AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 2001
REGISTRATION NO. 333-73718
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT
NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMB PROPERTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 94-3281941
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
PIER 1, BAY 1
SAN FRANCISCO, CALIFORNIA 94111
(415) 394-9000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
TAMRA D. BROWNE, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
AMB PROPERTY CORPORATION
PIER 1, BAY 1
SAN FRANCISCO, CALIFORNIA 94111
(415) 394-9000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
LAURA L. GABRIEL, ESQ.
TRACY ABELS, ESQ.
LATHAM & WATKINS
505 MONTGOMERY STREET, SUITE 1900
SAN FRANCISCO, CALIFORNIA 94111
(415) 391-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement of the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES AND THE SELLING STOCKHOLDERS MAY NOT RESELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 4, 2001
PROSPECTUS
AMB PROPERTY CORPORATION
1,560,697 Shares of Common Stock
$0.01 Par Value Per Share
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This prospectus relates to the possible issuance to, and resale by,
selling stockholders named in this prospectus of up to 1,560,697 shares of
common stock upon exchange, on a one-for-one basis, of their limited partnership
units in AMB Property, L.P. 94,771 of those units were issued on November 7,
2000 and became exchangeable on November 7, 2001. 1,465,926 of those units,
which we call performance units, were issued on January 7, 2000 and become
exchangeable on January 7, 2002. We are registering the shares of common stock
to provide the holders with freely tradable securities, but this registration
does not necessarily mean that we will issue any of these shares to the selling
stockholders or that the selling stockholders will offer or sell the shares.
We will not receive any proceeds from any issuance of the shares of
common stock to the selling stockholders or from any sale of the shares by the
selling stockholders but we have agreed to pay certain registration expenses. We
will acquire limited partnership units in AMB Property, L.P. in exchange for any
shares that we may issue to limited partnership unit holders pursuant to this
prospectus.
Our common stock is listed on the New York Stock Exchange under the
symbol "AMB." On December 3, 2001, the last reported sales price of our common
stock on the New York Stock Exchange was $25.39 per share.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is , 2001
Neither AMB Property Corporation nor the selling stockholders have
authorized any person to give any information or to make any representation not
contained or incorporated by reference in this prospectus. You must not rely
upon any information or representation not contained or incorporated by
reference in this prospectus as if we had authorized it. This prospectus is not
an offer to sell or the solicitation of an offer to buy any securities other
than the registered securities to which it relates and this prospectus is not an
offer to sell or the solicitation of an offer to buy securities in any
jurisdiction where, or to any person to whom, it is unlawful to make such offer
or solicitation. You should not assume that the information contained in this
prospectus is correct on any date after the date of this prospectus, even though
this prospectus is delivered or shares are sold pursuant to this prospectus on a
later date.
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TABLE OF CONTENTS
PAGE
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WHERE YOU CAN FIND MORE INFORMATION.................................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................... 1
FORWARD-LOOKING STATEMENTS........................................................... 2
RISK FACTORS......................................................................... 4
THE COMPANY.......................................................................... 5
DESCRIPTION OF CAPITAL STOCK......................................................... 5
DESCRIPTION OF CERTAIN PROVISIONS OF THE PARTNERSHIP AGREEMENT OF THE
OPERATING PARTNERSHIP............................................................. 33
REDEMPTION/EXCHANGE OF COMMON LIMITED PARTNERSHIP UNITS FOR COMMON STOCK............. 44
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS..................... 50
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS........................................... 53
SELLING STOCKHOLDERS................................................................. 65
PLAN OF DISTRIBUTION................................................................. 69
LEGAL MATTERS........................................................................ 70
EXPERTS.............................................................................. 70
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the Securities and Exchange Commission at the
Securities and Exchange Commission's public reference rooms at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the Securities and Exchange
Commission's regional offices at 233 Broadway, New York, New York 10279 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference rooms. The Securities and
Exchange Commission also maintains a web site that contains reports, proxy and
information statements, and other information regarding registrants that file
electronically with the Securities and Exchange Commission (http://www.sec.gov).
You can inspect reports and other information we file at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
We have filed a registration statement of which this prospectus is a part
and related exhibits with the Securities and Exchange Commission under the
Securities Act of 1933. The registration statement contains additional
information about us. You may inspect the registration statement and exhibits
without charge at the office of the Securities and Exchange Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and you may obtain copies from the
Securities and Exchange Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with the Securities and Exchange Commission,
which means that we can disclose important information to you by referring to
those documents. The information incorporated by reference is an important part
of this prospectus. Any statement contained in a document which is incorporated
by reference in this prospectus is automatically updated and superseded if
information contained in this prospectus, or information that we later file with
the Securities and Exchange Commission, modifies or replaces this information.
We incorporate by reference the following documents we filed with the Securities
and Exchange Commission:
- Annual Report on Form 10-K and 10-K/A for the year ended December
31, 2000;
- Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2001;
- Quarterly Report on Form 10-Q for the quarterly period ended June
30, 2001;
- Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2001;
- Current Report on Form 8-K filed on January 8, 2001;
- Current Report on Form 8-K filed on January 29, 2001;
- Current Report on Form 8-K filed on January 31, 2001;
- Current Report on Form 8-K filed on March 16, 2001;
- Current Report on Form 8-K filed on March 23, 2001;
- Current Report on Form 8-K filed on April 5, 2001;
- Current Report on Form 8-K filed on April 11, 2001;
- Current Report on Form 8-K filed on September 18, 2001;
- Current Report on Form 8-K filed on October 3, 2001;
- Current Report on Form 8-K filed on October 16, 2001;
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- the reports, financial statements and pro forma financial
statements for the Amberjack Portfolio, the Willow Lake Portfolio,
the Willow Park Portfolio, National Distribution Portfolio and the
Mahwah Portfolio from our Current Report on Form 8-K filed on
December 2, 1998;
- the proforma financial statements for the divestiture of 25
properties to BPP Retail, LLC during 1999 from our Current Report
on 8-K filed on December 14, 1999;
- the reports, financial statements and proforma financial
statements for the Columbia Business Center, Manekin Portfolio,
Technology Park II, WOCAC Portfolio, Junction Industrial Park and
the Miami Airport Business Center from our Current Report on Form
8-K on November 16, 1999;
- the reports, financial statements and pro forma financial
statements for the J.A. Green Portfolio, Magnum Realty Corp.
Portfolio, Beacon Centre Portfolio, AFCO Portfolio, AFCO Investors
Portfolio, AFCO Cargo I Associates L.P. Portfolio and the WEST*PAC
Portfolio from our Current Report on Form 8-K filed on December
14, 2000;
- the reports, financial statements and pro forma financial
statements for the AMB Contributed Properties, the Boston
Industrial Portfolio, the Jamesburg Property, Orlando Central
Park, Totem Lake Malls, Dallas Warehouse Portfolio (Garland
Industrial Portfolio), Twin Cities Office/Showroom Portfolio
(Minnetonka Industrial Portfolio), and the Crysen Corridor
Warehouse, from our Registration Statement on Form S-11
(No. 333-58107);
- the description of our common stock contained in our Registration
Statement on Form 8-A filed with the Securities and Exchange
Commission on October 28, 1997; and
- all documents filed by us with the Securities and Exchange
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus
and prior to the termination of the offering.
To receive a free copy of any of the documents incorporated by reference
in this prospectus (other than exhibits, unless they are specifically
incorporated by reference in the documents), call or write AMB Property
Corporation, Pier 1, Bay 1, San Francisco, California 94111, Attention:
Secretary (415/394-9000).
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "we," "us" or "our" mean AMB Property
Corporation and its subsidiaries, including AMB Property, L.P. and its
subsidiaries and, with respect to the period prior to AMB Property Corporation's
initial public offering, AMB Property Corporation's predecessor, AMB
Institutional Realty Advisors, Inc., and certain real estate investment funds,
trusts, corporations and partnerships that prior to AMB Property Corporation's
initial public offering owned properties that they contributed to AMB Property,
L.P. We refer to AMB Property, L.P., a Delaware limited partnership, as the
"operating partnership." As of September 30, 2001, we owed an approximate 94.4%
general partnership interest in the operating partnership, excluding preferred
units. The following marks are our registered trademarks: AMB(R); Customer
Alliance Partners(R), Customer Alliance Program(R); Development Alliance
Partners(R); Development Alliance Program(R); High Throughput Distribution(R);
HTD(R), Institutional Alliance Partners(R); Institutional Alliance Program(R);
Management Alliance Partners(R); Management Alliance Program(R); UPREIT Alliance
Partners(R); and UPREIT Alliance Program(R). The following are our unregistered
trademarks: Broker Alliance Partners(TM); Broker Alliance Program(TM); Strategic
Alliance Partners(TM); and Strategic Alliance Programs(TM).
FORWARD-LOOKING STATEMENTS
Some of the information included and incorporated by reference in this
prospectus contains forward-looking statements, such as those pertaining to our
(including certain of our subsidiaries') capital resources, portfolio
performance, anticipated consummation of transactions, future property
development, future financial performance and anticipated market conditions and
demographics. Likewise, the pro forma financial statements and other pro forma
information incorporated by reference in this prospectus and the applicable
prospectus supplements also contain forward-looking statements. You can identify
forward-looking statements by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "pro forma," "estimates" or "anticipates" or the negative of
these words and phrases or similar words or phrases. You can also identify
forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve numerous risks and uncertainties and you
should not rely upon them as predictions of future events. There is no assurance
that the events or circumstances reflected in forward-looking statements will be
achieved or occur. Forward-looking statements are necessarily dependent on
assumptions, data or methods that may be incorrect or imprecise and we may not
be able to realize them. The following factors, among others, could cause actual
results and future events to differ materially from those set forth or
contemplated in the forward-looking statements: defaults on or non-renewal of
leases by tenants, increased interest rates and operating costs, our failure to
obtain necessary outside financing, difficulties in identifying properties to
acquire and in effecting acquisitions, our failure to successfully integrate
acquired properties and operations, our failure to divest of properties we have
contracted to sell or to timely
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reinvest proceeds from any such divestitures, risks and uncertainties affecting
property development and construction (including construction delays, cost
overruns, our inability to obtain necessary permits and public opposition to
these activities), our failure to qualify and maintain our status as a real
estate investment trust under the Internal Revenue Code of 1986, as amended,
environmental uncertainties, risks related to natural disasters, financial
market fluctuations, changes in real estate and zoning laws and increases in
real property tax rates. Our success also depends upon economic trends
generally, including interest rates, income tax laws, governmental regulation,
legislation, population changes and certain other matters discussed under the
headings "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Other Information -- Business Risks" in our most
recent Quarterly Reports on Form 10-Q and under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Business Risks" in our most recent Annual Report on Form 10-K, all of which are
incorporated by reference into this prospectus, as updated by our future
filings, as well as other similar statements contained and incorporated by
reference in this prospectus. We caution you not to place undue reliance on
forward-looking statements, which reflect our analysis only.
3
RISK FACTORS
Before you invest in our common stock, you should be aware that
purchasing or owning our common stock involves various risks, including those
described below and those described under the headings "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Other
Information -- Business Risks" in our most recent Quarterly Reports on Form 10-Q
and under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Business Risks" in our most recent Annual
Report on Form 10-K, which are incorporated by reference into this prospectus,
as updated by our subsequent filings under the Securities and Exchange Act of
1934. You should consider carefully these risk factors together with all of the
other information included in this prospectus before you decide to purchase
shares of our common stock.
THE EXCHANGE OF COMMON LIMITED PARTNERSHIP UNITS FOR COMMON STOCK IS A TAXABLE
TRANSACTION
The exchange of the common limited partnership units held by a limited
partner of the operating partnership for shares of our common stock will be
treated for tax purposes as a sale of the common limited partnership units by
the limited partner. A limited partner will recognize gain or loss for income
tax purposes in an amount equal to the difference between the "amount realized"
by the limited partner in the exchange and the limited partner's adjusted tax
basis in the common limited partnership units exchanged. Generally, the amount
realized by a limited partner on an exchange will be the fair market value of
the exchanged shares received in the exchange, plus the amount of the operating
partnership's liabilities allocable to the common limited partnership units
being exchanged. The recognition of any loss resulting from an exchange of
common limited partnership units for shares of common stock is subject to a
number of limitations set forth in the Internal Revenue Code. It is possible
that the amount of gain recognized or even the tax liability resulting from the
gain could exceed the value of the shares of common stock received upon the
exchange. In addition, the ability of a limited partner to sell a substantial
number of shares of common stock in order to raise cash to pay tax liabilities
associated with the exchange of limited partnership units may be restricted and,
as a result of stock price fluctuations, the price the holder receives for the
shares of common stock may not equal the value of the limited partnership units
at the time of exchange.
AN INVESTMENT IN COMMON STOCK IS DIFFERENT FROM AN INVESTMENT IN LIMITED
PARTNERSHIP UNITS
If a limited partner exchanges his or her common limited partnership
units for shares of common stock, he or she will become one of our stockholders
rather than a limited partner in the operating partnership. Although the nature
of an investment in our common stock is similar to an investment in limited
partnership units, there are also differences between ownership of limited
partnership units and ownership of our common stock. These differences include:
- form of organization;
- permitted investments;
- policies and restrictions;
- management structure;
- compensation and fees;
- investor rights; and
- federal income taxation.
See "Redemption/Exchange of Common Limited Partnership Units for Common
Stock -- Comparison of Ownership of Common Limited Partnership Units and Common
Stock."
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THE COMPANY
AMB Property Corporation, a Maryland corporation, is one of the leading
owners and operators of industrial real estate nationwide. Through the operating
partnership, a Delaware limited partnership, we are engaged in the acquisition,
ownership, operation, management, renovation, expansion, and development of
primarily industrial properties in target markets nationwide. As the sole
general partner of the operating partnership, we have the full, exclusive, and
complete responsibility and discretion in the day-to-day management and control
of the operating partnership.
Our investment strategy is to become a leading provider of High
Throughput Distribution, or HTD, properties located near key passenger and cargo
airports, highway systems and ports in major metropolitan areas, such as
Atlanta, Chicago, Dallas/ Fort Worth, Northern New Jersey/ New York City, the
San Francisco Bay Area, Southern California, Miami, and Seattle. Within each of
our markets, we focus our investments in in-fill submarkets. In-fill sub-markets
are characterized by supply constraints on the availability of land for
competing projects. High Throughput Distribution facilities are designed to
serve the high-speed, high-value freight handling needs of today's supply chain,
as opposed to functioning as long-term storage facilities.
As of September 30, 2001, we owned and operated 876 industrial buildings
and seven retail centers, totaling approximately 79.7 million rentable square
feet, located in 26 markets nationwide. As of September 30, 2001, our industrial
and retail properties were 96.6% and 87.6% leased, respectively. As of September
30, 2001, through our subsidiary, AMB Investment Management, we also managed
industrial buildings and retail centers, totaling approximately 3.3 million
rentable square feet on behalf of various institutional investors. In addition,
we have invested in industrial buildings, totaling approximately 4.9 million
rentable square feet, through unconsolidated joint ventures.
Through the operating partnership, we enter into co-investment joint
ventures with institutional investors. These co-investment joint ventures
provide us with an additional source of capital to fund certain acquisitions,
development projects, and renovation projects. We have investments in five
co-investment joint ventures.
We are self-administered and self-managed and expect that we have
qualified and will continue to qualify as a real estate investment trust for
federal income tax purposes beginning with the year ending December 31, 1997. As
a self-administered and self-managed real estate investment trust, our own
employees perform our administrative and management functions, rather than our
relying on an outside manager for these services. The principal executive office
of AMB Property Corporation and the operating partnership is located at Pier 1,
Bay 1, San Francisco, CA 94111, and our telephone number is (415) 394-9000. We
also maintain a regional office in Boston, Massachusetts.
DESCRIPTION OF CAPITAL STOCK
We have summarized certain terms and provisions of our capital stock in
this section. This summary is not complete. For more detail you should refer to
the Maryland General Corporation Law and our charter and bylaws, which are
exhibits to the registration statement of which this prospectus is a part. See
"Where You Can Find More Information."
COMMON STOCK
Our charter provides that we are authorized to issue 500,000,000 shares
of common stock, $.01 par value per share. As of November 2, 2001, we had
83,705,442 shares of common stock issued and outstanding. Each outstanding share
of common stock entitles the holder to one vote on all matters presented to
stockholders generally for a vote, including the election of directors. Except
as otherwise required by law and except as provided in any resolution adopted by
the board of directors establishing any other class or series of stock, the
holders of common stock possess the exclusive voting power, subject to the
provisions of our charter regarding the ownership of shares of common stock in
excess of the ownership limit or any other limit specified in our charter, or
otherwise permitted by the board of directors. Holders of shares of common stock
do not have any conversion, exchange, sinking fund, redemption or appraisal
rights or any preemptive rights to subscribe for any of our securities or
cumulative voting rights in the election of directors. All shares of our common
stock that are issued and outstanding are duly authorized, fully paid and
nonassessable. Subject to the preferential rights of any other shares or series
or classes of stock, including our series A, B, C, D, E, F, G, H, I and J
preferred stock, and to the provisions of our charter regarding ownership of
shares of common stock in excess of the ownership limit, or such other limit
specified in our charter or as otherwise permitted by the board of directors, we
may pay distributions to the holders of
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shares of common stock if and when authorized and declared by the board of
directors out of funds legally available for distribution. We intend to continue
to make quarterly distributions on outstanding shares of common stock.
Under the Maryland General Corporation Law, stockholders are generally
not liable for our debts or obligations. If we liquidate, subject to the right
of any holders of preferred stock, including our series A, B, C, D, E, F, G, H,
I and J preferred stock, to receive preferential distributions, each outstanding
share of common stock will be entitled to participate pro rata in the assets
remaining after payment of, or adequate provision for, all of our known debts
and liabilities, including debts and liabilities arising out of our status as
general partner of the operating partnership.
Subject to the provisions of our charter regarding the ownership of
shares of common stock in excess of the ownership limit, or such other limit
specified in our charter, or as otherwise permitted by the board of directors as
described below, all shares of common stock have equal distribution, liquidation
and voting rights, and have no preference or exchange rights.
Under the Maryland General Corporation Law, 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 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. Under the
Maryland General Corporation Law, the term "substantially all of the company's
assets" is not defined and is, therefore, subject to Maryland common law and to
judicial interpretation and review in the context of the unique facts and
circumstances of any particular transaction. Our charter does not provide for a
lesser percentage in any of the above situations.
Our charter authorizes the board of directors to reclassify any unissued
shares of capital 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 and restrictions on ownership, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption for each
class or series.
PREFERRED STOCK
Our charter provides that we are authorized to issue 100,000,000 shares
of preferred stock, $.01 par value per share, of which 4,600,000 shares are of a
separate class designated as series A preferred stock, 1,300,000 shares are of a
separate class designated as series B preferred stock, 2,200,000 shares are of a
separate class designated as series C preferred stock, 1,595,337 shares are of a
separate class designated as series D preferred stock, 220,440 shares are of a
separate class designated as series E preferred stock, 397,439 shares are of a
separate class designated as series F preferred stock, 20,000 shares are of a
separate class designated as series G preferred stock, 840,000 shares are of a
separate class designated as series H preferred stock, 510,000 shares are of a
separate class designated as series I preferred stock and 800,000 shares are of
a separate class designated as series J preferred stock. Our series B and J
preferred stock are issuable in exchange, on a one-for-one basis, subject to
adjustment, for series B and J preferred units, respectively, of the operating
partnership. Our series C, D, E, F, G, H and I preferred stock are issuable in
exchange, on a one-for-one basis, subject to adjustment, for series C, D, E, F,
G, H and I preferred units of AMB Property II, L.P., a partnership in which our
wholly owned subsidiary, AMB Property Holding Corporation, owns an approximate
1% general partnership interest and the operating partnership owns an
approximate 99% common limited partnership interest. We have 4,000,000 shares of
series A preferred stock issued and outstanding. We have 1,300,000 shares of
series B preferred stock, 2,200,000 shares of series C preferred stock,
1,595,337 shares of series D preferred stock, 220,440 shares of series E
preferred stock, 397,439 shares of series F preferred stock, 20,000 shares of
series G preferred stock, 840,000 shares of series H preferred stock, 510,000
shares of series I preferred stock and 800,000 shares of series J preferred
stock reserved for issuance but not issued or outstanding. We may issue
additional shares of preferred stock from time to time, in one or more classes,
as authorized by the board of directors. Prior to the issuance of shares of each
class of preferred stock, the board of directors is required by the Maryland
General Corporation Law and our charter to fix for each class the terms,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to distributions, qualifications and terms or conditions of
redemption, as permitted by Maryland law. Because the board of directors has the
power to establish the preferences, powers and rights of each class of preferred
stock, it may afford the holders of any class of preferred stock preferences,
powers and rights, voting or otherwise, senior to the rights of holders of
shares of common stock. The issuance of preferred stock could have the effect of
delaying or preventing a change of control that might involve a premium price
for holders of shares of common stock or otherwise be in their best interest.
SERIES A PREFERRED STOCK. The series A preferred stock ranks, with
respect to dividends and in the event we voluntarily or involuntarily liquidate,
dissolve or wind up:
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- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
A preferred stock;
- junior to all equity securities issued by us which rank senior to
the series A preferred stock; and
- on a parity with all equity securities issued by us (including any
series B, C, D, E, F, G, H, I or J preferred stock) other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities.
Holders of the series A preferred stock are entitled to receive, when and
as authorized by the board of directors out of funds legally available for
dividends, cumulative preferential cash dividends at the rate of 8 1/2% of the
liquidation preference per annum (equivalent to $2.125 per annum per share of
series A preferred stock). Dividends on the series A preferred stock accumulate
on a daily basis and are payable quarterly in arrears on the 15th day of each
January, April, July and October. Except as provided below, unless full
cumulative dividends on the series A preferred stock have been or at the same
time are declared and paid or declared and a sum sufficient for payment set
apart for payment for all past dividend periods and the then current dividend
period, no dividends (other than in common stock or other equity securities
ranking junior to the series A preferred stock as to dividends and upon
liquidation, dissolution and winding up) shall be declared or paid or set aside
for payment, nor may any common stock or any other equity securities ranking
junior to or on a parity with the series A preferred stock be redeemed,
purchased or otherwise acquired for any consideration (or any monies be paid to
or made available for a sinking fund for the redemption of any such securities)
by us (except by conversion into or exchange for other equity securities ranking
junior to the series A preferred stock and pursuant to the provisions of our
charter providing for limitations on ownership and transfer in order to ensure
that we remain qualified as a real estate investment trust). When dividends are
not paid in full (or a sum sufficient for such full payment is not so set apart)
upon the series A preferred stock and any other equity securities ranking as to
dividends on a parity with the series A preferred stock, all dividends declared
upon the series A preferred stock and any other equity securities ranking as to
dividends on a parity with the series A preferred stock will be declared pro
rata so that the amount of dividends declared per share of series A preferred
stock and each such other equity securities shall bear to each other the same
ratio that accumulated dividends per share of series A preferred stock and such
other equity securities (which shall not include any accumulation in respect of
unpaid dividends for prior dividend periods if such other equity securities do
not have a cumulative dividend) bear to each other. Dividends on the series A
preferred stock will accumulate whether or not we have funds legally available
for the payment of dividends and whether or not we declare dividends. If we
designate any portion of a dividend as a "capital gain dividend," a holder's
share of the capital gain dividend will be an amount that bears the same ratio
to the total amount of dividends (as determined for federal income tax purposes)
paid to the holder for the year as the aggregate amount designated as a capital
gain dividend bears to the aggregate amount of all dividends (as determined for
federal income tax purposes) paid on all classes of shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up, the holders of our series A preferred stock are entitled to receive out
of our assets legally available for distribution to our stockholders remaining
after payment or provision for payment of all of our debts and liabilities, a
liquidation preference, in cash, of $25.00 per share, plus an amount equal to
any accumulated and unpaid dividends to the date of such payment, before any
distribution of assets is made to holders of common stock or any other equity
securities that rank junior to the series A preferred stock. After payment of
the full amount of the liquidating distributions to which they are entitled, the
holders of the series A preferred stock will have no right or claim to any of
our remaining assets. Our consolidation or merger with or into any other entity,
a merger of another entity with or into us, a statutory share exchange or the
sale, lease, transfer or conveyance of all or substantially all of our property
or business do not constitute a liquidation, dissolution or winding up for
purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up and our
assets are insufficient to make full payment to holders of the series A
preferred stock and the corresponding amounts payable on all shares of other
classes or series of equity securities ranking on a parity with the series A
preferred stock as to liquidation rights, then the holders of the series A
preferred stock and all other such classes or series of equity securities will
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be entitled.
The series A preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. We cannot redeem the series A
preferred stock prior to July 27, 2003. On and after July 27, 2003, we can
redeem the series A preferred stock for cash at our option, in whole or from
time to time in part, at a redemption price of $25.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series A preferred stock.
7
Holders of series A preferred stock have no voting rights, except as
described below. If we do not pay dividends on the series A preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series A preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series A preferred stock. So long as any
shares of series A preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of outstanding shares of series A preferred stock (the
series A preferred stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series A
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series A preferred stock;
- create, authorize or issue any obligation or security convertible
into, exchangeable or exercisable for, or evidencing the right to
purchase, any class or series of stock ranking senior to the
series A preferred stock; or
- amend, alter or repeal the provisions of our charter, whether by
merger or consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power
of the series A preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as shares of series A preferred stock (or
shares issued by a surviving entity in substitution for shares of the series A
preferred stock) remain outstanding with the terms materially unchanged, taking
into account that upon the occurrence of such an event, we may not be the
surviving entity, the occurrence of any such event will not be considered to
materially and adversely affect rights, preferences, privileges or voting powers
of holders of series A preferred stock. Any increase in the amount of the
authorized preferred stock, the creation or issuance of any other class or
series of preferred stock or any increase in the amount of authorized series A
preferred stock or any other class or series of preferred stock, in each case
ranking on a parity with or junior to the series A preferred stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.
In accordance with the terms of the operating partnership's partnership
agreement, we contributed the net proceeds of the sale of the series A Preferred
Shares to the operating partnership and the operating partnership issued to us
series A preferred units that mirror the rights, preferences and other terms of
the series A preferred stock. The operating partnership is required to make all
required distributions on the series A preferred units prior to any distribution
of cash or assets to the holders of any other units or any other equity
interests in the operating partnership, except for any other series of preferred
units ranking on a parity with the series A preferred units as to dividends or
voluntary or involuntary liquidation, dissolution or winding up of the operating
partnership. The operating partnership has no preferred units, other than the
series A preferred units, the series B preferred units and the series J
preferred units, outstanding or any other equity interests ranking prior to any
other units or any other equity interests in the operating partnership.
SERIES B PREFERRED STOCK. We currently have no shares of series B
preferred stock issued or outstanding. The series B preferred stock is issuable
upon exchange of the operating partnership's series B preferred units. The
series B preferred stock ranks, with respect to dividends and in the event we
voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
B preferred stock;
- junior to all equity securities issued by us which rank senior to
the series B preferred stock; and
- on a parity with all equity securities issued by us (including the
series A, C, D, E, F, G, H, I and J preferred stock) other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities.
If ever issued, the series B preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of 8
5/8% of the liquidation preference per annum (equivalent to $4.3125 per annum
per share of series B preferred stock). Dividends on the series B preferred
stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the series B preferred stock have been or at
the same time are declared and paid or declared
8
and a sum sufficient for payment set apart for payment for all past dividend
periods and the then current dividend period, no dividends (other than in common
stock or other equity securities ranking junior to the series B preferred stock
as to distributions and upon voluntary or involuntary liquidation, dissolution
and winding up) shall be declared or paid or set aside for payment or other
dividend be declared or made upon the common stock or any other equity
securities ranking as to distributions or upon voluntary or involuntary
liquidation, dissolution or winding up junior to or on a parity with the series
B preferred stock, nor shall any common stock or any other equity securities
ranking junior to or on a parity with the series B preferred stock as to
distributions or upon voluntary or involuntary liquidation, dissolution or
winding up be redeemed, purchased or otherwise acquired for any consideration
(or any monies be paid to or made available for a sinking fund for the
redemption of any such securities) by us (except by conversion into or exchange
for other equity securities ranking junior to the series B preferred stock as to
distributions and upon voluntary and involuntary liquidation, dissolution and
winding up and pursuant to the provisions of our charter providing for
limitations on ownership and transfer in order to ensure that we remain
qualified as a real estate investment trust). When dividends are not paid in
full (or a sum sufficient for such full payment is not so set apart) upon the
series B preferred stock and any other equity securities ranking as to
distributions on a parity with the series B preferred stock, all dividends
declared upon the series B preferred stock and any other equity securities
ranking on a parity with the series B preferred stock as to distributions and
upon voluntary or involuntary liquidation, dissolution or winding up will be
declared pro rata so that the amount of dividends declared per share of series B
preferred stock and each such other equity securities shall bear to each other
the same ratio that accumulated dividends per share of series B preferred stock
and such other equity securities (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if such other equity
securities do not have a cumulative dividend) bear to each other. Dividends on
the series B preferred stock will accumulate whether or not we have funds
legally available for the payment of dividends and whether or not we declare
dividends. If we designate any portion of a dividend as a "capital gain
dividend," a holder's share of the capital gain dividend will be an amount that
bears the same ratio to the total amount of dividends (as determined for federal
income tax purposes) paid to the holder for the year as the aggregate amount
designated as a capital gain dividend bears to the aggregate amount of all
dividends (as determined for federal income tax purposes) paid on all classes of
shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of the series B preferred stock, the holders of
the series B preferred stock will be entitled to receive out of our assets
legally available for distribution to our stockholders remaining after payment
or provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated and unpaid dividends to the date of such payment, before any
distribution of assets is made to holders of common stock or any other equity
securities that rank junior to the series B preferred stock. After payment of
the full amount of the liquidating distributions to which they are entitled, the
holders of the series B preferred stock will have no right or claim to any of
our remaining assets. Our consolidation or merger with or into any other entity,
a merger of another entity with or into us, a statutory share exchange or the
sale, lease, transfer or conveyance of all or substantially all of our property
or business do not constitute a liquidation, dissolution or winding up for
purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series B preferred stock and our assets are
insufficient to make full payment to the holders of the series B preferred stock
and the corresponding amounts payable on all shares of other classes or series
of equity securities ranking on a parity with the series B preferred stock as to
liquidation rights then the holders of the series B preferred stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The series B preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
B preferred stock prior to November 12, 2003. On and after November 12, 2003, we
can redeem the series B preferred stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series B preferred stock.
