Debt
Securities (other than by reason of a relationship described in Section 311(b) of the Trust
Indenture Act), the Trustee shall be subject to any and all applicable provisions of the Trust
Indenture Act regarding the collection of claims against the Company or such other obligor. For
purposes of Section 311(b) of the Trust Indenture Act:
(a) the term “cash transaction” means any transaction in which full payment for goods or
securities sold is made within seven days after delivery of the goods or securities in currency or
in checks or other orders drawn upon banks or bankers and payable upon demand; and
(b) the term “self-liquidating paper” means any draft, bill of exchange, acceptance or
obligation that is made, drawn, negotiated or incurred by the Company for the purpose of financing
the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise
and that is secured by documents evidencing title to, possession of, or a lien upon, the goods,
wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with the Company arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
Section 9.14.
Co-Trustees and Separate Trustees
.
At any time or times, for the purpose of meeting the legal requirements of any applicable
jurisdiction, the Company and the Trustee shall have power to appoint, and, upon the written
request of the Trustee or of the Holders of at least 33% in principal amount of the Debt Securities
then Outstanding, the Company shall for such purpose join with the Trustee in the execution and
delivery of all instruments and agreements necessary or proper to appoint, one or more Persons
approved by the Trustee either to act as co-trustee, jointly with the Trustee, or to act as
separate trustee, in either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons, in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other provisions of this Section. If
the Company does not join in such appointment within 15 days after the receipt by it of a request
so to do, or if an Event of Default shall have occurred and be continuing, the Trustee alone shall
have power to make such appointment.
Should any written instrument or instruments from the Company be required by any co-trustee or
separate trustee so appointed to more fully confirm to such co-trustee or separate trustee such
property, title, right or power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by the Company.
Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent
only, be appointed subject to the following conditions:
(a) the Debt Securities shall be authenticated and delivered, and all rights, powers, duties
and obligations hereunder in respect of the custody of securities, cash and other personal property
held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised
solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in
respect of any property covered by such appointment shall be conferred or imposed upon and
exercised or performed either by the Trustee or by the Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction in which any particular act is
to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations shall be exercised and performed by such
co-trustee or separate trustee;
(c) the Trustee at any time, by an instrument in writing executed by it, with the concurrence
of the Company, may accept the resignation of or remove any co-trustee or separate trustee
appointed under this Section, and, if an Event of Default shall have occurred and be continuing,
the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Company. Upon
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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42
the written request of the Trustee,
the Company shall join with the Trustee in the execution and delivery of all instruments and
agreements necessary or proper to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in
this Section;
(d) no co-trustee or separate trustee hereunder shall be personally liable by reason of any
act or omission of the Trustee, or any other such trustee hereunder, and the Trustee shall have no
liability, personally or in its capacity as Trustee, for any act or omission of any co-trustee or
separate trustee hereunder; and
(e) any Act of Holders delivered to the Trustee shall be deemed to have been delivered to each
such co-trustee and separate trustee.
Section 9.15.
Appointment of Authenticating Agent
.
The Trustee may appoint an Authenticating Agent or Agents with respect to the Debt Securities
of one or more series, or any Tranche thereof, which shall be authorized to act on behalf of the
Trustee to authenticate Debt Securities of such series or Tranche issued upon original issuance,
exchange, registration of transfer or partial redemption thereof or pursuant to
Section
3.06
, and Debt 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 Debt 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 Company and shall at all times be a corporation
organized and doing business under the laws of the United States, any state or territory thereof or
the District of Columbia or the Commonwealth of Puerto Rico, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or consolidation to
which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate
agency or corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent may resign at any time by giving 45 days written notice thereof to the
Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the Company. 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 that shall be acceptable to the Company.
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 Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section.
The provisions of
Sections 3.08
,
9.04
and
9.05
shall be applicable to
each Authenticating Agent.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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If an appointment with respect to the Debt
Securities of one or more series, or any Tranche
thereof, shall be made pursuant to this Section, the Debt Securities of such series or Tranche may
have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternate
certificate of authentication substantially in the following form:
This is one of the Debt Securities of the series
designated therein referred to in the
within-mentioned Indenture.
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Dated:
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By:
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As Trustee
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By:
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As Authenticating Agent
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By:
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Authorized Signatory
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If all of the Debt Securities of a series may not
be originally issued at one time, and if the
Trustee does not have an office capable of authenticating Debt Securities upon original issuance
located in a Place of Payment where the Company wishes to have Debt Securities of such series
authenticated upon original issuance, the Trustee, if so requested by the Company in writing (which
writing need not comply with
Section 1.02
and need not be accompanied by an Opinion of
Counsel), shall appoint, in accordance with this Section and in accordance with such procedures as
shall be acceptable to the Trustee, an Authenticating Agent having an office in a Place of Payment
designated by the Company with respect to such series of Debt Securities.
ARTICLE X
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY
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Section 10.01.
