As filed with the Securities and Exchange Registration Nos. 333-61394/
Commission on August 15, 2002 333-61394-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
POST EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
----------
TANGER FACTORY OUTLET CENTERS, INC.
TANGER PROPERTIES LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
TANGER FACTORY OUTLET CENTERS, 3200 Northline Avenue, Suite 360 TANGER FACTORY OUTLET CENTERS,
INC., a North Carolina Corporation Greensboro, North Carolina 27408 INC. - 56-1815473
(336) 292-1108
TANGER PROPERTIES LIMITED TANGER PROPERTIES LIMITED
PARTNERSHIP, a North Carolina Partnership (Address and telephone number of PARTNERSHIP - 56-1822494
Registrant's principal executive offices)
(State or other jurisdiction of Incorporation (I.R.S. Employer Identification Number)
or organization)
Stanley K. Tanger, Chairman of the Board of Directors
Tanger Factory Outlet Centers, Inc.
3200 Northline Avenue, Suite 360
Greensboro, North Carolina 27408
(336) 292-3010
(Name, address, including ZIP code, and telephone number, including area code,
of agent for service)
----------
Copies to:
Raymond Y. Lin, Esq.
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
(212) 906-1200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
CALCULATION OF REGISTRATION FEE
===================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED(1) (2) REGISTERED(3) PER UNIT (3)(4) PRICE (3)(4) FEE(4)(5)
-------------------------------------------------------------------------------------------------------------------
Tanger Factory Outlet Centers, Inc.
Common Stock, par value $.0l per share (6)..... (11) (11) (11) (11)
Preferred Stock, par value $.01 per share (7).. (11) (11) (11) (11)
Depositary Shares representing Preferred
Stock (8).................................... (11) (11) (11) (11)
Common Stock Warrants.......................... (11) (11) (11) (11)
Guarantees of Debt Securities (9).............. (11) (11) (11) (11)
Tanger Properties Limited Partnership
Debt Securities (10)........................... (12) (12) (12) (12)
Total........................................ $400,000,000 (11) $400,000,000 $75,000
===================================================================================================================
(FOOTNOTES ON FOLLOWING PAGE)
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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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
----------
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
(1) This Post-Effective Amendment also covers contracts which may be issued by
the Registrants under which the counterparty may be required to purchase
Offered Securities (as defined below). Such contracts would be issued with
the Offered Securities covered hereby. In addition, Offered Securities
registered hereunder may be sold separately, together or as units with
other Offered Securities registered under registration statement no.
333-03526/333-03526-01.
(2) The Offered Securities other than the Debt Securities will be issued by
Tanger Factory Outlet Centers, Inc., and the Debt Securities will be issued
by Tanger Properties Limited Partnership.
(3) In U.S. Dollars or the equivalent thereof denominated in one or more
foreign currencies or units or two or more foreign currencies or composite
currencies (such as European Currency Units). In addition, in the event
that debt securities are issued at a discount, debt securities may be sold
at a higher principal amount, such that the aggregate initial offering
price shall not exceed $400,000,000.
(4) $75,000 was previously paid on May 22, 2001. Pursuant to Rule 429 under the
Securities Act, the Prospectus included in this Registration Statement
also relates to an aggregate of $31,387,500 of Equity Securities and
$75,000,000 of Debt Securities previously registered pursuant to
registration statements no. 333-39365/333-39365-01 for which a filing
fee of $32,238.64 was paid at the time such registration statements were
originally filed.
(5) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act.
(6) Such indeterminate number of Common Shares as may from time to time be
issued at indeterminate prices or issuable upon conversion of Preferred
Shares previously registered or upon exercise of the Common Shares Warrants
previously registered, as the case may be.
(7) Such indeterminate number of Preferred Shares as may from time to time be
issued at indeterminate prices and which may be issued in one or more
classes or series.
(8) To be represented by Depositary Receipts representing an interest in all or
a specified portion of a share or Preferred Shares.
(9) Debt Guarantees issued by Tanger Factory Outlet Centers, Inc. will
accompany any Debt Securities issued by Tanger Properties Limited
Partnership.
(10) The Debt Securities which are issuable in series as Senior Debt Securities
or Subordinated Debt Securities will be guaranteed by Tanger Factory
Outlet Centers, Inc.
(11) Omitted pursuant to General Instruction II.D. of Form S-3 under the
Securities Act.
(12) Omitted pursuant to General Instruction II.D. of Form S-3 under the
Securities Act; however, the amount of Debt Securities will equal the
amount of Debt Guarantees.
PROSPECTUS
$400,000,000
TANGER FACTORY OUTLET CENTERS, INC.
PREFERRED SHARES, DEPOSITARY SHARES, COMMON SHARES AND COMMON SHARE WARRANTS
and
TANGER PROPERTIES LIMITED PARTNERSHIP
DEBT SECURITIES
Tanger Factory Outlet Centers, Inc. may from time to time offer:
(1) our preferred shares, par value $.01 per share;
(2) our preferred shares represented by depositary shares;
(3) our common shares, par value $.01 per share; or
(4) warrants to purchase our common shares; and
Tanger Properties Limited Partnership may from time to time offer in one of
more series its unsecured debt securities, which may either be senior or
subordinated.
The offering by Tanger Factory Outlet Centers, Inc. and Tanger Properties
Limited Partnership may be at an aggregate public offering price of up to
$400,000,000 on terms to be determined at the time of the offering.
Tanger Factory Outlet Centers, Inc. is referred to in this prospectus as
the Company and Tanger Properties Limited Partnership is referred to in this
prospectus as the Operating Partnership.
The preferred shares, depositary shares, common shares, warrants to
purchase our common shares and debt securities (collectively, the "Offered
Securities") may be offered, separately or together, in separate series, in
amounts, at prices and on terms that will be set forth in one or more
prospectus supplements to this prospectus; provided, that the Company will
unconditionally guarantee the payment of principal and a premium, if any, and
interest on the debt securities to the extent and on the terms described
herein and in any accompanying prospectus supplement to this prospectus.
Because the aggregate public offering price is $400,000,000, the Company's
issuance of any equity securities pursuant to this Registration Statement
will reduce dollar for dollar the amount of debt guarantees the Company can
issue and will, correspondingly, reduce dollar for dollar the amount of debt
securities that the Operating Partnership can issue. Similarly, if the
Operating Partnership issues debt securities, the Company will be required to
simultaneously issue an equal amount in debt guarantees, thereby reducing the
Company's ability to issue securities in the future. Under this Registration
Statement, the Company can issue equity securities and debt guarantees, but
not debt securities, and the Operating Partnership can issue only debt
securities.
The specific terms of the securities offered by this prospectus will be set
forth in each prospectus supplement and will include, where applicable:
- in the case of our preferred shares, the specific title and stated
value, any dividend, liquidation, redemption, conversion, exchange,
voting and other rights, and any
initial public offering price; in the case of our depositary shares,
the fractional share of preferred shares represented by each such
depositary share;
- in the case of our common shares, any initial public offering price;
in the case of the warrants to purchase our common shares, the
duration, offering price, exercise price and detachability;
- in the case of debt securities, the specific title, rank, aggregate
principal amount, currency, form (which may be registered or bearer,
or certificated or book-entry), authorized denominations, maturity,
rate (or manner of calculation thereof) and time of payment of
interest, terms for redemption at the option of the Operating
Partnership or repayment at the option of the holder, terms for
sinking fund payments, terms of the related guarantee, and
any initial public offering price; and
- in addition, the specific terms may include limitations on direct or
beneficial ownership and restrictions on transfer, in each case as may
be appropriate to preserve our status as a real estate investment
trust ("REIT") for federal income tax purposes.
Each prospectus supplement will also contain information, where applicable,
about the United States federal income tax considerations of, and any exchange
listing of, the securities covered by the prospectus supplement.
See "Risk Factors" beginning on page 5 of this Prospectus for a description
of certain factors that should be considered by purchasers of our securities.
Our common shares are traded on the New York Stock Exchange under the
symbol "SKT." On August 14, 2002, the last reported sale price of our common
shares was $28.35 per share.
Our securities may be offered directly, through agents designated from time
to time by us, or to or through underwriters or dealers. If any agents or
underwriters are involved in the sale of any of our securities, their names, and
any applicable purchase price, fee, commission or discount arrangement between
or among them, will be set forth, or will be calculable from the information set
forth, in the applicable prospectus supplement. None of our securities may be
sold without delivery of the applicable prospectus supplement describing the
method and terms of the offering of those securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is August 15, 2002.
2
PROSPECTUS
PAGE
----
The Company and the Operating Partnership........................3
Risk Factors.....................................................5
Use of Proceeds..................................................7
Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Share Dividends.....................7
Where You Can Find More Information..............................8
Forward-Looking Statements.......................................9
Description of Debt Securities...................................9
Description of Common Shares....................................29
Description of Common Share Warrants............................32
Description of Preferred Shares.................................33
Description of Depositary Shares................................44
Material Federal Income Tax Considerations to Tanger Factory
Outlet Centers, Inc of its REIT Election.......................49
Plan of Distribution............................................60
Experts.........................................................61
Legal Matters...................................................61
THE COMPANY AND THE OPERATING PARTNERSHIP
We are one of the largest owners and operators of factory outlet centers
in the United States. We are organized to operate as an equity real estate
investment trust, or REIT. We are a fully-integrated, self-administered and
self-managed real estate company that focuses exclusively on developing,
acquiring, owning and operating factory outlet centers. We provide all
development, leasing and management services for our centers. As of June 30,
2002, we operated 29 centers (28 wholly-owned and one 50%-owned through a
joint venture) with a total gross leasable area, or GLA, of approximately 5.4
million square feet. These centers were 96% occupied, contained approximately
1,100 stores and represented over 250 store brands as of such date.
The Company's wholly owned subsidiary, Tanger GP Trust, serves as the
general partner of the Operating Partnership. The factory outlet centers and
other assets of the Company's business are owned by, and all of its operations,
are conducted by the Operating Partnership. Accordingly, the descriptions of the
business, employees and properties of the Company are also descriptions of the
business, employees and properties of the Operating Partnership.
3
ORGANIZATIONAL CHART
------------------------------------- -----------------------------------
TANGER FACTORY OUTLET CENTERS, INC.
(Company) TANGER FAMILY LIMITED PARTNERSHIP
Guarantor
------------------------------------- -----------------------------------
100% 100%
----------------- -----------------
27.42% Limited Partner (Class A)
TANGER GP TRUST TANGER LP TRUST (25.89% upon conversion by
Company of Preferred Units)
----------------- -----------------
1.36% General Partner (Class A) 71.22% Limited Partner (Class B)
(1.28% upon conversion by (72.83% upon conversion by
Company of Preferred Units) Company of Preferred Units);
100% Preferred Limited Partner (Class C)
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TANGER PROPERTIES LIMITED PARTNERSHIP
(Operating Partnership)
Issuer
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In order to maintain our qualification as a REIT for federal income tax
purposes, we are required to distribute at least 90% of our taxable income each
year.
The Company and the Operating Partnership are organized under the laws of
the state of North Carolina and maintain their principal executive offices at
3200 Northline Avenue, Suite 360, Greensboro, North Carolina 27408.
4
RISK FACTORS
You should carefully consider the following risk factors and other
information in this prospectus and the related prospectus supplement before
deciding to buy our securities:
WE FACE COMPETITION FROM SEVERAL REAL ESTATE COMPANIES.
Numerous developers and real estate companies are engaged in the
development or ownership of manufacturers' outlet centers and other commercial
properties and compete with us in seeking tenants for outlet centers. This
results in competition for the acquisition of prime properties and for tenants
who will lease space in our existing and subsequently acquired outlet centers.
THE MANUFACTURER'S OUTLET CENTER INDUSTRY HAS A RELATIVELY SHORT OPERATING
HISTORY, THEREFORE PAST PERFORMANCE MAY NOT BE INDICATIVE OF OUR FUTURE
PERFORMANCE.
Although the manufacturers' outlet center industry has grown over the last
several years, the industry represents a relatively new segment of the retailing
industry and, therefore, the long-term performance of these centers may not be
comparable to, and cash flows may not be as predictable as, traditional retail
malls.
THE ECONOMIC PERFORMANCE AND THE VALUE OF OUR MANUFACTURER'S OUTLET CENTERS
ARE DEPENDENT ON SEVERAL MARKET FACTORS.
Real property investments are subject to varying degrees of risk. The
economic performance and values of real estate may be affected by many factors,
including changes in the national, regional and local economic climate, local
conditions such as an oversupply of space or a reduction in demand for real
estate in the area, the attractiveness of the properties to tenants, competition
from other available space, the ability of the owner to provide adequate
maintenance and insurance and increased operating costs.
WE MAY BE UNABLE TO SUCCESSFULLY BID FOR AND DEVELOP ECONOMICALLY
ATTRACTIVE MANUFACTURER'S OUTLET CENTERS.
We intend to actively pursue manufacturers' outlet center development
projects, including the expansion of existing centers. These projects generally
require expenditure of capital on projects that may not be completed as well as
various forms of government and other approvals. We cannot be assured that we
will be able to get financing on acceptable terms or be able to get the
necessary approvals.
OUR EARNINGS AND THEREFORE OUR PROFITABILITY IS ENTIRELY DEPENDENT ON
RENTAL INCOME FROM REAL PROPERTY.
Substantially all of our income is derived from rental income from real
property. Our income and funds for distribution would be adversely affected if a
significant number of our tenants were unable to meet their obligations to us or
if we were unable to lease a significant amount of space in our centers on
economically favorable lease terms. In addition, the terms of manufacturers'
outlet store tenant leases traditionally have been significantly shorter than in
traditional segments of retailing. There can be no assurance that any tenant
whose lease expires in the future will renew such lease or that we will be able
to re-lease space on economically favorable terms.
5
WE ARE SUBSTANTIALLY DEPENDENT ON THE SUCCESS OF OUR RETAILERS TO GENERATE
SALES.
Our operations are necessarily subject to the changes in operations of our
retail tenants. A portion of our rental revenues are derived from percentage
rents that directly depend on the sales volume of certain tenants. In addition,
in recent years, a number of retailers have experienced financial difficulties.
The bankruptcy of a major tenant or number of tenants may have a material
adverse effect on our results of operations.
WE MAY BE SUBJECT TO ENVIRONMENTAL REGULATION.
Under various federal, state and local laws, ordinances and regulations, we
may be considered an owner or operator of real property and may be responsible
for paying for the disposal or treatment of hazardous or toxic substances
released on or in our property or disposed of by us, as well as certain other
potential costs which could relate to hazardous or toxic substances (including
governmental fines and injuries to persons and property). This liability may be
imposed whether or not we knew about, or were responsible for, the presence of
hazardous or toxic substances.
WE ARE REQUIRED BY LAW TO MAKE DISTRIBUTIONS TO OUR SHAREHOLDERS.
To obtain the favorable tax treatment associated with our REIT status,
generally, we will be required to distribute to our common and preferred
shareholders at least 90% of our net taxable income each year. We depend upon
distributions or other payments from the Operating Partnership to make
distributions to our common and preferred shareholders.
OUR FAILURE TO QUALIFY AS A REIT COULD SUBJECT OUR EARNINGS TO CORPORATE
LEVEL TAXATION.
We believe that we have operated and intend to operate in a manner that
permits us to qualify as a REIT under the Internal Revenue Code of 1986, as
amended. However, no assurance can be given that we have qualified or will
remain qualified as a REIT. If in any taxable year we were to fail to qualify as
a REIT, we would not be allowed a deduction for distributions to shareholders in
computing taxable income and would be subject to federal income tax (including
any applicable alternative minimum tax) on our taxable income at regular
corporate rates. Our failure to qualify for taxation as a REIT is likely to have
an adverse effect on the market value and marketability of our securities.
WE DEPEND ON DISTRIBUTIONS FROM OUR OPERATING PARTNERSHIP TO MEET OUR
FINANCIAL OBLIGATIONS, INCLUDING GUARANTEE OBLIGATIONS.
Our operations are conducted by the Operating Partnership, and our only
significant asset is our interest in the Operating Partnership. As a result, we
depend upon distributions or other payments from the Operating Partnership in
order to meet our financial obligations, including our obligations under any
guarantees or to pay dividends to our common and preferred shareholders. Any
guarantee will be effectively subordinated to existing and future liabilities of
the Operating Partnership. At June 30, 2002, the Operating Partnership had
$357.8 million of indebtedness outstanding, of which $175.6 million was secured
debt. The Operating Partnership is a party to loan agreements with various bank
lenders which requires the Operating Partnership to comply with various
financial and other covenants before it may make distributions to us. Although
the Operating Partnership presently is in compliance with such covenants, there
is no assurance that it will continue to be in compliance and that it will be
able to continue to make distributions to us.
6
USE OF PROCEEDS
We intend to contribute all of the proceeds from the sale of securities of
the Company to the Operating Partnership. Unless otherwise described in the
applicable prospectus supplement, the Operating Partnership intends to use the
net proceeds from the sale of our securities for general purposes, which may
include the development or the acquisition of additional portfolio properties as
suitable opportunities arise, the expansion and improvement of certain centers
in the Operating Partnership's portfolio, and the repayment of certain secured
or unsecured indebtedness outstanding at such time.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED SHARE DIVIDENDS
The following table set forth ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred share dividends for the
periods shown. The ratios of earnings to fixed charges were computed by
dividing earnings by fixed charges. For this purpose, earnings consist of
income before minority interest, discontinued operations and extraordinary
items plus fixed charges. Fixed charges consist of interest costs (including
capitalized interest), amortization of debt issuance costs and that portion
of rental expense estimated to be attributed to interest.
RATIO OF EARNINGS TO FIXED CHARGES
SIX MONTHS ENDED JUNE 30,
----------------------------
2002 2001
---- ----
1.22 1.11
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
1.24 1.34 1.60 1.62 1.82
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
SHARE DIVIDENDS
SIX MONTHS ENDED JUNE 30,
----------------------------
2002 2001
---- ----
1.16 1.05
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
1.18 1.26 1.49 1.50 1.66
7
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission, or SEC, a
registration statement on Form S-3 (Reg. No. 333-61394/333-61394-01) with
respect to the securities we are offering. This prospectus does not contain
all the information contained in the registration statement, including its
exhibits and schedules. You should refer to the registration statement,
including the exhibits and schedules, for further information about us and
the securities we are offering. Statements we make in this prospectus about
certain contracts or other documents are not necessarily complete. When we
make such statements, we refer you to the copies of the contracts or
documents that are filed as exhibits to the registration statement, because
those statements are qualified in all respects by reference to those
exhibits. The registration statement, including exhibits and schedules, is on
file at the offices of the SEC and may be inspected without charge.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings, including the registration statement,
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You also may read and copy any document we file at the SEC's
public reference rooms in Washington, D.C.; New York, New York; and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information about
their public reference rooms.
SEC rules allow us to include some of the information required to be in the
registration statement by incorporating that information by reference to
documents we file with them. That means we can disclose important information to
you by referring you those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than
information in such documents that is deemed not to be filed) until we sell all
of the securities covered by this prospectus:
- Annual Reports on Form 10-K for the year ended December 31, 2001;
- Quarterly Reports on Form 10-Q for the quarters ended March 31,
2002 and June 30, 2002;
- Current Reports on Form 8-K, filed on April 30, 2002, July 30, 2002
and August 12, 2002; and
- Proxy Statement on Schedule 14A, dated April 16, 2002.
You may request a copy of any filings referred to above (excluding exhibits), at
no cost, by contacting us at the following address:
Tanger Factory Outlet Centers, Inc.
Attention: Investor Relations
3200 Northline Avenue, Suite 360
Greensboro, NC 27408
(336) 292-3010
8
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about the Company and the Operating Partnership,
including, among other things:
- our anticipated growth strategies;
- our intention to acquire additional properties;
- anticipated trends in our business, including trends in the market for
long-term net leases of freestanding, multiple tenant manufacturer's
outlet center properties;
- future expenditures for development projections; and
- availability of capital to finance our business.