Holders of series B preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series B preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series B preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series B preferred stock. So long as any
shares of series B preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of series B preferred stock (the
series B preferred stock voting separately as a class):
9
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series B
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series B preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series B preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series B
preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series B preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or transferee entity is a corporation
organized under the laws of any state and substitutes for the series B preferred
stock other preferred stock having substantially the same terms and rights as
the series B preferred stock, the occurrence of any such event will not be
considered to materially and adversely affect rights, preferences, privileges or
voting powers of holders of series B preferred stock. Any increase in the amount
of authorized preferred stock, the creation or issuance of any other class or
series of preferred stock or any increase in an amount of authorized shares of
each class or series, in each case ranking on a parity with or junior to the
series B preferred stock will not be considered to materially and adversely
affect such rights, preferences, privileges or voting powers.
SERIES C PREFERRED STOCK. We currently have no shares of series C
preferred stock issued or outstanding. The series C preferred stock is issuable
upon exchange of AMB Property II, L.P.'s series C preferred units. The AMB
Property II, L.P. series C preferred units are exchangeable in whole at any time
on or after November 24, 2008, at the option of 51% of the holders of all
outstanding series C preferred units, on a one-for-one basis, subject to
adjustment, for shares of our series C preferred stock. In addition, AMB
Property II, L.P.'s series C preferred units are exchangeable in whole at any
time at the option of 51% of the holders of all outstanding series C preferred
units of AMB Property II, L.P. if:
- any series C preferred unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB
Property II, L.P., or one of its subsidiaries takes the position,
and a holder or holders of series C preferred units receive an
opinion of independent counsel that AMB Property II, L.P. is, or
upon the happening of a certain event likely will be, a "publicly
traded partnership" within the meaning of the Internal Revenue
Code.
The series C preferred units of AMB Property II, L.P. are exchangeable in
whole for shares of our series C preferred stock at any time after November 24,
2001 and prior to November 24, 2008 at the option of 51% of the holders of all
outstanding series C preferred units of AMB Property II, L.P. if those holders
deliver to AMB Property Holding Corporation a private letter ruling or an
opinion of independent counsel to the effect that an exchange of the series C
preferred units at that time would not cause the series C preferred units to be
considered "stock and securities" within the meaning of the Internal Revenue
Code for purposes of determining whether the holder of the series C preferred
units is an "investment company" under the Internal Revenue Code.
The series C preferred units of AMB Property II, L.P. are also
exchangeable in whole at any time for shares of our series C preferred stock, if
initial purchasers of the series C preferred units holding 51% of all
outstanding series C preferred units determine, (regardless of whether held by
the initial purchasers) if:
- AMB Property II, L.P. reasonably determines that its assets and
income for a taxable year after 1998 would not satisfy the income
and assets tests of the Internal Revenue Code for such taxable
year if AMB Property II, L.P. were a real estate investment trust;
or
- any holder of the series C preferred units delivers to AMB
Property II, L.P. and AMB Property Holding Corporation an opinion
of independent counsel to the effect that (based on the assets and
income of AMB Property II, L.P. for a taxable year after 1998) AMB
Property II, L.P. would not satisfy the income and assets tests of
the Internal Revenue Code for such taxable
10
year if AMB Property II, L.P. were a real estate investment trust
and that such failure would create a meaningful risk that a holder
of the series C preferred units would fail to maintain
qualification as a real estate investment trust.
In lieu of an exchange for our series C preferred stock, AMB Property II,
L.P. may redeem the series C preferred units for cash in an amount equal to the
original capital account balance of the holder of series C preferred units. A
holder of series C preferred units of AMB Property II, L.P. will not be entitled
to exchange the units for series C preferred stock if the exchange would result
in a violation of the ownership limit.
The series C preferred stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
C preferred stock;
- junior to all equity securities issued by us which rank senior to
the series C preferred stock; and
- on a parity with all equity securities issued by us (including the
series A, B, D, E, F, G, H, I and J preferred stock), other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities until
converted into equity securities.
If ever issued, the series C preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
8.75% of the liquidation preference per annum (equivalent to $4.375 per annum
per share of series C preferred stock). Dividends on the series C preferred
stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the series C preferred stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than in common stock or other equity
securities ranking junior to the series C preferred stock as to distributions
and upon voluntary or involuntary liquidation, dissolution or winding up ) shall
be declared or paid or set aside for payment or other dividend be declared or
made upon the common stock or any other equity securities ranking junior to or
on a parity with the series C preferred stock as to distributions or upon
voluntary or involuntary liquidation, dissolution or winding up, nor shall any
common stock or any other equity securities ranking junior to or on a parity
with the series C preferred stock as to distributions or upon voluntary or
involuntary liquidation, dissolution or winding up, be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such securities) by us
(except by conversion into or exchange for other equity securities ranking
junior to the series C preferred stock as to distributions and upon voluntary or
involuntary liquidation, dissolution or winding up and pursuant to the
provisions of our charter providing for limitations on ownership and transfer in
order to ensure that we remain qualified as a real estate investment trust).
When dividends are not paid in full (or a sum sufficient for such full payment
is not so set apart) upon the series C preferred stock and any other equity
securities ranking as to distributions on a parity with the series C preferred
stock, all dividends declared upon the series C preferred stock and any other
equity securities ranking on a parity with the series C preferred stock as to
distributions and upon voluntary or involuntary liquidation, dissolution or
winding up will be declared pro rata so that the amount of dividends declared
per share of series C preferred stock and each such other equity securities
shall bear to each other the same ratio that accumulated dividends per share of
series C preferred stock and such other equity securities (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such other equity securities do not have a cumulative dividend) bear
to each other. Dividends on the series C preferred stock will accumulate whether
or not we have funds legally available for the payment of dividends and whether
or not we declare dividends. If we designate any portion of a dividend as a
"capital gain dividend," a holder's share of the capital gain dividend will be
an amount that bears the same ratio to the total amount of dividends (as
determined for federal income tax purposes) paid to the holder for the year as
the aggregate amount designated as a capital gain dividend bears to the
aggregate amount of all dividends (as determined for federal income tax
purposes) paid on all classes of shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of series C preferred stock, the holders of the
series C preferred stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the series C preferred stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the series C preferred stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of
11
another entity with or into us, a statutory share exchange or the sale, lease,
transfer or conveyance of all or substantially all of our property or business
do not constitute a liquidation, dissolution or winding up for purposes of
triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series C preferred stock and our assets are
insufficient to make full payment to holders of the series C preferred stock and
the corresponding amounts payable on all shares of other classes or series of
equity securities ranking on a parity with the series C preferred stock as to
liquidation rights, then the holders of the series C preferred stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The series C preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
C preferred stock prior to November 24, 2003. On and after November 24, 2003, we
can redeem the series C preferred stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series C preferred stock.
Holders of series C preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series C preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series C preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series C preferred stock. So long as any
shares of series C preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of series C preferred stock (the
series C preferred stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series C
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series C preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series C preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially, as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series C
preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series C preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or transferee entity is a corporation,
business trust or like entity organized under the laws of any state and
substitutes for the series C preferred stock other preferred stock or preferred
shares having substantially the same terms and rights as the series C preferred
stock, the occurrence of any such event will not be considered to materially and
adversely affect rights, preferences, privileges or voting powers of holders of
series C preferred stock. Any increase in the amount of authorized preferred
stock, the creation or issuance of any other class or series of preferred stock
or any increase in an amount of authorized shares of each class or series, in
each case ranking on a parity with or junior to the series C preferred stock
will not be considered to materially and adversely affect such rights,
preferences, privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of series C preferred stock issuable to the holders of AMB Property
II, L.P. series C preferred units as soon as practicable but not later than 60
days after the date the AMB Property II, L.P. series C preferred units are
exchanged for shares of series C preferred stock. We have also agreed to use our
best efforts to cause the registration statement to be declared effective within
120 days after the date of the exchange.
SERIES D PREFERRED STOCK. We currently have no shares of series D
preferred stock issued or outstanding. The series D preferred stock is issuable
upon exchange of AMB Property II, L.P. series D preferred units. The AMB
Property II, L.P. series D preferred units
12
are exchangeable in whole at any time on or after May 5, 2009, at the option of
51% of the holders of all outstanding series D preferred units, on a one-for-one
basis, subject to adjustment, for shares of our series D preferred stock. In
addition, AMB Property II, L.P. series D preferred units are exchangeable in
whole at any time at the option of 51% of the holders of all outstanding series
D preferred units of AMB Property II, L.P. if:
- any series D Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB
Property II, L.P., or one of its subsidiaries takes the position,
and a holder or holders of series D preferred units receive an
opinion of independent counsel that AMB Property II, L.P. is, or
upon the happening of a certain event likely will be, a "publicly
traded partnership" within the meaning of the Internal Revenue
Code.
The series D preferred units of AMB Property II, L.P. are exchangeable in
whole for shares of our series D preferred stock at any time after May 5, 2002
and prior to May 5, 2009 at the option of 51% of the holders of all outstanding
series D preferred units if those holders deliver to AMB Property Holding
Corporation a private letter ruling or an opinion of independent counsel to the
effect that an exchange of the series D preferred units at that time would not
cause the series D preferred units to be considered "stock and securities"
within the meaning of the Internal Revenue Code for purposes of determining
whether the holder of the series D preferred units is an "investment company"
under the Internal Revenue.
In lieu of an exchange for our series D preferred stock, AMB Property II,
L.P. may redeem the series D preferred units for cash in an amount equal to the
original capital account balance of the holder of AMB Property II, L.P. series D
preferred units. A holder of series D preferred units of AMB Property II, L.P.
will not be entitled to exchange the units for series D preferred stock if the
exchange would result in a violation of the ownership limit. See "Description of
Capital Stock -- Restrictions on Ownership and Transfer of Capital Stock."
The series D preferred stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
D preferred stock;
- junior to all equity securities issued by us which rank senior to
the series D preferred stock; and
- on a parity with all equity securities issued by us (including the
series A preferred stock and any series B, C, E, F, G, H, I or J
preferred stock) other than those referred to in the bullet points
above. The term "equity securities" does not include convertible
debt securities until converted into equity securities.
If ever issued, the series D preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
7.75% of the liquidation preference per annum (equivalent to $3.875 per annum
per share of series D preferred stock). Dividends on the series D preferred
stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the series D preferred stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than in common stock or other equity
securities ranking junior to the series D preferred stock as to distributions
and upon voluntary or involuntary liquidation, dissolution or winding up) shall
be declared or paid or set aside for payment or other dividend be declared or
made upon the common stock or any other equity securities ranking as to
distributions or upon voluntary or involuntary liquidation, dissolution or
winding up junior to or on a parity with the series D preferred stock, nor shall
any common stock or any other equity securities ranking junior to or on a parity
with the series D preferred stock as to distributions or upon voluntary or
involuntary liquidation, dissolution or winding up be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such securities) by us
(except by conversion into or exchange for other equity securities ranking
junior to the series D preferred stock and pursuant to the provisions of our
charter providing for limitations on ownership and transfer in order to ensure
that we remain qualified as a real estate investment trust). When dividends are
not paid in full (or a sum sufficient for such full payment is not so set apart)
upon the series D preferred stock and any other equity securities ranking as to
distributions on a parity with the series D preferred stock, all dividends
declared upon the series D preferred stock and any other equity securities
ranking on a parity with the series D preferred stock as to distributions and
upon
13
voluntary or involuntary liquidation, dissolution or winding up will be declared
pro rata so that the amount of dividends declared per share of series D
preferred stock and each such other equity securities shall bear to each other
the same ratio that accumulated dividends per share of series D preferred stock
and such other equity securities (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if such other equity
securities do not have a cumulative dividend) bear to each other. Dividends on
the series D preferred stock will accumulate whether or not we have funds
legally available for the payment of dividends and whether or not we declare
dividends. If we designate any portion of a dividend as a "capital gain
dividend," a holder's share of the capital gain dividend will be an amount that
bears the same ratio to the total amount of dividends (as determined for federal
income tax purposes) paid to the holder for the year as the aggregate amount
designated as a capital gain dividend bears to the aggregate amount of all
dividends (as determined for federal income tax purposes) paid on all classes of
shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of series D preferred stock, the holders of the
series D preferred stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the series D preferred stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the series D preferred stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series D preferred stock and our assets are
insufficient to make full payment to holders of the series D preferred stock and
the corresponding amounts payable on all shares of other classes or series of
equity securities ranking on a parity with the series D preferred stock as to
liquidation rights then the holders of the series D preferred stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The series D preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
D preferred stock prior to May 5, 2004. On and after May 5, 2004, we can redeem
the series D preferred stock for cash at our option, in whole or from time to
time in part, at a redemption price of $50.00 per share, plus accumulated and
unpaid dividends, if any, to the redemption date. We must pay the redemption
price (other than the portion of the redemption price consisting of accumulated
and unpaid dividends) solely out of the sale proceeds of other equity
securities, which may include other classes or series of preferred stock. In
certain circumstances related to our maintenance of our ability to qualify as a
real estate investment trust for federal income tax purposes, we may redeem
shares of series D preferred stock.
Holders of series D preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series D preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series D preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series D preferred stock. So long as any
shares of series D preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of series D preferred stock (the
series D preferred stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series D
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series D preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series D preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially, as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series D
preferred stock.
14
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series D preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or transferee entity is a corporation,
business trust or like entity organized under the laws of any state and
substitutes for the series D preferred stock other preferred stock or preferred
shares having substantially the same terms and rights as the series D preferred
stock, the occurrence of any such event will not be considered to materially and
adversely affect rights, preferences, privileges or voting powers of holders of
series D preferred stock. Any increase in the amount of authorized preferred
stock, the creation or issuance of any other class or series of preferred stock
or any increase in an amount of authorized shares of each class or series, in
each case ranking on a parity with or junior to the series D preferred stock
will not be considered to materially and adversely affect such rights,
preferences, privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of series D preferred stock issuable to the holders of AMB Property
II, L.P. series D preferred units as soon as practicable but not later than 60
days after the date the AMB Property II, L.P. series D preferred units are
exchanged for shares of series D preferred stock. We have also agreed to use our
best efforts to cause the registration statement to be declared effective within
120 days after the date of the exchange.
SERIES E PREFERRED STOCK. We currently have no shares of series E
preferred stock issued or outstanding. The series E preferred stock is issuable
upon exchange of AMB Property II, L.P. series E preferred units. The AMB
Property II, L.P. series E preferred units are exchangeable in whole at any time
on or after August 31, 2009, at the option of 51% of the holders of all
outstanding series E preferred units, on a one-for-one basis, subject to
adjustment, for shares of our series E preferred stock. In addition, AMB
Property II, L.P. series E preferred units are exchangeable in whole at any time
at the option of 51% of the holders of all outstanding series E preferred units
of AMB Property II, L.P. if:
- any series E Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB
Property II, L.P., or one of its subsidiaries takes the position,
and a holder or holders of series E preferred units receive an
opinion of independent counsel that AMB Property II, L.P. is, or
upon the happening of a certain event likely will be, a "publicly
traded partnership" within the meaning of the Internal Revenue
Code.
The series E preferred units of AMB Property II, L.P. are exchangeable in
whole for shares of our series E preferred stock at any time after August 31,
2002 and prior to August 31, 2009 at the option of 51% of the holders of all
outstanding series E preferred units if those holders deliver to AMB Property
Holding Corporation a private letter ruling or an opinion of independent counsel
to the effect that an exchange of the series E preferred units at that time
would not cause the series E preferred units to be considered "stock and
securities" within the meaning of the Internal Revenue Code for purposes of
determining whether the holder of the series E preferred units is an "investment
company" under the Internal Revenue Code.
In lieu of an exchange for our series E preferred stock, AMB Property II,
L.P. may redeem the series E preferred units for cash in an amount equal to the
original capital account balance of the holder of AMB Property II, L.P. series E
preferred units. A holder of series E preferred units will not be entitled to
exchange the units for series E preferred stock if the exchange would result in
a violation of the ownership limit. See "Description of Capital Stock --
Restrictions on Ownership and Transfer of Capital Stock."
The series E preferred stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
E preferred stock;
- junior to all equity securities issued by us which rank senior to
the series E preferred stock; and
- on a parity with all equity securities issued by us (including the
series A, B, C, D, F, G, H, I and J preferred stock) other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities until
converted into equity securities.
If ever issued, the series E preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
7.75% of the liquidation preference per
15
annum (equivalent to $3.875 per annum per share of series E preferred stock).
Dividends on the series E preferred stock accumulate on a daily basis and are
payable quarterly in arrears on the 15th day of each January, April, July and
October. Except as provided below, unless full cumulative dividends on the
series E preferred stock have been or at the same time are declared and paid or
declared and a sum sufficient for payment set apart for payment for all past
dividend periods and the then current dividend period, no dividends (other than
in common stock or other equity securities ranking junior to the series E
preferred stock as to distributions and upon voluntary or involuntary
liquidation, dissolution or winding up) shall be declared or paid or set aside
for payment or other dividend be declared or made upon the common stock or any
other equity securities ranking as to distributions or upon voluntary or
involuntary liquidation, dissolution or winding up junior to or on a parity with
the series E preferred stock, nor shall any common stock or any other equity
securities ranking junior to or on a parity with the series E preferred stock as
to distributions or upon voluntary or involuntary liquidation, dissolution or
winding up be redeemed, purchased or otherwise acquired for any consideration
(or any monies be paid to or made available for a sinking fund for the
redemption of any such securities) by us (except by conversion into or exchange
for other equity securities ranking junior to the series E preferred stock as to
distributions and upon voluntary or involuntary liquidation, dissolution or
winding up and pursuant to the provisions of our charter providing for
limitations on ownership and transfer in order to ensure that we remain
qualified as a real estate investment trust). When dividends are not paid in
full (or a sum sufficient for such full payment is not so set apart) upon the
series E preferred stock and any other equity securities ranking as to
distributions on a parity with the series E preferred stock, all dividends
declared upon the series E preferred stock and any other equity securities
ranking on a parity with the series E preferred stock as to distributions and
upon voluntary or involuntary liquidation, dissolution or winding up will be
declared pro rata so that the amount of dividends declared per share of series E
preferred stock and each such other equity securities shall bear to each other
the same ratio that accumulated dividends per share of series E preferred stock
and such other equity securities (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if such other equity
securities do not have a cumulative dividend) bear to each other. Dividends on
the series E preferred stock will accumulate whether or not we have funds
legally available for the payment of dividends and whether or not we declare
dividends. If we designate any portion of a dividend as a "capital gain
dividend," a holder's share of the capital gain dividend will be an amount that
bears the same ratio to the total amount of dividends (as determined for federal
income tax purposes) paid to the holder for the year as the aggregate amount
designated as a capital gain dividend bears to the aggregate amount of all
dividends (as determined for federal income tax purposes) paid on all classes of
shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of series E preferred stock, the holders of the
series E preferred stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the series E preferred stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the series E preferred stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series E preferred stock and our assets are
insufficient to make full payment to holders of the series E preferred stock and
the corresponding amounts payable on all shares of other classes or series of
equity securities ranking on a parity with the series E preferred stock as to
liquidation rights, then the holders of the series E preferred stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The series E preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
E preferred stock prior to August 31, 2004. On and after August 31, 2004, we can
redeem the series E preferred stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series E preferred stock.
Holders of series E preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series E preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series E preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series E preferred stock. So long as any
shares of series E preferred stock remain
16
outstanding, we may not, without the affirmative vote or consent of at least
two-thirds of the votes entitled to be cast by the holders of the outstanding
shares of series E preferred stock (the series E preferred stock voting
separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series E
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series E preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series E preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially, as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series E
preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series E preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or transferee entity is a corporation,
business trust or like entity organized under the laws of any state and
substitutes for the series E preferred stock other preferred stock or preferred
shares having substantially the same terms and rights as the series E preferred
stock, the occurrence of any such event will not be considered to materially and
adversely affect rights, preferences, privileges or voting powers of holders of
series E preferred stock. Any increase in the amount of authorized preferred
stock, the creation or issuance of any other class or series of preferred stock
or any increase in an amount of authorized shares of each class or series, in
each case ranking on a parity with or junior to the series E preferred stock
will not be considered to materially and adversely affect such rights,
preferences, privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of series E preferred stock issuable to the holders of AMB Property
II, L.P. series E preferred units as soon as practicable but not later than 60
days after the date the AMB Property II, L.P. series E preferred units are
exchanged for shares of series E preferred stock. We have also agreed to use our
best efforts to cause the registration statement to be declared effective within
120 days after the date of the exchange.
SERIES F PREFERRED STOCK. We currently have no shares of series F
preferred stock issued or outstanding. The series F preferred stock is issuable
upon exchange of AMB Property II, L.P. series F preferred units. The AMB
Property II, L.P. series F preferred units are exchangeable in whole at any time
on or after March 22, 2010, at the option of 51% of the holders of all
outstanding series F preferred units, on a one-for-one basis, subject to
adjustment, for shares of our series F preferred stock. In addition, AMB
Property II, L.P. series F preferred units are exchangeable in whole at any time
at the option of 51% of the holders of all outstanding series F preferred units
of AMB Property II, L.P. if:
- any series F Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB
Property II, L.P., or one of its subsidiaries takes the position,
and a holder or holders of series F preferred units receive an
opinion of independent counsel that AMB Property II, L.P. is, or
upon the happening of a certain event likely will be, a "publicly
traded partnership" within the meaning of the Internal Revenue
Code.
The series F preferred units of AMB Property II, L.P. are exchangeable in
whole for shares of our series F preferred stock at any time after March 22,
2003 and prior to March 22, 2010 at the option of 51% of the holders of all
outstanding series F preferred units of AMB Property II, L.P. if those holders
deliver to AMB Property Holding Corporation a private letter ruling or an
opinion of independent counsel to the effect that an exchange of the series F
preferred units at that time would not cause the series F preferred units to be
considered "stock and securities" within the meaning of the Internal Revenue
Code for purposes of determining whether the holder of the series F preferred
units is an "investment company" under the Internal Revenue Code.
17
In addition, the series F preferred units of AMB Property II, L.P. may be
exchanged, in whole but not in part, at the option of 51% of the holders, at any
time that there exists an imminent and substantial risk that such holders'
interest in AMB Property II, L.P. represents or will represent more than 19.0%
of the total profits of or capital interests in AMB Property II, L.P. for a
taxable year.
Furthermore, the AMB Property II, L.P. series F preferred units may be
exchanged, in whole but not in part, at the option of 51% of the holders, if the
AMB Property II, L.P. series F preferred units are held by a real estate
investment trust and excluding the effect of certain loans and advances for
purposes of the 5% test of Section 856(c)(4)(B) of the Internal Revenue Code,
either:
- AMB Property II, L.P. is advised by counsel that, based on the
assets and income of AMB Property II, L.P. for a taxable year
after 1998, it would not satisfy the income and assets tests of
Section 856 of the Internal Revenue Code for such taxable year if
it were a real estate investment trust; or
- the holder of the AMB Property II, L.P. series F preferred units
delivers an opinion of independent counsel to the effect that,
based on the assets and income of AMB Property II, L.P. for a
taxable year after 1999, AMB Property II, L.P. would not satisfy
the income and assets tests of Section 856 of the Internal Revenue
Code for such taxable year if it were a real estate investment
trust and that such failure would create a meaningful risk that
the holder of the AMB Property II, L.P. series F preferred units
would fail to maintain its qualification as a real estate
investment trust.
In lieu of an exchange for series F preferred stock, AMB Property II,
L.P. may redeem the series F preferred units for cash in an amount equal to the
original capital account balance of the holder of the series F preferred units.
A holder of series F preferred units of AMB Property II, L.P. will not be
entitled to exchange the units for series F preferred stock if the exchange
would result in a violation of the ownership limit. See "Description of Capital
Stock -- Restrictions on Ownership and Transfer of Capital Stock."
The series F preferred stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
F preferred stock;
- junior to all equity securities issued by us which rank senior to
the series F preferred stock; and
- on a parity with all equity securities issued by us (including the
series A, B, C, D, E, G, H, I and J preferred stock) other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities until
converted into equity securities.
If ever issued, the series F preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
7.95% of the liquidation preference per annum (equivalent to $3.975 per annum
per share of series F preferred stock). Dividends on the series F preferred
stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the series F preferred stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than in common stock or other equity
securities ranking junior to the series F preferred stock as to distributions
and upon voluntary or involuntary liquidation, dissolution or winding up) shall
be declared or paid or set aside for payment or other dividend be declared or
made upon the common stock or any other equity securities ranking as to
distributions or upon voluntary or involuntary liquidation, dissolution or
winding up junior to or on a parity with the series F preferred stock, nor shall
any common stock or any other equity securities ranking junior to or on a parity
with the series F preferred stock as to distributions or upon voluntary or
involuntary liquidation, dissolution or winding up be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such securities) by us
(except by conversion into or exchange for other equity securities ranking
junior to the series F preferred stock as to distributions and upon voluntary or
involuntary liquidation, dissolution or winding up and pursuant to the
provisions of our charter providing for limitations on ownership and transfer in
order to ensure that we remain qualified as a real estate investment trust).
When dividends are not paid in full (or a sum sufficient for such full payment
is not so set apart) upon the series F preferred stock and any other equity
securities ranking as to distributions on a parity with the series F preferred
stock, all dividends declared upon the series F preferred stock and any other
equity securities ranking on a parity with the series F preferred stock as to
distributions and upon voluntary or involuntary liquidation, dissolution or
winding up will be declared pro rata so that the amount of dividends declared
per share of series F preferred stock and each such other equity securities
shall bear to each other the same ratio that accumulated dividends per share of
series F preferred stock and such other
18
equity securities (which shall not include any accumulation in respect of unpaid
dividends for prior dividend periods if such other equity securities do not have
a cumulative dividend) bear to each other. Dividends on the series F preferred
stock will accumulate whether or not we have funds legally available for the
payment of dividends and whether or not we declare dividends. If we designate
any portion of a dividend as a "capital gain dividend," a holder's share of the
capital gain dividend will be an amount that bears the same ratio to the total
amount of dividends (as determined for federal income tax purposes) paid to the
holder for the year as the aggregate amount designated as a capital gain
dividend bears to the aggregate amount of all dividends (as determined for
federal income tax purposes) paid on all classes of shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of series F preferred stock, the holders of the
series F preferred stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the series F preferred stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the series F preferred stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series F preferred stock and our assets are
insufficient to make full payment to holders of the series F preferred stock and
the corresponding amounts payable on all shares of other classes or series of
equity securities ranking on a parity with the series F preferred stock as to
liquidation rights, then the holders of the series F preferred stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The series F preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
F preferred stock prior to March 22, 2005. On and after March 22, 2005, we can
redeem the series F preferred stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series F preferred stock.
Holders of series F preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series F preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series F preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series F preferred stock. So long as any
shares of series F preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of series F preferred stock (the
series F preferred stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series F
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series F preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series F preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially, as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series F
preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series F preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or
19
transferee entity is a corporation, business trust or like entity organized
under the laws of any state and substitutes for the series F preferred stock
other preferred stock or preferred shares having substantially the same terms
and rights as the series F preferred stock, the occurrence of any such event
will not be considered to materially and adversely affect rights, preferences,
privileges or voting powers of holders of series F preferred stock. Any increase
in the amount of authorized preferred stock, the creation or issuance of any
other class or series of preferred stock or any increase in an amount of
authorized shares of each class or series, in each case ranking on a parity with
or junior to the series F preferred stock will not be considered to materially
and adversely affect such rights, preferences, privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of series F preferred stock issuable to the holders of AMB Property
II, L.P. series F preferred units as soon as practicable but not later than 60
days after the date the AMB Property II, L.P. series F preferred units are
exchanged for shares of series F preferred stock. We have also agreed to use our
best efforts to cause the registration statement to be declared effective within
120 days after the date of the exchange.
SERIES G PREFERRED STOCK. We currently have no shares of series G
preferred stock issued or outstanding. The series G preferred stock is issuable
upon exchange of AMB Property II, L.P. series G preferred units. The AMB
Property II, L.P. series G preferred units are exchangeable in whole at any time
on or after August 29, 2010, at the option of 51% of the holders of all
outstanding series G preferred units, on a one-for-one basis, subject to
adjustment, for shares of our series G preferred stock. In addition, AMB
Property II, L.P. series G preferred units are exchangeable in whole at any time
at the option of 51% of the holders of all outstanding series G preferred units
of AMB Property II, L.P. if:
- any series G Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB
Property II, L.P., or one of its subsidiaries takes the position,
and a holder or holders of series G preferred units receive an
opinion of independent counsel that AMB Property II, L.P. is, or
upon the happening of a certain event likely will be, a "publicly
traded partnership" within the meaning of the Internal Revenue
Code.
The series G preferred units of AMB Property II, L.P. are exchangeable in
whole for shares of our series G preferred stock at any time after August 29,
2003 and prior to August 29, 2010 at the option of 51% of the holders of all
outstanding series G preferred units of AMB Property II, L.P. if those holders
deliver to AMB Property Holding Corporation a private letter ruling or an
opinion of independent counsel to the effect that an exchange of the series G
preferred units at that time would not cause the series G preferred units to be
considered "stock and securities" within the meaning of the Internal Revenue
Code for purposes of determining whether the holder of the series G preferred
units is an "investment company" under the Internal Revenue Code.
In addition, the series G preferred units of AMB Property II, L.P. may be
exchanged, in whole but not in part, at the option of 51% of the holders, at any
time that there exists an imminent and substantial risk that such holders'
interest in AMB Property II, L.P. represents or will represent more than 19.0%
of the total profits of or capital interests in AMB Property II, L.P. for a
taxable year.
Furthermore, the AMB Property II, L.P. series G preferred units may be
exchanged, in whole but not in part, at the option of 51% of the holders, if the
AMB Property II, L.P. series G preferred units are held by a real estate
investment trust and excluding the effect of certain loans and advances for
purposes of the 5% test of Section 856(c)(4)(B) of the Internal Revenue Code,
either:
- AMB Property II, L.P. is advised by counsel that, based on the
assets and income of AMB Property II, L.P. for a taxable year
after 1999, it would not satisfy the income and assets tests of
Section 856 of the Internal Revenue Code for such taxable year if
it were a real estate investment trust; or
- the holder of the AMB Property II, L.P. series G preferred units
delivers an opinion of independent counsel to the effect that,
based on the assets and income of AMB Property II, L.P. for a
taxable year after 1999, AMB Property II, L.P. would not satisfy
the income and assets tests of Section 856 of the Internal Revenue
Code for such taxable year if it were a real estate investment
trust and that such failure would create a meaningful risk that
the holder of the AMB Property II, L.P. series G preferred units
would fail to maintain its qualification as a real estate
investment trust.