Lists of Holders
.
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Semiannually,
not later than
and
In each year, commencing with
the year 20
, and at such other times as the Trustee may request in writing, the Company shall
furnish or cause to be furnished to the Trustee information as to the names and addresses of the
Holders, and the Trustee shall preserve such information and similar information received by it in
any other capacity and afford to the Holders access to information so preserved by it, all to such
extent, if any, and in such manner as shall be required by the Trust Indenture Act;
provided
,
however
, that no such list need be furnished so long as the Trustee shall be the Debt Security
Registrar. Every holder of Debt Securities, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them
shall be held accountable by reason of the disclosure of any such information as to the names and
addresses of the Holders of Debt Securities in accordance with Section 312 of the Trust Indenture
Act, or any successor Section of such 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, or any successor
Section of such Act.
Section 10.02.
Reports by Trustee and Company
.
Annually,
not later than
in each year, commencing
, the Trustee
shall transmit to the Holders, the Commission and each securities exchange upon which any Debt
Securities are listed, a report, dated as of the next preceding
, with respect to
any events and other matters described in Section 313(a) of the Trust Indenture Act, in such manner
and to the extent required by the Trust Indenture Act. The
Trustee shall transmit to the Holders, the Commission and each securities exchange upon which
any Debt Securities are listed, and the Company shall file with the Trustee (within 30 days after
filing with the Commission in the case
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*
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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44
of reports that pursuant to the Trust Indenture Act must be
filed with the Commission and furnished to the Trustee) and transmit to the Holders, such other
information, reports and other documents, if any, at such times and in such manner, as shall be
required by the Trust Indenture Act.
The Company shall notify the Trustee of the listing of any Debt Securities on any securities
exchange. Delivery of such reports, information and documents by the Company to the Trustee is for
informational purposes only, and the Trustee’s receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information contained therein,
including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer’s Certificates).
ARTICLE XI
CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
Section 11.01.
Company May Consolidate, Etc., Only on Certain Terms
.
The Company shall not consolidate with or merge into any other corporation, or convey or
otherwise transfer or lease its properties and assets substantially as an entirety to any Person,
unless
(a) the corporation formed by such consolidation or into which the Company is merged or the
Person that acquires by conveyance or transfer, or that leases, the properties and assets of the
Company substantially as an entirety shall be a Person organized and existing under the laws of the
United States, any state thereof or the District of Columbia, and shall expressly 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, and premium, if any, and interest
(including Additional Interest), if any, on all Outstanding Debt Securities and the performance of
every covenant of this Indenture on the part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction and treating any indebtedness for
borrowed money that becomes an obligation of the Company as a result of such transaction as having
been incurred by the Company at the time of such transaction, no Event of Default, and no event
that, after notice or lapse of time or both, would become an Event of Default, shall have occurred
and be continuing; and
(c) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, or other transfer or lease and
such supplemental indenture comply with this Article and that all conditions precedent herein
provided for relating to such transactions have been complied with.
Section 11.02.
Successor Corporation Substituted
.
Upon any consolidation by the Company with or merger by the Company into any other corporation
or any conveyance or other transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with
Section 11.01
, the successor corporation
formed by such consolidation or into which the Company is merged or the Person 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 Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Debt Securities Outstanding hereunder.
ARTICLE XII
SUPPLEMENTAL INDENTURES
Section 12.01.
Supplemental Indentures Without Consent of Holders
.
Without the consent of any Holders, the Company 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:
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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45
(a) to evidence the succession of another Person to the Company and the assumption by any such
successor of the covenants of the Company herein and in the Debt Securities, all as provided in
Article XI; or
(b) to add one or more covenants of the Company or other provisions for the benefit of all
Holders or for the benefit of the Holders of, or to remain in effect only so long as there shall be
Outstanding, Debt Securities of one or more specified series, or one or more specified Tranches
thereof, or to surrender any right or power herein conferred upon the Company; or
(c) to add any additional Events of Default with respect to all or any series of Debt
Securities Outstanding hereunder; or
(d) to change or eliminate any provision of this Indenture or to add any new provision to this
Indenture;
provided
,
however
, that if such change, elimination or addition shall adversely affect
the interests of the Holders of Debt Securities of any series or Tranche Outstanding on the date of
such indenture supplemental hereto in any material respect, such change, elimination or addition
shall become effective with respect to such series or Tranche only pursuant to the provisions of
Section 12.02
hereof or when no Debt Security of such series or Tranche remains
Outstanding; or
(e) to provide collateral security for the Debt Securities of any series or Tranche; or
(f) to establish the form or terms of Debt Securities of any series or Tranche as contemplated
by
Sections 2.01
and
3.01
; or
(g) to provide for the authentication and delivery of bearer securities and coupons
appertaining thereto representing interest, if any, thereon and for the procedures for the
registration, exchange and replacement thereof and for the giving of notice to, and the
solicitation of the vote or consent of, the holders thereof, and for any and all other matters
incidental thereto; or
(h) to evidence and provide for the acceptance of appointment hereunder by a separate or
