csaforms-3112009.htm
As
filed with the Securities and Exchange Commission on November 13,
2009
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
__________________
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
(Exact
name of registrant as specified in its charter)
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Maryland
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20-3126457
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification Number)
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4401
Barclay Downs Drive, Suite 300 Charlotte, North Carolina
28209-4670
(704) 940-2900
(Address,
including zip code and telephone number, including area code, of registrant’s
principal executive offices)
__________________
Frank
C. Spencer
Chief
Executive Officer
4401
Barclay Downs Drive, Suite 300
Charlotte,
North Carolina 28209-4670
(704) 940-2900
(Name,
address, including zip code and telephone number, including area code, of agent
for service)
Jay
L. Bernstein, Esq.
Andrew
S. Epstein, Esq.
Clifford
Chance US LLP
31 West
52nd Street
New
York, New York 10019
(212)
878-8000
Approximate date of commencement of
proposed sale to public: From time to time after the
effective date of the 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: o
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: þ
If this
Form is filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering.
If this
Form is a registration statement pursuant to General Instruction I.D. or
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box.
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated
filer Accelerated
filer ü Non-accelerated
filer Smaller
reporting company
(Do not check if a smaller reporting
company)
The
registrant hereby amends this registration statement on the date or dates as may
be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of
Securities
to be Registered(1)(2)
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Amount
to
be Registered(3)
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Proposed
Maximum
Offering
Price
Per Unit
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Proposed
Maximum
Aggregate
Offering
Price(5)
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Amount
of
Registration
Fee(4)
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Common
Stock, Preferred Stock, Depositary Shares, Warrants and
Rights
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(6)
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(6)
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$500,000,000
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$16,929.93
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(1)
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This
registration statement also covers delayed delivery contracts which may be
issued by the registrant under which the counterparty may be required to
purchase common stock, preferred stock, depositary shares, warrants or
rights to purchase common stock or preferred stock. Such contracts may be
issued together with the specific securities to which they relate. In
addition, securities registered hereunder may be sold separately, together
or as units with other securities registered
hereunder.
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(2)
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Subject
to footnote (5), there is being registered hereunder an indeterminate
amount of common stock, preferred stock, depositary shares, warrants and
rights to purchase common stock, preferred stock or depositary shares as
may be sold, from time to time, by Cogdell Spencer
Inc.
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(3)
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In
U.S. dollars or the equivalent thereof denominated in one or more
foreign currencies or units of two or more foreign currencies or composite
currencies (such as European Currency Units). Pursuant to Rule
415(a)(6) under the Securities Act of 1933, a portion of the securities
being registered hereunder represent all of the unsold securities under
the registration statement on Form S-3 filed by the registrant with the
Securities and Exchange Commission on November 3, 2006 (File
No.333-138426) (the “Prior Registration Statement”). This registration
statement is a replacement registration statement for the Prior
Registration Statement pursuant to Rule 415(a)(6) under the
Act.
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(4)
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Calculated
pursuant to Rule 457(o) under the Securities Act of 1933, as
amended. Pursuant to Rule 415(a)(6) under the Securities Act of
1933, a portion of the securities being registered hereunder include all
of the unsold securities under the Prior Registration Statement. In
connection with the Prior Registration Statement, the registrant paid an
aggregate filing fee of $42,800, of which $21,036.20 relates to such
unsold securities. The filing fee paid in connection with the Prior
Registration Statement shall continue to apply to the unsold securities
and no additional filing fee in respect of such unsold securities is due
hereunder. The amount of the registration fee in the
"Calculation of Registration Fee" table relates to the additional
$303,403,700 of securities being registered
hereunder.
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(5)
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Estimated
solely for purposes of calculating the registration fee. No separate
consideration will be received for shares of common stock that are issued
upon conversion of shares of depositary shares or preferred stock or upon
exercise of common stock warrants registered hereunder. The aggregate
maximum offering price of all securities issued pursuant to this
registration statement will not exceed
$500,000,000.
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(6)
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Omitted
pursuant to General Instruction II.D to Form S-3, under the
Securities Act of 1933, as amended.
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The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any jurisdiction where an offer or sale is not
permitted.
Subject
to Completion, dated November 13, 2009
COGDELL
SPENCER INC.
Common
Stock,
Preferred
Stock,
Depositary
Shares, Warrants and Rights
We may
from time to time offer, in one or more series or classes, separately or
together, and in amounts, at prices and on terms to be set forth in one or more
supplements to this prospectus, the following securities:
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shares
of common stock and/or preferred stock, par value $0.01 per
share;
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depositary
shares representing entitlement to all rights and preferences of fractions
of shares of preferred stock of a specified series and represented by
depositary receipts;
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warrants
to purchase shares of common stock, preferred stock or depositary
shares; or
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rights
to purchase common stock.
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We refer
to the common stock, preferred stock, depositary shares, warrants and rights,
collectively, as the “securities” in this prospectus. The securities will have
an aggregate initial offering price of up to $500,000,000, or its equivalent in
a foreign currency based on the exchange rate at the time of sale, in amounts,
at initial prices and on terms determined at the time of the
offering.
The
specific terms of the securities will be set forth in the applicable prospectus
supplement and will include, as applicable: (i) in the case of our common
stock, any public offering price; (ii) in the case of our preferred stock,
the specific designation and any dividend, liquidation, redemption, conversion,
voting and other rights, and any public offering price; (iii) in the case
of depositary shares, the fractional share of preferred stock represented by
each such depositary share; (iv) in the case of warrants, the duration,
offering price, exercise price and detachability; and (v) in the case of
rights, the number being issued, the exercise price and the expiration date. In
addition, we are organized and conduct our operations so as to qualify as a real
estate investment trust, or REIT, for U.S. federal income tax purposes, and
such specific terms may include limitations on actual or constructive ownership
and restrictions on transfer of the securities, in each case as may be
appropriate to preserve our qualification as a REIT.
The
applicable prospectus supplement will also contain information, where
applicable, about certain U.S. federal income tax consequences relating to,
and any listing on a securities exchange of, the securities covered by such
prospectus supplement. It is important that you read both this prospectus and
the applicable prospectus supplement before you invest.
We may
offer the securities directly, through agents, or to or through underwriters.
The prospectus supplement will describe the terms of the plan of distribution
and set forth the names of any underwriters involved in the sale of the
securities. See “Plan of Distribution” beginning on page 53 for more
information on this topic. No securities may be sold without delivery of a
prospectus supplement describing the method and terms of the offering of those
securities.
Our
common stock is listed on the New York Stock Exchange, or the NYSE, under the
symbol “CSA.” On November 12, 2009, the closing sale price of our common stock
on the NYSE was $4.90 per share.
An
investment in these securities entails certain material risks and uncertainties
that should be considered. See “Risk Factors” beginning on page 10 of our
Form 10-K for the year ended December 31, 2008.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
TABLE
OF CONTENTS
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You
should rely only on the information provided or incorporated by reference in
this prospectus or any applicable prospectus supplement. We have not authorized
anyone to provide you with different or additional information. We are not
making an offer to sell these securities in any jurisdiction where the offer or
sale of these securities is not permitted. You should not assume that the
information appearing in this prospectus, any accompanying prospectus supplement
or the documents incorporated by reference herein or therein is accurate as of
any date other than their respective dates. Our business, financial condition,
results of operations and prospects may have changed since those
dates.
You
should read carefully the entire prospectus, as well as the documents
incorporated by reference in the prospectus, before making an investment
decision.
COGDELL
SPENCER INC.
We are a
fully-integrated, self-administered and self-managed real estate investment
trust, or REIT, that invests in specialty office buildings for the medical
profession, including medical offices, ambulatory surgery and diagnostic
centers. We focus on the ownership, delivery, acquisition and management of
strategically located medical office buildings and other healthcare related
facilities in the United States of America. We have been built around
understanding and addressing the full range of specialized real estate needs of
the healthcare industry. We operate our business through our subsidiary, Cogdell
Spencer LP, a Delaware limited partnership, or our operating partnership, and
its subsidiaries.
Our
principal executive offices are located at 4401 Barclay Downs Drive,
Suite 300, Charlotte, North Carolina 28209-4670. Our telephone number
at that location is (704) 940-2900. Our website is located at
www.cogdellspencer.com. The information found on, or otherwise accessible
through, our website is not incorporated into, and does not form a part of, this
prospectus or any other report or document we file with or furnish to the
Securities and Exchange Commission, or the SEC.
RISK
FACTORS
Investment
in our securities involves a high degree of risk. You should carefully consider
the risks described in the section “Risk Factors” contained in our Annual Report
on Form 10-K for the year ended December 31, 2008, which has been
filed with the SEC, as well as other information in this prospectus and any
accompanying prospectus supplement before purchasing our shares of common stock.
The section “Risk Factors” contained in our Annual Report on Form 10-K for
the year ended December 31, 2008, is incorporated herein by reference. Each
of the risks described could materially adversely affect our business, financial
condition, results of operations, or ability to make distributions to our
stockholders. In such case, you could lose all or a portion of your original
investment.
STATEMENTS
REGARDING FORWARD-LOOKING INFORMATION
When used
in this discussion and elsewhere in this prospectus and the documents
incorporated by reference herein, the words “believes,” “anticipates,”
“projects,” “should,” “estimates,” “expects” and similar expressions are
intended to identify forward-looking statements within the meaning of that term
in Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and in Section 21F of the Securities and Exchange Act of 1934, as
amended (the “Exchange Act”). Actual results may differ materially due to
uncertainties including:
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our
ability to comply with financial covenants in our debt
instruments;
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our
ability to obtain future financing
arrangements;
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estimates
relating to our future
distributions;
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our
understanding of our competition;
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our
ability to renew our ground leases;
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legislative
and regulatory changes (including changes to laws governing the taxation
of REITs and individuals);
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increases
in costs of borrowing as a result of changes in interest rates and other
factors;
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our
ability to maintain our qualification as a REIT due to economic, market,
legal, tax or other considerations;
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changes
in the reimbursement available to our tenants by government or private
payors;
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our
tenants’ ability to make rent
payments;
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access
to financing by customers of our subsidiary, Marshall Erdman &
Associates, Inc., now operating as Erdman Company, or
Erdman;
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delays
in project starts and cancellations by Erdman’s
customers;
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the
timing of capital expenditures by healthcare systems and
providers;
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projected
capital expenditures.
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Forward-looking
statements are based on estimates as of the date of this prospectus. We disclaim
any obligation to publicly release the results of any revisions to these
forward-looking statements reflecting new estimates, events or circumstances
after the date of this prospectus.
For more
information regarding risks that may cause our actual results to differ
materially from any forward-looking statements, see “Risk Factors” beginning on
page 10 of our Annual Report on Form 10-K for the year ended
December 31, 2008. Moreover, we operate in a very competitive
and rapidly changing environment. New risk factors emerge from time to time and
it is not possible for management to predict all such risk factors, nor can it
assess the impact of all such risk factors on our business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. Given these
risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
USE
OF PROCEEDS
Unless
otherwise specified in the applicable prospectus supplement, we intend to use
the net proceeds from the sale of the securities for general corporate purposes,
which may include developing and buying additional properties, expanding and
improving certain of our existing properties and repaying debt. Further details
relating to the use of the net proceeds will be set forth in the applicable
prospectus supplement.
EARNINGS
RATIOS
The
following table sets forth our ratios of earnings to combined fixed charges and
preferred stock dividends for the periods indicated.
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Nine
Months
Ended
September
30, 2009
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November
1, 2005-
December
31, 2005
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January
1, 2005-
October
31, 2005
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Ratio
of earnings to combined fixed charges and preferred stock
dividends
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*
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*
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*
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*
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*
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1.5x
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1.9x
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Earnings
(as defined) were insufficient to cover fixed charges by $126,445,000 for
the nine months ended September 30, 2009, $9,330,000, $9,561,000, and
$14,544,000 for the years ended December 31, 2008, 2007, and 2006,
respectively, and $11,720,000 for the period from November 1, 2005 through
December 31, 2005, in the case of the
Company.
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We
computed the ratio of earnings to combined fixed charges and preferred stock
dividends by dividing earnings by fixed charges. We have not issued any
preferred stock as of the date of this prospectus, and therefore there were no
preferred dividends included in our calculation of ratios of earnings to
combined fixed charges and preferred stock dividends for these periods. Earnings
have been calculated by adding fixed charges to income before provision for
income taxes. Fixed charges consist of interest expense, amortization of
deferred financing costs and the portion of rental expense deemed to be the
equivalent of interest.
DESCRIPTION
OF COMMON STOCK
The
following summary of the material terms of the stock of our company does not
purport to be complete and is subject to and qualified in its entirety by
reference to Maryland law and our charter and bylaws. See “Where You Can Find
More Information.”
General
Cogdell
Spencer Inc. was formed on July 5, 2005. Our charter provides that we may
issue up to 200,000,000 shares of common stock, $0.01 par value per share.
Our charter authorizes our board of directors to amend our charter to increase
the aggregate number of authorized shares or the number of authorized shares of
any class or series without stockholder approval. As of November 6, 2009,
42,552,984 shares of our common stock were issued and outstanding and no shares
of preferred stock were issued and outstanding. Under Maryland law, stockholders
generally are not liable for a corporation’s debts or obligations.
Common
Stock
All
shares of our common stock offered hereby will be duly authorized, fully paid
and nonassessable. Subject to the preferential rights of any other class or
series of stock and to the provisions of the charter regarding the restrictions
on transfer of stock, holders of shares of our common stock are entitled to
receive dividends on such stock if, when and as authorized by our board of
directors and declared by us out of assets legally available therefor and
the holders of our common stock are entitled to share ratably in the assets of
our company legally available for distribution to our stockholders in the event
of our liquidation, dissolution or winding up after payment of or adequate
provision for all of our known debts and liabilities and to holders of any class
of stock, if any, having a preference as to distributions in the event of our
liquidation, dissolution or winding up.
Subject
to the provisions of our charter regarding the restrictions on transfer of
stock, and except as may otherwise be specified in the terms of any class or
series of common stock, each outstanding share of our common stock entitles the
holder to one vote on all matters submitted to a vote of stockholders, including
the election of directors and, except as may be provided with respect to any
other class or series of stock, the holders of such shares will possess the
exclusive voting power. There is no cumulative voting in the election of our
board of directors, which means that the holders of a majority of the
outstanding shares of our common stock can elect all of the directors then
standing for election and the holders of the remaining shares will not be able
to elect any directors.
Holders
of shares of our common stock have no preference, conversion, exchange, sinking
fund, redemption or appraisal rights and have no preemptive rights to subscribe
for any securities of our company. Subject to the provisions of the charter
regarding the restrictions on transfer of stock, shares of our common stock will
have equal dividend, liquidation and other rights.
Our
charter authorizes our board of directors to reclassify any unissued shares of
our common stock into other classes or series of classes of stock and to
establish the number of shares in each class or series and to set the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends or other distributions, qualifications and terms and
conditions of redemption for each such class or series.
Power
to Increase or Decrease Authorized Stock and Issue Additional Shares of Our
Common Stock
Our
charter authorizes our board of directors to amend our charter to increase or
decrease the aggregate number of authorized shares or the number of authorized
shares of any class or series without stockholder approval. We believe that the
power of our board of directors to increase or decrease the number of authorized
shares of stock, approve additional authorized but unissued shares of our common
stock and to classify or reclassify unissued shares of our common stock and
thereafter to cause us to issue such classified or reclassified shares of stock
will provide us with increased flexibility in structuring possible future
financings and acquisitions and in meeting other needs which might arise. The
additional classes or series, as well as the common stock, will be available for
issuance without further action by our stockholders, unless such action is
required by applicable law or the rules of any stock exchange or automated
quotation system on which our securities may be listed or traded. Although our
board of directors does not intend to do so, it could authorize us to issue a
class or series that could, depending upon the terms of the particular class or
series, delay, defer or prevent a transaction or a change of control of our
company that might involve a premium price for our stockholders or otherwise be
in their best interests.
Restrictions
on Ownership and Transfer
In order
for us to qualify as a REIT under the Internal Revenue Code of 1986, as amended,
or Code, our stock must be beneficially owned by 100 or more persons during at
least 335 days of a taxable year of 12 months (other than the first
year for which an election to be a REIT has been made) or during a proportionate
part of a shorter taxable year. Also, not more than 50% of the value of the
outstanding shares of stock may be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities such as
qualified pension plans) during the last half of a taxable year (other than the
first year for which an election to be a REIT has been made). To qualify as a
REIT, we must satisfy other requirements as well. See “U.S. Federal Income
Tax Considerations — Taxation of the Company — Requirements for
Qualification — General.”
Our
charter contains restrictions on the ownership and transfer of our common stock
and outstanding capital stock which are intended to assist us in complying with
these requirements and continuing to qualify as a REIT. The relevant sections of
our charter provide that, subject to the exceptions described below, no person
or entity may beneficially own, or be deemed to own by virtue of the applicable
constructive ownership provisions of the Code, more than 7.75% (by value or by
number of shares, whichever is more restrictive) of our outstanding common stock
(the common stock ownership limit) or 7.75% (by value or by number of shares,
whichever is more restrictive) of our outstanding capital stock (the aggregate
stock ownership limit). We refer to this restriction as the “ownership limit.”
In addition, different ownership limits apply to Mr. Cogdell, certain of
his affiliates, family members and estates and trusts formed for the benefit of
the foregoing and Mr. Spencer, certain of his affiliates, family members
and estates and trusts formed for the benefit of the foregoing. These ownership
limits, which our board has determined do not jeopardize our REIT qualification,
allow Mr. Cogdell and Mr. Spencer, certain of their affiliates, family
members and estates and trusts formed for the benefit of the foregoing, as an
excepted holder, to hold up to 18.0% (by value or by number of shares, whichever
is more restrictive) of our common stock or up to 18.0% (by value or by number
of shares, whichever is more restrictive) of our outstanding capital
stock. A person or entity that becomes subject to the ownership limit
by virtue of a violative transfer that results in a transfer to a trust, as set
forth below, is referred to as a “purported beneficial transferee” if, had the
violative transfer been effective, the person or entity would have been a record
owner and beneficial owner or solely a beneficial owner of our common stock, or
is referred to as a “purported record transferee” if, had the violative transfer
been effective, the person or entity would have been solely a record owner of
our common stock.
The
constructive ownership rules under the Code are complex and may cause stock
owned actually or constructively by a group of related individuals and/or
entities to be owned constructively by one individual or entity. As a result,
the acquisition of less than 7.75% (by value or by number of shares, whichever
is more restrictive) of our outstanding common stock or 7.75% (by value or by
number of shares, whichever is more restrictive) of our outstanding capital
stock (or the acquisition by an individual or entity of an interest in an entity
that owns, actually or constructively, our capital stock) could, nevertheless,
cause that individual or entity, or another individual or entity, to own
constructively in excess of 7.75% (by value or by number of shares, whichever is
more restrictive) of our outstanding common stock or 7.75% (by value or by
number of shares, whichever is more restrictive) of our outstanding capital
stock and thereby subject the common stock or capital stock to the applicable
ownership limit.
Our board
of directors may, in its sole discretion, waive the above-referenced 7.75%
ownership limits with respect to a particular stockholder if:
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our
board of directors obtains such representations and undertakings from such
stockholder as are reasonably necessary to ascertain that no individual’s
beneficial or constructive ownership of our stock will result in our being
“closely held” under Section 856(h) of the Code or otherwise failing
to qualify as a REIT;
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such
stockholder does not, and represents that it will not, own, actually or
constructively, an interest in a tenant of ours (or a tenant of any entity
owned or controlled by us) that would cause us to own, actually or
constructively, more than a 9.9% interest (as set forth in
Section 856(d)(2)(B) of the Code) in such tenant (or the board of
directors determines that revenue derived from such tenant will not affect
our ability to qualify as a REIT) and our board of directors obtains such
representations and undertakings from such stockholder as are reasonably
necessary to ascertain this
fact; and
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such
stockholder agrees that any violation or attempted violation of such
representations or undertakings will result in shares of stock being
automatically transferred to a charitable
trust.
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As a
condition of its waiver, our board of directors may require the applicant to
submit such information as the board of directors may reasonably need to make
the determination regarding our REIT qualification and an opinion of counsel or
IRS ruling satisfactory to our board of directors with respect to our REIT
qualification.
In
connection with the waiver of an ownership limit or at any other time, our board
of directors may from time to time increase or decrease the ownership limit for
all other persons and entities; provided, however, that any decrease may be made
only prospectively as to subsequent holders (other than a decrease as a result
of a retroactive change in existing law, in which case the decrease shall be
effective immediately); and the ownership limit may not be increased if, after
giving effect to such increase, five individuals (including certain entities)
could beneficially own or constructively own in the aggregate, more than 49.9%
in value of the shares then outstanding.