In lieu of an exchange for series G preferred stock, AMB Property II,
L.P. may redeem the series G preferred units for cash in an amount equal to the
original capital account balance of the holder of the series G preferred units.
A holder of series G preferred units
20
of AMB Property II, L.P. will not be entitled to exchange the units for series G
preferred stock if the exchange would result in a violation of the ownership
limit. See "Description of Capital Stock -- Restrictions on Ownership and
Transfer of Capital Stock."
The series G preferred stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
G preferred stock;
- junior to all equity securities issued by us which rank senior to
the series G preferred stock; and
- on a parity with all equity securities issued by us (including the
series A, B, C, D, E, F, H, I and J preferred stock) other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities until
converted into equity securities.
If ever issued, the series G preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
7.95% of the liquidation preference per annum (equivalent to $3.975 per annum
per share of series G preferred stock). Dividends on the series G preferred
stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the series G preferred stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than in common stock or other equity
securities ranking junior to the series G preferred stock as to distributions
and upon voluntary or involuntary liquidation, dissolution or winding up) shall
be declared or paid or set aside for payment or other dividend be declared or
made upon the common stock or any other equity securities ranking as to
distributions or upon voluntary or involuntary liquidation, dissolution or
winding up junior to or on a parity with the series G preferred stock, nor shall
any common stock or any other equity securities ranking junior to or on a parity
with the series G preferred stock as to distributions or upon voluntary or
involuntary liquidation, dissolution or winding up be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such securities) by us
(except by conversion into or exchange for other equity securities ranking
junior to the series G preferred stock as to distributions and upon voluntary or
involuntary liquidation, dissolution or winding up and pursuant to the
provisions of our charter providing for limitations on ownership and transfer in
order to ensure that we remain qualified as a real estate investment trust).
When dividends are not paid in full (or a sum sufficient for such full payment
is not so set apart) upon the series G preferred stock and any other equity
securities ranking as to distributions on a parity with the series G preferred
stock, all dividends declared upon the series G preferred stock and any other
equity securities ranking on a parity with the series G preferred stock as to
distributions and upon voluntary or involuntary liquidation, dissolution or
winding up will be declared pro rata so that the amount of dividends declared
per share of series G preferred stock and each such other equity securities
shall bear to each other the same ratio that accumulated dividends per share of
series G preferred stock and such other equity securities (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such other equity securities do not have a cumulative dividend) bear
to each other. Dividends on the series G preferred stock will accumulate whether
or not we have funds legally available for the payment of dividends and whether
or not we declare dividends. If we designate any portion of a dividend as a
"capital gain dividend," a holder's share of the capital gain dividend will be
an amount that bears the same ratio to the total amount of dividends (as
determined for federal income tax purposes) paid to the holder for the year as
the aggregate amount designated as a capital gain dividend bears to the
aggregate amount of all dividends (as determined for federal income tax
purposes) paid on all classes of shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of series G preferred stock, the holders of the
series G preferred stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the series G preferred stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the series G preferred stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series G preferred stock and our assets are
insufficient to make full payment to holders of the series G preferred stock and
the corresponding amounts payable on all shares of
21
other classes or series of equity securities ranking on a parity with the series
G preferred stock as to liquidation rights, then the holders of the series G
preferred stock and all other such classes or series of equity securities will
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be entitled.
The series G preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
G preferred stock prior to August 29, 2005. On and after August 29, 2005, we can
redeem the series G preferred stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series G preferred stock.
Holders of series G preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series G preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series G preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series G preferred stock. So long as any
shares of series G preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of series G preferred stock (the
series G preferred stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series G
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series G preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series G preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially, as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series G
preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series G preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or transferee entity is a corporation,
business trust or like entity organized under the laws of any state and
substitutes for the series G preferred stock other preferred stock or preferred
shares having substantially the same terms and rights as the series G preferred
stock, the occurrence of any such event will not be considered to materially and
adversely affect rights, preferences, privileges or voting powers of holders of
series G preferred stock. Any increase in the amount of authorized preferred
stock, the creation or issuance of any other class or series of preferred stock
or any increase in an amount of authorized shares of each class or series, in
each case ranking on a parity with or junior to the series G preferred stock
will not be considered to materially and adversely affect such rights,
preferences, privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of series G preferred stock issuable to the holders of AMB Property
II, L.P. series G preferred units as soon as practicable but not later than 60
days after the date the AMB Property II, L.P. series G preferred units are
exchanged for shares of series G preferred stock. We have also agreed to use our
best efforts to cause the registration statement to be declared effective within
120 days after the date of the exchange.
SERIES H PREFERRED STOCK. We currently have no shares of series H
preferred stock issued or outstanding. The series H preferred stock is issuable
upon exchange of AMB Property II, L.P. series H preferred units. The AMB
Property II, L.P. series H preferred units are exchangeable in whole at any time
on or after September 1, 2010, at the option of 51% of the holders of all
outstanding series H preferred units, on a one-for-one basis, subject to
adjustment, for shares of our series H preferred stock. In addition, AMB
Property II, L.P. series H preferred units are exchangeable in whole at any time
at the option of 51% of the holders of all outstanding series H preferred units
of AMB Property II, L.P. if:
22
- any series H Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB
Property II, L.P., or one of its subsidiaries takes the position,
and a holder or holders of series H preferred units receive an
opinion of independent counsel that AMB Property II, L.P. is, or
upon the happening of a certain event likely will be, a "publicly
traded partnership" within the meaning of the Internal Revenue
Code.
The series H preferred units of AMB Property II, L.P. are exchangeable in
whole for shares of our series H preferred stock at any time after September 1,
2003 and prior to September 1, 2010 at the option of 51% of the holders of all
outstanding series H preferred units of AMB Property II, L.P. if those holders
deliver to AMB Property Holding Corporation a private letter ruling or an
opinion of independent counsel to the effect that an exchange of the series H
preferred units at that time would not cause the series H preferred units to be
considered "stock and securities" within the meaning of the Internal Revenue
Code for purposes of determining whether the holder of the series H preferred
units is an "investment company" under the Internal Revenue Code.
In lieu of an exchange for series H preferred stock, AMB Property II,
L.P. may redeem the series H preferred units for cash in an amount equal to the
original capital account balance of the holder of the series H preferred units.
A holder of series H preferred units of AMB Property II, L.P. will not be
entitled to exchange the units for series H preferred stock if the exchange
would result in a violation of the ownership limit. See "Description of Capital
Stock -- Restrictions on Ownership and Transfer of Capital Stock."
The series H preferred stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
H preferred stock;
- junior to all equity securities issued by us which rank senior to
the series H preferred stock; and
- on a parity with all equity securities issued by us (including the
series A, B, C, D, E, F, G, I and J preferred stock) other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities until
converted into equity securities.
If ever issued, the series H preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
8.125% of the liquidation preference per annum (equivalent to $4.0625 per annum
per share of series H preferred stock). Dividends on the series H preferred
stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the series H preferred stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than in common stock or other equity
securities ranking junior to the series H preferred stock as to distributions
and upon voluntary or involuntary liquidation, dissolution or winding up) shall
be declared or paid or set aside for payment or other dividend be declared or
made upon the common stock or any other equity securities ranking as to
distributions or upon voluntary or involuntary liquidation, dissolution or
winding up junior to or on a parity with the series H preferred stock, nor shall
any common stock or any other equity securities ranking junior to or on a parity
with the series H preferred stock as to distributions or upon voluntary or
involuntary liquidation, dissolution or winding up be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such securities) by us
(except by conversion into or exchange for other equity securities ranking
junior to the series H preferred stock as to distributions and upon voluntary or
involuntary liquidation, dissolution or winding up and pursuant to the
provisions of our charter providing for limitations on ownership and transfer in
order to ensure that we remain qualified as a real estate investment trust).
When dividends are not paid in full (or a sum sufficient for such full payment
is not so set apart) upon the series H preferred stock and any other equity
securities ranking as to distributions on a parity with the series H preferred
stock, all dividends declared upon the series H preferred stock and any other
equity securities ranking on a parity with the series H preferred stock as to
distributions and upon voluntary or involuntary liquidation, dissolution or
winding up will be declared pro rata so that the amount of dividends declared
per share of series H preferred stock and each such other equity securities
shall bear to each other the same ratio that accumulated dividends per share of
series H preferred stock and such other equity securities (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such other equity securities do not have a cumulative dividend) bear
to each other. Dividends on the series H preferred stock will accumulate whether
or not we have funds legally available for the payment of dividends and whether
or not we declare dividends.
23
If we designate any portion of a dividend as a "capital gain dividend," a
holder's share of the capital gain dividend will be an amount that bears the
same ratio to the total amount of dividends (as determined for federal income
tax purposes) paid to the holder for the year as the aggregate amount designated
as a capital gain dividend bears to the aggregate amount of all dividends (as
determined for federal income tax purposes) paid on all classes of shares for
the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of series H preferred stock, the holders of the
series H preferred stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the series H preferred stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the series H preferred stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series H preferred stock and our assets are
insufficient to make full payment to holders of the series H preferred stock and
the corresponding amounts payable on all shares of other classes or series of
equity securities ranking on a parity with the series H preferred stock as to
liquidation rights, then the holders of the series H preferred stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The series H preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
H preferred stock prior to September 1, 2005. On and after September 1, 2005, we
can redeem the series H preferred stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series H preferred stock.
Holders of series H preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series H preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series H preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series H preferred stock. So long as any
shares of series H preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of series H preferred stock (the
series H preferred stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series H
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series H preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series H preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially, as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series H
preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series H preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or transferee entity is a corporation,
business trust or like entity organized under the laws of any state and
substitutes for the series H preferred stock other preferred stock or preferred
shares having substantially the same terms and rights as the series H preferred
stock, the occurrence of any such event will not be considered to materially and
adversely affect rights, preferences, privileges or voting
24
powers of holders of series H preferred stock. Any increase in the amount of
authorized preferred stock, the creation or issuance of any other class or
series of preferred stock or any increase in an amount of authorized shares of
each class or series, in each case ranking on a parity with or junior to the
series H preferred stock will not be considered to materially and adversely
affect such rights, preferences, privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of series H preferred stock issuable to the holders of AMB Property
II, L.P. series H preferred units as soon as practicable but not later than 60
days after the date the AMB Property II, L.P. series H preferred units are
exchanged for shares of series H preferred stock. We have also agreed to use our
best efforts to cause the registration statement to be declared effective within
120 days after the date of the exchange.
SERIES I PREFERRED STOCK. We currently have no shares of series I
preferred stock issued or outstanding. The series I preferred stock is issuable
upon exchange of AMB Property II, L.P. series I preferred units. The AMB
Property II, L.P. series I preferred units are exchangeable in whole at any time
on or after March 21, 2011, at the option of 51% of the holders of all
outstanding series I preferred units, on a one-for-one basis, subject to
adjustment, for shares of our series I preferred stock. In addition, AMB
Property II, L.P. series I preferred units are exchangeable in whole at any time
at the option of 51% of the holders of all outstanding series I preferred units
of AMB Property II, L.P. if:
- any series I Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
- AMB Property Holding Corporation, the general partner of AMB
Property II, L.P., or one of its subsidiaries takes the position,
and a holder or holders of series I preferred units receive an
opinion of independent counsel that AMB Property II, L.P. is, or
upon the happening of a certain event likely will be, a "publicly
traded partnership" within the meaning of the Internal Revenue
Code.
The series I preferred units of AMB Property II, L.P. are exchangeable in
whole for shares of our series I preferred stock at any time after March 21,
2011 and prior to March 21, 2011 at the option of 51% of the holders of all
outstanding series I preferred units of AMB Property II, L.P. if those holders
deliver to AMB Property Holding Corporation a private letter ruling or an
opinion of independent counsel to the effect that an exchange of the series I
preferred units at that time would not cause the series I preferred units to be
considered "stock and securities" within the meaning of the Internal Revenue
Code for purposes of determining whether the holder of the series I preferred
units is an "investment company" under the Internal Revenue Code.
In lieu of an exchange for series I preferred stock, AMB Property II,
L.P. may redeem the series I preferred units for cash in an amount equal to the
original capital account balance of the holder of the series I preferred units.
A holder of series I preferred units of AMB Property II, L.P. will not be
entitled to exchange the units for series I preferred stock if the exchange
would result in a violation of the ownership limit. See "Description of Capital
Stock -- Restrictions on Ownership and Transfer of Capital Stock."
The series I preferred stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
I preferred stock;
- junior to all equity securities issued by us which rank senior to
the series I preferred stock; and
- on a parity with all equity securities issued by us (including the
series A, B, C, D, E, F, G, H and J preferred stock) other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities until
converted into equity securities.
If ever issued, the series I preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
8.00% of the liquidation preference per annum (equivalent to $4.00 per annum per
share of series I preferred stock). Dividends on the series I preferred stock
accumulate on a daily basis and are payable quarterly in arrears on the 15th day
of each January, April, July and October. Except as provided below, unless full
cumulative dividends on the series I preferred stock have been or at the same
time are declared and paid or declared and a sum sufficient for payment set
apart for payment for all past dividend periods and the then current dividend
period, no dividends (other than in common stock or other equity securities
ranking junior to the series I preferred stock as to distributions and upon
25
voluntary or involuntary liquidation, dissolution or winding up) shall be
declared or paid or set aside for payment or other dividend be declared or made
upon the common stock or any other equity securities ranking as to distributions
or upon voluntary or involuntary liquidation, dissolution or winding up junior
to or on a parity with the series I preferred stock, nor shall any common stock
or any other equity securities ranking junior to or on a parity with the series
I preferred stock as to distributions or upon voluntary or involuntary
liquidation, dissolution or winding up be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such securities) by us (except by
conversion into or exchange for other equity securities ranking junior to the
series I preferred stock as to distributions and upon voluntary or involuntary
liquidation, dissolution or winding up and pursuant to the provisions of our
charter providing for limitations on ownership and transfer in order to ensure
that we remain qualified as a real estate investment trust). When dividends are
not paid in full (or a sum sufficient for such full payment is not so set apart)
upon the series I preferred stock and any other equity securities ranking as to
distributions on a parity with the series I preferred stock, all dividends
declared upon the series I preferred stock and any other equity securities
ranking on a parity with the series I preferred stock as to distributions and
upon voluntary or involuntary liquidation, dissolution or winding up will be
declared pro rata so that the amount of dividends declared per share of series I
preferred stock and each such other equity securities shall bear to each other
the same ratio that accumulated dividends per share of series I preferred stock
and such other equity securities (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if such other equity
securities do not have a cumulative dividend) bear to each other. Dividends on
the series I preferred stock will accumulate whether or not we have funds
legally available for the payment of dividends and whether or not we declare
dividends. If we designate any portion of a dividend as a "capital gain
dividend," a holder's share of the capital gain dividend will be an amount that
bears the same ratio to the total amount of dividends (as determined for federal
income tax purposes) paid to the holder for the year as the aggregate amount
designated as a capital gain dividend bears to the aggregate amount of all
dividends (as determined for federal income tax purposes) paid on all classes of
shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of series I preferred stock, the holders of the
series I preferred stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the series I preferred stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the series I preferred stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series I preferred stock and our assets are
insufficient to make full payment to holders of the series I preferred stock and
the corresponding amounts payable on all shares of other classes or series of
equity securities ranking on a parity with the series I preferred stock as to
liquidation rights, then the holders of the series I preferred stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The series I preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
I preferred stock prior to March 22, 2005. On and after March 22, 2005, we can
redeem the series I preferred stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series I preferred stock.
Holders of series I preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series I preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series I preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series I preferred stock. So long as any
shares of series I preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of series I preferred stock (the
series I preferred stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series I
preferred stock;
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- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series I preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series I preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially, as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series I
preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series I preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or transferee entity is a corporation,
business trust or like entity organized under the laws of any state and
substitutes for the series I preferred stock other preferred stock or preferred
shares having substantially the same terms and rights as the series I preferred
stock, the occurrence of any such event will not be considered to materially and
adversely affect rights, preferences, privileges or voting powers of holders of
series I preferred stock. Any increase in the amount of authorized preferred
stock, the creation or issuance of any other class or series of preferred stock
or any increase in an amount of authorized shares of each class or series, in
each case ranking on a parity with or junior to the series I preferred stock
will not be considered to materially and adversely affect such rights,
preferences, privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of series I preferred stock issuable to the holders of AMB Property
II, L.P. series I preferred units as soon as practicable but not later than 60
days after the date the AMB Property II, L.P. series I preferred units are
exchanged for shares of series I preferred stock. We have also agreed to use our
best efforts to cause the registration statement to be declared effective within
120 days after the date of the exchange.
SERIES J PREFERRED STOCK. We currently have no shares of series J
preferred stock issued or outstanding. The series J preferred stock is issuable
upon exchange of the operating partnership's series J preferred units. The
operating partnership's series J preferred units are exchangeable in whole at
any time on or after September 21, 2011, at the option of the holders of 51% of
all outstanding series J preferred units, on a one-for-one basis, subject to
adjustment, for shares of our series J preferred stock. In addition, the
operating partnership's series J preferred units are exchangeable in whole at
any time at the option of the holders of 51% of all outstanding series J
preferred units of the operating partnership if:
- any series J Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
- the holders of 51% of all outstanding series J preferred units
reasonably conclude that the operating partnership, if it were
otherwise taxable as a real estate investment trust, either:
- will not or likely will not satisfy the income tests of
Section 856 of the Internal Revenue Code for the year in
which the determination is made, or
- will not or likely will not satisfy the asset tests of
Section 856 of the Internal Revenue Code as of the end of
the calendar quarter in which the determination is made,
which failure will not or is unlikely to be (or is subsequently
not) cured as permitted under Section 856 of the Internal Revenue
Code, the holders of 51% of the series J preferred units deliver
us an opinion concurring with the holders' conclusion, the failure
by the operating partnership would create a meaningful risk that a
holder of the series J preferred units would fail to maintain its
qualification as a real estate investment trust and we, as the
general partner, agree with the conclusions reached by the holders
and in the opinion; provided, that we may not unreasonably
withhold our agreement.
With certain limitations, the series J preferred units of the operating
partnership are also exchangeable, in whole but not in part, at the option of
the holders of 51% of the outstanding series J preferred units if:
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- the holders of 51% of the outstanding series J preferred units
reasonably conclude that there exists an imminent and substantial
risk that the holders' interest in the operating partnership
represents or will represent more than 19.5% of the total profits
or capital interests in the operating partnership for a taxable
year; and
- the holders of 51% of the outstanding series J preferred units
deliver to us an opinion to the effect that there is a substantial
risk that its interest in the operating partnership represents or
will represent more than 19.5% of the total profits or capital
interests in the operating partnership for a taxable year, and
- we, as the general partner, agree with the conclusions in the
prior two bullet points; provided, that we may not unreasonably
withhold our agreement.
In lieu of an exchange for series J preferred stock, we may elect to
cause the operating partnership to redeem the series J preferred units for cash
in an amount equal to the original capital account balance of the holder of the
series J preferred units. A holder of series J preferred units of AMB Property,
L.P. will not be entitled to exchange the units for series J preferred stock if
the exchange would result in a violation of the ownership limit. See
"Description of Capital Stock -- Restrictions on Ownership and Transfer of
Capital Stock."
The series J preferred stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:
- senior to all classes or series of common stock and to all of our
equity securities that provide that they rank junior to the series
J preferred stock;
- junior to all equity securities issued by us which rank senior to
the series J preferred stock; and
- on a parity with all equity securities issued by us (including the
series A, B, C, D, E, F, G, H, and I preferred stock) other than
those referred to in the bullet points above. The term "equity
securities" does not include convertible debt securities until
converted into equity securities.
If ever issued, the series J preferred stock will entitle the holders to
receive, when and as authorized by the board of directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
7.95% of the liquidation preference per annum (equivalent to $3.975 per annum
per share of series J preferred stock). Dividends on the series J preferred
stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the series J preferred stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than in common stock or other equity
securities ranking junior to the series J preferred stock as to distributions
and upon voluntary or involuntary liquidation, dissolution or winding up) shall
be declared or paid or set aside for payment or other dividend be declared or
made upon the common stock or any other equity securities ranking as to
distributions or upon voluntary or involuntary liquidation, dissolution or
winding up junior to or on a parity with the series J preferred stock, nor may
any common stock or any other equity securities ranking as to distributions or
upon voluntary or involuntary liquidation, dissolution or winding up junior to
or on a parity with the series J preferred stock be redeemed, purchased or
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such securities) by us
(except by conversion into or exchange for other equity securities ranking
junior to the series J preferred stock as to distributions and upon voluntary or
involuntary liquidation, dissolution or winding up and pursuant to the
provisions of our charter providing for limitations on ownership and transfer in
order to ensure that we remain qualified as a real estate investment trust).
When dividends are not paid in full (or a sum sufficient for such full payment
is not so set apart) upon the series J preferred stock and any other equity
securities ranking as to distributions on a parity with the series J preferred
stock, all dividends declared upon the series J preferred stock and any other
equity securities ranking as to distributions and upon voluntary or involuntary
liquidation, dissolution or winding up on a parity with the series J preferred
stock will be declared pro rata so that the amount of dividends declared per
share of series J preferred stock and each such other equity securities shall
bear to each other the same ratio that accumulated dividends per share of series
J preferred stock and such other equity securities (which shall not include any
accumulation in respect of unpaid dividends for prior dividend periods if such
other equity securities do not have a cumulative dividend) bear to each other.
Dividends on the series J preferred stock will accumulate whether or not we have
funds legally available for the payment of dividends and whether or not we
declare dividends. If we designate any portion of a dividend as a "capital gain
dividend," a holder's share of the capital gain dividend will be an amount that
bears the same ratio to the total amount of dividends (as determined for federal
income tax purposes) paid to the holder for the year as the aggregate amount
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designated as a capital gain dividend bears to the aggregate amount of all
dividends (as determined for federal income tax purposes) paid on all classes of
shares for the year.
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of series J preferred stock, the holders of the
series J preferred stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the series J preferred stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the series J preferred stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.
If we voluntarily or involuntarily liquidate, dissolve or wind up
following the issuance of series J preferred stock and our assets are
insufficient to make full payment to holders of the series J preferred stock and
the corresponding amounts payable on all shares of other classes or series of
equity securities ranking on a parity with the series J preferred stock as to
liquidation rights, then the holders of the series J preferred stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.
The series J preferred stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the series
J preferred stock prior to September 21, 2006. On and after September 21, 2006,
we can redeem the series J preferred stock for cash at our option, in whole or
from time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a real estate investment trust for federal income tax purposes, we may redeem
shares of series J preferred stock.
Holders of series J preferred stock will have no voting rights, except as
described below. If we do not pay dividends on the series J preferred stock for
six or more quarterly periods (whether or not consecutive), holders of the
series J preferred stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our board of directors until we have eliminated all
dividend arrearages with respect to the series J preferred stock. So long as any
shares of series J preferred stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of series J preferred stock (the
series J preferred stock voting separately as a class):
- authorize or create, or increase the authorized or issued amount
of, any class or series of stock ranking senior to the series J
preferred stock;
- reclassify any of our authorized stock into any class or series of
stock ranking senior to the series J preferred stock;
- designate or create, or increase the authorized or issued amount
of, or reclassify, any authorized shares into, any preferred stock
ranking on a parity with the series J preferred stock or create,
authorize or issue any obligations or securities convertible into
any such shares, but only to the extent such stock is issued to
one of our affiliates; or
- either consolidate, merge into or with, or convey, transfer or
lease our assets substantially, as an entirety, to any corporation
or other entity, or amend, alter or repeal the provisions of our
charter, whether by merger or consolidation or otherwise, in each
case so as to materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the series J
preferred stock.
With respect to the occurrence of any of the events set forth in the
fourth bullet point above, so long as we are either the surviving entity and
shares of series J preferred stock remain outstanding with the terms materially
unchanged or the resulting, surviving or transferee entity is a corporation,
business trust or like entity organized under the laws of any state and
substitutes for the series J preferred stock other preferred stock or preferred
shares having substantially the same terms and rights as the series J preferred
stock, the occurrence of any such event will not be considered to materially and
adversely affect rights, preferences, privileges or voting powers of holders of
series J preferred stock. Any increase in the amount of authorized preferred
stock, the creation or issuance of any other class or series of preferred stock
or any increase in an amount of authorized shares of each class or series, in
each case ranking
29
on a parity with or junior to the series J preferred stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.
We have agreed to file a registration statement registering the resale of
the shares of series J preferred stock issuable to the holders of AMB Property,
L.P. series J preferred units as soon as practicable but not later than 60 days
after the date the AMB Property, L.P. series J preferred units are exchanged for
shares of series J preferred stock. We have also agreed to use our best efforts
to cause the registration statement to be declared effective within 120 days
after the date of the exchange.
RESTRICTIONS ON OWNERSHIP AND TRANSFER OF CAPITAL STOCK
In order for us to qualify as a real estate investment trust under the
Internal Revenue Code, no more than 50% in value of all classes of our
outstanding shares of capital stock may be owned, actually or constructively, by
five or fewer individuals (as defined in the Internal Revenue Code to include
certain entities) during the last half of a taxable year (other than the first
year for which we have made an election to be treated as a real estate
investment trust). In addition, if we, or an owner of 10% or more of our capital
stock, actually or constructively own 10% or more of one of our tenants (or a
tenant of any partnership or limited liability company in which we are a partner
or member), the rent received by us (either directly or through the partnership
or limited liability company) from the tenant will not be qualifying income for
purposes of the gross income tests for real estate investment trusts contained
in the Internal Revenue Code. A real estate investment trust's stock also must
be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months or during a proportionate part of a shorter taxable
year (other than the first year for which an election to be treated as a real
estate investment trust has been made).
Because our board of directors currently believes it is desirable for us
to qualify as a real estate investment trust, our charter, subject to certain
exceptions as discussed below, provides that no person may own, or be deemed to
own by virtue of the constructive ownership provisions of the Internal Revenue
Code, more than 9.8% (by value or number of shares, whichever is more
restrictive) of either our issued and outstanding common stock or our issued and
outstanding series A preferred stock. We also prohibit the ownership, actually
or constructively, of any shares of our series B, C, D, E, F, G, H, I or J
preferred stock by any single person so that no such person, taking into account
all of our stock so owned by such person, may own in excess of 9.8% in value of
our issued and outstanding capital stock. The constructive ownership rules under
the Internal Revenue Code are complex and may cause stock owned actually or
constructively by a group of related individuals and/or entities to be owned
constructively by one individual or entity. As a result, the acquisition of less
than 9.8% of our common stock, series A preferred stock or capital stock (or the
acquisition of an interest in an entity that owns, actually or constructively,
common stock, series A preferred stock or capital stock) by an individual or
entity, could, nevertheless cause that individual or entity, or another
individual or entity, to own constructively in excess of 9.8% of our outstanding
common stock, series A preferred stock or capital stock, as the case may be, and
thereby subject the common stock, series A preferred stock or capital stock to
the applicable ownership limit. The board of directors may, but in no event will
be required to, waive the applicable ownership limit with respect to a
particular stockholder if it determines that such ownership will not jeopardize
our status as a real estate investment trust and the board of directors
otherwise decides such action would be in our best interest. As a condition of
such waiver, the board of directors may require an opinion of counsel
satisfactory to it and/or undertakings or representations from the applicant
with respect to preserving our real estate investment trust status.
Our charter also provides that:
- no person may actually or constructively own common stock, series
A preferred stock, series B preferred stock, series C preferred
stock, series D preferred stock, series E preferred stock, series
F preferred stock, series G preferred stock, series H preferred
stock, series I preferred stock or series J preferred stock that
would result in us being "closely held" under Section 856(h) of
the Internal Revenue Code or otherwise cause us to fail to qualify
as a real estate investment trust;
- no person may transfer common stock, series A preferred stock,
series B preferred stock, series C preferred stock, series D
preferred stock, series E preferred stock, series F preferred
stock, series G preferred stock, series H preferred stock, series
I preferred stock or series J preferred stock , if a transfer
would result in shares of our capital stock being owned by fewer
than 100 persons; and
- any person who acquires or attempts or intends to acquire actual
or constructive ownership of common stock, series A preferred
stock, series B preferred stock, series C preferred stock, series
D preferred stock, series E preferred stock, series F preferred
stock, series G preferred stock, series H preferred stock, series
I preferred stock or series J preferred stock that will or may
violate any of the foregoing restrictions on transferability and
ownership is required to notify us immediately and
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provide us with such other information as we may request in order
to determine the effect of the transfer on our status as a real
estate investment trust.
These restrictions on transferability and ownership will not apply if our board
of directors determines that it is no longer in our best interest to attempt to
qualify, or to continue to qualify, as a real estate investment trust and such
determination is approved by the affirmative vote of holders owning at least
two-thirds of the shares of our outstanding capital stock entitled to vote
thereon. Except as otherwise described above, any change in the applicable
ownership limit would require an amendment to our charter, which must be
declared advisable by our board of directors and approved by the affirmative
vote of holders owning at least two-thirds of the shares of our outstanding
capital stock entitled to vote on the amendment.
Under our charter, if any attempted transfer of shares of stock or any
other event would otherwise result in any person violating an ownership limit,
any other limit imposed by our board of directors or the other restrictions in
the charter, then any such attempted transfer will be void and of no force or
effect with respect to the purported transferee as to that number of shares that
exceeds the applicable ownership limit or such other limit (referred to as
"excess shares"). Under those circumstances, the prohibited transferee will
acquire no right or interest (or, in the case of any event other than an
attempted transfer, the person or entity holding record title to any shares in
excess of the applicable ownership limit will cease to own any right or
interest) in the excess shares. Any excess shares described above will be
transferred automatically, by operation of law, to a trust, the beneficiary of
which will be a qualified charitable organization selected by us. This automatic
transfer will be considered to be effective as of the close of business on the
business day prior to the date of the violating transfer or event. Within 20
days of receiving notice from us of the transfer of shares to the trust, the
trustee of the trust will be required to sell the excess shares to a person or
entity who could own the shares without violating the applicable ownership
limit, or any other limit imposed by our board of directors, and distribute to
the prohibited transferee an amount equal to the lesser of the price paid by the
prohibited transferee for the excess shares or the sales proceeds received by
the trust for the excess shares. In the case of any excess shares resulting from
any event other than a transfer, or from a transfer for no consideration (such
as a gift), the trustee will be required to sell excess shares to a qualified
person or entity and distribute to the prohibited owner an amount equal to the
lesser of the applicable market price of the excess shares as of the date of the
event or the sales proceeds received by the trust for the excess shares. In
either case, any proceeds in excess of the amount distributable to the
prohibited transferee or prohibited owner will be distributed to the
beneficiary. Prior to a sale of any excess shares by the trust, the trustee will
be entitled to receive, in trust for the beneficiary, all dividends and other
distributions paid by us with respect to the excess shares, and also will be
entitled to exercise all voting rights with respect to the excess shares.