successor Trustee with respect to the Debt Securities of one or more series and to add to or change
any of the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of
Section 9.11(b)
; or
(i) to provide for the procedures required to permit the Company to utilize, at its option, a
non-certificated system of registration for all, or any series or Tranche of, the Debt Securities;
or to provide for the authentication and delivery of bearer securities and coupons appertaining
thereto representing interest, if any, thereon and for the procedures for the registration,
exchange and replacement thereof and for the giving of notice to, and the solicitation of the vote
or consent of, the holders thereof, and for any and all other matters incidental thereto; or
(j) to change any place or places where (1) the principal of and premium, if any, and interest
(including Additional Interest), if any, on all or any series of Debt Securities, or any Tranche
thereof, shall be payable, (2) all or any series of Debt Securities, or any Tranche thereof, may be
surrendered for registration of transfer, (3) all or any series of Debt Securities, or any Tranche
thereof, may be surrendered for exchange and (4) notices and demands to or upon the Company in
respect of all or any series of Debt Securities, or any Tranche thereof, and this Indenture may be
served; or
(k) to cure any ambiguity or to correct or supplement any provision herein that may be
defective or inconsistent with any other provision herein; provided that no such changes or
additions shall adversely affect the interests of the Holders of Debt Securities of any series or
Tranche in any material respect.
Without limiting the generality of the foregoing, if the Trust Indenture Act as in effect at
the date of the execution and delivery of this Indenture or at any time thereafter shall be amended
and
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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(x) if any such amendment shall require one or more changes to any provisions hereof or the
inclusion herein of any additional provisions, or shall by operation of law be deemed to effect
such changes or incorporate such provisions by reference or otherwise, this Indenture shall be
deemed to have been amended so as to conform to such amendment to the Trust Indenture Act, and the
Company and the Trustee may, without the consent of any Holders, enter into an indenture
supplemental hereto to effect or evidence such changes or additional provisions; or
(y) if any such amendment shall permit one or more changes to, or the elimination of, any
provisions hereof that, at the date of the execution and delivery hereof or at any time thereafter,
are required by the Trust Indenture Act to be contained herein, this Indenture shall be deemed to
have been amended to effect such changes or elimination, and the Company and the Trustee may,
without the consent of any Holders, enter into an indenture supplemental hereto to evidence such
amendment hereof, provided such amendment does not have a material adverse effect on any Holders.
Section 12.02.
Supplemental Indentures With Consent of Holders
.
With the consent of the Holders of not less than a majority in aggregate principal amount of
the Debt Securities of all series then Outstanding under this Indenture, considered as one class,
by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture;
provided
,
however
, that if there shall be Debt Securities of more
than one series Outstanding hereunder and if a proposed supplemental indenture shall directly
affect the rights of the Holders of Debt Securities of one or more, but less than all, of such
series, then the consent only of the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of all series so directly affected, considered as one class, shall be
required; and
provided
,
further
, that if the Debt Securities of any series shall have been issued
in more than one Tranche and if the proposed supplemental indenture shall directly affect the
rights of the Holders of Debt Securities of one or more, but less than all, of such Tranches, then
the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of all Tranches so directly affected, considered as one class, shall be required; and
provided
,
further
, that no such supplemental indenture shall:
(a) change the Stated Maturity of the principal of, or any installment of principal of or
interest (including Additional Interest) on [(except as provided in
Section 3.12
)]* any
Debt Security, or reduce the principal amount thereof or the rate of interest thereon (or the
amount of any installment of interest thereon) or change the method of calculating such rate or
reduce any premium payable upon the redemption thereof, or reduce the amount of the principal of a
Discount Debt Security that would be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to
Section 8.02
, or change the coin or currency (or other
property) in which any Debt Security or any premium or the interest (including Additional Interest)
thereon is payable, or impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity of any Debt Security (or, in the case of redemption, on or after
the Redemption Date), without, in any such case, the consent of the Holder of such Debt Security,
or
(b) reduce the percentage in principal amount of the Outstanding Debt Securities of any series
or any Tranche thereof, the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver of compliance with any
provision of this Indenture or of any default hereunder and its consequences, or reduce the
requirements of
Section 13.04
for quorum or voting, without, in any such case, the consent
of the Holders of each Outstanding Debt Security of such series or Tranche, or
(c) modify any of the provisions of this Section,
Section 6.07
or
Section 8.13
with respect to the Debt Securities of any series, or any Tranche thereof (except to increase the
percentages in principal amount referred to in this Section or such other Sections or to provide
that other provisions of this Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Debt Security affected thereby);
provided
,
however
, that this clause
shall not be deemed to require the consent of any Holder with respect to changes in the references
to “the Trustee” and concomitant changes in this Section, or the deletion of this proviso, in
accordance with the requirements of
Sections 9.11(b)
,
9.14
and
12.01(h)
.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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A supplemental indenture that changes or eliminates any covenant or other provision of this
Indenture that has expressly been included solely for the benefit of one or more particular series
of Debt Securities, or of one or more Tranches thereof, or that modifies the rights of the Holders
of Debt Securities of such series or Tranches with respect to such covenant or other provision,
shall be deemed not to affect the rights under this Indenture of the Holders of Debt Securities of
any other series or Tranche.
