-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
H/56bnv0ZVpbuwuRFJefIVsyX3vyeOpcgILD/TFSkwBykzyvVbwY06Iylqq20azG
OBvZxFAnDUo8+iv2ZQ90yA==
0000950123-10-064884.txt : 20100712
0000950123-10-064884.hdr.sgml : 20100712
20100712165243
ACCESSION NUMBER: 0000950123-10-064884
CONFORMED SUBMISSION TYPE: S-11/A
PUBLIC DOCUMENT COUNT: 29
FILED AS OF DATE: 20100712
DATE AS OF CHANGE: 20100712
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Carey Watermark Investors Inc
CENTRAL INDEX KEY: 0001430259
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 262145060
FILING VALUES:
FORM TYPE: S-11/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-149899
FILM NUMBER: 10948547
BUSINESS ADDRESS:
STREET 1: 207 E. WESTMINSTER
STREET 2: SUITE 200
CITY: LAKE FOREST
STATE: IL
ZIP: 60045
BUSINESS PHONE: 847-482-8600
MAIL ADDRESS:
STREET 1: 207 E. WESTMINSTER
STREET 2: SUITE 200
CITY: LAKE FOREST
STATE: IL
ZIP: 60045
S-11/A
1
y85445sv11za.htm
S-11/A
sv11za
As Filed with the Securities
and Exchange Commission on July 12, 2010
Registration No. 333-149899
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
PRE-EFFECTIVE
AMENDMENT
NO. 3 TO
FORM S-11
FOR REGISTRATION
Under
THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES
CAREY WATERMARK INVESTORS
INCORPORATED
(Exact Name of Registrant as
Specified in Governing Instruments)
50 Rockefeller Plaza
New York, New York 10020
(212) 492-1100
(Address Including Zip Code, and
Telephone Number, Including Area Code, of Registrants
Principal Executive Offices)
Michael G. Medzigian
Chief Executive
Officer
c/o W.
P. Carey & Co. LLC
50 Rockefeller Plaza
New York, New York
10020
(212) 492-1100
(Name, Address, Including Zip
Code, and Telephone Number, Including Area Code, of Agent for
Service)
Copy to:
|
|
|
Kathleen L. Werner, Esq.
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
|
|
Sharon A. Kroupa, Esq.
Brian J. OConnor, Esq.
Venable LLP
750 E. Pratt Street, Suite 900
Baltimore, Maryland 21202
|
Approximate date of commencement of proposed sale to the
public: As soon as possible after effectiveness of the
Registration Statement.
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 check the
following
box: þ
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If delivery of the prospectus is expected to be made pursuant to
Rule 434, check the following
box. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
|
|
|
|
Large
accelerated
filer o
|
Accelerated
filer o
|
Non-accelerated
filer þ
|
Smaller reporting
company o
|
(Do not check if a smaller
reporting company)
CALCULATION OF REGISTRATION
FEE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposed
|
|
|
Proposed
|
|
|
|
Title of Each Class
|
|
|
|
|
|
Maximum
|
|
|
Maximum
|
|
|
|
of Securities to be
|
|
|
Amount to be
|
|
|
Offering Price
|
|
|
Aggregate
|
|
|
Amount of
|
Registered
|
|
|
Registered
|
|
|
per Unit
|
|
|
Offering Price
|
|
|
Registration Fee
|
Common Stock
|
|
|
100,000,000 Shares
|
|
|
$10.00
|
|
|
$1,000,000,000
|
|
|
$39,300(2)
|
Common
Stock(1)
|
|
|
25,000,000 Shares
|
|
|
$9.50
|
|
|
$237,500,000
|
|
|
$9,333.75(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents shares issuable pursuant to the registrants
Distribution Reinvestment Plan. |
(2) |
|
Previously paid. |
We hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until we
shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933
or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said
Section 8(a), may determine.
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
declared effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer, solicitation or
sale is not permitted or would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. Any representation to the contrary is a criminal
offense.
|
SUBJECT TO
COMPLETION, DATED July 12, 2010
Prospectus
CAREY WATERMARK
INVESTORS INCORPORATED
100,000,000 Shares of Common Stock, $10.00 per
Share-Maximum Offering
1,000,000 Shares of Common Stock, $10.00 per Share-Minimum
Offering
25,000,000 Shares of Common Stock, $9.50 per Share issuable
pursuant
to our Distribution Reinvestment Plan
Minimum Investment: 200 Shares (may be higher in certain
states)
Carey Watermark Investors Incorporated, or CWI, has been formed
to take advantage of current and future opportunities to invest
in lodging and lodging-related properties. We intend to conduct
substantially all of our investment activities and own all of
our assets through CWI Limited Partnership, our operating
partnership. Carey Lodging Advisors, LLC, is our advisor
and will provide us with overall management of our business,
including services related to acquisitions and dispositions of
properties. Watermark Capital Partners, LLC, an investment firm
with significant expertise in lodging assets, will act through a
subsidiary as a subadvisor to our advisor. We have not yet
identified any of the properties to be acquired with the
proceeds from this offering. We expect to qualify as a real
estate investment trust, or a REIT, for U.S. federal income
tax purposes, beginning with our taxable year ending
December 31, 2010.
An investment in our shares involves a high degree of risk.
You should purchase these securities only if you can afford a
complete loss of your investment. See Risk
Factors beginning on page 27 for a discussion of
certain factors that you should consider before you invest in
the shares being sold with this prospectus, including:
|
|
|
Our advisor and the subadvisor may be subject to conflicts of
interest. We pay substantial fees to our advisor, portions of
which will be shared with the subadvisor, based on factors other
than the quality of services provided. Our fee structure may
encourage our advisor and the subadvisor to make investments
with increased leverage or to make riskier or more speculative
investments. In addition, we, our advisor, the subadvisor and
Carey Financial, LLC, the dealer manager, have some common
management, and agreements with these entities are not
arms length agreements.
|
|
|
|
We are considered a blind pool offering because we
do not currently own any properties, we have not identified any
properties to acquire with the offering proceeds and we have no
operating history or established financing sources. You will be
unable to evaluate the economic merits of our investment
portfolio prior to your investment.
|
|
|
|
There is no public market for our shares. If you have to sell
your shares in the initial years of the program, you will most
likely receive less than $10.00 per share.
|
|
|
|
There are conflicts of interest with certain of our directors
and officers who have duties to W. P. Carey & Co. LLC,
the subadvisor and entities sponsored or managed by either of
them with which we contract or with which we may compete for
properties.
|
|
|
|
We will be subject to the risks of operating lodging properties
and the lodging industry generally. Failure of lodging industry
fundamentals to improve may adversely affect our ability to
execute our business strategy.
|
|
|
|
Our failure to qualify as a REIT would adversely affect our
operations and ability to make distributions.
|
|
|
|
Our distributions may exceed our earnings and our adjusted cash
flow from operating activities and may be paid from borrowings,
offering proceeds and other sources, without limitation,
particularly during the period before we have substantially
invested the net proceeds from this offering.
|
|
|
|
As a new investor, you will experience substantial dilution in
the net tangible book value of your shares equal to your
shares proportionate share of the costs of the offering.
|
|
|
|
Shares of our common stock are subject to a 9.8% ownership
limitation that is intended, among other purposes, to assist us
in complying with restrictions imposed on REITs by the Internal
Revenue Code.
|
Neither the Securities and Exchange Commission, the Attorney
General of the State of New York, nor any state securities
commission has approved or disapproved of these securities or
passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
Projections and forecasts cannot be used in this offering. No
one is permitted to make any written or oral predictions about
how much cash you will receive from your investment or the tax
benefits that you may receive.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
|
|
|
|
|
|
Maximum
|
|
|
|
Proceeds,
|
|
|
|
|
Aggregate
|
|
|
|
Maximum Selling
|
|
|
|
Dealer Manager
|
|
|
|
Before Expenses,
|
|
|
|
|
Price to Public
|
|
|
|
Commissions
|
|
|
|
Fee
|
|
|
|
to
Us(1)
|
|
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Offering
|
|
|
|
$1,000,000,000
|
|
|
|
|
$70,000,000
|
|
|
|
|
$30,000,000
|
|
|
|
|
$900,000,000
|
|
Minimum Offering
|
|
|
|
$10,000,000
|
|
|
|
|
$700,000
|
|
|
|
|
$300,000
|
|
|
|
|
$9,000,000
|
|
Per Share
|
|
|
|
$10.00
|
|
|
|
|
$0.70
|
|
|
|
|
$0.30
|
|
|
|
|
$9.00
|
|
Distribution Reinvestment Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Offering
|
|
|
|
$237,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$237,500,000
|
|
Minimum Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
|
|
|
|
$9.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$9.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The proceeds are calculated before
deducting certain organization and offering expenses payable by
us. The total of the above fees, plus other organizational and
offering expenses and fees are estimated to be approximately
$107,754,000 if the maximum of 100,000,000 shares are sold
in the offering and approximately $107,754,000 if the maximum of
125,000,000 shares are sold, which includes
100,000,000 shares sold in the offering and
25,000,000 shares sold pursuant to our Distribution
Reinvestment Plan. The total of the above fees, plus other
organizational and offering expenses and fees are estimated to
be approximately $1,200,000 if the minimum of
1,000,000 shares are sold in the offering. To the extent
that all other organization and offering expenses exceed two
percent of the gross offering proceeds, the excess expenses will
be paid by our advisor. See The Offering/Plan of
Distribution.
|
The dealer manager, Carey Financial, LLC, is our affiliate and
is not required to sell any specific number or dollar amount of
the shares but will use its best efforts to sell the
shares offered. Until the subscription proceeds equal
$10,000,000, funds accepted by the dealer manager and selected
dealers from the sale of shares will be promptly deposited into
an interest-bearing escrow account maintained by Wells Fargo
Bank, National Association. After the subscription proceeds
exceed $10,000,000, funds accepted by the dealer manager and
selected dealers from the sale of shares will be promptly
deposited into an interest-bearing account at Bank of the West.
Interest earned will be paid to you if your funds are held in
the escrow or interest-bearing account for at least 20 days
or more. Interest earned, but not payable to you, shall be paid
to us. See The Offering/Plan of
Distribution Arrangements with respect to Money Held
in the Escrow Account and the Interest-Bearing
Account. The funds will be transferred to us from time
to time. You will become a stockholder once your funds are
transferred to us and shares are issued to you. Transfers occur
periodically to provide for an orderly flow of funds into our
company. See The Offering/Plan of
Distribution. If a minimum of 1,000,000 shares
are not sold within six months after the date of this
prospectus, or if we elect to extend it, to a period no later
than one year after the date of this prospectus, we will
terminate this offering and all money received will be promptly
refunded to investors with interest. We will not charge fees on
funds returned if the minimum offering is not reached. If Carey
Financial, LLC purchases any shares in this offering, we will
not count any of the shares purchased by them to reach the
minimum offering amount.
We may sell our shares in the offering
until ,
2012, unless our board of directors decides to extend the
offering for up to an additional 18 months.
This prospectus is
dated ,
2010
SUITABILITY
STANDARDS
The shares we are offering are suitable only as a long-term
investment for persons of adequate financial means. There is
currently no public market for the shares, and there is no
assurance that one will develop. This means that it may be
difficult to sell your shares. You should not invest in these
shares if you need to sell them immediately or will need to sell
them quickly in the future.
In consideration of these factors, we have established
suitability standards for initial stockholders in this offering
and subsequent transferees. These suitability standards require
that a purchaser of shares (other than a purchaser of shares in
New Hampshire) have either:
|
|
|
|
|
a gross annual income of at least $70,000 and a net worth
(excluding the value of a purchasers home, furnishings and
automobiles) of at least $70,000; or
|
|
|
|
a net worth of at least $250,000 (excluding the value of a
purchasers home, furnishings and automobiles).
|
New Hampshire Investors must have either:
(i) a net worth of $250,000, or (ii) a net worth
exclusive of home, home furnishings, and automobiles of
$125,000, and taxable income of $50,000.
Alabama, California, Iowa, Kansas, Kentucky, Massachusetts,
Michigan, Missouri, Ohio, Oregon, Pennsylvania and Tennessee
have established suitability standards in addition to those we
have established. Shares will be sold only to investors in these
states who meet the additional suitability standards set forth
below:
Alabama In addition to our suitability
requirements, investors must have a liquid net worth of at least
ten times their investment in CWI and its affiliated programs.
California Each investors maximum
investment in CWI may not be more than 10% of their liquid net
worth. Liquid net worth is defined as net worth excluding the
value of the purchasers home, home furnishings and
automobile.
Iowa The maximum investment in CWI and its
affiliated programs cannot exceed 10% of an Iowa residents
net worth.
Kansas Kansas recommends that Kansas
investors not invest, in the aggregate, more than 10% of their
liquid net worth in this and other similar investments. Liquid
net worth is defined as the portion of net worth which consists
of cash and cash equivalents and readily marketable securities.
Kentucky Each investor in Kentucky must have
a liquid net worth of $250,000, or a combined liquid net worth
of $70,000 and annual income of $70,000. Each investors
total investment in CWI may not be more than 10% of their liquid
net worth. Liquid net worth is defined as net worth excluding
the value of the purchasers home, home furnishings and
personal automobile.
Massachusetts The maximum investment in CWI
and its affiliated programs cannot exceed 10% of a Massachusetts
residents net worth.
Michigan The maximum investment in CWI and
its affiliated programs cannot exceed 10% of a Michigan
residents net worth.
Missouri, Oregon and Tennessee Investors must
also have a liquid net worth of at least ten times their
investment in CWI.
Ohio The maximum investment in CWI and its
affiliated programs cannot exceed 10% of an Ohio residents
net worth.
Pennsylvania In addition to our suitability
requirements, investors must have a net worth of at least ten
times their investment in CWI.
i
New York, North Carolina and Pennsylvania impose a higher
minimum investment requirement than we require. In New York and
North Carolina, individuals must purchase at least
250 shares (not applicable to IRAs).
In Pennsylvania, the minimum aggregate closing amount for
Pennsylvania investors is $33,333,334. In addition, Pennsylvania
requires that, until subscriptions exceed $33,333,334, proceeds
from investors in Pennsylvania must be placed in a short term
escrow account. If we have not reached this $33,333,334
threshold within 120 days of the date that we first accept
a subscription payment from a Pennsylvania investor, we will,
within 10 days of the end of that
120-day
period, notify Pennsylvania investors in writing of their right
to receive refunds, with interest. If a Pennsylvania investor
requests a refund within 10 days of receiving that notice,
we will arrange for the Escrow Agent to promptly return by check
that investors subscription amount with interest. Amounts
held in the Pennsylvania escrow account from Pennsylvania
investors not requesting a refund will continue to be held for
subsequent
120-day
periods until we raise at least $33,333,334 or until the end of
the subsequent escrow periods. At the end of each subsequent
120-day
period, we will again notify each Pennsylvania investor of his
or her right to receive a refund of his or her subscription
amount with interest. Until we have raised $33,333,334,
Pennsylvania investors should make their checks payable to
Wells Fargo Bank, National Association, as Escrow Agent
for Carey Watermark Investors Incorporated. Once we have
reached the Pennsylvania minimum, Pennsylvania investors should
make their checks payable to Carey Watermark Investors
Incorporated.
In the case of sales to fiduciary accounts, these suitability
standards must be met by the fiduciary account, by the person
who directly or indirectly supplied the funds for the purchase
of the shares, or by the beneficiary of the account. These
suitability standards are intended to help ensure that, given
the long-term nature of an investment in CWI, our investment
objectives and the relative illiquidity of the shares, a
purchase of shares is an appropriate investment. The sponsor and
each person selling shares on behalf of CWI must make every
reasonable effort to determine that the purchase of shares is a
suitable and appropriate investment for each stockholder based
on information provided by the stockholder regarding the
stockholders financial situation and investment
objectives. Each person selling shares on behalf of CWI is
required to maintain records for six years of the information
used to determine that an investment in the shares is suitable
and appropriate for a stockholder.
Additionally, investors should consult their financial advisors
as to their suitability, as the minimum suitability standards
may vary from broker-dealer to broker-dealer.
ii
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
1
|
|
|
|
|
27
|
|
|
|
|
45
|
|
|
|
|
47
|
|
|
|
|
55
|
|
|
|
|
60
|
|
|
|
|
75
|
|
|
|
|
77
|
|
|
|
|
99
|
|
|
|
|
111
|
|
|
|
|
112
|
|
|
|
|
112
|
|
|
|
|
113
|
|
|
|
|
118
|
|
|
|
|
118
|
|
|
|
|
142
|
|
|
|
|
146
|
|
|
|
|
159
|
|
|
|
|
166
|
|
|
|
|
167
|
|
|
|
|
167
|
|
|
|
|
167
|
|
|
|
|
168
|
|
|
|
|
F-1
|
|
|
|
|
A-1
|
|
|
|
|
B-1
|
|
EX-23.4 |
i
PROSPECTUS
SUMMARY
You should read the following summary together with the more
detailed information, including under the caption Risk
Factors, and our balance sheet and notes thereto, included
elsewhere in this prospectus. References in this prospectus to
the initial offering date refer to the first day our
common shares are sold to the public pursuant to this offering.
This prospectus will be used in connection with the continuous
offering of our shares, as supplemented from time to time.
Unless the context otherwise requires or indicates,
references in this prospectus to we, the
corporation, our, us and
CWI refer to Carey Watermark Investors Incorporated,
together with our subsidiary, CWI Limited Partnership, a
Delaware limited partnership, which we refer to in this
prospectus as our operating partnership. References
to our dealer manager refer to Carey Financial, LLC,
or Carey Financial. References to our
advisor refer to Carey Lodging Advisors, LLC, or
CLA, which is the entity named as the advisor under
our advisory agreement, together with the affiliates of W. P.
Carey & Co. LLC that perform services on its behalf in
connection with the advisory agreement. References to
Carey Watermark Holdings or our special
general partner refer to Carey Watermark Holdings, LLC,
the special general partner in our operating partnership.
References to W. P. Carey refer to W. P.
Carey & Co. LLC (or any of its predecessors), which is
the ultimate parent company of our advisor, Carey Financial and
Carey Asset Management Corp., and holds an indirect interest in
Carey Watermark Holdings. References to Watermark Capital
Partners refer to Watermark Capital Partners, LLC, which
is the parent company of CWA, LLC, the subadvisor to our
advisor. References to TRS lessees refer to CWI TRS,
our wholly-owned taxable REIT subsidiary, one of its
subsidiaries, or one or more wholly-owned taxable REIT
subsidiaries that we may form in the future. Unless indicated
otherwise, the information included in this prospectus assumes
the effectiveness of our articles of amendment and restatement,
the limited partnership agreement of our operating partnership,
the limited liability company agreement of our advisor and our
advisory agreement.
Carey
Watermark Investors Incorporated
Overview
We have been formed to take advantage of current and future
opportunities to invest in lodging and lodging-related
properties. We believe that current dynamics in the lodging
industry will create attractive opportunities for us to acquire
quality properties at prices below replacement cost, with the
potential to achieve long-term growth in value and generate
attractive returns for our stockholders.
This is our initial offering of securities. We do not currently
own any assets. We intend to conduct substantially all of our
investment activities and own all of our assets through CWI
Limited Partnership, our operating partnership. We
are both a general partner and a limited partner, and will
initially own a 99.97% capital interest, in our operating
partnership. Carey Watermark Holdings, which is owned indirectly
by W. P. Carey and Watermark Capital Partners, will hold a
special general partner interest in our operating partnership.
We expect to qualify as a REIT for federal income tax purposes
beginning with our taxable year ending December 31, 2010.
We are externally advised by our advisor, Carey Lodging
Advisors, LLC, an indirect subsidiary of W. P. Carey. CWA, LLC,
a subsidiary of Watermark Capital Partners, will enter into a
subadvisory agreement with our advisor effective upon the
commencement of this offering. Our advisor and the subadvisor
will manage our overall portfolio, including providing oversight
and strategic guidance to the independent property operators
that manage our properties.
W. P. Carey is a New York Stock Exchange listed real estate
advisory and investment company that has sponsored and advised
nine partnerships and seven real estate investment trusts under
the Corporate Property Associates and Carey Institutional
Properties brand names during W. P. Careys more than
35-year
history. We refer to these entities throughout this prospectus
as the
CPA®
Programs. Of the 16
CPA®
Programs, 12 have completed their investment and liquidation
phases and four continue to operate as entities advised by W. P.
Carey. While one of those entities, Corporate
1
Property Associates 17 Global Incorporated, or
CPA®:17
Global, has funds available that may be used to make additional
investments, the other three entities, Corporate Property
Associates 16 Global Incorporated, or
CPA®:16
Global, Corporate Property Associates 15 Incorporated, or
CPA®:15,
and Corporate Property Associates 14 Incorporated, or
CPA®:14,
have fully invested their offering proceeds and are principally
focused on managing their existing portfolios of properties;
however, none of them is focused on lodging and lodging related
properties. We refer to
CPA®:14,
CPA®:15,
CPA®:16
Global and
CPA®:17
Global throughout this prospectus as the
CPA®
REITs.
Watermark Capital Partners is a private investment firm formed
in May 2002 that focuses its investment activities on assets
that benefit from specialized marketing strategies and
demographic shifts, including hotels and resorts, resort
residential products, recreational projects including golf and
club ownership programs, and new-urbanism and mixed-use
projects. The principal of Watermark Capital Partners, Michael
G. Medzigian, has almost 30 years of experience in the
lodging and real estate industries, including as the Chief
Executive Officer of Lazard Freres Real Estate Investors, a real
estate private equity management organization, and as a senior
partner of Olympus Real Estate Corporation, the real estate fund
management affiliate of Hicks, Muse, Tate and Furst Incorporated.
Our office is located at 50 Rockefeller Plaza, New York, NY
10020. Our phone number is
(212) 492-1100,
and our web address will be www.careywatermarkinvestors.com. The
information on our website does not constitute a part of this
prospectus. We were organized as a Maryland corporation on
March 10, 2008 with the filing of our initial charter. We
intend to amend and restate our initial charter, substantially
in the form attached as an exhibit to this registration
statement prior to the commencement of this offering. Our
charter and bylaws will remain operative throughout our
existence, unless they are amended or we are dissolved.
Investment
Objectives, Procedures and Policies
Our objective is to achieve long-term growth in value and
generate attractive risk adjusted returns for our stockholders
primarily through capital appreciation and also through current
distributions. We will seek to create a portfolio with the
potential to generate attractive risk adjusted returns across
varying economic cycles, including by taking advantage of
opportunities to acquire hotel properties at attractive prices
in the currently disrupted economic environment.
Our core strategy for achieving these objectives is to acquire,
own, dispose of and manage and seek to enhance the value of,
interests in lodging and lodging related properties. While our
core strategy will be focused on the lodging industry, we may
also invest in other real estate property sectors. We will
adjust our investment focus from time to time based upon market
conditions and our advisors views on relative value as
market conditions change.
Our advisor and subadvisor will actively manage our portfolio
and supervise our independent property operators, with a goal of
enhancing our profitability and the value of our assets. We
believe that an experienced asset manager can improve the
performance of a lodging asset by actively overseeing brand and
management changes, market positioning, revenue and expense
management, strategic capital expenditures and enhancement of
operating efficiencies.
We expect to qualify as a REIT and will undertake our asset
management in the manner necessary to qualify as a REIT. Under
the provisions of the Internal Revenue Code, as a REIT we are
allowed to own lodging properties but are prohibited from
operating these properties. In order to comply with applicable
REIT qualification rules, we will enter into leases with the TRS
lessees. The TRS lessees will in turn contract with independent
property operators that will manage
day-to-day
operations of our properties.
Our chief executive officer has extensive experience acquiring,
managing, developing, repositioning and disposing of lodging and
other real estate assets on behalf of sophisticated
institutional investors in real estate private equity funds. We
expect to benefit from Mr. Medzigians
institutional-quality approach and we believe that our strategy
will entail lower risk when compared
2
with such funds because we expect to incur moderate levels of
leverage and generally expect to have longer holding periods
than such funds, which typically have holding periods of four to
eight years.
During the most recent real estate cycle, asset pricing was
inflated to a point that is not sustainable in the current
environment where capital availability and pricing, underwriting
criteria, and growth and economic assumptions have all become
more conservative. Additionally, factors external to the real
estate industry such as reduced consumer and business spending
are negatively impacting the sector. The result for real estate
owners has been deteriorating market and operating fundamentals
impacting the ability to meet debt service obligations and the
inability to refinance existing debt as it comes due, declining
values, and increasing distressed situations. As real estate
owners continue to reduce the amount of their leverage, there
will be a need for new equity capital that CWI seeks to provide.
Our advisor believes that investment opportunities will be
attractive over the next several years. As of December 2009,
commercial real estate and hotel values had declined 41% and 44%
from their peaks, respectively. According to HVS, a hotel
industry consulting firm, hotel values are projected to remain
unchanged in 2010 and then increase year-over-year 20%, 24%,
24%, 16%, and 9% in 2011, 2012, 2013, 2014, and 2015,
respectively. While the commercial mortgage backed securities,
or CMBS, market had been a growing and important source of
commercial real estate debt capital, that source of capital
effectively collapsed in 2008, as CMBS issuance declined from
$230.2 billion in 2007 to $12.1 billion in 2008, as
the broader markets entered the financial crisis and recession.
Foresight Analytics LLC estimates that commercial and
multifamily mortgage maturities will total approximately $1.5
trillion from 2010 through 2014. Combined with reduced real
estate debt availability and sales transactions, we believe this
high volume of debt maturities will further pressure borrowers
creating additional need for equity capital and investment
opportunities. As a result of reduced debt capital availability
and declining values as noted above, the real estate industry
has experienced increasing maturity defaults. With the
significant volume of mortgages maturing during our acquisition
stage, we expect that the recent rapid pace of mortgage
delinquencies and defaults will continue, placing continued
pressure on borrowers and creating opportunities for CWI to
participate in over-extended borrowers attempts to reduce
the amount of their leverage and improve their capital
structure. Beyond the investment opportunities created by the
dislocated market, our advisor believes that the period during
which we will seek to make investments will generally coincide
with a cyclically low point in the lodging industry, as it
relates to property performance and valuations, translating to
an attractive investment entry point.
We believe that the following market factors and attributes of
our investment model are particularly important to our ability
to meet our investment objective:
|
|
|
|
|
Our investment model should benefit from the current
economically disrupted environment. We
believe that the current distress in the credit, financial and
real property markets presents us with opportunities to acquire
distressed or undervalued real estate assets. As a result of
this distress, many commercial property owners have been unable
to meet debt-service obligations, loan maturity obligations or
arrange financing for scheduled purchases. In our experience,
distressed market conditions and cyclical downturns in the
lodging industry expose the weaknesses of certain property
operators that had access to capital when it was plentiful but
that are not experienced with market downturns. Consequently, we
expect that these distressed market conditions will result in a
significant increase of undercapitalized property owners, which,
when combined with the lack of available traditional debt
financing, should provide investment opportunities for us in
situations involving changes in an assets or a
companys capital structure, loan-forgiveness and
restructuring arrangements between debtors and creditors and
opportunities to provide mezzanine financing which
is senior to a borrowers equity position but subordinated
to senior debt and, therefore, carries a higher interest rate
than senior debt. In transactions where property owners have
utilized recourse debt financing the resulting circumstances can
be particularly challenging for them. Furthermore, we believe
these opportunities will be available to us during a period of
declining
|
3
|
|
|
|
|
fundamentals, particularly in the lodging industry, when
performance, and therefore pricing, is depressed. Given the
conditions caused by the distressed economic environment, and
coupled with the experience and expertise of our advisor and the
subadvisor, we expect to be well positioned to capitalize on
these opportunities to create an attractive investment portfolio.
|
|
|
|
|
|
A lodging-centric and opportunistic investment strategy
provides an opportunity for attractive returns and long-term
growth in value and a potentially effective inflation
hedge. Lodging properties can provide
investors with an attractive blend of current cash flow and
opportunity for capital appreciation. Cash flow is generated
primarily from daily property operations, and capital
appreciation may be achieved by growth over time and enhanced by
employing active management strategies such as brand and
management changes, market positioning, revenue and expense
management, strategic capital expenditures and enhancement of
operating efficiencies. Growth in U.S. hotel revenue per
available room, or RevPAR, has historically been closely
correlated with growth in U.S. GDP. Lodging properties do
not have a fixed lease structure, unlike other property types
and therefore rental rates on lodging properties can be
determined on virtually a daily basis. As a result, lodging
industry fundamentals tend to decline, and also recover, sharply
and more quickly than other property types as economies enter,
and exit, recessionary periods, respectively. Therefore, as the
U.S. economy begins to strengthen, we anticipate RevPAR
growth, along with the related growth in property operating
income and valuations, to culminate in an overall improvement of
lodging industry fundamentals over the course of our investment
period. While our strategy is significantly focused on lodging
and lodging-related sectors, it also embodies a flexible
approach that enables us to shift our investment focus to areas
that may present more attractive relative value in response to
changing market dynamics.
|
|
|
|
|
|
As compared with certain other types of real estate
assets, the lodging sector provides a broad range of value
creation opportunities that can enhance
returns. The operationally intense nature of
lodging assets presents opportunities to employ a variety of
strategies to enhance value, including brand and management
changes, revenue and expense management, strategic capital
expenditures, repositioning, facility reuse and reuse or sale of
excess land. Our asset management approach is designed to
capitalize on opportunities during periods of strong growth and
also to exploit efficiencies and operating leverage during
periods of slower growth.
|
|
|
|
A differentiated investment
approach. We intend to make some of our
investments through joint ventures with qualified owners and
operators of properties. Over his many years as a real estate
professional, our chief executive officer has developed a
network of relationships with operating partners in a variety of
sectors and geographies that may provide sources of investment
opportunities for us. In addition to expanding our investment
sourcing network, investing through joint ventures may provide
us with specialized resources and capabilities. We will explore
joint venture opportunities as part of our investment strategy
because joint ventures may be particularly effective in
challenging times such as the current recessionary environment,
when industry participants in need of capital may prefer not to
sell or lose control of their assets but still control or have
access to potentially attractive investment opportunities that
they seek to exploit. Joint venture investing may also be a risk
mitigant as we may be able to structure our investments on a
more senior basis, involving preferred equity, mezzanine debt or
cross collateralization of assets, creating additional security
for our investments. We believe that our ability to invest
through joint ventures, originate and purchase loans
and/or make
direct investments in real estate assets provides CWI with the
flexibility to capitalize on the opportunities in this business
cycle.
|
|
|
|
A lack of legacy issues. As a company
with no operating history or established financial resources, we
also do not have any legacy issues, which may benefit our
stockholders in two ways. Firstly, we have not yet acquired any
assets and therefore, our stockholders will not have invested in
a portfolio that includes assets acquired at the inflated prices
that existed prior to
|
4
|
|
|
|
|
the 2008 financial crisis. Secondly, our management team will be
able to focus its resources on value creation on behalf of the
stockholders, without having the distractions created by
under-performing or troubled assets acquired at the peak of the
market.
|
|
|
|
|
|
Our investment strategy, resources and investment
structure differentiate us from other sources of capital for the
real estate industry. We believe that our
investment structure offers certain advantages over other
private equity fund and traded REIT competitors. Unlike certain
private equity funds, we currently expect to operate an
investment portfolio that is 50% leveraged, on average and limit
our exposure to the potential default risks associated with
investor subscription agreements. However, our organizational
documents permit us to incur maximum leverage of up to 75% of
the total costs of our investments, or 300% of our net assets,
or a higher amount with the approval of a majority of our
independent directors. As compared to traded REITs, we will not
be subject to share price volatility and pressures relating to
quarterly earnings estimates and near term share price targets,
which can impede real estate value maximization. These
differentiating factors may make us more competitive in the
property and investment markets and enable us to take a more
balanced approach when making acquisitions and implementing
investment and operational strategies.
|
See Investment Objectives, Procedures and
Policies for a detailed discussion of the attributes
of the U.S. lodging industry, the resulting market
opportunity and our investment strategy noted above.
The lodging properties we acquire may include full-service
branded hotels located in urban settings, resort properties,
high-end independent urban and boutique hotels, select-service
hotels and mixed-use projects with non-lodging components.
Full-service hotels generally provide a full complement of guest
amenities, including food and beverage services, meeting and
conference facilities, concierge and room service, porter
service or valet parking, among others. Select-service hotels
typically have limited food and beverage outlets and do not
offer comprehensive business or banquet facilities. Resort
properties may include smaller boutique hotels and large-scale
integrated resorts. We generally intend to acquire fee ownership
of our properties but may consider leasehold interests.
At this time we are unable to predict what percentage of our
assets may consist of investments in any one category of the
target lodging portfolio. As opportunities arise, we may seek to
expand our portfolio to include other types of real
estate-related investments in the lodging sector, such as loans
secured by lodging properties, mezzanine loans related to
lodging properties (i.e. loans senior to the borrowers
common and preferred equity in, but subordinated to a mortgage
loan on, a property), subordinated interests in loans secured by
lodging properties and equity and debt securities issued by
companies engaged in the lodging sector. We may invest in the
securities of other issuers for the purpose of exercising
control.
We expect to make investments primarily in the United States.
However, we may consider investments outside the United States
and we are not prohibited under our organizational documents
from making investments outside the United States. The
investment committee will evaluate potential acquisitions on a
case-by-case
basis. We are not required to meet any diversification standards
and have no specific policies or restrictions regarding the
geographic areas where we make investments or on the percentage
of our capital that we may invest in a particular asset.
However, without the prior approval of a majority of our
independent directors, we may not invest more than 25% of our
equity capital in non-lodging-related investments.
As we seek to implement our business strategy and achieve our
investment objective, we believe that we will benefit from the
combined capabilities and resources of W. P. Carey and Watermark
Capital Partners:
|
|
|
|
|
W. P. Carey, founded by Wm. Polk Carey in 1973, has a more than
35-year
history of commercial real estate investment and management,
primarily involving long-term net leases,
|
5
|
|
|
|
|
both directly and on behalf of the
CPA®
Programs. Mr. Carey is the Chairman of W. P. Carey and of
the
CPA®
REITs.
|
|
|
|
|
|
Mr. Medzigian, our Chief Executive Officer, has extensive
experience as an active and successful real estate industry
investor and asset manager. Mr. Medzigian has particular
expertise in investing in and managing lodging properties,
having been responsible for investments in, or management of,
over $2.4 billion of lodging and related investments almost
30 years.
|
In addition, our independent directors have substantial
experience in the lodging industry.
In the past, W. P. Carey and Watermark Capital Partners have
worked together on four lodging transactions as described below.
None of these investments, which are small to medium by lodging
industry standards, will be included in our portfolio.
|
|
|
|
|
In 2005, affiliates of W. P. Carey and Watermark Capital
Partners entered into an agreement to redevelop and reposition
the Holiday Inn Livonia West, a
226-unit
full-service hotel located in Livonia, Michigan, which had been
owned by an affiliate of W. P. Carey since 1987. Watermark
Capital Partners assumed property management as well as
development and construction management responsibilities and
implemented a $12 million renovation and re-branding
program under which the hotel was rebranded as a Radisson hotel.
The hotels operating results have underperformed
expectations since the renovation and rebranding, which
management believes is primarily due to the difficult economic
environment in the Detroit metropolitan area, which was
particularly affected during that time by the decline in the
auto industry.
|
|
|
|
|
|
In 2007, affiliates of W. P. Carey acquired the Doubletree Hotel
Memphis Downtown, an urban full-service
280-unit
hotel located in downtown Memphis, Tennessee in a privately
negotiated transaction. Watermark Capital Partners is the asset
manager and has a performance-based carried interest in the
property. The incumbent third party property management company
prior to the acquisition continued in its management role with
oversight by Watermark Capital Partners as asset manager. Net
income of the hotel has remained essentially flat since the
acquisition in 2007, reflecting slight declines in both revenues
and expenses during the period. The hotel was acquired for
approximately $39.3 million or $140,000 per room, which
included an acquisition cost of approximately $35.5 million
and $3.8 million for capital expenditures, working capital
and transaction costs.
|
|
|
|
|
|
In December 2009, Watermark Capital Partners entered into an
asset management agreement with an affiliate of W. P. Carey with
respect to its investment in the Hilton Minneapolis/Bloomington,
a 257-unit
hotel located in Bloomington, Minnesota.
|
|
|
|
|
|
In May 2010, affiliates of W. P. Carey acquired Springhill
Suites by Marriott, a select service hotel located in Hillsboro,
Oregon for approximately $14.8 million including working
capital. Watermark Capital Partners is the asset manager and has
a performance-based carried interest in the property.
|
Investment
Program
While we intend primarily to acquire fee ownership of lodging
facilities and lodging related properties, as opportunities
arise, we may invest in other types of real estate-related
investments in the lodging sector, subject to the following
guidelines:
|
|
|
|
|
Without the approval of our independent directors, we will not
purchase any real property when the contractual purchase price
of the property plus all acquisition fees, but excluding
acquisition expenses, payable to our advisor is in excess of its
appraised value. We will not make or invest in mortgage loans
unless an appraisal is obtained on the underlying property. The
appraisals may take into consideration, among other things, the
terms and conditions of
|
6
|
|
|
|
|
the particular transaction and they may exceed the construction
cost or replacement cost of the property.
|
|
|
|
|
|
We will not make or invest in mortgage loans on any one
property, or in one borrower, which would exceed 20% of the
proceeds raised from this offering.
|
|
|
|
We will not make or invest in mortgage loans in any one property
if the aggregate amount of all mortgage loans outstanding on the
property that are senior to or pari passu with our loan,
together with our loan, would exceed 85% of the appraised value
of the property at the time that we make the investment, unless
such investment is justified by the presence of other
underwriting criteria such as the credit rating of the borrower,
a collateral that is adequate to justify the waiver of this
limitation or the guarantee of the mortgage by a government
agency. For this purpose, we do not treat CMBS as mortgage loans.
|
|
|
|
Any purchase from, sale to, or joint venture with, an affiliate
must be approved or ratified by at least a majority of our
independent directors.
|
|
|
|
We may invest no more than 10% of our net equity in unimproved
or non-income-producing real property or mortgage loans on
unimproved or non-income-producing property.
|
We currently expect that in light of current market conditions,
our investment portfolio will be 50% leveraged, on average. This
reflects our current expectation for the overall portfolio. We
may fund some individual investments solely or primarily using
our equity capital and others may be financed with greater than
50% leverage. If conditions in the financing markets improve,
our average portfolio leverage may exceed our current
expectations. The maximum leverage that our advisor may arrange
for us to incur in the aggregate on our portfolio, without the
need for further approval, is limited to the lesser of 75% of
the total costs of our investments, or 300% of our net assets,
or a higher amount with the approval of a majority of our
independent directors. Net assets are our total assets (other
than intangibles), valued at cost before deducting depreciation,
reserves for bad debts and other non-cash reserves, less total
liabilities. Any excess must be approved by a majority of our
independent directors. Our charter and bylaws do not restrict
the form of indebtedness we may incur (for example, we may incur
either recourse or non-recourse debt or cross collateralized
debt).
Our intention is to consider alternatives for providing
liquidity for our stockholders beginning not later than six
years following the termination of the primary offering being
conducted by this prospectus. If we have not consummated a
liquidity transaction by the sixth anniversary of the
termination of the primary offering being conducted by this
prospectus, our board of directors will be required to consider
(but will not be required to commence) an orderly liquidation of
our assets, which would require the approval of our
stockholders. A liquidity transaction could include sales of
assets, either on a portfolio basis or individually, a listing
of our shares on a national securities exchange, the Nasdaq
Global Select Market or the Nasdaq Global Market, a merger
(which may include a merger with one or more entities managed by
our advisor in the future or currently managed by W. P. Carey or
Watermark Capital Partners) or another transaction approved by
our board of directors.
Market conditions and other factors could cause us to delay a
liquidity transaction or the commencement of our liquidation.
Even if our board of directors decides to liquidate, we are
under no obligation to conclude our liquidation within a set
time because the precise timing of the sale of our assets will
depend on the prevailing real estate and financial markets, the
economic conditions of the areas in which our properties are
located and the federal income tax consequences to our
stockholders. As a result, we cannot provide assurances that we
will be able to liquidate our assets. After commencing a
liquidation, we would continue in existence until all of our
assets are sold.
7
Risk
Factors
An investment in our shares has risks. The
Risk Factors section of this prospectus
contains a detailed discussion of the most important risks.
Please refer to the Risk Factors section for
a more detailed discussion of the risks summarized below and
other risks of investment in us.
Risks
Related to this Offering
|
|
|
|
|
We have no operating history or established financing sources
and may be unable to successfully implement our investment
strategy or generate sufficient cash flow to make distributions
to our stockholders.
|
|
|
|
This is initially a blind pool offering because we
do not currently own any properties or other lodging related
investments and we have not identified any properties to acquire
with the offering proceeds. Therefore, you may not have the
opportunity to evaluate the economic merits of our investments
prior to making your investment decision.
|
|
|
|
The past performance of programs sponsored by or affiliated with
W. P. Carey is not an indicator of our future performance
because those programs had a different investment strategy.
|
|
|
|
The offering price for shares being offered in this offering and
through our distribution reinvestment plan was determined by our
board of directors and may not be indicative of the price at
which the shares would trade if they were listed on an exchange
or were actively traded by brokers.
|
|
|
|
A delay in investing funds may adversely affect or cause a delay
in our ability to deliver expected returns to investors and may
adversely affect our performance.
|
|
|
|
|
|
Our distributions may exceed our earnings and our adjusted cash
flow from operating activities and may be paid from borrowings,
offering proceeds and other sources, without limitation,
particularly during the period before we have substantially
invested the net proceeds from this offering, which would reduce
amounts available for the acquisition of properties.
|
|
|
|
|
|
As a new investor, you will experience substantial dilution in
the net tangible book value of your shares equal to the offering
costs associated with your shares.
|
|
|
|
Our board of directors may change our investment policies
without stockholder approval, which could alter the nature of
your investment.
|
|
|
|
If we only sell the minimum offering amount, we will invest in
very few assets and our stockholders may recognize greater risk
and a lower return.
|
|
|
|
Since this is a best-efforts offering, there is
neither any requirement, nor any assurance, that more than the
minimum offering amount will be raised.
|
Risks
Related to Our Relationship with Our Advisor
|
|
|
|
|
Our success will be dependent on the performance of our advisor
and the subadvisor.
|
|
|
|
The termination or resignation of the subadvisor could
materially adversely affect the ability of our advisor to
continue to perform services for us.
|
|
|
|
|
|
The termination or resignation of our advisor and its
replacement with an entity that is not an affiliate of the
advisor, or the non-renewal of our advisory agreement with the
advisor, all after two years from the start of operations of our
operating partnership, would give our operating partnership the
right, but not the obligation, to repurchase all or a portion of
Carey Watermark Holdings interests in our operating
partnership at the fair market value of those interests on
|
8
|
|
|
|
|
the date of termination, which could be prohibitively expensive.
If we do not exercise such election, we may be unable to retain
another advisor.
|
|
|
|
|
|
Payment of fees to our advisor, and distributions to our special
general partner, will reduce cash available for investment and
distribution.
|
|
|
|
Our advisor and the subadvisor may be subject to conflicts of
interest.
|
|
|
|
There are conflicts of interest with certain of our directors
and officers who have duties to W. P. Carey
and/or to
Watermark Capital Partners and entities sponsored or managed by
either of them with which we contract or with which we may
compete for properties.
|
|
|
|
We have limited independence from our advisor, and there are
potential conflicts between our advisor and our stockholders.
|
|
|
|
We may face competition from entities managed by our advisor and
its affiliates in the purchase, sale and ownership of properties.
|
Risks
Related to Our Operations
|
|
|
|
|
We are subject, in part, to the risks of real estate ownership
which could reduce the value of our properties.
|
|
|
|
We may have difficulty selling our properties, and this lack of
liquidity may limit our ability to quickly change our portfolio
in response to changes in economic or other conditions.
|
|
|
|
Potential liability for environmental matters could adversely
affect our financial condition.
|
Risks
Related to Investments in the Lodging Industry
|
|
|
|
|
Failure of the U.S. economy to improve due to continuing
adverse economic conditions, such as declines in U.S. GDP,
may adversely affect our ability to execute our investment
strategy, generate revenues, attain profitability and make
distributions to our stockholders.
|
|
|
|
|
|
Although we expect lodging fundamentals to improve as forecast
by industry analysts, such as PKF Hospitality Research and Smith
Travel Research, there can be no assurance as to whether, or
when, lodging industry fundamentals will in fact improve, or to
what extent they will improve.
|
|
|
|
|
|
Seasonality of certain lodging properties may cause quarterly
fluctuations in results of operations of our properties.
|
|
|
|
We are subject to the risk of potentially significant tax
penalties in case our leases with the TRS lessees do not qualify
for tax purposes as arms length.
|
|
|
|
Our results of operations, financial position, cash flows and
ability to service debt and to make distributions to
stockholders will depend on the ability of the independent
property operators to operate and manage the hotels.
|
|
|
|
There may be operational limitations associated with management
and franchise agreements affecting our properties and these
limitations may prevent us from using these properties to their
best advantage for our stockholders.
|
|
|
|
We will face competition in the lodging industry, which may
limit our profitability and return to our stockholders.
|
Risks
Related to an Investment in Our Shares
|
|
|
|
|
The lack of an active public trading market for our shares
combined with the limit on the number of our shares a person may
own may discourage a takeover and make it difficult for
stockholders to sell shares quickly.
|
9
|
|
|
|
|
Failing to qualify as a REIT would adversely affect our
operations and ability to make distributions.
|
|
|
|
Dividends payable by REITs generally do not qualify for reduced
U.S. federal income tax rates because qualifying REITs do
not pay U.S. federal income tax on their net income.
|
|
|
|
Possible legislative or other actions affecting REITs could
adversely affect our stockholders and us.
|
|
|
|
The power of our board of directors to revoke our REIT election
without stockholder approval may cause adverse consequences to
our stockholders.
|
|
|
|
Conflicts of interest may arise between holders of our common
shares and holders of partnership interests in our operating
partnership.
|
Our
Advisor and the Subadvisor
We will be externally managed and advised by Carey Lodging
Advisors, LLC, which is responsible to us under the advisory
agreement for managing our overall portfolio and for identifying
and making acquisitions on our behalf. The advisor is also
responsible to us for providing oversight and strategic guidance
to the independent property operators that manage
day-to-day
operations of our properties. Our special general partner will
also provide management assistance to our operating partnership.
The advisor will delegate certain of its obligations to the
subadvisor and will oversee the performance of the subadvisor.
Nonetheless, the advisor remains primarily liable to us to
perform all of its duties under the advisory agreement,
including those delegated to the subadvisor.
The subadvisor will provide services to the advisor primarily
relating to acquiring, managing, financing and disposing of our
assets and overseeing the independent property operators that
manage the
day-to-day
operations of our properties. In addition, the subadvisor will
agree to provide Mr. Medzigians services as our chief
executive officer during the term of the subadvisory agreement,
subject to the approval of our independent directors.
Several of the officers and directors of the advisor or the
subadvisor are also our officers and directors, including
Mr. Medzigian, Trevor P. Bond, Thomas E. Zacharias, Mark J.
DeCesaris and Thomas J. Ridings, Jr. In addition, W. P.
Carey and Watermark Capital Partners own indirect interests in
our special general partner which will entitle them to
distributions and allocations of income and loss. Our advisor
has responsibility to us for all aspects of our operations,
including:
|
|
|
|
|
selecting the investments that we will acquire, formulating and
evaluating the terms of each proposed acquisition, and arranging
for the acquisition of the investment, subject to the approval
of the chief investment officer
and/or the
investment committee;
|
|
|
|
negotiating the terms of any borrowing, including lines of
credit and any long-term financing;
|
|
|
|
managing our operations, including accounting, asset management
and investor relations;
|
|
|
|
arranging for and negotiating the sale of assets; and
|
|
|
|
providing asset management services, including oversight and
strategic guidance to the independent property operators.
|
See the Management section of this prospectus
for a description of the business background of the individuals
who are responsible for the management of our operations and our
advisor, as well as for a description of the services our
advisor provides. In payment for these services, our advisor
receives substantial fees, a portion of which will be paid by
our advisor to the subadvisor.
Our
Structure
The following chart shows our ownership structure and our
relationship with our advisor, Carey Watermark Holdings, W. P.
Carey and Watermark Capital Partners upon commencement of our
10
offering. We do not currently own any assets. We intend to
acquire and hold our assets through our operating partnership.
Our structure is often referred to as an UPREIT
structure. We believe this structure will enable us to offer
sellers of real properties the opportunity to achieve tax
deferral on the sale of the properties, which may give us a
competitive edge in acquiring real properties when compared with
buyers who are not able to offer consideration that will result
in tax deferral for the seller. Generally, a sale of property
directly to a REIT is a taxable sale to the selling property
owner. In an UPREIT structure, a seller of a property who
desires to defer taxable gain on the sale of his property may,
in some cases, transfer the property to the UPREIT in exchange
for limited partnership units in the partnership and defer
taxation of gain until the seller later exchanges his limited
partnership units on a
one-to-one
basis for REIT shares or for cash pursuant to the terms of the
limited partnership agreement. However, we may not have a
competitive edge when compared with publicly-traded UPREITs
because they can offer sellers of real property the opportunity
to achieve tax deferral and the ability to convert operating
partnership units into publicly-traded common stock. See
The Operating Partnership.
|
|
|
(1)
|
|
We will initially own a 99.97%
capital interest in the operating partnership consisting of
general and limited partnership interests. We are the managing
general partner of the operating partnership and, therefore, our
board of directors controls substantially all decisions of our
operating partnership. Our board has delegated authority for our
management and the management of our operating partnership to
our advisor subject to the terms of the advisory agreement.
|
|
(2)
|
|
W. P. Carey owns our advisor
through its subsidiary Carey Asset Management Corp. W. P. Carey
owns an interest in Carey Watermark Holdings through its
subsidiaries CLA Holdings, LLC and Carey REIT II, Inc. In order
to qualify as a REIT, Carey REIT II, Inc., has issued
120 shares of six percent cumulative redeemable non-voting
preferred stock to 120 individuals, including to certain of our
officers. Watermark Capital Partners owns an interest in Carey
Watermark Holdings through its subsidiary CWA, LLC.
|
|
(3)
|
|
The special general partner
interest will entitle Carey Watermark Holdings to receive a
special allocation of our operating partnerships profits
as well as certain operating partnership distributions. See
Management Compensation.
|
Our
REIT Qualification
We expect to elect and qualify to be taxed as a REIT beginning
with our taxable year ending December 31, 2010. Under the
Internal Revenue Code of 1986, as amended, referred to herein as
the Internal Revenue Code or the Code,
REITs are subject to numerous organizational and operational
requirements including limitations on certain types of gross
income. As a REIT, we generally will not
11
be subject to U.S. federal income tax on our net taxable
income that we distribute to our stockholders as long as we meet
the REIT requirements, including that we distribute at least 90%
of our net taxable income (excluding net capital gains) on an
annual basis. If we fail to qualify for taxation as a REIT
initially or in any year, our income will be taxed at regular
corporate rates, and we may not be able to qualify for treatment
as a REIT for the following four years. Even if we qualify as a
REIT for U.S. federal income tax purposes, we may be
subject to U.S. federal, state, local and foreign taxes on
our income and property and to income and excise taxes on our
undistributed income. See Risk Factors
Risks Related to an Investment in Our Shares for a
description of risks associated with our election to be subject
to taxation as a REIT.
Conflicts
of Interest
Entities with which we may potentially have conflicts of
interest are our advisor; the subadvisor; W. P. Carey, which is
the indirect owner of our advisor, owns an indirect interest in
the special general partner and is the parent company of Carey
Financial; Carey Financial, which is the dealer manager for this
offering; Watermark Capital Partners, which is the indirect
owner of the subadvisor and owns an indirect interest in the
special general partner; other entities or programs sponsored or
managed by our advisor, the subadvisor or their respective
affiliates now or in the future; and those of our officers and
directors who have ownership interests in W. P. Carey and
Watermark Capital Partners.
Our advisor, the subadvisor and their respective affiliates may
experience conflicts in the management of our operations with
respect to matters related to:
|
|
|
|
|
the advisors and the subadvisors compensation;
|
|
|
|
allocation of new investments and management time and services
between us and various other affiliates;
|
|
|
|
the timing and terms of the investment in or sale of an asset;
|
|
|
|
investments with our affiliates, our advisor, the subadvisor and
their respective affiliates;
|
|
|
|
purchases of assets from, sales of assets to, or business
combination transactions involving, other programs or entities
sponsored or managed by our advisor, the subadvisor and their
respective affiliates;
|
|
|
|
pre-existing lodging interests owned
and/or
managed by W. P. Carey, Watermark Capital Partners and their
respective affiliates which are not being contributed to us;
|
|
|
|
the termination of our advisory agreement;
|
|
|
|
the termination of the subadvisory agreement; and
|
|
|
|
our relationship with the dealer manager, Carey Financial, which
is an affiliate of W. P. Carey.
|
Furthermore, our duties as general partner to our operating
partnership and its limited partners may come into conflict with
the duties of our directors and officers to us and to our
stockholders.
Each of our advisor and the subadvisor has agreed that none of
it and its affiliates will invest in lodging investments except
for individual investments of less than $4 million,
non-controlling interests in lodging investments and lodging
investments that have been considered and rejected by our
investment committee. These commitments of our advisor and the
subadvisor will terminate upon the earliest to occur of
(1) the termination of the subadvisory agreement,
(2) the third anniversary of the commencement of this
offering if we have not raised aggregate net proceeds of
$500 million and (3) the date on which we have
invested at least 90% of the net proceeds of this offering. No
fund, including the
CPA®
REITs, managed by our advisor and its affiliates will be subject
to these commitments of our advisor unless our advisor and its
affiliates own a majority of the outstanding voting equity
interests of such fund.
12
The Conflicts of Interest section discusses
in more detail the more significant of these potential conflicts
of interest, as well as the procedures that have been
established to resolve a number of these potential conflicts.
Prior
Programs
The Prior Programs section of this prospectus
contains a narrative discussion of the public and private real
estate programs sponsored by affiliates of W. P. Carey in the
past, including nine public limited partnerships and seven
unlisted public REITs. During the ten-year period from
January 1, 2000 through December 31, 2009, these
entities, which invest in commercial properties that are leased
on a net basis, purchased 654 properties, including 240
properties outside the United States. Statistical data relating
to the historical experience of prior
CPA®
Programs are contained in Annex A
Prior Performance Tables. Information in the
Prior Programs section and in
Annex A Prior Performance
Tables should not be considered as indicative of how
we will perform. In particular, none of the prior programs
included in these sections held significant investments in
lodging properties. Watermark Capital Partners has never
sponsored a prior public program or a prior private program with
investment objectives similar to our objectives.
The
Offering
|
|
|
Maximum Offering Amount |
|
$1,000,000,000 of common shares |
|
Maximum Amount Issuable Pursuant to Our Distribution
Reinvestment Plan
|
|
$237,500,000 of common shares |
|
|
|
Minimum Offering Amount |
|
$10,000,000 of common shares |
|
|
|
Minimum Investment |
|
200 shares. (The minimum investment amount may vary from
state to state. Please see the Suitability
Standards section for more details.) |
|
Suitability Standards for Initial Purchasers in this Offering
and Subsequent Transferees
|
|
Net worth of at least $70,000 and annual gross income of at
least $70,000 (For this purpose, net worth excludes home, home
furnishings and personal automobiles); |
|
|
|
OR |
|
|
|
Net worth of at least $250,000. |
|
|
|
Suitability standards may vary from state to state and by
broker-dealer to broker-dealer. Please see the
Suitability Standards section for more
details. |
|
Distribution Policy |
|
Consistent with our objective of qualifying as a REIT, we expect
to distribute at least 90% of our net taxable income each year.
We intend to accrue and pay distributions on a quarterly basis
and we will calculate our distributions based upon daily record
and distribution declaration dates so investors will be able to
earn distributions immediately upon purchasing common stock. |
|
Our Advisor |
|
Carey Lodging Advisors, LLC manages our overall portfolio,
selects our investments and provides asset management services,
including oversight and strategic guidance to the independent
property operators we select to manage our lodging properties. |
13
|
|
|
The Subadvisor |
|
CWA, LLC, a subsidiary of Watermark Capital Partners, LLC,
provides services to the advisor primarily relating to
acquiring, managing, financing and disposing of our assets and
overseeing the independent property operators that manage
day-to-day
operations of our properties. In addition, the subadvisor will
agree to provide Mr. Medzigians services as our chief
executive officer during the term of the subadvisory agreement. |
|
Estimated Use of Proceeds |
|
Approximately 86% (maximum offering) or approximately 85%
(minimum offering) to acquire investments.
Approximately 14% (maximum offering) or approximately 15%
(minimum offering) to pay fees and expenses of
the offering, including the payment of fees to Carey Financial
and the payment of fees and reimbursement of expenses to the
advisor, a portion of which will be paid by the advisor to the
subadvisor. These estimates assume we incur no leverage. |
If you choose to purchase stock in this offering, you will fill
out an order form, like the one attached to this prospectus as
Annex B, for a specific number of shares and pay for the
shares at the time of your order. Until subscription proceeds
reach $10,000,000, funds received will be placed into escrow
with Wells Fargo Bank, National Association, our Escrow Agent,
along with those of other investors, in an interest-bearing
escrow account until the time you are admitted by us as a
stockholder. Until the minimum subscription amount has been
received, your check should be made payable to Wells Fargo
Bank, National Association, as Escrow Agent for Carey Watermark
Investors Incorporated. Promptly upon reaching the minimum
offering, subscription proceeds will be released to us from the
escrow account and investors with subscription funds held in the
escrow account will be admitted as stockholders. As soon as
practicable after the date a stockholder is admitted to CWI, we
will pay to such stockholder whose funds had been held in escrow
for at least 20 days, its share of interest earned.
Interest earned, but not payable to a stockholder, will be paid
to us. After subscription proceeds exceed $10,000,000, funds
received will be placed in an interest-bearing account at Bank
of the West. After the initial admission of stockholders in
connection with the sale of the minimum offering amount,
interest will be payable only to those stockholders whose funds
have been held in the interest-bearing account maintained by
Bank of the West for at least 20 days. Interest earned, but
not payable to a stockholder, will be paid to us. It is our
intention to admit stockholders generally every 20 days or
sooner after we reach the minimum offering amount. We may not
transfer your funds to us until at least five business days have
passed since you received a final prospectus. The sale of shares
pursuant to the order form will not be complete until we issue a
written confirmation of purchase to you. At any time prior to
the date the sale is completed, referred to as the settlement
date, you may withdraw your order by notifying your
broker-dealer.
No shares of common stock will be sold in the offering unless
subscriptions for at least 1,000,000 shares have been
received within six months after the date of this prospectus, or
if we elect to extend it, to a period no later than one year
after the date of this prospectus or, the Extended Period. If
the minimum offering amount has not been received and accepted
by , 2010, or by the Extended
Period, the escrow agent will promptly notify us and this
offering will be terminated and investors funds will be
returned promptly.
The offering of the maximum amount of shares is on a best
efforts basis. When shares are offered to the public on a
best efforts basis, we are not guaranteeing that any
minimum number of shares will be sold. Any purchases of shares
by W. P. Carey, Watermark Capital Partners, or their respective
affiliates, any officers or directors of these entities, or any
of our affiliates for the explicit purpose of meeting the
minimum offering amount must be made for investment purposes
only, and not with a view toward redistribution. However, none
of our affiliates expects to purchase any shares for the purpose
of meeting the minimum offering amount. If Carey Financial
purchases any shares in
14
this offering, we will not count any of the shares purchased by
it to reach the minimum offering amount.
We may sell our shares in the offering
until ,
2012, which is two years after the date of this prospectus.
However, our board of directors may extend the offering an
additional year. If we extend the offering for another year and
file another registration statement during the one-year
extension in order to sell additional shares, we could continue
to sell shares in this offering until the earlier of
180 days after the third anniversary of the effective date
of this offering or the effective date of the subsequent
registration statement. If we decide to extend the primary
offering
beyond ,
2012, we will provide that information in a prospectus
supplement. If we file a subsequent registration statement, we
could continue offering shares with the same or different terms
and conditions. Nothing in our organizational documents
prohibits us from engaging in additional subsequent public
offerings of our stock. Our board of directors may terminate
this offering at any time prior to the termination date. This
offering must be registered in every state, the District of
Columbia and Puerto Rico in which we offer or sell shares.
Generally, such registrations are for a period of one year.
Thus, we may have to stop selling shares in any state, the
District of Columbia and Puerto Rico in which the registration
is not renewed annually.
Compensation
We will pay our advisor fees for its services and will reimburse
our advisor for some expenses. Our advisor is responsible for
compensating the subadvisor and reimbursing the
subadvisors expenses, subject to the advisor being
reimbursed by us. In addition, our special general partner will
be entitled to receive distributions from our operating
partnership based upon our available cash and the performance of
our portfolio. Pursuant to our 2010 Equity Incentive Plan, our
officers and officers and employees of our advisor, the
subadvisor and their respective affiliates who perform services
on our behalf,
non-director
members of the investment committee and our independent
directors are eligible to receive equity incentive awards.
Outlined below are the material items of compensation. Investors
should note that when we refer to certain fees and distributions
payable to the advisor or the special general partner as being
subordinated to the six percent preferred return
rate, we mean that such fees and distributions will accrue
but will not be paid to the advisor or the special general
partner if we have not paid distributions at an average,
annualized, non-compounded rate of at least six percent on a
cumulative basis from our initial issuance of shares pursuant to
this offering through the date of calculation. Once we have
achieved the six percent preferred return rate, we may commence
paying accrued, subordinated fees and distributions for so long
as the six percent preferred return rate is maintained. We will
calculate the six percent preferred return rate based on the
proceeds from the sale of our shares, as adjusted for
redemptions and distributions of the proceeds from sales and
refinancing of assets.
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
Organization and Offering Stage
|
CLA
|
|
Reimbursement for organization and offering expenses, excluding
selling commissions and the dealer manager fee; provided
that the advisor shall bear all organization and offering
expenses, excluding selling commissions and the dealer manager
fee, that exceed in the aggregate two percent of the gross
proceeds from this offering and our distribution reinvestment
plan.
|
|
These expenses are estimated to be $7,754,000 if the maximum of
100,000,000 shares are sold in the offering.
|
|
|
|
|
|
15
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
Carey Financial
|
|
Selling commissions will be paid to Carey Financial of up to a
maximum of $0.70 per share sold. Carey Financial will, in turn,
re-allow all selling commissions to selected dealers.
|
|
The maximum amount payable to Carey Financial is $70,000,000 if
100,000,000 shares are sold in the offering, all of which
will be re-allowed to the selected dealers. The estimated
amounts payable to Carey Financial take into consideration
volume discounts and sales made net of commissions in connection
with the offering only.
|
Carey Financial
|
|
A dealer manager fee will be paid to Carey Financial of up to a
maximum of $0.30 per share sold. Carey Financial may, in turn,
re-allow a portion of the dealer manager fee to selected dealers
for shares sold by the selected dealers.
|
|
The amount payable to Carey Financial is $30,000,000 if
100,000,000 shares are sold in the offering, a portion of
which may be re-allowed to the selected dealers. The estimated
amounts payable to Carey Financial take into consideration
volume discounts and sales made net of commissions in connection
with the offering only.
|
Acquisition Stage
|
|
|
The total of all acquisition fees payable by sellers,
borrowers or us to our advisor and unaffiliated third parties on
all investments, and the total amount of acquisition expenses we
pay, must be reasonable and together may not exceed six percent
of the aggregate contract purchase price of all investments we
purchase and the principal amount of loans we originate.
|
|
|
CLA
|
|
We will pay the advisor an acquisition fee in an amount equal to
2.50% of the total investment cost of the properties acquired
and loans originated by us. We will also reimburse the advisor
for acquisition expenses.
Total
investment cost means, with respect to a property acquired or a
loan originated, an amount equal to the sum of the contract
purchase price of such investment plus the acquisition fees and
acquisition
|
|
If the investments we make or acquire from the proceeds of this
offering, are, on average, 50% leveraged, the acquisition fees
payable to CLA are estimated to be approximately $44,612,300 if
100,000,000 shares are sold in the offering. If the
maximum offering of 100,000,000 shares are sold and the
investment portfolio is 75% leveraged (the maximum allowable),
acquisition fees payable to CLA as a result of the offering
|
|
|
|
|
|
16
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
expenses paid in connection with the investment and other fees
and costs approved by our independent directors relating to the
initial capitalization of the investment.
|
|
(assuming an aggregate total cost of all investments of
approximately $3,456,561,004) are estimated to be approximately
$89,224,600.
|
Operational Stage
|
|
|
All fees, expenses and distributions on the special general
partner interest payable during the operational stage are
subject to the 2%/25% Guideline. The 2%/25% Guideline is the
requirement that, in the twelve- month period ending on the last
day of any fiscal quarter, operating expenses not exceed the
greater of 2% of the average invested assets during such
twelve-month period or 25% of our adjusted net income over the
same twelve- month period. Average invested assets means the
average aggregate book value of our investments, before
deducting non- cash items, computed by taking the average of
such values at the end of each month during such period.
Adjusted net income means our total consolidated revenues less
its total consolidated expenses, excluding non-cash items and
gains, losses or writedowns from the sale of our assets.
|
|
|
CLA
|
|
Our advisor will be paid an annual asset management fee equal to
0.50% of the aggregate average market value of our investments.
Average market value is equal to the total investment costs of
the investment, less acquisition fees, unless a later appraisal
by an independent appraiser is obtained, in which case that
later appraised value will
|
|
If the maximum number of 100,000,000 shares is sold in the
offering and the investments we make or acquire from the
proceeds of this offering are 50% leveraged, the average market
value as a result of the offering would be approximately
$1,728,280,502. The annual asset management fee on these assets
would be approximately $8,641,403.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
become the average market value.
|
|
If the maximum number of 100,000,000 shares is sold in the
offering and the investments we make or acquire from the
proceeds of this offering are 75% leveraged, the average market
value as a result of the offering would be approximately
$3,456,561,004. The annual asset management fee on these assets
would be approximately $17,282,805.
|
CLA
|
|
We will reimburse CLA for various expenses incurred in
connection with its provision of services to us. In addition to
reimbursement of third party expenses that will be paid by our
advisor (including property-specific costs, professional fees,
office expenses, travel expenses and business development
expenses), we will reimburse our advisor for the allocated costs
(including compensation) of personnel and overhead in providing
management of our day- to- day operations, including asset
management, accounting services, stockholder services, corporate
management and operations, except that we will not reimburse our
advisor for the cost of personnel to the extent such personnel
are used in transactions (acquisitions, dispositions and
refinancings) for which our advisor receives a transaction fee.
CLA must absorb, or reimburse us for, the amount in any
twelve-month period ending on the last day of any fiscal quarter
by which our operating expenses, including asset management
fees, distributions paid on the special general partner interest
during the operational stage, loan financing fees and
disposition fees paid on assets, other than interests in real
property, exceed the 2%/25% Guideline. Such reimbursement must
be made within 60 days after the end of the applicable
twelve-month period. To the extent
|
|
Not determinable at this time.
|
|
|
|
|
|
18
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
that operating expenses payable or reimbursable by us exceed
this limit and a majority of independent directors determine
that the excess expenses were justified based on any unusual and
nonrecurring factors which they deem sufficient, CLA may be
reimbursed in future quarters for the full amount of the excess,
or any portion thereof, but only to the extent the reimbursement
would not cause our operating expenses to exceed the 2%/25%
Guideline in the twelve-month period ending on the last day of
such quarter.
|
|
|
CLA
|
|
Loan Financing Fee.
|
|
Not determinable at this time.
|
|
|
We will pay the advisor up to 1% of the principal amount of a
refinanced loan secured by property if (1) the maturity date of
the refinanced loan is less than one year away and the new loan
has a term of at least five years, (2) in the judgment of the
independent directors, the terms of the new loan represent an
improvement over the refinanced loan or (3) the new loan is
approved by the independent directors as being in our best
interest.
|
|
|
Carey Watermark Holdings
|
|
Carey Watermark Holdings has a special general partner profits
interest in our operating partnership, which will entitle Carey
Watermark Holdings to receive 10% of distributions of available
cash. Available cash means the cash generated by operating
partnership operations and investments excluding cash from sales
and refinancings, after the payment of debt and other operating
expenses, but before distributions to partners. Distributions of
available cash will be paid quarterly; however, if the amount of
a quarterly distribution would cause the 2%/25% Guideline to be
exceeded for the relevant
|
|
Not determinable at this time.
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
twelve-month period, the portion of the distribution (which may
be 100% of it) equal to the excess over the 2%/25% Guideline
will be deferred until the next quarter in which the deferred
portion of the distribution can be paid without exceeding the
2%/25% Guideline.
|
|
|
Officers of CWI and Officers and Employees of our Advisor, the
Subadvisor and
Non-Director
Members of the Investment Committee
|
|
We have established the 2010 Equity Incentive Plan pursuant to
which our officers and officers and employees of CLA, the
subadvisor and their respective affiliates who perform services
on our behalf and non-director members of the investment
committee may be granted incentive awards in the form of
restricted stock units.
|
|
Equity awards under our two equity incentive plans may not
exceed, on a combined basis, four percent of our outstanding
shares of common stock on a fully diluted basis, up to a maximum
amount of 4,000,000 shares.
|
Independent Directors
|
|
We will pay each independent director (i) an annual fee of
$34,000 and (ii) an annual fee of $10,000 to serve on the
investment committee. In addition, the Chairman of the Audit
Committee will receive an annual fee of $5,000.
|
|
The estimated aggregate compensation payable to the independent
directors as a group for a full fiscal year is approximately
$137,000.
|
|
|
Each independent director is also entitled to receive an award
of 1,000 restricted stock units under our 2010 Equity Incentive
Plan when he or she joins the board and at each annual
stockholders meeting thereafter. The restricted stock
units will be fully vested on grant.
|
|
Equity awards under our two equity incentive plans may not
exceed, on a combined basis, four percent of our outstanding
shares of common stock on a fully diluted basis, up to a maximum
amount of 4,000,000 shares.
|
Non-Director
Members of the Investment Committee
|
|
We will pay any non-director member of the investment committee
who is not one of our officers an annual fee of $10,000 and an
annual award of 500 fully vested restricted stock units to serve
on the investment committee.
|
|
The estimated aggregate compensation currently payable for a
full fiscal year is approximately $10,000.
|
Dispositions/ Liquidation Stage
|
|
|
All disposition fees payable upon sales of assets, other than
interests in real property, are subject to the 2%/25%
Guideline.
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
CLA
|
|
If CLA provides a substantial amount of services in the sale of
an investment, we will pay disposition fees in an amount equal
to the lesser of: (i) 50% of the competitive real estate
commission and (ii) 1.5% of the contract sales price of a
property. The total real estate commissions and the disposition
fees we pay shall not exceed an amount equal to the lesser of:
(i) six percent of the contract sales price of a property or
(ii) the commission paid in a competitive market for the
purchase or sale of a property that is reasonable and
competitive in light of the size, type, location or other
relevant characteristics of the property.
|
|
Not determinable at this time.
|
|
|
If the advisory agreement is terminated, other than for cause,
or not renewed, we will pay our advisor accrued and unpaid fees
and expense reimbursements earned prior to termination or
non-renewal of the advisory agreement. If our advisory agreement
is terminated for cause, or by the advisor for other than good
reason, we will pay our advisor unpaid expense reimbursements.
|
|
Not determinable at this time.
|
Carey Watermark Holdings
|
|
Interest in Disposition Proceeds. Carey Watermark
Holdings special general partner interest will also
entitle it to receive distributions of up to 15% of the net
proceeds from the sale, exchange or other disposition of
operating partnership assets remaining after the corporation has
received a return of 100% of its initial investment in the
operating partnership (which will be equivalent to the initial
investment by our stockholders in our shares) (through certain
liquidity transactions or distributions) plus the six percent
preferred return rate. W. P. Carey and Watermark Capital
Partners may award their employees or employees of
|
|
The incentive profits interest is dependent on our operations
and the amounts received upon the sale or other disposition of
the assets and is not determinable at this time.
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
their affiliates (some of whom may also serve as our directors
or officers) interests in such distributions. A listing will not
trigger the payment of this distribution.
|
|
|
|
|
If we terminate or do not renew the advisory agreement
(including as a result of a merger, sale of substantially all of
our assets or a liquidation), or if our advisor resigns for good
reason, all after two years from the start of operations of our
operating partnership, our operating partnership will have the
right, but not the obligation, to repurchase all or a portion of
Carey Watermark Holdings interests in our operating
partnership at the fair market value of those interests on the
date of termination, as determined by an independent appraiser.
|
|
Not determinable at this time.
|
|
|
Subordinated Listing Distribution. At such time, if any,
as listing occurs, the special general partner will receive a
distribution in an amount equal to 15% of the amount by which
(i) our market value plus the total distributions made to our
stockholders since inception until the date of listing exceeds,
(ii) 100% of our investment in the operating partnership (which
will be equivalent to the initial investment by our stockholders
in our shares) plus the total distributions required to be made
to achieve the six percent preferred return rate.
|
|
Not determinable at this time.
|
|
|
The market value will be calculated on the basis of the
average closing price or bid and asked price, as the case may
be, of the shares over the 30 trading days beginning
180 days after the shares are first listed on a stock
exchange or listed or included for quotation.
|
|
|
22
There are many conditions and restrictions on the payment of
fees and distributions to our advisor and the special general
partner. For a more complete explanation of the fees and
expenses and an estimate of the dollar amount of these payments,
as well as commission and other fees that are re-allowed to
selected dealers, please see the Management
Compensation section of this prospectus.
Our advisor will be responsible for paying fees and reimbursing
expenses due to the subadvisor under the subadvisory agreement
between the advisor and the subadvisor. We will not pay fees
directly to the subadvisor; however, as an owner of the special
general partner, the subadvisor will be entitled to its
proportionate share of distributions we make to the special
general partner.
CLA may choose on an annual basis to take its fees in cash or
restricted shares, or a combination thereof. The number of
shares of restricted stock is determined by dividing the dollar
amount of fees by our share offering price of $10.00 until we
begin publishing annual estimated net asset values. Thereafter,
the dollar amount of fees will be divided by the most recently
published estimated net asset value per share. Carey Watermark
Holdings may also choose on an annual basis to reinvest the
distributions from its special general partnership interest in
our operating partnership in exchange for partnership units.
Our
Status Under the Investment Company Act
We intend to conduct our operations so that neither we nor any
of our subsidiaries is required to register as an investment
company under the Investment Company Act of 1940, as amended, or
the Investment Company Act. Section 3(a)(1)(A) of the
Investment Company Act defines an investment company as any
issuer that is or holds itself out as being engaged primarily in
the business of investing, reinvesting or trading in securities.
Section 3(a)(1)(C) of the Investment Company Act defines an
investment company as any issuer that is engaged or proposes to
engage in the business of investing, reinvesting, owning,
holding or trading in securities and owns or proposes to acquire
investment securities having a value exceeding 40% of the value
of the issuers total assets (exclusive of
U.S. Government securities and cash items) on an
unconsolidated basis, or the 40% test. We will monitor our
holdings to ensure continuing and ongoing compliance with this
test. In addition, we believe we will not be considered an
investment company under Section 3(a)(1)(A) of the
Investment Company Act because we will not engage primarily or
hold ourselves out as being engaged primarily in the business of
investing, reinvesting or trading in securities. Rather, through
our operating partnership, we will be primarily engaged in
non-investment company businesses related to the ownership of
real estate.
We intend to hold our assets and operate our business through
our operating partnership. We expect that our operating
partnership will rely upon the exemption from registration as an
investment company under the Investment Company Act pursuant to
Section 3(c)(5)(C) of the Investment Company Act, which is
available for entities primarily engaged in the business
of purchasing or otherwise acquiring mortgages and other liens
on and interests in real estate. This exemption generally
requires that at least 55% of these subsidiaries assets
must be comprised of qualifying real estate assets and at least
80% of each of their portfolios must be comprised of qualifying
real estate assets and real estate-related assets under the
Investment Company Act. We expect to rely on guidance published
by the SEC staff or on our analyses of guidance published with
respect to other types of assets to determine which assets are
qualifying real estate assets and real estate-related assets. To
the extent that the SEC staff publishes new or different
guidance with respect to these matters, we may be required to
adjust our strategy accordingly. In addition, we may be limited
in our ability to make certain investments and these limitations
could result in the operating partnership holding assets we
might wish to sell or selling assets we might wish to hold.
If we fail to comply with the 40% test or if the operating
partnership fails to maintain an exception or exemption from the
Investment Company Act under Section 3(c)(5)(C) of that
act, we could, among other things, be required either
(a) to substantially change the manner in which we conduct
our operations to avoid being required to register as an
investment company or (b) to register
23
as an investment company under the Investment Company Act,
either of which could have an adverse effect on us and our net
asset value. If we were required to register as an investment
company under the Investment Company Act, we would become
subject to substantial regulation with respect to our capital
structure (including our ability to use leverage), management,
operations, transactions with affiliated persons (as defined in
the Investment Company Act), portfolio composition, including
restrictions with respect to diversification and industry
concentration, and other matters.
ERISA
Considerations
The section of this prospectus entitled ERISA
Considerations describes the effect the purchase of
shares will have on retirement plans and individual retirement
accounts, referred to as IRAs, subject to the Employee
Retirement Income Security Act of 1974, as amended, referred to
as ERISA,
and/or the
Internal Revenue Code.
ERISA is a federal law that regulates the operation of certain
pension and other employee benefit plans. Any retirement plan
trustee or individual considering purchasing shares for a
retirement plan or IRA or any other employee benefit plan
subject to ERISA should read this section very carefully.
Description
of Shares
General
We will not issue stock certificates. A stockholders
investment will be recorded on our books as held by Phoenix
American Financial Services Inc., or Phoenix American, our
transfer agent. If you wish to sell your shares, you will be
required to comply with the transfer restrictions and send an
executed transfer form to Phoenix American. Transfer fees will
apply in certain circumstances.
Stockholder
Voting Rights and Limitations
Stockholders will meet each year for the election of directors,
who are elected by the holders of a majority of shares entitled
to vote who are present, in person or by proxy, at such meeting
at which a quorum is present. Other business matters may be
presented at the annual meeting or at special stockholder
meetings. You are entitled to one vote for each share you own.
All stockholders are bound by the decision of the majority of
stockholders who vote on each question voted upon or, in certain
instances, by the decision of a majority of all stockholders
entitled to vote.
Limitation
on Share Ownership
Our charter restricts ownership by one person and their
affiliates to no more than 9.8% of the value of our issued and
outstanding shares of stock and no more than 9.8% in value or
number, whichever is greater, of our issued and outstanding
shares of common stock. See Description of
Shares Restriction on Ownership of Shares.
These restrictions are designed, among other purposes, to assist
us in complying with restrictions imposed on REITs by the
Internal Revenue Code.
Sale of
Shares
Our shares are not listed for trading on any national securities
exchange or
over-the-counter
market. In fact, we expect that there will not be any public
market for the shares when you purchase them, and we cannot be
sure if a public market will ever develop prior to a liquidity
transaction. As a result, you may find that it is difficult to
sell your shares unless you sell them at a substantial discount.
Beginning one year after shares are issued to you, you may
request that we redeem those shares in accordance with our
redemption plan. The redemption procedures are described in the
Description of Shares Redemption of
Shares section of this prospectus.
24
For a more complete description of the shares, including
limitations on the ownership of shares, please refer to the
Description of Shares section of this
prospectus.
Reports
to Stockholders
You will receive periodic updates on the performance of your
investment in us, including:
|
|
|
|
|
Four quarterly distribution reports (including for investors in
New York and Maryland detailed disclosure if our cash flow from
operating activities for the most recently completed fiscal
quarter for which we have filed financial results with the
Securities and Exchange Commission, or the SEC, was less than
the distribution being paid);
|
|
|
|
|
|
an annual report;
|
|
|
|
an annual U.S. Internal Revenue Service, or IRS,
Form 1099, if applicable; and
|
|
|
|
supplements to the prospectus during the offering period, via
mailings or website access.
|
We will provide this information to you via one or more of the
following methods:
|
|
|
|
|
United States mail or other courier;
|
|
|
|
facsimile; or
|
|
|
|
electronic delivery.
|
Redemption Plan
We have adopted a discretionary redemption plan that, from and
after the second anniversary of the effective date of this
registration statement, allows our stockholders who hold shares
purchased directly from us for at least one year to request that
we redeem all or a portion of their shares in accordance with
the procedures outlined in this prospectus. If we have
sufficient funds available to do so and if we choose, in our
sole discretion, to redeem shares, the total number of shares
redeemed in any quarter and the price at which they are redeemed
are subject to conditions and limitations, including:
|
|
|
|
|
no more than 1% of the operating cash flow of the previous
fiscal year plus the proceeds from our distribution reinvestment
plan may be used to redeem shares;
|
|
|
|
together with the aggregate number of shares redeemed in the
preceding three fiscal quarters, no more than 5% of the total
number of shares of our common stock outstanding as of the last
day of the immediately preceding fiscal quarter may be
redeemed; and
|
|
|
|
redemption pricing as follows:
|
|
|
|
|
|
for redemptions effected beginning on the second anniversary of
the effective date of the registration statement of which this
prospectus is a part through the sixth anniversary of such date,
the lesser of (i) the price paid to acquire the shares from
us or (ii) 90% of the estimated NAV; and
|
|
|
|
for redemptions effected after the sixth anniversary of the
effective date of this registration statement, the greater of
(i) the price paid to acquire the shares from us or
(ii) 90% of the estimated NAV.
|
The estimated NAV will be the net asset value most recently
published by us; provided, however, that if we are
conducting a public offering at any time (and for up to
18 months after a public offering), the estimated NAV will
be the gross offering price per share. Subject to the
limitations described in this prospectus and provided that the
redemption request is made within 270 days of the event
giving rise to the following special circumstances, we may allow
a stockholder to request a redemption of his or her shares as
early as one year after the effective date of the registration
statement of which this prospectus is a part (a) upon the
request of the estate, heir or beneficiary of a deceased
stockholder or (b) upon the disability of a stockholder or
upon a stockholders confinement to
25
a long-term care facility, provided that the condition causing
such disability or need for long-term care was not preexisting
on the date that such person became a stockholder. The purchase
price per share for shares redeemed upon the death or qualifying
disability of the stockholder or upon such stockholders
confinement to a long-term care facility will be the greater of
(i) the price paid to acquire the shares from us or
(ii) 90% of the estimated NAV.
Our board of directors has the ability, in its sole discretion,
to amend or suspend the plan or to waive any specific condition
if it is deemed to be in our best interest.
Distribution
Reinvestment Plan
Prior to the commencement of the offering, we will adopt a
distribution reinvestment plan in which investors can reinvest
their distributions in additional shares. For information on how
to participate in our distribution reinvestment plan, see the
section of the prospectus entitled Description of
Shares Summary of Our Distribution Reinvestment
Plan.
If you have more questions about this offering or
if you would like additional copies of this prospectus,
you should contact your registered representative or:
Carey Watermark Investors Incorporated
50 Rockefeller Plaza
New York, New York 10020
1-800-WP CAREY
www.careywatermarkinvestors.com
26
RISK
FACTORS
Before you invest in our securities, you should be aware that
there are various risks. The material risks are described below.
You should consider carefully these risk factors together with
all of the other information included in this prospectus before
you decide to purchase our securities.
Risks
Related to This Offering
We
have no operating history or established financing sources and
may be unable to successfully implement our investment strategy
or generate sufficient cash flow to make distributions to our
stockholders.
We were incorporated in March 2008, have no operating history
and no assets, and have not obtained any financing. We are
subject to all of the business risks and uncertainties
associated with any new business, including the risk that we
will not achieve our investment objectives as described in this
prospectus and that the value of your investment could decline
substantially. Our financial condition and results of operations
will depend on many factors including the availability of
opportunities for the acquisition of assets, readily accessible
short and long-term financing, conditions in the lodging
industry specifically and financial markets and economic
conditions generally and the performance of our advisor and the
independent property operators managing our properties. There
can be no assurance that we will be able to generate sufficient
cash flow over time to pay our operating expenses and make
distributions to stockholders.
This
is initially a blind pool offering, and therefore,
you may not have the opportunity to evaluate the economic merits
of our investments prior to making your investment
decision.
This is initially a blind pool offering because we
do not currently own any properties or other lodging related
investments and further, we have yet to identify any specific
hotel properties or lodging related investments to acquire with
the offering proceeds. As a result, we are not able to provide
you with information to evaluate the economic merit of our
investments prior to acquisition and you will be relying
entirely on the ability of our advisor to select well-performing
investment properties. Additionally, our board of directors will
have broad discretion in implementing policies regarding tenant
or mortgagor creditworthiness, and you will not have the
opportunity to evaluate potential tenants, borrowers or
managers. These factors increase the risk that your investment
may not generate the returns that you seek by investing in our
shares.
Our
advisor has no operating history; the past performance of
programs sponsored by or affiliated with W. P. Carey is not an
indicator of our future performance because those programs had a
different investment strategy.
CLA was formed in January 2008 and has no operating history.
Although W. P. Carey has a long operating history, you should
not rely upon the past performance of the programs sponsored by
or affiliated with W. P. Carey as an indicator of our future
performance. This is particularly true since we will make
investments that are different from net leased properties of the
type that were the focus of prior programs sponsored by W. P.
Carey. None of the prior programs sponsored by W. P. Carey has
made significant investments in lodging properties or lodging
assets. Watermark Capital Partners has never acted as advisor or
subadvisor to a prior public program or a prior private program
with investment objectives similar to our objectives. We cannot
guarantee that we will be able to find suitable investments. Our
failure to timely invest the proceeds of this offering, or to
invest in quality assets, could diminish returns to investors
and our ability to pay distributions to our stockholders.
27
The
offering price for shares being offered in this offering and
through our distribution reinvestment plan was determined by our
board of directors and may not be indicative of the price at
which the shares would trade if they were listed on an exchange
or were actively traded by brokers.
The offering price of the shares being offered in this offering
and through our distribution reinvestment plan was determined by
our board of directors in the exercise of its business judgment.
This price may not be indicative of the price at which shares
would trade if they were listed on an exchange or actively
traded by brokers nor of the proceeds that a stockholder would
receive if we were liquidated or dissolved or of the value of
our portfolio at the time you purchase shares.
A
delay in investing funds may adversely affect or cause a delay
in our ability to deliver expected returns to investors and may
adversely affect our performance.
We have not yet identified the assets to be purchased with the
proceeds of this offering and our distribution reinvestment
plan; therefore, there could be a substantial delay between the
time you invest in shares and the time substantially all the
proceeds are invested by us. We currently expect that, if the
entire offering is subscribed for, it may take up to two years
after commencement of the offering or one year after the
termination of this offering, if later, until our capital is
substantially invested. Pending investment, the balance of the
proceeds of this offering will be invested in permitted
temporary investments, which include short term
U.S. government securities, bank certificates of deposit
and other short-term liquid investments. The rate of return on
those investments, which affects the amount of cash available to
make distributions to stockholders, has fluctuated in recent
years and most likely will be less than the return obtainable
from real property or other investments. Therefore, delays in
our ability to invest the proceeds of this offering could
adversely affect our ability to pay distributions to our
stockholders and adversely affect your total return. If we fail
to timely invest the net proceeds of this offering or to invest
in quality assets, our ability to achieve our investment
objectives could be materially adversely affected.
Our distributions may exceed our earnings and adjusted
cash flow from operating activities and may be paid from
borrowings, offering proceeds and other sources, without
limitation, particularly during the period before we have
substantially invested the net proceeds from this offering,
which would reduce amounts available for the acquisition of
properties.
The amount of any distributions we may make is uncertain. If our
lodging properties are not generating sufficient cash flow,
which is especially likely to occur during periods before we
have substantially invested the net proceeds from this offering,
we may pay distributions using borrowings, offering proceeds or
other sources, without limitation. Distributions in excess of
our earnings and profits could constitute a return of capital
for U.S. federal income tax purposes. If we fund
distributions from financings, then such financings will need to
be repaid, and if we fund distributions from offering proceeds,
then we will have fewer funds available for the acquisition of
properties, which may affect our ability to generate future cash
flows from operations and, therefore, reduce your overall
return. These risks will be greater for persons who acquire our
shares relatively early in this offering, before a significant
portion of the offering proceeds have been invested. In
addition, since there may be a delay between the raising of
offering proceeds and their investment in lodging or lodging
related properties, if we fund distributions from offering
proceeds during the stages of the offering prior to the
investment of a material portion of the offering proceeds,
persons who acquire shares relatively early in this offering, as
compared with later stockholders, may receive a greater return
of offering proceeds as part of the earlier distributions to our
stockholders.
Stockholders
equity interests may be diluted.
Our stockholders do not have preemptive rights to any shares of
common stock issued by us in the future. Therefore, if we
(1) sell shares of common stock in the future, including
those issued pursuant to our distribution reinvestment plan,
(2) sell securities that are convertible into our
28
common stock, (3) issue common stock in a private placement
to institutional investors, (4) issue shares of common
stock to our directors or to the advisor and its affiliates for
payment of fees in lieu of cash, or (5) issue common stock
under our 2010 Equity Incentive Plan, then existing stockholders
and investors purchasing shares in this offering will experience
dilution of their percentage ownership in us. Depending on the
terms of such transactions, most notably the offer price per
share, which may be less than the price paid per share in this
offering, and the value of our properties and our other
investments, existing stockholders might also experience a
dilution in the book value per share of their investment in us.
As a
new investor, you will experience substantial dilution in the
net tangible book value of your shares equal to the offering
costs associated with your shares.
If you purchase our common shares in this offering, you will
incur immediate dilution equal to the costs of the offering
associated with your shares. This means that the investors who
purchase common shares will pay a price per share that
substantially exceeds the per share value of our assets after
subtracting our liabilities. The costs of this offering are
currently unknown and cannot be precisely estimated at this
time. The costs will be substantial.
Our
board of directors may change our investment policies without
stockholder approval, which could alter the nature of your
investment.
Our charter requires that our independent directors review our
investment policies at least annually to determine that the
policies we are following are in the best interest of our
stockholders. These policies may change over time. The methods
of implementing our investment policies may also vary, as new
investment techniques are developed. Except as otherwise
provided in our charter, our investment policies, the methods
for their implementation, and our other objectives, policies and
procedures may be altered by a majority of the directors
(including a majority of the independent directors), without the
approval of our stockholders. As a result, the nature of your
investment could change without your consent. A change in our
investment strategy may, among other things, increase our
exposure to interest rate risk and hotel property market
fluctuations, all of which could materially adversely affect our
ability to achieve our investment objectives.
If we
only sell the minimum offering amount, we will invest in very
few assets and our stockholders may recognize greater risk and a
lower return.
In the event we sell only the minimum offering of
1,000,000 shares, we estimate that approximately $8,800,000
would be available for investment in properties after the
payment of offering and organizational fees and expenses and
provision for working capital reserve and, therefore, we will
invest in fewer properties. The fewer properties purchased, the
greater the potential adverse effect of a single unproductive
property upon our profitability. In addition, the returns on the
shares of stock sold will be reduced as a result of allocating
our expenses among the smaller number of shares of stock.
Since
this is a best-efforts offering, there is neither
any requirement, nor any assurance, that more than the minimum
offering amount will be raised.
This is a best-efforts, as opposed to a firm
commitment offering. This means that the dealer manager is
not obligated to purchase any shares of stock, but has only
agreed to use its best efforts to sell the shares of
stock to investors. So long as the minimum of
1,000,000 shares priced at $10 per share (representing
$10,000,000 in gross proceeds) is sold within six months after
the date of this prospectus, or if we elect to extend it, to a
period no later than one year after the date of this prospectus,
or the Extended Period, these proceeds may be released from
escrow to us and used by us for acquisitions, operations and the
other purposes described generally in this prospectus. There is
no requirement that any shares of commons stock above the
minimum offering amount be sold, and there is no assurance that
any shares of common stock above the minimum offering amount
will be sold.
29
Thus, aggregate gross proceeds from the offering made by this
prospectus could be as low as $10,000,000. This relatively small
amount of net offering proceeds available for investment would
limit flexibility in implementation of our business plans and
result in minimal, if any, diversification in property ownership.
As a general matter, at any point during the offering of our
shares of common stock after the minimum offering is sold, there
can be no assurance that more shares of common stock will be
sold than have already been sold. Accordingly, investors
purchasing such shares should not assume that the number of
shares sold, or gross offering proceeds received, by us will be
greater than the number of shares sold or the gross offering
proceeds received by us to that point in time. No investor
should assume that we will sell the maximum offering made by
this prospectus, or any other particular offering amount. See
The Offering/Plan of Distribution and
Estimated Use of Proceeds.
Investors
may wait up to one year before receiving their stocks or a
refund of their money if the minimum offering is not
achieved.
Until the minimum offering of 1,000,000 shares of common
stock is achieved, investors will not receive their shares. If
at least 1,000,000 shares of common stock have not been
sold within six months after the date of this prospectus, or
within the Extended Period, we will terminate this offering. If
the minimum offering is sold within six months, or within the
Extended Period, investors will receive their shares of common
stock plus the applicable interest on their subscription monies
at the time of closing. If the offering is terminated, investors
will have their money promptly refunded with interest. See
The Offering/Plan of Distribution.
We
make forward-looking statements in this prospectus which may
prove to be inaccurate.
This prospectus contains forward-looking statements within the
meaning of the federal securities laws which are intended to be
covered by the safe harbors created by those laws. These
statements include our plans and objectives for future
operations, including plans and objectives relating to future
growth and availability of funds. These forward-looking
statements are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to these
statements involve judgments with respect to, among other
things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or
impossible to accurately predict and many of which are beyond
our control. Although we believe the assumptions underlying the
forward-looking statements, and the forward looking statements
themselves, are reasonable, any of the assumptions could be
inaccurate and, therefore, there can be no assurance that these
forward-looking statements will prove to be accurate. In light
of the significant uncertainties inherent in these
forward-looking statements, the inclusion of this information
should not be regarded as a representation by us or any other
person that our objectives and plans, which we consider to be
reasonable, will be achieved.
Risks
Related to Our Relationship with Our Advisor
Our
success will be dependent on the performance of our advisor and
the subadvisor.
Our ability to achieve our investment objectives and to pay
distributions will be dependent upon the performance of our
advisor in the acquisition of investments, the determination of
any financing arrangements, and the management of our assets.
Our advisor has not previously sponsored a program focused on
lodging investments. Our advisor has retained the services of
the subadvisor because the subadvisor is experienced in
investing in and managing hotel properties and other
lodging-related assets. If either our advisor or the subadvisor
fails to perform according to our expectations, we could be
materially adversely affected.
Uncertainty and risk are increased to you because investors will
have no opportunity to evaluate the terms of transactions or
other economic or financial data concerning our investments that
are not described in this prospectus. You must rely entirely on
the management ability of our advisor, the oversight of our
board of directors and our advisors access to the lodging
experience of the subadvisor.
30
The past performance of W. P. Carey or Watermark Capital
Partners or partnerships and programs sponsored or managed by W.
P. Carey, including the
CPA®
Programs, may not be indicative of our advisors
performance with respect to us. We cannot guarantee that our
advisor will be able to successfully manage and achieve
liquidity for us to the extent it has done so in the past.
We are
dependent upon our advisor and our advisors access to the
lodging experience of the subadvisor. The decision by our
advisor to terminate the advisory agreement or by the subadvisor
to terminate the subadvisory agreement will materially adversely
affect our ability to meet our investment
objectives.
We are subject to the risk that our advisor will terminate the
advisory agreement and that the subadvisor will terminate the
subadvisory agreement and that no suitable replacements will be
found to manage us. We have no employees and have no separate
facilities and are substantially reliant on our advisor, which
has significant discretion as to the implementation and
execution of our business strategies. Our advisor in turn is
relying in part on the lodging experience of the subadvisor. We
can offer no assurance that our advisor will remain our external
manager, that the subadvisor will continue to be retained or
that we will continue to have access to our advisors, W.
P. Careys or Watermark Capital Partners
professionals or their information or deal flow. If our advisor
terminates the advisory agreement, we will not have access to
our advisors, W. P. Careys or Watermark Capital
Partners professionals or their information or deal flow
and will be required to expend time and money to seek
replacements all of which may impact our ability to execute our
business plan and meet our investment objectives.
Moreover, lenders for certain of our assets may request change
of control provisions in the loan documentation that would make
the termination or replacement of our advisor, or the
dissolution of our advisor, events of default or events
requiring the immediate repayment of the full outstanding
balance of the loan. While we will attempt to negotiate to not
include such provisions, lenders may require such provisions. If
an event of default or repayment event occurs with respect to
any of our assets, our revenues and distributions to our
stockholders may be adversely affected.
W. P.
Carey and our dealer manager are parties to a settlement
agreement with the SEC and are subject to a federal court
injunction.
In 2008, W. P. Carey and Carey Financial, the dealer manager for
this offering, settled all matters relating to an investigation
by the SEC, including matters relating to payments by certain
CPA®
REITs other than us during
2000-2003 to
broker-dealers that distributed their shares. In connection with
implementing the settlement, a federal court injunction has been
entered against W. P. Carey and Carey Financial enjoining them
from violating a number of provisions of the federal securities
laws. Any further violation of these laws by W. P. Carey or
Carey Financial could result in civil remedies, including
sanctions, fines and penalties, which may be more severe than if
the violation had occurred without the injunction being in
place. Additionally, if W. P. Carey or Carey Financial breaches
the terms of the injunction, the SEC may petition the court to
vacate the settlement and restore the SECs original action
to the active docket for all purposes.
The settlement is not binding on other regulatory authorities,
including FINRA, which regulates Carey Financial, state
securities regulators, or other regulatory organizations, which
may seek to commence proceedings or take action against W. P.
Carey or its affiliates on the basis of the settlement or
otherwise.
Exercising
our right to repurchase all or a portion of Carey Watermark
Holdings interests in our operating partnership upon
certain termination events could be prohibitively expensive and
could deter us from terminating the advisory
agreement.
The termination or resignation of CLA as our advisor, or
non-renewal of the advisory agreement, and replacement with an
entity that is not an affiliate of the advisor, all after two
years from the start of operations of our operating partnership,
would give our operating partnership the right, but not the
obligation, to repurchase all or a portion of Carey Watermark
Holdings interests in our operating
31
partnership at the fair market value of those interests on the
date of termination, as determined by an independent appraiser.
This repurchase could be prohibitively expensive, could require
the operating partnership to have to sell assets to raise
sufficient funds to complete the repurchase and could discourage
or deter us from terminating the advisory agreement.
Alternatively, if our operating partnership does not exercise
its repurchase right, we might be unable to find another entity
that would be willing to act as our advisor while Carey
Watermark Holdings owns a significant interest in the operating
partnership. If we do find another entity to act as our advisor,
we may be subject to higher fees than the fees charged by CLA.
The
repurchase of Carey Watermark Holdings special general
partner interest in our operating partnership upon the
termination of Carey Lodging Advisors, LLC as our advisor in
connection with a merger or other extraordinary corporate
transaction may discourage a takeover attempt if our advisory
agreement would be terminated and Carey Lodging Advisors, LLC is
not replaced by an affiliate of W. P. Carey as our advisor in
connection therewith.
In the event of a merger or other extraordinary corporate
transaction in which our advisory agreement is terminated and
CLA is not replaced by an affiliate of W. P. Carey as our
advisor, the operating partnership must either repurchase all or
a portion of Carey Watermark Holdings special general
partner interest in our operating partnership or obtain the
consent of Carey Watermark Holdings to the merger. This
obligation may deter a transaction in which we are not the
survivor. This deterrence may limit the opportunity for
stockholders to receive a premium for their common shares that
might otherwise exist if an investor attempted to acquire us
through a merger or other extraordinary corporate transaction.
Payment
of fees to our advisor, and distributions to our special general
partner, will reduce cash available for investment and
distribution.
Our advisor will perform services for us in connection with the
offer and sale of our shares, the selection and acquisition of
our investments, the management and leasing of our properties
and the administration of our other investments. Unless our
advisor elects to receive our common stock in lieu of cash
compensation, we will pay our advisor substantial cash fees for
these services. In addition, our special general partner is
entitled to certain distributions from our operating
partnership. The payment of these fees and distributions will
reduce the amount of cash available for investments or
distribution to our stockholders.
Our
advisor and the subadvisor may be subject to conflicts of
interest.
Our advisor manages our overall business and selects our
investments. The subsadvisor performs services for our advisor
relating to us. Our advisor and the subadvisor have some
conflicts of interest in the performance of their services which
arise with respect to matters relating to the following:
|
|
|
|
|
the receipt of compensation by our advisor and the subadvisor
for acquisitions of investments, leases, sales and financing,
and listing and other liquidity transactions for us, which may
cause our advisor and the subadvisor to engage in or recommend
transactions that generate higher fees, rather than transactions
that are more appropriate or beneficial for our business and our
stockholders;
|
|
|
|
agreements between us and our advisor, and between the advisor
and the subadvisor including agreements regarding compensation,
will not be negotiated on an arms length basis as would
occur if the agreements were with unaffiliated third parties;
|
|
|
|
acquisitions of single assets or portfolios of assets from
affiliates, including other entities that may in the future be
sponsored
and/or
managed by our advisor, the subadvisor or their respective
affiliates or the
CPA®
REITs, which may take the form of a direct purchase of assets, a
merger or another type of transaction;
|
|
|
|
competition with certain affiliates for investment acquisitions,
which may cause our advisor, the subadvisor or their respective
affiliates to direct investments suitable for us to other
related entities;
|
32
|
|
|
|
|
a decision by the asset operating committee (on our behalf) of
whether to hold or sell an asset. This decision could impact the
timing and amount of fees payable to our advisor and the
subadvisor as well as allocations and distributions payable to
Carey Watermark Holdings pursuant to its special general partner
interests. On the one hand, our advisor receives asset
management fees and may decide not to sell an asset. On the
other hand, our advisor receives disposition fees and Carey
Watermark Holdings will be entitled to certain profit
allocations and cash distributions based upon sales of assets as
a result of its operating partnership profits interest, and the
subadvisor will share in a portion of those fees and
distributions;
|
|
|
|
a recommendation by our advisor that we declare distributions at
a particular rate because our advisor and Carey Watermark
Holdings may begin collecting subordinated fees and subordinated
distributions once the applicable preferred return rate has been
met; and
|
|
|
|
disposition fees based on the sale price of assets and interests
in disposition proceeds based on net cash proceeds from sale,
exchange or other disposition of assets, may cause a conflict
between the advisors desire to sell an asset and our plans
to hold or sell the asset. See Conflicts of
Interest.
|
There
are conflicts of interest with certain of our directors and
officers who have duties to W. P. Carey and/or to Watermark
Capital Partners and entities sponsored or managed by either of
them with which we contract or with which we may compete for
properties.
Several of the officers and certain of the directors of the
advisor or the subadvisor are also our officers and directors,
including Mr. Medzigian, Trevor P. Bond, Thomas E.
Zacharias, Mark J. DeCesaris and Thomas J. Ridings, Jr. Our
advisor will enter into contracts with us to provide us with
asset management, property acquisition and disposition services,
and the subadvisor will support the advisor in the provision of
these services. Our officers may benefit from the fees and
distributions paid to our advisor, the subadvisor and Carey
Watermark Holdings.
In addition, Mr. Medzigian, one of our directors, is and
will be a principal in other real estate investment transactions
or programs that may compete with us. Currently,
Mr. Medzigian is the Chairman and Managing Partner of
Watermark Capital Partners. Watermark Capital Partners is a
private investment and management firm that specializes in real
estate private equity transactions involving hotels and resorts,
resort residential products, recreational projects including
golf and club ownership programs and new-urbanism and mixed-use
projects. Watermark Capital Partners through its affiliates,
currently owns interests in
and/or
manages seven lodging properties within the United States,
including the three which are part of a joint venture with W. P.
Carey and the one in which Watermark Capital Partners serves as
asset manager pursuant to an asset management agreement with an
affiliate of W. P. Carey. Mr. Bond, our Chairman, is a
director and interim chief executive officer of W. P. Carey,
which is a real estate advisory and investment company that has
been sponsoring and advising real estate programs primarily
engaged in long term net leased investments for more than
35 years. W. P. Carey and the
CPA®
REITs own five investments in 16 lodging properties located
within the United States, including the two which are part of a
joint venture with Watermark Capital Partners. None of W. P.
Careys or Watermark Capital Partners pre-existing
lodging investments will be contributed to us. W. P. Carey, the
CPA®
REITs and Watermark Capital Partners, therefore, have an
economic interest in other transactions, including in such
pre-existing lodging investments, and Messrs. Medzigian and
Bond, by virtue of their positions in Watermark Capital
Partners, W. P. Carey and the
CPA®
REITs, as applicable, may be subject to conflicts of interests.
Furthermore, the
CPA®
REITs and other entities managed by W. P. Carey are restricted
in making future investments in lodging properties, unless W. P.
Carey owns a majority of the voting equity interests of such
entities.
As a result of the interests described in this section, our
advisor, the subadvisor and the directors and officers who are
common to us, the
CPA®
REITs, W. P. Carey and Watermark Capital Partners will
experience conflicts of interest.
33
We
have limited independence, and there are potential conflicts
between our advisor, the subadvisor and our
stockholders.
Substantially all of our management functions are performed by
officers of our advisor pursuant to our contract with the
advisor and by the subadvisor pursuant to its subadvisory
agreement with the advisor. Additionally, some of the directors
of W. P. Carey and Watermark Capital Partners or entities
managed by them, will also be members of our board of directors
upon consummation of this offering. This limited independence,
combined with our advisors and Carey Watermark
Holdings interests in us, may result in potential
conflicts of interest described in this prospectus because of
the substantial control that our advisor has over us and because
of its economic incentives that may differ from those of our
stockholders. See Conflicts of Interest We
have limited independence.
We may
face competition from entities managed by our advisor, the
subadvisor and their respective affiliates in the purchase, sale
and ownership of properties.
Entities managed by our advisor in the future, and entities
separately managed now or in the future by W. P. Carey and
Watermark Capital Partners, may compete with us with respect to
properties, potential purchasers, sellers of properties; and
mortgage financing for properties. See Risk
Factors Risks Related to Our Relationship with Our
Advisor There are conflicts of interest with certain
of our directors and officers who have duties to W. P. Carey
and/or to
Watermark Capital Partners and entities sponsored or managed by
either of them with which we contract or with which we may
compete for properties. If in the future some of the
entities formed and managed by our advisor or the subadvisor or
their respective affiliates focus specifically on lodging
investments, they may receive preference in the allocation of
those types of investments. See Conflicts of
Interest We may enter into transactions with or take
loans from our advisor, the subadvisor or their respective
affiliates or entities managed by them. and
There may be competition from our advisor, the
subadvisor or their respective affiliates for the time and
services of officers and directors.
The
dealer managers affiliation with our advisor may cause a
conflict of interest and may hinder the performance of its due
diligence obligations.
Carey Financial will receive selling commissions and a dealer
manager fee, all or a portion of which it may re-allow to other
dealers, in connection with this offering. As dealer manager,
Carey Financial has certain obligations under the federal
securities laws to undertake a due diligence investigation with
respect to the parties involved in this offering, including our
advisor. Carey Financials affiliation with W. P. Carey may
cause a conflict of interest for Carey Financial in carrying out
its due diligence obligations. While we make certain
representations to Carey Financial on which it may rely, Carey
Financial has not requested and will not obtain from counsel an
opinion to the effect that the prospectus will not include any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements in the
prospectus, in the light of the circumstances under which they
were made, not misleading. The absence of an independent due
diligence review by Carey Financial may increase the risk and
uncertainty you face as a potential investor in our common
shares. See also Conflicts of Interest Our
dealer managers affiliation with W. P. Carey, its parent,
may cause conflicts of interest.
Risks
Related to Our Operations
We may
incur material losses on some of our investments.
Our objective is to generate attractive risk adjusted returns
which means that we will take on risk in order to achieve higher
returns. We expect that we will incur losses on some of our
investments. Some of those losses could be material.
Liability
for uninsured losses could adversely affect our financial
condition.
Losses from disaster-type occurrences (such as wars, terrorist
activities, floods or earthquakes) may be either uninsurable or
not insurable on economically viable terms. Should an uninsured
loss occur or a loss in excess of the limits of our insurance,
we could lose our capital investment
and/or
34
anticipated profits and cash flow from one or more investments,
which in turn could cause the value of the shares and
distributions to our stockholders to be reduced.
Our
participation in joint ventures creates additional risk because,
among other things, we cannot exercise sole decision making
power and our partners may have different economic interests
than we have.
From time to time we may participate in joint ventures and
purchase assets jointly with the other entities sponsored or
managed by our advisor, W. P. Carey or Watermark Capital
Partners and with third parties. There are additional risks
involved in joint venture transactions. As a co-investor in a
joint venture, we may not be in a position to exercise sole
decision-making authority relating to the property, joint
venture or other entity. In addition, there is the potential of
our joint venture partner becoming bankrupt and the possibility
of diverging or inconsistent economic or business interests of
us and our partner. These diverging interests could result in,
among other things, exposing us to liabilities of the joint
venture in excess of our proportionate share of these
liabilities. The partition rights of each owner in a jointly
owned property could reduce the value of each portion of the
divided property. Further, the fiduciary obligation that our
advisor or members of our board may owe to our partner in an
affiliated transaction may make it more difficult for us to
enforce our rights.
Our operations could be restricted if we become subject to
the Investment Company Act and your investment return, if any,
may be reduced if we are required to register as an investment
company under the Investment Company Act.
A person will generally be deemed to be an investment
company for purposes of the Investment Company Act if:
|
|
|
|
|
it is or holds itself out as being engaged primarily, or
proposes to engage primarily, in the business of investing,
reinvesting or trading in securities; or
|
|
|
|
|
|
absent an applicable exemption, it owns or proposes to acquire
investment securities having a value exceeding 40% of the value
of its total assets (exclusive of U.S. government
securities and cash items) on an unconsolidated basis, which is
referred to as the 40% test.
|
We believe that we are engaged primarily in the business of
acquiring and owning interests in real estate. We hold ourselves
out as a real estate firm and do not propose to engage primarily
in the business of investing, reinvesting or trading in
securities. Accordingly, we do not believe that we are, or
following this offering will be, an orthodox
investment company as defined in section 3(a)(1)(A) of the
Investment Company Act and described in the first bullet point
above. Further, following this offering, we will have no
material assets other than our 99.97% ownership interest in the
operating partnership. Excepted from the term investment
securities for purposes of the 40% test described above,
are securities issued by majority-owned subsidiaries, such as
our operating partnership, that are not themselves investment
companies and are not relying on the exception from the
definition of investment company set forth in
Section 3(c)(1) or Section 3(c)(7) of the Investment
Company Act.
We expect our operating partnership to rely upon the exemption
from registration as an investment company pursuant to
Section 3(c)(5)(C) of the Investment Company Act, which is
available for entities primarily engaged in the business
of purchasing or otherwise acquiring mortgages and other liens
on and interests in real estate. This exemption generally
requires that at least 55% of the operating partnerships
assets must be comprised of qualifying real estate assets and at
least 80% of its portfolio must be comprised of qualifying real
estate assets and real estate-related assets. Qualifying assets
for this purpose include mortgage loans and other assets,
including certain mezzanine loans and B notes, that the SEC
staff in various no-action letters has determined are the
functional equivalent of mortgage loans. We intend to treat as
real estate-related assets CMBS, debt and equity securities of
companies primarily engaged in real estate businesses and
securities issued by pass through entities of which
substantially all the assets consist of qualifying assets
and/or real
estate-related assets. To the extent that the SEC staff
publishes new or different guidance with respect to these
matters, we may be required to adjust our strategy accordingly.
In addition, we may
35
be limited in our ability to make certain investments and these
limitations could result in the operating partnership holding
assets we might wish to sell or selling assets we might wish to
hold.
To maintain compliance with the Investment Company Act
exemption, we may be unable to sell assets we would otherwise
want to sell and may need to sell assets we would otherwise wish
to retain. In addition, we may have to acquire additional income
or loss generating assets that we might not otherwise have
acquired or may have to forego opportunities to acquire
interests in companies that we would otherwise want to acquire
and would be important to our investment strategy. If we were
required to register as an investment company we would be
prohibited from engaging in our business as currently
contemplated because the Investment Company Act imposes
significant limitations on leverage. In addition, we would have
to seek to restructure the advisory agreement because the
compensation that it contemplates would not comply with the
Investment Company Act. Criminal and civil actions could also be
brought against us if we failed to comply with the Investment
Company Act. In addition, our contracts would be unenforceable
unless a court were to require enforcement, and a court could
appoint a receiver to take control of us and liquidate our
business.
Because the operating partnership will rely on the exemption
from investment company registration provided by
Section 3(c)(5)(C), and the operating partnership will be a
majority owned subsidiary of us, our interests in the operating
partnership will not constitute investment securities for
purposes of the 40% test. Our interests in the operating
partnership will be our only material asset; therefore, we
believe that we will satisfy the 40% test.
Compliance
with the Americans with Disabilities Act may require us to spend
substantial amounts of money which could adversely affect our
operating results.
We must comply with the Americans with Disabilities Act and fire
and safety regulations, which can require significant
expenditures. All of our properties must comply with the
applicable portions of the Americans with Disabilities Act and
the related regulations, rules and orders, commonly referred to
as the ADA, or similar applicable foreign laws. The ADA, for
example, has separate compliance requirements for public
accommodations and commercial facilities, but
generally requires that buildings be made accessible to persons
with disabilities. If we fail to comply with the ADA and other
applicable laws, the United States, or in case we invest outside
the United States, a foreign government might impose fines on us
and award damages to individuals affected by the failure. In
addition, we must operate our properties in compliance with
numerous local and, if we invest outside the United States, with
foreign fire and safety regulations, building codes and other
land use regulations. Compliance with these requirements could
require us to spend substantial amounts of money, which could
adversely affect our operating results. Failure to comply with
these requirements may also affect the marketability of the
properties.
We
will incur debt to finance our operations, which may subject us
to an increased risk of loss.
We will incur debt to finance our operations. The leverage we
employ will vary depending on our ability to obtain credit
facilities, the
loan-to-value
and debt service coverage ratios of our assets, the yield on our
assets, the targeted leveraged return we expect from our
investment portfolio and our ability to meet ongoing covenants
related to our asset mix and financial performance. Our return
on our investments and cash available for distribution to our
stockholders may be reduced to the extent that changes in market
conditions cause the cost of our financing to increase relative
to the income that we can derive from the assets we acquire.
Debt service payments may reduce the net income available for
distributions to our stockholders. Moreover, we may not be able
to meet our debt service obligations and, to the extent that we
cannot, we risk the loss of some or all of our assets to
foreclosure or sale to satisfy our debt obligations. Our charter
or bylaws do not restrict the form of indebtedness we may incur.
36
We are
subject, in part, to the risks of real estate ownership which
could reduce the value of our properties.
Our performance and asset value is, in part, subject to risks
incident to the ownership and operation of real estate,
including:
|
|
|
|
|
changes in the general economic climate;
|
|
|
|
changes in local conditions such as an oversupply of space or
reduction in demand for real estate;
|
|
|
|
changes in interest rates and the availability of
financing; and
|
|
|
|
changes in laws and governmental regulations, including those
governing real estate usage, zoning and taxes.
|
We may
have difficulty selling our properties, and this lack of
liquidity may limit our ability to quickly change our portfolio
in response to changes in economic or other
conditions.
Real estate investments generally have less liquidity compared
to other financial assets and this lack of liquidity may limit
our ability to quickly change our portfolio in response to
changes in economic or other conditions. The real estate market
is affected by many factors that are beyond our control,
including general economic conditions, availability of
financing, interest rates and other factors, such as supply and
demand.
We may be required to spend funds to correct defects or to make
improvements before a property can be sold. We may not have
funds available to correct those defects or to make those
improvements. In acquiring a lodging property, we may agree to
lock-out provisions that materially restrict us from selling
that property for a period of time or impose other restrictions,
such as a limitation on the amount of debt that can be placed or
repaid on that property. These factors and any others that would
impede our ability to respond to adverse changes in the lodging
industry or the performance of our properties could have a
material adverse effect on our results of operations and
financial condition, as well as our ability to pay distributions
to stockholders.
Our inability to sell properties that we have identified as held
for sale may result in us owning lodging facilities which no
longer fit within our business strategy. Holding these
properties or selling these properties for losses may affect our
earnings and, in turn, could adversely affect our value. Some of
the other factors that could result in difficulty selling
properties include, but are not limited to:
|
|
|
|
|
Inability to agree on a favorable price;
|
|
|
|
Inability to agree on favorable terms;
|
|
|
|
Restrictions imposed by third parties such as inability to
transfer franchise or management agreements;
|
|
|
|
Lender restrictions;
|
|
|
|
Environmental issues; and/or
|
|
|
|
Property condition.
|
Potential
liability for environmental matters could adversely affect our
financial condition.
Although we will subject our properties to an environmental
assessment prior to acquisition, we may not be made aware of all
the environmental liabilities associated with a property prior
to its purchase. There may be hidden environmental hazards that
may not be discovered prior to acquisition. The costs of
investigation, remediation or removal of hazardous substances
may be substantial. In addition, the presence of hazardous
substances on one of our properties, or the failure to properly
remediate a contaminated property, could adversely affect our
ability to sell or rent the property or to borrow using the
property as collateral.
37
Various federal, state and local environmental laws impose
responsibilities on an owner or operator of real estate and
subject those persons to potential joint and several
liabilities. Typical provisions of those laws include:
|
|
|
|
|
Responsibility and liability for the costs of investigation,
removal or remediation of hazardous substances released on or in
real property, generally without regard to knowledge of or
responsibility for the presence of the contaminants.
|
|
|
|
Liability for claims by third parties based on damages to
natural resources or property, personal injuries, or costs of
removal or remediation of hazardous or toxic substances in, on,
or migrating from our property.
|
|
|
|
Responsibility for managing asbestos-containing building
materials, and third-party claims for exposure to those
materials.
|
Environmental laws also may impose restrictions on the manner in
which property may be used or businesses may be operated, and
these restrictions may require expenditures.
Risks
Related to Investments in the Lodging Industry
Current
economic conditions may adversely affect the lodging
industry.
The performance of the lodging industry has historically been
closely linked to the performance of the general economy and,
specifically, growth in U.S. GDP. It is also sensitive to
business and personal discretionary spending levels. Declines in
corporate budgets and consumer demand due to adverse general
economic conditions, risks affecting or reducing travel
patterns, lower consumer confidence or adverse political
conditions can lower the revenues and profitability of our
future hotel properties and therefore the net operating profits
of our TRS lessees. The current global economic downturn has led
to a significant decline in demand for products and services
provided by the lodging industry, lower occupancy levels and
significantly reduced room rates.
We cannot predict how severe or prolonged the global economic
downturn will be or how severe or prolonged the lodging industry
downturn will be. A further extended period of economic weakness
would likely have an adverse impact on our revenues and
negatively affect our profitability.
Furthermore, a continued general reduction in available
financing for real-estate related investments may impact our
financial condition by increasing our cost of borrowing,
reducing our overall leverage (which may reduce our returns on
investment) and making it more difficult for us to obtain
financing for ongoing acquisitions. These effects could in turn
adversely affect our ability to make distributions to our
stockholders.
We are
subject to various operating risks common to the lodging
industry, which may adversely affect our ability to make
distributions to our stockholders.
Our hotel properties and lodging facilities will be subject to
various operating risks common to the lodging industry, many of
which are beyond our control, including the following:
|
|
|
|
|
competition from other hotel properties or lodging facilities in
our markets;
|
|
|
|
over-building of hotels in our markets, which will adversely
affect occupancy and revenues at the hotels we acquire;
|
|
|
|
dependence on business and commercial travelers and tourism;
|
|
|
|
increases in energy costs and other expenses affecting travel,
which may affect travel patterns and reduce the number of
business and commercial travelers and tourists;
|
|
|
|
increases in operating costs due to inflation and other factors
that may not be offset by increased room rates;
|
|
|
|
changes in governmental laws and regulations, fiscal policies
and zoning ordinances and the related costs of compliance with
laws and regulations, fiscal policies and ordinances;
|
|
|
|
adverse effects of international, national, regional and local
economic and market conditions;
|
38
|
|
|
|
|
unforeseen events beyond our control, such as terrorist attacks,
travel related health concerns, including pandemics and
epidemics such as H1N1 influenza (swine flu), avian bird flu and
SARS, political instability, regional hostilities, imposition of
taxes or surcharges by regulatory authorities, travel related
accidents and unusual weather patterns, including natural
disasters such as hurricanes, tsunamis or earthquakes;
|
|
|
|
adverse effects of a downturn in the lodging industry; and
|
|
|
|
risks generally associated with the ownership of hotel
properties and real estate, as discussed below.
|
These risks could reduce the net operating profits of our TRS
lessees, which in turn could adversely affect our ability to
make distributions to our stockholders.
Seasonality
of certain lodging properties may cause quarterly fluctuations
in results of operations of our properties.
Certain lodging properties are seasonal in nature. Generally,
occupancy rates and revenues are greater in the second and third
quarters than in the first and fourth quarters. As a result of
the seasonality of certain lodging properties, there may be
quarterly fluctuations in results of operations of our
properties. Quarterly financial results may be adversely
affected by factors outside our control, including weather
conditions and poor economic factors. As a result, we may need
to enter into short-term borrowings in certain periods in order
to offset these fluctuations in revenues, to fund operations or
to make distributions to our stockholders.
The
cyclical nature of the lodging industry may cause fluctuations
in our operating performance.
The lodging industry is highly cyclical in nature. Fluctuations
in operating performance, are caused largely by general economic
and local market conditions, which subsequently affect levels of
business and leisure travel. In addition to general economic
conditions, new hotel room supply is an important factor that
can affect lodging industrys performance, and
over-building has the potential to further exacerbate the
negative impact of an economic recession. Room rates and
occupancy, and thus RevPAR, tend to increase when demand growth
exceeds supply growth. The continued decline in lodging demand
beyond late 2010 to early 2011, or a continued growth in lodging
supply, could result in returns that are substantially below
expectations, or result in losses, which could have a material
adverse effect on our business, financial condition, results of
operations and our ability to make distributions to our
stockholders.
Future
terrorist attacks or increased concern about terrorist
activities could adversely affect the travel and lodging
industries and may affect operations for the lodging properties
that we acquire.
As part of the effects of previous terrorist attacks in the
United States, terrorist alerts and a decline in consumer and
business spending, the lodging industry could experience a
decline in business caused by a reduction in travel for both
business and pleasure. Any kind of terrorist activity within the
United States or elsewhere could negatively impact both domestic
and international markets as well as our business. Such attacks
or threats of attacks could have a material adverse effect on
our business, our ability to insure our properties and our
operations.
We may
not have control over properties under
construction.
We may acquire sites under development, as well as sites which
have existing properties, including properties which require
renovation. If we acquire a property for development or
renovation, we may be subject to the risk that we cannot control
construction costs and the timing of completion of construction
or a developers ability to build in conformity with plans,
specifications and timetables.
39
We are
subject to the risk of increased lodging operating
expenses.
We are subject to the risk of increased lodging operating
expenses, including, but not limited to, the following cost
elements:
|
|
|
|
|
wage and benefit costs;
|
|
|
|
repair and maintenance expenses;
|
|
|
|
employee liabilities;
|
|
|
|
energy costs;
|
|
|
|
property taxes;
|
|
|
|
insurance costs; and
|
|
|
|
other operating expenses.
|
Any increases in one or more of these operating expenses could
have a significant adverse impact on our results of operations,
cash flows and financial position.
We are
subject to the risk of potentially significant tax penalties in
case our leases with the TRS lessees do not qualify for tax
purposes as arms length.
Our TRS lessees will incur taxes or accrue tax benefits
consistent with a C corporation. If the leases
between us and our TRS lessees were deemed by the Internal
Revenue Service to not reflect arms length transactions
for tax purposes, we may be subject to severe tax penalties as
the lessor that will increase our lodging operating expenses and
adversely impact our profitability and cash flows.
Our
results of operations, financial position, cash flows and
ability to service debt and to make distributions to
stockholders will depend on the ability of the independent
property operators to operate and manage the
hotels.