Subject to Maryland law, effective as of the date that the shares have been
transferred to the trust, the trustee will have the authority (at the trustee's
sole discretion) to rescind as void any vote cast by a prohibited transferee or
prohibited owner prior to the time that we discover that the shares have been
automatically transferred to the trust and to recast the vote in accordance with
the desires of the trustee acting for the benefit of the beneficiary. However,
if we have already taken irreversible corporate action, then the trustee will
not have the authority to rescind and recast the vote. If we pay the prohibited
transferee or prohibited owner any dividend or other distribution before we
discover that the shares were transferred to the trust, the prohibited
transferee or prohibited owner will be required to repay the trustee upon demand
for distribution to the beneficiary. If the transfer to the trust is not
automatically effective (for any reason), to prevent violation of the applicable
ownership limit or any other limit provided in our charter or imposed by the
board of directors, then our charter provides that the transfer of the excess
shares will be void ab initio.
In addition, shares of stock held in the trust will be considered to have
been offered for sale to us, or our designee, at a price per share equal to the
lesser of (1) the price per share in the transaction that resulted in the
transfer to the trust (or, in the case of a devise or gift, the market price at
the time of such devise or gift) and (2) the applicable market price on the date
that we, or our designee, accept the offer. We have the right to accept the
offer until the trustee has sold the shares held in the trust. Upon that sale to
us, the interest of the beneficiary in the shares sold will terminate and the
trustee will distribute the net proceeds of the sale to the prohibited
transferee or prohibited owner.
If any attempted transfer of shares would cause us to be beneficially
owned by fewer than 100 persons, our charter provides that the transfer will be
null and void in its entirety and the intended transferee will acquire no rights
to the stock.
All certificates representing shares will bear a legend referring to the
restrictions described above. The ownership limitations described above could
delay, defer or prevent a transaction or a change in control that might involve
a premium price for the shares or otherwise be in the best interest of
stockholders.
Under our charter, owners of outstanding shares must, upon our demand,
provide us with a completed questionnaire containing information regarding
ownership of the shares, as set forth in the treasury regulations. In addition,
each stockholder must upon demand disclose to us in writing such information
that we may request in order to determine the effect, if any, of the
stockholder's
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actual and constructive ownership of shares of our stock, on our status as a
real estate investment trust and to ensure compliance with each ownership limit,
or any other limit specified in our charter or required by the board of
directors.
TRANSFER AGENT, REGISTRAR, CONVERSION AGENT AND DIVIDEND DISBURSING AGENT
The transfer agent, registrar and dividend disbursing agent for our
common stock and preferred stock is EquiServe Trust Company, with EquiServe
Limited Partnership, as record keeping agent.
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DESCRIPTION OF CERTAIN PROVISIONS OF THE
PARTNERSHIP AGREEMENT OF THE OPERATING PARTNERSHIP
Substantially all of our assets are held, and all of our operations are
conducted, by or through the operating partnership. As the sole general partner
of the operating partnership, we have the exclusive right and power to manage
the operating partnership. Our interest in the operating partnership is
designated as a general partner interest. Except with respect to distributions
of cash and allocations of income and loss, and except as otherwise noted in
this prospectus, the description in this section of common limited partnership
units is also applicable to performance units, and holders of performance units
are treated as limited partners. We have summarized certain terms and provisions
of the operating partnership's partnership agreement. This summary is not
complete and is qualified by the provisions of the partnership agreement. For
more detail, you should refer to the partnership agreement itself, which is as
an exhibit to the registration statement of which this prospectus is a part. See
"Where You Can Find More Information."
GENERAL
Holders of limited partnership units hold limited partnership interests
in the operating partnership, and all holders of partnership interests
(including us in our capacity as general partner) are entitled to share in cash
distributions from, and in the profits and losses of, the operating partnership.
The number of general partnership units held by us is approximately equal to the
total number of outstanding shares of our common stock and preferred stock.
Accordingly, the distributions that we pay per share of common stock are
expected to be equal to the distributions per unit that the operating
partnership pays on the common units, and the distributions that we pay per
share of series A preferred stock, and any series B, C, D, E, F, G, H, I or J
preferred stock are expected to be equal to the distributions per unit that the
operating partnership pays on the corresponding series of preferred units. The
units have not been registered pursuant to federal or state securities laws, and
they will not be listed on the New York Stock Exchange or any other exchange or
quoted on any national market system. However, the shares of common stock, and
preferred stock that we may issue upon exchange of the common units and the
preferred units of the operating partnership and AMB Property II, L.P. may be
sold in registered transactions or transactions exempt from registration under
the Securities Act. The limited partners of the operating partnership have the
rights to which limited partners are entitled under the partnership agreement
and the Delaware Uniform Limited Partnership Act. The partnership agreement
imposes certain restrictions on the transfer of operating partnership units, as
described below.
PURPOSE, BUSINESS AND MANAGEMENT
The operating partnership is organized as a Delaware limited partnership
pursuant to the terms of the partnership agreement. We are the sole general
partner of the operating partnership and conduct substantially all of our
business through the operating partnership, except for investment advisory
services (which we conduct through AMB Investment Management, Inc.) and certain
other activities we conduct through Headlands Realty Corporation. AMB Investment
Management, Inc. and Headlands Realty Corporation are our wholly-owned
subsidiaries.
The primary purpose of the operating partnership is, in general, to
acquire, purchase, own, operate, manage, develop, redevelop, invest in, finance,
refinance, sell, lease and otherwise deal with industrial and retail properties
and assets related to those properties, and interests in those properties and
assets. The operating partnership is authorized to conduct any business that a
limited partnership formed under the Delaware Uniform Limited Partnership Act
may lawfully conduct, except that the partnership agreement requires of the
operating partnership to conduct its business in such a manner that will permit
us to be classified as a real estate investment trust under Section 856 of the
Internal Revenue Code, unless we cease to qualify as a real estate investment
trust for reasons other than the conduct of the business of the operating
partnership. Subject to the foregoing limitation, the operating partnership may
enter into partnerships, joint ventures or similar arrangements and may own
interests directly or indirectly in any other entity.
As the general partner of the operating partnership we have the exclusive
power and authority to conduct the business of the operating partnership,
subject to the consent of the limited partners in certain limited circumstances
(as discussed below) and except as expressly limited in the partnership
agreement.
We have the right to make all decisions and take all actions with respect
to the operating partnership's acquisition and operation of our properties and
all other assets and businesses of or related to the operating partnership. No
limited partner may take part in the conduct or control of the business or
affairs of the operating partnership by virtue of being a holder of units. In
particular, each limited partner expressly acknowledged in the partnership
agreement that as general partner, we are acting on behalf of the operating
partnership's limited partners and our stockholders, collectively, and are under
no obligation to consider the tax consequences to
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limited partners when making decisions for the benefit of the operating
partnership. We intend to make decisions in our capacity as general partner of
the operating partnership so as to maximize our profitability and the
profitability of the operating partnership as a whole, independent of the tax
effects on the limited partners. We and the operating partnership have no
liability to a limited partner as a result of any liabilities or damages
incurred or suffered by, or benefits not derived by, a limited partner as a
result of our action or inaction as general partner of the operating partnership
as long as we acted in good faith. Limited partners have no right or authority
to act for or to bind the operating partnership.
Limited partners of the operating partnership have no authority to
transact business for, or participate in the management activities or decisions
of, the operating partnership, except as provided in the partnership agreement
or as required by applicable law.
ENGAGING IN OTHER BUSINESSES; CONFLICTS OF INTEREST
We may not conduct any business other than in connection with the
ownership, acquisition and disposition of operating partnership interests as a
general partner and the management of the business of the operating partnership,
its operation as a public reporting company with a class (or classes) of
securities registered under the Securities and Exchange Act, its operation as a
real estate investment trust and activities that are incidental to these
activities (including ownership of any interest in AMB Property Holding
Corporation, AMB Property Holding II Corporation, AMB Property Holding III
Corporation, AMB Investment Management, Inc., Headlands Realty Corporation or a
title holding, management or finance subsidiary organized as a partnership,
limited liability company or corporation) without the consent of the holders of
a majority of the limited partnership interests. Unless they otherwise agree in
writing, each limited partner, and its affiliates, is free to engage in any
business or activity, even if the business or activity competes with or is
enhanced by the business of the operating partnership. The operating
partnership's partnership agreement does not prevent another person or entity
that acquires control of us in the future from conducting other businesses or
owning other assets, even if it would be in the best interests of the limited
partners for the operating partnership to own those businesses or assets. In the
exercise of our power and authority under the partnership agreement, we may
contract and otherwise deal with or otherwise obligate the operating partnership
to entities in which we or any one or more of our officers, directors or
stockholders may have an ownership or other financial interest.
OUR REIMBURSEMENT; TRANSACTIONS WITH US AND OUR AFFILIATES
We do not receive any compensation for our services as general partner of
the operating partnership. However, as a partner in the operating partnership,
we have rights to allocations and distributions as a partner of the operating
partnership. In addition, the operating partnership reimburses us for all
expenses we incur relating to ownership of interests in and operation of, or for
the benefit of, the operating partnership. We may retain persons or entities
that we select (including ourselves, any entity in which we have an interest, or
any entity with which we are affiliated) to provide services to or on behalf of
the operating partnership. The operating partnership will reimburse us for all
expenses incurred relating to the ongoing operation of the operating partnership
and any issuance of additional partnership interests in the operating
partnership. These expenses include those incurred in connection with the
administration and activities of the operating partnership, such as the
maintenance of the operating partnership's books and records, management of the
operating partnership's property and assets, and preparation of information
regarding the operating partnership provided to the partners in the preparation
of their individual tax returns. Except as expressly permitted by the
partnership agreement, however, our affiliates will not engage in any
transactions with the operating partnership except on terms that are fair and
reasonable to the operating partnership and no less favorable to the operating
partnership than it would obtain from an unaffiliated third party.
OUR EXCULPATION AND INDEMNIFICATION
The partnership agreement generally provides that we, as general partner
of the operating partnership, will incur no liability to the operating
partnership or any limited partner for losses sustained, liabilities incurred,
or benefits not derived as a result of errors in judgment or for any mistakes of
fact or law or for anything that we may do or not do in connection with the
business and affairs of the operating partnership if we carry out our duties in
good faith. Our liability in any event is limited to our interest in the
operating partnership. We have no liability for the loss of any limited
partner's capital. In addition, we are not responsible for any misconduct,
negligent act or omission of any of our consultants, contractors or agents, or
any of the operating partnership's consultants, contractors or agents, and we
have no obligation other than to use good faith in the selection of all
contractors, consultants and agents. We may consult with counsel, accountants,
appraisers, management consultants, investment bankers, and other consultants
and advisors that we select. An opinion by a consultant on a matter that we
believe is within the consultant's professional or expert competence is
considered to be complete protection as to any action that we take or fail to
take based on the opinion and in good faith.
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The partnership agreement also requires the operating partnership to
indemnify us, our directors and officers, and other persons that we may from
time to time designate against any loss or damage, including reasonable legal
fees and court costs incurred by the person by reason of anything the person may
do or not do for or on behalf of the operating partnership or in connection with
its business or affairs unless it is established that:
- the act or omission of the indemnified person was material to the
matter giving rise to the proceeding and either the indemnified
person committed the act or omission in bad faith or as the result
of active and deliberate dishonesty;
- the indemnified person actually received an improper personal
benefit in money, property or services; or
- in the case of any criminal proceeding, the indemnified person had
reasonable cause to believe that the act or omission was unlawful.
Any indemnification claims must be satisfied solely out of the
assets of the operating partnership.
SALES OF ASSETS; LIQUIDATION
Under the partnership agreement, as general partner we generally have the
exclusive authority to determine whether, when and on what terms, the operating
partnership will sell its assets (including our properties, which we own through
the operating partnership). However, we have agreed, in connection with the
contribution of properties from taxable investors in our formation transactions
and certain property acquisitions for limited units in the operating
partnership, not to dispose of certain assets in a taxable sale or exchange for
a mutually agreed upon period and, thereafter, to use commercially reasonable or
best efforts to minimize the adverse tax consequences of any sale. We may enter
into similar or other agreements in connection with other acquisitions of
properties for units.
A merger of the operating partnership with another entity generally
requires an affirmative vote of the partners (other than the preferred limited
partners) holding a majority of the outstanding percentage interest (including
the interest held directly or indirectly by us) of all partners other than
preferred limited partners, subject to certain consent rights of holders of
limited partnership units as described below under "Amendment of the Partnership
Agreement." A dissolution or liquidation of the operating partnership, including
a sale or disposition of all or substantially all of the operating partnership's
assets and properties, generally requires an affirmative vote of the limited
partners (other than the preferred limited partners) holding a majority of the
outstanding percentage interest of all limited partners other than preferred
limited partners.
CAPITAL CONTRIBUTION
The operating partnership's partnership agreement provides that if the
operating partnership requires additional funds at any time or from time to time
in excess of funds available to the operating partnership from borrowings or
capital contributions, we may borrow funds from a financial institution or other
lender or through public or private debt offerings and lend the funds to the
operating partnership on the same terms and conditions as are applicable to our
borrowing of the funds. As an alternative to borrowing funds required by the
operating partnership, we may contribute the amount of the required funds as an
additional capital contribution to the operating partnership. If we contribute
additional capital to the operating partnership, our partnership interest in the
operating partnership will be increased on a proportionate basis. Conversely,
the partnership interests of the limited partners will be decreased on a
proportionate basis if we make additional capital contributions.
DISTRIBUTIONS
The partnership agreement generally provides that the operating
partnership will make quarterly distributions of available cash (as defined
below), as determined in the manner provided in the partnership agreement, to
the partners of the operating partnership in proportion to their percentage
interests in the operating partnership (which for any partner is determined by
the number of units it owns relative to the total number of units outstanding).
If any preferred units are outstanding, the operating partnership will pay
distributions to holders of preferred units in accordance with the rights of
each class of preferred units (and, within each such class, pro rata in
proportion to the respective percentage interest of each holder), with any
remaining available cash distributed in accordance with the previous sentence.
"Available cash" is generally defined as net cash flow from operations, plus any
reduction in reserves, and minus interest and principal payments on debt,
capital expenditures, any additions to reserves and other adjustments. Other
than as described below, neither we nor the limited partners are currently
entitled to any preferential or disproportionate distributions of available cash
with respect to the units.
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SERIES A PREFERRED UNITS
In connection with the sale of the series A preferred stock, we received
series A preferred units in the operating partnership that mirror the rights,
preferences and other terms of the series A preferred stock. The series A
preferred units rank, with respect to distribution rights and rights upon
liquidation, winding up or dissolution of the operating partnership:
- senior to the common units and to all units that provide that they
rank junior to the series A preferred units;
- junior to all units which rank senior to the series A preferred
units; and
- on a parity with the operating partnership's series B and J
preferred units, and any series C, D, E, F, G, H or I preferred
units that the operating partnership may issue to us, and all
other units expressly designated by the operating partnership to
rank on a parity with the series A preferred units.
We receive preferred distributions of cash and preferred allocations of
income on the series A preferred units in an amount equal to the dividends
payable by us on the series A preferred stock. If we acquire any series B or J
preferred units from the holders pursuant to the exercise of their exchange
rights, or if the operating partnership issues any series C, D, E, F, H or I
preferred units to us, we will receive preferred distributions of cash and
preferred allocations of income on those units in an amount equal to the
dividends payable by us on the corresponding series of our stock.
As a consequence, we will receive distributions from the operating
partnership sufficient to pay dividends on the series A preferred stock and any
series B, C, D, E, F, G, H, I or J preferred stock before any other partner in
the operating partnership (other than holders of parity preferred units)
receives a distribution. In addition, if necessary, income will be specially
allocated to us and losses will be allocated to the other partners of the
operating partnership in amounts necessary to ensure that, to the extent
possible, the balance in our capital account will at all times be equal to or in
excess of the amount payable by us on the series A preferred stock and any
series B, C, D, E, F, G, H, I or J preferred stock.
SERIES B PREFERRED UNITS
General. The series B preferred units of the operating partnership rank,
with respect to distribution rights and rights upon liquidation, winding up or
dissolution of the operating partnership:
- senior to the common units of the operating partnership and to all
units of the operating partnership that provide that they rank
junior to the series B preferred units;
- junior to all units which rank senior to the series B preferred
units; and
- on a parity with the series A and series J preferred units, and
any series C, D, E, F, G, H or I preferred units that the
operating partnership may issue to us, and all other units
expressly designated by the operating partnership to rank on a
parity with the series B preferred units.
Subject to the rights of holders of parity preferred units, holders of
the series B preferred units are entitled to receive, when, as and if declared
by the operating partnership, acting through us as general partner, cumulative
preferential cash distributions in an amount equal to 8 5/8% per annum on an
amount equal to $50.00 per series B Preferred Unit then outstanding (equivalent
to $4.3125 per annum). These distributions are payable on the 15th day of
January, April, July and October of each year.
Exchange Rights. The series B preferred units are exchangeable in whole
at any time on or after November 12, 2008, at the option of 51% of the holders
of all outstanding series B preferred units, on a one-for-one basis, subject to
adjustment, for shares of our series B preferred stock. In addition, the series
B preferred units are exchangeable in whole at any time at the option of 51% of
the holders of all outstanding series B preferred units if:
- any series B Preferred Unit shall not have received full
distributions with respect to six prior quarterly distribution
periods (whether or not consecutive); or
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- we or one of our subsidiaries take the position, and a holder or
holders of series B preferred units receive an opinion of
independent counsel that the operating partnership is, or upon the
happening of a certain event likely will be, a "publicly traded
partnership" within the meaning of the Internal Revenue Code.
The series B preferred units are exchangeable in whole for shares of
series B preferred stock at any time after November 12, 2001 and prior to
November 12, 2008 at the option of 51% of the holders of all outstanding series
B preferred units if those holders deliver to us as general partner a private
letter ruling or an opinion of independent counsel to the effect that an
exchange of the series B preferred units at that time would not cause the series
B preferred units to be considered "stock and securities" within the meaning of
the Internal Revenue Code for purposes of determining whether the holder of
series B preferred units is an "investment company" under the Internal Revenue
Code.
With certain limitations, the series B preferred units are also
exchangeable in whole at any time for shares of series B preferred stock
(regardless of whether held by the initial purchaser) if:
- the initial purchaser of the series B preferred units reasonably
concludes that there exists an imminent and substantial risk that
the initial purchaser's interest in the operating partnership
represents or will represent more than 19.5% of the total profits
or capital interests in the operating partnership for a taxable
year;
- the initial purchaser of the series B preferred units delivers to
us an opinion to the effect that there is a substantial risk that
the initial purchaser's interest in the operating partnership
represents or will represent more than 19.5% of the total profits
or capital interests in the operating partnership for a taxable
year; and
- we, as the general partner, agree with the conclusions in the
bullet points above; provided, that we may not unreasonably
withhold our agreement.
In lieu of an exchange for series B preferred stock, we may elect to
cause the operating partnership to redeem series B preferred units for cash in
an amount equal to the original capital account balance of the holder of the
series B preferred units. A holder of series B preferred units will not be
entitled to exchange the units for series B preferred stock if the exchange
would result in a violation of the ownership limit. See "Description of Capital
Stock -- Restrictions on Ownership and Transfer of Capital Stock."
Redemption. On or after November 12, 2003, the operating partnership has
the right to redeem the series B preferred units, in whole or in part from time
to time, at a redemption price payable in cash equal to the capital account
balance of the holder, provided that the amount shall not be less than $50.00
per series B preferred unit. The operating partnership must pay the redemption
price solely out of the sale proceeds of our capital stock or interests in the
operating partnership and from no other source. The operating partnership may
not redeem fewer than all of the series B preferred units unless the operating
partnership has paid all accumulated and unpaid distributions on all series B
preferred units for all quarterly distribution periods terminating on or prior
to the date of redemption.
Limited Approval Rights. For so long as any series B preferred units are
outstanding, without the affirmative vote of the holders of at least two-thirds
of the series B preferred units outstanding at the time, the operating
partnership may not:
- authorize, create or increase the authorized or issued amount of,
or reclassify, any class or series of partnership interests, or
create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any partnership
interests, ranking prior to the series B preferred units;
- authorize, create or increase the authorized or issued amount of,
or reclassify, any class or series of partnership interests, or
create, authorize or issue any obligations or security convertible
into or evidencing a right to purchase any partnership interests,
ranking equal to the series B preferred units, but only to the
extent that such securities are issued to an affiliate of the
operating partnership, other than AMB Property Corporation to the
extent that the issuance is to allow us to issue corresponding
shares of series B preferred stock to persons who are not
affiliates of the operating partnership; or
- either consolidate, merge into or with, or convey, transfer or
lease its assets substantially as an entirety to, any corporation
or other entity or amend, alter or repeal the provisions of the
partnership agreement, in a manner that would materially and
adversely affect the powers, special rights, preferences,
privileges or voting power of the series B preferred units. So
long as the operating partnership is the surviving entity and the
series B preferred units remain outstanding on the same terms, or
the resulting, surviving or transferee entity is a partnership,
limited liability company or other pass-through entity and
substitutes
37
the series B preferred units for other interests in such entity,
with substantially the same terms and rights, then the occurrence
of any of the events listed above in this bullet point will not be
considered to materially and adversely affect such rights,
privileges or voting powers.
Other than as discussed above or elsewhere in this prospectus, the
holders of series B preferred units have no voting rights other than with
respect to certain matters that would adversely affect them or as otherwise
provided by applicable law.
Liquidation Preference. The distribution and income allocation provisions
of the partnership agreement have the effect of providing each series B
Preferred Unit with a liquidation preference to each holder of series B
preferred units equal to the holder's capital contributions, plus any accrued
but unpaid distributions, in preference to any other class or series of
partnership interest of the operating partnership, other than any parity
preferred units.
Registration Rights. We have agreed to file a registration statement
registering the resale of the shares of series B preferred stock issuable to the
holders of series B preferred units as soon as practicable but not later than 60
days after the date the series B preferred units are exchanged for shares of
series B preferred stock. We have also agreed to use our best efforts to cause
the registration statement to be declared effective within 120 days after the
date of the exchange.
SERIES C PREFERRED UNITS
As described under "Description of Capital Stock -- Preferred Stock --
series C Preferred Stock," holders of series C preferred units of AMB Property
II, L.P. may exchange their units for shares of our series C preferred stock. If
we issue series C preferred stock, we will:
- contribute 99% of the series C preferred units of AMB Property II,
L.P. to the operating partnership in exchange for series C
preferred units in the operating partnership that mirror the
rights, preferences and other terms of the series C preferred
stock; and
- contribute 1% of the series C preferred units of AMB Property II,
L.P. to AMB Property Holding Corporation.
Any series C preferred units issued to us by the operating partnership,
as described in the first bullet point above, will rank on a parity with the
operating partnership's series A preferred units, series B preferred units and
series J preferred units. As a consequence, we would receive distributions from
the operating partnership that we would use to pay dividends on our preferred
stock before any other partner in the operating partnership (other than holders
of parity preferred units).
SERIES D PREFERRED UNITS
As described under "Description of Capital Stock -- Preferred Stock --
Series D Preferred Stock," holders of series D preferred units of AMB Property
II, L.P. may exchange their units for shares of our series D preferred stock. If
we issue series D preferred stock, it will:
- contribute 99% of the series D preferred units of AMB Property II,
L.P. to the operating partnership in exchange for series D
preferred units in the operating partnership that mirror the
rights, preferences and other terms of the series D preferred
stock; and
- contribute 1% of the series D preferred units of AMB Property II,
L.P. to AMB Property Holding Corporation.
Any series D preferred units issued to us by the operating partnership,
as described in the first bullet point above, will rank on a parity with the
operating partnership's series A preferred units, series B preferred units and
series J preferred units. As a consequence, we would receive distributions from
the operating partnership that we would use to pay dividends on any our
preferred stock before any other partner in the operating partnership (other
than holders of parity preferred units).
SERIES E PREFERRED UNITS
As described under "Description of Capital Stock -- Preferred Stock --
Series E Preferred Stock," holders of AMB Property II, L.P. series E preferred
units may exchange their units for shares of our series E preferred stock. If we
issue series E preferred stock, we will:
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- contribute 99% of the series E preferred units of AMB Property II,
L.P. to the operating partnership in exchange for series E
preferred units in the operating partnership that mirror the
rights, preferences and other terms of the series E preferred
stock; and
- contribute 1% of the series E preferred units to AMB Property
Holding Corporation.
Any series E preferred units issued to us by the operating partnership,
as described in the first bullet point above, will rank on a parity with the
operating partnership's series A preferred units, series B preferred units and
series J preferred units. As a consequence, we would receive distributions from
the operating partnership that we would use to pay dividends on any our
preferred stock before any other partner in the operating partnership (other
than holders of parity preferred units).
SERIES F PREFERRED UNITS
As described under "Description of Capital Stock -- Preferred Stock --
Series F Preferred Stock," holders of series F preferred units of AMB Property
II, L.P. may exchange their units for shares of our series F preferred stock. If
we issue series F preferred stock, we will:
- contribute 99% of the series F preferred units of AMB Property II,
L.P. to the operating partnership in exchange for series F
preferred units in the operating partnership that mirror the
rights, preferences and other terms of the series F preferred
stock; and
- contribute 1% of the series F preferred units of AMB Property II,
L.P. to AMB Property Holding Corporation.
Any series F preferred units issued to us by the operating partnership,
as described in the first bullet point above, will rank on a parity with the
operating partnership's series A preferred units, series B preferred units and
series J preferred units. As a consequence, we would receive distributions from
the operating partnership that we would use to pay dividends our preferred stock
before any other partner in the operating partnership (other than holders of
parity preferred units).
SERIES G PREFERRED UNITS
As described under "Description of Capital Stock -- Preferred Stock --
Series G Preferred Stock," holders of series G preferred units of AMB Property
II, L.P. may exchange their units for shares of our series G preferred stock. If
we issue series G preferred stock, we will:
- contribute 99% of the series G preferred units of AMB Property II,
L.P. to the operating partnership in exchange for series G
preferred units in the operating partnership that mirror the
rights, preferences and other terms of the series G preferred
stock; and
- contribute 1% of the series G preferred units of AMB Property II,
L.P. to AMB Property Holding Corporation.
Any series G preferred units issued to us by the operating partnership,
as described in the first bullet point above, will rank on a parity with the
operating partnership's series A preferred units, series B preferred units and
series J preferred units. As a consequence, we would receive distributions from
the operating partnership that we would use to pay dividends our preferred stock
before any other partner in the operating partnership (other than holders of
parity preferred units).
SERIES H PREFERRED UNITS
As described under "Description of Capital Stock -- Preferred Stock --
Series H Preferred Stock," holders of series H preferred units of AMB Property
II, L.P. may exchange their units for shares of our series H preferred stock. If
we issue series H preferred stock, we will:
- contribute 99% of the series H preferred units of AMB Property II,
L.P. to the operating partnership in exchange for series H
preferred units in the operating partnership that mirror the
rights, preferences and other terms of the series H preferred
stock; and
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- contribute 1% of the series H preferred units of AMB Property II,
L.P. to AMB Property Holding Corporation.
Any series H preferred units issued to us by the operating partnership,
as described in the first bullet point above, will rank on a parity with the
operating partnership's series A preferred units, series B preferred units and
series J preferred units. As a consequence, we would receive distributions from
the operating partnership that we would use to pay dividends our preferred stock
before any other partner in the operating partnership (other than holders of
parity preferred units).
SERIES I PREFERRED UNITS
As described under "Description of Capital Stock -- Preferred Stock --
Series I Preferred Stock," holders of series I preferred units of AMB Property
II, L.P. may exchange their units for shares of our series I preferred stock. If
we issue series I preferred stock, we will:
- contribute 99% of the series I preferred units of AMB Property II,
L.P. to the operating partnership in exchange for series I
preferred units in the operating partnership that mirror the
rights, preferences and other terms of the series I preferred
stock; and
- contribute 1% of the series I preferred units of AMB Property II,
L.P. to AMB Property Holding Corporation.
Any series I preferred units issued to us by the operating partnership,
as described in the first bullet point above, will rank on a parity with the
operating partnership's series A preferred units, series B preferred units and
series J preferred units. As a consequence, we would receive distributions from
the operating partnership that we would use to pay dividends our preferred stock
before any other partner in the operating partnership (other than holders of
parity preferred units).
SERIES J PREFERRED UNITS
General. The series J preferred units of the operating partnership rank,
with respect to distribution rights and rights upon liquidation, winding up or
dissolution of the operating partnership:
- senior to the common units of the operating partnership and to all
units of the operating partnership that provide that they rank
junior to the series J preferred units;
- junior to all units which rank senior to the series J preferred
units; and
- on a parity with the series A and series B preferred units, and
any series C, D, E, F, G, H and I preferred units that the
operating partnership may issue to us, and all other units
expressly designated by the operating partnership to rank on a
parity with the series J preferred units.
Subject to the rights of holders of parity preferred units, holders of
the series J preferred units are entitled to receive, when, as and if declared
by the operating partnership, acting through us as general partner, cumulative
preferential cash distributions in an amount equal to 7.95% per annum on an
amount equal to $50.00 per series J Preferred Unit then outstanding (equivalent
to $3.975 per annum). These distributions are payable on the 15th day of
January, April, July and October of each year.
Exchange Rights. The series J preferred units are exchangeable for shares
of our series J preferred stock as described under "Description of Capital Stock
- -- Preferred Stock -- Series J Preferred Stock."
Redemption. On or after September 21, 2006, the operating partnership has
the right to redeem the series J preferred units, in whole or in part from time
to time, at a redemption price payable in cash equal to the capital account
balance of the holder, provided that the amount shall not be less than $50.00
per series J Preferred Unit. The operating partnership must pay the redemption
price solely out of the sale proceeds of our capital stock or interests in the
operating partnership and from no other source. The operating partnership may
not redeem fewer than all of the series J preferred units unless the operating
partnership has paid all accumulated and unpaid distributions on all series J
preferred units for all quarterly distribution periods terminating on or prior
to the date of redemption.