Upon the request of the Company, accompanied by a copy of the Board Resolution authorizing the
execution of any such supplemental indenture, compliance by the Company with
Section 12.03
hereof, and the filing with the Trustee of evidence of the consent of the Holders of the Debt
Securities required hereunder with respect to the proposed supplemental indenture, the Trustee
shall join with the Company in the execution of such supplemental indenture unless the supplemental
indenture affects the Trustee’s own rights, duties or immunities under this Indenture, or
otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into
such supplemental indenture.
It shall not be necessary for any Act of Holders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof. A waiver by a Holder of such Holder’s right to consent under this Section
shall be deemed to be a consent of such Holder.
Section 12.03.
Execution of Supplemental Indentures
.
In executing, or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be provided and (subject to
Section 9.01
) shall be fully protected in relying
upon an Officer’s Certificate and Opinion of Counsel, each stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture.
Section 12.04.
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 Debt Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby. Any supplemental indenture permitted
by this Article may restate this Indenture in its entirety, and, upon the execution and delivery
thereof, any such restatement shall supersede this Indenture as theretofore in effect for all
purposes.
Section 12.05.
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.
Section 12.06.
Reference in Debt Securities to Supplemental Indentures
.
Debt Securities of any series, or any Tranche thereof, 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 Company shall so determine, new Debt Securities of any series, or
any Tranche thereof, so modified as to conform, in the opinion of the Trustee and the Company, to
any such supplemental indenture may be prepared and executed by the Company
and authenticated and delivered by the Trustee in exchange for Outstanding Debt Securities of
such series or Tranche.
Section 12.07.
Modification without Supplemental Indenture
.
If the terms of any particular series of Debt Securities shall have been established in a
Board Resolution or an Officer’s Certificate pursuant to a Board Resolution as contemplated by
Section 3.01
, and not in an indenture supplemental hereto, additions to, changes in or the
elimination of any of such terms may be effected by means of a supplemental Board Resolution or
Officer’s Certificate, as the case may be, delivered to, and accepted by, the
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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Trustee;
provided
,
however
, that such supplemental Board Resolution or Officer’s Certificate shall not be accepted by
the Trustee or otherwise be effective unless all conditions set forth in this Indenture that would
be required to be satisfied if such additions, changes or elimination were contained in a
supplemental indenture shall have been appropriately satisfied. Upon the acceptance thereof by the
Trustee, any such supplemental Board Resolution or Officer’s Certificate shall be deemed to be a
“supplemental indenture” for purposes of
Sections 12.04
and
12.06
.
ARTICLE XIII
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
Section 13.01.
Purposes for which Meetings may be Called
.
A meeting of Holders of Debt Securities of one or more, or all, series, or any Tranche or
Tranches thereof, may be called at any time and from time to time pursuant to this Article to make,
give or take any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Debt Securities of such series
or Tranches.
Section 13.02.
Call, Notice and Place of Meetings
.
(a) The Trustee may at any time call a meeting of Holders of Debt Securities of one or more,
or all, series, or any Tranche or Tranches thereof, for any purpose specified in
Section
13.01
, to be held at such time and at such place in the Borough of Manhattan, The City of New
York, as the Trustee shall determine, or, with the approval of the Company, at any other place.
Notice of every such meeting, 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 1.06
, not less than 21 nor more than 180 days prior to the date fixed for the
meeting.
(b) If the Trustee shall have been requested to call a meeting of the Holders of Debt
Securities of one or more, or all, series, or any Tranche or Tranches thereof, by the Company or by
the Holders of at least 33% in aggregate principal amount of all of such series and Tranches,
considered as one class, for any purpose specified in
Section 13.01
, by written request
setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee
shall not have given the notice of such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company
or the Holders of Debt Securities of such series and Tranches in the amount above specified, as the
case may be, may determine the time and the place in the Borough of Manhattan, The City of New
York, or in such other place as shall be determined or approved by the Company, for such meeting
and may call such meeting for such purposes by giving notice thereof as provided in Subsection (a)
of this Section.
(c) Any meeting of Holders of Debt Securities of one or more, or all, series, or any Tranche
or Tranches thereof, shall be valid without notice if the Holders of all Outstanding Debt
Securities of such series or Tranches are present in person or by proxy and if representatives of
the Company and the Trustee are present, or if notice is waived in writing before or after the
meeting by the Holders of all Outstanding Debt Securities of such series, or by such of them as are
not present at the meeting in person or by proxy, and by the Company and the Trustee.