Our
charter provisions further prohibit:
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any
person from beneficially or constructively owning shares of our stock that
would result in us being “closely held” under Section 856(h) of the
Code or otherwise cause us to fail to qualify as a
REIT;
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any
person from constructively owning shares of our stock that would cause any
of our income to be considered “related party rent” under
Section 856(d)(2)(B) of the
Code; and
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any
person from transferring shares of our common stock if such transfer would
result in shares of our stock being beneficially owned by fewer than 100
persons (determined without reference to any rules of
attribution).
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Any
person who acquires or attempts to acquire beneficial or constructive ownership
of shares of our capital stock that will or may violate any of the foregoing
restrictions on transferability and ownership will be required to give written
notice immediately to us and provide us with such other information as we may
request in order to determine the effect of such transfer on our qualification
as a REIT. The foregoing provisions on transferability and ownership will not
apply if our board of directors determines that it is no longer in our best
interests to attempt to qualify, or to continue to qualify, as a
REIT.
If any
transfer of shares of our stock occurs which, if effective, would result in any
person beneficially or constructively owning shares of our stock in excess or in
violation of the above transfer or ownership limitations (other than the 100
person limit), then that number of shares of our stock the beneficial or
constructive ownership of which otherwise would cause such person to violate
such limitations (rounded up to the nearest whole share) shall be automatically
transferred to a trust for the exclusive benefit of one or more charitable
beneficiaries, and the purported beneficial transferee shall not acquire any
rights in such shares. The automatic transfer will be effective as of the close
of business on the business day prior to the date of the violative transfer or
other event that results in a transfer to the trust. Any dividend or other
distribution paid to the purported record transferee, prior to our discovery
that the shares had been automatically transferred to a trust as described
above, must be repaid to the trustee upon demand for distribution to the
beneficiary of the trust. If the transfer to the trust as described above is not
automatically effective, for any reason, to prevent violation of the applicable
ownership limit or as otherwise permitted by our board of directors, then our
charter provides that the transfer of that number of shares that otherwise would
cause a person to violate the ownership limits will be void. Any transfer that
would cause the common stock to be beneficially owned by fewer than 100 persons
shall be void ab
initio.
Shares
of our common stock transferred to the trustee are deemed offered for sale to
us, or our designee, at a price per share equal to the lesser of (1) the
price paid by the purported record transferee for the shares (or, if the event
which resulted in the transfer to the trust did not involve a purchase of such
shares of our common stock at market price, the last reported sales price
reported on the NYSE on the trading day immediately preceding the day of the
event which resulted in the transfer of such shares of our common stock to the
trust) and (2) the market price on the date we, or our designee, accepts
such offer. We may reduce the amount payable to the purported record transferee
by the amount of dividends and other distributions which have been paid to the
purported record transferee and are owed by the purported record transferee to
the trustee, as discussed above. We have the right to accept such
offer until the trustee has sold the shares of our common stock held in the
trust pursuant to the clauses discussed below. Upon a sale to us, the interest
of the charitable beneficiary in the shares sold terminates and the trustee must
distribute the net proceeds of the sale to the purported record transferee and
any dividends or other distributions held by the trustee with respect to such
common stock will be paid to the charitable beneficiary.
If we do
not buy the shares, the trustee must, within 20 days of receiving notice
from us of the transfer of shares to the trust, sell the shares to a person or
entity designated by the trustee who could own the shares without violating the
ownership limits. After that, the trustee must distribute to the purported
record transferee an amount equal to the lesser of (1) the price paid by
the purported record transferee for the shares (or, if the event which resulted
in the transfer to the trust did not involve a purchase of such shares at market
price, the last reported sales price reported on the NYSE on the trading day
immediately preceding the relevant date) and (2) the sales proceeds (net of
commissions and other expenses of sale) received by the trust for the shares.
The purported beneficial transferee or purported record transferee has no rights
in the shares held by the trustee.
The
trustee shall be designated by us and shall be unaffiliated with us and with any
purported record transferee or purported beneficial transferee. Prior to the
sale of any shares by the trust, the trustee will receive, in trust for the
beneficiary, all dividends and other distributions paid by us with respect to
the shares held in trust, and may also exercise all voting rights with respect
to such shares.
Subject
to Maryland law, effective as of the date that the shares have been transferred
to the trust, the trustee shall have the authority, at the trustee’s sole
discretion:
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to
rescind as void any vote cast by a purported record transferee prior to
our discovery that the shares have been transferred to the
trust; and
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to
recast the vote in accordance with the desires of the trustee acting for
the benefit of the beneficiary of the
trust.
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However,
if we have already taken irreversible corporate action, then the trustee may not
rescind and recast the vote.
Any
beneficial owner or constructive owner of shares of our common stock and any
person or entity (including the stockholder of record) who is holding shares of
our common stock for a beneficial owner must, on request, provide us with a
completed questionnaire containing the information regarding their ownership of
such shares, as set forth in the applicable Treasury Regulations. In addition,
any person or entity that is a beneficial owner or constructive owner of shares
of our common stock and any person or entity (including the stockholder of
record) who is holding shares of our common stock for a beneficial owner or
constructive owner shall, on request, be required to disclose to us in writing
such information as we may request in order to determine the effect, if any, of
such stockholder’s actual and constructive ownership of shares of our common
stock on our qualification as a REIT and to ensure compliance with the ownership
limit, or as otherwise permitted by our board of directors.
All
certificates representing shares of our common stock bear a legend referring to
the restrictions described above.
These
ownership limits could delay, defer or prevent a transaction or a change of
control of our company that might involve a premium price for our common stock
or otherwise be in the best interests of our stockholders.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Continental Stock
Transfer & Trust Company.
DESCRIPTION
OF PREFERRED STOCK
General
Our
charter provides that we may issue up to 50,000,000 shares of preferred
stock, $0.01 par value per share. On November 6, 2009, we had no
outstanding series of preferred stock. Our charter authorizes our board of
directors to amend our charter to increase the aggregate number of authorized
shares or the number of authorized shares of any class or series without
stockholder approval.
The
following description of the preferred stock sets forth general terms and
provisions of the preferred stock to which any prospectus supplement may relate.
The statements below describing the preferred stock are in all respects subject
to and qualified in their entirety by reference to the applicable provisions of
our charter and bylaws and any applicable articles supplementary to the charter
designating terms of a series of preferred stock. The issuance of preferred
stock could adversely affect the voting power, dividend rights and other rights
of holders of common stock. Although our board of directors does not have this
intention at this present time, it could establish another series of preferred
stock, that could, depending on the terms of the series, delay, defer or prevent
a transaction or a change in control of our company that might involve a premium
price for the common stock or otherwise be in the best interest of the holders
thereof. Management believes that the availability of preferred stock will
provide us with increased flexibility in structuring possible future financing
and acquisitions and in meeting other needs that might arise.
Terms
Subject
to the limitations prescribed by our charter, our board of directors is
authorized to classify any unissued shares of preferred stock and to reclassify
any previously classified but unissued shares of any series of preferred stock
previously authorized by our board of directors. Prior to issuance of shares of
each class or series of preferred stock, our board of directors is required by
the MGCL and our charter to fix the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms or conditions of redemption for each class or
series.
Reference
is made to the prospectus supplement relating to the series of preferred stock
offered thereby for the specific terms thereof, including:
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The
title and par value of the preferred
stock;
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The
number of shares of the preferred stock, the liquidation preference per
share of the preferred stock and the offering price of the preferred
stock;
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The
dividend rate(s), period(s) and/or payment day(s) or method(s) of
calculation thereof applicable to the preferred
stock;
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The
date from which dividends on the preferred stock shall accumulate, if
applicable;
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The
procedures for any auction and remarketing, if any, for the preferred
stock;
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The
provision for a sinking fund, if any, for the preferred
stock;
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The
provision for redemption, if applicable, of the preferred
stock;
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Any
listing of the preferred stock on any securities
exchange;
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The
terms and conditions, if applicable, upon which the preferred stock may or
will be convertible into our common stock, including the conversion price
or manner of calculation thereof;
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The
relative ranking and preferences of the preferred stock as to dividend
rights and rights upon liquidation, dissolution or winding up of our
affairs;
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Any
limitations on direct or beneficial ownership and restrictions on
transfer;
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A
discussion of U.S. federal income tax considerations applicable to
the preferred stock; and
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Any
other specific terms, preferences, rights, limitations or restrictions of
the preferred stock.
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Rank
Unless
otherwise specified in the applicable prospectus supplement, the preferred stock
will, with respect to dividend rights and rights upon liquidation, dissolution
or winding up of our company, rank:
(a) senior
to all classes or series of common stock and to all equity securities issued by
us the terms of which provide that the equity securities shall rank junior to
the preferred stock;
(b) on
a parity with all equity securities issued by us other than those referred to in
clauses (a) and (c); and
(c) junior
to all equity securities issued by us which the terms of the preferred stock
provide will rank senior to it. The term “equity securities” does not include
convertible debt securities.
Dividends
Unless
otherwise specified in the applicable prospectus supplement, the preferred stock
will have the rights with respect to payment of dividends set forth
below.
Holders
of the preferred stock of each series will be entitled to receive, when, as and
if authorized by our board of directors and declared by us, out of our assets
legally available for payment, cash dividends in the amounts and on the dates as
will be set forth in, or pursuant to, the applicable prospectus supplement. Each
dividend shall be payable to holders of record as they appear on our share
transfer books on the record dates as shall be fixed by our board of
directors.
Dividends
on any series of preferred stock may be cumulative or non-cumulative, as
provided in the applicable prospectus supplement. Dividends, if cumulative, will
be cumulative from and after the date set forth in the applicable prospectus
supplement. If the board of directors fails to declare a dividend payable on a
dividend payment date on any series of preferred stock for which dividends are
non-cumulative, then the holders of this series of preferred stock will have no
right to receive a dividend in respect of the related dividend period and we
will have no obligation to pay the dividend accrued for the period, whether or
not dividends on this series of preferred stock are declared payable on any
future dividend payment date.
If
preferred stock of any series is outstanding, no full dividends will be declared
or paid or set apart for payment on any of our stock of any other series
ranking, as to dividends, on a parity with or junior to the preferred stock of
this series for any period unless:
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if
this series of preferred stock has a cumulative dividend, full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for the payment for
all past dividend periods; or
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if
this series of preferred stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for the payment on the preferred stock
of this series.
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When
dividends are not paid in full or a sum sufficient for the full payment is not
so set apart upon preferred stock of any series and the shares of any other
series of preferred stock ranking on a parity as to dividends with the preferred
stock of this series, all dividends declared upon the preferred stock of this
series and any other series of preferred stock ranking on a parity as to
dividends with the preferred stock shall be declared pro rata so that the amount
of dividends declared per share of preferred stock of this series and the other
series of preferred stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the preferred stock of this series and the
other series of preferred stock, which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if the preferred stock
does not have a cumulative dividend, bear to each other. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on preferred stock of this series which may be in
arrears.
Except as
provided in the immediately preceding paragraph, unless (a) if this series
of preferred stock has a cumulative dividend, full cumulative dividends on the
preferred stock of this series have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods, or (b) if this series of preferred
stock does not have a cumulative dividend, full dividends on the preferred stock
of this series have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for the then
current dividend period, no dividends, other than in shares of common stock or
other stock ranking junior to the preferred stock of this series as to dividends
and upon liquidation, shall be declared or paid or set aside for payment or
other distribution shall be declared or made upon the common stock, or any of
our other stock ranking junior to or on a parity with the preferred stock of
this series as to dividends or upon liquidation, nor shall any shares of common
stock, or any other of our capital stock ranking junior to or on a parity with
the preferred stock of this series as to dividends or upon liquidation, be
redeemed, purchased or otherwise acquired for any consideration or any moneys be
paid to or made available for a sinking fund for the redemption of any of the
shares by us except:
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by
conversion into or exchange for other shares of our stock ranking junior
to the preferred stock of this series as to dividends and upon
liquidation; or
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redemptions
for the purpose of preserving our qualification as a
REIT.
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Redemption
If so
provided in the applicable prospectus supplement, the preferred stock will be
subject to mandatory redemption or redemption at our option, as a whole or in
part, in each case upon the terms, at the times and at the redemption prices set
forth in the prospectus supplement.
The
prospectus supplement relating to a series of preferred stock that is subject to
mandatory redemption will specify the number of shares of the preferred stock
that 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
the preferred stock does not have a cumulative dividend, include any
accumulation in respect of unpaid dividends for prior dividend periods, to the
date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable prospectus supplement.
Notwithstanding
the foregoing, unless (a) if this series of preferred stock has a
cumulative dividend, full cumulative dividends on all shares of any series of
preferred stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods, or (b) if this series of preferred stock does
not have a cumulative dividend, full dividends on the preferred stock of any
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for payment for the then
current dividend period, no shares of any series of preferred stock shall be
redeemed unless all outstanding preferred stock of this series is simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of preferred stock of this series to preserve our REIT
qualification or pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding preferred stock of this series. In addition,
unless (a) if this series of preferred stock has a cumulative dividend,
full cumulative dividends on all outstanding shares of any series of preferred
stock have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past dividend
periods, or (b) if this series of preferred stock does not have a
cumulative dividend, full dividends on the preferred stock of any series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period, we shall not purchase or otherwise acquire, directly or indirectly, any
shares of preferred stock of this series except by conversion into or exchange
for our capital stock ranking junior to the preferred stock of this series as to
dividends and upon liquidation; provided, however, that the foregoing shall not
prevent the purchase or acquisition of preferred stock of this series to
preserve our REIT qualification or pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding preferred stock of this
series.
If fewer
than all of the outstanding shares of preferred stock of any series are to be
redeemed, the number of shares to be redeemed will be determined by us and the
shares may be redeemed pro rata from the holders of record of the shares in
proportion to the number of the shares held or for which redemption is requested
by the holder, with adjustments to avoid redemption of fractional shares, or by
lot in a manner determined by us.
Notice of
redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each holder of record of preferred stock of any
series to be redeemed at the address shown on our share transfer books. Each
notice shall state:
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the
number of shares and series of the preferred stock to be
redeemed;
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the
place or places where certificates for the preferred stock are to be
surrendered for payment of the redemption
price;
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that
dividends on the shares to be redeemed will cease to accumulate on the
redemption date; and
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the
date upon which the holder’s conversion rights, if any, as to the shares
shall terminate.
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If fewer
than all the shares of preferred stock of any series are to be redeemed, the
notice mailed to each holder thereof shall also specify the number of shares of
preferred stock to be redeemed from each holder. If notice of redemption of any
preferred stock has been given and if the funds necessary for the redemption
have been set aide by us in trust for the benefit of the holders of any
preferred stock so called for redemption, then from and after the redemption
date dividends will cease to accumulate on the preferred stock, and all rights
of the holders of the preferred stock will terminate, except the right to
receive the redemption price.
Liquidation
Preference
Upon any
voluntary or involuntary liquidation, dissolution or winding up of our affairs,
then, before any distribution or payment shall be made to the holders of any
common stock or any other class or series of our stock ranking junior to the
preferred stock of this series in the distribution of assets upon any
liquidation, dissolution or winding up of our company, the holders of the
preferred stock shall be entitled to receive out of our assets of our company
legally available for distribution to stockholders liquidating distributions in
the amount of the liquidation preference per share that is set forth in the
applicable prospectus supplement, plus an amount equal to all dividends
accumulated and unpaid thereon, which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if the preferred stock
does not have a cumulative dividend. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of preferred
stock will have no rights or claim to any of our remaining assets. In the event
that, upon any voluntary or involuntary liquidation, dissolution or winding up,
our available assets are insufficient to pay the amount of the liquidating
distributions on all outstanding preferred stock of this series and the
corresponding amounts payable on all shares of other classes or series of
capital stock of our company ranking on a parity with the preferred stock in the
distribution of assets, then the holders of the preferred stock and all other
classes or series of capital stock shall share ratably in any distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled.
Our
consolidation or merger with or into any other entity, or the merger of another
entity with or into our company, or a statutory share exchange by us, or the
sale, lease 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 company.
In
determining whether a distribution (other than upon voluntary or involuntary
liquidation), by dividend, redemption or other acquisition of shares of our
stock or otherwise, is permitted under Maryland law, amounts that would be
needed, if we were to be dissolved at the time of distribution, to satisfy the
preferential rights upon dissolution of holders of shares of the preferred stock
will not be added to our total liabilities.
Voting
Rights
Holders
of the preferred stock will not have any voting rights, except as set forth
below or as indicated in the applicable prospectus supplement.
Whenever
dividends on any series of preferred stock shall be in arrears for six or more
quarterly periods, the holders of the preferred stock, voting separately as a
class with all other series of preferred stock upon which like voting rights
have been conferred and are exercisable, will be entitled to vote for the
election of two additional directors of our company at a special meeting called
by the holders of record of at least ten percent of any series of preferred
stock 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
stockholders, or at the next annual meeting of stockholders, and at each
subsequent annual meeting until (a) if this series of preferred stock has a
cumulative dividend, all dividends accumulated on these shares of preferred
stock for the past dividend periods shall have been fully paid or declared and a
sum sufficient for the payment thereof set aside for payment or (b) if this
series of preferred stock does not have a cumulative dividend, four quarterly
dividends shall have been fully paid or declared and a sum sufficient for the
payment thereof set aside for payment. In these cases, the entire board of
directors will be increased by two directors.
Unless
provided otherwise for any series of preferred stock, so long as any shares of
the preferred stock remain outstanding, we will not, without the affirmative
vote or consent of the holders of at least two-thirds of the shares of this
series of preferred stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting with this series voting separately as a
class:
(a) authorize
or create, or increase the number of authorized or issued shares of, any class
or series of stock ranking senior to the preferred stock with respect to payment
of dividends or the distribution of assets upon liquidation, dissolution or
winding up of our company, or reclassify any of our authorized stock into this
series of preferred stock, or create, authorize or issue any obligation or
security convertible into or evidencing the right to purchase any of this series
of preferred stock; or
(b) amend,
alter or repeal the provisions of the charter or the articles supplementary for
this series of preferred stock, whether by merger, consolidation or otherwise,
so as to materially and adversely affect any right, preference, privilege or
voting power of this series of preferred stock;
provided,
however, with respect to the occurrence of any of the events set forth in
(b) above, so long as this series of preferred stock remains outstanding
with the terms thereof materially unchanged, taking into account that upon the
occurrence of an event we may not be the surviving entity, the occurrence of any
similar event shall not be deemed to materially and adversely affect the rights,
preferences, privileges or voting powers of this series of preferred stock; and
provided, further, that (x) any increase in the number of authorized shares
of preferred stock or the creation or issuance of any other series of preferred
stock, or (y) any increase in the number of authorized shares of this
series of preferred stock or any other series of preferred stock, in each case
ranking on a parity with or junior to the preferred stock of this series with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up of our company, shall not be deemed to materially and
adversely affect the 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 the vote or consent would otherwise be required shall
be effected, all outstanding shares of this series of preferred stock shall have
been converted, redeemed or called for redemption and sufficient funds shall
have been deposited in trust to effect the redemption.
Conversion
Rights
The terms
and conditions, if any, upon which any series of preferred stock is convertible
into shares of common stock will be set forth in the applicable prospectus
supplement. The terms will include the number of shares of common stock into
which the shares of preferred stock are convertible, the conversion price, or
manner of calculation thereof, the conversion period, provisions as to whether
conversion will be at the option of the holders of our preferred stock or us,
the events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of the preferred
stock.
Stockholder
Liability
Maryland
law provides that no stockholder, including holders of preferred stock, shall be
personally liable for our acts and obligations and that our funds and property
shall be the only recourse for these acts or obligations.
Restrictions
on Ownership
In order
for us to qualify as a REIT under the Code, our stock must be beneficially owned
by 100 or more persons during at least 335 days of a taxable year of
12 months (other than the first year for which an election to be a REIT has
been made) or during a proportionate part of a shorter taxable year. Also, not
more than 50% of the value of the outstanding shares of stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code to
include certain entities such as qualified pension plans) during the last half
of a taxable year (other than the first year for which an election to be a REIT
has been made). The charter contains restrictions on the ownership and transfer
of shares of our stock, including preferred stock. The articles supplementary
for each series of preferred stock may contain additional provisions restricting
the ownership and transfer of the preferred stock. The applicable prospectus
supplement will specify any additional ownership limitation relating to a series
of preferred stock.
Registrar
and Transfer Agent
The
Registrar and Transfer Agent for the preferred stock is Continental Stock
Trust & Transfer Company.
DESCRIPTION
OF DEPOSITARY SHARES
We may,
at our option, elect to offer depositary shares rather than full shares of
preferred stock. In the event such option is exercised, each of the depositary
shares will represent ownership of and entitlement to all rights and preferences
of a fraction of a share of preferred stock of a specified series (including
dividend, voting, redemption and liquidation rights). The applicable fraction
will be specified in a prospectus supplement. The shares of preferred stock
represented by the depositary shares will be deposited with a depositary named
in the applicable prospectus supplement, under a deposit agreement, among our
company, the depositary and the holders of the certificates evidencing
depositary shares, or depositary receipts. Depositary receipts will be delivered
to those persons purchasing depositary shares in the offering. The depositary
will be the transfer agent, registrar and dividend disbursing agent for the
depositary shares. Holders of depositary receipts agree to be bound by the
deposit agreement, which requires holders to take certain actions such as filing
proof of residence and paying certain charges.