Limited Approval Rights. For so long as any series J preferred units are
outstanding, without the affirmative vote of the holders of at least two-thirds
of the series J preferred units outstanding at the time, the operating
partnership may not:
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- authorize, create or increase the authorized or issued amount of,
or reclassify, any class or series of partnership interests, or
create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any partnership
interests, ranking prior to the series J preferred units;
- authorize, create or increase the authorized or issued amount of,
or reclassify, any class or series of partnership interests, or
create, authorize or issue any obligations or security convertible
into or evidencing a right to purchase any partnership interests,
ranking equal to the series J preferred units, but only to the
extent that such securities are issued to an affiliate of the
operating partnership, other than AMB Property Corporation to the
extent that the issuance is to allow us to issue corresponding
shares of series J preferred stock to persons who are not
affiliates of the operating partnership; or
- either consolidate, merge into or with, or convey, transfer or
lease its assets substantially as an entirety to, any corporation
or other entity or amend, alter or repeal the provisions of the
partnership agreement, in a manner that would materially and
adversely affect the powers, special rights, preferences,
privileges or voting power of the series J preferred units. So
long as the operating partnership is the surviving entity and the
series J preferred units remain outstanding on the same terms, or
the resulting, surviving or transferee entity is a partnership,
limited liability company or other pass-through entity and
substitutes the series J preferred units for other interests in
such entity, with substantially the same terms and rights, then
the occurrence of any of the events listed above in this bullet
point will not be considered to materially and adversely affect
such rights, privileges or voting powers.
Other than as discussed above or elsewhere in this prospectus, the
holders of series J preferred units have no voting rights other than with
respect to certain matters that would adversely affect them or as otherwise
provided by applicable law.
Liquidation Preference. The distribution and income allocation provisions
of the partnership agreement have the effect of providing each series J
Preferred Unit with a liquidation preference to each holder of series J
preferred units equal to the holder's capital contributions, plus any accrued
but unpaid distributions, in preference to any other class or series of
partnership interest of the operating partnership, other than any parity
preferred units.
Registration Rights. We have agreed to file a registration statement
registering the resale of the shares of series J preferred stock issuable to the
holders of series J preferred units as soon as practicable but not later than 60
days after the date the series J preferred units are exchanged for shares of
series J preferred stock. We have also agreed to use our best efforts to cause
the registration statement to be declared effective within 120 days after the
date of the exchange.
COMMON LIMITED PARTNERSHIP UNITS
Redemption Rights. Holders of common limited partnership units in the
operating partnership have the right, commencing generally on or before the
first anniversary of the holder becoming a limited partner of the operating
partnership (or such other date agreed to by the operating partnership and the
applicable unit holders), to require the operating partnership to redeem part
or all of their common units for cash (based upon the fair market value of an
equivalent number of shares of common stock at the time of redemption) or the
operating partnership may, in its sole and absolute discretion (subject to the
limits on ownership and transfer of common stock set forth in our charter)
elect to have us exchange those common units for shares of our common stock on
a one-for-one basis, subject to adjustment in the event of stock splits, stock
dividends, issuance of certain rights, certain extraordinary distributions and
similar events. We presently anticipate that the operating partnership will
generally elect to have us issue shares of our common stock in exchange for
common units in connection with a redemption request; however, the operating
partnership has paid cash and may in the future pay cash for a redemption of
common units. With each redemption or exchange, our percentage ownership
interest in the operating partnership will increase. Common limited partners
may exercise this redemption right from time to time, in whole or in part,
subject to the limitations that limited partners may not exercise the right if
exercise would result in any person actually or constructively owning shares of
common stock in excess of the ownership limit or any other amount specified by
the board of directors, assuming common stock was issued in the exchange.
Holders of performance units also have limited redemption rights, as discussed
under the caption "-- Performance Units" below.
Registration Rights. We have granted to common limited partners certain
registration rights with respect to the shares of stock issuable upon exchange
of common limited partnership units in the operating partnership or otherwise.
We have agreed to file and generally keep continuously effective generally
beginning on or as soon as practicable after one year after issuance of common
limited partnership units a registration statement covering the issuance of
shares of common stock upon exchange of the units and the resale of the shares.
We will bear expenses incident to our registration obligations upon exercise of
registration rights, including the payment
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of federal securities and state Blue Sky registration fees, except that we will
not bear any underwriting discounts or commissions or transfer taxes relating to
registration of the shares.
PERFORMANCE UNITS
Notwithstanding the foregoing discussion of distributions and allocations
of income or loss of the operating partnership, certain of our current and
former executive officers, in their capacity as limited partners of the
operating partnership, received an aggregate of 1,465,926 performance units on
January 7, 2000. The performance units are similar to common limited
partnership units in many respects, including the right to share in operating
distributions, and allocations of operating income and loss of the operating
partnership on a pro rata basis with common limited partnership units, and
certain redemption rights, including limited rights to cause the operating
partnership to redeem the performance units for cash or, at the operating
partnership's option, to have us exchange the performance units for shares of
our common stock. However, a holder of performance units may not require the
operating partnership to redeem, and the operating partnership may not redeem,
a number of performance units in excess of the number of performance units
equal to the amount of the unitholder's capital account balance immediately
following the revaluation of the operating partnership assets pursuant to the
partnership agreement, divided by the fair market value of a share of our
common stock. This prospectus covers the issuance and the resale of the
1,465,926 shares of our common stock issuable in exchange for the performance
units.
REMOVAL OF THE GENERAL PARTNER; TRANSFERABILITY OF OUR INTERESTS; TREATMENT OF
LIMITED PARTNERSHIP UNITS IN SIGNIFICANT TRANSACTIONS
The limited partners may not remove us as general partner of the
operating partnership, with or without cause, other than with our consent. The
partnership agreement provides that we may not withdraw from the operating
partnership (whether by sale, statutory merger, consolidation, liquidation or
otherwise) without the consent of a majority in interest of the limited partners
other than the preferred limited partners. However, except as set forth below,
we may transfer or assign our general partner interest in connection with a
merger, consolidation or sale of substantially all of our assets without limited
partner consent.
Neither we nor the operating partnership may engage in any merger,
consolidation or other combination, or effect any reclassification,
recapitalization or change of its outstanding equity interests, and we may not
sell all or substantially all of our assets unless in connection with the
termination transaction all holders of limited partnership units other than
preferred units either will receive, or will have the right to elect to receive,
for each unit an amount of cash, securities or other property equal to the
product of the number of shares of common stock into which each unit is then
exchangeable and the greatest amount of cash, securities or other property paid
to the holder of one share in consideration of one share pursuant to the
termination transaction. If, in connection with the termination transaction, a
purchase, tender or exchange offer shall have been made to and accepted by the
holders of the outstanding shares of common stock, each holder of limited
partnership units other than preferred units will receive, or will have the
right to elect to receive, the greatest amount of cash, securities or other
property that the holder would have received had it exercised its right to
redemption and received shares of common stock in exchange for its units
immediately prior to the expiration of the purchase, tender or exchange offer
and had accepted the purchase, tender or exchange offer. Performance units also
have the benefit of these provisions, irrespective of the capital account then
applicable to the performance units. We and the operating partnership may also
engage in a merger, consolidation or other combination, or effect any
reclassification, recapitalization or change or our outstanding equity
interests, and we may also sell all or substantially all of our assets if the
following conditions are met:
- substantially all of the assets directly or indirectly owned by
the surviving entity are held directly or indirectly by the
operating partnership or another limited partnership or limited
liability company which is the survivor of a merger, consolidation
or combination of assets with the operating partnership;
- the holders of common limited partnership units, including the
holders of any performance units issued, own a percentage interest
of the surviving partnership based on the relative fair market
value of the net assets of the operating partnership and the other
net assets of the surviving partnership immediately prior to the
consummation of the transaction;
- the rights, preferences and privileges of the holders in the
surviving partnership, including the holders of performance units
issued or to be issued, are at least as favorable as those in
effect immediately prior to the consummation of such transaction
and as those applicable to any other limited partners or
non-managing members of the surviving partnership (except, as to
performance units, for such differences with units regarding
liquidation, redemption or exchange as are described in this
prospectus); and
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- such rights of the common limited partners, including the holders
of performance units issued or to be issued, include at least one
of the following:
- the right to redeem their interests in the surviving
partnership for the consideration available to them
pursuant to the preceding paragraph; or
- the right to redeem their units for cash on terms
equivalent to those in effect immediately prior to the
consummation of the transaction, or, if the ultimate
controlling person of the surviving partnership has
publicly traded common equity securities, the common equity
securities, with an exchange ratio based on the relative
fair market value of the securities and the common stock.
Our board of directors will reasonably determine fair market values and
rights, preferences and privileges of the common limited partners of the
operating partnership as of the time of the termination transaction and, to the
extent applicable, the values will be no less favorable to the holders of common
limited partnership units than the relative values reflected in the terms of the
termination transaction.
In addition, in the event of a termination transaction, the arrangements
with respect to performance units and performance shares will be equitably
adjusted to reflect the terms of the transaction, including, to the extent that
the shares are exchanged for consideration other than publicly traded common
equity, the transfer or release of remaining performance shares, and resulting
issuance of any performance units, as of the consummation of the termination
transaction.
DUTIES AND CONFLICTS
Except as otherwise provided by our conflicts of interest policies with
respect to directors and officers and as provided in the non-competition
agreements that most of our executive officers have entered into with us, any
limited partner of the operating partnership may engage in other business
activities outside the operating partnership, including business activities that
directly compete with the operating partnership.
MEETINGS; VOTING
As general partner, we may call meetings of the limited partners of the
operating partnership on our own motion, or upon written request of limited
partners owning at least 25% of the then outstanding limited partnership units.
Limited partners may vote either in person or by proxy at meetings. Limited
partners may take any action that they are required or permitted to take either
at a meeting of the limited partners or without a meeting if consents in writing
setting forth the action taken are signed by limited partners owning not less
than the minimum number of units that would be necessary to authorize or take
the action at a meeting of the limited partners at which all limited partners
entitled to vote on the action were present. On matters for which limited
partners are entitled to vote, each limited partner has a vote equal to the
number of units the limited partner holds. A transferee of limited partnership
units who has not been admitted as a substituted limited partner with respect to
the units will have no voting rights with respect to the units, even if the
transferee holds other units as to which it has been admitted as a limited
partner. The partnership agreement does not provide for, and we do not
anticipate calling, annual meetings of the limited partners.
AMENDMENT OF THE PARTNERSHIP AGREEMENT
We or the limited partners owning at least 25% of the then outstanding
limited partnership units entitled to vote may propose amendments to the
operating partnership's partnership agreement. Generally, the partnership
agreement may be amended with our approval, as general partner, and partners
(including us but not including the preferred limited partners) holding a
majority of the percentage interest of all partners other than preferred limited
partners. Certain provisions regarding, among other things, our rights and
duties as general partner (e.g., restrictions on our power to conduct businesses
other than as denoted herein) or the dissolution of the operating partnership,
may not be amended without the approval of limited partners (other than
preferred limited partners) holding a majority of the percentage interests of
the limited partners other than preferred limited partners. As general partner,
we have the power, without the consent of the limited partners, to amend the
partnership agreement as may be required to, among other things:
- add to our obligations as general partner or surrender any right
or power granted to us as general partner;
- reflect the admission, substitution, termination or withdrawal of
partners in accordance with the terms of the partnership
agreement;
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- establish the rights, powers, duties and preferences of any
additional partnership interests issued in accordance with the
terms of the partnership agreement;
- reflect a change of an inconsequential nature that does not
materially adversely affect any limited partner, or cure any
ambiguity, correct or supplement any provisions of the partnership
agreement not inconsistent with law or with other provisions of
the partnership agreement, or make other changes concerning
matters under the partnership agreement that are not otherwise
inconsistent with the partnership agreement or applicable law; or
- satisfy any requirements of federal, state or local law.
We must approve, and each limited partner that would be adversely
affected must approve, certain amendments to the partnership agreement,
including amendments effected directly or indirectly through a merger or sale of
assets of the operating partnership or otherwise, that would, among other
things,
- convert a limited partner's interest into a general partner's
interest;
- modify the limited liability of a limited partner;
- alter the interest of a partner in profits or losses, or the
rights to receive any distributions (except as permitted under the
partnership agreement with respect to the admission of new
partners or the issuance of additional units, either of which
actions will have the effect of changing the percentage interests
of the partners and thereby altering their interests in profits,
losses and distributions); or
- alter the limited partner's redemption right.
BOOKS AND REPORTS
The operating partnership's books and records are maintained at its
principal office, which is located at Pier 1, Bay 1, San Francisco, California
94111. All elections and options available to the operating partnership for
federal or state income tax purposes may be taken or rejected by the operating
partnership in our sole discretion as general partner. The limited partners have
the right, subject to certain limitations, to receive copies of our and the
operating partnership's most recent filings with the Security and Exchange
Commission, the operating partnership's federal, state and local income tax
returns, a list of limited partners, the partnership agreement, the partnership
certificate and all amendments and certain information about the capital
contributions of the partners. We may keep confidential from the limited
partners any information that we believe to be in the nature of trade secrets or
other information the disclosure of which the we in good faith believe is not in
the best interests of the operating partnership or which the operating
partnership is required by law or by agreements with unaffiliated third parties
to keep confidential.
We will use reasonable efforts to furnish to each limited partner, within
90 days after the close of each taxable year, the tax information reasonably
required by the limited partners for federal and state income tax reporting
purposes.
TERM
The operating partnership will continue in full force and effect for
approximately 99 years or until sooner dissolved pursuant to the terms of the
partnership agreement.
REDEMPTION/EXCHANGE OF COMMON LIMITED PARTNERSHIP UNITS
FOR COMMON STOCK
TERMS OF THE EXCHANGE
An aggregate of 94,771 regular common limited partnership units of the
operating partnership become exchangeable, on a one-for-one basis, for our
common stock on November 7, 2001, one year after their issuance. An aggregate of
1,465,926 performance units of the operating partnership become exchangeable, on
a one-for-one basis, for our common stock on January 7, 2002, two years after
their issuance. Beginning on those dates, the respective selling stockholders
may require the operating partnership to redeem their limited partnership units,
in whole or in part, for cash by delivering to us, as the general partner of
the operating partnership, a notice of redemption. However, the
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selling stockholders holding performance units may not require the operating
partnership to redeem, and the operating partnership may not redeem, a number
of performance units in excess of the number of performance units equal to the
amount of the unitholder's capital account balance immediately following the
revaluation of the operating partnership's assets pursuant to the partnership
agreement, divided by the fair market value of a share of our common stock.
Upon receipt of the notice of redemption, the operating partnership may, in its
sole and absolute discretion (subject to the limitations on ownership and
transfer of common stock set forth in our charter), elect to have us exchange
those common limited partnership units for shares of our common stock on a
one-for-one basis, subject to adjustment as described under "Description of
Certain Provisions of the Partnership Agreement of the Operating Partnership --
Common Limited Partnership Units -- Redemption/Exchange Rights."
A tendering partner will have the right to receive, on the day of receipt
by us, as the general partner, of a notice of redemption, the number of shares
of common stock which corresponds to the number of common limited partnership
units that the operating partnership has elected to have us exchange in lieu of
a cash redemption. Any shares of common stock issued by us to a limited partner
will be duly authorized, validly issued, fully paid and nonassessable shares,
free of any pledge, lien, encumbrance or restriction other than those provided
in the charter, the bylaws, the Securities Act, relevant state securities or
blue sky laws and any applicable registration rights agreement with respect to
the shares entered into by the tendering partner. Notwithstanding any delay in
delivery, the tendering partner will be considered to be the owner of shares
and rights for all purposes, including rights to vote or consent and receive
dividends as of the date we received the notice of redemption.
Each tendering partner will continue to own all limited partnership units
subject to any redemption or exchange, and be treated as a limited partner with
respect to the limited partnership units for all purposes, until the limited
partner transfers the limited partnership units to us and we pay for them or
exchange them, and until that time, the partner will have no rights as a
stockholder.
CERTAIN CONDITIONS TO THE EXCHANGE
The consummation of a redemption or exchange as described above upon
our receipt of a notice of redemption from a tendering partner is subject to
the following conditions:
- in order to protect our status as a real estate investment trust,
no tendering partner will be entitled to effect a redemption for
cash or an exchange for common stock, if the ownership or right to
acquire common stock would cause the tendering partner or any
other person to violate the ownership limit;
- without our consent, no tendering partner may effect a redemption
for less than 10,000 limited partnership units, or if the
tendering partner holds less than 10,000 limited partnership
units, all of the limited partnership units held by the tendering
partner;
- without our consent, no tendering partner may effect a redemption
during the period after the record date established by us for a
distribution from the operating partnership to the partners in the
operating partnership and before the record date established by us
for a distribution to our common stockholders of some or all of
its portion of such distribution; and
- the consummation of any redemption or exchange will be subject to
the expiration or termination of any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
COMPARISON OF OWNERSHIP OF COMMON LIMITED PARTNERSHIP UNITS AND COMMON STOCK
Generally, the nature of an investment in our common stock is similar in
several respects to an investment in common limited partnership units of the
operating partnership. Holders of common stock and holders of common limited
partnership units generally receive the same distributions and stockholders and
holders of common limited partnership units generally share in the risks and
rewards of ownership in the enterprise being conducted by through the operating
partnership. However, there are also differences between ownership of common
limited partnership units and ownership of common stock, some of which may be
material to investors.
The information below highlights a number of the significant differences
between us and the operating partnership relating to, among other things, form
of organization, management control, voting rights, liquidity and federal income
tax considerations. These comparisons are intended to assist limited partners in
understanding how their investment will be changed if they exchange their common
limited partnership units for shares of our common stock. This discussion is
summary in nature and does not constitute a
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complete discussion of these matters, and holders of limited partnership units
should carefully review the rest of this prospectus and the registration
statement of which this prospectus is a part for additional important
information about us.
FORM OF ORGANIZATION AND ASSETS OWNED
OPERATING PARTNERSHIP
The operating partnership is organized as a Delaware limited partnership.
The operating partnership owns substantially all of our assets and conducts
substantially all of our business. The operating partnership's purpose is to
conduct any business that may be lawfully conducted by a limited partnership
organized pursuant to the Delaware Revised Uniform Limited Partnership Act,
provided that the operating partnership must conduct its business in a manner
that permits us to be qualified as a real estate investment trust unless we
cease to qualify as real estate investment trust for reasons other than the
conduct of the business of the operating partnership.
AMB PROPERTY CORPORATION
We are a Maryland corporation. We have elected to be taxed as a real
estate investment trust under the Internal Revenue Code, commencing with our
taxable year ending December 31, 1997. Our only substantial asset is our
interest in the operating partnership, which gives us an indirect investment in
the properties owned by the operating partnership. Under our charter, we may
engage in any lawful activity permitted by the Maryland General Corporation Law.
ADDITIONAL EQUITY
OPERATING PARTNERSHIP
The operating partnership is authorized to issue limited partnership
units and other partnership interests (including partnership interests of
different series or classes that may be senior to common limited partnership
units) as determined by us as its general partner, in our sole discretion. The
operating partnership may issue limited partnership units and other partnership
interests to us, as long as the operating partnership issues such interests in
connection with a comparable issuance of our shares and we contribute to the
operating partnership proceeds raised in connection with the issuance of such
shares.
AMB PROPERTY CORPORATION
Our board of directors may issue, in its discretion, additional shares of
common stock or additional shares of preferred stock; provided, that the total
number of shares issued does not exceed the authorized number of shares of
capital stock set forth in our charter. As long as the operating partnership is
in existence, we will contribute to the operating partnership the proceeds of
all equity capital raised by us in exchange for limited partnership units in the
operating partnership.
MANAGEMENT CONTROL
OPERATING PARTNERSHIP
All management powers over the business and affairs of the operating
partnership are exclusively vested in us as the general partner, and no limited
partner of the operating partnership has any right to participate in or exercise
control or management power over the business and affairs of the operating
partnership except as provided below under "-- Voting Rights." The general
partner may not be removed by the limited partners with or without cause.
AMB PROPERTY CORPORATION
Our board of directors has exclusive control over our business affairs
subject only to the restrictions in the our charter and bylaws. At each annual
meeting of stockholders, our stockholders elect the directors for one year terms
and until their successors are elected and qualified. The board of directors may
alter or eliminate our policies without a vote of the stockholders. Accordingly,
except for their vote in the election of directors, stockholders have no control
over our ordinary business policies. We cannot change our policy of maintaining
our status as a real estate investment trust, however, without the approval of
holders of two-thirds of the shares of our capital stock outstanding and
entitled to vote on the change.
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DUTIES TO LIMITED PARTNERS AND STOCKHOLDERS
OPERATING PARTNERSHIP
Under Delaware law, the general partner of the operating partnership is
accountable to the operating partnership as a fiduciary and, consequently, is
required to exercise good faith and integrity in all of its dealings with
respect to partnership affairs. However, under the partnership agreement, the
general partner is not liable for monetary damages for losses sustained,
liabilities incurred or benefits not derived by partners as a result of errors
of judgment or mistakes of fact or law or any act or omission, provided that the
general partner has acted in good faith. Each limited partner expressly
acknowledged in the partnership agreement that as general partner, we are acting
on behalf of the operating partnership's limited partners and our stockholders,
collectively, and are under no obligation to consider the tax consequences to
limited partners when making decisions for the benefit of the operating
partnership. We intend to make decisions in our capacity as general partner of
the operating partnership so as to maximize our profitability and the
profitability of the operating partnership as a whole, independent of the tax
effects on the limited partners.
AMB PROPERTY CORPORATION
Under Maryland law, our directors must perform their duties in good
faith, in a manner that they reasonably believe to be in our best interests and
with the care of an ordinarily prudent person in a like position. Our directors
who act in such a manner generally will not be liable to us for monetary damages
arising from their activities.
VOTING RIGHTS
OPERATING PARTNERSHIP
Under the operating partnership's partnership agreement, the common
limited partners have voting rights only as to the dissolution of the operating
partnership, the sale of all or substantially all of the operating partnership's
assets or merger of the operating partnership, and amendments of the partnership
agreement, as described more fully below. Otherwise, all decisions relating to
the operation and management of the operating partnership are made by the
general partner. As of September 30, 2001, we owned an approximate 94.4% common
general partnership interest in the operating partnership. As limited
partnership units are redeemed or exchanged by limited partners, our percentage
ownership of the limited partnership units will increase. If additional limited
partnership units are issued to third parties, our percentage ownership of the
limited partnership units will decrease.
AMB PROPERTY CORPORATION
We are managed and controlled by a board of directors. Directors are
elected by the stockholders at our annual meetings. Maryland law requires that
certain major corporate transactions, including most amendments to our charter,
may not be consummated without the approval of stockholders as set forth below.
All holders of common stock have one vote per share, and the charter permits the
board of directors to classify and issue preferred stock in one or more series
or classes having voting power which may differ from that of the common stock.
The following is a comparison of the voting rights of the common limited
partners of the operating partnership and our common stockholders as they relate
to certain major transactions:
A. AMENDMENT OF THE PARTNERSHIP AGREEMENT OR THE CHARTER
OPERATING PARTNERSHIP
The operating partnership's partnership agreement may be amended through
a proposal by the general partner or any limited partners holding 25% or more of
the then outstanding limited partnership units entitled to vote. Generally, the
partnership agreement may be amended with the approval of us, as general
partner, and the partners (including us but not including the preferred limited
partners) holding a majority of the percentage interest of all partners other
than preferred limited partners. Certain provisions regarding, among other
things, our rights and duties as general partner and the dissolution of the
operating partnership, may not be amended without the approval of the limited
partners (other than preferred limited partners) holding a majority of the
percentage interests of the limited partners other than preferred limited
partners. Certain amendments that affect the fundamental rights of a limited
partner must be approved by us and by each limited partner that would be
adversely affected. We may, without the limited partners' consent, amend the
partnership agreement to establish rights, powers, duties and preferences of
additional partnership interests issued in accordance with the partnership
agreement and to reflect certain ministerial matters.
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AMB PROPERTY CORPORATION
Amendments to our articles of incorporation must be advised by the board
of directors and approved by the vote of at least two-thirds of all the votes
entitled to be cast on the matter.
B. VOTE REQUIRED TO DISSOLVE THE OPERATING PARTNERSHIP OR AMB PROPERTY
CORPORATION
OPERATING PARTNERSHIP
The general partner may not elect to dissolve the operating partnership
without the prior consent of limited partners (other than the preferred limited
partners) holding a majority of the outstanding percentage interest of all
limited partners other than preferred limited partners.
AMB PROPERTY CORPORATION
Under Maryland law, our dissolution must be advised by the affirmative
vote of a majority of the entire board of directors and approved by the
stockholders by the affirmative vote of at least two-thirds of all the votes
entitled to be cast on the matter. The partnership agreement provides that we
may not withdraw from the operating partnership (whether by sale, statutory
merger, consolidation, liquidation or otherwise) without the consent of limited
partners (other than the preferred limited partners) holding a majority of the
outstanding percentage interest of all limited partners other than preferred
limited partners. However, as described below under "-- Vote Required to Sell
Assets or Merge," we may transfer or assign our general partner interest in
connection with a merger, consolidation or sale of substantially all of our
assets without limited partner consent, upon certain terms and conditions.
C. VOTE REQUIRED TO SELL ASSETS OR MERGE
OPERATING PARTNERSHIP
Under the operating partnership's partnership agreement, the sale,
exchange, transfer or other disposition of all or substantially all of the
operating partnership's assets requires the consent of the partners (other than
the preferred limited partners) holding a majority of the percentage interest of
all partners other than preferred limited partners.
The merger, consolidation or other combination of the operating
partnership also requires the consent of the partners (other than the preferred
limited partners) holding a majority of the percentage interest of all partners
other than preferred limited partners.
AMB PROPERTY CORPORATION
With limited exceptions, under Maryland law, the sale of all or
substantially all of our assets, or our merger or consolidation, must be advise
by the board of directors and approved by the stockholders by the affirmative
vote of at least two-thirds of all the votes entitled to be cast on the matter.
Pursuant to the partnership agreement, we may not withdraw from the
operating partnership and may not transfer all or any portion of our interest in
the operating partnership (whether by sale, statutory merger, consolidation,
liquidation or otherwise) without the consent of limited partners (other than
the preferred limited partners) holding a majority of the outstanding percentage
interest of all limited partners other than preferred limited partners. However,
we may transfer or assign our general partner interest in connection with a
merger, consolidation or sale of substantially all of our assets without limited
partner consent if the conditions described under "Description of Certain
Provisions of the Partnership Agreement of the Operating Partnership -- Removal
of the General Partner; Transferability of Our Interests; Treatment of Limited
Partnership Units in Significant Transactions" are met. These conditions
generally relate to receipt by the common limited partners of property that the
partner would have received had it exchanged its common limited partnership
units for shares of common stock immediately prior to the transaction.
COMPENSATION, FEES AND DISTRIBUTIONS
OPERATING PARTNERSHIP
We do not receive any compensation for our services as general partner of
the operating partnership. As a partner in the operating partnership, however,
we have the same right to allocations and distributions as other partners of the
operating partnership. In addition, the operating partnership will reimburse us
for all expenses we incur relating to our activities as general partner, our
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continued existence and qualification as a real estate investment trust and all
other liabilities that we incur in connection with the pursuit of our business
and affairs. The operating partnership will reimburse us for all expenses
incurred relating to our ongoing operation and any issuance of additional
partnership interests in the operating partnership. These expenses include those
incurred in connection with the administration and activities of the operating
partnership, such as the maintenance of the operating partnership's books and
records, management of the operating partnership's property and assets, and
preparation of information regarding the operating partnership provided to the
partners in the preparation of their individual tax returns. Except as expressly
permitted by the partnership agreement, however, our affiliates will not engage
in any transactions with the operating partnership except on terms that are fair
and reasonable to the operating partnership and no less favorable to the
operating partnership than it would obtain from an unaffiliated third party.
AMB PROPERTY CORPORATION
Our outside directors and officers receive compensation for their
services.
LIABILITY OF INVESTORS
OPERATING PARTNERSHIP
Under the operating partnership's partnership agreement and applicable
Delaware law, the liability of the limited partners for the operating
partnership's debts and obligations is generally limited to the amount of their
investment in the operating partnership.
AMB PROPERTY CORPORATION
Under Maryland law, stockholders are generally not personally liable for
our debts or obligations.
LIQUIDITY
OPERATING PARTNERSHIP
Subject to certain conditions, limited partners may generally transfer
their limited partnership units to accredited investors, provided that we have a
right of first refusal for any proposed transfer. Limited partners may transfer
their limited partnership units without our consent in the following situations:
- transfers to the general partner;
- transfers to an affiliate controlled by the limited partner or to
immediate family members;
- transfers to a trust for the benefit of a charitable beneficiary
or to a charitable foundation; or
- transfers pursuant to a pledge to an unaffiliated lending
institution as collateral or security for a loan or other
extension of credit.
AMB PROPERTY CORPORATION
A limited partner is entitled to freely transfer the shares of common
stock received by that partner in exchange for limited partnership units,
subject to prospectus delivery and other requirements for registered securities.
Our common stock is listed on the New York Stock Exchange. The breadth and
strength of this secondary market will depend, among other things, upon the
number of shares outstanding, our financial results and prospects, the general
interest in our and other real estate investments, and our dividend yield
compared to that of other debt and equity securities.
TAXES
OPERATING PARTNERSHIP
The operating partnership itself is not subject to federal income taxes.
Instead, each holder of limited partnership units includes its allocable share
of the operating partnership's taxable income or loss in determining its
individual federal income tax liability. The allocation of the operating
partnership's income and loss is discussed under the heading "--Material Federal
Income Tax
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Considerations -- Tax Aspects of the Operating Partnership, the Subsidiary
Partnerships and Limited Liability Companies -- Allocations of Income, Gain,
Loss and Deduction." Cash distributions from the operating partnership are
generally not taxable to a holder of limited partnership units except to the
extent they exceed the holder's basis in its interest in the operating
partnership (which will include such holder's allocable share of the operating
partnership's nonrecourse debt).
Income and loss from the operating partnership generally is subject to
the "passive activity" limitations. Under the "passive activity" rules, partners
can generally offset income and loss from the operating partnership that is
considered "passive income" against income and loss from other investments that
constitute "passive activities." However, this offset will not be available if
the operating partnership becomes a publicly traded partnership (as defined in
the Internal Revenue Code).
Holders of limited partnership units are required, in some cases, to file
state income tax returns and/or pay state income taxes in the states in which
the operating partnership owns property, even if they are not residents of those
states.
AMB PROPERTY CORPORATION
Distributions made by us to our taxable domestic stockholders out of
current or accumulated earnings and profits will be taken into account by them
as ordinary income. Distributions that are designated as capital gain dividends
generally will be taxed as gains from the sale or disposition of a capital
asset. Distributions in excess of current or accumulated earnings and profits
will be treated as a nontaxable return of basis to the extent of a stockholder's
adjusted basis in our common stock, with the excess taxed as capital gain.