Section 13.03.
Persons Entitled to Vote at Meetings
.
To be entitled to vote at any meeting of Holders of Debt Securities of one or more, or all,
series, or any Tranche or Tranches thereof, a Person shall be (a) a Holder of one or more
Outstanding Debt Securities of such series or Tranches, or (b) a Person appointed by an instrument
in writing as proxy for a Holder or Holders of one or more Outstanding Debt Securities of such
series or Tranches by such Holder or Holders. The only Persons who shall be entitled to attend any
meeting of Holders of Debt Securities of any series or Tranche shall be the Persons entitled to
vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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Section 13.04.
Quorum; Action
.
The Persons entitled to vote a majority in aggregate principal amount of the Outstanding Debt
Securities of the series and Tranches with respect to which a meeting shall have been called as
hereinbefore provided, considered as one class, shall constitute a quorum for a meeting of Holders
of Debt Securities of such series and Tranches;
provided
,
however
, that if any action is to be
taken at such meeting that this 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 such series and Tranches, considered as one class, the Persons entitled to vote such
specified percentage in principal amount of the Outstanding Debt Securities of such series and
Tranches, considered as one class, shall constitute a quorum. In the absence of a quorum within
one hour of the time appointed for any such meeting, the meeting shall, if convened at the request
of Holders of Debt Securities of such series and Tranches, be dissolved. In any other case the
meeting may be adjourned for such period as may be 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 such period as may be determined by the chairman of
the meeting prior to the adjournment of such adjourned meeting. Except as provided by
Section
13.05(e)
, notice of the reconvening of any meeting adjourned for more than 30 days shall be
given as provided in
Section 13.02(a)
not less than ten 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 Debt
Securities of such series and Tranches that shall constitute a quorum.
Except as limited by
Section 12.02
, 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 aggregate principal amount of the Outstanding Debt
Securities of the series and Tranches with respect to which such meeting shall have been called,
considered as one class; provided, however, that, except as so limited, any resolution with respect
to any action that this 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 such series and Tranches, considered as one class, 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 Debt Securities of
such series and Tranches, considered as one class.
Any resolution passed or decision taken at any meeting of Holders of Debt Securities duly held
in accordance with this Section shall be binding on all the Holders of Debt Securities of the
series and Tranches with respect to which such meeting shall have been held, whether or not present
or represented at the meeting.
Section 13.05.
Attendance at Meetings; Determination of Voting Rights; Conduct and Adjournment
of Meetings
.
(a) Attendance at meetings of Holders of Debt Securities may be in person or by proxy; and, to
the extent permitted by law, any such proxy shall remain in effect and be binding upon any future
Holder of the Debt Securities with respect to which it was given unless and until specifically
revoked by the Holder or future Holder of such Debt Securities before being voted.
(b) 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 Debt Securities in
regard to proof of the holding of such Debt Securities 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
Debt Securities shall be proved in the manner specified in
Section 1.04
and the appointment
of any proxy shall be proved in the manner specified in
Section 1.04
. 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 1.04
or other proof.
(c) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the
meeting, unless the meeting shall have been called by the Company or by Holders as provided in
Section 13.02(b)
, in which case the Company or the Holders of Debt Securities of the series
and Tranches calling the meeting, as the case may
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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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 aggregate principal amount of the Outstanding Debt
Securities of all series and Tranches represented at the meeting, considered as one class.
(d) At any meeting each Holder or proxy shall be entitled to one vote for each $1 principal
amount of Debt Securities held or represented by him;
provided
,
however
, that no vote shall be cast
or counted at any meeting in respect of any Debt 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 Debt Security or proxy.
(e) Any meeting duly called pursuant to
Section 13.02
at which a quorum is present may
be adjourned from time to time by Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Debt Securities of all series and Tranches represented at the meeting,
considered as one class; and the meeting may be held as so adjourned without further notice.
Section 13.06.
Counting Votes and Recording Action of Meetings
.
The vote upon any resolution submitted to any meeting of Holders shall be by written ballots
on which shall be subscribed the signatures of the Holders or of their representatives by proxy and
the principal amounts and serial numbers of the Outstanding Debt Securities, of the series and
Tranches with respect to which the meeting shall have been called, 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 of all votes cast at the meeting. A record
of the proceedings of each meeting of Holders 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 13.02
and, if applicable,
Section 13.04
. 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 Company, 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.
Section 13.07.
Action Without Meeting
.
In lieu of a vote of Holders at a meeting as hereinbefore contemplated in this Article, any
request, demand, authorization, direction, notice, consent, waiver or other action may be made,
given or taken by Holders by written instruments as provided in
Section 1.04
.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS
Section 14.01.
Liability Solely Corporate
.