Under the provisions of the Internal Revenue Code, as a REIT, we
are allowed to own lodging properties but are prohibited from
operating these properties. In order for us to satisfy certain
REIT qualification rules, we will enter into leases with the TRS
lessees for each of our lodging properties. The TRS lessees will
in turn contract with independent property operators that will
manage
day-to-day
operations of our properties. Although we will consult with the
property operators with respect to strategic business plans, we
may be limited, depending on the terms of the applicable
operating agreement and the applicable REIT qualification rules,
in our ability to direct the actions of the independent property
operators, particularly with respect to daily operations. Thus
even if we believe that our lodging properties are being
operated inefficiently or in a manner that does not result in
satisfactory occupancy rates, revenue per available room,
average daily rates or operating profits, we may not have
sufficient rights under a particular property operating
agreement to enable us to force the property operator to change
its method of operation. We can only seek redress if a property
operator violates the terms of the applicable property operating
agreement with the TRS lessee, and then only to the extent of
the remedies provided for under the terms of the property
operating agreement. Our results of operations, financial
position, cash flows and ability to service debt and to make
distributions to stockholders shall, therefore, be substantially
dependent on the ability of the property operators to operate
our properties successfully. Some of our operating agreements
may have lengthy terms, may not be terminable by us before the
agreements expiration and may require the payment of
substantial termination fees. In the event that we are able to
and do replace any of our property operators, we may experience
significant disruptions at the affected hotels, which may
adversely affect our ability to make distributions to our
stockholders.
40
There
may be operational limitations associated with management and
franchise agreements affecting our properties and these
limitations may prevent us from using these properties to their
best advantage for our stockholders.
The TRS lessees will lease and hold some of our properties and
may enter into franchise or license agreements with nationally
recognized lodging brands. These franchise agreements may
contain specific standards for, and restrictions and limitations
on, the operation and maintenance of our properties in order to
maintain uniformity within the franchiser system. We expect that
franchisors will periodically inspect our properties to ensure
that we maintain their standards. We do not know whether those
limitations may restrict our business plans tailored to each
property and to each market.
The standards are subject to change over time, in some cases at
the direction of the franchisor, and may restrict our TRS
lessees ability, as franchisee, to make improvements or
modifications to a property without the consent of the
franchisor. Conversely, as a condition to the maintenance of a
franchise license, a franchisor could also require us to make
capital expenditures, even if we do not believe the capital
improvements are necessary, desirable, or likely to result in an
acceptable return on our investment. Action or inaction on our
part or by our TRS lessees could result in a breach of those
standards or other terms and conditions of the franchise
agreements and could result in the loss or termination of a
franchise license.
In connection with terminating or changing the franchise
affiliation of a property, we may be required to incur
significant expenses or capital expenditures. Moreover, the loss
of a franchise license could have a material adverse effect upon
the operations or the underlying value of the property covered
by the franchise because of the loss of associated name
recognition, marketing support and centralized reservation
systems provided by the franchisor. A loss of a franchise
license for one or more lodging properties could materially and
adversely affect our results of operations, financial condition
and cash flows, including our ability to service debt and make
distributions to our stockholders.
We
will face competition in the lodging industry, which may limit
our profitability and return to our stockholders.
The lodging industry is highly competitive. This competition
could reduce occupancy levels and rental revenues at our
properties, which would adversely affect our operations. We
expect to face competition from many sources. We will face
competition from other lodging facilities both in the immediate
vicinity and the geographic market where our lodging properties
will be located. In addition, increases in operating costs due
to inflation may not be offset by increased room rates. We will
also face competition from nationally recognized lodging brands
with which we will not be associated.
We will also face competition for investment opportunities.
These competitors may be other real estate investment trusts,
national lodging chains and other entities that may have
substantially greater financial resources than we do. If our
advisor is unable to compete successfully in the acquisition and
management of our lodging properties, our results of operation
and financial condition may be adversely affected and may reduce
the cash available for distribution to our stockholders.
As to our properties that will be operated by independent
property operators, our revenues will depend on the ability of
such independent property operators to compete successfully with
other hotels and resorts in their respective markets. Some of
our competitors may have substantially greater marketing and
financial resources than us. If the independent property
operators are unable to compete successfully or if our
competitors marketing strategies are effective, our
results of operations, financial condition and ability to
service debt may be adversely affected and may reduce the cash
available for distribution to our stockholders.
41
Risks
Related to an Investment in Our Shares
The
lack of an active public trading market for our shares combined
with the limit on the number of our shares a person may own may
discourage a takeover and make it difficult for stockholders to
sell shares quickly.
There is no active public trading market for our shares, and we
do not expect there ever will be one. Our charter also prohibits
the ownership by one person or affiliated group of more than
9.8% in value of our stock or more than 9.8% in value or number,
whichever is greater, of our common stock, unless exempted by
our board of directors, to assist us in meeting the REIT
qualification rules, among other things. This limit on the
number of our shares a person may own may discourage a change of
control of us and may inhibit individuals or large investors
from desiring to purchase your shares by making a tender offer
for your shares through offers financially attractive to you.
Moreover, you should not rely on our redemption plan as a method
to sell shares promptly because our redemption plan includes
numerous restrictions that limit your ability to sell your
shares to us, and our board of directors may amend, suspend or
terminate our redemption plan without giving you advance notice.
In particular, the redemption plan provides that we may redeem
shares only if we have sufficient funds available for redemption
and to the extent the total number of shares for which
redemption is requested in any quarter, together with the
aggregate number of shares redeemed in the preceding three
fiscal quarters, does not exceed five percent of the total
number of our shares outstanding as of the last day of the
immediately preceding fiscal quarter. See Description
of Shares Redemption of Shares for a
description of our redemption plan. Therefore, it will be
difficult for you to sell your shares promptly or at all. In
addition, the price received for any shares sold prior to a
liquidity event is likely to be less than the proportionate
value of the real estate we own. Investor suitability standards
imposed by certain states may also make it more difficult to
sell your shares to someone in those states. The shares should
be purchased as a long-term investment only.
Failing
to qualify as a REIT would adversely affect our operations and
ability to make distributions.
If we fail to qualify as a REIT in any taxable year, we would be
subject to U.S. federal income tax on our net taxable
income at corporate rates. In addition, we would generally be
disqualified from treatment as a REIT for the four taxable years
following the year we lost our REIT qualification. Losing our
REIT qualification would reduce our net earnings available for
investment or distribution to stockholders because of the
additional tax liability, and we would no longer be required to
make distributions. We might be required to borrow funds or
liquidate some investments in order to pay the applicable tax.
Qualification as a REIT involves the application of highly
technical and complex Internal Revenue Code provisions for which
there are only limited judicial and administrative
interpretations. The determination of various factual matters
and circumstances not entirely within our control may affect our
ability to qualify as a REIT. In order to qualify as a REIT, we
must satisfy a number of requirements regarding the composition
of our assets and the sources of our gross income. Also, we must
make distributions to our stockholders aggregating annually at
least 90% of our net taxable income, excluding net capital
gains. In addition, legislation, new regulations, administrative
interpretations or court decisions may adversely affect our
investors, our ability to qualify as a REIT for
U.S. federal income tax purposes or the desirability of an
investment in a REIT relative to other investments. See
United States Federal Income Tax
Considerations Requirements for
Qualification General.
Dividends
payable by REITs generally do not qualify for reduced U.S.
federal income tax rates because qualifying REITs do not pay
U.S. federal income tax on their net income.
The maximum U.S. federal income tax rate for dividends
payable by domestic corporations to taxable
U.S. stockholders (as such term is defined under
United States Federal Income Tax
Considerations below) is 15% (through 2010 under
current law). Dividends payable by REITs, however, are generally
not eligible for the reduced rates, except to the extent that
they are attributable to dividends paid by a taxable REIT
subsidiary or a C corporation, or relate to certain
42
other activities. This is because qualifying REITs receive an
entity level tax benefit from not having to pay
U.S. federal income tax on their net income. As a result,
the more favorable rates applicable to regular corporate
dividends could cause stockholders who are individuals to
perceive investments in REITs to be relatively less attractive
than investments in the stocks of non-REIT corporations that pay
dividends, which could adversely affect the value of the stock
of REITs, including our common stock. In addition, the relative
attractiveness of real estate in general may be adversely
affected by the reduced U.S. federal income tax rates
applicable to corporate dividends, which could negatively affect
the value of our properties.
Possible
legislative or other actions affecting REITs could adversely
affect our stockholders and us.
The rules dealing with U.S. federal income taxation are
constantly under review by persons involved in the legislative
process and by the Internal Revenue Service, or IRS, and the
U.S. Treasury Department. Changes to tax laws (which
changes may have retroactive application) could adversely affect
our stockholders or us. It cannot be predicted whether, when, in
what forms, or with what effective dates, the tax laws
applicable to our stockholders or us will be changed.
Our
board of directors may revoke our REIT election without
stockholder approval, which may cause adverse consequences to
our stockholders.
Our organizational documents permit our board of directors to
revoke or otherwise terminate our REIT election, without the
approval of our stockholders, if the board determines that it is
not in our best interest to qualify as a REIT. In such a case,
we would become subject to U.S. federal income tax on our
net taxable income and we would no longer be required to
distribute most of our net taxable income to our stockholders,
which may have adverse consequences on the total return to our
stockholders.
Conflicts
of interest may arise between holders of our common shares and
holders of partnership interests in our operating
partnership.
Our directors and officers have duties to us and to our
stockholders under Maryland law in connection with their
management of us. At the same time, we, as general partner will
have fiduciary duties under Delaware law to our operating
partnership and to the limited partners in connection with the
management of our operating partnership. Our duties as general
partner of our operating partnership and its partners may come
into conflict with the duties of our directors and officers to
us and our stockholders.
Under Delaware law, a general partner of a Delaware limited
partnership owes its limited partners the duties of good faith
and fair dealing. Other duties, including fiduciary duties, may
be modified or eliminated in the partnerships partnership
agreement. The partnership agreement of our operating
partnership provides that, for so long as we own a controlling
interest in our operating partnership, any conflict that cannot
be resolved in a manner not adverse to either our stockholders
or the limited partners will be resolved in favor of our
stockholders.
Additionally, the partnership agreement expressly limits our
liability by providing that we and our officers, directors,
agents and employees, will not be liable or accountable to our
operating partnership for losses sustained, liabilities incurred
or benefits not derived if we or our officers, directors, agents
or employees acted in good faith. In addition, our operating
partnership is required to indemnify us and our officers,
directors, employees, agents and designees to the extent
permitted by applicable law from and against any and all claims
arising from operations of our operating partnership, unless it
is established that: (1) the act or omission was committed
in bad faith, was fraudulent or was the result of active and
deliberate dishonesty; (2) the indemnified party actually
received an improper personal benefit in money, property or
services; or (3) in the case of a criminal proceeding, the
indemnified person had reasonable cause to believe that the act
or omission was unlawful. These limitations on liability do not
supersede the indemnification provisions of our charter.
43
The provisions of Delaware law that allow the fiduciary duties
of a general partner to be modified by a partnership agreement
have not been tested in a court of law, and we have not obtained
an opinion of counsel covering the provisions set forth in the
partnership agreement that purport to waive or restrict our
fiduciary duties.
Maryland
law could restrict change in control which could have the effect
of inhibiting a change in control even if a change in control
were in our stockholders interest.
Provisions of Maryland law applicable to us prohibit business
combinations with:
|
|
|
|
|
any person who beneficially owns 10% or more of the voting power
of our outstanding voting shares, referred to as an interested
stockholder;
|
|
|
|
an affiliate who, at any time within the two-year period prior
to the date in question, was the beneficial owner of 10% or more
of the voting power of our outstanding shares, also referred to
as an interested stockholder; or
|
|
|
|
an affiliate of an interested stockholder.
|
These prohibitions last for five years after the most recent
date on which the interested stockholder became an interested
stockholder. Thereafter, any business combination must be
recommended by our board of directors and approved by the
affirmative vote of at least 80% of the votes entitled to be
cast by holders of our outstanding voting shares and two-thirds
of the votes entitled to be cast by holders of our voting shares
other than voting shares held by the interested stockholder or
by an affiliate or associate of the interested stockholder.
These requirements could have the effect of inhibiting a change
in control even if a change in control were in our
stockholders interest. These provisions of Maryland law do
not apply, however, to business combinations that are approved
or exempted by our board of directors prior to the time that
someone becomes an interested stockholder. In addition, a person
is not an interested stockholder if the board of directors
approved in advance the transaction by which he or she otherwise
would have become an interested stockholder. However, in
approving a transaction, the board of directors may provide that
its approval is subject to compliance, at or after the time of
approval, with any terms and conditions determined by the board.
Our
charter permits our board of directors to issue stock with terms
that may subordinate the rights of the holders of our current
common stock or discourage a third party from acquiring
us.
Our board of directors may determine that it is in our best
interest to classify or reclassify any unissued stock and
establish the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms or conditions of
redemption of any such stock. Thus, our board of directors could
authorize the issuance of such stock with terms and conditions
that could subordinate the rights of the holders of our common
stock or have the effect of delaying, deferring or preventing a
change in control of us, including an extraordinary transaction
(such as a merger, tender offer or sale of all or substantially
all of our assets) that might provide a premium price for
holders of our common stock. However, the issuance of preferred
stock must also be approved by a majority of independent
directors not otherwise interested in the transaction, who will
have access at our expense to our legal counsel or to
independent legal counsel. In addition, the board of directors,
with the approval of a majority of the entire board and without
any action by the stockholders, may amend our charter from time
to time to increase or decrease the aggregate number of shares
or the number of shares of any class or series that we have
authority to issue. If our board of directors determines to take
any such action, it will do so in accordance with the duties it
owes to holders of our common stock.
44
ESTIMATED
USE OF PROCEEDS
The following table presents information about how the proceeds
raised in this offering will be used. Information is provided
assuming (i) the sale of the minimum number of shares in
the offering, (ii) the sale of the maximum number of shares
in the offering based on the $10.00 per share offering price and
(iii) we incur no leverage. Many of the numbers in the
table are estimates because all fees and expenses cannot be
determined precisely at this time. The actual use of the capital
we raise is likely to be different than the figures presented in
the table because we may not raise the entire offering amount of
$1,000,000,000. Raising less than the full $1,000,000,000 in the
offering will alter the amounts of commissions, fees and
expenses set forth below. In addition, we currently expect to
incur leverage of 50% of our assets, on average. Based upon the
assumptions described above, we expect that approximately 86% of
the proceeds of the $1,000,000,000 offering will be used for
investments, while the remaining 14% will be used to pay
expenses and fees, including the payment of fees to Carey
Financial and the payment of fees and reimbursement of expenses
to our advisor. If we raise the minimum offering amount only, we
expect that approximately 85% of the proceeds of the $10,000,000
minimum offering will be used for investments, while the
remaining 15% will be used to pay expenses and fees, including
the payment of fees to Carey Financial and the payment of fees
and reimbursement of expenses to our advisor.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum Sale of
|
|
|
Maximum Sale
|
|
|
|
1,000,000 Shares
|
|
|
100,000,000 Shares
|
|
|
|
in the Offering
|
|
|
in the Offering
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
Amount
|
|
|
Public Offering
|
|
|
|
|
|
Public Offering
|
|
|
|
($)
|
|
|
Proceeds
|
|
|
Amount ($)
|
|
|
Proceeds
|
|
|
Gross Public Offering Proceeds
|
|
|
10,000,000
|
|
|
|
100
|
%
|
|
|
1,000,000,000
|
|
|
|
100
|
%
|
Less Public Offering Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
Commissions(1)
|
|
|
700,000
|
|
|
|
7.00
|
%
|
|
|
70,000,000
|
|
|
|
7.00
|
%
|
Dealer Manager
Fee(2)
|
|
|
300,000
|
|
|
|
3.00
|
%
|
|
|
30,000,000
|
|
|
|
3.00
|
%
|
Other Organization and Offering
Expenses(3)
|
|
|
200,000
|
|
|
|
2.00
|
%
|
|
|
7,754,000
|
|
|
|
0.78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Organization and Offering
Expenses(4)
|
|
|
1,200,000
|
|
|
|
12.00
|
%
|
|
|
107,754,000
|
|
|
|
10.78
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Public Offering Proceeds Available for
Investment(5)
|
|
|
8,800,000
|
|
|
|
88.00
|
%
|
|
|
892,246,000
|
|
|
|
89.22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
Fees(6)
|
|
|
220,000
|
|
|
|
2.20
|
%
|
|
|
22,306,150
|
|
|
|
2.23
|
%
|
Acquisition
Expenses(7)
|
|
|
65,000
|
|
|
|
0.65
|
%
|
|
|
6,500,000
|
|
|
|
0.65
|
%
|
Working Capital
Reserve(8)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Proceeds to be
Invested(9)
|
|
|
8,515,000
|
|
|
|
85.15
|
%
|
|
|
863,439,850
|
|
|
|
86.34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
We will generally pay a selling
commission in connection with the offering of $0.70 per share
sold, equivalent to seven percent of the $10.00 offering price.
Sales that qualify for volume discounts and net of commission
sales will reduce the aggregate overall selling commissions. See
The Offering/Plan of Distribution for a
description of volume discounts. The offering proceeds are
calculated as if all shares are sold at $10 per share and do not
take into account any reduction in selling commissions.
|
|
(2)
|
|
We will pay a dealer manager fee of
up to $0.30 per share sold, equivalent to three percent of the
$10.00 offering price to Carey Financial. A portion of this fee
may be re-allowed to any selected dealer that enters into an
addendum to the selected dealer agreement with Carey Financial.
See The Offering/Plan of Distribution.
|
|
|
|
(3)
|
|
Other Organization and
Offering Expenses represent all expenses incurred in
connection with our qualification and registration of our
shares, including registration fees paid to the SEC, FINRA and
state regulatory authorities, issuer legal and accounting
expenses, due diligence costs, advertising, sales literature,
fulfillment, escrow agent, transfer agent and personnel costs
associated with preparing the registration and offering of our
shares. Amounts of certain of the Other Organization and
Offering Expenses are not determinable at this time;
however, we expect that if we raise only the minimum offering
amount, Other Organization and Offering Expenses
will likely exceed 2.0% of the gross proceeds of this offering
and our distribution reinvestment plan. If Other
Organization and Offering Expenses, including
reimbursements for bona fide invoiced due diligence expenses,
exceed 2.0% of the gross proceeds of this offering and our
distribution reinvestment plan, the excess will be paid by CLA
with no recourse to us. See Management
Compensation.
|
|
|
|
(4)
|
|
The total underwriting compensation
in connection with this offering, including selling commissions
and the dealer manager fee cannot exceed the limitations
prescribed by FINRA. The Total Organization and Offering
Expenses shall be reasonable and shall in no event exceed
an amount equal to 15% of the gross proceeds of this offering
and our distribution reinvestment plan. In addition, our advisor
will be responsible for other organization and offering expenses
in excess of two percent of the gross proceeds of this offering
and our distribution reinvestment plan.
|
45
|
|
|
(5)
|
|
While we cannot say with certainty
how many properties we would purchase if only the minimum
offering amount is raised, we would hope to purchase a minimum
of one to two properties if we only raise the minimum offering
amount. See Risk Factors If we only sell
the minimum offering amount, we will invest in very few assets
and our stockholders may recognize greater risk and a lower
return and Risk Factors Since
this is a best-efforts offering, there is neither
any requirement, nor any assurance that more than the minimum
offering amount will be raised for a discussion of the
risks associated with raising only the minimum offering amount.
The above estimate is based on the assumption that we will tend
to invest in smaller and less expensive properties if we were to
raise the minimum offering amount only. However, the actual
number of lodging properties will be based in large part on the
size, pricing and leverage utilized for each property. As we
continue to raise offering proceeds in excess of our minimum
offering amount, we expect to increase the diversification of
our lodging properties, including with respect to the size and
type of lodging properties we invest in.
|
|
|
|
(6)
|
|
Acquisition fees include all fees
and commissions paid by us in connection with the making of
investments, including the purchase, development or construction
of properties. However, acquisition fees exclude any development
fee or construction fee paid to a person who is not an affiliate
of our sponsor in connection with the actual development and
construction of a project after our acquisition of the property.
The presentation in the table assumes that all investments are
in lodging properties. If we raise the maximum amount of the
offering of $1,000,000,000 and all of our investments are 50%
leveraged, the total acquisition fees payable will be
$44,612,300. See Management Compensation for
a complete description of the terms, conditions and limitations
of the payment of fees to our advisor.
|
|
|
|
(7)
|
|
Acquisition Expenses
are expenses related to our selection and acquisition of
investments, whether or not the investments are ultimately
acquired or originated. These expenses include but are not
limited to travel and communications expenses, the cost of
appraisals, title insurance, non-refundable option payments on
investments not acquired, legal fees and expenses, accounting
fees and expenses and miscellaneous expenses, related to
selection and acquisition of investments whether or not
ultimately acquired or originated. Acquisition
Expenses do not include acquisition fees.
|
|
(8)
|
|
The advisor may, but is not
required to, establish reserves from offering proceeds,
operating funds or the available proceeds of any sales of our
assets.
|
|
|
|
(9)
|
|
Cash amounts distributed to
stockholders in excess of cash flow from operating activities
may be funded, without limitation, from offering proceeds, which
would reduce the amount of offering proceeds available for
investment. We expect to use substantially all of the proceeds
from our distribution reinvestment plan to fund redemptions
under our redemption plan.
|
Once we receive minimum gross proceeds of $10,000,000 in this
offering and thereafter on an ongoing basis, we intend to
contribute the net proceeds of this offering and our
distribution reinvestment plan to our operating partnership. Our
operating partnership will use the net proceeds received from
us: (1) to fund acquisitions and investments in accordance
with our investment guidelines; (2) for working capital
purposes; (3) to fund our ongoing operations and pay our
expenses; (4) to fund redemptions of our common shares and
interests in the operating partnership;
and/or
(5) repay indebtedness incurred under various financing
instruments.
Set forth below is information about proceeds raised under our
distribution reinvestment plan, assuming we sell all of the
shares available under the plan, in one case, and half of the
available shares, in the other case. We will pay no selling
commissions or dealer manager fees in connection with purchases
through our distribution reinvestment plan and we will not use
offering proceeds to pay administrative expenses of the plan.
Over the life of our company, we generally expect that the
amount of proceeds received under our distribution reinvestment
plan will be used to fund requests for redemptions by our
stockholders. In the early years of our program, when we expect
to receive fewer redemption requests, the proceeds from our
distribution reinvestment plan will likely exceed redemption
requests. Any such excess proceeds will not be reserved, but
will be available for other purposes, which may include funding
investments or for working capital. In the later years of our
program, redemption requests may exceed the amount of proceeds
received under our distribution reinvestment plan, in which
event we may use other funds, to the extent available, to fund
such redemptions.
|
|
|
|
|
|
|
|
|
|
|
Maximum Sale of
|
|
|
Sale of 12,500,000
|
|
|
|
25,000,000 Shares in
|
|
|
Shares in
|
|
|
|
the Distribution Plan
|
|
|
the Distribution Plan
|
|
|
Gross Proceeds
|
|
$
|
237,500,000
|
|
|
$
|
118,750,000
|
|
46
MANAGEMENT
COMPENSATION
The following table sets forth the type and, to the extent
possible, estimates of the amounts of all fees, compensation,
income, partnership distributions and other payments that our
advisor, Carey Financial and their affiliates will be entitled
to receive in connection with (1) our organization and
offering stage, (2) our acquisition and operational stage
and (3) our liquidation stage. These payments will result
from non-arms length bargaining. See Conflicts of
Interest. The estimated amounts of fees listed in the
following table are based on the assumptions that (a) all
investments are made in lodging properties and (b) the
maximum net proceeds of the offering available for investment
are $892,218,000 and the minimum net proceeds of the offering
available for investment are $8,800,000 as discussed under
Estimated Use of Proceeds. The following
table also sets forth equity awards to be granted to our
officers and directors,
non-director
members of the investment committee and to officers and
employees of our advisor.
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
Organization and Offering Stage
|
|
|
|
|
|
CLA
|
|
Reimbursement for organization and offering expenses, excluding
selling commissions and the dealer manager
fee.(1)
Our advisor will be responsible for other organization and
offering expenses, excluding selling commissions and the dealer
manager fee, in excess of two percent of the gross proceeds of
this offering and our distribution reinvestment plan.
|
|
These expenses are estimated to be (i) $200,000 if
1,000,000 shares are sold in the offering and
(ii) $7,754,000 if 100,000,000 shares are sold in the
offering. Amounts that maybe reimbursed to broker-dealers and
certain other costs are not determinable at this time.
|
|
|
|
|
|
Carey Financial
|
|
Selling commissions paid in connection with the offering:
Selling commissions will be paid to Carey Financial of up to a
maximum of $0.70 per share sold. Carey Financial will, in turn,
re-allow all selling commissions to selected dealers.
|
|
The maximum amount payable to Carey Financial is (i) $700,000 if
1,000,000 shares are sold in the offering and (ii)
$70,000,000 if 100,000,000 shares are sold in the offering,
all of which will be re-allowed to the selected dealers. The
estimated amounts payable to Carey Financial take into
consideration volume discounts and sales made net of commissions
in connection with the offering only.
|
|
|
|
|
|
|
|
Selling commissions paid in connection with purchases
pursuant to our distribution reinvestment plan: We will not
pay selling commissions related to the purchases of shares
through our distribution reinvestment plan.
|
|
|
|
|
|
|
|
Carey Financial
|
|
Dealer manager fees in connection with the offering: A
dealer manager fee will be paid to Carey Financial of up to a
maximum of $0.30 per share sold, a portion of which may be
re-allowed to selected dealers for shares sold by the selected
dealers.
|
|
The amount payable to Carey Financial is (i) $300,000 if
1,000,000 shares are sold in the offering and (ii)
$30,000,000 if 100,000,000 shares are sold in the offering,
a portion of which may be re-allowed to the selected dealers.
The estimated amounts payable to
|
|
|
|
|
|
47
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
|
|
Carey Financial take into consideration volume discounts and
sales made net of commissions in connection with the offering
only.
|
|
|
|
|
|
|
|
Dealer manager fees in connection with purchases pursuant to
our distribution reinvestment plan: We will not pay dealer
manager fees in connection with purchases of shares made
pursuant to our distribution reinvestment plan.
|
|
|
|
Acquisition Stage
|
|
|
|
|
|
CLA
|
|
Total acquisition fees payable to CLA by us (which fees may
include real estate brokerage fees, mortgage placement fees,
lease-up fees and transaction structuring fees) will equal 2.50%
of the total investment cost of the properties acquired and
loans originated by us. We will also reimburse CLA for
acquisition expenses.
Total
investment cost means, with respect to a property acquired or a
loan originated, an amount equal to the sum of the contract
purchase price of such investment plus the acquisition fees and
acquisition expenses paid in connection with the investment and
other fees and costs approved by our independent directors
relating to the initial capitalization of the investment.
|
|
The actual amount to be paid to CLA will depend upon the
aggregate total cost of the investments we make or acquire,
which in turn is dependent upon the gross offering proceeds and
the amount of leverage we use to implement our investment
strategy, and accordingly is not determinable at this time. If
the investments we make or acquire from the proceeds of this
offering are, on average, 50% leveraged, the acquisition fees
payable to CLA are estimated to be approximately
(i) $440,000 if 1,000,000 shares are sold in the
offering and (ii) $44,612,300 if 100,000,000 shares
are sold in the offering. If the investments we make or acquire
from the proceeds of this offering are, on average, 75%
leveraged, the acquisition fees payable to CLA are estimated to
be approximately (i) $880,000 if 1,000,000 shares are
sold in the offering and (ii) $89,224,600 if
100,000,000 shares are sold in the
offering.(2)
See Conflicts of Interest.
|
|
|
|
|
|
|
|
The total of all acquisition fees payable by sellers, borrowers
or us to CLA and unaffiliated third parties on all investments,
and the total amount of acquisition expenses we pay, must be
reasonable and together may not exceed six percent of the
aggregate contract purchase price of all investments we purchase
and the principal amount of loans we originate. A majority of
the directors (including a majority of
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
the independent directors) not otherwise interested in any
transaction may approve fees in excess of these limits if they
find the excess commercially competitive, fair and reasonable to
us.(3)(4)
|
|
|
|
Operational Stage
|
|
|
|
|
|
|
|
All fees, expenses and distributions on the special general
partner interest payable during the operational stage are
subject to the 2%/25% Guideline.
|
|
|
|
|
|
|
|
CLA
|
|
An asset management fee is payable to CLA by us equal to 0.50%
of the aggregate average market value of our investments.
|
|
If the minimum number of 1,000,000 shares is sold in the
offering and the investments we make or acquire from the
proceeds of this offering are 50% leveraged, the average market
value as a result of the offering would be approximately
$17,045,600. The annual asset management fee on these assets
would be approximately
$85,228.(2)
|
|
|
|
|
|
|
|
Average market value is equal to the total investment costs of
the investment, less acquisition fees, unless a later appraisal
by an independent appraiser is obtained, in which case that
later appraised value will become the average market value.
|
|
If the maximum number of 100,000,000 shares is sold in the
offering and the investments we make or acquire from the
proceeds of this offering are 50% leveraged, the average market
value as a result of the offering would be approximately
$1,728,280,502. The annual asset management fee on these
assets would be approximately $8,641,403.
|
|
|
|
|
|
|
|
|
|
If the maximum number of 100,000,000 shares is sold in the
offering and the investments we make or acquire from the
proceeds of this offering are 75% leveraged, the average market
value as a result of the offering would be approximately
$3,456,561,004. The annual asset management fee on these
assets would be approximately
$17,282,805.(2)
|
|
|
|
|
|
CLA
|
|
We will reimburse CLA for various expenses incurred in
connection with its provision of services to us. In addition to
reimbursement of
|
|
Not determinable at this time.
|
|
|
|
|
|
|
|
|
|
|
49
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
third party expenses that will be paid by our advisor
(including property-specific costs, professional fees, office
expenses, travel expenses and business development expenses), we
will reimburse our advisor for the allocated costs (including
compensation) of personnel and overhead in providing management
of our day- to-day operations, including asset management,
accounting services, stockholder services, corporate management
and operations, except that we will not reimburse our advisor
for the cost of personnel to the extent such personnel are used
in transactions (acquisitions, dispositions and refinancings)
for which our advisor receives a transaction fee. CLA must
absorb, or reimburse us for, the amount in any twelve-month
period ending on the last day of any fiscal quarter by which our
operating expenses, including asset management fees,
distributions paid on the special general partner interest
during the operational stage, loan financing fees and
disposition fees paid on assets, other than interests in real
property, exceed the 2%/25% Guideline. Such reimbursement must
be made within 60 days after the end of the applicable
twelve-month period. To the extent that operating expenses
payable or reimbursable by us exceed this limit and a majority
of independent directors determine that the excess expenses were
justified based on any unusual and nonrecurring factors which
they deem sufficient, CLA may be reimbursed in future quarters
for the full amount of the excess, or any portion thereof, but
only to the extent the reimbursement would not cause our
operating expenses to exceed the 2%/25% Guideline in the
twelve-month period ending on the last day of such
quarter.(3)(4)(5)
|
|
|
|
|
|
|
|
CLA
|
|
Loan Financing Fee. We will pay the advisor up to 1% of
the principal amount of a refinanced
|
|
Not determinable at this time.
|
|
|
|
|
|
50
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
loan secured by property if (1) the maturity date of the
refinanced loan is less than one year away and the new loan has
a term of at least five years, (2) in the judgment of the
independent directors, the terms of the new loan represent an
improvement over the refinanced loan or (3) the new loan is
approved by the independent directors as being in our best
interest.
|
|
|
|
|
|
|
|
Carey Watermark Holdings
|
|
Carey Watermark Holdings has a special general partner profits
interest in our operating partnership which will entitle Carey
Watermark Holdings to receive 10% of distributions of available
cash. Available cash means the cash generated by operating
partnership operations and investments excluding cash from sales
and refinancings, after the payment of debt and other operating
expenses, but before distributions to partners. Distributions of
available cash will be paid quarterly; however, if the amount of
a quarterly distribution would cause the 2%/25% Guideline to be
exceeded for the relevant twelve-month period, the portion of
the distribution (which may be 100% of it) equal to the excess
over the 2%/25% Guideline will be deferred until the next
quarter in which the deferred portion of the distribution can be
paid without exceeding the 2%/25%
Guideline.(6)
|
|
Not determinable at this time. The actual amount to be paid to
Carey Watermark Holdings is limited to the 2%/25% Guideline.
|
|
|
|
|
|
Officers of CWI and Officers and Employees of our Advisor, the
Subadvisor and
Non-Director
Members of the Investment Committee
|
|
Our officers and officers and employees of CLA, the subadvisor
and their respective affiliates who perform services on our
behalf and non-director members of the investment committee may
be granted awards in the form of restricted stock units under
our 2010 Equity Incentive Plan.
|
|
Equity awards under our two equity incentive plans may not
exceed, on a combined basis, four percent of our outstanding
shares of common stock on a fully diluted basis, up to a maximum
amount of 4,000,000 shares.
|
|
|
|
|
|
Independent Directors
|
|
We will pay to each independent director (i) an annual fee of
$34,000, and (ii) an annual fee of $10,000 to serve on the
investment committee. In addition, the Chairman of the Audit
Committee will receive an annual fee of $5,000.
|
|
The estimated aggregate compensation payable to the independent
directors as a group for a full fiscal year is approximately
$137,000.
|
|
|
|
|
|
51
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
Each independent director is also entitled to receive an award
of 1,000 restricted stock units under our 2010 Equity Incentive
Plan when he or she joins the board and at each annual
stockholders meeting thereafter. The restricted stock
units will be fully vested on grant.
|
|
Equity awards under our two equity incentive plans may not
exceed, on a combined basis, four percent of our outstanding
shares of common stock on a fully diluted basis, up to a maximum
amount of 4,000,000 shares.
|
|
|
|
|
|
Non-Director
Members of the Investment Committee
|
|
We will pay any non-director member of the investment committee
who is not one of our officers an annual fee of $10,000 and an
annual award of 500 fully vested restricted stock units to serve
on the investment committee.
|
|
The estimated aggregate compensation currently payable for a
full fiscal year is approximately $10,000.
|
|
Dispositions/Liquidation Stage
|
|
|
|
|
|
|
|
All disposition fees payable upon sales of assets, other than
interests in real property, are subject to the 2%/25%
Guideline.
|
|
|
|
|
|
|
|
CLA
|
|
If CLA provides a substantial amount of services in the sale of
an investment, we will pay disposition fees in an amount equal
to the lesser of: (i) 50% of the competitive real estate
commission and (ii) 1.5% of the contract sales price of a
property. The total real estate commissions and the disposition
fees we pay shall not exceed an amount equal to the lesser of:
(i) six percent of the contract sales price of a property
or (ii) the commission paid in a competitive market for the
purchase or sale of a property that is reasonable and
competitive in light of the size, type and location of the
property.(3)(4)
|
|
Not determinable at this time.
|
|
|
|
|
|
|
|
If the advisory agreement is terminated, other than for cause,
or not renewed, we will pay CLA accrued and unpaid fees and
expense reimbursements earned prior to termination or non-
renewal of the advisory agreement. If our advisory agreement is
terminated for cause, or by the advisor for other than good
reason, we will pay CLA unpaid expense reimbursements.
|
|
Not determinable at this time.
|
|
|
|
|
|
52
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
Carey Watermark Holdings
|
|
Interest in Disposition Proceeds. Carey Watermark
Holdings special general partner interest will also
entitle it to receive distributions of up to 15% of the net
proceeds from the sale, exchange or other disposition of
operating partnership assets remaining after the corporation has
received a return of 100% of its initial investment in the
operating partnership (which will be equivalent to the initial
investment by our stockholders in our shares) (through certain
liquidity events or distributions) plus the six percent
preferred return rate. W. P. Carey and Watermark Capital
Partners may award their employees or the employees of their
affiliates (some of whom may also serve as our directors or
officers) interests in such distributions. A listing will not
trigger the payment of this distribution.
|
|
The incentive profits interest is dependent on our operations
and the amounts received upon the sale or other disposition of
the assets and is not determinable at this time.
|
|
|
|
|
|
|
|
If we terminate or do not renew the advisory agreement
(including as a result of a merger, sale of substantially all of
our assets or a liquidation), or if our advisor resigns for good
reason, all after two years from the start of operations of our
operating partnership, our operating partnership will have the
right, but not the obligation, to repurchase all or a portion of
Carey Watermark Holdings interests in our operating
partnership at the fair market value of those interests on the
date of termination, as determined by an independent
appraiser.(4)(5)
|
|
Not determinable at this time.
|
|
|
|
|
|
|
|
Subordinated Listing Distribution. At such time, if any,
as listing occurs, the special general partner will receive a
distribution in an amount equal to 15% of the amount by which
(i) our market value plus the total distributions made to our
stockholders since inception until the date of listing exceeds,
(ii) 100% of our investment in the operating partnership (which
will be equivalent to the initial investment
|
|
Not determinable at this time.
|
|
|
|
|
|
53
|
|
|
|
|
Entity Receiving Compensation
|
|
Form and Method of Compensation
|
|
Estimated Amount
|
|
|
|
by our stockholders in our shares) plus the total distributions
required to be made to achieve the six percent preferred return
rate.
|
|
|
|
|
The
market value will be calculated on the basis of the
average closing price or bid and asked price, as the case may
be, of the shares over the 30 trading days beginning
180 days after the shares are first listed on a stock
exchange or listed or included for quotation.
|
|
|
|
|
|
(1)
|
|
Organization and offering
expenses represents all expenses incurred in connection
with our qualification and registration of our shares including
registration fees paid to the SEC, the FINRA and state
regulatory authorities, issuer legal and accounting expenses,
due diligence costs, advertising, sales literature, fulfillment,
escrow agent, transfer agent and personnel costs associated with
preparing the registration and offering of our shares.
|
|
|
|
(2)
|
|
We currently estimate that in light
of current market conditions, we will borrow, on average, 50% of
the fair market value of our investment portfolio. The actual
leverage percentage we experience will affect the amount of
acquisition fees earned by CLA and the amount available for
investment will be affected by the amount we borrow (i.e. the
more that is borrowed, the more funds available for investment
in properties). If the minimum offering of 1,000,000 shares
are sold and the investment portfolio is 75% leveraged (the
maximum allowable), acquisition fees payable to CLA as a result
of the offering (assuming an aggregate total cost of all
investments of approximately $34,091,200) are estimated to be
approximately $880,000. If the minimum offering of
1,000,000 shares are sold and the investment portfolio is
75% leveraged (the maximum allowable), asset management fees
payable to CLA as a result of the offering are estimated to be
approximately $170,456.
|
|
|
|
(3)
|
|
CLA may choose on an annual basis
to take the acquisition fee, asset management fee and
disposition fee in cash or restricted shares, or a combination
thereof. For purposes of calculating the value per share of
restricted stock given for payment of a fee, the price per share
shall be the net asset value per share as determined by the most
recent appraisal performed by an independent appraiser or, if an
appraisal has not yet been performed, $10.00 per share.
|
|
(4)
|
|
If at any time the shares become
listed on a national securities exchange or are included for
quotation on The NASDAQ Stock Market, we will negotiate in good
faith with CLA a fee structure appropriate for an entity with a
perpetual life. A majority of the independent directors must
approve the new fee structure negotiated with CLA. In
negotiating a new fee structure, the independent directors shall
consider the following factors and any other factors they deem
relevant:
|
|
|
|
|
|
the size of the advisory fee in relation to the size,
composition and profitability of our portfolio;
|
|
|
|
the success of CLA in generating opportunities that meet our
investment objectives;
|
|
|
|
the rates charged to other REITs and to investors other than
REITs by advisors performing similar services;
|
|
|
|
additional revenues realized by CLA and its affiliates through
their relationship with us whether we pay them or they are paid
by others with whom we do business;
|
|
|
|
the quality and extent of service and advice furnished by CLA;
|
|
|
|
the performance of our investment portfolio, including income,
conservation or appreciation of capital, frequency of problem
investments and competence in dealing with distress
situations; and
|
|
|
|
the quality of our portfolio in relationship to the investments
generated by CLA for the account of other clients.
|
The board, including a majority of the independent directors,
may not approve a new fee structure that is, in its judgment,
more favorable to CLA than the then-current fee structure.
|
|
|
(5)
|
|
If the advisory agreement is
terminated, other than for cause, or not renewed, we will pay
our advisor accrued and unpaid fees and expense reimbursements,
including any subordinated fees, earned prior to termination or
non-renewal of the advisory agreement.
|
|
(6)
|
|
Carey Watermark Holdings may choose
on an annual basis to reinvest the distributions from its
special general partnership in our operating partnership in
exchange for partnership units.
|
54
CONFLICTS
OF INTEREST
There are various conflicts of interest in the operation of our
business. The independent directors have an obligation to
function on our behalf in all situations in which a conflict of
interest arises and have a fiduciary obligation to act on behalf
of the stockholders. Possible conflicts of interest include the
following:
Our advisor and the subadvisor may realize substantial
compensation. A transaction involving the
purchase, financing, or sale of any investment by us may result
in the realization by our advisor of substantial compensation, a
portion of which will be paid by our advisor to the subadvisor,
and by Carey Watermark Holdings, which owns a special general
partnership interest in our operating partnership, of
substantial distributions. Our advisor is owned indirectly by W.
P. Carey, the subadvisor is owned indirectly by Watermark
Capital Partners and Carey Watermark Holdings is owned
indirectly by both W. P. Carey and Watermark Capital Partners.
In most cases, our advisor has discretion with respect to all
decisions relating to any such transaction. Acquisition fees are
based upon the total investment cost, rather than the quality or
suitability of the investments. Asset management fees are based
initially on the purchase price of the investments and later on
an appraisal. Distributions on the special general partnership
interest are based on available cash flow and gains from our
investments. While compensation based on the total amount or
value of the investment may create an incentive for the advisor
to use more leverage to invest in assets, the maximum total
overall leverage the advisor may arrange for us to incur without
the need for further approval is the lesser of 75% of the total
cost of all our investments, or 300% of our net assets, or a
higher amount with the approval of a majority of our independent
directors. Net assets are our total assets (other than
intangibles), valued at cost before deducting depreciation,
reserves for bad debts and other non-cash reserves, less total
liabilities. Notwithstanding the leverage cap, a potential
conflict still exists in that fees based on the total amount or
value of the investment increase as leverage increases and more
assets are purchased using leverage. Potential conflicts may
also arise in connection with a decision by the asset operating
committee (on our behalf) of whether to hold or sell an asset.
Disposition fees, Carey Watermark Holdings right to
certain distributions pursuant to its special general
partnership profits interest and the subadvisors right to
share in a portion of these fees and distributions, may create a
conflict between the advisor, the subadvisor and us regarding
the timing and terms of the sale of such assets. Alternatively,
because our advisor receives asset management fees, it may have
an incentive not to sell a property. Our advisor and the
subadvisor may also face a conflict in recommending the rate at
which we pay distributions because in a liquidity transaction,
the special general partner will be entitled to distributions in
respect of realized gains on the disposition of assets once
stockholders have received a return of 100% of their initial
investment and the six percent preferred return rate has been
met.
Agreements between us and our advisor, W. P. Carey, Watermark
Capital Partners or entities sponsored or managed by them or our
advisor are not arms length
agreements. Such agreements and arrangements will
not be the result of arms length negotiations. In
addition, as a result of the fact that we have some common
management with our advisor, the subadvisor and W. P.
Carey, our board of directors may encounter conflicts of
interest in enforcing our rights against them in the event of a
default by, or disagreement with, any of them, or in invoking
powers, rights or options pursuant to any agreement between any
of them and us. Certain provisions of our charter require that
compensation to our advisor be approved by a majority of the
independent directors and that terms of transactions with our
advisor, the subadvisor and their respective affiliates be no
less favorable to us than terms which could be obtained from
unaffiliated entities. In making such determinations our
directors will use their judgment and may, but are not required
to, retain the services of advisors, professional service
providers or other third parties to assist them. We may enter
into transactions, such as real estate joint ventures or
investments in real estate funds with entities that are
sponsored
and/or
managed by our advisor, the subadvisor or their respective
affiliates. We may also purchase assets from, sell assets to, or
enter into mergers or other business combination transactions
with one or more entities managed by our advisor or the
subadvisor in the future or
55
managed now by W. P. Carey or Watermark Capital Partners.
Although all such transactions must be approved on our behalf by
our independent directors, and in some cases by our
stockholders, conflicts may arise in the event of a disagreement
between us and any such entity, or because certain of our
directors serve on the boards of W. P. Carey and Watermark
Capital Partners or entities managed by them, and may serve on
the boards of other entities sponsored
and/or
managed in the future by W. P. Carey or Watermark Capital
Partners or other entities, or in enforcing our rights against
such entities under agreements we have with them.
We have limited independence. A substantial
portion of our management functions are performed by officers of
CLA or W. P. Carey or Watermark Capital Partners pursuant to the
advisory agreement and subadvisory agreement. Additionally, some
of the members of the board of directors of W. P. Carey or
entities managed by it and Mr. Medzigian, the chief
executive officer of Watermark Capital Partners, will also be
members of our board of directors upon consummation of this
offering. Further, our independent directors were initially
selected by our advisor. As a result of the foregoing, we have
limited independence from our advisor, the subadvisor and their
respective affiliates. This limited independence, combined with
our advisors and Carey Watermark Holdings interest
in us, may exacerbate the conflicts of interest described in
this section by giving our advisor and the subadvisor
substantial influence over us while having different economic
incentives than our stockholders.
Several of our officers and certain of our directors have
ownership interests in W. P. Carey or Watermark Capital
Partners. Several of our officers and certain of
our directors own shares in W. P. Carey or Watermark Capital
Partners. W. P. Carey is also the parent company of Carey
Financial. These ownership interests may result in conflicts by
creating an incentive for members of our management to make
decisions or enter into transactions on our behalf, that may be
beneficial to W. P. Carey or Watermark Capital Partners and not
necessarily beneficial to us.
The following table sets forth as of June 30, 2010 certain
information regarding ownership interest in W. P. Carey and
Watermark Capital Partners of our directors and officers.
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Interest
|
|
|
|
|
of Watermark Capital
|
|
Number of Shares
|
|
|
Partners Beneficially
|
|
of W. P. Carey
|
Name
|
|
Owned
|
|
Beneficially
Owned(1)
|
|
Michael G. Medzigian
|
|
|
99.9
|
|
|
|
0
|
|
|
Trevor P. Bond
|
|
|
0
|
|
|
|
20,612
|
|
|
Mark J. DeCesaris
|
|
|
0
|
|
|
|
94,695
|
|
|
Thomas J. Ridings, Jr.
|
|
|
0
|
|
|
|
27,579
|
|
|
Thomas E. Zacharias
|
|
|
0
|
|
|
|
296,960
|
|
|
|
|
|
(1)
|
|
Includes options exercisable in the
next 60 days.
|
Our officers and directors who are employees of the advisor, the
subadvisor or their respective affiliates, may also receive
interests in distributions paid to the special general partner
upon certain liquidity transactions. The ability to participate
in such distributions may result in conflicts by creating an
incentive for those officers and directors who participate in
them to enter into liquidity transactions on our behalf which
may not necessarily be to our benefit. See Management
Compensation.
Certain of our independent directors provide advisory services
to hotel investors and developers and invest in lodging assets,
including lodging facilities, which may give rise to potential
conflicts of interest. While we believe that we will benefit
from the substantial experience of our independent directors,
they may from time to time have interests in transactions which
we are considering due to their other business affiliations. If
an independent director has an interest in a matter under review
by the board of directors, he or she will recuse himself or
herself from considering the matter and the matter will be
subject to approval by a majority of our disinterested directors.
56
We may enter into transactions with or take loans from our
advisor, the subadvisor or their respective affiliates or
entities managed by them. We may borrow funds or
purchase properties from, or enter into joint ventures with, our
advisor, the subadvisor or their respective affiliates or
entities managed by them if doing so is consistent with the
investment procedures, our objectives and policies and if other
conditions are met. See Investment Objectives,
Procedures and Policies. We may borrow funds from our
advisor, the subadvisor or their respective affiliates to
provide the debt portion of a particular investment or to
facilitate refinancings if we are unable to obtain a permanent
loan at that time or, in the judgment of the board, it is not in
our best interest to obtain a permanent loan at the interest
rates then prevailing and the board has reason to believe that
we will be able to obtain a permanent loan on or prior to the
end of the loan term provided by our advisor, the subadvisor or
their respective affiliates.
See Investment Objectives, Procedures and
Policies. We may borrow funds on a short-term basis
from W. P. Carey or Watermark Capital Partners or their
affiliates at any time.
We may also acquire assets from, or through joint ventures with,
entities sponsored or managed by our advisor, the subadvisor and
their respective affiliates, including the
CPA®
REITs and other entities managed by W. P. Carey or Watermark
Capital Partners, if we believe that doing so is consistent with
our investment objectives and we comply with our investment
policies and procedures. We may acquire single assets or
portfolios of assets. Like us, the
CPA®
REITs intend to consider alternatives for providing liquidity
for their stockholders some years after they have invested
substantially all of the net proceeds from their public
offerings. We may seek to purchase assets from another
CPA®
REIT that is entering its liquidation phase. These transactions
may take the form of a direct purchase of assets, a merger or
another type of transaction. We may invest in other vehicles,
such as real estate opportunity funds, that are formed,
sponsored or managed by our advisor or the subadvisor and their
respective affiliates.
Except as provided in our charter, we may not invest in other
REITs advised or managed, directly or through affiliates, by the
advisor and with respect to which the advisor, the subadvisor
and their respective subsidiaries or affiliates receive separate
fees.
Our advisor, the subadvisor and their respective affiliates
are engaged in or will engage in additional management or
investment activities that have and may have in the future
overlapping objectives with us. Each of Watermark
Capital Partners and our advisor has agreed that none of it and
its affiliates will invest in lodging investments except for
individual investments of less than $4 million,
non-controlling interests in lodging investments and lodging
investments that have been considered and rejected by the
investment committee. No fund, including the
CPA®
REITs, managed by our advisor and its affiliates will be subject
to these commitments of our advisor unless our advisor and its
affiliates own a majority of the outstanding voting equity
interests of such fund. The commitments of Watermark Capital
Partners and our advisor will terminate upon the earliest to
occur of (1) the termination of the subadvisory agreement,
(2) the third anniversary of the commencement of this
offering if we have not raised aggregate net proceeds of
$500 million and (3) the date on which we have
invested at least 90% of the net proceeds of this offering. In
addition, none of W. P. Careys, the
CPA®
REITs or Watermark Capital Partners pre-existing
lodging investments will be contributed to us.
In light of the foregoing, our advisor, the subadvisor and the
directors and officers who are common to us, W. P. Carey, the
CPA®
REITs and Watermark Capital Partners, will experience conflicts
of interest. In addition, our advisor, the subadvisor and their
respective affiliates may establish in the future other
investment vehicles that will invest in commercial real estate
related assets, including lodging properties. To the extent that
these entities have similar investment objectives, our advisor
and the subadvisor may face conflicts of interest in allocating
investment, purchase and sale, and financing opportunities among
itself, the subadvisor or their respective affiliates.
The conflicts described in the preceding paragraph may be
affected by variations in the economic benefits to our advisor,
the subadvisor and such entities from different allocations of
such
57
opportunities. Our advisor will use its best efforts to present
suitable investments to us consistent with our investment
procedures, objectives and policies. If our advisor or any of
its direct or indirect members is presented with a potential
investment in an asset which might be made by a member or by
more than one investment entity which it advises or manages,
including a future REIT managed by the advisor with objectives
similar to ours, the decision as to the suitability of the asset
for investment by a particular entity will be made by the chief
investment officer of our advisor based upon a variety of
factors which may include:
|
|
|
|
|
cash flow from the asset;
|
|
|
|
effect of the acquisition of the asset on the diversification of
each entitys portfolio;
|
|
|
|
the amount of equity required to make the investment;
|
|
|
|
the policies of each entity relating to leverage;
|
|
|
|
the funds of each entity available for investment;
|
|
|
|
the estimated income tax effects of the purchase on each entity;
|
|
|
|
the length of time the funds have been available for investment
and the manner in which the potential investment can be
structured by each entity; and
|
|
|
|
whether a particular entity has been formed specifically for the
purpose of making particular types of investments (in which case
it will generally receive preference in the allocation of those
types of investments).
|
Consideration will be given to joint ownership (e.g.,
tenancy-in-common
or joint venture arrangement) of a particular asset determined
to be suitable for more than one investment entity in order to
achieve diversification of each entitys portfolio and
efficient completion of an entitys portfolio. Our
directors (including the independent directors) must approve any
investment in which we invest jointly with an entity sponsored
and/or
managed by our advisor, the subadvisor or their respective
affiliates.
There may be competition from our advisor, the subadvisor and
their respective affiliates and entities which any of them
manages for the time and services of our officers and
directors. We depend on the board, our advisor,
the subadvisor and W. P. Carey for our operations and for the
acquisition, operation and disposition of our investments. CLA
has entered into the advisory agreement with us pursuant to
which it will perform certain functions relating to the
investment of our funds and our overall portfolio management,
including overseeing and guiding independent property operators
that carry out
day-to-day
management of our properties. See
Management Advisory Agreement.
CLA will enter into a subadvisory with Watermark Capital
Partners pursuant to which the subadvisor will provide services
to the advisor primarily relating to acquiring, managing,
financing and disposing of our assets and overseeing the
independent property operators that manage
day-to-day
operations of our properties. In addition, the subadvisor will
agree to provide Mr. Medzigians services as our chief
executive officer during the term of the subadvisory agreement.
Our advisor and the subadvisor may be performing similar
services for other entities they manage in the future. W. P.
Carey currently also performs such services for programs it
sponsors or manages, and both W. P. Carey and Watermark Capital
Partners may perform these services for REITs, partnerships or
other investment entities in the future. Our advisor, the
subadvisor and W. P. Carey are not required to devote any
minimum amount of time and attention to us as opposed to the
other entities managed or to be managed by them. They will
devote the time to our affairs as they, within their sole
discretion, exercised in good faith, determine to be necessary
for our benefit and that of our stockholders. See
Management. There is no exclusivity
arrangement between W. P. Carey and Watermark Capital Partners,
as described above, and further, CLA, the subadvisor and their
respective affiliates and Carey Financial are not restricted
from acting as general partner, advisor, underwriter, selling
agent or broker-dealer in public or private offerings of
securities in REITs, real
58
estate partnerships or other entities which may have objectives
similar to ours and which are sponsored by affiliated or
non-affiliated persons.
Our UPREIT Structure. Our directors and
officers have duties to us and to our stockholders under
Maryland law in connection with their management of us. At the
same time, we, as general partner, have fiduciary duties under
Delaware law to our operating partnership and to the limited
partners in connection with the management of our operating
partnership. Our duties as general partner to our operating
partnership and its partners may come into conflict with the
duties of our directors and officers to us and to our
stockholders. Under Delaware law, a general partner of a
Delaware limited partnership owes its limited partners the
duties of good faith and fair dealing. Other duties, including
fiduciary duties, may be modified or eliminated in the
partnerships partnership agreement. The partnership
agreement of our operating partnership provides that for so long
as we own a controlling interest in our operating partnership,
any conflict that cannot be resolved in a manner not adverse to
either our stockholders or the limited partners will be resolved
in favor of our stockholders.
Additionally, the partnership agreement expressly limits our
liability by providing that we and our officers, directors,
agents and employees, will not be liable or accountable to our
operating partnership for losses sustained, liabilities incurred
or benefits not derived if we or our officers, directors, agents
or employees acted in good faith. In addition, our operating
partnership is required to indemnify us and our officers,
directors, employees, agents and designees to the extent
permitted by applicable law from and against any and all claims
arising from operations of our operating partnership, unless it
is established that (1) the act or omission was committed
in bad faith, was fraudulent or was the result of active and
deliberate dishonesty; (2) the indemnified party actually
received an improper personal benefit in money, property or
services; or (3) in the case of a criminal proceeding, the
indemnified person had reasonable cause to believe that the act
or omission was unlawful. These limitations on liability do not
supersede the indemnification provisions of our charter, which
are discussed under Management Limited
Liability and Indemnification of Directors, Officers, Employees
and Other Agents.
The provisions of Delaware law that allow the fiduciary duties
of a general partner to be modified by a partnership agreement
have not been tested in a court of law, and we have not obtained
an opinion of counsel covering the provisions set forth in the
partnership agreement that purport to waive or restrict our
fiduciary duties. See Risk Factors Risks
Related to an Investment in Our Shares Conflicts of
interest may arise between holders of our common shares and
holders of partnership interests in our operating
partnership.
Our dealer managers affiliation with W. P. Carey, its
parent, may cause conflicts of interest. Carey
Financial, a subsidiary of W. P. Carey will receive, selling
commissions and a dealer manager fee for each share sold,
subject to certain exceptions, and will receive reimbursement
for bona fide due diligence expenses. See The
Offering/Plan of Distribution. As dealer manager,
Carey Financial has certain obligations to undertake a due
diligence investigation with respect to the parties involved in
this offering, including W. P. Carey. This need to investigate
its parent may cause a conflict of interest for Carey Financial
in carrying out its due diligence obligations.
59
MANAGEMENT
We operate under the direction of a board of directors, the
members of which are accountable to us and our stockholders as
fiduciaries. Prior to the initial offering date, our directors
will have reviewed and approved our amended and restated
charter. The board of directors is responsible for the
management and control of our affairs. The board of directors
has retained CLA to manage our overall portfolio, acquire and
dispose of investments and to provide management oversight to
our independent property operators, subject to the boards
supervision. CLA has retained the services of the subadvisor, an
affiliate of Watermark Capital Partners, to provide it with
access to the lodging experience of the subadvisor. We have no
employees. We must have at least three directors and may have no
more than nine directors.
A majority of the board of directors must be comprised of
independent directors, except for a period of up to 90 days
after the death, removal or resignation of an independent
director pending the election of such independent
directors successor. An independent director is a director
who is not and has not for the last two years been associated
with the advisor or any of its affiliates or the subadvisor and
its affiliates. A director is deemed to be associated with the
advisor or subadvisor if he or she, directly or indirectly
(including through a member of his or her immediate family),
owns any interest in, is employed by, has any material business
or professional relationship with, or serves as an officer or
director of the advisor or any of its affiliates or the
subadvisor and its affiliates, except as a director or trustee
for not more than two other REITs organized by or advised by the
advisor, W. P. Carey or Watermark Capital Partners. An
independent director may not perform material services for us,
except to carry out the responsibilities of a director.
Each director holds office until the next annual meeting of
stockholders and until his or her successor has been duly
elected and qualified. Although the number of directors may be
increased or decreased by a majority of the existing directors,
a decrease shall not have the effect of shortening the term of
any incumbent director. Any director may resign at any time and
may be removed with or without cause by the stockholders upon
the affirmative vote of at least a majority of all the votes
entitled to be cast at a meeting called for the purpose of the
proposed removal. The notice of the meeting shall indicate that
the purpose, or one of the purposes, of the meeting is to
determine if the director shall be removed.
A vacancy created by an increase in the number of directors or
the death, resignation, removal, adjudicated incompetence or
other incapacity of a director may be filled only by a vote of a
majority of the remaining directors (in case of election of an
independent director, by a vote of a majority of the remaining
independent directors) and any director elected to fill a
vacancy will serve for the remainder of the full term of the
directorship in which the vacancy occurred.
The directors are not required to devote all of their time to us
and are only required to devote the time to our affairs as their
duties require. The directors will generally meet quarterly or
more frequently if necessary. It is not expected that the
directors will be required to devote a substantial portion of
their time to discharge their duties as directors. Consequently,
in the exercise of their fiduciary responsibilities, the
directors will be relying heavily on our advisor. The board is
empowered to fix the compensation of all officers that it
selects and may pay remuneration to directors for services
rendered to us in any other capacity. We will pay to each
independent director (i) an annual fee of $34,000, and
(ii) an annual fee of $10,000 to serve on the investment
committee. In addition, the Chairman of the Audit Committee will
receive an additional annual fee of $5,000. It is estimated that
the aggregate compensation payable to the independent directors
as a group for a full fiscal year will be approximately
$137,000. Further, under our 2010 Equity Incentive Plan, each
non-employee director will receive an award of 1,000 restricted
stock units when he or she joins the board and at each annual
stockholders meeting thereafter. The restricted stock
units will be fully vested on grant. Except for potential awards
under our 2010 Equity Incentive Plan, we will not pay any
compensation to our officers or directors who also serve as
officers or directors of our advisor or the subadvisor. However,
we reimburse our advisor for the actual cost of personnel
allocable to their time devoted to
60
providing administrative services to us. See
Management Advisory Agreement for
a more complete discussion of these reimbursements. The board
may change the compensation of directors.
Our general investment and borrowing policies are set forth in
this prospectus. The directors may establish further written
policies on investments and borrowings and shall monitor the
administrative procedures, investment operations and performance
of us, our advisor and the independent property operators to
assure that the policies are in the best interest of the
stockholders and are fulfilled. We will follow the policies on
investments and borrowings set forth in this prospectus unless
and until they are modified by the directors.
The board is also responsible for reviewing our fees and
expenses on at least an annual basis and with sufficient
frequency to determine that the fees and expenses incurred are
reasonable in light of our investment performance, our net
assets, net income, and the fees and expenses of other
comparable unaffiliated REITs. In addition, a majority of the
independent directors and a majority of directors not otherwise
interested in the transaction must approve all transactions with
our advisor, the subadvisor or their respective affiliates
(other than other publicly-registered entities, in which case
only the allocation of interests in the transaction must be
approved by the independent directors). The independent
directors also will be responsible for reviewing the performance
of our advisor and determining that the compensation to be paid
to our advisor is reasonable in relation to the nature and
quality of services to be performed and that the provisions of
the advisory agreement are being carried out. Specifically, the
independent directors will consider factors such as:
|
|
|
|
|
the amount of the fee paid to our advisor in relation to the
size, composition and performance of our investment portfolio;
|
|
|
|
the success of our advisor in generating investment
opportunities that meet our investment objectives;
|
|
|
|
rates charged to other REITs and investment entities other than
REITs by advisors performing similar services;
|
|
|
|
additional revenues realized by our advisor and its affiliates
through their relationship with us, whether we pay them or they
are paid by others with whom we do business;
|
|
|
|
the quality and extent of service and advice furnished by our
advisor;
|
|
|
|
the performance of our investment portfolio, including income,
conservation or appreciation of capital, frequency of problem
investments and competence in dealing with distress
situations; and
|
|
|
|
the quality of our portfolio relative to the investments
generated by our advisor for itself.
|
The advisor may not vote any shares it now owns or hereafter
acquires in any vote for the removal of our directors or any
vote regarding the approval or termination of any contract with
itself or any of its affiliates and any shares owned by the
advisor will not be included in determining the requisite
percentage in interest in shares necessary to take action on any
such matter.
Directors
and Executive Officers of the Company
Our directors, director nominees and executive officers are as
follows:
|
|
|
Name
|
|
Office
|
|
Michael G. Medzigian
|
|
Chief Executive Officer and Director Nominee
|
Trevor P. Bond
|
|
Chairman and Director Nominee
|
Michael D. Johnson
|
|
Independent Director Nominee
|
Robert E. Parsons
|
|
Chairman of the Audit Committee and Independent Director Nominee
|
|
|
Independent Director Nominee
|
Mark J. DeCesaris
|
|
Chief Financial Officer
|
Thomas E. Zacharias
|
|
Chief Operating Officer
|
61
The director nominees will be elected to our board at the time
the registration statement of which this prospectus is a part is
declared effective. The initial directors will hold office until
the next annual meeting of stockholders and until his or her
successor has been duly elected and qualified. The following is
a biographical summary of the experience of our directors,
director nominees and executive officers, including information
concerning the particular attributes, experience
and/or
skills that have led the board of directors to determine that
each nominee should serve as a director or director nominee.
Trevor P. Bond, age 48, the Chairman and a Director
Nominee, also serves as a Director and interim Chief Executive
Officer of W. P. Carey and as a Director of W. P. Carey
International LLC. From June 2007 to July 2010, Mr. Bond
served as a Director and on the Investment Committee of Carey
Asset Management. Mr. Bond will remain on the Board of
Directors of. Mr. Bond served as a director and a member of
the Audit Committees of
CPA®:14,
CPA®:15
and
CPA®:16
Global from 2005 to April 2007. Mr. Bond has been the
managing member of a private investment vehicle investing in
real estate limited partnerships, Maidstone Investment Co., LLC,
since 2002. Mr. Bond served in several management
capacities for Credit Suisse First Boston (CSFB)
from 1992 to 2002, including: co-founder of CSFBs Real
Estate Equity Group, which managed approximately $3 billion
of real estate assets; founding team member of Praedium Recovery
Fund, a $100 million fund managing distressed real estate
and mortgage debt; and as a member of the Principal Transactions
Group managing $100 million of distressed mortgage debt.
Prior to CSFB, Mr. Bond served as an associate to the real
estate and finance departments of Tishman Realty &
Construction Co. and Goldman, Sachs & Co. in New York.
Mr. Bond also founded and managed an international trading
company from 1985 to 1987 that sourced industrial products in
China for U.S. manufacturers. Mr. Bond received an
M.B.A. from Harvard University. Mr. Bonds
qualifications for appointment to our board and as our Chairman
over 25 years of real estate experience in several sectors,
including finance, development, investment and asset management,
across a range of property types, as well as direct experience
in Asia.
Michael G. Medzigian, age 50, a Director Nominee, has been
Chairman and Managing Partner of Watermark Capital Partners, LLC
since its formation in 2002. Watermark Capital Partners, LLC is
a private real estate investment firm focused on hotels and
resorts, golf, resort residential, fractional and club programs,
and new-urbanism and mixed-use projects. Through 2001,
Mr. Medzigian was President and Chief Executive Officer of
Lazard Freres Real Estate Investors and a Managing Director of
Lazard where he was recruited to oversee the repositioning of
Lazards real estate private equity fund operations, one of
the largest real estate repositionings in history. At Lazard,
the real estate portfolio for which Mr. Medzigian was
responsible included the ownership of three lodging operating
companies, InTown Suites and Suburban Lodge in the United States
and Cliveden/Destination Europe in the United Kingdom. From 1994
to 1999, Mr. Medzigian was a Founding Partner of Olympus
Real Estate Corporation, the real estate fund management
affiliate of Hicks, Muse, Tate and Furst Incorporated. At
Olympus he acquired and oversaw an extensive portfolio of
lodging assets that included, among others, such properties as
the Boca Raton Resort & Club, Boca Raton, FL, the
Cheeca Lodge & Spa, Islamorada, FL, the Inn at Laguna
Beach, Laguna Beach, CA, La Posada de Santa Fe
Resort & Spa, Santa Fe, NM, the Ritz Carlton
Rancho Mirage, Rancho Mirage, CA, the Algonquin, New York, NY,
Equinox Resort & Spa, Manchester, VT, and the Fairmont
Copley Plaza, Boston, MA as well as lodging operating companies
that included RockResorts, Park Plaza International and Chalet
Susse. Earlier in his career, Mr. Medzigian was President
of Cohen Realty Services, a Chicago-based real estate investment
services firm, he founded and was National Director of the
Hospitality Consulting Practice at Deloitte & Touche,
and he held various management positions with Marriott
Corporation. Mr. Medzigian has served as Chairman and a
Director of Atria, Inc., Chairman and a Director of Kapson
Senior Quarters Corp., President, CEO and a Director of Park
Plaza International, President, CEO and a Director of
RockResorts, and as a Director of American Apartment
Communities, the American Seniors Housing Association, Arnold
Palmer Golf Management, the Assisted Living Federation of
America, Dermody Properties, iStar Financial (NYSE: SFI,
including serving in its audit and compensation committees),
Kemayan Hotels and Leisure (Australian ASX), and the Rubenstein
Company. He is or has been a member of the Cornell Hotel
62
Society, the Cornell Real Estate Council, the Cornell
University Council, Pension Real Estate Association, the Urban
Land Institute (Chairman, Hotel Development Council), and Young
Presidents Organization (Executive Committee Member).
Mr. Medzigian received a Bachelor of Science from Cornell
University. Mr. Medzigians qualifications for
appointment to our board include his extensive experience in a
broad range of investing activities in lodging assets, his
executive experience with Watermark Capital Partners, LLC and
his involvement in various companies, associations and councils
in the hospitality industry.
Michael D. Johnson, age 54, an Independent Director
Nominee, has been the Dean of Cornell Universitys School
of Hotel Administration since July 2006 and holds the E.M.
Statler Professorship of Hotel Administration. Prior to joining
Cornell University in 2006, Professor Johnson was the D. Maynard
Phelps Collegiate Professor of Business Administration from 1998
and a Professor of Marketing from 1995 at the University of
Michigans Ross School of Business. Dean Johnson serves as
the Chairman of the Board of Governors of the Program in Real
Estate at Cornell University, a member of the Board of Governors
of Entrepreneurship@Cornell, and a member of the Board of
eCornell, Cornell Universitys online learning company. At
Michigan, he served as the Director of the Center for
Customer-Focused Management in Executive Education at the
University of Michigans Ross School of Business from 2004
to May 2006. Professor Johnson also served as a member of the
Executive Committee of the University of Michigans Ross
School of Business from 1996 to 1998. Professor Johnson has
consulted for a diverse range of companies and public agencies,
including Promus Hotels, Northwest Airlines, the National
Association of Convenience Stores, Dell Corporation, Dow
Chemical, Schering Pharmaceutical and Volvo focusing on, among
other things, marketing strategy, service management, customer
portfolio management and customer satisfaction measurement and
relationship management. Professor Johnson is a founding member
of the University of Michigans National Quality Research
Center where he was instrumental in the development of the
American Customer Satisfaction Index. He has authored over a
hundred academic articles and industry reports over his career
and his five books have been published in six different
languages. His most recent books include Competing in a
Service Economy: How to Create a Competitive Advantage through
Service Development and Innovation (Jossey-Bass,
2003) and the award winning Improving Customer
Satisfaction, Loyalty and Profit: An Integrated Measurement and
Management System (Jossey-Bass, 2000). Professor Johnson has
served as associate editor of the Journal of Consumer
Research and served on the editorial boards of the
Journal of Marketing, the International Journal of
Research in Marketing, the Journal of Service Research,
and the International Journal of Service Industry
Management. Professor Johnson holds a Ph.D. and M.B.A. from
the University of Chicago and a Bachelor of Science degree with
honors from the University of Wisconsin. Professor
Johnsons qualifications for appointment to our board
include his distinguished academic career, his expertise in
marketing and customer relationship management, his leadership
of the leading institution for hospitality industry education
and research and his consulting experience in the hospitality
industry.
Robert E. Parsons, Jr., age 54, an Independent
Director Nominee, has been the Executive Vice President and
Chief Financial Officer of Exclusive Resorts, LLC, the
preeminent destination club, since 2004, shortly after its
founding. From 2002 until 2004, Mr. Parsons was Managing
Director of Wasatch Investments, a privately held consulting and
investment firm. He was the chief financial officer of Host
Marriott Corporation from 1995 to 2002. He began his career with
Marriott Corporation in 1981, and continued to work in various
strategic planning and treasury capacities at the company until
it split into Marriott International and Host Marriott
Corporation in 1993. After the split, Mr. Parsons served as
treasurer of Host Marriott Corporation, a company with over
$9 billion in total lodging assets, before being promoted
to chief financial officer. Mr. Parsons served as an
independent director of CNL Hotels & Resorts, Inc.
from 2003 to April 2007, where he was the lead independent
director and chaired the audit committee. He also served as
chairman of the Hotel Development Council of the Urban Land
Institute and as a member of the National Advisory Counsel of
the Graduate School of Management at Brigham Young University.
Mr. Parsons received his MBA from Brigham Young University
and earned his bachelors degree from the same alma mater
in Accounting.
63
Mr. Parsons qualifications for appointment to our
board include his extensive senior executive and director
experience at several preeminent hospitality companies.
Mark J. DeCesaris, age 50, our Chief Financial Officer,
became Acting Chief Financial Officer, Chief Administrative
Officer and Managing Director of W. P. Carey in November 2005
and was appointed as Chief Financial Officer in July 2010.
Mr. DeCesaris also serves as Chief Financial Officer, Chief
Administrative Officer and Managing Director for
CPA®:17
Global,
CPA®:16
Global,
CPA®:15
and
CPA®:14
and Manager of Carey Financial, LLC. Mr. DeCesaris had been
a consultant to W. P. Careys finance department since May
2005. Prior to joining W. P. Carey, from March 2003 to December
2004, Mr. DeCesaris was Executive Vice President for
Southern Union Company, a natural gas energy company publicly
traded on the NYSE, where his responsibilities included
overseeing the integration of acquisitions and developing and
implementing a shared service organization to reduce annual
operating costs. From August 1999 to March 2003, he was Senior
Vice President for Penn Millers Insurance Company, a property
and casualty insurance company where he served as President and
Chief Operating Officer of Penn Software, a subsidiary of Penn
Millers Insurance. From 1994 to August 1999, he was President
and Chief Executive Officer of System One Solutions, a business
consulting firm that he founded. Mr. DeCesaris is a
certified public accountant and started his career with
Coopers & Lybrand in Philadelphia, PA and earned his
CPA license in 1983. Mr. DeCesaris graduated from Kings
College with a B.S. in Accounting and Informational Technology.
He currently serves as a member of the Board of Trustees of
Kings College and the Board of Trustees of the Hilton Hospital
Foundation.
Thomas E. Zacharias, age 56, currently our sole Director
and our Chief Operating Officer, has also served in the same
capacity and as a Managing Director with W. P. Carey,
CPA®:14,
and
CPA®:15
since March 2005, and with
CPA®:
17 Global since October 2007. Mr. Zacharias
joined W. P. Carey in 2002, is head of the Asset Management
Department and has served as President of
CPA®:16
Global since 2003. Mr. Zacharias previously served as an
Independent Director of
CPA®:14
from 1997 to 2001 and
CPA®:15
in 2001. Prior to joining W. P. Carey, Mr. Zacharias was a
Senior Vice President of MetroNexus North America, a Morgan
Stanley Real Estate Funds Enterprise. Prior to joining
MetroNexus in 2000, Mr. Zacharias was a Principal at Lend
Lease Development U.S., a subsidiary of Lend Lease Corporation,
a global real estate investment management company. Between 1981
and 1998 Mr. Zacharias was a senior officer at Corporate
Property Investors, which at the time of its merger into Simon
Property Group in 1998 was the largest private equity REIT.
Mr. Zacharias received his undergraduate degree, magna
cum laude, from Princeton University in 1976 and a Masters
in Business Administration from Yale School of Management in
1979. He is a member of the Urban Land Institute, International
Council of Shopping Centers and NAREIT, and served as a Trustee
of Groton School in Groton, Massachusetts between 2003 and May
2007.
Some of our future directors and officers may act as directors
or officers of W. P. Carey or Watermark Capital Partners and
their respective affiliates and entities they manage may own
interests in those entities.
Audit
Committee
Prior to the commencement of the offering, our board of
directors will establish an Audit Committee comprised of three
directors, all of whom will be independent directors as defined
in our charter and by reference to the rules, regulations and
listing standards of the New York Stock Exchange. We expect that
Robert E. Parsons will chair our audit committee and serve as
our audit committee financial expert, as that term
is defined by the SEC.
The Audit Committee will assist the board in overseeing:
|
|
|
|
|
our accounting and financial reporting processes;
|
|
|
|
the integrity and audits of our consolidated financial
statements;
|
|
|
|
our compliance with legal and regulatory requirements;
|
64
|
|
|
|
|
the qualifications and independence of our independent
registered public accounting firm; and
|
|
|
|
the performance of our independent registered public accounting
firm and any internal auditors.
|
Additional
Management
The individuals listed below who are officers of subsidiaries of
W. P. Carey, will provide their services to our advisor pursuant
to a services agreement, as described below and will initially
also serve as our officers.
|
|
|
Name
|
|
Office
|
|
Susan C. Hyde
|
|
Managing Director and Secretary
|
Thomas J. Ridings, Jr.
|
|
Executive Director and Chief Accounting Officer
|
Kristin Chung
|
|
Controller
|
Susan C. Hyde, age 41, is a Managing Director, Corporate
Secretary and Director of Investor Relations of W. P. Carey.
Ms. Hyde oversees the Investor Relations, Corporate
Communications and Special Events departments. Ms. Hyde
also serves as Manager of Carey Financial, LLC. Ms. Hyde is
an associated person of Carey Financial, LLC. She joined W. P.
Carey in 1990 after graduating from Villanova University, where
she received a B.S. degree in Business Administration with a
concentration in marketing and a B.A. degree in English. She is
a member of NAREIT and The Society of Corporate Secretaries and
Governance Professionals.
Thomas J. Ridings, Jr., age 42, joined W. P. Carey in
July 2004 as First Vice President and was promoted to Senior
Vice President in 2006 and Executive Director in March 2007. He
became Chief Accounting Officer in June 2007. Prior to joining
W. P. Carey, Mr. Ridings was a Vice President at CA, Inc.,
a computer software company publicly traded on the NYSE. Between
1990 and 2000 he worked at Ernst & Young LLP.
Mr. Ridings, a certified public accountant, received a B.S.
in accounting from Long Island University.
Kristin Chung, age 43, Senior Vice President, joined W. P.
Carey in September 2006 as Controller. From April 2004 until
September 2006, Ms. Chung was Chief Financial Officer with
First New York Partners, the manager and advisor of Forest City
Enterprise, Inc.s New York strategic business unit. Prior
to joining First New York Partners, Ms. Chung was with
Ernst & Young, LLC where she focused on assurance and
advisory services for global financial institutions.
Ms. Chung is a Certified Public Accountant, and received a
B.A. with concentrations in Psychology and Economics from
Wellesley College and an M.B.A. in Management from the Graduate
School of Management in New Jersey.
Executive
Compensation
We have no employees to whom we pay salaries. We do not intend
to pay any annual cash compensation to our officers for their
services as officers; however, we will pay fees to our advisor
and reimburse the advisor for the services of its personnel,
including those who serve as our officers, pursuant to the
advisory agreement, a portion of which will be paid by the
advisor to the subadvisor, and we will use equity incentive
awards under our 2010 Equity Incentive Plan to provide
incentives to our officers and to officers and employees of our
advisor, the subadvisor and their affiliates who perform
services on our behalf.
2010
Equity Incentive Plan
We plan to adopt two stock incentive plans, which are described
below. Awards under the two stock incentive plans will be
limited in amount, on a combined basis, to four percent of the
issued and outstanding shares of our common stock (on a fully
diluted basis, including those issued and outstanding under the
two stock incentive plans) at the time of award of the
restricted stock units, subject to a ceiling of
4,000,000 shares. The purpose of the two stock incentive
plans is to attract and
65
retain the services of experienced and qualified individuals who
are acting on our behalf, in a way that aligns their interests
with those of the stockholders. As discussed below, the stock
incentive plans will be administered by our independent
directors. We expect that our independent directors in making
decisions regarding awards under the Incentive Plan (as defined
below) will consider various factors, including the incentive
compensation payable to our advisor under the advisory agreement.
The
Incentive Plan
Under one plan, the Incentive Plan, incentive awards
may be granted to our officers and officers and employees of our
advisor, W. P. Carey and Watermark Capital Partners who perform
services on our behalf and to
non-director
members of the investment committee. Of our directors, initially
Trevor P. Bond and Michael G. Medzigian will be eligible
participants in the Incentive Plan. Incentive awards will be in
the form of restricted stock units.
Any
non-director
member of the investment committee will be awarded 500
restricted stock units annually under the Incentive Plan which
will be fully vested on grant.
Distributions or distribution equivalents may be payable on
unvested awards at the discretion of the Plan Administrator,
defined below.
None of the shares underlying the restricted stock units issued
pursuant to the Incentive Plan may be sold, transferred,
pledged, or otherwise encumbered or disposed of until the
restrictions on those shares shall have lapsed or been removed
under the provisions of the Incentive Plan. If a holder of
restricted stock units ceases to be employed by us, he will
forfeit any restricted stock unit on which the restrictions have
not lapsed or been otherwise removed.
The Incentive Plan will be administered by the independent
directors of our board of directors as the Plan
Administrator. Subject to the provisions of the Incentive
Plan, the Plan Administrator has authority to determine:
|
|
|
|
|
when to grant incentive awards; and
|
|
|
|
which eligible employees will receive incentive awards.
|
The Plan Administrator may impose conditions on the transfer of
restricted stock units received under the Incentive Plan, and
may impose other restrictions and requirements as it may deem
appropriate.
The Plan Administrator will also establish as to each restricted
stock unit issued under the Incentive Plan the terms and
conditions upon which the restrictions on those shares shall
lapse. The terms and conditions may also include, without
limitation, the lapsing of those restrictions as a result of the
disability, death or retirement of the participant.
Amendment
of the Incentive Plan and Incentive Awards
The board of directors may amend the Incentive Plan as it deems
advisable, provided that to the extent required by
Rule 16b-3
of the Securities Act of 1933, as amended, or the Securities
Act, our stockholders must approve any amendment that would
(i) materially increase the benefits accruing to
participants under the Incentive Plan, (ii) materially
increase the number of shares that may be issued under the
Incentive Plan, (iii) materially modify the requirements of
eligibility for participation in the Incentive Plan, or
(iv) effect a change that could not be made under our
charter without stockholder approval. Incentive awards granted
under the Incentive Plan may be amended with the consent of the
recipient so long as the amended award is consistent with the
terms of the Incentive Plan.
Directors
Incentive Plan
We plan to adopt a second stock incentive plan, the
Directors Incentive Plan, for members of our
board of directors who are not our employees or employees of W.
P. Carey or Watermark Capital Partners. Awards under the
Directors Incentive Plan will also be in the form of
restricted stock units.
66
None of the shares underlying the restricted stock units issued
pursuant to the Directors Incentive Plan may be sold,
transferred, pledged, or otherwise encumbered or disposed of
until the restrictions on those shares shall have lapsed or been
removed under the provisions of the Directors Incentive
Plan. If an independent director resigns, he will forfeit any
restricted stock unit on which the restrictions have not lapsed
or been otherwise removed.
Each independent director is entitled to receive an award of
1,000 restricted stock units under the Directors Incentive
Plan when he or she joins the board and at each annual
stockholder meeting thereafter. The restricted stock units will
be fully vested on grant. Distributions or distribution
equivalents may be payable on unvested awards at the discretion
of the Plan Administrator.
The Plan Administrator will establish as to each restricted
stock unit issued under the Directors Incentive Plan the
terms and conditions upon which the restrictions on those shares
shall lapse. The terms and conditions may also include, without
limitation, the lapsing of those restrictions as a result of the
disability, death or retirement of the participant.
Grants
under the 2010 Equity Incentive Plan
As of the date of this prospectus, there have been no awards
under the Incentive Plan or the Directors Incentive Plan.
Investment
Decisions
Before an investment is made, the transaction is reviewed by the
investment committee, unless the purchase price and contemplated
capital improvements to the investment are $10,000,000 or less,
in which case the investment may be approved by our Chief
Executive Officer. The investment committee retains the
authority to identify other categories of transactions that may
be entered into without its prior approval. The investment
committee is not directly involved in originating or negotiating
potential investments, but instead functions as a separate and
final step in the acquisition process.
We will also maintain an asset operating committee that will be
responsible for evaluating and making decisions with respect to
any capital expenditures, refinancing, disposition, sale
and/or any
other transaction in excess of $10,000,000 involving assets that
we have previously acquired.
Limited
Liability and Indemnification of Directors, Officers, Employees
and Other Agents
Under the Maryland General Corporation Law, a Maryland
corporation may limit the liability of directors and officers to
the corporation and its stockholders for money damages unless
such liability results from (a) actual receipt of an
improper benefit or profit in money, property or services or
(b) active and deliberate dishonesty established by a final
judgment and which is material to the cause of action.
In addition, the Maryland General Corporation Law allows
directors and officers to be indemnified against judgments,
penalties, fines, settlements, and expenses actually incurred in
a proceeding unless the following can be established:
|
|
|
|
|
the act or omission of the director or officer was material to
the cause of action adjudicated in 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
|
|
|
|
with respect to any criminal proceeding, the director or officer
had reasonable cause to believe his or her act or omission was
unlawful.
|
However, under Maryland law, a Maryland corporation may not
indemnify for an adverse judgment in a suit by or in the right
of the corporation or for a judgment of liability on the basis
that
67
personal benefit was improperly received, unless in either case
a court orders indemnification and then only for expenses.
Finally, the Maryland General Corporation Law permits a Maryland
corporation to advance reasonable expenses to a director or
officer upon receipt of a written affirmation by the director or
officer of his or her good faith belief that he or she has met
the standard of conduct necessary for indemnification and a
written undertaking by him or her or on his or her behalf to
repay the amount paid or reimbursed if it is ultimately
determined that the standard of conduct was not met.
Except as prohibited by Maryland law and as set forth below, our
organizational documents limit the personal liability of our
directors and officers to us and our stockholders for monetary
damages and provide that a director or officer or
non-director
member of the investment committee will be indemnified and
advanced expenses in connection with legal proceedings. We also
maintain a directors and officers liability insurance policy and
we expect to enter into indemnification agreements with each of
our directors and executive officers.
In addition to any indemnification to which our directors and
officers are entitled, our organizational documents provide that
we will indemnify other employees and agents to the extent
authorized by the directors, whether they are serving us or, at
our request, any other entity. Provided the conditions set forth
below are met, we have also agreed to indemnify and hold
harmless our advisor, the subadvisor and their affiliates
performing services for us from any loss or liability arising
out of the performance of its/their obligations under the
advisory agreement and the subadvisory agreement, as applicable.
However, as required by the applicable guidelines of the North
American Securities Administrators Association, Inc., our
charter provides that a director, our advisor and any affiliate
of our advisor will be indemnified by us for losses suffered by
such person and held harmless for losses suffered by us only if
all of the following conditions are met:
|
|
|
|
|
such person has determined, in good faith, that the course of
conduct which caused the loss or liability was in our best
interest;
|
|
|
|
such person was acting on our behalf or performing services for
us;
|
|
|
|
the liability or loss was not the result of negligence or
misconduct by such person (if a non-independent director, our
advisor or an affiliate of our advisor);
|
|
|
|
the liability or loss was not the result of gross negligence or
willful misconduct by such person (if an independent
director); and
|
|
|
|
such indemnification or agreement to hold harmless is
recoverable only out of our assets and not from the stockholders.
|
In addition, our charter provides that we may not indemnify a
director, our advisor or any affiliate of our advisor for losses
and liabilities arising from alleged violations of federal or
state securities laws unless one or more of the following
conditions are met:
|
|
|
|
|
there has been a successful adjudication on the merits of each
count involving alleged material securities law violations as to
the particular indemnitee;
|
|
|
|
such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular
indemnitee; or
|
|
|
|
a court of competent jurisdiction approves a settlement of the
claims against the particular indemnitee and finds that
indemnification of the settlement and the related costs should
be made, and the court considering the request for
indemnification has been advised of the position of the SEC and
of the published position of any state securities regulatory
authority in which securities of us were offered or sold as to
indemnification for violation of securities laws.
|
68
Finally, our charter provides that we may not pay or reimburse
reasonable legal expenses and other costs incurred by a
director, our advisor or any affiliate of our advisor in advance
of final disposition of a proceeding unless all of the following
are satisfied:
|
|
|
|
|
the proceeding relates to acts or omissions with respect to the
performance of duties or services on our behalf;
|
|
|
|
such person has provided us with written affirmation of his, her
or its good faith belief that the standard of conduct necessary
for indemnification has been met;
|
|
|
|
the legal proceeding was initiated by a third party who is not a
stockholder or, if by a stockholder acting in his, her or its
capacity as such, a court of competent jurisdiction approves
such advancement; and
|
|
|
|
such person has provided us with a written agreement to repay
the amount paid or reimbursed, together with the applicable
legal rate of interest thereon, if it is ultimately determined
that such person did not comply with the requisite standard of
conduct and is not entitled to indemnification.
|
The general effect to investors of any arrangement under which
any controlling person or any of our directors or officers is
indemnified or insured against liability is a potential
reduction in distributions resulting from such indemnification
or our payment of premiums associated with insurance. In
addition, indemnification could reduce the legal remedies
available to us and our stockholders against the indemnified
individuals. As a result, we and our stockholders may be
entitled to a more limited right of action than we and our
stockholders would otherwise have if these indemnification
rights were not included in our charter or the advisory
agreement.
However, indemnification does not reduce the exposure of
directors and officers to liability under federal or state
securities laws, nor does it limit a stockholders ability
to obtain injunctive relief or other equitable remedies for a
violation of a directors or an officers duties to us
or our stockholders, although the equitable remedies may not be
an effective remedy in some circumstances.
We have been informed that the SEC and some states
securities commissions take the position that indemnification
against liabilities arising under the Securities Act is against
public policy and unenforceable.
Advisory
Agreement
While our advisor will be responsible for the overall management
of our business, including services related to acquisitions and
dispositions of properties, typically an independent property
management company will execute
day-to-day
property level responsibilities. Our advisor will be the asset
manager responsible for our overall portfolio, including
providing strategic direction to the independent property
operators by identifying best practices, value enhancement
opportunities and efficiencies and overseeing the implementation
of our business plan.
Many of the services performed by the advisor and its affiliates
in managing our activities are summarized below. This summary is
provided to illustrate the material functions which the advisor
and its affiliates perform for us and it is not intended to
include all of the services which may be provided to us by other
third parties.
Under the terms of our advisory agreement, the advisor
undertakes to use its best efforts to present to us investment
opportunities consistent with our investment policies and
objectives. Subject to the authority of our board and at times
with the assistance of the special general partner, the advisor:
|
|
|
|
|
sources, analyzes and makes investments on our behalf,
consistent with our investment policies and objectives;
|
69
|
|
|
|
|
provides advice to us, and acts on our behalf with respect to
the acquisition, financing, refinancing, holding, leasing and
disposition of investments;
|
|
|
|
creates business plans and asset management strategies;
|
|
|
|
implements asset management strategies, including the following:
|
|
|
|
|
|
selecting and entering into agreements with the appropriate
lodging brands and independent property management companies;
|
|
|
|
overseeing and guiding the independent property operators that
carry out
day-to-day
management of our properties;
|
|
|
|
monitoring and consulting on revenue enhancement and cost
containment initiatives;
|
|
|
|
overseeing risk management policies;
|
|
|
|
monitoring initial and ongoing capital expenditures; and
|
|
|
|
evaluating asset rationalization, expansion, and reuse
strategies;
|
|
|
|
|
|
takes the actions and obtains the services necessary to
effectuate the acquisition, financing, refinancing, holding,
leasing and disposition of investments; and
|
|
|
|
provides overall management of our business activities and
performs other administrative services for us as requested by
the board.
|
Subject generally to the approval of the investment committee as
described herein, the board has authorized the advisor to make
investments in assets on our behalf if the investment, in
conjunction with our other investments and proposed investments,
is reasonably expected to fulfill our investment objectives and
policies as established by the board and then in effect. The
board has also authorized the advisor to enter into agreements
with third parties as may be necessary to fulfill our investment
objectives.
The term of the advisory agreement with respect to this offering
of shares ends on September 30, 2011. The advisory
agreement may be renewed for successive one-year periods,
following an evaluation of our advisors performance by our
independent directors as required by our charter. This review
must be conducted annually and the agreement will continue in
effect until 60 days after our independent directors shall
have notified the advisor of their determination either to renew
the agreement for an additional one-year period or terminate it,
as required by our charter. The advisory agreement may be
amended only by the written agreement of its parties. Pursuant
to our charter all amendments to the advisory agreement must be
approved by our independent directors. During our current fiscal
year, our advisor has not yet received any compensation, as we
have not yet begun our operations.
Additionally, the advisory agreement may be terminated:
|
|
|
|
|
immediately by us, at the sole option of a majority of our
independent directors, upon the bankruptcy of the advisor or for
cause;
|
|
|
|
|
|
without cause or penalty by action of our directors, a majority
of our independent directors or majority of our stockholders
upon 60 days written notice; or
|
|
|
|
|
|
immediately with good reason by the advisor.
|
Good reason is defined in the advisory agreement to
mean either:
|
|
|
|
|
any failure to obtain a satisfactory agreement from any
successor to us to assume and agree to perform our obligations
under the advisory agreement, or
|
|
|
|
|
|
any material breach of the advisory agreement of any nature
whatsoever by us provided that the breach is of a
material term or condition of the advisory agreement and we have
not cured
|
70
|
|
|
|
|
it within 30 days after written notice or, if the breach
cannot be cured within 30 days by reasonable effort, we
have not taken all necessary action without a reasonable time
period to cure the breach.
|
Cause is defined in the advisory agreement to mean
with respect to the termination of the advisory agreement, the
occurrence of any of the following: (i) the transfer of W.
P. Careys interests in our advisor to one or more entities
other than to one or more of its controlled subsidiaries,
(ii) fraud, criminal conduct, willful misconduct or willful
or negligent breach of fiduciary duty by the advisor that, in
each case, is determined by a majority of independent directors
to be materially adverse to us, or (iii) a breach of a
material term or condition of the advisory agreement by the
advisor which breach has not been cured within 30 days
after written notice or, if the breach cannot be cured within
30 days by reasonable effort, the advisor has not taken all
necessary action within a reasonable time period to cure the
breach.
If the advisory agreement is terminated without cause upon
60 days notice, we will pay our advisor accrued and unpaid
fees and expense reimbursements, including any payment of
subordinated fees, earned prior to termination of the advisory
agreement.
In the event the advisory agreement is not renewed upon the
expiration of its then-current term, or is terminated for any
reason or the advisor resigns and an affiliate of the advisor is
not the advisor under the replacement advisory agreement, all
after two years from the start of operations of our operating
partnership, our operating partnership will have the right, but
not the obligation, to repurchase all or a portion of Carey
Watermark Holdings interests in our operating partnership
at the fair market value of those interests on the date of
termination, as determined by an independent appraiser. In such
event, the purchase price will be paid in cash or common shares,
at the option of Carey Watermark Holdings. The operating
partnership must purchase any such interests within
120 days after it gives Carey Watermark Holdings
written notice of its desire to repurchase all or a portion of
Carey Watermark Holdings interests in the operating
partnership. If the advisory agreement is terminated or not
renewed, we will pay our advisor accrued and unpaid fees and
expense reimbursements earned prior to termination or
non-renewal of the advisory agreement.
The advisor, the subadvisor and their respective affiliates
engage in other business ventures and, as a result, their
resources will not be dedicated exclusively to our business. See
Conflicts of Interest. However, pursuant to
the advisory agreement, the advisor must devote sufficient
resources to the administration of us to discharge its
obligations. The advisory agreement is not assignable or
transferable by either party without the consent of the other
party, except that we may assign or transfer the advisory
agreement to a successor entity and the advisor may assign the
advisory agreement to an entity that is directly or indirectly
controlled by the advisor and that has a net worth of at least
$5 million. In addition, the advisor may subcontract some
of its duties to affiliates without our consent so long as the
advisor remains liable for their performance. The directors
shall determine that any successor advisor possesses sufficient
qualifications to justify the compensation provided for in its
contract with us.
The actual terms and conditions of transactions involving
investments in assets shall be determined in the sole discretion
of the advisor, subject at all times to compliance with the
foregoing requirements.
Some types of transactions require the prior approval of the
board, including a majority of the independent directors and a
majority of directors not interested in the transaction,
including the following:
|
|
|
|
|
investments that may not be reasonably expected to fulfill our
investment objectives and policies;
|
|
|
|
investments made through joint venture arrangements with W. P.
Carey, Watermark Capital Partners, the advisor or their
affiliates;
|
71
|
|
|
|
|
investments which are not contemplated by the terms of a
prospectus;
|
|
|
|
transactions that present issues which involve conflicts of
interest for the advisor, the subadvisor or their respective
affiliates (other than conflicts involving the payment of fees
or the reimbursement of expenses);
|
|
|
|
the lease of assets to W. P. Carey, Watermark Capital Partners,
the advisor or their affiliates, or to any of our directors;
|
|
|
|
any purchase or sale of an investment asset from or to the
advisor, the subadvisor or any of their respective
affiliates; and
|
|
|
|
the retention of any affiliate of the advisor to provide
services to us not expressly contemplated by the advisory
agreement and the terms of such services by such affiliate.
|
We will pay to the advisor compensation for services it provides
to us. See Management Compensation.
We will pay directly or reimburse the advisor for all of the
costs incurred in connection with organization and offering
expenses, which include expenses attributable to preparation,
printing, filing and delivery of any registration statement or
prospectus (including any amendments thereof or supplements
thereto), qualification of the shares for sale under state
securities laws, escrow arrangements, filing fees and expenses
attributable to selling the shares, including, but not limited
to, advertising expenses, expense reimbursement, counsel and
accounting fees; provided, however, that the
advisor will be responsible for the payment of all other
organization and offering expenses in excess of two percent of
the gross offering proceeds. The amounts of certain of the
organization and offering expenses are not determinable at this
time.
In addition, we will reimburse the advisor for all of the costs
it incurs in connection with certain other services provided to
us, including, but not limited to:
|
|
|
|
|
expenses incurred in connection with the investment of our funds;
|
|
|
|
interest and other costs for borrowed money, including
discounts, points and other similar fees;
|
|
|
|
taxes and assessments on income, to the extent advanced or paid
by the advisor, or on assets and taxes as an expense of doing
business;
|
|
|
|
certain insurance costs in connection with our business;
|
|
|
|
expenses of managing and operating assets owned by us, whether
payable to an affiliate of the advisor or a non-affiliated
person;
|
|
|
|
fees and expenses of legal counsel, auditors and accountants;
|
|
|
|
payments to directors for expenses in connection with director
and stockholder meetings as well as payments to
non-director
members of the investment committee for investment committee
meetings;
|
|
|
|
expenses relating to the listing of the shares on a securities
exchange;
|
|
|
|
expenses in connection with dividend payments;
|
|
|
|
|
|
expenses of organizing, revising, amending, converting,
modifying, or terminating our company, our operating
partnership, or the governing instruments of our company or of
our operating partnership;
|
|
|
|
|
|
expenses of maintaining communication with our stockholders,
including the cost of mailing annual reports;
|
72
|
|
|
|
|
expenses related to investments and other fees relating to
making investments, including personnel and other costs incurred
in any transaction, where a fee is not payable to the
advisor; and
|
|
|
|
|
|
all other expenses the advisor incurs in connection with
providing services to us including reimbursement to the advisor
or its affiliates for the costs of rent, goods, materials and
personnel incurred by them based upon the compensation of the
persons involved and an appropriate share of the overhead
allocable to those persons.
|
The advisor must absorb, or reimburse us at least annually for,
the amount in any twelve-month period immediately preceding the
end of any fiscal quarter by which our operating expenses,
including asset management fees, exceed the 2%/25% Guideline. To
the extent that operating expenses payable or reimbursable by us
exceed this limit and a majority of independent directors
determine that the excess expenses were justified based on any
unusual and nonrecurring factors which they deem sufficient, the
advisor may be reimbursed in future quarters for the full amount
of the excess, or any portion thereof, but only to the extent
the reimbursement would not cause our operating expenses to
exceed the 2%/25% Guideline in the twelve-month period ending on
the last day of such quarter. Within 60 days after the end
of any of our fiscal quarters for which total operating expenses
for the 12 months then ended exceed the limitation, there
shall be sent to the stockholders a written disclosure, together
with an explanation of the factors the independent directors
considered in arriving at the conclusion that the excess
expenses were justified. This information shall also be
reflected in the minutes of the meeting of our board of
directors.
We do not have any agreements requiring our advisor, the
subadvisor or their respective affiliates to provide services to
us other than our advisory agreement with the advisor, the
subadvisory agreement between the advisor and the subadvisor and
our operating partnership agreement, which provides that Carey
Watermark Holdings will assist in certain management functions
for no additional consideration. As of the date of this
prospectus, we have not yet paid or accrued any fees to our
advisor for services relating to the identification, evaluation,
negotiation and purchase of investments. Pursuant to the
subadvisory agreement, our advisor will be responsible for
paying fees due to the subadvisor. We will not pay fees directly
to the subadvisor; however, as an owner of the special general
partner, the subadvisor will be entitled to its proportionate
share of distributions we make to the special general partner.
If the advisory agreement is not renewed by us or is terminated
by us without cause or with good reason by the advisor, we will
pay all accrued and unpaid fees and expense reimbursements. See
Management Compensation.
Promoter
W. P. Carey is the promoter of our company because it is
our founder and organizer.
In 2008, W. P. Carey and Carey Financial, the dealer manager for
this offering, settled all matters relating to an investigation
by the SEC, including matters relating to payments by certain
CPA®
REITs other than us during
2000-2003 to
broker-dealers that distributed their shares.
Under the settlement, W. P. Carey was required to cause payments
to be made to the affected
CPA®
REITs of approximately $20 million and paid a civil
monetary penalty of $10 million. Also, in connection with
implementing the settlement, a federal court injunction has been
entered against W. P. Carey and Carey Financial enjoining them
from violating a number of provisions of the federal securities
laws. Any further violation of these laws by W. P. Carey or
Carey Financial could result in civil remedies, including
sanctions, fines and penalties, which may be more severe than if
the violation had occurred without the injunction being in
place. Additionally, if W. P. Carey or Carey Financial breaches
the terms of the injunction, the SEC may petition the court to
vacate the settlement and restore the SECs original action
to the active docket for all purposes.
The settlement is not binding on other regulatory authorities,
including FINRA, which regulates Carey Financial, state
securities regulators, or other regulatory organizations, which
may seek to
73
commence proceedings or take action against W. P. Carey or its
affiliates on the basis of the settlement or otherwise.
Subadvisory
Agreement
The advisor will enter into a subadvisory agreement with the
subadvisor. The term of the subadvisory agreement will be
concurrent with the term of the advisory agreement, unless it is
terminated earlier by the advisor or the subadvisor as a result
of a default by the other party or otherwise in accordance with
its terms. Under the subadvisory agreement, the subadvisor will
provide services to the advisor primarily relating to acquiring,
managing, financing and disposing of our assets and overseeing
the independent property operators that manage the
day-to-day
operations of our properties. In addition, the subadvisor will
agree to provide Mr. Medzigians services as our chief
executive officer, subject to the approval of our independent
directors.
The subadvisor will be subject to the oversight of our advisor.
Our advisor will remain primarily liable to us to perform its
obligations under the advisory agreement.
Our advisor is responsible to the subadvisor for the payment of
fees and the reimbursement of expenses under the subadvisory
agreement. We will reimburse the advisor for expenses incurred
by the subadvisor if such expenses would be reimbursable under
the advisory agreement had they been incurred by the advisor.
License
Agreements
Watermark Capital Partners and W. P. Carey will enter into
license agreements with us pursuant to which Watermark Capital
Partners and W. P. Carey will each grant us a royalty free and
non-exclusive license to use their respective service marks,
corporate names and trade names Carey and
Watermark. Such license agreements will terminate
12 months after the date on which Watermark Capital
Partners or W. P. Carey or one of their respective affiliates,
as applicable, is no longer providing services pursuant to the
advisory agreement or the subadvisory agreement, as applicable.
Shares Owned
by the Advisor
Compensation payable to the advisor pursuant to the advisory
agreement will be paid in cash unless the advisor chooses to
receive all or a portion of such compensation in the form of our
common stock or a combination of cash and our common stock by
notifying us in writing. Shares acquired in lieu of cash fees
under the advisory agreement are subject to ratable vesting over
five years after their issuance and cannot be sold prior to
vesting. Furthermore, any resale of the shares that the advisor
or its affiliates own and the resale of any shares that may be
acquired by our affiliates are subject to the provisions of
Rule 144, promulgated under the Securities Act, which
limits the number of shares that may be sold at any one time and
the manner of such resale. Although CLA is not prohibited from
acquiring additional shares, CLA has no options or warrants to
acquire any additional shares. It may acquire additional shares
by electing to take certain fees in the form of shares. There is
no limitation on the ability of CLA or its affiliates to resell
any shares they may acquire in the future, other than
restrictions included as part of any fee arrangement or
restriction imposed by securities laws. Our advisor may not vote
any shares it now owns or hereafter acquires in any vote for the
removal of directors or any vote regarding the approval or
termination of any contract with itself or any of its affiliates
and any shares owned by the advisor will not be included in
determining the requisite percentage in interest in shares
necessary to take action on any such matter. See
Security Ownership of Certain Beneficial Owners and
Management for a discussion of the share ownership of
our officers and directors.
74
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our board of directors oversees our management. However, Carey
Lodging Advisors, LLC is responsible for managing our overall
portfolio and identifying and making investments on our behalf.
CLA is owned indirectly by W. P. Carey. Pursuant to a
subadvisory agreement, Watermark Capital Partners, LLC will
provide services to the advisor primarily relating to acquiring,
managing, financing and disposing of our assets and overseeing
the independent property operators that manage
day-to-day
operations of our properties. In addition, the subadvisor will
agree to provide Mr. Medzigians services as our chief
executive officer during the term of the subadvisory agreement.
Our dealer manager, Carey Financial, an indirect wholly-owned
subsidiary of W. P. Carey, will also provide services to us in
connection with the offering and investments made through our
distribution reinvestment plan. Several of our officers and
directors are also officers and directors of our advisor, W. P.
Carey and Watermark Capital Partners and their respective
affiliates. For a more complete explanation of these
relationships see Conflicts of Interest and
Management.
The advisor, Carey Watermark Holdings, Carey Financial and their
affiliates will receive the compensation described under
Management Compensation and
Conflicts of Interest. Our advisor will be
responsible for paying fees due to the subadvisor under the
subadvisory agreement between the advisor and the subadvisor. We
will not pay fees directly to the subadvisor; however, as an
owner of the special general partner, the subadvisor will be
entitled to its proportionate share of distributions we make to
the special general partner.
Carey Watermark Holdings, the special general partner, will be
entitled to receive profits allocations and cash flow
distributions equal to 10% of our operating profits and
available cash flow, respectively, and 15% of the profit and the
net proceeds arising from the sale, exchange or other
disposition of our assets or other liquidity transaction once
our stockholders have received a return of 100% of their initial
investment plus the six percent preferred return rate. If we
terminate the advisory agreement and do not name another
affiliate of the advisor as successor advisor or the advisor
resigns for good reason, all after two years from the start of
operations of our operating partnership, our operating
partnership will have the right, but not the obligation to
repurchase all or a portion of Carey Watermark Holdings
interests in our operating partnership at the fair market value
of those interests on the date of termination, as determined by
an independent appraiser. See Risk Factors
Risks Related to Our Relationship with Our Advisor.
We may enter into joint venture or other investment transactions
with the other entities managed by our advisor, W. P. Carey or
Watermark Capital Partners. For a more complete description of
the conflicts of interest that may arise, see Conflicts
of Interest. We will operate pursuant to certain
policies and procedures for the review, approval or ratification
of our transactions with related persons. These policies will
include the following:
|
|
|
|
|
Transactions with our Advisor. Except for
transactions under the advisory agreement or as otherwise
described in this prospectus, we will not purchase goods or
services from our advisor or its affiliates unless a majority of
our directors, including a majority of our independent
directors, not otherwise interested in the transactions approve
such transactions as fair and reasonable to us and on terms and
conditions not less favorable to us than those available from
unaffiliated third parties.
|
|
|
|
Transactions with the Advisor, the Subadvisor and their
respective Affiliates. We will not purchase
investments or lease properties in which our advisor, the
subadvisor or their respective affiliates have an ownership
interest without a determination by a majority of our directors,
including a majority of our independent directors, not otherwise
interested in such transaction that such transaction is fair and
reasonable to us and at a price to us no greater than the cost
of the investment to our advisor, the subadvisor or their
respective affiliates, unless there is substantial justification
for any amount that exceeds such cost and such excess amount is
determined to be reasonable. In no event will we acquire any
such property at an amount in excess of its current appraised
value. We will not sell investments or lease properties
|
75
|
|
|
|
|
to our advisor, the subadvisor or their respective affiliates or
to our directors unless a majority of our directors, including a
majority of our independent directors, not otherwise interested
in the transaction determine the transaction is fair and
reasonable to us.
|
|
|
|
|
|
Loans. We will not make any loans to our
advisor or the subadvisor or their respective affiliates or to
our directors except for mortgage loans in respect of underlying
assets that have been appraised by an independent appraiser, as
approved by our independent directors. We may not borrow money
from any of our directors or from our advisor and the subadvisor
or their respective affiliates unless approved by a majority of
our directors (including a majority of the independent
directors) not otherwise interested in the transaction, as fair,
competitive and commercially reasonable, and no less favorable
to us than loans between unaffiliated parties under the same
circumstances.
|
76
INVESTMENT
OBJECTIVES, PROCEDURES AND POLICIES
General
Our objective is to achieve long-term growth in value and
generate attractive risk adjusted returns for our stockholders
primarily through capital appreciation and also through current
distributions. We will seek to create a portfolio with the
potential to generate attractive risk adjusted returns across
varying economic cycles, including by taking advantage of
opportunities to acquire assets at attractive prices in the
currently disrupted economic environment.
Our core strategy for achieving these objectives is to acquire,
own, dispose of and manage and seek to enhance the value of,
interests in lodging and lodging related properties. While our
core strategy will be focused on the lodging industry, we may
also invest in other real estate property sectors. We will
adjust our investment focus from time to time based upon market
conditions and our advisors views on relative value as
market conditions change. Material changes in our investment
focus will be described in our periodic reports filed with the
SEC.
Our advisor will actively manage our portfolio and supervise our
independent property operators, with a goal of enhancing our
profitability and the value of our assets. We believe that an
experienced asset manager can improve the performance of a
lodging asset by actively overseeing brand and management
changes, market positioning, revenue and expense management,
strategic capital expenditures and enhancement of operating
efficiencies. We expect to qualify as a REIT and will undertake
our asset management in a manner necessary to qualify as a REIT.
Our chief executive officer has extensive experience acquiring,
managing, developing, repositioning and disposing of lodging and
other real estate assets on behalf of sophisticated
institutional investors in real estate private equity funds. We
expect to benefit from Mr. Medzigians
institutional-quality approach and we believe that our strategy
will entail lower risk when compared with private equity funds
because we expect our investment portfolio to be 50% leveraged,
on average, and generally expect to have longer holding periods
than such funds, which typically have holding periods of four to
eight years. However, our organizational documents permit us to
incur maximum leverage of up to 75% of the total costs of our
investments, or 300% of our net assets, or a higher amount with
the approval of a majority of our independent directors.
We believe that the following market factors and attributes of
our investment model are particularly important to our ability
to meet our investment objective:
|
|
|
|
|
our investment model should benefit from the current
economically disrupted environment;
|
|
|
|
a lodging-centric and opportunistic investment strategy provides
an opportunity for attractive returns and a potentially
effective inflation hedge;
|
|
|
|
as compared with certain other types of real estate assets, the
lodging sector provides a broad range of value creation
opportunities that can enhance returns;
|
|
|
|
a differentiated investment approach;
|
|
|
|
a lack of legacy issues; and
|
|
|
|
our investment strategy, resources and investment structure
differentiate us from other sources of capital for the real
estate industry.
|
Each of these attributes is discussed below.
77
Our
investment model should benefit from the current economically
disrupted environment.
Our investment model should benefit from both near-term
opportunities to acquire assets at attractive returns due to
current economic conditions and long-term growth that may result
from advantageous demographics.
We believe that the current distress in the credit markets,
financial markets and real property markets presents us with
opportunities to acquire distressed or undervalued real estate
assets. As a result of this distress, many property owners have
been unable to meet debt-service obligations, loan maturity
obligations or arrange financing for scheduled purchases. In our
experience, distressed market conditions and cyclical downturns
in the lodging industry expose the weaknesses of certain
property operators that had access to capital when it was
plentiful but that are not experienced with market downturns.
Consequently, we expect that these distressed market conditions
will result in a significant increase of undercapitalized
property owners, which, when combined with the lack of available
traditional debt financing, should provide investment
opportunities for us in situations involving changes in an
assets or a companys capital structure,
loan-forgiveness and restructuring arrangements between debtors
and creditors and opportunities to provide mezzanine
financing which is senior to a borrowers equity
position but subordinated to senior debt and, therefore, carries
a higher interest rate than senior debt. In transactions where
property owners have utilized recourse debt financing the
resulting circumstances can be particularly challenging for
them. Furthermore, we believe these opportunities will be
available to us during a period of declining fundamentals,
particularly in the lodging industry, when performance, and
therefore pricing, is depressed. Given the conditions caused by
the distressed economic environment, and coupled with the
experience and expertise of our advisor and the subadvisor, we
expect to be well positioned to capitalize on these
opportunities to create an attractive investment portfolio.
As the U.S. economy plunged into a recession in 2008,
inflated lodging asset prices could not be sustained in an
environment where economic growth slowed and assumptions in
capital availability, pricing and underwriting criteria became
more conservative. Additionally, factors external to the real
estate industry such as reduced consumer and business spending
have also negatively impacted the sector. As a result of the
deteriorating market and operating fundamentals as well as the
declining property values, real estate owners are increasingly
experiencing distressed situations, as they face the inability
to meet debt service obligations or refinance existing debt as
it comes due. We believe that over-extended borrowers
attempts to reduce the amount of their leverage and improve
their capital structure will present a need for new equity
capital that we will seek to provide.
Our strategy is to make opportunistic lodging and other real
estate investments that exploit the recent disruption in real
estate and credit markets, as well as investments in value
creation opportunities in markets with growth characteristics
and in assets with stable underlying fundamentals. In addition
to acquiring assets from, among others, distressed sellers and
financial institutions seeking to dispose of real estate assets
and securities, we will seek to invest in transactions adjusting
an assets or a companys capital structure, as well
as to provide capital to market participants that provide us
access to attractive investment opportunities.
78
As illustrated in the chart below, while the CMBS market has
been a growing and important source of commercial real estate
debt capital, that source of capital effectively collapsed in
2008 as the broader markets experienced financial crisis and
recession.
Source: Commercial Mortgage Alert
This collapse in the CMBS market coincided with reduced bank
lending and more conservative underwriting guidelines. According
to the Federal Deposit Insurance Corporation, or the FDIC, in
its fourth quarter 2009 Quarterly Banking Profile, total assets
of insured institutions declined by $731.7 billion, or
5.3%, in 2009, which is the largest annual percentage decline
since the inception of the FDIC in 1942. One result of these
conditions is that commercial real estate debt availability has
declined precipitously, contributing to reduced sales
transactions and property values.
79
As illustrated in the two charts below, transaction volumes for
both commercial real estate and hotels declined significantly in
2008 and 2009. However, Jones Lang LaSalle Hotels projects that
the aggregate value of sale transactions involving hotels in the
Americas will increase by approximately 62% in 2010, with much
of that activity occurring in the second half of the year.
|
|
|
|
(1)
|
Includes office, retail, apartments and industrial properties
valued over $5 million.
|
Source: Real Capital Analytics
Source: Data obtained from information that Jones
Lang LaSalle Hotels generally makes available on a public
basis.
In the most recent real estate and lodging industry cycle, we
believe commercial real estate values peaked in October 2007,
following several years of appreciation. As of December 2009,
80
commercial real estate values have declined 29%
year-over-year
and 41% from the October 2007 peak. We believe that this
significant decline in real estate values presents us with an
attractive investment entry point in the real estate and lodging
industry cycle.
Source: MIT Center for Real Estate
81
As illustrated in the chart below, hotel sector values have
declined 44% from their 2006 peak, and are expected to increase
at a compound annual growth rate of 15% from 2009 to 2015.
Specifically, according to HVS, hotel sector values are
projected to remain unchanged in 2010 and then increase
year-over-year 20%, 24%, 24%, 16% and 9% in 2011, 2012, 2013,
2014, and 2015, respectively.
Source: HVS
82
Foresight Analytics LLC estimates that commercial and
multifamily mortgage maturities will total approximately $1.5
trillion from 2010 through 2014. Combined with reduced real
estate debt availability and sales transactions, we believe this
anticipated high volume of debt maturities will further pressure
borrowers, creating additional need for equity capital and
investment opportunities.
Source: Foresight Analytics LLC
In response to declining operating incomes and property values,
reduced liquidity, the aggressive levels of leverage employed in
recent years and the new increasingly conservative underwriting
standards, the commercial real estate mortgage market has
experienced significant distress, which continues to worsen.
CMBS delinquency rates and commercial real estate loan default
rates increased dramatically in both 2008 and 2009. In
particular, CMBS delinquency rates increased from 0.3% in
December 2007 to 6.3% in February 2010 and are expected to peak
at 12% in 2012. Hotel CMBS delinquency rates are the highest
among the major property types, reaching 16.6% in February 2010
and are expected to peak at 25% to 30% in 2012. Additionally,
default rates of commercial real estate loans held by
FDIC-insured institutions, both commercial banks and savings
institutions, that are
83
non-current increased from 0.7% in the first quarter of 2007 to
3.8% in the fourth quarter of 2009, which was the highest
default rate for such institutions since the first quarter of
2004.
(1) Nonfarm
nonresidential real estate loans held by FDIC-insured
institutions, both commercial banks and savings institutions,
that are past due 90 days or more or that are in nonaccrual
status.
Source: Federal Deposit Insurance Corporation
84
The limited debt availability for new construction, coupled with
the recent decline in industry and economic fundamentals are
expected to limit new hotel room supply growth over the next
several years. As illustrated in the chart below, after
increasing 3.2%
year-over-year
in 2009, hotel room supply is forecast to increase only 1.8% and
1.0% in 2010 and 2011, respectively, both below the
20-year
average growth rate of 2.0%. According to Lodging Econometrics,
in 2009, new construction projects declined 58% and new project
announcements declined 51%, both measured by the number of hotel
rooms. The same factors will limit supply growth for other
property types in the near term.
Source: Smith Travel Research
With the economic crisis forcing the lending and capital markets
environment to become more disciplined, prices of existing
properties have been moderated as a result of reduced
competition from highly leveraged investors and the development
of new properties has been curtailed. We believe that a more
conservative capital markets environment will benefit companies
like us who expect to operate at a moderate level of leverage,
at 50% on average; however, our organizational documents permit
us to incur maximum leverage of up to 75% of the total costs of
our investments, or 300% of our net assets, or a higher amount
with the approval of a majority of our independent directors.
New construction that had not been funded prior to the recent
capital contraction has virtually come to a halt, resulting in
dampening supply growth and setting the stage for less
operational competition and the future recovery of the lodging
market. Accordingly, we believe that the conditions in the
current market present a unique opportunity in which we may
experience not only less operational competition, but also less
investment competition, therefore potentially providing
opportunities to acquire properties and build our portfolio on
favorable terms. Although there is no assurance that our
expectations will be realized, we believe that the real estate
pricing environment is at an attractive cyclical point of entry,
enabling us to capitalize on opportunistic acquisitions.
A
lodging-centric and opportunistic investment strategy provides
an opportunity for attractive returns and a potentially
effective inflation hedge.
Lodging properties can provide investors with an attractive
blend of current cash flow and opportunity for capital
appreciation. Cash flow is generated primarily from daily
property operations, and capital appreciation may be achieved by
growth over time and enhanced by employing active management
strategies such as brand and management changes, market
positioning, revenue and
85
expense management, strategic capital expenditures and
enhancement of operating efficiencies. While our strategy is
significantly focused on lodging and lodging-related sectors, it
also embodies a flexible approach that enables us to shift our
investment focus to areas that may present more attractive
relative value in response to changing market dynamics.
As illustrated in the chart below, growth in U.S. hotel
RevPAR has historically been closely correlated with growth in
U.S. GDP. Lodging properties do not have a fixed lease
structure, unlike other property types and therefore rental
rates on lodging properties can be determined on virtually a
daily basis. As a result, lodging industry fundamentals tend to
decline, and also recover, sharply and more quickly than other
property types as economies enter, and exit, recessionary
periods, respectively.
Source: Smith Travel Research and Bureau of
Economic Analysis
The current economic downturn negatively impacted hotel
fundamentals, as indicated by the decline in RevPAR of 1.8% and
16.7%
year-over-year
in 2008 and 2009, respectively. According to PKF Hospitality
Research, or PKF, the 2009 RevPAR decline was the highest annual
decline since the early 1930s. As illustrated in the chart
below, given the significant RevPAR decline and despite
aggressive cost cutting efforts industry wide, PKF estimates
that unit-level net operating income, or NOI, declined 34.9%
year-over-year
in 2009, the greatest annual decline since PKF began tracking
U.S. hotel performance in the 1930s. Notably, after two
years of declining demand, overall U.S. hotel room demand
is expected to increase 1.8% in 2010, according to Smith Travel
Research. PKF is also forecasting lodging demand to experience a
quarterly
year-over-year
increase in the first quarter 2010, after eight consecutive
quarters of declines. Although Smith Travel Research is
projecting RevPAR to decline 3.2%
year-over-year
in 2010, it also projects RevPAR to increase 4.2% in 2011. As
illustrated in the chart below, in its March 2010 forecast, PKF
is projecting that hotel unit-level NOIs will decline 5.3%
year-over-year
in 2010 and then increase 11.3%, 15.6% and 19.7% in 2011, 2012
and 2013, respectively. As further illustrated in the chart
below, significant NOI increases have been common following
other recent economic and industry downturns.
In light of these forecasts, we believe that the lodging
industry will be among the first real estate asset classes to
recover as GDP growth returns along with the anticipated
recovery of the U.S. economy. As we expect to be well
positioned to acquire assets with low operating income, we
believe that due to the historically cyclical nature of the
lodging industry, we will not only be able to
86
benefit from the anticipated U.S. economic recovery, but
also the related recovery of lodging industry fundamentals.
Source: Smith Travel Research
Source: PKF Hospitality Research, March 2010
forecast
87
Lodging properties can also provide a potentially effective
inflation hedge as hotel operators can adjust room rates on
nearly a daily basis utilizing advanced yield management
systems, reflecting real-time market conditions. Typical lease
terms for major property types are set forth in the table below.
Source: CWI Management
While lodging properties, along with other property types, are
experiencing a decrease in fundamentals, the lodging industry is
large and has displayed long-term growth characteristics. The
lodging industry is a primary component of the travel and
tourism industry, which is one of the largest industries in
terms of its contribution to U.S. GDP.
Year-over-year
demand for U.S. hotel rooms has increased in 16 of the past
20 years. Furthermore, total demand for U.S. hotel
rooms during that same
20-year
period increased by approximately 23%. While total lodging
demand is not tracked on a global basis, the United Nations
World Tourism Organization, or UNWTO, maintains data on total
worldwide tourist arrivals, which can be indicative of the
fundamentals supporting lodging demand. According to UNWTO,
total worldwide tourist arrivals were approximately
880 million people in 2009, up from 440 million in
1990 and 25.3 million in 1950.
We believe that demand in the U.S. lodging sector should
continue to increase in the long-term due to the following
factors:
|
|
|
|
|
Growth in international trade and commerce, the opening of
emerging markets, exposure of consumers through the media to
various travel alternatives, and the expansion of travel
infrastructure have contributed to an increased propensity for
consumers to travel and spend on business and leisure activities.
|
|
|
|
Demographics for the lodging industry are advantageous. Members
of the largest age cohort in United States history, the
Baby Boomer generation (individuals born between
1946 and 1964), have shown an increased interest in leisure
pursuits and as they approach retirement they are expected to
engage in greater travel, which should in turn increase demand
for lodging. Many lodging demand segments such as leisure,
international, and conference and association meetings have been
growing faster than the economy as a whole.
|
|
|
|
A weak United States dollar tends to increase domestic travel
within the United States and also tends to increase
international travel to the United States.
|
|
|
|
The disruption in the United States credit markets has made it
significantly more difficult to obtain debt financing for new
lodging construction, thereby reducing the new supply of lodging
properties, to the benefit of existing lodging properties.
|
Although we believe that these factors are favorable for our
investment model, there can be no assurance that periods of slow
economic growth will not result in slower growth and even
further
88
contraction in the lodging industry. While these periods have
occurred infrequently over the past two decades as described
above, they can still occur and negatively impact the operating
results of lodging properties.
As
compared with certain other types of real estate assets, the
lodging sector provides a broad range of value creation
opportunities that can enhance returns.
The operationally intense nature of lodging assets presents
opportunities to employ a variety of strategies to enhance
value, including brand and management changes, revenue and
expense management, strategic capital expenditures,
repositioning, facility reuse and reuse or sale of excess land.