Dividends paid by us will be treated as "portfolio" income and
stockholders cannot offset these dividends with losses from "passive
activities."
Stockholders who are individuals generally will not be required to file
state income tax returns and/or pay state income taxes outside of their state of
residence with respect to our operations and distributions. We may be required
to pay state income taxes in certain states.
CERTAIN PROVISIONS OF MARYLAND LAW AND OF
OUR CHARTER AND BYLAWS
We have summarized certain terms and provisions of the Maryland General
Corporation Law and our charter and bylaws. This summary is not complete and is
qualified by the provisions of our charter and bylaws and the Maryland General
Corporation Law. For more detail, you should refer to our charter and bylaws,
which are exhibits to the registration statement of which this prospectus is a
part. See "Where You Can Find More Information."
BOARD OF DIRECTORS
Our charter provides that the number of our directors shall be
established by the bylaws, but cannot be less than the minimum number required
by the Maryland General Corporation Law, which is one. Our bylaws currently
provide that our board of directors consists of not fewer than five nor more
than 13 members who are elected to a one-year term at each annual meeting of
stockholders. A majority of the entire board of directors may fill any vacancy
(except for a vacancy caused by removal, which must be filled by, or upon
approval of, the stockholders). Our bylaws provide that a majority of the board
of directors must be "independent directors." An "independent director" is a
director who:
- is not, and has not been for at least three years, an employee,
officer or affiliate of us or one of our subsidiaries or
divisions;
- is not, and has not been for at least three years, a relative of a
principal executive officer; or
- is not an individual member of an organization acting as advisor,
consultant or legal counsel, receiving compensation on a
continuing basis from us in addition to director's fees, unless
our board of directors has determined, in its business judgment,
that the relationship does not interfere with the director's
exercise of independent judgment and deems such director to be an
independent director.
Although the board of directors has no present intention of doing so,
under the Maryland General Corporation Law, the board of directors has the power
to elect, without stockholder vote, to divide the board of directors into three
classes of directors having
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staggered terms of office. The staggered terms of directors may reduce the
possibility of a tender offer or a change of control, even though that may be in
the best interests of stockholders.
REMOVAL OF DIRECTORS
While our charter and the Maryland General Corporation Law authorize our
stockholders to fill vacancies in the board of directors that are caused by the
removal of a director, our charter precludes stockholders from removing
incumbent directors except upon a substantial affirmative vote. Specifically,
our charter provides that stockholders may remove a director only for cause and
only by the affirmative vote of at least two-thirds of the votes entitled to be
cast in the election of directors, subject to the rights of the holders of
shares of our preferred stock to elect and remove directors elected by such
holders under certain circumstances. The Maryland General Corporation Law does
not define the term "cause." As a result, removal for "cause" is subject to
Maryland common law and to judicial interpretation and review in the context of
the unique facts and circumstances of any particular situation. This provision
precludes stockholders from removing incumbent directors except for cause and
upon a substantial affirmative vote and filling the vacancies created by removal
with their own nominees.
OPT OUT OF BUSINESS COMBINATION AND CONTROL SHARE ACQUISITION STATUTES
We have elected in our bylaws not to be governed by the "control share
acquisition" provisions of the Maryland General Corporation Law (Sections 3-701
through 3-710), and the board of directors has determined, by irrevocable
resolution, that we will not be governed by the "business combination" provision
of the Maryland General Corporation Law (Section 3-602), each of which could
have the effect of delaying or preventing a change of control. Our bylaws
provide that we cannot at a future date determine to be governed by either
provision without the approval of a majority of all votes entitled to be cast by
the holders of the issued and outstanding shares of common stock entitled to
vote. In addition, the irrevocable resolution adopted by the board of directors
may only be changed by the approval of a majority of the issued and outstanding
shares of common stock entitled to vote.
AMENDMENT TO OUR CHARTER AND BYLAWS
Our charter may not be amended without the amendment being declared
advisable by the board of directors and approved by the stockholders by the
affirmative vote of at least two-thirds of all votes entitled to be cast on the
matter. Our bylaws may be amended by the vote of a majority of the board of
directors or by the affirmative vote of a majority of all votes entitled to be
cast by the holders of the issued and outstanding shares of common stock
entitled to vote on the amendment, except with respect to the following bylaw
provisions (each of which may not be amended without the approval of a majority
of all votes entitled to be cast by the holders of the issued and outstanding
shares of our common stock entitled to vote on the amendment):
- provisions opting out of the control share acquisition statute and
the business combination statute;
- the requirement in our bylaws that our independent directors
approve certain transactions involving our executive officers or
directors or any limited partners of the operating partnership and
their affiliates;
- provisions governing amendment of our bylaws.
MEETINGS OF STOCKHOLDERS
Our bylaws provide for annual meetings of stockholders to elect the board
of directors and transact other business as may properly be brought before the
meeting. The President, a majority of the board of directors or a duly empowered
committee of the board of directors, and the Chairman of the Board may call a
special meeting of stockholders. The holders of 50% or more of our outstanding
stock entitled to vote may also make a written request to call a special meeting
of stockholders.
The Maryland General Corporation Law provides that stockholders may act
by unanimous written consent without a meeting with respect to any action that
they are required or permitted to take at a meeting, if each stockholder
entitled to vote on the matter signs the consent setting forth the action.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS
Our bylaws provide that with respect to an annual meeting of
stockholders, nominations of persons for election to the board of directors and
the proposal of business to be considered by stockholders may be made only:
- pursuant to the notice of the meeting;
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- otherwise brought before the meeting by or at the direction of our
board of directors; or
- by a stockholder who is entitled to vote at the meeting and has
complied with the advance notice procedures set forth in our
bylaws.
Our bylaws also provide that with respect to special meetings of
stockholders, only the business specified in the notice of meeting may be
brought before the meeting.
The provisions in our charter regarding amendments to our charter and the
advance notice provisions of our bylaws could have the effect of discouraging a
takeover or other transaction in which holders of some, or a majority, of the
shares of common stock might receive a premium for their shares over the then
prevailing market price or which holders might believe to be otherwise in their
best interests.
DISSOLUTION OF THE COMPANY
Under the Maryland General Corporation Law, our dissolution must be
advised by a majority of the entire board of directors and approved by the
stockholders by the affirmative vote of at least two-thirds of all the votes
entitled to be cast on the matter.
LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY
Our officers and directors are indemnified under the Maryland General
Corporation Law, our charter and the operating partnership's partnership
agreement against certain liabilities. Our charter and bylaws require us to
indemnify our directors and officers to the fullest extent permitted from time
to time by the Maryland General Corporation Law.
The Maryland General Corporation Law permits a corporation to indemnify
its directors and officers and certain other parties against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless:
- the act or omission of the director or officer was material to the
matter giving rise to the proceeding and was committed in bad
faith or was the result of active and deliberate dishonesty;
- the director or officer actually received an improper personal
benefit in money, property or services; or
- in the case of any criminal proceeding, the director or officer
had reasonable cause to believe that the act or omission was
unlawful.
A corporation may indemnify a director or officer against judgments,
penalties, fines, settlements and reasonable expenses that the director or
officer actually incurs in connection with the proceeding unless the proceeding
is one by or in the right of the corporation and the director or officer has
been adjudged to be liable to the corporation. In addition, a corporation may
not indemnify a director or officer with respect to any proceeding charging
improper personal benefit to the director or officer, whether or not involving
action in the director's or officer's official capacity, in which the director
or officer was adjudged to be liable on the basis that personal benefit was
improperly received. The termination of any proceeding by conviction, or upon a
plea of nolo contendere or its equivalent, or an entry of any order of probation
prior to judgment, creates a rebuttable presumption that the director or officer
did not meet the requisite standard of conduct required for indemnification to
be permitted.
The Maryland General Corporation Law permits the charter of a Maryland
corporation to include a provision limiting the liability of its directors and
officers to the corporation and its stockholders for money damages, subject to
specified restrictions. Our charter contains this provision. The Maryland
General Corporation Law does not, however, permit the liability of directors and
officers to the corporation or its stockholders for money damages to be limited
to the extent that:
- it is proven that the person actually received an improper
personal benefit or profit in money, property or services; or
- a judgment or other final adjudication adverse to the person is
entered in a proceeding based on a finding that the person's
action, or failure to act, was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in
the proceeding.
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This provision does not limit our ability or the ability of our
stockholders to obtain other relief, such as an injunction or rescission. The
operating partnership's partnership agreement also provides for our
indemnification, as general partner, and our officers and directors to the same
extent indemnification is provided to our officers and directors in our charter,
and limits our liability and the liability of our officers and directors to the
operating partnership and the partners of the operating partnership to the same
extent liability of our officers and directors to us and our stockholders is
limited under our charter. See "Description of Certain Provisions of the
Partnership Agreement of the Operating Partnership -- Our Exculpation and
Indemnification."
Insofar as the foregoing provisions permit indemnification for liability
arising under the Securities Act of directors, officers or persons controlling
us, we have been informed that, in the opinion of the Securities and Exchange
Commission, this indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following summary of material federal income tax considerations
regarding AMB Property Corporation and the common stock we are registering is
based on current law, is for general information only and is not tax advice.
Latham & Watkins has rendered an opinion to us that the statements set forth
below, insofar as they purport to describe or summarize certain provisions of
the agreements, statutes or regulations referred to below, are accurate
descriptions or summaries in all material respects.
This summary deals only with common stock and common units held as
"capital assets" -- i.e., generally, property held for investment within the
meaning of Section 1221 of the Internal Revenue Code. Your tax treatment will
vary depending on your particular situation, and this discussion does not
purport to deal with all aspects of taxation that may be relevant to a holder of
common stock or common units in light of his or her personal investment or tax
circumstances, or to holders who receive special treatment under the federal
income tax laws except to the extent discussed under the headings "-- Taxation
of Tax-Exempt Stockholders" and "-- Taxation of Non-U.S. Stockholders." Holders
of common stock or common units receiving special treatment include, without
limitation:
- insurance companies;
- financial institutions or broker-dealers;
- "S" corporations;
- expatriates;
- pension plans and other tax-exempt organizations;
- stockholders holding securities as part of a conversion
transaction, or a hedge or hedging transaction or as a position in
a straddle for tax purposes;
- foreign entities or individuals who are not citizens or residents
of the United States;
- persons whose functional currency is other than the United States
dollar; and
- persons who are subject to the alternative minimum tax provisions
of the Internal Revenue Code.
In addition, this summary does not purport to deal with aspects of taxation that
may be relevant to a limited partner of the operating partnership except to the
extent described in "-- Tax Consequences of an Exchange of Common Units for
Common Stock." Furthermore, the summary below does not consider the effect of
any foreign, state, local or other tax laws that may be applicable to you as a
holder of common units or our common stock.
The information in this section is based on:
- the Internal Revenue Code;
- current, temporary and proposed treasury regulations promulgated
under the Internal Revenue Code;
53
- the legislative history of the Internal Revenue Code;
- current administrative interpretations and practices of the
Internal Revenue Service; and
- court decisions;
in each case, as of the date of this prospectus. In addition, the administrative
interpretations and practices of the Internal Revenue Service include its
practices and policies as expressed in certain private letter rulings which are
not binding on the Internal Revenue Service except with respect to the
particular taxpayers who requested and received such rulings. Future
legislation, treasury regulations, administrative interpretations and practices
and/or court decisions may adversely affect the tax considerations described in
this prospectus. Any such change could apply retroactively to transactions
preceding the date of the change. The statements in this prospectus are not
binding on the Internal Revenue Service or a court. Thus, we can provide no
assurance that the tax considerations contained in this summary will not be
challenged by the Internal Revenue Service or sustained by a court if challenged
by the Internal Revenue Service.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF (1) A DISPOSITION OF COMMON UNITS, (2) THE ACQUISITION,
OWNERSHIP AND SALE OR OTHER DISPOSITION OF OUR COMMON STOCK, INCLUDING THE
FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION,
OWNERSHIP AND SALE OR OTHER DISPOSITION, (3) OUR ELECTION TO BE TAXED AS A REAL
ESTATE INVESTMENT TRUST FOR FEDERAL INCOME TAX PURPOSES AND (4) POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.
TAX CONSEQUENCES OF AN EXCHANGE OF COMMON UNITS FOR COMMON STOCK
If you exercise your right to require the operating partnership to
acquire all or part of your common units, and we elect to acquire some or all of
your common units in exchange for our common stock, the exchange will be a fully
taxable transaction. You will generally recognize gain in an amount equal to the
value of our common stock received, plus the amount of liabilities of the
operating partnership allocable to your common units being exchanged, less your
tax basis in those common units. The recognition of any loss is subject to a
number of limitations set forth in the Internal Revenue Code. The character of
any gain or loss as capital or ordinary will depend on the nature of the assets
of the operating partnership at the time of the exchange. The tax treatment of
any acquisition of your common units by the operating partnership in exchange
for cash may be similar, depending on your circumstances.
TAXATION OF AMB PROPERTY CORPORATION
General. We elected to be taxed as a real estate investment trust under
Sections 856 through 860 of the Internal Revenue Code, commencing with our
taxable year ended December 31, 1997. We believe we have been organized and have
operated in a manner which allows us to qualify for taxation as a real estate
investment trust under the Internal Revenue Code commencing with our taxable
year ended December 31, 1997. We currently intend to continue to operate in this
manner. However, qualification and taxation as a real estate investment trust
depends upon our ability to meet, through actual annual operating results, asset
diversification, distribution levels and diversity of stock ownership, the
various qualification tests imposed under the Internal Revenue Code.
Accordingly, no assurance can be given that we have operated or will continue to
operate in a manner so as to qualify or remain qualified as a real estate
investment trust. See "-- Failure to Qualify."
The sections of the Internal Revenue Code that relate to the
qualification and operation as a real estate investment trust are highly
technical and complex. The following sets forth the material aspects of the
sections of the Internal Revenue Code that govern the federal income tax
treatment of a real estate investment trust and its stockholders. This summary
is qualified in its entirety by the applicable Internal Revenue Code provisions,
relevant rules and regulations promulgated under the Internal Revenue Code, and
administrative and judicial interpretations of the Internal Revenue Code and
these rules and regulations.
If we qualify for taxation as a real estate investment trust, we
generally will not be required to pay federal corporate income taxes on our net
income that is currently distributed to our stockholders. This treatment
substantially eliminates the "double taxation" that generally results from
investment in a C corporation. A C corporation is generally a corporation
required to pay full corporate-level tax. Double taxation generally means
taxation that occurs once at the corporate level when income is earned and once
again at the stockholder level when the income is distributed. We will be
required to pay federal income tax, however, as follows:
- First, we will be required to pay tax at regular ordinary and
capital gain corporate tax rates on any undistributed real estate
investment trust taxable income, including undistributed net
capital gains.
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- Second, we may be required to pay the "alternative minimum tax" on
our items of tax preference under some circumstances.
- Third, if we have (1) net income from the sale or other
disposition of "foreclosure property" which is held primarily for
sale to customers in the ordinary course of business or (2) other
nonqualifying income from foreclosure property, we will be
required to pay tax at the highest corporate rate on this income.
Foreclosure property is generally defined as property we acquired
through foreclosure or after a default on a loan secured by the
property or a lease of the property.
- Fourth, we will be required to pay a 100% tax on any net income
from prohibited transactions. Prohibited transactions are, in
general, sales or other taxable dispositions of property held
primarily for sale to customers in the ordinary course of
business, other than foreclosure property.
- Fifth, if we fail to satisfy the 75% or 95% gross income test, as
described below, but have otherwise maintained our qualification
as a real estate investment trust because certain other
requirements are met, we will be required to pay a tax equal to
(1) the greater of (A) the amount by which 75% of our gross income
exceeds the amount qualifying under the 75% gross income test, and
(B) the amount by which 90% of our gross income exceeds the amount
qualifying under the 95% gross income test, multiplied by (2) a
fraction intended to reflect our profitability.
- Sixth, we will be required to pay a 4% excise tax on the excess of
the required distribution over the amounts actually distributed if
we fail to distribute during each calendar year at least the sum
of (1) 85% of our real estate investment trust ordinary income for
the year, (2) 95% of our real estate investment trust capital gain
net income for the year, and (3) any undistributed taxable income
from prior periods.
- Seventh, if we acquire any asset from a corporation which is or
has been a C corporation in a transaction in which the basis of
the asset in our hands is determined by reference to the basis of
the asset in the hands of the C corporation, and we subsequently
recognize gain on the disposition of the asset during the ten-year
period beginning on the date on which we acquired the asset, then
we will be required to pay tax at the highest regular corporate
tax rate on this gain to the extent of the excess of (1) the fair
market value of the asset over (2) our adjusted basis in the
asset, in each case determined as of the date on which we acquired
the asset. The results described in this paragraph with respect to
the recognition of such gain assume that we will make an election
under Treasury Regulation Section 1.337(d)-5T to be treated in
this manner on our tax return for the year in which we acquire an
asset from a C corporation.
- Eighth, we will be subject to a 100% tax on any "redetermined
rents," "redetermined deductions" or "excess interest." In
general, redetermined rents are rents from real property that are
overstated as a result of services furnished by a "taxable REIT
subsidiary" of ours to any of our tenants. See "-- Taxation of AMB
Property Corporation -- Ownership of Interests in Taxable REIT
Subsidiaries." Redetermined deductions and excess interest
represent amounts that are deducted by a taxable REIT subsidiary
of ours for amounts paid to us that are in excess of the amounts
that would have been deducted based on arm's length negotiations.
Requirements for Qualification as a Real Estate Investment Trust. The
Internal Revenue Code defines a real estate investment trust as a corporation,
trust or association:
(1) that is managed by one or more trustees or directors;
(2) that issues transferable shares or transferable certificates
to evidence its beneficial ownership;
(3) that would be taxable as a domestic corporation, but for
Sections 856 through 860 of the Internal Revenue Code;
(4) that is not a financial institution or an insurance company
within the meaning of the Internal Revenue Code;
(5) that is beneficially owned by 100 or more persons;
(6) not more than 50% in value of the outstanding stock of which
is owned, actually or constructively, by five or fewer individuals, as defined
in the Internal Revenue Code to include certain entities, during the last half
of each taxable year; and
(7) that meets other tests, described below, regarding the nature
of its income and assets and the amount of its distributions.
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The Internal Revenue Code provides that conditions (1) to (4), inclusive,
must be met during the entire taxable year and that condition (5) must be met
during at least 335 days of a taxable year of twelve months, or during a
proportionate part of a taxable year of less than twelve months. Conditions (5)
and (6) do not apply until after the first taxable year for which an election is
made to be taxed as a real estate investment trust. For purposes of condition
(6), pension funds and certain other tax-exempt entities generally are treated
as individuals, subject to a "look-through" exception with respect to pension
funds.
We believe that we have satisfied conditions (1) through (7) inclusive.
In addition, our charter provides for restrictions regarding ownership and
transfer of shares. These restrictions are intended to assist us in continuing
to satisfy the share ownership requirements described in (5) and (6) above.
These stock ownership and transfer restrictions are described in "Description of
Capital Stock -- Restrictions on Ownership and Transfer of Capital Stock." These
restrictions, however, may not ensure that we will, in all cases, be able to
satisfy the share ownership requirements described in (5) and (6) above. If we
fail to satisfy these share ownership requirements, except as provided in the
next sentence, our status as a real estate investment trust will terminate.
However, if we comply with the rules contained in applicable treasury
regulations that require us to ascertain the actual ownership of our shares and
we do not know, or would not have known through the exercise of reasonable
diligence, that we failed to meet the requirement described in condition (6)
above, we will be treated as having met this requirement. See the section below
entitled "-- Failure to Qualify."
In addition, we may not maintain our status as a real estate investment
trust unless our taxable year is the calendar year. We have and will continue to
have a calendar taxable year.
Ownership of Interests in Partnerships, Limited Liability Companies and
Qualified REIT Subsidiaries. Treasury regulations provide that, in the case of a
real estate investment trust which is a partner in a partnership or a member in
a limited liability company, the real estate investment trust will be deemed to
own its proportionate share of the assets of the partnership or limited
liability company, as the case may be. Also, the real estate investment trust
will be deemed to be entitled to the income of the partnership or limited
liability company attributable to its proportionate share of the assets. The
character of the assets and gross income of the partnership or limited liability
company retains the same character in the hands of the real estate investment
trust for purposes of Section 856 of the Internal Revenue Code, including
satisfying the gross income tests and the asset tests. We have included a brief
summary of the rules governing the federal income taxation of partnerships and
limited liability companies below in "-- Tax Aspects of the Operating
Partnership, the Partnerships and Limited Liability Companies." We have direct
control of the operating partnership and intend to continue to operate it in a
manner consistent with the requirements for qualification as a real estate
investment trust. However, we are a limited partner or non-managing member in
some of our partnerships and limited liability companies. If a partnership or
limited liability company takes or expects to take actions which could
jeopardize our status as a real estate investment trust or require us to pay
tax, we may be forced to dispose of our interest in such entity. In addition, it
is possible that a partnership or limited liability company could take an action
which could cause us to fail a real estate investment trust income or asset
test, and that we would not become aware of such action in a time frame which
would allow us to dispose of our interest in the partnership or limited
liability company or take other corrective action on a timely basis. In such a
case, we could fail to qualify as a real estate investment trust.
We own 100% of the stock of a number of subsidiaries that are qualified
REIT subsidiaries and may acquire stock of one or more new corporate
subsidiaries. A corporation will qualify as a qualified REIT subsidiary if we
own 100% of the corporation's stock, and the corporation is not a "taxable REIT
subsidiary," as described below. A qualified REIT subsidiary will not be treated
as a separate corporation. All assets, liabilities and items of income,
deduction and credit of a qualified REIT subsidiary we own will be treated as
our assets, liabilities and such items, for all purposes of the Internal Revenue
Code, including the real estate investment trust qualification tests. For this
reason, references under "Material Federal Income Tax Considerations" to our
income and assets shall include the income and assets of any qualified REIT
subsidiary. A qualified REIT subsidiary will not be required to pay federal
income tax, and our ownership of the stock of a qualified REIT subsidiary will
not violate the restrictions against ownership of securities of any one issuer
which constitute more than 10% of the voting power or value of such issuer's
securities or more than 5% of the value of our total assets, as described below
under "--Taxation of AMB Property Corporation-- Asset Tests."
Ownership of Interests in Taxable REIT Subsidiaries. A taxable REIT
subsidiary of ours is a corporation other than a real estate investment trust in
which we directly or indirectly hold stock and that has made a joint election
with us to be treated as a taxable REIT subsidiary. A taxable REIT subsidiary
also includes any corporation other than a real estate investment trust with
respect to which a taxable REIT subsidiary owns securities possessing more than
35% of the total voting power or value of the outstanding securities of such
corporation. Other than some activities relating to lodging and health care
facilities, a taxable REIT subsidiary may generally engage in any business,
including the provision of customary or non-customary services to tenants of its
parent real estate investment trust. A taxable REIT subsidiary is subject to
federal income tax, and state and local income tax where applicable, as a
regular C
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corporation. In addition, a taxable REIT subsidiary of ours may be prevented
from deducting interest on debt that we directly or indirectly fund if certain
tests regarding the taxable REIT subsidiary's debt-to-equity ratio and interest
expense are satisfied. Each of AMB Investment Management, Inc. and Headlands
Realty Corporation has elected, together with us, to be treated as our taxable
REIT subsidiary effective on or prior to March 31, 2001. See "-- Taxation of AMB
Property Corporation -- Asset Tests." Although we do not currently hold an
interest in any other taxable REIT subsidiary, we may acquire securities in one
or more additional taxable REIT subsidiaries in the future.
Income Tests. We must satisfy two gross income requirements annually to
maintain our qualification as a real estate investment trust. First, in each
taxable year we must derive directly or indirectly at least 75% of our gross
income, excluding gross income from prohibited transactions, from investments
relating to real property or mortgages on real property, including "rents from
real property" and, in certain circumstances, interest, or from certain types of
temporary investments. Second, in each taxable year we must derive at least 95%
of our gross income, excluding gross income from prohibited transactions, from
these real property investments, dividends, interest and gain from the sale or
disposition of stock or securities, or from any combination of the foregoing.
For these purposes, the term "interest" generally does not include any amount
received or accrued, directly or indirectly, if the determination of the amount
depends in whole or in part on the income or profits of any person. However, an
amount received or accrued generally will not be excluded from the term
"interest" solely by reason of being based on a fixed percentage or percentages
of receipts or sales.
Rents we receive from a tenant will qualify as "rents from real property"
for the purpose of satisfying the gross income requirements for a real estate
investment trust described above only if the following conditions are met:
- The amount of rent must not be based in whole or in part on the
income or profits of any person. However, an amount we receive or
accrue generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed
percentage or percentages of receipts or sales;
- We, or an actual or constructive owner of 10% or more of our
stock, must not actually or constructively own 10% or more of the
interests in the tenant. We refer to a tenant in which we, or an
actual or constructive owner of 10% or more of our stock, actually
or constructively own 10% or more of the interests in the tenant,
as a related party tenant. Rents received from a related party
tenant that is a taxable REIT subsidiary, however, will not be
excluded from the definition of "rents from real property" if at
least 90% of the space at the property to which the rents relate
is leased to third parties, and the rents paid by the taxable REIT
subsidiary are comparable to rents paid by the real estate
investment trust's other tenants for comparable space;
- Rent attributable to personal property, leased in connection with
a lease of real property, is not greater than 15% of the total
rent received under the lease. If this requirement is not met,
then the portion of rent attributable to personal property will
not qualify as "rents from real property"; and
- We generally must not operate or manage the property or furnish or
render services to the tenants of the property, subject to a 1% de
minimis exception, other than through an independent contractor
from whom we derive no revenue. We may, however, directly perform
certain services that are "usually or customarily rendered" in
connection with the rental of space for occupancy only and are not
otherwise considered "rendered to the occupant" of the property.
Examples of such services include the provision of light, heat, or
other utilities, trash removal and general maintenance of common
areas. In addition, we may employ a taxable REIT subsidiary, which
may be wholly or partially owned by us, to provide both customary
and non-customary services to our tenants without causing the rent
we receive from those tenants to fail to qualify as "rents from
real property." Any amounts we receive from a taxable REIT
subsidiary with respect to the taxable REIT subsidiary's provision
of non-customary services will, however, be nonqualified income
under the 75% gross income test and, except to the extent received
through the payment of dividends, the 95% gross income test.
We generally do not intend, and as a general partner of the operating
partnership, do not intend to permit the operating partnership, to take actions
we believe will cause us to fail to satisfy the rental conditions described
above. However, we may intentionally fail to satisfy some of these conditions to
the extent the failure will not, based on the advice of our tax counsel,
jeopardize our tax status as a real estate investment trust.
AMB Investment Management, Inc. is the sole general partner of, and
conducts its operations through, AMB Investment Management Limited Partnership.
AMB Investment Management Limited Partnership conducts the asset management
business and receives fees, including incentive fees, in exchange for the
provision of certain services to asset management clients. In addition,
Headlands Realty Corporation may provide certain services in exchange for a fee
or derive other income which would not qualify
57
under the real estate investment trust gross income tests. Such fees and other
income do not accrue to us, but we derive our allocable share of dividend income
from AMB Investment Management, Inc. and Headlands Realty through our interest
in the operating partnership. Such dividend income qualifies under the 95%, but
not the 75%, real estate investment trust gross income test. The operating
partnership may provide certain management or administrative services to AMB
Investment Management Limited Partnership and Headlands Realty Corporation. The
fees derived by the operating partnership as a result of the provision of such
services will be nonqualifying income to us under both the 95% and 75% real
estate investment trust income tests. The amount of such dividend and fee income
will depend on a number of factors which cannot be determined with certainty,
including the level of services provided by AMB Investment Management Limited
Partnership, Headlands Realty Corporation and the operating partnership. We will
monitor the amount of the dividend income from AMB Investment Management, Inc.
and Headlands Realty Corporation and the fee income described above, and will
take actions intended to keep this income, and any other nonqualifying income,
within the limitations of the real estate investment trust income tests.
However, we cannot guarantee that such actions will in all cases prevent us from
violating a real estate investment trust income test.
If we fail to satisfy one or both of the 75% or 95% gross income tests
for any taxable year, we may nevertheless qualify as a real estate investment
trust for the year if we are entitled to relief under certain provisions of the
Internal Revenue Code. Generally, we may avail ourselves of the relief
provisions if:
- our failure to meet these tests was due to reasonable cause and
not due to willful neglect;
- we attach a schedule of the sources of our income to any federal
income tax return; and
- any incorrect information on the schedule was not due to fraud
with intent to evade tax.
It is not possible, however, to state whether in all circumstances we
would be entitled to the benefit of these relief provisions. For example, if we
fail to satisfy the gross income tests because nonqualifying income that we
intentionally accrue or receive exceeds the limits on nonqualifying income, the
Internal Revenue Service could conclude that our failure to satisfy the tests
was not due to reasonable cause. If these relief provisions do not apply to a
particular set of circumstances, we will not qualify as a real estate investment
trust. As discussed above in "-- Taxation of AMB Property Corporation --
General," even if these relief provisions apply, and we retain our status as a
real estate investment trust, a tax would be imposed with respect to our
non-qualifying income. We may not always be able to comply with the gross income
tests for real estate investment trust qualification despite periodic monitoring
of our income.
Prohibited Transaction Income. Any gain we realize on the sale of any
property held as inventory or other property held primarily for sale to
customers in the ordinary course of business, including our share of any such
gain realized by our partnerships or limited liability companies, will be
treated as income from a prohibited transaction that is subject to a 100%
penalty tax. This prohibited transaction income may also adversely affect our
ability to satisfy the income tests for qualification as a real estate
investment trust. Under existing law, whether property is held as inventory or
primarily for sale to customers in the ordinary course of a trade or business is
a question of fact that depends on all the facts and circumstances surrounding
the particular transaction. We intend to hold our properties for investment with
a view to long-term appreciation, to engage in the business of acquiring,
developing and owning our properties and to make occasional sales of the
properties consistent with our investment objectives. However, the Internal
Revenue Service may contend that one or more of these sales is subject to the
100% penalty tax.