No recourse shall be had for the payment of the principal of or premium, if any, or interest
(including Additional Interest), if any, on any Debt Securities, or any part thereof, or for any
claim based thereon or otherwise
in respect thereof, or of the indebtedness represented thereby, or upon any obligation,
covenant or agreement under this Indenture, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any predecessor or successor
corporation (either directly or through the Company or a predecessor or successor corporation),
whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly agreed and understood that this
Indenture and all the Debt Securities are solely corporate obligations, and that no personal
liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, officer or
director, past, present or future, of the Company or of any predecessor or successor corporation,
either directly or indirectly through the Company or any predecessor or successor corporation,
because of the indebtedness hereby authorized or under or by reason of any of the obligations,
covenants or agreements contained in this Indenture or in any of the Debt Securities or to be
implied
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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herefrom or therefrom, and that any such personal liability is hereby expressly waived and
released as a condition of, and as part of the consideration for, the execution of this Indenture
and the issuance of the Debt Securities.
ARTICLE XV
[SUBORDINATION OF SECURITIES]*
Section 15.01.
Securities Subordinate to Senior Indebtedness
.
[The Company, for itself, its successors and assigns, covenants and agrees, and each Holder of
the Debt Securities of each series, by its acceptance thereof, likewise covenants and agrees, that
the payment of the principal of and premium, if any, and interest, if any, on each and all of the
Debt Securities is hereby expressly subordinated, to the extent and in the manner set forth in this
Article, in right of payment to the prior payment in full of all Senior Indebtedness.
Each Holder of the Debt Securities of each series, by its acceptance thereof, authorizes and
directs the Trustee on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article, and appoints the Trustee its
attorney-in-fact for any and all such purposes.
Without limiting the generality of the foregoing, nothing contained in this Article shall
restrict the right of the Trustee or the Holders of Debt Securities to take any action to declare
the Debt Securities to be due and payable prior to their stated maturity pursuant to
Section
8.02
or to pursue any rights or remedies hereunder;
provided
,
however
, that all Senior
Indebtedness then due and payable shall first be paid in full before the Holders of the Debt
Securities or the Trustee are entitled to receive any direct or indirect payment from the Company
of principal of, or premium, if any, or interest on the Debt Securities.
Section 15.02.
Payment Over of Proceeds of Securities
.
In the event (a) of any insolvency or bankruptcy proceedings or any receivership, liquidation,
reorganization or other similar proceedings in respect of the Company or a substantial part of its
property, or of any proceedings for liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy, whether voluntary or involuntary or (b) subject
to the provisions of
Section 15.03
, that (i) a default shall have occurred with respect to
the payment of principal of or interest on or other monetary amounts due and payable on any Senior
Indebtedness, or (ii) there shall have occurred a default (other than a default in the payment of
principal or interest or other monetary amounts due and payable) in respect of any Senior
Indebtedness, as defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof (with notice or lapse
of time, or both), and such default shall have continued beyond the period of grace, if any, in
respect thereof, and, in the cases of subclauses (i) and (ii) of this clause (b), such default
shall not have been cured or waived or shall not have ceased to exist, and, in the case of
subclause (ii) of this clause (b), the maturity of such Senior Indebtedness shall have been
accelerated in accordance with the default provisions thereof or (c) that the principal of and
accrued interest on the Debt Securities of any series shall have been declared due and payable
pursuant to
Section 8.01
and such declaration shall not have been rescinded and annulled as
provided in
Section 8.02
, then:
(1) the holders of all Senior Indebtedness shall first be entitled to receive payment
of the full amount due thereon, or provision shall be made for such payment in money or
money’s worth, before the Holders of any of the Debt Securities are entitled to receive a payment on account of
the principal of or interest on the indebtedness evidenced by the Debt Securities,
including, without limitation, any payments made pursuant to
Articles IV
and
V
;
(2) any payment by, or distribution of assets of, the Company of any kind or character,
whether in cash, property or securities, to which any Holder or the Trustee would be
entitled except for the provisions of this Article, shall be paid or delivered by the person
making such payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of such Senior Indebtedness or
their representative or representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness may have been issued,
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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ratably according to the aggregate amounts remaining unpaid on account of such Senior
Indebtedness held or represented by each, to the extent necessary to make payment in full of
all Senior Indebtedness remaining unpaid after giving effect to any concurrent payment or
distribution (or provision therefor) to the holders of such Senior Indebtedness, before any
payment or distribution is made to the Holder of the indebtedness evidenced by the Debt
Securities or to the Trustee under this Indenture; and
(3) in the event that, notwithstanding the foregoing, any payment by, or distribution
of assets of, the Company of any kind or character, whether in cash, property or securities,
in respect of principal of or interest on the Debt Securities or in connection with any
repurchase by the Company of the Debt Securities, shall be received by the Trustee or any
Holder before all Senior Indebtedness is paid in full to the extent required by Subsection
(1) of this
Section 15.02
, or provision is made for such payment in money or money’s
worth, such payment or distribution in respect of principal of or interest on the Debt
Securities or in connection with any repurchase by the Company of the Debt Securities shall
be paid over to the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under which any
instruments evidencing any such Senior Indebtedness may have been issued, ratably as
aforesaid, for application to the payment of all Senior Indebtedness remaining unpaid until
all such Senior Indebtedness shall have been paid in full, after giving effect to any
concurrent payment or distribution (or provision therefor) to the holders of such Senior
Indebtedness.