Our asset management approach is designed to capitalize on
opportunities during periods of strong growth and also to
exploit efficiencies and operating leverage during periods of
slower growth.
Lodging properties can also benefit from efficiencies created by
technological advances and innovations in sales and marketing.
According to PricewaterhouseCoopers LLP, it is estimated that
between 1990 and 2009, United States hotel employees per 100
occupied rooms have decreased by approximately 12%. We expect to
benefit from technology and process-driven industry developments.
Our asset management team and our senior management will
proactively manage our third-party management companies in order
to enhance operational performance and returns to our
stockholders. This process entails creating and executing
business plans for each investment in our portfolio, which may
include brand and management changes, market positioning,
revenue and expense management, strategic capital expenditures
and enhancement of operating efficiencies.
A
differentiated investment approach.
We intend to make some of our investments through joint ventures
with qualified owners and operators of properties. Over his many
years as a real estate professional, our chief executive officer
has developed a network of relationships with operating partners
in a variety of sectors and geographies that may provide sources
of investment opportunities for us. In addition to expanding our
investment sourcing network, investing through joint ventures
may provide us with specialized resources and capabilities. We
will explore joint venture opportunities as part of our
investment strategy because joint ventures may be particularly
effective in challenging times such as the current recessionary
environment, when industry participants in need of capital may
prefer not to sell or lose control of their assets but still
control or have access to potentially attractive investment
opportunities that they seek to exploit. Joint venture investing
may also be a risk mitigant as we may be able to structure our
investments on a more senior basis, involving preferred equity,
mezzanine debt or cross collateralization of assets, creating
additional security for our investments.
A lack
of legacy issues.
As described above, we believe the 2008 financial crisis and the
associated real estate downturn resulted in a number of owners
with existing, or legacy, properties that will be constrain
their ability to make acquisitions over the next several years
as they address issues. These issues, which we refer to as
legacy issues, are faced by owners with highly leveraged capital
structures resulting from the undisciplined lending practices of
prior years and owners who hold portfolios consisting of
underperforming properties, either of which could limit access
to new capital and debt financing for both existing properties
and new acquisitions. As a company with no operating history or
established financial resources, we also do not have any legacy
issues, which may benefit our stockholders in two ways. Firstly,
we have not yet acquired any assets and therefore, our
stockholders will not have invested in a portfolio that includes
assets acquired at the inflated prices that existed prior to the
2008 financial crisis. Secondly, our management team will be
able to focus its resources on value creation on behalf of the
stockholders, without having the distractions created by
under-performing or troubled assets acquired at the peak of the
market.
89
Our
investment strategy, resources and investment structure
differentiate us from other sources of capital for the real
estate industry.
The combination of our investment strategy and the resources of
our advisor and the subadvisor have historically been available
only to large institutional investors via real estate private
equity funds with high minimum investment requirements. We also
expect to benefit from access to our advisors global
investment management platform with approximately
150 employees worldwide. Furthermore, this access to our
advisors resources is complimented by our highly qualified
independent board of directors and investment committee.
We believe that our investment structure offers certain
advantages over other private equity fund and traded REIT
competitors. Unlike certain private equity funds, we currently
expect our investment portfolio to be 50% leveraged, on average,
and limit our exposure to the potential default risks associated
with investor subscription agreements; however, our
organizational documents permit us to incur maximum leverage of
up to 75% of the total costs of our investments, or 300% of our
net assets, or a higher amount with the approval of a majority
of our independent directors. As compared to traded REITs, we
will not be subject to share price volatility and pressures
relating to quarterly earnings estimates and near term share
price targets, which can impede real estate value maximization.
These differentiating factors may make us more competitive in
the property and investment markets and enable us to take a more
balanced approach when making acquisitions and implementing
investment and operational strategies.
Our
Business
The lodging properties we acquire may include full-service
branded hotels located in urban settings, resort properties,
high-end independent urban and boutique hotels, select-service
hotels and mixed-use projects with non-lodging components.
Full-service hotels generally provide a full complement of guest
amenities including food and beverage services, meeting and
conference facilities, concierge and room service, porter
service or valet parking, among others. Select-service hotels
typically have limited food and beverage outlets and do not
offer comprehensive business or banquet facilities. Resort
properties may include smaller boutique hotels and large-scale
integrated resorts. We generally intend to acquire fee ownership
of our properties but may consider leasehold interests. While
our portfolio will develop based upon opportunities and market
conditions prevailing from time to time, we expect to target a
mix of properties, including those that offer high current
income, value-added properties that provide opportunity for
capital appreciation, and to the extent available, distressed
situations where our investment may be on opportunistic terms.
At this time we are unable to predict what percentage of our
assets may consist of investments in any one category of the
target lodging portfolio. As opportunities arise, we may invest
in other types of real estate-related investments in the lodging
industry, such as loans secured by lodging properties, mezzanine
loans related to lodging properties (i.e. loans senior to the
borrowers common and preferred equity in, but subordinated
to a mortgage loan on, a property), subordinated interests in
loans secured by lodging properties and equity and debt
securities issued by companies engaged in the lodging sector. We
may invest in the securities of other issuers for the purpose of
exercising control.
While our core strategy will focus on lodging, we may also
invest across other real estate property sectors. We will adjust
our investment focus from time to time based upon market
conditions and our advisors views on relative value as
market conditions change. Our portfolio may include the
following:
|
|
|
|
|
Lodging, recreation and leisure-related assets such as hotels,
resorts, clubs, resort residential, timeshare and fractional
products, and golf, spa, marina, ski and other related uses.
|
|
|
|
Commercial assets including office, industrial, retail and
mixed-use assets.
|
|
|
|
Single and multifamily rental and for-sale residential uses.
|
90
|
|
|
|
|
Real estate securities including senior and junior debt
positions, commercial mortgage-backed securities, or CMBS,
mezzanine debt and preferred equity.
|
|
|
|
Other real estate-related entity-level investments,
land and land development, developmental projects, and secondary
property types such as senior living assets and single tenant
facilities.
|
We expect to make investments primarily in the United States.
However, we may consider investments outside the United States
and we are not prohibited under our organizational documents
from making investments outside the United States. Our advisor
will evaluate potential acquisitions on a
case-by-case
basis. We are not required to meet any diversification standards
and have no specific policies or restrictions regarding the
geographic areas where we make investments or on the percentage
of our capital that we may invest in a particular asset.
However, without the prior approval of a majority of our
independent directors, we may not invest more than 25% of our
equity capital in non-lodging-related investments.
We currently expect that, if the entire offering is subscribed
for, it may take up to three years after commencement of the
offering or one year after the termination of this offering, if
later, until our capital is substantially invested. Pending
investment, the balance of the proceeds of this offering will be
invested in permitted temporary investments, which include
short-term U.S. Government securities, bank certificates of
deposit and other short-term liquid investments.
Our
Operating Structure
We intend to qualify as a REIT for U.S. federal income tax
purposes. So long as we qualify as a REIT, we generally will not
be subject to U.S. federal corporate income tax on our net
taxable income to the extent we annually distribute that income
to our stockholders. We believe that the REIT structure can
enhance our returns because of its tax-advantaged nature.
The REIT structure does, however, impose limitations on our
operations. In general, a REIT can own, but cannot operate,
lodging properties. In order to comply with applicable REIT
qualification rules, we will enter into leases for each of our
properties with the TRS lessees. A taxable REIT subsidiary, or a
TRS, is generally subject to U.S. federal, state and local
income taxes on its earnings.
The TRS lessees will in turn contract with one or more
unaffiliated property management companies that will execute
day-to-day
property level responsibilities. These independent property
operators may or may not be affiliated with franchisors. Any net
profit from these leases held by the TRS lessees, after payment
of any applicable corporate tax, will be available for
distribution to us as dividends.
We expect that our leases for our lodging properties with our
TRS lessees will generally be long-term leases. We anticipate
that we will generally have identified and secured an
independent property management company and licensor at or prior
to entering into a lease agreement with the TRS lessees. We
anticipate that each lease will provide that rents will be based
on a base amount and a percentage of gross income. We expect
that our leases for our lodging properties with the TRS lessees
will be consistent with our objective of qualifying as a REIT.
The provisions of the operating agreements with the independent
management companies will vary. Typically the management company
is empowered to act only within the boundaries of the operating
agreement that we negotiate as further limited by the annual
budgets that we approve at the outset of the investment
and/or
annually. Often, a new operating agreement would be negotiated
as part of the purchase of the property but in some
circumstances we may acquire assets that are encumbered by
existing operating agreements. Operating agreements may or may
not be terminable early in the event of certain circumstances,
as both approaches are common in the industry.
We expect that the lodging properties within our portfolio will
in many cases be affiliated with boutique, national and
international franchise companies and in other cases will be
independent
91
assets operated without franchise affiliations. Our advisor
believes that some distinctive properties can be operated more
profitably without the costs associated with a franchise. In
particular, at the very high end of the lodging market and in
many resort locales it is not uncommon to operate without a
brand or to minimize the visibility of the brand. We do not
anticipate affiliating ourselves with only one brand or
franchise, providing us with a broader range of investment
alternatives to chose from.
Our advisor will be responsible for managing our overall
portfolio, including providing oversight and strategic direction
to the independent property managers that carry out
day-to-day
property management. Our advisor will utilize the services of
the subadvisor. In its asset management role, our advisor
develops business plans for the investments and oversees the
execution of the plans working with and guiding the independent
management companies. Business plans are generally created for
each investment at the time of investment and the plans are
generally updated over time to reflect both progress toward
goals and appropriate revisions.
Investment
Evaluation
Our advisor, through its investment committee, expects to
consider a broad range of criteria when evaluating proposed
lodging investments. The criteria can generally be grouped into
the categories of (i) market fundamentals,
(ii) property attributes, (iii) financial
considerations, and (iv) real estate and other
considerations. In considering a possible investment, our
advisor will not assign any prescribed weighting to a particular
criteria and will evaluate each investment on a case by case
basis. Without limiting the matters to be evaluated, our advisor
generally expects to consider, among other things, the following:
|
|
|
|
|
Market fundamentals. The advisor will evaluate
each potential investment based upon the quantity, nature,
seasonality and diversification of demand for such property. The
advisor will consider the competitive environment for the
potential investment, including the positioning of other
properties in the market, potential additions to the competitive
supply, barriers or lack of barriers to entry relating to future
competitive supply and the desirability of the competitive
market and competitive positioning as compared with other
competitive and potentially competitive markets. In addition,
the advisor will assess the general economic environment, growth
prospects of the potential investment and the various risks
associated with making the investment. Brand representation and
availability, and legislative and other environmental factors,
will also be part of the advisors evaluation of a
potential investment.
|
|
|
|
Property attributes. The advisor will attempt
to invest in properties that it believes to have the advantage
of location, visibility and access. The advisor will consider
competitive attributes and disadvantages as compared with the
primary competitors, including range and quality of facilities,
amenities and appropriateness as they relate to targeted market
demand. In considering an investment, the advisor will evaluate
opportunities to enhance the competitive positioning of the
property and otherwise assess the ability to enhance the asset
through capital investment, strategic positioning,
merchandising, operational procedures and through the
implementation of environmentally friendly or green
initiatives. The advisor will also weigh the appropriateness of
the brand and management and the implications of changes thereto.
|
|
|
|
Financial considerations. Our advisor will
review the quality of historical earnings and detailed
components of revenues and expenses and pricing metrics,
including revenue multipliers, price per guest unit, and
capitalization rates, sustainability of income and alternatives
for increasing same through revenue growth and cost containment.
Additionally, our advisor will conduct an evaluation of external
influences such as tax reassessments, insurance rates and
availability, labor availability and quality, and inflationary
factors.
|
|
|
|
Real estate and other considerations. In
analyzing a potential investment, our advisor will consider real
estate matters, including title, compliance with zoning and all
other jurisdictional requirements, the presence of all required
permits and licenses, the findings of environmental,
|
92
|
|
|
|
|
building condition and accessibility for purposes of the ADA
studies, the terms of all contractual relationships, including
sellers, partners, lenders, franchisors and managers and any
seller obligations to be assumed. Our advisor will weigh various
risk factors relating to the investment transaction, ongoing
operations and all critical components of the business plan. In
addition, the advisors investment strategy will include a
consideration of the capital structure of the proposed
investment, including the terms of equity and debt relating to
the property, as well as any structural requirements unique to
the investment. Control issues and analyses of all parties to
the investment, assessment of holding periods and alternative
exit strategies will be part of the investment considerations
utilized by our advisor in making investments on our behalf. Our
advisor will be guided by the principles of the REIT rules and
tax implications of potential investments while contemplating
investments for us.
|
Investment
Procedures
We will utilize our advisors and its principals
expertise and many years of experience in reviewing and
analyzing potential investments. Our advisors principals
have experience in all aspects of making investments, including
underwriting and pricing, evaluating, due diligence and legal
and financial structuring. Our advisor will also utilize the
expertise and experience of the subadvisor.
Before an investment is made, the transaction is reviewed by the
investment committee, unless the purchase price and contemplated
capital improvements to the investment are $10,000,000 or less,
in which case the investment may be approved by the Chief
Executive Officer. The investment committee is not directly
involved in originating or negotiating potential investments,
but instead functions as a separate and final step in the
acquisition process. Subject to limited exceptions, our advisor
and the subadvisor generally will not invest in a transaction on
our behalf unless it is approved by a majority of the members of
the investment committee present at the meeting at which an
investment is considered.
Each of our directors is a member of the investment committee.
For additional biographical information on each of the members,
see Management Directors and Executive
Officers of the Company.
The investment committee has developed policies that permit
certain investments to be made without committee approval. Under
current policy, investments of $10,000,000 or less may be
approved by the chief investment officer. Additional such
delegations may be made in the future, at the discretion of the
investment committee. For example, the advisor may create one or
more investment advisory committees with specialized expertise
in a particular geographic market or type of lodging investment
to assist the investment committee.
Subject to the terms of our advisory agreement, our asset
operating committee will be responsible for evaluating and
making decisions with respect to any capital expenditures,
refinancing, disposition, sale
and/or any
other transaction in excess of $10,000,000 involving assets we
have previously acquired.
Investments
with Affiliates
We may acquire some investments in joint ventures with other
entities sponsored or managed by our advisor, the subadvisor and
their respective affiliates. These investments may permit us to
own interests in larger properties without unduly restricting
the diversity of our portfolio. We may invest in funds sponsored
by our advisor, the subadvisor or their respective affiliates in
which entities sponsored or managed by them invest. We may also
merge with entities sponsored or managed by them or acquire
property portfolios or single assets from such entities. We will
not enter into a joint venture to make an investment that we
would not be permitted to make on our own.
We may participate jointly with publicly registered investment
programs or other entities sponsored or managed by the advisor,
the subadvisor or its direct or indirect partners in investments
93
as
tenants-in-common
or in some type of joint venture arrangement. Joint ventures
with affiliates of W. P. Carey or Watermark Capital Partners
will be permitted only if:
|
|
|
|
|
a majority of the directors (including a majority of the
independent directors) not otherwise interested in the
transaction approve the allocation of the transaction among the
affiliates as being fair and reasonable to us; and
|
|
|
|
the affiliate makes its investment on substantially the same
terms and conditions as us.
|
Investment
Limitations
Numerous limitations are placed on the manner in which we may
invest our funds. These limitations cannot be changed unless the
charter is amended, which requires the approval of the
stockholders. Unless the charter is amended in connection with a
listing of our common stock, we will not:
|
|
|
|
|
invest in commodities or commodity futures contracts, with this
limitation not being applicable to futures contracts when used
solely for the purpose of hedging in connection with our
ordinary business of investing in real estate assets and
mortgages;
|
|
|
|
make or invest in mortgage loans unless an appraisal is obtained
concerning the underlying property, except for those loans
insured or guaranteed by a government or government agency;
|
|
|
|
make or invest in mortgage loans, including construction loans,
on any one property if the aggregate amount of all mortgage
loans outstanding on the property, including our loans, would
exceed an amount equal to 85% of the appraised value of the
property, unless such investment is justified by the presence of
other underwriting criteria such as the credit rating of the
borrower, collateral that is adequate to justify the waiver of
this limitation or the guarantee of the mortgage by a government
agency. For this purpose, we do not treat CMBS as mortgage loans;
|
|
|
|
invest in contracts for the sale of real estate unless the
contract is in recordable form and is appropriately recorded in
the chain of title;
|
|
|
|
invest in equity securities unless a majority of our directors,
including a majority of our independent directors, not otherwise
interested in such transaction approve the transaction as being
fair, competitive and commercially reasonable;
|
|
|
|
borrow in amounts such that the total amount of all borrowings
does not exceed the lesser of 75% of the total costs of our
investments or 300% of our net assets, absent a satisfactory
showing that a higher level of borrowing is appropriate.
Net assets, for the purpose of this clause means
total assets (other than intangibles), valued at cost before
deducting depreciation, reserves for bad debts and other
non-cash reserves, less total liabilities;
|
|
|
|
make investments in unimproved property or indebtedness secured
by a deed of trust or mortgage loans on unimproved property in
excess of 10% of our total assets. Unimproved real
property means property which has the following three
characteristics:
|
|
|
|
|
|
an equity interest in property which was not acquired for the
purpose of producing rental or other operating income;
|
|
|
|
no development or construction is in process on the
property; and
|
|
|
|
no development or construction on the property is planned in
good faith to commence on the property within one year of
acquisition;
|
|
|
|
|
|
issue equity securities on a deferred payment basis or other
similar arrangement;
|
|
|
|
issue debt securities in the absence of adequate cash flow to
cover debt service;
|
94
|
|
|
|
|
issue equity securities in a private offering if the voting
rights per share issued in a private offering exceed the voting
rights which bear the same relationship to the voting rights of
a publicly held share as the consideration paid to us for each
privately offered share bears to the book value of each
outstanding publicly held share;
|
|
|
|
issue shares redeemable solely at the option of the holders
(except pursuant to our redemption plan);
|
|
|
|
take any action that would cause us to be classified as an
investment company under the Investment Company Act;
|
|
|
|
grant warrants
and/or
options to purchase shares to our advisor, our directors or
affiliates thereof except on the same terms as the options or
warrants are sold to the general public and provided that
the amount of the options or warrants does not exceed an amount
equal to 10% of the outstanding shares on the date of grant of
the warrants and options;
|
|
|
|
make any investment inconsistent with our objectives of
qualifying and remaining qualified as a REIT; or
|
|
|
|
make or invest in mortgage loans that are subordinate to any
mortgage or equity interest of our advisor, our directors, or
our affiliates.
|
Subject to the limitations set forth in our charter, our charter
currently provides that we will not engage in transactions with
our directors, W. P. Carey, Watermark Capital Partners or any
affiliate thereof, except to the extent that each such
transaction has, after disclosure of such affiliation, been
approved or ratified by a majority of our independent directors
and a majority of our directors who are not interested in the
transaction after a determination by them that: (1) the
transaction is on such terms as at the time of the transaction
and under the circumstances then prevailing, fair and reasonable
to us; and (2) the terms of such transaction are at least
as favorable as the terms then prevailing for comparable
transactions with unaffiliated third parties.
Under Delaware law (where our operating partnership is formed),
we, as a general partner, have a fiduciary duty to our operating
partnership and, consequently, such transactions with our
directors also are subject to the duties of care and loyalty
that we, as general partner, owe to limited partners in our
operating partnership to the extent such duties have not been
eliminated pursuant to the terms of the limited partnership
agreement of our operating partnership. Under the terms of the
partnership agreement, we are under no obligation to consider
the separate interests of the limited partners in deciding
whether to cause our operating partnership to take any actions.
Furthermore, in the event of a conflict of interest between the
interests of our stockholders and the limited partners, the
partnership agreement provides that we must endeavor in good
faith to resolve the conflict in a manner not adverse to either
our stockholders or the limited partners; provided,
however, that for so long as we directly own a
controlling interest in our operating partnership, any such
conflict that we, in our sole discretion, determine cannot be
resolved in a manner not adverse to either our stockholders or
the limited partners, will be resolved in favor of our
stockholders.
Our charter currently provides that we will not purchase an
investment in property from our directors, W. P. Carey,
Watermark Capital Partners or their affiliates, unless a
majority of the independent directors and a majority of the
directors who are not interested in the transaction approve such
transaction as being fair and reasonable to us and (i) at a
price to us no greater than the cost of the asset to the
affiliate, or (ii) if the price to us is in excess of such
costs, that a substantial justification for such excess exists,
such excess is reasonable and the total purchase price for the
property does not exceed the appraised value of such property.
The consideration we pay for an investment in property shall
ordinarily be based on the fair market value of the property, as
determined by a majority of our directors or a majority of the
members of a committee of our board. In cases in which a
majority of our independent directors or such committee
determine, or if the property is acquired from our directors, W.
P. Carey, Watermark Capital Partners or their affiliates, such
fair
95
market value shall be determined by a qualified independent
appraiser selected by our independent directors.
If at any time the character of our investments would cause us
to be deemed an investment company for purposes of
the Investment Company Act, we will take the necessary action to
ensure that we are not deemed to be an investment
company. Our advisor will continually review our
investment activity to attempt to ensure that we do not come
within the application of the Investment Company Act. Among
other things, they will attempt to monitor the proportion of our
portfolio that is placed in various investments so that we do
not come within the definition of an investment company under
the Investment Company Act. We have been advised by counsel that
if we operate in accordance with the description of our proposed
business in this prospectus, we will not be deemed an
investment company for purposes of the Investment
Company Act.
Although we are authorized to issue senior securities, we have
no current plans to do so. In addition, we will not engage in
underwriting or the agency distribution of securities issued by
others or in trading, as compared to investment activities.
Further, we are authorized to offer securities in exchange for
property if approved by our board of directors.
Our reserves, if any, will be invested in permitted temporary
investments. Our advisor will evaluate the relative risks and
rate of return, our cash needs and other appropriate
considerations when making short-term investments on our behalf.
The rate of return on permitted temporary investments may be
less than or greater than would be obtainable from real estate
investments.
Other
Investment Policies
Holding
Period for Investments and Application of Proceeds of Sales or
Refinancings
We generally intend to hold our investments in real property for
an extended period depending on the type of investment. We may
dispose of other types of investments, such as investments in
securities, more frequently. However, circumstances might arise
which could result in the early sale of some assets. An asset
may be sold before the end of the expected holding period if in
our judgment or in the judgment of our advisor, the sale of the
asset is in the best interest of our stockholders.
The determination of whether a particular asset should be sold
or otherwise disposed of will be made after consideration of
relevant factors, including prevailing economic conditions, with
a view to achieving maximum capital appreciation or avoiding
increases in risk. In connection with our sales of properties,
we may lend the purchaser all or a portion of the purchase
price, although we have no current plans to do so. In these
instances, our taxable income may exceed the cash received in
the sale. See United States Federal Income Tax
Considerations Requirements for
Qualification General.
The terms of payment will be affected by custom in the area in
which the investment being made is located and the then
prevailing economic conditions. To the extent that we receive
purchase money mortgages rather than cash in connection with
sales of properties, there may be a delay in making
distributions to stockholders. A decision to provide financing
to such purchasers would be made after an investigation into and
consideration of a number of factors including creditworthiness
of the purchaser and the circumstances of the transaction. See
United States Federal Income Tax
Considerations.
Change in
Investment Objectives and Limitations
Our charter requires that the independent directors review our
investment policies at least annually to determine that the
policies we are following are in the best interest of the
stockholders. Each determination and the basis therefor shall be
set forth in our minutes. The methods of implementing our
investment policies also may vary as new investment techniques
are developed. The methods of implementing our investment
procedures, objectives and policies, except as otherwise
provided in the charter, may be altered by a majority of the
directors (including a majority of the
96
independent directors) without the approval of the stockholders.
We will provide notice to stockholders of any material
alteration in our investment objectives through our public
reports filed under the Exchange Act.
Financing
Policies
We may borrow at the corporate level or the asset level. We
generally will seek to borrow in amounts that we believe will
maximize the return to our stockholders. Our indebtedness may be
recourse or non-recourse indebtedness. Recourse indebtedness
means that the lenders would have access to our general assets
to satisfy their debt. Non-recourse indebtedness means the
indebtedness of the borrower or its subsidiaries is secured only
by the assets to which such indebtedness relates without
recourse to the borrower or any of its subsidiaries, other than
in case of customary carve-outs for which the borrower or its
subsidiaries acts as guarantor in connection with such
indebtedness, such as fraud, misappropriation, misapplication of
funds, environmental conditions and material misrepresentation.
In some cases, particularly with respect to
non-U.S. investments,
the lenders may require that they have recourse to other assets
owned by a subsidiary borrower, in addition to the asset
securing the debt. If we invest in an asset denominated in a
foreign currency, any financing that we undertake will generally
be in the same currency. This will enable us to hedge a portion
of our currency risk on the investment.
We currently expect that in light of current market conditions,
obtaining financing for transactions in the near term will
remain difficult and may require that we fund the purchase of
properties solely or primarily using our equity capital until
market conditions improve. We currently estimate that our
investment portfolio will be 50% leveraged, on average; however,
there is no limitation on the amount we may borrow against any
single investment. If conditions in the financing markets
improve, our average portfolio leverage may exceed our current
expectations. Our aggregate borrowings, secured and unsecured,
will be reasonable in relation to our net assets and will be
reviewed by our board of directors at least quarterly. Aggregate
borrowings as of the time that the net proceeds of the offering
have been fully invested and at the time of each subsequent
borrowing may not exceed on average the lesser of 75% of the
total costs of all investments, or 300% of our net assets unless
the excess is approved by a majority of the independent
directors and disclosed to stockholders in our next quarterly
report, along with justification for the excess. Net assets are
our total assets (other than intangibles), valued at cost before
deducting depreciation, reserves for bad debts and other
non-cash reserves, less total liabilities.
It is expected that, by operating on a leveraged basis, we will
have more funds available and, therefore, will make more
investments and be in a better position to improve the returns
to our stockholders than would otherwise be possible without
such leverage. This is expected to result in a more diversified
portfolio. Our advisor will use its best efforts to obtain
financing on the most favorable terms available to us. Lenders
may have recourse to our other assets in limited circumstances
not related to the repayment of the indebtedness, such as under
an environmental indemnity, an adverse change in loan to value
ratios or in cases of fraud.
Lenders typically seek to include in the terms of a loan change
of control provisions making the termination or replacement of
the advisor, or dissolution of the advisor, events of default or
events requiring the immediate repayment of the full outstanding
balance of the loan. While we will attempt to negotiate to not
include such provisions, lenders may require them.
We may refinance properties or defease loans during the term of
a loan when a decline in interest rates makes it profitable to
prepay an existing loan, when an existing loan matures or if an
attractive investment becomes available and the proceeds from
the refinancing can be used to purchase such investment. The
benefits of the refinancing may include an increased cash flow
resulting from reduced debt service requirements, an increase in
distributions from proceeds of the refinancing, if any,
and/or an
increase in property ownership if some refinancing proceeds are
reinvested in real estate. The
97
prepayment of loans may require us to pay a yield maintenance
premium to the lender in order to pay off a loan prior to its
maturity.
We may enter into borrowing arrangements such as secured or
unsecured credit lines, warehouse facilities or other types of
financing arrangements. We may also issue corporate debt
securities, subject to the limitations in our charter. Some of
these arrangements may be recourse to us or may be secured by
our assets. Many of these arrangements would likely require us
to meet financial and non-financial covenants. Some of these
borrowings may be short term and may require that we meet margin
requirements.
We may borrow funds or purchase properties from our advisor or
the subadvisor or their respective affiliates if doing so is
consistent with the investment procedures, our objectives and
policies and if other conditions are met. See
Investment Objectives, Procedures and
Policies. We may borrow funds from our advisor or the
subadvisor or their respective affiliates to provide the debt
portion of a particular investment or to facilitate refinancings
if we are unable to obtain a permanent loan at that time or, in
the judgment of the board, it is not in our best interest to
obtain a permanent loan at the interest rates then prevailing
and the board has reason to believe that we will be able to
obtain a permanent loan on or prior to the end of the loan term
provided by our advisor or the subadvisor or their respective
affiliates.
These short-term loans may be fully or partially amortized, may
provide for the payment of interest only during the term of the
loan or may provide for the payment of principal and interest
only upon maturity. In addition, these loans may be secured by a
first or junior mortgage on the asset to be invested in or by a
pledge of or security interest in the offering proceeds that are
being held in escrow which are to be received from the sale of
our shares. Any short-term loan from our advisor or the
subadvisor or their respective affiliates will bear interest at
a rate equal to the lesser of one percent above the prime rate
of interest published in the Wall Street Journal or the rate
that would be charged to us by unrelated lending institutions on
comparable loans for the same purpose in the locality of the
investment. See Conflicts of Interest We
may enter into transactions with or take loans from our advisor,
the subadvisor or their respective affiliates or entities
managed by them.
Our charter currently provides that we will not borrow funds
from our directors, our advisor or their affiliates unless the
transaction is approved by a majority of the independent
directors and a majority of the directors who are not interested
in the transaction as being fair, competitive and commercially
reasonable and not less favorable than those prevailing for
loans between unaffiliated third parties under the same
circumstances.
98
PRIOR
PROGRAMS
The information in this section should not be considered as
indicative of how we will perform. This discussion refers to the
performance of prior programs sponsored by affiliates of W. P.
Carey over the lifetime of the programs. We will not make
investments comparable to those reflected in this section. In
particular, none of the prior programs included in this section
held significant investments in lodging properties and, as
discussed below, an investment in lodging properties is
different from an investment in the prior programs discussed
below, including the
CPA®
REITs. If you purchase our shares, you will not have any
ownership interest in any of the real estate programs described
in this section (unless you are also an investor in those real
estate programs).
Investments in the lodging industry have certain characteristics
that are different from investments in
triple-net
leased properties such as those made by the
CPA®
REITs. Among these differences are:
|
|
|
|
|
An investment in the lodging industry is focused on a single
industry, whereas the
CPA®
REITs seek to diversify across a number of different industries.
While we expect to seek geographic and customer based diversity
in our portfolio, investors will not have the benefit of
industry diversification and our performance will depend in
significant measure on economic factors affecting the lodging
industry, which may differ from those factors affecting other
industries.
|
|
|
|
The properties owned by the
CPA®
REITs are typically leased to single commercial tenants under
long-term net leases providing that all operating and
maintenance costs must be absorbed by the tenants. Occupancy
rates at lodging facilities, and revenues from operations,
fluctuate on a daily basis, and depending upon demand, a lodging
facility operator could face difficulties in raising rates to
cover increases in operating and maintenance costs.
|
|
|
|
A portfolio of
triple-net
leased properties tends to produce a stable flow of income over
the life of the lease, which income may increase over time, as
contractual lease rate increases take effect. In general, the
most significant risk to this cash flow arises from changes in
the tenants ability to make the contractual lease payments
when due. Income from lodging facilities is subject to
potentially greater fluctuation over time, due to factors that
may include seasonality, as well as the effect of economic
conditions, competition, management decisions, or external
events that weaken demand. These factors in turn may affect our
distributions to stockholders.
|
We believe, however, that the risks inherent in the lodging
industry are balanced by increased opportunities for capital
appreciation. In particular, because of the greater
opportunities for cash flow growth, yields on lodging facility
investments have been greater over the past several years than
yields on other major property types. Additionally, a major part
of our strategy is to purchase properties whose revenues and
profitability have the potential to increase through execution
of targeted asset management strategies, which may include brand
and management changes, market positioning, revenue and expense
management, strategic capital expenditures and enhancement of
operating efficiencies. This creates a potential opportunity for
value enhancement that is not generally applicable to properties
with single, long-term tenants. Also, the ability to reprice
rooms on a daily basis potentially allows a lodging operator to
respond rapidly to increases in inflation rates. These
characteristics of lodging sector investment thus may produce a
different risk/reward profile for us from that of the
CPA®
REITs and potential investors should carefully consider their
overall portfolio objectives in determining whether to invest in
us.
In the past, affiliates of W. P. Carey organized the limited
partnerships known as:
|
|
|
|
|
Corporate Property Associates
(CPA®:1)
|
|
|
|
Corporate Property Associates 2
(CPA®:2)
|
|
|
|
Corporate Property Associates 3
(CPA®:3)
|
|
|
|
Corporate Property Associates 4
(CPA®:4)
|
99
|
|
|
|
|
Corporate Property Associates 5
(CPA®:5)
|
|
|
|
Corporate Property Associates 6
(CPA®:6)
|
|
|
|
Corporate Property Associates 7
(CPA®:7)
|
|
|
|
Corporate Property Associates 8
(CPA®:8)
|
|
|
|
Corporate Property Associates 9
(CPA®:9)
|
On January 1, 1998, these nine partnerships were merged
into Carey Diversified LLC (CDC), a New York Stock
Exchange listed limited liability company. In this merger,
limited partners of
CPA®:1
through
CPA®:9
had the option to exchange their units for shares of CDC or,
through subsidiary partnership units, or SPUs, to retain a
direct interest in the respective CPA partnership. The SPUs were
redeemed for cash in July 1998 based on appraised valuations of
each partnership as of May 31, 1998. The partnerships no
longer operate as independent entities. In June 2000, CDC
acquired the net lease business operations of W. P.
Carey & Co. Inc. and is now known as W. P.
Carey & Co. LLC (NYSE:WPC). The rollup of these nine
partnerships occurred within the contemplated timeframes for a
liquidity event that were disclosed in the initial offering
documents for these partnerships, except with regard to
Corporate Property Associates, Corporate Property Associates 2
and Corporate Property Associates 3. The initial offering
documents for these partnerships contemplated potential
liquidity events prior to the end of 1992, 1995 and 1997,
respectively.
Affiliates of W. P. Carey have also organized the REITs listed
below:
|
|
|
|
|
Corporate Property Associates 10 Incorporated
(CPA®:10)
|
|
|
|
Carey Institutional Properties Incorporated
(CIP®)
|
|
|
|
Corporate Property Associates 12 Incorporated
(CPA®:12)
|
|
|
|
Corporate Property Associates 14 Incorporated
(CPA®:14)
|
|
|
|
Corporate Property Associates 15 Incorporated
(CPA®:15)
|
|
|
|
Corporate Property Associates 16 Global Incorporated
(CPA®:16
Global)
|
|
|
|
Corporate Property Associates 17 Global Incorporated
(CPA®:17
Global)
|
In May 2002,
CPA®:10
and
CIP®
merged, with
CIP®
being the surviving company. In this transaction
CPA®:10
stockholders exchanged their shares for either shares of
CIP®
or 4% promissory notes. The promissory notes were redeemed for
cash at par value in December 2002. In September 2004,
CIP®
and
CPA®:15
merged, with
CPA®:15
being the surviving company and
CIP®
stockholders received either cash or
CPA®:15 shares,
at the stockholders election, in addition to receiving a
special cash distribution out of the proceeds of the sale of
certain assets to W. P. Carey. In December 2006,
CPA®:12
and
CPA®:14
merged, with
CPA®:14
being the surviving company. In this transaction,
CPA®:12
stockholders received either cash or
CPA®:14 shares,
at the stockholders election, and also received a special
cash distribution out of the proceeds of the sale of certain
assets to W. P. Carey. Each of these liquidity events occurred
within the timeframes contemplated by the initial offering
documents of the acquired company. The offering materials for
each of the entities that have not been liquidated, namely
CPA®:14,
CPA®:15,
CPA®:16
Global and
CPA®:17
Global disclose an anticipated timeframe for liquidation, which
timeframes have not yet passed, although
CPA®:14
is in the timeframe during which its offering materials
disclosed that it will seek possible liquidity alternatives. The
primary investment objectives of the
CPA®
Programs have been to own a diversified portfolio of income
producing, single tenant net leased commercial real estate
assets.
We do not have any current plans to merge with a
CPA®
REIT; however, a merger transaction is not prohibited by our
organizational documents and it is possible that our board of
directors might determine that a merger transaction is advisable
in the future. Any merger between us and a
CPA®
REIT would require the approval of the holders of at least a
majority of our outstanding shares of
100
common stock. If we were the surviving entity of a merger
between us and a
CPA®
REIT, the merger would result in our advisor being eligible to
collect disposition fees from the
CPA®
REIT if the applicable stockholder return conditions for the
payment of the fees were satisfied. If we were the acquired
company in a merger between us and a
CPA®
REIT, our advisor would be eligible to receive disposition fees
and Carey Watermark Holdings would be eligible to receive its
15% profits distributions if the applicable stockholder
preferred return conditions were satisfied. These same fees and
distributions would be payable if we were to be acquired by an
unrelated third party.
The following is information relating to the
CPA®
Programs for the ten year period beginning January 1, 2000
and ending December 31, 2009:
|
|
|
|
|
Total equity raised:
|
|
$
|
3,284,432,000
|
|
Total investors (at December 31, 2009):
|
|
|
120,047
|
|
Total number of Properties Purchased:
|
|
|
654
|
|
Properties Purchased Outside the United States:
|
|
|
240
|
|
Aggregate Purchase Price of Properties:
|
|
$
|
6,988,458,000
|
|
Total Equity Investment in Properties:
|
|
$
|
2,883,928,000
|
|
Total Mortgage Financing:
|
|
$
|
4,104,530,000
|
|
Of all properties acquired by the
CPA®
Programs during the ten year period between January 1, 2000
and December 31, 2009, approximately 34% had newly
constructed buildings or buildings being constructed, and
approximately 66% had previously constructed buildings
(percentages are based on aggregate purchase price).
The
CPA®
Programs have made international investments totaling more than
$2.5 billion from January 1, 2000 to December 31,
2009.
The following table summarizes all property acquisitions by
CPA®
REITs from January 1, 2007 to December 31, 2009. This
table reflects information regarding properties acquired and is
not indicative of the total portfolios of the entities listed
below. See W. P. Carey Group Portfolio
Diversification for additional information.
Acquisition
of properties by
CPA®:14,
CPA®:15,
CPA®:16
Global and CPA:17 Global
from January 1, 2007 to December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
CPA®:14
|
|
CPA®:15
|
|
CPA®:16
Global
|
|
CPA®:17
Global
|
|
|
(Note 1)
|
|
(Note 1)
|
|
(Note 1)
|
|
(Note 1)
|
|
Locations
|
|
IA, Germany, Finland
|
|
Germany, Poland
|
|
AZ, CA, CO, CT, FL, GA, IL, IN, KS, MD, MI, MN, NC, NY, OK, SC,
TN, TX, WA, Canada, Finland, France, Germany, Poland, Hungary
|
|
AZ, IL, IN, LA, KS, MD, NC, NE, NY, TX, Germany, Hungary,
Poland, Spain, United Kingdom
|
Type of property
|
|
(Note 2)
|
|
(Note 2)
|
|
(Note 2)
|
|
(Note 2)
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross leasable space (sq.ft.)
|
|
|
1,229,116
|
|
|
|
2,318,930
|
|
|
|
8,957,376
|
|
|
|
5,500,019
|
|
Dates of purchase
|
|
|
4/2007-4/2009
|
|
|
|
3/2007-12/2009
|
|
|
|
2/2007-12/2009
|
|
|
|
12/2007-12/2009
|
|
Original mortgage financing
|
|
$
|
127,932,802
|
|
|
$
|
172,693,947
|
|
|
$
|
526,848,168
|
|
|
$
|
271,449,188
|
|
Cash down payment-equity
|
|
|
30,841,125
|
|
|
|
74,535,781
|
|
|
|
412,521,534
|
|
|
|
376,353,667
|
|
Contract purchase price plus acquisition fees (Note 3)
|
|
|
158,773,927
|
|
|
|
247,229,728
|
|
|
|
939,369,702
|
|
|
|
647,802,855
|
|
Other cash expenditures expensed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other capitalized expenditures (Note 4)
|
|
|
56,432
|
|
|
|
81,491
|
|
|
|
5,647,974
|
|
|
|
2,459,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of property
|
|
$
|
158,830,359
|
|
|
$
|
247,311,219
|
|
|
$
|
945,017,676
|
|
|
$
|
650,262,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The fund owns interests in one or
more joint ventures or
tenants-in-common
with affiliates that own property. The amounts included in the
table above reflect the funds percentage ownership in
joint ventures or
tenants-in-common.
|
|
(2)
|
|
Acquisitions consist of the
following types of properties:
|
|
|
|
CPA®:14
Office and retail facilities
|
|
|
|
CPA®:15
Distribution, industrial, office, retail and warehouse facilities
|
|
|
|
CPA®:16
Global Distribution, hotel, industrial, office,
retail, transportation and warehouse facilities
|
|
|
|
CPA®:17
Global Office, health and fitness, industrial,
educational, residential, distribution, retail and warehouse
facilities
|
|
(3)
|
|
Consists of initial purchase price,
including closing costs such as the cost of appraisals,
attorneys and accountants fees, costs of title
reports, transfer and recording taxes and title insurance. For
properties under construction, this column consists of amounts
funded to date. Amounts are based on currency conversion rates
in effect on date funded, where applicable.
|
|
(4)
|
|
Consists of capitalized interest,
net of construction rents, and also includes cost of
improvements/adjustments subsequent to acquisitions. For
properties under construction, interest on mortgages is
capitalized rather than expensed and rentals received are
recorded as a reduction of the basis in the properties.
|
While we expect that obtaining financing for transactions in the
near term will remain difficult and may require that we fund the
purchase of properties solely or primarily using our equity
capital until market conditions improve, we currently estimate
that we will borrow 50%, on average, of the purchase price of
our properties. The
CPA®
Programs had an expectation of borrowing between approximately
50% and 60% of the purchase price of properties. International
portions of the
CPA®
Programs have averaged approximately 66% leverage.
No
CPA®
Program has missed a quarterly distribution payment during the
10-year
period from January 1, 2000 to December 31, 2009,
although one
CPA®
Program reduced the rate of distributions as a result of adverse
developments as described below. During periods before each
CPA®
Program substantially invested the net proceeds of its initial
public offering in real estate assets, each
CPA®
Program funded portions of its distributions using offering
proceeds, and we will likely do the same. In addition, in 2009,
CPA®:14
and
CPA®:15
suspended their redemption programs in part to preserve
liquidity and capital in the currently distressed economic
environment.
As of December 31, 2009, the most recently published
estimated net asset values per share for
CPA®:14
and
CPA®:15
are $11.80 and $10.70, respectively, which are above their
original issue prices of $10.00 per share each, but reflect
decreases of 9.2% and 6.9%, respectively, from their prior
valuation as of December 31, 2008. The most recently
published estimated net asset value per share for
CPA®:16
Global is $9.20 per share, which reflects a 6% decrease from its
$10.00 original issue price.
CPA®:17
Global has not yet estimated its net asset value per share. The
CPA®
REITs currently provide an average distribution yield of 7.2%.
Between January 1, 2000 and December 31, 2009, the
CPA®
Programs have paid 159 quarterly distributions, with 3 initial
payments, no payments going down from the prior quarter, 18
payments staying the same and 138 payments increasing over
102
the prior quarter. Occupancy rates for
CPA®
Programs have averaged in excess of 97% every year during that
10-year
period.
The
CPA®
Programs have sold all or a portion of 133 properties during the
10-year period between January 1, 2000 and
December 31, 2009.
Some
CPA®
Programs have experienced adverse business developments during
the 10 year period from January 1, 2000 through
December 31, 2009, which have included the filing by some
tenants for protection from creditors under the bankruptcy code,
the vacating of facilities by a tenant at the end of an initial
lease term, and litigation with tenants involving lease defaults
and sales of properties. These developments caused a reduction
in cash flow
and/or an
increase in administrative expenses of the affected
CPA®
Programs for certain periods of time. Most
CPA®
Programs in which these developments occurred were able to meet
their obligations and maintain distributions to their investors,
primarily as a result of the efforts of management and the
existence of cash reserves for distribution payments. However,
in 1997, primarily as a result of the expiration of a
significant lease and the bankruptcy of Harvest Foods,
CPA®:10
reduced its annualized regular distribution rate from 8.30% in
the fourth quarter of 1996 to 7.02% for the first quarter of
1997.
CPA®:10
maintained a reduced annualized regular distribution rate
ranging from 7.02% in the first quarter of 1997 to 7.18% through
its liquidation in April 2002.
Additional information regarding the prior performance of the
CPA®
Programs is set forth in Annex A beginning on page A-1
of this prospectus.
Upon written request to the Director of Investor Relations, 50
Rockefeller Plaza, New York, New York 10020, 1-800-WP CAREY, W.
P. Carey will provide, at no fee, the most recent annual report
(on
Form 10-K)
filed by any of the
CPA®
REITs and, at a reasonable fee, the exhibits to the annual
reports. These annual reports and exhibits, as well as other
reports required to be filed with the SEC, are also available at
the SECs Website at www.sec.gov.
W. P.
CAREYS COMPLETED PROGRAMS
from January 1, 2000 through December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:10
|
|
|
CIP®
|
|
|
CPA®:12
|
|
|
Total Cash Distributions
Plus End Value per $10,000 Invested
|
|
|
|
|
|
$
|
20,833
|
|
|
$
|
24,243
|
|
|
$
|
23,552
|
|
Value Received at Liquidation per $10,000
Invested(1)
|
|
|
|
|
|
$
|
11,230
|
|
|
$
|
13,900
|
|
|
$
|
13,300
|
|
Total Cash Distributions per $10,000 Invested
|
|
|
|
|
|
$
|
9,603
|
|
|
$
|
10,343
|
|
|
$
|
10,252
|
|
Percentage of Original Investment Received
|
|
|
|
|
|
|
208
|
%
|
|
|
242
|
%
|
|
|
236
|
%
|
Average Annual
Return(2)
|
|
|
|
|
|
|
8.81
|
%
|
|
|
11.22
|
%
|
|
|
10.91
|
%
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
8.27
|
%
|
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
8.27
|
%
|
Annualized Yields Based on Calendar Year
Distributions(3)
|
|
|
2004
|
|
|
|
|
|
|
|
8.58
|
%
|
|
|
8.27
|
%
|
|
|
|
2003
|
|
|
|
|
|
|
|
8.54
|
%
|
|
|
8.26
|
%
|
|
|
|
2002
|
|
|
|
7.18
|
%
|
|
|
8.51
|
%
|
|
|
8.23
|
%
|
|
|
|
2001
|
|
|
|
7.15
|
%
|
|
|
8.41
|
%
|
|
|
8.20
|
%
|
|
|
|
2000
|
|
|
|
7.12
|
%
|
|
|
8.32
|
%
|
|
|
8.17
|
%
|
Past Performance is not a guarantee of future results.
|
|
|
(1)
|
|
In May 2002,
CPA®:10
and
CIP®
merged, with
CIP®
being the surviving company. In this transaction
CPA®:10
stockholders exchanged their shares for either shares of
CIP®
or 4% promissory notes. Those who elected promissory notes
received interest and $11.23 per share at the end of 2002, as
illustrated here. In September 2004,
CIP®
and
CPA®:15
merged with
CPA®:15
being the surviving company. In the merger,
CIP®
stockholders received a special cash distribution of $3.00 per
share and, in addition, the choice of either $10.90 in cash or
1.09 shares of
CPA®:15.
In December 2006,
CPA®:12
and
|
103
|
|
|
|
|
CPA®:14
merged, with
CPA®:14
being the surviving company. In the merger,
CPA®:12
stockholders received a special cash distribution of $3.19 per
share and, in addition, the choice of $10.30 in cash or 0.8692
shares of
CPA®:14.
|
|
|
|
(2)
|
|
Average annual return for each
CPA®
Program is calculated by dividing (i) cumulative total return
including cash distributions, special distributions and exchange
value/liquidation dividends at the end of the program above the
original capital paid to an investor who invested $10,000 at the
start of the
CPA®
Program and held through its completion, by (ii) the number
of years of the respective
CPA®
Program representing the investment holding period. Average
annual returns do not assume or include any distribution
reinvestment.
|
|
|
|
(3)
|
|
Cash return percentages,
represented as annualized yields, are calculated by dividing the
cash distributed during any given year (excluding distributions
of cash from property sales) by the total investment in the
program. Cash distributions from property sales are deducted
from the original investment in calculating subsequent cash
return percentages. When a funds first or last year was a
partial year, the cash distribution rate for that year is quoted
on an annualized basis. Yields do not reflect any special
distributions or liquidating distributions.
|
104
W. P.
CAREYS CURRENTLY OPERATING PROGRAMS
from January 1, 2000 through December 31, 2009
Cash Distributions From
Operations(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:14
|
|
|
CPA®:15
|
|
|
CPA®:16 Global
|
|
|
CPA®:17 Global
|
|
|
Total Cash Distributions Per
$10,000
Invested(2)
|
|
|
|
|
|
$
|
9,160
|
|
|
$
|
5,260
|
|
|
$
|
3,610
|
|
|
$
|
1,330
|
|
Annualized Yields Based On
Calendar Year
Distributions(3)
|
|
|
2009
|
|
|
|
8.31
|
%
|
|
|
7.21
|
%
|
|
|
6.62
|
%
|
|
|
6.32
|
%
|
|
|
|
2008
|
|
|
|
8.19
|
%
|
|
|
6.89
|
%
|
|
|
6.56
|
%
|
|
|
5.50
|
%
|
|
|
|
2007
|
|
|
|
8.11
|
%
|
|
|
6.64
|
%
|
|
|
6.48
|
%
|
|
|
|
|
|
|
|
2006
|
|
|
|
7.79
|
%
|
|
|
6.48
|
%
|
|
|
6.33
|
%
|
|
|
|
|
|
|
|
2005
|
|
|
|
7.63
|
%
|
|
|
6.37
|
%
|
|
|
5.36
|
%
|
|
|
|
|
|
|
|
2004
|
|
|
|
7.58
|
%
|
|
|
6.29
|
%
|
|
|
4.54
|
%
|
|
|
|
|
|
|
|
2003
|
|
|
|
7.54
|
%
|
|
|
6.21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
2002
|
|
|
|
7.49
|
%
|
|
|
6.05
|
%
|
|
|
|
|
|
|
|
|
|
|
|
2001
|
|
|
|
7.08
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2000
|
|
|
|
6.59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Past Performance is not a guarantee of future results.
|
|
|
(1)
|
|
Cash distributions for all periods
presented in the table were sourced by cash flow from
operations, except that for
CPA®:17 Global,
cash distributions from inception to December 2009 were 74%
sourced from adjusted cash flow from operations and 26% from
offering proceeds.
|
|
|
|
(2)
|
|
Total cash distributions include
those received from operations and from property sales through
January 15, 2010 and are exclusive of increases or decrease
in property values and equity
build-up
from paydown of mortgage balances. The percentages reflected
above will represent a return of the money originally invested
in a program and not a return on such money to the extent
aggregate proceeds from the sale of such programs
properties are less than the gross investment in such program.
|
|
|
|
(3)
|
|
Cash distribution percentages,
represented as annualized yields, are calculated by dividing the
cash distributed during any given year (excluding distributions
of cash from property sales) by the total original investment in
the program assuming investment in first closing. Beginning in
July 2006,
CPA®:14
cash distribution percentages are based on a $9.55 per share
investment after adjusting for a $0.45 per share special
distribution paid in July 2006. Beginning in January 2008,
CPA®:15
cash distribution percentages are based on a $9.92 per share
investment after adjusting for a $0.08 per share special
distribution paid in January 2008. Cash distribution percentages
are quoted on an annualized basis.
|
105
The following chart summarizes information regarding the cash
distributions paid by the
CPA®
Programs and the percentage of these distributions that was
covered by the net cash provided by operating activities as
calculated in accordance with GAAP for the 10-year period from
January 1, 2000 through December 31, 2009.
W. P.
CAREYS COMPLETED AND CURRENTLY OPERATING
PROGRAMS
from January 1, 2000 through December 31, 2009
Percentage of Cash Distributions Covered From Operations
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Net Cash
|
|
|
|
|
|
|
Distributions
|
|
|
Provided by (Used In)
|
|
|
%
|
|
|
|
Paid
|
|
|
Operating Activities
|
|
|
Coverage
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:17
Global
|
|
$
|
27,193
|
|
|
$
|
32,240
|
|
|
|
119
|
%
|
CPA®:16
Global
|
|
|
80,778
|
|
|
|
119,879
|
|
|
|
148
|
%
|
CPA®:15
|
|
|
88,939
|
|
|
|
160,033
|
|
|
|
180
|
%
|
CPA®:14
|
|
|
68,832
|
|
|
|
87,900
|
|
|
|
128
|
%
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:17
Global
|
|
|
5,196
|
|
|
|
4,443
|
|
|
|
86
|
%
|
CPA®:16
Global
|
|
|
79,011
|
|
|
|
117,435
|
|
|
|
149
|
%
|
CPA®:15
|
|
|
98,153
|
|
|
|
180,789
|
|
|
|
184
|
%
|
CPA®:14
|
|
|
68,851
|
|
|
|
110,697
|
|
|
|
161
|
%
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:17
Global(1)
|
|
|
0
|
|
|
|
(17
|
)
|
|
|
0
|
%
|
CPA®:16
Global
|
|
|
72,551
|
|
|
|
120,985
|
|
|
|
167
|
%
|
CPA®:15
|
|
|
85,327
|
|
|
|
162,985
|
|
|
|
191
|
%
|
CPA®:14
|
|
|
68,323
|
|
|
|
89,730
|
|
|
|
131
|
%
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:16
Global
|
|
|
41,227
|
|
|
|
52,255
|
|
|
|
127
|
%
|
CPA®:15
|
|
|
82,850
|
|
|
|
144,818
|
|
|
|
175
|
%
|
CPA®:14
|
|
|
83,633
|
|
|
|
102,232
|
|
|
|
122
|
%
|
CPA®:12(2)
|
|
|
19,265
|
|
|
|
27,364
|
|
|
|
142
|
%
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:16
Global
|
|
|
28,939
|
|
|
|
40,338
|
|
|
|
139
|
%
|
CPA®:15
|
|
|
80,475
|
|
|
|
124,049
|
|
|
|
154
|
%
|
CPA®:14
|
|
|
51,905
|
|
|
|
70,895
|
|
|
|
137
|
%
|
CPA®:12
|
|
|
25,431
|
|
|
|
44,285
|
|
|
|
174
|
%
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:16
Global
|
|
|
5,918
|
|
|
|
7,584
|
|
|
|
128
|
%
|
CPA®:15
|
|
|
67,797
|
|
|
|
90,721
|
|
|
|
134
|
%
|
CPA®:14
|
|
|
50,973
|
|
|
|
70,590
|
|
|
|
138
|
%
|
CPA®:12
|
|
|
25,173
|
|
|
|
27,529
|
|
|
|
109
|
%
|
CIP®(3)
|
|
|
12,093
|
|
|
|
17,306
|
|
|
|
143
|
%
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Net Cash
|
|
|
|
|
|
|
Distributions
|
|
|
Provided by (Used In)
|
|
|
%
|
|
|
|
Paid
|
|
|
Operating Activities
|
|
|
Coverage
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:16
Global(4)
|
|
|
0
|
|
|
|
(30
|
)
|
|
|
0
|
%
|
CPA®:15
|
|
|
40,498
|
|
|
|
55,536
|
|
|
|
137
|
%
|
CPA®:14
|
|
|
50,173
|
|
|
|
59,410
|
|
|
|
118
|
%
|
CPA®:12
|
|
|
24,960
|
|
|
|
28,979
|
|
|
|
116
|
%
|
CIP®
|
|
|
23,891
|
|
|
|
33,198
|
|
|
|
139
|
%
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:15
|
|
|
6,179
|
|
|
|
13,333
|
|
|
|
216
|
%
|
CPA®:14
|
|
|
48,581
|
|
|
|
60,569
|
|
|
|
125
|
%
|
CPA®:12
|
|
|
24,692
|
|
|
|
28,575
|
|
|
|
116
|
%
|
CIP®
|
|
|
20,877
|
|
|
|
25,599
|
|
|
|
123
|
%
|
2001
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:15(5)
|
|
|
0
|
|
|
|
(12
|
)
|
|
|
0
|
%
|
CPA®:14
|
|
|
32,811
|
|
|
|
53,275
|
|
|
|
162
|
%
|
CPA®:12
|
|
|
24,205
|
|
|
|
26,571
|
|
|
|
110
|
%
|
CIP®
|
|
|
18,550
|
|
|
|
23,916
|
|
|
|
129
|
%
|
CPA®:10(6)
|
|
|
5,452
|
|
|
|
8,482
|
|
|
|
156
|
%
|
2000
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:14
|
|
|
21,466
|
|
|
|
28,689
|
|
|
|
134
|
%
|
CPA®:12
|
|
|
23,435
|
|
|
|
29,953
|
|
|
|
128
|
%
|
CIP®
|
|
|
18,187
|
|
|
|
24,731
|
|
|
|
136
|
%
|
CPA®:10
|
|
|
5,430
|
|
|
|
6,681
|
|
|
|
123
|
%
|
Past Performance is not a
guarantee of future results.
|
|
|
(1)
|
|
Represents the period from
CPA®:17
Globals inception, February 20, 2007, through
December 31, 2007.
|
|
|
|
(2)
|
|
Represents the period from
January 1, 2006, through November 30, 2006. On
December 1, 2006,
CPA®:12
merged into
CPA®:14.
As a result of the merger,
CPA®:12
did not file financial statements for the fourth quarter of 2006
or thereafter.
|
|
|
|
(3)
|
|
Represents the period from
January 1, 2004, through August 30, 2004. On
September 1, 2004,
CIP®
merged into
CPA®:15.
As a result of the merger,
CIP®
did not file financial statements for the third quarter of 2004
or thereafter.
|
|
|
|
(4)
|
|
Represents the period from
CPA®:16
Globals inception, June 5, 2003, through
December 31, 2003.
CPA®:16
Global paid its first dividend in April 2004.
|
|
|
|
(5)
|
|
Represents the period from
CPA®:15s
inception, February 26, 2001, through December 31,
2001.
CPA®:15
paid its first dividend in April 2002.
|
|
|
|
(6)
|
|
In May 2002,
CPA®:10
merged into
CIP®.
As a result of the merger,
CPA®:10
did not file financial statements for the first quarter of 2002
or thereafter.
|
The charts above include, in summary form, the performance
histories of the
CPA®
Programs and should not be considered as indicative of our
possible operations. CWI was formed to invest primarily in
lodging properties and so will contain a portfolio different
from those owned by the predecessor
CPA®
Programs. As such, the inclusion of these charts does not imply
in any manner that CWI will make investments comparable to those
reflected in the charts with respect to cash flow, taxable
income or other factors, nor does it imply or indicate that
purchasers of shares will experience returns comparable to those
experienced by investors in the real estate portfolios other
than CWI referred to in the charts. Moreover, the size of cash
distributions is only one criterion on which a decision to
invest in CWI should be based. Investors who purchase shares in
CWI will not have ownership interests in any of the real estate
portfolios depicted here (unless they are also investors in
those real estate portfolios). An investment in the portfolios
listed above was subject to risks certain of which are similar
to those of an investment in CWI, except that, CWI is subject to
different risks associated with significant investments in
lodging properties.
107
W. P.
Carey Group Portfolio Diversification
The following charts show, as of December 31, 2009, the
portfolio diversification of each of the
CPA®
REITs.
Portfolio
Diversification by Tenant Industry
(Based on Annualized Contractual Lease Revenue at
December 31, 2009)
|
|
|
CPA®:16-
Global
|
|
CPA®:17
- Global
|
|
|
|
|
|
Amounts may not add to 100% due to rounding. |
108
Portfolio
Diversification by Facility Type
(Based on Annualized Contractual Lease Revenue at
December 31, 2009)
|
|
|
CPA®:16
- Global
|
|
CPA®:17
- Global
|
109
Portfolio
Diversification by Region (Based on Annualized Contractual Lease
Revenue at December 31, 2009)
|
|
|
CPA®:16
- Global
|
|
CPA®:17
- Global
|
|
|
|
|
|
Amounts may not add to 100% due to rounding. |
110
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 30, 2010 certain
information regarding the ownership of our shares of common
stock beneficially owned, both immediately prior and after this
offering, by:
|
|
|
|
|
each of our directors and named executive officers;
|
|
|
|
all of our directors and executive officers as a group; and
|
|
|
|
all persons known to us that are expected to be the beneficial
owner of more than five percent of our common stock.
|
We will have 22,222 shares of our common stock outstanding
prior to commencement of this offering. All 22,222 shares
will be owned by our advisor. In accordance with SEC rules, each
listed persons beneficial ownership includes:
|
|
|
|
|
All shares the investor actually owns beneficially or of record;
|
|
|
|
All shares over which the investor has or shares voting or
dispositive control (such as in the capacity as a general
partner of an investment fund); and
|
|
|
|
All shares the investor has the right to acquire within
60 days (such as upon exercise of options that are
currently vested or which are scheduled to vest within
60 days).
|
Unless otherwise indicated, all shares are owned directly and
the indicated person has sole voting and investment power.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of Common Stock
|
|
|
Name
|
|
Beneficially Owned
|
|
Percentage(1)
|
|
Carey Lodging Advisors,
LLC(3)
|
|
|
22,222
|
|
|
|
100
|
|
Trevor P.
Bond(3)
|
|
|
0
|
|
|
|
0
|
|
Michael G.
Medzigan(2)
|
|
|
0
|
|
|
|
0
|
|
Michael D.
Johnson(2)
|
|
|
0
|
|
|
|
0
|
|
Robert E.
Parsons(2)
|
|
|
0
|
|
|
|
0
|
|
Mark J.
DeCesaris(3)
|
|
|
0
|
|
|
|
0
|
|
Thomas E.
Zacharias(3)
|
|
|
0
|
|
|
|
0
|
|
All directors and executive officers as a group (six persons)
|
|
|
0
|
|
|
|
0
|
%
|
|
|
|
(1)
|
|
Assumes the issuance of
100,000,000 shares in the offering.
|
|
(2)
|
|
The business address of the
stockholders is 207 E. Westminster, Suite 200,
Lake Forest, IL 60045.
|
|
(3)
|
|
The business address of the
stockholder is 50 Rockefeller Plaza, New York, New York 10020.
|
111
SELECTED
FINANCIAL DATA
We have no operating history as a REIT or a public company. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations and our financial
statements and the notes thereto, included elsewhere in this
prospectus.
MANAGEMENTS
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We have no operating history. We are dependent upon proceeds
received from the offering to conduct our proposed activities.
In addition, we currently own no properties. The capital
required to purchase any property will be obtained from the
offering and from any mortgage indebtedness that we may incur in
connection with the acquisition of any property or thereafter.
Prior to the commencement of our offering, we will have been
capitalized with $200,000 from the sale of 22,222 shares to
our advisor. We have no commitments to acquire any property or
to make any other material capital expenditures. We will not
commence our operations until we have sold at least the minimum
offering of shares. In the event we sell only the minimum
offering of 1,000,000 shares, we will likely make only a
limited number of investments and will not be able to achieve
significant diversification or meet our investment objectives.
For information concerning the anticipated use of proceeds from
the offering, see Estimated Use of Proceeds
and Investment Objectives, Procedures and
Policies.
Liquidity would be affected adversely by unanticipated costs and
greater-than-anticipated
operating expenses. To the extent that the working capital
reserve is insufficient to satisfy our cash requirements,
additional funds may be provided from cash generated from
operations or through short-term borrowings. In addition,
subject to limitations described in this prospectus, we may
incur indebtedness in connection with the acquisition of any
property, refinance the debt thereon, arrange for the leveraging
of any previously unfinanced property or reinvest the proceeds
of financings or refinancings in additional properties. See
Investment Objectives, Procedures and
Policies.
We intend to qualify as a real estate investment trust, or REIT.
If we qualify as a REIT, we will not be subject to
U.S. federal income taxes on amounts distributed to
stockholders provided we meet certain conditions including
distributing at least 90% of our taxable income to stockholders.
Our objectives are to pay quarterly distributions at an
increasing rate, to increase equity in our real estate through
regular mortgage principal payments and to own a geographically
diversified portfolio of lodging properties that will increase
in value.
Under the provisions of the Internal Revenue Code, as a REIT, we
are allowed to own lodging properties but are prohibited from
operating these properties. In order to comply with applicable
REIT qualification rules, we will enter into leases for each of
our lodging properties with the TRS lessees. The TRS lessees
will in turn contract with independent property operators that
will manage
day-to-day
operations of our properties.
We will be advised by CLA, an indirect subsidiary of W. P.
Carey, pursuant to an advisory agreement. CLA will manage us
with assistance from Watermark Capital Partners, pursuant to a
subadvisory agreement. Our contract with CLA may be renewed for
successive one-year periods following an evaluation of our
advisors performance by our independent directors as
required by our charter. This review must be conducted annually
and the contract will continue in effect until 60 days
after our independent directors shall have notified the advisor
of their determination either to renew the agreement for an
additional one-year period or terminate it, as required by our
charter. See Management Advisory
Agreement.
While our advisor and the subadvisor will be responsible for
managing our overall portfolio, the independent property
operators will manage
day-to-day
operations of our properties under the oversight of the
subadvisor.
112
THE
OPERATING PARTNERSHIP
General
We intend to elect and qualify to be taxed as a REIT for
U.S. federal income tax purposes. We are structured as an
umbrella partnership REIT, or UPREIT, under which substantially
all of our future business will be conducted through our
operating partnership. Our operating partnership will be formed
under Delaware law to acquire, own and lease properties on our
behalf. We will utilize this UPREIT structure generally to
enable us to acquire real property in exchange for limited
partnership units in our operating partnership, or the OP units,
from owners who desire to defer taxable gain that would
otherwise normally be recognized by them upon the disposition of
their property or the transfer of their property to us in
exchange for our common stock or cash. These owners may also
desire to achieve diversity in their investment and other
benefits afforded to owners of stock in a REIT. For purposes of
satisfying the asset and income tests for qualification as a
REIT for U.S. federal income tax purposes (see
United States Federal Income Tax
Considerations), the REITs proportionate share
of the assets and income of our operating partnership will be
deemed to be assets and income of the REIT.
The property owners goals are accomplished because the
owner may contribute property to our operating partnership in
exchange for OP units on a tax deferred basis. Further, our
operating partnership will be structured to make distributions
with respect to OP units which are equivalent to the dividend
distributions made to our stockholders. Finally, a limited
partner in our operating partnership may later redeem his, her
or its OP units for shares of our common stock (in a taxable
transaction) or cash and achieve liquidity for his, her or its
investment.
We intend to hold substantially all of our assets in our
operating partnership or in subsidiary entities in which our
operating partnership owns an interest, and we intend to make
future acquisitions of real properties using the UPREIT
structure. We are the controlling general partner of and a
limited partner in the operating partnership and, as of the
commencement of the offering, will own a 99.97% capital interest
in the operating partnership. We are the managing general
partner of our operating partnership and therefore, our board of
directors controls all decisions of our operating partnership.
Our board has delegated authority for our management and the
management of our operating partnership to our advisor subject
to the terms of the advisory agreement. Carey Watermark Holdings
will assist our advisor in management and will hold a special
general partnership profits interest entitling it to receive
certain profit allocations and distributions of cash. Upon the
commencement of this offering, Carey Watermark Holdings will own
a 0.03% capital interest in our operating partnership.
The following is a summary of certain provisions of the limited
partnership agreement of our operating partnership, which we
intend to enter into prior to the commencement of this offering.
This summary is not complete and is qualified by the specific
language in the partnership agreement. You should refer to the
actual partnership agreement, a copy of which will be filed as
an exhibit to the registration statement of which this
prospectus is a part, for more detail.
Capital
Contributions
In connection with this offering and future offerings of our
common stock, we will transfer substantially all of the net
offering proceeds to our operating partnership in exchange for
OP units. However, we will be deemed to have made capital
contributions in the amount of the gross offering proceeds, and
our operating partnership will be deemed to have simultaneously
paid the underwriting discounts and commissions and other costs
associated with the offering. Carey Watermark Holdings will make
an initial capital contribution of $300,000 in cash and will
provide services to the operating partnership in exchange for
its special general partnership interest.
If our operating partnership requires additional funds at any
time in excess of capital contributions made by us, we may
borrow funds from a financial institution or other lender and
lend
113
such funds to our operating partnership on the same terms and
conditions as are applicable to our borrowing of such funds. In
addition, we are authorized to cause our operating partnership
to issue partnership interests for less than fair market value
if we conclude in good faith that such issuance is in the best
interest of our operating partnership and our company.
Fiduciary
Duties
For a description of the fiduciary duties that we, as a general
partner, owe to limited partners in our operating partnership
pursuant to Delaware law and the terms of the partnership
agreement, see Investment Objectives, Procedures and
Policies Investment Procedures.
Operations
The partnership agreement requires that our operating
partnership be operated in a manner that will enable us to
(1) satisfy the requirements for being classified as a REIT
for U.S. federal income tax purposes, unless we otherwise
cease to qualify as a REIT and (2) ensure that our
operating partnership will not be classified as a publicly
traded partnership for purposes of Section 7704 of
the Code, which classification could result in our operating
partnership being taxed as a corporation, rather than as a
partnership. (See United States Federal Income Tax
Considerations Federal Income Tax Aspects of Our
Partnership Classification as a
Partnership.)
Redemption Rights
The limited partners of our operating partnership (other than
our company) and the special general partner generally have the
right to cause our operating partnership to redeem all or a
portion of their OP units for cash or, at our sole discretion,
shares of our common stock, or a combination of both. If we
elect to redeem OP units for shares of our common stock, we will
generally deliver one share of our common stock for each OP unit
redeemed. If we elect to redeem OP units for cash, we will
generally deliver cash to be paid in an amount equal to, for
each redeemed OP unit, the average of the daily market price for
the ten consecutive trading days immediately preceding the date
we receive a notice of redemption by a limited partner. In
connection with the exercise of these redemption rights, a
limited partner or the special general partner must make certain
representations, including that the delivery of shares of our
common stock upon redemption would not result in such limited
partner or the special general partner owning shares in excess
of our ownership limits in our charter.
Subject to the foregoing, limited partners and the special
general partner may exercise their redemption rights at any time
after one year following the date of issuance of their OP units;
provided, however, that a limited partner may not
deliver more than two redemption notices each calendar year and
may not exercise a redemption right for less than 1,000 OP
units, unless the limited partner holds less than 1,000 OP
units, in which case it must exercise its redemption right for
all of its OP units.
Transferability
of Interests
We may not (1) voluntarily withdraw as a general partner of
our operating partnership, (2) engage in any merger,
consolidation or other business combination, or
(3) transfer our general partnership interest in our
operating partnership (except to a wholly-owned subsidiary),
unless we obtain the consent of a
majority-in-interest
of the partners of our operating partnership including us;
provided however, that if any such transaction results in
the termination of our advisory agreement with CLA, the consent
of the special general partner to such transaction will be
required unless the operating partnership agrees to repurchase
the special general partnership interest in the operating
partnership for its fair market value, as determined by an
independent appraiser. With certain exceptions, the limited
partners may not transfer their interests in our operating
partnership, in whole or in part, without our written consent as
general partner and that of the special general
114
partner. Carey Watermark Holdings may not transfer its special
general partner interest in our operating partnership without
our consent, which must be approved by a majority of our
independent directors, except to us, W. P. Carey, Watermark
Capital Partners or their respective subsidiaries.
Distributions
of Cash and Allocation of Income
The partnership agreement generally provides that our operating
partnership will distribute cash flows from operations and net
sales proceeds from dispositions of assets to the partners of
our operating partnership in accordance with their relative
percentage interests, on at least a quarterly basis, in amounts
determined by us as a general partner. In addition, Carey
Watermark Holdings, as the holder of a special general partner
interest will be entitled to special distributions of cash flow
and sale proceeds, as described under Management
Compensation. The general partner will have the power,
in its reasonable discretion, to adjust or withhold the
distributions to the special general partner in order to avoid
violations of the 2%/25% Guideline.
Similarly, the partnership agreement of our operating
partnership provides that income of our operating partnership
from operations and income of our operating partnership from
disposition of assets normally will be allocated to the partners
of our operating partnership in accordance with their relative
percentage interests such that a holder of one OP unit will be
allocated income for each taxable year in an amount equal to the
amount of taxable income allocated to us in respect of a holder
of one share of our common stock, subject to compliance with the
provisions of Sections 704(b) and 704(c) of the Code and
corresponding Treasury Regulations. Losses, if any, will
generally be allocated among the partners in accordance with
their respective percentage interests in our operating
partnership. Upon the liquidation of our operating partnership,
after payment of debts and obligations, any remaining assets of
our operating partnership will be distributed in accordance with
the distribution provisions of the partnership agreement to the
extent of each partners positive capital account balance.
In addition to the administrative and operating costs and
expenses incurred by our operating partnership or its
subsidiaries, in acquiring and operating real properties, our
operating partnership will pay all administrative costs and
expenses of our company, and such expenses will be treated as
expenses of our operating partnership. Such expenses will
include, without limitation:
|
|
|
|
|
All expenses relating to maintaining our corporate existence;
|
|
|
|
All expenses relating to the public offering and registration of
our securities;
|
|
|
|
All expenses associated with the preparation and filing of any
periodic reports by allocations of certain portions of our
profits under federal, state or local laws or regulations;
|
|
|
|
All expenses associated with our compliance with applicable
laws, rules and regulations; and
|
|
|
|
All our other operating or administrative costs incurred in the
ordinary course of its business on behalf of our operating
partnership.
|
The
Special General Partner Interest
Carey Watermark Holdings, an entity in which both W. P. Carey
and Watermark Capital Partners will own indirect interests, will
hold a special general partner profits interest in our operating
partnership. Carey Watermark Holdings special general
partner interest will entitle it to certain distributions of our
operating partnerships available cash and an allocation of
certain operating partnership profits, as described in the next
paragraph.
Operating partnership profits means profits as determined under
the operating partnerships partnership agreement and the
provisions of the Internal Revenue Code that apply to
partnership taxation. For a description of the calculation of
profits, see United States Federal Income Tax
Considerations Federal Income Tax Aspects of Our
Partnership. Operating partnership profits are
determined in accordance with the Code Section 703(a) (for
this purpose, all items of income, gain,
115
loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in the
determination of operating partnership profits), with the
following adjustments: (a) any income of the partnership
that is exempt from federal income tax and not otherwise taken
into account in computing operating partnership profits shall be
included in the determination of operating partnership profits;
(b) any expenditures of the partnership described in Code
Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulations
Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing operating
partnership profits shall be subtracted from such determination;
(c) in the event the value of any partnership asset is
adjusted pursuant to the partnership agreement, the amount of
such adjustment shall be taken into account as gain or loss from
the disposition of such asset for purposes of computing
operating partnership profits; (d) gain or loss resulting
from any disposition of property with respect to which gain or
loss is recognized for federal income tax purposes shall be
computed by reference to the gross asset value of the property
(as determined under the partnership agreement) disposed of,
notwithstanding that the adjusted tax basis of such property
differs from such value; (e) depreciation, amortization,
and other cost recovery deductions taken into account in
computing operating partnership profits shall be based upon the
gross asset value of partnership assets (as determined under the
partnership agreement) as opposed to the adjusted tax bases of
such assets; (f) to the extent an adjustment to the
adjusted tax basis of any partnership asset pursuant to Code
Section 734(b) or Code Section 743(b) is required
pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m)(4)
to be taken into account in determining capital accounts as a
result of a distribution other than in liquidation of a
partners interest in the partnership, the amount of such
adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for
purposes of computing operating partnership profits; and
(g) notwithstanding any other provision regarding the
calculation of operating partnership profits, any items that are
specially allocated pursuant to the partnership agreement shall
not be taken into account in computing operating partnership
profits. The amounts of the items of partnership income, gain,
loss, or deduction available to be specially allocated pursuant
to the partnership agreement shall be determined by applying
rules analogous to those set forth in this definition of
operating partnership profits.
Substantially all of Carey Watermark Holdings special
general partner interest in our operating partnership is
intended to qualify as a profits interest for tax
purposes within the meaning of IRS Revenue Procedure
93-27. As a
result, the special general partnership interest will initially
have no liquidation value aside from Carey Watermark
Holdings actual capital contributions. Further, without a
significant initial liquidation value, the interest will be
limited in its ability to receive loss allocations from the
operating partnership. For example, if our operating partnership
liquidates immediately after its funding, Carey Watermark
Holdings would receive no liquidation proceeds in excess of its
capital contributions. Similarly, if our operating partnership
incurs losses after its funding, no loss allocations (other than
certain loss allocations arising from expenses related to
certain borrowings) would be made to Carey Watermark Holdings in
excess of its capital contributions. Finally, if our operating
partnership generates profits after its funding, Carey Watermark
Holdings would share in those profits based on the terms of the
limited partnership agreement of our operating partnership. In
short, Carey Watermark Holdings will participate in future
increases in the value of our assets but will receive no portion
of the capital contributed by holders of our common stock.
If the advisory agreement is not renewed upon the expiration of
its then-current term or is terminated for any reason, or if the
advisor resigns, and, in each case, an affiliate of the advisor
does not become the replacement advisor, all after two years of
the date the operating partnership begins operations, our
operating partnership will have the right, but not the
obligation, to repurchase all or a portion of Carey Watermark
Holdings interests in our operating partnership at the
fair market value of those interests on the date of termination,
as determined by an independent appraiser. Please see
Management Advisory Agreement and
Risk Factors Risks Related to Our
Relationship with Our Advisor Exercising our right
to repurchase all or a portion of Carey Watermark Holdings
116
interests in our operating partnership upon certain
termination events could be prohibitively expensive and could
deter us from terminating the advisory agreement.
Tax-Matters
Partner
We are the tax-matters partner of our operating partnership,
and, as such, we have authority to make tax elections under the
Code on behalf of our operating partnership.
Term
Our operating partnership will continue in full force
perpetually or until sooner dissolved in accordance with its
terms or as otherwise provided by law.
Indemnity
The operating partnership must indemnify and hold us (and our
officers, directors, agents and employees) harmless from any
liability incurred, losses sustained or benefits not derived as
a result of errors in judgments or mistakes of fact or law or
any act or omission if we (or our officers, directors, agents or
employees) acted in good faith. In addition, the operating
partnership must indemnify us (and our officers, directors,
agents, employees and designees) to the extent permitted by
applicable law from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or
investigative, that relate to the operations of the operating
partnership, unless it is established that:
(1) our charter prohibits us from indemnifying the
indemnified party for a matter, in which case the operating
partnership shall likewise be prohibited from indemnifying the
indemnified party for the matter; or
(2) it is established that:
|
|
|
|
|
the act or omission was material to the matter giving rise to
the proceeding and was either committed in bad faith, was
fraudulent or was the result of active and deliberate dishonesty;
|
|
|
|
the indemnified party actually received an improper personal
benefit in money, property or services; or
|
|
|
|
in the case of a criminal proceeding, the indemnified person had
reasonable cause to believe that the act or omission was
unlawful.
|
Amendment
The partnership agreement may not be amended without our consent
as general partner. In general, we may not amend the partnership
agreement without first obtaining the consent of partners
holding at least 50% of the ownership interests of all partners.
In addition, the consent of the special general partner and the
limited partners holding greater than 50% of the ownership
interests of the limited partners would be required for any
amendment that would (1) contravene an express prohibition
or limitation in the partnership agreement; (2) subject a
limited partner to liability as a general partner in any
jurisdiction or any other liability except as provided in the
partnership agreement or under the Delaware Revised Uniform
Limited Partnership Act; or (3) prohibit or restrict, or
have the effect of prohibiting or restricting, the ability of a
limited partner to exercise its rights to a redemption in full.
However, there are certain circumstances in which we are
permitted to amend the partnership agreement without any consent.
117
LEGAL
PROCEEDINGS
Since our inception, we have not been involved in any material
litigation.
UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal
income tax considerations relating to our qualification and
taxation as a REIT and the acquisition, holding, and disposition
of our shares. For purposes of this section, under the heading
United States Federal Income Tax
Considerations, references to the company,
we, our and us mean only
Carey Watermark Investors Incorporated and not the operating
partnership, except as otherwise indicated. This summary is
based upon the Internal Revenue Code, the Treasury Regulations,
current administrative interpretations and practices of the IRS
(including administrative interpretations and practices
expressed in private letter rulings which are binding on the IRS
only with respect to the particular taxpayers who requested and
received those rulings) and judicial decisions, all as currently
in effect and all of which are subject to differing
interpretations or to change, possibly with retroactive effect.
No assurance can be given that the IRS would not assert, or that
a court would not sustain, a position contrary to any of the tax
consequences described below. No advance ruling has been or will
be sought from the IRS regarding any matter discussed in this
summary. The summary is also based upon the assumption that the
operation of the company, and of its subsidiaries and other
lower-tier and affiliated entities, will be, in each case, in
accordance with its applicable organizational documents or
partnership agreement. This summary is for general information
only, and does not purport to discuss all aspects of
U.S. federal income taxation that may be important to a
particular stockholder in light of its investment or tax
circumstances or to stockholders subject to special tax rules,
such as:
|
|
|
|
|
U.S. expatriates;
|
|
|
|
persons who
mark-to-market
our shares;
|
|
|
|
subchapter S corporations;
|
|
|
|
U.S. stockholders (as defined below) whose functional
currency is not the U.S. dollar;
|
|
|
|
financial institutions;
|
|
|
|
insurance companies;
|
|
|
|
broker-dealers;
|
|
|
|
regulated investment companies;
|
|
|
|
trusts and estates;
|
|
|
|
persons who receive our shares through the exercise of employee
share options or otherwise as compensation;
|
|
|
|
persons holding our shares as part of a straddle,
hedge, conversion transaction,
synthetic security or other integrated investment;
|
|
|
|
persons subject to the alternative minimum tax provisions of the
Internal Revenue Code;
|
|
|
|
persons holding their shares through a partnership or similar
pass-through entity;
|
|
|
|
persons holding shares constituting 10% or more (by vote or
value) of the ownership of the company; and, except to the
extent discussed below:
|
|
|
|
|
|
tax-exempt organizations; and
|
|
|
|
non-U.S. stockholders
(as defined below).
|
This summary assumes that stockholders will hold our shares as
capital assets, which generally means as property held for
investment.
118
THE U.S. FEDERAL INCOME TAX TREATMENT OF HOLDERS OF OUR
SHARES DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT
AND INTERPRETATIONS OF COMPLEX PROVISIONS OF U.S. FEDERAL
INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE
AVAILABLE. IN ADDITION, THE TAX CONSEQUENCES TO ANY PARTICULAR
STOCKHOLDER OF HOLDING OUR SHARES WILL DEPEND ON THE
STOCKHOLDERS PARTICULAR TAX CIRCUMSTANCES. YOU ARE URGED
TO CONSULT YOUR TAX ADVISOR REGARDING THE U.S. FEDERAL,
STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES TO
YOU, IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX
CIRCUMSTANCES, OF ACQUIRING, HOLDING, AND DISPOSING OF OUR
SHARES.
Taxation
of the Company
We intend to elect to be taxed as a REIT under the Internal
Revenue Code, commencing with our taxable year ending
December 31, 2010. We believe that we have been organized
and will operate in a manner that will allow us to qualify for
taxation as a REIT under the Internal Revenue Code commencing
with our taxable year ending December 31, 2010, and we
intend to continue to be organized and operate in such a manner.
During 2008 and 2009, we were a qualified REIT
subsidiary of Carey REIT II, Inc. and, therefore, did not
have any independent federal income tax return filing
obligations.
The law firm of Venable LLP has acted as our tax counsel in
connection with this offering. We expect to receive the opinion
of Venable LLP to the effect that, commencing with our taxable
year ending December 31, 2010, we have been organized in
conformity with the requirements for qualification and taxation
as a REIT under the Internal Revenue Code, and our proposed
method of operation will enable us to meet the requirements for
qualification and taxation as a REIT under the Internal Revenue
Code. A copy of the opinion of Venable LLP has been filed as an
exhibit to the registration statement of which this prospectus
is a part. It must be emphasized that the opinion of Venable LLP
is based on various assumptions relating to our organization and
operation, including that all factual representations and
statements set forth in all relevant documents, records and
instruments are true and correct, all actions described in this
prospectus are completed in a timely fashion and that we will at
all times operate in accordance with the method of operation
described in our organizational documents and this prospectus.
In addition, to the extent we make certain investments, such as
investments in preferred equity securities of REITS, or whole
loan mortgage or CMBS securitizations, the accuracy of such
opinion will also depend on the accuracy of certain opinions
rendered to us in connection with such transactions. While we
believe that we are organized and intend to operate so that we
will qualify as a REIT, given the highly complex nature of the
rules governing REITs, the ongoing importance of factual
determinations and the possibility of future changes in our
circumstances or applicable law, no assurance can be given by
Venable LLP or us that we will so qualify for any particular
year. Venable LLP will have no obligation to advise us or the
holders of our shares of any subsequent change in the matters
stated, represented or assumed or of any subsequent change in
the applicable law. You should be aware that opinions of counsel
are not binding on the IRS, and no assurance can be given that
the IRS will not challenge the conclusions set forth in such
opinions.
Qualification and taxation as a REIT depends on our ability to
meet, on a continuing basis, through actual results of
operations, distribution levels and diversity of share
ownership, various qualification requirements imposed upon REITs
by the Internal Revenue Code, the compliance with which will not
be reviewed by Venable LLP. In addition, our ability to qualify
as a REIT may depend in part upon the operating results,
organizational structure and entity classification for
U.S. federal income tax purposes of certain entities in
which we invest, which could include entities that have made
elections to be taxed as REITs, the qualification of which will
not have been reviewed by Venable LLP. Our ability to qualify as
a REIT also requires that we satisfy certain asset and income
tests, some of which depend upon the fair market values of
assets directly or indirectly owned by us or
119
which serve as security for loans made by us. Such values may
not be susceptible to a precise determination. Accordingly, no
assurance can be given that the actual results of our operations
for any taxable year will satisfy the requirements for
qualification and taxation as a REIT.
Taxation
of REITs in General
As indicated above, qualification and taxation as a REIT depends
upon our ability to meet, on a continuing basis, various
qualification requirements imposed upon REITs by the Internal
Revenue Code. The material qualification requirements are
summarized below, under Requirements for
Qualification General. While we intend to
operate so that we qualify as a REIT, no assurance can be given
that the IRS will not challenge our qualification as a REIT or
that we will be able to operate in accordance with the REIT
requirements in the future. See Failure to
Qualify.
Provided that we qualify as a REIT, we generally will be
entitled to a deduction for dividends that we pay and,
therefore, will not be subject to U.S. federal corporate
income tax on our net income that is currently distributed to
our stockholders. This treatment substantially eliminates the
double taxation at the corporate and stockholder
levels that generally results from investment in a corporation.
Rather, income generated by a REIT generally is taxed only at
the stockholder level, upon a distribution of dividends by the
REIT. See Taxation of Taxable
U.S. Stockholders Distributions.
Net operating losses, foreign tax credits and other tax
attributes of a REIT generally do not pass through to the
stockholders of a REIT, subject to special rules for certain
items, such as capital gains, recognized by REITs. See
Taxation of Taxable
U.S. Stockholders.
If we qualify as a REIT, we will nonetheless be subject to
U.S. federal income tax in the following circumstances:
|
|
|
|
|
We will be taxed at regular U.S. federal corporate income
tax rates on any undistributed income, including undistributed
net capital gains.
|
|
|
|
We may be subject to the alternative minimum tax on
our items of tax preference, if any.
|
|
|
|
If we have net income from prohibited transactions, which are,
in general, sales or other dispositions of inventory or property
held primarily for sale to customers in the ordinary course of
business, other than foreclosure property, such income will be
subject to a 100% tax. See Prohibited
Transactions, and Foreclosure
Property, below.
|
|
|
|
If we elect to treat property that we acquire in connection with
a foreclosure of a mortgage loan or from certain leasehold
terminations as foreclosure property, we may thereby
(a) avoid the 100% tax on gain from a resale of that
property (if the sale would otherwise constitute a prohibited
transaction) and (b) treat income and gain from such
property as qualifying income for purposes of the REIT gross
income tests discussed below, but the income from the sale or
operation of the property may be subject to corporate income tax
at the highest applicable rate (currently 35%).
|
|
|
|
If we fail to satisfy the 75% gross income test or the 95% gross
income test, as discussed below, but nonetheless maintain our
qualification as a REIT because other requirements are met, we
will be subject to a 100% tax on an amount equal to (a) the
greater of (1) the amount by which we fail the 75% gross
income test or (2) the amount by which we fail the 95%
gross income test, as the case may be, multiplied by (b) a
fraction intended to reflect our profitability.
|
|
|
|
If we fail to satisfy any of the REIT asset tests, as described
below, by larger than a de minimis amount, but our
failure is due to reasonable cause and not willful neglect and
we nonetheless maintain our REIT qualification because of
specified cure provisions, we will be required to pay a tax
equal to the greater of $50,000 or the highest corporate tax
rate (currently 35%) of the net income generated by the
nonqualifying assets during the period in which we failed to
satisfy the asset tests.
|
120
|
|
|
|
|
If we fail to satisfy any provision of the Internal Revenue Code
that would result in our failure to qualify as a REIT (other
than a gross income or asset test requirement) and the violation
is due to reasonable cause and not willful neglect, we may
retain our REIT qualification but we will be required to pay a
penalty of $50,000 for each such failure.
|
|
|
|
If we fail to distribute during each calendar year at least the
sum of (a) 85% of our REIT ordinary income for such year,
(b) 95% of our REIT capital gain net income for such year
and (c) any undistributed taxable income from prior
periods, or the required distribution, we will be
subject to a 4% excise tax on the excess of the required
distribution over the sum of (1) the amounts actually
distributed (taking into account excess distributions from prior
years), plus (2) retained amounts on which income tax is
paid at the corporate level.
|
|
|
|
We may be required to pay monetary penalties to the IRS in
certain circumstances, including if we fail to meet
record-keeping requirements intended to monitor our compliance
with rules relating to the composition of our stockholders, as
described below in Requirements for
Qualification General.
|
|
|
|
A 100% excise tax may be imposed on some items of income and
expense that are directly or constructively paid between us and
our TRS lessees, if any, if and to the extent that the IRS
successfully adjusts the reported amounts of these items.
|
|
|
|
If we acquire appreciated assets from a corporation that is not
a REIT in a transaction in which the adjusted tax basis of the
assets in our hands is determined by reference to the adjusted
tax basis of the assets in the hands of the non-REIT
corporation, we will be subject to tax on such appreciation
(determined as of the date of our acquisition of such assets) at
the highest corporate income tax rate then applicable to the
extent that we subsequently recognize gain on a disposition of
any such assets during the
10-year
period following their acquisition from the non-REIT
corporation. The results described in this paragraph assume that
the non-REIT corporation will not elect, in lieu of this
treatment, to be subject to an immediate tax when the asset is
acquired by us.
|
|
|
|
We will generally be subject to tax on the portion of any excess
inclusion income derived from direct or indirect ownership of
residual interests in real estate mortgage investment conduits,
or REMICs, to the extent our shares are held by specified
tax-exempt organizations not subject to tax on unrelated
business taxable income. Similar rules apply if we own an equity
interest in a taxable mortgage pool. To the extent that we own a
REMIC residual interest or a taxable mortgage pool through a
TRS, we will not be subject to this tax. For a discussion of
excess inclusion income, see
Effect of Subsidiary Entities and
Excess Inclusion Income.
|
|
|
|
We may elect to retain and pay income tax on our net long-term
capital gain. In that case, a stockholder would include its
proportionate share of our undistributed long-term capital gain
(to the extent we make a timely designation of such gain to the
stockholder) in its income and would be allowed a credit for its
proportionate share of the tax deemed to have been paid, and an
adjustment would be made to increase the stockholders
basis in our shares.
|
|
|
|
We may have subsidiaries or own interests in other lower-tier
entities that are subchapter C corporations (including TRSs),
the earnings of which would be subject to U.S. federal
corporate income tax.
|
In addition, we and our subsidiaries may be subject to a variety
of taxes other than U.S. federal income tax, including
payroll taxes and state, local, and foreign income, franchise,
property and other taxes on assets and operations. As further
described below, any TRS in which we own an interest will be
subject to U.S. federal income tax on its taxable income.
We could also be subject to tax in situations and on
transactions not presently contemplated.
121
Requirements
for Qualification General
The Internal Revenue Code defines a REIT as a corporation, trust
or association:
(1) that is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by
transferable shares or by transferable certificates of
beneficial interest;
(3) that would be taxable as a domestic corporation but for
the special Internal Revenue Code provisions applicable to REITs;
(4) that is neither a financial institution nor an
insurance company subject to specific provisions of the Internal
Revenue Code;
(5) the beneficial ownership of which is held by 100 or
more persons;
(6) in which, during the last half of each taxable year,
not more than 50% in value of the outstanding shares is owned,
directly or indirectly, by five or fewer individuals
(as defined in the Internal Revenue Code to include specified
entities);
(7) which meets other tests described below, including with
respect to the nature of its income and assets and the amount of
its distributions; and
(8) that makes an election to be a REIT for the current
taxable year or has made such an election for a previous taxable
year that has not been terminated or revoked.
The Internal Revenue Code provides that conditions
(1) through (4) must be met during the entire taxable
year, and that condition (5) must be met during at least
335 days of a taxable year of 12 months, or during a
proportionate part of a shorter taxable year. Conditions
(5) and (6) do not need to be satisfied for the first
taxable year for which an election to become a REIT has been
made. Our organizational documents provide restrictions
regarding the ownership and transfer of its shares, which are
intended to assist in satisfying the share ownership
requirements described in conditions (5) and
(6) above. For purposes of condition (6), an
individual generally includes a supplemental
unemployment compensation benefit plan, a private foundation or
a portion of a trust permanently set aside or used exclusively
for charitable purposes, but does not include a qualified
pension plan or profit sharing trust.
To monitor compliance with the share ownership requirements, we
are generally required to maintain records regarding the actual
ownership of our shares. To do so, we must demand written
statements each year from the record holders of significant
percentages of our shares, in which the record holders are to
disclose the actual owners of the shares (i.e., the persons
required to include in gross income the dividends paid by us). A
list of those persons failing or refusing to comply with this
demand must be maintained as part of our records. Failure by us
to comply with these record-keeping requirements could subject
us to monetary penalties. If we satisfy these requirements and
after exercising reasonable diligence would not have known that
condition (6) is not satisfied, we will be deemed to have
satisfied such condition. A stockholder that fails or refuses to
comply with the demand is required by Treasury Regulations to
submit a statement with its tax return disclosing the actual
ownership of the shares and other information.
In addition, a real estate investment trust generally may not
elect to become a REIT unless its taxable year is the calendar
year. We satisfy this requirement.
Effect of
Subsidiary Entities
Ownership of Partnership Interests. In the
case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT is deemed to own its
proportionate share of the partnerships assets and to earn
its proportionate share of the partnerships gross income
based on its pro rata share of capital interest in the
partnership for purposes of the asset and gross income tests
122
applicable to REITs, as described below. However, solely for
purposes of the 10% value test, described below, the
determination of a REITs interest in partnership assets
will be based on the REITs proportionate interest in any
securities issued by the partnership, excluding, for these
purposes, certain excluded securities as described in the
Internal Revenue Code. In addition, the assets and gross income
of the partnership generally are deemed to retain the same
character in the hands of the REIT. Thus, our proportionate
share of the assets and items of income of partnerships in which
we own an equity interest (including our interest in our
operating partnership) is treated as assets and items of income
of our company for purposes of applying the REIT requirements
described below. Consequently, to the extent that we directly or
indirectly hold a preferred or other equity interest in a
partnership, the partnerships assets and operations may
affect our ability to qualify as a REIT, even though we may have
no control or only limited influence over the partnership. A
summary of certain rules governing the U.S. federal income
taxation of partnerships and their partners is provided below in
Federal Income Tax Aspects of Our
Partnership.
Disregarded Subsidiaries. If a REIT owns a
corporate subsidiary that is a qualified REIT
subsidiary, that subsidiary is disregarded for
U.S. federal income tax purposes, and all assets,
liabilities and items of income, deduction and credit of the
subsidiary are treated as assets, liabilities and items of
income, deduction and credit of the REIT itself, including for
purposes of the gross income and asset tests applicable to
REITs, as summarized below. A qualified REIT subsidiary is any
entity otherwise treated as a corporation for U.S. federal
income tax purposes, other than a TRS (as described below), that
is wholly-owned by a REIT, by other disregarded subsidiaries or
by a combination of the two. Single member limited liability
companies that are wholly-owned by a REIT are also generally
disregarded as separate entities for U.S. federal income
tax purposes, including for purposes of the REIT gross income
and asset tests. Disregarded subsidiaries, along with
partnerships in which we hold an equity interest, are sometimes
referred to herein as pass-through subsidiaries.
In the event that a disregarded subsidiary ceases to be
wholly-owned by us for example, if any equity
interest in the subsidiary is acquired by a person other than us
or another disregarded subsidiary of us the
subsidiarys separate existence would no longer be
disregarded for U.S. federal income tax purposes. Instead,
it would have multiple owners and would be treated as either a
partnership or a taxable corporation. Such an event could,
depending on the circumstances, adversely affect our ability to
satisfy the various asset and gross income tests applicable to
REITs, including the requirement that REITs generally may not
own, directly or indirectly, more than 10% of the value or
voting power of the outstanding securities of another
corporation. See Asset Tests and
Gross Income Tests.
Taxable REIT Subsidiaries. A REIT, in general,
may jointly elect with a subsidiary corporation, whether or not
wholly-owned, to treat the subsidiary corporation as a Taxable
REIT Subsidiary, or a TRS. The separate existence of a TRS or
other taxable corporation, unlike a disregarded subsidiary as
discussed above, is not ignored for U.S. federal income tax
purposes. Accordingly, such an entity would generally be subject
to corporate income tax on its earnings, which may reduce the
cash flow generated by us and our subsidiaries in the aggregate
and our ability to make distributions to our stockholders.
A REIT is not treated as holding the assets of a TRS or other
taxable subsidiary corporation or as receiving any income that
the subsidiary earns. Rather, the stock issued by the subsidiary
is an asset in the hands of the REIT, and the REIT generally
recognizes as income the dividends, if any, that it receives
from the subsidiary. This treatment can affect the gross income
and asset test calculations that apply to the REIT, as described
below. Because a parent REIT does not include the assets and
income of such subsidiary corporations in determining the
parents compliance with the REIT requirements, such
entities may be used by the parent REIT to undertake indirectly
activities that the REIT rules might otherwise preclude it from
doing directly or through pass-through subsidiaries or render
commercially unfeasible (for example, activities that give rise
to certain categories of income such as nonqualifying hedging
income or inventory sales). If dividends are paid to us by one
or more of our TRSs, if any, then a portion of the dividends
that we distribute to stockholders who are taxed at
123
individual rates generally will be eligible for taxation at
preferential qualified dividend income tax rates rather than at
ordinary income rates. See Taxation of
Taxable U.S. Stockholders
Distributions.
Certain restrictions imposed on TRSs are intended to ensure that
such entities will be subject to appropriate levels of
U.S. federal income taxation. First, a TRS may not deduct
interest payments made in any year to an affiliated REIT to the
extent that such payments exceed, generally, 50% of the
TRSs adjusted taxable income for that year (although the
TRS may carry forward to, and deduct in, a succeeding year the
disallowed interest amount if the 50% test is satisfied in that
year). In addition, if amounts are paid to a REIT or deducted by
a TRS due to transactions between a REIT, its tenants
and/or a
TRS, that exceed the amount that would be paid to or deducted by
a party in an arms length transaction, the REIT generally
will be subject to an excise tax equal to 100% of such excess.
Rents we receive that include amounts for services furnished by
one of our TRSs, if any, to any of our tenants will not be
subject to the excise tax if such amounts qualify for the safe
harbor provisions contained in the Internal Revenue Code. Safe
harbor provisions are provided where (1) amounts are
excluded from the definition of impermissible tenant service
income as a result of satisfying the 1% de minimis exception;
(2) a TRS renders a significant amount of similar services
to unrelated parties and the charges for such services are
substantially comparable; (3) rents paid to us by tenants
that are not receiving services from the TRS are substantially
comparable to the rents paid by our tenants leasing comparable
space that are receiving such services from the TRS and the
charge for the services is separately stated; or (4) the
TRSs gross income from the service is not less than 150%
of the TRSs direct cost of furnishing the service.
We intend to form one or more TRSs in the future. To the extent
that any such TRSs pay any taxes, they will have less cash
available for distribution to us. If dividends are paid by our
TRSs to us, then the dividends we designate and pay to our
stockholders who are individuals, up to the amount of dividends
we receive from such entities, generally will be eligible to be
taxed at the reduced 15% maximum U.S. federal rate
applicable to qualified dividend income. See
Taxation of Taxable
U.S. Stockholders.
Lodging
Properties
Operating revenues from lodging properties are not qualifying
REIT income for purposes of the 75% or the 95% gross income
tests discussed below. Accordingly, in order to generate
qualifying income with respect to our lodging investments under
the REIT rules, we generally must master-lease our lodging
properties to a TRS.
In general, rent paid by a related party tenant, such as a TRS
lessee, is not qualifying rents from real property
for purposes of the REIT gross income tests discussed below, but
rent paid by a TRS lessee to our operating partnership with
respect to a lease of a qualified lodging facility
from the operating partnership can be qualifying rents from real
property under the REIT rules as long as such TRS lessee does
not directly or indirectly operate or manage any lodging
property or provide rights to any brand name under which any
lodging property is operated. Instead, the lodging property must
be operated on behalf of the TRS lessee by a person who
qualifies as an eligible independent contractor,
defined as an independent contractor who is, or is
related to a person who is, actively engaged in the trade or
business of operating qualified lodging facilities
for any person unrelated to us and the TRS lessee. A
qualified lodging facility is a hotel, motel, or
other establishment which satisfies certain unit occupation
requirements, provided that wagering activities are not
conducted at or in connection with such facility by any person
who is engaged in the business of accepting wagers and who is
legally authorized to engage in such business at or in
connection with such facility. A qualified lodging
facility includes customary amenities and facilities
operated as part of, or associated with, the lodging facility as
long as such amenities and facilities are customary for other
properties of a comparable size and class owned by other
unrelated owners. We anticipate that our lodging properties will
be qualified lodging facilities. Under such circumstances, rent
paid by a TRS lessee generally would be qualifying income for
purposes of the REIT gross income tests discussed below.
124
Two other limitations may affect our ability to treat rent paid
by a TRS lessee or other lessee as qualifying rents from real
property under the REIT rules. If the rent attributable to
personal property leased by the TRS lessee (or other lessee) in
connection with a lease of real property is greater than 15% of
the total rent under the lease, then the portion of the rent
attributable to such personal property will not qualify as rents
from real property. Also, an amount received or accrued will not
qualify as rents from real property for purposes of the 75% or
the 95% gross income tests discussed below if it is based in
whole or in part on the income or profits derived by any person
from such property. However, an amount received or accrued will
not be excluded from rents from real property solely by reason
of being based on a fixed percentage or percentages of receipts
or sales. To comply with the limitation on rents attributable to
personal property, a TRS lessee may acquire furnishings,
equipment,
and/or
personal property used in lodging properties, at least to the
extent that they exceed this 15% limit. To comply with the
prohibition on rent based on net income, the leases will provide
that each TRS lessee is obligated to pay our operating
partnership a minimum base rent together with a gross percentage
rent, at rates intended to equal market rental rates.
In addition, rent paid by a TRS lessee or other lessee that
leases a lodging property from our operating partnership will
constitute rents from real property for purposes of the REIT
gross income tests only if the lease is respected as a true
lease for federal income tax purposes and is not treated as a
service contract, joint venture, or some other type of
arrangement. The determination of whether a lease is a true
lease depends upon an analysis of all the surrounding facts and
circumstances. Potential investors in shares of our common stock
should be aware, however, that there are no controlling
regulations, published administrative rulings, or judicial
decisions involving leases with terms substantially similar to
the contemplated leases between our operating partnership and
the TRS lessees that discuss whether the leases constitute true
leases for federal income tax purposes. We believe that the
leases with our TRS lessees should be treated as true leases;
however, there can be no assurance that the IRS will not assert
a contrary position and that a court will not sustain such a
challenge. If any leases between our operating partnership and a
TRS lessee are re-characterized as service contracts or
partnership agreements, rather than as true leases, part or all
of the payment that we receive from such TRS lessee would not be
considered rent or would otherwise fail the various requirements
for qualification as rents from real property.
For rents received by or attributed to us to qualify as rents
from real property, we generally must not furnish or render any
services to tenants, other than through a TRS or an independent
contractor from whom we derive no income, except that we and our
operating partnership may directly provide services that are
usually or customarily rendered in connection with
the rental of properties for occupancy only, or are not
otherwise considered rendered to the occupant for his
convenience. Neither we nor our operating partnership
intends to provide any services to any TRS lessee or any other
tenant.
Taxable
Mortgage Pools
An entity, or a portion of an entity, is classified as a taxable
mortgage pool under the Internal Revenue Code if:
|
|
|
|
|
substantially all of its assets consist of debt obligations or
interests in debt obligations;
|
|
|
|
more than 50% of those debt obligations are real estate mortgage
loans or interests in real estate mortgage loans as of specified
testing dates;
|
|
|
|
the entity has issued debt obligations that have two or more
maturities; and
|
|
|
|
the payments required to be made by the entity on its debt
obligations bear a relationship to the payments to
be received by the entity on the debt obligations that it holds
as assets.
|
Under Treasury Regulations, if less than 80% of the assets of an
entity (or a portion of an entity) consist of debt obligations,
these debt obligations are considered not to comprise
substantially all of its assets, and therefore the
entity would not be treated as a taxable mortgage pool.
125
To the extent we make significant expenditures with respect to
senior mortgage loans, CMBS or RMBS securities, we may convey
one or more pools of real estate mortgage loans to a trust,
owned by a subsidiary REIT substantially owned by our operating
partnership, which trust will issue several classes of
mortgage-backed bonds having different maturities, and the cash
flow on the real estate mortgage loans will be the sole source
of payment of principal and interest on the several classes of
mortgage-backed bonds. We may not make a REMIC election with
respect to such securitization transactions, and, as a result,
each such transaction would likely be a taxable mortgage pool.
A taxable mortgage pool generally is treated as a corporation
for U.S. federal income tax purposes. However, special
rules apply to a REIT, a portion of a REIT, or a qualified REIT
subsidiary that is a taxable mortgage pool. If a REIT, including
a subsidiary REIT formed by our operating partnership, owns
directly, or indirectly through one or more qualified REIT
subsidiaries or other entities that are disregarded as a
separate entity for U.S. federal income tax purposes, 100%
of the equity interests in the taxable mortgage pool, the
taxable mortgage pool will be a qualified REIT subsidiary and,
therefore, ignored as an entity separate from the REIT for
U.S. federal income tax purposes and would not generally
affect the tax qualification of the REIT. Rather, the
consequences of the taxable mortgage pool classification would
generally, except as described below, be limited to the
REITs stockholders. See Excess
Inclusion Income.
If such a subsidiary REIT of our operating partnership owns less
than 100% of the ownership interests in a subsidiary that is a
taxable mortgage pool, the foregoing rules would not apply.
Rather, the subsidiary would be treated as a corporation for
U.S. federal income tax purposes, and would be subject to
corporate income tax. In addition, this characterization would
alter the REIT income and asset test calculations of such a
subsidiary REIT and could adversely affect such REITs
compliance with those requirements, which, in turn, could affect
our compliance with the REIT requirements. We do not expect that
we, or any subsidiary REIT owned by our operating partnership,
would form any subsidiary that would become a taxable mortgage
pool, in which we own some, but less than all, of the ownership
interests, and we intend to monitor the structure of any taxable
mortgage pools in which we have an interest to ensure that they
will not adversely affect our qualification as a REIT.
Gross
Income Tests
In order to qualify as a REIT, we annually must satisfy two
gross income tests. First, at least 75% of our gross income for
each taxable year, excluding gross income from sales of
inventory or property held primarily for sale to customers in
the ordinary course of business, or prohibited
transactions, must be derived from assets relating to real
property or mortgages on real property, including rents
from real property, dividends received from other REITs,
interest income derived from mortgage loans secured by real
property (including certain types of CMBS), and gains from the
sale of real estate assets, as well as income from certain kinds
of temporary assets. Second, at least 95% of our gross income in
each taxable year, excluding gross income from prohibited
transactions, must be derived from some combination of income
that qualifies under the 75% income test described above, as
well as other dividends, interest, and gain from the sale or
disposition of stock or securities, which need not have any
relation to real property.
For purposes of the 75% and 95% gross income tests, a REIT is
deemed to have earned a proportionate share of the income earned
by any partnership, or any limited liability company treated as
a partnership for U.S. federal income tax purposes, in
which it owns an interest, which share is determined by
reference to its capital interest in such entity, and is deemed
to have earned the income earned by any qualified REIT
subsidiary or disregarded subsidiary.
Interest Income. Interest income constitutes
qualifying mortgage interest for purposes of the 75% gross
income test to the extent that the obligation is secured by a
mortgage on real property. If we receive interest income with
respect to a mortgage loan that is secured by both real property
and other property and the highest principal amount of the loan
outstanding during a taxable year exceeds the fair market value
of the real property on the date that we had a binding
commitment to
126
acquire or originate the mortgage loan, the interest income will
be apportioned between the real property and the other property,
and our income from the arrangement will qualify for purposes of
the 75% gross income test only to the extent that the interest
is allocable to the real property. Even if a loan is not secured
by real property or is undersecured, the income that it
generates may nonetheless qualify for purposes of the 95% gross
income test.
To the extent that the terms of a loan provide for contingent
interest that is based on the cash proceeds realized upon the
sale of the property securing the loan (a shared
appreciation provision), income attributable to the
participation feature will be treated as gain from sale of the
underlying property, which generally will be qualifying income
for purposes of both the 75% and 95% gross income tests,
provided that the property is not inventory or dealer
property in the hands of the borrower or us.
To the extent that we derive interest income from a loan where
all or a portion of the amount of interest payable is
contingent, such income generally will qualify for purposes of
the gross income tests only if it is based upon the gross
receipts or sales and not the net income or profits of any
person. This limitation does not apply, however, to a mortgage
loan where the borrower derives substantially all of its income
from the property from the leasing of substantially all of its
interest in the property to tenants, to the extent that the
rental income derived by the borrower would qualify as rents
from real property had it been earned directly by us.
Any amount includible in our gross income with respect to a
regular or residual interest in a REMIC generally is treated as
interest on an obligation secured by a mortgage on real
property. If, however, less than 95% of the assets of a REMIC
consists of real estate assets (determined as if we held such
assets), we will be treated as receiving directly our
proportionate share of the income of the REMIC for purposes of
determining the amount which is treated as interest on an
obligation secured by a mortgage on real property.
Among the assets we may hold are certain mezzanine loans secured
by equity interests in a pass-through entity that directly or
indirectly owns real property, rather than a direct mortgage on
the real property. The IRS issued Revenue Procedure
2003-65,
which provides a safe harbor pursuant to which a mezzanine loan,
if it meets each of the requirements contained in the Revenue
Procedure, will be treated by the IRS as a real estate asset for
purposes of the REIT asset tests, and interest derived from it
will be treated as qualifying mortgage interest for purposes of
the 75% gross income test (described above). Although the
Revenue Procedure provides a safe harbor on which taxpayers may
rely, it does not prescribe rules of substantive tax law. The
mezzanine loans that we acquire may not meet all of the
requirements for reliance on this safe harbor. Hence, there can
be no assurance that the IRS will not challenge the
qualification of such assets as real estate assets or the
interest generated by these loans as qualifying income under the
75% gross income test (described above). To the extent we make
corporate mezzanine loans, such loans will not qualify as real
estate assets and interest income with respect to such loans
will not be qualifying income for the 75% gross income test
(described above).
We believe that the interest, original issue discount, and
market discount income that we receive from our mortgage related
securities generally will be qualifying income for purposes of
both gross income tests. However, to the extent that we own
non-REMIC collateralized mortgage obligations or other debt
instruments secured by mortgage loans (rather than by real
property) or secured by non-real estate assets, or debt
securities that are not secured by mortgages on real property or
interests in real property, the interest income received with
respect to such securities generally will be qualifying income
for purposes of the 95% gross income test, but not the 75% gross
income test. In addition, the loan amount of a mortgage loan
that we own may exceed the value of the real property securing
the loan. In that case, income from the loan will be qualifying
income for purposes of the 95% gross income test, but the
interest attributable to the amount of the loan that exceeds the
value of the real property securing the loan will not be
qualifying income for purposes of the 75% gross income test.
127
Fee Income. We may receive various fees in
connection with our operations. The fees will be qualifying
income for purposes of both the 75% and 95% gross income tests
if they are received in consideration for entering into an
agreement to make a loan secured by real property and the fees
are not determined by income and profits. Other fees are not
qualifying income for purposes of either gross income test. Any
fees earned by our TRS lessees, will not be included for
purposes of the gross income tests.
Dividend Income. We may receive distributions
from TRSs or other corporations that are not REITs or qualified
REIT subsidiaries. These distributions will be classified as
dividend income to the extent of the earnings and profits of the
distributing corporation. Such distributions will generally
constitute qualifying income for purposes of the 95% gross
income test, but not the 75% gross income test. Any dividends
received by us from a REIT will be qualifying income for
purposes of both the 95% and 75% gross income tests. Certain
income inclusions received with respect to our contemplated
equity transactions with respect to CDOs may not represent
qualifying income for purposes of either the 75% or 95% gross
income tests.
Foreign Assets. To the extent that we hold or
acquire foreign assets, such as CMBS denominated in foreign
currencies, such assets may generate foreign currency gains and
losses. For purposes of the REIT income requirements, foreign
currency gains are divided into two categories: real
estate foreign exchange gain and passive foreign
exchange gain. Real estate foreign exchange gain is
excluded from gross income for both the 75% gross income test
and the 95% gross income test. Passive foreign exchange gain is
excluded from gross income for the 95% gross income test, but is
treated as non-qualifying income for the 75% gross income test.
Real estate foreign exchange gain consists primarily of foreign
currency gain attributable to gain that would be qualifying
income for purposes of satisfying the 75% gross income test.
Passive foreign exchange gain consists primarily of foreign
currency gain attributable to gain that would otherwise qualify
under the 95% gross income test but not the 75% gross income
test. Any foreign exchange gain that is not real estate foreign
exchange gain or passive foreign exchange gain would be
non-qualifying income for both income tests, unless it is
excluded under the hedging rules discussed below in
Hedging Transactions. No
assurance can be given that any foreign currency gains
recognized by us directly or through pass-through subsidiaries
will not adversely affect our ability to satisfy the REIT
qualification requirements.
Hedging Transactions. We may enter into
hedging transactions with respect to one or more of our assets
or liabilities. Hedging transactions could take a variety of
forms, including interest rate swaps or cap agreements, options,
futures contracts, forward rate agreements or similar financial
instruments. Except to the extent provided by Treasury
Regulations, any income from a hedging transaction we enter into
in the normal course of our business primarily to
(i) manage risk of interest rate or price changes or
currency fluctuations with respect to borrowings made or to be
made, or ordinary obligations incurred or to be incurred, to
acquire or carry real estate assets, which is clearly identified
as specified in Treasury Regulations before the close of the day
on which it was acquired, originated, or entered into, including
gain from the sale or disposition of such a transaction, or
(ii) manage risk of currency fluctuations with respect to
any item of income or gain that would qualify under the 75%
gross income test or the 95% gross income test (or any property
which generates such income or gain), provided the transaction
is clearly identified as such before the close of the day on
which it is acquired, originated, or entered into, will not
constitute gross income for purposes of the 95% gross income
test or the 75% gross income test. To the extent that we enter
into other types of hedging transactions, the income from those
transactions is likely to be treated as non-qualifying income
for purposes of both of the gross income tests. We intend to
structure any hedging transactions in a manner that does not
jeopardize our qualification as a REIT.
Rents from Real Property. To the extent that
we acquire real property or interests therein, rents we receive
will qualify as rents from real property in
satisfying the gross income tests described above, only if
several conditions are met, including the following. If rent is
partly attributable to
128
personal property leased in connection with real property (based
on the relative fair market value of the properties involved),
then the portion of the rent attributable to the fair market
value of such personal property will not qualify as rents from
real property unless it constitutes 15% or less of the total
rent received under the lease. The determination of whether an
item of personal property constitutes real or personal property
under the REIT provisions of the Internal Revenue Code is
subject to both legal and factual considerations and is
therefore subject to different interpretations.
In addition, in order for rents received by us to qualify as
rents from real property, the rent must not be based
in whole or in part on the income or profits of any person.
However, an amount will not be excluded from rents from real
property solely because it is based on a fixed percentage or
percentages of sales or if it is based on the net income of a
tenant which derives substantially all of its income with
respect to such property from subleasing substantially all of
such property, to the extent that the rents paid by the
subtenants would qualify as rents from real property if earned
directly by us. Moreover, for rents received to qualify as
rents from real property, we generally must not
operate or manage the property or furnish or render certain
services to the tenants of such property, other than through an
independent contractor who is adequately compensated
and from which we derive no income, or through a TRS, as
discussed below. We are permitted, however, to perform services
that are usually or customarily rendered in
connection with the rental of space for occupancy only and are
not otherwise considered rendered to the occupant of the
property. In addition, we may directly or indirectly provide
non-customary services to tenants of our properties without
disqualifying all of the rent from the property if the payment
for such services does not exceed 1% of the total gross income
from the property. In such a case, only the amounts for
non-customary services are not treated as rents from real
property and the provision of the services does not disqualify
the related rent. Moreover, we are permitted to provide services
to tenants or others through a TRS without disqualifying the
rental income received from tenants for purposes of the REIT
income tests.
Rental income will qualify as rents from real property only to
the extent that we do not directly or constructively own,
(1) in the case of any tenant which is a corporation, stock
possessing 10% or more of the total combined voting power of all
classes of stock entitled to vote, or 10% or more of the total
value of shares of all classes of stock of such tenant, or
(2) in the case of any tenant which is not a corporation,
an interest of 10% or more in the assets or net profits of such
tenant. However, rental payments from a TRS will qualify as
rents from real property even if we own more than 10% of the
combined voting power of the TRS if at least 90% of the property
is leased to unrelated tenants and the rent paid by the TRS is
substantially comparable to the rent paid by the unrelated
tenants for comparable space. For a more complete discussion of
these rules and their application to lodging properties, see
Lodging Properties.
Failure to Satisfy the Gross Income Tests. We
intend to monitor our sources of income, including any
non-qualifying income received by us, so as to ensure our
compliance with the gross income tests. If we fail to satisfy
one or both of the 75% or 95% gross income tests for any taxable
year, we may still qualify as a REIT for the year if we are
entitled to relief under applicable provisions of the Internal
Revenue Code. These relief provisions generally will be
available if the failure of our company to meet these tests was
due to reasonable cause and not due to willful neglect and,
following the identification of such failure, we set forth a
description of each item of our gross income that satisfies the
gross income tests in a schedule for the taxable year filed in
accordance with regulations prescribed by the Treasury. It is
not possible to state whether we would be entitled to the
benefit of these relief provisions in all circumstances. If
these relief provisions are inapplicable to a particular set of
circumstances involving us, we will not qualify as a REIT. As
discussed above under Taxation of REITs in
General, even where these relief provisions apply, a
tax would be imposed upon the profit attributable to the amount
by which we fail to satisfy the particular gross income test.
Asset
Tests
At the close of each calendar quarter, we must satisfy four
tests relating to the nature of our assets. First, at least 75%
of the value of our total assets must be represented by some
combination of
129
real estate assets, cash, cash items,
U.S. government securities and, under some circumstances,
stock or debt instruments purchased with new capital. For this
purpose, real estate assets include interests in real property,
such as land, buildings, leasehold interests in real property,
stock of other REITs and certain kinds of CMBS and mortgage
loans. Assets that do not qualify for purposes of the 75% test
are subject to the additional asset tests described below.
The second asset test is that the value of any one issuers
securities owned by us may not exceed 5% of the value of our
gross assets. Third, we may not own more than 10% of any one
issuers outstanding securities, as measured by either
voting power or value. Fourth, the aggregate value of all
securities of TRSs held by us may not exceed 25% of the value of
our gross assets. In light of this aggregate value test for
TRSs, we will have to monitor closely any increases in the value
of our TRS lessees.
The 5% and 10% asset tests do not apply to securities of TRSs
and qualified REIT subsidiaries. The 10% value test does not
apply to certain straight debt and other excluded
securities, as described in the Internal Revenue Code, including
but not limited to any loan to an individual or an estate, any
obligation to pay rents from real property and any security
issued by a REIT. In addition, (a) a REITs interest
as a partner in a partnership is not considered a security for
purposes of applying the 10% value test; (b) any debt
instrument issued by a partnership (other than straight debt or
other excluded security) will not be considered a security
issued by the partnership if at least 75% of the
partnerships gross income is derived from sources that
would qualify for the 75% REIT gross income test; and
(c) any debt instrument issued by a partnership (other than
straight debt or other excluded security) will not be considered
a security issued by the partnership to the extent of the
REITs interest as a partner in the partnership.
For purposes of the 10% value test, straight debt
means a written unconditional promise to pay on demand or on a
specified date a sum certain in money if (i) the debt is
not convertible, directly or indirectly, into stock,
(ii) the interest rate and interest payment dates are not
contingent on profits, the borrowers discretion, or
similar factors other than certain contingencies relating to the
timing and amount of principal and interest payments, as
described in the Internal Revenue Code and (iii) in the
case of an issuer which is a corporation or a partnership,
securities that otherwise would be considered straight debt will
not be so considered if we, and any of our controlled
TRSs as defined in the Internal Revenue Code, hold any
securities of the corporate or partnership issuer which:
(a) are not straight debt or other excluded securities
(prior to the application of this rule), and (b) have an
aggregate value greater than 1% of the issuers outstanding
securities (including, for the purposes of a partnership issuer,
our interest as a partner in the partnership).
After initially meeting the asset tests at the close of any
quarter, we will not lose our qualification as a REIT for
failure to satisfy the asset tests at the end of a later quarter
solely by reason of changes in asset values. If we fail to
satisfy the asset tests because we acquire securities during a
quarter, we can cure this failure by disposing of sufficient
non-qualifying assets within 30 days after the close of
that quarter. If we fail the 5% asset test, or the 10% vote or
value asset tests at the end of any quarter and such failure is
not cured within 30 days thereafter, we may dispose of
sufficient assets (generally within six months after the last
day of the quarter in which our identification of the failure to
satisfy these asset tests occurred) to cure such a violation
that does not exceed the lesser of 1% of our assets at the end
of the relevant quarter or $10,000,000. If we fail any of the
other asset tests or our failure of the 5% and 10% asset tests
is in excess of the de minimis amount described above, as long
as such failure was due to reasonable cause and not willful
neglect, we are permitted to avoid disqualification as a REIT,
after the 30 day cure period, by taking steps including the
disposition of sufficient assets to meet the asset test
(generally within six months after the last day of the quarter
in which our identification of the failure to satisfy the REIT
asset test occurred) and paying a tax equal to the greater of
$50,000 or the highest corporate income tax rate (currently 35%)
of the net income generated by the nonqualifying assets during
the period in which we failed to satisfy the asset test.
130
We expect that the assets and mortgage related securities that
we own generally will be qualifying assets for purposes of the
75% asset test. However, to the extent that we own non-REMIC
collateralized mortgage obligations or other debt instruments
secured by mortgage loans (rather than by real property) or
secured by non-real estate assets, or debt securities issued by
C corporations that are not secured by mortgages on real
property, those securities may not be qualifying assets for
purposes of the 75% asset test. We believe that our holdings of
securities and other assets will be structured in a manner that
will comply with the foregoing REIT asset requirements and
intend to monitor compliance on an ongoing basis. However,
values of some assets may not be susceptible to a precise
determination and are subject to change in the future.
Furthermore, the proper classification of an instrument as debt
or equity for U.S. federal income tax purposes may be
uncertain in some circumstances, which could affect the
application of the REIT asset tests. As an example, if we were
to acquire equity securities of a REIT issuer that were
determined by the IRS to represent debt securities of such
issuer, such securities would also not qualify as real estate
assets. Accordingly, there can be no assurance that the IRS will
not contend that our interests in subsidiaries or in the
securities of other issuers (including REIT issuers) cause a
violation of the REIT asset tests.
