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EXHIBIT 4.1
[COPY]
REGISTERED No: PRINCIPAL AMOUNT
$55,000,000
CUSIP NO.: 74147T AB1
THE PRICE REIT, INC.
7 1/2% SENIOR NOTE DUE 2006
THE PRICE REIT, INC., a Maryland corporation (hereinafter called the
"Company", which term shall include any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to Cede & Co., or registered assignee (the "Holder"), upon presentation, the
principal sum of $55,000,000 DOLLARS on November 5, 2006, and to pay interest on
the outstanding principal amount thereon from November 5, 1996, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually in arrears on May 5 and October 5 in each year (each an
"Interest Payment Date"), commencing May 5, 1997, and at the Stated Maturity, at
the rate of 7 1/2% per annum, computed on the basis of a 360-day year comprised
of twelve 30-day months, until the entire principal amount hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for on any Interest Payment Date will, as provided in the Indenture, be
paid to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the Regular Record Date for such Interest
Payment Date which shall be the 15th calendar day preceding the applicable
Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may either be paid to the Person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Notes of this series
not more than 15 days and not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. Payments of the principal of, and interest on,
this Note will be made at the office or agency of the Trustee (hereinafter
defined) maintained for that purpose at 000 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, or elsewhere as provided in the Indenture, in United
States Dollars; provided, however, that at the option of the Holder hereof
payment of interest may be made by (i) check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register kept for
the Notes pursuant to Section 305 of the Indenture (the "Note Register") or (ii)
transfer to an account of the Person entitled thereto located inside the United
States.
This Note is one of a fully authorized issue of securities of the
Company (herein called the "Notes"), issued as a series of securities issued and
to be issued under an Indenture, dated as of October 27, 1995 (herein called the
"Indenture"), between the Company and First Trust of California, National
Association (herein called the "Trustee," which term includes any successor
trustee under the Indenture with respect to the Notes), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations
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of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated as the
"7 1/2% Senior Notes Due 2006," limited in aggregate principal amount to
$55,000,000.
The Notes may be redeemed at any time after November 5, 2001, at the
option of the Company, in whole or from time to time in part, at a redemption
price equal to the sum of (i) the principal amount of the Notes (or portion
thereof) being redeemed plus accrued interest thereon to the redemption date and
(ii) the Make-Whole Amount (as defined below), if any, with respect to such
Notes (or portion thereof) (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes (or any portion thereof) called for redemption
shall have been made available on the redemption date referred to in such
notice, such Notes (or any portion thereof) will cease to bear interest on the
date fixed for such redemption specified in such notice and the only right of
the Holders of such Notes will be to receive payment of the Redemption Price.
Notice of any optional redemption of any Notes (or any portion thereof)
will be given to Holders at their addresses, as shown in the security register
for such Notes, not more than 60 nor less than 30 days prior to the date fixed
for redemption. The notice of redemption will specify, among other things, the
Redemption Price and the principal amount of the Notes held by such Holder to be
redeemed.
The Company will notify the Trustee at least 45 days prior to giving
notice of redemption (or such shorter period as is satisfactory to the Trustee)
of the aggregate principal amount of such Notes to be redeemed and their
redemption date. If less than all of the Notes are to be redeemed at the
option of the Company, the Trustee shall select, in such manner as it shall
deem fair and appropriate, such Notes to be redeemed in whole or in part.
"Make-Whole Amount" means, in connection with any optional redemption
of any Notes, the excess, if any, of (i) the aggregate present value as of the
date of such redemption of each dollar of principal being redeemed and the
amount of interest (exclusive of interest accrued to the date of redemption)
that would have been payable in respect of each such dollar if such redemption
had not been made, determined by discounting, on a semi-annual basis, such
principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given) from the
respective dates on which such principal and interest would have been payable if
such redemption had not been made, over (ii) the aggregate principal amount of
the Notes being redeemed or paid.
"Reinvestment Rate" means 0.25% plus the arithmetic mean of the yields
under the respective heading "Week Ending" published in the most recent
Statistical Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or
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extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purpose of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities, or, if such
statistical release is not published at the time of any determination under the
Indenture, then such other reasonably comparable index which shall be
designated by the Company.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related defaults and Events of Default applicable to the
Company, in each case, upon compliance by the Company with certain conditions
set forth in the Indenture, which provisions apply to this Note.
In addition to the covenants of the Company contained in the Indenture,
the Company makes the following covenants with respect to, and for the benefit
of the Holders of, the Notes:
Limitation on Debt. The Company will not, and will not permit any
subsidiary to, incur any Debt if, after giving effect thereto, the
aggregate outstanding principal amount of all Debt of the Company and
its subsidiaries is greater than fifty percent (50%) of the sum of (i)
the Company's Total Assets at the end of the Company's fiscal quarter
ended immediately prior to the incurrence of such Debt and (ii) the
aggregate purchase price of real estate assets acquired after such
immediately preceding fiscal quarter, including any such assets acquired
in connection with the incurrence of such additional Debt.
Limitation on Secured Debt. The Company will not, and will not permit
any Subsidiary to, incur any Debt secured by any mortgage or other lien
upon any of its properties, and will not otherwise grant or convey any
such mortgage or other lien, if, after giving effect thereto, the
aggregate outstanding principal amount of secured Debt is greater than
thirty percent (30%) of the sum of (i) the Company's Total Assets at the
end of the Company's fiscal quarter ended immediately prior to the
incurrence of such Debt and (ii) the aggregate purchase price of real
estate assets acquired after such immediately preceding fiscal quarter,
including any such assets acquired in connection with the incurrence of
such additional Debt.