The
summary of terms of the depositary shares contained in this prospectus does not
purport to be complete and is subject to, and qualified in its entirety by, the
provisions of the deposit agreement and the form of articles supplementary for
the applicable series of preferred stock.
Dividends
The
depositary will distribute all cash dividends or other cash distributions
received in respect of the series of preferred stock represented by the
depositary shares to the record holders of depositary receipts in proportion to
the number of depositary shares owned by such holders on the relevant record
date, which will be the same date as the record date fixed by our company for
the applicable series of preferred stock. The depositary, however, will
distribute only such amount as can be distributed without attributing to any
depositary share a fraction of one cent, and any balance not so distributed will
be added to and treated as part of the next sum received by the depositary for
distribution to record holders of depositary receipts then
outstanding.
In the
event of a distribution other than in cash, the depositary will distribute
property received by it to the record holders of depositary receipts entitled
thereto, in proportion, as nearly as may be practicable, to the number of
depositary shares owned by such holders on the relevant record date, unless the
depositary determines (after consultation with our company) that it is not
feasible to make such distribution, in which case the depositary may (with the
approval of our company) adopt any other method for such distribution as it
deems equitable and appropriate, including the sale of such property (at such
place or places and upon such terms as it may deem equitable and appropriate)
and distribution of the net proceeds from such sale to such
holders.
No
distribution will be made in respect of any depositary share to the extent that
it represents any preferred stock converted into excess stock.
Liquidation
Preference
In the
event of the liquidation, dissolution or winding up of the affairs of our
company, whether voluntary or involuntary, the holders of each depositary share
will be entitled to the fraction of the liquidation preference accorded each
share of the applicable series of preferred stock as set forth in the prospectus
supplement.
Redemption
If the
series of preferred stock represented by the applicable series of depositary
shares is redeemable, such depositary shares will be redeemed from the proceeds
received by the depositary resulting from the redemption, in whole or in part,
of preferred stock held by the depositary. Whenever we redeem any preferred
stock held by the depositary, the depositary will redeem as of the same
redemption date the number of depositary shares representing the preferred stock
so redeemed. The depositary will mail the notice of redemption promptly upon
receipt of such notice from us and not less than 30 nor more than 60 days
prior to the date fixed for redemption of the preferred stock and the depositary
shares to the record holders of the depositary receipts.
Voting
Promptly
upon receipt of notice of any meeting at which the holders of the series of
preferred stock represented by the applicable series of depositary shares are
entitled to vote, the depositary will mail the information contained in such
notice of meeting to the record holders of the depositary receipts as of the
record date for such meeting. Each such record holder of depositary receipts
will be entitled to instruct the depositary as to the exercise of the voting
rights pertaining to the number of shares of preferred stock represented by such
record holder’s depositary shares. The depositary will endeavor, insofar as
practicable, to vote such preferred stock represented by such depositary shares
in accordance with such instructions, and we will agree to take all action which
may be deemed necessary by the depositary in order to enable the depositary to
do so. The depositary will abstain from voting any of the preferred stock to the
extent that it does not receive specific instructions from the holders of
depositary receipts.
Withdrawal
of Preferred Stock
Upon
surrender of depositary receipts at the principal office of the depositary, upon
payment of any unpaid amount due the depositary, and subject to the terms of the
deposit agreement, the owner of the depositary shares evidenced thereby is
entitled to delivery of the number of whole shares of preferred stock and all
money and other property, if any, represented by such depositary shares. Partial
shares of preferred stock will not be issued. If the depositary receipts
delivered by the holder evidence a number of depositary shares in excess of the
number of depositary shares representing the number of whole shares of preferred
stock to be withdrawn, the depositary will deliver to such holder at the same
time a new depositary receipt evidencing such excess number of depositary
shares. Holders of preferred stock thus withdrawn will not thereafter be
entitled to deposit such shares under the deposit agreement or to receive
depositary receipts evidencing depositary shares therefor.
Amendment
and Termination of Deposit Agreement
The form
of depositary receipt evidencing the depositary shares and any provision of the
deposit agreement may at any time and from time to time be amended by agreement
between our company and the depositary. However, any amendment which materially
and adversely alters the rights of the holders (other than any change in fees)
of depositary shares will not be effective unless such amendment has been
approved by at least a majority of the depositary shares then outstanding. No
such amendment may impair the right, subject to the terms of the deposit
agreement, of any owner of any depositary shares to surrender the depositary
receipt evidencing such depositary shares with instructions to the depositary to
deliver to the holder of the preferred stock and all money and other property,
if any, represented thereby, except in order to comply with mandatory provisions
of applicable law.
The
deposit agreement will be permitted to be terminated by our company upon not
less than 30 days prior written notice to the applicable depositary if
(i) such termination is necessary to preserve our qualification as a REIT
or (ii) a majority of each series of preferred stock affected by such
termination consents to such termination, whereupon such depositary will be
required to deliver or make available to each holder of depositary receipts,
upon surrender of the depositary receipts held by such holder, such number of
whole or fractional shares of preferred stock as are represented by the
depositary shares evidenced by such depositary receipts together with any other
property held by such depositary with respect to such depositary receipts. We
will agree that if the deposit agreement is terminated to preserve our
qualification as a REIT, then we will use our best efforts to list the preferred
stock issued upon surrender of the related depositary shares on a national
securities exchange. In addition, the deposit agreement will automatically
terminate if (i) all outstanding depositary shares thereunder shall have
been redeemed, (ii) there shall have been a final distribution in respect
of the related preferred stock in connection with any liquidation, dissolution
or winding-up of our company and such distribution shall have been distributed
to the holders of depositary receipts evidencing the depositary shares
representing such preferred stock or (iii) each share of the related
preferred stock shall have been converted into stock of our company not so
represented by depositary shares.
Charges
of Depositary
We will
pay all transfer and other taxes and governmental charges arising solely from
the existence of the depositary arrangements. We will pay charges of the
depositary in connection with the initial deposit of the preferred stock and
initial issuance of the depositary shares, and redemption of the preferred stock
and all withdrawals of preferred stock by owners of depositary shares. Holders
of depositary receipts will pay transfer, income and other taxes and
governmental charges and certain other charges as are provided in the deposit
agreement to be for their accounts. In certain circumstances, the depositary may
refuse to transfer depositary shares, may withhold dividends and distributions
and sell the depositary shares evidenced by such depositary receipt if such
charges are not paid.
Miscellaneous
The
depositary will forward to the holders of depositary receipts all reports and
communications from us which are delivered to the depositary and which we are
required to furnish to the holders of the preferred stock. In addition, the
depositary will make available for inspection by holders of depositary receipts
at the principal office of the depositary, and at such other places as it may
from time to time deem advisable, any reports and communications received from
us which are received by the depositary as the holder of preferred
stock.
Neither
the depositary nor our company assumes any obligation or will be subject to any
liability under the deposit agreement to holders of depositary receipts other
than for its negligence or willful misconduct. Neither the depositary nor our
company will be liable if it is prevented or delayed by law or any circumstance
beyond its control in performing its obligations under the deposit agreement.
The obligations of our company and the depositary under the deposit agreement
will be limited to performance in good faith of their duties thereunder, and
they will not be obligated to prosecute or defend any legal proceeding in
respect of any depositary shares or preferred stock unless satisfactory
indemnity is furnished. Our company and the depositary may rely on written
advice of counsel or accountants, on information provided by holders of the
depositary receipts or other persons believed in good faith to be competent to
give such information and on documents believed to be genuine and to have been
signed or presented by the proper party or parties.
In the
event the depositary shall receive conflicting claims, requests or instructions
from any holders of depositary receipts, on the one hand, and our company, on
the other hand, the depositary shall be entitled to act on such claims, requests
or instructions received from our company.
Resignation
and Removal of Depositary
The
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 depositary, any such resignation or
removal to take effect upon the appointment of a successor depositary and its
acceptance of such appointment. Such successor depositary must be appointed
within 60 days after delivery of the notice for resignation or removal and
must be a bank or trust company having its principal office in the United States
of America and having a combined capital and surplus of at least
$150,000,000.
U.S. Federal
Income Tax Consequences
Owners of
depositary shares will be treated for U.S. federal income tax purposes as
if they were owners of the preferred stock represented by such depositary
shares. Accordingly, such owners will be entitled to take into account, for
U.S. federal income tax purposes, income and deductions to which they would
be entitled if they were holders of such preferred stock. In addition,
(i) no gain or loss will be recognized for U.S. federal income tax
purposes upon the withdrawal of preferred stock by an owner of depositary
shares, (ii) the tax basis of each share of preferred stock to a
withdrawing owner of depositary shares will, upon such withdrawal, be the same
as the aggregate tax basis of the depositary shares in respect thereof, and
(iii) the holding period for preferred stock in the hands of a withdrawing
owner of depositary shares will include the period during which such person
owned such depositary shares.
DESCRIPTION
OF WARRANTS
We may
issue warrants for the purchase of common stock, preferred stock or depositary
shares and may issue warrants independently or together with common stock,
preferred stock, depositary shares or attached to or separate from such
securities. We will issue each series of warrants under a separate warrant
agreement between us and a bank or trust company as warrant agent, as specified
in the applicable prospectus supplement.
The
warrant agent will act solely as our agent in connection with the warrants and
will not act for or on behalf of warrant holders. The following sets forth
certain general terms and provisions of the warrants that may be offered under
this registration statement. Further terms of the warrants and the applicable
warrant agreement will be set forth in the applicable prospectus
supplement.
The
applicable prospectus supplement will describe the terms of the warrants in
respect of which this prospectus is being delivered, including, where
applicable, the following:
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the
title of such warrants;
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the
aggregate number of such warrants;
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the
price or prices at which such warrants will be
issued;
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the
type and number of securities purchasable upon exercise of such
warrants;
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the
designation and terms of the other securities, if any, with which such
warrants are issued and the number of such warrants issued with each such
offered security;
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the
date, if any, on and after which such warrants and the related securities
will be separately transferable;
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the
price at which each security purchasable upon exercise of such warrants
may be purchased;
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the
date on which the right to exercise such warrants shall commence and the
date on which such right shall
expire;
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the
minimum or maximum amount of such warrants that may be exercised at any
one time;
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information
with respect to book-entry procedures, if
any;
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any
anti-dilution protection;
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a
discussion of certain U.S. federal income tax
considerations; and
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any
other terms of such warrants, including terms, procedures and limitations
relating to the transferability, exercise and exchange of such
warrants.
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Warrant
certificates will be exchangeable for new warrant certificates of different
denominations and warrants may be exercised at the corporate trust office of the
warrant agent or any other office indicated in the applicable prospectus
supplement. Prior to the exercise of their warrants, holders of warrants will
not have any of the rights of holders of the securities purchasable upon such
exercise or to any dividend payments or voting rights as to which holders of the
shares of common stock or preferred stock purchasable upon such exercise may be
entitled.
Each
warrant will entitle the holder to purchase for cash such number of shares of
common stock or preferred stock, at such exercise price as shall, in each case,
be set forth in, or be determinable as set forth in, the applicable prospectus
supplement relating to the warrants offered thereby. Unless otherwise specified
in the applicable prospectus supplement, warrants may be exercised at any time
up to 5:00 p.m. New York City time on the expiration date set forth in
applicable prospectus supplement. After 5:00 p.m. New York City time on the
expiration date, unexercised warrants will be void.
Warrants
may be exercised as set forth in the applicable prospectus supplement relating
to the warrants. Upon receipt of payment and the warrant certificate properly
completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the applicable prospectus supplement, we will,
as soon as practicable, forward the securities purchasable upon such exercise.
If less than all of the warrants are presented by such warrant certificate of
exercise, a new warrant certificate will be issued for the remaining amount of
warrants.
DESCRIPTION
OF RIGHTS
We may
issue rights to our stockholders for the purchase of shares of common stock.
Each series of rights will be issued under a separate rights agreement to be
entered into between us and a bank or trust company, as rights agent, all as set
forth in the prospectus supplement relating to the particular issue of rights.
The rights agent will act solely as our agent in connection with the
certificates relating to the rights of such series and will not assume any
obligation or relationship of agency or trust for or with any holders of rights
certificates or beneficial owners of rights. The rights agreement and the rights
certificates relating to each series of rights will be filed with the SEC and
incorporated by reference as an exhibit to the Registration Statement of which
this prospectus is a part.
The
applicable prospectus supplement will describe the terms of the rights to be
issued, including the following, where applicable:
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the
date for determining the stockholders entitled to the rights
distribution;
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the
aggregate number of shares of common stock purchasable upon exercise of
such rights and the exercise price;
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the
aggregate number of rights being
issued;
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the
date, if any, on and after which such rights may be transferable
separately;
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the
date on which the right to exercise such rights shall commence and the
date on which such right shall
expire;
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any
special U.S. federal income tax
consequences; and
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any
other terms of such rights, including terms, procedures and limitations
relating to the distribution, exchange and exercise of such
rights.
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CERTAIN
PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS
The
following summary of certain provisions of Maryland law and of our charter and
bylaws does not purport to be complete and is subject to and qualified in its
entirety by reference to Maryland law and our charter and bylaws, copies of
which are exhibits to the registration statement of which this prospectus is a
part. See “Where You Can Find More Information.”
Our
Board of Directors
Our
charter and bylaws provide that the number of directors of our company will not
be less than the minimum number permitted under the Maryland General
Corporations Law, or the MGCL, and, unless our bylaws are amended, not more than
15 and may be increased or decreased pursuant to our bylaws by a vote of the
majority of our entire board of directors. Subject to the rights of
holders of one or more classes or series of preferred stock, any vacancy may be
filled, at any regular meeting or at any special meeting called for that
purpose, only by a majority of the remaining directors, even if the remaining
directors do not constitute a quorum, and any director elected to fill a vacancy
shall serve for the full term of the directorship in which such vacancy occurred
and until a successor is elected and qualifies.
Pursuant
to our charter and bylaws, each of our directors is elected by our common
stockholders entitled to vote to serve until the next annual meeting and until
his/her successor is duly elected and qualifies. Holders of shares of our common
stock will have no right to cumulative voting in the election of directors.
Consequently, at each annual meeting of stockholders, the holders of a majority
of the shares of our common stock entitled to vote will be able to elect all of
our directors.
Removal
of Directors
Our
charter provides that a director may be removed only for cause (as defined in
our charter) and only by the affirmative vote of at least two-thirds of the
votes of common stockholders entitled to be cast generally in the election of
directors. This provision, when coupled with the exclusive power of our board of
directors to fill vacant directorships, may preclude stockholders from removing
incumbent directors and filling the vacancies created by such removal with their
own nominees.
Business
Combinations
Under the
MGCL, certain “business combinations” (including a merger, consolidation, share
exchange or, in certain circumstances, an asset transfer or issuance or
reclassification of equity securities) between a Maryland corporation and an
interested stockholder (i.e., any person who
beneficially owns 10% or more of the voting power of the corporation’s shares or
an affiliate or associate of the corporation who, at any time within the
two-year period prior to the date in question, was the beneficial owner of 10%
or more of the voting power of the then outstanding voting stock of the
corporation, or an affiliate of such an interested stockholder) are prohibited
for five years after the most recent date on which the interested stockholder
becomes an interested stockholder. Thereafter, any such business combination
must be recommended by the board of directors of such corporation and approved
by the affirmative vote of at least (1) 80% of the votes entitled to be
cast by holders of outstanding shares of voting stock of the corporation and
(2) two-thirds of the votes entitled to be cast by holders of voting stock
of the corporation other than shares held by the interested stockholder with
whom (or with whose affiliate) the business combination is to be effected or
held by an affiliate or associate of the interested stockholder, unless, among
other conditions, the corporation’s common stockholders receive a minimum price
(as defined in the MGCL) for their shares and the consideration is received in
cash or in the same form as previously paid by the interested stockholder for
its shares. A person is not an interested stockholder under the statute if the
board of directors approved in advance the transaction by which the person
otherwise would have become an interested stockholder. The board of directors
may provide that its approval is subject to compliance with any terms and
conditions determined by it.
These
provisions of the MGCL do not apply, however, to business combinations that are
approved or exempted by a board of directors prior to the time that the
interested stockholder becomes an interested stockholder. Pursuant to the
statute, our board of directors has by resolution exempted James W. Cogdell, his
affiliates and associates and all persons acting in concert with the foregoing
and Frank C. Spencer, his affiliates and associates and all persons acting in
concert with the foregoing, from these provisions of the MGCL and, consequently,
the five-year prohibition and the supermajority vote requirements will not apply
to business combinations between us and any person described above. As a result,
any person described above may be able to enter into business combinations with
us that may not be in the best interests of our stockholders without compliance
by our company with the supermajority vote requirements and the other provisions
of the statute.
Control
Share Acquisitions
The MGCL
provides that “control shares” of a Maryland corporation acquired in a “control
share acquisition” have no voting rights except to the extent approved at a
special meeting by the affirmative vote of two-thirds of the votes entitled to
be cast on the matter, excluding shares of stock in a corporation in respect of
which any of the following persons is entitled to exercise or direct the
exercise of the voting power of shares of stock of the corporation in the
election of directors: (1) a person who makes or proposes to make a control
share acquisition, (2) an officer of the corporation or (3) an
employee of the corporation who is also a director of the corporation. “Control
shares” are voting shares of stock which, if aggregated with all other such
shares of stock previously acquired by the acquirer or in respect of which the
acquirer is able to exercise or direct the exercise of voting power (except
solely by virtue of a revocable proxy), would entitle the acquirer to exercise
voting power in electing directors within one of the following ranges of voting
power: (1) one-tenth or more but less than one-third, (2) one-third or
more but less than a majority, or (3) a majority or more of all voting
power. Control shares do not include shares the acquiring person is then
entitled to vote as a result of having previously obtained stockholder approval.
A “control share acquisition” means the acquisition of control shares, subject
to certain exceptions.
A person
who has made or proposes to make a control share acquisition, upon satisfaction
of certain conditions (including an undertaking to pay expenses), may compel the
board of directors to call a special meeting of stockholders to be held within
50 days of demand to consider the voting rights of the shares. If no
request for a meeting is made, the corporation may itself present the question
at any stockholders meeting.
If voting
rights are not approved at the meeting or if the acquiring person does not
deliver an acquiring person statement as required by the statute, then, subject
to certain conditions and limitations, the corporation may redeem any or all of
the control shares (except those for which voting rights have previously been
approved) for fair value determined, without regard to the absence of voting
rights for the control shares, as of the date of the last control share
acquisition by the acquirer or of any meeting of stockholders at which the
voting rights of such shares are considered and not approved. If voting rights
for control shares are approved at a stockholders meeting and the acquirer
becomes entitled to vote a majority of the shares entitled to vote, all other
stockholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquirer in the control share
acquisition.
The
control share acquisition statute does not apply (1) to shares acquired in
a merger, consolidation or share exchange if the corporation is a party to the
transaction or (2) to acquisitions approved or exempted by the charter or
bylaws of the corporation.
Our
bylaws contain a provision exempting from (opting out of) the control share
acquisition statute any acquisition by any person of shares of our stock. There
can be no assurance that such provision will not be amended or eliminated at any
time in the future.
Subtitle 8
Subtitle 8
of Title 3 of the MGCL permits a Maryland corporation with a class of
equity securities registered under the Exchange Act and at least three
independent directors to elect to be subject, by provision in its charter or
bylaws or a resolution of its board of directors and notwithstanding any
contrary provision in the charter or bylaws, to any or all of five of the
following provisions:
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a
two-thirds vote requirement for removing a
director;
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a
requirement that the number of directors be fixed only by vote of the
directors;
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a
requirement that a vacancy on the board be filled only by the remaining
directors and for the remainder of the full term of class of directors in
which the vacancy
occurred; and
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a
majority requirement for the calling of a special meeting of
stockholders.
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Pursuant
to Subtitle 8, we have elected to provide that vacancies on our board of
directors be filled only by the remaining directors and for the remainder of the
full term of the directorship in which the vacancy occurred. Through provisions
in our charter and bylaws unrelated to Subtitle 8, we already
(1) require the affirmative vote of the holders of not less than two-thirds
of all of the votes entitled to be cast on the matter for the removal of any
director from the board, which removal shall only be allowed for cause,
(2) vest in the board the exclusive power to fix the number of
directorships and (3) require, unless called by the Chairman of our board
of directors, our president, our chief executive officer or our board of
directors, the written request of the stockholders entitled to cast not less
than 35% of all votes entitled to be cast at such meeting to call a special
meeting. We have not elected to create a classified board; however, our board
may elect to do so in the future without stockholder approval.