Annual
Distribution Requirements
In order to qualify as a REIT, we are required to distribute
dividends, other than capital gain dividends, to our
stockholders in an amount at least equal to:
(a) the sum of:
|
|
|
|
|
90% of our REIT taxable income (computed without
regard to our deduction for dividends paid and our net capital
gains); and
|
|
|
|
90% of the net income (after tax), if any, from foreclosure
property (as described below); minus
|
(b) the sum of specified items of non-cash income that
exceeds a percentage of our income.
These distributions must be paid in the taxable year to which
they relate or in the following taxable year if such
distributions are declared in October, November or December of
the taxable year, are payable to stockholders of record on a
specified date in any such month and are actually paid before
the end of January of the following year. Such distributions are
treated as both paid by us and received by each stockholder on
December 31 of the year in which they are declared. In addition,
at our election, a distribution for a taxable year may be
declared before we timely file our tax return for the year and
be paid with or before the first regular dividend payment after
such declaration, provided that such payment is made
during the
12-month
period following the close of such taxable year. These
distributions are taxable to our stockholders in the year in
which paid, even though the distributions relate to our prior
taxable year for purposes of the 90% distribution requirement.
In order for distributions to be counted towards our
distribution requirement and to provide a tax deduction to us,
they must not be preferential dividends. A dividend
is not a preferential dividend if it is pro rata among
all outstanding shares within a particular class and is in
accordance with the preferences among different classes of
shares as set forth in the organizational documents.
To the extent that we distribute at least 90%, but less than
100%, of our REIT taxable income, as adjusted, we
will be subject to tax at ordinary U.S. federal corporate
income tax rates on the retained portion. In addition, we may
elect to retain, rather than distribute, our net long-term
capital gains and pay tax on such gains. In this case, we could
elect to have our stockholders include their proportionate share
of such undistributed long-term capital gains in income and
receive a corresponding credit for their proportionate share of
the tax paid by us. Our stockholders would then increase the
adjusted basis of their shares in us by the difference between
the designated amounts included in their long-term capital gains
and the tax deemed paid with respect to their proportionate
shares.
131
If we fail to distribute during each calendar year at least the
sum of (a) 85% of our REIT ordinary income for such year,
(b) 95% of our REIT capital gain net income for such year
and (c) any undistributed taxable income from prior
periods, we will be subject to a 4% excise tax on the excess of
such required distribution over the sum of (x) the amounts
actually distributed (taking into account excess distributions
from prior periods) and (y) the amounts of income retained
on which we have paid corporate income tax. We intend to make
timely distributions so that we are not subject to the 4% excise
tax.
It is possible that we, from time to time, may not have
sufficient cash to meet the distribution requirements due to
timing differences between (a) the actual receipt of cash,
including receipt of distributions from our subsidiaries and
(b) the inclusion of items in income by us for
U.S. federal income tax purposes, including the inclusion
of items of income from CDO entities in which we hold an equity
interest. For example, we may acquire or originate debt
instruments or notes whose face value may exceed its issue price
as determined for U.S. federal income tax purposes (such
excess, original issue discount or OID),
such that we will be required to include in our income a portion
of the OID each year that the instrument is held before we
receive any corresponding cash. In the event that such timing
differences occur, in order to meet the distribution
requirements, it might be necessary to arrange for short-term,
or possibly long-term, borrowings or to pay dividends in the
form of taxable in-kind distributions of property.
We may be able to rectify a failure to meet the distribution
requirements for a year by paying deficiency
dividends to stockholders in a later year, which may be
included in our deduction for dividends paid for the earlier
year. In this case, we may be able to avoid losing our
qualification as a REIT or being taxed on amounts distributed as
deficiency dividends. However, we will be required to pay
interest and possibly a penalty based on the amount of any
deduction taken for deficiency dividends.
Excess
Inclusion Income
If we, including a subsidiary REIT owned by our operating
partnership, acquire a residual interest in a REMIC, we may
realize excess inclusion income. If we are deemed to have issued
debt obligations having two or more maturities, the payments on
which correspond to payments on mortgage loans owned by us, such
arrangement will be treated as a taxable mortgage pool for
U.S. federal income tax purposes. See
Taxable Mortgage Pools. If all or
a portion of our company is treated as a taxable mortgage pool,
our qualification as a REIT generally should not be impaired.
However, to the extent that all or a portion of our company is
treated as a taxable mortgage pool, or we include assets in our
portfolio or enter into financing and securitization
transactions that result in our being considered to own an
interest in one or more taxable mortgage pools, a portion of our
REIT taxable income may be characterized as excess inclusion
income and allocated to our stockholders, generally in a manner
set forth under the applicable Treasury Regulations. The
Treasury Department has issued guidance on the tax treatment of
stockholders of a REIT that owns an interest in a taxable
mortgage pool. Excess inclusion income is an amount, with
respect to any calendar quarter, equal to the excess, if any, of
(i) taxable income allocable to the holder of a residual
interest in a REMIC during such calendar quarter over
(ii) the sum of amounts allocated to each day in the
calendar quarter equal to its ratable portion of the product of
(a) the adjusted issue price of the interest at the
beginning of the quarter multiplied by (b) 120% of the long
term U.S. federal rate (determined on the basis of
compounding at the close of each calendar quarter and properly
adjusted for the length of such quarter). Our excess inclusion
income would be allocated among our stockholders that hold our
shares in record name in proportion to dividends paid to such
stockholders. A stockholders share of any excess inclusion
income:
|
|
|
|
|
could not be offset by net operating losses of a stockholder;
|
|
|
|
would be subject to tax as unrelated business taxable income to
a tax-exempt holder;
|
132
|
|
|
|
|
would be subject to the application of the U.S. federal
income tax withholding (without reduction pursuant to any
otherwise applicable income tax treaty) with respect to amounts
allocable to
non-U.S. stockholders;
|
|
|
|
would be taxable (at the highest corporate tax rates) to us,
rather than our stockholders, to the extent allocable to our
shares held in record name by disqualified organizations
(generally, tax-exempt entities not subject to unrelated
business income tax, including charitable remainder trusts and
governmental organizations). Nominees or other broker/dealers
who hold our shares on behalf of disqualified organizations also
will be subject to this tax on the portion of our excess
inclusion income allocable to our shares held on behalf of
disqualified organizations; and
|
|
|
|
in the case of a stockholder that is a REIT, regulated
investment company (RIC) or common trust fund, or
other pass through entity would be considered excess inclusion
income of such entity and such entity will be subject to tax at
the highest corporate tax rate on any excess inclusion income
allocated to their owners that are disqualified organizations.
|
No detailed guidance has been provided with respect to the
manner in which excess inclusion income would be allocated among
different classes of shares, but generally such income must be
allocated in proportion to the distributions made to
stockholders. Tax-exempt investors, foreign investors, taxpayers
with net operating losses, RICs and REITs should carefully
consider the tax consequences described above and should consult
their tax advisors with respect to excess inclusion income.
Prohibited
Transactions
Net income we derive from a prohibited transaction is subject to
a 100% tax. The term prohibited transaction
generally includes a sale or other disposition of property
(other than foreclosure property) that is held as inventory or
primarily for sale to customers in the ordinary course of a
trade or business by a REIT, by a lower-tier partnership in
which the REIT holds an equity interest or by a borrower that
has issued a shared appreciation mortgage or similar debt
instrument to the REIT. We intend to conduct our operations so
that no asset owned by us or our subsidiaries, other than a TRS,
will be held as inventory or primarily for sale to customers in
the ordinary course of business, and that a sale of any assets
owned by us directly or through a pass-through subsidiary will
not be in the ordinary course of business. However, whether
property is held as inventory or primarily for sale to
customers in the ordinary course of a trade or business
depends on the particular facts and circumstances. No assurance
can be given that any particular asset in which we hold a direct
or indirect interest will not be treated as inventory or
property held primarily for sale to customers or that certain
safe-harbor provisions of the Internal Revenue Code that prevent
such treatment will apply. The 100% tax will not apply to gains
from the sale of property that is held through a TRS or other
taxable corporation, although such income will be subject to tax
in the hands of the corporation at regular U.S. federal
income tax rates.
Foreclosure
Property
Foreclosure property is real property and any personal property
incident to such real property (1) that is acquired by a
REIT as a result of the REIT having bid on the property at
foreclosure or having otherwise reduced the property to
ownership or possession by agreement or process of law after
there was a default (or default was imminent) on a lease of the
property or a mortgage loan held by the REIT and secured by the
property, (2) for which the related loan or lease was
acquired by the REIT at a time when default was not imminent or
anticipated and (3) for which such REIT makes a proper
election to treat the property as foreclosure property. REITs
generally are subject to tax at the maximum corporate rate
(currently 35%) on any net income from foreclosure property,
including any gain from the disposition of the foreclosure
property, other than income that would otherwise be qualifying
income for purposes of the 75% gross income test. Any gain from
the sale of property for which a foreclosure property election
has been made will not be subject to the 100% tax on gains from
133
prohibited transactions described above, even if the property
would otherwise constitute inventory or dealer property in the
hands of the selling REIT. We do not anticipate that we will
receive any income from foreclosure property that is not
qualifying income for purposes of the 75% gross income test,
but, if we do receive any such income, we intend to elect to
treat the related property as foreclosure property.
Failure
to Qualify
In the event that we violate a provision of the Internal Revenue
Code that would result in our failure to qualify as a REIT, we
may nevertheless qualify as a REIT under specified relief
provisions that will be available to us to avoid such
disqualification if (1) the violation is due to reasonable
cause, (2) we pay a penalty of $50,000 for each failure to
satisfy a requirement for qualification as a REIT and
(3) the violation does not include a violation under the
gross income or asset tests described above (for which other
specified relief provisions are available). This cure provision
reduces the instances that could lead to our disqualification as
a REIT for violations due to reasonable cause. If we fail to
qualify for taxation as a REIT in any taxable year and none of
the relief provisions of the Internal Revenue Code apply, we
will be subject to tax, including any applicable alternative
minimum tax, on our taxable income at regular corporate rates.
Distributions to our stockholders in any year in which we are
not a REIT will not be deductible by us, nor will they be
required to be made. In this situation, to the extent of current
and accumulated earnings and profits, and, subject to
limitations of the Internal Revenue Code, distributions to our
stockholders will generally be taxable in the case of our
stockholders who are individual U.S. stockholders (as
defined below), at a maximum rate of 15%, and dividends in the
hands of our corporate U.S. stockholders may be eligible
for the dividends received deduction, in each case, provided
applicable requirements of the Internal Revenue Code are
satisfied. Unless we are entitled to relief under the specific
statutory provisions, we will also be disqualified from
re-electing to be taxed as a REIT for the four taxable years
following a year during which qualification was lost. It is not
possible to state whether, in all circumstances, we will be
entitled to statutory relief.
Federal
Income Tax Aspects of Our Partnership
General
We intend to hold assets through entities that are classified as
partnerships for U.S. federal income tax purposes,
including our interest in our operating partnership and the
equity interests in lower-tier partnerships. In general,
partnerships are pass-through entities that are not
subject to U.S. federal income tax. Rather, partners are
allocated their proportionate shares of the items of income,
gain, loss, deduction and credit of a partnership, and are
subject to tax on these items without regard to whether the
partners receive a distribution from the partnership. We will
include in our income our proportionate share of these
partnership items for purposes of the various REIT income tests,
based on our capital interest in such partnership, and in the
computation of our REIT taxable income. Moreover, for purposes
of the REIT asset tests, we will include our proportionate share
of assets held by subsidiary partnerships, based on our capital
interest in such partnerships (other than for purposes of the
10% value test, for which the determination of our interest in
partnership assets will be based on our proportionate interest
in any securities issued by the partnership excluding, for these
purposes, certain excluded securities as described in the
Internal Revenue Code). Consequently, to the extent that we hold
an equity interest in a partnership, the partnerships
assets and operations may affect our ability to qualify as a
REIT, even though we may have no control, or only limited
influence, over the partnership.
Classification
as a Partnership
The ownership by us of equity interests in partnerships involves
special tax considerations, including the possibility of a
challenge by the IRS of the status of any of our subsidiary
partnerships as a partnership, as opposed to an association
taxable as a corporation, for U.S. federal income tax
134
purposes. If any of these entities were treated as an
association for U.S. federal income tax purposes, it would
be taxable as a corporation and, therefore, could be subject to
an entity-level tax on its income. In such a situation, the
character of our assets and items of our gross income would
change and could preclude us from satisfying the REIT asset
tests (particularly the tests generally preventing a REIT from
owning more than 10% of the voting securities, or more than 10%
of the value of the securities, of a corporation) or the gross
income tests as discussed in Asset
Tests and Gross Income
Tests above, and in turn could prevent us from
qualifying as a REIT. See Failure to
Qualify, above, for a discussion of the effect of our
failure to meet these tests for a taxable year. In addition, any
change in the status of any of our subsidiary partnerships for
tax purposes might be treated as a taxable event, in which case
we could have taxable income that is subject to the REIT
distribution requirements without receiving any cash.
Tax
Allocations with Respect to Partnership Properties
The partnership agreement of our operating partnership generally
provides that items of operating income and loss will be
allocated to the holders of units in proportion to the relative
percentage interests held by each holder. If an allocation of
partnership income or loss does not comply with the requirements
of Section 704(b) of the Internal Revenue Code and the
Treasury Regulations thereunder, the item subject to the
allocation will be reallocated in accordance with the
partners interests in the partnership. This reallocation
will be determined by taking into account all of the facts and
circumstances relating to the economic arrangement of the
partners with respect to such item. Our operating
partnerships allocations of income and loss are intended
to comply with the requirements of Section 704(b) of the
Internal Revenue Code and the Treasury Regulations promulgated
thereunder. Under the Internal Revenue Code and the Treasury
Regulations, income, gain, loss and deduction attributable to
appreciated or depreciated property that is contributed to a
partnership in exchange for an interest in the partnership must
be allocated for tax purposes in a manner such that the
contributing partner is charged with, or benefits from, the
unrealized gain or unrealized loss associated with the property
at the time of the contribution. The amount of the unrealized
gain or unrealized loss is generally equal to the difference
between the fair market value of the contributed property and
the adjusted tax basis of such property at the time of the
contribution (a book-tax difference). Such
allocations are solely for U.S. federal income tax purposes
and do not affect partnership capital accounts or other economic
or legal arrangements among the partners.
To the extent that any of our subsidiary partnerships acquires
appreciated (or depreciated) properties by way of capital
contributions from its partners, allocations would need to be
made in a manner consistent with these requirements. In
connection with the organization transactions, appreciated
property will be acquired by our operating partnership as a
result of actual or deemed contributions of such property to our
operating partnership. As a result, partners, including us, in
subsidiary partnerships, could be allocated greater or lesser
amounts of depreciation and taxable income in respect of a
partnerships properties than would be the case if all of
the partnerships assets (including any contributed assets)
had a tax basis equal to their fair market values at the time of
any contributions to that partnership. This could cause us to
recognize, over a period of time, (1) lower amounts of
depreciation deductions for tax purposes than if all of the
contributed properties were to have a tax basis equal to their
fair market value at the time of their contribution to the
operating partnership and (2) taxable income in excess of
economic or book income as a result of a sale of a property,
which might adversely affect our ability to comply with the REIT
distribution requirements and result in our stockholders
recognizing additional dividend income without an increase in
distributions.
135
Taxation
of Taxable U.S. Stockholders
This section summarizes the taxation of U.S. stockholders
that are not tax-exempt organizations. For these purposes, a
U.S. stockholder is a beneficial owner of our shares that
for U.S. federal income tax purposes is:
|
|
|
|
|
a citizen or resident of the U.S.;
|
|
|
|
a corporation (including an entity treated as a corporation for
U.S. federal income tax purposes) created or organized in
or under the laws of the U.S. or of a political subdivision
thereof (including the District of Columbia);
|
|
|
|
an estate whose income is subject to U.S. federal income
taxation regardless of its source; or
|
|
|
|
any trust if (1) a U.S. court is able to exercise
primary supervision over the administration of such trust and
one or more U.S. persons have the authority to control all
substantial decisions of the trust or (2) it has a valid
election in place to be treated as a U.S. person.
|
If an entity or arrangement treated as a partnership for
U.S. federal income tax purposes holds our shares, the
U.S. federal income tax treatment of a partner generally
will depend upon the status of the partner and the activities of
the partnership. A partner of a partnership holding our shares
should consult its tax advisor regarding the U.S. federal
income tax consequences to the partner of the acquisition,
ownership and disposition of our shares by the partnership.
Distributions. Provided that we qualify as a
REIT, distributions made to our taxable U.S. stockholders
out of our current and accumulated earnings and profits, and not
designated as capital gain dividends, will generally be taken
into account by them as ordinary dividend income and will not be
eligible for the dividends received deduction for corporations.
Dividends received from REITs are generally not eligible to be
taxed at the preferential qualified dividend income rates
applicable to individual U.S. stockholders who receive
dividends from taxable subchapter C corporations.
In addition, distributions from us that are designated as
capital gain dividends will be taxed to U.S. stockholders
as long-term capital gains, to the extent that they do not
exceed the actual net capital gain of our company for the
taxable year, without regard to the period for which the
U.S. stockholder has held its shares. To the extent that we
elect under the applicable provisions of the Internal Revenue
Code to retain our net capital gains, U.S. stockholders may
be treated as having received, for U.S. federal income tax
purposes, our undistributed capital gains as well as a
corresponding credit for taxes paid by us on such retained
capital gains. In such cases, U.S. stockholders will
increase their adjusted tax basis in our shares by the
difference between their allocable share of such retained
capital gain and their share of the tax paid by us. Corporate
U.S. stockholders may be required to treat up to 20% of
some capital gain dividends as ordinary income. Long-term
capital gains are generally taxable at maximum U.S. federal
rates of 15% (through 2010 under current law) in the case of
U.S. stockholders who are individuals, and 35% for
corporations. Capital gains attributable to the sale of
depreciable real property held for more than 12 months are
subject to a 25% maximum U.S. federal income tax rate for
individual U.S. stockholders who are individuals, to the
extent of previously claimed depreciation deductions.
Distributions in excess of our current and accumulated earnings
and profits will not be taxable to a U.S. stockholder to
the extent that they do not exceed the adjusted tax basis of the
U.S. stockholders shares in respect of which the
distributions were made, but rather will reduce the adjusted tax
basis of those shares. To the extent that such distributions
exceed the adjusted tax basis of an individual
U.S. stockholders shares, they will be included in
income as long-term capital gain, or short-term capital gain if
the shares have been held for one year or less. In addition, any
dividend declared by us in October, November or December of any
year and payable to a U.S. stockholder of record on a
specified date in any such month will be treated as both paid by
us and received by the
136
U.S. stockholder on December 31 of such year, provided
that the dividend is actually paid by us before the end of
January of the following calendar year.
With respect to U.S. stockholders who are taxed at the
rates applicable to individuals, we may elect to designate a
portion of our distributions paid to such U.S. stockholders
as qualified dividend income. A portion of a
distribution that is properly designated as qualified dividend
income is taxable to non-corporate U.S. stockholders as
capital gain, provided that the U.S. stockholder has
held the shares with respect to which the distribution is made
for more than 60 days during the
121-day
period beginning on the date that is 60 days before the
date on which such shares became ex-dividend with respect to the
relevant distribution. The maximum amount of our distributions
eligible to be designated as qualified dividend income for a
taxable year is equal to the sum of:
(a) the qualified dividend income received by us during
such taxable year from non-REIT C corporations (including our
TRS lessees, which are subject to U.S. federal income tax);
(b) the excess of any undistributed REIT
taxable income recognized during the immediately preceding year
over the U.S. federal income tax paid by us with respect to
such undistributed REIT taxable income; and
(c) the excess of any income recognized during the
immediately preceding year attributable to the sale of a
built-in-gain
asset that was acquired in a carry-over basis transaction from a
non-REIT C corporation over the U.S. federal income tax
paid by us with respect to such built-in gain.
Generally, dividends that we receive will be treated as
qualified dividend income for purposes of (a) above if the
dividends are received from a domestic C corporation (other than
a REIT or a regulated investment company), such as our TRS
lessees which are subject to U.S. federal income tax, or a
qualifying foreign corporation and specified holding
period requirements and other requirements are met. We expect
that any foreign corporate CDO entity for which we would make
expenditures would not be a qualifying foreign
corporation, and accordingly our distribution of any
income with respect to such entities will not constitute
qualifying dividend income.
To the extent that we have available net operating losses and
capital losses carried forward from prior tax years, such losses
may reduce the amount of distributions that must be made in
order to comply with the REIT distribution requirements. See
Taxation of the Company and
Annual Distribution Requirements.
Such losses, however, are not passed through to
U.S. stockholders and do not offset income of
U.S. stockholders from other sources, nor do they affect
the character of any distributions that are actually made by us,
which are generally subject to tax in the hands of
U.S. stockholders to the extent that we have current or
accumulated earnings and profits.
Dispositions
of Our Shares
There is no current, and there may never be, a public market for
our shares. Therefore, it will be difficult for stockholders to
sell shares quickly. In general, a U.S. stockholder will
realize gain or loss upon the sale, redemption or other taxable
disposition of our shares in an amount equal to the difference
between the sum of the fair market value of any property and the
amount of cash received in such disposition and the
U.S. stockholders adjusted tax basis in the shares at
the time of the disposition. In general, a
U.S. stockholders adjusted tax basis will equal the
U.S. stockholders acquisition cost, increased by the
excess of net capital gains deemed distributed to the
U.S. stockholder (discussed above) less tax deemed paid on
such gain and reduced by returns of capital. In general, under
current law capital gains recognized by individuals and other
non-corporate U.S. stockholders upon the sale or
disposition of shares will be subject to a maximum
U.S. federal income tax rate of 15% for taxable years
through 2010, if our shares are held for more than
12 months, and will be taxed at ordinary income rates (of
up to 35% through 2010) if our shares are held for
12 months or less. Gains recognized by
U.S. stockholders that are corporations are subject to
U.S. federal income tax at a maximum rate of 35%, whether
or not classified as long-term capital gains. The IRS has the
authority to prescribe, but has not yet prescribed, regulations
that would apply
137
a capital gain tax rate of 25% (which is generally higher than
the long-term capital gain tax rates for non-corporate holders)
to a portion of the capital gain realized by a non-corporate
holder on the sale of REIT shares that would correspond to the
REITs unrecaptured Section 1250 gain.
Holders are urged to consult their tax advisors with respect to
the taxation of capital gain income. Capital losses recognized
by a U.S. stockholder upon the disposition of our shares
held for more than one year at the time of disposition will be
considered long-term capital losses, and are generally available
only to offset capital gain income of the U.S. stockholder
but not ordinary income (except in the case of individuals, who
may offset up to $3,000 of ordinary income each year). In
addition, any loss upon a sale or exchange of shares by a
U.S. stockholder who has held the shares for six months or
less, after applying holding period rules, will be treated as a
long-term capital loss to the extent of distributions received
from us that were required to be treated by the
U.S. stockholder as long-term capital gain.
Passive
Activity Losses and Investment Interest Limitations
Distributions made by us and gain arising from the sale or
exchange by a U.S. stockholder of our shares will not be
treated as passive activity income. As a result,
U.S. stockholders will not be able to apply any
passive losses against income or gain relating to
our shares. Distributions made by us, to the extent they do not
constitute a return of capital, generally will be treated as
investment income for purposes of computing the investment
interest limitation. A U.S. stockholder that elects to
treat capital gain dividends, capital gains from the disposition
of shares or qualified dividend income as investment income for
purposes of the investment interest limitation will be taxed at
ordinary income rates on such amounts.
Taxation
of Tax-Exempt U.S. Stockholders
U.S. tax-exempt entities, including qualified employee
pension and profit sharing trusts and individual retirement
accounts, generally are exempt from U.S. federal income
taxation. However, they are subject to taxation on their
unrelated business taxable income, which we refer to in this
prospectus as UBTI. While ownership of many real estate assets
may generate UBTI, the IRS has ruled that dividend distributions
from a REIT to a tax-exempt entity do not constitute UBTI. Based
on that ruling, and provided that (1) a tax-exempt
U.S. stockholder has not held our shares as
debt-financed property within the meaning of the
Internal Revenue Code (i.e., where the acquisition or holding of
the shares is financed through a borrowing by the tax-exempt
stockholder), (2) our shares are not otherwise used in an
unrelated trade or business, and (3) we do not hold an
asset that gives rise to excess inclusion income
(See Taxable Mortgage Pools and
Excess Inclusion Income),
distributions from us and income from the sale of our shares
generally should not be treated as UBTI to a tax-exempt
U.S. stockholder. As previously noted, we may engage in
transactions that would result in a portion of our dividend
income being considered excess inclusion income, and
accordingly, a portion of our dividends received by a tax-exempt
stockholder may be treated as UBTI.
Tax-exempt U.S. stockholders that are social clubs,
voluntary employee benefit associations, supplemental
unemployment benefit trusts, and qualified group legal services
plans exempt from U.S. federal income taxation under
Sections 501(c)(7), (c)(9), (c)(17) and (c)(20) of the
Internal Revenue Code, respectively, are subject to different
UBTI rules, which generally will require them to characterize
distributions from us as UBTI.
In certain circumstances, a pension trust (1) that is
described in Section 401(a) of the Internal Revenue Code,
(2) is tax exempt under Section 501(a) of the Internal
Revenue Code, and (3) that owns more than 10% of our shares
could be required to treat a percentage of the dividends from us
as UBTI if we are a pension-held REIT. We will not
be a pension-held REIT unless (1) either (A) one
pension trust owns more than 25% of the value of our shares, or
(B) a group of pension trusts, each individually holding
more than 10% of the value of our shares, collectively owns more
than 50% of the value of our shares; and (2) we would not
have satisfied the ownership tests described above in
Requirements for Qualification
General but for the fact that Section 856(h)(3)
of the Internal Revenue Code provides that shares owned by such
trusts shall be treated, as owned by the
138
beneficiaries of such trusts. Certain restrictions on ownership
and transfer of our shares should generally prevent a tax-exempt
entity from owning more than 10% of the value of our shares, or
us from becoming a pension-held REIT.
Tax-exempt U.S. stockholders are urged to consult their tax
advisors regarding the U.S. federal, state, local and
foreign tax consequences of owning our shares.
Taxation
of Non-U.S.
Stockholders
The following is a summary of certain U.S. federal income
tax consequences of the acquisition, ownership and disposition
of our common shares applicable to
non-U.S. stockholders
of our common shares. For purposes of this summary, a
non-U.S. stockholder
is a beneficial owner of our common shares that is not a
U.S. stockholder. The discussion is based on current law
and is for general information only. It addresses only selective
aspects of U.S. federal income taxation.
Ordinary Dividends. The portion of dividends
received by
non-U.S. stockholders
payable out of our earnings and profits that are not
attributable to gains from sales or exchanges of U.S. real
property interests and which are not effectively connected with
a U.S. trade or business of the
non-U.S. stockholder
will generally be subject to U.S. federal withholding tax
at the rate of 30%, unless reduced or eliminated by an
applicable income tax treaty. Under some treaties, however,
lower rates generally applicable to dividends do not apply to
dividends from REITs. In addition, any portion of the dividends
paid to
non-U.S. stockholders
that are treated as excess inclusion income will not be eligible
for exemption from the 30% withholding tax or a reduced treaty
rate. As previously noted, we may engage in transactions that
result in a portion of our dividends being considered excess
inclusion income, and accordingly, a portion of our dividend
income may not be eligible for exemption from the 30%
withholding rate or a reduced treaty rate.
In general,
non-U.S. stockholders
will not be considered to be engaged in a U.S. trade or
business solely as a result of their ownership of our shares. In
cases where the dividend income from a
non-U.S. stockholders
investment in our shares is, or is treated as, effectively
connected with the
non-U.S. stockholders
conduct of a U.S. trade or business, the
non-U.S. stockholder
generally will be subject to U.S. federal income tax at
graduated rates, in the same manner as U.S. stockholders
are taxed with respect to such dividends, and may also be
subject to the 30% branch profits tax on the income after the
application of the income tax in the case of a
non-U.S. stockholder
that is a corporation.
Non-Dividend Distributions. Unless
(A) our shares constitute a U.S. real property
interest, or USRPI, or (B) either (1) the
non-U.S. stockholders
investment in our shares is effectively connected with a
U.S. trade or business conducted by such
non-U.S. stockholder
(in which case the
non-U.S. stockholder
will be subject to the same treatment as U.S. stockholders
with respect to such gain) or (2) the
non-U.S. stockholder
is a nonresident alien individual who was present in the
U.S. for 183 days or more during the taxable year and
has a tax home in the U.S. (in which case the
non-U.S. stockholder
will be subject to a 30% tax on the individuals net
capital gain for the year), distributions by us which are not
dividends out of our earnings and profits generally will not be
subject to U.S. federal income tax. If it cannot be
determined at the time at which a distribution is made whether
or not the distribution will exceed current and accumulated
earnings and profits, the distribution will be subject to
withholding at the rate applicable to dividends. However, the
non-U.S. stockholder
may seek a refund from the IRS of any amounts withheld if it is
subsequently determined that the distribution was, in fact, in
excess of our current and accumulated earnings and profits. If
our shares constitute a USRPI, as described below, distributions
by us in excess of the sum of our earnings and profits plus the
non-U.S. stockholders
adjusted tax basis in our shares will be taxed under the Foreign
Investment in Real Property Tax Act of 1980, or FIRPTA, at the
rate of tax, including any applicable capital gains rates, that
would apply to a U.S. stockholder of the same type (e.g.,
an individual or a corporation, as the case may be), and the
collection of the tax will be enforced by a refundable
withholding at a rate of 10% of the amount by which the
distribution exceeds the stockholders share of our
earnings and profits.
139
Capital Gain Dividends. Under FIRPTA, a
distribution made by us to a
non-U.S. stockholder,
to the extent attributable to gains from dispositions of USRPIs
held by us directly or through pass-through subsidiaries
(USRPI capital gains), will be considered
effectively connected with a U.S. trade or business of the
non-U.S. stockholder
and will be subject to U.S. federal income tax at the rates
applicable to U.S. stockholders, without regard to whether
the distribution is designated as a capital gain dividend. In
addition, we will be required to withhold tax equal to 35% of
the amount of capital gain dividends to the extent the dividends
constitute USRPI capital gains. Distributions subject to FIRPTA
may also be subject to a 30% branch profits tax (applied to the
net amount after the 35% tax rate is applied) in the hands of a
non-U.S. holder
that is a corporation. However, the 35% withholding tax will not
apply to any capital gain dividend with respect to any class of
our shares which is regularly traded on an established
securities market located in the U.S. if the
non-U.S. stockholder
did not own more than 5% of such class of shares at any time
during the taxable year. Instead, such capital gain dividend
will be treated as a distribution subject to the rules discussed
above under Taxation of
Non-U.S. Stockholders
Ordinary Dividends. Also, the branch profits tax will
not apply to such a distribution. A distribution is not a USRPI
capital gain if we held the underlying asset solely as a
creditor, although the holding of a shared appreciation mortgage
loan would not be solely as a creditor. Capital gain dividends
received by a
non-U.S. stockholder
from a REIT that are not USRPI capital gains are generally not
subject to U.S. federal income or withholding tax, unless
either (1) the
non-U.S. stockholders
investment in our common shares is effectively connected with a
U.S. trade or business conducted by such
non-U.S. stockholder
(in which case the
non-U.S. stockholder
will be subject to the same treatment as U.S. stockholders
with respect to such gain) or (2) the
non-U.S. stockholder
is a nonresident alien individual who was present in the
U.S. for 183 days or more during the taxable year and
has a tax home in the U.S. (in which case the
non-U.S. stockholder
will be subject to a 30% tax on the individuals net
capital gain for the year).
Dispositions of Our Shares. Unless our shares
constitute a USRPI, a sale of the shares by a
non-U.S. stockholder
generally will not be subject to U.S. federal income
taxation under FIRPTA. The shares will not be treated as a USRPI
if less than 50% of our business assets throughout a prescribed
testing period consist of interests in real property located
within the U.S., excluding, for this purpose, interests in real
property solely in a capacity as a creditor.
We expect that 50% or more of our business assets will consist
of real property interests located within the
U.S. Therefore, even if our shares would be a USRPI under
the foregoing test, our shares will not constitute a USRPI if we
are a domestically controlled REIT. A domestically
controlled REIT is a REIT in which, at all times during a
specified testing period, less than 50% in value of its
outstanding shares is held directly or indirectly by
non-U.S. stockholders.
We believe we will be a domestically controlled REIT and,
therefore, the sale of our common shares should not be subject
to taxation under FIRPTA. However, we cannot assure our
investors that we will become or remain a domestically
controlled REIT. Even if we do not qualify as a domestically
controlled REIT, a
non-U.S. stockholders
sale of our shares nonetheless will generally not be subject to
tax under FIRPTA as a sale of a USRPI, provided that
(a) our shares owned are of a class that is regularly
traded, as defined by applicable Treasury Regulations, on
an established securities market, and (b) the selling
non-U.S. stockholder
owned, actually or constructively, 5% or less of our shares of
that class at all times during a specified testing period.
If gain on the sale of our shares were subject to taxation under
FIRPTA, the
non-U.S. stockholder
would be subject to the same treatment as a
U.S. stockholder with respect to such gain, subject to
applicable alternative minimum tax and a special alternative
minimum tax in the case of non-resident alien individuals, and
the purchaser of the shares could be required to withhold 10% of
the purchase price and remit such amount to the IRS.
Gain from the sale of our shares that would not otherwise be
subject to FIRPTA will nonetheless be taxable in the
U.S. to a
non-U.S. stockholder
in two cases: (a) if the
non-U.S. stockholders
investment in our shares is effectively connected with a
U.S. trade or business conducted by such
non-U.S. stockholder,
the
non-U.S. stockholder
will be subject to the same treatment as a U.S. stockholder
with respect to such gain, or (b) if the
non-U.S. stockholder
is a nonresident alien individual who was present in the
U.S. for
140
183 days or more during the taxable year and has a
tax home in the U.S., the nonresident alien
individual will be subject to a 30% tax on the individuals
capital gain.
Backup
Withholding and Information Reporting
We will report to our U.S. stockholders and the IRS the
amount of dividends paid during each calendar year and the
amount of any tax withheld. Under the backup withholding rules,
a U.S. stockholder may be subject to backup withholding
with respect to dividends paid unless the holder (i) is a
corporation or comes within other exempt categories and, when
required, demonstrates this fact or (ii) provides a
taxpayer identification number or social security 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
his or her correct taxpayer identification number or social
security number may also be subject to penalties imposed by the
IRS. In addition, we may be required to withhold a portion of
capital gain distributions to any U.S. stockholder who
fails to certify its non-foreign status.
We must report annually to the IRS and to each
non-U.S. stockholder
the amount of dividends paid to such holder and the tax withheld
with respect to such dividends, regardless of whether
withholding was required. Copies of the information returns
reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the
non-U.S. stockholder
resides under the provisions of an applicable income tax treaty.
A
non-U.S. stockholder
may be subject to backup withholding unless applicable
certification requirements are met.
Payment of the proceeds of a sale of our shares within the
U.S. is subject to both backup withholding and information
reporting unless the beneficial owner certifies under penalties
of perjury that it is a
non-U.S. stockholder
(and the payor does not have actual knowledge or reason to know
that the beneficial owner is a U.S. person) or the holder
otherwise establishes an exemption. Payment of the proceeds of a
sale of our shares conducted through certain U.S. related
financial intermediaries is subject to information reporting
(but not backup withholding) unless the financial intermediary
has documentary evidence in its records that the beneficial
owner is a
non-U.S. stockholder
and specified conditions are met or an exemption is otherwise
established.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules may be allowed as a
refund or a credit against such holders U.S. federal
income tax liability, provided the required information is
furnished to the IRS.
State,
Local and Foreign Taxes
Our company and our subsidiaries and stockholders may be subject
to state, local or foreign taxation in various jurisdictions,
including those in which it or they transact business, own
property or reside. We may own interests in properties located
in a number of jurisdictions, and may be required to file tax
returns in certain of those jurisdictions. The state, local or
foreign tax treatment of our company and our stockholders may
not conform to the U.S. federal income tax treatment
discussed above. Any foreign taxes incurred by us would not pass
through to stockholders as a credit against their
U.S. federal income tax liability. Prospective stockholders
should consult their tax advisors regarding the application and
effect of state, local and foreign income and other tax laws on
an investment in our shares.
Other Tax
Considerations
Legislative
or Other Actions Affecting REITs
The rules dealing with U.S. federal income taxation are
constantly under review by persons involved in the legislative
process and by the IRS and the U.S. Treasury Department. No
assurance can be given as to whether, when, or in what form,
U.S. federal income tax laws applicable to us and our
stockholders may be enacted. Changes to the federal tax laws and
interpretations of federal tax laws could adversely affect an
investment in our shares.
141
ERISA
CONSIDERATIONS
The following is a summary of certain considerations associated
with an investment in us by a pension, profit-sharing, IRA or
other employee benefit plan subject to ERISA or
Section 4975 of the Code. This summary is based on
provisions of ERISA and the Code, as amended through the date of
this prospectus, and relevant regulations and opinions issued by
the Department of Labor. No assurance can be given that
legislative or administrative changes or court decisions may not
be forthcoming that would significantly modify the statements
expressed herein. Any changes may or may not apply to
transactions entered into prior to the date of their enactment.
In considering using the assets of an employee benefit plan
subject to ERISA to purchase shares, such as a profit-sharing,
401(k), or pension plan, or of any other retirement plan or
account subject to Section 4975 of the Code such as an IRA
or Keogh Plan (collectively, Benefit Plans), a
fiduciary, taking into account the facts and circumstances of
such Benefit Plan, should consider, among other matters,
|
|
|
|
|
whether the investment is consistent with the applicable
provisions of ERISA and the Code,
|
|
|
|
whether the investment will produce UBTI to the Benefit Plan
(see United States Federal Income Tax Considerations
Taxation of Tax-Exempt
U.S. Stockholders), and
|
|
|
|
the need to value the assets of the Benefit Plan annually.
|
Under ERISA, a plan fiduciarys responsibilities include
the duty
|
|
|
|
|
to act solely in the interest of plan participants and
beneficiaries and for the exclusive purpose of providing
benefits to them, as well as defraying reasonable expenses of
plan administration;
|
|
|
|
to invest plan assets prudently;
|
|
|
|
to diversify the investments of the plan unless it is clearly
prudent not to do so; and
|
|
|
|
to comply with plan documents insofar as they are consistent
with ERISA.
|
ERISA also requires that the assets of an employee benefit plan
be held in trust and that the trustee (or a duly authorized
named fiduciary or investment manager) have exclusive authority
and discretion to manage and control the assets of the plan.
In addition, Section 406 of ERISA and Section 4975 of
the Code prohibit specified transactions involving assets of a
Benefit Plan and any party in interest or
disqualified person with respect to that Benefit
Plan. These transactions are prohibited regardless of how
beneficial they may be for the Benefit Plan. The prohibited
transactions include the sale, exchange or leasing of property,
the lending of money or the extension of credit between a
Benefit Plan and a party in interest or disqualified person, and
the transfer to, or use by or for the benefit of, a party in
interest, or disqualified person, of any assets of a Benefit
Plan. A fiduciary of a Benefit Plan also is prohibited from
engaging in self-dealing, acting for a person who has an
interest adverse to the plan (other than in the case of most
IRAs and some Keogh Plans), or receiving any consideration for
its own account from a party dealing with the plan in a
transaction involving plan assets.
Furthermore, Section 408 of the Code states that assets of
an IRA trust may not be commingled with other property except in
a common trust fund or common investment fund.
Plan
Assets
While neither ERISA nor the Code defines the term plan
assets, a Department of Labor regulation describes what
constitutes the assets of a Benefit Plan when it invests in
specific kinds of entities (29 C.F.R.
Section 2510.3-101,
as modified by ERISA, the Regulation). Under the
Regulation, an entity in which a Benefit Plan makes an equity
investment will be deemed to be plan assets of the
Benefit Plan unless the entity satisfies at least one of the
exceptions to this general rule.
142
The Regulation provides as one exception that the underlying
assets of entities such as ours will not be treated as assets of
a Benefit Plan if the interest the Benefit Plan acquires is a
publicly-offered security. A publicly-offered
security must be:
|
|
|
|
|
freely transferable,
|
|
|
|
part of a class of securities that is owned by 100 or more
persons who are independent of the issuer and one
another, and
|
|
|
|
either part of a class of securities registered under the
Securities Exchange Act of 1934, as amended, known as the
Exchange Act, or sold as part of a public offering registered
under the Securities Act and be part of a class of securities
registered under the Exchange Act within 120 days (or such
later time as may be allowed by the SEC) after the end of the
fiscal year of the issuer during which the offering of such
securities to the public occurred.
|
Whether a security is freely transferable depends upon the
particular facts and circumstances. The shares will be subject
to restrictions intended to ensure that we qualify for
U.S. federal income tax treatment as a REIT. According to
the Regulation, where the minimum investment in a public
offering of securities is $10,000 or less, the presence of a
restriction on transferability intended to prohibit transfers
that would result in a termination or reclassification of the
entity for state or federal tax purposes will not ordinarily
affect a determination that such securities are freely
transferable. The minimum investment in shares is less than
$10,000. Thus, we will proceed on the basis that the
restrictions imposed to maintain our status as a REIT should not
cause the shares to not be considered freely transferable for
purposes of the Regulation.
We anticipate having over 100 stockholders following the
completion of this offering. Thus, the second criterion of the
publicly offered exception will be satisfied.
The shares are being sold as part of an offering of securities
to the public pursuant to an effective registration statement
under the Securities Act, and the shares are part of a class
that was registered under the Exchange Act before the
120th day after December 31, 2010. Any shares
purchased, therefore, should satisfy the third criterion of the
publicly offered exemption.
We believe that the shares should constitute
publicly-offered securities, and that our underlying
assets should not be considered plan assets under the
Regulation, assuming that our common stock is freely
transferable and widely held (as contemplated above) and
that the offering otherwise takes place as described in this
prospectus.
In the event that our underlying assets were treated by the
Department of Labor as plan assets of a Benefit
Plan, our management could be treated as fiduciaries with
respect to Benefit Plan stockholders, and the prohibited
transaction restrictions of ERISA and the Code could apply to
any transaction involving our management and assets (absent an
applicable administrative or statutory exemption). These
restrictions could, for example, require that we avoid
transactions with entities that are affiliated with us or our
affiliates or restructure our activities in order to obtain an
exemption from the prohibited transaction restrictions.
Alternatively, we might provide Benefit Plan stockholders with
the opportunity to sell their shares to us or we might dissolve
or terminate.
If our underlying assets were treated as assets of a Benefit
Plan, the investment in us also might constitute an ineffective
delegation of fiduciary responsibility to our advisor and expose
the fiduciary of the plan to co-fiduciary liability under ERISA
for any breach by our advisor of its ERISA fiduciary duties.
Finally, an investment by an IRA in us might result in an
impermissible commingling of plan assets with other property.
If a prohibited transaction were to occur, our advisor, and
possibly other fiduciaries of Benefit Plan stockholders subject
to ERISA who permitted the prohibited transaction to occur or
who otherwise breached their fiduciary responsibilities, or a
non-fiduciary participating in the prohibited transaction could
be required to restore to the plan any profits they realized as
a result of the transaction or breach and make good to the plan
any losses incurred by the plan as a result of the
143
transaction or breach. In addition, the Code imposes an excise
tax equal to fifteen percent (15%) of the amount involved and
authorizes the IRS to impose an additional 100% excise tax if
the prohibited transaction is not corrected. These
taxes would be imposed on any disqualified person who
participates in the prohibited transaction. With respect to an
IRA, the occurrence of a prohibited transaction involving the
individual who established the IRA, or his or her beneficiary,
could cause the IRA to lose its tax-exempt status under
Section 408(e)(2) of the Code.
If, as contemplated above, our assets do not constitute plan
assets following an investment in shares by Benefit Plans, the
problems discussed in the preceding three paragraphs are not
expected to arise.
Other
Prohibited Transactions
Regardless of whether the shares qualify for the
publicly-offered security exception of the
Regulation, a prohibited transaction could occur if we, any
selected dealer, the escrow agent or any of their affiliates is
a fiduciary (within the meaning of Section 3(21) of ERISA)
with respect to the purchase of the shares. Accordingly, unless
an administrative or statutory exemption applies, shares should
not be purchased by a Benefit Plan to which any of the above
persons is a fiduciary with respect to the purchase. A person is
a fiduciary to a plan under Section 3(21) of ERISA if,
among other things, the person has discretionary authority or
control with respect to plan assets or provides investment
advice for a fee with respect to the assets. Under a regulation
issued by the Department of Labor, a person would be deemed to
be providing investment advice if that person renders advice as
to the advisability of investing in shares and that person
regularly provides investment advice to the plan pursuant to a
mutual agreement or understanding (written or otherwise) that:
(i) the advice will serve as the primary basis for
investment decisions, and (ii) the advice will be
individualized for the plan based on its particular needs.
Admittance
of Stockholders
Until the subscription proceeds equal $10,000,000, funds
received will be promptly deposited into our account at our
escrow agent, Wells Fargo Bank, National Association, or Wells
Fargo. After the subscription proceeds exceed $10,000,000, all
funds will be deposited into our interest-bearing account at
Bank of the West. On each admittance date, the funds deposited
by each investor will be transferred to us and exchanged for the
applicable number of shares. Any interest earned by the
investors funds prior to any such admittance date will be
paid to an investor only if the investors funds have been
held in the account for 20 days or longer. Interest earned,
but not payable to an investor, will be paid to us.
In considering an investment in us, a Benefit Plan should
consider whether the escrow account arrangement as well as the
ultimate investment in us would be consistent with fiduciary
standards applicable to that Benefit Plan.
Annual
Valuation
A fiduciary of an employee benefit plan subject to ERISA is
required to determine annually the fair market value of each
asset of the plan as of the end of the plans fiscal year
and to file a report reflecting that value. When no fair market
value of a particular asset is available, the fiduciary is to
make a good faith determination of that assets fair
market value assuming an orderly liquidation at the time
the determination is made. In addition, a trustee or custodian
of an IRA must provide an IRA participant with a statement of
the value of the IRA each year. In discharging its obligation to
value assets of a plan, a fiduciary subject to ERISA must act
consistently with the relevant provisions of the plan and the
general fiduciary standards of ERISA.
Unless and until the shares are listed on a national securities
exchange or are included for quotation on The NASDAQ Stock
Market, it is not expected that a public market for the shares
will develop. To date, neither the IRS nor the Department of
Labor has promulgated regulations specifying
144
how a plan fiduciary should determine the fair market
value of the shares when the fair market value of the
shares is not determined in the marketplace. Therefore, to
assist fiduciaries in fulfilling their valuation and annual
reporting responsibilities with respect to ownership of shares,
we intend to provide, no less frequently than annually, reports
of our determinations of the current value of our net assets per
outstanding share to those fiduciaries (including IRA trustees
and custodians) who identify themselves to us and request the
reports.
We anticipate that upon an annual valuation, we will publish the
determination of the net asset value to stockholders by filing a
current report on
Form 8-K
with the SEC. We also anticipate that we will provide annual
reports of the determination (i) to IRA trustees and
custodians not later than January 15 of each year, and
(ii) to other plan trustees and custodians within
75 days after the end of each calendar year. Each
determination may be based upon valuation information available
as of October 31 of the preceding year, updated for any material
changes occurring between October 31 and December 31.
With respect to the annual valuation requirements described
above, we expect to provide an estimated value for our shares
annually. Until 18 months have passed without a sale in a
public offering of our common stock, not including any offerings
on behalf of selling stockholders or offerings related to any
dividend reinvestment plan, employee benefit plan, or the
issuance of shares upon redemption of interests in our operating
partnership, we expect to use the gross offering price of a
share of the common stock in our most recent offering as the per
share estimated value thereof. This estimated value is not
likely to reflect the proceeds you would receive upon our
liquidation or upon the sale of your shares. Accordingly, we can
make no assurances that such estimated value will satisfy the
applicable annual valuation requirements under ERISA and the
Internal Revenue Code. The Department of Labor or the Internal
Revenue Service may determine that a plan fiduciary or an IRA
custodian is required to take further steps to determine the
value of our common shares. In the absence of an appropriate
determination of value, a plan fiduciary or an IRA custodian may
be subject to damages, penalties or other sanctions.
Failure to satisfy the fiduciary standards of conduct and other
applicable requirements of ERISA and the Internal Revenue Code
may result in the imposition of civil and criminal penalties,
and can subject the fiduciary to claims for damages or for
equitable remedies. In addition, if an investment in our shares
constitutes a prohibited transaction under ERISA or the Internal
Revenue Code, the fiduciary or IRA owner who authorized or
directed the investment may be subject to the imposition of
excise taxes with respect to the amount invested. In the case of
a prohibited transaction involving an IRA owner, the IRA may be
disqualified and all of the assets of the IRA may be deemed
distributed and subjected to tax. ERISA plan fiduciaries and IRA
custodians should consult with counsel before making an
investment in our common shares.
After the
18-month
period described above (or possibly sooner if our board so
directs), we expect the estimated share values reported in our
annual reports will be based on estimates of the values of our
assets net of our liabilities. However, there can be no
assurance:
|
|
|
|
|
that the value could or will actually be realized by us or by
stockholders upon liquidation (in part because appraisal or
estimated values do not necessarily indicate the price at which
assets could be sold and because no attempt will be made to
estimate the expenses of selling any of our assets),
|
|
|
|
that stockholders could realize this value if they were to
attempt to sell their shares, or
|
|
|
|
that this value could comply with the ERISA or IRA requirements
described above.
|
145
DESCRIPTION
OF SHARES
The following description of the shares does not purport to be
complete but contains a summary of portions of the amended and
restated charter and bylaws, and such description is qualified
in its entirety by reference to the form of the amended and
restated charter and the bylaws filed as exhibits to this
registration statement. Our initial charter and the bylaws
became operative on March 10, 2008. We will adopt the
amended and restated charter prior to the commencement of this
offering. Our charter and bylaws will remain in effect for the
duration of our existence although they may be amended in
accordance with their terms.
General
Description of Shares
We are authorized to issue 300,000,000 shares of common
stock and 50,000,000 shares of preferred stock, each share
having a par value of $0.001. The issuance of the preferred
stock must be approved by a majority of the CWI independent
directors who do not have an interest in the transactions and
who have access at CWIs expense, to CWIs or
independent legal counsel. Each common share is entitled to
participate equally in distributions when and as authorized by
the directors and declared by us and in the distribution of our
assets upon liquidation. Each common share is entitled to one
vote and will be fully paid and non-assessable by us upon
issuance and payment therefor. Common shares are not subject to
mandatory redemption. The common shares have no preemptive
rights (which are intended to insure that a stockholder has the
right to maintain the same ownership interest on a percentage
basis before and after the issuance of additional securities) or
cumulative voting rights (which are intended to increase the
ability of smaller groups of stockholders to elect directors).
We have the authority to issue shares of any class or securities
convertible into shares of any class or classes, to classify or
to reclassify any unissued stock by setting or changing the
preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other
distributions, qualifications and terms and conditions of
redemption of the stock, all as determined by our board of
directors. In addition, the board of directors, with the
approval of a majority of the entire board and without any
action by the stockholders, may amend our charter from time to
time to increase or decrease the aggregate number of shares or
the number of shares of any class or series that we have
authority to issue.
Our intention is to consider alternatives for providing
liquidity for our stockholders beginning not later than six
years following the termination of the primary offering being
conducted by this prospectus. If we have not consummated a
liquidity transaction by the sixth anniversary of the
termination of the primary offering being conducted by this
prospectus, our board of directors will be required to consider
(but will not be required to commence) an orderly liquidation of
our assets, which would require the approval of our
stockholders. A liquidity transaction could include sales of
assets, either on a portfolio basis or individually, a listing
of our shares on a national securities exchange, the Nasdaq
Global Select Market or the Nasdaq Global Market, a merger
(which may include a merger with one or more entities managed by
our advisor in the future or currently managed by W. P. Carey or
Watermark Capital Partners) or another transaction approved by
our board of directors.
Market conditions and other factors could cause us to delay a
liquidity transaction or the commencement of our liquidation.
Even if our board of directors decides to liquidate, we are
under no obligation to conclude our liquidation within a set
time because the precise timing of the sale of our assets will
depend on the prevailing real estate and financial markets, the
economic conditions of the areas in which our properties are
located and the federal income tax consequences to our
stockholders. As a result, we cannot provide assurances that we
will be able to liquidate our assets. After commencing a
liquidation, we would continue in existence until all of our
assets are sold.
We will not issue stock certificates. Shares will be held in
uncertificated form, which will eliminate the
physical handling and safekeeping responsibilities inherent in
owning transferable stock certificates and eliminate the need to
return a duly executed stock certificate to the transfer agent
to effect a transfer. Transfers can be effected by mailing to
Phoenix American Financial Services Inc., or
146
Phoenix American, a duly executed transfer form available upon
request from them or from our website at
www.careywatermarkinvestors.com. Upon the issuance of our shares
and upon the request of a stockholder, we will send to each such
stockholder a written statement, which will include all
information that is required to be written upon stock
certificates under Maryland law.
Meetings
and Special Voting Requirements
An annual meeting of the stockholders will be held each year,
not fewer than 30 days after delivery of our annual report.
Special meetings of stockholders may be called only upon the
request of a majority of the directors, a majority of the
independent directors, the chairman, the chief executive officer
or the president, and must be called by our secretary upon the
written request of stockholders entitled to cast at least 10% of
all the votes entitled to be cast at such a meeting on any
matter. In general, the presence in person or by proxy of
holders of shares entitled to cast 50% of the votes entitled to
be cast at the meeting on any matter shall constitute a quorum.
Generally, the affirmative vote of a majority of the votes cast
at a meeting at which a quorum is present is necessary to take
stockholder action, although the affirmative vote of the
majority of shares which are entitled to vote and which are
present in person or by proxy at a meeting at which a quorum is
present is necessary to elect each director.
Except as otherwise provided by Maryland law or our charter, our
charter may be amended only if such amendment is declared
advisable by a majority of our board of directors and approved
by the stockholders either at a duly held meeting at which a
quorum is present by the affirmative vote of a majority of all
votes entitled to be cast or by unanimous written or electronic
consent. Our board of directors has the exclusive power to
amend, alter or repeal our bylaws. Stockholders may, by the
affirmative vote of a majority of the votes entitled to be cast
on such matter remove a director from the board. Stockholders do
not have the ability to vote to replace CLA or to select a new
advisor. A dissolution proposed by our board of directors must
be declared advisable by a majority of our entire board of
directors and approved by the affirmative vote of the holders of
not less than a majority of all of the votes entitled to be cast
on the matter.
Except as otherwise provided by law, a merger or sale of all or
substantially all of our assets other than in the ordinary
course of business must be declared advisable by our board of
directors and approved by holders of shares entitled to cast a
majority of the votes entitled to be cast on the matter. Our
stockholders will not have appraisal rights unless our board of
directors determines that such rights apply, with respect to all
or any classes or series of stock, to one or more transactions
occurring after the date of such determination in connection
with which holders of such shares would otherwise be entitled to
exercise such rights.
Stockholders are entitled to receive a copy of our stockholder
list upon request provided that the requesting
stockholder represents to us that the list will not be used to
pursue commercial interests unrelated to the stockholders
interest in us. The list provided by us will include the name,
address and telephone number (if available) of, and number of
shares owned by, each stockholder and will be in alphabetical
order, on white paper and in easily readable type size and will
be sent within ten days of the receipt by us of the request. A
stockholder requesting a list will be required to pay our
reasonable cost of postage and duplication. We will pay the
costs incurred and any actual damages suffered by a stockholder
who must compel the production of a list and is successful. It
shall be a defense that the actual purpose and reason for the
requests for inspection or for a copy of the stockholders list
is to secure such list of stockholders or other information for
the purpose of selling such list or copies thereof, or of using
the same for a commercial purpose other than in the interest of
the applicant as a stockholder relative to our affairs. The list
will be updated at least quarterly to reflect changes in the
information contained therein.
The rights of stockholders described above are in addition to
and do not adversely affect rights provided to investors under
Rule 14a-7
promulgated under the Exchange Act, which provides that, upon
request of investors and the payment of the expenses of the
distribution, we are required to
147
distribute specific materials to stockholders in the context of
the solicitation of proxies for voting on matters presented to
stockholders, or, at our option, provide requesting stockholders
with a copy of the list of stockholders so that the requesting
stockholders may make the distribution themselves.
Restriction
on Ownership of Shares
In order for us to qualify as a REIT, not more than 50% of our
outstanding shares may be owned by any five or fewer individuals
(including some tax-exempt entities) during the last half of
each taxable year, and the outstanding shares must be owned by
100 or more persons independent of us and each other during at
least 335 days of a
12-month
taxable year or during a proportionate part of a shorter taxable
year for which an election to be treated as a REIT is made. We
may prohibit certain acquisitions and transfers of shares so as
to facilitate our qualification as a REIT under the Code.
However, there can be no assurance that this prohibition will be
effective.
Our charter contains restrictions on the number of shares of our
stock that a person may own. No person may acquire or hold,
directly or indirectly, in excess of 9.8% in value of our
outstanding shares of stock. In addition, no person may acquire
or hold, directly or indirectly, common stock in excess of 9.8%
(in value or in number of shares, whichever is more restrictive)
of our outstanding shares of common stock.
Our charter further prohibits (a) any person from owning
shares of our stock that would result in our being closely
held under Section 856(h) of the Code or otherwise
cause us to fail to qualify as a REIT and (b) any person
from transferring shares of our stock if the transfer would
result in our stock being beneficially owned by fewer than
100 persons. Any person who acquires or intends to acquire
shares of our stock that may violate any of these restrictions,
or who is the intended transferee of shares of our stock which
are transferred to the trust, as defined below, is required to
give us immediate written notice or, in the case of a proposed
or attempted transaction, at least 15 days prior
written notice and provide us with such information as we may
request in order to determine the effect of the transfer on our
status as a REIT. The above restrictions will not apply if our
board of directors determines that it is no longer in our best
interests to continue to qualify as a REIT.
Our board of directors, in its sole discretion, may exempt a
person (prospectively or retroactively) from these limits.
However, the board may not exempt any person whose ownership of
our outstanding stock would result in our being closely
held within the meaning of Section 856(h) of the Code
or otherwise would result in our failing to qualify as a REIT.
In order to be considered by the board for exemption, a person
also must not own, directly or indirectly, an interest in our
tenant (or a tenant of any entity which we own or control) that
would cause us to own, directly or indirectly, more than a 9.9%
interest in the tenant. The person seeking an exemption must
represent to the satisfaction of the board that it will not
violate these two restrictions. The person also must agree that
any violation or attempted violation of these restrictions will
result in the automatic transfer of the shares of stock causing
the violation to the trust. The board of directors may require a
ruling from the Internal Revenue Service or an opinion of
counsel in order to determine or ensure our status as a REIT.
Any attempted transfer of our stock which, if effective, would
result in our stock being beneficially owned by fewer than
100 persons will be null and void. Any attempted transfer
of our stock which, if effective, would result in violation of
the ownership limits discussed above or in our being
closely held under Section 856(h) of the Code
or otherwise failing to qualify as a REIT will cause the number
of shares causing the violation (rounded to the nearest whole
share) to be automatically transferred to a trust for the
exclusive benefit of one or more charitable beneficiaries, and
the proposed transferee will not acquire any rights in the
shares. The automatic transfer will be deemed to be effective as
of the close of business on the business day (as defined in the
charter) prior to the date of the transfer. Shares of our stock
held in the trust will be issued and outstanding shares. The
proposed transferee will not benefit economically from ownership
of any shares of stock held in the trust, will have no rights to
dividends and no rights to vote or other rights attributable to
the shares of stock held in the
148
trust. The trustee of the trust will have all voting rights and
rights to dividends or other distributions with respect to
shares held in the trust. These rights will be exercised for the
exclusive benefit of the charitable beneficiary. Any dividend or
other distribution paid prior to our discovery that shares of
stock have been transferred to the trust will be paid by the
recipient to the trustee upon demand. Any dividend or other
distribution authorized but unpaid will be paid when due to the
trustee. Any dividend or other distribution paid to the trustee
will be held in trust for the charitable beneficiary. Subject to
Maryland law, the trustee will have the authority (i) to
rescind as void any vote cast by the proposed transferee prior
to our discovery that the shares have been transferred to the
trust and (ii) to recast the vote in accordance with the
desires of the trustee acting for the benefit of the charitable
beneficiary. However, if we have already taken irreversible
corporate action, then the trustee will not have the authority
to rescind and recast the vote.
Within 20 days of receiving notice from us that shares of
our stock have been transferred to the trust, the trustee will
sell the shares to a person designated by the trustee, whose
ownership of the shares will not violate the above ownership
limitations. Upon the sale, the interest of the charitable
beneficiary in the shares sold will terminate and the trustee
will distribute the net proceeds of the sale to the proposed
transferee and to the charitable beneficiary as follows. The
proposed transferee will receive the lesser of (i) the
price paid by the proposed transferee for the shares or, if the
proposed transferee did not give value for the shares in
connection with the event causing the shares to be held in the
trust (e.g., a gift, devise or other similar
transaction), the market price (as defined in our charter) of
the shares on the day of the event causing the shares to be held
in the trust and (ii) the price received by the trustee
from the sale or other disposition of the shares. The trustee
may reduce the amount payable to the proposed transferee by the
amount of dividends and other distributions which have been paid
to the proposed transferee and are owed by the proposed
transferee to the trustee. Any net sale proceeds in excess of
the amount payable to the proposed transferee will be paid
immediately to the charitable beneficiary. If, prior to our
discovery that shares of our stock have been transferred to the
trust, the shares are sold by the proposed transferee, then
(i) the shares shall be deemed to have been sold on behalf
of the trust and (ii) to the extent that the proposed
transferee received an amount for the shares that exceeds the
amount he was entitled to receive, the excess shall be paid to
the trustee upon demand.
In addition, shares of our stock held in the trust will be
deemed to have been offered for sale to us, or our designee, at
a price per share equal to the lesser of (i) the price per
share in the transaction that resulted in the transfer to the
trust (or, in the case of a devise or gift, the market price at
the time of the devise or gift) and (ii) the market price
on the date we, or our designee, accept the offer. We may reduce
the amount payable to the proposed transferee by the amount of
dividends and other distributions which have been paid to the
proposed transferee and are owed by the proposed transferee to
the trustee. We may pay the amount of such reduction to the
trustee for the benefit of the charitable beneficiary. We will
have the right to accept the offer until the trustee has sold
the shares. Upon a sale to us, the interest of the charitable
beneficiary in the shares sold will terminate and the trustee
will distribute the net proceeds of the sale to the proposed
transferee.
Any certificates representing shares of our stock will bear a
legend referring to the restrictions described above.
Every owner of more than five percent (or such lower percentage
as required by the Code or the regulations promulgated
thereunder) of our stock, within 30 days after the end of
each taxable year, is required to give us written notice,
stating his name and address, the number of shares of each class
and series of our stock which he beneficially owns and a
description of the manner in which the shares are held. Each
such owner shall provide us with such additional information as
we may request in order to determine the effect, if any, of his
beneficial ownership on our status as a REIT and to ensure
compliance with the ownership limits. In addition, each
stockholder shall upon demand be required to provide us with
such information as we may request in good faith in order to
determine our status as a REIT and to comply with the
requirements of any taxing authority or governmental authority
or to determine such compliance.
149
These ownership limits could delay, defer or prevent a
transaction or a change in control that might involve a premium
price for the common stock or otherwise be in the best interest
of the stockholders.
Distributions
Consistent with our intent to qualify to be taxed as a REIT, we
expect to distribute at least 90% of our net taxable income each
year. We intend to accrue and pay distributions on a quarterly
basis and we will calculate our distributions based upon daily
record and distribution declaration dates so investors will be
able to earn distributions immediately upon purchasing common
stock. Generally, income distributed as distributions will not
be taxable to us under U.S. federal income tax laws unless
we fail to comply with the REIT requirements.
Distributions will be paid out of funds legally available
therefore at the discretion of the directors, in accordance with
our earnings, cash flow and general financial condition. The
directors discretion will be directed, in substantial
part, by their obligation to cause us to comply with the REIT
requirements. Because we may receive income from interest or
rents at various times during its fiscal year, distributions may
not reflect our income earned in that particular distribution
period but may be made in anticipation of cash flow which we
expect to receive during a later quarter and may be made in
advance of actual receipt in an attempt to make distributions
relatively uniform. Also each distribution will not necessarily
be funded solely through current or accumulated earnings and
profits. As discussed in United States Federal Income
Tax Considerations Taxation of Taxable
U.S. Stockholders Distributions, we
may make distributions in excess of our current or accumulated
earnings and profits, in which case the distribution will be
treated in part as a return of capital. The directors, in their
discretion, will determine in each case whether the sources and
amounts of distributions are appropriate. We can borrow to make
distributions if the borrowing is necessary to comply with the
REIT requirements or if the borrowing is part of a liquidation
strategy whereby the borrowing is done in anticipation of the
sale of the properties and the proceeds will be used to repay
the loan.
We are not prohibited from distributing our own securities in
lieu of making cash distributions to stockholders, provided
that the securities distributed to stockholders are readily
marketable. Stockholders who receive marketable securities in
lieu of cash distributions may incur transaction expenses in
liquidating the securities.
Summary
of Our Distribution Reinvestment Plan
We have adopted the CWI Distribution Reinvestment Plan, referred
to in this prospectus as the distribution reinvestment
plan, pursuant to which some stockholders may elect to
have up to the full amount of their cash distributions from us
reinvested in additional shares. The following discussion
summarizes the principal terms of the distribution reinvestment
plan. The distribution reinvestment plan is attached as
Exhibit 4.1 to this registration statement.
The primary purpose of the distribution reinvestment plan is to
provide interested investors with an economical and convenient
method of increasing their investment in us by investing cash
distributions in additional shares at the net asset value per
share of common stock determined by our board of directors from
time to time. To the extent shares are purchased from us under
the distribution reinvestment plan, we will receive additional
funds for acquisitions and general purposes including the
repurchase of shares.
The distribution reinvestment plan will be available to
stockholders who purchase shares in this offering. You may elect
to participate in the distribution reinvestment plan by making a
written election to participate on your subscription agreement
at the time you subscribe for shares. Any other stockholder who
receives a copy of our prospectus in this offering or a separate
prospectus relating solely to the distribution reinvestment plan
and who has not previously elected to participate in the
150
distribution reinvestment plan may so elect at any time to
participate in the distribution reinvestment plan.
Participation; Agent. Our distribution
reinvestment plan is available to stockholders of record of our
common stock. Phoenix American, acting as agent for each
participant in the plan, will apply cash distributions which
become payable to such participant on our shares (including
shares held in the participants name and shares
accumulated under the plan), to the purchase of additional whole
and fractional shares of our common stock for such participant.
Eligibility. Participation in the distribution
reinvestment plan is limited to registered owners of our common
stock. Shares held by a broker-dealer or nominee must be
transferred to ownership in the name of the stockholder in order
to be eligible for this plan. Further, a stockholder who wishes
to participate in the distribution reinvestment plan may
purchase shares through the plan only after receipt of a
prospectus relating to the distribution reinvestment plan, which
prospectus may also relate to a concurrent public offering of
shares by us. Our board of directors reserves the right to amend
the plan in the future to permit voluntary cash investments in
our common stock pursuant to the plan. A participating
stockholder is not required to include all of the shares owned
by such stockholder in the plan but all of the distributions
paid on enrolled shares will be reinvested.
Stock Purchases. In making purchases for the
accounts of participants, Phoenix American may commingle the
funds of one participant with those of other participants in the
distribution reinvestment plan. All shares purchased under the
distribution reinvestment plan will be held in the name of each
participant. Purchases will be made directly from us at 95% of
the estimated net asset value, or NAV, per share of our common
stock, as estimated by our advisor or another firm we choose for
that purpose. During the offering and until the first annual
valuation of our assets is received, the purchase price will be
$9.50 per share. Subsequent to the time that we begin to receive
annual valuations, the per share purchase price will be 95% of
the then current NAV. In no event will discounts exceed 5%. NAV
is determined by adding the most recent appraised value of the
real estate owned by us to the value of our other assets,
subtracting the total amount of all liabilities and dividing the
difference by the total number of outstanding shares. Phoenix
American shall have no responsibility with respect to the market
value of our common stock acquired for participants under the
plan.
Timing of Purchases. Phoenix American will
make every reasonable effort to reinvest all distributions on
the day the cash distribution is paid, except where necessary
for us to comply with applicable securities laws. If, for any
reason beyond the control of Phoenix American, reinvestment of
the distribution cannot be completed within 30 days after
the applicable distribution payment date, participants
funds held by Phoenix American will be distributed to the
participant.
Account Statements. Following each purchase of
shares, Phoenix American will provide to each participant an
account statement showing the cash distribution, the number of
shares purchased with the cash distribution and the
year-to-date
and cumulative cash distributions paid.
Expenses and Commissions. There will be no
direct expenses to participants for the administration of the
plan. Administrative fees associated with the distribution
reinvestment plan will be paid by us.
Taxation of Distributions. The reinvestment of
distributions does not relieve the participant of any taxes
which may be payable on such distributions (i.e. 100% of the
distribution, not 95% of the distribution). As a result, unless
you are exempt from tax, you may have to use funds from other
sources to pay the tax liability attributable to reinvested
amounts.
Stock Certificates. No share certificates will
be issued to a participant.
Voting of Shares. In connection with any
matter requiring the vote of our stockholders, each participant
will be entitled to vote all of the whole shares held by the
participant in the distribution reinvestment plan. Fractional
shares will not be voted.
151
Absence of Liability. Neither we nor Phoenix
American shall have any responsibility or liability as to the
value of our shares, any change in the value of the shares
acquired for any participants account, or the rate of
return earned on, or the value of, the interest-bearing
accounts, if any, in which distributions are invested. Neither
we nor Phoenix American shall be liable for any act done in good
faith, or for any good faith omission to act, including, without
limitation, any claims of liability: (a) arising out of the
failure to terminate a participants participation in the
distribution reinvestment plan upon such participants
death prior to the date of receipt of such notice, and
(b) with respect to the time and prices at which shares are
purchased for a participant. Notwithstanding the foregoing,
liability under the U.S. federal securities laws cannot be
waived. Similarly, we and Phoenix American have been advised
that in the opinion of certain state securities commissioners,
indemnification is also considered contrary to public policy and
therefore unenforceable.
Termination of Participation. A participant
may terminate participation in the distribution reinvestment
plan at any time by written instructions to that effect to
Phoenix American. To be effective on a distribution payment
date, the notice of termination and termination fee must be
received by Phoenix American at least 15 days before that
distribution payment date. Upon receipt of notice of termination
from the participant, Phoenix American may also terminate any
participants account at any time in its discretion by
notice in writing mailed to the participant.
Amendment, Supplement, Termination and Suspension of
Distribution Reinvestment Plan. The distribution
reinvestment plan may be amended, supplemented or terminated by
us at any time by the delivery of written notice to each
participant at least 10 days prior to the effective date of
the amendment, supplement or termination. Any amendment or
supplement shall be effective as to the participant unless,
prior to its effective date, Phoenix American receives written
notice of termination of the participants account.
Amendment may include an appointment by us or Phoenix American
with our approval of a successor agent, in which event such
successor shall have all of the rights and obligations of
Phoenix American under the distribution reinvestment plan. The
plan may also be suspended by us at any time without notice to
the participants.
Governing Law. The distribution reinvestment
plan and the authorization card signed by the participant (which
is deemed a part of the distribution reinvestment plan) and the
participants account shall be governed by and construed in
accordance with the laws of Maryland provided that the
foregoing choice of law shall not restrict the application of
any states securities laws to the sale of shares to its
residents or within such state. The distribution reinvestment
plan and the authorization card cannot be changed orally.
Redemption
of Shares
Prior to the time, if any, as the shares are listed on a
national securities exchange or included for quotation on The
NASDAQ Stock Market, any stockholder that has held shares for at
least one year since the date of their issuance, and who
purchased those shares from us or received the shares from us
through a non-cash transaction, not in the secondary market or
in any other transaction to which we were not a party, may
present all or any portion of these shares to us for redemption
at any time from and after the second anniversary of the
effective date of this registration statement, in accordance
with the procedures outlined in this prospectus. At that time,
we may, at our option, subject to the conditions described
below, redeem the shares presented for redemption for cash to
the extent we have sufficient funds available for redemption and
to the extent the total number of shares for which redemption is
requested in any quarter, together with the aggregate number of
shares redeemed in the preceding three fiscal quarters, does not
exceed five percent of the total number of our shares
outstanding as of the last day of the immediately preceding
fiscal quarter, which we refer to as the 5% limit. As a result,
some or all of a stockholders shares may not be redeemed.
In addition, our advisor may assist with the identification of
prospective third party buyers, but receives no compensation for
such assistance. Affiliates of our advisor are eligible to have
their shares redeemed on the same terms as other stockholders.
152
Generally, cash available for redemption will be limited to
proceeds from our distribution reinvestment plan, plus, if we
had positive operating cash flow from the previous fiscal year,
up to 1% of the operating cash flow of the previous fiscal year.
Stockholders may offer shares to us for purchase and we may
purchase the offered shares if we have sufficient cash, subject
to the 5% limit.
Except for redemptions sought upon a stockholders death or
qualifying disability (as defined below) or redemptions sought
upon a stockholders confinement to a long-term care
facility (upon the conditions set forth below), the purchase
price per share for shares redeemed under the redemption plan
will be as follows:
|
|
|
|
|
for redemptions effected beginning on the second anniversary of
the effective date of the registration statement of which this
prospectus is a part through the sixth anniversary of such date,
the lesser of (i) the price paid to acquire the shares from
us or (ii) 90% of the estimated NAV; and
|
|
|
|
for redemptions effected after the sixth anniversary of the
effective date of this registration statement, the greater of
(i) the price paid to acquire the shares from us or
(ii) 90% of the estimated NAV.
|
The estimated NAV will be the net asset value most recently
published by us; provided, however, that if we are
conducting a public offering at any time (and for up to
18 months after a public offering), the estimated NAV will
be the gross offering price per share.
Subject to the limitations described in this prospectus and
provided that the redemption request is made within
270 days of the event giving rise to the following special
circumstances, we may allow a stockholder to request a
redemption of his or her shares as early as one year after the
effective date of the registration statement of which this
prospectus is a part (a) upon the request of the estate,
heir or beneficiary of a deceased stockholder or (b) upon
the disability of a stockholder or upon a stockholders
confinement to a long-term care facility, provided that the
condition causing such disability or need for long-term care was
not preexisting on the date that such person became a
stockholder. The purchase price per share for shares redeemed
upon the death or qualifying disability of the stockholder or
upon such stockholders confinement to a long-term care
facility will be the greater of (i) the price paid to
acquire the shares from us or (ii) 90% of the estimated NAV.
If we have sufficient funds to purchase some but not all of the
shares offered, or if over 5% of our then outstanding shares are
offered for redemption, requesting stockholders shares may
be redeemed on a pro-rata basis, rounded to the nearest whole
share, based upon the total number of shares for which
redemption was requested, and the total funds available for
redemption. Requests not fulfilled in one quarter will
automatically be carried forward to the next quarter, unless
such request is revoked, and will receive priority over requests
made in the carryover quarter. Requests can be revoked by
sending a letter requesting revocation to our Investor Relations
department. There can be no assurances that we will have
sufficient funds to repurchase any shares.
A stockholder who wishes to have shares redeemed must mail or
deliver a written request on a form provided by us and executed
by the stockholder, its trustee or authorized agent to the
redemption agent, which is currently Phoenix American. To
request a form, call our Investor Relations Department at
1-800-WP CAREY. The redemption agent at all times will be
registered as a broker-dealer with the SEC and each states
securities commission unless exempt from registration. Within
30 days following our receipt of the stockholders
request, we will forward to the stockholder the documents
necessary to effect the redemption, including any signature
guarantee we or the redemption agent may require. As a result,
we anticipate that, assuming sufficient funds for redemption,
the effective date of redemptions will be no later than
30 days after the quarterly determination of the
availability of funds for redemption.
A stockholder may present to us fewer than all of the
stockholders shares for redemption, provided,
however, that the stockholder must present for redemption at
least 25% of the stockholders shares.
153
The board of directors, in its sole discretion, may amend,
suspend or terminate the redemption plan at any time it
determines that such amendment, suspension or termination is in
our best interest. The board of directors may also change or
waive the limitations described above on the number of shares we
may repurchase during any 12 month period and the amount of
operating cash flow we may use to affect redemptions. We are not
required to provide advance notice of any decision to amend,
suspend, terminate or change or waive limitations under, the
redemption plan; however, we will publicly report any material
amendment, change or waiver or any termination or suspension in
a periodic report filed with the SEC and, during this offering,
in a prospectus supplement. The board of directors may also
suspend the redemption of shares if:
|
|
|
|
|
it determines, in its sole discretion, that such redemption
impairs our capital or operations;
|
|
|
|
it determines, in its sole discretion, that an emergency makes
such redemption not reasonably practical;
|
|
|
|
any governmental or regulatory agency with jurisdiction over us
so demands for the protection of the stockholders;
|
|
|
|
it determines, in its sole discretion, that such redemption
would be unlawful; or
|
|
|
|
it determines, in its sole discretion, that such redemption,
when considered with all other redemptions, sales, assignments,
transfers and exchanges of our shares, could cause direct or
indirect ownership of shares to become concentrated to an extent
which would prevent us from qualifying as a REIT under the Code.
|
Shares of our common stock redeemed under the redemption plan
will return to the status of authorized but unissued shares of
common stock. We will not resell such shares to the public
unless they are first registered with the SEC under the
Securities Act and under appropriate state securities laws or
otherwise sold in compliance with such laws. We will immediately
terminate the redemption plan and will not accept shares of
common stock for redemption in the event the shares of common
stock are listed on a national securities exchange or included
for quotation on an automatic quotation system or if a secondary
trading market for the common stock is otherwise established.
For a discussion of the tax treatment of such redemptions, see
United States Federal Income Tax Considerations
Taxation of Taxable
U.S. Stockholders.
Restrictions
on Roll-Up
Transactions
In connection with any proposed transaction considered a
Roll-up
Transaction involving us and the issuance of securities of
an entity (a
Roll-up
Entity) that would be created or would survive after the
successful completion of the
Roll-up
Transaction, an appraisal of all properties shall be obtained
from a competent independent appraiser. The properties shall be
appraised on a consistent basis, and the appraisal shall be
based on the evaluation of all relevant information and shall
indicate the value of the properties as of a date immediately
prior to the announcement of the proposed
Roll-up
Transaction. The appraisal shall assume an orderly liquidation
of properties over a
12-month
period. The terms of the engagement of the independent appraiser
shall clearly state that the engagement is for the benefit of us
and our stockholders. If the appraisal will be included in a
prospectus used to offer the securities of a
Roll-up
Entity, the appraisal shall be filed with the SEC and the states
as an exhibit to the registration statement for the offering.
Accordingly, an issuer using the appraisal in the registration
statement shall be subject to liability for violation of Section
11 of the Securities Act and comparable provisions under state
laws for any material misrepresentations or material omissions
in the appraisal, unless the issuer can establish a defense to
such liability. A summary of the appraisal, indicating all
material assumptions underlying the appraisal, shall be included
in a report to stockholders in connection with a proposed
Roll-up
Transaction. A
Roll-up
Transaction is a
154
transaction involving the acquisition, merger, conversion or
consolidation, directly or indirectly, of us and the issuance of
securities of a
Roll-up
Entity. This term does not include:
|
|
|
|
|
a transaction involving our securities that have been listed on
a national securities exchange or included for quotation on
NASDAQ National Market System for at least
12 months; or
|
|
|
|
a transaction involving the conversion to corporate, trust or
association form of only us if, as a consequence of the
transaction, there will be no significant adverse change in any
of the following: stockholder voting rights; the term of our
existence; compensation to our advisor, or our investment
objectives.
|
In connection with a proposed
Roll-up
Transaction, the person sponsoring the
Roll-up
Transaction must offer to stockholders who vote no
on the proposal the choice of;
(i) accepting the securities of a
Roll-up
Entity offered in the proposed
Roll-up
Transaction; or
(ii) one of the following:
(A) remaining as stockholders of us and preserving their
interests therein on the same terms and conditions as existed
previously, or
(B) receiving cash in an amount equal to the
stockholders pro rata share of the appraised value
of our net assets.
We are prohibited from participating in any proposed
Roll-up
Transaction:
(i) which would result in the stockholders having democracy
rights in a
Roll-up
Entity that are less than those provided in the charter and
described elsewhere in this prospectus, including rights with
respect to the election and removal of directors, annual
reports, annual and special meetings, amendment of the charter,
and dissolution of us. See Management,
Reports to Stockholders and
Description of Shares;
(ii) which includes provisions that would operate to
materially impede or frustrate the accumulation of shares by any
purchaser of the securities of the
Roll-up
Entity (except to the minimum extent necessary to preserve the
tax status of the
Roll-up
Entity), or which would limit the ability of an investor to
exercise the voting rights of its securities of the
Roll-up
Entity on the basis of the number of shares held by that
investor;
(iii) in which investors rights to access of records
of the
Roll-up
Entity will be less than those provided in the section of this
prospectus entitled Description of Shares
Meetings and Special Voting Requirements; or
(iv) in which any of the costs of the
Roll-up
Transaction would be borne by us if the
Roll-up
Transaction is rejected by the stockholders.
Transfer
Agent
The transfer agent and registrar for the shares is Phoenix
American Financial Services Inc. The transfer agents
address is 2401 Kerner Boulevard, San Rafael, CA
94901-5529,
and its phone number is 1-888-241-3737.
Business
Combinations
Under Maryland law, business combinations between a
Maryland corporation and an interested stockholder or an
affiliate of an interested stockholder are prohibited for five
years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business
combinations include a merger, consolidation, share exchange,
or, in circumstances specified in the
155
statute, an asset transfer or issuance or reclassification of
equity securities. An interested stockholder is defined as:
|
|
|
|
|
any person who beneficially owns ten percent or more of the
voting power of the corporations outstanding voting
stock; or
|
|
|
|
an affiliate or associate of the corporation who, at any time
within the two-year period prior to the date in question, was
the beneficial owner of ten percent or more of the voting power
of the then outstanding stock of the corporation.
|
A person is not an interested stockholder under the statute if
the board of directors approved in advance the transaction by
which he otherwise would have become an interested stockholder.
However, in approving a transaction, the board of directors may
provide that its approval is subject to compliance, at or after
the time of approval, with any terms and conditions determined
by the board.
After the five-year prohibition, any business combination
between the Maryland corporation and an interested stockholder
generally must be recommended by the board of directors of the
corporation and approved by the affirmative vote of at least:
|
|
|
|
|
80% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation; and
|
|
|
|
two-thirds of the votes entitled to be cast by holders of voting
stock of the corporation other than voting shares held by the
interested stockholder with whom or with whose affiliate the
business combination is to be effected or held by an affiliate
or associate of the interested stockholder.
|
These super-majority vote requirements do not apply if the
corporations common stockholders receive a minimum price,
as defined under Maryland law, for their shares in the form of
cash or other consideration in the same form as previously paid
by the interested stockholder for its shares.
The statute permits various exemptions from its provisions,
including business combinations that are exempted by the board
of directors before the time that the interested stockholder
becomes an interested stockholder.
The business combination statute may discourage others from
trying to acquire control of us and increase the difficulty of
consummating any offer.
Control
Share Acquisitions
Maryland law provides that control shares of a Maryland
corporation acquired in a control share acquisition have no
voting rights except to the extent approved by a vote of
two-thirds of the votes entitled to be cast on the matter.
Shares owned by the acquiror, by officers or by employees who
are directors of the corporation are excluded from shares
entitled to vote on the matter. Control shares are voting shares
of stock which, if aggregated with all other shares of stock
owned by the acquirer or in respect of which the acquirer is
able to exercise or direct the exercise of voting power (except
solely by virtue of a revocable proxy), would entitle the
acquirer to exercise voting power in electing directors within
one of the following ranges of voting power:
|
|
|
|
|
one-tenth or more but less than one-third,
|
|
|
|
one-third or more but less than a majority, or
|
|
|
|
a majority or more of all voting power.
|
Control shares do not include shares the acquiring person is
then entitled to vote as a result of having previously obtained
stockholder approval. A control share acquisition means the
acquisition of issued and outstanding control shares, subject to
certain exceptions.
156
A person who has made or proposes to make a control share
acquisition may compel the board of directors of the corporation
to call a special meeting of stockholders to be held within
50 days of demand to consider the voting rights of the
shares. The right to compel the calling of a special meeting is
subject to the satisfaction of certain conditions, including an
undertaking to pay the expenses of the meeting. If no request
for a meeting is made, the corporation may itself present the
question at any stockholders meeting.
If voting rights are not approved at the meeting or if the
acquiring person does not deliver an acquiring person statement
as required by the statute, then the corporation may redeem for
fair value any or all of the control shares, except those for
which voting rights have previously been approved. The right of
the corporation to redeem control shares is subject to certain
conditions and limitations. Fair value is determined, without
regard to the absence of voting rights for the control shares,
as of the date of the last control share acquisition by the
acquirer or of any meeting of stockholders at which the voting
rights of the shares are considered and not approved. If voting
rights for control shares are approved at a stockholders meeting
and the acquiror becomes entitled to vote a majority of the
shares entitled to vote, all other stockholders may exercise
appraisal rights. The fair value of the shares as determined for
purposes of appraisal rights may not be less than the highest
price per share paid by the acquirer in the control share
acquisition.
The control share acquisition statute does not apply (a) to
shares acquired in a merger, consolidation or share exchange if
the corporation is a party to the transaction, or (b) to
acquisitions approved or exempted by the charter or bylaws of
the corporation.
Our bylaws contain a provision exempting from the control share
acquisition statute any and all acquisitions by any person of
shares of our stock. There can be no assurance that this
provision will not be amended or eliminated at any time in the
future.
Subtitle
8
Subtitle 8 of Title 3 of the Maryland General Corporation
Law permits a Maryland corporation with a class of equity
securities registered under the Exchange Act and at least three
independent directors to elect to be subject, by provision in
its charter or bylaws or a resolution of its board of directors
and notwithstanding any contrary provision in the charter or
bylaws, to any or all of five provisions:
|
|
|
|
|
a classified board,
|
|
|
|
a two-thirds vote requirement for removing a director,
|
|
|
|
a requirement that the number of directors be fixed only by vote
of the directors,
|
|
|
|
a requirement that a vacancy on the board be filled only by the
remaining directors and for the remainder of the full term of
the class of directors in which the vacancy occurred, and
|
|
|
|
a majority requirement for the calling of a special meeting of
stockholders.
|
In our charter, we have elected that vacancies on the board be
filled only by the remaining directors and for the remainder of
the full term of the directorship in which the vacancy occurred.
Through provisions in our charter and bylaws unrelated to
Subtitle 8, we vest in the board the exclusive power to fix the
number of directorships. Our charter, however, provides that the
total number of directors shall not be less than 3. We have not
adopted provisions for a classified board. As described above
under Meetings and Special Voting
Requirements, stockholders may, by the affirmative
vote of a majority of the votes entitled to be cast on the
matter, remove a director. In addition, stockholders entitled to
cast at least 10% of all the votes entitled to be cast at the
meeting on any matter may request that we call a special meeting
of stockholders.
Although our board has no current intention to opt in to any of
the other above provisions permitted under Maryland law, our
charter does not prohibit our board from doing so. Becoming
governed by any of these provisions could discourage an
extraordinary transaction (such as a merger,
157
tender offer or sale of all or substantially all of our assets)
that might provide a premium price for holders of our securities.
Tender
Offers
Our charter provides that any tender offer made by a
stockholder, including any mini-tender offer, must
comply with certain notice and disclosure requirements. These
procedural requirements with respect to tender offers apply to
any widespread solicitation for shares of our stock at firm
prices for a limited time period.
In order for any person to conduct a tender offer to any
stockholder, our charter requires that the person comply with
Regulation 14D of the Securities Exchange Act of 1934, as
amended, other than
Rule 14d-9,
and provide the Company notice of such tender offer at least 10
business days before initiating the tender offer. Pursuant to
our charter, any person initiating a tender offer would be
required to provide:
|
|
|
|
|
Specific disclosure to stockholders focusing on the terms of the
offer and information about the bidder;
|
|
|
|
The ability to allow stockholders to withdraw tendered shares
while the offer remains open;
|
|
|
|
The right to have tendered shares accepted on a pro rata basis
throughout the term of the offer if the offer is for less than
all of our shares; and
|
|
|
|
That all stockholders of the subject class of shares be treated
equally.
|
In addition to the foregoing, there are certain ramifications to
persons should they attempt to conduct a noncompliant tender
offer. If any person initiates a tender offer without complying
with the provisions set forth above, in our sole discretion, we
shall have the right to redeem such noncompliant persons
shares and any shares acquired in such tender offer. The
noncomplying person shall also be responsible for all of our
expenses in connection with that persons noncompliance.
Advance
Notice of Director Nominations and New Business
Our bylaws provide that with respect to an annual meeting of
stockholders, nominations of individuals for election to the
board of directors and the proposal of business to be considered
by stockholders may be made only (i) pursuant to our notice
of the meeting, (ii) by or at the direction of the board of
directors or (iii) by a stockholder who was a stockholder
of record both at the time of giving of the advance notice
required by our bylaws and at the time of the meeting, who is
entitled to vote at the meeting and who has complied with the
advance notice procedures of the bylaws. With respect to special
meetings of stockholders, only the business specified in our
notice of the meeting may be brought before the meeting.
Nominations of individuals for election to the board of
directors at a special meeting may be made only
(i) pursuant to our notice of the meeting, (ii) by or
at the direction of the board of directors, or
(iii) provided that the board of directors has
determined that directors will be elected at the meeting, by a
stockholder who was a stockholder of record both at the time of
giving of the advance notice required by our bylaws and at the
time of the meeting, who is entitled to vote at the meeting and
who has complied with the advance notice provisions of the
bylaws.
158
THE
OFFERING/PLAN OF DISTRIBUTION
The
Offering
We are publicly offering through Carey Financial, our dealer
manager, on a best efforts basis a minimum of $10,000,000 of
shares of common stock consisting of 1,000,000 shares
priced at $10 per share, and a maximum of $1,000,000,000 of
shares of common stock consisting of 100,000,000 shares
priced at $10 per share. There are discounts available for
certain categories of purchasers as described below. No shares
of common stock will be sold and the offering will terminate
unless subscriptions for at least the minimum offering have been
obtained within six months after the date of this prospectus, or
within the Extended Period. Until subscription funds for our
shares total $10,000,000, the funds will be held in escrow by
Wells Fargo, or the Escrow Agent, and thereafter in an interest
bearing account at Bank of the West, and interest earned on such
funds will accrue to the benefit of subscribers as discussed in
Arrangements with Respect to Money Held in
the Escrow Account and the Interest Bearing Account.
Subscription amounts with all interest due will be returned
in the event that a minimum of 1,000,000 shares are not
sold within six months after the date of this prospectus, or
within the Extended Period. We will not charge fees on funds
returned if the minimum offering is not met. Any purchases of
shares by W. P. Carey, Watermark Capital Partners, or their
respective affiliates, any officers or directors of these
entities, or any of our affiliates for the explicit purpose of
meeting the minimum offering amount must be made for investment
purposes only, and not with a view toward redistribution.
However, none of our affiliates expects to purchase any shares
for the purpose of meeting the minimum offering amount. If Carey
Financial purchases any shares in this offering, we will not
count any of the shares purchased by them to reach the minimum
offering amount.
A stockholder may purchase shares in the offering only after
receipt of a prospectus related to the offering. The minimum
order is 200 shares or $2,000. The offering price of $10.00
per share is based solely upon the amount of funds we wish to
raise, divided by the number of shares we have deemed
appropriate for investor liquidity and marketability of the
shares, rather than upon an appraisal of our assets or expected
earnings. The offering price was determined by our board of
directors in the exercise of its business judgment. This price
may not be indicative of the price at which shares would trade
if they were listed on an exchange or actively traded by brokers
nor of the proceeds that a stockholder would receive if we were
liquidated or dissolved.
We have also registered 25,000,000 shares ($237,500,000)
available to stockholders who elect to participate in the
distribution reinvestment plan who receive a copy of this
prospectus or a separate prospectus for such plan. We reserve
the right to reallocate the shares of common stock we are
offering between the primary offering and our distribution
reinvestment plan. The shares purchased through our distribution
reinvestment plan will initially be purchased at a price of
$9.50 per share. Once we establish an estimated net asset value
per share that is not based on the price to acquire a share in
the primary offering or a follow-on public offering, the price
of shares issued pursuant to our dividend reinvestment plan will
be based upon the estimated net asset value per share of our
common stock, as determined by our advisor or another firm
chosen for that purpose, less administrative fees. We expect to
establish an estimated net asset value per share not based on
the price to acquire a share in the primary offering or a
follow-on public offering upon the completion of our offering
stage. We will consider our offering stage complete when we are
no longer engaged in public equity offerings whether
through this offering or a follow-on public offering
and have not done so for 18 months. For purposes of
determining the completion of our offering stage, we do not
consider public equity offerings to include
offerings on behalf of selling stockholders or offerings related
to any distribution reinvestment plan, employee benefit plan or
the redemption of interests in our operating partnership.
Subject to the receipt of the minimum subscriptions set forth
above, the primary offering of shares of our common stock will
terminate on or
before , 2012,
which is two years after the effective date of this offering.
However, our board of directors may extend the offering an
additional
159
year. If we extend the offering for another year and file
another registration statement during the one-year extension in
order to sell additional shares, we could continue to sell
shares in this offering until the earlier of 180 days after
the third anniversary of the effective date of this offering or
the effective date of the subsequent registration statement. If
we decide to extend the primary offering
beyond , 2012, we will provide that
information in a prospectus supplement. If we file a subsequent
registration statement, we could continue offering shares with
the same or different terms and conditions. Nothing in our
organizational documents prohibits us from engaging in
additional subsequent public offerings of our stock. Our board
of directors may terminate this offering at any time prior to
the termination date.
This offering must be registered in every state, the District of
Columbia and Puerto Rico, in which we offer or sell shares.
Generally, such registrations are for a period of one year.
Thus, we may have to stop selling shares in any state, the
District of Columbia and Puerto Rico, in which our registration
is not renewed annually.
Our shares may also be sold by our officers and directors and
the officers and directors of our advisor without receiving any
selling commission or dealer manager fees, in those states where
they are licensed to do so or are exempt from licensing. All
offers and sales of shares by our officers and directors and
those of our advisor will be made under the safe harbor from
broker-dealer registration provided by SEC
Rule 3a4-1.
Dealer
Manager and Compensation We Will Pay for the Sale of Our
Shares
Our dealer manager is a member firm of FINRA. We have agreed to
indemnify Carey Financial and selected dealers against specified
liabilities, including liabilities under the Securities Act.
Except as provided below, Carey Financial will receive selling
commissions of 7.0% of the gross offering proceeds for shares
sold in our primary offering. Our dealer manager will receive
3.0% of the gross offering proceeds as compensation for acting
as the dealer manager. Reduced selling commissions will be paid
with respect to certain volume discount sales. We do not pay any
selling commissions or dealer manager fees for shares sold under
our friends and family program or our distribution reinvestment
plan, although we will pay administrative fees related to the
purchase of shares through our distribution reinvestment plan.
We will also reimburse our dealer manager for reasonable bona
fide invoiced due diligence expenses as described below.
We expect our dealer manager to authorize other broker-dealers
that are members of FINRA, which we refer to as selected
dealers, to sell our shares. Except as provided below, our
dealer manager will re-allow all of its selling commissions
attributable to a selected dealer.
We may also sell shares at a discount to the primary offering
price of $10.00 per share through the following distribution
channels in the event that the investor:
|
|
|
|
|
pays a broker a single fee, e.g., a percentage of assets under
management, for investment advisory and broker services, which
is frequently referred to as a wrap fee;
|
|
|
|
|
|
engages the services of a registered investment advisor with
whom the investor has agreed to pay compensation for investment
advisory or other financial services, other than a registered
investment advisor that is also registered as a broker dealer
who does not have a wrap fee or similar arrangement with the
investor; or
|
|
|
|
|
|
invests through a bank acting as trustee or fiduciary.
|
If an investor purchases shares through one of these
distribution channels in our primary offering, we will sell the
shares at a 7.0% discount, or at $9.30 per share, reflecting
that selling commissions are not being paid in connection with
such purchases. The net proceeds to us will not be affected by
any such reduction in selling commissions.
160
Neither our dealer manager nor its affiliates will compensate
any person engaged as an investment advisor by a potential
investor as an inducement for such investment advisor to advise
favorably for an investment in us.
The dealer manager may re-allow to a selected dealer a portion
of its dealer manager fee to that selected dealer as a marketing
fee based upon such factors as:
|
|
|
|
|
the volume of sales estimated to be made by the selected
dealer; or
|
|
|
|
the selected dealers agreement to provide one or more of
the following services:
|
|
|
|
|
|
providing internal marketing support personnel and marketing
communications vehicles to assist the dealer manager in our
promotion;
|
|
|
|
responding to investors inquiries concerning monthly
statements, valuations, distribution rates, tax information,
annual reports, reinvestment and redemption rights and
procedures, our financial status and the markets in which we
have invested;
|
|
|
|
assisting investors with redemptions; or
|
|
|
|
providing other services requested by investors from time to
time and maintaining the technology necessary to adequately
service investors.
|
In addition, Carey Financial may reimburse certain of our
selected dealers for:
|
|
|
|
|
technology costs; and
|
|
|
|
other costs and expenses associated with the primary offering,
the facilitation of the marketing of our shares and the
ownership of such shares by our selected dealers customers.
|
These costs will be paid out of the dealer manager fee. There is
a possibility that these reimbursements may cause the aggregate
compensation paid to a particular selected dealer to exceed ten
percent of its sales. For a more complete discussion of all
compensation and fees paid in connection with the offering, see
Management Compensation.
Carey Financial, as our dealer manager, provides services to us,
which include conducting broker-dealer seminars, holding
informational meetings and providing information and answering
any questions concerning this offering. We pay Carey Financial a
dealer manager fee of 3.0% of the gross offering proceeds. In
addition to re-allowing a portion of the dealer manager fee as a
marketing fee to certain selected dealers, the fee will also be
used for certain costs that are viewed by FINRA as included in
the 10% underwriting compensation limit, such as the cost of the
following activities:
|
|
|
|
|
travel and entertainment expenses;
|
|
|
|
compensation of Carey Financials employees in connection
with wholesaling activities;
|
|
|
|
expenses incurred in coordinating broker-dealer seminars and
meetings;
|
|
|
|
wholesaling expense reimbursements paid by Carey Financial or
its affiliates to other entities;
|
|
|
|
the national and regional sales conferences of our selected
dealers;
|
|
|
|
training and education meetings for registered representatives
of our selected dealers; and
|
|
|
|
permissible forms of non-cash compensation to registered
representatives of our selected dealers, such as logo apparel
items and gifts that do not exceed an aggregate value of $100
per annum per registered representative and that are not
pre-conditioned on achievement of a sales target. These gifts
would include, but not be limited to, seasonal gifts.
|
The maximum amount of all items of compensation we may pay to
Carey Financial and the selected dealers is set forth in the
table below. For a complete description of these fees, see
Management Compensation. This table assumes
that all shares are sold through distribution channels
associated with the highest possible selling commissions and
dealer manager fees.
161
Dealer
Manager and Selected Dealer Compensation
|
|
|
|
|
|
|
Maximum Aggregate
|
|
|
Selling Commission (maximum)
|
|
$
|
70,000,000
|
|
Dealer Manager fee (maximum)
|
|
$
|
30,000,000
|
|
|
|
|
|
|
Total
|
|
$
|
100,000,000
|
|
|
|
|
|
|
We will reimburse our dealer manager for reimbursements it may
make to broker-dealers for reasonable bona fide due diligence
expenses incurred which are supported by a detailed and itemized
invoice. Such reimbursements are subject to the limitations on
organization and offering expenses described below.
Under FINRA rules, the total underwriting compensation to be
paid to Carey Financial and selected dealers from any source in
connection with the primary offering, including selling
commissions and the dealer manager fee may not exceed 10% of our
gross offering proceeds from the sale of shares in our primary
offering. Carey Financial and we will monitor the payment of all
fees and expense reimbursements to assure that this 10%
underwriting compensation limit is not exceeded. Our dealer
manager will reimburse us for any underwriting compensation in
excess of FINRAs 10% underwriting compensation limit in
the event the offering is abruptly terminated after reaching the
minimum offering amount, but before reaching the maximum
offering amount.
In addition to the 10% underwriting compensation limit, FINRA
and many states also limit the total organizational and offering
expenses (including selling commissions and the dealer manager
fee) that we may incur to 15% of our gross offering proceeds.
Our advisor has agreed to reimburse any organizational and
offering expenses, excluding selling commissions and the dealer
manager fee that exceed two percent of the gross offering
proceeds. We expect that our total organizational and offering
expenses, including selling commissions and the dealer manager
fee, in connection with the primary offering to be $107,754,000
if the maximum of 100,000,000 shares are sold in the
offering. If we sell the maximum of 125,000,000 shares in
the offering and pursuant to our distribution reinvestment plan,
we expect our organizational and offering expenses to be
approximately $107,754,000. During the course of the offering we
may pay up to 15% of our gross offering proceeds for
organizational and offering expenses (excluding selling
commissions and the dealer manager fee) and at the end of the
offering our advisor will reimburse us so that our
organizational and offering expenses (excluding selling
commissions and the dealer manager fee) do not exceed 2% of the
gross offering proceeds in the primary offering.
Certain of the selected dealers and their affiliates we may
engage to offer our shares to the public have from time to time
provided, and may in the future provide, general financing,
banking and advisory services to our advisor and its affiliates
for customary fees. In addition, certain of the selected dealers
and their affiliates we may engage to offer our shares to the
public may also provide general financing and banking services
to us for customary fees.
Volume
Discounts
We will offer a reduced share purchase price in the offering to
single purchasers on orders of more than $500,000 made through
the same selected dealer, which we refer to in this prospectus
as volume discounts. Volume discounts are not
applicable to shares purchased pursuant to our distribution
reinvestment plan. Selling commissions paid to Carey Financial
and selected dealers will be reduced by the amount of the
discount. The share purchase price will be reduced for each
incremental share purchased in the total volume ranges set forth
in the table below.
162
|
|
|
|
|
|
|
|
|
|
|
Selling Commission
|
|
|
|
|
Per Share For
|
|
|
Dollar Volume of Shares Purchased
|
|
Incremental Share
|
|
|
For A Single
|
|
in Volume Discount
|
|
Purchase Price
|
Purchaser
|
|
Range
|
|
Per Share to Investors
|
|
$2,000 $500,000
|
|
|
$0.70
|
|
|
|
$10.00
|
|
500,001 1,000,000
|
|
|
$0.60
|
|
|
|
9.90
|
|
1,000,001 2,000,000
|
|
|
$0.50
|
|
|
|
9.80
|
|
2,000,001 3,000,000
|
|
|
$0.40
|
|
|
|
9.70
|
|
3,000,001 5,000,000
|
|
|
$0.30
|
|
|
|
9.60
|
|
For example, a single purchaser would receive
55,050.5051 shares rather than 55,000 shares for an
investment of $550,000 and the selling commission would be
$38,030. The discount would be calculated as follows: On the
first $500,000 of the investment there would be no discount and
the purchaser would receive 50,000 shares at $10 per share.
On the remaining $50,000, the per share price would be $9.90 and
the purchaser would receive 5,050.5051 shares.
For purposes of determining investors eligible for volume
discounts, investments made by accounts with the same primary
account holder, as determined by the account tax identification
number, may be combined. This includes individual accounts and
joint accounts that have the same primary holder as any
individual account. Investments made through individual
retirement accounts may also be combined with accounts that have
the same tax identification number as the beneficiary of the
individual retirement account.
An investor may accomplish this instruction by checking the
appropriate box and providing requested information under the
Investment section of our order form. To the extent
an investor qualified for a volume discount on a particular
purchase, any subsequent purchase, regardless of the number of
shares subscribed for in that purchase (other than through the
distribution reinvestment plan), will also qualify for that
volume discount or, to the extent the subsequent purchase when
aggregated with the prior purchase(s) qualifies for a greater
volume discount, such greater discount. For example, if an
initial purchase is for $450,000, and a second purchase is for
$80,000, then the first $50,000 of the second purchase will be
priced at $10.00 per share and the remaining $30,000 of the
second purchase will be priced at $9.90 per share. Any request
to treat a subsequent purchase cumulatively for purposes of the
volume discount must be made in writing and will be subject to
our verification that all of the orders were made by a single
purchaser.
In the event orders are combined, the commission payable with
respect to the subsequent purchase of shares will equal the
commission per share which would have been payable in accordance
with the commission schedule set forth above if all purchases
had been made simultaneously. Any reduction of the 7.0% selling
commission otherwise payable to Carey Financial or a selected
dealer will be credited to the purchaser as additional shares.
Unless investors indicate that orders are to be combined and
provide all other requested information, we cannot be held
responsible for failing to combine orders properly.
The volume discount will be prorated among the separate accounts
considered to be a single purchaser. The amount of total
commissions thus computed will be apportioned pro rata
among the individual orders on the basis of the respective
amounts of the orders being combined. Shares purchased pursuant
to our distribution reinvestment plan on behalf of a participant
in the plan will not be combined with other subscriptions for
shares by the participant.
Any reduction in selling commissions will reduce the effective
purchase price per share to the investor involved but will not
alter the proceeds available to us with which to acquire
properties or use for other corporate purposes. All investors
will be deemed to have contributed the same amount per share to
us whether or not the investor receives a discount. Accordingly,
for purposes of distributions, investors who pay reduced selling
commissions will receive higher returns on their investments in
us as compared to investors who do not pay reduced selling
commissions.
163
Selling commissions for purchases of more than $5 million
are negotiable. Selling commissions paid will in all cases be
the same for the same level of sales and once a price is
negotiated with the initial purchaser this will be the price for
all purchases at that volume. In the event of a sale of more
than $5 million, we will supplement this prospectus to
include:
|
|
|
|
|
the aggregate amount of the sale;
|
|
|
|
the price per share paid by the purchaser; and
|
|
|
|
a statement that other similar investors wishing to purchase at
that volume of securities will pay the same price for that
volume of securities.
|
California residents should be aware that volume discounts will
not be available in connection with the sale of shares made to
California residents to the extent such discounts do not comply
with the provisions of Rule 260.140.51 adopted pursuant to
the California Corporate Securities Law of 1968. Pursuant to
this rule, volume discounts can be made available to California
residents only in accordance with the following conditions:
|
|
|
|
|
there can be no variance in the net proceeds to us from the sale
of the shares to different purchasers of the same offering;
|
|
|
|
|
|
all purchasers of the shares must be informed of the
availability of quantity discounts;
|
|
|
|
|
|
the same volume discounts must be allowed to all purchasers of
shares which are part of the offering;
|
|
|
|
|
|
the minimum amount of shares as to which volume discounts are
allowed cannot be less than $10,000;
|
|
|
|
|
|
the variance in the price of the shares must result solely from
a different range of commissions, and all discounts must be
based on a uniform scale of commissions; and
|
|
|
|
|
|
no discounts are allowed to any group of purchasers.
|
Accordingly, volume discounts for California residents will be
available in accordance with the foregoing table of uniform
discount levels based on dollar volume of shares purchased, but
no discounts are allowed to any group of purchasers, and no
subscriptions may be aggregated as part of a combined order for
purposes of determining the number of shares purchased.
Shares Purchased
by Broker-Dealers Participating in the Offering and our
Affiliates
We may sell shares to selected dealers, their retirement plans,
their representatives and the family members, IRAs and the
qualified plans of their representatives at a purchase price of
$9.30 per share, which is net of the selling commissions. For
purposes of this discount, we consider a family member to be a
spouse, parent, child, sibling, cousin, mother- or
father-in-law,
son- or
daughter-in-law
or brother- or
sister-in-law.
The net offering proceeds we receive will not be affected by the
discounted sales price of such shares.
Our officers and directors and their family members, as defined
above, as well as our advisor and its affiliates and the
officers, directors, and employees of our advisor and its
affiliates and their family members and if approved by our
board, consultants, may purchase directly from us shares offered
in this offering at $9.00 per share, which is net of all selling
commissions and the dealer manager fee. Except for certain share
ownership and transfer restrictions contained in our charter,
there is no limit on the number of shares that may be sold to
such persons. The net offering proceeds we receive will not be
affected by the reduced sales price of such shares. Such persons
shall be expected to hold their shares purchased as stockholders
for investment and not with a view towards distribution.
164
Investments
through IRA Accounts
We may retain a custodian to act as an IRA custodian for our
stockholders who desire to establish an IRA, SEP or certain
other tax-deferred accounts or transfer or rollover existing
accounts.
Other
Sales
From time to time, we or our operating partnership may sell
equity securities to institutional investors. We may sell shares
of our common stock directly to institutional investors in this
offering or we and our operating partnership may sell equity
interests in other public offerings or private placement
transactions. Such sales may be based upon the price at which
shares of common stock are being sold in this offering, or they
may be at negotiated prices and on terms that are different from
the terms of this offering. We may pay commissions to placement
agents, selected dealers, brokers and our dealer manager in
connection with such transactions that are different from the
dealer manager fees and selling commissions described above. In
the event of a sale to an institution in this offering at a
negotiated price, then we will supplement this prospectus to
include:
|
|
|
|
|
the aggregate amount of the sale;
|
|
|
|
the price per share paid by the institution; and
|
|
|
|
a statement that other similar institutions wishing to purchase
at that volume of securities will pay the same price for that
volume of securities.
|
For a summary of certain U.S. federal income tax
consequences of the acquisition, ownership and disposition of
our common shares applicable to
non-U.S. stockholders
of our common shares, see United States Federal Income
Tax Considerations Taxation of
Non-U.S. Stockholders.
Arrangements
with Respect to Money Held in the Escrow Account and the
Interest-Bearing Account
Until the subscription proceeds equal $10,000,000, all funds
received by the Escrow Agent from the dealer manager and
selected dealers in connection with orders will be promptly
deposited in an interest-bearing escrow account with the Escrow
Agent, Wells Fargo, at our expense until these funds are
released as described below. Payment for shares is to be sent to
the Escrow Agent. After subscription proceeds exceed
$10,000,000, the funds, will be deposited into an interest
bearing account at Bank of the West. Each of Wells Fargo and
Bank of the West will be given the right to invest funds in
U.S. government securities, certificates of deposit or
other time or demand deposits of commercial banks with a net
worth of $100,000,000 or in which the certificates or deposits
are fully insured by any federal or state government agency or
any other investment that meets the requirements of 15c2-4.
As soon as practicable after the date a stockholder is admitted
to CWI, we will pay to such stockholder whose funds had been
held in escrow for at least 20 days, its share of interest
earned. Interest, if any, earned on funds held in escrow will be
payable to you only if your funds have been held in escrow by
the Escrow Agent for at least 20 days or more from the date
of receipt of the funds by the Escrow Agent. You will not
otherwise be entitled to interest earned on funds held by the
Escrow Agent. Interest earned, but not payable to you, will be
paid to us. After the initial admission of stockholders in
connection with the sale of the minimum offering amount, it is
our intention to admit stockholders generally every 20 days
or sooner and pay interest to those stockholders whose funds
have been held in the interest-bearing account maintained by
Bank of the West for at least 20 days. You will not
otherwise be entitled to interest earned on funds held in the
interest-bearing account at Bank of the West. Interest earned,
but not payable to you, will be paid to us.
We may not transfer your funds to us until at least five
business days have passed since you received a final prospectus.
The sale of shares pursuant to the order form will not be
complete until we issue a written confirmation of purchase to
you. While your funds are held in escrow or in the
165
interest-bearing account and at any time prior to the date the
sale is completed, you may withdraw your order by notifying your
broker-dealer.
Special
Notice to Pennsylvania Investors
Because the minimum offering of our common stock is less than
$100,000,000, we caution you to carefully evaluate our ability
to fully accomplish our stated objectives and to inquire as to
the current dollar volume of our subscription proceeds.
Notwithstanding our $10,000,000 minimum offering amount for all
other jurisdictions, we will not sell any shares to Pennsylvania
investors unless we raise a minimum of $33,333,334 in gross
offering proceeds (including sales made to residents of other
jurisdictions) prior
to ,
2012. In the event we do not raise gross offering proceeds of
$33,333,334
by ,
2012, we will promptly return all funds held in escrow for the
benefit of Pennsylvania investors (in which case, Pennsylvania
investors will not be required to request a refund of their
investment). Pending satisfaction of this condition, all
Pennsylvania subscription payments will be placed in a separate
account held by the Escrow Agent in trust for Pennsylvania
subscribers benefit, pending release to us.
If we have not reached this $33,333,334 threshold within
120 days of the date that we first accept a subscription
payment from a Pennsylvania investor, we will, within
10 days of the end of that
120-day
period, notify Pennsylvania investors in writing of their right
to receive refunds, with interest. If a Pennsylvania investor
requests a refund within 10 days of receiving that notice,
we will arrange for the Escrow Agent to promptly return by check
that investors subscription amount with interest. Amounts
held in the Pennsylvania escrow account from Pennsylvania
investors not requesting a refund will continue to be held for
subsequent
120-day
periods until we raise at least $33,333,334 or until the end of
the subsequent escrow periods. At the end of each subsequent
120-day
period, we will again notify each Pennsylvania investor of his
or her right to receive a refund of his or her subscription
amount with interest. Until we have raised $33,333,334,
Pennsylvania investors should make their checks payable to
Wells Fargo Bank, National Association, as Escrow Agent
for Carey Watermark Investors Incorporated. Once we have
reached the Pennsylvania minimum, Pennsylvania investors should
make their checks payable to Carey Watermark Investors
Incorporated.
REPORTS
TO STOCKHOLDERS
We will provide periodic reports to stockholders regarding our
operations over the course of the year. Financial information
contained in all reports to stockholders will be prepared on the
accrual basis of accounting in accordance with accounting
principles generally accepted in the United States. Tax
information will be mailed to the stockholders by January 31 of
each year. Our annual report, which will include financial
statements audited and reported upon by independent public
accountants, will be furnished within 120 days following
the close of each fiscal year, or such shorter period (but not
less than 90 days) as may be required by law. Our quarterly
report on
Form 10-Q
will be furnished within 45 days after the close of each
quarterly fiscal period, or such shorter period as may be
required by law. The annual financial statements will contain or
be accompanied by a complete statement of transactions with W.
P. Carey or Watermark Capital Partners or their affiliates and
of compensation and fees paid or payable by us to our advisor
and its affiliates. The annual report will also contain an
estimated value per share, the method by which that value was
determined, and the date of the data used to develop the
estimated value. We expect that we will commence an estimation
of the value per share of our common stock beginning no later
than the end of the third full calendar year after the final
closing of this offering.
If a distribution is not being funded from cash flow from
operating activities, our stockholders resident in Arizona, New
York and Maryland will be provided disclosure along with the
distribution check that provides the percentage and dollar
amount that is being funded from cash flow from
166
operating activities and the percentage and dollar amount that
is being funded by offering proceeds or borrowings.
We may also receive requests from stockholders and their
advisors to answer specific questions and report to them
regarding our operations over the course of the year utilizing
means of communication in addition to the periodic written
reports referred to in the previous paragraph. Personnel from
our dealer manager and our advisors investor relations
group will endeavor to meet any such reasonable request
electronically or in person. We expect that the costs not
material to our total operation budget will be incurred to
provide this stockholder service.
Investors have the right under applicable federal and Maryland
laws to obtain information about us and, at their expense, may
obtain a list of names and addresses of all of the stockholders
under certain conditions. See Description of
Shares Meetings and Special Voting
Requirements. Stockholders also have the right to
inspect and duplicate our appraisal records. In the event that
the SEC promulgates rules
and/or in
the event that the applicable guidelines of the North American
Securities Administrators Association, Inc., are amended so
that, taking these changes into account, our reporting
requirements are reduced, we may cease preparing and filing some
of the aforementioned reports if the directors determine this
action to be in the best interest of us and if this cessation is
in compliance with the rules and regulations of the commission
and state securities law and regulations, both as then amended.
LEGAL
OPINIONS
Certain legal matters, including the legality of the shares,
will be passed upon for us by Clifford Chance US LLP,
31 West 52nd Street, New York, New York 10019 and
Venable LLP, 750 E. Pratt Street, Suite 900,
Baltimore, MD 21202.
EXPERTS
To be added by amendment. As of the date of this filing, the
entity has not commenced operations and has nominal assets and
liabilities.
SALES
LITERATURE
In addition to and apart from this prospectus, we will use sales
material in connection with this offering. This material may
include, but is not limited to, the following:
|
|
|
|
|
an investor sales promotion brochure;
|
|
|
|
prospecting letters or mailers and seminar invitations;
|
|
|
|
media advertising inviting seminar attendance;
|
|
|
|
a brochure describing the investment committee;
|
|
|
|
information on a website;
|
|
|
|
a presentation using a computer;
|
|
|
|
reprints of articles about us or the lodging industry;
|
|
|
|
a fact sheet describing acquisitions;
|
|
|
|
a slide presentation and studies of the prior performance of
entities managed by our advisor, the subadvisor
and/or their
respective affiliates;
|
|
|
|
broker-dealer updates;
|
|
|
|
an electronic media presentation;
|
167
|
|
|
|
|
a video presentation;
|
|
|
|
a cd-rom presentation;
|
|
|
|
a script for telephonic marketing; and
|
|
|
|
certain third party articles.
|
In some jurisdictions the sales material will not be available.
Other than as described herein, we have not authorized the use
of other sales material. This offering is made only by means of
this prospectus. Although the information contained in the
material will not conflict with any of the information contained
in this prospectus, the material does not purport to be complete
and should not be considered as a part of this prospectus or the
registration statement of which this prospectus is a part, or as
incorporated in this prospectus or said registration statement
by reference, or as forming the basis of this offering.
FURTHER
INFORMATION
We have filed a registration statement on
Form S-11
with the SEC with respect to the shares of common stock to be
issued in this offering. This prospectus is a part of that
registration statement and, as permitted by SEC rules, does not
include all of the information you can find in the registration
statement or the exhibits to the registration statement. You may
read and copy our registration statement and all of its
exhibits, which we have filed, at the SECs Public
Reference Room in Washington, D.C. at
100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at
1-800-SEC-0330
for further information about operation of the Public Reference
Room. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information
regarding issuers that file electronically with the SEC,
including us. The address of this website is
http://www.sec.gov.
All summaries contained herein of documents which are filed as
exhibits to the registration statement are qualified in their
entirety by this reference to those exhibits. We have not
knowingly made any untrue statement of a material fact or
omitted to state any fact required to be stated in the
registration statement, including this prospectus, or necessary
to make the statements therein not misleading.
168
CAREY
WATERMARK INVESTORS INCORPORATED
BALANCE
SHEET
As
of ,
2010
To be added by amendment. As of the date of this filing, the
entity has not commenced operations and has nominal assets and
liabilities.
F-3
CAREY
WATERMARK INVESTORS INCORPORATED
NOTES TO
BALANCE SHEET
To be added by amendment. As of the date of this filing, the
entity has not commenced operations and has nominal assets and
liabilities.
F-4
ANNEX A
PRIOR PERFORMANCE TABLES
The information presented in the following tables in this
Annex A represents the historical experience of the prior
programs (the Prior Programs) sponsored by
affiliates of W. P. Carey and the record of the Prior Programs
in meeting their investment objectives.
These tables are as follows:
Table II Compensation to Advisor
Table III Operating Results of Prior Programs
Table IV Results of Completed Programs
Table V Sales or Dispositions of Properties
Persons who purchase shares in Carey Watermark Investors
Incorporated will not thereby acquire any ownership interest in
any of the Prior Programs to which these tables relate. It
should not be assumed that investors in Carey Watermark
Investors Incorporated will experience results comparable to
those experienced by investors in the Prior Programs. Carey
Watermark Investors Incorporated will not make investments
comparable to those made by the Prior Programs. Specifically,
none of the Prior Programs included in Annex A or in Table
VI of Part II of the Registration Statement of which this
prospectus is a part, held significant investments in lodging
properties. Neither Carey Watermark Investors Incorporated nor
any of the other Prior Programs is a mutual fund or any other
type of investment company within the meaning of the Investment
Company Act of 1940 or subject to regulations thereunder. See
Prior Programs elsewhere in this prospectus.
The investment objective of Carey Watermark Investors
Incorporated is similar to those of the Prior Programs because
it intends to invest in real estate and real estate related
assets. However, while the Prior Programs were focused on making
triple net-leased investments, Carey Watermark Investors
Incorporated expects to make investments in lodging properties
and lodging related assets.
A more detailed description of the acquisitions by the Prior
Programs is set forth in Table VI Acquisition of
Properties by
CPA®:14,
CPA®:15,
CPA®:16
Global and CPA:17 Global, included in Part II
of the Registration Statement to which this prospectus relates
and is available from W. P. Carey upon request to the Director
of Investor Relations, 50 Rockefeller Plaza, New York, NY 10020,
(800)-WP-CAREY, free of charge. In addition, upon request to W.
P. Carey, it will provide, without charge, a copy of the most
recent Annual Report on
Form 10-K
filed with the SEC for
CPA®:14,
CPA®:15,
CPA®:16
Global and
CPA®:17
Global, as well as a copy, for a reasonable fee, of the exhibits
filed with such reports.
The following are definitions of certain terms used throughout
the Prior Performance Tables:
Acquisition Fees means the fees and commissions paid
to the advisor in connection with structuring and negotiating
investments and related mortgage financing.
GAAP means accounting principles generally accepted
in the United States of America.
Total Acquisition Cost represents the contract
purchase price plus acquisition fees and other prepaid costs
related to the purchase of investments.
Unless otherwise indicated in the tables, all information
contained in the following tables reflects historical
information of the Prior Programs as of the dates, and for the
periods, presented. Since December 31, 2007, certain of the
Prior Programs have engaged, and in the future may engage, in
dispositions of assets that may result in such Prior Programs
having to retrospectively adjust their financial results for
prior periods to reflect the assets sold or held for sale as
discontinued operations pursuant to current authoritative
accounting guidance. The following tables do not give effect to
any such restatements by the Prior Programs, with the exception
of Table III, which reflects the
A-1
retrospective adjustment of the operating results of
CPA®:16
Global for the years ended December 31, 2005, 2006, 2007,
2008 and 2009 for the disposition of assets during 2009.
TABLE
II
Compensation to Advisor as of December 31,
2009(1)
Table II provides information as to Prior Programs that
will enable an investor to understand the significance of
compensation paid to the advisor and its affiliates, as well as
to understand how the compensation is spread over the cycle of
the programs. The information presented below is for
compensation paid on Prior Programs, the primary offerings of
which have closed since January 1, 2007, as well as
compensation paid on all other Programs during the three-year
period ended December 31, 2009.