Redetermined Rents. Any redetermined rents, redetermined deductions or
excess interest that we generate will be subject to a 100% penalty tax. In
general, redetermined rents are rents from real property that are overstated as
a result of services furnished by a taxable REIT subsidiary of ours to any of
our tenants, and redetermined deductions and excess interest represent amounts
that are deducted by a taxable REIT subsidiary for amounts paid by it that are
in excess of the amounts that would have been deducted based on arm's length
negotiations. Rents that we receive will not constitute redetermined rents if
they qualify for the safe harbor provisions contained in the Internal Revenue
Code. Safe harbor provisions are provided where (1) amounts are received by a
real estate investment trust for services customarily furnished or rendered in
connection with the rental of real property, (2) amounts are excluded from the
definition of impermissible tenant service income as a result of satisfying the
1% de minimis exception, (3) the taxable REIT subsidiary renders a significant
amount of similar services to unrelated parties and the charges for such
services are substantially comparable, (4) rents paid to the real estate
investment trust by tenants who are not receiving services from the taxable REIT
subsidiary are substantially comparable to the rents paid by the real estate
investment trust's tenants leasing comparable space who are receiving such
services from the taxable REIT subsidiary and the charge for the services is
separately stated or (5) the taxable REIT subsidiary's gross income from the
service is not less than 150% of the subsidiary's direct cost in furnishing the
service.
58
Asset Tests. At the close of each quarter of our taxable year, we must
also satisfy four tests relating to the nature and diversification of our
assets. First, at least 75% of the value of our total assets must be represented
by real estate assets, cash, cash items and government securities. For purposes
of this test, real estate assets include stock or debt instruments that are
purchased with the proceeds of a stock offering or a long-term (at least five
years) public debt offering, but only for the one year period beginning on the
date we receive such proceeds. Second, not more than 25% of our total assets may
be represented by securities, other than those securities includable in the 75%
asset test. Third, of the investments included in the 25% asset class and except
for investments in real estate investment trusts, qualified REIT subsidiaries
and taxable REIT subsidiaries, the value of any one issuer's securities may not
exceed 5% of the value of our total assets and we may not own more than 10% of
the total vote or value of the outstanding securities of any one issuer. Fourth,
not more than 20% of the value of our total assets may be represented by the
securities of one or more taxable REIT subsidiaries. The 10% value limitation
and the 20% asset test are part of recently enacted legislation and are
effective for taxable years ending after December 31, 2000.
The operating partnership owns 100% of the stock of AMB Investment
Management, Inc. and Headlands Realty Corporation. We are considered to own our
pro rata share of that stock because we own interests in the operating
partnership. Each of AMB Investment Management, Inc. and Headlands Realty
Corporation elected, together with us, to be treated as our taxable REIT
subsidiary effective no later than March 31, 2001. So long as each of AMB
Investment Management, Inc. and Headlands Realty Corporation qualifies as a
taxable REIT subsidiary, we will not be subject to the 5% asset test, 10% voting
securities limitation or 10% value limitation with respect to these
corporations. We may acquire securities in other taxable REIT subsidiaries in
the future. We believe that the aggregate value of our taxable REIT subsidiaries
will not exceed 20% of the aggregate value of our gross assets. Prior to the
election to treat AMB Investment Management, Inc. and Headlands Realty
Corporation as taxable REIT subsidiaries, the operating partnership did not own
any of the voting securities of either of AMB Investment Management, Inc. and
Headlands Realty Corporation, and therefore we would not be considered to own
more than 10% of the voting securities of either of these corporations. In
addition, we believe that prior to the election to treat AMB Investment
Management, Inc. and Headlands Realty Corporation as our taxable REIT
subsidiaries, the value of our pro rata share of the securities of each of these
corporations held by the operating partnership did not, in either case, exceed
5% of the total value of our assets. With respect to each issuer in which we
currently own securities that does not qualify as a real estate investment
trust, a qualified REIT subsidiary or a taxable REIT subsidiary, we believe that
the value of the securities of each issuer does not exceed 5% of the total value
of our assets and our ownership of the securities of each issuer complies with
the 10% voting securities limitation and 10% value limitation. No independent
appraisals have been obtained to support these conclusions. In addition, there
can be no assurance that the Internal Revenue Service will not disagree with our
determinations of value.
The asset tests must be satisfied not only on the date that we, directly
or through the operating partnership, acquire securities in the applicable
issuer, but also each time we increase our ownership of securities of such
issuer, including as a result of increasing our interest in the operating
partnership. For example, our indirect ownership of securities of each issuer
will increase as a result of our capital contributions to the operating
partnership and as limited partners exercise their redemption/exchange rights.
After initially meeting the asset tests at the close of any quarter, we will not
lose our status as a real estate investment trust for failure to satisfy the
asset tests at the end of a later quarter solely by reason of changes in asset
values. If we fail to satisfy an asset test because we acquire securities or
other property during a quarter (including an increase in our interests in the
operating partnership), we can cure this failure by disposing of sufficient
nonqualifying assets within 30 days after the close of that quarter. Although we
believe that we have satisfied the asset tests and plan to take steps to ensure
that we satisfy such tests for any quarter with respect to which retesting is to
occur, there can be no assurance that such steps will always be successful, or
will not require a reduction in the operating partnership's overall interest in
an issuer. If we fail to timely cure any noncompliance with the asset tests, we
would cease to qualify as a real estate investment trust.
Annual Distribution Requirements. To maintain our qualification as a real
estate investment trust, we are required to distribute dividends, other than
capital gain dividends, to our stockholders in an amount at least equal to the
sum of:
- 90% of our "real estate investment trust taxable income"; and
- 90% of our after tax net income, if any, from foreclosure
property; minus
- the excess of the sum of certain items of noncash income over 5%
of the "real estate investment trust taxable income."
Our "real estate investment trust taxable income" is computed without
regard to the dividends paid deduction and our net capital gain. In addition,
for purposes of this test, non-cash income means income attributable to leveled
stepped rents, original issue discount on purchase money debt, cancellation of
indebtedness or a like-kind exchange that is later determined to be taxable.
This distribution requirement was 95% for taxable years beginning prior to
January 1, 2001.
59
We must pay these distributions in the taxable year to which they relate,
or in the following taxable year if they are declared during the last three
months of the taxable year, payable to stockholders of record on a specified
date during such period and paid during January of the following year. In
addition, at our election, a distribution for a taxable year may be declared
before we timely file our tax return for such year and paid on or before the
first regular dividend payment after such declaration, provided such payment is
made during the twelve month period following the close of such year. Except as
provided in "-- Taxation of Taxable U.S. Stockholders Generally" below, these
distributions are taxable to stockholders, other than tax-exempt entities, as
discussed below, in the year in which paid. This is so even though these
distributions relate to the prior year for purposes of our 90% distribution
requirement. The amount distributed must not be preferential (i.e., every
stockholder of the class of stock to which a distribution is made must be
treated the same as every other stockholder of that class, and no class of stock
may be treated otherwise than in accordance with its dividend rights as a
class). To the extent that we do not distribute all of our net capital gain or
distribute at least 90%, but less than 100%, of our "real estate investment
trust taxable income," as adjusted, we will be required to pay tax on that
amount at regular ordinary and capital gain corporate tax rates. We believe we
have made, and intend to continue to make, timely distributions sufficient to
satisfy these annual distribution requirements. In this regard, the partnership
agreement authorizes us, as general partner of the operating partnership, to
take such steps as may be necessary to cause the operating partnership to
distribute to its partners an amount sufficient to permit us to meet these
distribution requirements.
We expect that our real estate investment trust taxable income will be
less than our cash flow due to the allowance of depreciation and other non-cash
charges in computing real estate investment trust taxable income. Accordingly,
we anticipate that we will generally have sufficient cash or liquid assets to
enable us to satisfy the distribution requirements described above. However,
from time to time, we may not have sufficient cash or other liquid assets to
meet these distribution requirements due to timing differences between the
actual receipt of income and actual payment of deductible expenses, and the
inclusion of income and deduction of expenses in arriving at our taxable income.
If these timing differences occur, we may need to arrange for short-term, or
possibly long-term, borrowings or need to pay dividends in the form of taxable
stock dividends in order to meet the distribution requirements.
Under some circumstances, we may be able to rectify an inadvertent
failure to meet the distribution requirement for a year by paying "deficiency
dividends" to our stockholders in a later year, which may be included in our
deduction for dividends paid for the earlier year. Thus, we may be able to avoid
being taxed on amounts distributed as deficiency dividends. However, we will be
required to pay interest to the Internal Revenue Service based upon the amount
of any deduction claimed for deficiency dividends.
Furthermore, we will be required to pay a 4% excise tax on the excess of
the required distribution over the amounts actually distributed if we fail to
distribute during each calendar year, or in the case of distributions with
declaration and record dates falling in the last three months of the calendar
year, by the end of January immediately following such year, at least the sum of
85% of our real estate investment trust ordinary income for such year, 95% of
our real estate investment trust capital gain income for the year and any
undistributed taxable income from prior periods. Any real estate investment
trust taxable income and net capital gain on which this excise tax is imposed
for any year is treated as an amount distributed during that year for purposes
of calculating such tax.
We have, and may in the future, dispose of properties in transactions
intended to qualify as like-kind exchanges under the Internal Revenue Code,
resulting in the deferral of gain for federal income tax purposes. The failure
of any such transaction to qualify as a like-kind exchange could subject us to
federal income tax, possibly including the 100% prohibited transaction tax,
depending on the facts and circumstances surrounding the particular transaction.
Property Transfer. Any gain that we realize on the sale of any property
held as inventory or other property held primarily for sale to customers in the
ordinary course of business, including our share of any such gain realized by
the operating partnership, either directly or through our subsidiary
partnerships and limited liability companies, will be treated as income from a
prohibited transaction that is subject to a 100% penalty tax. This prohibited
transaction income may adversely affect our ability to satisfy the income tests
for qualification as a real estate investment trust. Under existing law, whether
property is held as inventory or primarily for sale to customers in the ordinary
course of a trade or business is a question of fact that depends on all the
facts and circumstances surrounding the particular transaction. The operating
partnership intends to hold its properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing and
owning its properties and to make occasional sales of the properties as are
consistent with the operating partnership's investment objectives. However, the
Internal Revenue Service may successfully contend that some or all of the sales
made by the operating partnership or its subsidiary partnerships or limited
liability companies are prohibited transactions. We would be required to pay the
100% penalty tax on our allocable share of the gains resulting from any such
sales.
60
FAILURE TO QUALIFY
If we fail to qualify for taxation as a real estate investment trust in
any taxable year, and the relief provisions of the Internal Revenue Code do not
apply, we will be required to pay tax, including any applicable alternative
minimum tax, on our taxable income at regular ordinary and capital gain
corporate tax rates. Distributions to stockholders in any year in which we fail
to qualify as a real estate investment trust will not be deductible by us, and
we will not be required to distribute any amounts to our stockholders. As a
result, we anticipate that our failure to qualify as a real estate investment
trust would reduce our cash available for distribution to our stockholders. In
addition, if we fail to qualify as a real estate investment trust, all
distributions to stockholders will be taxable as ordinary income to the extent
of our current and accumulated earnings and profits, and subject to certain
limitations of the Internal Revenue Code, corporate distributees may be eligible
for the dividends received deduction. Unless entitled to relief under specific
statutory provisions, we will also be disqualified from taxation as a real
estate investment trust for the four taxable years following the year during
which we lost our qualification. It is not possible to state whether in all
circumstances we would be entitled to this statutory relief.
TAX ASPECTS OF THE OPERATING PARTNERSHIP, THE SUBSIDIARY PARTNERSHIPS AND
LIMITED LIABILITY COMPANIES
General. Substantially all of our investments are held indirectly through
the operating partnership. In addition, the operating partnership holds certain
of its investments indirectly through subsidiary partnerships and limited
liability companies. In general, entities that are classified as partnerships
for federal income tax purposes are "pass-through" entities which are not
required to pay federal income tax. Rather, partners or members of such entities
are allocated their proportionate shares of the items of income, gain, loss,
deduction and credit of the entity, and are potentially required to pay tax
thereon, without regard to whether the partners or members receive a
distribution of cash from the entity. We will include in our income our
proportionate share of the foregoing items for purposes of the various real
estate investment trust income tests and in the computation of our real estate
investment trust taxable income. Moreover, for purposes of the real estate
investment trust asset tests, we will include our proportionate share of assets
held by the operating partnership, including its share of its subsidiary
partnerships and limited liability companies. See "-- Taxation of AMB Property
Corporation."
Entity Classification. Our interests in the operating partnership, the
partnerships and limited liability companies involve special tax considerations,
including the possibility that the Internal Revenue Service might challenge the
status of these entities as a partnership, as opposed to an association taxable
as a corporation for federal income tax purposes. If the operating partnership,
a partnership, or a limited liability company were treated as an association, it
would be taxable as a corporation and would be required to pay an entity-level
tax on its income. In this situation, the character of our assets and items of
gross income would change and preclude us from satisfying the asset tests and
possibly the income tests (see "-- Taxation of AMB Property Corporation -- Asset
Tests" and "-- Income Tests"). This, in turn, would prevent us from qualifying
as a real estate investment trust. See "-- Failure to Qualify" for a discussion
of the effect of our failure to meet these tests for a taxable year. In
addition, a change in the operating partnership's, a partnership's or a limited
liability company's status for tax purposes might be treated as a taxable event.
If so, we might incur a tax liability without any related cash distributions.
Treasury regulations that apply for tax periods beginning on or after
January 1, 1997 provide that a domestic business entity not otherwise organized
as a corporation and which has at least two members, an "eligible entity," may
elect to be taxed as a partnership for federal income tax purposes. Unless it
elects otherwise, an eligible entity in existence prior to January 1, 1997 will
have the same classification for federal income tax purposes that it claimed
under the entity classification treasury regulations in effect prior to this
date. In addition, an eligible entity which did not exist, or did not claim a
classification, prior to January 1, 1997, will be classified as a partnership
for federal income tax purposes unless it elects otherwise. The operating
partnership and each of our other partnerships and limited liability companies
intend to claim classification as a partnership under the final regulations. As
a result, we believe these entities will be classified as partnerships for
federal income tax purposes.
Allocations of Income, Gain, Loss and Deduction. The partnership
agreement provides for preferred distributions of cash and preferred allocations
of income to holders of preferred units, including us, with respect to the
operating partnership's preferred limited partnership units. In addition, to the
extent we issue preferred stock in exchange for preferred limited partnership
units of AMB Property II, L.P., we will contribute substantially all of such
units to the operating partnership in exchange for additional preferred limited
partnership units, and the partnership agreement will be amended to provide for
similar preferred distributions of cash and preferred allocations of income to
us with respect to these newly issued preferred units. As a consequence, we will
receive distributions from the operating partnership that we will use to pay
dividends on substantially all of the shares of preferred stock that we issue
before any other partner in the operating partnership (other than a holder of
preferred units, if such units are not then held by us) receives a distribution.
In addition, if necessary, income will be specially allocated to us, and losses
will be allocated to the other
61
partners of the operating partnership, in amounts necessary to ensure that the
balance in our capital account will at all times be equal to or in excess of the
amount we are required to pay on the preferred stock then issued by us upon
liquidation or redemption. Similar preferred distributions and allocations will
be made for the benefit of other holders of the operating partnership's
preferred limited partnership units. All remaining items of operating income and
loss will be allocated to the holders of common units in proportion to the
number of units or performance units held by each such unitholder. All remaining
items of gain or loss relating to the disposition of the operating partnership's
assets upon liquidation will be allocated first to the partners in the amounts
necessary, in general, to equalize our and the limited partners' per unit
capital accounts, with any special allocation of gain to the holders of
performance units being offset by a reduction in the gain allocation to us and
unitholders which were performance investors. Certain limited partners have
agreed to guarantee debt of the operating partnership, either directly or
indirectly through an agreement to make capital contributions to the operating
partnership under limited circumstances. As a result of these guarantees or
contribution agreements, and notwithstanding the foregoing discussion of
allocations of income and loss of the operating partnership to holders of common
units, such limited partners could under limited circumstances be allocated a
disproportionate amount of net loss upon a liquidation of the operating
partnership, which net loss would have otherwise been allocable to us.
If an allocation is not recognized for federal income tax purposes, 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. The operating
partnership's allocations of taxable income and loss are intended to comply with
the requirements of Section 704(b) of the Internal Revenue Code and the treasury
regulations promulgated under this section of the Internal Revenue Code.
Tax Allocations with Respect to the Properties. Under Section 704(c) of
the Internal Revenue 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 in a manner so
that the contributing partner is charged with the unrealized gain or benefits
from the 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 and the
adjusted tax basis of the property at the time of contribution. These
allocations are solely for federal income tax purposes and do not affect the
book capital accounts or other economic or legal arrangements among the
partners. The operating partnership was formed by way of contributions of
appreciated property. Moreover, subsequent to the formation of the operating
partnership, additional appreciated property has been contributed to the
operating partnership in exchange for interests in the operating partnership.
The partnership agreement requires that these allocations be made in a manner
consistent with Section 704(c) of the Internal Revenue Code.
In general, the partners of the operating partnership, including us,
which contributed assets having an adjusted tax basis less than their fair
market value at the time of contribution will be allocated depreciation
deductions for tax purposes which are lower than such deductions would have been
if determined on a pro rata basis. In addition, in the event of the disposition
of any of the contributed assets which have such a book-tax difference, all
income attributable to such book-tax difference generally will be allocated to
the contributing partners. These allocations will tend to eliminate the book-tax
difference over the life of the operating partnership. However, the special
allocation rules of Section 704(c) do not always entirely eliminate the book-tax
difference on an annual basis or with respect to a specific taxable transaction
such as a sale. Thus, the carryover basis of the contributed assets in the hands
of the operating partnership may cause us or other partners to be allocated
lower depreciation and other deductions, and possibly an amount of taxable
income in the event of a sale of such contributed assets in excess of the
economic or book income allocated to us or other partners as a result of the
sale. Such an allocation might cause us or other partners to recognize taxable
income in excess of cash proceeds, which might adversely affect our ability to
comply with the real estate investment trust distribution requirements. See "--
Taxation of AMB Property Corporation -- Requirements for Qualification as a Real
Estate Investment Trust" and "-- Annual Distribution Requirements."
Treasury regulations issued under Section 704(c) of the Internal Revenue
Code provide partnerships with a choice of several methods of accounting for
book-tax differences, including retention of the "traditional method" or the
election of certain methods which would permit any distortions caused by a
book-tax difference to be entirely rectified on an annual basis or with respect
to a specific taxable transaction such as a sale. We and the operating
partnership have determined to use the "traditional method" for accounting for
book-tax differences for the properties initially contributed to the operating
partnership and for certain assets contributed subsequently. We and the
operating partnership have not yet decided what method will be used to account
for book-tax differences for properties acquired by the operating partnership in
the future.
Any property acquired by the operating partnership in a taxable
transaction will initially have a tax basis equal to its fair market value, and
Section 704(c) of the Internal Revenue Code will not apply.
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TAXATION OF TAXABLE U.S. STOCKHOLDERS GENERALLY
When we use the term "U.S. stockholder," we mean a holder of shares of
common stock who, for United States federal income tax purposes:
- is a citizen or resident of the United States;
- is a corporation, partnership, limited liability company or other
entity created or organized in or under the laws of the United
States or of any state thereof or in the District of Columbia,
unless, in the case of a partnership or limited liability company,
treasury regulations provide otherwise;
- is an estate the income of which is subject to United States
federal income taxation regardless of its source; or
- is a trust whose administration is subject to the primary
supervision of a United States court and which has one or more
United States persons who have the authority to control all
substantial decisions of the trust.
Notwithstanding the preceding sentence, to the extent provided in the
treasury regulations, certain trusts in existence on August 20, 1996, and
treated as United States persons prior to this date that elect to continue to be
treated as United States persons, shall also be considered U.S. stockholders. If
you hold shares of common stock and are not a U.S. stockholder, you are a
"non-U.S. stockholder."
Distributions Generally. As long as we qualify as a real estate
investment trust, distributions out of our current or accumulated earnings and
profits, other than capital gain dividends discussed below, will constitute
dividends taxable to our taxable U.S. stockholders as ordinary income. As long
as we qualify as a real estate investment trust, these distributions will not be
eligible for the dividends-received deduction in the case of U.S. stockholders
that are corporations. For purposes of determining whether distributions to
holders of common stock are out of current or accumulated earnings and profits,
our earnings and profits will be allocated first to the outstanding preferred
stock, if any, and then to the common stock.
To the extent that we make distributions, other than capital gain
dividends discussed below, in excess of our current and accumulated earnings and
profits, these distributions will be treated first as a tax-free return of
capital to each U.S. stockholder. This treatment will reduce the adjusted tax
basis which each U.S. stockholder has in his shares of stock for tax purposes by
the amount of the distribution, but not below zero. Distributions in excess of a
U.S. stockholder's adjusted tax basis in his shares will be taxable as capital
gains, provided that the shares have been held as a capital asset, and will be
taxable as long-term capital gain if the shares have been held for more than one
year. Dividends we declare in October, November, or December of any year and
payable to a stockholder of record on a specified date in any of these months
shall be treated as both paid by us and received by the stockholder on December
31 of that year, provided we actually pay the dividend on or before January 31
of the following calendar year. Stockholders may not include in their own income
tax returns any of our net operating losses or capital losses.
Capital Gain Distributions. Distributions that we properly designate as
capital gain dividends will be taxable to taxable U.S. stockholders as gains
from the sale or disposition of a capital asset, to the extent that such gains
do not exceed our actual net capital gain for the taxable year. Depending on the
characteristics of the assets which produced these gains, and on certain
designations, if any, which we may make, these gains may be taxable to
non-corporate U.S. stockholders at a 20% or 25% rate. U.S. stockholders that are
corporations may, however, be required to treat up to 20% of certain capital
gain dividends as ordinary income. For a discussion of the manner in which that
portion of any dividends designated as capital gain dividends will be allocated
among the holders of our preferred stock, if any, and common stock, see
"Description of Capital Stock."
Passive Activity Losses and Investment Interest Limitations.
Distributions we make and gain arising from the sale or exchange by a U.S.
stockholder of our shares will not be treated as passive activity income. As a
result, U.S. stockholders generally will not be able to apply any "passive
losses" against this income or gain. Distributions we make, 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. Gain
arising from the sale or other disposition of our shares, however, will not be
treated as investment income under certain circumstances.
Retention of Net Long-Term Capital Gains. We may elect to retain, rather
than distribute as a capital gain dividend, our net long-term capital gains. If
we make this election, we would pay tax on our retained net long-term capital
gains. In addition, to the extent we designate, a U.S. stockholder generally
would:
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- include its proportionate share of our undistributed long-term
capital gains in computing its long-term capital gains in its
return for its taxable year in which the last day of our taxable
year falls, subject to certain limitations as to the amount that
is includable;
- be deemed to have paid the capital gains tax imposed on us on the
designated amounts included in the U.S. stockholder's long-term
capital gains;
- receive a credit or refund for the amount of tax deemed paid by
it;
- increase the adjusted basis of its common stock by the difference
between the amount of includable gains and the tax deemed to have
been paid by it; and
- in the case of a U.S. stockholder that is a corporation,
appropriately adjust its earnings and profits for the retained
capital gains in accordance with treasury regulations to be
prescribed by the Internal Revenue Service.
Dispositions of Common Stock. If you are a U.S. stockholder and you sell
or dispose of your shares of common stock, you will recognize gain or loss for
federal income tax purposes in an amount equal to the difference between the
amount of cash and the fair market value of any property you receive on the sale
or other disposition and your adjusted basis in the shares for tax purposes.
This gain or loss will be capital if you have held the common stock as a capital
asset. This gain or loss will be long-term capital gain or loss if you have held
the common stock for more than one year. In general, if you are a U.S.
stockholder and you recognize loss upon the sale or other disposition of common
stock that you have held for six months or less, after applying certain holding
period rules, the loss you recognize will be treated as a long-term capital
loss, to the extent you received distributions from us which were required to be
treated as long-term capital gains.
BACKUP WITHHOLDING
We report to our U.S. stockholders and the Internal Revenue Service the
amount of dividends paid during each calendar year, and the amount of any tax
withheld. Under the backup withholding rules, a stockholder may be subject to
backup withholding at a maximum rate of 31% with respect to dividends paid
unless the holder is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact, or provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A U.S. stockholder that does not provide us with his correct
taxpayer identification number may also be subject to penalties imposed by the
Internal Revenue Service. Backup withholding is not an additional tax. Any
amount paid as backup withholding will be creditable against the stockholder's
federal income tax liability. In addition, we may be required to withhold a
portion of capital gain distributions to any stockholders who fail to certify
their non-foreign status. See "-- Taxation of Non-U.S. Stockholders."
TAXATION OF TAX-EXEMPT STOCKHOLDERS
The Internal Revenue Service has ruled that amounts distributed as
dividends by a real estate investment trust do not constitute unrelated business
taxable income when received by a tax-exempt entity. Based on that ruling,
provided that a tax-exempt stockholder, except certain tax-exempt stockholders
described below, has not held its shares as "debt financed property" within the
meaning of the Internal Revenue Code and the shares are not otherwise used in
its trade or business, dividend income from us and gain from the sale of our
shares will not be unrelated business taxable income to a tax-exempt
stockholder. Generally, "debt financed property" is property, the acquisition or
holding of which was financed through a borrowing by the tax exempt stockholder.
For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from federal income taxation under Internal
Revenue Code Sections 501(c)(7), (c)(9), (c)(17) and (c)(20), respectively,
income from an investment in our shares will constitute unrelated business
taxable income unless the organization is able to properly claim a deduction for
amounts set aside or placed in reserve for certain purposes so as to offset the
income generated by its investment in our shares. These prospective investors
should consult their own tax advisors concerning these set aside and reserve
requirements.
Notwithstanding the above, however, a portion of the dividends paid by a
"pension-held REIT" shall be treated as unrelated business taxable income as to
certain types of trusts which hold more than 10%, by value, of the interests in
the real estate investment trust. A real estate investment trust will not be a
"pension-held REIT" if it is able to satisfy the "not closely held" requirement
without relying upon the "look-through" exception with respect to certain
trusts. As a result of certain limitations on the transfer and
64
ownership of stock contained in our charter, we do not expect to be classified
as a "pension-held REIT," and as a result, the tax treatment described above
should be inapplicable to our stockholders.
TAXATION OF NON-U.S. STOCKHOLDERS
The preceding discussion does not address the rules governing United
States federal income taxation of the ownership and disposition of common stock
by persons that are not U.S. stockholders. In general, non-U.S. stockholders may
be subject to special tax withholding requirements on distributions from us with
respect to their sale or other disposition of our common stock, except to the
extent reduced or eliminated by an income tax treaty between the United States
and the non-U.S. stockholder's country. A non-U.S. stockholder who is a
stockholder of record and is eligible for reduction or elimination of
withholding must file an appropriate form with us in order to claim such
treatment. Non-U.S. stockholders should consult their own tax advisors
concerning the federal income tax consequences to them of an acquisition of
shares of common stock, including the federal income tax treatment of
dispositions of interests in, and the receipt of distributions from, us.
OTHER TAX CONSEQUENCES
We may be required to pay tax in various state or local jurisdictions,
including those in which we transact business, and our stockholders and the
operating partnership's limited partners may be required to pay tax in various
state or local jurisdictions, including those in which they reside. Our state
and local tax treatment may not conform to the federal income tax consequences
discussed above. In addition, your state and local tax treatment may not conform
to the federal income tax consequences discussed above. Consequently, you should
consult your tax advisors regarding the effect of state and local tax laws on an
investment in our shares or a disposition of common units.
SELLING STOCKHOLDERS
Selling stockholders may receive shares of our common stock, on a
one-for-one basis, upon exchange of 94,771 the operating partnership's common
limited partnership units and 1,465,926 of the operating partnership's
performance units. This prospectus relates to the issuance and resale of the
1,560,697 shares of our common stock issuable upon exchange of these units.
The following table assumes that each selling stockholder tenders all of
its units for redemption and that we elect to redeem all of those units for
shares of our common stock instead of cash. The table provides the names of each
of the selling stockholders, the number of shares of common stock that they own
prior to the exchange of their limited partnership units in the operating
partnership, the maximum number of shares of common stock issuable in exchange
for their limited partnership units and the percentage of our outstanding common
stock owned by each of them following the exchange of their limited partnership
units.
Because the selling stockholders may sell all, some or none of their
shares, we cannot estimate the aggregate number of shares of common stock that
the selling stockholders will offer pursuant to this prospectus or that each
selling stockholder will own upon completion of the offering to which this
prospectus relates. Our current executive officers listed in the table below
have informed us that, as of the date of this prospectus, they do not intend to
have the operating partnership redeem their performance units or sell any shares
of our stock that they may receive upon exchange of such performance units.
The selling stockholders named below may from time to time offer the
shares of common stock offered by this prospectus:
65
MAXIMUM NUMBER OF
SHARES OF COMMON STOCK PERCENTAGE OF OUTSTANDING
NUMBER OF SHARES OF COMMON ISSUABLE IN THE EXCHANGE COMMON STOCK OWNED
STOCK OWNED PRIOR TO THE OF LIMITED PARTNERSHIP FOLLOWING THE EXCHANGE OF
EXCHANGE OF LIMITED UNITS AND AVAILABLE LIMITED PARTNERSHIP UNITS AND
NAME PARTNERSHIP UNITS FOR RESALE PRIOR TO RESALE(1)
- ---- --------------------------- ------------------------ -----------------------------
REGULAR COMMON UNITHOLDERS
AFCO Cargo DFW Limited Partnership -- 44,523 *
AFCO Cargo SEA Limited Partnership -- 44,523 *
WEST*PAC Limited Partnership -- 5,725 *
--------- -----
TOTAL REGULAR COMMON UNITS...... 94,771 *
PERFORMANCE UNITHOLDERS
Douglas D. Abbey (2) 1,558,842 312,071 2.34%
W. Blake Baird (3) 355,582 25,569 *
Luis A. Belmonte (4) 368,640 37,013 *
T. Robert Burke (5) 1,126,316 235,506 1.63%
Steven J. Callaway (6) 44,831 5,114 *
Steven E. Campbell (7) 47,746 3,409 *
S. Davis Carniglia (8) 289,377 62,366 *
Michael A. Coke (9) 206,654 8,439 *
Martin J. Coyne (10) 55,596 3,409 *
John H. Diserens (11) 361,668 78,988 *
David G. Doyno (12) 49,485 3,409 *
Bruce H. Freedman (13) 399,124 25,868 *
David S. Fries (14) 226,205 15,257 *
Kent D. Greenwalt (15) 65,149 5,114 *
Jane L. Harris (16) 72,358 6,818 *
Carlie P. Headapohl (17) 8,187 3,409 *
Tyler W. Higgins (18) 78,737 6,818 *
Jean Collier Hurley (19) 180,871 32,206 *
Steven T. Kimball (20) 13,658 3,409 *
Barbara J. Linn (21) 242,675 56,028 *
John T. Meyer (22) 45,109 5,114 *
Hamid R. Moghadam (23) 3,392,117 388,126 4.51%
John T. Roberts, Jr. (24) 241,000 8,439 *
John L. Rossi (25) 59,767 3,409 *
Cynthia J. Sarver (26) 48,360 3,409 *
Christine G. Schadlich (27) 99,284 6,733 *
Craig A. Severance (28) 309,935 91,158 *
Andrew N. Singer (29) 70,444 5,114 *
Gayle P. Starr (30) 62,572 5,114 *
William Steinberg (31) -- 6,818 *
K.C. Swartzel (32) 53,315 6,818 *
Celia M. Tanaka (33) -- 3,409 *
Janice G. Thacher (34) 32,687 2,045 *
--------- -----
TOTAL PERFORMANCE UNITS......... 1,465,926 1.75%
--------- -----
TOTAL ALL UNITS.................. 1,560,697 1.86%
- ----------
* Less than 1%
(1) Based on 83,705,442 shares of our common stock outstanding as of November
2, 2001.