Interest Expense Coverage. The Company will not incur any Debt if,
after giving effect to the incurrence of such Debt, the Company's ratio
of Total Cash Flow to Total Interest Expense, at the end of each fiscal
year of the Company, will have been less than 2:1, on a pro forma basis
after giving effect thereto and to the application of the proceeds
therefrom, and calculated on the assumption that (i) such Debt and any
other Debt incurred by the Company since the first day of such fiscal
year and the application of the proceeds therefrom, including to
refinance other Debt, had occurred at the beginning of such fiscal year;
(ii) the repayment or retirement of any other Debt by the Company since
the first day of such fiscal year had been repaid or retired at the
beginning of such period
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(except that, in making such computation, the amount of Debt under any
revolving credit facility shall be computed based upon the average daily
balance of such Debt during such period); (iii) in the case of Acquired
Debt or Debt incurred in connection with any acquisition since the first
day of such fiscal year, the related acquisition had occurred as of the
first day of such period with the appropriate adjustments with respect
to such acquisition being included in such pro forma calculation; and
(iv) in the case of any acquisition or disposition by the Company of any
asset or group of assets since the first day of such fiscal year,
whether by merger, stock purchase or sale, or asset purchase or sale,
such acquisition or disposition or any related repayment of Debt had
occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being
included in such pro forma calculation.
Maintenance of Total Unencumbered Assets. The Company will maintain
Total Unencumbered Assets of not less than 200% of the aggregate
outstanding principal amount of all unsecured Debt of the Company.
Restrictions on Distributions. The Company will not make any payment of
dividends if the aggregate amount of dividends paid in the twelve months
preceding the dividend payment date (including the dividends paid on
such date) will exceed 95% of its Funds From Operations in the period of
twelve consecutive months ended on the last day of the last month ended
prior to such payment date; provided, however, that the foregoing
restriction shall not apply to any payment of dividends or other action
which is necessary to maintain the Company's status as a REIT for
federal income tax purposes.
As used herein, the following terms have the meanings set forth below:
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person becomes a subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Debt
incurred in connection with, or in contemplation of, such Person
becoming a subsidiary or such acquisition. Acquired Debt shall be deemed
to be incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a subsidiary.
"Debt" means any indebtedness of the Company or any subsidiary in
respect of (i) borrowed money or evidenced by bonds, notes, debentures
or similar instruments, (ii) indebtedness secured by any mortgage,
pledge, lien, charge, encumbrance or any security interest existing on
property owned by the Company or any Subsidiary, (iii) letters of credit
or amounts representing the balance deferred and unpaid of the purchase
price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) capitalized leases, in the case
of items of indebtedness under (i) through (iii) above to the extent
that any such items (other than letters of credit) would appear as a
liability on the Company's consolidated balance sheet in accordance with
GAAP, and also includes, to the extent not otherwise included, any
obligation by the Company or any Subsidiary to be liable for, or to pay,
as obligor, guarantor or otherwise (other than for purposes of
collection in the ordinary course of business), indebtedness of another
person (other than the Company or any subsidiary).
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"Funds From Operations" means consolidated net income, computed in
accordance with GAAP, excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization,
and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint
ventures will be calculated to reflect Funds From Operations on the same
basis. The Company computes Funds From Operations in accordance with
standards established by the National Association of Real Estate
Investment Trusts.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Total Assets" means total assets of the Company on a consolidated
basis, computed in accordance with GAAP, plus accumulated depreciation.
"Total Cash Flow" means, for any period, consolidated net income of the
Company, computed in accordance with GAAP, excluding gains (or losses)
from debt restructuring and sales of property, plus depreciation and
amortization, Total Interest Expense and provisions for income taxes,
all to the extent deducted in computing consolidated net income and
after adjustments for deferred rent and unconsolidated partnerships and
joint ventures.
"Total Interest Expense" means, for any period, the aggregate amount,
computed in accordance with GAAP, of interest expense incurred during
such period by the Company on a consolidated basis in respect of all
Debt, including interest capitalized to construction-in-process; less
amortization of capitalized loan fees, costs and expenses incurred in
connection with such Debt or in connection with interest rate caps,
collars, swaps, or similar agreements in respect of any such Debt, all
to the extent included in the computation of interest expense.
"Total Unencumbered Assets" means the aggregate book value of all assets
of the Company and its subsidiaries, plus accumulated depreciation,
which are not subject to any mortgage, pledge, lien, security interest
or other encumbrance.
If an Event of Default as defined in the Indenture with respect to the
Notes shall occur and be continuing, the principal of the Notes may be declared
due and payable in the manner and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Note shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have
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received from the Holders of a majority in principal amount of the Notes at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Note for the enforcement of any payment
of principal hereof or any interest on or after the respective due dates
expressed herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of not less
than a majority in principal amount of the Outstanding Notes. The Indenture
also contains provisions permitting the Holders of not less than a majority in
principal amount of the Notes at the time Outstanding, on behalf of the Holders
of all Notes, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest on, this Note
at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in any Place of Payment where the principal of, and interest on,
this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar for the Notes duly executed by, the Holder hereof or his attorney duly
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this series are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall, be affected by notice to the contrary.
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All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE NOTES INCLUDING THIS NOTE, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to
be printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the correctness or accuracy of such CUSIP numbers
as printed on the Notes, and reliance may be placed only on the other
identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee by manual signature, this Note shall not be entitled to
any benefit under the Indenture or be valid or obligatory for any purposes.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal this ____ day of _____________, 199_.
THE PRICE REIT, INC.
By:
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Name:
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Title:
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Attest:
By:
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Name:
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Title:
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[SEAL]
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Notes of the series designated "7-1/2% Senior Notes
Due 2006" pursuant to the within-mentioned Indenture.
[ ],
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By:
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Authorized Signatory
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