The information presented in this table should not be
considered as indicative of the compensation that will be
received by the advisor and affiliates of the advisor. The
compensation payable to the advisor and affiliates of the
CPA®
Programs differs from the entitlement and allocation of
compensation to the advisor and affiliates of the advisor. See
Management Compensation and Estimated Use of
Proceeds. Purchasers of shares offered by this prospectus
will not have any ownership in the
CPA®
Programs:
|
|
|
|
|
|
|
Other
Programs(2)
|
|
|
Date offering(s) commenced
|
|
|
Feb-1994 - Nov-2007
|
|
Dollar amount raised (net of discounts and individual advisor
contributions)
|
|
$
|
3,584,695,797
|
|
Amount to be paid to advisor from proceeds of offering:
|
|
|
|
|
Underwriting
fees(3)
|
|
|
36,980,634
|
|
Acquisition fees real estate commissions and
mortgage placement fees
|
|
|
71,799,836
|
|
Other fees
|
|
|
|
|
Dollar amount of cash generated from operations before deducting
payments to advisor
|
|
|
1,187,084,968
|
|
Amount paid to advisor from operations:
|
|
|
|
|
Asset management fees
|
|
|
227,978,326
|
|
Reimbursements
|
|
|
27,364,296
|
|
Other (cash distributions to advisor)
|
|
|
|
|
Dollar amount of property sales and refinancing before deducting
payments to
advisor(4)
|
|
|
358,007,611
|
|
Amount paid to sponsor from property sales and refinancing:
|
|
|
|
|
Other(5)
|
|
|
1,808,782
|
|
FOOTNOTES
|
|
|
(1)
|
|
The amounts in this table relating
to proceeds of the offerings are cumulative and are as of
December 31, 2009 and the amounts relating to cash
generated from operations, property sales and refinancing are
for the three years ended December 31, 2009.
|
|
(2)
|
|
Represents the following
CPA®
Programs:
CPA®:14,
CPA®:15,
CPA®:16
Global and
CPA®:17
Global.
|
|
(3)
|
|
Includes commissions, selected
dealers and marketing fees and all other costs, including due
diligence costs, relating to the offering of shares. A
substantial portion of costs reimbursed to the advisor and
affiliates are passed through to unaffiliated broker-dealers.
|
|
(4)
|
|
Represents reimbursements of
personnel provided by advisor and its affiliates in connection
with providing management and administrative services.
|
|
(5)
|
|
Represents fees paid to the advisor
in connection with the refinancing of mortgage obligations on
existing properties.
|
A-2
TABLE
III
Operating Results of Prior Programs
Table III includes information showing the operating
results of Prior Programs, the primary offerings of which have
closed subsequent to January 1, 2005. This Table is
designed to provide the investor with information on the
financial operations of such Prior Programs for the five most
recent fiscal years. The results shown in this Table are in all
cases for years ended December 31.
The information in this table should not be considered as
indicative of our possible operations. Purchasers of shares
offered by this prospectus will not have any ownership in the
CPA®
REITs. The
CPA®
REITs may obtain mortgage financing in the future which would
make additional funds available for investment by the funds. Any
additional investment may significantly alter the information
presented in this table.
For more current information on the Prior Programs, please see
their respective Annual Report on
Form 10-K
filed in March 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:16
Global
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
Gross Revenues
|
|
$
|
41,651,003
|
|
|
$
|
67,032,882
|
|
|
$
|
163,028,649
|
|
|
$
|
235,007,595
|
|
|
$
|
236,557,551
|
|
Gain (loss) on sale of properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136,558
|
|
|
|
43,722
|
|
Other(2)
|
|
|
9,605,628
|
|
|
|
19,970,232
|
|
|
|
24,379,873
|
|
|
|
14,263,873
|
|
|
|
20,165,871
|
|
Unrealized gains
(losses)(3)
|
|
|
(125,177
|
)
|
|
|
179,156
|
|
|
|
2,701,405
|
|
|
|
(3,366,870
|
)
|
|
|
(377,725
|
)
|
Extraordinary (charge) gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
charge(4)
|
|
|
(301,995
|
)
|
|
|
|
|
|
|
|
|
|
|
(890,000
|
)
|
|
|
(50,857,434
|
)
|
Discontinued operations
|
|
|
199,812
|
|
|
|
225,597
|
|
|
|
715,810
|
|
|
|
1,342,291
|
|
|
|
5,607,353
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(11,890,277
|
)
|
|
|
(17,567,081
|
)
|
|
|
(36,288,884
|
)
|
|
|
(68,633,595
|
)
|
|
|
(68,710,465
|
)
|
Interest expense
|
|
|
(14,959,280
|
)
|
|
|
(24,915,993
|
)
|
|
|
(64,683,811
|
)
|
|
|
(83,837,655
|
)
|
|
|
(81,610,406
|
)
|
Depreciation
|
|
|
(7,253,661
|
)
|
|
|
(12,954,258
|
)
|
|
|
(31,680,793
|
)
|
|
|
(45,708,527
|
)
|
|
|
(47,858,948
|
)
|
Minority Interest
|
|
|
(641,770
|
)
|
|
|
(1,864,970
|
)
|
|
|
(23,967,834
|
)
|
|
|
(27,116,543
|
)
|
|
|
(15,498,799
|
)
|
Net Income (Loss) GAAP Basis
|
|
|
16,284,283
|
|
|
|
30,105,565
|
|
|
|
34,204,415
|
|
|
|
21,197,127
|
|
|
|
(2,539,280
|
)
|
Taxable Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from gain (loss) on sale
|
|
|
(129,051
|
)
|
|
|
(64,093
|
)
|
|
|
3,020,450
|
|
|
|
32,782
|
|
|
|
6,089,797
|
|
from operations
|
|
|
28,391,998
|
|
|
|
34,627,775
|
|
|
|
51,038,971
|
|
|
|
18,403,440
|
|
|
|
15,737,990
|
|
from other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from extraordinary charge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash (used in) generated from operations
|
|
|
40,337,279
|
|
|
|
52,253,862
|
|
|
|
120,985,178
|
|
|
|
117,433,091
|
|
|
|
119,878,313
|
|
Cash generated from sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,185,186
|
|
Cash generated from refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,000,000
|
|
Cash generated from other
|
|
|
|
|
|
|
20,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations, sales, refinancing and other
|
|
|
40,337,279
|
|
|
|
72,253,862
|
|
|
|
120,985,178
|
|
|
|
117,433,091
|
|
|
|
177,063,499
|
|
Less: Cash distributed to investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from operating cash
flow(6)
|
|
|
28,938,863
|
|
|
|
41,227,195
|
|
|
|
72,552,053
|
|
|
|
79,010,411
|
|
|
|
80,982,485
|
|
from sales and refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions
|
|
|
11,398,416
|
|
|
|
31,026,667
|
|
|
|
48,433,125
|
|
|
|
38,422,680
|
|
|
|
96,081,014
|
|
Less: Special items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated (deficiency) after cash distributions and special
items
|
|
|
11,398,416
|
|
|
|
31,026,667
|
|
|
|
48,433,125
|
|
|
|
38,422,680
|
|
|
|
96,081,014
|
|
A-3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CPA®:16
Global
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
Tax and Distribution Data per $1,000 Invested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Income Tax Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income (loss)
|
|
|
51
|
|
|
|
62
|
|
|
|
45
|
|
|
|
16
|
|
|
|
45
|
|
Capital gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nontaxable distributions
|
|
|
7
|
|
|
|
2
|
|
|
|
20
|
|
|
|
50
|
|
|
|
20
|
|
Cash Distributions to Investors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source (on GAAP basis):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
29
|
|
|
|
40
|
|
|
|
29
|
|
|
|
17
|
|
|
|
29
|
|
Return of capital
|
|
|
29
|
|
|
|
24
|
|
|
|
36
|
|
|
|
49
|
|
|
|
36
|
|
Source (on cash basis):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
58
|
|
|
|
64
|
|
|
|
65
|
|
|
|
66
|
|
|
|
65
|
|
Amount (in percentage terms) remaining invested in program
properties at the end of the last year reported in the Table
(original total acquisition cost of properties retained divided
by original total acquisition cost of all properties in program)
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
97
|
%
|
FOOTNOTES
|
|
|
(1)
|
|
Comprised primarily of results of
equity investments income (loss), interest income and realized
gains (losses) on settlement of foreign currency intercompany
transactions.
|
|
(2)
|
|
Unrealized gains (losses) are
comprised primarily of unrealized gains (losses) on derivative
instruments, warrants and foreign currency intercompany
transactions scheduled for settlement.
|
|
|
|
(3)
|
|
Impairment charges are comprised
primarily of a write down of Clean Earth Kentucky, LLC warrants
(2005); write downs of Polestar Petty Ltd. and Willy Voit
GmbH & Co. Stanz-und Metallwerk properties (2008); and
write downs of Görtz & Schiele GmbH &
Co., Goertz & Schiele Corp., Foss Manufacturing
Company LLC, John McGavigan Limited, Metals America Inc., and
Valley Diagnostic Properties (2009).
|
|
|
|
(4)
|
|
To the extent cash
distribution to investors from operating cash flow exceeds
cash generated from operations in any given year,
such excess represents the distribution of cash generated from
partnership operations in prior years that has not previously
been distributed.
|
A-4
TABLE
IV
Results of Completed Programs
Table IV provides information on Prior Programs that have
completed operations since January 1, 2005.
The information presented in this table should not be
considered as indicative of our possible operations.
|
|
|
|
|
|
|
|
|
|
|
CIP®
|
|
|
CPA®:12
|
|
Dollar Amount Raised
|
|
$
|
141,676,000
|
|
|
$
|
283,344,510
|
|
Number of Properties Purchased
|
|
|
104
|
|
|
|
125
|
|
Date of Closing of Offering
|
|
|
Aug-93
|
|
|
|
Sep-97
|
|
Date of First Sale of Property
|
|
|
Nov-94
|
|
|
|
Jul-99
|
|
Date of Final Sale of
Property(1)(2)
|
|
|
Sep-04
|
|
|
|
Dec-06
|
|
Tax and Distribution Data per $1,000 Investment Through Federal
Income Tax Results:
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
$
|
650
|
|
|
$
|
716
|
|
Capital gain
|
|
|
212
|
|
|
|
75
|
|
Other
|
|
|
432
|
|
|
|
528
|
|
Cash Distributions to Investors Source (on GAAP basis)
|
|
|
|
|
|
|
|
|
Investment Income
|
|
|
770
|
|
|
|
794
|
|
Return of Capital
|
|
|
563
|
|
|
|
525
|
|
Source (on cash basis)
|
|
|
|
|
|
|
|
|
Sales
|
|
|
379
|
|
|
|
319
|
|
Refinancing
|
|
|
|
|
|
|
4
|
|
Operations
|
|
|
954
|
|
|
|
996
|
|
FOOTNOTES
|
|
|
(1)
|
|
Date of merger of
CIP®
and
CPA®:15.
Shares of
CIP®
were converted to shares of
CPA®:15.
|
|
(2)
|
|
Date of merger of
CPA®:12
and
CPA®:14.
Shares of
CPA®:12
were converted to shares of
CPA®:14.
|
A-5
TABLE
V
Sales or Dispositions of Properties as of December 31,
2009
Table V provides information on the sales and dispositions of
property held by Prior Programs since January 1, 2007.
The information in this table should not be considered as
indicative of our possible performance. Purchasers of the shares
offered by this prospectus will not have any ownership in the
CPA®
REITs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling Price net of Closing Costs and GAAP Adjustments
|
|
|
Cost of Properties Including Closing and Soft Costs(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Excess
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
money
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
acquisition
|
|
|
(deficiency) of
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
mortgage
|
|
|
resulting
|
|
|
Total
|
|
|
|
|
|
|
|
|
cost, capital
|
|
|
operating
|
|
|
|
|
|
|
|
|
|
received net
|
|
|
Mortgage
|
|
|
taken
|
|
|
from
|
|
|
Proceeds
|
|
|
Original
|
|
|
Original
|
|
|
improvement
|
|
|
receipts over
|
|
|
|
Date
|
|
|
|
|
|
of closing
|
|
|
balance at
|
|
|
back
|
|
|
application
|
|
|
Received
|
|
|
Equity
|
|
|
mortgage
|
|
|
closing and
|
|
|
cash
|
|
Property
|
|
acquired
|
|
|
Date of sale
|
|
|
costs
|
|
|
time of sale
|
|
|
by program
|
|
|
of GAAP
|
|
|
From Sale
|
|
|
Investment
|
|
|
financing
|
|
|
soft costs
|
|
|
expenditures(2)
|
|
|
PW Eagle, Inc.(3)
|
|
|
Feb-02
|
|
|
|
Jan-07
|
|
|
|
845,106
|
|
|
|
1,004,894
|
|
|
|
|
|
|
|
None
|
|
|
|
1,850,000
|
|
|
|
6,038,042
|
|
|
|
8,200,000
|
|
|
|
14,238,042
|
|
|
|
|
|
Marcourt Investments Inc.(4)
|
|
|
Jan-92
|
|
|
|
Oct-07
|
|
|
|
39,487,192
|
|
|
|
3,847,026
|
|
|
|
|
|
|
|
None
|
|
|
|
43,334,218
|
|
|
|
3,037,712
|
|
|
|
8,938,000
|
|
|
|
11,975,712
|
|
|
|
3,908,539
|
|
Starmark Holdings LLC(5)
|
|
|
Feb-03
|
|
|
|
Oct-07
|
|
|
|
41,448,846
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
41,448,846
|
|
|
|
20,200,431
|
|
|
|
16,961,124
|
|
|
|
37,161,555
|
|
|
|
9,479,153
|
|
Starmark Holdings LLC(6)
|
|
|
Nov-03
|
|
|
|
Nov-07
|
|
|
|
19,007,521
|
|
|
|
14,874,525
|
|
|
|
|
|
|
|
None
|
|
|
|
33,882,046
|
|
|
|
12,772,251
|
|
|
|
15,500,000
|
|
|
|
28,272,251
|
|
|
|
5,324,959
|
|
Collins & Aikman Corporation(7)
|
|
|
Oct-01
|
|
|
|
Dec-07
|
|
|
|
5,006,175
|
|
|
|
5,692,563
|
|
|
|
|
|
|
|
None
|
|
|
|
10,698,738
|
|
|
|
3,324,230
|
|
|
|
6,309,278
|
|
|
|
9,633,508
|
|
|
|
2,351,457
|
|
Textron, Inc.(8)
|
|
|
Feb-99
|
|
|
|
Dec-07
|
|
|
|
23,570,646
|
|
|
|
12,141,060
|
|
|
|
|
|
|
|
None
|
|
|
|
35,711,706
|
|
|
|
14,480,934
|
|
|
|
12,630,755
|
|
|
|
27,111,689
|
|
|
|
9,796,001
|
|
Meadowbrook Meat Company, Inc.(9)
|
|
|
Dec-02
|
|
|
|
Apr-08
|
|
|
|
450,406
|
|
|
|
559,594
|
|
|
|
|
|
|
|
None
|
|
|
|
1,010,000
|
|
|
|
403,695
|
|
|
|
600,000
|
|
|
|
1,003,695
|
|
|
|
226,077
|
|
Earle M. Jorgensen Company(10)
|
|
|
Sep-00
|
|
|
|
Jun-08
|
|
|
|
6,427,548
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
6,427,548
|
|
|
|
2,639,791
|
|
|
|
3,800,000
|
|
|
|
6,439,791
|
|
|
|
2,787,310
|
|
Worthington Precision Metals, Inc.(11)
|
|
|
Apr-04
|
|
|
|
Oct-08
|
|
|
|
2,184,356
|
|
|
|
1,950,351
|
|
|
|
|
|
|
|
None
|
|
|
|
4,134,707
|
|
|
|
1,199,041
|
|
|
|
2,148,200
|
|
|
|
3,347,241
|
|
|
|
966,011
|
|
Warehouse Associates, L.P.(12)
|
|
|
Mar-91
|
|
|
|
Dec-08
|
|
|
|
(692,681
|
)
|
|
|
7,514,286
|
|
|
|
|
|
|
|
None
|
|
|
|
6,821,605
|
|
|
|
3,100,000
|
|
|
|
7,650,000
|
|
|
|
10,750,000
|
|
|
|
6,434,110
|
|
Nexpak B.V.(13)
|
|
|
Jun-01
|
|
|
|
Dec-08
|
|
|
|
2,024,362
|
|
|
|
6,474,308
|
|
|
|
|
|
|
|
None
|
|
|
|
8,498,670
|
|
|
|
894,638
|
|
|
|
4,550,388
|
|
|
|
5,445,026
|
|
|
|
3,350,109
|
|
Moonlight Molds(14)
|
|
|
Jul-99
|
|
|
|
Feb-09
|
|
|
|
977,510
|
|
|
|
2,675,875
|
|
|
|
|
|
|
|
None
|
|
|
|
3,653,385
|
|
|
|
3,282,723
|
|
|
|
3,000,000
|
|
|
|
6,282,723
|
|
|
|
1,017,541
|
|
American Pad & Paper LLC(15)
|
|
|
Aug-03
|
|
|
|
Mar-09
|
|
|
|
2,183,538
|
|
|
|
1,982,045
|
|
|
|
|
|
|
|
None
|
|
|
|
4,165,583
|
|
|
|
1,787,589
|
|
|
|
1,982,045
|
|
|
|
3,769,634
|
|
|
|
504,480
|
|
Career Education Corporation(16)
|
|
|
May-02
|
|
|
|
May-09
|
|
|
|
22,275,606
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
22,275,606
|
|
|
|
7,202,203
|
|
|
|
12,500,000
|
|
|
|
19,702,203
|
|
|
|
6,033,319
|
|
Thales S.A.(17)
|
|
|
Jul-04, Aug-04
|
|
|
|
Jul-09
|
|
|
|
197,049
|
|
|
|
46,457,126
|
|
|
|
|
|
|
|
None
|
|
|
|
46,654,175
|
|
|
|
19,897,502
|
|
|
|
54,022,254
|
|
|
|
73,919,756
|
|
|
|
9,262,455
|
|
Holopack International Corp.(18)
|
|
|
Mar-07
|
|
|
|
Jul-09
|
|
|
|
26,233,615
|
|
|
|
24,446,889
|
|
|
|
|
|
|
|
None
|
|
|
|
50,680,504
|
|
|
|
18,570,314
|
|
|
|
26,000,000
|
|
|
|
44,570,314
|
|
|
|
2,940,210
|
|
Metals America, Inc.(19)
|
|
|
Feb-05
|
|
|
|
Aug-09
|
|
|
|
(2,228,477
|
)
|
|
|
3,528,477
|
|
|
|
|
|
|
|
None
|
|
|
|
1,300,000
|
|
|
|
3,443,080
|
|
|
|
4,000,000
|
|
|
|
7,443,080
|
|
|
|
1,062,614
|
|
Shires Limited(20)
|
|
|
Apr-03
|
|
|
|
Sep-09, Oct-09
|
|
|
|
624,209
|
|
|
|
14,080,223
|
|
|
|
|
|
|
|
None
|
|
|
|
14,704,432
|
|
|
|
11,720,131
|
|
|
|
23,493,371
|
|
|
|
35,213,502
|
|
|
|
8,595,599
|
|
Southwest Convenience Stores, LLC(21)
|
|
|
Jul-06
|
|
|
|
Oct-09
|
|
|
|
221,339
|
|
|
|
408,000
|
|
|
|
|
|
|
|
None
|
|
|
|
629,339
|
|
|
|
238,860
|
|
|
|
408,000
|
|
|
|
646,860
|
|
|
|
34,585
|
|
Fraikin SAS(22)
|
|
|
Dec-06
|
|
|
|
Oct-09
|
|
|
|
295,578
|
|
|
|
1,030,572
|
|
|
|
|
|
|
|
None
|
|
|
|
1,326,150
|
|
|
|
293,389
|
|
|
|
946,100
|
|
|
|
1,239,489
|
|
|
|
11,477
|
|
Innovate Holdings Limited(23)
|
|
|
Jan-03
|
|
|
|
Oct-09
|
|
|
|
(554,227
|
)
|
|
|
14,962,420
|
|
|
|
|
|
|
|
None
|
|
|
|
14,408,193
|
|
|
|
6,437,950
|
|
|
|
16,540,050
|
|
|
|
22,978,000
|
|
|
|
840,409
|
|
The Kroger Co.(24)
|
|
|
Feb-92
|
|
|
|
Oct-09, Dec-09
|
|
|
|
4,392,161
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
4,392,161
|
|
|
|
3,147,000
|
|
|
|
|
|
|
|
3,147,000
|
|
|
|
4,797,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
194,377,378
|
|
|
$
|
163,630,234
|
|
|
$
|
|
|
|
|
|
|
|
$
|
358,007,611
|
|
|
$
|
144,111,506
|
|
|
$
|
230,179,565
|
|
|
$
|
374,291,071
|
|
|
$
|
79,723,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A-6
FOOTNOTES
TO TABLE V
|
|
|
(1)
|
|
The term soft costs
refers to miscellaneous closing costs such as accounting fees,
legal fees, title insurance costs and survey costs. Original
equity investment and mortgage financing includes amounts funded
for the initial acquisition plus subsequent capital improvements
and costs funded through equity investments.
|
|
(2)
|
|
Operating receipts include rental
income from the properties as well as certain receipts from the
settlement of bankruptcy claims, where applicable. The net
excess (deficiency) presented is for the entire period the
property was owned. No amounts are presented for partial land
sales since such amounts are negligible.
|
|
(3)
|
|
In February 2002,
CPA®:14
purchased land in West Jordan, Utah net leased to PW Eagle, Inc.
In January 2007,
CPA®:14
sold the land for $1,850,000, net of closing costs and used a
portion of the proceeds to pay an outstanding mortgage
obligation of $1,004,894.
CPA®:14
realized a loss on this sale of $55,500. The property sold
represents a partial land sale and no receipts or expenses have
been separately allocated.
|
|
(4)
|
|
In January 1992, Corporate Property
Associates 10 Incorporated
(CPA®:10)
and
CIP®
acquired a combined 47.35% interest in a real estate investment
trust, Marcourt Investments Incorporated (Marcourt),
which owned 13 domestic properties net leased to Marriott
International, Inc., including a property in Las Vegas, Nevada.
The remaining interest in Marcourt is owned by an unaffiliated
third party. In December 2001, in connection with the merger of
CPA®:10
and
CIP®,
CIP®
acquired
CPA®:10s
interest in Marcourt. In September 2004, in connection with the
merger of
CIP®
and
CPA®:15,
CPA®:15
acquired
CIP®s
interest in Marcourt.
CPA®:15
accounts for its investment in Marcourt under the equity method
of accounting as it does not have a controlling interest but
exerts significant influence. In October 2007, Marcourt sold its
property in Las Vegas for $43,334,218. Marcourt used the
proceeds of the sale, along with capital contributions from
CPA®:15
and the unaffiliated third party, to prepay the outstanding
mortgage obligation of $46,914,949, which was collateralized by
all 13 properties. The amount of the mortgage obligation
attributable to the Las Vegas property was $3,847,026. Marcourt
recognized a gain on this sale of $31,317,035, of which
$14,828,616 was attributable to
CPA®:15.
The amounts in the table above reflect the total results of
solely the Las Vegas property.
|
|
(5)
|
|
In February 2003, through a limited
liability company,
CPA®:12,
CPA®:14
and
CPA®:15
purchased properties in Tampa, Florida and Albuquerque, New
Mexico net leased to Starmark Holdings LLC. In December 2006, in
connection with the merger of
CPA®:12
and
CPA®:14,
CPA®:14
acquired
CPA®:12s
interest in the properties. In October 2007, the limited
liability company sold the properties for $41,448,846, net of
closing costs and recognized a gain on the sale of $12,253,279,
of which $6,938,311 was attributable to
CPA®:14
and $5,314,968 was attributable to
CPA®:15.
The original equity investment and original mortgage financing
shown above reflect the original share of the equity investment
and original share of the mortgage financing acquired by
CPA®:14
and
CPA®:15
in 2003 and the share of the equity investment and mortgage
financing acquired by
CPA®:14
in the merger with
CPA®:12.
|
|
(6)
|
|
In November 2003,
CPA®:15
purchased properties in Atlanta, Georgia and Bel Air, Maryland
net leased to Starmark Holdings LLC. In November 2007,
CPA®:15
sold the properties for $33,882,046 and used a portion of the
proceeds to pay an outstanding mortgage obligation of
$14,874,525.
CPA®:15
recognized a gain on this sale of $9,833,482.
|
|
(7)
|
|
In October 2001,
CPA®:14
purchased properties in Manchester, Michigan and Farmville,
North Carolina net leased to Collins & Aikman
Corporation. In December 2007,
CPA®:14
sold the properties for $10,698,738, net of selling costs and
used a portion of the proceeds to pay an outstanding mortgage
obligation of $5,692,563.
CPA®:14
recognized a gain on this sale of $1,112,250.
|
|
(8)
|
|
In February 1999, through a limited
liability company,
CPA®:12
and
CPA®:14
purchased a property in Gilbert, Arizona net leased to Textron,
Inc. In December 2006, in connection with the merger of
CPA®:12
and
CPA®:14,
CPA®:14
acquired
CPA®:12s
interest in the property. In December 2007,
CPA®:14
sold the property for $35,711,706, net of selling costs and used
a portion of the proceeds to pay an outstanding mortgage
obligation of $12,141,060.
CPA®:14
recognized a gain on this sale of $7,779,964. The original
equity investment and original mortgage financing shown above
reflect the original share of the equity investment and original
share of the mortgage financing acquired by
CPA®:14
in 1999 and the share of the equity investment and mortgage
financing acquired by
CPA®:14
in the merger with
CPA®:12.
|
|
(9)
|
|
In December 2002,
CPA®:15
purchased a property in Macon, Georgia net leased to Meadowbrook
Meat Company, Inc. In April 2008,
CPA®:15
sold the property for $1,010,000, net of closing costs.
CPA®:15
used $750,000 of the proceeds of the sale to prepay a portion of
an outstanding mortgage obligation, of which $559,594 was
collateralized by the Macon property and $190,406 was
collateralized by four additional properties that are also
net-leased to Meadowbrook. The amounts in the table above solely
reflect the results of the Macon property.
|
|
(10)
|
|
In September 2000,
CPA®:14
purchased a property in Kansas City, Missouri net leased to
Earle M. Jorgensen Company. In June 2008,
CPA®:14
sold the property for $6,427,548, net of closing costs and
recognized a gain on this sale of $158,575.
|
A-7
|
|
|
(11)
|
|
In April 2004,
CPA®:15
purchased a property in Franklin, Tennessee net leased to
Worthington Precision Metals, Inc. In October 2008,
CPA®:15
sold the property for $4,134,707, net of closing costs.
CPA®:15
used the proceeds of the sale and a capital contribution from
CPA®:15,
to prepay an outstanding mortgage obligation totaling
$4,176,341, of which $1,950,351 was collateralized by the
Franklin property and $2,225,990 was collateralized by a second
property that is also net-leased to Worthington.
CPA®:15
recognized a gain on this sale of $785,555. The amounts in the
table above solely reflect the results of the Franklin property.
|
|
(12)
|
|
In March 1991,
CIP®
purchased a property in Lima, Ohio net leased to Warehouse
Associates, L.P. In September 2004, in connection with the
merger of
CIP®
and
CPA®:15,
CPA®:15
acquired the property. In December 2008,
CPA®:15
sold the property for $8,371,605, net of closing costs, and used
a portion of the proceeds to repay an outstanding mortgage
obligation of $7,514,286.
CPA®:15
recognized a loss on this sale of $157,216, excluding previously
recognized impairment charges totaling $4,049,199.
|
|
(13)
|
|
In June 2001,
CPA®:14
purchased a property in Helmond, The Netherlands net leased to
Nexpak B.V. In December 2008,
CPA®:14
sold the property for $8,498,670, net of closing costs, and used
a portion of the proceeds to repay an outstanding mortgage
obligation of $6,474,308.
CPA®:14
recognized a gain on this sale of $365,497.
|
|
(14)
|
|
In July 1999,
CPA®:14
purchased a property in Gardena, CA net leased to Moonlight
Molds. In February 2009,
CPA®:14
sold the property for $3,653,385, net of closing costs, and used
a portion of the proceeds to repay an outstanding mortgage
obligation of $2,675,875.
CPA®:14
recognized a gain on this sale of $401,630, excluding previously
recognized impairment charges totaling $2,900,000.
|
|
(15)
|
|
In August 2003,
CPA®:15
purchased a property in Holyoke, MA net leased to American
Pad & Paper LLC. In March 2009,
CPA®:15
sold the property for $4,165,583, net of closing costs, and
recognized a gain on this sale of $850,626.
CPA®:15
used the proceeds to prepay a portion of an outstanding mortgage
obligation totaling $2,745,000, of which $1,982,045 was
collateralized by the Holyoke property and $762,955 was
collateralized by three other properties that are also net
leased to American Pad and Paper. The amounts in the table above
solely reflect the results of the Holyoke property.
|
|
(16)
|
|
In May 2002,
CPA®:14
purchased a property in Allentown, PA net leased to Career
Education Corporation. In May 2009,
CPA®:14
sold the property for $22,275,606, net of closing costs, and
recognized a gain on this sale of $8,209,305. Concurrent with
the closing of this sale,
CPA®:14
used a portion of the sale proceeds to defease non-recourse
mortgage debt totaling $14,966,204 on two unrelated domestic
properties and incurred defeasance charges totaling $445,552.
CPA®:14
then substituted the then-unencumbered properties as collateral
for a $12,222,000 non-recourse mortgage loan that had previously
been collateralized by the Allentown property. The terms of the
$12,222,000 loan remain unchanged.
|
|
(17)
|
|
In July and August 2004,
CPA®:15
and
CPA®:16
− Global purchased properties in Guyancourt, Ymare, Laval
and Aubagne, France. In July 2009,
CPA®:15
and
CPA®:16
− Global sold the property for $46,654,175, net of closing
costs, and used the proceeds to repay a portion of an
outstanding mortgage obligation totaling $46,457,126.
CPA®:15
and
CPA®:16
− Global recognized a gain on this sale of $11,309,151,
excluding previously recognized impairment charges totaling
$35,392,341. In connection with the mortgage repayment,
CPA®:15
and
CPA®:16
− Global incurred mortgage prepayment penalties totaling
$2,033,405.
|
|
(18)
|
|
In March 2007,
CPA®:16
− Global purchased a property in Columbia, SC net leased
to Holopack International Corp. In July 2009,
CPA®:16
− Global sold the property for $50,680,504, net of closing
costs, which was comprised of cash consideration of $26,233,615
and the assumption of the outstanding mortgage obligation of
$24,446,889 by the buyer of the property.
CPA®:16
− Global recognized a gain on this sale of $7,974,012.
|
|
(19)
|
|
In February 2005,
CPA®:16
− Global purchased a property in Shelby, NC net leased to
Metals America, Inc. In August 2009,
CPA®:16
− Global sold the property for $1,300,000 and recognized a
loss on this sale of $339,850, excluding previously recognized
impairment charges totaling $5,100,000. This property was
encumbered by a non-recourse mortgage loan of $3,528,477.
Concurrent with the closing of this sale, the lender agreed to
release all the liens on the property in exchange for the sale
proceeds. As a result of the release of the liens,
CPA®:16
− Global recognized a gain on extinguishment of debt of
$2,313,246.
|
|
(20)
|
|
In April 2003,
CPA®:15
purchased properties in Bradford, Belfast, Darwen,
Stoke-on-Tenant,
and Rochdale, United Kingdom and Dublin, Ireland net leased to
Shires Limited. In September 2009,
CPA®:15
sold the Darwen property for $959,856, net of closing costs, and
used $713,476 of the proceeds to repay a portion of an
outstanding mortgage obligation.
CPA®:15
recognized a loss on this sale of $2,129,197. In October 2009,
CPA®:15
returned the remaining five properties to the lender in exchange
for the lenders agreement to relieve
CPA®:15
of all obligations under the related non-recourse mortgage loan.
The five properties and related mortgage loan had carrying
values of $13,744,576 and $13,366,747, respectively, at the date
of disposition.
CPA®:15
recognized a gain on this disposition of $1,106,703, excluding
previously recognized impairment charges totaling $19,610,396.
In connection with its release from the mortgage obligations,
CPA®:15
recognized a gain on extinguishment of debt totaling $998,750.
|
|
(21)
|
|
In July 2006,
CPA®:16
− Global purchased a property in Socorro, TX net leased to
Southwest Convenience Stores, LLC. In October 2009,
CPA®:16
− Global sold the property for $629,339, net of closing
costs, and used a portion of the proceeds to repay an
outstanding mortgage balance of $408,000.
CPA®:16
− Global recognized a gain on this sale of $224.
|
A-8
|
|
|
(22)
|
|
In December 2006,
CPA®:16
− Global purchased a property in Corbas, France net leased
to Fraikin SAS. In October 2009,
CPA®:16
− Global sold the property for $1,326,150, net of closing
costs, and used a portion of the proceeds to repay an
outstanding mortgage obligation of $1,030,572.
CPA®:16
− Global recognized a gain on this sale of $15,522.
|
|
(23)
|
|
In January 2003,
CPA®:15
purchased a property in Birmingham, UK formerly net leased to
Innovate Holdings Limited. In October 2009,
CPA®:15
returned the property to the lender in exchange for the
lenders agreement to relieve
CPA®:15
of all obligations under the related non-recourse mortgage loan.
The property and related mortgage loan had carrying values of
$14,408,193 and $14,962,420, respectively, at the date of
disposition.
CPA®:15
recognized a gain on this disposition of $246,417, excluding
previously recognized impairment charges totaling $7,298,815. In
connection with its release from the mortgage obligations,
CPA®:15
recognized a gain on extinguishment of debt totaling $576,440.
|
|
(24)
|
|
In February 1992,
CPA®:10
and
CIP®
purchased properties in North Little Rock and Conway, AK net
leased to The Kroger Co. In December 2001, in connection with
the merger of
CPA®:10
and
CIP®,
CIP®
acquired
CPA®:10s
interest in the properties. In September 2004, in connection
with the merger of
CIP®
and
CPA®:15,
CPA®:15
acquired the properties. In October and December 2009,
CPA®:15
sold the properties for $4,392,161, net of closing costs, and
recognized a loss on these sales of $17,021, excluding
previously recognized impairment charges totaling $1,473,000.
|
A-9
ANNEX B
CAREY WATERMARK INVESTORS INCORPORATED ORDER FORM
INSTRUCTIONS FOR
COMPLETION OF
CAREY WATERMARK INVESTORS INCORPORATED ORDER FORM
INSTRUCTIONS TO INVESTORS
YOU MUST COMPLETE ALL ITEMS AND SIGN THE ORDER FORM IN
ITEM 5. INVESTORS ARE ENCOURAGED TO READ THE PROSPECTUS IN
ITS ENTIRETY FOR A COMPLETE EXPLANATION OF AN INVESTMENT IN THE
COMPANY.
Item 1 Indicate the number of
shares you are purchasing (200 Shares is the minimum) and
the dollar amount of your investment. Check the appropriate box
to indicate whether this is an initial or additional investment
and whether the order is to be combined with a previous Carey
Watermark Investors Incorporated investment with the same
primary account holder or beneficiary for IRA registrations, as
determined by the account Tax ID number. Please see The
Offering/Plan of Distribution section of the
prospectus for further information on volume discounts
Registration of other investment.
Item 2 Check the appropriate box
to indicate form of ownership. If the investor is a Custodian,
Corporation, Partnership or Trust, please provide the additional
requested information
and/or
documents.
Item 3 Please print names(s) in
which shares are to be registered and provide address and
telephone numbers. Check appropriate box if you are subject to
back up withholding (if the latter applies to you, cross out
clause (ii) in the paragraph appearing immediately above
Item 1). Trusts should provide their taxpayer
identification number. Custodians on UGMA or UTMA registrations
should provide the minors social security number. All
individual investors should provide their social security
number. Other entities should provide their taxpayer
identification number. If you have an account with the
broker/dealer named on the reverse side of the form, provide
your account number.
Item 4 Provide distribution
payment preference.
Item 5 You MUST initial the
representations and sign the form in Item 5. Signature(s)
must be witnessed and the date of signing must be inserted on
the line provided.
AFTER FOLLOWING THE ABOVE INSTRUCTIONS, RETURN THE ORDER
FORM TO THE FINANCIAL ADVISOR WHO SOLICITED YOUR ORDER
TOGETHER WITH A CHECK MADE PAYABLE TO WELLS FARGO BANK,
NATIONAL ASSOCIATION, AS ESCROW AGENT FOR CAREY WATERMARK
INVESTORS INCORPORATED (OR, INSTEAD OF A CHECK, A REQUEST
TO THE BROKER/DEALER IN THE AMOUNT OF YOUR ORDER). TRUSTS should
furnish a copy of the title and signature pages of the trust
instrument and all amendments thereto. CORPORATIONS should
furnish an appropriate corporate resolution authorizing the
purchase of the Shares. PARTNERSHIPS should furnish a copy of
the partnership agreement.
Notice to Investors. The sale of shares
pursuant to this subscription agreement will not be effective
until Carey Watermark Investors Incorporated has issued written
confirmation of purchase to the investor.
INSTRUCTIONS TO FINANCIAL ADVISORS
Please be sure to verify all investor information on the Order
Form. YOU MUST COMPLETE ITEM 6 AND SIGN THE ORDER
FORM FOR THE ORDER TO BE ACCEPTED. Please verify that
investors have signed Item 5.
Please send check(s) payable to Wells Fargo Bank, National
Association, as Escrow Agent for Carey Watermark Investors
Incorporated and completed Order Forms(s) to Phoenix
American Financial Services Inc., 2401 Kerner Boulevard,
San Rafael, CA 94901. Attn: Carey Watermark Investors
Incorporated New Business Team.
For wiring instructions, contact the Carey Watermark Investors
Incorporated New Business Team at
888-241-3737
prior to wiring funds.
B-1
The investor named below, under penalties of perjury, certifies
that (i) the number shown under Item 4 on this Order
Form is his correct Taxpayer Identification Number (or he is
waiting for a number to be issued to him) and (ii) he is
not subject to backup withholding either because he has not been
notified by the Internal Revenue Service
(IRS) that he is subject to backup
withholding as a result of a failure to report all interest or
distributions, or the IRS has notified him that he is no longer
subject to backup withholding [NOTE: CLAUSE (ii) IN THIS
CERTIFICATION SHOULD BE CROSSED OUT IF THE APPROPRIATE BOX IN
ITEM 4 BELOW HAS BEEN CHECKED].
1. INVESTMENT
|
|
|
|
|
|
|
This is an (check one):
|
|
o Initial
Investment
|
|
o Additional
Investment in this offering
|
|
o Check
this box if you have agreed with your broker-dealer to purchase
shares net of commission. Investors electing this option are
required to pay $9.30 per share.
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
Number of Shares
minimum 200
(or 250 for NY and NC non-qualified investments)
|
|
Dollar Amount of Investment ($10.00 per share)
|
|
Number of Shares
minimum 200
for 250 (or NY and NC non-qualified investments)
|
|
Dollar Amount of
Investment
($9.30 per share)
|
Make Investment Check Payable
to: CAREY WATERMARK INVESTORS INCORPORATED
|
|
|
|
o
|
Volume Discounts
Check this box if you
wish to have your investment combined with a previous Carey
Watermark Investors Incorporated investment with the same
primary account holder or beneficiary for IRA registrations, as
determined by the account Tax ID number. Please see The
Offering/Plan of Distribution section of the
prospectus for further information on volume discounts.
|
Registration of other
investment
2. FORM OF
OWNERSHIP Mark only one box
|
|
|
NON-QUALIFIED OWNERSHIP
o INDIVIDUAL
o HUSBAND
AND WIFE AS COMMUNITY PROPERTY
(In Item 5, both signatures must appear)
o JOINT
TENANTS WITH RIGHT OF SURVIVORSHIP (In Item 5, both
signatures must appear)
o TENANTS
IN COMMON
o A
MARRIED PERSON SEPARATE PROPERTY
(In Item 5, only one signature must appear)
o CUSTODIAN
Custodian
for
Under the
o Uniform
Gift to Minors Act of the State
of
o Uniform
Transfers to Minors Act of the State
of
o CORPORATION
OR PARTNERSHIP
(Corporate Resolution or Partnership Agreement MUST be
enclosed)
o TRUST o TAXABLE o GRANTOR
A or B
(Signature and title pages of Trust Agreement must be
enclosed)
Trustee
name(s)
For the Benefit
of
Trust
Date
o ESTATE
o CHARITABLE
REMAINDER TRUST
o NON-PROFIT
ORGANIZATION
o TRANSFER
ON DEATH
(TOD)
(Please complete enclosed TOD Form to effect designation)
|
|
QUALIFIED OWNERSHIP
o IRA
o KEOGH
o PENSION
OR PROFIT SHARING PLAN
o TAXABLE o EXEMPT
UNDER §501a
o SIMPLIFIED
EMPLOYEE PENSION / TRUST (S.E.P.)
Please complete the following for qualified ownership:
Custodian or Trustee
Name
Mailing
Address
City, State,
Zip
To be completed by Custodian:
Custodian Tax ID
#
Custodian Account
#
Custodian Phone
#
|
3. INVESTOR INFORMATION
Name(s) and address will be
recorded exactly as printed below: Please print name(s) in which
shares are to be registered. Include trust name if applicable
|
|
|
o Check
this box if you are not a U.S. citizen
|
|
o Check
this box if you are subject to backup withholding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Name of
|
|
|
|
|
|
|
|
|
|
|
Joint Investor
|
|
|
|
|
|
Address
|
|
|
|
|
|
|
|
|
|
|
|
|
|
City
|
|
|
|
State
|
|
|
|
Zip Code
|
|
|
Investor Social
|
|
- -
|
|
Joint Investors
|
|
- -
|
|
Taxpayer
|
|
-
|
Security
|
|
|
|
Social Security
|
|
|
|
ID #
|
|
|
Investor Home
|
|
|
|
|
|
|
|
Investor
|
Phone Number
|
|
|
|
Date of Birth
|
|
|
Investor e-mail
address (optional)
|
|
|
B-2
|
|
|
|
|
|
|
|
|
|
|
o GO
PAPERLESS Check this box if you would like to receive your
correspondence relating to your Carey Watermark Investors
Incorporated investment(s) at the
e-mail
address provided above. You may request paper copies of any
document delivered electronically. You may revoke this consent
at anytime, and the revoking of this consent applies to all
documents and not to a portion of the deliverable documents.
|
|
|
|
|
|
|
|
|
|
|
|
|
Investors Account Number with Broker Dealer (if
any):
|
4. DISTRIBUTION PAYMENT OPTIONS
Complete this section only to
enroll in Distribution Reinvestment or to direct distribution
payments to a party other than indicated in Section 3.
Choose Option a, b or c.
6a. DISTRIBUTION
REINVESTMENT Check the applicable box to participate in the
Distribution Reinvestment Plan:
100% o Other o
%
6b. ALTERNATE PAYEE(S)
(Non-Qualified Investors
Only) Please indicate the address(es) to which distributions
should be mailed. Distributions may be split on a percentage
basis, between a maximum of two (2) payees. Percentage
amount must equal 100%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Destination 1:
|
|
|
|
%
|
|
|
|
Destination 2:
|
|
|
|
%*
|
|
|
Company
|
|
|
|
Company
|
|
|
Address
|
|
|
|
Address
|
|
|
|
|
|
|
|
|
|
City
|
|
|
|
City
|
|
|
State
|
|
|
|
Zip Code
|
|
|
|
State
|
|
|
|
Zip Code
|
|
|
Account number (if any):
|
|
|
|
Account number (if any):
|
|
|
Account name
|
|
|
|
Account name
|
|
|
6c. AUTOMATIC DEPOSITS
Please include a voided
check or savings deposit slip. (Non-Qualified Investors Only) I
authorize Bank of the West to initiate variable entries to my
checking or savings account. This authority will remain in
effect until I notify Carey Watermark Investors
Incorporateds Investor Relations Department or Phoenix
American Financial Services Inc., the transfer agent for Carey
Watermark Investors Incorporated, in writing to cancel in such
time as to afford a reasonable opportunity to act on the
cancellation.
|
|
|
|
|
|
|
Financial Institution Name and Address:
|
|
|
|
|
|
|
|
|
|
|
|
|
Account Type (check one):
|
|
o Checking o Savings o Other
|
Account Number
Bank ABA Routing Number
|
5. SIGNATURE OF INVESTOR(S)
Please separately initial each of
the representations below. Except in the case of fiduciary
accounts, you may not grant any person a power of attorney to
make such representations on your behalf. In order to induce the
Company to accept this subscription, I hereby represent and
warrant to you as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint
|
|
|
|
|
Investor
|
|
Investor
|
|
(a)
|
|
I have received the Prospectus.
|
|
|
|
|
|
|
|
|
Initials
|
|
Initials
|
(b)
|
|
I hereby certify that (i) I have (a) a net worth (exclusive of
home, furnishings and automobiles) of at least $250,000 or more,
or, (b) a net worth (as described above) of at least $70,000 and
had during the last two years or estimate that I will have
during the current tax year a minimum of $70,000 annual gross
income, or that I meet the higher suitability requirements
imposed by my state of primary residence as set forth in the
prospectus under Suitability Standards; (ii)
I am purchasing the shares for my own account or in a fiduciary
capacity; and (iii) I acknowledge that the shares are not liquid.
|
|
Initials
|
|
Initials
|
Notice to Investors. The sale of shares
pursuant to this subscription agreement will not be effective
until (1) at least five business days after the investor
receives a final prospectus and (2) Carey Watermark
Investors Incorporated has issued written confirmation of
purchase to the investor.
Notice to Kansas Investors. Kansas recommends
that Kansas investors not invest, in the aggregate, more than
10% of their liquid net worth in this and other similar
investments. Liquid net worth is defined as the portion of net
worth which consists of cash and cash equivalents and readily
marketable securities.
The Internal Revenue Service does not require your consent
to any provision of this document other than the certifications
required to avoid backup withholding.
|
|
|
|
|
|
|
|
|
SIGNATURE OF INVESTOR
|
|
DATE
|
|
|
|
|
|
|
|
|
|
|
|
|
SIGNATURE OF INVESTOR
|
|
DATE
|
6. BROKER/DEALER INFORMATION
The Financial Adviser must sign
below to complete order. Financial Advisor hereby warrants that
he/she is
duly licensed and may lawfully sell shares in the state
designated as the investors residence.
o Check
if employed by new Broker/Dealer since last sale of Carey
Watermark Investors Incorporated
shares o Check
if updated address
|
|
|
|
|
|
|
|
|
|
|
Licensed Firm Name
|
|
|
Advisor Name
|
|
|
Advisor Mailing Address
|
|
|
City
|
|
|
|
State
|
|
|
|
Zip Code
|
|
|
Advisor Number
|
|
|
|
Telephone Number
|
|
|
e-mail address (optional)
|
|
|
|
FINRA CRD Number
|
|
|
B-3
o GO
PAPERLESS Check this box to receive correspondence relating
to your clients investments in the Carey Watermark
Investors Incorporated series of funds at the
e-mail
address provided above. This consent applies to all of your
clients and not just this individual investment. This consent
may be revoked at any time.
The undersigned confirms by his
signature that he (i) has reasonable grounds to believe
that the information and representations concerning the investor
identified herein are true, correct and complete in all
respects; (ii) has discussed such investors
prospective purchase of Shares with such investor;
(iii) has advised such investor of all pertinent facts with
regard to the liquidity and marketability of the Shares;
(iv) has delivered a current Prospectus and related
supplements, if any, to such investor; and (v) has
reasonable grounds to believe that the purchase of Shares is a
suitable investment for such investor that such investor meets
the suitability standards applicable to such investor set forth
in the Prospectus and related supplements, if any, and that such
investor is in a financial position to enable such investor to
realize the benefits of such an investment and to suffer any
loss that may occur with respect thereto.
The above identified entity, acting
in its capacity as agent. Advisor
and/or
Broker/Dealer, has performed functions required by federal and
state securities laws and FINRA rules and regulations,
including, but not limited to, Know Your Customer, Suitability
and PATRIOT Act (AML Customer Identification) as required by
their relationship with the subscribers) identified on this
document.
|
|
|
|
ALL INVESTOR AND BROKER/DEALER INFORMATION MUST BE COMPLETED OR
|
|
REGISTRATION CANNOT BE PROCESSED.
B-4
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
Prospectus Summary
|
|
|
1
|
|
Risk Factors
|
|
|
27
|
|
Estimated Use of Proceeds
|
|
|
45
|
|
Management Compensation
|
|
|
47
|
|
Conflicts of Interest
|
|
|
55
|
|
Management
|
|
|
60
|
|
Certain Relationships and Related Party Transactions
|
|
|
75
|
|
Investment Objectives, Procedures and Policies
|
|
|
77
|
|
Prior Programs
|
|
|
99
|
|
Security Ownership of Certain Beneficial Owners and Management
|
|
|
111
|
|
Selected Financial Data
|
|
|
112
|
|
Managements Discussion and Analysis of Financial Condition
and Results of Operations
|
|
|
112
|
|
The Operating Partnership
|
|
|
113
|
|
Legal Proceedings
|
|
|
118
|
|
United States Federal Income Tax Considerations
|
|
|
118
|
|
ERISA Considerations
|
|
|
142
|
|
Description of Shares
|
|
|
146
|
|
The Offering/Plan of Distribution
|
|
|
159
|
|
Reports To Stockholders
|
|
|
166
|
|
Legal Opinions
|
|
|
167
|
|
Experts
|
|
|
167
|
|
Sales Literature
|
|
|
167
|
|
Further Information
|
|
|
168
|
|
Index to Financial Statement
|
|
|
F-1
|
|
Annex A Prior Performance Tables
|
|
|
A-1
|
|
Annex B CAREY WATERMARK INVESTORS INCORPORATED Order Form
|
|
|
B-1
|
|
Dealer Prospectus Delivery Requirement
Until ,
2010 (90 days after the initial date of the prospectus),
all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required
to deliver a prospectus. This delivery is in addition to the
dealers obligation to deliver a prospectus when acting as
an underwriter and with respect to its unsold allotments or
subscriptions.
No person has been authorized to give any information or to
make any representation in connection with the offer contained
in this prospectus unless preceded or accompanied by this
prospectus nor has any person been authorized to give any
information or to make any representation other than those
contained in this prospectus in connection with the offer
contained in this prospectus, and, if given or made, such
information or representations must not be relied upon. This
prospectus does not constitute an offer or solicitation in any
jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery
of this prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no
change in the affairs of Carey Watermark Investors Incorporated
since the date hereof. However, if any material change occurs
while this prospectus is required by law to be delivered, this
prospectus will be amended or supplemented accordingly.
Carey Watermark
Investors Incorporated
A Maximum of
100,000,000 Shares of Common Stock
A Minimum of 1,000,000 Shares
of Common Stock
A Maximum of
25,000,000 Shares of Common Stock issuable pursuant to Our
Distribution
Reinvestment Plan
PROSPECTUS
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
ITEM 31.
|
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION.
|
|
|
|
|
|
|
|
$
|
|
|
SEC registration fee
|
|
|
48,634
|
|
FINRA filing fee
|
|
|
75,500
|
|
Legal Issuer Offering Costs
|
|
|
1,700,000
|
|
Printing
|
|
|
1,100,000
|
|
Accounting
|
|
|
350,000
|
|
Blue sky expenses
|
|
|
550,000
|
|
Advertising & Sales Literature
|
|
|
1,422,750
|
|
Miscellaneous Fulfillment, Transfer Agent
|
|
|
1,800,000
|
|
Miscellaneous Personnel Costs
|
|
|
157,000
|
|
Miscellaneous Due Diligence
|
|
|
500,000
|
|
Seminars
|
|
|
50,000
|
|
|
|
|
|
|
Total
|
|
|
7,753,884
|
(1)
|
|
|
|
|
|
|
|
|
(1)
|
|
All amounts, other than SEC
registration fee and FINRA filing fee, are estimates. Excludes
selling commissions and dealer manager fees.
|
|
|
ITEM 32.
|
SALES
TO SPECIAL PARTIES.
|
None.
|
|
ITEM 33.
|
RECENT
SALES OF UNREGISTERED SECURITIES.
|
On March 19, 2008, the advisor purchased 1,000 shares
of our common stock for $9,000. Prior to the commencement of our
offering, we will have been capitalized with $200,000 from the
sale of an additional 21,222 shares to our advisor. Since
this transaction was not considered to have involved a
public offering within the meaning of
Section 4(2) of the Securities Act of 1933, as amended, or
the Securities Act, the shares issued were deemed to be exempt
from registration. In acquiring our shares, the Advisor
represented that such interests were being acquired by it for
the purposes of investment and not with a view to the
distribution thereof.
|
|
ITEM 34.
|
INDEMNIFICATION
OF DIRECTORS AND OFFICERS.
|
Maryland law permits a corporation to include in its charter a
provision limiting the liability of directors and officers to
the corporation and its stockholders for money damages, except
for liability resulting from (a) actual receipt of an
improper benefit or profit in money, property or services or
(b) active and deliberate dishonesty established by a final
judgment and which is material to the cause of action.
In addition, Maryland law allows directors and officers to be
indemnified against judgments, penalties, fines, settlements,
and expenses actually incurred in a proceeding unless the
following can be established:
|
|
|
|
|
the act or omission of the director or officer was material to
the cause of action adjudicated in 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
|
II-1
|
|
|
|
|
with respect to any criminal proceeding, the director or officer
had reasonable cause to believe his or her act or omission was
unlawful.
|
However, under Maryland law, a Maryland corporation may not
indemnify for an adverse judgment in a suit by or in the right
of the corporation or for a judgment of liability on the basis
that personal benefit was improperly received, unless in either
case a court orders indemnification and then only for expenses.
Finally, Maryland law permits a Maryland corporation to advance
reasonable expenses to a director or officer upon receipt of a
written affirmation by the director or officer of his or her
good faith belief that he or she has met the standard of conduct
necessary for indemnification and a written undertaking by him
or her on his or her behalf to repay the amount paid or
reimbursed if it is ultimately determined that the standard of
conduct was not met.
Except as prohibited by Maryland law and as set forth below, our
organizational documents limit the personal liability of our
directors and officers for monetary damages and provide that a
director or officer or
non-director
member of the investment committee will be indemnified and
advanced expenses in connection with legal proceedings. We also
maintain a directors and officers liability insurance policy and
we expect to enter into indemnification agreements with each of
our directors and executive officers.
In addition to any indemnification to which our directors and
officers are entitled, our organizational documents provide that
we will indemnify other employees and agents to the extent
authorized by the directors, whether they are serving us or, at
our request, any other entity. Provided the conditions set forth
below are met, we have also agreed to indemnify and hold
harmless our advisor and its affiliates (including W. P. Carey
and Watermark Capital Partners) performing services for us from
specific claims and liabilities arising out of the performance
of its/their obligations under the advisory agreement.
Notwithstanding the foregoing, as required by the applicable
guidelines of the North American Securities Administrators
Association, Inc., our charter provides that a director, our
advisor and any affiliate of our advisor (including W. P. Carey
and Watermark Capital Partners) will be indemnified by us for
losses suffered by such person and held harmless for losses
suffered by us only if all of the following conditions are met:
|
|
|
|
|
such person has determined, in good faith, that the course of
conduct which caused the loss or liability was in our best
interests;
|
|
|
|
such person was acting on our behalf or performing services for
us;
|
|
|
|
the liability or loss was not the result of negligence or
misconduct by such person (if a non-independent director, our
advisor or an affiliate of our advisor);
|
|
|
|
the liability or loss was not the result of gross negligence or
willful misconduct by such person (if an independent director);
and
|
|
|
|
such indemnification or agreement to hold harmless is
recoverable only out of our assets and not from the stockholders.
|
In addition, our charter provides that we may not indemnify a
director, our advisor or any affiliate of our advisor (including
W. P. Carey or Watermark Capital Partners) for losses and
liabilities arising from alleged violations of federal or state
securities laws unless one or more of the following conditions
are met:
|
|
|
|
|
there has been a successful adjudication on the merits of each
count involving alleged material securities law violations as to
the particular indemnitee;
|
|
|
|
such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular
indemnitee; or
|
II-2
|
|
|
|
|
a court of competent jurisdiction approves a settlement of the
claims against the particular indemnitee and finds that
indemnification of the settlement and the related costs should
be made, and the court considering the request for
indemnification has been advised of the position of the SEC and
of the published position of any state securities regulatory
authority in which securities of us were offered or sold as to
indemnification for violation of securities laws.
|
Finally, our charter provides that we may not pay or reimburse
reasonable legal expenses and other costs incurred by a
director, our advisor or any affiliate of our advisor (including
W. P. Carey and Watermark Capital Partners) in advance of final
disposition of a proceeding unless all of the following are
satisfied:
|
|
|
|
|
the proceeding relates to acts or omissions with respect to the
performance of duties or services on our behalf;
|
|
|
|
such person has provided us with written affirmation of his, her
or its good faith belief that the standard of conduct necessary
for indemnification has been met;
|
|
|
|
the legal proceeding was initiated by a third party who is not a
stockholder or, if by a stockholder acting in his or her
capacity as such, a court of competent jurisdiction approves
such advancement; and
|
|
|
|
such person has provided us with a written agreement to repay
the amount paid or reimbursed, together with the applicable
legal rate of interest thereon, if it is ultimately determined
that such person did not comply with the requisite standard of
conduct and is not entitled to indemnification.
|
Indemnification could reduce the legal remedies available to us
and our stockholders against the indemnified individuals. As a
result, we and our stockholders may be entitled to a more
limited right of action than we and our stockholders would
otherwise have if these indemnification rights were not included
in our charter or the advisory agreement.
However, indemnification does not reduce the exposure of
directors and officers to liability under federal or state
securities laws, nor does it limit a stockholders ability
to obtain injunctive relief or other equitable remedies for a
violation of a directors or an officers duties to us
or our stockholders, although the equitable remedies may not be
an effective remedy in some circumstances.
|
|
ITEM 35.
|
TREATMENT
OF PROCEEDS FROM STOCK BEING REGISTERED
|
Not applicable.
|
|
ITEM 36.
|
FINANCIAL
STATEMENTS AND EXHIBITS.
|
b. Exhibits
|
|
|
|
|
Exhibit No.
|
|
Exhibit
|
|
|
3
|
.1.
|
|
Articles of Incorporation of Carey Watermark Investors
Incorporated (Incorporated by reference to Exhibit 3.1 to
the registrants Registration Statement on
Form S-11
(File
No. 333-149899)
filed on March 26, 2008)
|
|
3
|
.2.
|
|
Form of Articles of Amendment and Restatement of Carey Watermark
Investors Incorporated (Incorporated by reference to
Exhibit 3.2 to the registrants Registration Statement
on
Form S-11
(File
No. 333-149899)
filed on April 13, 2010)
|
|
3
|
.3.
|
|
Bylaws of Carey Watermark Investors Incorporated (Incorporated
by reference to Exhibit 3.3 to the registrants
Registration Statement on
Form S-11
(File
No. 333-149899)
filed on March 26, 2008)
|
|
4
|
.1.
|
|
Form of Distribution Reinvestment Plan (Incorporated by
reference to Exhibit 4.1 to the registrants
Registration Statement on
Form S-11
(File
No. 333-149899)
filed on June 6, 2008)
|
II-3
|
|
|
|
|
Exhibit No.
|
|
Exhibit
|
|
|
4
|
.2.
|
|
Form of Notice to Stockholder (Incorporated by reference to
Exhibit 4.2 to the registrants Registration Statement
on
Form S-11
(File
No. 333-149899)
filed on June 6, 2008)
|
|
5
|
.1.*
|
|
Opinion of Clifford Chance US LLP as to the legality of
securities issued
|
|
8
|
.1.*
|
|
Opinion of Venable LLP as to certain tax matters
|
|
10
|
.1.
|
|
Form of Selected Dealer Agreement (Incorporated by reference to
Exhibit 10.1 to the registrants Registration
Statement on
Form S-11
(File
No. 333-149899)
filed on June 6, 2008)
|
|
10
|
.2.*
|
|
Form of Subscription Escrow Agreement
|
|
10
|
.3.*
|
|
Form of Dealer Manager Agreement
|
|
10
|
.4.*
|
|
Form of Advisory Agreement
|
|
10
|
.5.
|
|
Form of Agreement of Limited Partnership (Incorporated by
reference to Exhibit 10.5 to the registrants
Registration Statement on
Form S-11
(File
No. 333-149899)
filed on March 26, 2008)
|
|
10
|
.6.*
|
|
Form of 2010 Equity Incentive Plan
|
|
21
|
.1.*
|
|
Subsidiaries of the Registrant
|
|
23
|
.1.*
|
|
Consent of Clifford Chance US LLP
|
|
23
|
.2.*
|
|
Consent of Venable LLP
|
|
23
|
.3.
|
|
Consent of Director Nominees (Incorporated by reference to
Exhibit 23.3 to the registrants Registration
Statement on
Form S-11
(File
No. 333-149899)
filed on April 13, 2010)
|
|
23
|
.4.
|
|
Consent of Director Nominee
|
|
24
|
.1.
|
|
Power of Attorney (included on signature page to the
registrants Registration Statement on
Form S-11
(File
No. 333-149899)
filed on March 26, 2008)
|
|
99
|
.1.*
|
|
Consent of Morningstar, Inc.
|
|
|
|
* |
|
To be filed by amendment. |
II-4
TABLE
VI
Acquisition of properties by
CPA®:14,
CPA®:15,
CPA®:16
Global and CPA:17 Global
from January 1, 2007 to December 31, 2009
Table VI provides information on the acquisition of properties
by Prior Programs since January 1, 2007. This table only
reflects information regarding properties acquired and is not
indicative of the total portfolios of the certified.
The information in this table should not be considered as
indicative of our possible acquisitions. Purchasers of the
shares offered by this prospectus will not have any ownership in
the
CPA®
REITs.
|
|
|
|
|
|
|
|
|
|
|
CPA®:14
|
|
CPA®:15
|
|
CPA®:16
Global
|
|
CPA®:17
Global
|
|
|
(Note 1)
|
|
(Note 1)
|
|
(Note 1)
|
|
(Note 1)
|
|
Locations
|
|
IA, Germany, Finland
|
|
Germany, Poland
|
|
AZ, CA, CO, CT, FL, GA, IL, IN, KS, MD, MI, MN, NC, NY, OK, SC,
TN, TX, WA, Canada, Finland, France, Germany, Poland, Hungary
|
|
AZ, IL, IN, LA, KS, MD, NC, NE, NY, TX, Germany, Hungary,
Poland, Spain, United Kingdom
|
Type of property
|
|
(Note 2)
|
|
(Note 2)
|
|
(Note 2)
|
|
(Note 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross leasable space (sq.ft.)
|
|
|
1,229,116
|
|
|
|
2,318,930
|
|
|
|
8,957,376
|
|
|
|
5,500,019
|
|
Dates of purchase
|
|
|
4/2007-4/2009
|
|
|
|
3/2007-12/2009
|
|
|
|
2/2007-12/2009
|
|
|
|
12/2007-12/2009
|
|
Original mortgage financing
|
|
$
|
127,932,802
|
|
|
$
|
172,693,947
|
|
|
$
|
526,848,168
|
|
|
$
|
271,449,188
|
|
Cash down payment-equity
|
|
|
30,841,125
|
|
|
|
74,535,781
|
|
|
|
412,521,534
|
|
|
|
376,353,667
|
|
Contract purchase price plus acquisition fees (Note 3)
|
|
|
158,773,927
|
|
|
|
247,229,728
|
|
|
|
939,369,702
|
|
|
|
647,802,855
|
|
Other cash expenditures expensed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other capitalized expenditures (Note 4)
|
|
|
56,432
|
|
|
|
81,491
|
|
|
|
5,647,974
|
|
|
|
2,459,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of property
|
|
$
|
158,830,359
|
|
|
$
|
247,311,219
|
|
|
$
|
945,017,676
|
|
|
$
|
650,262,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOOTNOTE
|
|
|
(1)
|
|
The fund owns interests in one or
more joint ventures or
tenants-in-common
with affiliates that own property. The amounts included in the
table above reflect the funds percentage ownership in the
joint venture or
tenants-in-common.
|
|
(2)
|
|
Acquisitions consist of the
following types of properties:
CPA®:14
Industrial, office and retail facilities,
CPA®:15
Distribution, industrial, office, retail and warehouse
facilities,
CPA®:16
Global Distribution, hotel, industrial, office,
retail and warehouse facilities,
CPA®:17
Global Office, health and fitness, industrial,
educational, residential, distribution, retail and warehouse
facilities.
|
|
(3)
|
|
Consists of initial purchase price,
including closing costs such as the cost of appraisals,
attorneys and accountants fees, costs of title
reports, transfer and recording taxes and title insurance. For
properties under construction, this column consists of amounts
funded to date. Amounts are based on currency conversion rates
in effect on date funded, where applicable.
|
|
(4)
|
|
Consists of capitalized interest,
net of construction rents, and also includes cost of
improvements/adjustments subsequent to acquisitions. For
properties under construction, interest on mortgages is
capitalized rather than expensed and rentals received are
recorded as a reduction of the basis in the properties.
|
II-5
(a) The registrant undertakes: (1) To file, during any
period in which offers or sales are being made, a post-effective
amendment to this registration statement: (i) To include
any prospectus required by Section (10)(a)(3) of the Securities
Act; (ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of the securities offered (if the total dollar value of
the securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the
effective registration statement; (iii) To include any
material information with respect to the plan of distribution
not previously disclosed in the registration statement or any
material change to such information in the registration
statement; (2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at this 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.
(b) The registrant undertakes to file a sticker supplement
pursuant to rule 424(c) under the Securities Act during the
distribution period describing each property not identified in
the prospectus at such time as there arises a reasonable
probability that such property will be acquired and to
consolidate all such stickers into a post-effective amendment
filed at least once every three months, with the information
contained in such amendment provided simultaneously to the
existing stockholders. Each sticker supplement should disclose
all compensation and fees received by the advisor and its
affiliates in connection with any such acquisition. The
post-effective amendment shall include audited financial
statements meeting the requirements of
Rule 3-14
of
Regulation S-X
only for properties acquired during the distribution period.
(c) The registrant undertakes that all post-effective
amendments will comply with the applicable forms, rules and
regulations of the Commission in effect at the time such
post-effective amendments are filed.
(d) The registrant undertakes to send to each stockholder
at least on an annual basis a detailed statement of any
transactions with the sponsor or its affiliates, and of fees,
commissions, compensation and other benefits paid, or accrued to
the sponsor or its affiliates for the fiscal year completed,
showing the amount paid or accrued to each recipient and the
services performed.
(e) The registrant undertakes to provide to the
stockholders the financial statements required by
Form 10-K
for the first full year of operations of the registrant.
(f) The registrant also undertakes to file, after the end
of the distribution period, a current report on
Form 8-K
containing the financial statements and any additional
information meeting the requirements of
Rule 3-14
of Regulations S-X, to reflect each commitment (i.e., the
signing of a binding purchase agreement) made after the end of
the distribution period involving the use of 10 percent or
more (on a cumulative basis) of the net proceeds of the offering
and to provide the information contained in such report to the
stockholders at least once each quarter after the distribution
period of the offering has ended.
(g) For purposes of determining liability under the
Securities Act to any purchaser, each prospectus filed pursuant
to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in
the registration statement as of the date
II-6
it is first used after effectiveness. Provided,
however, that no statement made in a registration
statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as
to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in
the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such date of first use.
(h) For purposes of determining liability of the registrant
under the Securities Act to any purchaser in the initial
distribution of the securities, the undersigned registrant
undertakes that in a primary offering of securities of the
undersigned registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser: (1) Any preliminary
prospectus or prospectus of the undersigned registrant relating
to the offering required to be filed pursuant to Rule 424;
(2) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant; (3) The
portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and (4) Any other communication
that is an offer in the offering made by the undersigned
registrant to the purchaser.
(i) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-7
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-11
and has duly caused this Pre-effective Amendment No. 3 to
the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of New York,
State of New York, on July 12, 2010.
Carey Watermark Investors Incorporated
|
|
|
|
By:
|
/s/ Michael
G. Medzigian
|
Michael G. Medzigian
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-effective Amendment No. 3 to the Registration Statement
has been signed below by the following persons in the capacities
indicated.
|
|
|
|
|
|
|
Signature
|
|
Capacity
|
|
Date
|
|
By:
|
|
/s/ Michael
G. Medzigian
Michael
G. Medzigian
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
July 12, 2010
|
|
|
|
|
|
|
|
By:
|
|
/s/ Mark
J. DeCesaris
Mark
J. DeCesaris
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
July 12, 2010
|
|
|
|
|
|
|
|
By:
|
|
/s/ Thomas
J. Ridings,
Jr.
Thomas
J. Ridings, Jr.
|
|
Chief Accounting Officer
(Principal Accounting Officer)
|
|
July 12, 2010
|
|
|
|
|
|
|
|
By:
|
|
/s/ Thomas
E. Zacharias
Thomas
E. Zacharias
|
|
Director
|
|
July 12, 2010
|
II-8
EXHIBIT
INDEX
|
|
|
|
|
Exhibit No.
|
|
Exhibit
|
|
|
3
|
.1.
|
|
Articles of Incorporation of Carey Watermark Investors
Incorporated (Incorporated by reference to Exhibit 3.1 to
the registrants Registration Statement on
Form S-11
(File
No. 333-149899)
filed on March 26, 2008)
|
|
3
|
.2.
|
|
Form of Articles of Amendment and Restatement of Carey Watermark
Investors Incorporated (Incorporated by reference to
Exhibit 3.2 to the registrants Registration Statement
on
Form S-11
(File
No. 333-149899)
filed on April 13, 2010)
|
|
3
|
.3.
|
|
Bylaws of Carey Watermark Investors Incorporated (Incorporated
by reference to Exhibit 3.3 to the registrants
Registration Statement on
Form S-11
(File
No. 333-149899)
filed on March 26, 2008)
|
|
4
|
.1.
|
|
Form of Distribution Reinvestment Plan (Incorporated by
reference to Exhibit 4.1 to the registrants
Registration Statement on
Form S-11
(File
No. 333-149899)
filed on June 6, 2008)
|
|
4
|
.2.
|
|
Form of Notice to Stockholder (Incorporated by reference to
Exhibit 4.2 to the registrants Registration Statement
on
Form S-11
(File
No. 333-149899)
filed on June 6, 2008)
|
|
5
|
.1.*
|
|
Opinion of Clifford Chance US LLP as to the legality of
securities issued
|
|
8
|
.1.*
|
|
Opinion of Venable LLP as to certain tax matters
|
|
10
|
.1.
|
|
Form of Selected Dealer Agreement (Incorporated by reference to
Exhibit 10.1 to the registrants Registration
Statement on
Form S-11
(File
No. 333-149899)
filed on June 6, 2008)
|
|
10
|
.2.*
|
|
Form of Subscription Escrow Agreement
|
|
10
|
.3.*
|
|
Form of Dealer Manager Agreement
|
|
10
|
.4.*
|
|
Form of Advisory Agreement
|
|
10
|
.5.
|
|
Form of Agreement of Limited Partnership (Incorporated by
reference to Exhibit 10.5 to the registrants
Registration Statement on
Form S-11
(File
No. 333-149899)
filed on March 26, 2008)
|
|
10
|
.6.*
|
|
Form of 2010 Equity Incentive Plan
|
|
21
|
.1.*
|
|
Subsidiaries of the Registrant
|
|
23
|
.1.*
|
|
Consent of Clifford Chance US LLP
|
|
23
|
.2.*
|
|
Consent of Venable LLP
|
|
23
|
.3.
|
|
Consent of Director Nominees (Incorporated by reference to
Exhibit 23.3 to the registrants Registration
Statement on
Form S-11
(File
No. 333-149899)
filed on April 13, 2010)
|
|
23
|
.4.
|
|
Consent of Director Nominee
|
|
24
|
.1.
|
|
Power of Attorney (included on signature page to the
registrants Registration Statement on
Form S-11
(File
No. 333-149899)
filed on March 26, 2008)
|
|
99
|
.1.*
|
|
Consent of Morningstar, Inc.
|
|
|
|
* |
|
To be filed by amendment. |
II-9
EX-23.4
2
y85445exv23w4.htm
EX-23.4
exv23w4
Exhibit 23.4
CONSENT OF DIRECTOR NOMINEE
To Carey Watermark Investors Incorporated (the Company):
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, I hereby consent to
the references in the Companys Registration Statement on Form S-11 (the Registration
Statement), and any amendments thereto, which indicate that I have accepted a nomination to
become a director of the Company and upon appointment prior to the commencement of the Companys
initial public offering of shares of common stock pursuant to such Registration Statement, will
serve as a member of the Board of Directors of the Company.
Dated:
July 9, 2010
|
|
|
|
|
|
|
/s/ Trevor
P. Bond
Name: Trevor P. Bond
|
|
|
|
|
|
|
|
|
|
Director Nominee |
|
|
GRAPHIC
3
y85445y8544522.gif
GRAPHIC
begin 644 y85445y8544522.gif
M1TE&.#EA?0!M`-4@`$!`0,#`P("`@"`@(/#P\.#@X*"@H/___S`P,&!@8-#0
MT!`0$+"PL'!P<)"0D%!04%]?7W]_?[^_OP\/#\_/SV]O;X^/C^_O[S\_/Q\?
M'Z^OKR\O+Y^?GT]/3]_?WP```/___P``````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````````````````"'Y!`$``"``+`````!]`&T```;_
M0)!P2"P:C\BDT@A8.I_0J'1*13:KV*QV2[URO^`PUBLNF\]#,GK-SJK;\/CR
M+:_;0?2[/ASH$_-[@5H?A'^"AV"$'X:(C5F*C(Z24I!IDY=0E4*`F)T@FGB>
MHD:@G*.2I:>JJ:JCK*V>K["8LK.3L@`?`;:(N+J\A[Z[P('"Q,6%EFF_QWK&
MS7?/T'72TW'5UFV*?0P"`P("#`$('P;99P0!`@T`"+F$X`+C?>`#'P#X`P`-
M\@7G5`H'`GP,"P3\DV_6$F)$"W!_H:,/#W#TF!!`,2&*!(*F&H90>-I!,`
M8(!$`A6)$%#@!%L2=>X<<$RYQ.62`@X0('"`DN80_P7J2+Z[AP_`@J)&/R!(
M4#!`SR9KM
MEJ"=HL^@/[MC:G#PSIMNR85>S9JUOG!K?;;%V!J?@&V1)W.SUSFI:XTSK;5]
ML'I?W+75')*T%QI!@\NV"H<&($])8@+=ABI:D`#88N:$N#.(C20QX0:J/PRP
MM7C!YZE3S!_!^:#!7@'N"7TCOP2HHMY&(>4>=0+$!5TS`8`W@#E093?:;83H
M148N!@5@P#KM`,#45LT0X/_>@DX$--`#\B#GT80,%:&`@W`=.$HW_:'WP$:!
MG;B0BT-8]=9A_QA`54LV@C2%50,UX-A@0^`6@`/?R#/.!S]6P0!:1OIDH0`/
M:-?:9T>1R,"12TPY`(_-6(7>ED5A)$!O^;&VSWA0M"45CITPT`!X^E%G4`'&
M%+`D26T2XAR=0IRU('^73!DH=1S.%>17EV''#I<)1*G$=V`VB,6>!'2W2A\@OB(1Z^F6$4`#^0JB+8U[LJ$M4A^H:R0X8HQ+J3E
MFDO_[;+I)K(NN>UR<6Z\9#N$`X$FH#`8)A51P`*Q47SQMA*#D,`]XRF`'P(?;]'``D7<<
M1>]Q=)(O*U$`.Z:6!H(`5H$-`E\:_@@4$2M2Y,`'%&$$@CY#9`S"K_M854`Z
M2PU#][!"%*"66&//[(`!**D3TMY6[>(W7T4?[0.E<@@049+%"U4G`3D/2:
M'Q1]VT$#<"P$`1^\3/K+:_O#`-L@!!!!)4,,```2A@_Q3%^U
M$!"U_@%*'G:'%@@%3$!!]0=0P`QU0E@^Q`,/+)]_0Z6S_X'H)&'?`MY7/?DU
M3BD]B9CW&%2.EVP`?M6KP.7&1Y!X+.!E(]M%+F;BO7'D;&4;,X<#(`#!`V!@
M&/2+_`,;+EZ24`+!/"[X`'@A&6L`,'C%+$%L`@$+CC)1@H800N=Q"E(`4`
MYN`3`!2`,R,L@!P'X1,Y4"*`"`@1A8T[RA&71X3*I.%'-JNB$`]XD(A%30@+
M+`(!'@"4!T)PB$)@"`)Z"`*]$/^'',0:F=+(U\0:DA"")]S$`57".V]Y<1-Z
M6X0-(0B!`[ZP4@\U+)U$Z"F!68WR%WR4B\X`8=<
MMJ8A!7A-;$2X4'6(<)0DL`IAG1D6C5H717!HAGVEM,H0]NDW?-:M-`7-T?@&
M%X<.'BP+<'MH%1PJ48!PJZ(8S:AV&`(WG-`'0T64.8*01V`&!_*LD2'84`
MH9`QH)'!IE(1/E9:TGWH89Y$P`]+P%$$[8$@6Z^*RY$$0@!7%J&;"/OC!0"P
ME@!`0`,Q1-MZD&4'G'H2(GXKY==D@@`FD,8(&],JPM[P@`O`3P(D=:H&]C@$
MYZ3,#%9E:4&&T`&(A%8T<@%\%`),@:!I!`2RAY1T6RU.1B=5.O,*'40?JNZX:
5X;(EA4`$9G14ZKQ!`?KP*16"```[
`
end
GRAPHIC
4
y85445y8544501.gif
GRAPHIC
begin 644 y85445y8544501.gif
M1TE&.#EA_@%/`=4@`+^_OX"`@$!`0,#`P']_?S\_/^_O[P```-_?W_#P\,_/
MS^#@X(^/C]#0T)^?GZ^OKZ"@H%]?7V]O;V!@8+"PL)"0D$]/3S`P,"\O+W!P
M$PNF\_HM'K-;KO?\+A\
M/H`$I)B"A,``^#^`@8*#@`A^#P0$%@47`EH#7G.2DY25EI>8F9J;G$H#`1L7
M>GT&A*:GJ(0*B!88`AD0D9VSM+6VM[BYNF4#&1<8$@\(J<3%QH``#!8<&[&[
MS]#1TM/4N@D0&QK!I=WJD*RAP9#=7FY^CIZND4&Q@,"M_R\ZD/$1<9LNO[
M_/W^_V82!.`@(1Z]@P@'&7!00``%@!`C2IQ(;<$$#0ZX)=S($4$$#A`HBAQ)
MLF0<@1<<<%S)\H/'"P-,RIQ)LZ:0!A<(M-RY4D&!_PP);`H=2E1=!0P&>2I-
MR.""OJ)0HTKE-"&"QJ58Z2G@4&ZJUZ]@WP2(D+4LPJU/PZI=R];(@`)FXVJ]
MT+:NW;47A@E"E$AO(`,,5!8J^('L*04$)$@P9D""X`\/+)Q"0!B0`YW?"(2\
MR[GS4`J+"1UPJ2$IH$2""@!PB4IR84`/B*$.-/J4ZD``X'XS0->S[]\D,ZP6
M?5H"``2"1R(%CU0F0$A@/R$&\8`Z0?+NL%$/U#(@,`XAU`0*`4]^&WR3.`
M"YC!AX6K$#].'12X_?O^!)P:C4`#@#T?8,"=:ABHI)H"HR7S00%),7"`51_D
MYITP&ACB'H.)*"#8>`Y$\/^?`07$YEP!RL$E`6`$(,@<7.X10D!,^,4HHSD;
M^"7(`0QTAYIJJ#T`UVVCN49(;AX8`I<'@$B@C""*A/9!@@58L%ID"P)P680,
M>OB`2K5Y4)XI$L`XXYADYE+!?+0QJ1./.@$@&9`+ZJ71<'M(>$`IB10@9V(,
M`@)EB%A6B5IN`!A62FT>>7`5(!B4Z>BCLRR@VR"UG::3@(E-6.63'ZSW82"N
M,2=A!.Y%@("G)V:(P:%8.B`9`K\,!H-+"OOPBCPH"O
M!#?L,!@&2Y?PQ!$P_/#%&!>Q0$X3)ZP`!A5D+/+((`3@7\=Q-79!O22W[+!%
MMZ&LE'(@N6PSQ@U,4*#,+%%V007UW2STRQD0Q"_/W2S4T&9#-WTQ!1->-HXRW2`@-4`(H`
MHA3`;")]^"'ZZ`#PE6P0!6QX5
MYDW8L<4=6@R_N.N^@S``9F'+`T#OR:ME=_1?+-_\/,]3+[V8VB-A_?7?9-_]
M5]./?\3WX'BG;\SZ[Q?E?OW*,R]_,?3C+]3]]8O?_E+1/YI\
M8G@(3*`"%\C`!CKP@0ZL"0#?)\`!GJ*`,PE`Z$C'P0YZ\(,@#*$(1=@HFDR0
M?16TX)"@9Y,`2$R%\RB`!+F'OQ3"$#KB);.2(:1Y@.@U*Z2$)"]IR=YU8`@)"-D%
M$B"`*:;ADSU932K])`3=T)6]R,:(3$%H'>/I17%>V$/EK'1EX>!`%W^@M72;2>K^5(
M3V-]@'$/ZPE13)*ST`4*E"K,D/
M!$5$H?I`T.E2]QD44.D0#A`46(*W9`'[+G>3&4L0@^"CRLMNP,`K63TVH;N;
M(2,'@OM4.DY56@M%*"HDX-"%+`9."IC5;AV``1L=8#4$T``@KH+@B2AX'@A:
M5.D$#)?N!$+`/*DN+030N\+>$P1U36]W0QP3\`XV`6DL[Q#ZF<^0@!>6[=WC
M`#I`@3J'A)VJI2-A%.!0AU[3`GYQZ'O>924K26FJ#%Y-!#1`K8DN2$#*T(/$
MFBR1)\]#MBXA6ZQ8Y)K5$#EN'-$R+?\J<,^'4'9URN/")SK;5&'"M`DMA9H9
MTWFV"C!->`'[!*P'L`$*P,(.7J``EYD)!:?B*X4:\0NH!0'JY"##``A8E`+\
MXDA,V2\+9"1\-%ZDA0\B
M.-Q`6\IS4DJZU4T1=LM%`?,D()_!]BK
MR5G\XAC/N,85-X&%FP7@2]DW1(:M[HG_.QCJB_I
M'>9KW`",!4RSK9H?IU,ISS;+0>GR?\#*OQR1$*\<37?(3$K0A$A[/XY>P[Z:0EV#@!6I$N]T)CD:
M$6@BX-I'XG=D9*<\X&(`6314D/:(_CV)$09A&*!IP1.1\!+#]+(#H7A^,#Z(
MW8!\:E;C>MI7GJ_GAK?04W$`N0HFX"(&7)<'Y[D+MEYFQ=)YW>[_`=':#W>>?!$;S,V*@\)]C=B
M^?77D?TY>D,1PR`,$:4(?!!]MA98\A.*(#<*3##8@1
M+MB3?@DV709@?I!!4(JQ(`^@*.O1]&-F^S&!CP``QP(O<584FA@,G@'@?H
M!W"!`#N#`("7&A"'@\DC<^G#=Q"A8**#&^'A!X90.N$2+F;X!^`";7Y`@-)E
MADJX9#,(@WY@$`O1+*E@@NF`@J6D@C`$A@"A;1\'@0G!A^C@AVP'B"HDB/]`
MB"VWA1+'B!;$8`[Q/T.'2(AX#HJH/5X(/@"P`0)P`+UA0IGH1IMH#IU(/9]X
M/=FS`/B$9D9TBE:4BM(`/!<`2'*TB+T4(?\Y-`&:96R#2(M(9(O1L``'D(S)
MR&:-UXO]%?]`(E$-Q/CE8Q<&%#<
MN#]V-&<=`!1]]SFZ$X_R.(_TB#L:0!,0<``<`(Y_Z(R;)Q`=L$_^`#P;5Y`&
M>9"+$P8(MY`,67`=,'`-&9$2.4MKT8K-XP`6$P86L4;O(V`C])$@&9(B.9(D
M69(>5$(5F8[RPV`"^07`R`&[Z#O!UXNUV!86&3:AV`$Q>00+D`$[B3X0)CG!'[>A.2T!K
M'#D$M[0$,F4$#2",86"8Z2"7&0$8U$@,?,8O>7@T"=.8=\&9EK``
M`=D&D=!99:"5NA1("5`O`]`5>D.14K1>Q*4\LM"628`-+%28@%D.>E,?TDE(
MP^D%8@()0J"=?,2,\`;I%H\=0?8*`)$IBA4IR(CD"``N%7T+*`!5R4%)")5*J
M$U*B(J)'%AA18!^@J>$"#)X2IJ_7*45&*HI@&?^U)26LMQ#+1R'K>0`K`G2)
M5*:=(%IPF088M9,N%5YPR@5W.4@4``'!]$H!0VHP`DL+N@4E-DO-D*%0,`%L
M9J?EX%WUT0M$X*A<]I?@5:ES8)J8"G<>\6!\5CH&\@>#4"%+F".%0"M5`BZ%
MQBGQ9ULN4:^;XCEH(B'M5V#@T2E]`"W7P7M'DB2X,AU?@9Z
MI(^5LTS,%*EC)J<;\%D@I@5U&C#ZLJTQ]98P21=X-DMSYCKI-`2$!69$`$N5
MQ4<95@XAP:X0L$X)\!#ORK%M8)KOP%#<\6"%*(3B!(!BJ*Q%Z.TEI"74GAA`3[6@GQ##93>U#^8K#]'VFHN)"M?;%MEK
MGS_)!DUP$Q]+)B6<&6>7PNB&K+:`IJ39!AW0`6UU+S6,PSRSPFS1PI>@K)@`
MD!LJQ$0\E!>,"QZ;";+(1R]L'T.\$N`1'CSS'!UCQ&N!Q'B9D9F062#\*%F\
M$D+Z;X?18`@#QFHAQI`IF9Q@$3OK*&D<>+HQ#-+QA(0&\&'S@("@#QV$AQYB04EQND,LQ92Z0!0H7J2X7CIKM?K,.[P,.VP&N[W!:6G!"^C"5Z2+"H41NW
MD0C`&QVZP7H>"!<$]9Z-W"^R#!:T7,9:B0MZU%+`DLY2I1(.H%!;M<0`D
M\CKPTMQ@>K1/*8`A)^`[]H:,:X`'I\E7[%X=!43,?/P`$@,<-0@=/^TA]%N3\\/14^G0F1_`P]J91V8=1/7!9++15-
MG0FV'`U5',-J0=55C157'17_69T)U#P-V'@!>2L58!W6^B;-U*#$T\!KECD5
M;>W6.S'64%'6F@#1YK!J4N&1)CG8A%W8AEW8*/DP?*T),UT-N;Q9]C.1DMV0
MJC/9ECT\N1A!,5T-VYL.V'#-0T-*ME`!EM0TBZT)3ZT.;$74+B/:M@"BIHT$
M.^66U5H?=2:T;#,$YW@&6ZT.DO7#:ZTUKHT+XFLS2CM+`%JS#P&@Y_2ADP3:
M:'#6OFU,=S/D.R.(O/>E2K?
M0D"1_T!C:^1P"8V]"PIWV!9^X2%TVK9@X+@`66P*UX'5.[U!%V@$9ET1PWB$
MG)/0V3*-UZB@X;7`X;G`.@F>!,HD!&)4!WP$-"2;LW7J:P0N!ZFM"_KAXJ8`
MX]9UR]&`8@W#L<`3"?<]G2LU!'6F";U-Y$9^Y&&HY-`0`+*DV!`AW;A0Y%DN
M"$@^"S+^#`TPWNX=$>5]"V1>YH!PYIV0YM&P`1Z,+W0^"_I="W$NYWN^"78.
M#3@1Z'$\$1.^97)NYEM.$6S^*(;."2QN"W]>YI&."8,^#:#`VO9QZ9LPY+-0
MZ5GNZ9:0Z=)`6:()*:1NY??IYXL>"*MN2%R>#M3)Z9X1Z_]FG::A_NIS'N;M
MO0ZB->NW21)OO@FB;D'0MA*&_@E`@]\:\^B$N9U>/;[\B%I*D%J;$+207A)]
MG@G'W@U(C2U%YATW_!X;`2))?0J!7EEO"0MJL)EBX)ENR6%$8.U(8.U.95BT
ML*=D@NO&3L;>OA$_&&3SNRA.NA&SL1%[3@&ER$Q"P)WKE6*$M)P+X*=ZHYV<
M>?'=*?''R4)U_9;8&>4P\I:P/?'6B8RTD%*[S<(F,>F,O1$$CUSQH!-H)7K]
M,79A)3A?I0?)LE^[&L!9IP=?51Z5<1![[J!%(%F!A#DPF@$=NCK=-0YW$)F8
M\YB:Y!0O&J,(2J!$8)F#!0DHJJ+_`5!7,%D!*X-,)!H`3%77G[Z*PVX2H"[A
M'%$:K6PUD/&[58);2Y)TYR&(7GD2I,8I:H,K5'1PL"
M<89.#R%?X'6G)K9A12!)['IB+P9F30!(O<'VLR#L[CP35XZ7'-&O-\\-OCL:
M'J@_XVRP"P%_X5P%'+'GCJO;4."NW`6@3'27-X5'\#I)PE9FO1\3R"F-0:'Y
MQJ]>PK]'O@_?VX4+C>#L/8V/NB[W&Y'2`>(:*.?ZX2%D_V4I!KLJ@(]D9J?P
M0IZF4%"T;XFTW/6SA>E>9`:OE,2N+!M,7:_;G`\$(,$`=``-!,(!$C29@!J4
M3B)A!%VQ_UGMEMOU;@.;[YA<-I_1:6Y2W7:_N15.`JX6?/!Y_9Z_+^`9'/`B
M"!X.%"P($"(T"AX`#@`,+"P0,!0C-1X(,``T""8K-1CZ2DO9ZK@:G,*(,@X$
M$I`&*#8:!`XR0"HV%@8N*"XJ>!>N?H,K9FL'.#:.%Y.G7)RZ@Z[7N3/OY#/`8`/C!`(`/"@@B
M/(C`'QX$"!4VE+@'E3Z+%S'*.P,%3V&W/>D([^))U&F5.D/I$B7+T4R
M@3GS34N:&!-NCF4*#T*Z8HFW6)3J;P%'3A^#/\ZE>I/IDVQ
M9M4B)4.^-TO`AA4[EFQ9LV?1IA5[06U;MV_ADG6GI4$'(A=[5M6[5ZA6K0M(
M^KV28,+<-Y\()%:\F'%CQX\A1Y8\F7)ERY`%0`>Z2@!=H>)P%:QE0P6N:/ZZ1)U>.'`#P.',L
MYM7[X/B'"!,)\`%0G2]L.`$X__*R1(U,,N:S.#_#^XKZX"#$73",AOMR^_?Q
M2VS^Y5YQ>-*KPD`0ASYXX($(#'`@,0L40$`"!2"1A(%`/M@..>_>``\^(RJ@
M0)X_(^`*F*9`\-/D@,``P,
M8."/`@PZX(,)/U#30M/
M0,71:"4=8@E9DDAQ"=DXX$A#)[\X!RDS=D75W'-34M6+IZ**A\NI+#@M#P0L
M,$#,XSSXP%8U_QT@Q`)/*_`\6*9B\+2Q`U^R?3;B(\0PA@TC
MF#`"3Q`@!N';!62Y`,4FP:7K+G+135EEE-3UHJZ3WWDW*$L$0>`!!3#X()$'
M-"@S.PP>:-,`1Q0XP(`']0S%KE^BND!`H"T@FI`+5D+$LL`>.6[56[9"\]\BSFY!`L!Q`$%
M'-B.0@0`,.B!P15A`'$`5.N.'E\&<">!9RD`%E@H2MP66-XXHCR:9X^H/*P%
MJB%]L&0;`+;U2SEBNYAM.29].(XN'U7N+)AIU0N[\0X>5;V]D"-N-_]D3NY-
MR]R')[
M]2\D7_[P-^"@"_3ASS]5DK]@=9WD]8<'!PQH(N";WP$[`AHJ:`%_>C"`!!)#
M"I\H@``.&$@I'!21/"@")0^X(!X`P8!#K(<<8-;`@&!`(:GYB:W\`44]
M>$\B&)"@'M3$!RJJ9'EXD.)!R$20UKBP#2]+Q0SS(($(`,`"5^2#!GV"-`<:
MS8&V>E,0A3C$(AJ1'A7X#!:4N*8Q)N1H#`#_R,U(H2`#0$@!!;G@%\MD2`&:
MR2`V*]S1?N@`!'#P:(7S'@7!%!`&&.)Q!VFD(.RER0K-BB"#NUD%M5.?+[8Q
M#W@\"?O&P+%*"0'_[0AGOHXJWT$`%Y?:!F
M6^S''IN"33[2HT4@"&0!LJ,'"P#@`97`@`08H`@%%,``'D!(T/(P2YOE;$+M
MA-P?(N"X3A2-<*TADP,&B8?3=`(/#(*$OD@!N:+I;)&)D\#0;G:``?[!C2"4
MI2UAY1-R,H\(U.8V_^-1EPI\,YSS*M.9#((F`&0G,8O4@Q37B0+!33D+HIHHP9!Q%J@U6?0`*&+I!XS:DHLO+(/V
MD(<2`B2"04?[0"=HY<4T+0(`#CB-6R415RSN(:,^^6E1'@O4=4CC`(&40$"I
M63BD?B"4`$&`!^`9SR`F*&EHRJ*M++`)P=[*0@1(YP='F3BN!I:S.20K00B0
M4T=H-8N+X*HSJX,0*!K`$A4EHT>UE(:/^C(/HU3J<4Z;)@!,$YH\D]+R`')3
M@&B`@(XU8F0EZX8&)&,7UPBD/9&)`#511U])76,X\^D'>%Y'`\)%J`$T`/^Y
M<=HPJQ92J@:+"L%V)C.+#J@.OPI4P=8,$)J"D`#D+C@F9&)UOA72@&H2RS*[
MEL%_;5AN4=/97MKNZ[,($406#;)6/;RI3-`,TYJJ\T.5@/2`Z$9*8`RT5E1%@$!X>\,G%"$(!A(!(O-#YU<048).%F]52';0@A0#`
M<01)I\T*`-"@)0B$LTHG7$V34%:R$*0!49!B'K)D9!)"DL>-#50\?!('20##
M0+,B:QAB140X#DT.\$!]MY-BT^!WM&9*S!JI`T%T`@*<#(!C3P]HXQNO"Q?)
MS4(@?8PXH""HEZ5P`#Q5F1^GYF>C9C"C[1
%-FR'=G?!W@?70[X]`O&2R>Y/UTA%P,VU1F?>=%Y%=?B*
M$YZI.AX1__@,1YLN\Q@*P)[.9U&S!^*@-@@*:W-7E#Y(V&&)+\YBM!^4=4
MWH5@'*!=\HBYJ33YVP(1(A*V:MR")?#@)DO3PGO]=L[1\&HL]7S&Z`XZ?"!`
M&RB$PR)'K])IXOO77^I+_Q`&\2]"1@J0W=+QZB%O@[/;Q_64_!PO*H\"D;;1
M$;-?+Q$2`%-@J>-4"QD:05GT)D<)W^N!.I=ONBYT<\G@\U/4
MJH8RB]RUJ%B_RH#ZANG$YI9\&NB]A0P(@/:UM_WM<9][W>N^`[OW_>U[__O?
M^VYW(!+0T0HP(SY60``=N`*W0P+Z^["1(9,H:0$2<8"@M9``%WYI(9#&Q@HU
M-G^O5^["9[**,WZ='1?0^!0C<(&VD8\"G+E<.X8B_>&M6B`\;)!#Z`K1O?#QB`5Z$(R@`
M^BA0!840A.PN%?!N)BJ`!)'GUF3C`N`**!+$`6$F)"KG3V!$!Y,B!8(KP?]`/(U#$#HT(,"Z@SNS#`3``6=;!1D(G
M`,@.@0SQ$$TE#D5N`E_B`6,0@LZPD-BAGQ6810&
M#E4,;`.F,`LZ)0R)!`B!*AF5
M`T2XJQK3Q\"HAOUL\B;+9Q'%;1YK0C`@X`+8$=X601A8$2>-,A2)CQ[F,#V4;RF;$@*>DCVR`//.`'4X8`%-KDPD`!7(XP7,F
M-$0=U0\&KT`I-28EYZTJ)VLJGP\IRK-B=H$.TA,+=O,S]9`[':0/P[,_:<).
M0.=/>,,WR`,$\$$^=DDGU2`XM5$`P$-%NJ)$C.$N#G0NO!(2GY`[_8&T+-$_
M/30D9/]A+@9@1[``4M23`$51W;J@=:[%&$AT,#*G*SVB#+M+0RN!QJ8QA>!T.:[Q1.UT4*M-0=N'3L?0"-XB`&@B'>KYD*@KFTZJ_<3IF(Z_V&29A&2_&8B9V4R2&&
M*5VPDUQ+QER)%%W/Z%9C%?+$*E\4@%W#Z8ND:!)`P0+6R`-.K6<2H;@<9#M^
M"$TNH:8(P@,L81)@B@`BP(KHY:5@=H"45:6,3`(>@`$2IQ.4RF@H(;>"M10T
M`%$AUB8EUD8IM@X&P-<.B@\<(1!J$)X\UI9\R9>RBFL+"V@KR&?;#(0N(;6H
MZ0,@")J<+CO09+\VJP!(H2#^X/':_PR@3L(@E_9#FU9#G[8.)D!7)4*]MH@T
M#,D#IBEKC6UKV39-V@Q-`F>U_+6+%B=MHZMQ)4RT#J(`+JRULD--?.F93,$`
MTC1OP7-ON;-OX2`GC-44$B$/%&+`=(:$$'=-[(6I%O=6O)82!4)6T+:HEB>J
MZ'9>O=;T!,&.UF16YK9SZ];C^B$">I5T"]-T^8`T$H.ZT@5-Z`44'@@5]0)G
MCO;AZNT=`H!Y)^*!$D$2Y>74D*F-!@(12@-!HF[/%H'0'B#J'B@U)*"RB$L#
M**%>O.S("(*[(N"E;$6-5HC/\FEC299>2$'2%`#03(,ZE@J<_+A`%B9`&M*A4VID=+JB$1=36>ZB"N:BCFNC`5PD15:D1EQD`XYBCXU8;I"8
MK.BJI3HWF4[C0.R6KC9V39CH9G0&0OY`30@';0OGPD;*@XS&0BBY39()3:04
MW\+W/[ZWC8/"`/`4+1?@`CK@*0]@`>H"$*.A,#@#4YC`%IA@8W[_!!Z?11>>
M1@C"P0@`Q6!*Q'XTY)$C]GO);^F4-X16E;-$;0^8J%_2%H2^U7.!%G+>I+^<
ME1#4=CNO*9;?80&2AI9%@P`.4N7.AE@<%%F`176HY0B8KUB@X%&PP`C8@CP4
MAI\!&=?$SIK!)9)UAKKHI799ZS@88J\NC0%*ZK/@"Y1Q-YP0YSC4>1(H^K20
MYE9I.!4RP+@VU(;W$%UD+"#@N."@4SBC@AOT.:`Y1BV7,@EV[)A/IEL*&B[I
M@&&(`$C8P*@3P#JKF8>S`J)I1JQN)F=.EHXPX'P#N."2AHGP@*O,Q`",1@$,
M]\'D"%J%9DRLJJH!`FAPQEA3N@Z>9G63_XP@A@:&]6(@U!4*A2V_LI5[R8'"851
M(-N$9QEPX"D0"(>1O(R`N-=U02A;'<>0GG63W`YR'@=QD@ER2'MP?"AQ:/N=
M2B5P)H73IEWCH5+L#@P&024H-F*?$@
M]HJ`ONJR"H*[/N%XV&WW6D?W
M)NL//)3V"U:A;XYB1:&[3&'(8P1#S[606B.%24MD[ù--G&84#!X6"34'FY4&LPR<08$)4PX1B!8).+5DE
M(M2_`X9#B378R)PJR`/`:5XTP8DD2EEG#@.H+$)4BHW6*+\BI/L6@4$:H0"F
MJ5E5EA`,`90>PM\C@:5P!M]-"G$>3!0PH9SJA>!3F,K>J+F+P@HT!%-`HW6&
MH2)W[4B/8-LXYBBB@'1F1$);I^0-`T]:!P+(U`F*X4:B8;R(9/[JKW*(4B[3
MO-H7:[6`BUX)SB=R^)GL]B!.HV$;`MW_,+[YX%E378O@R)'(ZEY!*-@:Q%J/
MJ0\\&6TW:%8ZX$"\GJN?8SN
MI@*""BNT6C@_I+65^L`!Y%CNWX8(J""9-61:D``;AZ-CZB(J#H8VB658B(@(
MFKJIV:98K&7;--"AGUKH.;^&"*H2Y,A"ZBFG%DJCYW>L$O@TC(OU5PSR-@%P
M05WV]Q3\)\*TJP)"+@@(#`"`X6,\(I/*)=.(_ADL"9+UBL]HMM^O]@L/;
M`[812)`#`=!`8"6W!?\+:Z)MC8,$`U!Z3<[O6>F!J`$6`:1>-KF!
M_4Y.-GSV&A\C)RLO&Q.L"4-'2T?_"0Z@$:[9\;$)!%P,5"S8#I#JE6W+#P@8&14,22W
MC(BJJ,#``07,/@3S$O)?EPFU/J),J7*E$@2,2,*,"8U"``I7*,S;$*["N@T4
MZ`V@MR"``)L0`BPP4W,HA*$4*O`\4"%#@RMFFD)=4`%"@PT-$DSPRK11V`;_
M2HUFF"-SK96`R`8NU.#QTZH"#`QH0*7J4RL$%H8\0?`!EL?.GIM8"(1Y-.G27JJ93OW/K;&(#QH3<&!`0017
M'QP00*#`@@0)#``0`(`;@0,&"&H3**"@U0._A1$P:-7*`&[I@C\\J'T2V64M
MW=E6D/AY//F5`+ZK3J\>6AO1Z]^'85V^283-XH]LG)\$O;MA51)%PL%U^A%8
MX!(:J`6?@@LRV&`T\AF(7VUW(6'`9@;R)XA5[8!0P0`V+0!!4Q].8,57D@Q@
M080K%LC`,P["&*.,#D+(HHU,9)@'%K]`L$>))8(P_T$^O[@GA@"6W)@D2P9P
M\-^,3T(9)68U*JEDCB']LD%;75FQ`004:%FD&`N44J69S$0`@91KLMFF,%2>
MR>*5.VI(R#9N4-#``DG9-$D`C\49Z"4*Y.BFH8<^&0!RTC':J*./0AJII)-2
M6BFC<_8'@I:$<*GI%7OXI*8D"6@FJ*E+%"`FHJNR*N,X0<$:JZRSTEJKK;?B
MFJNNL58%#)T@<`5"!L):,2P()\8C#`2(G=KL;4"V&JVTTU(+33`+Z8SZ^*;K[Y2MKO6!*_5
M:Z9+^Q)K.N5F37;9I6Y,4WM>>
M.0!MD&Z;';?<,*%-$LEK+TD%%@ETD.#`>RS
MTUZ[ZEYL8"SINY=MNM!2)M`G[\-?[3N[Q".?/%O&1\L\20(LK;ST(#O/:O7^
M@"[_^O3;'WP]HMY/$T"\W)-O,/B&GE^^^DZGWV;[T"R@^_KSI_O^FO9/0FKT
M]//?_,_X3X("+^D?`5<%0*T=:GP%7*#[_H>H!6C/*A/H50,&(*K@0:`*(H+6
MB]H2@`G`C0L-\%D6$I"!$V8@@OG;P(L6$$(&TNR`3Y*A)"K`GT$D`$_U6(<;
M.I"'JHBC#,^H0".(*!(QD7``'/)'(6!8/`F33S`G8)"_\@UZ`D+%3B`'+(1
MI#EPH`$I])0>>'(%HNQ(#<,"%QOR0`%L#`LG?##+.20YK`M4T`T?U%0'$]FQ
M1L((F,^3Y#,H^8M^\&0K5,'"`C80ND+\00U8@IXFL20.1`3`*U48!"7G,8"J
M_.$"[ZA'4'2I#6'Z4CWH9-`ZP7`!O^UH#PTH43/W804.!<40S]!'D.BQAKX1
MH@)-.I8K<7F%!1S@/V@P1P8[T"=N;F,.?ZACW^!13D\.8%/I_"445X4Z+ER@
M3RFL0%5Z9$$Z&-=[S#'A.P@3.F<)0JN,"
M+(Q*%89%E1.ZD@+GR*:F5+51\_]U%%&D$ET%KW$')V7R#EB@@/`@6`&D-`*L
M1U$+5!+PJG&,;RA@M<*>"`J"LWZSD&JJ8%5H8U<%PLEBEFZ5E2HD,^M9P6WVLZ*%
MJF&KM0$CCC:U(@DMHAH0.M7"=@N'11BZQ!?;VV:J9K/%+6^-Q-I5U;.WJMUM
M>H@;AC@*-[7&3U"6Z^+V>U2=ETV].YW
M?QLM#G26O.D$[UJV&P`,%""^\ITO?>MKW_OB-[_ZW2]_V:O>W,906G#BG#'\
M^]_,L12?(P5ET]1EAHRD8<<
M@5ZNQ\;DPC$(E,H6%/L8"4`F'Y3/!``DU[C$HMD&%OA903IXF8(G.F6/HVQA
M$4^XS.2Z,H.4["PF<[D1&6A#_)XR+)V4J"9EI,E3L%!E,T^9>W^N$IL7Y.9F
MP3DD$/"0'U])@1Y>PX46S,`'U^%G-9L91VCV,*:;56@%'?I4B7973:RR%3QQ
M0`^Z`XM#+VT,`TC``M=A@`2\=H10,T$"A[$``2(PKB@@8"$3_]GO
MTZ=*]GN6'2@<%](;']Q#!CB9PP!4X)TL3&&U0_E5/[IZW">1B`$8P(!:X$;7
M,&.%KE4A$0<@_#!)R`5VLB,$`@BA%@QX`&+LPNMR&X'64]L/NIF(:>H$9R-#
M$$(G&D,$(QC`V[J``D96GH2(..#7$\%R>MP=)R:/YL_AUOAC&J(!!"`@%1#_
M0`2*OI?!J&+B%2G%+3"@F-FHZ!1VP8M>C#,8F1LAT-NKD0$6L@H)P&P7,%_X
M!QC`]B1PI&$8`-@1FOX!!`:^Q.LO^63ZSN`P'G"`AX0$.*D0JS)^3I\"TS
MQ;%3F[O+!>8/X,1";G%X3=@Z["5/MQ(BP*S;-*9,D7_`N"*@@`#F%@
MIG5+Q";UP@8[2#8OC1IY0,V1QP!B[@.`[(S\".8F2(\_WH2]9QE-N(=[2FS_
M#Q$%'!G&-P)$%'```TQ>"O??A`&"\P$/%!P&(`!B2,"OY5]CP`*O00&OT1I>
M/(`%W$5DQ-T#>$"OH9[834^-9((2',8#``#5&88J&$T2C-_J%4#&*`'Z]1PS
M&``&O%TOJ`C_2K@?$QV`%!'"^DT)AQ!$9";
M`43`"TX<[*6&["%!MP&@$>B:BLPA;`#?+A!!;7S>,1"`AUC5L<#*I^@8F.$5
M6\%*`!Q`(L8##F8:!DI/C3!`12#`9EA=VVT.A=R&&J:>$4B$L-W%+&Q&S*UA
MFS$#8MC=!YR>8*3B!_P%`'A`Z@&`BE0A$Q1`(A[`,W2`+P>=A2`KOG&_VX@Q\*-
M@F_0G2ZPH6FXX43PF@24B014X`>H8R`S(:@PK&WC+QAWM0"0!!V-HY?=YH0<&!P;\AB8B`=YUVG:8)>@U05&>FS)2@D$J24B28]^5
M!ISD`B<\G12881,>Q-V5(5^J7B=LA@+DQ_]UZ`9#.H%4ZH9?ZF145B%2$H]2
MKHA<-B5=DH9=?L(L3"0G!![YW5J9_<5*YH7:%8#G`:!K_$9#1``%#D$J<-PK
M)%]I,D`J+,<#?$)HAIA;2@*5*$!O_,7$$=L24&02',='4"9I.&626&2:,<$'
M$D#V301GB@>YK=[_O=Q"7![314=]%$$JY)UGTN9&I,)%I$($#(&O91_M0>;P
M4$D,B@(97L+XJ<1QCD9RWLARN9T1,!+IIY"
MZ$7!J1UY$L2%!.BAK2?OM&=]2($3/H%$'(!MOH82%F!C^$8F^%^WX0:(N@*L
MK:8J1$")CJ*A66;_T'7:*N#%#U;$8U`GX['B*.C%0OB:)7A"ZN7%8.C%;XZG
M>)0GS!"F)?RFBNGF;F(:WGD`H!!H1X"B!63$@R8=*EK":]2%A="&*GH$E:8@
M4R+GB][>$A2P&)M+?8:1I@`K'"6I<*RC&*01H!&!`
M<)P"`4!$]O6&$)Q"V1T`8ISC!3;I6Z[E.DYI7PJA)D;=V6GA)EI>&YB`1Q'1AA$ZAD`@CZ=$%C=_#GC)HXI*9H,?I*$
M9$9.J9).>VZI1-1?1W@`8<(,`$8B7AQ<1[`CH.0?QCW`=K*BA=R?<'XJIV;8
MIXWPZK%E6B\`Z^A028:B:F[(AA.>Q+1"1\RY0C1>1T\>7&+DALOIW,[IJL9T
MJ\E]*[@^*D",ZHW0I[:&ZEKXJN&$*^84;($$+%ML*XOD*^?M:Q0<[.4D+($L
M[%HHV(-I[,;B5X1A9<3F9K]^0<7JQ\4FY;]6V,1:#LG.A\E&)LH2F,HN#LN6
@A\L.#P383L[J[,[R+,_*C\AR`<[V[-`2[>HL31```#L_
`
end
GRAPHIC
5
y85445y8544502.gif
GRAPHIC
begin 644 y85445y8544502.gif
M1TE&.#EAL@%%`<03`#`P,$!`0("`@````/#P\)"0D.#@X-#0T*"@H&!@8+"P
ML%!04'!P<"`@(!`0$`P,#"0D)!@8&,#`P/___P``````````````````````
M`````````````````````````"'Y!`$``!,`+`````"R`44!``7_8"".9&F>
M:*JN;.N^<"S/=&W?>*[O/"]-P*!P2"P:C\BD$PNF\_H]+.K;KO?\+A\3L^RZ_B\?L_O^X-W?X*#A(6&AX!>B(N,C8Z/
M5X&0DY25EH>2EYJ;G)UGF9ZAHJ.D2J!7!EU=!A.JK$,*`@4&!@1*L0('$[I[
M!+-'!UVV002JO!/%7<=YR:H2PTW)RTK-108%`@J[81((1KZO4,[/HZ=6!@D#
M`[\*``OAR``)!`8+`XI%!PWS$P4.`7P*#%@`K,$](000J',01.```-.HX0OC
M2UT""0`&)'!"0,``@-$4J"."P,&/DB"__S@8<$P;$($$HV`"I`"@,KA(IQH2<$G4_"*CS
MUF2G4B8\B?T+@N!LE@(;@1A@*'=!4R8>W7;*667G`"$^HWY\5>#NA*=Q@1"(
MN4M`+B#!GB$H0$\`V<@)*1NP+.3:XU9L"I!-R#F5!%ZD/Q^&ZM0>`V0+K!)#
M8-F6M(ZGTUWD%0ONNL:U@QQPS*!!S.&_B(`%HJX`9,<(H)$F:[;9*\_+:/L=
MXI?L!,;8B3IFI0KT,],&AIM^EM"@,F5!PBO&=@`>D+SQ9=$"(L%R+2``*RT^&(\67KTUX7J-,!`+4#8.0!9Z71Q3XP3*.!>/0-E9)=[6G8Y
MW):">E-4DPFXA5^161H`P%4)$"2!22&>)IN:9B%H#P#8(%FDB08T<%6EW!C6
M5UH3!(901A.B:81?&0JA4%SI>/.4-NJL"<2Q$R2;J@$#$-DL7F`4*WD,EBN/W#\+;T$IPS0R`T/5+&V#-KJ(*ZZ:GBD.J_E
M@^$0M=BCE4<$<3Q2JJO]\+2.0SJVG#J\9+LG`KI`'4QQKG(-]$OB*8D5Y`&)08$`P<$#E^3O\%=?2X
M"^26R+CB?J-)\(KM%)C-K7:5\&!!??M+`S"P``.VE#0/3]TFD(`NFQ\AN)Y%
MQCXUX/P].7?N@M%*]B10-"[=PWH!',+@(O<'D!>P!!($+LI@[[;.H`O"(9
M`E@WM]GE[WU[^E:J-H4^Y&D!>%)`'/-8`8[#9&@G#PN8L$CV/8$434+.H=[T
M#C(U@%1L%[;`%>.$D*ITO`M642/"S2HH/B"LQ#8'V]+MFF>B52`H636;2XJF
M]*K$#$5P$FH`N8+XE_^Y#``>9B%7NF@(1!M>D7^M.(JXSOC#)CE,@7ORX!P?
M^)<#(&!DT@)B7&8RC4UMA``*,$HW.`>ZV8TQBR+44;8"><5`-JEG8BA;7=#7
M-)/4O'S*!=,1$0F$YY,J<%$LB:L0V#K@A+@\)`#G^
M<0+86HDV),2O8@+TC-D`)OCB>9BX,&"60K!'EII%%A*-2A=BT48Z*),1*J[_
M#9VDA-,L"[4+Y\`3&^FX(OU:3,^=BE2?]PE@&%HSCYR84`"]$,,N"0@
M8+09CV/H!)V@$E6HG$G4`AR3IJ&&0P()8`!E^@,=,P4@`090WX#&`PBG(D`;
M0TTJ5/WV@\T,%3!7]=`^_(8U!8B`:WV[4=\JU[D"++5S^0EKS@`*XY`"Q*8Q>DQI65F!62%1-
MJF03.QF:6DBOGM$IQ0J0E8LH)E/-@XY;`P!7GPRVL(%:JG=&:R$[K+04H;"'
MN.1(!(%X`2C`3:X>4*A<3IAIJ5H]0E($H+[4-?>Z_W!@+G:WR]WNOD&[W@VO
M>,?K6_*:][SHY<)OT\O>]J(7O.Z-KWRQ"]_YVO>^H:@O?O?+WTGHM[\`#G`A
M_BO@`ALX#P0^L((7W(8$,_C!$*Y5A"=,X>RNM\(8SG#P+JSA#GLX"0[^L(@U
M'.(1FWC")3ZQBA>4Z+&2^B(`K(*
MIK$RSS&=!,YSD`F1JM6"5D"@G5(*2T(UBJLZ`MW&`V
M$.0`IPS'K+2A@`-];]"03O_#G9/0$8-:V9H0!MYBT!)`J4`+[DQQOW
M1`2]W2ZNS:#K7==!5*FPR6'JDR;Z`8$Q'LJ5I[N[[#(TV]ES\)M+AJ&:UVSF
MRHKAS[:YVVTR?!O<`ERX)0-#D%8VD_239]8TV'=\,[#@4`@!<4L(S#]F=X
M1+&N=]L]!G__N\&MB,4N,"J$)6T((:<<+\/%X/"'IV%^!$Q/W[)!@*[IHJ8=
M2=R-'+-N9?-[#AWW.!H.T+G(L"<;X5#`9>GA"HV_7`XQE_D9]-W?C8UOQPC:(5%WNV[
MX,E+>"P8_O!52/S9V=OX*SP>\E.0_#@6[W.^8SX/FG<&Y\5;>2M<_O-0"#W<
M]_Z(TZ/>":KOPNC#6_HJN/[51-="[/5.^;2_X?:I[K1+DG+91D-F`?SHR5F3
ML/O9+]SW;@!^J-FG"H*OLA;FOE(_$H/H+J"L",UGO2.D#^H$_'/*,-/YAO*V
M+"+X40GA[[WG7V\$3Q6/>3!K/V0<#29;"R'^Z55[5$!^_Z&6`&"V"V#U(SU1
M!-\'?GFW>O+7>O17?ZU`&\C@$NK73D`@;>'4^+7"#88
M:?ZG>T/(>P%(@TRP#/41'XI0#$1WA"/X?TOH?-SFA$HP&;V6*P(``-K@1RF7
M&Z(
M!,8Q!+D4$YW&&`UX&&J8!!"@39`8B9`(`5$0B)W7!HL!$6S!"B#1'W&&AHV(
M!);(?%E8A)(F`=*"@]>F;HIHB/\BT#:A^(&EF'JSV(0-E@K?@0QD@0XO<8Q:`2C*(JU&()J@`Z6%1U5$0"'%AVT@-HQ'0(U;^%U'@(N*X16@
M&(RR.(1:Z(#@:(J+((V19HWB^(#AZ'(BZ(U!@([?J([DB`CF"&GP.`3W>%T"
M.`7U.&CY^([%.(/MZ(YD$Y"`:)"".)#N^(]KB)"7.'X$B87C2(L3:8L2&)$-
M69&PYY"D-XC,AI$9*8\4*9(6"9$@R9`%J9$">9$8B9(H"5S[:&J[EGM_QY'$
MJ))MJ)"@)GR*D66(=H$9>!_+=Y,DN9$XF9`LB6K4QP9,:":\$!?8I@#>!W\V
M68U5>8W_25F`YZ=_T^9GT9%2N\!_\9AWZXB/5\EN'NEMKV9_T``2L6(M%2(/
MO?4G5'F4=5F4*VF2KV:`K]")6D$D-`<`_+>(9FF7I&B8M)>6[K:6%:@5;.*8
MC*AG1.&!A8F7!XF8SZ>3D%:"A<&5[\2(&OB"='F79%F)9\F.60EJ.&B'SW%9
M7V4+?C0EQE9`AVF90HB96*F7KI:$-8F;Z5B:$:B;!.F2I[EOFAF+Q.F;J"F<
MN[:$^I6B7F>J):>BK>>XYF7X`EO\#EY3_"2I1"34="/#':?FR>?_^H9G/4);@`J
M>@(:GP3*"/ZY8`<*@?E9G/JHF`WW<`]*A",YGSF9FK1VH4Q(GAJ*E,S9H1(*
MD-PID>R9F6[`FTW0H`KFH66)HB$JG6@@?*C"XD!EEQIH$^:DBDJ
MC%\*DQ3*'7YB4QG2$43RB9\6GE\*I`M:!=<@`@Q@*Y[('UEV$6RJ&*]HH6_Z
MIR?:7"W6:2W1JY7\T
MV:)^2JJ`&J9HN06G<127NIB/"JQC6:M-H)^D4&.'51]<&G6]BJS=J:R72:T3
M*@:[:GG3.J56Z:N42J9;8#8B0$DIO8:J+KJEPUEB&PBG7HJJ"3VJY@
MZJVYB06%T05_R'3S*J3+^JOX&JQ:$%:$27?_&J`9FJZDR;#FJ072\9''.K#)
M2J^T:K'T"64BD"(2.ZKV.JL9:P7PRJ*FE[`(NK`8>ZT4:YPG)!SQ6G@F"Z$7
M"[`JZ[!4F@6=.FS1*J\3:[/?^K%CNI\T6`PDRZT]F[+JNK(RZK/Y*JP=ZZ7@
M"K3A*K0P2P+_YGIT,8NA]:JT[,JU[@I]QU"TMI>U'QJP4>NUE9IV7=>OTGJT
M-)NT3/N;<;N<5K!3!ONTLBJPMXHANDA#NSL1NR4^`-/L&O>+MKD`NWI]NTJ"`!H!NZERNS9BNU]MJY
M61"&CJ%P6#N\6BN[F`N]Q!NY6`!1^V&LCENZD=J[J\95NS
MWLNW;^NWF5<"K6NTV7N^AYN^4JJ]:9L%P>NZY#NZVRN_FTN_R%N@_WE[MO3+
MK.50ILW[OOS[LX\;M,V:=ND1*&XVO@@\N^:;P&(ZM0V?F(JPE+%#%O`H\P'I[PE^+LZCD
M$DP:*,=0K!$W#*_:HQ\6-VQ`+.BW/.01Q!5KP=TKQ5%,P2)J!AKQ2;LQMEZ!?J&4U&&('AZ<3+%
M@^?6C1XF`#5Q&*Q0IZVP`'&'`,%6P7`\OSQ\K_Y+M5C`@<*Q9%_V5)#9,GOZ
M:!^V0;7P1_SB6D-PM3G``^I$`ZPR8UMO,C6+,>FR\X]7*6R0'#-
M3)>^D(&%09EE7/,KN7+]N\+).D,\"ML\7?+S8#,"ZN\/]3,"BP)]0(-"D
M8%1^B&0HN]`*K@)PZ
MK`D9VV;(@7L88*V_CDS5,-W0!NRO[,7)JTAO\,`^;=&B<0V[1"W6@VW*1HU>
MM/P81!8$*`,29;G2O&S1D5W6+#NBX;7,6H&JC:$8!-$\O@#8DUW8ZTS9\4O:
M*"S3["8.M=@@>VNS-R`N^W7:-
MVI:'2!OQ&$6SV"F7*+1IX92:W_RMW]C=S[Y\UI^P6UZ1;?Q!-\![X"F>X.NM
MWD&=X3?KXPUGF@XOU,Y+,]UQN^XM?VWJHXSW.XX3MXQG=Y.GU
MY%8>Y1A.Y1I^Y`R=7W?=MD3JG$-^X?N=Y&I^Y"].CS6(G7">`-K):FC>XF`N
MY>UM"$>HY5Y.@1Q7YRP>Z$KNXOX-XVG`YV&=#_U!*,RX"X9\(,<-VO:*Z')-
MT&0-Y03KW$Q7G-"]8VRA3`A1X4E`Z?V)YU^.Z?]5C.J5#>1'5YR@M2&Q@PQ[
M;>!,0.KGW>6)/MJJ7MJ[?MH<*N2W3JWP?1W(1PQ9)NI(8.M/H.SIG>NRW>O[
MR^:%[N:AKAKRK!C100Q2B=+B4J(!'@2!%,$MX]HYCNN5;NH_CN4;@:6HY`5;
M3&^SK@3,#F*M0,AZ+&TW@>P]"NB#?N?F/H_NC8_!,`S8$(??!Q*J,>JN#N)%
M9_JE?_&&=_F;9#6@)`EF0P:BW?;
MB=_(SU'"[F=:#7S*,YC(TTCB'+#7?Z?;[ODS_SK-_OF3_M
M:I#8QU!39^^!>X[[,8^&R'_N=Z_[RRR_Y
M&*_ZT6[WS"WV=B87W$B%2*R''>W1WL_]NT_ZZ/[LX(_DS\_=6.X4W;_]BI__
M_\X/`I(H`9-YHBD*C*U;JG'*NC4LX[F^\[V_BW["(7$2P`5J-F)2V;K]FDX1
MU">=5GM79Y9'FY*(7ZP83"VBT^IB<.U&'V5;97@]\1E>@ATB`6:2#27B"87N@79&HJ;B/*JJ3JI4CFS*
MG0K%GOUAYFH6\IKJCM:V#J.R$D.^IMSZV0I;.6M!\RS/QI!:_OH&`Q]WOQE[
MOR6C4'L2[GXV-GY2CGZO3%D6:'8*"#")"B(,>
M,WT.>^1[F(=3NVD*:54LF%&'OVT"?3"LIB*DQ)(Z(O^:U$+Q8[2-DBY2@@E+
MY@R:*VR>()ER)PJ4/"6ME,>.I46700$.-"I#IT>A[G#^'.8S*J6CBOY=#>BT
M*%&-70\JM09U`E.J):>:)6=55-*O+\/.A*ML;%F0=,>FA80VKY&UI;0B';K5
MZV".=^7>1)P3+]]%>_/R,]&Q;>&W;OUB`YQUWN'+2QDW=B0A-%",GF,JECQV
MLN#`3U.3[5R9M*K':2,;6:T;-NN6IT?*=NT%-&U\HXO#P@P/*]O6FYTW]SW[
M,^RZKW^?((!JW\V+%]=YJO&F7G3#I2?_5P(3N#>!`04(8$(!!!S0``H/1KA??,=IV)=I
M`C93JB%Z2).A(0``PTFH!`C$MVR""'
M&D*))8%1`FBE.9^Z4YYWAJEL@FCU3N@&*B
M0F:VPP(,)J`=C0.&6HGVI9*J&*QG"``@7$2``"
MK$X`H0`1$D#KJV/RP">#+J+`*S&;[M3IJ%<**B"A4I)Z*J/+-57L";@VXFH!