Charter
Amendments and Extraordinary Transactions
Under the
MGCL, a Maryland corporation generally cannot dissolve, amend its charter,
merge, sell all or substantially all of its assets, engage in a share exchange
or engage in similar transactions outside the ordinary course of business unless
approved by the affirmative vote of stockholders entitled to cast at least
two-thirds of the votes entitled to be cast on the matter unless a lesser
percentage (but not less than a majority of all of the votes entitled to be cast
on the matter) is set forth in the corporation’s charter. Our charter generally
provides that charter amendments requiring stockholder approval must be declared
advisable by our board of directors and approved by the affirmative vote of
stockholders entitled to cast a majority of all of the votes entitled to be cast
on the matter. However, our charter’s provisions regarding removal of directors
and stock ownership restrictions may be amended only if such amendment is
declared advisable by our board of directors and approved by the affirmative
vote of stockholders entitled to cast not less than two-thirds of all the votes
entitled to be cast on the matter. In addition, we generally may not merge with
or into another company, sell all or substantially all of our assets, engage in
a share exchange or engage in similar transactions outside the ordinary course
of business unless such transaction is declared advisable by our board of
directors and approved by the affirmative vote of stockholders entitled to cast
a majority of all of the votes entitled to be cast on the matter. However,
because operating assets may be held by a corporation’s subsidiaries, as in our
situation, this may mean that a subsidiary of a corporation can transfer all of
its assets without any vote of the corporation’s stockholders.
Bylaw
Amendments
Our board
of directors has the exclusive power to adopt, alter or repeal any provision of
our bylaws and to make new bylaws.
Advance
Notice of Director Nominations and New Business
Our
bylaws provide that with respect to an annual meeting of stockholders,
nominations of individuals for election to our board of directors and the
proposal of business to be considered by stockholders may be made only
(1) pursuant to our notice of the meeting, (2) by or at the direction
of our board of directors or (3) by a stockholder who was a stockholder of
record both at the time of provision of the stockholders’ notice and at the time
of the meeting, is entitled to vote at the meeting and has complied with the
advance notice procedures set forth in our bylaws.
With
respect to special meetings of stockholders, only the business specified in our
notice of meeting may be brought before the meeting. Nominations of individuals
for election to our board of directors may be made at a special meeting of
stockholders at which directors are to be elected only (1) pursuant to our
notice of the meeting, (2) by or at the direction of our board of directors
or (3) provided that our board of directors has determined that directors
shall be elected at such meeting, by a stockholder who was a stockholder of
record both at the time of provision of the stockholders’ notice and at the time
of the meeting, is entitled to vote at the meeting and has complied with the
advance notice provisions set forth in our bylaws.
Anti-Takeover
Effect of Certain Provisions of Maryland Law and of our Charter and
Bylaws
Our
charter and bylaws and Maryland law contain provisions that may delay, defer or
prevent a change of control or other transaction that might involve a premium
price for our common stock or otherwise be in the best interests of our
stockholders, including business combination provisions, supermajority vote and
cause requirements for removal of directors, the power of our board to issue
additional shares of capital stock, ability of our board to create a classified
board, the restrictions on ownership and transfer of our shares of capital stock
and advance notice requirements for director nominations and stockholder
proposals. Likewise, if the provision in the bylaws opting out of the control
share acquisition provisions of the MGCL were rescinded, these provisions of the
MGCL could have similar anti-takeover effects.
Indemnification
and Limitation of Directors’ and Officers’ Liability
Our
charter and bylaws and the partnership agreement of our operating partnership
provide for indemnification of our officers and directors against liabilities to
the fullest extent permitted by the MGCL, as amended from time to time, and
Delaware law, as applicable.
The MGCL
permits a Maryland corporation to include in its charter a provision limiting
the liability of its directors and officers to the corporation and its
stockholders for money damages except for liability resulting from
(1) actual receipt of an improper benefit or profit in money, property or
services or (2) active and deliberate dishonesty established by a final
judgment as being material to the cause of action. Our charter contains such a
provision which eliminates such liability to the maximum extent permitted by
Maryland law.
Our
charter authorizes us and our bylaws obligate us, to the maximum extent
permitted by Maryland law in effect from time to time, to indemnify and, without
requiring a preliminary determination of the ultimate entitlement to
indemnification, pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to:
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any
present or former director or officer who is made, or threatened to be
made, a party to the proceeding by reason of his or her service in that
capacity; or
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any
individual who, while a director or officer of our company and at our
request, serves or has served another corporation, real estate investment
trust, partnership, joint venture, trust, employee benefit plan or any
other enterprise as a director, officer, partner or trustee of such
corporation, real estate investment trust, partnership, joint venture,
trust, employee benefit plan or other enterprise and who is made, or
threatened to be made, a party to the proceeding by reason of his or her
service in that capacity.
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Our
charter and bylaws also permit us to indemnify and advance expenses to any
person who served our predecessor in any of the capacities described above and
to any employee or agent of our company or our predecessor.
The MGCL
requires a corporation (unless its charter provides otherwise, which our
company’s charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she is made, or threatened to be made, a party by reason of his or
her service in that capacity. The MGCL permits a corporation to indemnify its
present and former directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made, or threatened to be
made, a party by reason of their service in those or other capacities unless it
is established that:
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the
act or omission of the director or officer was material to the matter
giving rise to the proceeding and (a) was committed in bad
faith; or (b) was the result of active and deliberate
dishonesty;
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the
director or officer actually received an improper personal benefit in
money, property or
services; or
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in
the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was
unlawful.
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However,
under the MGCL, a Maryland corporation may not indemnify for an adverse judgment
in a suit by or in the right of the corporation or for a judgment of liability
on the basis that personal benefit was improperly received, unless in either
case a court orders indemnification and then only for expenses. In addition, the
MGCL permits us to advance reasonable expenses to a director or officer upon our
receipt of:
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a
written affirmation by the director or officer of his or her good faith
belief that he or she has met the standard of conduct necessary for
indemnification by the
corporation; and
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a
written undertaking by the director or officer or on the director’s or
officer’s behalf to repay the amount paid or reimbursed by the corporation
if it is ultimately determined that the director or officer did not meet
the standard of conduct.
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The
partnership agreement provides that our wholly owned business trust subsidiary,
the general partner, and our and its officers and directors are indemnified to
the fullest extent permitted by applicable law. See “Cogdell Spencer
LP Partnership Agreement — Management Liability and
Indemnification.”
Insofar
as the foregoing provisions permit indemnification of directors, officers or
persons controlling us for liability arising under the Securities Act, we have
been informed that in the opinion of the SEC, this indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
REIT
Qualification
Our
charter provides that our board of directors may revoke or otherwise terminate
our REIT election, without approval of our stockholders, if it determines that
it is no longer in our best interests to attempt to qualify, or to continue to
qualify, as a REIT.
COGDELL
SPENCER LP PARTNERSHIP AGREEMENT
The
following is a summary of the material terms of the partnership agreement, a
copy of which is filed as an exhibit to the registration statement of which this
prospectus is a part. See “Where You Can Find More Information.” For the
purposes of this section, references to the “general partner” refer to CS
Business Trust I, our wholly owned Maryland business trust
subsidiary.
General
Management
Our
operating partnership is a Delaware limited partnership that was formed on
July 18, 2005. Our wholly owned business trust subsidiary is the sole
general partner of our operating partnership. Pursuant to the partnership
agreement, through the sole general partner of our operating partnership, we
have, subject to certain protective rights of limited partners described below,
full, exclusive and complete responsibility and discretion in the management and
control of our operating partnership, including the ability to cause the
partnership to enter into certain major transactions including a merger of our
operating partnership or a sale of substantially all of the assets of our
operating partnership. The limited partners have no power to remove the general
partner without the general partner’s consent.
Our
company is under no obligation to give priority to the separate interests of the
limited partners or our stockholders in deciding whether to cause our operating
partnership to take or decline to take any actions. If there is a conflict
between the interests of our stockholders on one hand and the limited partners
on the other, we will endeavor in good faith to resolve the conflict in a manner
not adverse to either our stockholders or the limited partners. We are not
liable under the partnership agreement to our operating partnership or to any
partner for monetary damages for losses sustained, liabilities incurred, or
benefits not derived by limited partners in connection with such decisions,
provided that we have acted in good faith.
All of
our business activities, including all activities pertaining to the acquisition
and operation of properties, must be conducted through our operating
partnership, and our operating partnership must be operated in a manner that
will enable us to satisfy the requirements for qualification as a
REIT.
Management
Liability and Indemnification
Neither
we nor the general partner of our operating partnership, nor our directors and
officers or its trustees and officers are liable to our operating partnership
for losses sustained, liabilities incurred or benefits not derived as a result
of errors in judgment or mistakes of fact or law or of any act or omission, so
long as such person acted in good faith. The partnership agreement provides for
indemnification of us, our affiliates and each of our respective trustees,
officers, directors, employees and any persons we may designate from time to
time in our sole and absolute discretion to the fullest extent permitted by
applicable law against any and all losses, claims, damages, liabilities (whether
joint or several), expenses (including, without limitation, attorneys’ fees and
other legal fees and expenses), judgments, fines, settlements and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the operations of our
operating partnership, provided that our operating partnership will not
indemnify such person, for (1) willful misconduct or a knowing violation of
the law, (2) any transaction for which such person received an improper
personal benefit in violation or breach of any provision of the partnership
agreement, or (3) in the case of a criminal proceeding, the person had
reasonable cause to believe the act or omission was unlawful, as set forth in
the partnership agreement (subject to the exceptions described below under
“— Fiduciary Responsibilities”).
Fiduciary
Responsibilities
Our
directors and officers have duties under applicable Maryland law to manage us in
a manner consistent with the best interests of our stockholders. At the same
time, the general partner of our operating partnership has fiduciary duties to
manage our operating partnership in a manner beneficial to our operating
partnership and its partners. Our duties, through the general partner, to our
operating partnership and its limited partners, therefore, may come into
conflict with the duties of our directors and officers to our stockholders. We
will be under no obligation to give priority to the separate interests of the
limited partners of our operating partnership or our stockholders in deciding
whether to cause our operating partnership to take or decline to take any
actions.
The
limited partners of our operating partnership expressly acknowledged that
through our wholly owned Maryland business trust, which is the general partner
of our operating partnership, we are acting for the benefit of our operating
partnership, the limited partners and our stockholders
collectively.
Distributions
The
partnership agreement provides that holders of OP units and LTIP units are
entitled to receive quarterly distributions of available cash (1) first,
with respect to any OP units and LTIP units that are entitled to any preference
in accordance with the rights of such OP unit or LTIP unit (and, within such
class, pro rata according to their respective percentage interests) and
(2) second, with respect to any OP units and LTIP units that are not
entitled to any preference in distribution, in accordance with the rights of
such class of OP unit or LTIP units (and, within such class, pro rata in
accordance with their respective percentage interests).
Allocations
of Net Income and Net Loss
Net
income and net loss of our operating partnership are determined and allocated
with respect to each fiscal year of our operating partnership as of the end of
the year. Except as otherwise provided in the partnership agreement, an
allocation of a share of net income or net loss is treated as an allocation of
the same share of each item of income, gain, loss or deduction that is taken
into account in computing net income or net loss. Except as otherwise provided
in the partnership agreement, net income and net loss are allocated to the
holders of OP units or LTIP units holding the same class of OP units or LTIP
units in accordance with their respective percentage interests in the class at
the end of each fiscal year. In particular, upon the occurrence of certain
specified events, our operating partnership will revalue its assets and any net
increase in valuation will be allocated first to the holders of LTIP units to
equalize the capital accounts of such holders with the capital accounts of OP
unit or LTIP units holders. The partnership agreement contains
provisions for special allocations intended to comply with certain regulatory
requirements, including the requirements of Treasury Regulations
Sections 1.704-1(b) and 1.704-2. Except as otherwise provided in the
partnership agreement, for U.S. federal income tax purposes under the Code
and the Treasury Regulations, each operating partnership item of income, gain,
loss and deduction is allocated among the limited partners of our operating
partnership in the same manner as its correlative item of book income, gain,
loss or deduction is allocated pursuant to the partnership agreement. In
addition, under Section 704(c) of the Code, items of income, gain, loss and
deduction with respect to appreciated or depreciated property which is
contributed to a partnership, such as our operating partnership, in a tax-free
transaction must be specially allocated among the partners in such a manner so
as to take into account such variation between tax basis and fair market value.
Our operating partnership will allocate tax items to the holders of OP units or
LTIP units taking into consideration the requirements of Section 704(c).
See “U.S. Federal Income Tax Considerations — Tax Aspects of Investments in
Partnerships — Tax Allocations with Respect to Partnership
Properties.”
Redemption Rights
After the
first anniversary of becoming a holder of OP units (including any LTIP units
that are converted into OP units), each limited partner of our operating
partnership, other than CS Business Trust II, will have the right, subject
to the terms and conditions set forth in the partnership agreement, to require
our operating partnership to redeem all or a portion of the OP units held by
such limited partner in exchange for a cash amount equal to the number of
tendered OP units multiplied by the price of a share of our common stock, unless
the terms of such OP units or a separate agreement entered into between our
operating partnership and the holder of such OP units provide that they are not
entitled to a right of redemption. On or before the close of business on the
fifth business day after we receive a notice of redemption, we may, in our sole
and absolute discretion, but subject to the restrictions on the ownership of our
common stock imposed under our charter and the transfer restrictions and other
limitations thereof, elect to acquire some or all of the tendered OP units from
the tendering partner in exchange for shares of our common stock, based on an
exchange ratio of one share of our common stock for each OP unit (subject to
antidilution adjustments provided in the partnership agreement). It is our
current intention to exercise this right in connection with any redemption of OP
units.
Transferability
of OP Units; Extraordinary Transactions
The
general partner of our operating partnership will not be able to voluntarily
withdraw from our operating partnership or transfer or assign its interest in
our operating partnership, including our limited partner interest without the
consent of limited partners holding more than 50% of the partnership interests
of the limited partners (other than those held by us or our subsidiaries),
unless the transfer is made in connection with any merger or sale of all or
substantially all of the assets or stock of our company. In addition, subject to
certain limited exceptions, the general partner will not engage in any merger,
consolidation or other combination, or sale of substantially all of our assets,
in a transaction which results in a change of control of our operating
partnership unless:
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we
receive the consent of limited partners holding more than 50% of the
partnership interests of the limited partners (other than those held by
our company or its
subsidiaries); or
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as
a result of such transaction all limited partners will receive for each
partnership unit an amount of cash, securities or other property equal in
value to the greatest amount of cash, securities or other property paid in
the transaction to a holder of one share of our common stock, provided
that if, in connection with the transaction, a purchase, tender or
exchange offer shall have been made to and accepted by the holders of more
than 50% of the outstanding shares of our common stock, each holder of
partnership units shall be given the option to exchange its partnership
units for the greatest amount of cash, securities or other property that a
limited partner would have received had it (1) exercised its
redemption right (described above) and (2) sold, tendered or
exchanged pursuant to the offer, the shares of our common stock received
upon exercise of the redemption right immediately prior to the expiration
of the offer.
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Our
operating partnership may also merge with or into or consolidate with another
entity without the consent of the limited partners if immediately after such
merger or consolidation (1) substantially all of the assets of the
successor or surviving entity, other than partnership units held by us, are
contributed, directly or indirectly, to the partnership as a capital
contribution in exchange for partnership units with a fair market value equal to
the value of the assets so contributed as determined by the survivor in good
faith and (2) the survivor expressly agrees to assume all of the general
partner’s obligations under the partnership agreement and the partnership
agreement shall be amended after any such merger or consolidation so as to
arrive at a new method of calculating the amounts payable upon exercise of the
redemption right that approximates the existing method for such calculation as
closely as reasonably possible.
We also
may (1) transfer all or any portion of our directly or indirectly held
general partnership interest to (A) a wholly owned subsidiary or (B) a
parent company, and following such transfer may withdraw as the general partner
and (2) engage in a transaction required by law or by the rules of any
national securities exchange on which our common stock is listed.
Issuance
of Our Stock
Pursuant
to the partnership agreement, upon the issuance of our stock other than in
connection with a redemption of OP units, we will generally be obligated to
contribute or cause to be contributed the cash proceeds or other consideration
received from the issuance to our operating partnership in exchange for, in the
case of common stock, OP units, or in the case of an issuance of preferred
stock, preferred OP units with designations, preferences and other rights, terms
and provisions that are substantially the same as the designations, preferences
and other rights, terms and provisions of the preferred stock.
Tax
Matters
Pursuant
to the partnership agreement, the general partner is the tax matters partner of
our operating partnership. Accordingly, through our role as the parent of our
wholly owned Maryland business trust, the general partner of our operating
partnership, we have the authority to handle tax audits and to make tax
elections under the Code, in each case, on behalf of our operating
partnership.
Term
The term
of our operating partnership commenced on July 18, 2005 and will continue
until December 31, 2104, unless earlier terminated in the following
circumstances:
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a
final and nonappealable judgment is entered by a court of competent
jurisdiction ruling that the general partner is bankrupt or insolvent, or
a final and nonappealable order for relief is entered by a court with
appropriate jurisdiction against the general partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless, prior to the entry of such order or judgment, a majority
in interest of the remaining outside limited partners agree in writing, in
their sole and absolute discretion, to continue the business of the
operating partnership and to the appointment, effective as of a date prior
to the date of such order or judgment, of a successor general
partner;
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an
election to dissolve our operating partnership made by the general partner
in its sole and absolute discretion, with or without the consent of a
majority in interest of the outside limited
partners;
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entry
of a decree of judicial dissolution of our operating partnership pursuant
to the provisions of the Delaware Revised Uniform Limited Partnership
Act;
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the
occurrence of any sale or other disposition of all or substantially all of
the assets of our operating partnership or a related series of
transactions that, taken together, result in the sale or other disposition
of all or substantially all of the assets of our operating
partnership;
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the
redemption (or acquisition by the general partner) of all OP units that
the general partner has authorized other than those held by the general
partner and CS Business
Trust II; or
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the
incapacity or withdrawal of the general partner, unless all of the
remaining partners in their sole and absolute discretion agree in writing
to continue the business of the operating partnership and to the
appointment, effective as of a date prior to the date of such incapacity,
of a substitute general partner.
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Amendments
to the Partnership Agreement
Amendments
to the partnership agreement may only be proposed by the general partner.
Generally, the partnership agreement may be amended with the general partner’s
approval and the approval of the limited partners holding a majority of all
outstanding limited partner units (excluding limited partner units held by us or
our subsidiaries). Certain amendments that would, among other things, have the
following effects, must be approved by each partner adversely affected
thereby:
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convert
a limited partner’s interest into a general partner’s interest (except as
a result of the general partner acquiring such
interest); or
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modify
the limited liability of a limited
partner.
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Notwithstanding
the foregoing, we will have the power, without the consent of the limited
partners, to amend the partnership agreement as may be required to:
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add
to our obligations or surrender any right or power granted to us or any of
our affiliates for the benefit of the limited
partners;
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reflect
the admission, substitution, or withdrawal of partners or the termination
of our operating partnership in accordance with the partnership agreement
and to amend the list of OP unit and LTIP unit holders in connection
with such admission, substitution or
withdrawal;
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reflect
a change that is of an inconsequential nature and does not adversely
affect the limited partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in the partnership
agreement not inconsistent with law or with other provisions, or make
other changes with respect to matters arising under the partnership
agreement that will not be inconsistent with law or with the provisions of
the partnership agreement;
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satisfy
any requirements, conditions, or guidelines contained in any order,
directive, opinion, ruling or regulation of a U.S. federal or state
agency or contained in U.S. federal or state
law;
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set
forth and reflect in the partnership agreement the designations, rights,
powers, duties and preferences of the holders of any additional
partnership units issued pursuant to the partnership
agreement;
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reflect
such changes as are reasonably necessary for us to maintain or restore our
qualification as a REIT or to satisfy the REIT requirements or to reflect
the transfer of all or any part of a partnership interest among us, the
general partner, CS Business Trust II and any qualified REIT
subsidiary;
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to
modify the manner in which capital accounts are computed (but only to the
extent set forth in the partnership agreement by the Code or applicable
income tax regulations under the
Code); and
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issue
additional partnership interests.
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Certain
provisions affecting our rights and duties as general partner, either directly
or indirectly (e.g., restrictions
relating to certain extraordinary transactions involving us or the operating
partnership) may not be amended without the approval of a majority of the
limited partnership units (excluding limited partnership units held by
us).
U.S. FEDERAL
INCOME TAX CONSIDERATIONS
The
following is a summary of the material U.S. federal income tax consequences
relating to our qualification and taxation as a REIT and the acquisition,
holding, and disposition of our common stock. For purposes of this section under
the heading “U.S. Federal Income Tax Considerations,” references to “the
company,” “we,” “our” and “us” mean only Cogdell Spencer Inc. and not its
subsidiaries or other lower-tier entities or predecessor, except as otherwise
indicated. You are urged to both review the following discussion and to consult
your tax advisor to determine the effect of ownership and disposition of our
shares on your individual tax situation, including any state, local or
non-U.S. tax consequences.