Additional factors that may cause risks, uncertainties and assumptions
include those discussed in the section entitled "Business" in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2001 (the "Annual Report"),
including the subheadings entitled "The Company's Factory Outlet Center," "The
Factory Outlet Concept," "Business and Operating Strategy," "Capital Strategy,"
"Competition" and "Recent Developments," and the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report.
You should rely only on the information contained or incorporated by
reference in this prospectus and in any accompanying prospectus supplement. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus, as well as information we
previously filed with the SEC and incorporated by reference, is accurate as of
its date only. Our business, financial condition, results of operations and
prospects may have changed since those dates.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description of the terms of the debt securities sets forth
certain general terms and provisions of our debt securities to which any
prospectus supplement may relate. The particular terms of the debt securities
being offered, the extent, if any, to which such general provisions may apply to
our debt securities and any modifications of or additions to the general terms
of the debt securities applicable in the case of the debt securities will be
described in the prospectus supplement relating to such debt securities.
The debt securities will be issued by the Operating Partnership and will
be guaruanteed by the Company. The Company will not issue debt securities.
The senior debt securities will be issued under an indenture, dated as of
March 1, 1996 between the Operating Partnership, the Company and State Street
Bank and Trust Company, as trustee and the subordinated debt securities are
to be issued under an indenture to be dated as of a date on or prior to the
first issuance of subordinated debt securities, as supplemented from time to
time between the Operating Partnership, the Company and State Street Bank and
Trust Company, as trustee. The original senior indenture, dated as of March
1, 1996, was filed as an exhibit to our
9
Registration Statement on Form S-3 dated April 12, 1996. The senior indenture
was subsequently supplemented by a First Supplemental Indenture, Second
Supplemental Indenture and Third Supplemental Indenture, which were filed on
our Current Reports on Form 8-K dated March 11, 1996, October 24, 1997 and
February 16, 2001, respectively. The form of the subordinated indenture was
filed as an exhibit to the Amendment No. 1 to the Registration Statement on
Form S-3 dated January 23, 1996.
The indentures are subject to, and governed by, the Trust Indenture Act of
1939, as amended, or the TIA. The statements made hereunder relating to the
indentures and the debt securities to be issued thereunder are summaries of
certain provisions of those agreements and are not complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indentures and such debt securities.
The debt securities will be direct, unsecured obligations of the Operating
Partnership. The indebtedness represented by the senior debt securities will
rank equally with all other unsecured and unsubordinated indebtedness of the
Operating Partnership. The indebtedness represented by the subordinated debt
securities will be subordinated in right of payment to the prior payment in full
of all senior indebtedness of the Operating Partnership (including the senior
debt securities) as described under "Subordination" below. The indentures
provide that the debt securities may be issued without limit as to aggregate
principal amount, in one or more series, in each case as established from time
to time in or pursuant to authority granted by a resolution of the general
partner of the Operating Partnership or as established in one or more indentures
supplemental to the indenture. All debt securities of one series need not be
issued at the same time and may vary as to interest rate or formula, maturity
and other provisions and, unless otherwise provided, a series may be reopened,
without the consent of the holders of the debt securities of such series, for
issuances of additional debt securities of such series.
The indentures provide or will provide that we may, but need not, designate
more than one trustee for the indenture, each with respect to one or more series
of the debt securities. Any trustee under an indenture may resign or be removed
with respect to one or more series of the debt securities, and a successor
trustee may be appointed to act with respect to that series. If two or more
persons are acting as trustee to different series of our debt securities, each
trustee shall be a trustee of a trust under the applicable indenture separate
and apart from the trust administered by any other trustee and, except as
otherwise indicated in this prospectus, any action taken by a trustee may be
taken by that trustee with respect to, and only with respect to, the one or more
series of debt securities for which it is trustee under the applicable
indenture.
This summary sets forth certain general terms and provisions of the
indentures, the debt securities and the related guarantees. For a detailed
description of a specific series of debt securities and the related
guarantees, you should consult the prospectus supplement for that series. The
prospectus supplement may contain any of the following information where
applicable:
(1) the title of those debt securities;
10
(2) the aggregate principal amount of those debt securities and any limit
on the aggregate principal amount;
(3) the percentage of the principal amount at which those debt securities
will be issued and, if other than 100% of the principal amount
thereof, the portion of the principal amount payable upon acceleration
of the maturity;
(4) the date or dates, or the method for determining the date or dates, on
which the principal of (and premium, if any, on) those debt securities
will be payable;
(5) the rate or rates (which may be fixed or variable), or the method by
which the rate or rates shall be determined, at which those debt
securities will bear interest, if any;
(6) the date or dates, or the method for determining the date or dates,
from which any interest will accrue, the dates upon which that
interest will be payable, the record dates for Payment of that
interest, or the method by which any of those dates shall be
determined, the persons to whom that interest shall be payable, and
the basis upon which that interest shall be calculated if other than
that of a 360-day year of twelve 30-day months;
(7) the place or places where the principal of (and premium, if any) and
interest, if any, on debt securities will be payable, where debt
securities may be surrendered for registration of transfer or exchange
and where notices or demands to or upon the Operating Partnership or
the Company, as applicable, relating to the debt securities, the
applicable guarantees and the applicable Indenture may be served;
(8) the date or dates on which, the period or periods within which, the
price or prices at which and the terms and conditions upon which those
debt securities may be redeemed, as a whole or in part, at the option
of the Operating Partnership, if the Operating Partnership is to have
such an option;
(9) the obligation, if any, of the Operating Partnership to redeem, repay
or purchase those debt securities pursuant to any sinking fund or
analogous provision or at the option of a holder of those debt
securities of the Operating Partnership to offer to redeem, repay or
purchase those debt securities, and the date or dates on which, the
period or periods within which, the price or prices at which and the
terms and conditions upon which such those debt securities will be
redeemed, repaid or purchased, as a whole or in part, pursuant to this
obligation;
(10) if other than U.S. dollars, the currency or currencies in which those
debt securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
(11) whether the amount of payments of principal of (and premium, if any)
or interest, if any, on those debt securities may be determined with
reference to an index, formula or other method (which index, formula
or method may, but need not, be, based on one or more currencies,
currency units or composite currencies) and the manner in which those
amounts shall be determined;
11
(12) any additions to, modifications of or deletions from the terms of the
events of default or covenants with respect to those debt securities;
(13) whether those debt securities will be issued in certificated or
book-entry form or both, and, if so, the identity of the depositary
and the terms of the depositary arrangement for those debt securities;
(14) whether those debt securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than
$1,000 and any integral multiple thereof and, if in bearer form, the
denominations thereof if other than $5,000 and terms and conditions
relating thereto;
(15) the specific terms of the related guarantees;
(16) if the defeasance and covenant defeasance provisions of the applicable
indenture for those debt securities are to be inapplicable, or any
modifications to such provisions;
(17) whether and under what circumstances the Operating Partnership will
pay additional amounts as contemplated in the applicable indenture on
those debt securities in respect of any tax, assessment or
governmental charge and, if so, whether the Operating Partnership will
have the option to redeem such debt securities in lieu of making such
payment;
(18) if other than the trustee, the identity of each security registrar
and/or paying agent; and
(19) any other terms of those debt securities not inconsistent with the
provisions of the applicable indenture.
The debt securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof.
Any material, special U.S. federal income tax, accounting and other
considerations applicable to securities issued with original issue discount will
be described in the applicable prospectus supplement.
Except as described in "Merger, Consolidation or Sale" or as may be set
forth in the applicable prospectus supplement, the indentures do not contain any
provisions that would limit the ability of the Operating Partnership or the
Company to incur indebtedness or that would afford holders of debt securities
protection in the event of:
(1) a highly leveraged or similar transaction involving the Operating
Partnership, the management of the Operating Partnership or the
Company, or any affiliate of any such party,
(2) a change of control, or
(3) a reorganization, restructuring, merger or similar transaction
involving the Operating Partnership or the Company that may adversely
affect the holders of the debt securities.
12
However, our organizational documents contain certain restrictions on
ownership and transfers of our common shares and preferred shares that are
designed to preserve our status as a REIT and may act to prevent or hinder a
change of control. See "Description of Common Shares" and "Description of
Preferred Shares." In addition, subject to the limitations set forth under
"Merger, Consolidation or Sale," the Operating Partnership or the Company may,
in the future, enter into certain transactions, such as the sale of all or
substantially all of its assets or the merger or consolidation of the Operating
Partnership or the Company, that would increase the amount of the Operating
Partnership's indebtedness or substantially reduce or eliminate the Operating
Partnership's assets, which may have an adverse effect on the Operating
Partnership's ability to service its indebtedness, including the debt
securities.
Reference is made to the applicable prospectus supplement for information
with respect to any deletions from, modifications of or additions to the events
of default or covenants of the Company and the Operating Partnership that are
described below, including any addition of a covenant or other provision
providing event risk or similar protection. Reference is made to "Certain
Covenants" below and to the description of any additional covenants with respect
to a series of Debt Securities in the applicable prospectus supplement. Except
as otherwise described in the applicable prospectus supplement, compliance with
such covenants generally may not be waived with respect to a series of debt
securities by the Board of Directors of the Company as sole shareholder of the
general partner of the Operating Partnership or by the trustee unless the
holders of at least a majority in principal amount of all outstanding debt
securities of such series consent to such waiver, except to the extent that the
defeasance and covenant defeasance provisions of the indenture described under
"Discharge, Defeasance and Covenant Defeasance" below apply to such series of
debt securities. See "Modification of the Indenture."
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable prospectus supplement, the
debt securities of any series which are registered securities, other than
registered securities issued in book-entry form (which may be in any
denomination) will be issuable in denominations of $1,000 and integral multiples
thereof, and the debt securities which are bearer securities, other than bearer
securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $5,000.
Unless otherwise specified in the applicable prospectus supplement, the
principal of (and premium, if any) and interest on any series of debt securities
will be payable at the corporate trust office of the applicable trustee PROVIDED
that, at the option of the Operating Partnership, payment of interest may be
made by check mailed to the address of the person entitled thereto as it appears
in the security register or by wire transfer of funds to such person at an
account maintained within the United States.
Any interest not punctually paid or duly provided for on any interest
payment date with respect to a debt security will forthwith cease to be payable
to the holder on the applicable record date and may either be paid to the person
in whose name such debt security is registered at the close of business on a
special record date for the payment of such defaulted interest to be fixed by
the applicable trustee, notice whereof shall be given to the holder of such debt
security not less than 10 days prior to such special record date, or may be paid
at any time in any other lawful manner, all as more completely described in the
indenture.
Subject to certain limitations imposed upon debt securities issued in
book-entry form, the debt securities of any series will be exchangeable for
other debt securities of the same series and rank and of a like aggregate
principal amount and tenor of different authorized denominations
13
upon surrender of such debt securities at the corporate trust office of the
applicable trustee referred to above. In addition, subject to certain
limitations imposed upon debt securities issued in book-entry form, the debt
securities of any series may be surrendered for registration of transfer thereof
at the corporate trust office of the applicable trustee. Every debt security
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer. No service charge will be made
for any registration of transfer or exchange of any debt securities, but the
Operating Partnership may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. If the applicable
prospectus supplement refers to any transfer agent (in addition to the
applicable trustee) initially designated by the Operating Partnership with
respect to any series of debt securities, the Operating Partnership may at any
time rescind the designation of any such transfer agent or approve a change in
the location through which any such transfer agent acts, except that the
Operating Partnership will be required to maintain a transfer agent in each
place of payment for such series. The Operating Partnership may at any time
designate additional transfer agents with respect to any series of debt
securities.
Neither the Operating Partnership nor the applicable trustee shall be
required to:
(1) issue, register the transfer of or exchange any debt securities if
such debt security may be among those selected for redemption during a
period beginning at the opening of business 15 days before selection
of the debt securities to be redeemed and ending at the close of
business on the day of such selection;
(2) register the transfer of or exchange any registered security, or
portion thereof, called for redemption, except the unredeemed portion
of any registered security being redeemed in part; or
(3) issue, register the transfer of or exchange any debt security which
has been surrendered for repayment at the option of the holder, except
the portion, if any, of such debt security not to be so repaid.
MERGER, CONSOLIDATION OR SALE
Each Indenture provides that the Operating Partnership or the Company may
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into, any other entity PROVIDED that:
(1) either the Operating Partnership or the Company, as the case may be,
shall be the continuing entity, or the successor entity (if other than
the Operating Partnership or the Company, as the case may be) formed
by or resulting from any such consolidation or merger or which shall
have received the transfer of such assets shall expressly assume
payment of the principal of (and premium, if any) and interest on all
of the debt securities issued under such indenture, in the case of any
successor to the Operating Partnership, or the applicable guarantee,
in the case of any successor to the Company and the due and punctual
performance and observance of all of the covenants and conditions
contained in such indenture and, as applicable, such debt securities
or guarantees;
(2) immediately after giving effect to such transaction no event of
default, and no event which, after notice or the lapse of time, or
both, would become such an event of default, under such indenture
shall have occurred and be continuing; and
14
(3) an officer's certificate and legal opinion covering such conditions
shall be delivered to the applicable trustee.
CERTAIN COVENANTS
LIMITATIONS ON INCURRENCE OF INDEBTEDNESS. The Operating Partnership will
not, and will not permit any Subsidiary to, incur any Indebtedness (as defined
below), other than Permitted Indebtedness (as defined below), if, immediately
after giving effect to the incurrence of such additional Indebtedness, the
aggregate principal amount of all outstanding Indebtedness of the Operating
Partnership and its Subsidiaries on a consolidated basis determined in
accordance with accounting principles generally accepted in the United States of
America, or GAAP, is greater than 60% of the sum of:
(1) the Operating Partnership's Total Assets (as defined below) as of the
end of the calendar quarter covered in the Operating Partnership's
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the
case may be, most recently filed with the Commission (or, if such
filing is not permitted under the Exchange Act, with the Trustee)
prior to the incurrence of such additional Indebtedness; and
(2) any increase in the Total Assets since the end of such quarter
including, without limitation, any increase in Total Assets resulting
from the incurrence of such additional Indebtedness (such increase
together with the Total Assets being referred to as the "Adjusted
Total Assets").
In addition to the other limitations on the incurrence of Indebtedness, the
Operating Partnership will not, and will not permit any Subsidiary to, incur any
Indebtedness if, for the period consisting of the four consecutive fiscal
quarters most recently ended prior to the date on which such additional
Indebtedness is to be incurred, the ratio of Consolidated Income Available for
Debt Service (as defined below) to the Annual Service Charge (as defined below)
shall have been less than 2.0 to 1, on a pro forma basis after giving effect to
the incurrence of such Indebtedness and to the application of the proceeds
therefrom, and calculated on the assumption that:
(1) such Indebtedness and any other Indebtedness incurred by the Operating
Partnership or its Subsidiaries since the first day of such
four-quarter period and the application of the proceeds therefrom,
including to refinance other Indebtedness, had occurred at the
beginning of such period;
(2) the repayment or retirement of any other Indebtedness by the Operating
Partnership or its Subsidiaries since the first day of such
four-quarter period had been incurred, repaid or retired at the
beginning of such period (except that, in making such computation, the
amount of Indebtedness under any revolving credit facility shall be
computed based upon the average daily balance of such Indebtedness
during such period);
(3) any income earned as a result of any increase in Adjusted Total Assets
since the end of such four-quarter period had been earned, on an
annualized basis, during such period; and
(4) in the case of an acquisition or disposition by the Operating
Partnership or any Subsidiary or any asset or group of assets since
the first day of such four-quarter period, including, without
limitation, by merger, stock purchase or sale, or asset
15
purchase or sale, such acquisition or disposition or any related
repayment of Indebtedness had incurred as of the first day of such
period with the appropriate adjustments with respect to such
acquisition or disposition being included in such pro forma
calculation.
In addition to the other limitations on the incurrence of Indebtedness, the
Operating Partnership will not, and will not permit any Subsidiary to, incur any
Secured Indebtedness (as defined below), whether owned at the date of the
indenture or thereafter acquired, if, immediately after giving effect to the
incurrence of such additional Secured Indebtedness, the aggregate principal
amount of all outstanding Secured Indebtedness of the Operating Partnership and
its Subsidiaries on a consolidated basis is greater than 40% of the Operating
Partnership's Adjusted Total Assets.
For purposes of this covenant, Indebtedness is deemed to be "incurred" by
the Operating Partnership or its Subsidiaries on a consolidated basis whenever
the Operating Partnership and its Subsidiaries on a consolidated basis shall
create, assume, guarantee or otherwise become liable in respect thereof.
RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS. The Operating
Partnership will not make any distribution, by reduction of capital or otherwise
(other than distributions payable in securities evidencing interests in the
Operating Partnership's capital for the purpose of acquiring interests in real
property or otherwise) unless, immediately after giving pro forma effect to such
distribution:
(a) no default under the Indenture or event of default under any mortgage,
indenture or instrument under which there may be issued, or by which
there may be secured or evidenced, any Indebtedness of the Operating
Partnership, the Company or any Subsidiary shall have occurred or be
continuing and
(b) the aggregate sum of all distributions made after the date of the
Indenture shall not exceed the sum of
(i) 95% of the aggregate cumulative Funds From Operations (as
defined below) of the Operating Partnership accrued on a
cumulative basis from the date of the Indenture until the end of
the last fiscal quarter prior to the contemplated payment, and
(ii) the aggregate Net Cash Proceeds (as defined below) received by
the Operating Partnership after the date of the Indenture from
the issuance and sale of Capital Stock (as defined below) of the
Operating Partnership or the Company to the extent such proceeds
are contributed to the Operating Partnership; PROVIDED, HOWEVER,
that the foregoing limitation shall not apply to any
distribution or other action which is necessary to maintain the
Company's status as a REIT under the Code, if the aggregate
principal amount of all outstanding Indebtedness of the Company
and the Operating Partnership on a consolidated basis at such
time is less than 60% of Adjusted Total Assets.
Notwithstanding the foregoing, the Operating Partnership will not be
prohibited from making the payment of any distribution within 30 days of the
declaration thereof if at such date of
16
declaration such payment would have complied with the provisions of the
immediately preceding paragraph.
EXISTENCE. Except as permitted under "Merger, Consolidation or Sale," each
of the Company and the Operating Partnership will be required to do or cause to
be done all things necessary to preserve and keep in full force and effect its
existence, rights and franchises; PROVIDED, HOWEVER, that neither the Company
nor the Operating Partnership shall be required to preserve any right or
franchise if it determines that the preservation thereof is no longer desirable
in the conduct of its business and that the loss thereof is not disadvantageous
in any material respect to the Holders of the Debt Securities.
MAINTENANCE OF CENTERS. Each of the Company and the Operating Partnership
will be required to cause all of its material properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company and the Operating Partnership may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; PROVIDED, HOWEVER, that the Operating Partnership, the Company and
its Subsidiaries shall not be prevented from selling or otherwise disposing for
value their respective properties except as otherwise provided in "Merger,
Consolidation or Sale."
INSURANCE. The Company and the Operating Partnership will be required to,
and will be required to cause each of its respective Subsidiaries to, keep all
of its insurable properties insured against loss or damage at least equal to
their then full insurable value with insurers of recognized responsibility and
having a rating of at least A:VIII in Best's Key Rating Guide.