66
(2) Chairman of the Board and Chief Executive Officer of AMB Investment
Management, Inc. since November 1997; Director of AMB Property
Corporation from November 1997 to May 2001. The number of shares of
common stock owned prior to the exchange of limited partnership units
includes options to purchase up to 451,743 shares of common stock, which
are currently exercisable or will become exercisable within 60 days of
November 15, 2001.
(3) Director of AMB Property Corporation since May 2001 and President of AMB
Property Corporation since January 2000; Managing Director and Chief
Investment Officer of AMB Property Corporation from January 1999, when he
became an employee, to December 1999. The number of shares of common
stock owned prior to the exchange of limited partnership units includes
options to purchase up to 195,800 shares of common stock, which are
currently exercisable or will become exercisable within 60 days of
November 15, 2001.
(4) Executive Vice President of AMB Property Corporation since May 2000;
Managing Director of AMB Property Corporation from November 1997 to May
2000. The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 205,948
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(5) Director of AMB Property Corporation since November 1997; Chairman of the
Board of AMB Property Corporation from November 1997 to December 1999.
The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 270,000
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(6) Senior Vice President of AMB Property Corporation since January 2000;
Vice President of AMB Property Corporation from November 1997 to December
1999. The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 41,689
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(7) Vice President of AMB Property Corporation since May 1998, when he became
an employee. The number of shares of common stock owned prior to the
exchange of limited partnership units includes options to purchase up to
40,125 shares of common stock, which are currently exercisable or will
become exercisable within 60 days of November 15, 2001.
(8) Senior Advisor of AMB Property Corporation since December 1998; Managing
Director and Chief Financial Officer of AMB Property Corporation from May
1998 to December 1998; Managing Director, Chief Financial Officer and
General Counsel of AMB Property Corporation from November 1997 to May
1998. The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 65,000
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(9) Executive Vice President and Chief Financial Officer of AMB Property
Corporation since May 2000; Managing Director and Chief Financial Officer
of AMB Property Corporation from December 1999 to May 2000; Chief
Financial Officer and Senior Vice President of AMB Property Corporation
from January 1999 to December 1999; Senior Vice President and Director of
Financial Reporting from December 1998 to December 1999; Vice President
and Director of Financial Reporting from November 1997 to December 1998.
The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 174,837
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(10) Vice President of AMB Property Corporation since November 1997. The
number of shares of common stock owned prior to the exchange of limited
partnership units includes options to purchase up to 52,179 shares of
common stock, which are currently exercisable or will become exercisable
within 60 days of November 15, 2001.
(11) Left the employ of AMB Property Corporation in December 2000; Managing
Director of AMB Property Corporation from November 1997 to December 2000.
The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 170,786
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(12) Vice President of AMB Property Corporation since November 1997. The
number of shares of common stock owned prior to the exchange of limited
partnership units includes options to purchase up to 46,111 shares of
common stock, which are currently exercisable or will become exercisable
within 60 days of November 15, 2001.
(13) Executive Vice President of AMB Property Corporation since May 2000;
Managing Director of AMB Property Corporation from November 1997 to May
2000. The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 255,298
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(14) Executive Vice President of AMB Property Corporation since May 2000;
Managing Director, Chief Administrative Officer and General Counsel of
AMB Property Corporation from March 1999 to May 2000; Managing Director
and General Counsel from May 1998, when he became an employee, to March
1999. The number of shares of common stock owned prior to the exchange
67
of limited partnership units includes options to purchase up to 163,922
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(15) Senior Vice President since July 2000; Vice President from November 1997
to June 2000. The number of shares of common stock owned prior to the
exchange of limited partnership units includes options to purchase up to
51,401 shares of common stock, which are currently exercisable or will
become exercisable within 60 days of November 15, 2001.
(16) Consultant to AMB Property Corporation since September 2000; Vice
President of AMB Property Corporation from November 1997 to August 2000.
The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 64,009
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(17) Left the employ of AMB Property Corporation in September 2000; Vice
President of AMB Property Corporation from November 1997 to September
2000.
(18) Senior Vice President of AMB Property Corporation since January 2001;
Vice President of AMB Property Corporation from November 1997 to December
2000. The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 76,320
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(19) Senior Advisor of AMB Property Corporation since December 1998; Managing
Director of AMB Property Corporation from November 1997 to December 1998.
The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 65,000
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(20) Vice President of AMB Property Corporation since January 1998. The number
of shares of common stock owned prior to the exchange of limited
partnership units includes options to purchase up to 12,080 shares of
common stock, which are currently exercisable or will become exercisable
within 60 days of November 15, 2001.
(21) Senior Advisor of AMB Investment Management, Inc. since December 1999;
Director of AMB Investment Management, Inc. from November 1997 to
December 2000; Managing Director and President of AMB Investment
Management, Inc. from November 1997 to December 1999. The number of
shares of common stock owned prior to the exchange of limited partnership
units includes options to purchase up to 97,500 shares of common stock,
which are currently exercisable or will become exercisable within 60 days
of November 15, 2001.
(22) Vice President of AMB Property Corporation since December 1997. The
number of shares of common stock owned prior to the exchange of limited
partnership units includes options to purchase up to 39,662 shares of
common stock, which are currently exercisable or will become exercisable
within 60 days of November 15, 2001.
(23) Chairman of the Board and Chief Executive Officer of AMB Property
Corporation since January 2000; Director, President and Chief Executive
Officer of AMB Property Corporation from November 1997 to December 1999.
The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 1,675,248
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(24) President of AMB Investment Management, Inc. since December 1999; Senior
Vice President of AMB Property Corporation from July 1999 to December
1999; Vice President of AMB Property Corporation from May 1997 to June
1999. The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 125,866
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(25) Senior Vice President of AMB Property Corporation since January 2001;
Vice President of AMB Property Corporation from November 1997 to December
2000. The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 51,208
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(26) Vice President of AMB Property Corporation since November 1997. The
number of shares of common stock owned prior to the exchange of limited
partnership units includes options to purchase up to 42,960 shares of
common stock, which are currently exercisable or will become exercisable
within 60 days of November 15, 2001.
(27) Vice President of AMB Property Corporation since November 1997. The
number of shares of common stock owned prior to the exchange of limited
partnership units includes options to purchase up to 96,084 shares of
common stock, which are currently exercisable or will become exercisable
within 60 days of November 15, 2001.
(28) Left the employ of AMB Property Corporation in March 2000; Managing
Director of AMB Property Corporation from November 1997 to March 2000.
The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 97,500
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(29) Senior Vice President of AMB Property Corporation since July 2001; Vice
President of AMB Property Corporation from November 1997 to June 2001.
The number of shares of common stock owned prior to the exchange of
limited partnership units
68
includes options to purchase up to 61,928 shares of common stock, which
are currently exercisable or will become exercisable within 60 days of
November 15, 2001.
(30) Vice President of AMB Property Corporation since November 1997. The
number of shares of common stock owned prior to the exchange of limited
partnership units includes options to purchase up to 57,410 shares of
common stock, which are currently exercisable or will become exercisable
within 60 days of November 15, 2001.
(31) Left the employ of AMB Property Corporation in July 2001; Vice President
of AMB Property Corporation from November 1997 to July 2001.
(32) Senior Vice President of AMB Property Corporation since January 2000;
Vice President of AMB Property Corporation from November 1997 to December
1999. The number of shares of common stock owned prior to the exchange of
limited partnership units includes options to purchase up to 50,056
shares of common stock, which are currently exercisable or will become
exercisable within 60 days of November 15, 2001.
(33) Left the employ of AMB Property Corporation in September 2000; Vice
President of AMB Property Corporation from November 1998 to September
2000.
(34) Vice President of AMB Property Corporation since December 1997. The
number of shares of common stock owned prior to the exchange of limited
partnership units includes options to purchase up to 31,356 shares of
common stock, which are currently exercisable or will become exercisable
within 60 days of November 15, 2001.
The regular common unitholders listed above received the limited
partnership units that are exchangeable into the common stock listed above in
connection with our purchase of properties. Various affiliates of the regular
common unit holders provide us with property management, leasing and development
services, for which we pay customary compensation, in connection with certain of
our properties.
The performance unitholders listed above received the limited partnership
units that are exchangeable into common stock listed above in their capacity as
our current and former executive officers. When the performance unitholders
listed above received the performance units, an equal number of general
partnership units allocable to us and units allocable to the investors who are
limited partners in the operating partnership were transferred to the operating
partnership.
PLAN OF DISTRIBUTION
This prospectus relates to the possible issuance by us and possible offer
and sale from time to time by the selling stockholders of up to an aggregate of
1,560,697 shares of common stock if they tender their common limited partnership
units in AMB Property, L.P. for cash redemption and we elect, in our discretion,
to exchange the limited partnership units for common stock in lieu of a cash
redemption.
We are registering the shares of common stock to provide the selling
stockholders with freely tradable securities, but the registration of these
shares does not necessarily mean that we will issue any of these shares to the
selling stockholders or that the selling stockholders will offer or sell the
shares.
Pursuant to the terms and conditions of the registration rights
agreements between us, the operating partnership, AFCO Cargo DFW Limited
Partnership, AFCO Cargo, SEA Limited Partnership and WEST*PAC Limited
Partnership, prior to the date upon which the limited partnership units of those
three entities would be eligible for resale under Rule 144(k) under the
Securities Act, each of those selling stockholders generally is limited to
resales of any shares of common stock issued pursuant to this prospectus to the
number of shares which otherwise would be eligible for resale by that selling
stockholder pursuant to Rule 144, assuming the shares were issued on the same
date as the respective limited partnership units were issued.
We will not receive any proceeds from the issuance of the shares of
common stock to the selling stockholders or from the sale of the shares by the
selling stockholders, but we have agreed to pay certain expenses of the
registration of the shares. The selling stockholders may from time to time sell
the shares directly to purchasers. Alternatively, the selling stockholders may
from time to time offer the shares through dealers or agents, who may receive
compensation in the form of commissions from the selling stockholders and for
the purchasers of the shares for whom they may act as agent. The selling
stockholders and any dealers or agents that participate in the distribution of
the shares may be deemed to be "underwriters" within the meaning of the
Securities Act and any profit on the sale of the common stock by them and any
commissions received by any such dealers or agents might be deemed to be
underwriting commissions under the Securities Act.
69
In connection with distribution of the shares of common stock covered by
this prospectus, the selling stockholders may enter into hedging transactions
with broker-dealers, and the broker-dealers may engage in short sales of the
common stock in the course of hedging the positions they assume with the selling
stockholders. The selling stockholders also may sell the common stock short and
deliver the common stock to close out such short positions. The selling
stockholders also may enter into option or other transactions with
broker-dealers that involve the delivery of the shares to the broker-dealers,
who may then resell or otherwise transfer the shares.
The selling stockholders may transfer the shares to a donee and any donee
would become a selling stockholder under this prospectus. The selling
stockholders also may loan or pledge the shares. If a selling stockholder
defaults on a loan secured by the shares, the pledgee could obtain ownership of
the shares and would then become a selling stockholder under this prospectus.
LEGAL MATTERS
Ballard, Spahr, Andrews & Ingersoll, LLP, Baltimore, Maryland will issue
an opinion to us regarding certain matters of Maryland law. Latham & Watkins
will issue an opinion to us regarding certain tax matters described under
"Material Federal Income Tax Considerations."
EXPERTS
The audited financial statements and schedules incorporated by reference
in this prospectus and elsewhere in the registration statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
70
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table itemizes the expenses incurred by the Registrant 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 ........ $ 9,665
NYSE Listing Fee ........................................... $ 1,500
Printing and Engraving Expenses ............................ $ 5,000
Legal Fees and Expenses .................................... $40,000
Accounting and Fees and Expenses ........................... $10,000
Miscellaneous .............................................. $ 3,835
-------
Total ............................................ $70,000
=======
All of the costs identified above will be paid for by the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 2-418 of the Maryland General Corporation Law permits a
corporation to indemnify its directors and officers and certain other parties
against judgments, penalties, fines, settlements, and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service in those or other capacities unless it
is established that (i) 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; (ii) the
director or officer actually received an improper personal benefit in money,
property or services; or (iii) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the act or omission was
unlawful. Indemnification may be made against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by the director or officer
in connection with the proceeding; provided, however, that if the proceeding is
one by or in the right of the corporation, indemnification may not be made with
respect to any proceeding in which the director or officer has been adjudged to
be liable to the corporation. In addition, a director or officer may not be
indemnified with respect to any proceeding charging improper personal benefit to
the director or officer, whether or not involving action in the director's or
officer's official capacity, in which the director or officer was adjudged to be
liable on the basis that personal benefit was improperly received. The
termination of any proceeding by conviction, or upon a plea of nolo contendere
or its equivalent, or an entry of any order of probation prior to judgment,
creates a rebuttable presumption that the director or officer did not meet the
requisite standard of conduct required for indemnification to be permitted.
In addition, Section 2-418 of the Maryland General Corporation Law
requires that, unless limited by its charter, a corporation indemnify any
director or officer who is made a party to any proceeding by reason of service
in that capacity against reasonable expenses incurred by the director or officer
in connection with the proceeding, in the event that the director or officer is
successful, on the merits or otherwise, in the defense of the proceeding.
Our charter and bylaws provide in effect for the indemnification by us of
our directors and officers to the fullest extent permitted by applicable law. We
have purchased directors' and officers' liability insurance for the benefit of
our directors and officers.
We have entered into indemnification agreements with each of our
executive officers and directors. The indemnification agreements require, among
other matters, that we indemnify our executive officers and directors to the
fullest extent permitted by law and reimburse the executive officers and
directors for all related expenses as incurred, subject to return if it is
subsequently determined that indemnification is not permitted.
II-1
ITEM 16. EXHIBITS
EXHIBIT
NUMBER EXHIBIT INDEX
- ------- -------------
4.1 Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Registrant's Registration
Statement on Form S-11 (No. 333-35915)).
4.2 Articles Supplementary establishing and fixing the rights and
preferences of the 8 1/2% Series A Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.4(4) of the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1998).
4.3 Certificate of Correction of the Registrant's Articles
Supplementary establishing and fixing the rights and preferences
of the 8 1/2% Series A Cumulative Redeemable Preferred Stock
(incorporated by reference to Exhibit 3.2 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998).
4.4 Articles Supplementary establishing and fixing the rights and
preferences of the 8 5/8% Series B Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's current report on Form 8-K filed on January 7, 1999).
4.5 Articles Supplementary establishing and fixing the rights and
preferences of the 8.75% Series C Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.2 of the
Registrant's current report on Form 8-K filed on January 7, 1999).
4.6 Articles Supplementary establishing and fixing the rights and
preferences of the 7.75% Series D Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1999).
4.7 Articles Supplementary establishing and fixing the rights and
preferences of the 7.75% Series E Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on September 14,
1999).
4.8 Articles Supplementary establishing and fixing the rights and
preferences of the 7.95% Series F Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on April 14, 2000).
4.9 Articles Supplementary establishing and fixing the rights and
preferences of the 7.95% Series G Cumulative Redeemable Preferred
Stock. (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on September 29,
2000).
4.10 Articles Supplementary establishing and fixing the rights and
preferences of the 8.125% Series H Cumulative Redeemable Preferred
Stock. (incorporated by reference to Exhibit 3.3 of the
Registrant's Current Report on Form 8-K filed on September 29,
2000).
4.11 Articles Supplementary establishing and fixing the rights and
preferences of the 8.00% Series I Cumulative
II-2
EXHIBIT
NUMBER EXHIBIT INDEX
- ------- -------------
Redeemable Preferred Stock (incorporated by reference to Exhibit
3.3 of the Registrant's Current Report on Form 8-K filed on March
23, 2001).
4.12 Articles Supplementary establishing and fixing the rights and
preferences of the 7.95% Series J Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on October 3, 2001).
4.13 Second Amended and Restated Bylaws of the Registrant (incorporated
by reference to Exhibit 3.11 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 2000).
4.14 Specimen common stock certificate (incorporated by reference to
Exhibit 3.3 of the Registrant's Registration Statement on Form
S-11 (No. 333-35915)).
4.15 Indenture dated as of June 30, 1998 by and among the Operating
Partnership, the Registrant and State Street Bank and Trust
Company of California, N.A., as trustee (incorporated by reference
to Exhibit 4.1 of the Registrant's Registration Statement on Form
S-11 (No. 333-49163)).
4.16 First Supplemental Indenture dated as of June 30, 1998 by and
among the Operating Partnership, the Registrant and State Street
Bank and Trust Company of California, N.A., as trustee
(incorporated by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form S-11 (No. 333-49163)).
4.17 Second Supplemental Indenture dated as of June 30, 1998 by and
among the Operating Partnership, the Registrant and State Street
Bank and Trust Company of California, N.A., as trustee
(incorporated by reference to Exhibit 4.3 to the Registrant's
Registration Statement on Form S-11 (No. 333-49163)).
4.18 Third Supplemental Indenture dated as of June 30, 1998 by and
among the Operating Partnership, the Registrant and State Street
Bank and Trust Company of California, N.A., as trustee
(incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-11 (No. 333-49163)).
4.19 Fourth Supplemental Indenture, by and among AMB Property, L.P.,
AMB Property Corporation and State Street Bank and Trust Company
of California, N.A., as trustee (incorporated herein by reference
as Exhibit 4.1 of the Registrant's Current Report on Form 8-K/A
filed on November 9, 2000).
4.20 Specimen of 7.10% Notes due 2008 (included in the First
Supplemental Indenture incorporated by reference as Exhibit 4.2 to
the Registrant's Registration Statement on Form S-11 (No.
333-49163)).
4.21 Specimen of 7.50% Notes due 2018 (included in the Second
Supplemental Indenture incorporated by reference as Exhibit 4.3 to
the Registrant's Registration Statement on Form S-11 (No.
333-49163)).
II-3
EXHIBIT
NUMBER EXHIBIT INDEX
- ------- -------------
4.22 Specimen of 6.90% Reset Put Securities due 2015 (included in the
Third Supplemental Indenture incorporated by reference as Exhibit
4.4 to the Registrant's Registration Statement on Form S-11 (No.
333-49163)).
4.23 $30,000,000 7.925% Fixed Rate Note No. 1 dated August 18, 2000,
attaching the Parent Guarantee dated August 18, 2000 (incorporated
herein by reference to Exhibit 4.5 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 2000).
4.24 $25,000,000 7.925% Fixed Rate Note No. 2 dated September 12, 2000,
attaching the Parent Guarantee dated September 12, 2000
(incorporated herein by reference to Exhibit 4.6 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000).
4.25 $50,000,000 8.00% Fixed Rate Note No. 3 dated October 26, 2000,
attaching the Parent Guarantee dated October 26, 2000
(incorporated herein by reference to Exhibit 4.7 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000).
4.26 $25,000,000 8.00% Fixed Rate Note No. 4 dated October 26, 2000,
attaching the Parent Guarantee dated October 26, 2000
(incorporated herein by reference to Exhibit 4.8 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000).
4.27 $50,000,000 7.20% Fixed Rate Note No. 5 dated December 19, 2000,
attaching the Parent Guarantee dated December 19, 2000
(incorporated herein by reference to Exhibit 4.1 of the
Registrant's Current Report on Form 8-K filed on January 8, 2001).
4.28 $50,000,000 7.20% Fixed Rate Note No. 6 dated December 19, 2000,
attaching the Parent Guarantee dated December 19, 2000
(incorporated herein by reference to Exhibit 4.2 of the
Registrant's Current Report on Form 8-K filed on January 8, 2001).
4.29 $50,000,000 7.20% Fixed Rate Note No. 7 dated December 19, 2000,
attaching the Parent Guarantee dated December 19, 2000
(incorporated herein by reference to Exhibit 4.3 of the
Registrant's Current Report on Form 8-K filed on January 8, 2001).
4.30 $25,000,000 6.90% Fixed Rate Note No. 8 dated January 9, 2001,
attaching the Parent Guarantee dated January 9, 2001 (incorporated
herein by reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K filed on January 31, 2001).
4.31 $50,000,000 7.00% Fixed Rate Note No. 9 dated March 7, 2001,
attaching the Parent Guarantee dated March 7, 2001 (incorporated
be reference to Exhibit 4.1 of the Registrant's Current Report on
Form 8-K filed on March 16, 2001).
4.32 $25,000,000 6.75% Fixed Rate Note No. 10 dated September 6, 2001,
attaching the Parent Guarantee dated September 6, 2001
(incorporated be reference to Exhibit 4.1 of the Registrant's
Current Report on Form 8-K filed on September 18, 2001).
*5.1 Opinion of Ballard, Spahr, Andrews & Ingersoll, LLP regarding the
validity of the common stock being registered.
8.1 Opinion of Latham & Watkins regarding certain federal income tax
matters.
23.1 Consent of Arthur Andersen, LLP.
*23.2 Consent of Ballard, Spahr, Andrews & Ingersoll, LLP (included in
Exhibit 5.1).
23.3 Consent of Latham & Watkins (included in Exhibit 8.1).
*24.1 Power of Attorney.
* Previously filed.
ITEM 17. UNDERTAKINGS
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:
II-4
(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;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in 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.
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 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 herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant:
hereby undertakes to deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange
Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or given the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
The undersigned Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance under Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4), or 497(h) under the Securities Act of 1933 shall
be deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, 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 Securities Exchange Act of 1934, 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
II-5
precedent submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Exchange Act of 1934, and will be governed by the final adjudication
of such issue.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized in the City of San Francisco, State of
California, on the 4th day of December, 2001.
AMB PROPERTY CORPORATION
By: /s/ Michael A. Coke
------------------------------------
Michael A. Coke
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board and Chief Executive December 4, 2001
- -------------------------------- Officer (Principal Executive Officer)
Hamid R. Moghadam
* Director and President December 4, 2001
- --------------------------------
W. Blake Baird
* Director December 4, 2001
- --------------------------------
T. Robert Burke
* Director December 4, 2001
- --------------------------------
Daniel H. Case III
* Director December 4, 2001
- --------------------------------
David A. Cole
* Director December 4, 2001
- --------------------------------
Lynn M. Sedway
* Director December 4, 2001
- --------------------------------
Jeffrey L. Skelton
* Director December 4, 2001
- --------------------------------
Thomas W. Tusher
* Director December 4, 2001
- --------------------------------
Caryl B. Welborn
II-7
SIGNATURE TITLE DATE
/s/ Michael A. Coke Executive Vice President and Chief Financial December 4, 2001
- -------------------------------- Officer (Principal Financial and Accounting Officer)
Michael A. Coke
*By: /s/ Michael A. Coke
----------------------------
Michael A. Coke
Attorney-in-Fact
II-8
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT INDEX
- ------- -------------
4.1 Articles of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.1 of the Registrant's Registration
Statement on Form S-11 (No. 333-35915)).
4.2 Articles Supplementary establishing and fixing the rights and
preferences of the 8 1/2% Series A Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.4(4) of the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1998).
4.3 Certificate of Correction of the Registrant's Articles
Supplementary establishing and fixing the rights and preferences
of the 8 1/2% Series A Cumulative Redeemable Preferred Stock
(incorporated by reference to Exhibit 3.2 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998).
4.4 Articles Supplementary establishing and fixing the rights and
preferences of the 8 5/8% Series B Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's current report on Form 8-K filed on January 7, 1999).
4.5 Articles Supplementary establishing and fixing the rights and
preferences of the 8.75% Series C Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.2 of the
Registrant's current report on Form 8-K filed on January 7, 1999).
4.6 Articles Supplementary establishing and fixing the rights and
preferences of the 7.75% Series D Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1999).
4.7 Articles Supplementary establishing and fixing the rights and
preferences of the 7.75% Series E Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on September 14,
1999).
4.8 Articles Supplementary establishing and fixing the rights and
preferences of the 7.95% Series F Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on April 14, 2000).
4.9 Articles Supplementary establishing and fixing the rights and
preferences of the 7.95% Series G Cumulative Redeemable Preferred
Stock. (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on September 29,
2000).
4.10 Articles Supplementary establishing and fixing the rights and
preferences of the 8.125% Series H Cumulative Redeemable Preferred
Stock. (incorporated by reference to Exhibit 3.3 of the
Registrant's Current Report on Form 8-K filed on September 29,
2000).
4.11 Articles Supplementary establishing and fixing the rights and
preferences of the 8.00% Series I Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.3 of the
Registrant's Current Report on Form 8-K filed on March 23, 2001).
4.12 Articles Supplementary establishing and fixing the rights and
preferences of the 7.95% Series J Cumulative Redeemable Preferred
Stock (incorporated by reference to Exhibit 3.1 of the
Registrant's Current Report on Form 8-K filed on October 3, 2001).
4.13 Second Amended and Restated Bylaws of the Registrant (incorporated
by reference to Exhibit 3.11 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 2000).
4.14 Specimen common stock certificate (incorporated by reference to
Exhibit 3.3 of the Registrant's Registration Statement on Form
S-11 (No. 333-35915)).
4.15 Indenture dated as of June 30, 1998 by and among the Operating
Partnership, the Registrant and State Street Bank and Trust
Company of California, N.A., as trustee (incorporated by reference
to Exhibit 4.1 of the Registrant's Registration Statement on Form
S-11 (No. 333-49163)).
4.16 First Supplemental Indenture dated as of June 30, 1998 by and
among the Operating Partnership, the Registrant and State Street
Bank and Trust Company of California, N.A., as trustee
(incorporated by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form S-11 (No. 333-49163)).
4.17 Second Supplemental Indenture dated as of June 30, 1998 by and
among the Operating Partnership, the Registrant and State Street
Bank and Trust Company of California, N.A., as trustee
(incorporated by reference to Exhibit 4.3 to the Registrant's
Registration Statement on Form S-11 (No. 333-49163)).
4.18 Third Supplemental Indenture dated as of June 30, 1998 by and
among the Operating Partnership, the Registrant
II-9
EXHIBIT
NUMBER EXHIBIT INDEX
- ------- -------------
and State Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.4 to the
Registrant's Registration Statement on Form S-11 (No. 333-49163)).
4.19 Fourth Supplemental Indenture, by and among AMB Property, L.P.,
AMB Property Corporation and State Street Bank and Trust Company
of California, N.A., as trustee (incorporated herein by reference
as Exhibit 4.1 of the Registrant's Current Report on Form 8-K/A
filed on November 9, 2000).
4.20 Specimen of 7.10% Notes due 2008 (included in the First
Supplemental Indenture incorporated by reference as Exhibit 4.2 to
the Registrant's Registration Statement on Form S-11 (No.
333-49163)).
4.21 Specimen of 7.50% Notes due 2018 (included in the Second
Supplemental Indenture incorporated by reference as Exhibit 4.3 to
the Registrant's Registration Statement on Form S-11 (No.
333-49163)).
4.22 Specimen of 6.90% Reset Put Securities due 2015 (included in the
Third Supplemental Indenture incorporated by reference as Exhibit
4.4 to the Registrant's Registration Statement on Form S-11 (No.
333-49163)).
4.23 $30,000,000 7.925% Fixed Rate Note No. 1 dated August 18, 2000,
attaching the Parent Guarantee dated August 18, 2000 (incorporated
herein by reference to Exhibit 4.5 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 2000).
4.24 $25,000,000 7.925% Fixed Rate Note No. 2 dated September 12, 2000,
attaching the Parent Guarantee dated September 12, 2000
(incorporated herein by reference to Exhibit 4.6 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000).
4.25 $50,000,000 8.00% Fixed Rate Note No. 3 dated October 26, 2000,
attaching the Parent Guarantee dated October 26, 2000
(incorporated herein by reference to Exhibit 4.7 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000).
4.26 $25,000,000 8.00% Fixed Rate Note No. 4 dated October 26, 2000,
attaching the Parent Guarantee dated October 26, 2000
(incorporated herein by reference to Exhibit 4.8 of the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000).
4.27 $50,000,000 7.20% Fixed Rate Note No. 5 dated December 19, 2000,
attaching the Parent Guarantee dated December 19, 2000
(incorporated herein by reference to Exhibit 4.1 of the
Registrant's Current Report on Form 8-K filed on January 8, 2001).
4.28 $50,000,000 7.20% Fixed Rate Note No. 6 dated December 19, 2000,
attaching the Parent Guarantee dated December 19, 2000
(incorporated herein by reference to Exhibit 4.2 of the
Registrant's Current Report on Form 8-K filed on January 8, 2001).
4.29 $50,000,000 7.20% Fixed Rate Note No. 7 dated December 19, 2000,
attaching the Parent Guarantee dated December 19, 2000
(incorporated herein by reference to Exhibit 4.3 of the
Registrant's Current Report on Form 8-K filed on January 8, 2001).
4.30 $25,000,000 6.90% Fixed Rate Note No. 8 dated January 9, 2001,
attaching the Parent Guarantee dated January 9, 2001 (incorporated
herein by reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K filed on January 31, 2001).
4.31 $50,000,000 7.00% Fixed Rate Note No. 9 dated March 7, 2001,
attaching the Parent Guarantee dated March 7, 2001 (incorporated
be reference to Exhibit 4.1 of the Registrant's Current Report on
Form 8-K filed on March 16, 2001).
4.32 $25,000,000 6.75% Fixed Rate Note No. 10 dated September 6, 2001,
attaching the Parent Guarantee dated September 6, 2001
(incorporated be reference to Exhibit 4.1 of the Registrant's
Current Report on Form 8-K filed on September 18, 2001).
*5.1 Opinion of Ballard, Spahr, Andrews & Ingersoll, LLP regarding the
validity of the common stock being registered.
8.1 Opinion of Latham & Watkins regarding certain federal income tax
matters.
23.1 Consent of Arthur Andersen, LLP.
*23.2 Consent of Ballard, Spahr, Andrews & Ingersoll, LLP (included in
Exhibit 5.1).
23.3 Consent of Latham & Watkins (included in Exhibit 8.1).
*24.1 Power of Attorney (included on signature page).
* Previously filed.
II-10