This
summary is based upon the Code, the regulations promulgated by the
U.S. Treasury Department, or the Treasury Regulations, current
administrative interpretations and practices of the IRS (including
administrative interpretations and practices expressed in private letter rulings
which are binding on the IRS only with respect to the particular taxpayers who
requested and received those rulings) and judicial decisions, all as currently
in effect, and all of which are subject to differing interpretations or to
change, possibly with retroactive effect. No assurance can be given that the IRS
would not assert, or that a court would not sustain, a position contrary to any
of the tax consequences described below. No advance ruling has been or will be
sought from the IRS regarding any matter discussed in this summary. This summary
is also based upon the assumption that the operation of the company, and of its
subsidiaries and other lower-tier and affiliated entities, will in each case be
in accordance with its applicable organizational documents or partnership
agreements. This summary is for general information only, and does not purport
to discuss all aspects of U.S. federal income taxation that may be
important to a particular stockholder in light of its investment or tax
circumstances, or to stockholders subject to special tax rules, such
as:
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persons
who mark-to-market our common
stock;
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subchapter
S corporations;
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U.S. stockholders
(as defined below) whose functional currency is not the
U.S. dollar;
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financial
institutions;
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regulated
investment companies;
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holders
who receive our common stock through the exercise of employee stock
options or otherwise as
compensation;
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persons
holding our common stock as part of a “straddle,” “hedge,” “conversion
transaction,” “synthetic security” or other integrated
investment;
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persons
subject to the alternative minimum tax provisions of the
Code;
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persons
holding their interest through a partnership or similar pass-through
entity;
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persons
holding a 10% or more (by vote or value) beneficial interest in
us;
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and,
except to the extent discussed below:
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tax-exempt
organizations; and
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non-U.S. stockholders
(as defined below).
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This
summary assumes that stockholders will hold our common stock as capital assets,
which generally means as property held for investment.
THE
U.S. FEDERAL INCOME TAX TREATMENT OF HOLDERS OF OUR COMMON STOCK DEPENDS IN
SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX
PROVISIONS OF U.S. FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR
AUTHORITY MAY BE AVAILABLE. IN ADDITION, THE TAX CONSEQUENCES OF HOLDING OUR
COMMON STOCK TO ANY PARTICULAR STOCKHOLDER WILL DEPEND ON THE STOCKHOLDER’S
PARTICULAR TAX CIRCUMSTANCES. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR
REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX
CONSEQUENCES TO YOU, IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX
CIRCUMSTANCES, OF ACQUIRING, HOLDING, AND DISPOSING OF OUR COMMON
STOCK.
Taxation
of the Company
We
elected to be taxed as a REIT under the Code, commencing with our taxable year
ended December 31, 2005. We believe that we are organized and will operate
in a manner that will allow us to qualify for taxation as a REIT under the Code
commencing with our taxable year ended December 31, 2005, and we intend to
continue to be organized and to operate in such a manner.
The law
firm of Clifford Chance US LLP has acted as our counsel in connection with the
offering. We have received the opinion of Clifford Chance US LLP to the effect
that, commencing with our taxable year ended December 31, 2005, we have
been organized and operated in conformity with the requirements for
qualification and taxation as a REIT under the Code, and our proposed method of
operation will enable us to continue to meet the requirements for qualification
and taxation as a REIT under the Code. It must be emphasized that the opinion of
Clifford Chance US LLP is based on various assumptions relating to our
organization and operation, including that all factual representations and
statements set forth in all relevant documents, records and instruments are true
and correct, all actions described in this prospectus are completed in a timely
fashion and that we will at all times operate in accordance with the method of
operation described in our organizational documents and this prospectus, and is
conditioned upon factual representations and covenants made by our management
and affiliated entities regarding our organization, assets, and present and
future conduct of our business operations, and assumes that such representations
and covenants are accurate and complete and that we will take no action
inconsistent with our qualification as a REIT. While we believe that we are
organized and intend to operate so that we will qualify as a REIT, given the
highly complex nature of the rules governing REITs, the ongoing importance of
factual determinations, and the possibility of future changes in our
circumstances, no assurance can be given by Clifford Chance US LLP or us that we
will so qualify for any particular year. Clifford Chance US LLP will have no
obligation to advise us or the holders of our common stock of any subsequent
change in the matters stated, represented or assumed, or of any subsequent
change in the applicable law. You should be aware that opinions of counsel are
not binding on the IRS, and no assurance can be given that the IRS will not
challenge the conclusions set forth in such opinions.
Qualification
and taxation as a REIT depends on our ability to meet, on a continuing basis,
through actual operating results, distribution levels, and diversity of stock
ownership, various qualification requirements imposed upon REITs by the Code,
the compliance with which will not be reviewed by Clifford Chance US LLP. Our
ability to qualify as a REIT also requires that we satisfy certain asset tests,
some of which depend upon the fair market values of assets directly or
indirectly owned by us. Such values may not be susceptible to a precise
determination. Accordingly, no assurance can be given that the actual results of
our operations for any taxable year will satisfy such requirements for
qualification and taxation as a REIT.
Taxation
of REITs in General
As
indicated above, our qualification and taxation as a REIT depend upon our
ability to meet, on a continuing basis, various qualification requirements
imposed upon REITs by the Code. The material qualification requirements are
summarized below under “— Requirements for Qualification — General.”
While we intend to operate so that we qualify as a REIT, no assurance can be
given that the IRS will not challenge our qualification as a REIT, or that we
will be able to operate in accordance with the REIT requirements in the future.
See “— Failure to Qualify.”
Provided
that we qualify as a REIT, we will generally be entitled to a deduction for
dividends that we pay and therefore will not be subject to U.S. federal
corporate income tax on our net income that is currently distributed to our
stockholders. This treatment substantially eliminates the “double taxation” at
the corporate and stockholder levels that generally results from investment in a
corporation. Rather, income generated by a REIT generally is taxed only at the
stockholder level upon a distribution of dividends by the REIT.
For tax
years through 2010, stockholders who are individual U.S. stockholders (as
defined below) are generally taxed on corporate dividends at a maximum rate of
15% (the same as capital gains), thereby substantially reducing, though not
completely eliminating, the double taxation that has historically applied to
corporate dividends. With limited exceptions, however, dividends received by
individual U.S. stockholders from us or from other entities that are taxed
as REITs will continue to be taxed at rates applicable to ordinary income, which
will be as high as 35% through 2010.
Net
operating losses, foreign tax credits and other tax attributes of a REIT
generally do not pass through to the stockholders of the REIT, subject to
special rules for certain items such as capital gains recognized by REITs. See
“— Taxation of Stockholders.”
If we
qualify as a REIT, we will nonetheless be subject to U.S. federal tax in
the following circumstances:
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We
will be taxed at regular corporate rates on any undistributed income,
including undistributed net capital
gains.
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We
may be subject to the “alternative minimum tax” on our items of tax
preference, if any.
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If
we have net income from prohibited transactions, which are, in general,
sales or other dispositions of property held primarily for sale to
customers in the ordinary course of business, other than foreclosure
property, such income will be subject to a 100% tax. See
“— Prohibited Transactions,” and “— Foreclosure Property,”
below.
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If
we elect to treat property that we acquire in connection with a
foreclosure of a mortgage loan or leasehold as “foreclosure property,” we
may thereby avoid (1) the 100% tax on gain from a resale of that
property (if the sale would otherwise constitute a prohibited
transaction), and (2) the inclusion of any income from such property
not qualifying for purposes of the REIT gross income tests discussed
below, but the income from the sale or operation of the property may be
subject to corporate income tax at the highest applicable rate (currently
35%).
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If
we fail to satisfy the 75% gross income test or the 95% gross income test,
as discussed below, but nonetheless maintain our qualification as a REIT
because other requirements are met, we will be subject to a 100% tax on an
amount equal to (1) the greater of (A) the amount by which we
fail the 75% gross income test or (B) the amount by which we fail the
95% gross income test, as the case may be, multiplied by (2) a
fraction intended to reflect our
profitability.
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If
we fail to satisfy any of the REIT asset tests, as described below, by
larger than a de
minimis amount, but our failure is due to reasonable cause and not
due to willful negligence and we nonetheless maintain our REIT
qualification because of specified cure provisions, we will be required to
pay a tax equal to the greater of $50,000 or 35% of the net income
generated by the nonqualifying assets during the period in which we failed
to satisfy the asset tests.
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If
we fail to satisfy any provision of the Code that would result in our
failure to qualify as a REIT (other than a gross income or asset test
requirement) and that violation is due to reasonable cause and not due to
willful negligence, we may retain our REIT qualification, but we will be
required to pay a penalty of $50,000 for each such
failure.
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If
we fail to distribute during each calendar year at least the sum of
(1) 85% of our REIT ordinary income for such year, (2) 95% of
our REIT capital gain net income for such year and (3) any
undistributed taxable income from prior periods, or the “required
distribution,” we will be subject to a 4% excise tax on the excess of the
required distribution over the sum of (A) the amounts actually
distributed (taking into account excess distributions from prior years),
plus (B) retained amounts on which U.S. federal income tax is
paid at the corporate level.
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We
may be required to pay monetary penalties to the IRS in certain
circumstances, including if we fail to meet record-keeping requirements
intended to monitor our compliance with rules relating to the composition
of our stockholders, as described below in “— Requirements for
Qualification — General.”
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A
100% excise tax may be imposed on some items of income and expense that
are directly or constructively paid between us, our tenants and/or our
taxable REIT subsidiaries (“TRSs”) if and to the extent that the IRS
successfully adjusts the reported amounts of these
items.
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If
we acquire appreciated assets from a C corporation (i.e., a corporation
taxable under subchapter C of the Code) in a transaction in which the
adjusted tax basis of the assets in our hands is determined by reference
to the adjusted tax basis of the assets in the hands of the C corporation,
we may be subject to tax on such appreciation at the highest corporate
income tax rate then applicable if we subsequently recognize gain on a
disposition of such assets during the ten-year period following their
acquisition from the C corporation. The results described in this
paragraph assume that the non-REIT corporation will not elect in lieu of
this treatment to be subject to an immediate tax when the asset is
acquired by us.
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We
may elect to retain and pay income tax on our net long-term capital gain.
In that case, a stockholder would include its proportionate share of our
undistributed long-term capital gain (to the extent we make a timely
designation of such gain to the stockholder) in its income, would be
deemed to have paid the tax that we paid on such gain, and would be
allowed a credit for its proportionate share of the tax deemed to have
been paid, and an adjustment would be made to increase the stockholders’
basis in our common stock.
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We
may have subsidiaries or own interests in other lower-tier entities that
are C corporations, including our TRSs, the earnings of which would be
subject to U.S. federal corporate income
tax.
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In
addition, we and our subsidiaries may be subject to a variety of taxes other
than U.S. federal income tax, including payroll taxes and state, local, and
foreign income, franchise property and other taxes on assets and operations. We
could also be subject to tax in situations and on transactions not presently
contemplated.
Requirements
for Qualification — General
The Code
defines a REIT as a corporation, trust or association:
(1) that
is managed by one or more trustees or directors;
(2) the
beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest;
(3) that
would be taxable as a domestic corporation but for the special Code provisions
applicable to REITs;
(4) that
is neither a financial institution nor an insurance company subject to specific
provisions of the Code;
(5) the
beneficial ownership of which is held by 100 or more persons;
(6) in
which, during the last half of each taxable year, not more than 50% in value of
the outstanding stock is owned, directly or indirectly, by five or fewer
“individuals” (as defined in the Code to include specified
entities);
(7) which
meets other tests described below, including with respect to the nature of its
income and assets and the amount of its distributions; and
(8) that
makes an election to be a REIT for the current taxable year or has made such an
election for a previous taxable year that has not been terminated or
revoked.
The Code
provides that conditions (1) through (4) 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 12 months, or during a proportionate
part of a shorter taxable year. Conditions (5) and (6) do not need to
be satisfied for the first taxable year for which an election to become a REIT
has been made. Our charter provides restrictions regarding the ownership and
transfer of our shares, which are intended to assist us in satisfying the share
ownership requirements described in conditions (5) and (6) above. For
purposes of condition (6), an “individual” generally includes a supplemental
unemployment compensation benefit plan, a private foundation, or a portion of a
trust permanently set aside or used exclusively for charitable purposes, but
does not include a qualified pension plan or profit sharing trust.
To
monitor compliance with the share ownership requirements, we are required to
maintain records regarding the actual ownership of our shares. To do so, we must
demand written statements each year from the record holders of certain
percentages of our stock in which the record holders are to disclose the actual
owners of the shares (i.e., the persons required to
include in gross income the dividends paid by us). A list of those persons
failing or refusing to comply with this demand must be maintained as part of our
records. Failure by us to comply with these record-keeping requirements could
subject us to monetary penalties. If we satisfy these requirements and have no
reason to know that condition (6) is not satisfied, we will be deemed to
have satisfied such condition. A stockholder that fails or refuses to comply
with the demand is required by Treasury Regulations to submit a statement with
its tax return disclosing the actual ownership of the shares and other
information.
In
addition, a corporation generally may not elect to become a REIT unless its
taxable year is the calendar year. We satisfy this requirement.
Effect
of Subsidiary Entities
Ownership of
Partnership Interests. In the case of a REIT that is a
partner in a partnership, Treasury Regulations provide that the REIT is deemed
to own its proportionate share of the partnership’s assets and to earn its
proportionate share of the partnership’s gross income based on its proportionate
share of capital interest in the partnership for purposes of the asset and gross
income tests applicable to REITs, as described below. However, for purposes of
the 10% value test only, the determination of a REIT’s interest in partnership
assets will be based on the REIT’s proportionate interest in any securities
issued by the partnership, excluding, for these purposes, certain excluded
securities as described in the Code. In addition, the assets and gross income of
the partnership generally are deemed to retain the same character in the hands
of the REIT. Thus, our proportionate share, based upon our percentage capital
interest, of the assets and items of income of partnerships in which we own an
equity interest (including our interest in our operating partnership and its
equity interests in lower-tier partnerships), is treated as our assets and items
of income for purposes of applying the REIT requirements described below.
Consequently, to the extent that we directly or indirectly hold a preferred or
other equity interest in a partnership, the partnership’s assets and operations
may affect our ability to qualify as a REIT, even though we may have no control,
or only limited influence, over the partnership. A summary of certain rules
governing the U.S. federal income taxation of partnerships and their
partners is provided below in “— Tax Aspects of Investments in
Partnerships.”
Disregarded Subsidiaries.
If a REIT owns a corporate subsidiary that is a “qualified REIT
subsidiary,” that subsidiary is disregarded for U.S. federal income tax
purposes, and all assets, liabilities and items of income, deduction and credit
of the subsidiary are treated as assets, liabilities and items of income,
deduction and credit of the REIT, including for purposes of the gross income and
asset tests applicable to REITs as summarized below. A qualified REIT subsidiary
is any corporation, other than a TRS (as described below), that is wholly owned
by a REIT, or by other disregarded subsidiaries, or by a combination of the two.
Single member limited liability companies that are wholly owned by a REIT are
also generally disregarded subsidiaries for U.S. federal income tax
purposes, including for purposes of the REIT gross income and asset tests.
Disregarded subsidiaries, along with partnerships in which we hold an equity
interest, are sometimes referred to herein as “pass-through
subsidiaries.”
In the
event that a disregarded subsidiary ceases to be wholly owned by us — for
example, if any equity interest in the subsidiary is acquired by a person other
than us or another disregarded subsidiary of us — the subsidiary’s separate
existence would no longer be disregarded for U.S. federal income tax
purposes. Instead, it would have multiple owners and would be treated as either
a partnership or a taxable corporation. Such an event could, depending on the
circumstances, adversely affect our ability to satisfy the various asset and
gross income tests applicable to REITs, including the requirement that REITs
generally may not own, directly or indirectly, more than 10% of the value or
voting power of the outstanding securities of another entity. See “— Asset
Tests” and “— Gross Income Tests.”
Taxable Subsidiaries.
A REIT, generally may jointly elect with a subsidiary corporation,
whether or not wholly owned, to treat the subsidiary corporation as a TRS. The
separate existence of a TRS or other taxable corporation, unlike a disregarded
subsidiary as discussed above, is not ignored for U.S. federal income tax
purposes. Accordingly, such an entity would generally be subject to corporate
U.S. federal, state, local and income and franchise tax on its earnings,
which may reduce the cash flow generated by us and our subsidiaries in the
aggregate, and our ability to make distributions to our
stockholders.
A REIT is
not treated as holding the assets of a TRS or other taxable subsidiary
corporation or as receiving any income that the subsidiary earns. Rather, the
stock issued by the subsidiary is an asset in the hands of the REIT, and the
REIT recognizes as income the dividends, if any, that it receives from the
subsidiary. This treatment can affect the gross income and asset test
calculations that apply to the REIT, as described below. Because a REIT does not
include the assets and income of such subsidiary corporations in determining the
REIT’s compliance with the REIT requirements, such entities may be used by the
parent REIT to undertake indirectly activities that the REIT rules might
otherwise preclude it from doing directly or through pass-through subsidiaries
(for example, activities that give rise to certain categories of income such as
management fees or foreign currency gains).
Certain
restrictions imposed on TRSs are intended to ensure that such entities will be
subject to appropriate levels of U.S. federal income taxation. First, if a
TRS has a debt to equity ratio as of the close of the taxable year exceeding 1.5
to 1, it may not deduct interest payments made in any year to an affiliated
REIT to the extent that such payments exceed, generally, 50% of the TRS’s
adjusted taxable income for that year (although the TRS may carry forward to,
and deduct in, a succeeding year the disallowed interest amount if the 50% test
is satisfied in that year). In addition, if amounts are paid to a REIT or
deducted by a TRS due to transactions between a REIT, its tenants and/or a TRS,
that exceed the amount that would be paid to or deducted by a party in an
arm’s-length transaction, the REIT generally will be subject to an excise tax
equal to 100% of such excess.
Rents we
receive that include amounts for services furnished by a TRS to any of our
tenants will not be subject to the excise tax if such amounts qualify for the
safe harbor provisions contained in the Code. Safe harbor provisions are
provided where (1) amounts are excluded from the definition of
impermissible tenants service income as a result of satisfying a 1% de minimis exception;
(2) a TRS renders a significant amount of similar services to unrelated
parties and the charges for such services are substantially comparable;
(3) rents paid to us by tenants that are not receiving services from the
TRS are substantially comparable to the rents by our tenants leasing comparable
space that are receiving such services from the TRS and the charge for the
services is separately stated; or (4) the TRS’s gross income from the
service is not less than 150% of the TRS’s direct cost of furnishing the
service.
Our TRSs
will perform certain activities that we are not permitted to perform as a REIT,
including managing properties owned by third parties. We have jointly elected
with each of Cogdell Spencer TRS Holdings, LLC, Cogdell Spencer Advisors, LLC,
Consera Healthcare Real Estate, LLC, MEA Holdings, Inc., Erdman, MEA1, Inc.,
Cogdell Spencer Management Company and Erdman Purchasing Group, LLC to treat
such entity as a TRS.
Gross
Income Tests
In order
to qualify as a REIT, we annually must satisfy two gross income tests. First, at
least 75% of our gross income for each taxable year, excluding gross income from
prohibited transactions, must be derived from investments relating to real
property or mortgages on real property, including “rents from real property,”
dividends received from other REITs, interest income derived from mortgage loans
secured by real property (including certain types of mortgage-backed
securities), and gains from the sale of real estate assets, as well as income
from certain kinds of temporary investments. Second, at least 95% of our gross
income in each taxable year, excluding gross income from prohibited
transactions, must be derived from sources of income that qualify under the 75%
income test described above, as well as other dividends, interest, and gain from
the sale or disposition of stock or securities, which need not have any relation
to real property.