PAYMENT OF TAXES AND OTHER CLAIMS. Each of the Company and the Operating
Partnership will be required to pay or discharge or cause to be paid or
discharged, before the same shall become delinquent,
(1) all taxes, assessments and governmental charges levied or imposed upon
it or any Subsidiary or upon the income, profits or property of it or
any Subsidiary; and
(2) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien upon the property of the Operating
Partnership, the Company or any Subsidiary; PROVIDED, HOWEVER, that
neither the Company nor the Operating Partnership shall be required to
pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
PROVISION OF FINANCIAL INFORMATION. Whether or not the Operating
Partnership or the Company is subject to Section 13 or 15(d) of the Exchange Act
and for so long as any debt securities are outstanding, the Company and the
Operating Partnership will, to the extent permitted under the Exchange Act, be
required to file with the Commission the annual reports, quarterly reports and
other documents which the Company and the Operating Partnership would have been
required to file with the Commission pursuant to such Section 13 or 15(d) of the
Exchange Act (the "Financial Statements") if the Company and the Operating
Partnership were so subject, such documents to be filed with the Commission on
or prior to the respective dates (the "Required Filing Dates") by which the
Company and the Operating Partnership would have
17
been required so to file such documents if the Company and the Operating
Partnership were so subject.
The Company and the Operating Partnership will also in any event (x) within
15 days of each Required Filing Date
(1) transmit by mail to all Holders of debt securities, as their names and
addresses appear in the Security Register, without cost to such
Holders copies of the annual reports and quarterly reports which the
Company and the Operating Partnership would have been required to file
with the Commission pursuant to Sections 13 or 15(d) of the Exchange
Act if the Company and the Operating Partnership were subject to such
Sections, and
(2) file with the applicable trustee, copies of the annual reports,
quarterly reports and other documents which the Company and the
Operating Partnership would have been required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act if the
Company and the Operating Partnership were subject to such Sections,
and
(y) if filing such documents by the Company and the Operating Partnership with
the Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective Holder.
DEFINITIONS USED FOR THE DEBT SECURITIES
As used herein,
"ANNUAL SERVICE CHARGE" as of any date means the amount which is expensed
or capitalized in the immediately preceding four fiscal quarter period for
interest on Indebtedness, excluding amounts relating to the amortization of
deferred financing costs.
"CAPITAL STOCK" of any Person means any and all shares, interests, rights
to purchase warrants, options, participations, rights in or other equivalents
(however designated) of such Person's capital stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any preferred stock, and any rights (other than debt
securities convertible into capital stock), warrants or options exchangeable for
or convertible into such capital stock, whether now outstanding or hereafter
issued.
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" for any period means
Consolidated Net Income of the Operating Partnership and its Subsidiaries
(1) plus amounts which have been deducted for
(a) interest on Indebtedness of the Operating Partnership and its
Subsidiaries,
(b) provision for taxes of the Operating Partnership and its
Subsidiaries based on income,
(c) amortization of debt discount,
(d) depreciation and amortization,
18
(e) the effect of any noncash charge resulting from a change in
accounting principles in determining Consolidated Net Income for
such period,
(f) amortization of deferred charges, and
(g) provisions for or realized losses on properties,
(2) less amounts which have been included for gains on properties.
"CONSOLIDATED NET INCOME" for any period means the amount of consolidated
net income (or loss) of the Operating Partnership and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
"FUNDS FROM OPERATIONS," or FFO, means for any period the Consolidated Net
Income of the Operating Partnership and its Subsidiaries for such period without
giving effect to depreciation and amortization uniquely significant to real
estate, gains or losses from extraordinary items, gains or losses on sales of
real estate, gains or losses with respect to the disposition of investments in
marketable securities and any provision/benefit for income taxes for such
period, plus the allocable portion, based on the Operating Partnership's
ownership interest, of funds from operations of unconsolidated joint ventures,
all determined on a consistent basis.
"INDEBTEDNESS" means any indebtedness, whether or not contingent, in
respect of
(1) borrowed money evidenced by bonds, notes, debentures or similar
instruments,
(2) indebtedness secured by any mortgage, pledge, lien, charge,
encumbrance or any security interest existing on property,
(3) the reimbursement obligations, contingent or otherwise, in connection
with any letters of credit actually issued or amounts representing the
balance deferred and unpaid of the purchase price of any property
except any such balance that constitutes an accrued expense or trade
payable; or
(4) any lease of property as lessee which would be reflected on a
consolidated balance sheet as a capitalized lease in accordance with
GAAP, in the case of items of indebtedness under (1) through (3) above
to the extent that any such items (other than letters of credit) would
appear as a liability on a consolidated balance sheet in accordance
with GAAP, and also includes, to the extent not otherwise included,
any obligation to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary
course of business), indebtedness of another person.
"NET CASH PROCEEDS" means the proceeds of any issuance or sale of Capital
Stock or options, warrants or rights to purchase Capital Stock, in the form of
cash or cash equivalents, including payments in respect of deferred payment
obligations when received in the form of, or stock or other assets when disposed
for, cash or cash equivalents (except to the extent that such obligations are
financed or sold with recourse to the Operating Partnership or any Subsidiary),
net of attorney's fees, accountant's fees and brokerage, consultation,
underwriting and other fees and expenses actually incurred in connection with
such issuance or sale and net of taxes paid or payable as a result thereof.
19
"PERMITTED INDEBTEDNESS" means Indebtedness of the Operating Partnership,
the Company or any Subsidiary owing to any Subsidiary, the Company or the
Operating Partnership pursuant to an intercompany note, PROVIDED that such
Indebtedness is expressly subordinated in right of payment to the Securities;
PROVIDED FURTHER that any disposition, pledge or transfer of such Indebtedness
to a Person (other than the Operating Partnership or another Subsidiary) shall
be deemed to be an incurrence of such Indebtedness by the Operating Partnership,
the Company or a Subsidiary, as the case may be, and not Permitted Indebtedness
as defined herein.
"SECURED INDEBTEDNESS" means any Indebtedness secured by any mortgage,
pledge, lien, charge, encumbrance or security interest of any kind upon any
property of the Operating Partnership or any Subsidiary.
"SUBSIDIARY" means any entity of which at the time of determination the
Operating Partnership or one or more other Subsidiaries owns or controls,
directly or indirectly, more than 50% of the shares of Voting Stock.
"TOTAL ASSETS" as of any date means the sum of (1) Undepreciated Real
Estate Assets and (2) all other assets of the Operating Partnership and its
Subsidiaries on a consolidated basis determined in accordance with GAAP (but
excluding intangibles and accounts receivables).
"UNDEPRECIATED REAL ESTATE ASSETS" as of any date means the cost (original
cost plus capital improvements) of real estate assets of the Operating
Partnership and its Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in accordance with GAAP.
"VOTING STOCK" means stock having general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees (or persons performing similar functions), PROVIDED that stock that
carries only the right to vote conditionally on the happening of an event shall
not be considered Voting Stock.
ADDITIONAL COVENANTS
Any additional or different covenants of the Company and the Operating
Partnership with respect to any series of debt securities will be set forth in
the prospectus supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Under each indenture, an event of default with respect to any series of
debt securities issuable thereunder means any one of the following events:
(1) default for 30 days in the payment of any installment of interest on
any debt security of any series when due and payable;
(2) default in the payment of the principal of (or premium, if any, on)
any debt security of such series at its maturity;
(3) default in making any sinking fund payment as required for any debt
security of such series;
(4) default in the performance, or breach, of any covenant or warranty
contained in the applicable indenture (other than a covenant added to
the applicable indenture solely
20
for the benefit of a series of debt securities issued thereunder other
than that series), continued for 60 days after written notice as
provided in the applicable indenture;
(5) default in the payment of an aggregate principal amount exceeding
$5,000,000 of any evidence of recourse indebtedness of the Operating
Partnership or the Company or any mortgage, indenture or other
instrument under which such indebtedness is issued or by which such
indebtedness is secured, such default having occurred after the
expiration of any applicable grace period and having resulted in the
acceleration of the maturity of such indebtedness, but only if such
indebtedness is not discharged or such acceleration is not rescinded
or annulled;
(6) failure of the Operating Partnership or the Company within 60 days to
pay, bond or otherwise discharge any uninsured judgment or court order
in excess of $5,000,000 which is not stayed on appeal or contested in
good faith,
(7) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of the Company, the
Operating Partnership or any Significant Subsidiary (as defined in
Regulation S-X promulgated under the Securities Act) or either of its
property; and
(8) any other event of default provided with respect to a particular
series of debt securities of the Operating Partnership.
If an event of default with respect to debt securities of any series at the
time outstanding (other than one for certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator or trustee as
described above, which event of default shall result in an automatic
acceleration) occurs and is continuing, then the applicable trustee or the
holders of not less than 25% in principal amount of the outstanding debt
securities of that series may declare the principal amount (or, if the debt
securities of that series are Original Issue Discount Securities or indexed
securities, such portion of the principal amount as may be specified in the
terms thereof) of all of the debt securities of that series to be due and
payable immediately by written notice thereof to the Operating Partnership and
the guarantor (and to the applicable trustee if given by the holders).
However, at any time after the declaration of acceleration with respect to
debt securities of a series (or of all debt securities then outstanding under
the applicable indenture, as the case may be) has been made, but before a
judgment or decree for payment of the money due has been obtained by the
applicable trustee, the holders of not less than a majority in principal amount
of outstanding debt securities of that series (or of all debt securities then
outstanding under such indenture, as the case may be) may rescind and annul such
acceleration and its consequences if:
(1) the Operating Partnership or the guarantor had paid or deposited with
the applicable trustee all required payments of the principal of (and
premium, if any) and interest on the debt securities of such series
(or of all debt securities then outstanding under such indenture, as
the case may be), plus certain fees, expenses, disbursements and
advances of the applicable trustee and
(2) all events of default, other than the non-payment of accelerated
principal of (and premium, if any) and interest on the debt securities
of such series (or of all debt
21
securities then Outstanding under such Indenture, as the case may be)
have been cured or waived as provided in such indenture.
The indentures also provide or will provide that the holders of not less
than a majority in principal amount of the outstanding debt securities of any
series (or of all debt securities then Outstanding under the applicable
indenture, as the case may be) may waive any past default with respect to such
series and its consequences, except a default:
(1) in the payment of the principal of (or premium, if any) or interest on
any debt security of such series, or
(2) in respect of a covenant or provision contained in such indenture that
cannot be modified or amended without the consent of the holder of
each outstanding debt security affected thereby.
Each indenture requires or will require each trustee to give notice of a
default under the indenture to all holders of debt securities within 90 days,
unless the default shall have been cured or waived, subject to certain
exceptions; PROVIDED, HOWEVER, that the trustee shall be protected in
withholding notice to the holders of any series of debt securities of any
default with respect to that series (except a default in the payment of the
principal of (or premium, if any) or interest on any debt security of that
series or in the payment of any sinking fund installment in respect of any debt
security of that series) if specified responsible officers of the trustee
consider withholding the notice to be in that holders' interest.
Each indenture provides or will provide that no holders of debt securities
of any series may institute any proceedings, judicial or otherwise, with respect
to the indenture or for any remedy thereunder, except in the case of failure of
the trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an event of default from the holders of not
less than 25% in principal amount of the outstanding debt securities of that
series, as well as an offer of indemnity reasonably satisfactory to it, and no
direction inconsistent with the written request has been given to the trustee
during the 60-day period by holders of a majority in principal amount of the
outstanding debt securities of that series. This provision will not prevent,
however, any holder of debt securities from instituting suit for the enforcement
of payment of the principal of (and premium, if any) and interest on those debt
securities at the respective due dates thereof.
Each indenture provides or will provide that, subject to provisions in the
Trust Indenture Act of 1939 relating to its duties in case of default, the
trustee is under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any holders of any series of the debt
securities then outstanding under the indenture, unless those holders shall have
offered to the trustee reasonable security or indemnity. The holders of not less
than a majority in principal amount of the outstanding debt securities of any
series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the trustee, or of exercising any
trust or power conferred upon the trustee; PROVIDED that the direction shall not
conflict with any rule of law or the indenture, and PROVIDED FURTHER that the
trustee may refuse to follow any direction that may involve the trustee in
personal liability or that may be unduly prejudicial to the holders of debt
securities of that series not joining in the direction to the trustee.
Within 120 days after the close of each fiscal year, the Operating
Partnership and the guarantor must deliver to each trustee a certificate,
signed by one of several
22
specified officers, stating whether or not such officer has knowledge of any
default under the applicable indenture and, if so, specifying each such default
and the nature and status thereof.
MODIFICATION OF THE INDENTURE
Modifications and amendments of any indenture may be made only with the
consent of the holders of not less than a majority in principal amount of all
outstanding debt securities of each series issued under the indenture affected
by such modification or amendment; PROVIDED, HOWEVER, that no such modification
or amendment may, without the consent of the holder of each debt security
affected thereby:
(1) change the stated maturity of the principal of, or any installment of
interest (or premium, if any) on, any debt security;
(2) reduce the principal amount of, or the rate (or manner of calculation
of the rate) or amount of interest on, or any premium payable on
redemption of, any debt security, or reduce the amount of principal of
an Original Issue Discount Security that would be due and payable upon
acceleration of the maturity thereof or would be provable in
bankruptcy;
(3) change the place of payment, or the coin or currency, for payment of
principal of, or premium, if any, or interest on, any debt security;
(4) impair the right to institute suit for the enforcement of any payment
right with respect to any debt security;
(5) change any redemption or repayment provisions applicable to any debt
security;
(6) reduce the above-stated percentage of outstanding debt securities of
any series necessary to modify or amend the applicable indenture, to
waive compliance with certain provisions thereof or certain defaults
and consequences thereunder or to reduce the quorum or voting
requirements set forth in such indenture;
(7) modify or affect in any manner adverse to the holders the terms and
conditions of the obligations of the guarantor under the related
guarantees in respect of the payment of principal (and premium, if
any) and interest on any guaranteed securities;
(8) make any change that adversely affects any right to exchange any debt
security;
(9) in the case of subordinated debt securities, modify any of the
subordination provisions in a manner adverse to the holders thereof;
or
(10) modify any of the foregoing provisions or any of the provisions
relating to the waiver of certain past defaults or certain covenants,
except to increase the required percentage to effect the action or to
provide that certain other provisions may not be modified or waived
without the consent of the holder of each outstanding debt security.
The holders of not less than a majority in principal amount of a series of
outstanding debt securities have the right insofar as that series is concerned,
to waive compliance by the Operating
23
Partnership and the guarantor with certain covenants relating to that series
of debt securities in the applicable indenture.
Modifications and amendments of each indenture may be made by the Operating
Partnership, the Company and the applicable trustee without the consent of any
holder of debt securities for any of the following purposes:
(1) to evidence the succession of another person to the Operating
Partnership as obligor under the debt securities issuable under the
applicable indenture or the Company as guarantor under the applicable
guarantees;
(2) to add to the covenants of the Operating Partnership or the Company
for the benefit of the holders of all or any series of debt securities
or to surrender any right or power conferred upon the Operating
Partnership or the Company;
(3) to add events of default for the benefit of the holders of all or any
series of debt securities issuable under each indenture;
(4) to add or change certain provisions of the applicable indenture
relating to certain debt securities in bearer form, or to permit or
facilitate the issuance of debt securities in uncertificated form,
PROVIDED that such action shall not adversely affect the interests of
the holders of the debt securities of any series issuable under such
indenture in any material respect;
(5) to secure the debt securities;
(6) to establish the form or terms of debt securities of any series;
(7) to provide for the acceptance of appointment by a successor trustee or
facilitate the administration of the trusts under the applicable
indenture by more than one trustee;
(8) to cure any ambiguity, defect or inconsistency in the applicable
indenture, PROVIDED that such action shall not adversely affect the
interests of holders of debt securities of any series issuable under
any indenture in any material respect;
(9) to supplement any of the provisions of the applicable indenture to the
extent necessary to permit or facilitate defeasance and discharge of
any series of debt securities, PROVIDED that this action shall not
adversely affect the interests of the holders of the debt securities
of any series issuable under such indenture in any material respect;
or
(10) to effect the assumption by the guarantor or a subsidiary thereof to
the debt securities then outstanding under the applicable indenture.
(11) to amend or supplement any provisions of the applicable indenture,
PROVIDED that no such amendment or supplement shall materially
adversely affect the interests of the holders of any debt securities
then outstanding under any indenture;
Each indenture provides or will provide that in determining whether the
holders of the requisite principal amount of outstanding debt securities of a
series have given any request,
24
demand, authorization, direction, notice, consent or waiver thereunder or
whether a quorum is present at a meeting of holders of debt securities:
(1) the principal amount of an Original Issue Discount Security that shall
be deemed to be outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of such
determination upon declaration of acceleration of the maturity
thereof;
(2) the principal amount of a debt security denominated in a foreign
currency that shall be deemed outstanding shall be the U.S. dollar
equivalent, determined on the issue date for such debt security, of
the principal amount (or, in the case of an Original Issue Discount
Security, the U.S. dollar equivalent on the issue date of such debt
security of the amount determined as provided above);
(3) the principal amount of an indexed security that shall be deemed
outstanding shall be the principal face amount of the indexed security
at original issuance, unless otherwise provided with respect to the
indexed security in the applicable Indenture; and
(4) debt securities owned by the Operating Partnership, the Company or any
other obligor upon the debt securities or any affiliate of the
Operating Partnership, the Company or of such other obligor shall be
disregarded.
Each indenture contains or will contain provisions for convening meetings
of the holders of debt securities of a series. A meeting may be called at any
time by the applicable trustee, and also, upon request, by the Operating
Partnership, the Company (in respect of a series of guaranteed securities) or
request of the holders of at least 10% in principal amount of the outstanding
debt securities of such series, in any such case upon notice given as provided
in the indenture. Except for any consent or waiver that must be given by the
holder of each debt security affected by the indenture, any resolution presented
at a meeting or adjourned meeting duly reconvened at which a quorum is present
may be adopted by the affirmative vote of the holders of a majority in principal
amount of the outstanding debt securities of that series; PROVIDED, HOWEVER,
that, except as referred to above, any resolution with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
may be made, given or taken by the holders of a specified percentage, which is
less than a majority, in principal amount of the outstanding debt securities of
a series may be adopted at a meeting or adjourned meeting duly reconvened at
which a quorum is present by the affirmative vote of the holders of such
specified percentage in principal amount of the outstanding debt securities of
that series. Any resolution passed or decision taken at any meeting of holders
of debt securities of any series duly held in accordance with the applicable
indenture will be binding on all holders of debt securities of that series. The
quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be persons holding or representing a majority in principal amount
of the outstanding debt securities of a series; PROVIDED, HOWEVER, that if any
action is to be taken at a meeting with respect to a consent or waiver which may
be given by the holders of not less than a specified percentage in principal
amount of the outstanding debt securities of a series, the persons holding or
representing the specified percentage in principal amount of the outstanding
debt securities of that series will constitute a quorum.
SUBORDINATION
Upon any distribution of assets of the Operating Partnership upon any
dissolution, winding up, liquidation or reorganization, the payment of the
principal of (and premium, if any)
25
and interest on subordinated debt securities is to be subordinated to the extent
provided in the subordinated indenture in right of payment to the prior payment
in full of all senior indebtedness, but the obligation of the Operating
Partnership to make payment of the principal (and premium, if any) and interest
on the subordinated debt securities will not otherwise be affected. In addition,
no payment on account of principal (or premium, if any), or interest, may be
made on the subordinated debt securities at any time unless full payment of all
amounts due in respect of the senior indebtedness has been made or duly provided
for in money or money's worth.
In the event that, notwithstanding the foregoing, any such payment by the
Operating Partnership is received by the trustee or the holders of any of the
subordinated debt securities before all senior indebtedness is paid in full,
such payment or distribution shall be paid over to the holders of the senior
indebtedness or any representative on their behalf for application to the
payment of all of the senior indebtedness remaining unpaid until all of the
senior indebtedness has been paid in full, after giving effect to any concurrent
payment or distribution to the holders of the senior indebtedness.
Subject to the payment in full of all senior indebtedness upon the payment
or distribution of the Operating Partnership, the holders of the subordinated
debt securities will be subrogated to the rights of the holders of the senior
indebtedness to the extent of payments made to the holders of the senior
indebtedness out of the distributive share of the subordinated debt securities.