M",Q7_X`$`4"K@(7=`)N2L$-"!ZYTSNYHJ*GD9JDL;)$(H$">8PH`K8?'=&O2
MMXV&B^^XGA++[YL-V26GOW02&HD!#C!97W+<_KG=O
M>N9M@UY3YZ>G:W-4HC?"H@!=&
MN?"%_LY[/Y:O73SKU1-\.&P><\]QY#=:.XWNS&'OO/03^Z[]]5ASOG[/`,
MM/Q",TS5T=C:,;YFYT.?_O-56T]=[ML"^SD@`!*<
MX`0=`(`+8C"#%WP`!3OH00I:4(,BY.`'2UA!$8[0A"H,(0HQ2$(5?I"%+03`
M"V'8P0?,T(4V_"`.$4O(@.,CH'_HD,"0``%%*UYC=AB$=C(!#$RPHT3^2(=
MPUC',9IE>3P@(SZ*X4>E_5$O@6P$']DPR&\44A^0.QXC&^E(1]+ND9*<)"4K
MZ8-(6C*3FMQD(S&9DE>YB(HF$.4$SIC("8!RE!+`#RD=1#H
M!2R2:]"43RB+V9Y3<@>$#.`IBS`.A49XP.D(0>
MO#.>\Y0GJPA0*1:XLYP.XFJ
M!\C0UUKAR9TL:!(2[`=&)[>#P/9#L$85`F(EH]@P@;.Q1GBL!/K:`\D.5D9@
ME:,),*M8`03``1^5@6?[00`'("`!SLQ!:64DH=7BH+5]00``!!#6$/8*5
M@)(X:YQ*!D&P@BVL'(.;V)0%%9S&=2QR@_J#Y4XV9>T)P$Q7,?\:X?:#188]
MR76/Z]I8^92[\\IL;E0*42!TE[G?M2QZQZO8`R1`KI=,KVY3ABT#P`Z!E#SH
M!-*8`/_BM;,]X*]__;O8`>NGP"##_UVP`8Q4@/#B@,++B_`J45R;FC:F9*.DU@04
M@``>^[C%I81Q#'2\-R#_>#X^/K"'Y7ED)2>YQUU3`'Q@FP(C'P#)2,Z.DW6`
M92U#N;E>=G*6H;QE^G29/60&LY3[J^$Q[]C,88Z5E:^\9CE+F4;LE0&6(_52
M`YRYO[?%HR09,$'M6,O)B3:!`E8U:!/_&%J"B):`HBEM-`9`4P>1-F.L+-UI
M>=I3@FG&P:8G76EY&F`!C>Y!J3\M(4]#FM6'=K6K[>E2'K1ZT;1.=K3_2NUK8SO;]=,VM[OM[9]8
M^]OB'C>Y51#N_^PUN'/L[
MX`(GS;X';O"#WQCA"E^XO@'.\(=#/.$1GSC%]5'PBF.YXW[O8K=6'OP,^\((?
M/.$+;_C#(S[QBE\\XQOO^,=#/O*4[A[E*V_YRV,^\YK?/.<[[_G/@S[THA\]
- -Z4MO^M.C/O6@#P$`.S\_
`
end
GRAPHIC
6
y85445y8544503.gif
GRAPHIC
begin 644 y85445y8544503.gif
M1TE&.#EAL@%%`<05`$!`0("`@)"0D#`P,&!@8/#P\````.#@X-#0T+"PL*"@
MH'!P<%!04"`@(!`0$"0D)`P,#!@8&$A(2&QL;,#`P/___P``````````````
M`````````````````````````"'Y!`$``!4`+`````"R`44!``7_("".9&F>
M:*JN;.N^<"S/=&W?>*[O/$]5P*!P2"P:C\BD$PNF\_H]+.K;KO?\+A\3L^RZ_B\?L_O^X-W?X*#A(6&AX!>B(N,C8Z/
M5X&0DY25EH>2EYJ;G)UGF9ZAHJ((!`<5%`$*0`0)HXFO!5VS%`50!UVG0;*T
ML[IFO12_;PJ*40D!`@<'MD6\"%$(M!6X%-!$LU\(`\T5!@%!#*NOH)P%"0X&
M#!0,!@M/!^W@N^@&`!0)`]](KDK]2A3T.4A`P%XW,_\0&'`@I<```@7B&3`F
MI$``>\?2-?AQ@,``BD`2#PA8$`(?N`_R!@2`ZD)P#["HP0`2WX`:F*LT,```30^A1`X&>6BHHU'*`R%LF!A$`'_B(S\,A$ESZZCRG7*
M"63DO`(*`F1%IC:(32)DK:4"4D!```3,%!3M8@M!`%6V#@1P\-$+VK9$+@:M
M`!.`M%H)!#1#I@R(+\"[TO9[?$Z9WHG"L@$Y8/=:A;IWAS&VITN`%[^844WU
M6YEN:=52P2X^K*#;5LZ/3W7!*V!5*F.T=8$M^]7E)K&`I!@P`RCS)F
M4.%M]Y0XOQWX2*W"2@0%"`"0-9)O@`;L@Y(V4-C\]>R),19(=[4,2$.U`LY5L'5:Y
MFFE`7'3=`-=YJ0Z/I60(A)LC05/026Y>N1H#>)J)$DD'&-!`60R)>5J9N^@S
MDD$5I&DHFQ5,=Y14W#E*)A$%+1K`*6XFNNBE,/W@W4CL#1<>.!&65]!(`_2SYFD4*-#.F5OZ^E?_45TJ
M!ILO1E59X",(WTCBS2KGEB.SLM
M6P&\S1)A8"GF/=LGJEVM2M*);_$;@+\5('-0A5V&DJLF9.FCX;,>A#MRU5`=KWV:L9
M\]LJ6YD:!'IQ&X[335*96
M>;T$V)4@J,Z_(!X@TCP+S`>?G`L@4-4[%?EWFK8`:+>`JT2A[.[8[O8GA[CC-*R2BJLN0CP`]J5BLL/&
MDRXAF+\`1CV;(0"0;`6`==`K`6GYBR(ZZ$$/KD(!`E@`D)J!``8`X"0)$,'>
M=A*2$H9PA$-HX:B"D,)DC4:&!*#)3&38C5(`L8B*J.$-63B/!##@+[:`H0RQ
M,X1B!&"+D]$ACR+D0O\@""D9%8KA#)TQ1$`0X&$<:>%IU!.\OQ1Q5'9,A1'/
MV*T,1F6#?@RDSP1)R#S0KI"CZ,A("`!(1#I2#(=\I"0G24DK1+*2F,RD)HMP
MR4UZ\I.2["0H1TE*V8FRE*A,Y7,:JWJS"B*>YJ$1:[WT
MI\"(J31_`"F4=B=3KD"A$3X*U*;:0:A5L`A63./.-PK#C!3HH\R<2@BI!9.B
M!\4"4[F*!VFH`A#SH$"'$A`M.'G1JY4$JQG&2E8Z<"=:='DC779#O)WZ!148
MC"M4\4#7NLKAAHIPC4XL,X\.(4AX<*6D7,M06,/"X0`B$`XN%DN-Q01-*H,U
M96CI4%G+PF$!%UVH`$SAI2"@4*V[B-!%03E9,I36M&KXP493J!YP#2$!_TA6
M6F@[VCG<%K=H6`]!T!H$!:6Q0@B(3,2*&Q;JQN&X_\C]1)(BHI([7%4E,Z4G
M<2&!W>R:86+"K.T8RFM>PZI7#.QM+UG?&X;XRI<,=Q2B$*TK6O+>-P\WE)Z`
M!RS@"036D_0%@WW_6]]@.-@NJDSP%Q;,X`D[.!@03J6$MT#A"FOA'A>F1891
MN6$17:'#'A9KB$5\X'7RUPFDV:=KKZ&`!%R#K?+"28H/N^)9C+B4$A:,JNA"
MGB$N`%^9<@Z*=UP%$/?XQ^=\,1/&XXIFV.4'V@'ND4]SP*TR^0U.7C&41[EA
M=O6C-\DR40!66H0E?UD*80[QF,?KAASV3E4_4#.;=R&"G[PY#7&^\)P_&614
M$(5>`,!IEA.PY14M]<]M"/_T@UNL20EGM18[39:1D5R,1T,:T#WNPJ`1+&4F
M1*86@-!%C6^,CR.X^=--D#2&*9W)$D?V":^&]1)DW8M1N]B_NIYKJ+-*:TR6
M.`NY#C82>,WB")=:#M*/QO0TK8MM8LM6&!GN\&AKG:MKYW<;\-W
MV\[VMKDYC&X-D_L,T5ZWE]I-XG?/5=X6#C>W)6MORN*;W?I.]R/B+6]F^WC?
MDSRV6/_]87H#N=^V93BR'1YE=4N<"@87-<)#"?'U7OS$%"=SQXD`)W@^#5KH
M#=G'K9!Q8@M<#3"4;C%:@2(1L*T[*6?,RIL<'6W&%FE5Y3N?
M0LO_Q6WLD0NA`9!BA2WRX8!50"KJ.DXZG'M.:*?OXC\T'L`!*0"?/7M9ZU!8
M^L8?6>(NG&I/0ECHU8>`60#X&>VQYCJIVQ":2L5="-@1@-$]C7[(Y7@X)WSAF7!X=[\ABJBF1N91[NK)&U[OOQZXY_,><,N+?O2[!KVU
M+;[CV@@Y",NP39*H850E5+[>K*\P`ER3U7-4JD7WJ%!`N^7[AE)>]>/./8.E
MQY%F;-GQ=(G8/YR?\S8CO^G*_R^"&-`-=KAEA483@O=)_^2U.U+A)_YS>AH`
M#5GP$/J664#0W+_OVS\\^_<-+Z0*4"R*T(_/Y"=FYH=(_^C'V>A@`$H9P-82`789&^V>\41$0P`7$A4(:J6'
M>R:(>B.8@O>W@BPX;2Y8<3`8@W!!@OR&?RD6``\@(#[X@S\(`4J'@PGG=1,6
M;,DP;/^':T3(<<1P#75!$_A`0^+59DC(>SVVA)\W@R+7!OK$3ZL@/=-5`3*2
M0'!%<#^5A*&FA0\H:!%(2!*&4.4Q=:Z@'6]%>Y(':6J8A4/(A3Z7!A;U"YAE
M"WJ&='!QA4K8A^6'>&E04O$7%(786CWU'O54?6"PARO&AL?GAUWGA:B`($+@
M*G&C`#NU4XF@B=H48]7!`!`!6/\J1'LHI4>U=P28&&*H:'M-R'9&F`U1!PZM
MV#LU%C&S9XCB]'K($E!'40P40`#0$"&;IXS,R`2U>&&WF`3V1X-I(%4VUH%7
M51<:&%!9U7GF1&6G,3*2B"*G(79>U65),(T.5HTMN(BFUP9_HW3J9&;O1!/Q
M(PLW,C'Q(XU8F(F**(",N`AH2$MVYA9"$(QNH54,N03N&`SPZ&JY>'Y&R&'I
M)!Q$$1('88JHH%4>V8X!:8L#"8$%B0@'^4J7%C\PA`^G\(^Z(&.&$9(P,Y+4
M6))N>)*'D)*O=&IL8T>6T0\$T8UI)8*T:)/OB).3II.&P).O=&M?$)&],)$R
M*(\JZ`C_3BE14DD+5&E]G+AW-?AF6SD+77F#7QEZ6*F5^K66;00%8]D%92DS
M%4F`%_EA$O4`!):7TB,!4/66`:&4L\:4A9"5M%08/<9(4N"7<8D39PY::3Z"8K7EP@ND$%@&5"F::M]F7J\F5NZEQO9E/V#$`
M8L@$)26JT<%Z&%3AK8$,7<2?Q$P9&AS%A%Y5DB=
MATF)'!$41!=0@Y>>!'6:%V:=-5&<_V1YG"[WFE9@
MB4^'=?%#=587#GE83_[I8``*D.T9!=?8A56@'B*`=4=`)@-`5;]`=OQ'C%G7
MG\.9F`(*EP3*="4X!=$U.5]#=J,A+W+GH/PY4!$:#!,*D2GZE^Y)D`8*!77A
M8[.#"WZ'%J/A%G6QG[#79\)9G>RYABO:F8%43&_T%^QH!!V!%;TQ`!OJ>(UW
MGEQTH_:4H[VPHTJ`G1;:F'!87-V`H.*GI9LG"]5'F+-DIK2`IB)9H6G'IIY9
M7(@6/)'VI.N)HGS*A-J9?%1P`#1!FJ6IGI89I7SXHR89I$\0F\(';80:J88J
MI92:DY::F^,YC/X&J:@IJ0+YJ4L9JO_P()V3::)0VJF3NJ:)BGUV,*BF^I^H
M2I*J&IBLJ@0=@2`CP*&E"JN%BIF'NH7OB8TN"GNX:JR2JO+BJ%1P`LB
M]JPX>J+2.JM]6JLM>@M7ZD%96JS;&JO=FJK4"J17>:TGIZFY*J&[>I.]RIG)
MV:$8IJUERJVJF:QMN*KM"@_CBJ7Z6DIPJ@5X.@MZ6I/^NHG5^H="2G<%2V98
M,1K=T@7]H$=#@+%.D+!=L+!'V;"I!ZXYV!`)8!'D.K&?=&2SX'XJ42"A"0T+
M-3DPVP0>NXSSFI3UZIH!ZYNNL%"BIK*>E$0_T`S]AR8>`GA>0*Q&<+,@:P1J
M^JT/VXE6(`W_!WN$J30>X:=S`34.^!D`SM6UYZ@$3INSFKFSO/FKE'=%=R&T
MGT0`L\6UZ0%<.[4`.S6WR\4$92NKZBJU[`J?4D`PL0.OJ"0NNXUPFY4WJO1K`-
M)`:1T>BHZ0[@A<2;7L.7A`/;`5=O/L$>YNNO+JNE=JS
M,!8-PI4IJ,`=O\BH236,*MI*P(FPI!N@(HN+D^N$:H`@#8BTHUB*3^-3\:JC
M9LN::(N<:AL&9/=\8QB)B'MVYWJL_3JM?GN\@`N;+UD<3I`*N\$4__`[5G;J
M"8\1:K0YNNA:O]Z*J%,+EM?:6&IQN4.`'C_`/./PCW<(463:2LE#`![\P2#\
MP10VO`K,Q0U18DX<'6&\QV/,HU5,
MD=NKBSHX2GJ\PY>[^@:LJ#BM
M;,:OG+\&*5#,IO3,5^
M[+!S3+5I"-_,?VNKZ",,FZ$LU2',I[6LTCV\!HV0CDC#'F#`5\
M3,;?;,V/3,?/+$N??,[=3,\F[,C##,F[K,VIS,V+3,WUO,[7K,9T^82[8!K5
M4!U5.)WZ',_"B\X,J\[:R\Z_51S0T!%>$!D-E1YB5Q&R.PD2]H4R`B0>\D]F
M^*"JM,_RC-$AJ]$_#*Z\Q[P6\1H?&3&$:!K/"PEQN`[E`5BC87Q#I,%\9G?&
M?&'(;+[*?+;,#,C_21`026)4E=$,;U@3WVF
MYVN[%\R_3^/"7EG0
MTGS0WOS/X,RS2V!%\V!4!_!VVUC75"H'*?V)IV+7WR>^&PP)NQ>T/$(DRP@.
M"Z57L,?2C4T+:9VG:SV@;S*S9P$I-$,U6`+_Q[=
M77SQG4LLU'5IV(:W">MG*\;`@68T,$,RX3PSF)@@;U!#0L@&60B`A!A0\ECU'6!/=,]WXD-W0@MW0I]STO`(RY@
MX(LP@1C'"5K><-L-R_G]-8S4SW>MVYE;T6$NX5*^V!5NXZ6\!FD^
MX6O>R=KPKIJW"ZXZFWH@TQ>MYJ*%)Y/.`-NL30-M:/,XX[=OXH^YI7`Y?;X2S/K!?]VK1V"E[N[A]L5XJB`UX-`
M..L#((2D',4S3>CIG-#-;>4`$>HF#DMLCL=H`'7B-P^^+20VRK4B7@11:^9H
M7>+)?.)2G>(];N>;C@G#;H#9"'8U'L!N42#<]NP6'@PX_K$Z[J.>GK90@+.Z
M?D_;3H&Y):-ZG>QS1T0;]>7=T>G6W@OGCK-1C;[KKK[M#NS3+NR-S@5&ZMOS
MH.J[QZ1Y)>=E7N[^+NU03>T"W^_LCNWOON7QWN6)QZ7'0S;F@6:0AQV?DBD,
MCLDV/>+';/%J'?!L/?!U#NK9;@@E=L?+QG='8*1TD7F!0>8H#NWF#O.N+?.P
M3?-NO;$&?_$(WP:J&)3_1%39.":.GD#N=([K@X[GA=[RFLS14='T,7\)0:9I
MU)!AFX97G?;9EX#U3Q[M8A[LT3WG;W_M-M_QB!!D`=,,J1X2C'8ZESY6.N\'
M;E_E+Q_W!S_W$T_G2R]^8G_T9'^1^/CMC&5V)2H$45]$I\!6?70.WWB=;*E?
MU>OL_$[T%8_X3J_X0T_Q&W_W7-\()9:0>@WN%>&D=*=I:-$%0=%I6\U33(L$
M>*F7!,:72+_C&G_C1I_CQ:_NQU_S:'[S7VV$&KG9#>_WC1;X/;'W?T>*_](-
M2?2/FH[WI&_HA^W2(H$@)2B)75"6`"Q*HDI!P""8(`@,*'P1
M11V)*64UB4%EU8D=+B5^+48U?CTN38UI956.B8X*A9&.K9U61):LQ33HD3",
M`+R1!!7`>DT6A79=+F5Z;2ZQ[F9IC0$7"7<1_W2*?2)NJ5J?FEYK5QE74)@!
M5B045LQ6!!P4O-6%=_'^^'(M_S1S/?]T<[WCQ%?-X]3CABS:EVF4JFU+R"6;
MPH8G\I6A,**"&A)]PB`HE)&"+7?(^CGY=R.@DWM`1/_MNP$2B4@7))&8=$'0
MB\%>"!WB1,$P9\-\%5+Q3.EBI9"63$3%=.'3B5`C-^798(1T(!5I6*CQS&IB
MIU9M2[4V??'47U1,4Y%]'?)Q;,BRPCJ54+2C9YF6,G[;+2I\)'$WISG2C30TJ>>+E+IN?#*W:DO>C8UY_BTTS.C_NUJ6Y?]\8.R3M6%=+/;_;
M.`KD?UF#)Y-Z<[&G4GSR+73_(((R?(4>;_9-AI]9^F4GWG;_Y><(59X4.)2"
MK0A@0@%;'"#'"252`)1M'R[8`WV#04B;A&]16)^%]Y$'8(V<#!C9>/X"-``.6A04!4!
M#(18`@4+.`":FW`.(R<^=`YJYW!X7JIGEGS2Z&=4+W(QB14N1-57>T4T(N
M*CK4I%8'-/K3"FL@P-&3=%SI:9V@;BDJC+YF"NR=PG9)ZI<=.N7%"+PI,```
M`QB*_R0#:I80P)OPO8>.D"0H206M%,%:0H.]2F(J5#HBFV>Z%VK*'*_BF&]YBP6H%*8>8MBG
ME7\.;*^Z0@A0QAPD9,3'`A0H,,(L!&A;+G4%:U,H.8^B&HE/#ML(\902L[MQ
MSH9\W%;/PVQH5=!"M.FDK%E1@*I%#1Q@\Q.6AJ?SGCQ72?3#0,-K[*;M.M=:3RI>T/53?('D*H`?'
MN3USZU[WNL,_SS'PTI/E_(J$]A!2N&
M]UVGFRU[E+3_RGNPOM^?^=7"WZYSUC-:\*87P)S0CU+VY[4`R?%"U'17H5<09'-&,2
MT=B5!,+)B9@3X0M5R,'JY0Z%V!-:"4OBN?7@D`9WV^'\F/@>/98/?$ALX_C>
M&,DU3A*+4]1BV+A(02]N$HQA?,@8>UC&]V7LCRR4(!^[Z,<8`O)W!!PD2Q;9
MFFW@T4F05*,5V:A)-W)RCX(<(2%7:,@!?BZ%Q51EK!QIG5V249)TI*02@WG)
M7F82E,`48`MG245M:I2;LDSF0+M34(8Z
MLR$NBUTI5^##"@`QH]64*3M1ZDZ5AC*>6YQG2OW)S'O"*5)P)QN`P`V*$E;?YK5OL:4J\(4Z#<5^L_&'))`B42!#F^IC8;F)&H`
MV*F+3%I4QM+3L4^%K`VQ.MD35):'96+J49VJ3G&:;0$-0,-43[09!Y".,PX8
M`&][ZUO?XC:WPN4,!'YK7-Y&0%K#%6X#'G!WT?7NZ*@;W@&4!RP\M>Y:IW,^!U[WB%2S!*Q>!1'-%5
M27'R4W\`MJH.^6](`MQ?ZG14%/[R[WWS6(!O?9#!.%GP@'E"8)88F*>V2;`R
M,DQ*7'I8%6L-5&5R@H"`4:?$.#DQ`M,6XA*PV#8-IA2*26KC&^,XQW_5,8][
M[.,?]QBS0!XRD8ML9&L(F7M]4),<)I*KCAR`LSLX`(43,#)Q7#D--?[2PLS$
MWP=O83!1(00`.R=,^DB6_DF(*O*3N%6A`)V.00!`W2]?
M@VM)72`UKKTZ2!NY`&LH0!#"H8!$K8'*`F.1+91][G.'`Q"VL"R,P05OAHT8
M$",X]+77W6XV_%O>%-E;O:F0[WL#X@!L^L*^SQ%O;9$#$`FP=JX-?N]W+XS*
M$U$`LV70<(BCW-7'EC.>?VAQ@&>\'.!B.9(C_1YYUR%14CM'P=Z=*($)F\*M
MZL("V&VN!=9=Y6WV(
MTRVZ[@W-B$$`>2>[N7)%>$OX_1Q!#S/4"A(#KLL=J#^D^0D43WB=F\LB0Y='
MY*L.>)EQ"_.W.':?)\XTFT\'`;8(!\K:$0Z^5Z'/#)LWU=?M=B[$G`0$>+?P
M)T?QV9=9`;8GP&TEIWN%:ZOW;'/6R&Q/_'/7`?=(0[XWE.\VQGWA^5;O?>)>
M1?WB"__ZX9#]Z&%;9`3,0=U[2!SCD,3S\+_A#6B2^?[1-'@S$1!`;0*AYE)_!W`_!U`_:F)\^6?S/&?+)B``O[?`*:)`?(!((1#T74!_/%!
M`XX`_1%@\'F!&P!@_U$@FF1?R:%`!D(@!R)@"0S62!59`3#`9@A%VC:9H1(1I""30A`(P`%5J9YR&`MOP>#V@A`/3@FU&A#E(<9QSA
M$N:?'YH)QGG!&K;A%U:A``H`#(+8W3%B(SKB(]($[$'B)%)B)4Y'DEEB)FKB
M)EX&)G+B)X)B*-:<*))B*9HB6IUB*JKB*L[_A22RXBO"XH]Y8BS28BT2V2S:
M8B[JXHWAXB[ZXB\23B\"XS`2HW4(8S$B8S*^GC(R8S,&HRLZ8S1*X]A`XS1:
MXS4>XS5JXS8Z&C=ZXS=B0S6"XSCN8C:2XSD2HSFBXSJ6HSBRXSN>HCK"XSRR
MHCS2XSV:HCWBXSZ"HC[RXS]FHC\"Y$!"HD`2Y$'>G4$BY$(.F4(RY$/RF$-"
MY$3:F$12Y$6&D45BY$::C49RY$"Y$A>HCN2Y$GBADBBY$HN(TNZ9)&I
MY$O*Y&69Y$S:)$W>9$[RXB+M1D_ZY$\"95`*Y5`295$:Y5$B95(JY5(R95/N
MQA14751*Y512955:(N558F56:N56N57@F58BN58DF59FN59HF5:JF4`
$A```.S\_
`
end
GRAPHIC
7
y85445y8544504.gif
GRAPHIC
begin 644 y85445y8544504.gif
M1TE&.#EAL@%%`<03`$!`0("`@#`P,/#P\````-#0T.#@X*"@H+"PL&!@8)"0
MD'!P<%!04"`@(!`0$`P,#!@8&"0D),#`P/___P``````````````````````
M`````````````````````````"'Y!`$``!,`+`````"R`44!``7_("".9&F>
M:*JN;.N^<"S/=&W?>*[O/"]-P*!P2"P:C\BD$PNF\_H]+.K;KO?\+A\3L^RZ_B\?L_O^X-W?X*#A(6&AX!>B(N,C8Z/
M5X&0DY25EH>2EYJ;G)UGF9ZAHJ.D2J"E1@IA$@=9!EU=`[`2!52O$@9"LK.S
M=0,*N5*[7;FP`T2WP:ADI\M"!P2U7P[16`8)!`0*`PC4`M)'"$@`0!0A($
M#0<"!`D!U''B0`H$#%/7V0&YW0''0^3,.6.F:"`1`.[`*$B@)1V!(`C/(4$`
M($D`@8`(Y(HX`1H`SGD35J)C
M.('CA`:Q$"#MB15(,JVM@/P*4""8TI]!O/JLNI58%W!6VU8E!K<(PI1J@1Q5
MMG)7@6B?9\J@"IW*\MA[QTEJ``-8D#+@I04(X!@@8.C@T0,4&`@`$!&;1C
M($'FCP$"&FA-':"!+`(I$]R3X&"D5)08H?UT#;L>UQ\Q_24,2W6(V9CVVBD`
M<$]LP-%B/3].4+'W[Y2>&:P&8)7`KT9DY(,("^5P)Q-781
M`/\]%!``ISF0`/\"\4T074ED93;!9JBL-L$"ZF0D`'4+E$7`#]BT1A+6(91A5"#!0`
M@&<.3-C@@$Y65$XK`]SSX@0Q!EE``00T^6-&%>W8@'P)0?DE0-G\U&&(0,A$
MHT!G9GE1APB)DZ6;0THXX4@M'0!``-@`&%5\8J7(HCL!'$;=/5/]0,T/$H@C
MRP'E&)A-E_S9^!!RY]234CI>-LBE.3F>4^1!1Z[HE@0*M).26%\&ZIZDK%0J
MXZ8'U')FE!-X.FB3L#8XQ&P'./HAFMJ@5&>.2L2W0I@%;A`8*G!FL!55
M>:E&Y/(7XW%@%@REDP_Q6T0]TXG+*77GQ+GIMN$^)*^>Z/`YD`01,BCDEQ3O
M)VA4$-=[[)0AZ1?C`:VTQVA&['+$Y89&V<-KKGA.,`"1^$W%DJ$];OAC?PJ3
M)4$['A\3HP'4*'-S`5_.K)C-"B-C$A#ES-,.SQ$O.W&SQ]XII,[@4*OQ,@8(
MT&$0V:C'X(9S>B@.TRD=(`Z&+[=&@#B>I;2`0U";Q(`#M90$5G[5#"`3H]C4
M,G@M8I;%#48+Y(+AVD,H;C,0VN7GVT4-+%``_X8,I;,A`&0M\$TV@6NC`#3G
M#-!AY`2^#43C$SQ^H8_N&='./^G)F#H!LZOS"S7'7"XWE@0M9K2@X
MXLA7]=@7BR,K..8B^SOB-(5C@-7G8L`""2A0"T4`Y/JG50L`:ASV6E4?UP$)
M+!"]8MS-4T#^=.E(]492O^H)<'M`2!1M_(0`\3EE?`=0@/[\8101N$\B'%N`
M92AB&@?>+W_1\V#]XC($!)"P*OI+P/T&6$'3Z,0G`WQA`9,"P+*9#6,XS*$.
MVS"]'?KPAT!<0@^#2,0B`G&(1DRB$C.#Q"4Z\8FB:"(4ITA%2DBQBEC,HB&N
MJ,4N>E$/7/RB&,?HAO\PDO&,:!2#&=/(QC9688UNC*,<0Z4O*2790D%*P"
MD&-`S8:8#.4?-.F$?2"`+*/[`2>!(E.-TRQ#Q"JG/J.84!PF-`*0OLE.+H23#`I0BZ3^%A=]G<0P[@8+HI1A&K_
M5`P<[:A`/QJ&D(I4GR0%@TE/VLZ4?F&E+/VF2[<`TYA&835QK27Z13F
MA8H%T-6TP0$.!<+3*UEW&1P`*J*]SZ6F>\2^"&OIX1%1+FZI2T0"T=
MDID7W0"IN-W$[Q+:NT>F5G-)0AAS3(AOY:"]6?W`4P-U;+A9N1>V<\
M]U;/@W9OG^/P9XH&^LAV=O]$HR?ZZ#9'NA&3=FBE]XQ&,:O8T.I$]*49D>F&
M;CK1B5PT'$J-T%./>A&L/JBK^9QF4!M&U+0NM*VM@^M.J_H-L1;HK'U=ZUW7
MJ][V,9&";*#+.EH'YO-J,:BI]5I;8A,.\G0CK:SJ2V'ONJU
MV]+&]JO;((L`NB4N#62L>+L];G#+H70L><>$6E$L;J.[WEF>PS=0C/2)(#>*
M13AV.6UMB[]Y#L/)%&GWW9&S43R?+B=T'`J@%F6\0C&1^G3(U9UKDH<5W641
M^LUVC%9&E?^(T'9T<3N]/SG;8>=Z
M&KSN1L6I)PA7D8^%AA#Y->_]V7W'Z``2X-JJG(86/P"H`3YO^<.OVPJGY(YE
M2AK3:DK@93TA#P`<8-">E/[*IY_"+Q#KEG*RGJ7;($K'P)$2J"`@QM+C%`"/@?]]75-J7;NN'>2-6%.'75`78@-YV>>26!050+%W@81,(5!68
M="!H;UM0)=5S3\]'@1YH@;BW?%I0%`,X5!VX@GG&@R,'!BWV)SF(5#MX@897
M@^RG!<>W7OF'@C.H@D;(@@W!7R!5A$CX3T_X1)(D.P&@.ALH558(@'65A4Y$
M2E#3!$,X9F%X9F/H@TLW!K#4;H4C0=(0;T+'8T^8@EJH;"Q3&Q&8!/AF%#I3
M$:Q0<_[FA&X8:HG8=E\`&$DP<$7!20>G,PDW;WBXB&N'B?2G!4,!"R:(#O05
M%0(`6RAQB)<8A3V(BC^8!?OW@O]*L!H6%A/3]6%N`7*G>(5'*(9)>`7FEH8E
MIPAT,8FRLW*(9VIY2(9+I$B=6())$'-%H0J%V&]CAXBJ>&B:Z(!:T(HX`H/-
MUW-A<6)`)V^T2&3'>(W;IVSFIG8`<70R:(XTJ(L8B`5;HA3;V(2W"(^YR(:[
M:`5X]S?,6(7M6(V**)",6'Z*9XGDZ(Y0B(M2Z`H"\`X4!)#4R)"I2)&KJ`6O
M`PCVF)`$F8D=N8E;8`#^M9%-5HX?B8U9L!TE((X$&)`6:8TG>8XAV75K6&=M
M&)-3)'8'49."QH`*N8=8UV4F^9)/QP5`42,D665#B8\-B7JWL0Z^EW[WJ(]8
M^)-E^&O_O]`%J!-WZLB!+LF4%0F6%QD)7D$SW)"4C]255[645!F"5X`^YI,`
M:@F&F*06N;)Y:N,6U#<$Q;)Z,$F4MV:5R8B.1=`?4@E)^I(3O`=AH5$0DN4@
MW!B8.+F08OF&UC`2LB"1DW0T$/[H:4">0%)I6">GB5C0B1@"*!+7E)O02#
MF`.:`E2*8=F6_T>;#?<%K_"%7EF7[Z<8X`";O6)"E2B9@.F1Q0F24'=)D&(A
M6Z(SH5D$.S&;-JE7R*A$.JEPE/0ZK'!\?R(8BR4?<\B2O*:0I3F80;E(5N%)
MQA`9GM0?!%>;TUF5DPF4F?=(:6)H.<)208*H0!J1%9UGZ882A5ZG,GGH3)9;DU1.,)1
MAT&WH9C4H94YD"":DPFZ!(&X#3%!<]*XDZZDHK8Y9A=:1-L%-4!1BL(XG++9
M2CBJG_#9DS981J&(+Q*'HI=4I$A*G0<:H'0`BT%P`!LQCNO1)#>:GU$JGRW:
M2"^J!+_H(-(0I$Y*25`*:3<9IO09!\Z82IYHB-,H2FMJ:6VZH@7Y!CS'2E=A
M/49QHG7*H5[*IE(ZGZ9)!W.9IEBDH695J'AZJ&Z:J-4F1H/%>Z$A!.,C!/4S
M37?*9G%XD640!C19F-[,48?^Q<*2&"J9Z:IRQBIRD)D:@Y9SUQ0![
MF1=JLZB?6HSOF*.66:MBU%K$!PCPH`BRD`"IX:J1"JO"RJ*SBI*D^D7`-:11
M85IA$9FR&JW$.:T?B*CF69]4)%TI85#:FEW2^:6ARJ[."JI-R9]B5%[7)5R&
M.7H.`AN*,9>_^J"3.JZ5ZD7ZY04W,3>F(0W_17V^"JGPNJZONI^'L*".L*B/
M2IX,"ZQB.J&/U*]YZJWD%[!V>K'^"JXNJK&,Q+&22K(92ZY:I'&N\;(P*P`/
M,+(>.YX6.J48.J9HV44H"ZVBJJ,XRZ,ZJYECU+/M^K#OBK%O6JU%*[(=^[-_
MJ;)+2ZQG9+3_24NS4%N4L)9&5NNPSWJT7QNO$JH.'2=",FV9>NS[NJU#6L$<@AT
M?"*2@3NTATFX?1NF=$L$,6HY3K,7CVNR552YWVJWP9JUP^*CPJ6NVZI#@CN.
MDNNW*NNYH+@V#%`,++$.^;.Y%=T@.YX\".55NX
M8)NX=2NZG#HAN[H?1<$HP&D03`4UFHL_D&>Z-GJ\D]NZR(L$SB@?\P`BR6.[
M<$ISQU`W'<:H+?N]B(NQVM>GYH.ES13!XWJ*L[P*P+NI0)P5,+!PO@&[*YP'DA`ER*,05LN$C[OEA[
MN`*9HKV;A\E,7,G*J\F9_+F;
M'*&;\,GV%6$.`!:U410)C,))L+BD%9TZPS*I[%,]G%W`D*DH,L2=0"Z@2_*6BS:6@2!>"&2T,AO4(C2%`Q>P'M^7,O=.LV$S,ZZ2\*<
M@,U$P''N%A9]I;U'`(D3,AHXN#:3Z`;)?+70/,NV#,^`C-""+,'7?,@GJ$UJ
M82J@IS/W\`N?B%VA.'JL@4W/20DTO-#NO,8*;#"D*E"D\P=
M9D#/9""_WYA9F>H5>*$$#60]D2)!S\`QX@G67QW/:NS`@#W(<&L%0^P@6",$
M9_@)3DV$1="@*?`$3+W/>Y+2^]&\YIR\1_W.?9W0FPW28[VC7+5?@'`XS.K(
M31V49$T%PE$0HBT$IGW)Z]S9H?O9FFW3-6W01`#41H#'HKA-M+76B[V;?MW)
M6@`/XRL;?)F7'FS;2W9LBW6\:U],;HSZMTIE*P9JPR,[97?_PT1
MW'3YW+AM'5-=V3&Y()%7+/A:)6%A$_STT1,NX?)-XQ_]<$PZ!"`N
M1/`FVCO3*[FBV.%=VQ!.,H.A#.J9RC)>XT7.Y"@>V*"[TAW17D1=F'C`U@+^
MY/(\5!4>W11.Y%INMV7:G"6DVW.`Y5YNXZ"]EF#NU6K>YEW-!''JCY#2$?K"
M7HN`Y@\>YL2=4UV^YV[>Y!_MUG\:._Y@/TW@V"B`!GH>X8*>AS$;Z3,;Y^S]
MZ'!>Z7P>UI$MS6%-!8T^XY8^W6\NZJ$.Y2%MZO^=3E-K3D=#3NJ9_N6N'NBO
M/NJH'M\Q';3(5.)<=>*RWNN4OMRE+MBU3NM;CE2KGE"M/NS!_M?"WNS,_NRG
MWKJ1'K.3CNF,KNMO#.B_CMF^;NW;OM[`/NO+'NT,+06?[N3='N[ISNW?#MOJ
MWNZ<#NMX"P5YY:N\#N]%[>WZ_N[[SN[]#N[^7@9O9=8Z=N__[NX!G_``O_`(
MS_#Q3NSEGD?8'@2%7?`-+NX8O^X.G^_\WO$*W_`@OPH3CQ*MK887K_$AS_$?
M__#C+MW*GO'X;I!\P-L6G^4HS_(P?_`X?_,JO_$&[_&GW0>0K!/'A<"T=P(.
M,.TP^P`QD/1*[QI,#P/_3O_T4?\"4Z_T5>\"5S_M6=\"6R_I3?_T4!_V8M_U
M+/#UU$[V5*_V6/_8[3?R$[+?O,7``?[4JVGW>,_8=Z_W>2_.]."]7#-=_W
M=?_W?G_XA8_X)O[0AI_X5D!7EXT$RC;Y[5?Y4WCY=F#YF8_YS/?V?F#F2&='
MNASZ@S3ZI.]7<&\+H/F8BN'+ZGP$6J$(K&].Z$"FJP\6LQ]!OGC[ZP46NI\$
ML=_[PI\7L!3\K3_\D=&5QD_[Q\^I0[C\L\_Z0Z'\O-_\$`?\U<_\HJ5VT'\X
MBL!;O("_])[ZPO`W7('/F>H/F=I`%X($LG,T/Z#^ID(TQQQ2[W_^\H_^G:(6
M_QP%`L,B"=(4#$-PIBLR%,PTT[5(FJC*[G.PUH*W$F^E`RY^0>&(>"S."J.E
MK9EK014_`((Z&UYW3TEW8?!.P-`GPK08+-7/P0$P,R@F"L.`\`6B!0I*F`@:
M'B(F!A;,(*PDS$!"3DC.'!12,4XX4D9V?D[8+38^>DY":@J,;I9VGJ:E+:QR
MOKY.2&C-ME9V&C!HHFG2FGH:B.I^\D+"3<@&DR9'*^29/;-&O\IL'BP)[]*(
M!IP9K/A]*2H2HJ^SMP==2@#]R$N(QAO"RRN=%!X+YOO8%P#3I'^$]-%+DP!3
M((`G!$J@CT5E`O45\'OAY*IK<'8W-&+L93F?=JB-U[4U\M&HS`]*>7I[Z
MQ+AXJUU+IPZZ("1SR2%3!2]^'0)&C+3)0$_)[77H5P\Z4/D)YV>DQY_&
M)[#-[^/K1X-2_MD'GW[RR47_WW\'!NC#:0L:J)X"C"!@&H'W1=C@8A<:F*&!
MX?3G7H$`=FC?@#34AZ$VADUP0!=U(39>$([)6&,P`."81P$''&`>CXP,H$"%
MB^`(@(X_VH?D)K\0F6.2/3[)R`)%?E=#`44>">6.4/X@08A!7.GDECY"&<5M
M5F(9I9H)#-0>F&F.J>8-9](0II%JQKF)8%[8F269Y@U$9Q1P(AFG`2[R26B9
M"#"I!RZ;<&%C>))26JFEEV*:J::;2FBJNN_+:JZ^_IB,KL,,26ZRQJNIZK+++,MOL>,DZ&ZVT
MTU([_Z.PU6*;K;:]0KNMM]^"B^RUX9);KKFQGINNNNN*URV[[\(;K[7RTELO
MO>[:FZ^^V>*[K[__+MLOP`,3S.VX!2.<\*P"*]RPP[D>_+#$$VO*,,478_QL
MQ!ESW+%0%GLK-==?^^HU
MV&/?*C;99\.*"R%KL]VVVV_#';?<<]-=M]UWXYVWWGOSW;???P,>N."#$SZX
I%O,@GKCBBS/>N../0QZYY)-37KGEEV.>N>:;<]ZYYY^#'@1Z`"$``#L_
`
end
GRAPHIC
8
y85445y8544505.gif
GRAPHIC
begin 644 y85445y8544505.gif
M1TE&.#EAO@%2`<00`,#`P$!`0("`@/#P\.#@X````-#0T*"@H'!P<+"PL&!@
M8)"0D%!04#`P,"`@(!`0$/___P``````````````````````````````````
M`````````````````````````"'Y!`$``!``+`````"^`5(!``7_8"".9&F>
M:*JN;.N^<"S/=&W?>*[O?+\"D*!P2"P:C\BD$PNF\_HM'H-_;+?\+A\3J_;N^Z[?L_O^_^`1GF!A(6&AXB)1X.*C8Z/
MD)%X8)*5EI>8DHR9G)V>GW&;?%^,I)11I`-0!`('I@"J$`.OI`1$!`E#!J:V
M2`,'`@L$`[U[!`NQ@INTQ:.OS44`!U,$I@9+LZ*0VGH)#@4%UQ`&X`^Y4P#?
MITP+!0!0P`#`4(L@GP`0`)#04"1`H>Z%(`3AB2=PMD!?S'AU["(PG`$0'0
MSQS!`,G.&("VJ&*"BQF'P!.WJET!!21]_T4L@(F;'A'U@B`(4""`%9KKECA@
M`('FOP'@IO7T)R0`PR`#X`D-`D#BP9I#C/:9QW&(TR$"H$+XID!-@YQ'LMK<
M>O+(@JY4P($]T"5<.():"YX11@65JTT`SP7
M(-BZ+&!+?PDX5T3MN,*GAP#++*3V\5JD`KVU$X!<`0($%/R6U:#!K\X0!&2`
M`0^@1=`N:A%`C_\#&S&```$-)-1.$`$!]\\!!3S0BT\0`M%,`_91PAY$Y@UA
MRP#]_3=-1`X@(-8"]`#!HHLUP5@`&`@\,$".L675`#T"8.\P`#7]J4I0!`H46$>5G6E$",_#D@FU/O[-,9`/`TD%\#Y/DQ
M7QTV?;/``GAI19!0WQ"`H8'ND.-`$.J,DZ$J-K739D^R%`A<`#_NEAU!ZP!@
M3S]^CFA$5G46L2FI]_%6P"P%S)450^`0:RQ1GXX6C[/A(/!@AI0]>VS_M0GA
MQ&0161'9`)&^GUT18!$"X_*FT#01A?25&N]!`$"\>"Y'SP&GVEDN`SL
MIVV89Q)@#X;@@(NA.!S:-=0_LQ6C@'XT!0NMB4.8M,XU'`.7D$1-V72ML,X*
M310]1A'$4E,05_LD,OH2-=I'/1--Q'[7\13$QU'SI"W3$,!#,U19:0T<)?T(
M8\_5+H,B3WV+
M)7*O&+;82X[@N`-K443ULQ1C`W2N-0'Z?`$/_T.Z[F5B4$38M#A10),M=>M&
M_\,U9G9A'>X_63HZ?T8X"J,IU)SF6EMJH5=^,0A/%#P=/$`'[!
M^S96*T)@[+"N4AD"0?P$@?Q`@'Q!,!_1@O:\!;KN0F5A2M&$("JV_>,;N0B,
MU9S4O*.@[V)G&DHN(K*NI5@/>?*ZF/NV)[P.0B]L-@-6+P9`,&%U[(3_0-_"
M6-(P"L9"`0M0BOFB*JR"*B`#QC+`7(!
M20&ZPU84`A`1'#F$3@JA'[D0DBSL$1&&,$\7!4D@NV*2%$/Q2A48`\(:%<*3
M=G1)/D2D`ROX\H6$`(,O##$9`A00GK,`L8L""``0^3*'[X'"
M5./"VT\[,;(JD".H0QUB4I6`H@`NM1.4"\!2IM!4H3Y5#SZ]JE:WRE5-!+.K
M8`VK6($YUK*:]:R%0ZM:U\K6,V2UK7"-JUR5,=>ZVO6NT?@J7O?*5["^M:^`
M#:PG_BK8PAIV&WH]K&(7FPC",O:QD+V#8R-+VMHHZ,T3K`.,`%'(N92I(7*GVQ+6O<2RHW"
MD;0+@+%\I@@B<-AWUVN(\"[W&J;3ET&YBP06LO>^:57#+@H(W:Z@90'2I0M^
M!RPIZV(A2R*XT("(VQRK%H7`$,:J@<,PH/8$T[X1SO!E)PP^#7L8#NY%`X8_
M3&(QA/@,(RZQBK5P8C.D>,4PKD*+R_#B&-NX#1R>0XUOS.,ES)@,.^ZQD.F:
MB"`/^BE5R%?5Z&->:UZAC,##!#JD*JWU(#87S6F6D"\M2D!=A[KJ_5%B0'Y
MERF\CC.N`8%=I#"`@$)89"F?B]9A[S,(TPD0+GDJZ&6;@8#`%L12F@U=5W.:
M&A1=(H"1@JE@*]O;HTCV$68M$R',K=KG?D.WX1V&03T!`;#PTX[PK8A]\UL+
M:^QN$Q!`[_X1O,@'KP/HX,R$==S;K,.^2<3GL$:*2X$5YB[XQM<`(S"@A`NM
M%FO&JV#PD2]\H,\.=.[H!HUT)RW2E<#TZ>>`(6;X>Y7E7L4Z#YRO)-!.5AG0W[F!>R$#*#=2>![
MQ'?YAN$"G0VR:;2`I?U*(RC^X.&&@]^3:FW!*12ZTI#TU+.P>3*4_J>=+\I8
M:HW>`#1M]%8XO1AP&O8W[-,5FF:]Y6%_A]S/GN(.3
MF_5CB`#@24#`.?"DPD+C_?+PEOT8M-\)Y6*3)%T_@F!4,0`_QV(?1L?^LI$^
M!VAOM;?@7UXYK[8L!^@8<%_P>@'WPA3U5&?U,`
M@&+`@.`5=!6F"_RW=@J("O+V!@YH";T5@10T@7-7@5!`>W0`/P-X!06(3`@X
M?R#H!!F(!^ZV5.X%'C2V@DW@=G;0@I&@7"=X@!>(!?XW:(5V!SB(6`=&,!Q(
M9C3(!$/(!2*8?T5(!$>X!3\H9^XW![YG!([7?4JW@P*0@E^6A$I@?'9@7$C`
M<(.E?Y$Q@V"(!*DFA-%G?VZA="IU4#$'96NX"#TH!W`W7`)875C@*41P`#RE
M<7=8!*O"!T%HB'RFA5A@6TA1,?AS'FV&?HE7B+>PA&%`AH:(;8/H",H5#*2P
M`,M':SC"%X9B?95HB;_3B7HH;O^TX75>I07G$PQ/-QO)8`^05C%3B&38Y"*`
M<'721FU^F`6X01LO"&NZD"TC)7JPEX?Z(HB$D(C1EC.LV%A*UP`KA2I)<&T7
M8PNZ%Q6NQWLEAP0&@(EF8%RV(@#+%"E]&(>-"&B"F&+WQBW%]A"4QVW\MDC2X'72!G*&Z(%VP'_FV%-*
MAPOJ@00F(U$((`Z'=X7H!6_&!VT?*039%@3#15&<((VQ>`4&!8=?Z&T$9(^C
MX6OJV`H4F0@2J8%95XX.LI-[YVUB>$#3V%4720IF#2K=,%(%1
M=EAJB8D)D[EA!R8AGU.-'SAI:+E6E:D&O:61HY%D"3AI@5EMSMA>2E>,]J:9
M0SEDTO@11SE7(Z9(`/8>7GG62%$0>)N.2<16<9M!B^$%Q
M*D4)&P4_AWA\-E:08>&=C2"2A-F8.R$4\B@X](,6]OE@-S:<_T@0G6Q5FZIY
M8)^CC`,*!@Y0@/;PC;]C-SQFH(%EGF00FJVV`*2V*P:S-;2VC'FUH2L6E9#5
MA/>9!5=HH/ND-:SAG\=(GY9%H8%EE>C@ETRP3Y2G+[;PGB,98V@768MYHF'`
M4Z5!?M,A#IO4G3;&HX]%H&2EENG4AFX)8]AD619J8HWY"DYZ1Y"&O:!&VZ6%NR64&*"'/*!'6J6-OD
M66E*,4>'&9'Y8>2V66#*!>'%A4V)A!]F0)^5J%L07H='"G;)IB1&?9\5J/FE
MJ&1*@1YFDYX5IX7@7@L`*P$`7*6I8?\R"EFBJJ=B!P2F\:F;F6&O"JC4J06B
MN!?UL:H1UJI?FJO5>:ETJF&W^IW"N@8A$0NYE8H1)J6;2JM[\&JDJ'I8TF#.
M2F#-A5H&9:-EX%[[MP3[Y'O_)7-]NE=KE)J:I8[26@*K#=UZI$XX#QJ2MI;!J"H$!NZ!$,!=:4Z7W
MB%\V&%N06JI;"*]>B)"/!%WK5K'WI96N=:8-NP7AF@0*@E/;E(;%%9WG:E?`
M.EI>>K('5FD!4(=,L%\6I@0Q.U?3*5LI^:16H)VMZ:O?9;*RQ:E]V8C+ZJT_
M*U>2BE=,^WO_60"*Q52UF,I>QRI;4XL*/RF*(8NTTS5?U*6U;#!C[7J5ZY4`
M7XM7;[M<09<-IH"V?/I=V^I==@N:2F<4Y`2M61"UGLE>)BJH!W8+A8ITI;$$==I+I;C3L1W@IDWA6WZ+JW:#"YV7IEB;M;IWE2HJN[69"2N,FA]@9]N1B\NC68R!6Y&+D%4>D-'K=/D3$;
M$)ID(CI;J9MFE4N,8KC4;_Z>:JB!2
MCSTHN&-U`/B:M$3[A\?P9MMX"K.QD-K[6K(98>OK!>_["]A(<1V9#/<6DF%I
MPEMAI&O%BZ!0S@`!)%MJI5@!YVP8L@=NHJEK&%P!]FPF&Z!;\P&OS*MJ]%
ML1Z&PY.`POO3NJDEPGOUNDHI=D$(?2K86B0+89P+6UJP'@C0EEJ`Q$\UL]\%
MO?U[7:U`NENK6MQXPX#@?5IJQ#3+Q>L%PXY[!?#*%X";G*D%1V9ZQDJWK&KL
M66M$K-3EQI0K=:1%:V*LP#:+"%H\6`Q+8DHL!S/6PZ4[6B[,8YQKJBJ9OEDL
MR3.<88L[K;&:39"RQY4%R,%:8%L@``T0QO\?,>FK`7,
M4[-"$'DJ>:_:UHT3;*6%G+NUG`7$,`Y&-["V0,"_7%ELG&%"S&+&*Q"=?#64
M\`Z+8;_@^'J9Q;\PQKV.+';4*["G0`"CK&*3&X,C9"@0:VC9>[N9
MU9B4-0MS?&,0K5RV0!Z(P<**Q4VL$"OR^:;5&T%?]O3>)71QM9ON]6'!3R"3695I8=SIR,%U;2@?7*-
MV*QZVCQ7'8=\P=V^[UQ`TT=?#!U7R8U\=\VWK8T40@&I8]O;==6K]`?8,;T&
M*]LY#2`"382MLHU64DU_B%UQS!T%F1W=;+7>])>Z4RS?:D7?]>VN[VW1__/]
MU,MVJ$W[N'"EWQ68U)/:WXZZEP`.;ZF]N0H^I6.5'TR6-%
MR.Q4@`F\@@CNOH*L5=6@"J#D0ZIX%YN]X4?]5.6X
MXD_PX-^*XW3,":R9R_S(XTM@ST#=!/<-GY1Y*2B5S$ENB11JXTFPY-Q="5N2
M$L>@ST;^!(-YVTQ=XI*PKUU^F4B0SF'^XI'P$21=YM-V!%1>Y4">+@I-'DEZ
MVHH@BFYNRW"6X6-`K5Q>&[ZQHQZ'U55^G'LNB_*VVC5ZW2#JHND-"&O4WJIX
M=9^9V^=ESJ8("9J:Z%O`I)RMJ'-^;9E>W.C["/__Z>E6()*,WNAL0.H,`>GX
M'0AUK>I<<'(.]^..?I.#?C&%[@A_:NO5&8P=Z^)J4*3?(1IW'NF(2./"3@T8
MX=VZKN99#=$*:%!M[@16GCJ)H%+/[I-B3NL8\>WN2.UJ6N3D_I5S3HB$P!?I
M#N[FO@'O'MZ(;`5H%@9=6-OU+J?K/M=2L$:#8F
M/P1N:^!5L",H2.]'[];_Q\[EP_7!B`?0`I_M4?]^0*[+]EHEV[;,T[WU['O=
M$LD=RAS=8T_V>)5ZYP5JIMX3$VT"#U#>/G#W>)_W>K_W?-_W?M\#4(\9HPX$
M;U]><9^OD9SX3K#62L#X#QR"!N;XS=T$DA\6D7_YD)_YR\6TE2\(3&NPQJX&
M./I<\K#/8[YJ:_YBZ_ZK<_ZE._ZL0_[%C^^Q!,[HPS24#_\'__
M_^T!`I`XDM`"H&@"E*TSE$1;GBFPSB3#DG(NUE*X'^05(T(.-M0!N3L2EWY.D!EOC-
MV2$)PB$9"B`2*>YA-2XDZDD2-3[^+%P&5$91(G5>@H*)$I'JF>80SB'^LGJ8C_[,M-F5]-=
MYXI_SX634)]:-WOCSM2VPZLEQ'R1P4#4S\SWY#^+])?8YP5@CGL$1PC\=["%
M020)\2UDB,\AO30-B3R(=R):=[(A"0`4"'
M`9H%+B'`;#:SYLV1:/R@`$D3*.5F5J5
MR%5''Z?=H6JU*:VP6UDB^XJVW8`&2A(P((K'!IJV;^.244"7I-L;>!/MM=<7
MKMP9>E/4'?R7B)T4-W_8]5LX4&`R#`2@0-"`3&,4C[E@!J"9LXW/.2YGWHRD
M,P#3,U"+5KT6[.S:(PPP>.!`0!F!$4G@ULV;C.\TP7?W]F(\-W+BRM$<'R[R
M'W3FTDU2KZO`P0,%KDDD_"UBP/;NWQ%>(5G>N_/G]M:?;Z?2-MH$`@[$'\'@
MC8,T]O&CL9\;_:'Q7WXB"!C_`(&]W7<@!`DN2%R#-37@1@-J&1@@?\8)L(!X
M)E08P(70=?CA`B&.6(8!)5)HH5HK>D@?;3*BI0`#"?@BU2PVXGA=-VOPF&-6
M.]XH9$Q$]J@CD$7Z6-0L![BU0(Q'K@'E`5**IQ8)5F(Y9)513EG;?#3"HUIK
M7\6AEID#H)D2&FNVB2<9`<#`0D;NN%D&H!H-ZHU:
MAPJJ)QJ,0I`H2F.2B8M0FAV8X*%D7-I`IGH>"VQN;Q.;P19WN`@#O
M#/)B^"Z[$,Q+G+[T/0OM&@0@$``"'R(PDW@$&XRPPF4P?#`:"1^U<,$2ET&Q
M``Q8W'!-=8SQ0\0.5TQ2)WI]?$C(!9VLUC:.K#Q#+P&@'!3()M/?2931-1M%)%)B"O2U,?70)4:_&'@#BK8#"
MU24@X#785D]L=F]H9ZRV;0'W'""ZQJF!%+]:CMV"W?V2D7<)>^-=]]SC.OC@
MX"H*CA[A:=@=:1H$%-ZXI"U`SCAX`/,<-WA5&?!`X0'(P_^YYVF`[I_HGX<.
M0>>HFZ[ZZ&A@UOKJI*MAP#X/:!D[=+?GCC?O:>BNXN]O9ZXY,;:4;A'R:Q1.
M0O)U+;^1+<&3%+WRLU!OS_3--C]"]LI4"K?Q?\[B=PO/0S<+^HBOL7[?ZL]2
MN1KN(V%^(3K+#SS^W7]O%?_%IT%\XR,"_0JB@#PH8'+.V\@!W9#`1S$0@0H<
M00%EUD":35`$%>P#`IN4@PV"Y((/;%6S!-!!V)7PA"14@PD=Z,$^`%`J,32>
MUEH@E)1\I88TN(D`J9:&&Z8%:FH`XHRPH(8#U(,`.O0A3\Z!I@\E(8E+_%H:
MD-B#*4+1BE[`(HUZ.$"DY4$`O\G_R`0/$,8QMJ",9VS/Y;"PQNDH+@IOQ$X;
MY>@&,;(QCD4IF,$^0L:8\!$8Q4HC(-T@2'T0LAF!G&%1&"FP!?AF`7E+0&<.
M@(#X0-(+DG1()2\YBDA.LI.8!"4GQ>#)5)"2"`9`0-@HF;=,_F.3&!&E0P#$
MKP,H<)6M1,`D;3D`7-:/E2K@92WO\PC@`3D!QWQ$B>5IJD,24&3S3>4V&
MU%.>X%P+-*-I@E2B!9;XD"48@/,1@1*`H(,DAM\0JM`?N.6'`"V6#P80JHGF
M8$7G+%`S_S,(GHYTE%.@(,`80^H/?OG";PDP*3\=*3`SWO$WO;_D8!*6F`3\$P1SF<(`%N.)!H#/F1Q\BD
MD'WD5`)P!"5KGF.1[5&`$I2@U4.NI)_^5*(W474)![C4>;^\AWWJ!QQ[1JH2
M`WBA>_CEH-*9M0P*L)^?%&`'OHJ`L''TT&1F$-0/;6Q*6:T=E01@A(\80+%G
M$`C>XJH+S]*(DJ:,CT?3"`JJ"I#0S0H16WT-XB^I-3/&QO$%(`1=KM%9?(6@DZ!Q"`N'2!);KE3VD#
M"(,%>*Z_MQ`(33);FX3&):@`7L,\`+`;7-6&ESSHUC-/;!OR2+`VW;N%+&5B
MY4[P9@#KG1^93B8#M9*D8`Z@0H_C=X#+S(8\#*C*QL8,.SA#(SK1BE[T9QGMZ$?B0SK2DAY@H2=MZ4MC.M..KK2F.^WI
M3X-:8)P.-:E+;>I39\7*J%XUJUO]Z%&[.M:RGC6B84WK6^,ZU\:SM:Y[[>M?
MIU75P!XVL8N-8F,C.]G*EN&RF^WL9P<1VM*>-K!Y3>UK8SO2ULXVM[MMZ&U[
M.]SB]B>XQVWN-[O1HNYVPSO>.Y,WO>LM:F';.]_T?K>^^RUO?OL[
MX.L&N,`++FZ"&SSAV4:XPALN;88[/.++AKC$*UYL`*2W$1K?.,<[[O&/@SSD
;(A\YR4MN\I.C/.4J7SG+6^[RE\-
GRAPHIC
9
y85445y8544506.gif
GRAPHIC
begin 644 y85445y8544506.gif
M1TE&.#EA\`%2`<09`,#`P$!`0("`@$M+2W%Q<24E)?#P\.#@X#`P,-#0T*"@
MH%!04&!@8'!P<)"0D+"PL"`@(!`0$!(2$C@X.`D)"1P<'%145)>7EP```/__
M_P```````````````````````"'Y!`$``!D`+`````#P`5(!``7_(!:,9&F>
M:*JN;.N^<"S/=&W?>*[O?.__/@@F0RP:C\BD'DIB;G)V>GUN:H*.DI::7HJ>JJZRM=ZFNCP``![&7"@JVB["Z
M=P`8`D5C`$<*$1C(`09+(D6_P4L)#TL!9,+(R!$-5=78&`NU80T8TT0&&`A)
MSUX&VAD&W0S+"`&]@KSV=.M$PT;M"`\`+`#&K!Z1?4D2$%12[<@8!@($"'%`
MI5I$`0R:A5'(H(@"#!21(`R%H5:`"`@0_Q#\2"P?'WPNWR#LYPS#-GZYE&C,
ML"\!@P`,$F0XD#%`+@,-@`K-T-`(S7,&'RP($/*`@`0+P!EI2D2EN:0+RKT#
M*U8```%`#:"5=P1"A"(#:SD8T6#9.@70SH:32K7(W`!UD4!(E\%F1`5"SW6,
MJ0_Z9?!_K1%3
M(!$(5C.-`V*]YUP&LATGWSB7K1>'>C::T1X2!BBPP#$+8*899\'LU-`Z8]!3
M33U9(!XYZ@K%C$0YQ-
M`QMY`C3P%G=+_BXM50U!7)9V+HT)S'0P+F%QMNT'PUV##$D#X9!+A]A
M0]BA1-PL!#39)HP&PDYGX>,(.66`ESE_,="25>Y%5S77YN"E`(,\"1#2`V8S
M>+41>B41J%FOP8W$VD2`6`[:@AJ!]V4"Y-0W3@D)()8!#EQUE@%@EZV`5>&\
M;6=$=!*!G%\00%#UY%%'@EOFG/>2$=D1%<%?_^=/;T[ZZ:O`5O41#!B(>AA0
MORX[):,IP>SL8IB.^^Z\2?/34
M5P_(]-9GK_V>SF_O_??I=0_^^.2W@7WYZ*<_Q?GJM^]^$NR_+[_[\<]O?_GU
MWZ^_]_GO[W_U_?N?`)D7P`$:L'@%/*`">9?`!3KP=0U\H`1])[X)6G!Y$;R@
M!O64P0UZ\#$)[-H'1SB\"E8!/LJHVW>$0)`$8(QL&5C84:H!@6B]D(0X#$0`
M19.K%4'`(.
MZ#;-H/&/94@@`P9)QW;IL9#\8!H>C3-'GI`*4+-8#"`GR87^D28Z5T3DXGR3
M`3`FD3EF)"-2*'))3SJ`.4HH#R57>84`(F`J$-(D`M`2#-`((`+$"!%P]!,!
M6T9GEKAL@BI924PI!)!P`;!3UTL9QW."<]BRG-/]63G/6^4SW3N
M$P[T["N&G1%6@4;N`U*0:<*F5="H.H1H*J8H4IXYHJE7]1U5P;O6#
M72=9[W$C#!&>&470DC
M)\N(K-C*UGVTA5]BF&TG>(U0*`.;E;OF2BU@P7#*WB+Q8U:`1RBZ*L@&D3(:@8'=\0AY>^M&4PF:!7`Q
X$`S*5
MF1A^(KZ$C*W28G#&>KW<]2XH;YYAW,TYKCW\\
MOB"K<\A$_IZ1X=K*)"MYQ[5%LI.%]U[-%(QM4%:N6J<,/`=A0QU9KJ^4N=P[
M+R,#S/3A\2A\3.;UF-ET2UYN)MK<9>^BV:U17C.=RVQGD80YP7K>\^[>?&>[
MYAD4;!:T2PCMYS0?^A.)5O^T/1A]A#AO6=*GHS26':WE,6.:=)JN":?%'.A/
M9[K/E?YSB$MMZLZ%^B"JIK&G6QVU5R=HU(!&-*U!C>I-X[G3K-ZUTVQMZ5D+
M^U?$CK60@WUL9/=:U+\FM:Z;/>QGPQK7JYXVM0V6;&S+FMG;SE&WHYUK2(>;
MV]:^-;FS;>YS\VKE_BQ\B
M-P#)KXEQABM[X_WF`@0[\D,(0<)`)L#"D(.Z(T"=-X1GON18I][M7.B+:530`)%"`RA=``@5?A-^](7&!0YT+!]B&6;!H$+!?+`-9MQK7
M%_/UJZ-^[,+<-0`&<(':7V``F5?$YK_L]'A3?`OMH'GA$V\UHA](:SZ'+-"%
M;GRCKZ[`K9Z][6^?^T/L_LR]GWBY.[Z`CU.+.6O!S\I1?]X`G#PZ*1\_TO-.
M>]OCWA;7A[/:$_C\*!#8J^R?_OMC$?_.)SP/?"=6LM=^_[6W?Z[0?]GG>Y7?8:`@(#W=`OH;Z;F@`4(@84@@;[F>]LG/0.H?^&$%B5P?Y;`@=#F
M@0,'@OGW@$D0`!9``#)(`)%'"2AX;10H>!;X:1A(?2](`--7@Y-P@^JF@I]'
M<"'H@N`"A+8GA)!`A/>F!&^3-UF5A!GX@T'H"5`X?\Z3)0C0``%##Q97"!JX
M53UH@%O!A+7GA++P+!P`%K!-G.H"&5H56<83@&@AA?`AHZPA7"H.],T
M*;40@(-PAU*5AUC8A%KHAG_7@=JW@C]'B%78@E>XA%G8"8"8@_A0192`B$ZE
MB)C(B)KHB)R7@/\'+@&Q=Y48??\$Z(.CN(:-N'0P]WO^\"8C<&5V:(6PV"!\
MZ(>-L(E&6(&59H*,`(I))8J^F(F<((R1>(2L8XB[:(F]F(;,N`G.J(`Z.(&2
ME5>\B(9E\HNS2(&U^(&<@(Q$I8S62(K-:(J\QXW/2(RI]1-!D5/?J(?B6(JT
M^(:(CWN(BRJ(_DR(_#N(UL@ULO1I#4"([FD8_MN(^/F(+Q
MR)"`@@"U<``(T1."D1P7?9
MF(HLZ(HB:)!]>(S>)4(WR7'%(`268X].EA0FH`XB&9/LF`D_B8HOJ)`9B0\>
MV9$?Z8W_3K:'TP=G2\F3P!A%]`&4)RE_@<@$GA@=#WD/4Z:5ML>5.QF+/8D$
M#D!YEBBB5*NF/EA.0PH*52<:6M>>62KB,32D,(GF7%I67D*B`
MY2B)X$&/NCB-@\F'AGF)B'F0#K&8X1.64`DN?(F3SE`P`%"9AH".`D68%Y"9
MU1B.,LD/GHD'8P":>AF5%XF#"\D+*1$!TM0`J2>81,::KCF2K*E=`C";:62;
MC[F7N5F$4ZD[+C044A(85V```XE2:XF92OF6FQF7G:E_C*DYS(F1D#F:0DE\
M0Y,%#Y`2TX"4(U!9N:@WYK<4X3=RT\5RE[F5W7F8Z\B93J&<_^;DF.;IG*=X
MFS&'2'*V&Q&A&L6R&4'2D3A>JG7=>NWGVW9GYKYG^`9H.+Y
MF=X@EA9YH,V9GFQT`JCY!`*C-1ZQ&-T')P5C1\ET>.SEA*K93\3IHZ\YD;$9
M'2+*/>59HN?YG%%X!@_``!OF2>^P##ZB>'>$I7.G#I"WG?SIH=X)I"$ZI+1)
MHM!YIDA:H.GI!9LQ"Z%S>@=Q=SK:>F'W>JH7>QR:IY7VH=_9I^XWGA\%J$&9
MH%\``+UT2\8B2521*2=#G0\0=!:Z<_\9*JD\6IA>:IPEJ9A^NIQ%&IH-@IZ>
M6C<:.@7M"1#O\34_$1(&8G+VF7[YZ:K#V:&5NJ>PF9BR6:L#6J:!:J#OF*2[
M.A3RD06UXZ1#-:D]JJ?^^:P`2JN92J388*0)B:9<:);4&@8MNCYX&J[-.JY@
M"JUB*JTC2JV=:HOG.*^P*JX_2JY!:JX%J*FEPZ]CZ7^%6C<,T``/T*1D"+"M
M&:M,6:[1>JY_JK!'>JV$FJV$JL(FJOL
M6I9+4$7U(#?'2+'%>;$%F[$'BZ[=B*TR.ZAF2IJOP9$!<#%C.+$7-!4E8+)8
M@++U.K#WBK'_^:JQMIJNN+H5NNJOHD.4O4H(4*L\!]-,@(4LLVELJG\#.F
M-\*I"[NUDHD)8WL\96M[9[L(:>L,:TNPF/JS&PNS0LNU,]N/-9L5"'L]&G2W
MM9>WBK"W!]&W5=NS5PNX*$63:%6;@ONQ0^NQ19N>YX`+7`0)=6L\C'L!CGL(
MD,L3DKNR^-JR6&L&WH6<<-NQ*#FXDNA@B?L2BVNV7YD'JZN.?MNV+@L&LZM<
M'+NN1%NMZ:F[DU"ZQ7.ZJ6L'>@<``1B\K7N,MPF:X"=`K/`2,!P:,P#Q)OR!JO[>WNU0PPM=0PKBYO&F*A.KK
MNP6\P8W;P5.KLMK+P,7KP/F+O)O[N:)9N+O9A<1@`%D1P`(\02WL"T*,ND2L
MMLXZN7];PVF`PT[2Q!33=#3E\ZO?-`8',0F#:0H/;PJ+<9H@,^AC,85'<67
MAM,#'4X@7=0B?<[_)&W)T+S0FMS01?W01]W29:S-N-LE4!R=30T\.0W5.VW0
MS?S3SQS4!#O48.S0W70;V%!<$HT-J(G4+QV^_3NW%GP\9[W6]3Q]4TTQ53W+
M;CVY<-W'/%V\>@W6Y^S5H+S7_#O6?5G6O1/8[9S6(>W3C9O!9>#1>2S/7FRO
MC$W-L2S9V1RTD>T-^DO9$AS3_/RO@/W4@NW'/7W;TXO8F(S5TKS`N;S2A:':
M@#KL]V.U-W;N]+'IG.WJWR$Z`W:2]
MQZ:-RT*JR^(M,OB=#,@]WC)=WK)]WF;0#EG!1<``-QHV&>UP83S12X4WX\K:
MT1!.U>Q=>^Y=&/`M`'19>1303>]K>15@W3PAWT)-WT1MWUS]W<<]R/MMW/E]
MXB1.WF+-W$R-!G@$``^P6J[324(!7.>%+!4"8-0B8&=NC,(@T'P'3J>-#WX'/.V5)-X6J-!'H./Q,0R0,`9X"NV/^"?MIR3BMCN*%[-=,
M%1H'<``GTQN4;J6,AWCME>"1A#KP.0)V_>>;_N/K[.F=G02A3D[,RC:GSMB+
M#>(&>]\4\^I;SM^&?M>P_LMA/;Y>4&5@>,ZBY%^?%%RA-4;$M>.9$[P];MC&
M;N=#GMN@/N3-3NR]/=^_OW@SFXUEP/P\)06_:=![B1*_;GWX$
M2.\42L_AOCW/T[SJ[6SM_![PA^[R,`W@E\T'UNS@G//U5"OD&T_VR3[O;)WT
M(&_O\;SVI=WW)5^YU([M_3[WUP[P*3_U`\_M*"SKE=#UC\#W'\WI1@_X'2_X
MGPT_:?_L3?_AW,WX4._XNH`KDX*:G*_3?Q_=HQ_Z9O_Q]!KR
M]_[D^:[5^\[J4C_9*__XKJ_HE>W\=P_]\"/C[TQ[[[8G__O5_A
M_P(``L0U7EAVHAE0D!;\\D
M,^:<1E.`*887"W"#VZG7:@NBT^HUN\TNN^/R.;VN8A7A)U]-C!_M(+5<5*4,
MM11DI6"T$!2B')(D!OVY/)X(T(R<:56^!/%MBA$!ZF6$$@9%`BJB<%T*<;6>
MO*K*WHP]F8)-B7&9QMH)#PL#$Q\C'Z_H[&J6^#$+_JB27DQ*-<*N6L]F>&H[
MZYBO
MQSZ9_6P9S%G'F,Z>R3PZ_,*QDSJ*@U!*4IF-&J*,2YL,'>?)I"A<)15"-.1.
MY4LS,5T^D?=UW,PO-;64->-S[1J>;-_.`4KU&<.BBXXR32IMA*.\(R:FT`@U
M)+1R\(5,DS)_'3IZW59";!_<#]C`BVZCERL?>KFV3NB
M,3?5?=LUI?342M214TU7[7AUW4F_%][1H^S5VK?L9ZA8F_8>A_R90T8A6#:A%'S/9PN->_5OH-5X9>7$JQY/,RL4Y
M\Q-?SM52YY-T`8Y66GMT==3_D"G?=7TI9Y-MX)Y1G"'8>F2/4>;IIAPIK
M\"W2E2$MA2C)1(Z%>%@
M-Q)E&&X(:K&;C0U&E-)C\@U'7WSVS8=?LE6C2F@@MB8
MKN#%XX3;S:95;#=4",F%MQUHII)D,O;>9%">2-R4&(CE9W-=V&12;DXXY-?F>4D)P^*-NG%EXJ52/J6=5AGCR"Z(J(
MD)#HJHFPHJB"BGNP:*N+L$ZZ*!T8$!`L`1;`TJL-RNV;,<2)B;)&UKG>OGANBTFWX@8J98E\TBIH
MBXBN:"A:NV+2KKMT>+%-J[2T.;*E1/K[\&*E5OM@Z_-M<'^[Y;9\6RXIQR+6JBR5-'@^Z7YFLWN'@?*G6A_5W9FA#L+'&K:!:\-=MN.ORWVUC17_O];W16'^R?I?'_,
M,:Y0;^QWHH23/+=CB-?;Z^*/!P6QY@JJMFGH-JM=]L&!!9\)VW3RFRW&FDSMZ](%GF<26KK\(^TZRBWXV[+?CN#SXUN:.)MG;`(^Y\`.35_S"/S><
MJOBK-GOR=J\NK3$M^,?"]+F\`*YOZYJ:]N1@.+IYCT`)```#&6@`SI'/;1'L
MG>02^#N=_8A:_?+9M>+7.^FCG!`QF+C,]9"#&>+A!A,SO_-=[6)&RQC2
M]C>K_%6Q:&=!R?81A\NB%D7M&`1
MI95!GB4Q;!U,7M!^R#S?<<]^*]E;"0FYPK^I4(!.>PX8XR!&01:O``.8Y``D
MT`V!L)&/N,LA!_VHHPJ244U&!,?Q3@7!<=SI:\U;'PREJ+>CET.F'E$UB?1%D-C$D]]Q@LFPS3Y03]Z2$\CG![%J)DZ
M[*TN@-<<("-S^89=TM%Y[).#`1K(P'G9$9KOVZ$JFTA,.=8QE#FSXQ&%L,XE
MME-YGHLFJPH)2]3)TII1XV8MN:A%=GFS<."4IR]W4@$;%H`"Z$28,-V922::
MZ:+F"Z(X_RUW3%'2DY3,A)\SDU11$5;3A--4J2*WJ,V!+O)U"?7'0C\ZSW!OM93PIJLQ[R.E)U`7&58P\E*9R63B$CL:3,QVL>A23.E
MAM3K/T_HQ11:CY9;Y:HJ:CHSHG84KF$D:SJ3BJSQP9&"R!PJ6,UV.;G:\ZPD
MM:O\EAI4!/*5BK%,VA2Q.-HN8A-=!KVE9WRB``6@H)P'&(<#.S)1V:+@``!0
MHQJ\ZM:VXE2H%/(IX\R:5D_",[%#1.Q;=>H^S>Z1L\_$:S]7NO]7Z+%TFS'M
M&%91JU5>^00!$(```E00@0!$P`$92,!Y`S#1#"!`O`W(P`'.&X$'9.`!]IUM
M;PU+65#^:0$;$:XWB+O)4W8RCI_UZ&$K2^"$93:M^.2I/M7Z1Y1B][H!S2Y,
M79I([0K.)P!```,;<(`&P/8`)E"`@#M27@.80`#S?0`0`H#?!KC%MPPM:H-%
MRN#VH768._WC3Y=73)#N6+FC'+"$'9M*GF)XPQHF[2M%"]"L;C>;'^XP0GMB
M``@TH!4'@$`&&K"``,P7$CP(``#83(OMC$2&.K9I0WO,Y!\/-\AT]>QQ%RD089+G3B`
MS=0&0`0FNH`'*H`!XWAQC&=^!:OEP$::A079]'@1\&4(0"H##L!Y!&;+A/B"F;[V
MQ:]^T
M^1E"TOD=\CT7]1%>9,7?U*W;Q[$?XLG>_;'>UCU>9YV_>49O-%>_MD>__V?_^'>!_H>
MVJV6VE7:3(E>#;X>X.'1\C6@K3T@4'G%P*A
MOGV7LPT@LX48"AZ@"B:>!")A^[E@ZD6=O$'@_*U@&\X>_L6?_J$<&N*;#^YA
M%[J<&)(?`9K?^1VA$B;A%%H@$[Y@X4D7(P[5X2F>U47BH"7B]=7>]DD>V/'>
M%_:@'XH?\(WA[PV6&18B(O::(;(AGJ%>#%[_X.IQG)^QE10FG[A980[>H1:F
MW%/%BB9ZGR<&(`E>3QB>("DBX/&=WBP&7F/!81,ZWPS:H"G2X@)>(/9="!YR
MH!?N8O&=(C32X`W6X31>XL9Q
M7PCR(
M7A]RX@_NHBB^7`FF5C\:X#\J'0OB(!T>Y!L^(?1%(4A2H?N%I#Q&)#UFHC92
M'B]NXPAVHT8*X]J%8_'1WR$*9"HJ(CK"X$BFXV$II"Q^)!U6(N-0(]M8XTF"
M%D5FHSWZ(DUR5R@*_Y\9IJ!.SJ$J]J0Y"MXR+J(#LJ.X=24YPF-2/LY2:DY3
MQN+SX.-45MZ4?:,`>B-&?A%6HI]6IJ%1MB!!,N-C&61"MF-9+N0JHB4,JN4P
ML651NF54^?N(H^B-F3A]7;N8Y=B9"?J:%N5[(,:19&N9#*N4\=J9J
M>F!4KF95"6'P$2%>YF6K;:73$::LR9Y0!N7S@:8<[J5*QJ-I$J=Q
M^@\*I9T)XN1LBF,Y`N=T4C#N91DN9*>F=+%N=+2F5%0F5Y_O_5
M>6YD>G8D;=9G:>(F?(IE(RXH?9*E?7+F85K+:588>/)G*EE=:F=-XFB?YI04)7Q[6EBEXI
MBV;=<.KGDI[ID\XHAI[6H=YH91+H9:[G;Q:F>XK_))#6:3-&CIR&*=:-J::6
M::!VZJ#"9:&ZIJA*Z8!2:2XQZH'BYX_N9JO*GU."Z:7BIH3J$(5"'A.%YR:.
MIWC6:!@B*C^6ZO`%*ZQV)[%NJ;'&(;(Z:HC>9W?ZZ9TJ*8QN82ZZ8?&J;W.
M:76R:L0Z(T]"Z+]FJHMNJKKF8L%FZ,&"8;-=:VR"UZ(V;$#>*YU*[+<*)K?Z
MJY@NX;D.FP9RZKK*J,%R;*AR:%U>):I%2[,,.&KCJ*Q3RZ[C&ZN(![(0*
MK-<1++7:K-.>7<+JK(>Z_XL9>9X!E>S/#BNDHBM@3NK*.NS15F#2-NO21IZ@
MZJIFN^AB6>>JFP*JO+#F1^UNI^HNW:
M/F;:'F[;*NS;N@L&&(``.(!8M47=-B1[`EO>=JVDRN"KANW?RNK+TNJ?IF;3
M2NNGWBS"!FBOXNC(!,`950WEMN?)0FRQINR0FBRY8NJL8NS@SNS&0BT(>NP?
MABPWRF:8/"X&0,![M<&T,4`#,8`D45(!1*XY,1`&4-(`3`")42\`/._U2L#T
M4J_U4E+V;B_W3H#W@J\Y2<#U%D#S;B\"G"\EEUQ`QU=%KPQ`\7Q]K;Q"12R%)-Q$YLQ]:9Q&/_Q
M';\='V?E%C<0('>Q)=.Q(N?QVRTQ(E,R$2M0!#RN`[3_6.PHU#>U@>1FI1H8
M,BNO@2N_,J7HDBS/UH:F#5]H?55@[56<[55?P%6R_6\=#4:?'4&A+48S#5;G_4W
M"X!:&P-$&Z"JG1$"@!XYH]$"T%T0*``:474V-_9CWT!DG]%DZW1E=]49-8#-
MI1H:*79GRQAHBX%H+[85>+9I7[9D0_-(R-B\E)=>)\",`8.J-8!L>W5MYU=G
M/$!`&T"]!,!KE=DE"8T;9MAW9NP]=N._=I0_=L@P)O/\!MQW9T
MZ_5R&S=R!W=77;0W8?)KE_0DEQ$G;S-ZW\`;:[,<4TH55W,4QS<;SS<:U_<<
MM[=Z=_\$##A*FH'">@4``FBSJI797@=X`@RX-G^:`2P`IWEU!BC`HW35;CWX
M4`?XA`NW@!-X:!\X@/<`AQ>X?R-XB"MXAY_VAT>XAE>X@T,X3[_I;"6`>:.T
MW('TW8&TC=^T"KRTC@=!YY63.LLXC:MTD(/TC.MSY^W6C;/S`A'Y>2^Y&CCY
M&C"Q.S,0.T^;+^/X-/_R->MW40/`DU=Y4(C]YEL_REL,X7CX`CBU`
MJ%4SFR&`HZ1!`]#89U_2`="YG:,!GJ,9BY`#``7:=`P"7V)6T:CG5Z&H#_N@`(NA@@P*H]
M=0PX=FE_\XBQ>AJ\^F=_\ZFG^C9O>JFC`:Z+^JY[.@KXNJ:3>K"#-0/`>JJM
M^F"W.C-CY:>U6+&H6N2>0H0+F(&?-K5O^+5KM[;O-@Q\FC_DM7";D1`8][A_
MN[GK-5^K@';+0(3#MH?O`;RWN[B_^[ICPKG?>X#G.[[7>XK/N[]C.RYXP8;'
M.\!7N[^'NRID0;T8]OGQ>9PO`(;?@&/7.8C'P`,\N*.,L\4W`,:G@,;7>0!T
M/`-%XP+=9S/@S_W;K[W@E[V9ZWVT#?0!(,#$NY=7+P"+I78**("GQ==[DWQ\
M&'[FD_ZC
M($"SCP.DD'SN#SCOQQFD:/.EZ;Y8!=R`6S8YG]F`([_N+W^V$3_P[SX;(#D;
M5'X9/?D)9/\-/(!`&P#KCRQ!'S=\A;<8S%>F67>(EU=VAW;YK_\71+?[GS;\
M>S4`S!=S,_]\IIT_"&3BF`5`DS4`20I`8!@!2YJH2HLSDCU"GCF->$"8R`<4
MBH@Y8^^7$SQ$,F"&B8M.,U4@=M4T'*$TY=6:`*B=-(/ZI$"_V2RWNA%/JA4,
MZ^&]D&`E@&%E>(B8J+C(HB#@$-"`DG.P\!`Y`R0@8,D`UA;@P/"P,,CYX`DD
M(TIJM:!@0D<"L-#@X$!&\QHKED-KB^L*^])+L]GYR7*`\`"@P$3#X$*;1[/<
M_&PEK?8*I+"@)M#GI0#P@'#@#0X@;H50?IZ>LTT-=.T,W;BYF4QRL+_)BJ-]
M_4;\`VAJG[PR`*L9*\0HHL2)$Q4X"&*(G8$$Q7SQ,V0`EX..#%W_@!1)4I^`
MA90V.(GC>EG'PDDP4[HU9"(C5$]&=0
MBE2K6C5$Z*K6K8J660K@$]0R!+F4!C@;("F-ERRZE5"K0U""244:"!6Q+`.$
M`&R'!H@0H*P5NL80.)`D$!<"=-K.&D:4(&P9(XZLH!+!`&X0"`59/!(0(+.J
M!0@@!$JD0#*)O7U%9.6*/'F+
M*0BZE&2^NQ>2'';@[%80AUV2'W$R%4D@6M.*4MYIS'B@H(%JOZG*L^`A)8OY
M,]/+T,U'(LT:H2<8B'%?0V]IR";"4A?M_Q8$+IUEX,`4"QA02A&A&&!2&"?4
MI]0FT!4A'8'5X7%==@1JU]UOX&EF$GF#0*18`A$`!0,4QK'HHN65F411DVA!-4F4$;DTP&?%BB`&\$5
MQX(/Z8SZ3QQ;''(`JO\D<(!M2RV(ETY6&2`/`'>%]("HAOR!"(5Q''"7(W\$
M-Q1:>BVX.":!UUF#L
M%KPH,5F"Y6F"W#``@],<,$&W\3D;T$8NG#""&IGA7;W
MZI!!G%&L<.]Q!V_,<<<>?PRR1P[S"/%V(S?1<,0_3,RDQ<9@_&W(,L],<\TV
M7V4`!`VPS$F0(.G,,VFX<@'T(9%`$)R08\9\<]-./PTUR&XD0FNQ0X]0]2%3
M(Z(MK-5J''788H]-=MD>@VUVVFJOS7;;$Z'M=MQRSTTWU(2\@7?>>N_-=]]^
M_PUXX((/3GCAAA^.>.**+\YXXXX_#GGDDD\.`)_V7HYYYIIOSGGGGG\9#GKH
8HH].>NFFGXYZZJJOSGKKKK\.N^8A```[
`
end
GRAPHIC
10
y85445y8544507.gif
GRAPHIC
begin 644 y85445y8544507.gif
M1TE&.#EAL@%%`<03`#`P,("`@````/#P\.#@X-#0T+"PL*"@H)"0D&!@8'!P
M<%!04"`@(!`0$`P,#!@8&"0D)$!`0,#`P/___P``````````````````````
M`````````````````````````"'Y!`$``!,`+`````"R`44!``7_8"2.9&F>
M:*JN;.N^<"S/=&W?>*[O/"]-P*!P2"P:C\BD$PNF\_H]+.K;KO?\+A\3L^RZ_B\?L_O^X-W?X*#A(6&AX!>B(N,C8Z/
M5X&0DY25EH>2EYJ;G)UGF9ZAHJ.D2J!J`PR!R8)R3"N3T$%M0B
MXHX+S6T1W"$;$%3`SFT_)RBX.4'"@EX6E3*,@B!!D)Y+1`A0`$1!T(!.#(!5
M,A`:,B5:N2K]>G(LDYR*`"BJVNWHF0$/FP%B:F!5+US&FDD(X`4P`L&$A1@+
M@/'988&JFNW"N%@6$*Q#^@;X6*#+L,0"$028Z;9I@(<=#:0SVI0-+602:!9(
M(""!A`*=@0USQR95`,;.;@$B$=`"`VD_H^<-;Q@7@-Y/[P
M#3Q(WZH"Q!7X33W(^``*&.`;;YFY<^@`S9-'AEW[+@*36_\XG%]L>&"O>3?:
M6:9=1Z`:,8DAT?].KPP```"I"-!,.PPL-0\"^OQ`H87-90@$.!*T,^$^%N'6
MP`)$11`/3;$50``##9R%61`1K"//.058%($!'A9PX@1L;1.`/E;QP]M!/87T
M0VSTS%;;;07H$\!N1DF`US$>;@@0AJQ)8)$72;HS944[14`2?@G$EU$#1380
M$8D"J":`=E<.X.$$"_TCP#D!,+!;0.ETH0XR"L18Z$LTGDE`FC_U^><$QLS)
MBY0$V$./1`E8U!>+`/QWRY?CB##!@\@DL(X$#=AE1H)AR,,:$;3I9=$K0L7V
MW(W'[7;KGI`*P,!E#1QW&(HE:A0LDQ.D(TY08$XD1`/'_A04G[SJTPS_:40,
M-E.P]!PY`5;,-M4HKT#@^NU$&ME(;JUS3F!NN.?FPZMJ1-!C$0((;!K0K+W^
M>NZPCV:DCKN\:D0/LOKD@M5#QTTPDU6QK43C!/?FJV;"\8H+%J[(_GL`BAW#
M"R1KL1*,@,&O@-8&JV"LME,N#WD1E#@](6MNS33AF@X#OQTIDL`3'9!+QR&6
M\^J,ODB`0*;LSX?WK'R@Y&;CD(*(`,.VEBEFT`"N4B)Q*7W$!S0^($_GE3D`H@UD:>IRM+K=
M3)[#),`YK5IQ$`CY+#9L1G=$R$%+*$
M1K\?4NYR*PQ7R8(C&?^5_`\.1"'=.)ZRIG5H9&_LVA57XJ\D#@43*
MD96R4YU#WT6NAR_#N0-"HXI11ICB"Y/$7QA0(4D`"]_.8W\1C-8`ASSP#D
M\P#[]`*/?H.,?@;#G0HXQCY'$R6;Y`1]_1Q"`&K$C!VIXC==P&A3%M`<\@C_
MX:)\?!)GH".M)\#68!!%'//+HBC
MIL92V)4/"4.F'/1!(V42(5#E
MLMQ=R\#.P1IV##-1`*+0:"KTR/0($W4L2@X[AL)2]K*8S2R"`*C9SGKVLV*P
M+&A'2]K2&D&TIDVM:CV+VM6Z]K5W;2UL9TO;3^O8/O/VM
M<(<[A^`2][C(_01GD\O[TO4N
M>,?+7/&2][S#-2]ZUZM;];+WO;-U[Q+2!M_ZVE6^23"&`5Y1`+E6!ZU0G*Q]
M!\P(_!XA'C\X1VINH@#77"N[!(ZP'@Q<#`"L,@A":PH`CJ&4H:A%PB"NBQO2
M@1+^Y8(`4072Q+9!X1"[>!D0_H)8/ER1FA0`+&[Y1Y]>S&,XM)@(K_@!!/$D
M!,:$SZU&*$V/ETR&'V_#I.0X)*2PVI0')YG)6%Y5C+6@&BOA":`%)=):J+2EWXSI+&AZTV?N-!8^#>HW
MT#>^A-8#J4NM!OWRU[\?,L")4?I165-6U%=8-:N1D.%Q/,89214(,8)P'T@E
M1L$'X=,KP@=%I>W4GQT^+*ZMH.M="V,SE7)8LL0!Q14F"ZU!6,I-"A<6`X
M%](S`$K:DVX!EV+:5:BVM840I1\TZ"`=D1Y`\23@G""*Q!AF0"X"\KM\U(2$
MTDYU'N0];X(P(!BU0P;!_=DG23JC4!\^2`1H_*N)R_/@IDFXHAN.A3[I)9ST
M\'@^]!*$`3Q\RD(60C:!H&ZL(JK=(G\$PQL.&Y<+X3G2XP;");HD*`\P6>Y:
M]EG_5I)@I>?<$3M_,:)PP6X_C)O^(
M]6+OJW`\1#W$!\B7.'Y3[@)0Y\,WIO?=!;(*6R\`H`W*5T>JLAP[N9`PVF`S
M;.%-A;=+.)Q+&DCM7!CK#XU%WRA9.WD9/P7'2U@]0XBRQZDS%I7;E_-M+K6=
M`/"2Z[AK0H09>)%A3V!,*QX*GG^\EWQ1XG!&Z3<,8+G#?'^$W$3C^&J.P(.6
MS_P'.>"SDU9:S57SV%C4/%E=O?*F`43D5/A"(!#K`NM#?_1ZG>_\Z#_?`YX0
M`>0?W^*:=?1X?M",H8GCB(0+"3W:"BH@NOS@[PF=^X2`.6F
M?UR7=E,R!*(A@VU7!8,!%B^B8J:1@T60>SW8?B4(A`RXA;/08$TA>:K3$8QQ
M,AFQ4\9V@3#QA%)0``,!?T7R(8/Q"O&@?3V8:4+H!%H8@5Q(,1(S#E;Q(JJ@
M=82(?6K8!_)G&^/1%.,P(3\`2K:D>%CX8BUU5O=T@EZHAWEH!*O7>KV``.AD
MA0[S&4[H!MF`5;W6%,&6$5%TA?]9B"^P&(OX`@&8R(>UV(!]V!K^@F)RF",)
MJ'4Y43CM1PB8=FI1,(DNMH>X>(ONEXOULHG9<@O=IQ>3IQ1*DPO])6Q*PP_$
MR(9S@(PAIHS-R(S(YXS,`8VZD``!Z"`$Z#!6=';N`CA,=XA\@'K'F(7HB!;Y
MF`3B6(Y]=F"*`(/F)@P+.(?!<0?XL57>B`3VB'L1QH*S`&2:5Q/[&(29V`3]
M^'YG`%"#T1GYXB>50G<9,8PM!TL3B5TC-V!Q1R]T]Q&Q0!U*:%3@8Y&VJ(D7
MR009Z8!G(%/VAA$-=A;&4"ZU00F-`,&3/
M>),0:)7_^HB5[50ADT0@9N@N1^$4E764<)"4N@5Z_F`5$_`B92:::5\B:
MYI=^Z;=^17`.(=(,'(817PF6`N$/:+@%#3
M$DB.&DF7DOF8<6D`<7CGF5_P&:E0-J"/>)
MD_CXGZVIH%59H'(IGXMPH%F1H`[ZGOX8GQ?JGQ5J!)5HB?0(!A**%CQ&F0WH
MG#J)H<^IH=$IH"N*%K+XHK2H7)\9CK`9FR;:G"AZHBH*H2S*HP3:HG\YHR#&
MG":8HSBZHQDJG1NZH$O:H$#JF3K'8T2:@C=:I$B:HDKZI!:*I3V:I$T&F&X@
MF*0`D8I1IE5*I49JI5GJHZG)H'#9I&^JI5\0HOPX7"LY=T:X;DR1=S8D`L&W
MI3JZIE[ZHVSZH(/:IG!*D6Z:9D*:6Y`7ADWI"[^!86/1"T7)I'**J84*J$O]%T(&*FJ@DN*BQ"JO0X9IQNJD`FJG>
M":9M(*:B0)@?\@K4\3O+41K9R*EJVJ6C*JJ!JJS-"JK+BJQHJF5OT&LO26R\
MP(HGZ:NB$)J\!RD+((Q.`7S]EW_,VJG.BJ[0^JR(JJNW&JK2:HZ,B@K8QA4-
MEB9=,:E!V1ZE\UO<-YQZD1M5\0OCIY?GFJSKJJ[MBJN:"J^YRK!."K%VP*M*
M4&^0X@JA`JX8`6UUZ(J_)9X"V(Y#IS8)N(@'.ZV>RJXG*Z^SZJZOZK(M*['S
MJ@8+\'+$1IL81X4ZVZ_"E6I`:8PQZ[`-&ZT/*[01:[3O2K1#J[(@2K%+8'+)
M22`N5XT[&RK_$<"#R6BK+RNS0:NT1^NU2>!@T6FD%*?@>FV=DNK0(*X
MBWNWC:NX4UJW4.BT2/`/^>*&'*52AY=$V->;_G=7=UJ$Y68`,QE5`'!T+PFT
M7K$"=-NZ:8JRZ8JP"XNT6TN[*.D&AHN?@_6H3`DIES*54X9O+<>>\>JZ5PJW
M7XN\82NWQ?NZDDL%=+H^AW6JX&>P0'!T:\E9D6N\*+OM+&!!B[F^.P7#Z',HMG%FJ[,:7;,FFG,BS
M7,K4^LJ8%0+,IWE<[DW,WF#,_H
M?,Z@O,[)3%GN',_Y22]D$,ZJ5M'#7-#R3-$E3=+J+`7&A7798IFY
M)M$BK=&];-'&G-`Q7`C@*-Y
MY+9*_*EB[79D?D34?I"*+,V*A0%M0`:T$XW2_=S7__S7\^RX9FT%/.(BKHI5
MZC02-TA"HLAW.R8(_[!?H+04P*841N2U@`$$W+1_W5B"S%GHW)GTW%80"T
M&O=A-,38@IO$88V[\/L7-X$OEGT61T>UHGW;G.W5G;W;NMW;.:T%#NVGQ<"(
M_K**;^UAU1'>XO4MX:--JED@M7.,X'WW=7+%7X0Q
M(;:Q'98/(]WS!.W1F-W1#^XBXNXUAP8RJ5XI16"+D;;RR.Y%0^X49>Y/9]
MOB5G'B/XTIUUX6/MSX$MYB9-YIS,W]!K'E$>;S"MWRONYO@=YGX]Y@"MTF!*
MND-RV$_^Y5-NY5E.Y+)\Y8&>RUHP#%T^:N#(K^?((^TW'^YF:>WY$NYX&,
MYI%0X_[;YS&^Z8#NZ!0.YJV=X8W'2\(=T6!PZ/^-I^F=+N1)SNG97>6N[IM@
MJDN8[IN"=W9HR`RPD6.WONHJ_NC`_NFJ_NI^3EADB7P?FFE?,'_:1HK7BQ*=
M&03XMYS#?N3%WNJ^7N'!WNA#;`5ILN&U/N,\(S4?\I.KK8'9#NK;_N?$'NM8
M/N1S2I9I8]J>!J(T.'1_)Q:]X!:F]^[8WN[I7NW^#NO9;NE0@.SA[IT3-73O
MD]H@]^`#?^T$#_`4;^WN/NCP+NM9\.WWQ.&/MNQO.'2?DWUNH6\`I.["#NSNV_OO)S7N8N?_!D
M:9L=G_!8<(JL_1>'_W:#_Q=I_XN[H%%I>0'WT&A9P"64_G7"_I1<_7E4_I"\WWP`V4D2RF=)_Q
MA:_XAR_QI@_TK$[:5[">(^#Q>X[$?W;V04_XI8_Z0W_UH<_=5A#W<2^]2=P=
M05GNG,$,B%(U3I[[B#_ZRE_[>7_YEE_I7D]8MVZYR2G#G7O@E/<[?>D,R"!)
MTL-TW=_\F=_RX[_NHL_\AC_[QMX&S(Y+#[Y3?UO`'LMZ9%>U:L%Z)AO=XD_Y
M__P/`I(H`I-YHJD9C6U;JO')NBXLQW0]WGBJ[R0]WRS((ZJ`NR&RB1,YFX2"
MZ8`8R`:,`$K"G1P$"VKB5,Z9)`T%*G(B+,Z%;0I^SAE)T55>N)\HU3`1!=K\
M%;X<]@WZ(![M.>I!+BKF,?XY06'*!&`%+'@],2A@382:#`0P`,ZD#$1$-)R\
MWKC-1AQ,&"`P4*&\YN)95AI=RD3Z30XK%Q,'&0LW,S\[+U4+;F9K9J,4($@<
M-!A(?#\%V)Z:2=BRHDT0F"9(K*20%[!)+*B0'U-.6__#%M#0P$0%'T5!!BV)
MOX0-G2CDAFF;1!,&!@`P4$5&@0'S8*0S$8#`R'=?DO^8T"PF5!F
MW@D#\*)1.RC)X3*>TGSF!`I0J$"B!(T:1(JP8A.*%0O@JG(R10%Y!;X8B'D1
MS#L$$Q#<1#FAP*Z;!@)0,6#5HH&MG=1*\(5S*,2'32+J3*9T9]V>?7_^#1J8
M[EV[3'TXY59*1=A?8%&)@+>+YMBX.%PV/MS&,"'.C3Q?!MW/;V'22/#NU3NX
MZ.JCFA%39KJU6^99FEV^GLNZ->@GT3/BU:MVO@NX6;[IS\\_+<)Q)+#*`@
M@/0$_7CQV*%7%+%8>_88!?K$-E[\
M?/#T_=?_UQY[Y05(X''^'0C_8(("%N@/1IA]L,"5!8H84)/'#-?@ANJ&"'
M#"YHX(*506XY9)92+O3#DZ^]N.1M
M6OJ(99=H5JEFFER^Z>6:8&KX)90-WKEBGD22J:29,;(9YF9&BDGHH$CN:6>A
MB"X:9:)S/AIGH'5"VN>?,#:)FHF5'NIHHWA^JF>H?'8*:JFBGDIJ$8:NRJAF
M95XJ4:9CIJIHK9RVZNFMDM*9EZ"YF@HLJL*J.J.KA\$::S:SLFJLKL3:"BVN
MS@9+_^VPUA;K9+/:'HMMM-Y.&Y^?RC+%;+?@LNKY&V"6>[+V"ZC"FPHL;<4(/ZRO
ME1?C.Z_&;C8L;[@?T\=OQ!`53''(`V=,J\4KO]SRMB3#"S/#\LDY%+3O\(Y7CSK7??,7-^
MN>>'=\[XOJ"'?MGH?J]>N>N9W]YZX[FKSC3L]!T@UP!R23#;?=<1SGKONS.O
M>/.X/Z^[\]/#*'A%J=C$!@'3632/]EX]YH[MT2]/O?30FU\^^NN?[^+OSA4`
MRCMI?''&`5[`0U+8RF]>.^EUY\MT`IS9`(.F-YV]SSD+8$!83H&.<[2B'NTZ
M7=)XUS\+S@YU_J,=!OGWN9.I(A@.I!\[<$,2562P@N2[X`I3N#<`>JR`4Z,@
MQ,B%!0EH@7XF.`,X[G"'Y(TO?2P4H@MI:$09E@V)]T)@OT8P`7V8HGY84``!
M#J`1`P1#+$%DG_K:U\4O#I&+8?3_XAA+EL#7I`(!!J#"`!!`Q0FTL2TF^(97
M]K=%,A91B0$D(!\-V,<9'M!K9\P-\KAA+D#^,8F)M)L>8[C(/?KQ7$R,'28.
MJ,I;$E.%1$S2+Q."RUU"$IJZ_&0TJ3E-
M7M;+E\V473)?6,MG6O-HJA1G+LG92T%NTF4XM
MTG*#Q1SF,<&)S7]6$Z#SLN<]Z]//=39RG@)5:$`;>DV'AHN@!:4'0N/YS8J6
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M*V;!-A]2HG:RJN6L;8N+V\+J-C=EU8Q'T$*_DHQ#(UD-;%U%&_]U
M+G=?-4CMS.0+"H`".,`PKMD:-[N$K6YRNZO=T+8WOLCZ+G8`<)\;`N`*$R`%
M'&,"V/5N5[X`AN][+4:+-D`E@EV8('&/RUX-7Q>N%\;NI99[&'BLA#)HX>\`_.M8`2_6M2AV[X`-
M;.$,]YB98%,)2V[BE?+>;[I!3K%>5ZQB(.M*/AC.A(;UH
M,[D8;)CV-*6EC.A3&YK`J*:AI=,Y:DZG%M88EG2GH=SJ;;Z:UK'6]:Q-G6I'
MMU3!?\VUKS6=7E)OFM6];)!C>:0.CO3M59VF8N];;\&
MFMA?7O6WQQUM-G_:U[=NIKCW?.Y![]K;\38WJX4MUW8?^MU]+K>[C?ULV+XM
MT(+>][S[S>]\^UO;"0YXN+.-[&ES6\[R[G7UKFU6AU.[V_0^.+03WF*+#P[?
M'>Z8F?D^&-EO:_6:YPBAN\X&84N,A+CG*-QQSF"`^DRIOM\H>W'-VE
MWKC,M1-JI]7\_^<9ESC1=3[RA7\4Y'%+NM"3?7.FY[S:ZK:WY`K)98([W>9-
MU_K8<3[S48Z#.L"L.L2O?O*R8WWG4)^(U+53`EA1'=YA5[K)TPUWTO8\=`F0
MW]KU3O:LF_WI>V>[1^G^RP"(`P<$@$4#8&%YRS<``)K?/.]:V__.MA[_G9N][VFI<][E.O>][COO:P!_[L
MA:]ZXK?>^*7O/>UU?_O3?_"7!V"@`B)@8X.>*3=-,J3$7K/]974_^]X/_V&^
M'WC)Y<(+7L=^^?D@G8Q51D4/@7"B;A$Q;A"5B!"[X@$:+"=7A$
M$R;A`(S#%9H`#4J`$%)9!-:8$,Q#)Z3"!+BA>*D=#JPA`+3A`+QA'.[@>/E`
M'=YA'N(A%R``=43`EJF`'\)A(";B&Q;/?@DA(NJA'HXA?V7!>-GA(G+!]F"%
M]_2A)?YA)G(/'!V`^4&B(FKB'.W"]Y7B&Y[_HBX,#Q15(AMBXCN$HDCTGRMX
MXGZ9@D:TXG[-8<51H"^<01DTXSO(WS(:HS,68RE<
M'U58!#,6XS,B@%>\$4=DXS2*(Q1A$0Y(XS-&43&:ESF&(SJ&A/F=HSJ>@B\8
M0SP:XRE@08WY@#WRT$F0PRUV0S:6USU^`3(R6P3>SRE0QQ?`H`0HP!HT04(R
MY!S"H`)8)$"J@$3:(D-2Q@_A@$;"(47B$``H@"%^I`A,)$=&P`UA)`J`)`Z.
M4#H2P4O.PSLZ`4W*I!E$)$J*1$V>Q`#(PTXJI$^BPOVTI$MZ`4T\4!H\Y#7F
M'P5R@4**)"HP$!)$_V5*]N1*[E<6X4)<$$2
M+N4L5"4P5N!6Z$]<,F185*$,0"9'3N9BXL!E]N1D[I!@H@!G2J9(;`\!:`$:
MNJ))="9IO@/^$(%HEL0I\!!:I@!LPMA4R%]J1F9L_J1)6B86[.9MI@`?^H!M
MIF,!`$`$```#T&9H8D&2$>1@@F`,3*#DK-%8/%%*9.=VBL1K4@$50)$^A.=7
MI(5OAN9W;J=X:J*G@D+17C;H6&P/'/7C8%I;,%J>5Q3``03/6'`H
M&<`@&D(%+&CHAWIHAZYA<^Y@AI[H=YJH+K@E1[#HAG8HC7XG#*KH6,RHB=KH
M.U@1$8QH!)0HBKH1/,21>2KCCA+I-QK`&.RCDK)1D>Z7Y8%FD`YIE+X1EB&H
ME;8H'$GI#N8HE[:%?K71&R5`B%ZH!ZKIFK*I!U9GF\)IG,II$TWGG-KIG>+I
M`N;IGO)IGQZDGP)JH`KJ'[SIH!KJH;IIG2+JHC)J!!9JHT)JI/[5HTIJI5KJ
M+U'JI6KJICI-IG+JIX)JFH;JJ)*J!"IJJ:)JJI[KGZJR:JN*JJO":JP^I:S2
M:JVNJJWB:J[ZWZGJ:J]>JJ?Z:K`V*K`*:[$:*K$::[+Z*;(J:[/B*;,Z:[3&
M*;1*:[6J*;5::[9J(+9J:[=2(+=Z:[@*'+B*:[E.*J^::[HZ(+FJ:[LR(+JZ
M:[SV%+O*:[WW::[Y+[J:[]^G+\"[+;":\`2+)T6[,$^(+\B[,)F(,,Z
M+*8.[,-*++)\`WY8[,5B;,9J[,9R;,=Z[,>";,B*[,B2;,F:[,FB[#\NY,JR
J;,NZ[,O";,S*[,S2;,W:[,WB;,[J[,[R;,_Z[,\";=`*[=`2;0"$```[
`
end
GRAPHIC
11
y85445y8544508.gif
GRAPHIC
begin 644 y85445y8544508.gif
M1TE&.#EALP%%`<05`("`@$!`0)"0D#`P,&!@8/#P\.#@X-#0T````+"PL*"@
MH'!P<%!04!`0$"`@("0D)&QL;$A(2!@8&`P,#,#`P/___P``````````````
M`````````````````````````"'Y!`$``!4`+`````"S`44!``7_X!*,9&F>
M:*JN;.N^<"S/=&W?>*[O?.]7P*!P2"P:C\BD$PNF\_H:#?-;KO?\+A\S@W0[_B\?L_O#]=^@8*#A(6&0H"'BHN,C8Y7
MB8^2DY2+!0E!!T`)!821E:"AHG,'`085I785!@&:@I]]!0($```'`GRS1P:U
M"D.UP``*G4Z\PK_!P+YF%,'+7LD"%$P)``*G3,;/1LG"Q%H%#=@5@`8-WWVP
M>P<-#$`%`PA\#0BN10D(JD(,"`,5%`@:V*.6CPB_`9T$--!W;R"W)@<0(,`5
MAI^#`@4(.'!()(`X!PV`8L%,&!+!=0$SIKZ(!C@81L("`X@(*`#!P#,0SRX*\*MQ=
MQ7B!KP7T:$U3,(L!)@-T$=0Z58`Q:R)6B>3=^R[UZL>U?`8@@&YH4=FB*Q1O
M_)BN@V.\"?A>UC^K"JT.]2J60.7.!P56,[O:MDVX!01PYFO/+6'
M`]?95<])`E6P0/\_\*A7``(.;*+2@@C%2<]G826`$`.*'!`27C.1@0!/^V1*!T$"F5`,T4!
M),^EDWH[K:3`2D0+`0%T&FJ;<+DR*9ZK]EOKM':0V.9;(JA"`<("LT?>/RE)
ME$^ZX!H@`CU2F:M>8PD?>Q6_&E?*\;/"L>EQJLX>W+)K)GL$;+<\>?:PQQ:W
M-K.=0=.G6@##T"/11D#L2T2@G@BHQY=#*,";Q"$!7'#2=GA=(KC6]X\?">!;[K\3@`AQAP27773
MW)*T9@W;$N%`D2G:I$"W!AK9N8:='>/.(AWU_YWO;$Q@=I+<.T7NFDI2`/EU(18K58B^
M3.KS-$-.TWPM$^%E^$FFU(FG>A'QM'W-SZM28R>X>^\9RI@Z7]"#8*=-CL?&
M%\>\/-KSS]:!JW!>PQ:6.JOIH10-F,PQQC>,4KV.'PQ@A7#HQPE/'0!N$@0`
M1@+@@"LMX``&.(@]Z#*-#U*`0,((2`)FU`Y^02T(%(C'C_Q5J`5-0P`*P(EF
M",0`S4!H(#%4X<:4!(`$%@LAU[)&/$S#P["$1@&"*0`'/3B0S-"'`ORP0Y[@
M@1`=`H"'`L@BVWXHA/\@_FA'U#E.SS*KZ!X@`.HZG74`0@N*)"@2:CN#A?TAA`R`P#%[,MY!F";VIRW
M2>>!$).:)$8UKA%`3PKA@J3DY":M48`+"H^30%3E/P!PE4BZPAA7HN4E*1!+
M57)R%0=(S392@PE9T+(".'R'9NPQRG%$S9>F7(5F%$,>`.0R4+`L0#1;X\M[
M6`,SJKR29FZX#%Y<0Y.:Y"40B`D4639C&K@LP#&UL\SF2+*5HZR.(QXYBG[Z
M\Y\`90(_`TK0@AH4%`,]J$(7RM"X&+"A$(VH1.F0T(E:]*(8Q4)%,\K1CGK_
M]`@;_:A(1XK1D)+TI"A5J$E3RM*6CF*E+HVI3!L!TYG:]*8.Q:E.=^K(A_+T
MIT#50TV#2M2B?F&H1DVJ4J>`U*4Z]:E):"I4ITI56N;.$.:K(E,9,-
M[2`0*X2,[)Y_U4(KA92^]SN!J&54DG`
M7=_EO"UH-PO<]:YW%1"6:E["N/#2Z%7SD%[U=C>M\BQ6:Q8@O#HVZ
M,`)">-FVD%HX+Q8`'.`&>T'!5V"P@R<,B?GB0<(4SK`4(&P%#&NXL-U88((M
M?`?SBO#Q"`BE=,XB9PN`HF/G%;!P#-%@O4QG*(L8S#2F-?XE@)+Z:"CG?<
MU1ZK\L=11?(;ADSDK!J9DTH&:93;P.0F5_7)SIMR$8(\A2I;>:I8IH"6.S)F
M-'CYRT\-C%L$/D=:I":SQR7^08%=
M%>'/>4Z#!O'V'2!<9)9I@?2G6WJE9U2#/^4]]:3E>P9Y-A*&`/*0NWC)VS+*
M>M8LM49KBL6?!#@;NZ@N-!KV1@16:&<:P@B+9P.`*V3OE"*,,<4_.,.1:%,:
M#?**4A!*TL'(`M;;.%W7)]>)"KT5#@CFYG496OD/3;A+:@@>2@40\A-/PQNG
M^:ZP&>1)-51@I)+CP,BU.WWL@PB8#QSMN46@V7-<^
M!K0A1DYRB4J``#"'>03J_'$J:#P*+&\Y1+&L:2/4G*DA'T/.=<7_BW]C+L0YOZ$NC_A[G@7A=Z#P'>R$`+SB*S%X?&<=Y%@(XPALP_7$3WZAE1_XY6VN95DX$[)?D/SG
M)1'ZPKM8R]B%;NH]OWJ#MG[T0,^"/>JU8-K7GJ"W3WFJK5"<`92@\[]O.N./
M+GQI$S_V0,$N")N@^N0O(OAB'_X5=EDO:="XM)DIIC76E>YW6_^BV'^\]JL0
M0F"T=Y)#>09P5,OY7S[Z_**XH%1,N2[>IS_+D$<%VA0$_]!7'$*0&D)B#MIQ
M0;&&?Z%P"NV%"SAT25BG2HV7=K@7=5B@:".`%E"A$)Z56=+U;`J@3L;F@*$P
M:@JB(,[6?XY7&,R7?<[783"T"TT16.,```NP2*/!;;Z'@GXP&=KA;/MU;Z)G
M@3&H?C/(?IC`"4CP?O-W/ZT2#@366T`X":EQ#<3&5L2%@4CX=!FX=AO8)_14
M;=7%/MBF-Z>!"Z9!3>9WA46W??.<&8P,X<)UV%=\P?4Q0?7#H!_\G9@%(
M!>.W&LCWAZ`GAQ4H@W4(8^QTB(CX""%FA);WA8NHA(TX!='U79`8B8V08BLF
M`!"0A#`XAXRH;\3W%OK1B9YX??^*^((7*'=A2'=K)@W.HT=;X(>M.`;_%XM[
M-XM]5V:\(G0_N(MTT(ND*(CK)X`]0HD15HS&*`?(:(J8B(I5``\DX(&Y"(W1
M"`?3>(D`N(Q4,`XK\8S=J`C?^(+*N(2$Z'ZL>(Z"D(Y>>(I)=P6T=(OO"(^`
M^(KS>(O)&')DA8O;Q8WZF`;R*(MT:(T@-P+E-Y`%20@'^8L)68\T*'($^9!F
M$)&$!XR&5XM\H4_H=9$8208:68GTJ'58$%W$\'Y>H(LC604E>80GB7G;APU_
MDH\O>0>23`D%3CF3I)>2U,01Q1%#>@09M!%,&T-Q6ZD'75F-%"F`ME@8
M1(!:#&$;Q,``W))#:KF6>-"6X$\6K.=I,B=/+D$4K4OEVF.YXD%4J,=$616)>&&DFF;WPF?_T;9D_C)2;QG
MG_=I!6Z87_NR`$9HG+@9!>TWF+.7H%;`&-:%&J:F-O/TF-[IGM])F@HY!7>X
M"CAIH<2'!!`JCE+`@0&@C0Z)H@9)F__YH>IXG.A5@VUGGC+:!"L*F$'(HSVZ
M!#\:GGV@E4PY`:6RI`_PGDX:HCBZ!?7984)ZGWXIH)/YE5BP`)WEC%0ZI%1P
MI;?)HE%P"XK1D$()IE(@IE`:H5"02;4%$Q6JIE'`IN`HHF])!5!4*EX*8U5Z
MGG9ZHV[Z!*BQ9W]:G8':C^`YHKG9(]"'H'3J!(GJH8N:IRUJ?%.YHY'*E31J
MDC:JJ%CJE;FW8,HYIYOJHYW:G:4(HO]W&J7/6`LPFJ:GR@236IMN"956\"Y:
M(Y>:.JNTFJI%RJ@2NBNXP)($*&+O0(2E$S5[Z:M*4*LU6JFXJJ"VI1=$,)8#
MH$?ND%JA5H)HBJ1#":V>*JV4.09TF0GM90=X^0]Z29W.F@3BJJIX.JUE4)BM
M$ECL4&]!"6OO"J_`^J^6**AD&@8LR5CDX!,E<0T.^IJ-<:C$&:_Q"61K-@Z4
MJ)J;$%C$0!FNF0FKVJ\!^J2L*K!`2JBS``P"`B^OTPD9`01HT1+RP(=OZ+&P
M"+(SVZ8#^P1HB4ES20*SLQOBY0JC-IW#*;.@2K-%:[,C"P7:Y#S&&J-$>[0A
M"[4B:Z1/P`O_>M$8)RJS$#N@\HF`+!_JE3RNU9$NIH7JKY5H%TG4`!""G
MY3FV96NK'1NWT3JO:;N!6>NQ6YNEHWH%&?.B>=NO>RNJ&AAAN=.G0N:PLCFX
M:*NE5T!-CRJVY0]HCA)5#GFF[M2NWE6NWJRN`
MD2NKO1L$IG%7SN83M!N]=#NNQMNWD:>XN]@C+4$1%."@TBN\WRNWU5NX9(>]
MGBA/EW`)ZB2=)I&ZXRN&X&!-I^NL[NNJUZA!V;JOD#JY]3NH3F!;_X;A;J[[
MN:HJNA][N\(:!8VA38H+KG"XM+[TJ/U[LR0ZO[(90S$GLN<95@O]+W#`8\<.>50&[51UJS'3:)'':
M\<,.A\BD;,"-[,&GO`1ZHYA-*TVD]&^^(6K)96I#.Z1Q3,3$N\'/C,!>'`4E
MD1'#O)1TVLRES,AS#+HP/,T26FR\R\RA[,S,J*;,H4[`2E40LDK+Q#20$2
ML*2E(@&4J,V\W,T%_,WTJHGV@+B0S)?:+,1I4<[;[,UUK,\1FV3X";0-;+[>
M9IG8`,2ZK$H$'<2[#,WG3*GO2XL^B3"7;,&K5\7:D1=Z$TSU,M#W;-#YC,ZB
MS-&/G*+C#(=HLUELTU]`8=`77=$O';[S*$I=9A.KW28!W7;NW(OYP$8;N-GX]W6/?W6CHW0=KS.2I#7]I"\B5O8++%II?;.2;'8&/W7^PS5BPS8DIT$
M\`'&1"VY@6?846-<:3S/]&S/C,W4?`W:$YRYU*?$(@UOZ,L)O,()[5I&GMW5
M32W1W5!^W+I9T-XFRJD3FW1XFW.Y#W:H1W9N)T-#JW>O&UR2LG>QNW>_[.=
MW+>-NTV0%]Q6CJH=>!BK[SAX.X?[-
MX%[-XRTMX6)]WM!0TQC[:A@VRVVE-X7*-O"A32:1XR(.XN_=XUW]XW"-W&/=
MD6C`X@8K&<+&-DR^S'U67BUQG<*P+LK:W](]Y2$.Y?ALW2:.Y4+N$J6FE"S>
MX#X.YUW5`SK?D*V1XHH6.KK/)^5[?I;)K+>-358+84$GO
M@M*XON.%SN-M7MV]KN@3OMR[(`W$VMW>;5]DGB6X8`N!8ME)\.FY;NV(3NH1
MKLXJC@2H!T^#?=D9-NZ7(,295`TDO$NJM-^@_N'43N*B7N7N;MM!WNA&X!3*
M1HP?YNS$6JCK>6\`$`$9W+:'ONO5;O#9'M^^#N\"O@0E.G7,#E6T_L.V;H36
ML.X;3_!4[O+7_N[:GO#<[NA&8.`!K4W8($P.A_,QQ391,QS\YA!`7TU7DEQ6
ML/(#'^HOS_0QO_0"7^+_`1[#`^Y,=UVA8,NL-]R>/W4)4C-5=WT45_P,)_QO![6"!_WV>W15S`+#%GO`7W8F9`9T0[N+C7N;'57VP3X
MNRGXB8WV+-_V&J_X;W_B`$[S\4X'J26!H_%,WLM30$\1A9I)9E5+-]0(P$IN\\P\\2:?_TI\_NQZ_\S2_S'E^W
MJWOY""[TQRI.I`,^"#(,0O&`Q1?STA%3=JS8&390I/^A:6,MY?9`SP0I5<5H<,##$20L%!0K$`170
MP`Y,H+)&R]=OA`&F!L".$+@CF%FT6W<]&$:D8\1EDV1-3\$X%_.1F+B.?;_Q,/8G.JC]OAN_99LT_IU.4OJ__
M)*/5^_\#&*`[X(DG"X&+C<3_G6,M0<8>2S`U^!A]H$T87X7SX<0-3_OE)^!]
MJ:'@GXC-?,F!EK(BPHFN"(7!3IQ8GG1P,C@@A!>^6*...[(98_UM7=CD:&-%E20
M20[5WY:_`-"FF]2PZ6:;<,KIY@]0*%`G`'<^D6>=?%*E)Z`NZ"GFB5#NNVFHDT1`)GQSBN%
MO-O:&UJQORB*+*,&'JLLI=*Z^.BSU43K++L6+HRAN^URRO"/]YT)H`$$H&`.
M`#LLT,(5Z#H<<JF;'6QO^[J>__-W,A!(L'P7[5T$!GH.`^Q'5
M;(23B,*Q<(4`Y!T/V;=!#/[.??(SWOM$:#;DU2^)):S,_UHX01T"D30P1%,@
M<+C#'$XOBNW3X@^MER\?=E"(EIO_'/W(.#PS?E"))U0A$I<8DR9",8Y9]"+%
MIDA%J8EO4W.P=_$`8OS'.[XQKU%R-VKC(-X8NDN.[5!]]
M(L,[3L&*3L0B'"LIR#\&<9`]%&,9$YE&-(80[P+F-_E9T7^F
MLGC%1"5Y_PCJT8$ZZ*!!BRC$/)F.ALI3DW(DJWWC5D?$7J9/7ZR<`>$ZJ8
M!>AF!8K3FQ9VF5ZMWF@#>#V@HD:H5XVLW2A*6==:EI#B;*IF-3M8T"HSI(?]
MZFI;>UK4"N*QO>7M1/-:V>/"MK-,S>QLCWG;ST+WE;LE[71-:_\TX`97M8F%
M:U'U&=N7?A>PM6TN9Y\;6MPZK[1/=.=OL8M'Q!)UNY)-+GV-F]SQAC._(T3O
M_LQ+,/6ZM;L_=6\FM1O?`^/5N\BUKW'QJU'R>O:\TWK\?5,3$A;-,)I]C'Z67Q%;L<
MR),NEAS?"M>855`%)F`LQO!M,IOG>V,H+SC'5C:Q*OF+0A6C$,!>CJ-)!QCF
M863O5D9(,R`Z%@IH"%>^:W8SCN$LXK#_EOBODB8QGMFHY14+><;#?6&&`X2Z
M`,S@TP9XVEUNE&@G#YG1CGXSI.\[YTG[=:U2K303,^W"6^L.S"7:V^[<@0=Y
M!YMLSM7$0!/-^8-JWF+6P#V7A6^MZUO>=.[
M/?M&MKF?'6T*&+S@N8*VPKO-!=7IFD2BOL&O#>*Z$1"*``$H%,0H!X#*4=[RDK]`#^MG(`U/SF.+?YRG-^]BAC)C4#,]:8GV:6;^ZUKO.#CA1`>RR
M$'N4R#[/H*)=$55_V=89NO1=ET4$M_A%W%?70(PTYX&!*,LPUBZ+88`"$8$_
MA-^C!/C#)T(&B8=X($R0",B\/1(Q.`C?N09D$K),!X]
MZ4MO^M/7\L^H7SWK6^_ZUY<#]I0A5:EH+PC1!P+W4]"]%'@?!54D`OB5G\[>
MB3\%>"0"^8A0_B&8CQK;5Q'ZF91^&:@?!=]#`?N65'TU#S"`V`WJ"=X'OR%8
M1X@T!\+\-2\_(=8O"/6C/Q`:)X3U4S#_IAGB_O5'@?X-H8#O#X#Q]?\)``H@
M51"@_QW@[0%@^"79`AK"^`T``Z8`!$K@ZK1?_$D!_`%(8Z$65KA`_7G@#>S?
M)*"`10@"";:&V*&@"6;>;+#@%"B`:U1@#*[.#,J@(-"@"E3@`?Q`YV5?#]X>
M$.:>$!X?'UA%^ADA""8A$G[@";J@"C[A?W`@4,T!901"%39#("P`(X#=%EKA
M%'AA%H(A%S:>.8!=`IAA&7ZA%*#A&O[>TXBA%(R:&T+!',;A&](A:.2A9^SA
M>_0ACOPA/I#A&`:BY[7>/@B$"G`/&RI`(A;`(HX*`4R%$!2@WTRB`%2B)!8!