Notwithstanding the foregoing, at any time after the 123rd day following the date of deposit
of cash or Eligible Obligations pursuant to
Section 7.01
(provided all conditions set out
in such Section shall have been satisfied), the funds so deposited and any interest thereon will
not be subject to any rights of holders of Senior Indebtedness, including, without limitation,
those arising under this Article; provided that no event described in clauses (e) and (f) of
Section 8.01
with respect to the Company has occurred during such 123-day period.
For purposes of this Article only, the words “cash, property or securities” shall not be
deemed to include shares of beneficial interest of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan of reorganization or
readjustment that are subordinate in right of payment to all Senior Indebtedness that may at the
time be outstanding to the same extent as, or to a greater extent than, the Debt Securities are so
subordinated as provided in this Article. The consolidation of the Company with, or the merger of
the Company into, another corporation or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or substantially as an entirety, to
another corporation upon the terms and conditions provided for in
Article XI
hereof shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 15.02
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in
Article XI
hereof. Nothing in
Section 15.01
or in this
Section 15.02
shall apply to claims of, or payments to,
the Trustee under or pursuant to
Section 9.07
.
Section 15.03.
Disputes with Holders of Certain Senior Indebtedness
.
Any failure by the Company to make any payment on or perform any other obligation in respect
of Senior Indebtedness, other than any indebtedness incurred by the Company or assumed or
guaranteed, directly or indirectly, by the Company for money borrowed (or any deferral, renewal,
extension or refunding thereof) or any other obligation as to which the provisions of this Section
shall have been waived by the Company in the instrument or instruments by which the Company
incurred, assumed, guaranteed or otherwise created such indebtedness or obligation, shall not be
deemed a default under clause (b) of
Section 15.02
if (i) the Company shall be disputing
its
obligation to make such payment or perform such obligation and (ii) either (A) no final
judgment relating to such dispute shall have been issued against the Company that is in full force
and effect and is not subject to further review, including a judgment that has become final by
reason of the expiration of the time within which a party may seek further appeal or review, or (B)
in the event that a judgment that is subject to further review or appeal has been issued, the
Company shall in good faith be prosecuting an appeal or other proceeding for review and a stay of
execution shall have been obtained pending such appeal or review.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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Section 15.04.
Subrogation
.
Senior Indebtedness shall not be deemed to have been paid in full unless the holders thereof
shall have received cash (or securities or other property satisfactory to such holders) in full
payment of such Senior Indebtedness then outstanding. Upon the payment in full of all Senior
Indebtedness, the Holders of the Debt Securities shall be subrogated to the rights of the holders
of Senior Indebtedness to receive any further payments or distributions of cash, property or
securities of the Company applicable to the holders of the Senior Indebtedness until all amounts
owing on the Debt Securities shall be paid in full; and such payments or distributions of cash,
property or securities received by the Holders of the Debt Securities, by reason of such
subrogation, which otherwise would be paid or distributed to the holders of such Senior
Indebtedness shall, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the Holders, be deemed to be a payment by the Company to or on account of Senior
Indebtedness, it being understood that the provisions of this Article are and are intended solely
for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of
the Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders of the Debt Securities would otherwise
have been entitled but for the provisions of this Article shall have been applied, pursuant to the
provisions of this Article, to the payment of amounts payable under Senior Indebtedness, then and
in such case, the Holders of the Debt Securities shall be entitled to receive from the holders of
such Senior Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount required to make payment to the extent required by
Section
15.02
, or provision for payment, of such Senior Indebtedness.
Section 15.05.
Unconditional Obligation of the Company
.
Nothing contained in this Article or elsewhere in this Indenture or in the Debt Securities is
intended to or shall impair, as among the Company, its creditors other than the holders of Senior
Indebtedness and the Holders, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders the principal of and interest on the Debt Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from
exercising all remedies otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article of the holders of Senior Indebtedness in respect
of cash, property or securities of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets or securities of the Company referred to in this
Article, the Trustee and the Holders shall be entitled to rely upon any order or decree of a court
of competent jurisdiction in which such bankruptcy, dissolution, winding up, liquidation or
reorganization proceedings are pending or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee agent or other person making such payment or distribution delivered
to the Trustee or to the Holders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon, and all other facts pertinent thereto or to this Article.
Section 15.06.
Priority of Senior Indebtedness Upon Maturity
.