By reason of subordination, in the event of a distribution of assets upon
insolvency, certain general creditors of the Operating Partnership may recover
more, ratably, than holders of the subordinated debt securities.
Senior indebtedness is defined in the subordinated indenture as the
principal of (and premium, if any) and unpaid interest on indebtedness of the
Operating Partnership (including indebtedness of others guaranteed by the
Operating Partnership), whether outstanding on the date of the subordinated
indenture or thereafter created, incurred, assumed or guaranteed, for money
borrowed (other than the subordinated debt securities issued under the
subordinated indenture), unless in the instrument creating or evidencing the
same or pursuant to which the same is outstanding it is PROVIDED that such
indebtedness is not senior or prior in right of payment to the subordinated debt
securities, and renewals, extensions, modifications and refundings of any such
indebtedness.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Operating Partnership may discharge certain obligations to holders of
any series of debt securities that have not already been delivered to the
applicable trustee for cancellation and that either have become due and payable
or will become due and payable within one year (or scheduled for redemption
within one year) by irrevocably depositing with the trustee, in trust, funds in
such currency or currencies, currency unit or units or composite currency or
currencies in which the debt securities are payable in an amount sufficient to
pay the entire indebtedness on the debt securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if the debt
securities have become due and payable) or to the stated maturity or redemption
date, as the case may be.
Each indenture provides or will provide that, unless the provisions of
Section 402 are made inapplicable to the debt securities of or within any series
pursuant to Section 301 of the applicable indenture, the Operating Partnership
may elect either to:
(1) defease and discharge itself and, if applicable, to discharge the
guarantor from any and all obligations with respect to debt securities
(except for the obligation to pay
26
additional amounts, if any, upon the occurrence of certain events of
tax, assessment or governmental charges with respect to payments on
the debt securities and the obligations to register the transfer or
exchange of such debt securities, to replace temporary or mutilated,
destroyed, lost or stolen debt securities, to maintain an office or
agency in respect of the debt securities and to hold moneys for
payment in trust) ("defeasance"); or
(2) release the Operating Partnership and the guarantor from certain
obligations of the applicable indenture (including the restrictions
described under "Certain Covenants") and if provided pursuant to
Section 301 or Section 901 of the applicable indenture, their
obligations with respect to any other covenant, and any omission to
comply with such obligations shall not constitute a default or an
Event or Default with respect to such debt securities of any series
("covenant defeasance").
in either case upon the irrevocable deposit by the Operating Partnership or
the guarantor with the trustee, in trust, of an amount, in such currency or
currencies, currency unit or units or composite currency or currencies in
which those debt securities are payable at stated maturity, or Government
Obligations (as defined below), or both, applicable to those debt securities
through the scheduled payment of principal and interest in accordance with
their terms will provide money in an amount sufficient to pay the principal
of (and premium, if any) and interest on those debt securities, and any
mandatory sinking fund or analogous payments on those debt securities, on the
scheduled due dates.
A trust may only be established if, among other things, the Operating
Partnership or, if applicable, the guarantor has delivered to the applicable
trustee an opinion of counsel (as specified in the applicable indenture) to the
effect that the holders of those debt securities will not recognize income, gain
or loss for U.S. federal income tax purposes as a result of the defeasance or
covenant defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
the defeasance or covenant defeasance had not occurred, and such opinion of
counsel, in the case of defeasance, must refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable United States federal
income tax law occurring after the date of the applicable indenture.
"GOVERNMENT OBLIGATIONS" means securities that are (1) direct obligations
of the United States of America or the government or governments in the
confederation which issued the foreign currency in which the principal of or any
premium or interest on the debt securities of a particular series are payable,
for the payment of which its full faith and credit is pledged or (2) obligations
of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or other government which issued
the foreign currency in which the debt securities of that series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or the other government, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any Government Obligation or a specific payment of
interest on or principal of any such Government Obligation held by a custodian
for the account of the holder of a depository receipt, PROVIDED that (except as
required by law) the custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any amount received
by the custodian in respect of the Government Obligation or the specific payment
of interest on or principal of the Government Obligation evidenced by such
depository receipt.
27
Unless otherwise provided in the applicable prospectus supplement, if
after the Operating Partnership or the guarantor has deposited funds and/or
Government Obligations to effect defeasance or covenant defeasance with
respect to debt securities of any series:
(1) the Holder of a debt security of that series is entitled to, and does,
elect pursuant to the applicable indenture or the terms of that debt
security to receive payment in a currency, currency unit or composite
currency other than that in which the deposit has been made in respect
of that debt security; or
(2) a Conversion Event (as defined below) occurs in respect of the
currency, currency unit or composite currency in which the deposit has
been made.
Then the indebtedness represented by that debt security shall be deemed to
have been, and will be, fully discharged and satisfied through the payment of
the principal of (and premium, if any) and interest on that debt security as
they become due out of the proceeds yielded by converting the amount so
deposited in respect of that debt security into the currency, currency unit or
composite currency in which the debt security becomes payable as a result of
such election or such Conversion Event based on the applicable market exchange
rate. "Conversion Event" means the cessation of use of:
(1) a currency, currency unit or composite currency both by the government
of the country which issued such currency and for the settlement of
transactions by a central bank or other public institutions of or
within the international banking community;
(2) the ECU, both within the European Monetary System and for the
settlement of transactions by public institutions of or within the
European Community; or
(3) any currency unit or composite currency other than the ECU for the
purposes for which it was established. Unless otherwise provided in
the applicable prospectus supplement, after the deposit of funds
and/or Government Obligations referred to above, all payments of
principal of (and premium, if any) and interest on any debt security
that is payable in a foreign currency that ceases to be used by its
government of issuance shall be made in U.S. dollars.
In the event the Operating Partnership effects a covenant defeasance
with respect to any debt securities and those debt securities are declared
due and payable because of the occurrence of certain events of default other
than the event of default described in clause 4 under "Events of Default,
Notice and Waiver" with respect to sections no longer applicable to the debt
securities or described in clause 8 thereunder with respect to any other
covenant as to which there has been covenant defeasance, the amount in such
currency, currency unit or composite currency in which the debt securities
are payable, and Government Obligations on deposit with the trustee, will be
sufficient to pay amounts due on the debt securities at the time of their
stated maturity but may not be sufficient to pay amounts due on the debt
securities at the time of the acceleration resulting from the event of
default. However, the Operating Partnership and the guarantor would remain
liable to make payment of the amounts due at the time of acceleration.
The applicable prospectus supplement may further describe the provisions,
if any, permitting the defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the debt
securities of or within a particular series.
28
NO CONVERSION OR EXCHANGE RIGHTS
The debt securities will not be convertible into or exchangeable for any
capital stock of the Company or equity interest in the Operating Partnership.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in
book-entry form consisting of one or more global securities (the "Global
Securities") that will be deposited with, or on behalf of, a depositary
identified in the applicable prospectus supplement relating to that series.
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form. The specific terms of the depositary
arrangement with respect to a series of debt securities will be described in the
applicable prospectus supplement relating to that series.
GUARANTEES OF DEBT SECURITIES
The Company, as guarantor, will unconditionally and irrevocably
guarantee, on a senior or subordinated basis, the due and punctual payment of
principal of, and premium, if any, and interest on, the debt securities, and
the due and punctual payment of any sinking fund payments thereon, when and
as the same shall become due and payable, whether at stated maturity, upon
redemption or otherwise. The additional terms of any guarantee relating to a
series of debt securities will be set forth in the applicable prospectus
supplement. Guarantees will be unsecured obligations of the guarantor. Any
right of payment of the holders of senior debt securities under the related
guarantee will be prior to the right of payment of the holders of
subordinated debt securities under the related guarantee, upon the terms set
forth in the applicable prospectus supplement. The guarantees may be
subordinated to other indebtedness and obligations of the Guarantor to the
extent set forth in the applicable prospectus supplement.
For any guarantee, reference is made to the applicable indenture and the
applicable prospectus supplement for a description of the specific terms of
that guarantee, including any additional covenants of the guarantor, the
outstanding principal amount of indebtedness and other obligations, if any
that will rank senior to such guarantee and, where applicable, subordination
provisions of such guarantee.
DESCRIPTION OF COMMON SHARES
The Company has authority to issue 50,000,000 common shares, $0.01 par
value per share. In this section, the terms "we," "our" and "us" refer to the
Company and not the Operating Partnership. As of June 30, 2002, we had
outstanding 8,029,905 common shares.
GENERAL
The following description of our common shares sets forth certain general
terms and provisions of our common shares to which any prospectus supplement may
relate, including a prospectus supplement providing that our common shares will
be issuable upon conversion of our preferred shares or upon the exercise of our
common shares warrants. The statements below describing our common shares are in
all respects subject to and qualified in their entirety by reference to the
applicable provisions of our charter and bylaws.
29
TERMS
Holders of our outstanding common shares will be entitled to one vote on
all matters presented to shareholders for a vote. Holders of our common shares
will not have, or be subject to, any preemptive or similar rights.
Except for the election of a director to fill a vacancy on the board of
directors and the election of directors by holders of one or more class or
series of our preferred shares, directors will be elected by the holders of our
common shares at each annual meeting of shareholders by a plurality of the votes
cast. Holders of our common shares will not have cumulative voting rights for
the election of directors. Consequently, at each annual meeting of shareholders,
the holders of a plurality of the our common shares cast for the election of
directors at that meeting will be able to elect all of the directors, other than
any directors to be elected by the holders of one or more series of our
preferred shares. A director may be removed by a majority of votes cast. If a
director is elected by a voting group of shareholders, only the shareholders of
that voting group may participate in a vote to remove him.
Our common shares will, when issued, be fully paid and non-assessable.
Dividends and other distributions may be paid to the holders of our common
shares if and when declared by the board of directors of the Company out of
funds legally available therefor.
Under North Carolina law, shareholders are generally not liable for our
debts or obligations. Payment and declaration of dividends on our common shares
and purchases of our shares are subject to certain limitations under North
Carolina law and will be subject to certain restrictions if we fail to pay
dividends on one or more series of our preferred shares. See "Description of
Preferred Shares." If we were to experience a liquidation, dissolution or
winding up, holders of our common shares would, subject to the rights of any
holders of our preferred shares to receive preferential distributions, be
entitled to participate equally in the assets available for distribution to them
after payment of, or adequate provision for, all our known debts and
liabilities.
RESTRICTIONS ON OWNERSHIP AND TRANSFER
For us to qualify as a REIT under the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), not more than 50% in value of our
outstanding capital stock may be owned, actually or constructively, by five or
fewer individuals during the last half of our taxable year. This requirement is
referred to as the "five or fewer" requirement. For purposes of this five or
fewer requirement, individuals include the entities that are set forth in
Section 542(a)(2) of the Internal Revenue Code. Attribution rules in the
Internal Revenue Code determine if any individual or entity constructively owns
our stock under the "five or fewer" requirement. Our capital stock also 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. In
addition, rent from a related party tenant, is not qualifying income for
purposes of the gross income tests under the Internal Revenue Code. A related
party tenant is generally a tenant in which the REIT or an owner of 10% or more
of the REIT owns, actually or constructively, 10% or more of such tenant. To
assist us in meeting these requirements, we may take certain actions to limit
the actual, beneficial or constructive ownership by a single person or entity of
our outstanding equity securities. See "Material Federal Income Tax
Considerations to Tanger Factory Outlet Centers, Inc.," including discussion
under the subheadings "--Requirements for Qualification as a Real Estate
Investment Trust" and "--Income Tests."
30
Subject to certain exceptions specified in our charter, no shareholder
(other than Stanley K. Tanger, Steven B. Tanger, members of their families,
affiliated entities and their transferees) may own, or be deemed to own by
virtue of the constructive ownership provisions of the Internal Revenue Code,
more than 4% of our outstanding common shares. Our charter provides that Stanley
K. Tanger, Steven B. Tanger, members of their families, affiliated entities and
their transferees may acquire additional common stock, but may not acquire
additional shares, such that the five largest beneficial owners of our common
shares, taking into account the 4% limit and certain exemptions from such limit
that the board of directors has granted to other shareholders, could hold more
than 49% of our outstanding common shares. The constructive ownership rules are
complex and may cause common stock owned actually or constructively by a group
of related individuals and/or entities to be constructively owned by one
individual or entity. As a result, the acquisition of less than 4% of our
outstanding common shares (or the acquisition of an interest in an entity which
owns our common stock) by an individual or entity could cause that individual or
entity (or another individual or entity) to constructively own in excess of 4%
of our outstanding common shares, and thus subject those common shares to the
ownership limit in our charter.
If the board of directors shall at any time determine in good faith that a
person intends to acquire or own, has attempted to acquire or own or may acquire
or own common shares in the Company in violation of the above limit, the board
of directors shall take such action as it deems advisable to refuse to give
effect to, or to prevent such ownership or acquisition, including, but not
limited to, the redemption of our common shares, refusal to give effect to the
ownership or acquisition on our books or instituting proceedings to enjoin such
ownership or acquisition.
The board of directors may waive the limit with respect to a particular
shareholder if evidence satisfactory to the board of directors and our tax
counsel is presented that such ownership will not then or in the future
jeopardize our status as a REIT. As a condition of such waiver, the board of
directors may require opinions of counsel satisfactory to it and/or an
undertaking from the applicant with respect to preserving our REIT status. If
our common shares are issued in excess of the ownership limit in our charter, or
if our stock is transferred in a way that would cause our stock to be
beneficially owned by fewer than 100 persons, then the issuance or transfer
shall be void, and the intended transferee will acquire no rights to our stock.
The ownership limits desonded above will be automatically removed if our
board of directors determines that it is no longer in our best interest to
attempt to qualify, or to continue to qualify, as a REIT. Except as otherwise
described above, any change in our ownership limits would require an amendment
to our charter. Amendments to our charter require the affirmative vote of
holders owning a majority of our outstanding common shares. In addition to
preserving our status as a REIT, the ownership limit may have the effect of
precluding an acquisition of control of the REIT without the approval of the
board of directors.
All certificates representing our common shares will bear a legend
referring to the restrictions described above.
All persons who own a specified percentage (or more) of our outstanding
common shares must file an affidavit with us containing information regarding
their ownership of our common shares, as set forth in the applicable treasury
regulations promulgated under the Internal Revenue Code. Under these treasury
regulations, the percentage will be set between one-half of 1% and 5%, depending
on the number of record holders of our common shares. In addition, each
shareholder shall upon demand be required to disclose to us in writing the
information with respect to the direct, indirect and constructive ownership of
stock as the board of directors deems
31
necessary to comply with the provisions of the Internal Revenue Code applicable
to a REIT or to comply with the requirements of any taxing authority or
governmental agency.
TRANSFER AGENT
The registrar and transfer agent for our common shares is EquiServe Trust
Company, NA.
DESCRIPTION OF COMMON SHARE WARRANTS
The Company may issue warrants to purchase its common shares. In this
section, the terms "we," "our" and "us" refer to the Company and not the
Operating Partnership. These warrants may be issued independently or together
with any other securities offered pursuant to any prospectus supplement and may
be attached to or separate from these securities. Each series of warrants will
be issued under a separate warrant agreement to be entered into between us and a
warrant agent specified in the applicable prospectus supplement. The warrant
agent will act solely as our agent in connection with the warrants and will not
assume any obligation or relationship of agency or trust for or with any holders
or beneficial owners of the warrants.
The applicable prospectus supplement will describe the specific terms of
the warrants offered thereby, including, where applicable, the following:
(1) the title of the warrants;
(2) the aggregate number of the warrants;
(3) the price or prices at which the warrants will be issued;
(4) the designation, number and terms of the common shares purchasable
upon exercise of the warrants;
(5) the designation and terms of the other securities with which the
warrants are issued and the number of the warrants issued with each
security;
(6) the date, if any, on and after which the warrants and the related
common shares will be separately transferable;
(7) the price at which each common shares purchasable upon exercise of the
warrants may be purchased;
(8) the date on which the right to exercise the warrants shall commence
and the date on which that right shall expire;
(9) the minimum or maximum number of warrants which may be exercised at
any one time;
(10) information with respect to book-entry procedures, if any;
(11) a discussion of certain material federal income tax considerations;
and
(12) any other material terms of the warrants, including terms, procedures
and limitations relating to the exchange and exercise of the warrants.
32
DESCRIPTION OF PREFERRED SHARES
The Company is authorized to issue 1,000,000 Class A Preferred Shares,
8,000,000 Class B Preferred Shares, 8,000,000 Class C Preferred Shares and
8,000,000 Class D Preferred Shares. As of June 30, 2002, 300,000 Class A
Preferred Shares were issued as Series A Cumulative Convertible Redeemable
Preferred Shares in the form of 3,000,000 depositary shares. As of June 30,
2002, 80,190 Series A Preferred Shares remain outstanding in the form of 801,897
Series A Depositary Shares. In this section, the terms "we," "our" and "us"
refer to the Company and not the Operating Partnership.
Our Series A Preferred Shares are convertible at the option of the holders
into our common shares at a conversion price of $27.75 per common share, subject
to adjustment upon the occurrence of certain events. Dividends on the Series A
Preferred Shares are cumulative and payable quarterly in an amount per Series A
Depositary Share equal to the greater of (i) $1.575 per annum or (ii) the
quarterly dividends on the common shares, or portion thereof, into which a
Series A Depositary Share is convertible. On and after December 15, 1998, the
Series A Preferred Shares may be redeemed at our option, in whole or in part, at
a redemption price of $250.00 per share, plus accrued and unpaid dividends, if
any.
Holders of Series A Preferred Shares do not have voting rights except:
(1) whenever dividends on the Series A Preferred Shares are in arrears for
six or more consecutive quarterly periods, the holders of Series A
Preferred Shares are entitled to vote for the election of two
additional directors;
(2) so long as shares of Series A Preferred Shares remain outstanding, the
Company must obtain the consent of the holders of Series A Preferred
Shares prior to (a) authorizing, creating or issuing capital stock
ranking senior to the Series A Preferred Shares with respect to
dividend or liquidation rights, or (b) amending, altering or repealing
provisions of the Company's Articles of Incorporation, so as to
materially and adversely affect the holders of the Series A Preferred
Shares; or
(3) as otherwise from time to time required by law.
In the event of any liquidation of the Company, the holders of Series A
Preferred Shares are entitled to a liquidation preference of $250.00 per share,
plus accrued and unpaid dividends, if any. The holders of our Series A Preferred
Shares have no preemptive rights and are not entitled to the benefit of any
sinking fund. Ownership of more than 9.8% of our Series A Preferred Shares (or a
lesser amount in certain cases) or more than 4% of our common shares is
restricted to preserve our status as a REIT for federal income tax purposes.
Conversion of the Series A Preferred Shares into common shares is also
restricted to the extent that ownership of our common shares would exceed the
REIT ownership limitation as describe above. See "Description of Common Shares
-- Restrictions on Ownership and Transfer."
The following description of our preferred shares sets forth certain
general terms and provisions of the preferred shares to which any prospectus
supplement may relate. The statements below describing the preferred shares are
in all respects subject to and qualified in their entirety by reference to the
applicable provisions of our charter.
33
GENERAL
Subject to limitations prescribed by North Carolina law and our charter,
the board of directors shall determine, in whole or in part, the preferences,
limitations and relative rights of any class or series of our preferred shares,
including such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets, conversion, and such other
subjects or matters as may be determined by the board of directors.