M)AZ?)G9/`58`)&B%!(IB-)`B7YBB_*'B"$C_X"WD`W54G2OJPEED7D#,8BS:
M(BPV7B.>P"/NHB-"(A0@8B\&XQ,,HR*FGR=28B=>(B@:(NN)0`$P``($8..I
MP#16X_3A0P,X@`0FQS9V8_2!HS?JP@)P8P7"@`,T0#$:8PZH(SLZ03JNHR#(
M(SRF@`AX'P(P0/WAXP#H(S^VAC_NHS7FXT!.031B(R@B)#4JY#4RI#5*XT-J
MHSF&XT2>XP9R'^JY!MDU`>-%00[JQUA@GOC-AD?^X'^,Q3>FGVOLGSNT)#D(
M`W4X(\;QP"$(@$GZQ$:6BA$<`DA*849BDC'X(!000#]`'@Q2!W60W22H9""0
M0F;LWP(4P0K@8$U6_^"AX>0](0]KHYL,$`"8&`=XAP`A&&!N4(`B8!"*80$"9JYL!ASF0,`>4=O:0+Z*#9L0`#
M[=\!J$%=!B<*T,4^H(9=W*0@2(45..-RDD5KV(4AG`5PO)\SO!^@B4)TOM\0
M\&"IJ,'^66<+K`!Q6D5VYEYR_J3L-0>@#<-5)-]RVN?R66==SF?PT:=_`O]H
MY?VG@`;H(?"G$QPH#>"G=4[3;][2`23B(4!H@DI%9B(HN%0>AAJHAI9?`F@>
M)7RHARZ?B"I":&:2B:;!#:'H]47H`[;H[;UH[L7H%%1HAEJHG\EGCNKHCO+H
MZ4TA4(5!S>EF-0BI=BY``#"`7\KAD2;I_AD`DRKI[T$I>@(``P3`C#X!5E@I
MECJ!EEZI1;I9+YI%97ID`:I)!HIDD9I
M'4YI?,I>$TQ=)M&`,WZ!V`UJ^Q?J4)E<)'_@D^VP:H*JJNJ*@FPZ@_*
MZJ2NJJW6:A#F:OI9@7/R*@GXZO'U:@4R$+!>):JZ)PQV0K)*`;*>ZK+NGP_(
MZJM.*Y_"7EGL24MBZQ%*IR2(9_%5P8$>P,:)*[D:*&7VYL4@IG;"P8U21[LV
M7YYP:_K)J[:VB;N>!6&R0[82'K\:0@(L``&\),`*K(16:6]*`@/TIF_*)_=$
M9E2BP,,*`O?L25U2K.)549M$X)(!P,9*9YMI"GNWSSXP--&PPNR_^'4$FJX_D.!1>?:Y:LE<&V;>&W1#H#S-:K1DFVC
MR@M-`FK:BIT,!,&?-BM"JME$BN9
MP@`]`H!E6JB'*N[MD29%.*X7NBN(KFB7,J[:V=$BP)#&U:@@<"Z'3@&UE<"0
MBFYA9AX#)"GAH6[A)<"6MF3K7BF#PI.#]JB'")^!+JP*Y*WNUF[O^F[&T.[O
M"N_P$F^.[FWQ(F_R*B_J'>_R.N_S0N\M-6_T4F_U6N^H7F_V:N_V8B3W>N_W
M@N_VA>_XDF_YJDSPFF_ZJJ]\3N_ZNN_[NE[[PN_\TB^,R6_]XF_^5M/]ZF__
M^K1OB?#O_PKP`!L9`1OP`6-2`"/P`C-PO*!O`T,P!"MP!%,P`D]P!6.P`%]P
M!G-P_FYP!X,P_'YP")-P^HYP":-P^)YP"K/P]JYP"\-P];YP#-.P\\YP#>-P
M\=YP#O.P[^YP#P/QCOYP$!,Q[`UQ$2/QZA&"N3%Q$SOQ$T-Q%$OQ%%-Q%5OQ
M%6-Q%FOQ%G-Q%WOQ%X/QD_A)TI%Q&9OQ&:-Q&JOQ&K-Q&[OQ&\-Q',OQ'*]Q
$"```.S\_
`
end
GRAPHIC
12
y85445y8544509.gif
GRAPHIC
begin 644 y85445y8544509.gif
M1TE&.#EAQ`$X`<0<`"DI*4!`0("`@)"0D````/#P\+"PL.#@X!X>'J"@H-#0
MT'!P<#`P,&!@8%!04"`@(!`0$`H*"A04%$I*2B0D)&QL;&1D9`<'!P\/#TA(
M2$='1\#`P/___P```````````"'Y!`$``!P`+`````#$`3@!``7_8"".9&F>
M:*JN;.N^<"S/=&W?>*[O?`\O`HYP2"P:C\BD$PNF\_HM'K-OH+;\+A\3J_;[^6&3EI>8F9HGZ"AB=`4;&W:F8@<;IZA-L+*@I&L"#VD;
M#`25'!L.!`0,"P0."FRV7`4-#`8;#0X!',<$;0\$S$D)$,0+!P<-!`',!0$.
M&P(!$$F]Q`X'UQ`)2]Q%\,#SQ`RZT&;0J6/G+LN!8=7NX%*CC14:`;^,$&,%
M$4(!-0H2-O-EBYH08FT+C8!*)&3D;(_PW9@.T=2"$!(BK)N`0B,)@1#TPL
MHU((RRTL3])9B,8;,B2QC*@BJ0260R$V)1)@Q7*J$%7X@C%5L($I!ZY'8*UD
M<%)55R*J%$`T<#5IRJ-##B0$J4#9$+->VWKEJN`!@R%@G]0]8I*(4`[$V`KY
MZ[(E)YE"N#+M)106TZA%8H8A5BFM$%!`PX'RY';U=?!<+8*_`F`
MH.R:@.U_I1%X\'VYNMM"!A`PX`!"@U/,G4N]Z9!8@V,+H)Y?SR'W[M[0,6!=
M,?9D]QUW16PW5?]TQN!G1&%#'*9-.0D48!=2+ST61E\-&`!!?N*1%T0!#@QH
MSW*011B1`CM9`X$!#3Q@%X<>@NC+?1`T2$!^14P80(7*&+5!`MH$<8UU[O7W
M#30,,'!14-;$,P\$`[3Q6AGC<*`-CRCN`N5CST7U)4A08F;<$,0,X&$]*%9Y
MC#U5#>?D-P6H%T`!$+A3P'@?$6!/3%2UUB=KU>A4#4L.M!GEB3YQAL1.+Y$I
M:$QA1D0.*S$I@*>>?&9F556G9#@$A#`9D1PQ+RI1U7>Z1+1I>A%]^9@R'*%X
MTV,!V&8=5`14R4&>!;S*@7I!0/1<3/:(*L2I!*3Z&$4R[33,GQ&I]]S_E[X4
MR.4:5Y(!A##-DB3FI%:-.U=+`RA@@&:\WIKF*D-H,X!XB58U1&R%)A,;`ZL0
MHTQPGPK*@0$&*$!.-2P>>I2\]!*QZJ,MO42PP>1"&\0PF!*@P+[]:NQIH.<^
M*#!*1H!+C,<8.L8NOHUZ*:A.4\%3Y9DX">!-)0WAE`#+K.T2%:"(.>;P,"/PI5BS_Y96C5TSYR#];)6R'%1^P.5:
M1]M284!W+BB>4U5N)>9G).`K!^0PMG7L08R)C=)FBFXZ$>A=E?7`Q:@6O?-!
MXP3WD'Q">8#7J36/N.2GE5I]]2RYG-#1$2WPXU,LGI;7TL:+?)+N=BDGQ#%5
MNI*/YA$9("A+X6E-+.ATE\-Y*@B4"I8O'!(3@OTO>JH+G-`^8@O\$8]K$,E/
M[:(G*W*P*6J\*T/BGN*_BUX#@]8=`S'H`G&P8&1EF*VZ;B=CQHK>O!&P`?4$@Q\D<
M<)&8_#`O&XR<]"PBA/\L`>]J<`$>&;7!C1*2Q!<\\L5%CH$=(K[N:L.RF!'@
MV+IF"4!=.T+<].08);9$<'S'T5T#R(@>=@6-+<1Y3'[H^#P6%02$RZ!&`^"D
M/A$(@!H_RLB/$B`"=9!2'5$"@_H6(#<;)H`W.Z,&*GW2@%(RRB<,T$T0QB$"
M+CE#.QD``)G2*7N@2":_4S0#L,8]>
M$H%]$#=,`10S0<>4AC>]681UD6<``B#)`"#`BMHX
MP)WR$()(O"*,8W93!/9P1JX`PL+JO9SGH6$YS]
MK&A'FU?&DO:TJ'5$:%/+VM:.PK2NC:UL_PK;V=KVMDRM[1@J<0!?E0:WP!7M
M:JO0G#("44VZ#:YR$3O<*?0P(0U`VP"NNMSJ.K:Y_U*H4D+JU=M@6/>[D,4N
M%)*2D`,8X'59*DTYDPO>]HI"O$_H)`0T8M[H>C,(8GD2!R7#A#'M8M16.VH='
M+(D-CZ'#)$YQ($Q<6!6[&!$L]@**7TQC.\2XOS7.L1]NS(49Z_C'W`JQE8!,
MY*$(F0T^+K*2"WMD;BWYR7-M\ERA3&4S\'@+2:ZREJ5P92UD>@(
MS;D,?RXTE`5MA40K&@NJ"/_-QO4[O%XR:#9ZAG77!#0=SQ)K&]OY#O,N^;$?T>`UL;1_""ZQK&
M`1?#!BHP@(8[_.$0'T`%I'W:?P\BX5[8@-D*SG&-4YRT%F<"OC'NL(UWG.#S
M0U]_C-&Y?SU%+Z`-UA
MQ3C_ZF0`W@&=Y4(?^BJ*/NTY\,B^&J?NTTD>=:E3O>(S5T(!=G,1[E;IXUO'
M>->'_G60AWT),$PP>I^CWA'47`MKOWG;1PMNW=47;0&^.Q;R_O*]"_?M32G-
M?QUG&,$/WN5Z_SC?$6^$@T3C+LHP;U;2GG#"G]SPGPWYG1U_!<]W'/2>%;T2
M.!]PTW,<]9U5?1)8WV_7XUSRAU\YZ:E@>Y3C/O24SS.@?_DWZ"1`&74ZN[&)
M"_G"_S[UP?'LV&$RA:0(U!.ER+5G0@##W@)45@?@U@6`@`(84+->B&%R%
M?Q[X#OWW>BLX62#8>!/8-D]21@181F4D5U'`@>ZG_G&@Q[G@X8`A/$F
MA+`'?^'7:+O'?.W7@S*G>W;V.JQ2A59HA=2U@RUX>T18"$;X84CX@D<0AETH
M"%_H863X>$\XA%'X@X26AJ6WA;Y7ABOVAG+H@!MXAQU(AX!PAAD&AU8`B%7G
MAH`FB/RWADD(@$M8:7:(B&)8,GH(A3JWB*36B$^8B$M@B&XGA76FB5+@B;E'
MB'L&BN,5B6PXB9P89Z3X!*L(?O^I"&>MV`2QJ(BOR&:SF(FFB(D?2(FQ9HGM
MIXLLZ(A\^`=^B&&WJ"JY^(C7Q8O)5HC)F(?"V(9%Z(M>IXPE%XVH*(IV=HS!
M>(G6J%@%UG0&V&/4R';?Z!//*(T;N`!6A&U_A&7E&'G0Z(W#2&O[MQKB-XKI
M&(?8:'2[AGXXYHS]Z(3TJ(Y:("!?<4O2)Y`%R8\-Z8]=,&P.H3O"QY"_>([!
ML(\0V0Q65"<=MBX]EU'R9Y'5.(\768]58#"YLE3KYP#<=%Q--Y+Z.)"'^)"#
MR`6V8%[O,QM9)%U:%X_.9Y(EN8&5AVUQ(0LZ"%J'IDFM,S!),`"G8';W%8(S
M:9,U>9+_6"`W13!V`V,/.S,OPK99<]9NP5`-KH86OJ)Y`I!>]V)W)&F.0@F7
M%0D8B6(`%7(HPZ)3\-5;PL`>P(--1?!W4QDA0.E]<2F/8;XF8#HF5"YEJ`7!#\]);=JF0GA!CU*46W^$0
M"*9Y`MB90:F&5EF)J68/+HF!#Z^"4
M%-8%Z@(8P5F5Q4F0TTD%"K`KK1,LPN9L_9$>F]F;=VZB1U#F4V<@%
MNN1.Y-F)YGF5Z+F1S;`2[:F*[\F`]SEY7L`.(A`^H5F>-(F?_P&JGUS0%6*Q
M@(PHG/YWF+-9>A@@`1`:H1(ZH1*``1AIAN$955;T=,4X8=R(%/FY@P@``"1:
MHB9ZH@"``!>Z8H=V`!=A@?"HH"[(H,-9>B.*HCA*HBJ*"@7F%)@9H](9G^*I*&PET^1A;THHUQ(G$+*>U-*
MI25JI0^V!68155-7G[`8I:S(IDZP`6$JIBFZHGV(9N-@A<7'A%PZAUY*I($8
MIV)*IN`YGYKR%5K:C$'JIT/JF7\JIR8JJ*DY9^9W"G6BIK;HIK*(J:@!J%0*
MJ9L`7X6Z&):Z9A\ZAIJ:B9QJI)ZJ"?\%9C8E,JIF5JJ0.*`BZJAC2J?$N&M-
MAZ`)FE_O$VEE(*OY<*JJDJI'BJL[QHSAIE]:R6F:EA"LJ7&H"9^*2JV,2ES&
MBJ.KF@DQR)GY51E"<$-X>9:!2*S=6)T,F*THNJV0J8WMQ6"UUFW!D<NJ!]
M>JU@:JLZBJQ]L&'1@*L=VEB'\6OL1FP$4Z\S>J\-VJCZRJZ7@%W!XA.(0Z)F`79I2(8T7>IK`U6JZT*J7Z
M.J<\ZF:Q@*9K":O!U1>*D7WEAH':298;6ZT=BZZ?J*Y5&K)[`+$;E[,Z:UW!
M)+1C(*S7Z+'_,@NR-;L%8!%I=OFT8$:U*V&N2(&TCZJTKN%F"["=\):H^%JT
M''NT,^NPE@!?Z_"86\JV"[NH>9NO6)NDTYA?&Y`!132XA%NX190!&`FVZ!BS
MK$BVMYJU[OI=BIN1C/NF8CN&CKNOD/NW[C6YGGNY)9.Y-)L%O_J=F$0&%*M?
MGUNYFJZJ`J[)TL$Z?(5VM5J
M2'9H^S>\G0NZPPJ\R`B][R"Z<@MPS#,$(36O9KM@XONVY.N[;TJ]%RH4NJ,[&;N]_VWF!1M'
MKGK:O.5KJ@<\J_@KB_K+O.FA#`K@*]S6LFEV:`2,OI+KO%4[OJ68P/G0P%C`
MLP(5++2;'D&[O"=V:%^)PO=2?CX7FP:\P*BAP6'KP0X#PO,YL8=:P6.03=-U
M!`;C$$N'7#))OS2\N#*,BS:\$CA!5OT0+I5D<#$T\J%K`'MS)!..HEFRY+&X9PUML
MN6WLN6]LG1HP`8(\R(1=JOQU,R>;;
MMT6JR90P!MY+D0]"-HOW/KM[6&K
M`,64.E3Y2-'LS,<9KUW"J@&MK7F[E?7771K8R$S./8W-2.W1G(L$Q1O!14!*I<(*%^Q8DLVG
ME%W-?'O9J9W9/!RY)174]X(.P8!KA^T)I8V'+FO4KYC;@-W;@=K,=(UEB',5+,N;C\7=I^C=8-W/X%W7XGW6P*T4)X-C"`*SQ`^
MX`:NR!2N5ERY?<;E:3@$:M.:S(+]U0)NT?&MT!+NX;QM9='=UGS5V;^C:JPF
MVNSWXACMXUKY&EK`?Z]4[!-!.$@KVW3XT*^
MX0[.X48^Y%W>:#7^U"Z>Y:[AK9E9W.U[VKJMMZBMXI7-T,V=U$1^9D@^N7%`
MW<_F%?^+L),-WV0>UEY=X#.^VKZMV5XHUT`N!SB>:J>P;>N=N`V>Z'X\YSH]
MZ..-X!O\YZV0WSTD30&@;B?,YZ;MYX&.Z)H.X_\?'MZ6;M^'CM")+@<6ON#*
MW>=LON;6^N:%'>>#5]707>>Y7%89#NEH'?M^`ON*$%>RBCMM'7>C/
MKNNMC>S/>]/`'NFG_N/9KM&4OLI?7FEA+G*F7NI_,'#M)^LGK>SCKNZNONUN
MW.VA"^^Q%NZCU^[D[@<+%W'Z[G`3U^S)K>;+7>L!3^C2SMR=6MO=*CYC?N]]
MP.RS/NH"3^L$?_!R_NVD1N^KM^ZX7@@.#_`2[^9M;MG&GNL4;^AFJ/$A?P@=
M3^KLOO`M[^7$+NC0[M/4GND,SP%_/<+#W6=->6[<`"#$`!35+YEG_Y34+Y/K#Y*3#YF/_YE:_Y
M..#YH/_YHG\#I%_ZEW_Z-I#ZJA_Z9#'Z%Q`!M%_[MG_[$7`!L8_ZLX_[OD_[
MNL\"Z1QNBXCV<0$C@$>52/;W'Z_\3B9BT#]DT;_\BE_U^?$ZF5DOI&QAS+_S
M1T]FT__\TC_^U'_D<*`N!Y9YMNS\:I#B-K_B[F\&\5\&\T\&]=_#<7#_'YWW
M_S4/`IPXDJ5YHNFX#9O[PC&[J;5]X[F^\[W_`X/"(7$4$!23J(`RJ;`LHM(I
M=6$Y-+/:+;?K_8*-R'"023ZCT^HUN_T]NG/F.+UNO^/S/KC>-.\#!@H.$A+Q
M#?[E'="8%!0^0D8&'@HFWBDD%(R)%"3,)0RT-&!)EIJ>;E%.`C:(#"B4F!VT
M;G2BWN+F]J@"6MHYB+#$B@@8<+`XZBHO,XOP]OG6F6UL.@&&"^-'-W2S[K
M1;<%!"0`'P\,DP@<`#-ZP\>'5Z_VM7*\JHLH4!N_RP,,R`9<'G%Q,&GB4."<
M@0>PB*$SD$P@Q8I@".(Q&&?1B(D6/X)$@_&.QI`F3_]6'&FG),J6+KFIE/9R
M)DUX,>FPK*ES)R)ZO7@"#0KI9IR<0H\B%>D36M*F3L"#1OK:D:Q9L_6Z#H.+=NVSLB2="O7K-J!<^]NK;OF*]Z^,_6JX>MW
M\$G`:0033FS1L$C%CG4PF3>#OM7Y8NC2%$>_,:U:
M'FHOGU?#G@1W9>S:G&?+M*U;-&XM">XI#'7,F)_=QDVUUN%HCH,"+@1X-')\
M^M#>6LPHH'4@P1+JWGO:Y7!@P2(D&QZ2>/U]/9?D-@0(8#3GP*(-#@X0Y^`I
MP#GV_J591X0+I"3R"BW_(3C_SQH%,$!"`O21]T^"$WH5H!(NH$<*?11R6)2%
M'8(8CWLADOC-AR6BJ,N(*;+8RXE]*.!``\DDD(T(!FR0'P$ED'>V"4'
M_$@$1`$-./`0F0IMXB1W!0Q08R8]K-FFE`\E-`*8P=D9718KJH'$`*VPP\$"
MSG&7`",;/$"$H8ABL>B7^M%0XP:D!#'ICI4RBJE"#80)A*>)6MIHCBX()\2I
MH%[J*`?W]&D]Q-X[)TU$#PL0\KU_SR
M`0^8@^61-+?\\@@49TGT,39;$RS#)?!XS7*#^-QQ@]&[$IRT6L+?7(]L&=,34O2\Q!I)+:S?3;XR41]])&&S"`
M0W6_?;=T"SBJWH.)"TXV$P(TP(+`.SR.]=LD$U-YP*ZE;?]'FA>'"_$"Y$`@
M\Y+)/,PNKT<3,7KKQRY<-1"R&^RZ*_G^@'N_$"O`*]U#^%ZZ[OLPK+`((K\=
M[O)EB_D0\W^0S?$;H=,!2HY5PJJJ=$-H;P#WN<9:BR/X@=^"^,.6S\$YKP<1
M_OBIBNI^$?*SKVKPSPN!?_?U`TY,$7L.J#+VKV19KP?!>\&PQE8RSV#/#9HH
MTI[*I".AZY$,1'*!.W0K%Y;35HB>R)H)0G"))
MI$C%*U8(BUK$1
GRAPHIC
13
y85445y8544510.gif
GRAPHIC
begin 644 y85445y8544510.gif
M1TE&.#EAQ0$W`=4@`,#`P$!`0("`@/#P\````-#0T.#@X'!P<*"@H+"PL']_
M?V!@8)"0D%!04+^_OS`P,"`@(!`0$)^?G]_?W^_O[\_/SZ^OKS\_/X^/CV]O
M;T]/3R\O+U]?7Q\?'P\/#________P``````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````````````````"'Y!`$``"``+`````#%`38B9"9G)V>GZ"A
MHF^;HZ:GJ*FJJW"EK*^PL;*SFH*TM[BYNKMCKKR_P,'"E;Z9!9D&`,>6!@.#
M``##:LO2T+G%EP,1"(H'!`1H!0$-``D-0@8-!+:*!@00;]X$$0(@``$$"V8(
M$`CF#_72R-L&X,&W!@;8)%2#(`*!:&0`J"/0X$"$!M3<2/SVP!O&,@`(+`1A
M0!Y`"`\2Z"GYS"!_P4+!3@D<.`!A("8L%E"
ML&Y12S,%(L`;,^"HO::,JC:`@P\I"'8D"2#=J:;KF)#@V##PB@8?Q#+?HC&-
MX"Q.7!`"YM4%L4"L&;/N:NIY:N;NW+UOW)H9\(`N&8!D[H)H$&%97C':_"8%
MB\D@@8QDDH4#G0;:2!"$R4`@P*`,@GHAQ0`X74#9:)?E(AR(2%K-``"(R9@5
M;N9RW01L_VI&6^9WQH9L;0L7#+WV,`8<1E`?\EMS>;#3G0P-/
M'=FZ9!"US21[^Y7Z&(]ED+>'F."=L\MCX,/9)$I1`D!1^9`ASQ`1/$"2.AUY
MLQM-`/#C5P(/`)#7;F.PU_\=2%=!L(`Z*AD`00(-.9@.`1$2=18]>9$#0@(1
M_(,82^#0M(``C9T6H&8![O.-;L?T-EU`S-U7XP(0'(.`@`)P0Z.-/]+784T,
MZ`7"``TTT!\"*[IH$3>&?1,44P1P7:0=F5`*<"=O;`V1@2.
MU7K5JPG69V6J"QP0P`)_?@:"07@],%<$"7*BD7S5-Y
MP4/_*E-;%<#>EXPVX0WPSE5B&$OH&.X"N1UUY)6:85\!\"I)@9)454[`
M5U:);\/*EEI/`0P8D"6>G[8IJFQ-#2"``19&0VJJPZ8U#U_Y`)!E>'DZ;&RO
M_G+F\6H'K3%M,V!HF,U5/N#M%/?3]#LZS@
MT;R\)G%E"+`,AN_"C.13DIFE;\J:.YSG;%I>IWE"@=V$_^A?1#2Z9LYG%-Y?
M6K62.ESI<;E3+(N:`X<7/7T%Q#8(#G$X+9"2V2OMHI[D[0BX82D.\:F"<"YQ
M9IABC'A]TF^Y5>--[0SXY&D]L$`"U&0IO7;B>_ZC5UN1]%^L]F)9,VRUG*=$
M[D>*\@L"[$>&NCQ/;JD"$_0(L!<'LFAQ&DL'&22U/\P-H((.*9_6'N:->E@/
M#7>AE`'
M[XI*910D.8Z)X1LJ68V=`J>J;\QC-]J8BNU:%C']@2!+MD``-]P!C[PLPQWU
M(.,9#,*AWSFC/UADT1@86#"I4/_%4<^SGDH<\JQ2J8D!_+D75:!HA@8@Q7H!
M8>-DYB$Z45'0B$-P6U/L!!O<`^'`Y+$#M&!EW,\RUG/*LFSWA:&W?02/A"(P`*>U``$>.,H8,36
M+Q?#HP,(`)#V6$`8$"".`(B16`=HR(FD*:ZO=%,H`?#,&,\A@`/<")?9#`,Y
MB+DL'@F!`:W9$@2V8LR*"*`!\=2*&7!I38F$`2@SZLBSZN+)BXQ3".;$RS]'
MPLMQ5(A8?^Q(E$@9SX86DPS2-"1)`M%+?E)S->ECVCN>N0Z=6+.:4D*)+=-G
MT8=V:P#_12EGD1J%@,:\9J%G>-*O#,D-BY9330KMY=WP%DMI5")+$/$&4(W*
MU*;JK:A.=80GR8&AD$;UJEC]0PZSBHCY6K8-7#5L-*UK*:E1A0/:M:U\K6
M0XRUK7"-JUQ)D=:YVO6N>.U%7?/*U[Z>]:U^#:Q@FPK8P1KVL+LH+&(7R]A7
M*+:QD(UL*!XKVU:3WL'CT%$-%1YE89DR]NXTO8.`H#(`H3I#`;T5(*]3:Y:?VN'X(:F
M`?KPAS(8\!O8*O>Z3F5N'9Q;AJD48``5$\/B[A$`&'WAO.A-_Z]ZU\O>]KKW
MO4:`UAZT2P?N8K2!"^RIK;#+WU!`[1%[-<0!RL6-`2RN'M*]6X#[R^!%_!
M])7#?(I+S3(LY+MM:;"&+_%@X"[X$Q_>L(C]T.'FAK@3)QZQBO%0XNVF.!,O
M7K&,Y=#B^L;X$C>>L8[94&/3YK@2/]ZQD'$SWR!/PLA#'G*/Y1!A1B`YR3M>
M,B">[`@J0UG&4FZ%E9U\Y2[3($G?[
MMQ4NS6BWS7;VE:%-C&@8("`?,ZX]D+M?"VL[RL*V<;?M`>X*)6"ZU2UWJXUT
M;C:GV\?KQK9SOQO>&44M#"QK8"?KO6)N4X*[C@)@?NTA;S)@B^`J-O@D!MR+
M#R(%P>]6,!K$"'$12SP2$W;3XDC"+U[%$J`=MW>1=6V3_J5\SO=F.M%7'HNZ8EOI3"7:`>C=B)^K
M8J_VA3HPL#7_ORTA8`',-E#1M7ST-33`8%J7Q0"^3MTSE"2;D[!Z*@*<]+3?
M@FCR90/>J4X(N:-BP4^W^RL\!O;E8"=%5'X4E\\\*S8O!XXCXO.B"#'D19\*F.[!](9`?2A.3'K4EH?U
M=EC]'@I?"-F#@O:$0!'N^9!0XO.=Q6,/<]/GH/M!'"#YPV=#[>LP]=Y#W\TS
MQT.*IR]Y010``FB/OANX/P=/'K\.O@U`5`@B`;`U(@LX"/NW"!=(!Y.W!P;("2_V@700=F=P#YE%>-XF$XVP(XXP?X=P
M1'U0@C!F!R%H$P7C&WFE/&_P=C[">XJ```?B"`+0@7@0*WJ`@X3@262!',U0
M'C&V@W.0'G(U3.4T8-95$A^3!L:T"+8#?X5@A2EH752A&Q0``BA"=%@AG=@B')P;'S@A(,``58Q
M&0D1>+TR@$P8!QBR@!D25^*6!A3S$\/4@3>AAN7'(63X#)$G8(LHBHK&AA'Q
M`-S02=24`-GQ%W=0B6^@#>=G#Z\T"4_B"?^PIU6E"&$+\6Z,`(C=D(I,QPD&
M(`B=(L!$$^F\$QH4'>1,(*(\``!\&X2X5RZ%`:]
M8(>]`"[4,))P8);_`=B$3&EJ3CD'[%3
M>)F'5#$CA>D&"0%>!C,$]Q>'J:68O1>:?V"6APED>=".#,$`K&0/4BEY;4>.
M:W"3"[&0!_";1@@!"6$.17,MI4&/?2`.VO%]`\`G<>YK8E
M5"$_=2`_8OE6=7V0$,[2(`!E
M37<@HEO"F0JI&PDAI>NI'6B:4Z5(D'L@#KJY&'+ZHZ'E#$`(%<[P+.3FG5YZ
MG;36!Q\4#J_V>J"1`/%D#FB@I$!:3`+()I:!'`J`X'G+R2IY_&F@C(&'9X(.['IW@PDO]?6I4]M:4(FH#I,WFX!17(
M:9K8DDT&DUK`*GDN-YUUT)A1TTD6HY.[T:)P(#:A,4]C^@;)*JU4P7UT:`C"
M.8<3PX5S"*I$]J*#<`Z],&G:>4<+:)F^(2-E\*VT@:F%4"0YV@8W\9S="DQ+
M96`/":LUN0;60*MQ``#<6EL,P"3>!0<6XZ(`%GQ)Y:H(*8W+D'=;4GOZ"A(?
M^ZI@!S)4J@;XF8\8V#]OTZQNP!A@4JZ-@"WTZ)%.Z@<\,HB.ZJ;[R8^]JJ<'
MXC>_!@?Z@72[(0`C-Z%HD%J*AIP6[*1?]:GB?.I6ZN`<+:9]2
M>X@B$I(\ZZIOAAS@&JG_M^B(UD4.;-%U:S"NSX6QA0!V]%H'GHE5'()X`Y@0
M1GM?AK!V>SA4"KJP8CMF!$D[@4MS`;>YLWL&0*L&0F.T-#:XA-`L4Q=<"LL50=BR0PFZS=$_E;D*[@"[
M23L5\OE557L&T!6.?YH(C:L@=]"S9O",P85KD^BO'TH2ZMH&R&&/J=!YU*DF
M)?L**EB7;8"WBYDPT"6\]V>Z@\`W#(`0C8=JWAH1=:MH,S&Y\RBQ4X&"6?5?
MNLJB\B6`U?L&"^`HOVN8X#L(&+:073L'=<6R-MI4VA#`),<79C6Q#2@BT(>Y
M_Y-0+A"4B6:W#(>;52$UOANKBO6K
M!@QL5KL+I$[,"`VAKBX<$72L:79PH\61P@>C:X@BYWL&4EHWJ@PI(03*`Z
MQRO8@6D#5`PAZ9
M6N`UM+1X&PK!OEM7J:_$@OSRQE$UP;&9Q?7UJ*7[R?]>.C;VL("ZIP_RI3(F
M=P<]FK2L+`O/&BM:JB#'_`MM/&B2''M)-9Z(_$6B$PCGQUUBL#X3NRR<0<9X
M8*]8):5C4!$^VE8#*I&=T*6@"0?5W$"YJ,TD(8L?HP_/"'!AD,\8"@'ZW,_^
M_,_X#-`"/=`$7=`&?=`('4[\'`8]U,]&D=`0'=$2/=$'O=`4K<\H<=$:3=`1
M(-$Z7+'^"\-O\,NA82?'L(YF,+[)6QHX,6@QEU90)8DN08:R*H=I`%4T["9,
M*,[9=M,(2],Q5].X4A8_O0;/9S-LP(S_&=-`C=1.G3ZU*=.AT\6HICG(2@08<]S#3_TK>;L+N1#(&&T_>=;%%!&3IH=6;6;4MU8[W6
M@P2AOT(>S,$9ER!,MP`!(R?/,;F!E2/M5F+?&;67;]Q'-@^G)[&K!OTE0JQL'1D8-YJG;VH&R<-7:
MQGH*JDF#I2';`QA2<)O*I'KHC\!FT">BV9'7:3-/,P_#,CDG?9P"_YJ'+=H"S)*%F
M2+86_VR5/K9\=ZJ8QJ;PIX#)*W,<%5II4V$X&Y@BH.>IOUGC-^"R$HU::P>4/USG>V
M649(R,LE!Z$-"F08>4;N9YZ5OWEU@2*>"K7WX0=NWR0#>TY%RW>%K74&W)4`YSRVXW/PB1)!J6S.@,^0?".\"FTVQ\!A
M7-^6W2O-YT](CY0="YD=VPA>![1]1(9^Z(CN?"])"SDZQY4*'[Z=U)5N",$X
MW['@@'/\=7I>:)]>AFT`W9^0Z7;^F$*MP:D>N@K1Z9A`ZO^O_GNS/@AC+=Z.
MYR*F@:L/M[(F>R"S&<3
M90_/".;4#F&ET=ZGD.W!'@?J"GGG0:E-Z\CA'J]G\./'J!'GSKJ?^0;0!1$J
MXI'@_N[;E;2VCD/\^^AW[$RB:YA"$0VZ!1RD<:!:]Z](.?!<_J`=R.*D%#6`N26="@V[&/)TX-W._@HU
MO^4@_0XH.KW5K^PM@9N3^!,AID`[TXW"$NM73+O,)&1'D
MG@K>7=T$3WUAD%1RWN]2'P<0'@S_]%C-SLTT79^Q7P\(H1'PH$!^+BR(2KX'
M0P]U85?VB47O62]YXU)]>Y[VP-ZQPN#V]:Z00*S>?O^8K7'ENC#V@^^.?7_X
M9[;7P;#HYIWW=Q#%B`OY=P[?PI!EU7S#]J[Y@'#MJK#:ZYKS,XK8AB_Z\<#V
MHQ",U=PLH/WXK,^B9S_DCG[RKV?5M%_[7`7[C=\&9=O[OF^WN8_Z?;#SW!WZ
MQ4]6P&_Y7T9.MZ_=S1]62D[V6__;+E[]7R5E9'\:=C_:W!]6ID^2T-^R2V^V
MXP]6I3C'3'JOTT_IZV_\E:_[CV#P/P'Z1#W_N@L$(.&0"`(`BDGE4A!8/J')
MXR!:C3JM_UGMEMOU?L%A\9A<-I^CB^BQW$2_KW#YG%ZWW_%YLF"-W&/US@`#
M"0L-#Q$3T02HGMC^%,,&(RDK+2\QS1Z7-L7<,K,F04=)2TT/`1*@.L,^#PT,
MAA)4APJH!AJ+1$]Y>WU_O_@<_<9<"PL"_!@'A`\`&``:S9
MP>=/2#@#"([X2U5+@``(!#%FU.B)&T)""`)@P6=`7ZR&YHP,Z0?@P4:7+V$J
M87004CP_#83@%)*`)(!^`&,&%8J1%9&BP1+2,7"``94""!`4&/^"`,1#>D*2
M#M6ZE=3$>1ZQ9>4ZEFRD?T6.>C$&3&Q9MV\+TBS6%A-=N'?QGCEK]"K2;';S
M!A;<9>^0M(0!5TH\F'%C)0:5'.:R]M=BQY<;%Q8B>0ME7Y8QA\Z;H*^1THC_
MBE:]6DIISEH\]P+-FK969E]K7IM=FW=,S:^SQ.:UNW=QC9#1GIY,W!!SX\\#
M_E;>V3FAZM"Q8T/.%ZSN[-_)2N]N[3IX\Z9(1YX.NWR>]N?A8SH*W(KP4^_C
MYX]TN_5XMOH!Q*@P^JJPSQ3\`DPPD.TV6R\X!.N`4,$)ZQC0P?HDG"-#"CE$
M@T'3_*NLPQ%[L3#$STA,L92H^LN-/!7_8"S(5EZ^DG,3$E%@T7N7"1DJ:9`
M>`"B7*BR2LI2:26#E3.9T%.06GD-XZGD.!VNUV'5`C95$8E--HOM<)5)5S.>
M53;!LYK=,UHRKI56/V87Q3);,;[5%CYJNT4S7##.%1<\!DQJ,-C[U(W7L&ZJ
M+2)-4-*5][QZ_XFX-Y-\]06/WR'\K2O@@T$\%D6$]1VX(8"Y@)AAXQP&H>!+
M))ZXMXHOMB1CC6OC^&,K1@9Y-9%3,UE;E,-2>>5RZWY19Z']?D_H'O.V=J=B2Y5:$)\JD4J+4I.6K"E]5@2@EBB^I5-!J!9H%UJ
MI*Z5:CR:YI(<(=0PH)P!F@0J;%+'UB.!J/0A5)5GI@'[;;B-MO=;/N0,YYD$
MGHJ(4DLC2ESQQ1EOW/''(8]<\LDIK]SRRS'/7//-.>_<\\\3A^9=.1SM4RI"
M&WK:8@-P(H90`:`!7?;9::_=]MMQSUWWW?,&HV,S"D`BEG'&V=&?N__W?OMW
M,OP,B8^LVP:<@01Z3_[FY>$H0'7KN;*6T?_B+\80BF2O
MI['MA"54(0M=&$,0Z)!@,VS;"&VHO^]5`0`A"4GQ8&C$`/`0;4J\R@.4V#LH
M&M&%2D2B$!B@1":2PXE)F&)(JFC$*^Y0BTE80!>+\,4`2#&*:+%B$K)HQ"V>
MT8A/;*-1WEB$.(9DBP+X50'Z^,<^IH%(00KQ'?,K@B>)`$I*14&452'E*:%0RE*:,I6H?((J7;F$5<*R
ME5!@Y`%6",=,YM)>.UH2`E61@`:$20@(B`4#&N"_6_*R7[[<2P&".\YWD
M3&4[=R1*`.!SG_!$QRO#:4#E]).GNDJU#+$*T]M,$F25DN3XX2K&1$).
MBV#7'BF3%E>)ZU4,)UI_G8PL*PKW!5+&(;
M1-?(WI6OC4VL9F<*T]!ZUK/TH%=$12O4U*[6M*IU+681V[>8O:.1`5C`#VMQ
MQ@4,4)@!.$#U!-"`AS)!N(6I[6T-J%O>-L"WP"VN^0Y@6]SV2;E*Z.UO9?+<
M[`XW?M%%+@*K6U7F8G=/VL6?=Z?K2]NB%:H(!&M5KTK6BYJUJ^RE:A'$6O\1
M^6H5KF=U;UHYV5!5>)-%`\0D^I1`I*I43\'LB\R`EU!@\S'2DPVNWD0,C,7T
MWL)3ZNO3?3WZX?DU(@&LPI^&W\>,JS2"4"/>B8E#O,/T[LBVH$2&UR(<@)=Z
MM`DS5EL`O'EC4()DQRKIL2S/&.0:PV&;D2!2B1NPQ5E,E+]Z3(6._1<.(O=.
MRSK.VY.1*>59+*#*AKTR2_L%@"U_'Q(68&<,?C0<
M2X7S=%4ZYXCFF9H`Y/,+9_IG*4!$S?Y3\Q%.-5C2X`U_L9L;`AE]6:-DVG\(
MF#2,U6?IZ1;NT8N&]$+7^@Y;"#.>;\4H;'TB3<#_&@#(D]T,K6TQOE5+@\ZO
M!NP`9"T%7-MZUZWN$9-ZU%2W/A:_BOUGLY'P;,.R:KK,H,H`E*T*9A-A;M&>
M']>H4&UD8QNUI(UMN8F="SJOMK3HUK6ZRPWKUXZN%P?XK:95$N5%1C491.H=
M`AI0J?0"7."/N?>*]8U(#/8;U,4,>)Q/>/`)-S?!T=WB9A8@S/S-[AR#P8_X0>EO$2"!7UL*\S?C.LGM:LZ_4G)`#$XAR@A.-W
M;-G.MAV+/,*E\9NXBCI#?=.-E42!NVVC/,U5ICZ`3C1(L#VIVG3]T^L
MJ4?:AFV(Z.RE9HU[M%U[F3*94VHQ02^"K>>$=UZGNO1^&9X!@-8IW[.L8P%D
MLT=(>&I5=T)N#%:$>E8:MC*I'>^K9!_LJ8,(CFOQB#[DL'Y=J+X
M=J(B`JL6L(W7XF?PP#[U!
M#_G0$/"P#P'Q00)Q$!6B^@B18?XP,!)`B1BQ$1WQ$2$Q$B5Q$BFQ$BWQ$C$Q
M$S5Q$SF1$=6*(!(Q+P3``3Z@%$WQ%%$Q%55Q%5FQ%5WQ%6$Q%F5Q%FFQ%FWQ
M%FM1`53P%T(1+T81%X$Q&(5Q&(FQ&(WQ&$U1%[6B%^__XA>1\1FA,1JE<1JA
M41F'@AGAPAF+D0(DH!0K`!4GP`$`U83,V9?,UZ=$"U)$<`=(4"0`5'6`F45(D?1(S,^`;
M9](H39(L37$#0K(AP]$W*8`<>],!-.`;':`N85(!,$`F_](6,^`"O+,A]]([
MO?,;AQ,M;Y,M*?("JM(I??,#@/,#..`>O[(X"1(P%?,#U!,#1'("NK$#)D`=
MOS(I37,M%0`R=1,P[]$G6S$U82(KRZ(UAU$_!;(4.V`[11,_4U(O,30I5[(X
MQ5$A+__``OP2/\7Q&VTS'I^2)B6@`TJQ(#?@/@FS%"6T*CG@)A?2)%$R'%>R
M()^R0S]`.1T`1">@`Z12'4DQ'8_S'/73%%$R18NR-%^105_"0<-C/8E1`BB@
M29-1*,<2/^L20U$R*=^1'C&3+IF4+V=2,)VR%-7S0M=2,3F@&PNR*"F2,+%4
M2Q=R+R7S*5&R*<.T)&/R+,LT/5/2+RV@*>L24`64`BJ43=T4.074%:74):AT
M+"`4&/E1'2WT'<4Q)H>3*FMT*35@`C(@'C7@`JCR,R/3*4?5/3&``CB``P[R
M)O7S(!7@)A4@`TCU*S_S**DQ4QW`0AV`)(-5`CZU`A(S`T*Z4B)-\E1350-6
M=0*HTE,I0`%2-5E)]3[_,RV[\26'E10Y\E6C=!=9VPEX/40]1
L-F7M<&59%GQ<]F6YIPDZL69M]F9Q-F=U=F=YMF=]]F>!-FB%]A(A(`@``#L_
`
end
GRAPHIC
14
y85445y8544511.gif
GRAPHIC
begin 644 y85445y8544511.gif
M1TE&.#EAU`$A`<0<`("`@$!`0)"0D&!@8/#P\#`P,.#@X-#0T*"@H````+"P
ML"DI*7!P<%!04$I*2A`0$"`@("0D)!@8&$A(2&QL;`P,#!04%`H*"AL;&U55
M51(2$L#`P/___P```````````"'Y!`$``!P`+`````#4`2$!``7_8`",9&F>
M:*JN;.N^<"S/=&W?>*[O?.__@`&`0RP:C\BD!@1Y!AL'>*-A!QNDH4RHKVV@LEH!`VL,"0E)
M!P$-&PH-(@8-"0%N!@D04+H)#T,;`0FX1@<0`!L#`9%&\8)#0P/#;%0[N2Z]$8$#PA&`."@!2`P^8$2%`
M<,,Q-Q0;1)E&AD@W(Q`^`OB8!,!%(KO8_RT1T%')-)5%4G)`\(PA%)DF%Q:A
M29*#R6X0$K1$6.4@T2D#P`E(0J#5PWJP3AEQ>"3HTIW1+FY`5X05U"*FCFP(
M]H!!NZ]-MB;A:*2GQ0=<"?0\\C/F.B-CC7P;RJKMW2,R+?[E8,IFDL`RB138
M!;4NAVESCT8Q*OF)7%T29X(34@#NN`(,=)E5MP%!T"$&("CX5L"NV,3MQ"P;
M8$P!8=6LB3@;\:"U&&@F@7%0\$!8`9L&G(E9'*\V$K9%>BK;-<`VVG\G.23^
M)D!`OYF0`?@[4(!WK)=(9`JHR8%`@P8*$B`8E\"L/'\R:2;@NH'!XFI$U$61
M4)45-52!42`PW_\NMGE$C4\$"H8.5>B9-(2%C_U%51$F#897318A@R%ZVLF7
MH3E!H?2`;!K%!Z!K$#(3XG,$1H?$`+N00F@LM@HX)AS@%DE"D#<=T0,8(!^#)F$S3!7(2@%968J48`"&P3U
M4841GD3A71@2`,"70;&S88"P?8C,C';BJ2$O)W(`CHH)8'`8KLXJH1C)9J#(QDFX4(D3>4(A@J)4R6@``.J$3'=6(LMI2@'XC`I
M0%Y%4!3,+AW]!-$`AJ69UH'"?B)"$+MP!6=6W5&T_2RF)Z'H63L"!/Y,L^A82Y;()[,TMN3650>\DRZ/'\D$75U$FE3J6*2@
M:M=6[`F&KEK31?LO$D&,,$UF=7U:K#W$/GQC/4%AN6RV3"H)X1#3E$OMI/7M
MH]&,,W9MAV5YZD,8Y%Z5!3H1.FT8LAHHJ=&4GDRZ@AHPA`M;Z
M]O+)J9JSRWR&)L"0*].L>?`11D_7(+Y)1$#T0#T,F$/R16BKNC:X=P65J5G\2&3PH^MB?,1Z'RE(1%"F)%!F2(0E
M>80NOB&I*F&]*087!RT_EB%7P"(]T;7@W`*A_S^8LQ-?9I(W6(0`)"W6#>28
M[]+=UI]$3+LT`<0]TS:_C/1+:;\@P+M9W)AUS0,#(!#\-V5]HYJ3N2-A)V@`
MW"H&[T1SHZ"1##A_)3=>.NDE0`%@ZD\Q(C"`'/1Q#Q-`]N\C7(`(LQ/1``0$
M'##`_D&HWQX$0-H)-W)G`-X))U[OT4=[`C`/?Q#`/P!@`"I\YZ5V&+`T1B*=
M`*A'.OM=11O<:$`'64<,G[A/"`-4'V2"13LB=*V%M5@/.W3101C:4!`OO*$G
MY`(,!8!&AT`$1`Z#R`E3S(N(2)S#$)/(Q"8ZL79/C*(4I\@UVU'QBEB\X1*S
MR,4N'F6+7@RCD!QO\QFO&,CB@C&M?(1AQ:L8UPC*,;Y4C'.@Y"C7;,HQZ_
M@,<]^O&/!@*D(`<9ACX2\I"(-"0B%PE(13+RD7ET)"0G&4=)4O*2:+0D)C<9
M1DUR\I-8]"0<$'`5!.1%/(P"I2H)(FPZ@M57:<@^M=(,,MBSN*-B)"#*1/5-F"J9"R1,:8TS9#+8[9'``0HI2F7%,UI
M>M,+U60#O]H3"U>DJYO?'`0!$.`*6K)"=9U$9B?0F"/5BA@%`>0:#LFT!T!4*`C
M-Q7#ETXJ@%HR$:IZD.I4=7DN1B64IV_5A%K7*LZVLN2,:,W#7.FJ!FV@ZZYF
MS"L>]LI7+9A@27X="V#!8@*S-E&P=R!L8;$0@:Y^52QV']A<)O;?M7X8X%MW#=*!O7B0XV9=-P_VKH"^8X<``%L=`,R[5@
M)G[7)6$M#WH&$5\
M'V9<.*3WADM9"JZT1%PNL`)4)UUO&_)[O?V*M[\[T2";2-E@,Q7X#0?NA`&T
M*@`O"8"44`@IN@@SG#6PR0`C1L2%;J!\_625%*ID*SX;WS:/&`C3ZSP",X$
MEL9>=:67S>0O/YO'PZTVGRF1;$K<.-9.N+>87<;>U1Q`U%0X-C37?>DF-UO?
M=+'ONV\W[T"8`A5N=FR])X'P,]U6)<)#1UB[NTPN"%P:!'^UP9W[[NK%^\R;
ML.X#-_R<4@QLP'2H>%<&R`VSRGPF8F"'L`$^A8]/7#'L#KJ>.:1P?&_-VE@P
M`#?_"CI.;&GA:6:&^5JDO8U17SS,6+^RNMW@ZH-?_1]%%[<6!$J8D@(3FT)L
M>""`*5`#K(ITON#&V+%T3_WQ?%);U\/-G1WKO:?!YR'WNM!+'O8U1'0GMT+W
M'Y"N!2V;NBU9.'S.Q[(:J>,=V58_^;AA+?8M`)[K@Q?\T`-4^.QJPX5RYN7B
MU>Z'HI*B*8SZBF2;`BPC?AJUD]7QC7KUTQTYFB+N9%`X<3EF+WTO,LR'X!;03+.NQ
M]_8CG_3H,EH7G(]?Z&>=Z)JO,NL=P>H"*C^F)U8/]*<&_TO!3@JF>L9W?^XF
M?0HG?Q[G>VO0==&W)-.W<$>W?XW`:DP%8Z$F!J;$$`-X!GEA5010@DZQ@,>7
M?PD(=O&'%^R0%[RW$1"H!A*H@/!&?0RW??^6*U$'!4:T8CTW@W;@?BJX=Q5H
M-.#W,J1$=E(0@FE0@YR7<"J8!AE@`59H`1DP1YOV9F10=YWS!``0;?LC`0$G
MA)?P?BN8?/`'*T;@?X3A)<#W8U#@A&@`A6IX@Q9X!@ZP`'RX``Z@A9+1#6#8@&5H?GJ'AD1(?4>H%[91&I'X@3*HB/57<.XF>H0WA6BPAWWXAX'`
M>&@@B.P$>[<'8X?8@F)A`L]AAO]G4`&.5@`1,($V:(2(^`5T>`9VB()2B(.=
MV(=^"(A'T0VM4(('X'T"YBI6PF+XQX9T00%=%0&M:(D1.'A]QXAH^(@)@@MV
M,@#=I571X8K@97]1R(*^J(?`"(IIMWU,H#8!$@QV9XX;X(!X2(^Y2`4C!G$2
MM53*AHEIR(OEV(SS.`4=]&FP!(+B6`:[^(]X:'3H^(G"2!0+U2#)07D[58\(
M(<5Z)!F
MX(E\J([:MX6R-C`,\8&T-!ZX)Y#TJ(T;.7!Q\`\/!A.N=HU%F(T:R2'0V!W2
MN#JX%PO_,`85]ZB0,PF0`FF398"3P1B*&,@(Q*@R^T-MA'A2K^=F1)F1*!F.
MEBB'IW!3'>@$5\(F*OF96>"8
M$8D0D\F)3&"9I&F/OH>*%\(*]<,%H!F07EF;<"F8E9B9ERARF:B87\F:6.":
M9+E]>P=[8X$6M(F1F`ER$S$`M^)VD>A4O$F2H:F"TSF=#1"+!8`!TTB"2GB0PHFSX*D!)I%(Z,%2JG\6IB71*@>VY!ENJ=UV:"%]:IV$:GD3ZIP@:
MJ,VFIH0*F(8ZI%&ZJ8H:IZ`7JH]JG_\,^@63F@>B>`:7"JFE6JM^.H.`.I+^
M"*J"VHBB>JBVBJ.G6IWI]4P"9E8*RJ.MZ@6OB@>Q:@:SZJ+2.J%DBJJ^E:8R
MZJN8:J.)^J:=^@3L5%78M%[$E*S`>HYWFI-`6@O12JU&.J9'RJ@?6J5-T*2A
MZI2%>J[<:JK>:J%5<"%&MAJKP90[JJ_+V@7->@?/6@;M^JYB^K";!WJS\SJV
M\CJB(VN#JZFE70N?7VNS[NJR$4NO3#"S)#NC:YNW-YJS8,`2)(`6YHJQ6]N8
M=?N@EL`*I-`7YQ2A2BNVA$NL:+JKV6JQV]JG;GNY7E!9W7%9GCJG?SNW;4"T
M,6>T:5NR0EL%JJM$
MK`L'UM,`]L5.LD>YB!J]M6NM41"\-^#]"^-%<`(0&_`_2^]%L^\TN_\GN_`S$_`0"+_XX6`?,+
M`?Y+O_9[OP=LP/S+OOR;P/#KP,RWO_4N\7TV,,,0U
MQ5$,Q=K8!T;9#0#0M5:5+GEDH@QTG`,\O%,TI`:'I\
M#DVPQTM`Q](3QU"S=7:\7WASK`BQ&BVL8'D]M\F_W,NNO,RP++V9.LR)$*L/
MQ4SSI\R\#$2^G,V!$,S_(,W)Y,-80$N,\B*V@,UGV\H<^S"'PS$H`;07!ICP^X7'HC-':W,S<.0+_QG;21MUG3(W2D?#4,DW+5QT%ZS46Q*335OU$/\T)7*VN
MD0#1]D715[#37Z#4,'36Q!P+WJ4@]9#68_G/@J`_.%W5EN`^VF/66?W5AC!#
M;">'20O57GM'@)U<-SH7_!G`ADT%Y&PZ`!!1VJ77C^G5.#2>T8/4R=6TA0!+
MPF8=^\39DD#-8H!SHMU;I%T)JKW6E>T$O!8/CRT)^5ANO[0:313;E##;?-W7
M8IW;D>"1W*4^#(;,6T-_V91ZIS!2F3"=8T`"8TW,M=T$",``?_W:C-`4K0EL)V95AF6YW/F;7';C,
MI3AD%O=ET@8.W.OMH:6!>*#VT.Z]!*I#X`4-V23NU!KI%+HF!J@"0L;!CX^2$WNWT3:WBG'
M2TQUXFT\VK<;W%<.X#G^";@<+7(#E"TWXE]>XB"*Y3C$7/AQRQET\G,J*
MON8RWN9B'@@,,``YO>23M>B*L.JT+0BH"`93+DB^[N"<#N6M/HJSKNF;`.S#
M_;4P3NM!;NN=7@B!+N+3[NR:`.TJCNV3'G#-GNJ=X.TS+0B*AXOC_K:U8.Z>
M'0C=I5CQS>34[N3)SN=]+03FQNN%=>R(X.[8W=<\R.]X;J;%W@8`/\W+/AR&
M..^3E:3#=.'W[NB6O!P,$.Z:7.'"DO#A+`BL4T.`:GR8T'6J+T;_VYQX(
MI%!4;P_XFT[V^!Z*R[F^W?S`"7!$O5Q_YH3#YCJL'&K?K\$
M!Z_Y9\#Y2-YZY=1Q(D_Z<2_X[PX(PG,+=G_JK+_YKA_PE(!B`STDIL3#HU_[
MDG;["E_VZ"9+IR!QP&_[BD_Q^'Z^OF3XA)'HR5_NPM_Q6QT-0[!,U?!+3@5[
MOS_]7Z'H[OSZU--?7]X&]8U6_R]N84^3,1+I3FZ6_TRX_T/#G_EB#^E,J.
M__@/`IPXDJ5YHJFZEH"PP04[T[6];L"]\[T=^(+"(;%H/"*32I$+MI$MH[6<
MM.H#6K/:+;?KI35C7RUU;,::T^HUN\T)/]W)LMR*KN/S^KT*#N7[T`$>W0T:
M'B)J^27>"#)>/49*3NXL4JHX7M(4:G9Z)EI^DF2*HG"6HJ:NA:*2JHZ]KC_S/2-XE?)W\`#PX2*(F@
M)H,('^91&(GA)8<0+[:1^(@B)8L8/YK1R(CC)(\@3_]R$9F(I"23*%_6BA9G
MFHYB+F'B3*(2$;`B(,+#A``<"!CA<+8%4
M*==C0U\Y52.@IH(-!`@P*(O`Q-:N;OM\I;E.AX$``0C(A*KU+=\H3`V%34-'
M@0`#A14P6(O5;MN^CM_$3178"P`=@@2(4(``P8:]CS\/^3MH\A@!`P@05@"5
M``P!5$DT!NU6-"#2AF++YDJ;C^U!N',GW;VG-Z#?P($*UT.LQ1H`!B#P`HC&C$AB-F\HH$!F!""@V8'CA#A+C#+NPMH;
M'""`HP$'7(6C`CO.!2.0G[$&%54&9"7EBS8]F>5&/>:BI9=-<2G,EV/R%N8R
M9**)G9G5I-DF?6MVXZ:<@L%9SIQW>O%@&S_B2::>;/#9YY=_KA&HH%H2JH:A
MASZ9:!J+,BJCHT90*0(!KWV8%6R1\\<<0A]RQQB5SB)D(*I,``*:*M?RR"2Y;"O,(-%=ELP@,9'5`
M9R7P_/'/))PF0I$F%$WDP<_J=?0H++,\PKU7:-YMJ8@N-%_MXJ8ZW#/G,*)[XMLMK':!Y67##"__`Y^"V,#J3K2EN
M`NK/*GP-P2:\7D+L(\Q.^PJU1W6[[BK@OB'ONZ>`>^\'V*A``S:6@,!5`C0`
MK_)P-V_"\\P[OWST)4S.0-(D9+_]S2=F>\*RX<\,?H7$_C^'O7Q!\
M8/K\IR\$B`X%AL$9[,8R+ZQX4(,AA)@+9B>_PJ!``=I:6F96F$(77C"#]L+@
M^J)SM58\"U:ODY4.59?#YV7L4KQZVP&$.#6)&?%MG8G5`)?(F2;2Z'-FBZ+?
M.B,Z*8[BASO4H@]'!41Y)5%?T=#_C,6XQ9DRPN",$C.CWU"4QBJ:$5ZP2J/S
MRO*MI>6H-7BTHP7=-<8!X@4&9%3.#4NAFZK&(N>\FA6E9%CNX2IJ68-$L1M%%#?FM/(6\Q`/>=8`//W*34IHD"
M!#1@`!_$IC:OF5[C([:5HA]M''D46Z"LVWEM)=ZS?G.D;X7=O$UFSWI*T_[#I5(^,QH
M1P#0KLH.G0^=9T4IBE'Z-MBF*JBJFJZ!O-JIL'?*'45*
M6QK4_-&0!P)U6[]NQ#AD8E,Q3:U_?%LA0#=".@O2J3*6W
M(=L^CL1L8X*+6@`K)X\,F7X3*X+!6&4Q"C++DZ4FK[J2R.!;"2(^K`.BFV:P"@0-.M2K=765EG`#:S3Z7:IW.]*>K*^H<
M(>:W!VC`!DI=S6P-@)IF,<"K*X2\LBBRUIA&9FCAQ4HD)C<'TFTG&QK-!;Q,
MSMK^/`N*#\``>)5WO"1`;S[[*^$4/+)S+-R,J2PV*AC$#H-70>6XT2P5"I$:C7GI>\,?&T`!J-)CWVRFMN+)F?`.@5
M]CG1HXF#,A4]0NG)Z+G2FZYRIT-](DR/.M6WX.VJ8WT4$-`:U[ON]:^#/>QB
A'SO9RV[VLZ,][6I?.]O;[O:WPSWNON]0*$```[
`
end
GRAPHIC
15
y85445y8544512.gif
GRAPHIC
begin 644 y85445y8544512.gif
M1TE&.#EAQ`%#`=4A`("`@````)"0D&!@8'!P<$!`0/#P\.#@X-#0T*"@H+"P
ML$I*2BDI*5!04#`P,!X>'B`@(!`0$!04%$A(2%A86#@X.&1D9&QL;'Q\?')R
M<@H*"D='1P\/#T1$1(R,C&=G9\#`P/___P``````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````````````````"'Y!`$``"$`+`````#$`4,!``;_
MP$!A2"P:C\BD8&-9@*090H``@<&!HT""&X@GR`'
MH*%]HJ`&IB!JG&P(H)V#IV.NI',&"0`*B0B2=`:CFI.*C\((`;J$!PU"9P@0
M!"$&`P$@!,2&Q@UN"A`!!`?KC$08;?C)P2(_X8`]7:9`*9*B9X![3:5`5>=;BTE-=JI84`U3,2^A@(`F6]=L90#Y)Q8XX*'%#6`+=%$`H$AD6@UU&6
M.1`<3`5H4X"61`9@)&9A!#545<.C7N=]:AEL*W[26:YZ
MI6A2/R%L5ZB6JO+(4TRKBH+.(Y4)Q2H9RIK$[)W3%;6,)OAH@B5-1.WFFRY#
MZ5+_K5TN!E>KKE`18`PT'T$CJG$&!!J>;`PBR>-(_C+S49*]1JN3;PD8`U"V
MTW02;KV6$;MKIL@V@E5@$02@FK^ARB93J?VHX\"`SII1%L&.'ENRHT.@`_)T
M'-)DKQ``$%``KZO&5M2ZOX[1\8,O_QO8$"N3H2I.@8Q&K8M(%>7O&*\%`,'0
M.)6%``'BEMM``9U@*:00MT8%P``%_,6S`662P:>[1=TT5`$UW^RN>8B=RB](
M_NKD;Z!N6I5SSCK)M"`Z'(LQ<,1OQXWS(IH:TD!!CS)6^$(>DWK9D!%TE.J.
M;Y>!@"Y),S/-)RY?+@8"<`OW*,IE/#(Y94Q?MKK/`8P3_TB>.S9[-.#3]O-2
M)O"Q/4L!!^SHZ#S%5OSW3F3PH\KHL(.021G3]!+",G_E'=7L9=@Z!EF"WMW1
M.-IWM/<`]4'8JT[+!%6\I1I'?#BNW&/4."%$DH'V9:^_WG[Q8A@*-#J3@&:%
MP&ID@)+*=!(&`T"E;#T+A&_N=+-,0$!+T4"9ZRH'K-BI@B8=01M.,@:HZP4@
M&/3:$4U"-!S5A`YI_6A?K*Q5%+)TY%MCX%4W8'$NI61-1?H;UKP"H@L9,D51
MWXN*KWPCO0M^SVDN^HB6K,$>8W1D9FUCAK\RECF?F($8+YR8CV+B*0=X"E?S
M$T.","@BBD$"*W#+$P"&T```;/^M`=4HP`!`<,<\`L094R,;ULPX`.T`A6P0
M%,K-`M,)F]T,=4`10.;&%H'\Z/$`0[C$EPJ0,6T8)W6/<20!^-@E/Y;!D7A$
MI2J,0X`!*#`X5I*$-!S`R`,@TCRS:,#4$I/#(-HBC`$3:_@-HX>X'TA'V@QBCJU#)$VI2HU6
M%G(VPH[_-=OC2D.JO)G:]*8XS:E.=\H&D?+TIT`-JE"'N@>?$O6H2$VJ4GEJ
MU*4Z]:E0C2KC:BK5JEKUJEAU!%6SRM6N>K6K3?VJ6,=*5IV&M:QH3:M:P7+6
MM;KUK7#]0UOC2M>ZVM4-<[VK7O=JU[SR]:^`1:M?`TO8PF)UL(9-K&*5BMC%
M.O:Q3-TJ9"=+V:,VMK*8S2Q;):O9SGIVI)?]K&A'VX?0DO:TJ)V#:5/+VM:F
M8;6NC:UK82O;VIZ6MK;-K6=QJ]O>5I:WO@VN8X$KW.(6EKC&32Y?DX>EK-^\).(;B4-`E7G(I4(_XQWUVM9\/(A
MNPH@0`%?]#T00$DBK&.O?G-J71`8!FN&Z44"P@,;I>SWP#NU[G1@<1O]O>4Q
M:D.PA&^JX#KD=\(8MFB%,YKA#H-TPW.XL(='S`@0RT'$)$XQ36>*8A6[6!`F
MCD.+7TSCHKH7+#.NL8[M$&,XY'C'0(Y#C]_PXR`;N:+.4JXS7)PH"RE8T\9#=H>#D@S
M6QW<5._!OQ6EM6UMK0=))]+USG6_4*IA`FG!%,,;1)&8/O.#ZIO+#(<[:
M8.-AW10GK<7O@/&,BW;C=NBXQW?K[D7$>C7X'KD=KA:8EKO\Y3"/NZE'_$-3,8CJ@^.B#T^$YS$0#P@Z/:-7GX'2LV\0S"MCCY\H=8!$A
M!EHI,T.L<$(6M=U=V:]L\T77+H>VNST-GUB0//$"$/L6!533&>,9>H&5@#S^
M>CXBU)T'O_1$-/WJAV>#SRV"$Z)5`T':X`XTT&[,KO`=]2%X30$]@V;.YWSB
MH7]#9!J9B59F/BW0>@R!`\)R"*@&^-'X=KT%K^'.(^+S!,^]&DZ#/HLDP"*?
M^$MF4+&H,=P`1B,]_P*`-9G7
M+8.1$GL$`C<'-9-1#1_T&G7A8_6G?SK'?A(8@#8B`)<`&G@'#="`$Q]E7RHQ
M#@#1>-9#9"7X8@H@'$^56>M#2%EO"'45QIB'>1V1&<&!.LM7#\(Q0PDT'9_3(5"X>>EG?[<6@2EX&H&A"I'!"J*0)R,(&]DU#JCQ
M&@OG(WWHAU*H?H&(@A+X?B#5@$(VA850A6PX@2;XAZ-X?Z$HBCQ(BJEHBJ<8
M@(YB'3`1%%K'(@(HBV5P?=_S%VB'>P
M<188Y"28D2\V&'LMQHF`X(F$@&?^923"V'X^1R#TX"4_X3/UADM)PA//DB^-
M86[SUVB]6(HAQX*&*(B9"!.2((3F.`9&:(=SQ!YT^"R\H(O.\1J32(UO\(#3
M!X\HAXD)*!>H@1B*V(_BF';W:`:J$5U-(G;8!E$&B7@(N8W2=QK1=(&VU`D(
M0!"V!#FW6`\#T`DCZ2@<&!0(8&Z36&FJJ(87UY'RN)`+B&-I.%+8B),*"8":
MB%$$>66+4&X!.`XON6SVQG%`V8J0X8XXMV]R1VWH.)09.71/"961<18%<1@L
M&7;P-X'"]W48R8[_&FF-;=`6;!D3YE=NY]9RPK:5K7@:<0=WY>:,M\!+.-&!
M]8!!IZ$DRX8=BQ>%:9D(!30`"#EO?/2%:*F5VIB30GE^'"@5D!<,D,=PO(@3
M[*0:RJ!UWS!@Z->.V&!?EY`]WI<9U_:3D1F4PP@3I">./$%[JI>'T6!?M,<3
M!D`/N;!]G`!^9UF4;5!AI*!P]>`C8L>:\>B:W*AUO(>.?,'L>=]
M\A80U]=@E'B8OFAUK0F5*EA]MV`13H(:Z*,6W9=WD7:>@$(8B(&4JQ%="RB<
M2'8'HK".>J"<"2F>6"EU/?D&)=ERWS`(_.F1N?>?`QB@;;!U.:&?=G"@_Y+Y
MFE)I/YTW8%YGH',9GERYDTK&H-NP%&VDH3?)H75)@1:871CH*-]@2]EG$`]"
M"V"H7N9&A(8YE3VW&L9QC1NZG/Y)>]'5@O5X=AR(=WX3?GA!DVOQ%P!1':/I
MG19V*C.)!Q+*G!\)A,FH.?5@4`=$A.08CM`B'A:AFMIWHQ9Z!X=QEE3:H_W9
MH=Z7A>#X/3'HF.$!-V8S'%HA<"GQ;5W1G3AJ"WJTFT\H"%7ZH_4C&I+M\S
M1CQA%>6(&9(P#GJ!GF5&8IY183*I@@:>@K*@"#J!O]/B`HR]0>>>J(5:A^=1PN[
MN)^V.J'-.:P/10<5&!C=U*G):J4)FIXU=ZW8FJTO%ZW-RG:?P:,EZJ/BJ5(;
M`J'#L'2<04?@ZI0F.JXDA3XU*7]?1Z+L*J[N2E(;$J]PH`S\M*[OV*[W"E*%
M1)IRH`L`Y:^0::\!"U*,0K#^)R]C@[#@J;`+BU'@!*4KYZ$1.JT52U(@P!AG
M.G1$L!7`RK$=.U*)1*S>9G;T^J\4>[(1];%_"@>@FI[M:#=$(&^E^92NW
MU5!;$2NXC6L&6_L!HG>Y?INYLD43:@ICQ9IX;H"+;W%^MS!V38D&D6NY?;M?
ML]M:F\NX20M0G>"A[>`7_D9??N&G9G"[;2BZQF4*LDNZI0L?UY,9GR,*MRB7:F"\.8&\Q64)K'8&WIM:N9L1)5=`T<6T4+,ET#)@-(A?
M:U"^LE:[X6M?RZL7KG"ZG66Z=(``&[`!4_I%[K9L\B&T;0@\U`89\H)V*$:_
M_RAGO\*U%-'WMQ/`2Z[E2CWW``^@L04C?_+5"^;*<@9;"ZK`"K%+OLS+D1(<
M7!2`[P?@[Q#%LQ&G%#TDL>DM<0$7@,-Q(`$,T#:R?)]U$"NR=\N^G,M1[,+!S,A5'*'7W`@80``8D,TO
M0LR%H,M_H,S,O,9<_,PL$LIW8,C4G,BZUS&'=>\A&4\UB/,5;&\GX+,Y$MLV,T-`/LLJ(L,]]T,\@T,R8NG2I
M<*QYX,ZA"\^Y)<1_*]'UC!$F'X
M'-*C;,U24=*_?-+"D-)F;-&"H,M&;09W._[LU
M>B3-?FT3"*W(;*T7;AUB<*UNZ4;&5EW4CMT'I.W5R&P&_1P"D0W0[Q8,,GUB
M:(W9(AW8FPW5*@T9+:T4GYT&BVW61X+5B,W5=IBK:'#:\7C7U5A8ATMWW9DUS),M;;Q^W0=R;_Z6]W.W-VNV=T4P]RW=@K)9MO*K;V(:="*,TT>#-!P4N%.;-"(+-V>,=
MX@PN!R,N9P<.SNEMS`4FSVO@X,J=S!'>W!;^;HA2,QG^Q1-PS(FMUH?PX>!<
M""VN-E/\;9'\B0">XDM&XVJ0Y'PVQ1[@S;B=ST/^X%O2X`F.VDJ=XQ->TZ^U
M=+17A[4ZW<<-YD1N"$:>VX90X`LNQ%+>J4^.X%$^X&9`Y2M^V<-MUS.NY]3S
MYY;PM%<1!J'<.XRHN
M%(*>0*'>/9\.YS8>Z%X^UV!N:G"`Z.ZMUWO]%HZ^YI$N?97=;?N-U_MVL'NGB"^$/HN/.;`>V1,A]`-($SN:@
MU^Q#%]UPO.NEC@>3O.&_/L4G[NG(CN+*'AR3X>+&7NRX_>=@+NK&WMA&XNVJ
M+>:)+NN%QTD[W-?&"^E;'GWZ[ME!2>GC?@?;+>2Z#.SKKN[S#N5X<>/VSN(+
MK^E^3O'XKNH8_^R)??!D`.L4KNA)"P$;2(7T33W<;O"C/AN!\5'>KO"P1K]WB/M$6;^KQ_M`[3^^1?O%QD.H:_^K\'NN2+0>@P;JUWKH%0?`<
M;GD/(O)0S.P#3O/[O>LWC^[!GNW_P][S%;^3WHYL<"[T$Z_L'=_GZ$WH(?_R
M$C[M8U[AU>X+Z17UW/TB+;_I?H^U1M_#(%[S7@_M8+_S.K_VH.[S9C_@>\_K
M2C[T'`_H;O\&2(_UN#13AWNH]WW&H_YB.SQ;,#U:]!,&%0'-F_X
M4I'N_RWY[4[P;3;@Q*[V&\_VE!_XE@_W#R_W)$_F:/"S$'80PFX),(SJHH_S
M@`_T;8#Z\,[PA1_WKQ_V:3`0#Z*ZM2_[BU_V!AZ46@X"$S`!C<_]J.[[",GD
M?__V(/_[]AS\=L_Y5O<)\17;/B;/1+W\A^^RE0\$(>%02``!A(,CD2D$@`9-
MZ32D1%8%_Z`02)`-/:-?:!%$H`ZMPLE%B[!8$$TPV1PRUM/5)59[GI_UKM*X
MO/S&[,KHDO8&N[0(M?[^`(D:O2#%PBB')!BN.I%`'A[Z-D,"`DRE#A(`$@Q4
M8YTFB>X6!2\=MP3")`]EA3"9:*>,!/>HB&7S!G*]?,-L`9F=2X?^I*69&0N3
M?ZFV0W4/```.Y`ZS$P-O=ZLSG;XW+1]UE0%!A?)%26-1@0$&G"5/$3L^[NKU
M.G3/%"80$QS$TT3%6#M#$X%1J_=L8;IU9S0B1!=MG39&W*Q)85CII+AWPSS6
M,7G,Y<9('3%2HB=RY91\(?:-2@GHGT"CJLH11(0'I4@N"J$*=/_(2Z(4#`0P
MD*$)J*?.IIB@%03Y51=,DC+7A4O2;4I7@SN%$<%6,FU+I_9P+ELRE6-.?)[T
M`>8W]$S1H\`0@(!E($$(!+#DW)NYUN:NJ/`"3KW,1-W6BT9#@LV[U"NNRF8+
M3G[+5J72JUG?[M45]UK,@FKYWMQL"BY>OV=^!NVGRO!A5:R^5`DAH+%*R75-
MW[WLEHKFJDTZ6_3VFS?9OM>EC8U.&SQ=IIZ;$9:K5'5OUIC5G6^7&S-UEC5Y
M*@4.&*A@H?Y2,2X6+QI````$%#C`&@7**:"``1PH1\)R*AB@@G(<&*``#"<8
M`(`!)NCP0X@:A+#$""=,4<4401011!3_'T0QQ0HO!*#"#0'($,<53^31QQ1U
MY-##%CV,L4<;+?P10PV%'%'$%(U$LD8:E\0QR!R?]#'*&9/,D4DO-R3220^A
M-%%*"KN\,D@QQ8QR2R4E7#/$(><$X$TX`=!``ASU#),##@9H;I/B!*3DB1`*
M""$!!0N;:M%]M)6'1%W#%D#YE9=?L&]-N*`
M)S987V;SI7B]AI>EMME*%?98VE@[?M;DE34^-6)O,Z[XX(?+/1>$=&5FMS!W
MWZ5$TG.V6.Y12(4PP(`[C!XB:2&`9IJ(ID.`NFFC$WO,`'\M.,<*K;.0^NFG
MMUTZ!+&]WAH2J><@IPRCD3[Z"*^'@-OIN)5VFP"VW_Z:[KWG[EMLLO5F^NQE
MI[;[;\BB#CSQN`FOV_&^%X=<[LBC#MMNK?/FFW*TQSB@9J/3G7SR=GLN?572
M2C^C:HO2BV5;O?!#30RTT#I=P.Q2!\8Z[#XZ:MG<-WD=]3P`^J-F(?_239U0
MX`4Z/3SFP6D*J=[GD>T]7VC7*G7_NYB7T\A\RLJG?OYI_"]6H0O,^,#X'K,1SQ@&,]<9Y7#\)UN]]'\1>:@I6J/_=4"0&<%8.!=3""KX0.@))``&&M;X&
M2K&$AXD@$8DVA!4>D(?D\V%'^!?$VY$0BY$J"T4("!`E2I")\C'.#!_XKBN6
MD5^H,V$7N_?%_0&QBD<9X@T?,@'U#($"`XC_XF'6>,`V:N9(1^>E
M\7UXA)X>XQ'&1PKDCW2<7R(!N,CS-7**'9#`)@,2R3).4H=N9/G#>E)1WN2[P!O@!HE^!F0B/:S4$8<
M)/G:B4I3%%1YV=1F0LNX4(I.%!@DI>A)72=0=P*$H^WS*#1!BD61]M.DL:@I
M2G%JB`2N%!@MK2%._V-*1`K`(:>M:$[_>G;3G"X5)CO5Z"9\*L>7YC*H3,TE
M4M^E5*LR57BO8:0U%]"]@[J0@EM-)U:%B$NSKE6G4ACH.Z\9SZEZLJILO6$K
M+NI$`"A`A';U*P+=RE-91+508UUB6?^:6%6@5;%K%1X3WLK2N!ITKI)$;&,Q
M6PS!9A:EC[7@&R?;4:!>EK.E#4$AGVI:JA(PLCT-K4M'BT35SI:V5O7L-0X%
MVK!"S[!L)&UM@1MYH22N@(QK'.2&4KG-M>YU3?=<
MW8JULJNL+G;!&]Z`W#9UT;5B=X?Y7?&NE[UMA9YYCS)=7JJWO?6U+WE+!_]?
M2*)WGO2U[W_%B]^>Z5<@\F6G?P&<8.L*^%T$3B5_$8I@!4\XN`PN[FM_VED)
M4YC#JK4P=#$LU=AJ4;L=-G%I/[Q=WD*8K+(]\8N!F^+#.!@@!I;%`8!F@*'%
M06RXLB.,@6Q:&9-RM]CLH0*48``!*-D.\1)`6S8<9"ESU9#=HS$P;*P*6(`@
M`0G0P@`,E$PF)":(W)SRF2E\95ED.1:O.%2B#J0`YC2-S'5%\YW_JV8`=>]7
M"(B#`O@:AL0TZJ'$^C&>$9WG$!>6Q49!@(<:X^4^*,!M*HERHC$=7#T3I]&^
M=7&F01W>39N"S5=O;Y?8DN)D@[G>1V]SMOB&ZB:#N0K';W?4&(+R'(&\!T=O>_7[O
MHH_;:NKZF^"YQ+<0]&T>\?D=_!07/[#&
M0?[OAU,VXB$W^85'+MI?GYSE#N=NR5L><]>F'+8KE_G-!UOQ\\(]#,8G>=*3SK3;>YTJ4/]I$.7>L,SL(`,O#SJ5_>ZD;O^
M=;%GN.IC-[O*RWYVM0>\_^EK=SNIC\[GM\^]QG&'GM7I+O:@$R%I.AX"CQ'G
MX[P/7MIV5T62E_QD`C@9RH1W?.$_^00O5R',Y!RSI/#^>*7O/6IJ>_,7$#3G
MO_],\Z7/M^']L$P[#0#0RG$,%'!L>MF'&_7!TX*DA4!I(\R>]Z?O_>]SR7G@
M#U_9M2?^M8>F&%,\RHBF.`!D'+7\HN4UW<;OF:2PK\$S2)H+@:\.]KEL"NXO
MV7O@USX5QN_]`)I?_-@GO\_8OXGT;T(!X.>K_-VO?BG4'_OWI\3\*8'_),7_
M`"$+).7);`\R$%`G'B5!O$<`@&8!IZ$!"ZWX4.I;RD$"4T]"AN8,,'"93"%%
M.O^P.B9$`Y-A0D8P@$HP!%'0>U8P>%KP_R:$`#>P'%)0"EI!0FCP!#E0_F:0
M-R9$_^PE`0"ME=HB7F"O_``-!!H@!)&P43@-I800$*:0"JK0"H'A"J=`"YN`
M"[LP"P'""_DN#,&P#&-!#,=0%D#@'!#@_?YO;"9O$Q0D:B!0_."0^N+-^MX%
M,N3,"Q%%QY[`!`,H%^MO%VW1%Z4@$G21$FJQ%W%QKX+_$1EY\1:]!QCQ\/:\
M;!2;P!B;$1"H,?RBD1FG45&J$1>58%'@1=+B\/_X[Q&WT``5P!J9@`@/4`QG
M$2"Z`!;+
MY@8A#Z<2H`'`[#@(H`"(<0IFLB:=[R9S$@=I$B97P2?;+"AM$B>+DB?ED"@5
M40`*X&Z.\B>90,F>4@P/@"DETBFALB$&H`$ZTB2O44.:015XX4%2
MTBRELOI0:A\-@"S1`0TI3Q:>_\`JFT,AL64-50$*&H`1Q\8I`4`,_1(P\5$H
MIR`C`0$!"B1>%#%0E,P+&=//]/(<#(`FN3!I$J``OI()%$`LVU)I;E(ID5%#
MMC(0E6;/3DKYM"`T2P4!Y%(.F@\I'",V(V4Q-F0DBZ#+Y)"O&(0161$`C'`5
M?',3T6]H-`H$_.^I&D,!"N"(J(#2$(`S.W,(FO,YIY$QSD$O^0H)_,Q['N4`
MJE,(6!$1;3-J[H\Q@+`!`_7$DEXE!EF^9GF@DG9/_RJ\`O&P\$?%"
MH3,9C/^@]>"%`+)`'8LQ/#FT/!V0$L2S:/32`"5%'M_S7;3@^51!+]\1&'`4
M)2W3"_?Q/!%10RD'$KL2%H#4.144,0P3/15Q,!T#+>,`,<$2%J1TS/;J#!.@
M#D<2-+5L-*OT[TR3+K%L1GNF(D.Q$>4P+X_#,7)3#OL@+A'C2P//"Z^`+^6P
M"`K$#A<2&!@4"XMF)..@3ZF`#=LT`*%/3"E-(M/04'+/1_'T2Q_T2:/PI%@!
M,IYJ0J#09W#SJ?AJR$4Q%;09RF0``MC_[*`%7HCUQ=4U)PL@&`M..82CV/
MJ4=5@4$@-1BB1DP3@WE^]!3+4P[9D$\Y-"",R$A5,145,4H!8EE3YSN']`R<
M-6.=$4XG]?B([UM=$T:!-29A=OB^94B`D$P`
GRAPHIC
16
y85445y8544520.gif
GRAPHIC
begin 644 y85445y8544520.gif
M1TE&.#EAQ`'5`,00`$!`0,#`P("`@/#P\.#@X-#0T*"@H+"PL)"0D%!04&!@
M8'!P<"`@(#`P,!`0$````/___P``````````````````````````````````
M`````````````````````````"'Y!`$``!``+`````#$`=4```7_("".9&F>
M:*JN;.N^<"S/=&W?>*[O?`\O`(AP2"P:C\BD$PNF\_HM'J-!;/?\+A\3J_;R^Z[?L_O^_^`3'F!A(6&AXB)38.*C8Z/
MD)%X09*5EI>8F4*,FIV>GZ!QG(8%`::GI@1/!`@#4*=%I:>J9K*HJ6FF4ZA$
MO$D&`52W`;1]MK?%H8N4B@`/"@@/#P?.`D\)#PA0!]*Q"M((R6/.T-+4#]9F
M!PX+"0[B3`<,T@5"!=(.!TGW#L(-#_F^`7"51M^B9]&F55/VA5DB``H@!.@&
M@4&Z)@$2P%M"L5=',Q`E4K1X9AZ$!>^D_XAXL$`(D`<.CT"K(@"FD'D1T1#H
MMRCBQ`IO`FFK`$'6@FI6W:6W2%JV=HS
MA3J<@7E[3_&E/>3MUP5,`VC6'4#VD*IE,Q,V#*GHH:\%YFF,;H#;LP$,&@PH
M@"W=-U,/P/-EX(!@5[A#@(P,WOQ/'EY3(80*"!M>@"!CQ#\C4SF`;:$8!-
M`O\DP`T#"U2&`/\VP13@`&@*.(28-+HH\*"#$0GX`($;%@'`/0^@I0!I$`@P
MWT1!J$41AA!8"%I-#6##TQ"D#>``.M%M^$\K`*KHEW4*8*?=8A;I%U&.'`)&
M80#<``7PDL0)!'<5F7GSQU26/`/3FA-`!*]3@(84S-D)E(?]&DF(`0]+28
M38GHR-4A-@A$HXTS@9W7WUA.LMF/G1#@"8$##`137$4A!OJ`6$7T]XU?-6E3
M4WD)^"7-A)/59`TV?@VP9A$4&;"?FY`"Y*E?;B%:9Y:48%-/1R,E2D"?/Q6P
M0$M$U&11`R0IFD`!'SYZ4Z)M?J/-/*HX4X\SOWX(04?\N&(F>D)T1Y?_-A/Q
M-$\!HOHTYP.=?OJ(V,P\TCS*XA6S2/4$/W=.*(S0;!+1#P2;&*SYC0+BXFR3NPL=EQT!@JI,=,K(D>QU`V#7
M6\`_TCQYWMA#U)QKG#]'[*ZGTD@C#D5=D^:NQW0)#"BOF=-[IO(9.*'KE%)I$5>D=^X4&>(A!RO>.KR2W;HQY+,-"`^P+A1
M*VZTE'--20@)&<``OF$-D`5CA(/*AHW0H;P&M(0;Z5C`1APX%@<03A\@$Y<'
M!0BGEH3D)`,<`OCJ,0!>B7""KA,7$7:B#VRH`AOS`9'+LG&SN(A*&]'XD9,^
M.`0H`+.,H[P@TY-/NO**W6>7D@E*QQ@\7
M$$1'4"T0:[&*:(2SH.89X%:N"*1H!I,`!.B#.[E+@`(88Q4B*%*0HJ%+`JPB
ME01$,DB$`0ZJ%J.`!$U/")<,S)=&I(_B6`55F"3`*UUI,@3<*C]+Q&2G/`<-
M5[@2*D60I55,H8U+TD4$6X)(%1$V(J9\#Y/KBR7F!/DXH8D28X>4TG%*V1A%
M/@Z2VN"+@WZ!2>$$HY$(BYKG?`;"3?K,`+9,$!?+A`D[.?-G0]&$JUX&A[=)
MX1Z5.I@27#4D.C+0$W]$!(9&20"*W3.?EA#``K+XAH9*XZ%4*&+3H""J!3#_
M*@#.8,?F$'I0B)HT$7B9YTE7ZK&2LO2E,(TI(A(JTYK:]*9SH"E.=\K3GGI!
MISX-JE"'N@RB&O6H2!6$2Y/*U*;:%*A.C:I4AP+5J5KUJIBH*E:WRE5Z=O6K
M8+6$5L-*UK+F=*EF3:M:WS#6M;KUK5QH*USG2E>5H+6N>,UK0]`@0)`*M`JG
M3"`W&J`>B$[D26UPVH+^:HF1,:6P72```S8'%0-@=`FWL@==^CB6R2Y&$G*-
MPO,"*X41\<=V01CE4!I'A5(%0[6:F(@UU!(&V!XG?!)Y'!,*4`_3HN8(?AGG
MU.YZ!9N`C!H+TD=U\F.`R)BV1`^\ZU>`*04I>I.^&,?0F]SUX8C`$A)FS,EKA6B
M-B]];`@!!FCN29@R#?T4``%!"!\`&'"`EL2I)H,Q@MEP?*?)M.,>@;K8(Q8'
MXV?9:"W]"`\!N`,8SM8D,$4.7TWF9:0JSZQ')]4+'C*T"-F;$23\HUO\Q,R#MET.C`QV9C(39!K#HJ\@2&ZX;"$PJ.;?(
M6>0J@'Z6->*DO:K%28N!V;.:P8!IYX$T"&`0P:QCHHHO9:/3L@2*"#A=05KK
M.2XBP%9X`-T>T@(BM%`H=#H*7"(`J%D_-2X/??*`#E=\8YZ+^W:@/F8QM56"
M9"_V$F+6L^=2V*DUVB[6!S9=7X1H1L,_/B"N(%<>4Q]D0D$G!<&US-
M(+N+O#9QR'KO600$4,MZC#VRU2Q*),4!BBNRTPAH.^&P8@'H^10P+Y>)+G@S
M;@4#//NN!DM$B19'K%<^968V!P,E((;$84U6*$XS(!P,:-J##.31Z%AWB=TY
M7\K_WZ6V#(^:!F*"22"7\?MUX'CYB1/EO$ZH!?
M$V:%&24PGB``&GQ>#4!8/R+>[\/(_"T(`QC-9]Z1GD<%Z-DSR]";_O2\0<-P
M4,_ZUKN>]3_O:V][TG;]]Z`V?!8\KX2=Y"[[PAT_\XAO_^,A/OO*'
MK]LR`'_YT(^^](]_>2H`['3_[QJU0,XB^_^FL?
M>R_@9?WPC[_\/<_[-E1?\OC'*_CSSW^S[K__`/A5_Q>`_P1X50-8@`CH5`>8
M@`QX5`O8@!`85`\8@12(4Q-8@1@84Q>8@1QX4AO8@2#($!\8@B1(4B5X@DPU
M@BBX@L/%@BXH@??W@C+8"2.(']]3=DM0'T[%#<2D=[VQ%X538H6?GA=L'$
M62^E@M:V"_2"@>0
M$G2`FO5%=VV(DW)QR-
M&(<.H1Z5I@RIR(3QHQ2R1`P#%`Q!H`J%=%0I(U$G42+,&(<69%N:J(JB\6+"
M<8L5(17T41]PB(J$J`1#6"3PE&/+@5V`(5G%P1?>MU,\N&8^4RB;Y(YV1@L>
M15?G>!5:EB!0X8Z2]6+VX1=K0F$'4'^G,P=+=ASVP$4-.55H88I'$(]X%0[L
M<4IH@3#GHY`+.8,00\`-0H:'J>*$2`@X.OA2
M7[:"9&E2*AAT-"*)-!(,/@ASBZ"!+%B7$*6")M(@HB(1+1%I@+$VO-6,#>:&
MUB`@==%U;C>.J36'0T-517`R]-$2U2$RW!(.`K(4`"B8^428U+9J<4B)U>B-
M)4*-WG@HEEB*!#"2H$`FF%@7(%4=I:!'8HE7IDE59CD:-F(RS[*:>M::LZD6
MMFB)LFF-N6B7T00INA5(IUB:>FF5:*!G\W&!!!PZ%D>@H$-1'/#P?FN*?V9:"2HH-6UZ4%QT%;&`I(#`
M6T5D!`"9@74*6CIZA3&*%F:RD2]F/(+A%03AIW]`$+(S%N'E>(S"'"\JB&95
MJ"V(!G<(#?-2/;4Y$'4F6?UB"I;%"O\>!E+!$!&X(JF`0!B-@G.PT0#:,$E;
M8DLG$1IQYE'C.5>>^I%GL(25&!IQ2)Z6)4*'A@L1Q<1
M89#LL2;Z$!SI\)C":J1EF0;&RHS.VC"M"2;-.FW!$%VS>5-U`2S.HA2Z]21^
MT4?>
M,"^;(00C0@Q&$#W.1%BEM+(GX:P:*ZYV*:T`6+/Q*;2#2;3\URL)N+$=I[1D
MBE-..VA1JU?_4_L04%NU-76U>Z>U5HNTIYFU7@M37'L(8SJV)E6VAG"V:)M/
M:FL48MNV)_6VA,"VW<.6W?["W@-L)@BN3.FJ(CJ06
M,DL7O]D+@,B%H"!,P'2"A]L'->@=L"D%TN4$)Z.%2="X?U"&](B"E\L'->A9
MJL`6Z?(]BE$`=2$5L?L]O?9BO89>'_0@:5DRJ%(*P>4LM7E"C5H*HBL'R5$*
M]!$,P;MPBP&[FI%_I[L'*F@A!J$5[\(76%2&)V)MV\MIPE$IH)@?;4<0`U<$
M+3%1`:`=^]B,VM!@46(`LB07BJ!$T8&,[*9PJ&(C:*SNT^28^@:
M*-NA';`[2,F2"'X99(L!QM>%&@S[(Y)+5TILDV@*&/`[&%'A2'3Q8!5A,ANG
MQW1,QU41&A'"P)@###B;$0E[%78LDG)A772,AF6(",BZ/@317,K%%FPG&L#0
M>$GLO_.)N6T9NKC"'#T5<199I"6L!V8X<_^Q%QI=YZ8LE<8KRLDD6KAN]<9V
M0+BTC`FV7`>XG,L1)]G,R/L,QGYBO)
M$!I\X<.=<&M"9EGUN6806,YP,(+U01"\*DOT<20>J<$EDA(W*%#DJ0R2>\-R
M<5X8#+WAS*1GD%F"$3Z>PQ>/V5ZEH$VI<3%-K!2D>1*5A!J8T="DVPD,-I*4
M(#NR\XCL<2V/9)QJ(9*F@*)H![_\/"NS-!V=,$*JD`I)<);\T&PG+K3%0VE-:IE7-&;T+EF
MCV-MJ8="--(B$Q4:Z>!*.'R)^#75J,:GKMFPDW4GI^`*)GN*0.#*4L73;#""
MGVL/NW.N]!II!2P6M-"Z';H3>H:?:$V>(B0`;WD)>IQZN*@*\8LYBGRIK+##
MIZ@6UTI6ANV3.CI)-DNQN#(D(LE$\$MY[MG"&UP/;I991T$87Z(/VE$A]ZP*
MG7L8`Q0OR7$3B=1@^;$[!A*HKZG73SG658JD$$R^Q/!^SUL5)ZP:J[%$NG`7
M31$.&$D,3((8"=D)ZSQ/>S$;IW01:P;86[(EA6RTTTS=6@JD*1;6P(G?_V*Z
MS?B'QUPJ4\T\SH:PVFI0X`9."`A.K@"^X(W0X*#ZX!">"!)>K!1>X8=PX4*I
MX87MWV?JX50)XG::X2(>"!P^"2>NI"1NJ"O>E2W^J2]^5"E.!@H^XW50X^-0
MHR)I61/&*`(^R$@`8P(]PC@%4FF9&A\T0BX$0OQ\M-X\!JV4(H\C0O?B?0Y0
M4`+%WPS!:6/1$FZ]&M*"SN(%Y5UJW=QUHC--CRUQ*&I\/`66$_X/1JC>9[G9,V&6JQ/P9BB&LFCO^L(%UV+E2B(GR;CN%J@.36
M")X5;`T-5K/WX0!KT7;M_>J@VNFA.$RK<8:>WB(I%AJFCA0AW%FES%0!DS=<
M'LQ\Q0R40.N3/D=6WJ%TX0"%\@2H^@;.\E1E\&MIC(36/^#T/:\3T
M$25=U>K2X.L=7A`#!-TU!ETE@AHM<5]`RQTT8@T_AU[Q4[R74%!M?C'`8A4=
M3*I%@'6T#5)9442NH!KV/%7/'NW2;@:?X81((1Q:D=Z\D6*]@+.:-1B!\<@P
M)0N"H?+'\==.^-Y"Q*>V"\1,XKK%S56M3N_UGN,:_U;LT<9SA1MG;@=]W'^-
MBG\22^`\C^-UL.KB[/3_57OC4H]_5%_U@W?U6)]76K_UNMCT7L_U8!_V7T_V
M6]KU9N]6:)_V:C63M&'P246^&S$EB#$E)K_U*GA((O1<5`#PEFKD-=5N8*S`7U3)6?#EBC=F9)5^`0I'93();T/DP)3?QBEK]6)"[T^6T&4XAT
MI`D,4H)B7P(EO$X7:R;Y0@&[72=AVE#46Z(6O*H):9.8@>&7K=)%!/PNQ_$A
M7X(:9C@8T36:;I>&1*6795@8GA)=H-D*\.29\5VMV@RJZ3`84C(0=[P8EUS7
ME%CLD_\N//>:CAC[.*W0ML_`^_^XQ2+6$#@@@D",$`1DCP6F\>8
MP!CSP0H&T:`!&&"!XC%9?!`@E)"$"V!8PMCQ=%P6`!0*4EC`\/)U?94-$A8:
MQCS86;T0)#0>O(49.$0>6E[B]F!#`0&?D8(,`H-#V]%!4HP%%9070.0!00
M@$*T("0H'$`,%&S^'@8<%(Q"K,[X(/@2$Y,B&ZGP"1_YW,H!8V?O)/(U.D,T
M*!"X&>_V$J@4A&FS_VBVQRPX0B`8$#`H#20,V#<&*`BX%P`7N'H-6MC*%>#?
MP`8"#*CKE(I6IRKP+M(P8&^7$WZ^9!1@8,Z(@%@E(O6I%.[CBU[-FVZL&OCSJU[-YD>OG\##RY\./'BQH\C3ZY\.?/FSI]#CRY]
,.O7JUJ]C;[X@!``[
`
end
GRAPHIC
17
y85445y8544514a.gif
GRAPHIC
begin 644 y85445y8544514a.gif
M1TE&.#EARP#_`.9_`.GIZ5=75X>'A]?7UY.3DYF9F6QL;"PL+*.CHV)B8DE)
M2:FIJ9N;FYV=G69F9MW=W4Q,3+FYN0\/#[^_OX*"@H"`@%]?7\#`P$!`0.#@
MX/#P\+"PL!\?'Z"@H-#0T)"0D'!P<&!@8']_?Y^?GU!04#`P,/___\/#PR`@
M(,?'QZ>GIV]O;\_/S^'AX>/CXQ`0$*^OKTM+2X^/CWM[>^?GYR\O+WU]?;6U
MM:NKJ^_O[]'1T4]/3Z&AH8B(B'Q\?%-34[.SLV%A8?/S\SL[.XN+B^7EY;>W
MMS7OGY^7E[&QL8F)B5145)65EGHZ.CE%141X>'C\_/]_?WP```/___R'Y!`$``'\`
M+`````#+`/\```?_@'^"@X2%AH>(B8J+C(V.CY"1DI.4E9:7F)F:FYR=GI^@
MH:*CI*6FIZBIJJNLK:ZOL+&RG1X>?QX7AQF&&1<7&H.[O),:OL*'&L"%Q[/-
ME1@$3Y@<21E_6W3GR[--U4I?JO8MA'4]]YW*5_1J690D/7;&F`+
M`L$2Q,#&'GMCC1TB1(F;EIV58'8JPVG-HV#'B]Z,[*G4?T"_3(WR(O=+JST(
M+\19D(>WCU9?("&H_2+HA]26TOHG8V&M+,%WGB77H&,(2Q/Q]\@U2+&42&H"
M&E*>*?SYYXLY&84V(($7E,32!B!@X!I6L)5@5',A@<"-B!]X9Q`(%V307`4E
MA&@="2%6)=$V((``V7H.G:)@!]-IY1`\&U928/]*"Y6#G%0A9>`!7B-I@$%&
MA!PT7UB3992!DPY&YI6#@N!'2CY3=M#61>9(B622DRRIX@4O\,12AAB(6-@^
MTYFST`7J&?0'<3WR%.(%*M9)0D:0(0IC9(.X>&:,NRAF##`:4`=G([W@8DLN
M4N*2"Z"`9J`!0;CT`@Q!?U#3BR^GUG+J+QG46LM%O=1J*J#@M*K,IL!F4LP@
MR6B:B2_!)BN)!B4-Y\UH]`!4IGZ5=*3LM8=TUEH'&VS4K&MPE?!10]>T54$&
MW6ZPP9=O3;A38X9(BBVVSIE4@1^9&>A@,7GFDY)GCFW0XELO(/.J["5
M)8SH!PG^WG(32OVBXT?_1BS1M=1!YG@6WB$(-Z0PMM89!P\ZLBFF5%6WN47:
MG>IZ1D)5P'R@UX&_"J+0R#RG@FPA"/<\LDGR++1M:Z,20VVKC&`D$R'^6(IN
MSH[<*K0G'AS:'T!6TA9@)0@'78B_]`UR+CMA4==K(@I>S4EIF%855X;808+P
M0(MTV%)$2T'640A\[^.!:\;Y?`3.![50=N1VDBS]7MZDE51Q
M2AB;%1G$=]4SI3E=X=4VXYAD4$))N6$0C3NVOBD)WD!CCE!@%@/L>7$J>A8/
MX$9UE95(J`L+:ZW(9OJQ\I-<7KLB3MO"D,"NL3O]22S/_,M%KG6DKKJ4%Q\=
M_\)+"V*=L8W87+?XDE0UZ-+E'54*PNX*4M6YA#0'L81D,9MR,,M@GR,ZQ*RE
M[>MFHD!8D.RWGD+`BU6_X`\Z_"$EU7E`2OT)0:;0)T"=_<0=.;H15L0E(A/)
MR$7!!!$](X#T,M`5B(C$--:Y4ESQ-A#8@H&$'$=&9:7AD
M'U[RBK_R1"/.%$8#*%@?/M;G(FOEQRD96)0O3)?#&+7E!=885!3OE)D6#A%I
M[JB`HA!UE'LM$1TT+$V9$%@M`_Y*;,TASD18!I82)*,$+<(*/Z;!1+G=QHQ#
MO."K0J6:3OF"5!<\53&^5#Y*(.QG"3MC,S1S*GFLZO]C@\"%(AH3/D0@S(I(
M@\3-!A>>MXAR;9J$!+>\TX%#HD--7Z($_D8)LF"44A%A5$U(IH01>&`PEI6[
M2YE.TQ>O<7`1SDM$_9P5*4BPHQ_3B8B!U$6T28B/$)6]&NT9<0X.`FP]&
M6A.:;@["'#Y*$/'.&*+;C,:&,G)E?YZI"'4MHGPNBB8T*2(3EICJ+7-6$F0ZQ
M5FJZ=11^*$$P6'H;-74KK9D0IR*")JF<;J(SQPB1E91R&[QF0J0X.Q`A^$&*
M"[*F,R3Q"#PL8AEN04XBB9"=/#!;C9CTY)[A`"8$=+F26[+$$)_\9&:EL1<\0C3:0U3W
MJ`*-KV$3P:SP^$6+)DF+5U0#@@)U@`31$`;:WH'$UMG+0."M%2.2NM=>PG>^
MAN#6_T=J])B3M,6&$7&':\#[TI]0A+;;:$<(QF(:SO3(I9?EQS@2D=.;_BJJ
MHY!B+$$;"1H;HJCLZ:98A7F*2B;):`X+`67`W-H"16B@AJ-=I["]`ZUZ^<
M\/&&\K&!LK%)4))`V^`NE(G2FLW!;QT%E+F3CQ:=K$.0^^E[N$6FCHA3<-QB
M1S9J6\M:6'8[K^J,24$65+ZJTZJ8T$`]KM4A&BH1CM=XP:(@!J-P`E>->WE!
M4FEC0R0V#`5ER[-Q::PM4QYBG8CU1'!F"J>S],2-:2G026(;I%IN(S)"*5,;
M\S$6V%09-9X&XESAY/%NM[Q)CSFS8>PPV;(5HI'-N'E@`8MJKY^A'&>JJ:MT):%%3`.MB.A
MUQNCKWP5D:\F"BO4?KPDBRD9E'!'I`E]^Q(1U>VK)@1-ZB%^P`]^(&;$O?&I
M_MAX$@6G)XTE]5Y(!`?0$-ZX*1%Y4T+8.Q)P"_HI<&R_J0JB?/5+^"&RIFZE
M;V*Y#QY$:>67]4>LR>JHP",BF)YM:>!+2#
MG1-B,[O)WXKU0IB@!2>`@0!L8('_PAN^\#3H@^(7KW@:`"#N=;][):I[=*;M
M.LR",,$`!'_XSG<^\8P//>-ID(,JF$#R/A>[KL.!0$FAX00%N(+G9W]XT(O^
M]HL'@!"H@'K2COU@7QU$0TQ`@RG0_OB'9P'NE\]XW?.^]S(T8Z@M'R]"V"$"
M4Q@!`9#/_10P__N*;X$9(@]]0DP_VZB5(EE,4`4OC.#](\`!]Y'O??#;GP9"
M.'WY,<__OG>`!J`'?_%7!O-'>_5G?_;G`OFW?V+C4=57"%5@>WTP`0*X!`4X
M>P>(@`F(!OJ'>F;7#OE!"%E@!KWV'?M1D`A.@!+?7
M`C<`?U-`_W@H:'@JN(+V)P?/=W=>1FX#00-+(`("@'L#((`CL(,\Z(-0Z`)H
M('EB@W4>,`(BD(4BP`0UR`3P!P1.6'@]"(4_&(1!YX"&L%8Y<(1:F(5:<'LL
M((!$$(9C2(;@YP(M:'5B$VU_,``"T(9:^`0N('HN@`/PAP!T:(=VN(!!)S:7
M0WQ_"(A:2`:WEP+PQP2RMX-UJ(C@9P8=:%AD-RA9,``3<`*2J(5)*'HMD'WO
M)P-.N(F<^'U%8(9I=7X,H`03D(M&<(I9B`.W=P+P)W^:&(MV6`1YF`K!P6X'
M`G39![V>!W.B-=@B.JG`EYE`C+/(!)?$$[W>"]6B/9(B/XH@H(>$4`!$2?G$E)W$Q
M()`0M\!%DW&.RZ(60B"-#KF.D0B(J@(MF.`=0I``%O"2#KD&O.B+H6<'`HB3.>F#+4"+H5`,@!(>
MJ1)!GK);R0`JX#`KG6(K$Z=P&F`"*\`'?/"44#F-,,"+V+AXA?A^8'B!W9B5
MRS>+G8!''X?G-8@'WIE[@'
M`)^('BSD;8W0#<&$4)G%9([@`(NYF#$`!(]Y`@1PBA*Y>$7`BHB(F9IIAW*P
M"8WV"RA!$PK1&=Q"$/X0G,8@$+;`#G5B"[VI)I"C)KQ9*Q^Q=X@`!JF9FJO9
MFC&)BEX0>I8X`IAHF[=)AE.8"082'/FP&I267R;Q$V!Q1&=3%:13'R@@+@:#
M`O#`&<7A&?8Y8F,F!`%0G=;)FH]YB@C0`HSG`O#GBO.7F>&IBEF0"19196BR
M#_YB%G+1$8`B$A>#%_/`-#:D$6TR'2RQ/]'0$15V)X=@`HH)H-:I`H\)!*=X
MEXHGC\+8?0U*_X9%T)GKQBL,05Q503@"`QHF\1(-91JHP1JT0:3K`FYD@2`#
M\1X3T6LM=`(LRJ(C,)>).0&JDKN`6JD%3$@P[)\!`,41E=EGE=NGB"&JIP.:I0N8N`**.5V82M
MZJH(N)6I``]^E!C]016A89J0H"U;<'LN`*J^"JREJJ5MR*5X:8A[>?]\#(JL
MBY>;/G,E\6`@_<0NFT`"5&"@N&<'!N"KEX`5!7$)0I"1"KNF
M1LN.D9F%<*IX8#"`)0NUX%>FEB!7N"(3%=$N@,(0%1$SW,.N%X$"JC*UE/4(
M)E`$BDBT51H#1E"J;IJ%8!!^-TB/3VNVX-?_`I2Z(/(0#5'$1%>"._FE.FYA
MGSK3%DM1&_T2(XZ0!+%H@RW+IA^KA0T`KTOXJ)TWKE`K!);`&ZU!%PF1)_I)
MN5AD#CNE,]B@4/J8%FLY"'+@C6!@!6MZI0[9AC3;!X7(JJL+A2?@!T20!HQW
M`HQG`ROP`S?0!S^PO3\@>CJ`O>`WJ=7"+?W`+4MQ&N0;$6U!.!OA"^"V&?U@
M9Z&14'H+K\0HNE5JO-,(HUFHM(I7F3@+A7[0!P.L`S=P`EQP`SJ@`GU0`#=P
M!`Q\`RNP`@6@`M2K`CK0!RH`P1K\?2B++6B0E<-;I3)`JEFJA6$[F^%Z>*R[
M>'[P`P6@`T>P`BHP_\#;:[TKP,%],,%]<`0_$`0_D`84S`4;7``KP'RP.ICH
M@&U6U&G$@DM$Y(R'(`.CNJOW>P.C*ZHF/+B%VP>6>)DL3(9^8,0J0,3/VP+I]L(K&&L8^^+QE?`)!4,=<4`![$`0^_`-<0`2*
MM[TZP`4G\,-[8+V=3`1$P,#,]\&1P"`T$B+_A1?!`R)4UB*"0!?A(3`W\1.W
M9AJJ-6F$H`6'G,R(K,BAB\6-G`+L.+,S2K)/J+@(Z+J4P"!.DA8=$45#`?\E
M2($"@C8\GJ,/)0G(F2$(,J#,[)S()V#%9`@&:@"@'BNL,VFSS>N--U``&@S+
M?;#/?:`#I%S'_TR&`*`D[2!HAT(1>?)RUD%E]A$:Q'$21B$B.;(/1I,($:9,4JG?3'@DE/Z_S13.W.\*R!7C#/)3V-*>"F;S@`
M8&K)L:@#!4#$$A`$BL?51X#):6#3-D"]=@H*"A8,7EDKF)()*<#4PU',]UW6]@E$=H-/XA]3K=H?GSYSXO8VM`BM`!#]`P:M-TS:P
MP(Y-ACL;F$X!#@BB4E^3"7&PV;Y-U\R,@'<-ET:[BTGH`DR@@Q9@VHIX`A-\
M`BK`ST2PP(=-RM1[`\RM@3GZ"3(B#/M"%JZA691@`@KPV^8-TD^->Y]-W#!`
MC2C-`@Q@>-EMSX)V]?->ZF`9.`*>;`IU60+!B>
MX1F^X;='X,8K`-1KK"1>_^*AA[;`X@(LP`(JH`)-(`)!$`"&K.*^S>('BJTP
MO@9)J`.R-^,TOG@VOBD3")5*P`),H`*O.0\)A0F0(LL`96+@)P$`#EO>4'L`(X\.6?R@,[GH6/[MN2_N4).P!%`_$1-A&_\6LV[P"=N^!1Y@+MTS[O].[F<-X`:@`%
M+>"IWP[N>0-(QN$<A8>YD`"..(1YED,0<1;9"*[&-.>)\$(
M$U_Q.#^-APX#,B``*]"R`8`$7U``"@!S?E`#4B`&,$`#(5_B]AT;ND&DNV`S
M,A(<+>(<&A0:_@0NG[$MW6),=])H;'/S.;_K)\`"1J`"$/F6+(H$;;`'/=`#
M86#T='_T2;_T3N\)V@%6S.ATK>1=9%_V<^GF,&"S5I#_`+X:`R%P`'L0!5W0
M`WI0]'4_^7QP!01`!A+8KXPK+"(3$915>9*0-3XB"($O^!>?\3*P`B3MJXL9
M`A"P![`_`Q0`^7,_^;9O])5_^9D_IIZ."?UT2[]5;VV!JX)`BH(_`3O?\S_/
M^FOJ`(P/^P=``+.O!WKP!;=__73/!U;``TJ@Y^'9^X^0)Y9[&S2B&.34(]8`
M(CD"(BGH&$GZ.
MCY"1DH\2?%8\2D5]FYR=GI^@G#1_I*6FIZ85*!<8%1@8K!>DL!6U%7Y_?AVM
M)!<9O1FXN'\9'Q4@(!\:J*4N_Q//T-'2*2PP*C)6"7S;W-W>W^#=6&V$A&R'
M8HIZ3I/M[I&55C!>+J'V]CG,^J4>KQ^MK3:4D/4'U@5D%_QD`/&B`HD*&S)`
MS("!(JD,&?:=RB$MFI(4,$;(6!$@G,F3)F.$*$D>S)@<(\NC=
MVYE/HSX/'C)<\"!K:$8-0XD=E94!Z!\/RZ#^(>@3E1!H+";`6")@10R48,-Z
M0W*'):$\+V.J8U>SK4T(8F#0:+'34Y6J>$UE+'4THP=2R_)6-<%`Q`JQB!/S
MB1'G@-E!7YJD5;>HD=O+-6M(B3MW9Q+!>"V2ZE#ACZL,'3IL"`QZGPEMBF.C
M=/+E,?^AEX?4KL7,VZUF,61H@#+1VB<(#(`#@KC`',2&XCYGR)X.SD$4VX.B
M=,&M6]',WN#;\KE"('B?4=#U7=@UVM;Q8A\^=$BO;P3U^WP"(,%.:`;N)F]0
MI@A;X14H'@[T,7/!!R5DL,$&(81`&@9!75!+@JBP@-]T8Y##WQX'$(`;#P)Z
M9YF!*+HS'X:G0.A!:1<:\]0?&U#%XA\F;*B82HY]N(824!`U&[*^`I#IQ),`#Q*BRMIRJXC!E]40;ZC+
M^L&'#'Y47(G$?`2-[\S.:JBC=3D3_W(%SSW[[/)E[CK21]-'3U"#AL&*P,?+
M[GP,=;XFE'1?`(-6/<@Y/'?A\\]<3R#OFX[P`8.7[EIL`:AN];3VLPS!!*(P`*H-=0@@P4Y\#&"!/"FVY8%A^M+@:H[AG`RXSTXG@CD
M0-?4M1_KVB?#T9>&.CC:DAQ9^K,@V*=8"&4Q3DADKD,>.>^1;,-!)35P&;TC
MRUI6-$T8//T[GQY\(`3J8#&VNO'88OTZ[##S-L'VSM;XA_!@T68\2]HY_KCR
MDJ=?4_;LHUJ:R.`+!Q:N,[]RI,Q^Z5">'F*G/S?U#U4@*`7\P*&?`K)D9_;K
MSMWRU\!)\/_O@7V*("G:%@XD>,B"5K-?;A2(MPZ""X1]*H8II-:-DHT/A73+
M(`N7YT))D`Z&?')?*4P0K6TX"85F&8,*5[A#+/00$N4"(I_^9XKO;<,!-T1B
MZY:H0(H3"`J)CU$`K.P'H!TJPHE/_&""
M6-$B,U:%!!]`THM,P493F*`+<'Q,^>RWIAU^L8<2D!F&^&B:"G1@("&`"`9*
M(!`2;``$(3@%"$J@@1)\X#@:\`,(CE&C6ESRE,@)`0@\X(<00"@$@9$A,[9`
MP$0&;(E3LJ,Z\-A!&"")C[38`/_**"(A9#C
MAUHP)"'*I`4L2M"!A-B"BD)DAA9\20@@+;&1C@1C`RV@/?JPXD4@$`HMG+-)
M/BX$*B4@12!K(]"&*+Z:"%*#X1:09P8AI_H`4I#"'*%!IBB_^0M*A#$4#$"WI7V11FD(R
MPP1A\&6:@`G/>*8OBL\2"G/V@<93-)4^&?'I3P.0R!PN458"%>*4G0!
M6ZOF3M[:S;=:Y0VN`/R45\Q'`\HD16G<=]9\K;5J#-#O(*"
MJOF'#VP`%\&HY']!!E2`#56_'/9M&"Z#`<,!>!G_@W`H.X`+8W2V=(2QEE5Y
M&V/?>K@F%0`I$/\'*5"B\!@C\4GKX30`AUY^"'D:OA^"%3'C*ZV/P:>X$`IV
M4=9<$*-[4EX;<[90`2A15L-%-K([=F!C,`-F&1A9JE`RL(S$_FZPI$B!E[7.@4P4/+(#;6%NW\GP`!`",.]Y@)G&"3"#_%!XP
MZI@EH,(`++,#@0>*6`WS0`""XP00F`($?'4[N94,'
MT*<`>0XP`@`WT&$!"_"X&V9>!Y"C0B(D![@TD01Q/N4SYX(IYXI!@W/!%-T4
MCZ4/>D^5@9X#72.J*;%&?JR/SD*X-<-(!9*2#B;R/MTGO6#I0F99RT\^R)0A
M>(@J(8(,4^YB`_,52$6(00)2EMTY6>\TDDR.I*5_?1\AD,6+;-'-8[R`H9XM
M/#`,`DV`P(*EJ'UN:D6Y]V=Y_>_,V*MA#[*BMT26J-`!6S*,"HA?A\U""\A>(_R9%ID_!*5`\&U.CS+9"0/&]
M&7O-(N8[*_2V;XU(G7IS#/&]-=<'D].CCY?E.GW,R"FE=%M#6U=67E_EY+Y@
MENN<#9"WM1@P+#F/*Y^IR`AJ>`W9]M6_#V:>LA;"P`J!!PM^P`JPT`H5]BP"
MAWZPQW]CQ4T`F`NLT`L$:(`78$N'LW_/HH$.B'34%%_4A0$=$'CSM0LCR$]C
MMC;9QR?KT8%@LA!4%S+7M#8"H/-80*TDT"E4FL)2$@X'Q0LW.'0@(3T/^!G9WOF5$)D
M6$@16H7E9Z"!%-?FC:>``:'T(!#1(*B!&LI46$4Y31T@$7S$=6#V3"L2>`\!
M2LQA8AT889[H
3F9[JN9[LV9[N^9[P&9^M%@@`.S\_
`
end
GRAPHIC
18
y85445y8544514b.gif
GRAPHIC
begin 644 y85445y8544514b.gif
M1TE&.#EAS`#_`.9_`/3T]'U]?>GIZ=O;VY>7EVEI:6MK:SL[.W-S'L#`P$!`0%]?7Q\?']#0T*"@H+"PL/#P\']_?^#@X)"0D'!P
M<&!@8)^?GS`P,%!04&]O;____Z^OKR`@(*>GI\/#PX>'A\_/SQ`0$.?GYW=W
M=TM+2^'AX8^/C\?'Q^/CXU-34Z6EI6)B8K.SL[6UM9F9F6%A85M;6^_O[WM[
M>U=75XF)B3WMXB(B/?W]T]/3_GY^5Y>7B\O+\O+RU965O/S
M\]G9V>OKZZNKJV-C8R0D)-'1T9.3DY&1D?O[^RDI*>7EY=75U;N[N_'Q\?W]
M_<'!P:.CHTI*2IV=G7%Q<9Z>GEI:6C4U-8Z.CK&QL61D9$5%186%A;Z^OI*2
MDLG)R9B8F!L;&X&!@:FIJ=34U,[.SHV-C3\_/]_?WP```/___R'Y!`$``'\`
M+`````#,`/\```?_@'^"@X2%AH>(B8J+C(V.CY"1DI.4E9:7F)F:FYR=GI^@
MH:*CI*6FIZBIJJNLK:ZOL+&RHR0=(1T=G+F))HDD(8*U';W$)'_&L\F@'AT;
M&X2[@BG/B]."*"0LB2S`AR(H(W\=,!XB)C5_)R%_(?DA3HCX(\(:"0_B_.43,4*$N74;\IDXD4(:BA/^2`S\X^>/LXWO0E)"
M]L<#Q8@?.\(XN0$&"D$;6&SHX,'#-'DT39,HK6;)#5Q0_?W8(^A'9B0X._PE2
MZRB76M.[AG2FB'8L1=(-)-21^/HO1-:-*4Y\30%NJB!^&T(D1CLB<641)BFN
MJ%BR7$5Z_CRP$].3V#]N&(ASK&8S/]%VCDD@EDGK*!=#0\NI9TQ
M*9CC1P@:HHB"=HQM68,'QK@$H8D4,;9(DDJV*<@)E9TGR9%NBB2C.8/<\X<)
M'9!0FIY^%J*G)2*T4V=O$(HWEA\Z#2)/HX20(*`_
M23'FX`D>!K87(CIEQ68A=%J:S'JY^&0D536N\)'0)IF'C5*+*JJ\K0A-H&
M1J[5X`ABX?HCH^6,1Y(AG`&KX`G&_//6",-L,,*U^"2U+4/:IK!5(P@>TJJT
MOUGKB'"(8(NN::0*DE2AW^ACRZ2/_"K(/^_B-18S*XF`:S/42:(O3/W>-=:7
M'760@CY?\A4)8(DMT)NHODYUB3E&F+QQ:_LMY=7<+Y542X"5<*N
MN<^2?.C![LKLZL$3V>PJQ8B,K/-R(;/Z\Z$OBSSTH=$:PO/12AX<--//F8=J
M:U`OHLZ3@O"I27R(C)9)I3U?.LA0^J0260*_;U5Z@JD,L20
MPRA,5'`C!_OL:RZVKF""3_KYQT]I??83(V.%[H0O4\RD:8(?:3:8E8WU$=N,
M,QGV",,M*'04%3HQUG0"#'8?5)\:&?81KR%A/X
M1P3FZ8_@S!$0AOC':`3LC(P05B^2PB>9U&43_!+@YQ[S1N?AD1%1
M,D'\J/6-^VA$>Y@88R*:)[I#IJ(HD\2B(NIH25D$$O^)AEP$#3OY"B9F9XZ.
M`ATI9P&WK@V2(*B$X2IA<4=0"NJ5A+#B+%UA2D+4C1V24L_B?+8FI2F*RH
MI2$XB:1&+`V9J^#5+1'1/-)`4VVJ8&8S#U&S7D&3C:H(IBT)\4E?05.1`\''
M1.+#CUH`;HKI9&)T.8@
MNBFTNR'TC+F`@56.@9`0,$,F6^F>K=!Q.FQ"0IQY@>0@*EE)J!EF/_1R6"\$
M8IB!3,=!?ZO'DXRHB%[6!F;TO.8B;D?3*L[S#_IZFC=B*0@7&)4&&$CJ"S90
MA2(`P`E0A8)121:8/>[%4.W_%",UI]8(9;J`!O3C@Q3\0-:RDM4&?4BK6M-J
M`QL4H0I211I2%(78*`%?#"K8`6+UK4:=JUN=8(+T%,3
M$Z!`7$G9F["8P9BUI"I_HA+(MEZ205S`)68+G:N024S@%ZPY#[320*^^\/F'/K3`
M`LV-+UE?$-WZJO4*BDW7/=BA0#W=HAN_X%,OVG,+^60$$7D[1#E3>8AR^16U
M\HTP_WWM2V$>5$&VR]$-VC+XBV!(PJ9`W>LAA.,"!CP`!!%.\80I7.$+(R=%
M+IK&"MCC$*Y%(D#G#6G/"##WP@"RF6,(N'W`<+8_@W8Q$*1I[DHI\RPJ8+
MEL8AKK`!'_L8`2@.`KYQ3RV4Z4S@'8SBR
M;/01F3"!0TXM*CCO.C!-MK1%+;!G7\&TA\:0A]7"$"/
M18UH19>ZK*=&M7USX(2C=>X0[-V#FPM@:%K#^=9FS;6N[?];!$E?#%*%\.H+
MWHP`!!C;QXE&]GR7[6A5_PR3A1`/`!X@ZEE?6P/:]H.RN5U?,$#A'>N(]I.!
M<1T'42(@0_V#"XI=[FM_P`CI7C>[HYN#=RO#`R^QQ2U2DY![[2)6+,161='K
MS1FB``HC(("QB>UO'&A;X`.';L&3$9BKR&JRI]/N3TX'H99W*$*4&J091J`"
M'R#!V`%PL[$!CFR0AQRZ56@132SJ.X0$KT.[M6V-),2"MTQ"1(3`N`JF;G-C
MFYO6'K^USW_>6@#$8C_[\8JX+$JPP&UG7IO*'.8>Z.1-\D7J4Z?Z'6C-\9WW
MG.N.'CG)H@7WN$\]!C>@=;6OG?7_16\=[X?5NSM>*"]@O#`?DN)$O%T@@!?X
MW>^`I_75#\USPR,^[ZN>Q5N\,_I"@4A&3E;51U'@@BNDM0&7CSL>='[HS5NY
M`&PH]>$_;U@PA#X6M[!K\/NS%1?E8Q$%@0T/U)H#)<2>ZK2_/;\/W0+=\][1
M5W"V*^[CW3U=1Q_`0.%2D`]B0T#!L#F8PO-K'GT?YYSNN9?S[J^_UC$D@P6G
M:P;^RX$";=QC_.37"&2P?(=%`^MG!IIG;-4G?_3G:`87"QQ6#Y[U*%WD",FG
M"*T'70/@`^LG:G5W:+C'@`W89;[W'!>("%507U:`!1UX:(,G:@L89/,W@FD%
M`:U0&12G_PD%@@A.,`-N$`'U97FQQP7]YH%C)8,T2&>]M@II%`H[:`@O4`(E
MH`!A4%^P=WE55WNT!F1(F(1$Q@/:1PH-8B+D!1A=L@(L@"QLY`=^X2!9T7;[
MPB9]((5TR`0$R%K-%WM9:&4O2&U9)F1>2&1%P(02P@PK(%%L02:#$3PQ,0R>
M\E!Q.`@NH`-T2(=4*'+J=WF9]V;O=VA<"(B!R&(YX`6J4!\UT0R=0R7$D@ZZ
MPA;:XEA:TPA/N`.56(MV"%T&J(F!]V:VAV4J%HI$=@6J\%_WHB?W@0L#=@\*
M=V!4U#4HT(.U6(N7V%H;J(MO]H%6]HGQ-8.A2(JNH!^#@#;@D?\V'C4)(4")
MT1B-3)`#K;6"6!A]?7AE?SAGP#AD-A"&I2!Q60-!&H(/#`%:N\,(T)B.T8@&
M5@!=0AAW/A!]MD`P,$$LN:$_9H90UI%.A\ET=MUO9FI$:/
M$,EBWJ@*^[)T9=M0CF4]F6#3"@C
MC<(0W9)IS9@UO>0"*A"54:F3!7AYY&9EFQ>4JJ62H9@#OR<;%$0(5;`#3$``
M:NF1,R`#5*E6U4AU-^=CV*B5<\F50Q;_=+NA+84P`$DE`S(0`S/PE^EH!JSE
MCH;)AS_I8W)I:G0F`W[@`'"P5C*P5@'0`CT0!'W0`[#9`X>U!:UI7V"`CZ=!