Rents
received by us will qualify as “rents from real property” in satisfying the 75%
gross income test described above, only if several conditions are met, including
the following. The rent must not be based in whole or in part on the income or
profits of any person. However, an amount will not be excluded from rents from
real property solely by being based on a fixed percentage or percentages of
receipts or sales or if it is based on the net income or profits of a tenant
which derives substantially all of its income with respect to such property from
subleasing of substantially all of such property, to the extent that the rents
paid by the sublessees would qualify as rents from real property, if earned
directly by us. If rent is partly attributable to personal property leased in
connection with a lease of real property, the portion of the total rent that is
attributable to the personal property will not qualify as rents from real
property unless it constitutes 15% or less of the total rent received under the
lease. Moreover, for rents received to qualify as rents from real property, we
generally must not operate or manage the property or furnish or render certain
services to the tenants of such property, other than through an “independent
contractor” who is adequately compensated and from which we derive no income, or
through a TRS, as discussed below. We are permitted, however, to 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. In addition, we may directly or indirectly provide
non-customary services to tenants of our properties if the gross income from
such services does not exceed 1% of the total gross income from the property. In
such a case, only the amounts for non-customary services are not treated as
rents from real property and the provision of the services does not disqualify
the rents from treatment as rents from real property. For purposes of this test,
the gross income received from such non-customary services is deemed to be at
least 150% of the direct cost of providing the services. Moreover, we are
permitted to provide services to tenants through a TRS without disqualifying the
rental income received from tenants as rents from real property. Also, rental
income will qualify as rents from real property only to the extent that we do
not directly or indirectly (through application of certain constructive
ownership rules) own, (1) in the case of any tenant which is a corporation,
stock possessing 10% or more of the total combined voting power of all classes
of stock entitled to vote, or 10% or more of the total value of shares of all
classes of stock of such tenant, or (2) in the case of any tenant which is
not a corporation, an interest of 10% or more in the assets or net profits of
such tenant. However, rental payments from a TRS will qualify as rents from real
property even if we own more than 10% of the total value or combined voting
power of the TRS if at least 90% of the property is leased to unrelated tenants
and the rent paid by the TRS is substantially comparable to the rent paid by the
unrelated tenants for comparable space.
Unless we
determine that the resulting nonqualifying income under any of the following
situations, taken together with all other nonqualifying income earned by us in
the taxable year, will not jeopardize our qualification as a REIT, we do not
intend to:
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charge
rent for any property that is based in whole or in part on the income or
profits of any person, except by reason of being based on a fixed
percentage or percentages of receipts or sales, as described
above;
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rent
any property to a related party tenant, including a TRS, unless the rent
from the lease to the TRS would qualify for the special exception from the
related party tenant rule applicable to certain leases with a
TRS;
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derive
rental income attributable to personal property other than personal
property leased in connection with the lease of real property, the amount
of which is less than 15% of the total rent received under the
lease; or
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directly
perform services considered to be noncustomary or rendered to the occupant
of the property.
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We may
indirectly receive distributions from our TRSs or other corporations that are
not REITs or qualified REIT subsidiaries. These distributions will be classified
as dividend income to the extent of the earnings and profits of the distributing
corporation. Such distributions will generally constitute qualifying income for
purposes of the 95% gross income test, but not for purposes of the 75% gross
income test. Any dividends received by us from a REIT, however, will be
qualifying income for purposes of both the 95% and 75% gross income
tests.
Interest
income constitutes qualifying mortgage interest for purposes of the 75% gross
income test (as described above) to the extent that the obligation is secured by
a mortgage on real property. If we receive interest income with respect to a
mortgage loan that is secured by both real property and other property, and the
highest principal amount of the loan outstanding during a taxable year exceeds
the fair market value of the real property on the date that we acquired or
originated the mortgage loan, the interest income will be apportioned between
the real property and the other property, and our income from the loan will
qualify for purposes of the 75% gross income test only to the extent that the
interest is allocable to the real property. Even if a loan is not secured by
real property or is undersecured, the income that it generates may nonetheless
also qualify for purposes of the 95% gross income test.
To the
extent that the terms of a loan provide for contingent interest that is based on
the cash proceeds realized upon the sale of the property securing the loan,
income attributable to the participation feature will be treated as gain from
sale of the underlying property, which generally will be qualifying income for
purposes of both the 75% and 95% gross income tests.
If we
fail to satisfy one or both of the 75% or 95% gross income tests for any taxable
year, we may still qualify as a REIT for the year if we are entitled to relief
under applicable provisions of the Code. These relief provisions will generally
be available if the failure of our company to meet these tests was due to
reasonable cause and not due to willful neglect and, following the
identification of such failure, we set forth a description of each item of our
gross income that satisfies the gross income tests in a schedule for the taxable
year filed in accordance with regulations prescribed by the Treasury. It is not
possible to state whether we would be entitled to the benefit of these relief
provisions in all circumstances. If these relief provisions are inapplicable to
a particular set of circumstances involving us, we will not qualify as a REIT.
As discussed above under “— Taxation of REITs in General,” even where these
relief provisions apply, a tax would be imposed upon the profit attributable to
the amount by which we fail to satisfy the particular gross income
test.
Asset
Tests
At the
close of each calendar quarter we must also satisfy four tests relating to the
nature of our assets. First, at least 75% of the value of our total assets must
be represented by some combination of “real estate assets,” cash, cash items,
U.S. government securities, and, under some circumstances, stock or debt
instruments purchased with new capital. For this purpose, real estate assets
include interests in real property, such as land, buildings, leasehold interests
in real property, stock of other REITs, and certain kinds of mortgage-backed
securities and mortgage loans. Assets that do not qualify for purposes of the
75% test are subject to the additional asset tests described below.
Second,
the value of any one issuer’s securities owned by us may not exceed 5% of the
value of our total assets. Third, we may not own more than 10% of any one
issuer’s outstanding securities, as measured by either voting power or value.
Fourth, the aggregate value of all securities of TRSs held by us may not exceed
25% (20% for our taxable year ended on or prior to December 31, 2008) of the
value of our total assets.
The 5%
and 10% asset tests do not apply to securities of TRSs, qualified REIT
subsidiaries or securities that are “real estate assets” for purposes of the 75%
gross asset test described above. The 10% value test does not apply to certain
“straight debt” and other excluded securities, as described in the Code
including, but not limited to, any loan to an individual or estate, any
obligation to pay rents from real property and any security issued by a REIT. In
addition, (1) a REIT’s interest as a partner in a partnership is not
considered a security for purposes of applying the 10% value test to securities
issued by the partnership; (2) any debt instrument issued by a partnership
(other than straight debt or another excluded security) will not be considered a
security issued by the partnership if at least 75% of the partnership’s gross
income is derived from sources that would qualify for the 75% REIT gross income
test; and (3) any debt instrument issued by a partnership (other than
straight debt or another excluded security) will not be considered a security
issued by the partnership to the extent of the REIT’s interest as a partner in
the partnership. In general, straight debt is defined as a written,
unconditional promise to pay on demand or at a specific date a fixed principal
amount, and the interest rate and payment dates on the debt must not be
contingent on profits or the discretion of the debtor. In addition, straight
debt may not contain a convertibility feature.
In connection with our acquisition of
Erdman, we acquired a new TRS, MEA Holdings, Inc. While we believe we have
properly valued the securities we hold in MEA Holdings, Inc., and all of our
TRSs, there is no guarantee that the IRS would agree with such valuation or that
a court would agree with such determination by the IRS. In the event we have
improperly valued the securities we hold in MEA Holdings, Inc., we may fail to
satisfy the asset test limitation which may result in our failure to qualify as
a REIT.
After initially meeting the asset tests
at the close of any quarter, we will not lose our qualification as a REIT 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 during a quarter, we can cure this failure by disposing of
the non-qualifying assets within 30 days after the close of that quarter.
If we fail the 5% asset test or the 10% asset test at the end of any quarter,
and such failure is not cured within 30 days thereafter, we may dispose of
sufficient assets (generally, within six months after the last day of the
quarter in which our identification of the failure to satisfy those asset tests
occurred) to cure the violation, provided that the non-permitted assets do not
exceed the lesser of 1% of our assets at the end of the relevant quarter or
$10,000,000. If we fail any of the other asset tests, or our failure of the 5%
and 10% asset tests is in excess of this amount, as long as the failure was due
to reasonable cause and not willful neglect, we are permitted to avoid
disqualification as a REIT, after the thirty day cure period, by taking steps
including the disposition of sufficient assets to meet the asset tests
(generally within six months after the last day of the quarter in which our
identification of the failure to satisfy the REIT asset test occurred), and
paying a tax equal to the greater of $50,000 or 35% of the net income generated
by the nonqualifying assets during the period in which we failed to satisfy the
relevant asset test.
We
believe that our holdings of securities and other assets will comply with the
foregoing REIT asset requirements, and we intend to monitor compliance with such
tests on an ongoing basis. However, the values of some of our assets, including
the securities of our TRSs, may not be precisely valued, and values are subject
to change in the future. Furthermore, the proper classification of an instrument
as debt or equity for U.S. federal income tax purposes may be uncertain in
some circumstances, which could affect the application of the REIT asset tests.
Accordingly, there can be no assurance that the IRS will not contend that our
assets do not meet the requirements of the REIT asset tests.
Annual
Distribution Requirements
In order
to qualify as a REIT, we are required to distribute dividends, other than
capital gain dividends, to our stockholders in an amount at least equal
to:
(1) the
sum of:
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90%
of our “REIT taxable income” (computed without regard to our deduction for
dividends paid and our net capital
gains), and
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90%
of the net income, if any (after tax), from foreclosure property (as
described below), minus
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(2) the
sum of specified items of non-cash income that exceeds a percentage of our
income.
These
distributions must be paid in the taxable year to which they relate, or in the
following taxable year if such distributions are declared in October, November
or December of the taxable year, are payable to stockholders of record on a
specified date in any such month, and are actually paid before the end of
January of the following year. Such distributions are treated as both paid by us
and received by our stockholders on December 31 of the year in which they
are declared. In addition, at our election, a distribution for a taxable year
may be declared before we timely file our tax return for the year provided we
pay such distribution with or before our first regular dividend payment after
such declaration, and such payment is made during the 12-month period following
the close of such taxable year. These distributions are taxable to our
stockholders in the year in which paid, even though the distributions relate to
our prior taxable year for purposes of the 90% distribution
requirement.
In order
for distributions to be counted towards our distribution requirement, and to
provide a tax deduction to us, they must not be “preferential dividends.” A
dividend is not a preferential dividend if it is pro rata among all
outstanding shares of stock within a particular class, and is in accordance with
the preferences among our different classes of stock as set forth in our
organizational documents.
To the
extent that we distribute at least 90%, but less than 100%, of our net taxable
income, we will be subject to tax at ordinary corporate tax rates on the
retained portion. In addition, we may elect to retain, rather than distribute,
our net long-term capital gains and pay tax on such gains. In this case, we
would elect to have our stockholders include their proportionate share of such
undistributed long-term capital gains in their income and receive a
corresponding credit for their proportionate share of the tax paid by us. Our
stockholders would then increase their adjusted basis in our stock by the
difference between the amount included in their long-term capital gains and the
tax deemed paid with respect to their shares.
If we
fail to distribute during each calendar year at least the sum of (1) 85% of
our REIT ordinary income for such year, (2) 95% of our REIT capital gain
net income for such year and (3) any undistributed taxable income from
prior periods, we will be subject to a 4% excise tax on the excess of such
amount over the sum of (A) the amounts actually distributed (taking into
account excess distributions from prior periods) and (B) the amounts of
income retained on which we have paid corporate income tax. We intend to make
timely distributions so that we are not subject to the 4% excise
tax.
It is
possible that we, from time to time, may not have sufficient cash to meet the
REIT distribution requirements due to timing differences between (1) the
actual receipt of cash, including the receipt of distributions from our
pass-through subsidiaries and (2) the inclusion of items in income by us
for U.S. federal income tax purposes. Additional potential sources of
non-cash taxable income include loans or mortgage-backed securities held by us
as assets that are issued at a discount and require the accrual of taxable
interest income in advance of our receipt in cash, loans on which the borrower
is permitted to defer cash payments of interest and distressed loans on which we
may be required to accrue taxable interest income even though the borrower is
unable to make current interest payments in cash. In the event that such timing
differences occur, in order to meet the distribution requirements, it might be
necessary to arrange for short- term, or possibly long-term, borrowings, or to
pay dividends in the form of taxable in-kind distributions of property,
including potentially, our stock.
We may be
able to rectify a failure to meet the distribution requirements for a year by
paying “deficiency dividends” to stockholders in a later year, which may be
included in our deduction for dividends paid for the earlier year. In this case,
we may be able to avoid losing our REIT qualification or being taxed on amounts
distributed as deficiency dividends. However, we will be required to pay
interest and a penalty based on the amount of any deduction taken for deficiency
dividends.
Failure
to Qualify
In the
event we violate a provision of the Code that would result in our failure to
qualify as a REIT, specified relief provisions will be available to us to avoid
such disqualification if (1) the violation is due to reasonable cause and
not due to willful neglect, (2) we pay a penalty of $50,000 for each
failure to satisfy the provision and (3) the violation does not include a
violation under the gross income or asset tests described above (for which other
specified relief provisions are available). This cure provision reduces the
instances that could lead to our disqualification as a REIT for violations due
to reasonable cause and not due to willful neglect. If we fail to qualify for
taxation as a REIT in any taxable year, and the relief provisions of the Code do
not apply, we will be subject to tax, including any applicable alternative
minimum tax, on our taxable income at regular corporate rates. Distributions to
our stockholders in any year in which we are not a REIT will not be deductible
by us, nor will they be required to be made. In this situation, to the extent of
current and accumulated earnings and profits, and, subject to limitations of the
Code, distributions to our stockholders through 2010 will generally be taxable
to stockholders who are individual U.S. stockholders at a maximum rate of
15%, and dividends received by our corporate U.S. stockholders may be
eligible for the dividends received deduction. Unless we are entitled to relief
under specific statutory provisions, we will also be disqualified from
re-electing to be taxed as a REIT for the four taxable years following a year
during which qualification was lost. It is not possible to state whether, in all
circumstances, we will be entitled to this statutory relief.
Prohibited
Transactions
Net
income derived from a prohibited transactions (including any foreign
currency gain, as defined in Section 988(b)(1) of the Code, minus any foreign
currency loss, as defined in Section 988(b)(2) of the Code) is subject to a 100%
tax. The term “prohibited transactions” generally includes a sale or other
disposition of property (other than foreclosure property) that is held primarily
for sale to customers in the ordinary course of a trade or business. We intend
to hold our properties for investment with a view to long-term appreciation, to
engage in the business of owning and operating properties and to make sales of
properties that are consistent with our investment objectives. Whether property
is held “primarily for sale to customers in the ordinary course of a trade or
business,” however, depends on the specific facts and circumstances. No
assurance can be given that any particular property in which we hold a direct or
indirect interest will not be treated as property held for sale to customers, or
that certain safe-harbor provisions of the Code discussed below that prevent
such treatment will apply. The 100% tax will not apply to gains from the sale of
property held through a TRS or other taxable corporation, although such income
will be subject to tax at regular corporate income tax rates.
The Code
provides a safe harbor that, if met, allows us to avoid being treated as engaged
in a prohibited transaction. In order to meet the safe harbor, among other
things, (i) we must have held the property for at least 2 years (and,
in the case of property which consists of land or improvements not acquired
through foreclosure, we must have held the property for 2 years for the
production of rental income) and (ii) during the taxable year the property
is disposed of, we must not have made more than 7 property sales or,
alternatively, the aggregate adjusted basis or fair market value of all of the
properties sold by us during the taxable year must not exceed 10% of the
aggregate adjusted basis or 10% of the fair market value, respectively, of all
of our assets as of the beginning of the taxable year.
Foreclosure
Property
Foreclosure
property is real property (including interests in real property) and any
personal property incident to such real property (1) that is acquired by a
REIT as a result of the REIT having bid in the property at foreclosure, or
having otherwise reduced the property to ownership or possession by agreement or
process of law, after there was a default (or default was imminent) on a lease
of the property or a mortgage loan held by the REIT and secured by the property,
(2) for which the related loan or lease was made, entered into or acquired
by the REIT at a time when default was not imminent or anticipated and
(3) for which such REIT makes an election to treat the property as
foreclosure property. REITs generally are subject to tax at the maximum
corporate rate (currently 35%) on any net income from foreclosure property,
including any gain from the disposition of the foreclosure property, other than
income that would otherwise be qualifying income for purposes of the 75% gross
income test. Any gain from the sale of property for which a foreclosure property
election has been made will not be subject to the 100% tax on gains from
prohibited transactions described above, even if the property primarily for sale
to customers in the ordinary course of a trade or business.
Hedging
Transactions
We may
enter into hedging transactions with respect to one or more of our assets or
liabilities. Hedging transactions could take a variety of forms, including
interest rate swaps or cap agreements, options, futures contracts, forward rate
agreements or similar financial instruments. Except to the extent provided by
Treasury Regulations, any income from a hedging transaction we enter into the
normal course of our trade or business (1) primarily to manage risk of interest
rate or price changes or currency fluctuations with respect to borrowings made
or to be made, or ordinary obligations incurred or to be incurred by us to
acquire or own real estate assets, which is clearly identified as such before
the close of the day on which it was acquired, originated or entered into, and
(2) for hedging transactions entered into after July 30, 2008, primarily to
manage risk of currency fluctuations with respect to any item of income or gain
that would be qualifying income under the 75% or 95% income tests which is
clearly identified as such before the close of the day on which it was acquired,
originated, or entered into, including gain from the disposition of such a
transaction, will not constitute gross income for purposes of the 75% (to the
extent such transaction is entered into after July 30, 2008) or 95% gross income
test (income from hedging transactions entered into on or before July 30, 2008
generally will constitute non-qualifying gross income for purposes of the 75%
income test). To the extent we enter into other types of hedging transactions,
the income from those transactions is likely to be treated as non-qualifying
income for purposes of both the 75% and 95% gross income tests. We intend to
structure any hedging transactions in a manner that does not jeopardize our
ability to qualify as a REIT.
Foreign
Investments
To the
extent that we hold or acquire any investments and, accordingly, pay taxes in
foreign countries, taxes paid by us in foreign jurisdictions may not be passed
through to, or used by, our stockholders as a foreign tax credit or otherwise.
Foreign investments may also generate foreign currency gains and losses. Foreign
currency gains are generally treated as income that does not qualify under the
75% or 95% gross income tests. However, in general, if foreign currency gain is
recognized after July 30, 2008 with respect to income which otherwise qualifies
for purposes of the 75% or 95% gross income test, then such foreign currency
gain will not constitute gross income for purposes of the 75% or 95% gross
income tests, respectively. No assurance can be given that any foreign currency
gains recognized by us directly or through pass through subsidiaries will not
adversely affect our ability to satisfy the REIT qualification
requirements.
Tax
Aspects of Investments in Partnerships
General
We may
hold investments through entities that are classified as partnerships for
U.S. federal income tax purposes, including our interest in our operating
partnership and the equity interests in lower-tier partnerships. In general,
partnerships are “pass-through” entities that are not subject to
U.S. 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 subject to tax on these items without regard to whether the
partners receive a distribution from the partnership. We will include in our
income our proportionate share of these partnership items for purposes of the
various REIT income tests, based on our capital interest in such partnership,
and in the computation of our REIT taxable income. Moreover, for purposes of the
REIT asset tests, we will include our proportionate share of assets held by
subsidiary partnerships, based on our capital interest in such partnerships
(other than for purposes of the 10% value test, for which the determination of
our interest in partnership assets will be based on our proportionate interest
in any securities issued by the partnership excluding, for these purposes,
certain excluded securities as described in the Code). Consequently, to the
extent that we hold an equity interest in a partnership, the partnership’s
assets and operations may affect our ability to qualify as a REIT, even though
we may have no control, or only limited influence, over the
partnership.
Entity
Classification
The
investment by us in partnerships involves special tax considerations, including
the possibility of a challenge by the IRS of the status of any of our subsidiary
partnerships as a partnership, as opposed to an association taxable as a
corporation, for U.S. federal income tax purposes. If any of these entities
were treated as an association for U.S. federal income tax purposes, it
would be taxable as a corporation and, therefore, could be subject to an
entity-level tax on its income. In such a situation, the character of our assets
and items of our gross income would change and could preclude us from satisfying
the REIT asset tests (particularly the tests generally preventing a REIT from
owning more than 10% of the voting securities, or more than 10% of the value of
the securities, of a corporation) or the gross income tests as discussed in
“— Taxation of the Company — Asset Tests” and “— Gross Income
Tests” above, and in turn could prevent us from qualifying as a REIT. See
“— Taxation of the Company — Failure to Qualify,” above, for a
discussion of the effect of our failure to meet these tests for a taxable year.
In addition, any change in the status of any of our subsidiary partnerships for
tax purposes might be treated as a taxable event, in which case we could have
taxable income that is subject to the REIT distribution requirements without
receiving any cash.
Tax
Allocations with Respect to Partnership Properties
The
partnership agreement of our operating partnership generally provides that items
of operating income and loss will be allocated to the holders of units in
proportion to the number of units held by each holder. If an allocation of
partnership income or loss does not comply with the requirements of
Section 704(b) of the Code and the Treasury Regulations thereunder, the
item subject to the allocation will be reallocated in accordance with the
partners’ interests in the partnership. This reallocation will be determined by
taking into account all of the facts and circumstances relating to the economic
arrangement of the partners with respect to such item. Our operating
partnership’s allocations of income and loss are intended to comply with the
requirements of Section 704(b) of the Code of the Treasury Regulations
promulgated under this section of the Code.