The prospectus supplement relating to the preferred shares offered thereby
will include specific terms of any preferred shares offered, including, if
applicable:
(1) the title of the preferred shares;
(2) the number of preferred shares offered, the liquidation preference per
share and the offering price of the preferred shares;
(3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to the preferred shares;
(4) whether the preferred shares are cumulative or not and, if cumulative,
the date from which dividends on the preferred shares shall
accumulate;
(5) the procedures for any auction and remarketing, if any, for the
preferred shares;
(6) the provision for a sinking fund, if any, for the preferred shares;
(7) the provision for redemption, if applicable, of the preferred shares;
(8) any listing of the preferred shares on any securities exchange;
(9) the terms and conditions, if applicable, upon which the preferred
shares will be convertible into common shares, including the
conversion price (or manner of calculation thereof);
(10) a discussion of federal income tax considerations applicable to the
preferred shares;
(11) any limitations on actual, beneficial or constructive ownership and
restrictions on transfer, in each case as may be appropriate to
preserve our REIT status;
(12) the relative ranking and preferences of the preferred shares as to
dividend rights and rights upon liquidation, dissolution or winding up
of our affairs;
(13) any limitations on issuance of any series or class of preferred shares
ranking senior to or on a parity with such series or class of
preferred shares as to dividend rights and rights upon liquidation,
dissolution or winding up of our affairs; and
(14) any other specific terms, preferences, rights, limitations or
restrictions of the preferred shares.
34
RANK
Unless otherwise specified in the applicable prospectus supplement, the
preferred shares will rank, with respect to rights to the payment of dividends
and distribution of our assets and rights upon our on, dissolution or winding
up:
(1) senior to all classes or series of common shares and to all equity
securities ranking junior to the preferred shares stock rights to the
payment of dividends and distribution of our assets and rights upon
our liquidation, dissolution or winding up;
(2) on a parity with all equity securities issued by us with terms
specifically providing that those equity securities rank on a parity
with the preferred shares with respect to rights to the payment of
dividends and distribution of our assets and rights upon our
liquidation, dissolution or winding up; and
(3) junior to all equity securities issued by us with terms specifically
providing that those equity securities rank senior to the preferred
shares with respect to rights to the payment of dividends and
distribution of our assets and rights upon our liquidation,
dissolution or winding up.
For these purposes, the term "equity securities" does not include
convertible debt securities.
DIVIDENDS
Holders of our preferred shares of each series or class shall be entitled
to receive, when, as and if authorized and declared by our board of directors,
out of our assets legally available for payment, dividends at rates and on dates
and terms as will be set forth in the applicable prospectus supplement. Each
dividend shall be payable to holders of record as they appear on our stock
transfer books on the record dates as shall be fixed by our board of directors.
Dividends on any series or class of our preferred shares may be cumulative
or noncumulative, as provided in the applicable prospectus supplement.
Dividends, if cumulative, will be cumulative from and after the date set forth
in the applicable prospectus supplement. If our board of directors fails to
authorize a dividend payable on a dividend payment date on any series or class
of preferred shares for which dividends are noncumulative, then the holders of
such series or class of preferred shares will have no right to receive a
dividend in respect of the dividend period ending on that dividend payment date,
and we will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series or class are declared or paid for any
future period.
If any preferred shares of any series or class are outstanding, no full
dividends shall be authorized or paid or set apart for payment on the preferred
shares of any other series or class ranking, as to dividends, on a parity with
or junior to the preferred shares of that series or class for any period unless:
(1) the series or class of preferred shares has a cumulative dividend,
then full cumulative dividends have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment
thereof is set apart for such payment on the preferred shares of such
series or class for all past dividend periods and the then current
dividend period; or
35
(2) the series or class of preferred shares does not have a cumulative
dividend, then full dividends for the then current dividend period
have been or contemporaneously are authorized and paid or authorized
and a sum sufficient for the payment thereof is set apart for the
payment on the preferred shares of such series or class.
When dividends are not paid in full (or a sum sufficient for the full
payment thereof is not set apart) upon the preferred shares of any series or
class and the shares of any other series or class of preferred shares ranking on
a parity as to dividends with the preferred shares of that series or class, then
all dividends authorized on preferred shares of that series or class and any
other series or class of preferred shares ranking on a parity as to dividends
with that preferred shares shall be authorized pro rata so that the amount of
dividends authorized per share on the preferred shares of that series or class
and such other series or class of preferred shares shall in all cases bear to
each other the same ratio that accrued and unpaid dividends per share on the
preferred shares of such series or class (which shall not include any
accumulation in respect of unpaid dividends for prior dividend periods if the
preferred shares do not have a cumulative dividend) and such other series or
class of preferred shares bear to each other. No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on preferred shares of such series or class that may be in arrears.
Except as provided in the immediately preceding paragraph, unless:
(1) in the case of a series or class of preferred shares that has a
cumulative dividend, full cumulative dividends on the preferred shares
of such series or class have been or contemporaneously are authorized
and paid or authorized and a sum sufficient for the payment thereof is
set apart for payment for all past dividend periods and the then
current dividend period; and
(2) in the case of a series or class of preferred shares that does not
have a cumulative dividend, full dividends on the preferred shares of
such series or class have been or contemporaneously are authorized and
paid or authorized and a sum sufficient for the payment thereof is set
apart for payment for the then current dividend period,
then no dividends (other than in the common shares or other shares of ours
ranking junior to the preferred shares of that series or class as to dividends
and as to the distribution of assets upon liquidation, dissolution or winding up
of the Company) shall be authorized or paid or set aside for payment nor shall
any other distribution be authorized or made on the common shares or any other
class or series of shares of ours ranking junior to or on a parity with the
preferred shares of that series or class as to dividends or as to the
distribution of assets upon liquidation, dissolution or winding up of the
Company, nor shall any common shares or any other shares of ours ranking junior
to or on a parity with the preferred shares of that series or class as to
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up of the Company be redeemed, purchased or otherwise acquired for any
consideration (or any amounts be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by us (except by conversion
into or exchange for other shares of ours ranking junior to the preferred shares
of that series or class as to dividends and as to the distribution of assets
upon liquidation, dissolution or winding up of the Company); PROVIDED, HOWEVER,
that the foregoing shall not prevent the purchase or acquisition of our shares
stock to preserve our status as a REIT for federal and/or state income tax
purposes.
36
Any dividend payment made on shares of a series or class of preferred
shares shall first be credited against the earliest accrued but unpaid dividend
due with respect to shares of that series or class that remains payable.
If we properly designate any portion of a dividend as a "capital gain
dividend," a holder's share of such capital gain dividend will be an amount
which bears the same ratio to the total amount of dividends (as determined for
federal income tax purposes) paid to such holder for the year as the aggregate
amount designated as a capital gain dividend bears to the aggregate amount of
all dividends (as determined for federal income tax purposes) paid on all
classes of our shares for the year.
REDEMPTION
If the applicable prospectus supplement so states, the preferred shares
will be subject to mandatory redemption or redemption at our option, in whole or
in part, in each case on the terms, at the times and at the redemption prices
set forth in that prospectus supplement.
The prospectus supplement relating to a series or class of preferred shares
that is subject to mandatory redemption will specify the number of preferred
shares that shall be redeemed by us in each year commencing after a date to be
specified, at a redemption price per share to be specified, together with an
amount equal to all accumulated and unpaid dividends thereon (which shall not,
if such preferred shares does not have a cumulative dividend, include any
accumulation in respect of unpaid dividends for prior dividend periods) to the
date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable prospectus supplement. If the
redemption price for preferred shares of any series or class is payable only
from the net proceeds of the issuance of our shares, the terms of that preferred
shares may provide that, if no such shares shall have been issued or to the
extent the net proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, that preferred shares shall automatically
and mandatorily be converted into shares of our applicable stock pursuant to
conversion provisions specified in the applicable prospectus supplement.
Notwithstanding the foregoing, unless:
(1) in the case of a the series or class of preferred shares that has a
cumulative dividend, full cumulative dividends on all outstanding
shares of such series or class of preferred shares have been or
contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof is set apart for payment for all
past dividend periods and the then current dividend period; and
(2) in the case of a series or class of preferred shares that does not
have a cumulative dividend, full dividends on the preferred shares of
that series or class have been or contemporaneously are authorized and
paid or authorized and a sum sufficient for the payment thereof is set
apart for payment for the then current dividend period,
then no shares of that series or class of preferred shares shall be redeemed
unless all outstanding preferred shares of that series or class are
simultaneously redeemed; PROVIDED, HOWEVER, that the foregoing shall not prevent
the purchase or acquisition of preferred shares of that series or class to
preserve our REIT status or pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding preferred shares of that series or
class; or
(3) in the case of a series or class of preferred shares that has a
cumulative dividend, full cumulative dividends on all outstanding
shares of that series or class of preferred shares have been or
contemporaneously are authorized and paid or
37
authorized and a sum sufficient for the payment thereof is set apart
for payment for all past dividend periods and the then current
dividend period; and
(4) in the case of a series or class of preferred shares that does not
have a cumulative dividend, full dividends on the preferred shares of
that series or class have been or contemporaneously are authorized and
paid or authorized and a sum sufficient for the payment thereof is set
apart for payment for the then current dividend period,
we shall not purchase or otherwise acquire directly or indirectly any shares of
preferred shares of such series or class (then except by conversion into or
exchange for stock of ours ranking junior to the preferred shares of that series
or class as to dividends and upon liquidation, dissolution and winding up of the
Company); PROVIDED, HOWEVER, that the foregoing shall not prevent the purchase
or acquisition of preferred shares of such series or class to preserve our REIT
status or pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding preferred shares of that series or class.
If fewer than all the outstanding preferred shares of any series or class
are to be redeemed, the number of shares to be redeemed will be determined by us
and those shares may be redeemed pro rata from the holders of record of those
shares in proportion to the number of those shares held by such holders (with
adjustments to avoid redemption of fractional shares) or any other equitable
method determined by us.
Notice of redemption will be mailed at least 30, but not more than 60, days
before the redemption date to each holder of record of a preferred share of any
series or class to be redeemed at the address shown on our stock transfer books,
and notice of redemption will also be given by publication in The Wall Street
Journal or, if such newspaper is not then being published, another newspaper of
general circulation in The City of New York, such publication to be made at
least once a week for two successive weeks commencing not less than 30 nor more
than 60 days prior to the redemption date. Each notice shall state:
(1) The redemption date;
(2) The number of shares and series or class of the preferred shares to be
redeemed;
(3) The redemption price;
(4) The place or places (which shall include a place in the Borough of
Manhattan, The City of New York) where certificates for the preferred
shares are to be surrendered for payment of the redemption price;
(5) That dividends on the shares to be redeemed will cease to accumulate
on the redemption date; and
(6) The date on which the holder's conversion rights, if any, as to those
shares shall terminate.
If fewer than all the preferred shares of any series or class are to be
redeemed, the notice mailed to each holder thereof shall also specify the number
of preferred shares to be redeemed from each holder and, upon redemption, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof. If notice of redemption of any preferred shares has been
given and if the funds necessary for the redemption have been irrevocably set
38
aside by us in trust for the benefit of the holders of any preferred shares so
called for redemption, then from and after the redemption date dividends will
cease to accrue on the preferred shares, the preferred shares shall no longer be
deemed outstanding and all rights of the holders of the shares will terminate,
except the right to receive the redemption price. In order to facilitate the
redemption of preferred shares of any series or class, the board of directors
may fix a record date for the determination of shares of the series or class of
preferred shares to be redeemed.
Notwithstanding the foregoing, the persons who were holders of record of
shares of any class or series of preferred shares at the close of business on a
record date for the payment of dividends will be entitled to receive the
dividend payable on the corresponding dividend payment date notwithstanding the
redemption of those shares after the record date and on or prior to the dividend
payment date or our default in the payment of the dividend due on that dividend
payment date. In that case, the amount payable on the redemption of those
preferred shares would not include that dividend. Except as provided in the
preceding sentence and except to the extent that accrued and unpaid dividends
are payable as part of the redemption price, we will make no payment or
allowance for unpaid dividends, whether or not in arrears, on shares of
preferred stock called for redemption.
Subject to applicable law and the limitation on purchases when dividends on
a series or class of preferred shares are in arrears, we may, at any time and
from time to time, purchase any shares of such series or class of preferred
shares in the open market, by tender or by private agreement.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company's affairs, then, before any distribution or payment will be made to
the holders of common shares or any other series or class of shares ranking
junior to any series or class of the preferred shares in the distribution of
assets upon any liquidation, dissolution or winding up, the holders of that
series or class of preferred shares shall be entitled to receive, out of our
assets but subject to the preferential rights of the holders of shares of any
class or series of our shares ranking senior to such series or class of
preferred shares with respect to our distribution of assets of liquidation,
dissolution or winding up legally available for distribution to shareholders,
liquidating distributions in the amount of the liquidation preference per share
(set forth in the applicable prospectus supplement), plus an amount equal to all
dividends accrued and unpaid thereon (which shall not include any accumulation
in respect of unpaid dividends for prior dividend periods if the preferred
shares do not have a cumulative dividend). After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of
preferred shares will have no right or claim to any of our remaining assets. If,
upon any such voluntary or involuntary liquidation, dissolution or winding up,
the legally available assets are insufficient to pay the amount of the
liquidating distributions on all outstanding shares of any series or class of
preferred shares and the corresponding amounts payable on all shares of other
classes or series of shares of the Company ranking on a parity with that series
or class of preferred shares in the distribution of assets upon liquidation,
dissolution or winding up, then the holders of that series or class of preferred
shares and all other such classes or series of capital shares shall share
ratably in any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
any series or class of preferred shares, our remaining assets will be
distributed among the holders of any other classes or series of shares ranking
junior to that series or class of preferred shares upon
39
liquidation, dissolution or winding up, according to their respective rights and
preferences and in each case according to their respective number of shares. For
those purposes, the consolidation or merger of us with or into any other entity,
or the sale, lease, transfer or conveyance of all or substantially all of our
property or business, shall not be deemed to constitute a liquidation,
dissolution or winding up of our affairs.
VOTING RIGHTS
Except as set forth below or as otherwise from time to time required by law
or as indicated in the applicable prospectus supplement, holders of preferred
shares will not have any voting rights.
Unless provided otherwise for any class or series of preferred shares, so
long as any preferred shares remains outstanding, whenever dividends on any
preferred shares shall be in arrears for six or more quarterly periods,
regardless of whether such quarterly periods are consecutive, the holders of
preferred shares (voting separately as a class with all other class or series of
cumulative preferred shares upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors at a special meeting called by an officer of the company at the
request of a holder of the class or series of preferred shares or, if the
special meeting is not called by an officer of the company within 30 days, at a
special meeting called by a holder of the class or series of preferred shares
designated by the holders of record of at least 10% of any class or series of
preferred shares so in arrears (unless the request is received less than 90 days
before the date fixed for the next annual or special meeting of the
shareholders) or at the next annual meeting of shareholders, and at each
subsequent meeting until:
(1) if such class or series of Preferred Shares has a cumulative dividend,
all dividends accumulated on such Preferred Shares for the past
dividend periods and the then current dividend period shall have been
fully paid or declared and irrevocably set apart for payment or
(2) if such class or series of Preferred Shares does not have a cumulative
dividend, four consecutive quarterly dividends are paid or declared
and irrevocably set apart for payment. In such case, the entire Board
of Directors of the Company will be increased by two directors.
Unless provided otherwise in the applicable prospectus supplement, for any
class or series of preferred shares, so long as any preferred shares remains
outstanding, the company shall not, without the affirmative vote or consent of
the holders of at least 66 2/3 % of the shares of each class or series of
preferred stock outstanding at the time, given in person or by proxy, either in
writing or at a meeting (with each class or series of preferred shares that is
affected by the following voting separately as a class):
(1) authorize or create, or increase the authorized or issued amount of,
any class or series of equity securities ranking senior to such class
or series of preferred shares with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up
of the Company or reclassify any authorized securities of the Company
into any such equity securities, or create, authorize or issue any
obligation or security convertible into or evidencing the right to
purchase any such equity securities; or
40
(2) amend, alter or repeal the provisions of the charter including the
articles supplementary for such class or series of preferred shares,
whether by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of
such class or series of preferred shares or the holders thereof;
PROVIDED, HOWEVER, that any increase in the amount of the authorized
preferred shares or the creation or issuance of any other class or
series of preferred shares, or any increase in the amount of
authorized shares of such class or series or any other class or series
of preferred shares, in each case ranking on a parity with or junior
to the preferred shares of such class or series with respect to
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the company, shall not be deemed to
materially and adversely affect such rights, preferences, privileges
or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such class or series of preferred shares
shall have been redeemed or called for redemption and sufficient funds shall
have been irrevocably deposited in trust to effect such redemption.
Under the North Carolina Business Corporation Act, the holders of
outstanding Series A Preferred Shares are entitled to vote as a separate voting
group (if shareholder voting is otherwise required by that Act and even though
the charter provides that such shares are nonvoting shares) on a proposed
amendment to our charter if the amendment would affect the Series A Preferred
Shares in ways specified in that Act, including an increase or decrease in the
number of authorized Series A Preferred Shares, a change in the designation,
rights, preferences or limitations of all or part of the Series A Preferred
Shares or the creation of a new class of stock having rights or preferences with
respect to the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the company that are prior, superior
or substantially equal to the rights of the Series A Preferred Shares.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any class or series
of preferred shares are convertible into common shares will be set forth in the
applicable prospectus supplement relating thereto. Such terms will include the
number of common shares into which the preferred shares are convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at our option or the option of the
holders of the preferred shares, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of preferred shares.
RESTRICTIONS ON OWNERSHIP AND TRANSFER
As discussed above under "Description of Common Shares-Restrictions on
Ownership and Transfer," for us to qualify as a REIT under the Internal Revenue
Code, not more than 50% in value of our outstanding capital shares may be owned,
actually or constructively, by five or fewer individuals during the last half of
a taxable year. This requirement is referred to as the "five or fewer"
requirement. For purposes of this five or fewer requirement, individuals include
the entities that are set forth in Section 542(a)(2) of the Internal Revenue
Code. Attribution rules in the Internal Revenue Code determine if any individual
or entity constructively owns our stock under the "five or fewer" requirement.
Our capital shares must also be beneficially owned by 100 or more persons during
at least 335 days of a taxable year of 12 months, or during a proportionate part
of a shorter taxable year. In addition, rent from related party tenants is not
qualifying income for purposes of the gross income tests under the Internal
Revenue Code. See "Material Federal
41
Income Tax Considerations to Tanger Factory Outlet Centers, Inc. Taxation of
Tanger Factory Outlet Centers, Inc.," " Requirements for Qualification as a Real
Estate Investment Trust" and " Income Tests." Therefore, with regards to our
charter each class or series of preferred shares will contain provisions
restricting the ownership and transfer of the preferred shares. Except as
otherwise described in the applicable prospectus supplement relating thereto,
the provisions of our charter relating to the ownership limit for any class or
series of preferred shares other than the Series A Preferred Shares, with
respect to which the ownership limit differs slightly from that described below,
will provide as follows:
Our preferred share ownership limit provision will provide that, subject to
certain exceptions, no holder of preferred shares may own, or be deemed to own
by virtue of the constructive ownership provisions of the Internal Revenue Code,
preferred shares in excess of the lesser of:
(1) 9.8% of the preferred shares issued in the offering;
(2) if the preferred shares are convertible into common shares, an amount
of preferred shares which, if so converted at a time when all
outstanding convertible shares were converted into common shares,
would cause any person to own, actually or constructively, common
shares in violation of the ownership limit or the existing holder
limit;
(3) an amount of preferred shares which would cause five or fewer
individuals to own, actually or constructively, more then 49% in value
of our outstanding capital shares (in the aggregate); or
(4) an amount of preferred shares which would cause any person (other than
Stanley K. Tanger, Steven B. Tanger and certain members of their
families and affiliates) to own, actually or constructively, more than
9.8% of the value of our outstanding capital shares (in the
aggregate).
The constructive ownership rules are complex and may cause preferred shares
owned actually or constructively by a group of related individuals and/or
entities to be deemed to be actually or constructively owned by one individual
or entity. As a result, the acquisition of preferred shares (or the acquisition
of an interest in any entity which owns our preferred shares or common shares)
by an individual or entity could cause that individual or entity (or another
individual or entity) to own constructively preferred shares in excess of the
preferred share ownership limit.