Upon the maturity of the principal of any Senior Indebtedness by lapse of time, acceleration
or otherwise, all matured principal of Senior Indebtedness and interest and premium, if any,
thereon shall first be paid in full before any payment of principal or premium or interest, if any,
is made upon the Debt Securities or before any Debt
Securities can be acquired by the Company or any sinking fund payment is made with respect to
the Debt Securities (except that required sinking fund payments may be reduced by Debt Securities
acquired before such maturity of such Senior Indebtedness).
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
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Section 15.07.
Trustee as Holder of Senior Indebtedness
.
The Trustee shall be entitled to all rights set forth in this Article with respect to any
Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior
Indebtedness. Nothing in this Article shall deprive the Trustee of any of its rights as such
holder.
Section 15.08.
Notice to Trustee to Effectuate Subordination
.
The Company shall give prompt written notice to the Trustee of any fact known to the Company
that would prohibit the making of any payment to or by the Trustee in respect of the Debt
Securities pursuant to the provisions of this Article. Notwithstanding the provisions of this
Article or any other provision of the Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of moneys to or by the
Trustee unless and until the Trustee shall have received written notice thereof from the Company,
from a Holder or from a holder of any Senior Indebtedness or from any representative or
representatives of such holder and, prior to the receipt of any such written notice, the Trustee
shall be entitled, subject to
Section 9.01
, in all respects to assume that no such facts
exist;
provided
,
however
, that, if prior to the fifth Business Day preceding the date upon which by
the terms hereof any such moneys may become payable for any purpose, or in the event of the
execution of an instrument pursuant to
Section 7.02
acknowledging satisfaction and
discharge of this Indenture, then if prior to the second Business Day preceding the date of such
execution, the Trustee shall not have received with respect to such moneys the notice provided for
in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee may,
in its discretion, receive such moneys and/or apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary, which may be received by it on
or after such date;
provided
,
however
, that no such application shall affect the obligations under
this Article of the persons receiving such moneys from the Trustee.
Section 15.09.
Modification, Extension, Etc. of Senior Indebtedness
.
The holders of Senior Indebtedness may, without affecting in any manner the subordination of
the payment of the principal of and premium, if any, and interest, if any, on the Debt Securities,
at any time or from time to time and in their absolute discretion, agree with the Company to change
the manner, place or terms of payment, change or extend the time of payment of, or renew or alter,
any Senior Indebtedness, or amend or supplement any instrument pursuant to which any Senior
Indebtedness is issued, or exercise or refrain from exercising any other of their rights under the
Senior Indebtedness, including, without limitation, the waiver of default thereunder, all without
notice to or assent from the Holders or the Trustee.
Section 15.10.
Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness
.
With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to
observe only such of its covenants and objectives as are specifically set forth in this Article,
and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if it shall
mistakenly pay over or deliver to the Holders or the Company or any other Person, cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
Section 15.11.
Paying Agents other than the Trustee
.
In case at any time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term “Trustee” as used in this Article shall in such case
(unless the context shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully for all
intents and purposes as if such Paying Agent were named in this Article in addition to or in
place of the Trustee;
provided
,
however
, that
Sections 15.07
,
15.08
and
15.10
shall not apply to the Company if it acts as Paying Agent.
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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Section 15.12.
Rights of Holders of Senior Indebtedness Not Impaired
.
No right of any present or future holder of Senior Indebtedness to enforce the subordination
herein shall at any time or in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Section 15.13.
This Article Not To Prevent Events of Default
.
The failure to make a payment on account of principal of, or premium, if any, or interest on
the Debt Securities by reason of any provision of this Article shall not be construed as preventing
the occurrence of an Event of Default specified in paragraph (a) or (b) of
Section 8.01
.
Section 15.14.
Effect of Subordination Provisions; Termination
.
Notwithstanding anything contained herein to the contrary, other than as provided in the
immediately succeeding sentence, all the provisions of this Indenture shall be subject to the
provisions of this Article, so far as the same may be applicable thereto.
Notwithstanding anything contained herein to the contrary, the provisions of this
Article
XV
shall be of no further effect, and the Debt Securities shall no longer be subordinated in
right of payment to the prior payment of Senior Indebtedness, if the Company shall have delivered
to the Trustee a notice to such effect. Any such notice delivered by the Company shall not be
deemed to be a supplemental indenture for purposes of
Article XII
.]*
This instrument 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.
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*
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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56
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and
their respective corporate seals to be hereunto affixed and attested, all as of the day and year
first above written.
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TERRENO REALTY CORPORATION
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By:
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Name:
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Title:
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[SEAL]
[ATTEST]
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By:
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Name:
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Title:
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[
Trustee’s signature page follows.
]
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*
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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, Trustee
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By:
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Authorized Representative
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[SEAL]
[ATTEST]
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Authorized Representative
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*
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Bracketed language throughout this Indenture will be inserted in the Indenture in the event
that subordinated Debt Securities are issued.
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