Under
Section 704(c) of the Code, income, gain, loss and deduction attributable
to appreciated or depreciated property that is contributed to a partnership in
exchange for an interest in the partnership must be allocated for tax purposes
in a manner such that the contributing partner is charged with, or benefits
from, the unrealized gain or unrealized loss associated with the property at the
time of the contribution. The amount of the unrealized gain or unrealized loss
is generally equal to the difference between the fair market value, or book
value, of the contributed property and the adjusted tax basis of such property
at the time of the contribution (a “book-tax difference”). Such allocations are
solely for U.S. federal income tax purposes and do not affect partnership
capital accounts or other economic or legal arrangements among the
partners.
In
connection with our formation, appreciated property was acquired by our
operating partnership in exchange for interests in our operating partnership.
The partnership agreement requires that allocations with respect to such
acquired property be made in a manner consistent with Section 704(c) of the
Code. Treasury Regulations issued under Section 704(c) of the Code provide
partnerships with a choice of several methods of allocating book-tax
differences. We and our operating partnership have agreed to use the
“traditional method” for accounting for book-tax differences for the properties
acquired by our operating partnership during our formation. Under the
traditional method, which is the least favorable method from our perspective,
the carryover basis of the acquired properties in the hands of our operating
partnership (1) may cause us to be allocated lower amounts of depreciation
and other deductions for tax purposes than would be allocated to us if all of
the acquired properties were to have a tax basis equal to their fair market
value at the time of acquisition and (2) in the event of a sale of such
properties, could cause us to be allocated gain in excess of our corresponding
economic or book gain (or taxable loss that is less than our economic or book
loss), with a corresponding benefit to the partners transferring such properties
to our operating partnership for interests in our operating partnership.
Therefore, the use of the traditional method could result in our having taxable
income that is in excess of our economic or book income as well as our cash
distributions from our operating partnership, which might adversely affect our
ability to comply with the REIT distribution requirements or result in our
stockholders recognizing additional dividend income without an increase in
distributions.
Taxation
of Stockholders
Taxation
of Taxable U.S. Stockholders
This
section summarizes the taxation of U.S. stockholders that are not
tax-exempt organizations. For these purposes, a U.S. stockholder is a
beneficial owner of our common stock that for U.S. federal income tax
purposes is:
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a
citizen or resident of the United
States;
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a
corporation (including an entity treated as a corporation for
U.S. federal income tax purposes) created or organized in or under
the laws of the United States or of a political subdivision thereof
(including the District of
Columbia);
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an
estate whose income is subject to U.S. federal income taxation
regardless of its source; or
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any
trust if (1) a U.S. court is able to exercise primary
supervision over the administration of such trust and one or more
U.S. persons have the authority to control all substantial decisions
of the trust or (2) it has a valid election in place to be treated as
a U.S. person.
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If an
entity or arrangement treated as a partnership for U.S. federal income tax
purposes holds our stock, the U.S. federal income tax treatment of a
partner generally will depend upon the status of the partner and the activities
of the partnership. A partner of a partnership holding our common stock should
consult its tax advisor regarding the U.S. federal income tax consequences
to the partner of the acquisition, ownership and disposition of our stock by the
partnership.
Distributions.
Provided that we qualify as a REIT, distributions made to our
taxable U.S. stockholders out of our current and accumulated earnings and
profits, and not designated as capital gain dividends, will generally be taken
into account by them as ordinary dividend income and will not be eligible for
the dividends received deduction for corporations. In determining the extent to
which a distribution with respect to our common stock constitutes a dividend for
U.S. federal income tax purposes, our earnings and profits will be
allocated first to distributions with respect to our preferred stock, if any,
and then to our common stock. Dividends received from REITs are generally not
eligible to be taxed at the preferential qualified dividend income rates
applicable to individual U.S. stockholders who receive dividends from
taxable subchapter C corporations.
In
addition, distributions from us that are designated as capital gain dividends
will be taxed to U.S. stockholders as long-term capital gains, to the
extent that they do not exceed our actual net capital gain for the taxable year,
without regard to the period for which the U.S. stockholder has held its
stock. To the extent that we elect under the applicable provisions of the Code
to retain our net capital gains, U.S. stockholders will be treated as
having received, for U.S. federal income tax purposes, our undistributed
capital gains as well as a corresponding credit for taxes paid by us on such
retained capital gains. U.S. stockholders will increase their adjusted tax
basis in our common stock by the difference between their allocable share of
such retained capital gain and their share of the tax paid by us. Corporate
U.S. stockholders may be required to treat up to 20% of some capital gain
dividends as ordinary income. Long-term capital gains are generally taxable at
maximum U.S. federal rates of 15% (through 2010) in the case of
U.S. stockholders who are individuals, and 35% for corporations. Capital
gains attributable to the sale of depreciable real property held for more than
12 months are subject to a 25% maximum U.S. federal income tax rate
for individual U.S. stockholders who are individuals, to the extent of
previously claimed depreciation deductions. Because many of our assets were
contributed to us in carryover basis transactions at the time of our formation,
we may recognize capital gain on the sale of assets that is attributable to gain
that was inherent in the asset at the time of such asset’s acquisition by our
operating partnership.
Distributions
in excess of our current and accumulated earnings and profits will not be
taxable to a U.S. stockholder to the extent that they do not exceed the
adjusted tax basis of the U.S. stockholder’s shares in respect of which the
distributions were made, but rather will reduce the adjusted tax basis of these
shares. To the extent that such distributions exceed the adjusted tax basis of
an individual U.S. stockholder’s shares, they will be included in income as
long-term capital gain, or short-term capital gain if the shares have been held
for one year or less. In addition, any dividend declared by us in October,
November or December of any year and payable to a U.S. stockholder of
record on a specified date in any such month will be treated as both paid by us
and received by the U.S. stockholder on December 31 of such year,
provided that the dividend is actually paid by us before the end of January of
the following calendar year.
With
respect to U.S. stockholders who are taxed at the rates applicable to
individuals, we may elect to designate a portion of our distributions paid to
such U.S. stockholders as “qualified dividend income.” A portion of a
distribution that is properly designated as qualified dividend income is taxable
to non-corporate U.S. stockholders as net capital gain, provided that the
U.S. stockholder has held the common stock with respect to which the
distribution is made for more than 60 days during the 120-day period
beginning on the date that is 60 days before the date on which such common
stock became ex-dividend with respect to the relevant distribution. The maximum
amount of our distributions eligible to be designated as qualified dividend
income for a taxable year is equal to the sum of:
(1) the
qualified dividend income received by us during such taxable year from C
corporations (including our TRSs);
(2) the
excess of any “undistributed” REIT taxable income recognized during the
immediately preceding year over the U.S. federal income tax paid by us with
respect to such undistributed REIT taxable income; and
(3) the
excess of any income recognized during the immediately preceding year
attributable to the sale of a built-in-gain asset that was acquired in a
carry-over basis transaction from a C corporation over the U.S. federal
income tax paid by us with respect to such built-in gain.
Generally,
dividends that we receive will be treated as qualified dividend income for
purposes of (1) above if the dividends are received from a domestic C
corporation, such as our TRSs, and specified holding period and other
requirements are met.
To the
extent that we have available net operating losses and capital losses carried
forward from prior tax years, such losses may reduce the amount of distributions
that must be made in order to comply with the REIT distribution requirements.
See “— Taxation of the Company — Annual Distribution Requirements.”
Such losses, however, are not passed through to U.S. stockholders and do
not offset income of U.S. stockholders from other sources, nor do they
affect the character of any distributions that are actually made by us, which
are generally subject to tax in the hands of U.S. stockholders to the
extent that we have current or accumulated earnings and profits.
Dispositions of Our Common
Stock. In general, a U.S. stockholder will realize gain
or loss upon the sale, redemption or other taxable disposition of our common
stock in an amount equal to the difference between the sum of the fair market
value of any property and the amount of cash received in such disposition and
the U.S. stockholder’s adjusted tax basis in the common stock at the time
of the disposition. In general, a U.S. stockholder’s adjusted tax basis
will equal the U.S. stockholder’s acquisition cost, increased by the excess
of net capital gains deemed distributed to the U.S. stockholder (discussed
above) less tax deemed paid on it and reduced by returns of capital. In general,
capital gains recognized by individuals and other non-corporate
U.S. stockholders upon the sale or disposition of shares of our common
stock will be subject to a maximum U.S. federal income tax rate of 15% for
taxable years through 2010, if our common stock is held for more than
12 months, and will be taxed at ordinary income rates (of up to 35% through
2010) if our common stock is held for 12 months or less. Gains
recognized by U.S. stockholders that are corporations are subject to
U.S. federal income tax at a maximum rate of 35%, whether or not classified
as long-term capital gains. The IRS has the authority to prescribe, but has not
yet prescribed, regulations that would apply a capital gain tax rate of 25%
(which is generally higher than the long-term capital gain tax rates for
non-corporate holders) to a portion of capital gain realized by a non-corporate
holder on the sale of REIT stock that would correspond to the REIT’s
“unrecaptured Section 1250 gain.” Holders are advised to consult their tax
advisors with respect to their capital gain tax liability. Capital losses
recognized by a U.S. stockholder upon the disposition of our common stock
held for more than one year at the time of disposition will be considered
long-term capital losses, and are generally available only to offset capital
gain income of the U.S. stockholder but not ordinary income (except in the
case of individuals, who may offset up to $3,000 of ordinary income each year).
In addition, any loss upon a sale or exchange of shares of our common stock by a
U.S. stockholder who has held the shares for six months or less, after
applying holding period rules, will be treated as a long-term capital loss to
the extent of distributions received from us that were required to be treated by
the U.S. stockholder as long-term capital gain.
If a
U.S. stockholder recognizes a loss upon a subsequent disposition of our
common stock in an amount that exceeds a prescribed threshold, it is possible
that the provisions of recently adopted Treasury Regulations involving
“reportable transactions” could apply, with a resulting requirement to
separately disclose the loss generating transactions to the IRS. While these
regulations are directed towards “tax shelters,” they are written quite broadly,
and apply to transactions that would not typically be considered tax shelters.
Significant penalties apply for failure to comply with these requirements. You
should consult your tax advisors concerning any possible disclosure obligation
with respect to the receipt or disposition of our common stock, or transactions
that might be undertaken directly or indirectly by us. Moreover, you should be
aware that we and other participants in transactions involving us (including our
advisors) might be subject to disclosure or other requirements pursuant to these
regulations.
Passive
Activity Losses and Investment Interest Limitations
Distributions
made by us and gain arising from the sale or exchange by a U.S. stockholder
of our common stock will not be treated as passive activity income. As a result,
U.S. stockholders will not be able to apply any “passive losses” against
income or gain relating to our common stock. Distributions made by us, to the
extent they do not constitute a return of capital, generally will be treated as
investment income for purposes of computing the investment interest limitation.
A U.S. stockholder that elects to treat capital gain dividends, capital
gains from the disposition of stock or qualified dividend income as investment
income for purposes of the investment interest limitation will be taxed at
ordinary income rates on such amounts.
Taxation
of Tax-Exempt U.S. Stockholders
U.S. tax-exempt
entities, including qualified employee pension and profit sharing trusts and
individual retirement accounts, generally are exempt from U.S. federal
income taxation. However, they are subject to taxation on their unrelated
business taxable income or UBTI. The IRS has ruled that dividend distributions
from a REIT to a tax-exempt entity do not constitute UBTI. Based on that ruling,
and provided that (1) a tax-exempt U.S. stockholder has not held our
common stock as “debt financed property” within the meaning of the Code (i.e., where the acquisition
or ownership of the property is financed through a borrowing by the tax-exempt
stockholder), and (2) our common stock is not otherwise used in an
unrelated trade or business, distributions from us and income from the sale of
our common stock generally should not give rise to UBTI to a tax-exempt
U.S. stockholder.
Tax-exempt
U.S. stockholders that are social clubs, voluntary employee benefit
associations, supplemental unemployment benefit trusts, and qualified group
legal services plans exempt from U.S. federal income taxation under
sections 501(c)(7), (c)(9), (c)(17) and (c)(20) of the Code, respectively,
are subject to different UBTI rules, which generally will require them to
characterize distributions from us as UBTI.
In
certain circumstances, a pension trust (1) that is described in
Section 401(a) of the Code, (2) is tax exempt under
section 501(a) of the Code, and (3) that owns more than 10% of our
stock could be required to treat a percentage of the dividends from us as UBTI
if we are a “pension-held REIT.” We will not be a pension-held REIT unless
(1) either (A) one pension trust owns more than 25% of the value of
our stock, or (B) a group of pension trusts, each individually holding more
than 10% of the value of our stock, collectively owns more than 50% of such
stock and (2) we would not have qualified as a REIT but for the fact that
Section 856(h)(3) of the Code provides that stock owned by such trusts
shall be treated, for purposes of the requirement that not more than 50% of the
value of the outstanding stock of a REIT is owned, directly or indirectly, by
five or fewer “individuals” (as defined in the Code to include certain
entities). Certain restrictions on ownership and transfer of our stock should
generally prevent a tax-exempt entity from owning more than 10% of the value of
our stock, or us from becoming a pension-held REIT.
Tax-exempt
U.S. stockholders are urged to consult their tax advisor regarding the
U.S. federal, state, local and foreign tax consequences of the acquisition,
ownership and disposition of our stock.
Taxation
of Non-U.S. Stockholders
The
following is a summary of certain U.S. federal income tax consequences of
the acquisition, ownership and disposition of our common stock applicable to
non-U.S. stockholders. For purposes of this summary, a
non-U.S. stockholder is a beneficial owner of our common stock that is not
a U.S. stockholder. The discussion is based on current law and is for
general information only. It addresses only selective and not all aspects of
U.S. federal income taxation.
Ordinary Dividends.
The portion of dividends received by non-U.S. stockholders
payable out of our earnings and profits that are not attributable to gains from
sales or exchanges of U.S. real property interests and which are not
effectively connected with a U.S. trade or business of the
non-U.S. stockholder generally will be treated as ordinary income and will
be subject to U.S. federal withholding tax at the rate of 30%, unless
reduced or eliminated by an applicable income tax treaty. Under some treaties,
however, lower rates generally applicable to dividends do not apply to dividends
from REITs.
In
general, non-U.S. stockholders will not be considered to be engaged in a
U.S. trade or business solely as a result of their ownership of our stock.
In cases where the dividend income from a non-U.S. stockholder’s investment
in our common stock is, or is treated as, effectively connected with the
non-U.S. stockholder’s conduct of a U.S. trade or business, the
non-U.S. stockholder generally will be subject to U.S. federal income
tax at graduated rates, in the same manner as U.S. stockholders are taxed
with respect to such dividends, and may also be subject to the 30% branch
profits tax on the income after the application of the income tax in the case of
a non-U.S. stockholder that is a corporation.
Non-Dividend Distributions.
Unless (1) our common stock constitutes a U.S. real
property interest (“USRPI”), or (2) either (A) if the
non-U.S. stockholder’s investment in our common stock is effectively
connected with a U.S. trade or business conducted by such
non-U.S. stockholder (in which case the non-U.S. stockholder will be
subject to the same treatment as U.S. stockholders with respect to such
gain) or (B) if the non-U.S. stockholder is a nonresident alien
individual who was present in the United States for 183 days or more during
the taxable year and has a “tax home” in the United States (in which case the
non-U.S. stockholder will be subject to a 30% tax on the individual’s net
capital gain for the year), distributions by us which are not dividends out of
our earnings and profits will not be subject to U.S. federal income tax. If
it cannot be determined at the time at which a distribution is made whether or
not the distribution will exceed current and accumulated earnings and profits,
the distribution will be subject to withholding at the rate applicable to
dividends. However, the non-U.S. stockholder may seek a refund from the IRS
of any amounts withheld if it is subsequently determined that the distribution
was, in fact, in excess of our current and accumulated earnings and profits. If
our company’s common stock constitutes a USRPI, as described below,
distributions by us in excess of the sum of our earnings and profits plus the
non-U.S. stockholder’s adjusted tax basis in our common stock will be taxed
under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”), at the
rate of tax, including any applicable capital gains rates, that would apply to a
U.S. stockholder of the same type (e.g., an individual or a
corporation, as the case may be), and the collection of the tax will be enforced
by a refundable withholding at a rate of 10% of the amount by which the
distribution exceeds the stockholder’s share of our earnings and
profits.
Capital Gain Dividends.
Under FIRPTA, a distribution made by us to a
non-U.S. stockholder, to the extent attributable to gains from dispositions
of USRPIs held by us directly or through pass-through subsidiaries (“USRPI
capital gains”), will be considered effectively connected with a U.S. trade
or business of the non-U.S. stockholder and will be subject to
U.S. federal income tax at the rates applicable to U.S. stockholders,
without regard to whether the distribution is designated as a capital gain
dividend. In addition, we will be required to withhold tax equal to 35% of the
amount of capital gain dividends to the extent the dividends constitute USRPI
capital gains. Distributions subject to FIRPTA may also be subject to a 30%
branch profits tax in the hands of a non-U.S. holder that is a corporation.
However, the 35% withholding tax will not apply to any capital gain dividend
with respect to any class of our stock which is regularly traded on an
established securities market located in the United States if the
non-U.S. stockholder did not own more than 5% of such class of stock at any
time during the taxable year. Instead, any capital gain dividend will be treated
as a distribution subject to the rules discussed above under “— Taxation of
Non-U.S. Stockholders — Ordinary Dividends.” Also, the branch profits
tax will not apply to such a distribution. A distribution is not a
USRPI capital gain if we held the underlying asset solely as a creditor,
although the holding of a shared appreciation mortgage loan would not be solely
as a creditor. Capital gain dividends received by a non-U.S. stockholder
from a REIT that are not USRPI capital gains are generally not subject to
U.S. federal income or withholding tax, unless either (1) if the
non-U.S. stockholder’s investment in our common stock is effectively
connected with a U.S. trade or business conducted by such
non-U.S. stockholder (in which case the non-U.S. stockholder will be
subject to the same treatment as U.S. stockholders with respect to such
gain) or (2) if the non-U.S. stockholder is a nonresident alien
individual who was present in the United States for 183 days or more during
the taxable year and has a “tax home” in the United States (in which case the
non-U.S. stockholder will be subject to a 30% tax on the individual’s net
capital gain for the year).
Dispositions of Our Common
Stock. Unless our common stock constitutes a USRPI, a sale of
the stock by a non-U.S. stockholder generally will not be subject to
U.S. federal income taxation under FIRPTA.
The stock
will not be treated as a USRPI if less than 50% of our assets throughout a
prescribed testing period consist of interests in real property located within
the United States, excluding, for this purpose, interests in real property
solely in a capacity as a creditor. However, we expect that more than 50% of our
assets will consist of interests in real property located in the United
States.
Still,
our common stock nonetheless will not constitute a USRPI if we are a
“domestically controlled REIT.” A domestically controlled REIT is a REIT in
which, at all times during a specified testing period, less than 50% in value of
its outstanding stock is held directly or indirectly by
non-U.S. stockholders. We believe we are, and we expect to continue to be,
a domestically controlled REIT and, therefore, the sale of our common stock
should not be subject to taxation under FIRPTA. Because our stock will be
publicly-traded, however, no assurance can be given that we will be, or that if
we are, that we will remain a domestically controlled REIT.
In the
event that we do not constitute a domestically controlled REIT, a
non-U.S. stockholder’s sale of our common stock nonetheless will generally
not be subject to tax under FIRPTA as a sale of a USRPI, provided that
(1) our common stock is “regularly traded,” as defined by applicable
Treasury Regulations, on an established securities market, and (2) the
selling non-U.S. stockholder owned, actually or constructively, 5% or less
of our outstanding common stock at all times during a specified testing
period.
If gain
on the sale of our common stock were subject to taxation under FIRPTA, the
non-U.S. stockholder would be subject to the same treatment as a
U.S. stockholder with respect to such gain, subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
non-resident alien individuals, and the purchaser of the stock could be required
to withhold 10% of the purchase price and remit such amount to the
IRS.
Gain from
the sale of our common stock that would not otherwise be subject to FIRPTA will
nonetheless be taxable in the United States to a non-U.S. stockholder in
two cases: (1) if the non-U.S. stockholder’s investment in our common
stock is effectively connected with a U.S. trade or business conducted by
such non-U.S. stockholder, the non-U.S. stockholder will be subject to
the same treatment as a U.S. stockholder with respect to such gain, or
(2) if the non-U.S. stockholder is a nonresident alien individual who
was present in the United States for 183 days or more during the taxable
year and has a “tax home” in the United States, the nonresident alien individual
will be subject to a 30% tax on the individual’s capital gain.
Backup
Withholding and Information Reporting
We will
report to our U.S. stockholders and the IRS the amount of dividends paid
during each calendar year and the amount of any tax withheld. Under the backup
withholding rules, a U.S. stockholder may be subject to backup withholding
at the current rate of 28% with respect to dividends paid unless the holder is
(1) a corporation or comes within other exempt categories and, when
required, demonstrates this fact or (2) provides a taxpayer identification
number or social security number, certifies under penalties of perjury that such
number is correct and that such holder is not subject to backup withholding and
otherwise complies with applicable requirements of the backup withholding rules.