To the extent that any person purports to convert preferred shares into
common shares in violation of either the ownership limit or the preferred shares
ownership limit, and to the extent that any person would own or purport to
acquire preferred shares in excess of the preferred shares ownership limit,
then, depending upon the circumstances, as set forth below:
(1) the conversion of preferred shares or the purported acquisition of the
excess preferred shares would be void;
(2) the preferred shares would be automatically converted to excess
preferred shares which have limited economic rights; or
(3) we would automatically redeem the preferred shares.
42
Generally, an automatic redemption will occur to prevent a violation of the
preferred shares ownership limit that would not have occurred but for a
conversion of preferred shares, or a redemption or open market purchase of
preferred shares by the Company. In the case of such an automatic redemption,
the redemption price of each preferred share redeemed will be (x) if a purported
acquisition of preferred shares in which full value was paid for the preferred
shares caused the redemption, the price per share paid for the preferred shares
or (y) if the transaction that resulted in the redemption was not an acquisition
of preferred shares in which the full value was paid for the preferred shares, a
price per share equal to the market price of the shares on the date of the
purported transfer that resulted in the redemption. Any dividend or other
distribution paid to a holder of redeemed preferred shares (prior to a discovery
that the shares have been automatically redeemed by us as described above) will
be required to be repaid upon demand.
A transfer of preferred shares or other event that, if effective, would
result in a violation of the preferred shares ownership limit will be null and
void. In addition, our charter as heretofore or hereafter amended will provide
that preferred stock that would otherwise be actually or constructively owned by
a prohibited transferee in excess of the preferred share ownership limit as a
result of the transfer or other event, will be automatically exchanged for
excess preferred shares, a separate class of preferred shares that will
automatically be transferred to a trust for the benefit of a charitable
beneficiary, effective as of the close of business on the business day prior to
the purported acquisition by the prohibited transferee. While such shares are
held in trust, the trustee will have all voting rights with respect to the
shares, and all dividends or distributions paid on the shares will be paid to
the trustee of the trust for the benefit of the charitable beneficiary (any
dividend or distribution paid on capital shares prior to the discovery by us
that such shares have been automatically transferred to the trust must, upon
demand, be paid over to the trustee for the benefit of the charitable
beneficiary). Within 20 days of receiving notice from us of the transfer of
shares to the trust, the trustee of the trust will be required to sell the
shares held in the trust to a permitted holder who may own such shares without
violating the ownership restrictions. Upon such sale, the excess preferred
shares will be automatically converted into preferred shares, and the price paid
for the shares by any permitted holder will be distributed to the prohibited
transferee to the extent of the lesser of:
(1) the price paid by the prohibited transferee for the shares or, in the
case of a transfer of shares to a trust resulting from an event other
than an actual acquisition of shares by a prohibited transferee, the
fair market value, on the date of transfer to the trust, of the shares
so transferred; or
(2) the fair market value of the shares on the date of transfer by the
trustee.
Any proceeds in excess of this amount will be paid to the charitable
beneficiary. In addition, we would have the right, during the time period prior
to the sale of the excess preferred shares by the trustee, to purchase all or
any portion of such shares from the trustee at a price equal to the lesser of:
(1) the price paid by the prohibited transferee for the shares or, in the
case of a transfer of shares to a trust resulting from an event other
than an actual acquisition of shares by a prohibited transferee, the
fair market value, on the date of transfer to the trust, of the shares
so transferred; or
(2) the fair market value of the shares on the date the Company exercise
our option to purchase the shares.
43
In addition, if the board of directors shall at any time determine in good
faith that any person intends to own or acquire, has purported to own or acquire
or may own or acquire actual or constructive ownership of any preferred shares
in violation of the preferred share ownership limit, the board of directors is
authorized to take such action as it deems advisable to refuse to give effect to
or to prevent such ownership or acquisition, including, but not limited to:
(1) causing us to redeem the shares at the market price thereof determined
on the earlier of the date of such redemption and the date of the
purported ownership or acquisition, and upon such other terms and
conditions (including limited notice or no notice, except as otherwise
required by law) as may be specified by the board of directors in its
sole discretion;
(2) refusing to give effect to the ownership or acquisition on our books;
or
(3) instituting proceedings to enjoin the ownership or acquisition.
The board of directors will be entitled to waive the preferred share
ownership limit with respect to a particular shareholder if evidence
satisfactory to the board of directors and the our tax counsel is presented that
such ownership will not then or in the future jeopardize our status as a REIT.
As a condition of such waiver, the board of directors may require opinions of
counsel satisfactory to it and/or an understanding from the applicant with
respect to preserving our REIT status.
All certificates representing preferred shares will bear a legend referring
to the restrictions described above.
All persons who own a specified percentage (or more) of our outstanding
capital shares must file an affidavit with us containing information regarding
their ownership of shares as set forth in the Treasury Regulations. Under
current Treasury Regulations, the percentage is set between one-half of one
percent and five percent, depending on the number of record holders of capital
shares. In addition, each shareholder shall upon demand be required to disclose
to us in writing the information with respect to the direct, indirect, and
constructive ownership of our capital shares as the board of directors deems
necessary to comply with the provisions of the Code applicable to a REIT or to
comply with the requirements of any taxing authority or governmental agency.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue depositary receipts for depositary shares, each of
which will represent a fractional interest of a share of a particular class or
series of our preferred shares, as specified in the applicable prospectus
supplement. In this section, the terms "we," "our" and "us" refer to the Company
and not the Operating Partnership. Preferred shares of each class or series
represented by depositary shares will be deposited under a separate deposit
agreement among the Company, the depositary named therein and the holders from
time to time of the depositary receipts. Subject to the terms of the deposit
agreement, each owner of a depositary receipt will be entitled, in proportion to
the fractional interest of a share of a particular class or series of preferred
shares represented by the depositary shares evidenced by the depositary receipt,
to all the rights and preferences of the preferred shares represented by the
depositary shares (including dividend, voting, conversion, redemption and
liquidation rights).
44
The depositary shares will be evidenced by depositary receipts issued
pursuant to the applicable deposit agreement. Immediately following the issuance
and delivery of the preferred shares to the preferred shares depositary, we will
cause the preferred share depositary to issue, on our behalf, the depositary
receipts. Copies of the applicable form of deposit agreement and depositary
receipt may be obtained from us upon request, and the following summary is
qualified in its entirety by reference thereto.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred share depositary will distribute all cash dividends or other
cash distributions received in respect of the preferred shares to the record
holders of depositary receipts evidencing the related depositary shares in
proportion to the number of the depositary receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to the preferred share
depositary.
In the event of a distribution other than in cash, the preferred share
depositary will distribute property received by it to the record holders of
depositary receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the preferred share depositary, unless the preferred share
depositary determines that it is not feasible to make such distribution, in
which case the preferred share depositary may, with our approval sell such
property and distribute the net proceeds from such sale to such holders.
WITHDRAWAL
Upon surrender of the depositary receipts at the corporate trust office of
the preferred share depositary (unless the related depositary shares have
previously been called for redemption or converted), the holders thereof will be
entitled to delivery at such office, to or upon such holder's order, of the
number of whole or fractional preferred shares and any money or other property
represented by the depositary shares evidenced by the depositary receipts.
Holders of depositary receipts will be entitled to receive whole or fractional
shares of the related preferred shares on the basis of the proportion of
preferred shares represented by each depositary share as specified in the
applicable prospectus supplement, but holders of such preferred shares will not
thereafter be entitled to receive depositary shares therefor. If the depositary
receipts delivered by the holder evidence a number of depositary shares in
excess of the number of depositary shares representing the number of preferred
shares to be withdrawn, the preferred share depositary will deliver to such
holder at the same time a new depositary receipt evidencing such excess number
of depositary shares.
REDEMPTION
Whenever we redeem preferred shares held by the preferred share depositary,
the preferred share depositary will redeem as of the same redemption date the
number of depositary shares representing the preferred shares so redeemed,
provided us shall have paid in full to the preferred share depositary the
redemption price of the preferred shares to be redeemed plus an amount equal to
any accrued and unpaid dividends thereon to the date fixed for redemption. The
redemption price per depositary share will be equal to the related fractional
interest of the redemption price and any other amounts per share payable with
respect to the preferred shares. If fewer than all the depositary shares are to
be redeemed, the depositary shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional depositary shares) or
by any other equitable method determined by us that will not result in the
automatic redemption of the preferred shares or the automatic conversion of
preferred shares into excess
45
preferred shares which are transferred to a charitable trust. See "Description
of Preferred Shares Restrictions on Ownership and Transfer."
After the date fixed for redemption, the depositary shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary receipts evidencing the depositary shares so called
for redemption will cease, except the right to receive any moneys payable upon
such redemption and any money or other property to which the holders of such
depositary receipts are entitled upon such redemption upon surrender thereof to
the preferred share depositary.
VOTING
Upon receipt of notice of any meeting at which the holders of the preferred
shares are entitled to vote, the preferred share depositary will mail the
information contained in such notice of meeting to the record holders of the
depositary receipts evidencing the depositary shares which represent such
preferred shares. Each record holder of depositary receipts evidencing
depositary shares on the record date (which will be the same date as the record
date for the preferred shares) will be entitled to instruct the preferred share
depositary as to the exercise of the voting rights pertaining to the amount of
preferred stock represented by such holder's depositary shares. The preferred
share depositary will vote the number of preferred shares represented by such
depositary shares in accordance with such instructions, and we have agreed to
take all reasonable action which may be deemed necessary by the preferred share
depositary in order to enable the preferred share depositary to do so. The
preferred share depositary will abstain from voting the number of preferred
shares represented by the depositary shares to the extent that it does not
receive specific instructions from the holders of depositary receipts evidencing
such depositary shares. The preferred share depositary shall not be responsible
for any failure to carry out any instruction to vote, or for the manner or
effect of any such vote made, as long as any such action or non-action is in
good faith and does not result from negligence or willful misconduct of the
preferred share depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each depositary share will be
entitled to the fractional interest of the liquidation preference accorded each
preferred share represented by the depositary share evidenced by the depositary
receipt, as set forth in the applicable prospectus supplement.
CONVERSION
The depositary shares, as such, are not convertible or exchangeable into
our common shares or any other securities or property, except in connection with
certain conversions in connection with the preservation of our status as a REIT.
See "Description of Preferred Shares Restrictions on Ownership and Transfer."
Nevertheless, if the preferred shares represented by the depositary shares are
specified in the applicable prospectus supplement to be convertible into common
shares or other preferred shares, the depositary receipts evidencing such
depositary shares may be surrendered by holders thereof to the preferred share
depositary with written instructions to the preferred share depositary to
instruct us to cause conversion of the preferred shares into whole common shares
or other preferred shares (including excess preferred shares), and we have
agreed that upon receipt of such instructions and any amounts payable in respect
thereof, we will cause the conversion thereof utilizing the same procedures as
those provided for delivery of preferred shares to effect such conversion. If
the depositary shares evidenced by a depositary receipt are to be converted in
part only, a new depositary receipt or receipts will be issued for any
depositary shares not to be converted. No fractional common shares will be
issued
46
upon conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by us equal to the value of the
fractional interest based upon the closing price of our common shares on the
last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The depositary receipt evidencing the depositary shares which represent the
preferred shares and any provision of the deposit agreement may at any time be
amended by agreement between the Company and the preferred share depositary.
However, any amendment that materially and adversely alters the rights of the
holders of depositary receipts or that would be materially and adversely
inconsistent with the rights granted to the holders of the related preferred
shares will not be effective unless such amendment has been approved by the
existing holders of at least two-thirds of the depositary shares evidenced by
the depositary receipts then outstanding. No amendment shall impair the right,
subject to certain exceptions in the depositary agreement, of any holder of
depositary receipts to surrender any depositary receipt with instructions to
deliver to the holder the related preferred shares and all money and other
property, if any, represented thereby, except in order to comply with law. Every
holder of an outstanding depositary receipt at the time any such amendment
becomes effective shall be deemed, by continuing to hold such Receipt, to
consent and agree to such amendment and to be bound by the depositary receipt or
deposit agreement, as the case may be, as amended thereby.
We may terminate the deposit agreement upon not less than 30 days' prior
written notice to the preferred share depositary if:
(1) the termination is necessary to preserve our status as a REIT; or
(2) a majority of each series of preferred shares affected by termination
consents to such termination, whereupon the preferred share depositary
shall deliver or make available to each holder of depositary receipts,
upon surrender of the depositary receipts held by such holder, such
number of whole or fractional preferred shares as are represented by
the depositary shares evidenced by the depositary receipts, together
with any other property held by the preferred share depositary with
respect to each depositary receipt.
We have agreed that if the deposit agreement is terminated to preserve the
our status as a REIT, then we will use our best efforts to list the preferred
shares issued upon surrender of the related depositary shares on a national
securities exchange. In addition, the deposit agreement will automatically
terminate if:
(1) all outstanding depositary shares shall have been redeemed;
(2) there shall have been a final distribution in respect of the related
preferred shares in connection with any liquidation, dissolution or
winding up of the Company and such distribution shall have been
distributed to the holders of depositary receipts evidencing the
depositary shares representing the preferred shares; or
(3) all outstanding preferred shares shall have been converted into common
shares or other preferred shares.
47
CHARGES OF PREFERRED SHARE DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the deposit agreement. In addition, we will pay the
fees and expenses of the preferred share depositary in connection with the
performance of its duties under the deposit agreement. However, holders of
depositary receipts will pay certain other transfer and other taxes and
governmental charges, as well as the fees and expenses of the preferred share
depositary for any duties requested by such holder to be performed which are
outside of those expressly provided for in the deposit agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred share depositary may resign at any time by delivering to us
notice of its election to do so, and we may at any time remove the preferred
share depositary, any resignation or removal to take effect upon the appointment
of a successor preferred share depositary. A successor preferred share
depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
MISCELLANEOUS
The preferred share depositary will forward to holders of depositary
receipts any reports and communications from us which are received by it with
respect to the related preferred shares.
Neither we nor the preferred share depositary will be liable if prevented
or delayed, by law or any circumstances beyond its control, from performing its
obligations under the deposit agreement. Our obligations, and the preferred
share depositary under the deposit agreement will be limited to performing the
duties thereunder in good faith and without negligence (in the case of any
action or inaction in the voting of preferred shares represented by the
depositary shares), gross negligence or willful misconduct, and we and the
preferred share depositary will not be obligated to prosecute or defend any
legal proceeding in respect of any depositary receipts, depositary shares or any
preferred shares represented thereby unless satisfactory indemnity is furnished.
We and the Preferred Share Depositary may rely on written advice of counsel or
accountants, or information provided by persons presenting preferred shares
represented thereby for deposit, holders of depositary receipts or other persons
believed in good faith to be competent to give such information, and on
documents believed in good faith to be genuine and signed by a proper party.
In the event the preferred share depositary shall receive conflicting
claims, requests or instructions from any holders of depositary receipts, on the
one hand, and us, on the other hand, the preferred share depositary shall be
entitled to act on such claims, requests or instructions received from us.
48
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS TO
TANGER FACTORY OUTLET CENTERS, INC. OF ITS REIT ELECTION
The following is a summary of the federal income tax considerations to us
which are anticipated to be material to purchasers of our securities. This
summary is based on current law, is for general information only and is not tax
advice. The tax treatment of a holder of any of our securities will vary
depending upon the terms of the specific securities acquired by such holder, as
well as the holder's particular situation. This discussion does not attempt to
address any aspects of federal income taxation relating to holders of the
securities. Federal income tax considerations relevant to holders of the
securities may be provided in the applicable prospectus supplement relating
thereto. You are urged to review the applicable prospectus supplement in
connection with the purchase of any of our securities.
The information in this section is based on:
- the Internal Revenue Code;
- current, temporary and proposed treasury regulations promulgated under
the Internal Revenue Code;
- the legislative history of the Internal Revenue Code;
- current administrative interpretations and practices of the Internal
Revenue Service; and
- court decisions,
all as of the date of this prospectus. In addition, the administrative
interpretations and practices of the Internal Revenue Service include its
practices and policies as expressed in private letter rulings which are not
binding on the Internal Revenue Service, except with respect to the particular
taxpayers who requested and received such rulings. Future legislation, treasury
regulations, administrative interpretations and practices and/or court decisions
may adversely affect, perhaps retroactively, the tax considerations contained in
this discussion. Any change could apply retroactively to transactions preceding
the date of the change. We have not requested, and do not plan to request, any
rulings from the Internal Revenue Service concerning our tax treatment and the
statements in this prospectus are not binding on the Internal Revenue Service or
a court. Thus, we can provide no assurance that the tax considerations contained
in this discussion will not be challenged by the Internal Revenue Service or
sustained by a court if challenged by the Internal Revenue Service.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF:
- THE ACQUISITION, OWNERSHIP AND SALE OR OTHER DISPOSITION OF OUR
SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES;
- OUR ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST FOR FEDERAL
INCOME TAX PURPOSES; AND
- POTENTIAL CHANGES IN THE TAX LAWS.
49
TAXATION OF TANGER FACTORY OUTLET CENTERS, INC.
GENERAL
We elected to be taxed as a real estate investment trust under Sections 856
through 860 of the Internal Revenue Code, commencing with our taxable year ended
December 31, 1993. We believe we have been organized and have operated in a
manner which allows us to qualify for taxation as a real estate investment trust
under the Internal Revenue Code commencing with our taxable year ended December
31, 1993. We intend to continue to operate in this manner. However, no assurance
can be given that we have operated or will continue to operate in a manner so as
to qualify or remain qualified as a real estate investment trust. See "--Failure
to Qualify" on page 57.
The sections of the Internal Revenue Code that relate to the qualification
and operation as a real estate investment trust are highly technical and
complex. The following describes the material aspects of these sections of the
Internal Revenue Code that govern the federal income tax treatment of a real
estate investment trust. This summary is qualified in its entirety by the
Internal Revenue Code, relevant rules and treasury regulations promulgated under
the Internal Revenue Code, and administrative and judicial interpretations of
the Internal Revenue Code, and these rules and treasury regulations.
Unless we specify otherwise in the applicable prospectus supplement, as a
condition of the closing of each offering of equity securities under this
prospectus, our tax counsel will render an opinion to the underwriters of the
offering to the effect that, commencing with our taxable year ended December 31,
1993, we have been organized and have operated in conformity with the
requirements for qualification and taxation as a real estate investment trust
under the Internal Revenue Code, and our proposed method of operation will
enable us to continue to meet the requirements for qualification and taxation as
a real estate investment trust under the Internal Revenue Code. It must be
emphasized that this opinion will be based on various assumptions and
representations made by us as to factual matters, including representations made
by us in this prospectus, the applicable prospectus supplement and a factual
certificate provided by one of our officers. Our counsel will have no obligation
to update its opinion subsequent to its date. Moreover, such qualification and
taxation as a real estate investment trust depends upon our ability to meet the
various qualification tests imposed under the Internal Revenue Code and
discussed below, relating to our actual annual operating results, asset
diversification, distribution levels and diversity of share ownership, the
results of which have not been and will not be reviewed by our tax counsel.
Accordingly, no assurance can be given that the actual results of our operation
for any particular taxable year will satisfy such requirements. See "--Failure
to Qualify" on page 57.
If we qualify for taxation as a real estate investment trust, we generally
will not be required to pay federal corporate income taxes on our net income
that is currently distributed to our stockholders. This treatment substantially
eliminates the "double taxation" that generally results from investment in a
corporation. Double taxation means taxation once at the corporate level when
income is earned and once again at the shareholder level when such income is
distributed. We will be required to pay federal income taxes, however, as
follows:
- We will be required to pay tax at regular corporate rates on any
undistributed "real estate investment trust taxable income," including
undistributed net capital gains.
- We may be required to pay the "alternative minimum tax" on our items
of tax preference.