A U.S. stockholder that does not provide a correct taxpayer identification
number or social security number may also be subject to penalties imposed by the
IRS. In addition, we may be required to withhold a portion of capital gain
distribution to any U.S. stockholder who fails to certify their non-foreign
status.
We must
report annually to the IRS and to each non-U.S. stockholder the amount of
dividends paid to such holder and the tax withheld with respect to such
dividends, regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the
non-U.S. stockholder resides under the provisions of an applicable income
tax treaty. A non-U.S. stockholder may be subject to backup withholding
unless applicable certification requirements are met.
Payment
of the proceeds of a sale of our common stock within the United States is
subject to both backup withholding and information reporting unless the
beneficial owner certifies under penalties of perjury that it is a
non-U.S. stockholder (and the payor does not have actual knowledge or
reason to know that the beneficial owner is a United States person) or the
holder otherwise establishes an exemption. Payment of the proceeds of a sale of
our common stock conducted through certain United States related financial
intermediaries is subject to information reporting (but not backup withholding)
unless the financial intermediary has documentary evidence in its records that
the beneficial owner is a non-U.S. stockholder and specified conditions are
met or an exemption is otherwise established.
Backup
withholding is not an additional tax. Any amounts withheld under the backup
withholding rules may be allowed as a refund or a credit against such holder’s
U.S. federal income tax liability, provided the required information is
furnished to the IRS.
State,
Local and Foreign Taxes
We and
our subsidiaries and stockholders may be subject to state, local and foreign
taxation in various jurisdictions, including those in which they or we transact
business, own property or reside. We own interests in properties located in a
number of jurisdictions, and we may be required to file tax returns and pay
taxes in certain of those jurisdictions. The state, local or foreign tax
treatment of our company and our stockholders may not conform to the
U.S. federal income tax treatment discussed above. Any foreign taxes
incurred by us would not pass through to stockholders as a credit against their
U.S. federal income tax liability. Prospective stockholders should consult
their tax advisor regarding the application and effect of state, local and
foreign income and other tax laws on an investment in our common
stock.
Other
Tax Considerations
Legislative
or Other Actions Affecting REITs
The rules
dealing with U.S. federal income taxation are constantly under review by
persons involved in the legislative process and by the IRS and the
U.S. Treasury Department. No assurance can be given as to whether, when, or
in what form, the U.S. federal income tax laws applicable to us and our
stockholders may be enacted. Changes to the U.S. federal tax laws and
interpretations of U.S. federal tax laws could adversely affect an investment in
our common stock.
BOOK-ENTRY
SECURITIES
We may
issue the securities offered by means of this prospectus in whole or in part in
book-entry form, meaning that beneficial owners of the securities will not
receive certificates representing their ownership interests in the securities,
except in the event the book-entry system for the securities is discontinued. If
securities are issued in book entry form, they will be evidenced by one or more
global securities that will be deposited with, or on behalf of, a depositary
identified in the applicable prospectus supplement relating to the securities.
The Depository Trust Company is expected to serve as depository. Unless and
until it is exchanged in whole or in part for the individual securities
represented thereby, a global security may not be transferred except as a whole
by the depository for the global security to a nominee of such depository or by
a nominee of such depository to such depository or another nominee of such
depository or by the depository or any nominee of such depository to a successor
depository or a nominee of such successor. 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 class or series
of securities that differ from the terms described here will be described in the
applicable prospectus supplement.
Unless
otherwise indicated in the applicable prospectus supplement, we anticipate that
the following provisions will apply to depository arrangements.
Upon the
issuance of a global security, the depository for the global security or its
nominee will credit on its book-entry registration and transfer system the
respective principal amounts of the individual securities represented by such
global security to the accounts of persons that have accounts with such
depository, who are called “participants.” Such accounts shall be designated by
the underwriters, dealers or agents with respect to the securities or by us if
the securities are offered and sold directly by us. Ownership of beneficial
interests in a global security will be limited to the depository’s participants
or persons that may hold interests through such participants. Ownership of
beneficial interests in the global security will be shown on, and the transfer
of that ownership will be effected only through, records maintained by the
applicable depository or its nominee (with respect to beneficial interests of
participants) and records of the participants (with respect to beneficial
interests of persons who hold through participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and laws may impair the ability to
own, pledge or transfer beneficial interest in a global security.
So long
as the depository for a global security or its nominee is the registered owner
of such global security, such depository or nominee, as the case may be, will be
considered the sole owner or holder of the securities represented by such global
security for all purposes under the applicable Indenture or other instrument
defining the rights of a holder of the securities. Except as provided below or
in the applicable prospectus supplement, owners of beneficial interest in a
global security will not be entitled to have any of the individual securities of
the series represented by such global security registered in their names, will
not receive or be entitled to receive physical delivery of any such securities
in definitive form and will not be considered the owners or holders thereof
under the applicable Indenture or other instrument defining the rights of the
holders of the securities.
Payments
of amounts payable with respect to individual securities represented by a global
security registered in the name of a depository or its nominee will be made to
the depository or its nominee, as the case may be, as the registered owner of
the global security representing such securities. None of us, our officers and
board members or any trustee, paying agent or security registrar for an
individual series of securities will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the global security for such securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
We expect
that the depository for a series of securities offered by means of this
prospectus or its nominee, upon receipt of any payment of principal, premium,
interest, dividend or other amount in respect of a permanent global security
representing any of such securities, will immediately credit its participants’
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such global security for such securities as
shown on the records of such depository or its nominee. We also expect that
payments by participants to owners of beneficial interests in such global
security held through such participants will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in “street name.” Such
payments will be the responsibility of such participants.
If a
depository for a series of securities is at any time unwilling, unable or
ineligible to continue as depository and a successor depository is not appointed
by us within 90 days, we will issue individual securities of such series in
exchange for the global security representing such series of securities. In
addition, we may, at any time and in our sole discretion, subject to any
limitations described in the applicable prospectus supplement relating to such
securities, determine not to have any securities of such series represented by
one or more global securities and, in such event, will issue individual
securities of such series in exchange for the global security or securities
representing such series of securities.
PLAN
OF DISTRIBUTION
We may
sell the securities to one or more underwriters for public offering and sale by
them or may sell the securities to investors directly or through agents. Any
underwriter or agent involved in the offer and sale of the securities will be
named in the applicable prospectus supplement. Underwriters and agents in any
distribution contemplated hereby, including but not limited to at-the-market
equity offerings, may from time to time be designated on terms to be set forth
in the applicable prospectus supplement. Underwriters or agents could make sales
in privately negotiated transactions and/or any other method permitted by law,
including sales deemed to be an “at the market” offering as defined in
Rule 415 promulgated under the Securities Act, which includes sales made
directly on the New York Stock Exchange, the existing trading market for our
common stock, or sales made to or through a market maker other than on an
exchange.
Underwriters
may offer and sell the securities at a fixed price or prices, which may be
changed related to the prevailing market prices at the time of sale or at
negotiated prices. We also may, from time to time, authorize underwriters acting
as our agents to offer and sell the securities upon the terms and conditions as
are set forth in the applicable prospectus supplement. In connection with the
sale of securities, underwriters may be deemed to have received compensation
from us in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of securities for whom they may act as
agent. Underwriters may sell securities to or through dealers, and the 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 us to underwriters or agents in connection
with the offering of securities, and any discounts, concessions or commissions
allowed by underwriters to participating dealers, will be set forth in the
applicable prospectus supplement. Underwriters, dealers and agents participating
in the distribution of the securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the securities may be deemed to be underwriting discounts and
commissions, under the Securities Act of 1933, as amended, or the Securities
Act. Underwriters, dealers and agents may be entitled, under agreements entered
into with us and our operating partnership, to indemnification against and
contribution toward civil liabilities, including liabilities under the
Securities Act.
Any
securities issued hereunder (other than common stock) will be new issues of
securities with no established trading market. Any underwriters or agents to or
through whom such securities are sold by us or the operating partnership for
public offering and sale may make a market in such securities, but such
underwriters or agents will not be obligated to do so and may discontinue any
market making at any time without notice. We cannot assure you as to the
liquidity of the trading market for any such securities.
The
underwriters and their affiliates may be customers of, engage in transactions
with and perform services for us and the operating partnership and its
subsidiaries in the ordinary course of business.
LEGAL
MATTERS
Certain
legal matters will be passed upon for us by Clifford Chance US
LLP. If the validity of any securities is also passed upon by counsel
for the underwriters of an offering of those securities, that counsel will be
named in the prospectus supplement relating to that offering. As to
certain matters of Maryland law, Clifford Chance US LLP may rely on the opinion
of Venable LLP, Baltimore, Maryland.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from our Annual Report on Form 10-K
for the year ended December 31, 2008, as updated in our Current Report on Form
8-K dated November 13, 2009, and the effectiveness of our internal control over
financial reporting as of December 31, 2008 have been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their
reports (which report related to the financial statements and the related
financial statement schedule expresses an unqualified opinion and includes an
explanatory paragraph relating to the Company changing its method of accounting
for noncontrolling interests in 2006, 2007 and 2008), which
are incorporated herein by reference. Such financial statements and financial
statement schedule have been so incorporated in reliance upon the reports of
such firm given upon their authority as experts in accounting and
auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We are
subject to the informational requirements of the Exchange Act, and, in
accordance therewith, we file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC’s Public Reference
Room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our
SEC filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at http://www.sec.gov. We
maintain a website at www.cogdellspencer.com. The information on our website is
not, and you must not consider the information to be, a part of this prospectus.
Our securities are listed on the NYSE and all such material filed by us with the
NYSE also can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
We have
filed with the SEC a registration statement on Form S-3, of which this
prospectus is a part, under the Securities Act with respect to the securities.
This prospectus does not contain all of the information set forth in the
registration statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. For further information concerning us and
the securities, reference is made to the registration statement. Statements
contained in this prospectus as to the contents of any contract or other
documents are not necessarily complete, and in each instance, reference is made
to the copy of such contract or documents filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference.
The SEC
allows us to “incorporate by reference” information into this prospectus, which
means that we can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated by
reference herein is deemed to be part of this prospectus, except for any
information superseded by information in this prospectus. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about us, our
business and our finances.
|
Document
|
Period
|
|
Annual
Report on Form 10-K (File No. 001-32649)
|
Year
ended December 31, 2008
|
|
Quarterly
Reports on Form 10-Q (File No. 001-32649)
|
Quarter
ended March 31, 2009
|
|
|
Quarter
ended June 30, 2009
Quarter
ended September 30, 2009
|
|
Document
|
Filed
|
|
Current
Reports on Form 8-K (File No. 001-32649)
|
February 26,
2009
May
12, 2009
June
2, 2009
June
9, 2009
August
7, 2009
November
13, 2009
|
|
Document
|
Filed
|
|
Definitive
Proxy Statement on Schedule 14A
(File
No. 001-32649)
|
March
25, 2009
|
|
Document
|
Filed
|
|
Description
of our common stock contained in our Registration Statement on Form
8-A
(File
No. 001-32649)
|
October
18, 2005
|
|
|
|
All
documents that we file pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this prospectus but before the end of any
offering of securities made under this prospectus will also be considered to be
incorporated by reference.
If you
request, either orally or in writing, we will provide you with a copy of any or
all documents that are incorporated by reference. Such documents will be
provided to you free of charge, but will not contain any exhibits, unless those
exhibits are incorporated by reference into the document. Requests should be
addressed to Cogdell Spencer Inc., 4401 Barclay Downs Drive, Suite 300,
Charlotte, North Carolina, 28209, Telephone: (704) 940-2900.
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and
Distribution
The
following table itemizes the expenses incurred by us in connection with the
issuance and registration of the securities being registered hereunder. All
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
|
Securities
and Exchange Commission registration fee
|
|
$ |
16,930 |
|
|
Printing
and engraving expenses*
|
|
|
10,000 |
|
|
Legal
fees and expenses*
|
|
|
60,000 |
|
|
Accounting
fees and expenses*
|
|
|
40,000 |
|
|
Blue
Sky fees and expenses
|
|
|
5,000 |
|
|
Miscellaneous
|
|
|
50,000 |
|
|
Total
|
|
$ |
181,930 |
|
___________
|
*
|
Does
not include expenses of preparing prospectus supplements and other
expenses relating to offerings of particular
securities.
|
Item 15. Indemnification of Directors and
Officers.
Maryland
law permits a Maryland corporation to include in its charter a provision
limiting the liability of its directors and officers to the corporation and its
stockholders for money damages except for liability resulting from
(1) actual receipt of an improper benefit or profit in money, property or
services or (2) active and deliberate dishonesty established by a final
judgment as being material to the cause of action. Our charter contains such a
provision which eliminates such liability to the maximum extent permitted by
Maryland law.
Our
charter authorizes us and our bylaws obligate us, to the maximum extent
permitted by Maryland law in effect from time to time, to indemnify and, without
requiring a preliminary determination of the ultimate entitlement to
indemnification, pay or reimburse reasonable expenses in advance of financial
disposition of a proceeding to any present or former director or officer who is
made, or threatened to be made, a party to the proceeding by reason of his or
her service in that capacity, or any individual who, while one of directors or
officers and at our request, serves or has served another corporation, real
estate investment trust, partnership, joint venture, trust, employee benefit
plan or any other enterprise as a director, officer, partner or trustee and who
is made, or threatened to be made, a party to the proceeding by reason of his or
her service in that capacity from and against any claim or liability to which
that individual may become subject or which that individual may incur by reason
of his or her status as our present or former director or officer. Our charter
and bylaws also permit us to indemnify and advance expenses to any person who
served our predecessor in any of the capacities described above and any employee
or agent of our company or our predecessor.
Maryland
law requires us (unless our charter provides otherwise, which it does not) to
indemnify a director or officer who has been successful, on the merits or
otherwise, in the defense of any proceeding to which he or she is made, or
threatened to be made, a party by reason of his or her service in that capacity.
Maryland law permits us to indemnify our present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made, or threatened to be made, a party by reason of their
service in those or other capacities unless it is established that (1) the
act or omission of the director or officer was material to the matter giving
rise to the proceeding and (A) was committed in bad faith or (B) was
the result of active and deliberate dishonesty, (2) the director or officer
actually received an improper personal benefit in money, property or services or
(3) in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful. However,
under Maryland law, we may not indemnify for an adverse judgment in a suit by or
in our right or for a judgment of liability on the basis that personal benefit
was improperly received, unless in either case a court orders indemnification
and then only for expenses. In addition, Maryland law permits us to advance
reasonable expenses to a director or officer upon our receipt of (1) a
written affirmation by the director or officer of his or her good faith belief
that he or she has met the standard of conduct necessary for indemnification by
us and (2) a written undertaking by the director or officer or on the
directors or officers behalf to repay the amount paid or reimbursed by us if it
is ultimately determined that the director or officer did not meet the standard
of conduct.
In
addition, certain persons, including trustees of CS Business Trust I and CS
Business Trust II, our directors officers or employees, the officers or
employees of Cogdell Spencer LP, CS Business Trust I and CS Business Trust II,
and other persons that CS Business Trust I and CS Business Trust II designate
from time to time, are indemnified for specified liabilities and expenses
pursuant to the Cogdell Spencer LP Partnership Agreement, the partnership in
which we serve as a general partner through a wholly owned Maryland business
trust.
Item 16. Exhibits.
|
|
|
|
1.1*
|
Form
of Underwriting Agreement by and among Cogdell Spencer Inc. and the
underwriters named therein.
|
|
4.1**
|
Form
of Certificate for Common Stock of Cogdell Spencer Inc.
|
|
4.2*
|
Form
of Certificate for Preferred Stock of Cogdell Spencer
Inc.
|
|
4.3*
|
Form
of Articles Supplementary for preferred stock.
|
|
4.4*
|
Form
of Depositary Agreement.
|
|
4.5*
|
Form
of Depositary Receipt.
|
|
4.6*
|
Form
of Warrant Agreement.
|
|
5.1*
|
Opinion
of Clifford Chance US LLP with respect to the legality of the common stock
being registered.
|
|
8.1*
|
Opinion
of Clifford Chance US LLP with respect to tax matters.
|
|
12.1*
|
Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
|
|
23.1
|
Consent
of Deloitte & Touche LLP.
|
|
23.3*
|
Consent
of Clifford Chance US LLP (included in
Exhibit 5.1).
|
|
23.4*
|
Consent
of Clifford Chance US LLP (included in
Exhibit 8.1).
|
|
24.1
|
Power
of Attorney (included on signature page).
|
|
|
|
____________
|
*
|
To
be filed by amendment or incorporated by reference in connection with the
offering of securities.
|
|
**
|
Incorporated
by reference to our Registration Statement on Form S-11 (File
No. 333-127396).
|
Item 17. Undertakings.
(a) The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To
include any prospectus required by section 10(a)(3) of the Securities Act
of 1933;
ii. To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement.
iii. To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
Provided, however ,
that:
(A) Paragraphs (a)(l)(i),
(a)(l)(ii) and (a)(l)(iii) of this section do not apply if the registration
statement is on Form S-3 or Form F-3 and the information required to
be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement, or is
contained in a form of prospectus filed pursuant to Rule 424(b) that is
part of the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for the purpose of determining liability under the Securities Act of 1933, as
amended, to any purchaser:
(A)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement;
and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or
(x) for the purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed to be part of
and included in the registration statement as of the earlier of the date such
form of prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer and any person
that is at that date an underwriter, such date shall be deemed to be a new
effective date of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date; or
(ii) If
the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
(5) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the
securities:
The
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b) The
undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant’s
annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan’s annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the 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, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant
certifies that it has reasonable grounds to believe that the registrant meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, in the State of North Carolina, on
this 13th day
of November, 2009.
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COGDELL
SPENCER INC.
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By:
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/s/
Charles M. Handy |
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Name: Charles
M. Handy |
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Title: Chief
Financial Officer, Senior Vice President and
Secretary |
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POWER
OF ATTORNEY
KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints James W. Cogdell and Frank C. Spencer, and each of
them, with full power to act without the other, as such person’s true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this Registration Statement, and any and all amendments
thereto (including post-effective amendments), and to file the same, with
exhibits and schedules thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing necessary or desirable to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
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Name
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Title
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Date:
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/s/
JAMES W. COGDELL
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Chairman
of the Board
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November
13, 2009
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James
W. Cogdell
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/s/
FRANK C. SPENCER
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Chief
Executive Officer, President and Director (Principal Executive
Officer)
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November
13, 2009
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Frank
C. Spencer
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/s/
CHARLES M. HANDY
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Chief
Financial Officer, Senior Vice President and Secretary (Principal
Financial Officer and Principal Accounting Officer)
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November
13, 2009
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Charles
M. Handy
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/s/
JOHN R. GEORGIUS
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Director
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November
13, 2009
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John
R. Georgius
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/s/
RICHARD B. JENNINGS
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Director
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November
13, 2009
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Richard
B. Jennings
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/s/
CHRISTOPHER E. LEE
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Director
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November
13, 2009
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Christopher
E. Lee
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/s/
DAVID J. LUBAR
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Director
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November
13, 2009
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David
J. Lubar
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/s/
RICHARD C. NEUGENT
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Director
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November
13, 2009
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Richard
C. Neugent
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/s/
SCOTT A. RANSOM
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Director
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November
13, 2009
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Scott
A. Ransom
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/s/
RANDOLPH D. SMOAK
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Director
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November
13, 2009
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Randolph
D. Smoak
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EXHIBIT INDEX
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1.1*
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Form
of Underwriting Agreement by and among Cogdell Spencer Inc. and the
underwriters named therein.
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4.1**
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Form
of Certificate for Common Stock of Cogdell Spencer Inc.
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4.2*
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Form
of Certificate for Preferred Stock of Cogdell Spencer
Inc.
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4.3*
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Form
of Articles Supplementary for preferred stock.
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4.4*
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Form
of Depositary Agreement.
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4.5*
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Form
of Depositary Receipt.
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4.6*
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Form
of Warrant Agreement.
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5.1*
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Opinion
of Clifford Chance US LLP with respect to the legality of the common stock
being registered.
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8.1*
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Opinion
of Clifford Chance US LLP with respect to tax matters.
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12.1*
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Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
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23.1
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Consent
of Deloitte & Touche LLP.
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23.3*
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Consent
of Clifford Chance US LLP (included in
Exhibit 5.1).
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23.4*
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Consent
of Clifford Chance US LLP (included in
Exhibit 8.1).
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24.1
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Power
of Attorney (included on signature page).
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____________
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*
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To
be filed by amendment or incorporated by reference in connection with the
offering of securities.
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**
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Incorporated
by reference to our Registration Statement on Form S-11 (File
No. 333-127396).
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