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- If we have (a) net income from the sale or other disposition of
"foreclosure property," which is held primarily for sale to customers
in the ordinary course of business or (b) other nonqualifying income
from foreclosure property, we will be required to pay tax at the
highest corporate rate on this income. Foreclosure property is
generally defined as property acquired through foreclosure or after a
default on a loan secured by the property or on a lease of the
property.
- We will be required to pay a 100% tax on any net income from
prohibited transactions. Prohibited transactions are, in general,
sales or other taxable dispositions of property, other than
foreclosure property, held primarily for sale to customers in the
ordinary course of business.
- If we fail to satisfy the 75% or 95% gross income test, as described
below, but have maintained our qualification as a real estate
investment trust, we will be required to pay a 100% tax on an amount
equal to (a) the gross income attributable to the greater of (i) the
amount by which 75% of our gross income exceeds the amount qualifying
under the 75% gross income test described below and (ii) the amount by
which 90% of our gross income exceeds the amount qualifying under the
95% gross income test described below multiplied by (b) a fraction
intended to reflect our profitability.
- We will be required to pay a 4% excise tax on the excess of the
required distribution over the amounts actually distributed if we fail
to distribute during each calendar year at least the sum of (a) 85% of
our ordinary income for the year, (b) 95% of our real estate
investment trust capital gain net income for the year, and (c) any
undistributed taxable income from prior periods.
- If we acquire any asset from a corporation which is or has been a C
corporation in a transaction in which the basis of the asset in our
hands is determined by reference to the basis of the asset in the
hands of the C corporation, and we subsequently recognize gain on the
disposition of the asset during the ten-year period beginning on the
date on which we acquired the asset, then we will be required to pay
tax at the highest regular corporate tax rate on this gain to the
extent of the excess of (a) the fair market value of the asset over
(b) our adjusted basis in the asset, in each case determined as of the
date on which we acquired the asset. A C corporation is generally
defined as a corporation required to pay full corporate-level tax. The
results described in this paragraph with respect to the recognition of
such gain assume that we have made and will make a timely election
under the relevant treasury regulations. We have timely filed the
election provided by the relevant treasury regulations and we intend
to timely file all other similar elections.
REQUIREMENTS FOR QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST
The Internal Revenue Code defines a real estate investment trust as a
corporation, trust or association:
(1) that is managed by one or more trustees or directors;
(2) that issues transferable shares or transferable certificates to
evidence beneficial ownership;
51
(3) that would be taxable as a domestic corporation, but for Sections 856
through 860 of the Internal Revenue Code;
(4) that is not a financial institution or an insurance company within the
meaning of the Internal Revenue Code;
(5) that is beneficially owned by 100 or more persons;
(6) not more than 50% in value of the outstanding stock of which is owned,
actually or constructively, by five or fewer individuals, including
specified entities, during the last half of each taxable year; and
(7) that meets other tests, described below, regarding the nature of its
income and assets and the amount of its distributions.
The Internal Revenue Code provides that conditions (1) to (4), inclusive,
must be met during the entire taxable year and that condition (5) must be met
during at least 335 days of a taxable year of twelve months, or during a
proportionate part of a taxable year of less than twelve months. Conditions (5)
and (6) do not apply until after the first taxable year for which an election is
made to be taxed as a real estate investment trust. For purposes of condition
(6), specified tax-exempt entities, including pension funds, generally are
treated as individuals, except a "look-through" exception applies with respect
to pension funds.
We believe that we have satisfied conditions (1) through (7) inclusive. In
addition, our charter provides for restrictions regarding the ownership and
transfer of our shares. These restrictions are intended to assist us in
continuing to satisfy the share ownership requirements described in (5) and (6)
above. These stock ownership and transfer restrictions are described in
"Restrictions on Ownership and Transfer." These restrictions, however, may not
ensure that we will, in all cases, be able to satisfy the share ownership
requirements described in (5) and (6) above. If we fail to satisfy these share
ownership requirements, our status as a real estate investment trust will
terminate. If, however, we comply with the rules contained in the treasury
regulations that require us to ascertain the actual ownership of our shares and
we do not know, or would not have known through the exercise of reasonable
diligence, that we failed to meet the requirement described in condition (6)
above, we will be treated as having met this requirement.
In addition, a corporation may not elect to become a real estate investment
trust unless its taxable year is the calendar year. We have and will continue to
have a calendar taxable year.
QUALIFIED REAL ESTATE INVESTMENT TRUST SUBSIDIARIES
We own a number of properties through wholly owned subsidiaries that we
believe will be treated as "qualified REIT subsidiaries" under Internal Revenue
Code Section 856(i). A qualified REIT subsidiary will not be treated as a
separate corporation, and all assets, liabilities, and items of income,
deduction, and credit of a qualified REIT subsidiary shall be treated as assets,
liabilities and such items, as the case may be, of the real estate investment
trust. Thus, in applying the requirements described in this prospectus, our
qualified REIT subsidiaries will be ignored, and all assets, liabilities and
items of income, deduction and credit of such subsidiaries will be treated as
our assets, liabilities and such items. A qualified REIT subsidiary will not be
subject to federal income tax, and our ownership of the shares of a qualified
REIT subsidiary will not violate the restrictions against ownership of
securities of any one issuer which constitutes more than 10% of such issuer's
securities or more than 5% of the value of our total assets.
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INCOME TESTS
We must satisfy two gross income requirements annually to maintain our
qualification as a real estate investment trust.
- First, each taxable year we must derive directly or indirectly at
least 75% of our gross income, excluding gross income from prohibited
transactions, from (a) investments relating to real property or
mortgages on real property, including "rents from real property" and,
in some circumstances, interest, or (b) specified types of temporary
investments.
- Second, each taxable year we must derive at least 95% of our gross
income, excluding gross income from prohibited transactions, from (a)
the real property investments described above, (b) dividends, interest
and gain from the sale or disposition of shares or securities, or (c)
any combination of the foregoing.
For these purposes, the term "interest" generally does not include any
amount received or accrued, directly or indirectly, if the determination of all
or some of the amount depends in any way on the income or profits of any person.
An amount received or accrued generally will not be excluded from the term
"interest," however, solely by reason of being based on a fixed percentage or
percentages of receipts or sales.
Rents we receive will qualify as "rents from real property" in satisfying
the gross income requirements for a real estate investment trust described above
only if the following conditions are met:
- the amount of rent must not be based in any way on the income or
profits of any person. An amount received or accrued generally will
not be excluded from the term "rents from real property," however,
solely by reason of being based on a fixed percentage or percentages
of receipts or sales;
- the Internal Revenue Code provides that rents received from a tenant
will not qualify as "rents from real property" in satisfying the gross
income tests if we, or an actual or constructive owner of 10% or more
of our capital shares, actually or constructively owns 10% or more of
the interests in such tenant;
- 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 personal
property will not qualify as "rents from real property"; and
- for rents received to qualify as "rents from real property," we
generally must not operate or manage the property or furnish or render
services to the tenants of the property, subject to a 1% DE MINIMIS
exception, other than through an independent contractor from whom we
derive no revenue. We may, however, directly perform services that are
"usually or customarily rendered" in connection with the rental of
space for occupancy only and are not otherwise considered "rendered to
the occupant" of the property. Examples of such services include the
provision of light, heat, or other utilities, trash removal and
general maintenance of common areas. In addition, we may employ a
taxable corporation, which is wholly or partially owned by us and
which elects jointly with us to be treated as our "taxable REIT
subsidiary," to provide both customary and noncustomary services to
our
53
tenants without causing the rent we receive from those tenants to fail
to qualify as "rents from real property."
We do not intend to receive rent which fails to qualify as "rents from real
property." However, we may have failed to satisfy, and may continue to fail to
satisfy, some of the conditions described above to the extent these failures
will not, based on the advice of our tax counsel, jeopardize our status as a
real estate investment trust.
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 real estate investment trust
for the year if we are entitled to relief under the Internal Revenue Code.
Generally, we may avail ourselves of the relief provisions if:
- our failure to meet these tests was due to reasonable cause and not
due to willful neglect;
- we attach a schedule of the sources of our income to our federal
income tax return; and
- any incorrect information on the schedule was not due to fraud with
intent to evade tax.
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 accrue or receive exceeds the limits on nonqualifying income, the
Internal Revenue Service could conclude that our failure to satisfy the tests
was not due to reasonable cause. If these relief provisions do not apply to a
particular set of circumstances, we will not qualify as a real estate investment
trust. As discussed above in "Taxation of Tanger Factory Outlet Centers,
Inc.--General" on page 50, even if these relief provisions apply, and we retain
our status as a real estate investment trust, a tax would be imposed with
respect to our nonqualifying income. We may not always be able to maintain
compliance with the gross income tests for real estate investment trust
qualification despite our periodic monitoring of our income.
PROHIBITED TRANSACTION INCOME
Any gain realized by us 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. Our gain includes our share of any such gain realized by
any partnerships or limited liability companies in which we own an interest or
by our qualified REIT subsidiaries. This prohibited transaction income may also
adversely affect our ability to satisfy the income tests for qualification as a
real estate investment trust. Under existing law, whether property is held as
inventory or primarily for sale to customers in the ordinary course of a trade
or business depends on all the facts and circumstances surrounding the
particular transaction. We intend to hold our properties for investment with a
view to long-term appreciation, to engage in the business of acquiring,
developing and owning our properties and other properties. We intend to make
occasional sales of our properties as are consistent with our investment
objectives. The Internal Revenue Service may contend, however, that one or more
of these sales is subject to the 100% penalty tax.
54
ASSET TESTS
At the close of each quarter of our taxable year, we also must satisfy four
tests relating to the nature and diversification of our assets:
- First, at least 75% of the value of our assets must be represented by
real estate assets, cash, cash items and government securities. For
purposes of this test, real estate assets include stock or debt
instruments that are purchased with the proceeds of a share offering
or a public debt offering with a term of at least five years, but only
for the one year period beginning on the date we received such
proceeds.
- Second, not more than 25% of our total assets may be represented by
securities, other than those securities includable in the 75% asset
test.
- Third, not more than 20% of the value of our total assets may be
represented by securities of one or more taxable REIT subsidiaries.
- Fourth, except for the securities of a taxable REIT subsidiary and
securities included in the 75% asset test, not more than 5% of the
value of our assets may be represented by securities of any one
issuer, we may not own more than 10% of any one issuer's outstanding
voting securities and we may not own more than 10% of the value of any
one issuer's securities. For purposes of the 10% value test,
securities do not include straight debt that we own if the issuer is
an individual, neither we nor any of our taxable REIT subsidiaries
owns any security of the issuer other than straight debt or if the
issuer is a partnership, we own at least 20% of a profits interest in
the partnership. Straight debt is any written unconditional promise to
pay on demand or on a specified date a fixed amount of money if the
interest rate and interest payment dates are not contingent on
profits, the borrower's discretion or similar factors and the debt is
not convertible, directly or indirectly, into stock.
After initially meeting the asset tests at the close of any quarter, we
will not lose our status as a real estate investment trust for failure to
satisfy the asset tests at the end of a later quarter solely by reason of
changes in asset values. If we fail to satisfy the asset tests because we
acquire securities or other property during a quarter, we can cure this failure
by disposing of sufficient nonqualifying assets within 30 days after the close
of that quarter. For this purpose, an increase in our interests in a partnership
or limited liability company will be treated as an acquisition of a portion of
the securities or other property owned by the partnership or limited liability
company. We believe we have maintained and intend to continue to maintain
adequate records of the value of our assets to ensure compliance with the asset
tests. In addition, we intend to take such other actions within the 30 days
after the close of any quarter as may be required to cure any noncompliance. If
we fail to cure noncompliance with the asset tests within this time period, we
would cease to qualify as a real estate investment trust.
ANNUAL DISTRIBUTION REQUIREMENTS
To maintain our qualification as a real estate investment trust, we are
required to distribute dividends, other than capital gain dividends, to our
shareholders in an amount at least equal to the sum of:
- 90% of our "REIT taxable income;" and
55
- 90% of our after tax net income, if any, from foreclosure property;
minus
- the excess of the sum of specified items of non-cash income over 5% of
our "REIT taxable income". Our "REIT taxable income" is computed
without regard to the dividends paid deduction and our net capital
gain. For purposes of this test, non-cash income means income
attributable to leveled stepped rents, original issue discount on
purchase money debt, or a like-kind exchange that is later determined
to be taxable.
In addition, if we dispose of any asset we acquired from a corporation
which is or has been a C corporation in a transaction in which our basis in the
asset is determined by reference to the basis of the asset in the hands of the C
corporation within the ten-year period following our acquisition of such asset,
we would be required, to distribute at least 90% of the after-tax gain, if any,
recognized by us on the disposition of the asset, to the extent such gain does
not exceed the excess of (a) the fair market value of the asset on the date we
acquired the asset over (b) our adjusted basis in the asset on the date we
acquired the asset.
These distributions must be paid in the taxable year to which they relate,
or in the following taxable year if they are declared before we timely file our
tax return for such year and if paid on or before the first regular dividend
payment after such declaration. The amount distributed must not be preferential.
To avoid this treatment, every shareholder of the class of shares to which a
distribution is made must be treated the same as every other shareholder of that
class, and no class of shares may be treated other than according to its
dividend rights as a class. To the extent that we do not distribute 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 required to pay tax on this income at
regular ordinary and capital gain corporate tax rates. We believe we have made
and intend to continue to make timely distributions sufficient to satisfy these
annual distribution requirements.
We expect that our "REIT taxable income" will be less than our cash flow
due to the allowance for depreciation and other non-cash charges in computing
"REIT taxable income." Accordingly, we anticipate that we will generally have
sufficient cash or liquid assets to enable us to satisfy the distribution
requirements described above. However, it is possible that we may not have
sufficient cash or other liquid assets to meet these distribution requirements
due to timing differences between the actual receipt of income and actual
payment of deductible expenses, and the inclusion of income and deduction of
expenses in arriving at our taxable income. If these timing differences occur,
in order to meet the distribution requirements, we may need to arrange for
short-term, or possibly long-term, borrowings or need to pay dividends in the
form of taxable share dividends.
We may be able to rectify an inadvertent failure to meet the distribution
requirement for a year by paying "deficiency dividends" to shareholders in a
later year, which may be included in our deduction for dividends paid for the
earlier year. Thus, we may be able to avoid being subject to tax on amounts
distributed as deficiency dividends. We will be required, however, to pay
interest to the Internal Revenue Service based upon the amount of any deduction
claimed for deficiency dividends.
Furthermore, we would be required to pay a 4% excise tax on the excess of
the required distribution over the amount, if any, by which our actual annual
distributions during a calendar year are less than the sum of 85% of our
ordinary income for the year, 95% of our capital gain income for the year and
any undistributed taxable income from prior periods. Distributions with
56
declaration and record dates falling in the last three months of the calendar
year, which are made by the end of January immediately following such year, will
be treated as made on December 31 of the prior year. Any taxable income and net
capital gain on which this excise tax is imposed for any year is treated as an
amount distributed during that year for purposes of calculating such tax.
FAILURE TO QUALIFY
If we fail to qualify for taxation as a real estate investment trust in any
taxable year, and the relief provisions of the Internal Revenue Code do not
apply, we will be required to pay tax, including any alternative minimum tax and
possibly increased state and local taxes, on our taxable income at regular
corporate rates. Distributions to shareholders in any year in which we fail to
qualify as a real estate investment trust will not be deductible by us and we
will not be required to distribute any amounts to our shareholders as a result
of the provisions in the Internal Revenue Code. As a result, we anticipate that
our failure to qualify as a real estate investment trust would reduce the cash
available for distribution by us to our shareholders. In addition, if we fail to
quality as a real estate investment trust, shareholders will be required to pay
tax on all distributions to them at ordinary income rates to the extent of our
current and accumulated earnings and profits. In this event, corporate
distributees may be eligible for the dividends received deduction. Unless
entitled to relief under specific statutory provisions, we will also be
disqualified from taxation as a real estate investment trust for the four
taxable years following the year during which we lost our qualification. It is
not possible to state whether in all circumstances we would be entitled to this
statutory relief.
TAX ASPECTS OF THE OPERATING PARTNERSHIP
GENERAL
Substantially all of the Company's investments are held through the
Operating Partnership. In general, partnerships are "pass-through" entities
which are not subject to federal income tax. Rather, partners are allocated
their proportionate shares of the items of income, gain, loss, deduction and
credit of a partnership, and are potentially subject to tax thereon, without
regard to whether the partners receive a distribution from the partnership. The
Company includes in its income its proportionate share of the foregoing
Operating Partnership items for purposes of the various REIT income tests and in
the computation of its REIT taxable income. Moreover, for purposes of the REIT
asset tests, the Company includes its proportionate share of assets held by the
Operating Partnership.
ENTITY CLASSIFICATION
Treasury Regulations that apply for tax periods beginning on or after
January 1, 1997 provide that an "eligible entity" may elect to be taxed as a
partnership for federal income tax purposes. An eligible entity is a domestic
business entity not otherwise classified as a corporation and which has at least
two members. Unless it elects otherwise, an eligible entity in existence prior
to January 1, 1997 will have the same classification for federal income tax
purposes that it claimed under the entity classification treasury regulations in
effect prior to this date. Such an entity's claimed classification will be
respected for all prior periods so long as the entity had a reasonable basis for
its claimed classification and certain other requirements are met. In addition,
an eligible entity which did not exist, or did not claim a classification, prior
to January 1, 1997, will be classified as a partnership for federal income tax
purposes unless it elects otherwise. The Operating Partnership met the
requirements for classification as a partnership under prior law for all periods
prior to January 1, 1997 and has claimed and will continue to claim
classification as a partnership. Therefore, under the current treasury
regulations, the Operating Partnership will be taxed as a partnership.
57
TAX ALLOCATIONS WITH RESPECT TO THE CENTERS
Pursuant to Section 704(c) of the Internal Revenue Code, income, gain, loss
and deduction attributable to appreciated or depreciated property (such as the
Centers) that is contributed to a partnership in exchange for an interest in the
Partnership, must be allocated in a manner such that the contributing partner is
charged with, or benefits from, respectively, the unrealized gain or unrealized
loss associated with the property at the time of the contribution. The amount of
such unrealized gain or unrealized loss is generally equal to the difference
between the fair market value of contributed property at the time of
contribution, and the adjusted tax basis of such property at the time of
contribution (a "Book-Tax Difference"). Such allocations are solely for federal
income tax purposes and do not affect the book capital accounts or other
economic or legal arrangements among the partners. The Operating Partnership was
formed by way of contributions of appreciated property. Consequently, the
Partnership Agreement requires such allocations to be made in a manner
consistent with Section 704(c) of the Code.
In general, the Tanger Family Partnership will be allocated lower amounts
of depreciation deductions for tax purposes than such deductions would be if
determined on a pro rata basis. In addition, in the event of the disposition of
any of the contributed assets which have a Book-Tax Difference, all income
attributable to such Book-Tax Difference will generally be allocated to the
Tanger Family Partnership, and the Company will generally be allocated only its
share of capital gains attributable to appreciation, if any, occurring after the
contribution of such assets to the Operating Partnership. This will tend to
eliminate the Book-Tax Difference over the life of the Operating Partnership.
However, the special allocation rules of Section 704(c) do not always entirely
eliminate the Book-Tax Difference on an annual basis or with respect to a
specific taxable transaction such as a sale. Thus, the carryover basis of the
contributed assets in the hands of the Operating Partnership will cause the
Company to be allocated lower depreciation and other deductions, and possibly
amounts of taxable income in the event of a sale of such contributed assets in
excess of the economic or book income allocated to it as a result of such sale.
This may cause the Company to recognize taxable income in excess of cash
proceeds, which might adversely affect the Company's ability to comply with the
REIT distribution requirements. See "--Annual Distribution Requirements."
Treasury Regulations under Section 704(c) of the Code provide partnerships
with a choice of several methods of accounting for Book-Tax Differences,
including retention of the "traditional method" under current law, or the
election of certain methods which would permit any distortions caused by a
Book-Tax Difference to be entirely rectified on an annual basis or with respect
to a specific taxable transaction such as a sale. The Operating Partnership and
the Company have determined to use the "traditional method" for accounting for
Book-Tax Differences with respect to the Centers initially contributed to the
Partnership. As a result of such determination, distributions to shareholders
will be comprised of a greater portion of taxable income rather than a return of
capital. The Operating Partnership and the Company have not determined which of
the alternative methods of accounting for Book-Tax Differences will be elected
with respect to Centers contributed to the Partnership in the future.
With respect to the Centers initially contributed to the Operating
Partnership by the Company, as well as any property purchased by the Operating
Partnership subsequent to the admission of the Company to the Operating
Partnership, such property will initially have a tax basis equal to its fair
market value and Section 704(c) of the Code will not apply.
58
BASIS IN OPERATING PARTNERSHIP INTEREST
The Company's adjusted tax basis in its interest in the Operating
Partnership generally (i) will be equal to the amount of cash and the basis of
any other property contributed to the Operating Partnership by the Company, (ii)
will be increased by (a) its allocable share of the Operating Partnership's
income and (b) its allocable share of indebtedness of the Operating Partnership
and (iii) will be reduced, but not below zero, by the Company's allocable share
of (a) losses suffered by the Operating Partnership, (b) the amount of cash
distributed to the Company and (c) by constructive distributions resulting from
a reduction in the Company's share of indebtedness of the Operating Partnership.
If the allocation of the Company's distributive share of the Operating
Partnership's loss exceeds the adjusted tax basis of the Company's partnership
interest in the Operating Partnership, the recognition of such excess loss will
be deferred until such time and to the extent that the Company has an adjusted
tax basis in its partnership interest. To the extent that the Operating
Partnership's distributions, or any decrease in the Company's share of the
indebtedness of the Operating Partnership (such decreases being considered a
cash distribution to the partners), exceed the Company's adjusted tax basis,
such excess distributions (including such constructive distributions) constitute
taxable income to the Company. Such taxable income will normally be
characterized as a capital gain, and if the Company's interest in the Operating
Partnership has been held for longer than the long-term capital gain holding
period (currently one year for corporations), the distributions and constructive
distributions will constitute long-term capital gains. Under current law,
capital gains and ordinary income of corporations are generally taxed at the
same marginal rates.
SALE OF THE CENTERS
The Company's share of any gain realized by the Operating Partnership on
the sale of any property held by the Operating Partnership as inventory or other
property held primarily for sale to customers in the ordinary course of the
Operating Partnership's trade or business will be treated as income from a
prohibited transaction that is subject to a 100% penalty tax. See " --Income
Tests." Such prohibited transaction income may also have an adverse effect upon
the Company's ability to satisfy the income tests for qualification as a REIT.
See "Taxation of Tanger Factory Outlet Centers, Inc.--General." Under existing
law, whether property is held as inventory or primarily for sale to customers in
the ordinary course of the Operating Partnership's trade or business is a
question of fact that depends on all the facts and circumstances with respect to
the particular transaction. The Operating Partnership intends to hold the
Centers for investment with a view to long-term appreciation, to engage in the
business of acquiring, developing, owning, and operating the Centers (and other
shopping centers) and to make such occasional sales of the Centers, including
peripheral land, as are consistent with the Operating Partnership's investment
objectives.
OTHER TAX CONSEQUENCES
The Company may be subject to state or local taxation in various state or
local jurisdictions, including those in which it transacts business. The state
and local tax treatment of the Company may not conform to the federal income tax
consequences discussed above. Consequently, prospective shareholders should
consult their own tax advisors regarding the effect of state and local tax laws
on an investment in the Company.
59
PLAN OF DISTRIBUTION
The Company and the Operating Partnership may offer the securities to one
or more underwriters for public offering and sale by them or may sell the
securities to investors directly or through agents. Any such underwriter or
agent involved in the offer and sale of the securities will be named in the
applicable prospectus supplement.
Underwriters may offer and sell the securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices. The Company and the Operating Partnership
may, from time to time, authorize underwriters acting as the Company's agents to
offer and sell the securities upon the terms and conditions as are set forth in
the applicable prospectus supplement. In connection with the sale of the
securities, underwriters may be deemed to have received compensation from the
Company or the Operating Partnership in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of securities for
whom they may act as agent. Underwriters may sell the securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company or the Operating
Partnership to underwriters or agents in connection with the offering of the
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, are set forth in the applicable
prospectus supplement. Underwriters, dealers and agents participating in the
distribution of the securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the securities may be deemed to be underwriting discounts and
commissions, under the Securities Act of 1933, as amended (the "Securities
Act"). Underwriters, dealers and agents may be entitled, under agreements
entered into with the Company and the Operating Partnership, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act.
If so indicated in the applicable prospectus supplement, the Company and
the Operating Partnership will authorize dealers acting as their agents to
solicit offers by certain institutions to purchase the securities from them at
the public offering price set forth in the prospectus supplement pursuant to
delayed delivery contracts providing for payment and delivery on the date or
dates stated in each prospectus supplement. Each contract will be for an amount
not less than, and the aggregate principal amount of the securities sold
pursuant to contracts shall be not less nor more than, the respective amounts
stated in the applicable prospectus supplement. Institutions with whom
contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions, but will in all cases be
subject to the approval of the Company or the Operating Partnership, as the case
may be. Contracts will not be subject to any conditions except:
- the purchase by an institution of the securities covered by its
contracts shall not at the time of delivery be prohibited under the
laws of any jurisdiction in the United States to which such
institution is subject, and
- if our securities are being sold to underwriters, the Company or the
Operating Partnership, shall have sold to the underwriters the total
principal amount of the securities less the principal amount thereof
covered by contracts.
60
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and the
Operating Partnership in the ordinary course of business.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of Tanger Factory Outlet Centers,
Inc. for the year ended December 31, 2001, have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K of Tanger Properties Limited Partnership for the
year ended December 31, 2001, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
Latham & Watkins, New York, New York will pass upon the validity of the
securities offered by this prospectus. Any counsel for any underwriters, dealers
or agents will rely on Vernon, Vernon, Wooten, Brown, Andrews & Garrett, P.A.,
Burlington, North Carolina as to certain matters of North Carolina law.
In addition, the description of federal income tax consequences contained
in this prospectus entitled "Material Federal Income Tax Considerations to
Tanger Factory Outlet Centers, Inc. of its REIT Election" is based upon the
opinion of Latham & Watkins.
61
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses, other than underwriting discounts and commissions,
in connection with the offerings of the Securities are as follows:
Securities and Exchange Commission Registration Fee.. $ 75,000
Printing and Engraving Expenses...................... 100,000
Legal Fees and Expenses.............................. 50,000
Accounting Fees and Expenses......................... 30,000
Fees of Rating Agency................................ 45,000
Fees of Trustee (Including counsel fees)............. 10,000
Miscellaneous........................................ 40,000
---------
$ 350,000
---------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a North Carolina Corporation. The Company's Amended and
Restated Articles of Incorporation contain a provision authorized by Section
55-2-02(b)(3) of the North Carolina Business Corporation Act (the "NC BCA")
eliminating the personal liability of a director arising out of an action
whether by or in the right of the corporation or otherwise for monetary damages
for breach of any duty of a director, except for liability with respect to (i)
acts or omissions that the director at the time of such breach knew or believed
were clearly in conflict with the best interests of the corporation, (ii) any
transaction from which the director derived an "improper personal benefit" as
that term is defined in the NC BCA, (iii) acts or omissions occurring prior to
the effective date of the Articles or (iv) acts or omissions with respect to
which the NC BCA does not permit the limitation of liability.
The Company has also adopted indemnification provisions authorized by NC
BCA Section 55-8-57 which obligate the corporation:
(1) to indemnify any person who serves or has served as a director or
officer against (i) any liability for or obligation to pay reasonable expenses,
including attorneys' fees, incurred by such officer or director in connection
with any proceeding arising out of such director's or officer's status as such
or any activities of such director or officer in such capacity and (ii) any
liability for or obligation to pay any judgment, settlement, penalty or fine
(including an excise tax assessed with respect to an employee benefit plan) in
any such proceeding; and
(2) to indemnify any person who serves or has served as a director or
officer and who, at the request of the corporation, serves or has served as a
director, officer, partner, trustee employee or agent of another corporation,
partnership, joint venture, trust or other enterprise or as a trustee or
administrator under an employee benefit plan against (i) any liability for or
obligation to pay reasonable expenses, including attorneys' fees, incurred by
such officer or director in connection with any proceeding arising out of such
person's status as a director or officer of the corporation or as a director,
officer, partner, trustee, employee or agent of such other corporation,
partnership, joint venture, trust or other enterprise or as a trustee or
administrator under an employee benefit plan or any activities of such director
or officer in any of such capacities and
II-1
(ii) any liability for or obligation to pay any judgment, settlement, penalty or
fine (including an excise tax assessed with respect to any employee benefit
plan) in any such proceeding.
Provided however, such indemnification does not extend to any liability or
expense the director or officer may incur on account of his or her activities
which, at the time taken, were known or believed by such director or officer to
be clearly in conflict with the best interests of the corporation.
Pursuant to Section 55-8-51 of NC BCA, a North Carolina corporation may
indemnify a director against liability in any proceeding to which the director
is made a party because of his status as such if the director (i) conducted
himself in good faith, (ii) reasonably believed that his conduct in his official
capacity was in the corporation's best interests and, in all other cases, that
his conduct was at least not opposed to the corporation's best interests and
(iii) in the case of a criminal proceeding, had no reasonable cause to believe
his conduct was unlawful.
Pursuant to Section 55-8-52 of the NC BCA, a North Carolina corporation is
required to indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
is or was a director against reasonable expenses incurred by him in connection
with the proceeding.
Pursuant to Section 55-8-54 of the NC BCA, the court may order
indemnification of a director of a North Carolina corporation in any proceeding
to which the director is a party if the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances.
The term "proceeding" as used herein includes any threatened, pending or
completed civil, criminal, administrative or investigative action, suit or
proceeding (and any appeal therein), whether formal or informal and whether or
not brought by or on behalf of the corporation.
ITEM 16. EXHIBITS.
1(a) -- Form of Underwriting Agreement for Debt Securities (filed as Exhibit
1(a) to Amendment No. 1 to Registrant's Registration Statement on Form
S-3, dated January 23, 1996, File No. 33-99736/33-99736-01)
1(b) -- Form of Underwriting Agreement for Equity Securities (filed as Exhibit
1(b) to Amendment No. 1 to Registrant's Registration Statement on Form
S-3, dated January 23, 1996, File No. 33-99736/33-99736-01)
1(c) -- Underwriting Agreement, dated February 9, 2001 among Tanger Properties
Limited Partnership, Tanger Factory Outlet Centers, Inc., Merrill, Lynch,
Pierce Fenner & Smith Incorporated and Banc of America Securities LLC
(filed as Exhibit 1.1 to Registrant's Current Report on Form 8-K, dated
February 16, 2001)
1(d) -- Terms Agreement, dated February 9, 2001 among Tanger Properties
Limited Partnership, Merrill, Lynch, Pierce Fenner & Smith Incorporated
and Banc of America Securities LLC (filed as Exhibit 1.2 to Registrant's
Current Report on Form 8-K, dated February 16, 2001)
4(a) -- Senior Indenture (filed as Exhibit 4(a) to Registrant's Registration
Statement on Form S-3, dated April 12, 1996, File
No. 333-03526/333-03526-01)
II-2
4(b) -- Form of Subordinated Indenture (filed as Exhibit 4(b) to
Amendment No. 1 to Registrant's Registration Statement on Form S-3, dated
January 23, 1996, File No. 33-99736/33-99736-01)
4(c) -- Form of Debt Securities (filed as Exhibit 4(c) to Amendment No. 1 to
Registrant's Registration Statement on Form S-3, dated January 23, 1996,
File No. 33-99736/33-99736-01)
4(d) -- Form of Common Share Warrant Agreement(1)
4(e) -- Form of Articles of Restatement for the Preferred Shares(1)
4(f) -- Form of Preferred Share Certificate(1)
4(g) -- Form of Deposit Agreement(1)
4(h) -- Form of Second Supplemental Indenture to Senior Indenture (filed as
Exhibit 4(i) to Registrant's Current Report on Form 8-K, dated October 24,
1997)
4(i) -- Third Supplemental Indenture to Senior Indenture (filed as Exhibit 4.1
to Registrant's Current Report on Form 8-K, dated February 16, 2001).
4(j) -- Form of Common Share Certificate (filed as Exhibit 4(h) to
Registrant's Current Report on Form 8-K, dated September 23, 1997)
5(a) -- Opinion of Vernon, Vernon, Wooten, Brown, Andrews & Garrett
5(b) -- Opinion of Latham & Watkins
8 -- Opinion of Latham & Watkins re: tax matters (filed as Exhibit 8 to
Registrant's Registration Statement on Form S-3 and Post-Effective
Amendment No. 1 to Form S-3, dated May 22, 2001, File
No. 333-61394/333-61394-01)
12(a) -- Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
12(b) -- Calculation of Ratios of Earnings to Fixed Charges
23(a) -- Consent of PricewaterhouseCoopers LLP
23(b) -- Consent of Latham & Watkins (included in Exhibit 5(b))
23(c) -- Consent of Vernon, Vernon, Wooten, Brown, Andrews & Garrett (included
in Exhibit 5(a))
24 -- Power of Attorney (included on signature page in Part II of the
Registration Statement)
25 -- Statement of Eligibility of Trustee on Form T-1(2)
II-3
----------
(1) To be filed by amendment or incorporated by reference in connection
with the offering of depository shares.
(2) To be filed by amendment or incorporated by reference in connection
with the offering of debt securities.
ITEM 17. UNDERTAKINGS.
Each of the undersigned Registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(b) 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 this 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 and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
PROVIDED, HOWEVER, that subparagraphs (a) and (b) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in registration statements on Form S-3 or Form S-8 and
the periodic reports filed by such Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the Securities offered herein, 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.
Each of the undersigned Registrants hereby further undertakes that, for
the purposes of determining any liability under the Securities Act, each filing
of any Registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of any Registrant
pursuant to the provisions described under Item 15 of this registration
II-4
statement, or otherwise (other than insurance), each Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by such Registrant of expenses incurred
or paid by a director, officer or controlling person of such Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the Securities being
registered, each 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 such Act and will be governed by the final
adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing and has duly caused this Post-Effective
Amendment No. 2 to Form S-3 to be signed on its behalf by the undersigned,
thereunto duly authorized, in Greensboro, North Carolina, on August 15, 2002.
TANGER FACTORY OUTLET CENTERS, INC.
BY: /s/ STEVEN B. TANGER
---------------------
Steven B. Tanger
Director, President and
Chief Operating Officer
TANGER PROPERTIES LIMITED PARTNERSHIP
By Tanger GP Trust, its sole general partner
By: /s/ STEVEN B. TANGER
---------------------
Steven B. Tanger
President and Trustee of
Tanger GP Trust
II-6
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 to Form S-3 has been signed below by the
following persons in the capacities indicated on the 15th day of August, 2002:
SIGNATURE TITLE DATE
--------- ----- ----
*
-------------------------------- August 15, 2002
Stanley K. Tanger Chairman of the Board of Directors and Chief
Executive Officer (principal executive
officer), Tanger Factory Outlet Centers, Inc.
Chairman of the Board of Directors and Chief
Executive Officer (principal executive
officer), Tanger GP Trust
*
-------------------------------- August 15, 2002
Steven B. Tanger Director, President and Chief Operating
Officer, Tanger Factory Outlet Centers, Inc.
President and Trustee, Tanger GP Trust
*
-------------------------------- August 15, 2002
Jack Africk Director, Tanger Factory Outlet Centers, Inc.
Trustee, Tanger GP Trust
*
-------------------------------- August 15, 2002
William Benton Director, Tanger Factory Outlet Centers, Inc.
Trustee, Tanger GP Trust
*
-------------------------------- August 15, 2002
Thomas E. Robinson Director, Tanger Factory Outlet Centers, Inc.
Trustee, Tanger GP Trust
*
-------------------------------- August 15, 2002
Frank C. Marchisello, Jr. Senior Vice President and Chief Financial
Officer (principal accounting and finance
officer), Tanger Factory Outlet Centers, Inc.
Treasurer and Trustee (principal accounting
and finance officer), Tanger GP Trust
*By: /s/ Steven B. Tanger
----------------------------
Name: Steven B. Tanger
Title: Attorney-in-Fact
II-7
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
1(a) Form of Underwriting Agreement for Debt Securities (filed as Exhibit
1(a) to Amendment No. 1 to Registrant's Registration Statement on
Form S-3, dated January 23, 1996, File No. 33-99736/33-99736-01)
1(b) Form of Underwriting Agreement for Equity Securities (filed as Exhibit
1(b) to Amendment No. 1 to Registrant's Registration Statement on
Form S-3, dated January 23, 1996, File No. 33-99736/33-99736-01)
1(c) Underwriting Agreement, dated February 9, 2001 among Tanger Properties
Limited Partnership, Tanger Factory Outlet Centers, Inc., Merrill,
Lynch, Pierce Fenner & Smith Incorporated and Banc of America
Securities LLC (filed as Exhibit 1.1 to Registrant's Current Report on
Form 8-K, dated February 16, 2001)
1(d) Terms Agreement, dated February 9, 2001 among Tanger Properties
Limited Partnership, Merrill, Lynch, Pierce Fenner & Smith
Incorporated and Banc of America Securities LLC (filed as Exhibit 1.2
to Registrant's Current Report on Form 8-K, dated February 16, 2001)
4(a) Senior Indenture (filed as Exhibit 4(a) to Registrant's Registration
Statement on Form S-3, dated April 12, 1996, File
No. 333-03526/333-03526-01)
4(b) Form of Subordinated Indenture (filed as Exhibit 4(b) to Amendment No.
1 to Registrant's Registration Statement on Form S-3, dated January
23, 1996, File No. 33-99736/33-99736-01)
4(c) Form of Debt Securities (filed as Exhibit 4(c) to Amendment No. 1 to
Registrant's Registration Statement on Form S-3, dated January 23,
1996, File No. 33-99736/33-99736-01)
4(d) Form of Common Share Warrant Agreement(1)
4(e) Form of Articles of Restatement for the Preferred Shares(1)
4(f) Form of Preferred Share Certificate(1)
4(g) Form of Deposit Agreement(1)
4(h) Form of Second Supplemental Indenture to Senior Indenture (filed as
Exhibit 4(i) to Registrant's Current Report on Form 8-K, dated October
24, 1997)
4(i) Third Supplemental Indenture to Senior Indenture (filed as Exhibit 4.1
to Registrant's Current Report on Form 8-K, dated February 16, 2001).
4(j) Form of Common Share Certificate (filed as Exhibit 4(h) to
Registrant's Current Report on Form 8-K, dated September 23, 1997)
5(a) Opinion of Vernon, Vernon, Wooten, Brown, Andrews & Garrett
5(b) Opinion of Latham & Watkins
8 Opinion of Latham & Watkins re: tax matters (filed as Exhibit 8 to
Registrant's Registration Statement on Form S-3 and Post-Effective
Amendment No. 1 to Form S-3, dated May 22, 2001,
File No. 333-61394/333-61394-01)
12(a) Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
12(b) Calculation of Ratios of Earnings to Fixed Charges
23(a) Consent of PricewaterhouseCoopers LLP
23(b) Consent of Latham & Watkins (included in Exhibit 5(b))
23(c) Consent of Vernon, Vernon, Wooten, Brown, Andrews & Garrett (included
in Exhibit 5(a))
24 Power of Attorney (included on signature page in Part II of the
Registration Statement)
25 Statement of Eligibility of Trustee on Form T-1(2)
(1) To be filed by amendment or incorporated by reference in connection
with the offering of depository shares.
(2) To be filed by amendment or incorporated by reference in connection
with the offering of debt securities.
70