M.9(H`TG5FWQYDY@IA3-`!X.95@GI`W/G8U?7>8SF:'[0!\^Y!4$@`U\0!%L0
M`WT@!$&0!-@9!"W0`D(0`ZD9`UO0!S'`G>997T6Y+IZ5@Z+4)YO@E']P!;U9
MGQBP`Q@0`\%9B9IY6"2YB1]P=84GFG3F!ST@!%N0!"T0`\\)FZO9`NCI7BW0
M!TG0`T/0`W``GE]PGD(PH=!E?Y%0.WQA#8=P.X3P,"M#"";04\>P-^3$&0Q@
MGS(Z!4``G'\Y_YR#F8=_MXM]R)R"I9)^T*$QL*&DV0/,1`LI1$N
MFDL;X`*\*:,RBI]FL)\ET)_,EXDJT&;N1WL#FFRCZ0=#*@-#,*5?(`1V,`05
MV@-?X`!I!9M;\`4R8*%VL)J'Z@`.@)W1M9Z-X!/FL1E&PD]343P[,@@BL$8Y
M0:J4M3S2P!ZRLA=SI30J(*>TFE0[\`(V*I4T8%@TP('LIYQ6YJ.XQIA$YIB/
M,%<=E14M@16XD`)5@10((R&54140LA?&IH`O!162((3V(82E$8
MVJ)_$6("=C43\7$1,6$M%K0G*%(0%!$0IW((WOJMWWJKEZF6.K"K:F4%0A@#
M5_:3PJIN`R<#1^H``2"I35JH2>!>`1``Y)EWN+D)<(@)?F6Q.(L!4\`$#_"7
MY:I6"0FLZAI_@,IN6R`$U2D$29":J1D`?6`'/6"R+YN:#O@(^]%VT+8YI5`$
M.=NU,K`#6)"Q'KFQ:\63*B"T,5A67!!R#A`$;ENH\SH$?>``7U"H0_"RJ`:B
MCL"MB$`7<2%2E6`8B-`'75NX.LNS4>D&!*C_HT0X>"%H5C^7MGX0N>Q&KRT0!#$`KX[JMO&*H*G)
MO*AFI7MK"\I:`Y)"JG2Q%UJ!%LZ`%IW26[5PBNRS(.+U9Y*8!7S0OCC0`KG+
M!!7+NW/:EQYYBWW0JU778X]+5LA+K$,VLX1P42[R%62"%EM"%ZC'#"AB"P@1
M7@@!%KV#$-Y%=,&5/AY25.V[P1S,!RTP`RH@O_1KG[Y+D--XKEAP`QR7MO\+
MP!3V@._I&ROZ&%UT_PNJX4A["W@Y5P!'>+PN/&02^0G@2,-90T3NN0@6A0%)7,8=O,3R
M&Z>%BY_Z*8U5V`7S%K[&@HN^29O@1G@4Y:,P`6C_,ME7,J*
MS,ASBJO"J00\T*LS$``H)LNSS`-M-0`O(`.AL'^%HC\Q$B5^@BW5E`B##/_,
MX$S*):`#+[`#^#FG8M"S)6"0R@QDSAR*T&P#4_`"+\`%-W`#1-"^\\@'MHQZ
M]``:.`@,[`4)WQS.!IW$1W`#Y&S.]?FU80N2TMP%(/#.7`<&;:4$]!P']WP!
M^JQE("#`3%'0!SW2"*W0Y7S.._L`:#`!>K``%&V/;47/+W#/-\#1?&!KZ596
M("T2(DW2/EW2Y(P!-+`#0,```S`#]94#;64#,DW3&YS3B[;3(='3/UW52?R^
MY'P%`M!6'OL"2W#/!="^5PS59"W5@T"ZZ@L)YP$>`/@(1O"=$T`6%"X=+#4?OW75\``,F`#5J`%9'W8\F7_UOM2.RLZ-O\A#OE!#&@S
M##EQ#_L!)_0F*5ZC"!`PRVJ5S"K0`A)0`DK@`">0`8:-V*H]6(J-&KC``OTD
M&AY2`^J0%`\"4S21&*F1`NC0/A&2/Z*Q"(65Q:#=`@<``B!0`F6``1^P!DW@
M`$.0VJL]W:U=%@N$`M@#/.MQ$S61%1&<&JKZ.Q)"+'.%&8@PW%Q9W,>-W"!@
M`&*05.K*`4WP`!KP`S@]W8?=VB0@)05Q71Y2/-I"*M&1NB%@.J<3'3&"(M&Q
M+7YA(G"(WO!L@,;-WNS=`^\-WWRP!ARP!!E0`O5]W_B=;A90W>/1S970V8&H
MWA1.X3T@GDD%!!_`!P7`_P$;G@%MH`$?'N)DS<^Z(!`#QLO0P**&4`0TJ.(K
M3N$'@`9J#`0XT+X:7N-J@.,YKN/IQN.;T""!Q@AI75K79^1'CN1<<,XOWN0R
M3N-4D`%HG@%2;M]4KFU9;@F8PAH`BT+YH#BH\PT`*PE.@'=>_N44G@"D;9],
M[KX78.9IW@52/N5MOF@FCD9[4P/T$Q&G*A5*$45&PIY)@0<#U^=^ON+*+:.#
MWKX+0.,<<.9H+@1$D.ALONARUNCD(B)DHA-R(R4I43^/E=:X$+X>L@^?IFN<
MWNDK[MYR&NI\@`-G0.H%D.9HGNB*GEH6<+8ZX,'S&&')O6@8T`DR@"8/"%$K[>P-[I%DZKQ,X'HT[J+:#L=<#LS3Y89-R^
M9#Q8@,5<%O`$B]8'O"$`NY;NZW[P+4[,O?GNQD[J'##OA[X`]EX`S84!E.@'
M9"R%3S#.'T`#+;"G']\"3Z`#*D`#'X`!($#..O`$@15?).X(R*(:C416+(!"
M\W`)1(Z'`X`%1B`!!__S!\`%"K_P9+[!\4[JRH[F36#O&A`%S)7O?$#&+O`$
M'U`$%F`!&<\'3T#&'5D"+A#U+5`"*5\$+<]<5@X*&T,-:5A5`&MCE;#GS+?S
M/?_S=)\`8?ZM[U[LQ^[P39#T],WT3I]:9+SQ9*P#(!#_]18``B\0]C>-`1LO
MA5]?^,E-]?'5`K2@F^OQ%2%&/VT]"2Z0`W+O\W1?]Y^.]T5O]`Y/XWVO[$B0
M!DS?](-E`1LL!6+E!RT?6!9`^V.5^WX@!;3?OHF/W&.M6H!<";*.?T0'&")"
M/T(%"7(47Z+C(U^
M3QB+*GR2)2`?.D\M+19/CI^?("Y_I*6FIZBIJJNLK:IA(+&RL[2UMCUN&+J[
MO+Q`.'S!PGPX9QS'R!Q+@\PE_XC/&HJ@BWR14GV44A@E'RHZ+275'>BPQ\1'3R$^$,B!(D.(4RD%O''A(G3?T*7
M)E%J@__M#7[^I-9M(G0'UJ5CTU;5D7`L`X@3WV.RF/$;JL=:1,X@!"9E#98S
M:P=E86@Z#YYCKP#OX:T'NWW]A$#!(F]G#RQ&C":U(04*$WY,I*@1(@7H]']X
M@`(*)XRP"BR$&2"&B``D:"R,
MEE=K?M17PP8G;'"B"/FE`-<()_2)"IE&Q`,'/4C>XZ"2$3;_V<2372P@)794
M5EF1!]X9E=$(0V;4FRE@BD#"8+6$U%2A]ARJ)).*/IE!$X]"*JEFEIYBP@8A
MFM(!;;N5DJDJI^VJ*RDD@&E@*3H4AL2HI/9BZH.)IOKD`ZVZ^NHTHL1ZBA\D
MU&`*>#1N@!&WJLQ:)BICN`."8,-ML*-M?K#@VRD=I"!P*V.,5/&Z%P?CKL:J
M%N+Q$%J`O,AF(Y,RIIBV@<<""K:-_]#7B3228,)X(M"L)[BES'>.#3\#'73&
M$TJ`Q,89.'-TTO92VC0ILYK`V@@B@"9?"+6&8.())IQ@6MX=C#""G2((OI$+
M4Y2MR[+L#CVA51L/Y+$&2-M[Y=P;.3QW$8Y#CJB$3:[$-G76O?UJ"YR3(H)=
M-.*["@E6TTWU9_>=X*GG&3'PL^BGEHY,`:<+)+DFF6]CC4J?^K;#NN;UZP\EL@T*=@2C#>BH%(:C
MTVM\4QYO=?_-6T5QP03"%S1]I"`!PD.&$8J7@0LI,'EJ60'SFL>B$=BL91XH
M#PJZ5B<,VL4$,+#+"?Z`@A2H)EA#-(H7D.64`3XH"BE$QJ**%R4%+C`H%M@<
M#;=8%/!9K(3#.&$4CS'%TR70B@N@2$6ZQ\4VKB-O9$L2&(-=#':UX#$B>3EZ3I*0?&2'#3+I2%6`ZA1<:AP%0BE(88K3C/_*8
M`&G/ROS`]7L@H(5
MG$!G$AW!>"*&BA#T!1T$920\#_I-K$PR#0UUJ)YT0YX.H&P%,"!!;MZB4]O8
M[$1P25EYP![F=7`9@H2L`"IK7`!%\"X4CN6D9=G3-\\CQ6$
M)#$T5^2B@@53HUE8G1:@^\XWK/8MCZ=:IUQ3V$"I?`CO?]46X`P@`0'728-J
M#8R*%/2O3QZ8%9U:\Q`-RVQ`1`#EXQRU93L>.6C/C!M_&1(,$W#EXL`%'-A7(DR'"'")`
M64[&F15\\<)K?"Q2,!#")S@"BQ[>A52.QR_,0/7=.ZZ-85-=*WI6RM$<59:N)Q'M%1-:HPPZU@
M!!3ETX!"U%HBGD>DX,F+L\^13J.`O!5CMA2\Z78>)?\!;WK6&\'1D>I\@8=`
M*$-!#>8;M3HI_4!OZ)L\VB8K;6
MRG57JY9HE.%M3UV[#UY)K7U`ZJO
MZ_T#N!O723TH2['CB7X"$@`<([#%#RD0QL]4^$D50;4-I#.R=:U;RVZ)UY*T
M!4MJO5;>;WKBE\,Z;_G28%;?BO[Y"+!;N-^\SC3R\7\F(!\"$VRSA6"*MG]Y
M(SB$0SNNL3M#9RVA9REZUCJDQ@J01SB@(4%=TX(I<":<4X&6PC#-PS+GQ!>D`!Z=40J\4U3KH#L_!S`M
M8AX@"!=ZDB5[#N=$R004F*[![!33,_`?(;'D`7M_)]U52-Z-"%S5,#_I8M)Y4;=?*#UD0WEW59I-$:K]C_
M1@9Y#AF9$4]#&FHR1+D1.`1)3+U!4D+2%N((C_FR48@P,X+B'I:%(U?2-9
M:QN),_VTA8]G=>[3&JWQ%WYC&J2AB8(T6[2C7*CQ-[XF'W:3*3+S&;XV,'AS
ME$?Y.GFC-S>YB-9(0[EA?174>B;5>K0B@Z8@,_$3&N;1>C,F@FUI
M)A]%,Y&8"EWYE<5474LH?BQPA"X"&!&57,%"-6S)ED?7'K<2EUE(ET<5@?2(
ME_QV(G8Q,$%5('83,`92B.-R'S9$*R:V:/X1(I3IF?Z472AF`@LS+N_569#9
MFEK6/,O8"B3P)6]R"K#S&B>%#K/Y49X!.Y;U4#KI_YK=0H3J4'J#A"+>(I2W
MPD$7)9A'A&>W6`K@P91\\4^>$1S+*1J>$AS_1)0%9QMVHRL(V7VZ$9RG0)Y&
M,2(Z\S)@8C/D82,$TB=H(AH>`(QG)9U4TR]60S,!0C5ZP2/G<1X2I"W"21]Z
M040MHR8JIB:R95(I1GCV`28C4B#]4T29J!YI%U1]J250R$$V$HI$M"-]P9M:
MTX,F8CT=U)$=T*%],51LB1L%2A]O$50=Z0=X135]>7(ID"!91RQE86H(KYAFG1B$VMQ@<)7J1Q50C-Q8BW&(XW%*7B-HTB1-[5L.-
M?!*&E;5)\'`<-B/+=#W(,B+<(PAX,P5=,GCGJIJ%`BM#$KT64?``.GF<07
MY@$?MT%3/&>6(A<:]JBCW*,F>`BK&&&C3/8;0H(P'=`G.U=-9_(U]=FK`7(:
M)P*LB5:?J,$U/'4UR(I]*XHIM/*L?]@U6E)75LDPV94WPY)74OEHG6$X8:A<
MYC18]Q>NZ0`7\3-6#NHIKJ&2^CJP!+L*>Q(;BS!$;Y$X/U>P#JL.;3(:22DD
M,T,W*Z_ZL`7K!P0I%XG&0P*+L2!;"DO7AX
GRAPHIC
19
y85445y8544515a.gif
GRAPHIC
begin 644 y85445y8544515a.gif
M1TE&.#EARP#_`.9_`$]/3T5%1=34U'U]?3HZ.KN[NS8V-FQL;._O[V-C8]K:
MVG5U=;V]O5M;6Y.3D^GIZ6IJ:M+2TI65E9R'K"PL)"0D.#@X'!P<&!@8)^?GU!04#`P,&]O;___
M_R`@((^/C[>WMX>'A\/#P^'AX:^OKQ`0$,_/SZ>GIR\O+^/CXVEI::NKJY>7
ME^?GYU=75W=W=W-S^7EY?GY^?/S\\O+R_7U]='1T6=G9XN+B_W]_8F)B8Z.CH.#
M@UY>7BDI*:VMKGK.SLQL;&W%Q<3\_/]_?WP```/___R'Y!`$``'\`
M+`````#+`/\```?_@'^"@X2%AH>(B8J+C(V.CY"1DI.4E9:7F)F:FYR=ARLB
M+)ZCI*6FIX4B)ZB*+#(J,80N*B\P?R(J+BZ2,".LO\"$JBPC*BPB+L0NN"XK
MNG\O*BLL+C`PQI8GJB*#*RO:MR?>J;:+?L'HK*I_?B,C.+'M[B,O,>@A$J42Q%JE3\*Z1B55$1+TQK
M%H:ZN*5O--VMJ%$K:O#9$#G*^"QH=R)5+FA0FR9M7=%9M*O]\&:LX;%=QM,[
M,N:U]0A5[F!`%;HH9:%:N&L(S(J#J3;?^+S``CSLM$;#/#!H1)%Z#"*2(',T
MN/<'#3&(\!=4C!`#VH*(P&=0*"_08!:`%D9E$DLT4*C<*M0UZ")?HB;BRXPL^14ZE4S_\*(UQCX8M0>J+C(%-&::65
MTO#6WB-,BO+-"?R,`,HNPEUI)B?R%=)+)#S=`A4,6;GWY)ET;L*C(%4R8I%7
MHOA2$&?1<%CGH)7D"20D@K7')#3N;>EH1&"@E^PJ#GR`GXT,"D+S+(P,TL
M*N`HZ:B,(&-(GKA9:$N1-]KX!Z2DQFK;J9.PP)RGA,AFB"M;CN!"+**RN@BO
MA-[IR:^0Y$DIF\A,XY5JODQCX6.VL/;'#X')]9#>?-L.=S4*$B,XUSCFR-Y;C6)/B.TY`Y'5>&SD0P__#9(6IZN@NDW
M*<6@75'BZ/6#KS60>Z7_"_[XJTI6'/E36@W[$#PA+?APHQM,^F%W;R.9%8(J
M(]H\5O%![BB4EX5$:5-.J#BL$T//VOA3V\]YI?6?Q58N@\-R%JXRCPPT`&T0
M4>/8:J7
M/?P\5*=JMM:34@W6<$3+>R`;A*VO,%3HU48XO*!?=HY'DF>6D+0(B:"RBK3R
M*7EVO<@U#27S7"*T+39MYIV0)APHX*+R`JQ3Y7@3I-8B\A%PGF/"`N:C*C=E
MX[![HJ_+EA."*CB``OHC11_A*B-4*@GVYD&ZQ0#G3]#4@@]6TV7NV@^`SB6?
M_X#4Y^+,ZUP'%IC7J5AZR/$E_FL6U@6V[<\\C@M6@Z_:E'5T/LOQ54Y0]SU_
M-.4M^SO+2S3U`WZD3WVCP]/[%.$+0VBC&/-8!87D\A'5@$9@(-(+>&7F
M&>!B72U6$`W@X((]%O)5,K`A*]7-*XJ$^>$+EE&D:A2J4H98EB'2A+HR2JX0
M%23$\!"Q0TK2C@N.RGY
MA_BX@\I;?@Y"*_A!._B1#%``$A-50E4;V^A,,XI1FY*,73?'>0OW8;*3@E3PGH#
M#MK4)BGKX-\W=G$/E;WG*83X"/].M@Y]'.@L<8+$&H.(M!W^\A,`\Q6D@H2+
MW95&%^^IQH>"6`T!_:$TM/@+J*@A/74J91TV*PKS?O.4BL'I!]XJ$.12(J*^
MYL-F[Q'6(WA$S(`>HK;"0%HD7#,J%22F;/S`@:U\ZSA8".8@;YQ+=LK&..R`
M#*)FPY!)=S35DK;QL)#H%$SNZ%'47=41I8-$55&%6]O>MJJ/0$NZGE2;:?P%
MJ08;U#$^\]9&S+<0U`F37G3;P\L&SUB#0%\BT.N(J<%E8UF!2%G2)HZ%U8Y.
MK($!_]L>\6!%O$R8KU+DH3[QW=90PC56,ZM&_A.7'P%-M^F)*/686#%!^-89
M!_G&ZV"Q*8P)J,*#/,2=4/5*>AJ"P(WH5-@0(Q^,84P(Y+#-1FI7?`YR7;
M$$1GX(.3A/0&A+[E'XH-\0P?OPS`YA6H/QN1(#"Y)&'Q"H74.JD2>"`7AD[9
MLIAS19VL!A(10,9J)MRW"\>`XE5T3V,":1XY`\X:`H[
M07TF/,Y+L<7("S4V\;)L#O37/J;$1VAS#M^2#80_A;!I-/^U`HF4K)V:V/!)
MPUQ)8/\X$^=XCPA"6M$@!H?69F)-4(1"MKR\21.##;"H^CL(:(YUY(\^,0-(2XWJ@G0@)8JQZD[9TLCO-J2OB=PO!(*
MNO`&62X&X3Y"U>&55]J&K4SW(,"\<>PV`B,_,H]/:F@,\WEZH_[2QL3RDFR?
M#\+CZ>ZU@^P)QZORA+>#*%A"7"./QM$,/=;+.0:Y[4NK,V*CT\XX2JV=\$/D
M63L8:U399_(>'F+,WYU*1H1T01G_MRO"LU6RX3FT]VST1U.CS7:'2%5_A
M21_/P/*SH%%U4]#C.X0H(GK3BDICX="-/9_;G-D-E8(EO13
M$$=I=Z5#T<_P#GQSP>YO>5_VR<:\A@*Q&@,AG#8*A&8]1&-[`*K1Q-8,A&(GR&(`!"E"A*17A#;0Q
M&(3!,OUD_V>I9G?%@WB%<`,W(``[P`1,4``YL`4(T`5KL(1:`(3.%!JD,QO#
MU&78E`KD0GRWEV$:MP4]H`!T@`0E$(9B&(9'T`=F>(9F>`0/D(1-6$:Y81T%
M`5*P1B71`G=2@E\6YX$=^`X@=Y`7Q7AQ95D2-Q5WR<1P@WP`-8
MP`?,R(R!F(HSD`2L*(8\\(K6B(:Q.(MUXAVW"$)'\2-CY8OW9_]KL[4(D29E
M*G1A]($`.C`#S?B..P"-,V`$TQB&.G"-^&B&/5`';6@FHG99DQ@-845A$0
MND$/VE`#J/4(\Y0(@X5P>18#?1`$)F`"._`%[\B,-B"/,U"/)7"/^1B21[`%
MCDA.&"-M&6AA:`2`?-@'>%"1,+D#&=%S
MCF"')"%0\=*L!(+-X``7*"6:>D`,[F1T"C_C=-(E7,9DA:@C5"2#(#S&\4&.!3%
M>)*`<:V!(UFG!5G0!STP`8@9DPDPDZB8BCD0EY$IET/0!5$R'=H@$;UQ-DPE
M79?@;O5T9X)P`XBH`*<9DS,I!?+HFJ\IEY,));5A"TME&J(@(YK@F3R21FXP
MFHBH`\-I`@[@E.^H!M!XDX^9G)$Y!'9I>"Z&8LMR&UW0`ZZ8`3FPG4F0D0GP
MC#,0E>-)GI'9DX;'`F(9>JAD%0I@C6BPG3F@FF^9G_HYEW6`E9[G*^?(&X_6
MD(Z54IY88#\%=]_@!QHP!*]8FL.9`TB0D<:9BHY9B)"YH#J9!919"H^T,A$$
M=M?A&TWQ9Y\`_RM;I6H[E"4(4`-^\*,(5S3=V6_
M6#0Z`2;U8%\[!`<#<``@P*8_Z@.O.`3Q>9I*D)%U*HCBB:)YJJ=\V@DOFG0)
ML44`5Q44<2!J@RD+YAO!41`5B!`9E`^Z`99X(E)=,``ID`*4:JD@@`:O"`3#
M"089Z0"I6`0$@*>C&IE[*A(L6$.K\BPSTCHE6(/68*.O(B/O152&T?\7T8,1
M9)8GO?JKOQJL;*H!`N"*/7`!IRFB[XBDJ4B(8\BDSYJ/T7H7H%DD*6$-HJ!R
M5U=^;$0=YXJNOVH#ENH'03JD.W":;,F,=&JBSIJO<]D#+1H2&'@+3(,#COHZ
M?DD)IW<#38"P")L`"QL'KPBG:BFG[VB?.U"Q%BN7+%H7WC$+XY%O(-0A[H`K
MA2(*-U`!1+`#)HNN*&NIF)J(FHJ8%_F.0!F2;`DK@JZ$[NFR:!*[(LDNIF,WXM()XHJ\+NW.9!56K";VP*,!`
M)(Z``;O[JT3@NP@KNI9*!4J[J4NY`ZG)C&TKB#%[K\P;F0@03SUU#9CQ*=/0
M#,C@2[?+-:_`"%T0N-<[M$7+O6=;`(FHMFDID\U8DW^8BC[@N`IP17W5-C3%*:%`_QF^M0ESPYE7P,%%*[8F>P`>P*:EFXBINY2KRP=N^00:
M@+XK+)=MT`F.Q1:/\<#!$21`I'I6.(*3U%W("+H\C+"?^\-!_*-$D(@,H)8'
MJI'URL1-K),8JQ0%)6FX\`H".TQQ.`A@^\5%JP1>G*YC[`=NBH9#(`%I*:\T
M*8@VP,9M+)FCD#BR,!C=02;R1J5X(8/YJ\=DV[MB_+^(*,`P::3,6*(FH,B+
MG(^RZPETT3-(!A'OT7G#E*MUC%4C<`4Y@,EDR[\(NP>5Z@F:X9%7/^1
MGP#=MC#-0P@:"0
MB612#:1A9+&<"#?0S6>8!4"PFO*(V+:K^)&O
MZ0/^O;M/S;UP[>K>A@``;7?8WIG0YZ
M\3FP(,V(<`1+"><](.=HV(7Z+8]GX`!L[;O;(!_M
ML0S3\#IILK?X!0M(9@@D@+@,H`"J?H9#H-3R:,^*[<'YA[:6SZ7#\`)K^`;,N$W)7.AD_`K'3$(,["=1L``
M`N"AF2H`=E[/UWR]/@S$?I"T`@"3\]D$XJGKUL@#3NX$'1[:01``B&X#`W#Q
M`S#>>LK5D]`+"W(".!!G/C$1MZT(3!$#:+F=,)D#3[#O']H')/A`''`S@
M0(RV?1#D)G"@3PN/^*7B`%(:[HY%V-`]`'>B`%#G_QG!V9#%P),-`,+@8U
M,"$3&)-/G-#3*K_S3X`&V)F(/0`$%%W3%[V[80S$[.KG(MJVJS@#>0H&3@`&
M$'[TX6X%SSWQ06`%%Y^<)YX)JY$B3*1@L!!$[ML)R;[_]4Q;!%X_YV:=BF2O
MY[X*Q`U;ZQ5YBM*X`TUZVE8@!1\.!J7MV1H>!%%@W7O_F@>-TH)1K2UM(Q?\
M"!2)^,.Y`ZC^BDSPC(_?O[Z:!""@LB`JIS/0FIBOHN1N`^(>Z9'N!*'M\%Y0
MC4[0Z9'9Y75R`T8`^XB/ZKK-VZL9B(G-OY3JO0=O`DH0CR40_'@=DAS_(C=`
M_>J?[\R^ZOG-N#.0V$1[`"4`P$$.!C9PD^1?_O@("%I_@X2%AH[N^:.4^BI4-`3JI&1*XI`TH'#7KP,(%E1HI=Q!(J7"@,@;E(?E3(
M2#9B!`T7*Y3YB?'BA`N+&$^\&"1#QHL1,7Z(B$'.W!`2,&$R`<*$1!X?%V;`
MVQGO"9HLI'HH(-'DC#Y72I002=)C@A$U21`RG$J5F,.'C92=$.&GX@L<*C16
M5+GBJ\0?X3I6'-%U;2$8:T<2ZA.SKET20("D6S>C'4]/.XK\#,JEB-%]*90,
M2$!%P8X=$J16G4R9U!&LB!2=8%&C9`P583.R!+U2A0@9(U@XBG&"I9\5GB&-
M(S3TKO_MNS-KWLSY5]..)CQZF!)0X(R#5D1V*"F@8\<3R96C,[R,N;KUA[/_
MZ+W-O7O>O:F,_`7>0S@/)SE>I1%P@0%TZ?"'43_F0D2XZ]E<$+)_#6,D%ZH=
M,MMVW15H(`\TD:`#3C/LX`XH"MA30'J_<4'"$_%E2,P0-QPS`C3EX`<7(16)
M$P,+7#MCX$D<.W[=A@PP0]W#```$DD084/7!QQA*O2P0J)"-C`H`(,QYJ&I*,8
MT5I6.!@Y6B5HE.`+(+,K'#L(@%$>&8TS_FEW[5W9TL2M#WV!FX2XXB[!Q\<@
MAQPR&6_X0((/S*W1H";P\8<
MBVSTT4@;388`5QS@0`YC3!!"`AZT_VSUU2P+P0>Z26S;+E`UDW*SSM>,.4A%
M"<>`Y$CZY5P$N%APG$#2=-=MM]%+&)%!'QALL``3-D`AQ0(A3`$`UH@G[@<(
M'Z?K@`\,S)QAN60W$FJ(?IQ&@Z05'9RS#7>'+KK=2!2A`"E%:!``$S/8T`(5
M$H0@>P(K*VZ[[5HWD.ZV"APQRE3S56X(#0'6(.D?DS#Z0HKX.3#Z\]#SD4`1
MOP^!10D:O,%#`G*T,($8A,M^@`&WEV\^RR4TKB[D[@83O/`+TQK.-,0N\VNB
MV.`\0_3\UWT`"33K@P(V4((2/.%D?*!#"ZJ`@MC)+@0-^,#Y)DA!EGU,=S'S
M@;LL`#]#_/^@*S18@4C@\I&'I29G^^N?"D*#LYE.!\?"B!$!!7.Y==C0]"*"#6BFBU$'7PB<<`P@I5N(0YT((7/=A!
M`4OP!1[`Y((ML$$.Q\!#V5F!`.6S`0AL0((A!A&)?C"!$(98`A"0P`]#9!D)
M,D]VB`%.<@C"1+)
M2T/<@)&C*]WO>L$#`FPQ>S+YF.M:`(4N==6[+4-C/Q@&@%C_Y@*$D8-3B5,ILC@@5@_EK>]"6,&
M,0QH`!@0$R;D\V,W1"@#G5F%N3[0<.4CP0SL",L4S``(.=!).P\W3AOD0+:$
M35P.$#N"%[#`4V*J@9*4X96MR`!16VD-HQ#5C8=L0:RE@V0PK+=3[.F@+D$(
M6295ZTP4Q-6U#Y0#$[%V,MI>$I4F(`$?"#O$W+8#@85%W"[)MMB.B.`1+/A3
M,EB0*!&*@`;0K10V5'"I8]#K).28&R.GYT]@]*V[)1AH3&H(,B008*AB+&]K
MT2L^\B4.HR(%W5Y3@$0DFO2=`$B!245Z.,19%2LLD('R9("1R2H)!K(:@7Y>
M,%F3\%@&QRH+I__VPRARH$3(_!F$\U;X/Q<&(W48CF]==!"R92(TQ,[$`XD?
M&$'%!31Q1K$'^X7@O:DVS.R*P*EV9E8&01PR7H@!?K721I$65B`HH3IIZLXNP%01U=%
MLA)#`1_`\VCO(C(%`EK0*)`:H
M@B9$6BU'H1*%69S9(9B/9`@/0MM=#9SA+@4-66J'2@58HV#6LFN`REJ64?FF
MDXUL]`-&08<)/@P2G/FU6@EN3+9+R25SSA(8:(2GV;L)DR$]`"B>2S#_`9Z-
M&HQ#):J@90WNJ=EU:R)UA4B'"()RNOB:3(4JRVQ0SZTH8QFG^<-64%3@RHG:
M?_VN9]R<%F1>GKFW'7CSJ;59Y_*F=^56L`U-&^FE7A>>`HZVM*KT`+0L
M)P!I[P)S@R;\R][>8=5#4%>L"_?->"?$#23,A\Y.1JM6G($&[7^TJ><<[E[-+F0NSO`0SM(TVC=;6MP<:UG*?>PC4ZWB6'3;R>;^!
M#RH\%2Q??@'P^_,-0Y(0,4?@G4SIT=',W#;T=HMVUO5.<;6N?[I3[>
M?S\5&&I?\+?AP<&A'GZ$CL'V*&B^\\TX[/-)7_UY9WT+<6?:AWG=801(\V?A
M1W/>5G[.)VY7ASB\5SEKT6SXD6-.4EUOX43(L`4*L7(%F%:W85I(XVKAMP#X
M9UYRM7\/1#7E$>"A-
M)F8U-3!]6.$5+($O]K,OB7(2KX$H0(8O*`$#TQ)TV>`1A-(I)Y`(?S"+C<`"
M$D`M@+9M6&!E@@29`T4?=VRG>$8O:)9-9X+<-SPD,O^9,_]\%U<>8,*U%<
M?_`-X5`.+C4(T7`-V9`P!-8(<"$KAM`%O8!V;2B"W4$W$%"$XG>$@^:,Z75H
M'$A]S7"*B(`9F`5D,6"!-U`'I!!\;1B$W2%[1V-X1>@`]LAP^!@"9_1_U'?_
M//2B"/G3$CDC)3#5"&$P!);7AAKP704B?W33>47(@"DXD:_UA+SDB])`9,S2
M$4:2#.)0'U%("4IB)`!R@SW9"`Q&@\C@!F=%C!I6(-DFA_38`EA@C['FDK*#
M!G@7B=$5*=%%",J`9"=0+"BA#,K%.6M!E)J&9-51!,3(4R_R4W6#?.&'>"EH
M@!.]8?-TQA"(#?O28
M`%#90!,Y`*18.Z>7E)>9*R4#,0')Q5D_9,9VBM78OP@2AXY;U)Y]CY)WU
M:9]"9A&P@62'LC"@88$=E!V#H*'8J6=8IJ&@/\`BED@K6DW*MF4"B6FGDAB55"9E6,:9/E$II$-
M7#)9.)-C:GH(:V`A+Q)>H3.'8+J=D7F'Z-4``G`B>9=IS/-$)5*>9GF!,C"H
M6DH7UBDZ(%J$;T6G)+8#MCDB>).8.,J24.FH9=0`:-`GDOIF
M9FE@'E<1B-BJ:W$HB>*'6?HKD\(6:P&L*O`(8L$6(E2DA7!0`9DH(0(9WS,DHS>*M%3&0/^!DX+H2^.(K@_`#%E$1F<,2
MP.K_""+7*1)[#,?EKEA!`U<0`<8G.L&)H'`9F1(9`@.0`;'BHE`TCN+`:)@CI6`J_BACC>``!A0%]XG.ME)LOO*
MKX4C`%;%`C%`??@":M7!=1V$)3A3)H5PM$G;I*$#GTT9F_(Y`5/``%K7-KVW
ME9S:JH-P/(6@)%$""7+[$%R+'S#ZM6SZ/`>:KV8+E50``WA*?RA(%B#$4Q&9@I7_%5T,5JF6BK7'L`4Z
M8`>@RP=/FJ\+E()!L`((@*>;R57,6P@C\2%DTRDWR"@Z]B&C\1EDPB5U:R2(
MVV,C0619(A%5PK)DX[7782\*,`-8,&HC^ZRP1@7VL8]8\0)_LA)(5@-F,L`H
MD22>F0BG<6#V4B;S>Z9/M+?5,;F#<`-'``0S<`%0H`'J:P-4$`0B0`&GRV37
M02CU@;M;L;TG42C;FQ%!QV.!PBB(Y(LT6!9DENH"`I8I'GR&
M]#()ZO>[.%.UU:'%QY!IF$'%N.*+44(FM$(OI%&Y0N;>I0XQDDR`L-[L\D"UW@;RY@*PS5&P-X)JNV\C'D3,N9Y(!O5U@EH]S+X&P.R_S)(K+.%^@KX;`2
MM;(2]R/+Y\R'XGL=[OP0Z1PKSFL.7^4(,$`#Y<`HTH#(D>>++IS%_?P?]ER*
MJ%<6]^S_NZK!RN(HRH?`")ZCMQC=D6S;RQ.-'P)&*V+B`C6P%1QAJRMPJX22
M;!R1.PH3TM51)-I**)'R`]L[Q[FK*)RF%5Q!$6R!%68#
M/[*"N!:-'WN:T3I=':"1,$)VE[L20I?K*R*D59L1*-J*L4EM#D+V1)]Q*$^M
ML60Y$AUM"'TZU5AAQ2^++SNK&L_`'SU;+PGCS$%+S?3QT($<++XJ9&>=F6BR
M%BAB)IE9$J5AJ[RR/!A;I&T-UYM++S+%:?^8M9/=D92PHC:(8+G[%6O1E5Z1
M;%,"VK[B!X3Y`FW1C14!%PU-V8<@MUMARA(J)@5]N6"%8UC,_Z?.["SER1J2
M(A(F71'E>CS&+=RY&!&UVMI7RVG[+-N'(),$5EDV&72Y.#"FT3G^E229UB2&
M`!=K0;1F?0U4;,@?419)@A%1*'2<8EP*_1&_@BM'`B!"]M$D\<^R;944\5PK
M*G*8$KWEZM_1);&XXK";_,F`'=<+KM-VZ:VH/0C+!EWC'5W@RA8YEL_V%-V5
MD"2T+#S7*MV-<)F=LCR3,!$8N*GZ>ZXG'HG%5=MHT7O34!V,0-=5;+/TK.'S
M$M4BSDME$N)YM]#F\-^^^B.]V)]0/-S_(M<.VN#9$+E.
MHA7(,UF/.(/X[>2Q;,>#@,=5@C_2[/^C'-[A0R<#BU(#.>;!PVH=30[F#UK)
MF0*8*&(OFHSF\).+`,J,J/U*C?,14)L4T(P"X;+U`#63(MCR!@`<,\(N"Z4VQ<*'%<)GT2F6GL
M6'*>*$PB[5X6RB42DU7F`YG'6(*XIP'DO921+GRW.D/>^T&A*=R+J]Z-5(P1
M2T:#X4`-7)7_VBM]HK!KNQ++**"Q*[*R*$[D%0-MNVUAGB-0\0J6E]#^9N&@
M#&3BN/[1+_61+STV="B").J=YR\U68'B*%5\+TA2NV]TE@)*6R,NY&WE5]AO5_Q$4_?QKJ2*`DFQ,U27,^%
MD\\R*N;*8Y#0S4%O)A]R65X"ZDF2&C&OIY(LT01##8A+)J#A+Z1!)CI?'^I]
M\$^TE;-BO9=>#D2<*V#?^%>)UH.)8*UZ7(JR#`:NA;$"YEK;XYT"#5$2B6%R
MZR`WA0.5@'B*TPI.40,72'_PBM]5:
M*&1:A3S`>M)(W!4F?6#Z:^29HH76?L]R6R5^`!N;:S^JPZ]/';R7,,M0:
M8>'*``@P,7Y_)W\O,B(L?XR-CH^0D9*3E)6-+#&&?RPN,H@C,"HQ*BN6IJ>H
MJ9,K)RW^#AXN,B)RLT*BZMS),](+%>M&%+IG,U_.GDB3LN3$T`6,C2Q4
5]-.73:G5JUBS:MW*M:O7K_("`0`[
`
end
GRAPHIC
20
y85445y8544515b.gif
GRAPHIC
begin 644 y85445y8544515b.gif
M1TE&.#EAR@#_`.9_`).3DV-C8\_/SUM;6UY>7NSL[+FYN=/3T[V]O45%17)R
M7ESHZ.JBHJ%145)V=G75U=6AH:$E)28V-C6UM;5Q<7`\/#S\_/\#`P("`
M@!\?'T!`0.#@X*"@H-#0T/#P\+"PL)"0D&!@8'!P<%!04#`P,/___Z>GIV]O
M;XN+B\/#P[6UM3'AX2`@('U]?>/CXQ`0$-'1T2TM+>_O[^?GYXF)
MB6%A84M+2\?'Q]?7UV9F9O/S\_?W]U965E=75X>'ARPL+(^/C[>WMU-34_GY
M^?O[^^7EY;N[NRDI*9&1D:^OKUE967M[>^OKZ]75U?W]_9^?GW%Q7U]86%
MA6=G9_'Q\>GIZGB\O+VMK:YB8F(B(B-34U-C8V-[>WK.SLT='1V1D
M9,W-S965E=;6UGEY>?3T]+^_OX*"@E%141X>'M_?WP```/___R'Y!`$``'\`
M+`````#*`/\```?_@'^"@X2%AH>(B8J+C(V.CY"1DI.4E9:7F)F:FYR=GI^@
MH:*CI*6FIZBIJJNLK:ZOL+&RL[2UMK>XN;J[O+V^O\#!PL/$Q<;'R,G*R\S-
MSL_0T94<&Q\=(AX9A"**(-PCVH<39A'Z/
M^N?"(AGK.FP8(:($!S\@2FS@((($AD$81(3X!R($06PD2OSQPV%$B$$@!G[P
M(T(="'[]@'60(1##A@P9]/EQN0$#B1$<(':PEV%#")@9/HR0R4$&B4$>2&S8
M"%-F2F`?$KITV70C3:H<2.0$$1$FB`X8?O[SXV&F30_<2&0PZ`?F0I1/_WEQ
M\#`7@UT,'O#>]:`N0X@..>ERL/O'PX<_#_'F]6#XC[8/>3\HAHSA<-Q:@RL/
MRNFH`\Z\G!41'O3!LJ+0Q!Y*TAP5`^I3'%\,(N'A$8D0)PEQ""U0$,Q"_PZI
M_D/;V(O7'Q?5_#/NMRH_'UAR#1$6+`AK>4%4_.J;1&X,UWUZZ"!YJ>,,7]M=
M\_LUJ@>"VCN$V$T>/#`//O]('+&3P]^(\HWPQU_X_=17!N/%8PI"&'A5TTLN
M>5.31"%0)\\+)W%0@@@M9:"62[X!Y4<'0+WT4DDP111"32],](*`OW2PTQ\F
MNH2?337U=*-2+JT(TVU'P>;;0P]FT*-2(&C#P?\+M2%6$T=+?;`!""3MJP^,<':S792SL&U?A@1#DN-&%-WKWDU6N:1`7C9@LY=AV'
M$GE3(0DDC@DCF?,M!!8'\NWGS6$P5;A0HR1RR%4V/WU0TGC9*,C+>!_@-EX(
MU@P&@G\8R"C9=>#E]=<[()@YB&*6P]%)4*I&2#*GZOAOAK/N>^8"E"UD_2JB,">_)3G=26`5].G
MR>5+FG;,=5!65.U$Y=S_:NHB0DXHXV`D@I39T%-9A0Z+ZP=9WB49PLF(#9BQ
M(P0?$G,G'!R6DV8UC\D<39UYAT1ER,6#K`F7():*;LO7&EHZ0HL*>1.4'[BE^_@[Z;PX94DSR:KA
M_P@:8<[(WKG&FSA#MV[8`:`+>;E.D@`)O7L(]"`T4$=_)1PYA9^SQ?)6@1-&
M"$X1\RH,3=8"%@@]Z">(LMT(9#"(\UKD("R#AP*CB1@8>`\A6MT$@U?E!+"9I`W?&`%@G(*)`ND)G;8MZV&\;892ZBJQE>F*.8RC3&BC7#6Q9S`1-)481C8,0PSG5
MH,8?M$.">6U`(*]4"(D$%12K(
MDI+3$7V8R)5$*A6H$"*"$X4$05AKG@$7<:U$T)(05#&2(O6!SH".:2GMB,@/
M>^*0Y>!F@R%`DI?>9T1=4(DS5&*4/%>).28"QZ."0)_&&N&-+@FE)/?Z2SMP
MPY!Z(,9#:-';1.(EHT)Y!%#3&=4O>%*8>E:&D5X!J2-,A\EM2NV?E^#:92S5
M)(:(KB8D(MDE;`F<1?SS@)'_"$>G@/E*H4T2&>.P24[(4Y$=BLY(7WU$J:P6
MR#\*(LPR"C[Q:%K*)`!P=HQ;:3Q!41MSXS5RD"MHC
MME50X#PLS5QS,^8=YK:O;:UN`$=5QW@4J;J-1>:ZH50X%G<0P`WN*SSPV4&\
M]1"&5>XM>BN(CY56.&F5+BRX4]3KXA^YM&RR9T:!F00$KR0)RK40)!USA9=3U1R69^-67Z;EL@&J84_
M/8FP_XBN81!1=!.!WBW$@I'62#C=Q"$TDG!3`E7>2W1D$>HE!&`+@56DH2%3T#[^L:*L^$ZH^ORM;[>9"I*0MWALW_!3&-`L:.>;02Y$$/H
M098%((`\V/G.=K9!'_;,YSW;``LUH,*7DW$V&J-G(`E92`G6\;60X&2B=_,#
M.!HRE)&4!'%NS>W2%C'<0O2SRGT0@`KP3&H\Z[G/J.ZS#6K@`Q,48W:EX@D&
MKV(BF&`0@AL$2F5DYZ$"S@X33^MN'O/PA!V,NM3(OO.I4__-;#YCH0=1$`:!
MNS+#'2KR)G+2H6?FHC@9@&-VO'Y)3@J(F+U(XL"'H.P?3$"%`^3`"\F.MYU=
MT.QZ]_G9T?8%NP1C%\K,+8QWH0S?"O.!NN!E;OX%!ZCN%$?T2(+]-\YG%SQAT+PH>"-*@Q3FC$GD0M6.$T^G:=W\;XSCW-8$/=L#L%;S;YJ7.N=1CL/-C
M>("1@J"@K6ICUTR\)Q)K-80/EIWJ&``!XU#'L]37'@,J\'P8+1$$[$P2EDIA
M(IJ/V%P,,A"#C4^@YFF_\]H';P/_(PPC*CM$6(/L\1$2Z?)O4%/$V=8]!!IH
M```;S\+3`Y^'P7N^`/F&"HI6*YF@%/R$F&@A)+@!!0EHX/4T`(.]S8[VP'O>
M\VW7;58@(84AO/[W&G#"QA<0!,YW_O:?#_W@&N2(&+@>^+\7@+T/``0=@`/(7?G+0=\U&?=:7=OF'?$B@?%CS=85P!`=@!0,8?E)@
M;W>`?@JX@+>'!-NG-GCW!T<`;RI0!!4(?+%7;UIP?U#'@'LN
MX(`]8P)U)F\`<(8%V&QZH(%N^(:>UX!-8P)V`'4W<(87V'1>J'%^>'MHP'\.
M8P-IIP(4>((,P'1EAP)MJ(B+^'E#TP.:N(F#1P4E((T0`?,E@6)B&RH"(='D"^":'PWR``GB`+,%@.8V(>WN'9(X(A/\01'
M:'Q8>()IB&H+8(JV6(R>5P/*T@,YH`#+R'D@<((.0'Y]=@!#0/^,U"AU8E@)
MYO)5K1%((9A'+:<(8G`!%Y`#3,"+=G:'%7B(?>8"0;"-I%:.GF<#R$@M-5%1
M!P<4_N1(>(%$DB``\OB0M9AVA3B`E9AJ9D".`(ES5Y`)4N(:0X=3)8`;WY8@
M:81)%3B*X;@`\I:142B'DU"0
MT/,^-Q100%(E9O(;"9$N0W%#60(]H>0(6C"35!F1&0>*`QB+J?8`_BAX/KEV
M!9`)-6%247$*\@>,
MJ*8%/?F5:Y>+16+0)?5J`:BMPBKJY<:C)"6[3&%/A
M&QK!&'2Q15CD&J51&P-4")8"+JYYG)H9FX&'C]#'``:X9TAPD=,8G3C'FYC`
M$#)`(UZ"'E'9`<9IGD/0E8`5+NJ0L:G.?^7NAR6<@X(]8RG$"
M.0HEI$>V@B*%H0D]$*9AVJ1/>H,Y"'RVN6=90*-KVFSTZ0EA$21+,4,?RA>:
M0`1V:J=C*F_+^7K-2:56ZI6!6F\;&0H2H1HOX'Z[41$CJ@E.T*AV>G%Y&JGL
MR6=)L(V7:F_'&`HU<9^BLVCZ41KF,8`(Y0*J-JHUV"'V8MV<'$'7,=@(I
MT`#R@E&@B&@RO\-LMHJ
M88$)#LFKC6JJ\0:A,>H"K%JL7-`'2C"E>\8")U`$S&:O2K`">X8"9[IG,-`'
M^.J<]N8'?*:EH(`=VMED\3!61[<(`("NO.JKR08!P"=\>P8&5YIJ)Y``*9``
M*+`"R;H",*`$*<`"*X`#*:`"?FFO7``#*(`#1;`"18`"R:H$)\`",\`"(0L#
M*ML',Q"S.QNR*=`"!KMG6(`,)A``$LNK%Y=L4:H!3$@&F=AL)P`#/(L""0`#
M"9``.7L"?K`"":"S+5"O,*"M./"U/&NO+-`'!NL'**"U(0NT./"V<6L!;MMQ
M./H+)M"T$FN5.K"G&M"G&FNIJ'8"'1NW*-#_`B7XM7Y0!#A@KRV[K2<`C&R+
M`FRK`G:+N3!@K2E0MYH;M_%ZM'MVCL%PKG[+JWI9:I^9AC&`9[*7:BVP`L9Z
MK+/KK-)JLRV``C-0MM%*N2GPN](:L"E0N2NPN#!0!%O;!RJ0`C!PO"TPN[MK
MK7N6J<5@G*F+KA%)!."7JE1[9Y8HF-&ZLJ=Y#*.:O1*[NGA&F\'ZNG86OFNG
MN1_+9R>``T`[LPG`KWU0OWL6K^KWJL2PM.CKMT'0B@\`>[)7`."+?&^[`K3[
MM7W``M,Z`RN@K2C;O"K@P$!;N8.WM[Q@`C]```'``R@@DP/M,EO->]8"/GO-2E#-*+"MV;S-WGS/]RS,3&N>>'H"
M04`&Z!R_?&RO>`NT_MH'(1NM,`#*V!<#'JP+W(S/$HW/0O`#%2`"/$`!^TR5
M+`H`.Q#04J<$?<`%\\P%T0NS:8L#SSR[5YM_#XT+)B`!$SW3,UW1%YW1^YP#
M4J`#9(=\UZP"SNK`(FNSE0N,H1F\+CT,)D#33-W4-HW1<>`#KE`'
M>W`!%A"L:HUJ;%T+$1W7@(W$&R`&>E#8>^``)U/_!>"XUS=*#'\=V''M`"E0
MV"TP`'L0`"?C!TW0GFJMS8X-V8"-`C=0V'K0!7NP!V60V7Y``U"PUWW@V
]!U-@`>OM!Q?0VFMZQI-0'8%$KLS#79H0UO,-
MS$+0!?9-VFV0WWN0`/V]VEFPID!)*U-"61]4+_S00HV5X`RPX,"\`0#PX(6]
M!#P@X8A=X1:``#7:V`/N_Q,R%D)WTT;8P`\B\`*`01;I03\5,1ZMX@AS0.*E
M/`!+@.*%S082O@<14.&9K=>Z"=NK40(M!"0N(13N5*`AE0$R4!9_<)\4="N%
MA)2.`-U&OL804-Y*7@5-'@90GMEEX-X9^=U@]Q)J,2I4`9?FA%X>OB3GQ'RI
M%%6.(-]I?L1SK>2D7=E-GMMQSMX`+IBJ2`EAP2RKY)CRQ%Q)J&_>J8+>O*W=L9"<"<\!/C<2?^-R`?(RV!-!@E]LA&+MK"7MC%_>I[
MH/\`QGXR%F`&/NG%'$29$_Z*:N3KBXCW8\%[8-P`!W'[<]L[>G+V),K[O]:(XB((_\&(Q
M1*8QXCW=!U_8^+WP>]`$#3_KD;Z)T]D)EO(/$9$4L]H11Y$WN,H([0[G#>.0_G/*_#+Z,U0T.]]4M
M^'O@Z(2OW#"^@&WZ#'Q/TZKN^*2]`)8-^<@]^=N]@(GO#(L_T\#.^:0M[Y"?
MW:)_,G..?9#3$`]A*]YJIOVY!_VM[^^I".?*7_#&W?S>^>^Z2][;N_W[X_
MZ[6>:HW8#U=`\-UL\,9_\[MOW!2^_,>^=BZP]L\0WMTLV=6/\.A]_2&O_>`N
M[A<:%R90Y+^,[>.O!Q]O_G2/_GZ@V!RG["GQ]:0,"$).>H2%AH>(B855>XV.
MCY"087Z4E9:7F)F833%]GI^@?49_I*6FIZBIJJNLK:ZN!GRRLWP,8HJXN89+
M/)&^OQ>:PL.9-%"AH#6OR\S-_\[-)@JT?&,INM>X=;_;D&/$W]\T2#YPA9,H2Y'ZP(*'`A%"!\G\>8IU--B@#UN9?1)
MS`3`Q2^;!S[FA3YTN3*H)M=_LI(,Z0!:CI7*M$GM&MG)D!\
M;6@ZDO\WU1NTOM[MRH2'J"%K0R*@&L5.WLA=V5`<4S@D!9'Y)9_^RH=LA42=
M/R)I=T-KZN!9F7CS5JIV2`FN6AAR/+S[5#Y@8IMYWM'1FQN^>'C/7Q6)-V;H
M(E=]CD!FD@9,F/"!"/TU6,H(&/S$`52*_$5@(YSI8T$&QW40H8/\@1""*;X%
M>$A8%SI2US<;ZD8*@R"ZY\$(J9C`05"%9)9B(X(1HT$'+I;200V(CS`DY-%>*C`6F9P('+PR7AP.[1@1)FH`N0P&1%K)6P8?,H-'%@!T
M61]W?EA``I!3ND("DF:Z)J(Z)L#10!CG#0!!!E*JXT$&>8;_-F-&?2+P0!B]
M%#5%$`UD@46=Z8R`9Z*&'>F2"7VZX48<#93:1JF5BHH'J"YQ0".GAF&9%Z)L
MC9`EK&RAJ1>MN/9ZRIZ[^BHL*8L:QBM+(H@00@89E&G*!YNBX@$)PZ+CJ;$\
M,8L!!LS^\:$''"B+`0=(1N@!N!Z`\`<'Y'H0;;6JR'K8L1ME(`*US&X`0@8A
MA##"!MPJNP$'&V0P@@P8;#`C"22`L!^\J^A*&;T:,^H%&<4;(=;("SAR+..(((1#9K\`A^
MA%#"C!B,X"$Z"9]R;C,DC#C0HS*]N;P0=^C#!""218;:LI
M8_\AL`@>E/#O""!PVVP)_FZ@MJTEB/`SRZY?=NL(V4Q^$0&;*
MQ#Y,>5,Y_T$"!B-R$(+"+^#>+P"Y3PH;;*;3`',HR0@=VV?]`V*2,RVSF:
M)/R;0>/%>VSWG1LOO^SS$;_,E,<4-STBR$PU33*U'X!0`@J!?`5$?!JCU!_I=+`-E8U8'9-82`BY0%30T
M10[3L4-B76U\N>Q9/60&4V[W??TAH$D$DE$^_,)
MP%QGBC1UT11E@V(S_-84\ETO7/\BWF'D2NM>
M]P>'90Y-(1`S!/`=-=+A=GM`W'4EPC\@$Q;:LMS+Q!@,=\5FF0M:UW_S,/A'U`(
M,SK&:$$8ZX"R6#8"#>X/2Q\8P;)N!S3Y+6MEKM.@U7:9SOJY1EL+7!SP;F@N
M=AW-8?D[E\P6"+S]7"R;O_25O:BUQH0!;$[VDD'(MK8\@AE,HBV\5^6*"`*$
M#JL#A\2<(P,8M_R!R&(=`%G\``8R5ZF4HBH=&>:(Z-#E^7)85$*R6!`&$HEF]"+7TA&G-4SK_`"'FZ1%]
M'(.K);/T/X.."TD?>"*(,+:NRI5P<2)NWUI,`3@
M*J7K0HE*W!KWN,AM!0;QQ*P/H$E\R45MR8AD41#(0(/1-2[!E$=6)%XWN\9-
M6LRJVX'=@1>UJD54-)M;7NB>][WPC:]\YTO?^MKWOOC-KW[WR]_^^O>_``ZP
(@`?LGD```#L_
`
end
GRAPHIC
21
y85445y8544516a.gif
GRAPHIC
begin 644 y85445y8544516a.gif
M1TE&.#EAG`"H`.9X`/___U=75WAX>)B8F(^/CRPL+(6%A:6EI6]O;S\_/VUM
M;8.#@]+2TEE969J:FA\?'WIZ>F)B8J:FII^?G[^_OVEI:7]_?P\/#YN;F[N[
MNU]?7\?'Q\7%Q3,S,T]/3Y65E49&1I"0D).3D["PL"\O+R,C(Z^OK\_/S]_?
MWZ&AH61D9'%Q<>_O[V!@8/7U]5)24O3T]*BHJ,K*RMW=W7EY>5145!D9&;:V
MMNSL[.GIZ3DY.8*"@H"`@"$A(:NKJWQ\?,#`P$U-36QL;$Y.3KR\O.+BXB8F
M)OCX^-G9VWM_KZ^C'AW)R<@P,#*FIJ>OKZ[*R
MLHR,C$Q,3&9F9@```/___P```````````````````````````"'Y!`$``'@`
M+`````"<`*@```?_@'B"@X2%AH>(B8J+C(V.CY"1DI.4E9:7F)F:FYR=GI^@
MH:*CI*6FIZBIJJNLK:ZOL+&RJ0"U6#BXN&L4O!0GM0"SPIT`MS-G'!QSR\S+
M0G?0T7"1X\)K_!P]N,M7)G,AG-X^//TN?2"4\3*-K<[P`N,S+D]>3FZ/G1
M#T\F[N^PXLT`8J]@.7T(I5UHX0]@*P!%E!FW!!!8;0\7C$K+E'(LD1UZP@#+EII4N7<*,*;-%39N6L+#,Z=(-SZ/09OX$
M"@D`DH\&)80@VFP`TJL7"/QCJ@@`#H(30P3!L&0.A#D("KBT>O4J"0I;_[D6
MPI(F9!8#?;)4KB"OXD+>P5N@P9TY?ALT
M*""AQYPH*A`K5OP`KN/'2'(6H!SBLH'*E@TTR%LP\>C%<5.Z`.M2+-G/?6$O
M"4&Y]NW1)%`PA9B$ZARIRP@3)SXGA`0,!B2(/J[X0L.-`-C0\<';N7/;W*]:
MR#T+P!4Z\#-`-4\5?7JD/M\=20&_/SU[$O2%@7,#UF/??4>1T%@L^_77GPC_
MU:-7#P6V=%864Y%S(((\*2A,#OPYV%\*$I&SFEXJ0'!==H8=)AAAAD'0@P$J
M#-B78&=MR&%,R?J?!:7K)!`-MA
M.NY(T@4GP/)CD$&6V,QJRZ@UY1V::3;9;&:J=:(**B`0A6=9:CG2`PNB<@20
M8(HH0G-%XD7;'%E@$$0#2RQ!%G5J*?F:`0BH$$(#$JA5IYT7>;A*@WT&Z<`&
MS00X58`%3M7`6,M8AYUV(6`W%6$!:G(G09)7DB&G4?K;6JP!XI[
MN78J'WT@S?HK0BT(2PP'Q>8:(3D%!L;,@-I9:VV%52U[VP3.;D)&M+E"6(\*
M:DG0I'9YW8$`!C/.H9E9!GI[6Y>C?$ENIR22,Z4*FH6&5H9D%K`:N^,H:V\^
M>(H"`*[[]CGD.%.F.=O_'`"?16:,@&FX\&C!#DM%Q-&*B9E:`#<0FF!3DFD6
MP`)W^[%B$X!2!,G1_MF,C,^MFP4"`<_1PUD!RB:HS#-CI5PG1SB`<[2?,B/@
M<]H-2-@-B70"OY
MOA/[S7A;%%BRY^81F^SKYTAA3HGFI).K,[)>7X!``N=VX7Q4Z
MWI&W3F[4]/U-`>WG')^/!24Q'XWR5ZD>2>'D+E!!!1`4F_W9Y1%E?#4F6$`"
M_PD(H.#!!!Y0X*X%#P"0@$D$>$``^03<`?U5^#8%<;$E5/#%]O!I@8C^=X=H
MQ:T^2#E>`BA@`0N88($0=-\)F`>`QB5@@1Y`0`7OAY_!$>)F$>M?_Q;0`@BT
M0`HK@$``4@@".A0P6GU;2P(OR$`+'.^&8;O`24@``-RI#X,:M!_RVG*W1+PG
MA%9P`AU*L``I5*`$=`C#$*!8P!<6"W'>.PJ7-*"!$Q``?01`@08(H$$-((``
M7/+``TYP@2Z&CP46.($&1D,`2(PNA`&@8@5`\$0Z!,`)5'3AOBB7$\NA;AH>
MQ`/U0E@!-`S!"BNHP`KZAX8`.+&*$>O"?%IBR$/F;_\1`#`!R:R7P@70806F
M1"4$("#)ZV&O=%D\9%M:X(@C"&]S(@"5#$F#`-Q=0'=)N=T=/)``$ER`!-/H
M77HN,+A%WG)O*=!E2#HY`0V8P%WJ@\8$3&(_%B1@`NR;(X=^MX@C/M-P:$O6
M:+A8OP5&HX(5U``RPZ`YQT2H`'Q$1,!P+Q/^Q;A-IP5<`AYK`!\0#"$!9!4A"5(H=EB
MN)VVG""B$U7?!2Z`@CN@X`$6<&28:`#"!8`
M`>L-`00'?1HAC2-+Q=`R$0#09\0^V@(G!`"N?K5"!9(H4H/"]6V:?&I=22.L
M-CQMCQ6PWD%;8#T![A$$JX0/4]]F.K4MMBT^+<2XSOG,7#+TLVTQ02)81UKA
M19.NJ#T*#Q(!UM;>,IV>C2U//("(O-GVG`JMEVX[E!L`_):T+.WD8HM[W',Z
M=6[#Y4EH!0'"YMYRKHJ++D_(^4'KGC.QT-7N2%1K"&=ZMW5B4FY=9VL(UIZ7
M=*9=AGIER=Y"R.`#7IB`?GT0@_[N[[V#U.5\#UE?0FS!#@A.<()IT)\/./@#
M^HVP_PGZ&P.]GG=7`T8=;PTQ`05[^,,@5K"#'/#@_.Z7PO\UG$(S_+D$'((.
M(8ZQC&>L8`;#Y\$0CO`$)MQ?"X-)!BR^W(MI3.0B&]G#(RYQA'U@`@Z(ER0N
M-@2,CTSE*EO9#@@(`2L?\&2$1+D04[ZRF,<,X@'4X@B-R$`A(YT
M`"R@`"YKM\"#6'2C-QUB!#`ATJ`^LP)^<.CA8EH0FN:TJA,\A5"[N@Z3KG1L
M3XT')*SZUG:@@0!>S>M1E[JNY"V$K7&M:BWP^MBPIK2E4?_'W4'@@-BSO6R_Y:<7>P;4"+`=+>3G<=K)TT'B("SN46,P(,
MH.YZ)UO6"TNT(?P<;S*;V=X`9_>R:"V($_1[S#O8-<`7#NY?!=L0SQYS!^K0
M`3M07`<%Z``<-BWHA7ME*5[IEOB[F5D_][#L_CE<3400Q/]T.#VB`U\%N!QLT
MX`5@T$`#KJQKM/M]W2%7S,@'`8#_DE^Y`75H@`9T`((ZZ(#BBD^`XD%@!_/1*"%X(#GB^RU$6/>49V?<-'?GM7``E@!T9`<_/7`3I`?C36
M<0&8@1&`!)'0=D>F@'90!@B6`#IP!X$OX'@ZB&`V-W]$YFDQ&(,',`D&-WNL5H0Q"`-X0P-*F&L0
MP(0!J!6K$X671X7GEP.5``!0F'J@=VP!``4$P``90``$X&H'D(;>%@$C8'M6
M6`G5YWE-X&TCX``',`(+4`<"$`$!T(>B5@=Y6&?K5@<1(``*4&<*,&T!,&T.
M0(BBQX6/\X7]5GO41@`;,`(,L``.X`!*4`<,L`$*L`&<>``9P``*,`(1L`%U
M```"P`!H>`!N.`(*P`"VYP`TB`C#%F_-UX90L```0``1<````(I\.`,$,`('
M<``,(`#%V(RN"(L`D`&F>``.D`&L%P!.B`G&U6\.4&^?B(H9X/^,$6"+Y6B(
MR]B,#!``ZQB-"Z``,[``;W@`>RAZ([`).&!XT/9_ZK9K>R@`!.```3EM$;``
M$8"&!"``?SAM"\")`K``NR8``,EZ"I"+B\!OT(:!6GA[#$`,Y$9L+[B1SH>+
MGN"!MT:$(FE[$;"-Q)!UMV9VZ18`9T@`C7@`@X9N9R:+"2EI=="0SC<#*F
M@$8#4UAOS:@`&1``]0AKV&AG!;6,D<:*B7A[Q"@*+J"/C9:%ZM:,=:`$92@`
M#C`"!#`#"H")##`#`G``&S".P<@`$>"*U!@`UB@`,W``,X!VSD@*)LEH86B4
MNZ8$K^@`4.``K\B'(\".:;F,Q%B8Q;C_C'@H`!L`C6>GC:4``',(:'4(<$W&692G)>B29"B[PD63V
MC=$9>G&H"M5)9GV7G7^WG:O0G6)F!JTG`&^HB;8(:_)(G-88`#09`)!X=A4)
M"^1992'Y=_38C,)IDX*X`&CI`)UIC6R(=@K`DJ]PGT>V>@9*EWZH`/7XA^M(
M``9)`,NH`#BIL,(D5UY_V8!B8<.,`,!\(E]N`&LJ',NVAXN26/FAWEEB(IUT)09<(B'
M>9N[5F<2J9S,>0H`<`)8"6)T!IY3QXY5F@HX8)T@EIE<^G$*((E``0!Q$&*Q
M6:8+-YU!>@@N
M,`?F::C>Y@`:F1]HJ;FJ:=ZJF@*JEX`XN.
MBIRAFJ@```6[R:4!X`"::JHW08HIN0#+2:N?```P0`26"H"X"@.KJJM=`0`;
M\(BVIP"?4@O$2@LPL`&H&:)VFI8;(*S-&@N\R@!$L(93^FH2::%$P"@`UGJM
FX`$,YGJNY)JNZKJN[-JN[OJN\!JO\CJO]%JO]GJO^)JO^!H(`#L_
`
end
GRAPHIC
22
y85445y8544516b.gif
GRAPHIC
begin 644 y85445y8544516b.gif
M1TE&.#EAG`"I`.9_``H*"A<7%P<'!____S\_/Z6EI5]?7X6%A65E97)R7ESX^/IB8F-C8V%=75P\/#ZRLK*:FIM#0T(*"@G=W=YN;FV=G9T='
M1SK"PL-_?WXN+BX>'
MA\K*RHR,C$9&1NSL[/+R\E)24D)"0N#@X*^OKWY^?B5965JVMK;Z^
MOLC(R'!P<)*2DM+2TN_O[WQ\?+N[N^7EY=G9V?7U]6EI:2$A(:"@H.+BXM75
MU61D9+JZNC`P,$U-3965E<[.SG5U=??W]]/3T[2TM%!04!,3$ZBHJ-?7U[.S
MLQP<'.?GY[>WM]K:VN;FYKR\O,?'Q\/#P]O;VXB(B/KZ^FAH:!`0$"`@(*ZN
MKOGY^:>GIVYN;HV-C;*RLG]_?S(R,LS,S)F9F69F9@```/___R'Y!`$``'\`
M+`````"<`*D```?_@'^"@X2%AH>(B8J+C(V.CY"1DI.4E8D:#R,C#QJ*&IV(
M/Y:CI*6FB14/#Q6+%A9_-(0O&2-@L*>XN;J-J:M_/YP:-#0/%E,:4P](+\"O
M&1D/4S18(\:9N]C9IA6N%1K>W!G)6#2SS[1@J<^KOA8OL=KQ\I&]J:Q^#W%8
M[!7G&1I(]JVS]RL.O'D($QZJ]P?,#R06OCV0,V7*,PL9P`1$,G!$JC_4%(H4
MB4D3IS\C_F#"5"&EJC\/8/[8E(G3"`TO7HW<2:J"SY]`6S8J!LH1C90\DU(B
M,*"ITZ=*HTHEQ/2IU44S!]$4).J7RJ)3PSZJ:K4IUG+P?&+!F>%/AH@'_\7*
M943VZJ):SP3%G.*V;;\I2.<*3E37J:-O12VDS$O#PH.C@R,;*CS@T;'`6`3E
M14DCH^3/@@H_^B&GGZL_?@0A02*(A@:,H#_7A83IP8]/7FMWZM0U=F2ROH/G
MJBJ\N"FFQI-':LJ#1YHT)#Q(EZZ%@'7KYH"L,*O\\P`H9CQL\;"GO/GS>Q+X
M6<^^O1\0!)!`J%&YN]3O5+8TP<,?#WGTZ*GGWH#M@2`!!?39)](`9GBQ7W\0
MC@%@@`16Z%X#2`!1GX+8#+##%C!`*")_7DQXGH`6IK@>""]@L"&'I'SWQ(,C
MCCB!B>:AJ.*.#5"P!(R6#*#!%C46R1\..):GX_^..[*8()"/>"B#D50V4462
M2S+)Y`O;0;F(E%2&B4<;6&II9GL$/.DE(=_A(*:82B0IQIETKO="#6L.\L83
M;[X9)XX%U%DG"'F\R*&'-/9)Y19)!BIHG0UTR>$;7BC:IPR-/OHH$C]VAZBE
M?5H)J*:/1FJH;P/P":JB:(Q*ZJ.%%O>&FZLJ^N>$CKXJ*`&=QH9)K9:.X*JN
M@H+@HG<[A`BLHHR:F"NQ@D)P:E@#4+$LJ)@Z"RVIL)J+JGH4DMD?PR(8,4!_?G0;PLI6(!'O__.4.N5
M]MZK:;Y1#5`IA"TP8(+_!2+,8`(##"P@A0G\56S"#```;`'`!\PP@P56O#N#
M#S-D#/*-#3O\*,0\?2LBR5*(T(((4G!\0`O]\2R"'W@-)-K,[[IRC-`#4>,J+$4!_AQ`,=-MV"!VF.7?7#:9Q^<`@-,9X&'
MV0S@(0,&-6\M*,X*U!J&F
ME(BC'*7X1]X9+/]F&U.8*ZS(GQX:R7[I
MJ],"#,DK`AAR`'[(0QX@(`$(0,"5#="5$D^A!$W&D7#TJY&H4DDG!V#`#[5T
MI1]@*4L@$,`/*U@``4!`+`J8@@X7]"4&5Q?,$9&)F'0R@`3R(,E%#L`!MD2G
M`1HI`6KJ"@3M8R+\M!G'U94OF`_,Z3?,`=Y)@I%
M4S,U(`\X=8`QR&B`!`8TB_1YX
M4`(U``+K<0`0AHA(`L!5K@X@@$CSD,MMY4$2V(SC!61W`3XX@`\*4(!#YV@^
M87GT3)24P"1EB=(5N'*R>4"F+#.[K08LT1!/B&/94N<']21``0X8K%@5<(`P
M%#:&C`671/59S*;D0:]`R*I-%R`!W*+4`4_MZ[:8%R48QG"T?#";'Q"K@`LD
M``#/Y4,9R/I$8%ZKH[2EJ*XD\-E!P%&392!L<@^06.<"H*Q\>&T]60PCI4//CBM`GP0!2:<]0`JH.YZ(_UL/K*)=,N*[#L[P0$&5M0E3.$7R301],^S@C7+8P!^F4X(5`;[X44`%
M1/#!2\G*6H+^!3F]?#"`
MG5609P.P!S%M6,I^WT'0,$\V6G&CVZ.\0`\#@BZ-05A7(6:P40*UB
M_9L``%-@R%CN[UFC$`4#!-2Z8;(?J4N]GJZEX:5?)K$ON?\9)@?JF-A:6D$B
M>JGL:O?/GF$BS[")O6)#C-C:X.;#AFLDH6V7>M&'R*0OHZ!8\C(!>@GP`07<
MS8<$H!6MU1ZWB$ID[D03`!$#R.83$_#:1\?;ST'6,KZK;6(;/1O:39I6JK5)
M\-0]F@)1<`"K@_SE6H?[QOU!4K\3/2T,:[+B?X;W?8-\`#';^>-([H^51JYF
M:1OBV!0O.%J+G%]?/]H`=29TN,\,H3;0G,DV+X3@M$D$!\C.`8160!0N<`$#
M'`#J?#@`!<)J9&L;FC]*.'J*LWJ(/83[[)N$4-@ASA[XZ#6Q!HA`!**```1$
MH`-E1[O>^P?L+8B=6'DE0)T58/?_""2@[GI(O.(7GWB\&\+L>X]\ZI@M@[\W
MR3H]@+OY#CX!#0&"SP`^^+8`3$4X/C(I\'I3?^%$1GW[.3[@I;[GOO>&^'WPQT_^\IM?EA0@OBU#@/SC%V'YJ%=]_W!``U-;9_;7
MMSWBO<___G,?_(4@?NI7?$7@`=F'`!S@?Q`8@?P'@(0@@`=X
M@1B8@;)T`T4P!!$@@2`8@M_G>QI8@B9X?ALP!7W0!S8@@B[X@A0X"'-P@C18
M@QNP`2O8_P=)\(`OV(,1&(."L`(U.(0:>(,YN()(1]T`%+>(7(0D4(9\J'AG.`@U<'X2X``&T``E8`!Q^%0'*`$?H($%
M0`)Y>(1:P(-]2(83<`B!:'XG``(?X`\`$I$`!YX`!"@`(B10!6]0$G@`($
M<`+(9(@IT$AL^`%"X(B0&(E'>`"56(9[@&H#*``2$``I<`+/=%L?4`("8`#)
MV`#6(00&P(9^4(@G(`!N&``H(`2UB(&/B(M42`&[2(8\@&HW]^#0"*UM&)
M)8"*>2``>7"(S$@`A*A7T=@`"X`"UOA4'S!.%[B-W'B$"Y``WWB%Z6*!XRY4"@RA.=?B)#E`"%Q@"M]B/N1B02H@`Z3*#
M7@B%"^21>9@#VP>2+CAZA[`&)4F$)XF2>>@&+/F"?T@(F1B3)SB3-$F%27"3
M+GB)`%=^(F4`&JF/Y'<")X!9XW>0&>B3/^F/2=A_'.`!057^E]X0AP&T!^UE$"3]5(FT4`P/>)UC%^<"E-%W@#-+``4XF+0>E_
M$U!X8Q@!$W!X$8![,1`!,>`!G8>8AJ?_!YVG!W_9?Q%0.C"@EG#9`(68!ZQ(
M29/D`&O86T)``#_U`?08C:"8!R*5CBF0`AHY?ARXE]SH@7Y9=T[0`3;0`4'@
M!`CPEP,0`WA@A0.0>#Q@!+MI`S;``Y`YAM[GDH@P!I;)5R!E``$`E[%$3L]X
M'6R(F;$42X786^MD'9CIFD4`F_W8@OWWE[O9`1WPE^PIDC&P+AP0G)#IF!,0
M`QT0G)')?WBP"%WPG*+H!R7@``+@BAKY5-B9G2"56>[(B@80F@00GL#WFN3)
MC3MXGG4W`>J)!PF@F+Q9F$8PF1\X`?2)!^Z9GV;Y)6D9?%*5CY&%`JP9`!^P
M``$0H!"YAB60_P(HX`H&`I&J?C-Z=TBHM[>*?=]YZ.0*8#")4'>0)O
MJ5>)F@1.(D0>'JL>Z8W^%Z4%L)N[J7C!&?\!3F`#
MG(J;*]E_(@D)SCF`F9D'PPA\V?BN^2@!=1A\_(BM'OF/_L;$+B?D#``%,"N3V4`)]"(M+H`#?NPLD2:ZKA9]XJO'IFK_$>E6MJK
MK>L`!?RF6G]H!8FF5W54(AEI^T[0`0K`>Y.2HM1BSW'F0]2I+&:NQ_:B2
MYSD!!7"E3VIOWNJ8GZH'F5J6W>>FC-`%XQB3.\NS_6B3@@IZR#H)1@"U'2FU
M*-F75;MX_@0)3NN%>#`$7#N5"X"D7ZL'5TL)61N%4GFV7;NVB1>VD3"V,JF7
M57N?,;*G)CC_N%/)`"Y``"I`A09PA`S``I5+
MDQ4JJ!QPEJ1@!B?(@7J;IG[0!Z.;@P9P`4=H`#I`NC^IMD*)L*4P`&=0@D5*
MIW[0`V'0!];!`@00!CV`4CI``"[`NC3IJT*9KJ?0!0N+@;5KNPW0`WT@``H@
MO+`@W``@HPO*6+DG;*IGF:"SMI@,UKNPK0``P@`'T@:2[0`R[``BR@`]H[
ME8%ZDXB;"[)[@..;IH[[NSW0`P1@?2V@`UXVP.S+`#]IJ2PIIKLP`(IK?BE(
MN/C*L=]XE=JP!$_KP-<*P92JK0$)N]FPKK6JP?BJK]]HM[HP`&_;IQF,K3K`
M`NFK`@20@\%K`/Z[_[J)U0<*L)<2S(<1P+GQ,`#*&GR3>JO9VP+9%?,3NB\,ND+T-D+W-=0$*8,![2;5E
M2,$B<<4ZN[4\6\0&8+TN+,;KJP(`4,8*0`#8NY=>2X8>K!!F<`-1J[%%K`,Z
MT`(]H`,,$,;NZ[@K"+DL$+EHZ[I*B`5?,G80`6A*\)<2P+GVH.6/!6L[,IR:[BRK,KQ4,NV++69^X*S+!=4
M8+:]S+.4'(%;J>##WH$!K=S-Y(G`5ED`RAP5.]#,YCR5)>!_$?"]R<'-[TR>QIN%ZRP6U>+.
M]\R-)+Q[\[S/WH('_SR5._QY'%"_4.(AFGS0'BG%H)<'5>PE`X`!Q`S1N)C0
MCND!!!T<[Y/1&GV$J(P`>_#1QA'2(TV5B9<`)YTGCO`^_GS/24#1*`TCZU+-
M$$T",@`%,!TD4"`##VW-0R`&.W#3/RT('J(&6F#+)*`&5(#426T(38$!8C#3
M?TH"8H`!4"#54_TEJ:(&$##4$YH#$*`&3\`=7[T330$%3_`$9$`&>)`#=%W7
0.:`%<4T&;]W57JT0@0``.S\_
`
end
GRAPHIC
23
y85445y8544517a.gif
GRAPHIC
begin 644 y85445y8544517a.gif
M1TE&.#EAG`"I`.9_`/___S\_/VEI:7]_?VQL;&5E949&1H"`@&!@8,#`P`\/
M#[^_OR,C(SX^/A\?'R\O+Y^?G]#0T$M+2YB8F$Q,3%=75T!`0,7%Q?#P\$Y.
M3C,S,UA86'IZ>N_O[Z"@H#0T-&]O;U]?7ZBHJ).3D^#@X,_/SZ^OKX.#@Y65
ME7%Q<5E967!P<(N+BST]/:&AH+:VML?'QX^/CWY^
M?BPL+/CX^.+BXG5U=1H:&O7U]28F)A,3$\S,S/+R\H6%A=_?WZ6EI0@("&YN
M;A$1$>GIZ?'Q\3DY.6)B8NSL[-G9V=O;VZFIJ=/3TQ`0$,W-S;.SLYN;F[>W
MMWM[>^?GYT)"0GQ\?*:FIKR\O)R(B8J+C(V.CY"1DH88$9.7F)F:FYL1*R0(
M?S)_'A:&!@R)"0>'JN^O\"-?JX6!WY_M`<'%A@X
M?V!!P=+3P1;$$<<)Q<8)!Z_4X.&GGJ#/L]L($<3B[.V2E8*ZZNI_$1@D"1CN
M^_S]_O\``PH<2+#@.QS+]$&RE,.2P8>3K,%*0.+//601'%HB$8%$D'2VZ@GJ
M"+&D(@M!<&"PD$/&"@\R#B!`D&!%A!S/_(022I5G460K8AY8L8+6Q:81K*DD(2.",PPY%%8UB"&(J[85_^G)
M'(6K8Y!;'CSF*QM!ABM2.!RN7;L3D]E>@Q-G6KE"L>-+*YA)`D"Y,N7'J!+X
M\0/4PN:^*GF1>N0A,"+*6\S8L-'C@FL]L`-L?A"@MC(3"SH`P!PI@;J*?Z)Y
M"%)*FP62CPX+`L!$]84AL*-+CRY[L_7K?A0$.`!!RF[>C!H/\EO/V=&_CSKD
M(7(GQO3W[ZMCGV_=`8+NW\$7B@!4$$Z.*]R50!`'(+8(`'8DT0-\#,9'WX/8
M/;!""?GIM],!%1T3A$N]_&3@:0HV*.)T\D%HHA\.#."=?AF)HD\O&"30"W#H
M&<+<%]"-J&-L)_9H70`05*A?)`!LL>".2.I1HO^/)Z;8P9"0%'E!DE0NR>2)
M"@SP))2*`(#'E%16>>68V6G)I8U8F$`#F&$B:2696`X@Y)!(_+#'G0FTF>2;
M<#:YP)R/`=#%"'?>N::>._+9YXDY;,D;%B(4*JE[B(ZHZ*(F*E`$H%0!\`6A
MDA8Z`A&5BG@IIB8VJA@2)H3J*J6EPG$`T*W*]A[ZL,OE.CH-M#0OG.?-.&,K;RK%]ARPS95J'/28"`Q]RA5&6_P#
MT$M++`T2NT8=L*])5[VHN<``T*K6"SO,_F`TYAT0;;%7.N)=MH^KL"V
M)$B`_+:W9E,Y-]T]GDSTV'MOS:[?@/?IP-V/)%%XR/B>G7B?PW("0-:/+WPX
MDG]/;J(4IX21.>3AH;9@0`8?I-""M`)4H+(!H;*,^.ED"I[)
M!:Y6\($`#)P@`.T,A,S![)*.O#OO5P:@^B&LAYJ"%0A(Q<$'2W!0`0PP5%"!
M_P$"6/$!`BED8``'2U3@QPDM?+#'ZPAD<'RH&.O8.?3TF?"[L52HP!):`+\E
M"$``!*2"`!3(``,8``8">!T#!."'%%`A=DO(`/AXY3S3\>]*B[M$]5S%``2X
M#H$EC.`>J+`'XS70`,,S0`4FZ`<.9""#R=N>L38GHOU]$#N^BX3HC%6!$Z`/
M@2UH`0)PEX(*"``!'U#?"<2W!_&5L`(9V,-,[&_6Q'
M/@2C=8+H"+>5,6I>[*$:F=2T*!'NC6;TX!Q[I#-&8,%84'SB'N0GJ1,4B@/D
MLYVK#$E(N.E.CGOL41$@,417$6\/,/">I+AX)R->,O]47%1DR/H&GS3N,82-
MD)FQ+FF`%OAA#RW(``(R>#T&S+!\!H!B"Y8PRPRDX)6Y%)_Y$."MN#7(E'N$
MV2+^N,KDO>Z55,CD!/>P!!<2CW@.G.`T*Y@\!CI07:2<#C+G*!Y&5-*2R5;`)NZ*^801C5.-J.Q2I``Y/`2\$Y$5\%X%
M4O`!(\:PB"F`(0+$EP(&<&`F*8"B^NP5.0;]4XW*1`02\)@Y'D;GHV#L3R+<
M2-*]=?0]*/WAVA9AIY86SJ3Z0A5M%+`H!S"KCX50)*=YIN!.#&!`"YI(
MS`/NX7Y&ZZ`X416`!!HEW
M`O!Q`*I&RQ]L8KJ9JJ9H!@_P0P!`L(`0S``$#G!`"!Y0!`@\``1X!>M>_3``
ML,*IG(=P7,\N>4!B=C(#;;WF!X;'`;))]:14M2H`9K``!Y2`M(U=0`!,,(,9
M--8/"QC`XAZ`FP"\%D[22P3P)IM#6(H2!GM(7S[?.CZX]DRN=-6K:*O*W-@.
M0+4@`$`17IM5`&BJ!+9U+)SD%2W>[B$#%8@E`DY0T?F]\TY8?!W9>)"_Y%;5
M#P"HJKFP"H(!8%>V$*CO>^$+@B*48+K:)5-(!R%4FFF0`RD0`&;7AT@MHF\/
M'#C!_Q0-2;8S@A93M,EP`!3@@)T&X`$/<$!U-AR`P):XQ+29U8,@/SL(YC>259H`(R=HX>SL;(/D719I),54`]X<=E
M=)B0K0."`)2`L0J`P&8&,`,M#\"V8"9RL`"U6R@_+FY3WO(#.@#;$&@9ME5=
MLQ\ZT%@N7PM0"6@#!"!@`A',S,Q1@U6:-^-F/\P``&_FLA2D!]\4A:`VS!KP
M'_;0ATI7>@>&0@$*T@`!$7CZSX`V%M<C5FF#-LA%Q:=G,9NV8P`3,8J,@
M*&WI6MO:TIC>PQI0L&<(L,'39/QQ':`SZ"*85@$FL-5J#?];!,;:UM",#3"F
M9#WI6UO[VK?6P9UVS8,]N\'3>KMICJ]%9.WPU`':J<]F>*H`(]-*K(0`P`ZP
M3>]Z7_M.FD9!M_GL::V!:]"GF_$?`O@ANUI$>R*#4K0\9@F?O&2F]S@VD;!&T1^)9*?_.4PO[4/&D!!
MEO?(Y3'/^@_Z@B=.ZZ%#'>,^1SH^>+!;
M'>NY-402)`_U*%2>[6)G.H\/07'.YYSRGP>[VR,I\.7HP/0Q!X'G4P]VO`>=
MQ8B(N\DID(4`J(#>+W@!!7X?\Z_3GNT-T(+-)2V(PY><`CL]W`T<0`$?0
M!,,7@"_0!`%H@-KW`,Q52
M2(4'%X!]``<4T(=]8'T!\`(.X($:8``7]X:)6'EYQSLFN`A?:'&2>`1Z96DO
MD`5CV'\J\'[59W&(&(J+UP`%<#H!)84@@(H"*!N6YH)]$``AL(9D&%A&UP"V
M^'E0.#D#$`D08'&!J`+M=P.:V`&UG>&;/A[9#A\8SB&8FAPJ">.<1J=>,.+.+1"*!
M54B1'DE[2A(`\D)F[>$1*B3
MQ]>0$9,ZEN,%0IB3W;F$/?@N"F".G,`$O6AZ5[B`>B`!4\"4+O`#
M-J`'-E"+6#AX_#))J1"$G`>*2^D"?%``/V`$-E```+`!1M!S1K`!;SEU(MAX
MY/*0IS"%G$>6QS"6`,`'$]#_F$8`!!-0`R[PE/-7?[0"-JM@E8C'
MEMV7F&_Y`YZYF(WI`CWG`BS``H"W@Z%'*VCI"^,W=X39?5O9E:')F)$9F4;`
M`DR)A:LW)D;Y"P"`E')7CWVIC!M0`,AYG#VWFQ*0FD48E7#B`#](-/Q8=/\H
ME$YHEGW"?*J@F5Q'G-CIA'Y))AT3#$EPE9T7GK9HF3Y21^&PD427D$YH!#_`
M!Q+``O+)!RQ0`W=I`VZYGPU0`Z'8@'0D1IL``/"Y?5CHF1.`GWK)!T#0`*`Y
M`:J8`0`V@*G^Z*NV
MN`>PJA\`H`?H"9[&*H(2`*Q]BJVT-X$`R7HF
M0?4$?`FNJ3<`0+"ML6JNZ%IYZLJNCB&L`_"N=Q>OY$HD4#`%2%JK7#FN^3H)
MPLJJZMD`>V`#\AJPRV$#!.N1$K`'MZ*PJP``0*`'`]"OMAB@4["N$DL-%+L`
ED6FGT)JB"\"Q'3NC%-M/C;D'R-FRR+D'C:D'3\`%EZ$8@0``.S\_
`
end
GRAPHIC
24
y85445y8544517b.gif
GRAPHIC
begin 644 y85445y8544517b.gif
M1TE&.#EAG`"J`.9_`!\?'VMK:YV=G:BHJ(>'A]O;VW-S<____X"`@,#`P-#0
MT$!`0*"@H&]O;S\_/["PL/#P\)"0D.#@X&!@8"@H*#P\/$M+2YB8F&5E90\/
M#UA86'!P<']_?\_/SSX^/E!04%]?7UM;6S`P,,O+RR\O+Y^?G^_O[[Z^OB`@
M('M[>WQ\?*6EI104%-_?WT9&1G)RGI[&QL:&AH7EY<;&QI65E8R,C&=G9]/3TY24E,+"PGIZ>L3$Q+V]O:VMK9F9
MF='1T=+2TM[>WN[N[L[.SOKZ^N/CXZJJJ@4%!86%A>CHZ-34U(F)B(B8J+C(V.CY"1DI.4E9:7F(X*?@I"#!L*
MB!`3H8\,#YF7"@\,@A`0$1*)HQ$;DA!_#ZBI@B(*"[H0":\)LA"R"PRR?Z$*
M"L5_PW\2N!.\E1`B?PP("@A_"PF*X>&0H\REO!,1(@@/$P@?X!\/&Z#)0G\?
M$AL)"P@(2$5@M0""O&N3&"R(AF+"!`G_M"$8..%#!$'A4"@0\<$;*P8H-CQ0
M$.$ABF2^X)&<`&-4L@'PA9M6'APH`(%";PX^\/SW\!_2@LF1-APH4)4``$
MMW-CA`_N<(&+!4["KS]"_/FSZ$N$L)OQV#$0\K+2U7PH_$',90OB3@@%_\D!
MU/5!I$&I1B%)T,8-H%M."R$@$(>1\,*U:<-5%`B"!94MO"(8K8'"1M7->)/1(GTX]+P.OS[-K-^3@@/?OX+>+'Y^W._CPY)U+
MX)D\0G-!Z?Z@&!4?OK[ZV\V?/T!)0@2\JO4V4C3VB>?'-@.%,DQ)HUG52C)6
M/3-:.`S@0LUH"N#%FG[G43(!`P=%L)$"UGS`36GD'>@/0`(M%=:!R0`#5$_A
ML++!>B!FQ^%WE91F2RX/^/(!/!$`A-]S*L(35/]??PSF$U/_S&B35@#]I.-^
MEL#RXS:M@"2"!*>@:.`?_-Q;YP9-(
MUF362GJDIL)AJ:@BY(MSIZ;J*B8*:+0AC_O=^:ISJ^PBC"VL9%@A!$<2$FNP
MDGBGA@EO5%%`!\R.(%T#GCH@K0,`E:"'";;>:HF?@[H33CXB%!G!J(L,6\D!
M:/BP+'7L3@>MI_#&ZT<FQ00@?9:OO(!N'"E\"7^0AEI(:)F/L(ND8\`<,>
M/[3KL![ORBLQO!G(H$/_"_GJF\A30BPCHJ(,J`C:-XT8K,@!:U"1Q!XLL_S%
MP^U&//',G@*P`;X:C_-'9<2YDP!+\A3SP4$ERWH(RE0LW/+23\#,KLPT1VTS
MSCD7NN.)9].WW
MXYS[$7G&DT\BMN67*PY$#8UWKCH'B1IFE"[['GP[[;CJ;F=0`NBNG_Q&
MV;-?GD;JN*ON`-6]+Z+\'/O@3QQ:_..R8#?=:;-.42:\@!OS<_>QC01]\Y
M_PD=Y!4.9(4I\HTNCAP0N_>SG[[V[>+_K?OTE`"C#$DH*%1/DY^IQ7I`LRAE
M+&![N1W@"$GHX15+AP,J:'&+
MQ>NBQ@Z`!`,8X`AB'*/BRG!&-.)N`_@C#QO=Z,8$R%%V#8,9_>P(N`GDT1Q?
MRU!O0O&*:11BCWPT0`IJ\,?+O4R0A!2?(5-1I!^QPO\:]D!.+@@!R4A*!%7<9$&HJ#J""LI;U!DCP9UH-D,Y*#N^K;^7`_I'
M(#XML+C30RJ8$(+#'G8'1]WK1>68Q<="MG,`(*PBJ&K9PX;@`A1-*TFO6$;`
M?A9P8KV$#RI;6LO&8`5[7>H5'>C9USXNH98X`!1J6]NKZE6G/+VB8]GF6\YQ
MP!)D)2YQO8!6I"I5N:YM+D(5"@GA2E>Z.U#"<45*S1*N4J;:=2XEHOM=Z?(@
MM2TM+_R"V=OTYHZ[CA!`>]MK5*3VE8%T1*]]`;?-2%!VO^T-P12RVE+&PB^0
MS!VP_]M"&PG#(GB_,1"`3C?K/8)&6,)MD^S!=G!A!.-UO.=<;?`T*F`0MVV3
MCCA#B4OL!<56]`C>,^F'74PS_"9BN#.^<'A1;,KD!N^:,^5Q@1EQ`-H&^<*H
MK:B19=?.)+M8!K!)92"/2""T
MFA-[3C9@U&P^E7.C9R9B1-!5TFK&;(HOW;(Q`]K%)/,TJ/%\6OA&$L>*:ZVF
M-RVQJ"*B"ZLF]&UW.>6S\?;4('YT(DB;:S6'(*]%IJ3>@/\(;!"7#Q$$*+:D
MJ6M*,"^;S+2>69U)>0-I2WK(:LU;%ILMX50_TMNK?F\D^0Q,9Y%[P`Y`!!S0
MO>K^\E'1+:/CN^U+84-HF=Z@9C,?+6VVANW;OJ`C-L`EG6$^JG@/+SMX>N5*
M"/TN?-4G=B.L6=8TB6NWTX2HZ\5S36DC!]/C\0(``!R=@7?:U!`B'_FJPRM)
M9=,.Y9X"@VEG8-_'``/W#@[R!H@0-TP('_L&]Q[```$(0N^['TS@@+WW_>]ZV#H'2J!U-")>
M\7U@P0S\X((,S$#R+!`]$3H?=PKT8/=]F(/H1>]M+WP!"!S8XLZU[GJ_%[[P
M<,N`U[<8[W-+U^RYKX`?S$[^X%/@"G[H`?,I4($^^*$/%"#"\M%]`R.``8TJ
M__JT2""MK[=<^W;4?:2$>Y+G!Q:0`6EG`RR@?A3@`@!P!>S'?NYG`QF@>?)'
M;V!@!=D6-0(X"(EW=)97`4CG`BZ`=!9@`R/8?GW0?B+H`I9G`RY8`2I8;#>@
M!1:@`1M(_S,=6'0R!W`1P`64AX,Y.#%EX8$]Z&T[$`0>0'E\((0IQ`$.``"$
M]W\RT`$D```-`"TZQW6'MSU.AF!,MX)*5U4G6%5)UP=A&(:DMP48P(1!*$0`
M('A_QP$@\'4E\'[AXKP
M!P`]4`')Z`(44'DSB&<_*(MNB`%;%'L-``(Z``"%IP,R0'N\F/]SEEB'*01R
M@Z!P[<5\1&`#;=!^$"A\[IAT%4`$1$!H2;B$ULB$V%B+A4DYB3"*17E9!*"/22F+3!F4H2@(%A>5=K61'5F5
MUGB5-HF.A/!O7%E5,0F6,RF6('EF?\!>40DS(7DU3IF!X)F2!Y
MEYX&E=X6`G:@`9A9E9HYA%NB"`P)<&Z``*,)EJ69@V1Y"'!)@TYPF:TYDQ-@
MD\+&9)XI:8UYFV`IB1L(F(I@8?5F!;8)G#,IG-D6FXAP8)(&FJ*IG&K)G)O&
MF8P@F$^VFM3)E];9:,\%"8.V93=0F]W)EUP`DI+)FULF!4!XGGP)E+0&8Y!@
MEA>F`DH(GX8IGYOFG(MP`'FY7R&P!=.IG_&9@[8F"<;Y76#`F@;JF/PY9_[)
M9`%:6^4YEP\*H1N8H).PH);EGADZFA:P??T)4KV)G\EIF!Y@!$U@!)=9H)2'
M!1Y0!##JD6S)_V,<2@FXUI4$VITC@`$_R@<6X`$68`08X`%':@$QP`=!FI0W
MZF(3>C#15E4-"I\C<`$GX`$O$`,CP`<'P`=%@*5>RJ1?69>-1I^R%0(UB*'G
M>:4KP*1-0*-?^@(KT*5?VJ0^^:0#%E?7D`7OJ9\_>@!T^@(>X`$'H`%8`*06
M<*=E:J.-1HQS5:/4Z0%-@`$O()HOT(:7&@,O<`&=J@&56I5Y,&<>911&$*+P
M^9H2]FR4JH\CH`$G$`/&RJ75RJ8>:8X2%J5SM?\%Y_FE
M6%H$&-H$0V"LZFJL&-"HUOB=KS6KVW$`[CJ:Y*JNE+<"37``)Z"N2-H$%Z"L
M'@FOD(6FVC$$DHJ9T9JMP]JE/[H"P\90JSPJS=/D"VC6SJ7(`16"S
M:AFA8*6SKL*S/EN50`M40OLJ1%NT,WFT*)6TMW(`>I"B3,L'3GM0Y#,Y+UNU
MU]AR%]NRKV($"OI.$I0\0X"R/ENVQ:0#HC6TKLJUE,>VA-1S;ZNT/T"U
MMDJW:/0!8#LY:"VR7,R*Z"W&:J[LA#D`.MYN(>`!3M0M+@J1/<#
MN>WS`]R*JI4+01OPMYA+2HEKJYT;09(3NI&0KHI[JP&H!W>+NH2@NAE:NIPS
M`44$NY4P!.9JH%=K/X+SNKAK9S_``:L;L]'C`,<4O$:ANR&KG(PK,21P,<"K
MO-TU!"?``9MKO(!C,:=+O>-Q`'>P`MAKF!9;,0C@NM/KO;QP`$/P`RO`AMDK
DB[08+_0"#WK0O>KK1>S[`_R[`NMJK$4P'1B3OOE;P#D3"``[
`
end
GRAPHIC
25
y85445y8544518a.gif
GRAPHIC
begin 644 y85445y8544518a.gif
M1TE&.#EAG`"H`.9G`/___V]O;X>'AU=75V-C8Q\?'Z>GI^?GY\_/ST]/3R\O
M+XN+BTM+2[^_OW=W=^_O[ZNKJ_/S\P\/#\/#PYF9F;>WMU]?7[6UM2Z6EI6=G9^'AX;&QL8&!@>7EY=O;V^/CXY>7EY65E8^/CVUM;='1T??W
M]UE96:.CHV%A8?GY^:^OKW-SKJZKV]
MO'QT5%1;N[N_W]_3L[.^WM[1,3$_O[^UU=7>[N[@<'!]?7U]G9
MV1L;&PD)";:VMH"`@%!04.SL[)Z>GKR\O(F)B9*2D@T-#<[.SI^?GW]_?]_?
MWS\_/P```/___P``````````````````````````````````````````````
M`````````````````````````````````````````````````"'Y!`$``&<`
M+`````"<`*@```?_@&>"@X2%AH>(B8J+C(V.CY"1DI.4E9:7F)F:FYR=GI^@
MH:*CI*6FIZBIJJNLK:ZOHP"R/0>U!P@-N0T/L@"PO[$`!R$(-Q4;8LG*8F5F
MSL]F"F4S60UDOL#9D[('-#<0R^'AS=#ESQ)E62V\VNV(`!'>XO/BY.;WSPHS
M#=CNV0`]A("C1W"9/7P(S4@8TJ*?OU7P:`PL2#'9P80)%_)[B$K8C8H@E5W$
MB+&`F`<<8X68&!+D2)(8)8RYEK(3@)4M#HXKN&Y$L18]==#;V.^C_U.
M_J?$\F6=A3-C5.L/@)+/<$.+3JA@+;#`J%.O[MOZG];8A&?33@P+P&W>[HRUV;JFS].G:T0S:'8N&Y>T[5WQ%6
M-06`L7FNZ?NV*`7[??"CTLJ@'TZJP^`%C`PP>X[?=,&0U(T``^":RF@'B:
M1%`>5&:(88(#!4Z%H'YFE!&`&058H$`)8A2PV@P0"O568V:DX,`"1A!@!@E&
MU/!!`B800(`/.9CP00H\&(54&;A$TT(#9;200/\"8XRA6P.@T/"9&1\X0$*`
M%6*PP`<8B'&%`P%B4$,*1A!(D8'.(%A`&1*4@("'`)30I&X%:)>)A%.*X0"8
M#F0I!H!B^,`G#S5@2$)%:':8(`(!N"FG20&,D2A&*'("0!>?`>B`C3IB\`$/
M"UCHHP,^I+``"2F8("1^^C531@$*K)FF;C1"[3L;,9H.O@C@WB"`NK9L$*;XS[++W.7NL
M)+=BWEBSFM\#[".^>?YYZ*OQY@@`II^.>F8S0%*!`!YH$Z$<`
M!<#EKNF3.@\Z-RSS$@$XK>OGP84-*_]]NG/%?LB%;BO/P,?>.">\.A+W^@2(0#]
M&;`,`Z!`^0!8/^DL80=B&<`!)P@_^6$N@*@K`!!4$`(1D*$)BD#>!$?(/_]=
ML($E`0()@@`",KC0A3U01/Y&2$,$*C![&4)A.32XPA:^\(=D``&$7E##(GH(
M>._!X.02T$,@.O&%X@%``(QH1/Y!X'\YY)X$$B"`!AS@B6!\(0K>0<4R(O`%
MM0..$M&RQ2Y^,8QP=&$$$"%",Y8Q`$A$S1J/4@8O>#&.@'QAU=YD1SM:$8O>
M24\9HN`!)'0@D)!TX0$0P8Q"6G(`:,3A\U:SR$8^,O^2H"2#"#9#1$N:L@S;
M"EZQ9J,`1CHRE+"$XB&F>,I:$FA%O6VN0)
M#UD(SG:^<([C-*<\CYG&>B1DG3YTIS[)8"=RRO.?O\OF3LHA`16R>1HXQ\32E&%&H*0#UG&<4P
M@0%,,0`$8,`+`B"&`41`72'_$`!,S!)BFE2<``$T$``-"``"`YB`!LAY5;9:I)P+0&QB!2HSQ$4`^8V2D>MH"OQ689-#`!`0R@
MJCJJY6&W6]=O%@$&9%@!#$Y@!1=28`6`O``L)WD(AHZ048,M@PBG6L`0>#89
M/CUE_VCI6U8`!DF<($)P,``
MH:R:/VN(X`,PP)_'FO&0S'/G(9`##DP.`Y0_MUPRP_&TAF'O@*89@`)CU,5L'@``&(*^O:2[D
M<]NS>!B*),!R5:8P'_)0`$#Y.`"9A`P*"&DY@F^MX"3?:U/
MU85*]R(0@1+,+J6+6X5?QH#$!OAU`$1-@1B<>M/R.8>+;?3
M#41A)D+'[G8?F^.=6Z/&\@(!$/`"/NQ"@*LZR\PF`XQ#.>U%B#G?U9LTOXL;
M5EC26Z7/AR
M`"\`T$4H@@%4'$KE,J+5$,?VRHN[V%!N^`0RSS*(5W""%@,ZY`O(."B%V(B'
M0[S<0R\N:4.9\1A@O,0`#W;(4TV&EP<@!B-?7;O=#>^L%W>WH,Q`!FS^86?+
M'ZA^=R(Z[;7)4[
M?KO=37<'*F>("&Q5N$*__';I+85)K)VD6!?]=K?=[;]#HMH-;;OJMXN#[]J`
M\X<`P.D!2M39#_G-U'5])&!?SL;[GKZ6[NWM*Z'[D5K^^!3N=6F%+PG/-S3T
MT*=OR_.Z_$M0OIJISSZ%T2W6#MC;$N$VI^S%3]^:BI7DFABO*0?/_B'[.Z54
M#];)3VE\54H*&"=972\_';U#``04@6S+C`&/`
M`0%@`05P@+M6`GA545N`>Y$0>):$??RF`#(`!;CF+DLR+N\2;T5742)P?IO0
M?)84?A,W_S<#,`42*`,*D`'1H('\MG45Q0*A@%:%M'X3)X%C,`5CD`$#$#`<
M``4:R('9!G<))04B>#>?5T3TEW7L,@!-,@`6P`%DV"Z1PF^&MT^))PI`1T/]
M5W_\!GGZ-(/T\054](!R.'&9UTX=8(3LL7\39()[.''Z)'FD@(0CA(,3%P`8
MP"XH>(!+,P:1.``R,`91R&^L]TT1L(6;H(@&I(0K%R(:*")-@%(NK,(ON
M$X=9%R*8*`,8,#'1^(S1:(9E(#$3EWRQA(RLH(SBHX=N%R("-K4*(63=%3&(![,(!!<@D;(,XD3*,0[=]D22/
MK@"*C%B(HD=^D!2"[H"$HJB0E^=^@=2)#P$`7&"+$@E]6!A&'=`$GJ@*`'`$
M&\E^"0A&(`"(-0$`5"!:)>E['@A&2$"#-?$`(_"2QQ>#/Y0$(?D+(XF3LT>$
M+I22/?D:9"`G0'EY%N9"6F@7AX`"%9"4EX<`1.F4[W``-RF50R<`85"4*XD`
M+JF5V48$"VB5B8`"1Q"68DE?)^&5=H$"1+"6;`D49BD)`/``:2F7=44$=%F7
ME8`".("48BD`6,`.?ADL9!"726D`".!OEH``P8@F&Y7`@:``VT8FJV@F62``U@@!J9)8212`=:``H[)
MFL$``$"4"U3P0[V@F\(YG,19G,9YG,B9G,JYG,S9G,[YG-`9G=(YG=09FH$`
"`#L_
`
end
GRAPHIC
26
y85445y8544518b.gif
GRAPHIC
begin 644 y85445y8544518b.gif
M1TE&.#EAG`"H`.9H`/___V]O;Q\?'T]/3U]?7\_/S^?GYV-C8X>'AP\/#[>W
MM[^_OTM+2R\O+X^/CWM[>U=75Z>GIW=W=XN+B[&QL9.3D\/#P^'AX:6EI9F9
MF9>7EY65E:NKJ^_O[]'1T??W]RGIZ0<'!\?'QRDI*>[N[@T-#8.#
M@V%A8;Z^OHF)B3$Q,<'!P1T='<7%Q=?7UZVMK=75UGO'Q\?O[^Y^?GS\_
M/W]_?]_?WP```/___P``````````````````````````````````````````
M`````````````````````````````````````````````````"'Y!`$``&@`
M+`````"<`*@```?_@&B"@X2%AH>(B8J+C(V.CY"1DI.4E9:7F)F:FYR=GI^@
MH:*CI*6FIZBIJJNLK:ZOHP"R+0:U!@4+N0NRLK"^L28&4"P*"AACR,EC9&?-
MSF=D9"X."QT`O]B4L@;$Q\K?RLS/X\X"`RZ[U]GKAP`MQ.#QX.+D]P3,";NCCYPI`B2@!!TI,5O#@00$.S.QC6`K`!0430U*T
M2/(9C%T<8XF(*%)DQ9(6&XS9F%(3@)4M
M)8D%+-M![HC"S2EWKL6T:U,"@+*W;%^_%F\$YN>VL&'$/':MT>9!CU@P!@:\:R'[/W0(-)S!H775CD"B0EU^.0T9T
MDI108YE-5@!E3A*`@,P!_HT1@Q)TT@D""!)H>6>>9SG0"0`(``KHD$45BN4)
MB6()@I9T+G?"`9+&@R>ESH3)20&::OJD3IY*(,$9,1RZ0:YTUJF>#).R*A46
M?#8"``2Q:GIFFO*E8",
MDQA`L+[+'AQ.PD>540G_I@\3;*[$.U',T\*4.)PQP?P>3&_"EDZ2Z<@$&]SO
MR?\*<.\@^;),<,1%POQ,`T$>&3`DX]K\\,8NZGS/`@DL<.2>D!PK],@E[V9T
M,U1%(T`99!"00``#),#S&02$?48"`PC@EYB-D/GTR"[+-C4TN#0#`%5G+%`&
M`0X,4$89#CA``-(%Q,?4`VNSC#-J;U,E`#-S*ZWTWE3MO??<9?B50+$E%"XT
MT9]U]L\B;W:Y8QD3KS0ASOGL52K+]+Z\T]S'M?T7=W`R,K8OT[D
M_XN(-3!``0F04<88S9B/?@-[G\$UV9G)K(C3Y$)0`)`%/.`_&0RH`+(@IB_C
M&6DN`?@;&50@LV8D<`$+))OZ%C"`U:#-$"+3EPC&$``1!&`YT2A```H8M&1%
M+S20:4#@Y.<`9ZCP#`#`V]8<0(8&B.9GA[B>OCC0/Q&"Y`%C,,`##(````2@
M`F.HP`,J@(`*%&.`^M+>?_PB@`8X8(2;L6$5KP@`&"*$#&,H`^\0X[U$@(]<
M#RC!`T2(#!&*,"`;/(`(*F`!"W@0&5`;7XD0.`"_C4$`!?@)U_RF@C.8X8MA
M'*-?&A`8``")8`$0(AO'8($`B/`!$=;,G9$#$
M&2&&@$PA((E!:B<9R`E`!#"``8_4'`.,.:]S]H21AQCAR/!8`1%&(P#(&.'<
MD,C$\$5SFOXLB5*,R#(\(N`!`PS'W-Z)RS\]3YO^BJA$#3&WBBX#`@P0F48/
MBM!PNHZ4]K8CB(`BPSK6Q;J68(YU0&1I2]R]*>"VR!7B8<-:5-;F
M\[>`^JP50EO$-&UZ!"P
M1JA`_P1F:^`*:^"^"3[O!0IPA6[:SQ!W!:I\Z5OA$J\OPQD>`0]>.;UT'L)Y
MX0L``G1`8!/;N`Q40#&*#:"!Y2:LC"3U:.$@$&$=4/C&2#ZNCE$L`E!1;+6#
MJ*K-.NF`,5`7R5C>FP>6K.,-KQ=:^0SVUER0%`SEPU@6%9]^,4F_*R5[TSHR2)8STN^+*4&<+_GSE.P$2BT
MI/=&6D2K^;1?/DC*$E$!,C@6LB2>M*0C8&E$Y];-SRG`(LPP:%&[VKBEMK1R
M)?1G1'S@U;B^;JQ+O5T`!6\1`(ATKD6=YETC.KV9/D-O$_]1@&&+V@?&CK5^
M4>T7.!^B`\Z>]*&C;>D%TV8`?`)`C;-]Y@MS>]<;[G!FEJV(9I/;SI4^]ZY5
MS&+-W.O6[SXS#^3-;1[[^"A`-M8,)DV"`$A`U$KF=[2;?)8+,L(,DB8`!$B@
MON(ZEFM2:*4<^,P0D8#N6
MIU+H6".#T4V\;:5S6]$'P6$DD$!H$)```A(?0`A4#H&KK=QJ1Z_P&"[@=85C
MVAY/A\0'HIYE"11\;P8O0P!(0`#_"5`U;"0@08E)7?>-GYH<8I<$V?-MXX0W
M7N&S]LG,#K%WRIMX`8A&00!$'X$)H.#R"09[>R6!<\\7&.9<+H('AA"!#.`W
M`*@W0WH#L'E$`"#D)@X`"(Z>`PBX7`(U+`,(S#'"P2O>P-!&=`@R,(079``%
M$\B`!2;P@@D,X?2Y-\$F()[EK2>@4'O+`0'T1H8<(#\:CJUPUY<<@!H<(049
MZ($9>A"`%$P@`B&0>V:0!;V7",%6?D<'`BNW-XL#`F60`SE`>.WW=P7F`#9@
M:1'0`Q9P!AYP!A$0`2B0`D4`@%MV>2.P`IW0>4AF=!(0`@T0!`Q(`$9'>`Z8
M0`T`/P46_V]ZY@$U8`8!R"X98'U'8`$AP'B-MP6?(`18-H,A4`9;TWXRJ'8#
M`#]3=X,&9EL"N'%`4(!B,6X5-D)Z`P$08'".%39W$W\!('AI6&"6EX7<=@$H
M"`HJZ'K%I7%N*&\?,`I.0(?5!7LH%@$68`8HD`$E.`%4908>0(@><'H64((*
M1X"QH`!\2%P8MF060'MFT(,I4%HIT'^9R'TU$`#;%W,VP(61(&Z3*%KSEV%%
M:`9%$``34%J-J'U#,`$>T(FVN'%P>`H?`'R>-W=ZUHI'4`0]6%I#&`&T5P.#
M&`'6IW#BAPI$E(HZN&1%*'HHP(%;IG]$"(!F4'L!$(#R5@*F6/\)Y,>'.:9F
M%L!_/)@!`?`"+[!_I>6.MF=[S7AN1#".%\,"D]B&=ZAG.X"/`J./=.B(_>B/
M`'D)%D*'3E"0B/:/P2&0E+>*#(E?#OD+"9EOE#612U:1_<`"?)=KTZB1Y\61
MZQ"-V8:%(HE?7'"0H=`!5Y9K_)B2%R".0?$!`S=LV)62R#4"S[@4`*"$N>:'
M&@D$<1@6_O"2DU:)*;F2=X$7DR=J$GF'-F`"+/D:/#9IYB:2]]B4OB<$'YEE
M(7F'!D"57*D(-DEH^\:0(T"390EL'7"39A:3J'27>1>3;`EH>)D`8P`X-)7!E9=Q?0`F09
MF9P``$XP`XLY6EYW`3NP!57)F>U@`$+@A9)CA/)F`QVPF:C9$?X@!#-P97*I
M9Q=@`!WP`2MPFK,I"=M@!B)`"P9`=SIF`P8`!!T0!KX)G,%Y*;P@!A]0G<_)
D"]&9G=JYG=S9G=[YG>`9GN(YGN19GN9YGNB9GNJYGJ,0"``[
`
end
GRAPHIC
27
y85445y8544519a.gif
GRAPHIC
begin 644 y85445y8544519a.gif
M1TE&.#EAG`"H`.9Y`!\?'____[^_OV]O;\_/SX"`@,#`P+>WMT!`0%=75_#P
M\+"PL*"@H$]/3Z6EI>#@X"\O+X>'AU]?7]O;VP\/#Z>GI]#0T)"0D(^/CTM+
M2W=W=W!P<&!@8&-C8^_O[^'AX8N+BX&!@5!04.?GYWM[>^/CXZNKJY>7EY65
ME6UM;;&QL9.3DS`P,//S\SWM[?GY^6%A8?W]_5U=73$Q
M,<'!P?O[^PT-#=?7URDI*?'Q\:&AH;R\O.SL[-K:VIZ>GKN[N\O+
MRY^?GS\_/W]_?]_?WP```/___P```````````````````````"'Y!`$``'D`
M+`````"<`*@```?_@'F"@X2%AH>(B8J+C(V.CY"1DI.4C`8*E9F:FYR=C"(*
M#`6,#WB>IZBIF@L;@@L/#!8/!0L6"@L+>0\+>+>YE;,/>04&A[>JR(FVA!86
MD06C@B(7"'EX"P@7%Z8RI=JFF3(7%C+%AK/)Z84<#(2XD0RM>0;QU7@&"!8%
MIOSZX)4<1&`SL*``@P<(#&R(-^R"+V?J4"$0,8]!08L&'X%Z\(`)`Q8&[DUD
M<"TA'A$D?U%B(&,@M&H;6"C`%X]8-1D13QD(J0#!!@/07D(R((RC`0M'B39[
MH`!I,UF9##`9N(%:G@5,=F8;9:$:DYR>&-!YMB,&IPGA&R0"'[X%/0U"
M3,1`!`(&E151)N2X:9[EFFTW(CH(Z?-8>98--\0`0?+=@A(B*-"2U@6"VQ]O
MD+$A>B(%&S94)AU?WZC6TA<]`"D(/@<+&UC`Q"P<4$><3*6EE4=OQXF774$4
M#1+*2)&HMEJ"5VV0RV>7Y/=(0H+@UDXM++!%VX&8D)6'-J;E(=A]"J@FB`4<
ML%"`>XW(AF$!'/S$@$7(>=@(B,-LD-$"H.B5&O\C'\U$%'35]:=+C&7A5R$T
M%V!HX7VJ92GD(B#"$M1_(&)##),(&J)@:88YM`E\\K6EXBP_.7GFEXD\(,,H
M,L38GD4473+8;6D2DM8#<15X"I29/3>99'@J]E$`6BAA0A=WV-$%`5<``$$=
M1D(C@``>!!!`I*A"8FH0(X20@`X`Q`J`":..2D<=>.2JZZX0-%``J:>F*JP@
MIG[PQ`%TT&%"$[+*:D>M`MRZZ[34`L`!'7<$.VQ^`;2@!;+)ADM'"LW&^FRM
MTE*K[K0`;`"#MMLJUBT!)HAK+QT:E`O`N;;BNNZ_NU+`@0#PQJN.$!.H<._"
M5N@[!;3I`BQQKOMF:S#_,MW&X,#"'-.@;P(0^SOQR'@,7/#%F00P0@P8P!\TV%XT'SB?KS$@++/OL^0JY-#LS`+\#CS<$&S^Y=;'?WYXK,P[__S8T4_?=.0H&)%"
M_PX-I-#!O2@L#+6L"<0PJO;;QTV`AP$\<7P.'310_L)&+`QVLU)KGNSB1S(*
MS,\V`8A`"%CW.1_DH`!Z`*`!#G7H-P!(CR\!(!T0@\A`O/F`#@V@`PI\(,$.?+$'
M&KS7%A`W12I"[XI@T>(6N5@]O(4N5HG[H!NK-CQ43"`#<]RB$.OHL]?):@EM
MW./8A`>6%@`RD(+L(B$7%@71)5*15*-#'S<1@`Y`,O^0@^08"B08K@YHH(GG
MHT,(TA>">R7/69?$I-$.F`P??A*2H;Q7#HZ8+!1D`0PH"`$-0="`73;Q7E.0
MU0!B*4N;63$=,;CE)W,I+AUHP)KX"L$Q:1B"!B"18_G"'C.;23(1;'(2CI3F
M-"49KA0T``Q)1,$N9Y@L\YG1?^P;)SE'!@-5!(`$ZKPE-<>%`AV@``0I<&<8
M:5A/'30@C>+B8*R:H`0![I-Q<.1$-`,J4'8VH`/G`T-"+ZB!#.)KE%^\EPUC
M)34EY/"B`#/G*=+)T5O:`'>3I,,3924U`KP4IO_J9R<26%-U.@"GDUQCK'8@
M`)\"E6K/Y(1/BVI4I-9Q";+_XIM3GVHT.W`B``.@:D"/FE,Z&!(`6OTI5ZE%
M`9*T-0ULZR0*,M6N%F"A=<1481M;S7H-9@"HK6%OBP>OJHJ$O"VJ;",'-"@0
MP+;$51<%*IN'%B17K,O%FU*?.USBT@$2)I!F!$@X@!4D`*!U`"EIL^LUK`*`
MN]$=60/.V4GQ6M<$!$C`K>HP@-W>&5Y@`.8((($*"_
M'7@Q`2*`WQ60X`#]C<`$;A6`L?IV88,=<7>)"X$^UE?%*YA`?YJ>,N7';X,YEQ]=Q&CO>Y?>^:TANUYR,1M`".0*VC29H#0+O-8
M[Q!]V^DJHJ^-YNVC?PL%D%'ZMK0\!)EK>MD.7+:$I09D!@!Y:JINVFD)\'2?
M)7;B1&R4HROP*0D2,('+YKH.=+@QL&]U9[&^VF4U:-^G5_^KZ$3$H:C]W7"N
MP\I?G\HXQB_6L%3U?!KHYV`_OK5PG30,&:Y;2^]=6'9Z[*#'8`H
M`0F44'\4J(.Y&B#N7F5.`(CH<5%)X&8=*SD&'2!Y'0[@X#ID8``#H(.Y&0;\"O67
ME_"1_Z8YO>N)\^U)'``E%,#/[8"'`.!!`'4P>P!V;O'%Y:;IF8X[$&N.KZX_
M3^(0@`$$!(#T.I`=`_HN.[`A0`?_"HC;;W5`!(#EGNF:6V$).:=6N/$`@4]]
M*E>'#\#A#9\YD*KP`N1GVR_9\[ZUHO+
M[K,&&,@-0?O:"_K8EXN?WW-5>CPT``82P(,$DMZ``1B?`J;;/2$^['NYOQH)
ML9^6V/%0='_Y5`!XT/O>DYY]Z0]"Y-6W/K*.D'U=-0#IRD=[KB@`QCIDJ@%V
M&`#'H9^Y/T]?X@`H<20`?@W0YG#=.<7@![X@7:``2WC!1A0@B98@BL`@@)8@`5X@#75`5'0?KHB<;F"
M=OHC`&T5_W[`IGS[HH%+IS4J&(1".(1$&(`BR#$D>((F>`#)]SP4`'/(=XZ(%N>`=WP`5RN"ZU-GU(EX>$R(9[R(=(\(?J8GZ#0`>%
M^(AA>(A\^`%*IXB[PHB"X(B0N(E"*(E\>``,#H`&Y&(03((O(^(EP
M*(II=PB9$H82D``WX'<@F`!)MR^;N`,?D(S<2`*BV&R&P`-B6/\'.C``RR:B0"YF,H:B(H58(
M8Q"&.G`#"1"-#>`"`Z`#"5!<[KB1U'B''OF1R#@!JYA[=`.,8*@!PBAQPV@'
M/BD!!'@#Z+A\-+F--DF/M"B'S8@('E",2;F4"RD&?R@:AY!`4JF&-4F5R+B,
M9@B1B%`!6QF&7>F5R.B-9MAOA,"30]B2R_U@9:1IFJ?Y
MD3C99Y;&"".@F?FF`4_H=XQ97'8PD;9)A*69FTO9E"7V=HL0`(,8A&&%?S?0
M?!I0<'6`?Q:W?`.0?]\YA,O)G#9IE6`FEHN@!&7Y@>-)GA\)EO'5FXU0F.LI
M<>WIGA^IEO%UF=%)EO5YG_BYD($976*F",]8E@`:H)1Y>,3UE(\@G0B*FPJZ
ME"<07_X'"6Z9BPDZH?0X`='E>9(`H;EX`I+)H3;Y`<[Y61<:"1G*B2=0`B:*
MEE50:6S9""+J_Z(P&J->.0)Q.%G&50DM6H@OJJ-_206?%55\E9F0.*1$BI8$
MH**<<*"$R*1-ZI4EP*!<-9B>IHN4`$Q4`/H)YW^*9P.@`U,`,#\`-#,`-#\`,Q@`<5
M\)G.:-/%8BGP*9JB`$Y
MBI]Q.@,UX`(VL*DUL`85@`E'HF0H!H*1#"*W1^I=7ND\;0%UKVO^F0:BM
MV_J7:"I+N9H.(R"NI]BK`6H#`W`'F$JF?`@"9(JI-G`'-D`#=X"L7HFGF(2D
M.?$$*DBN?UD!+G`'-0"OBUH!,.>P%=`##ML#-F"F:$F)F,1#:E$_[6JB"*NO
M:3`$?%B`<>H"8OH#)"O)(NP%4`#\!JH
M?ZF*>Z1)/02S=B"S,YNP"3L$Q.JP`P"Q/3`#,V`#/3``_%JD;B2TF_&R1CN9
M-=`#,4`#-1"HGFJO\@H"^J'
M\5.W"$0&>$ND``L\?"L=W?*W,8JQLV-`X+K_L4D`MX;KGBN[.!`PDI$B!!+Z
MN.X)M(LC`C7Z)40`!)@;H,H*-[5S,0&@`*'KGFMK-.^UN`@D!*F:NMR*I22S
M`9V[+43P!K)[FGI+,@"0.H%3ASP0N[MKDX$K,79PNSH3`&3@N,6;C(@+,/;G
MNMN"!G?[O!^9FNJ"-,'+"`'``R.`O?2HN>PRN-V+-N`KOLF8HD?S+N<;HCP`
MNNK+AVMK,N_+5V@0!,Z;NB_@=Q9SOYS4`O(KNQ\0!CQ`O0",-D0@P(];`D&0
M!`B
GRAPHIC
28
y85445y8544519b.gif
GRAPHIC
begin 644 y85445y8544519b.gif
M1TE&.#EAG`"H`.9C`/___V]O;Q\?'U=75Z>GI\_/S^?GYV-C8U]?7X"`@`\/
M#R\O+[^_OX>'ATM+2^_O[S[>WMV!@8*^OK_/S
M\[&QL>'AX=#0T)F9F7=W=["PL+6UM??W]X^/CZ"@H*.CH_#P\$='1_W]_=O;
MVY>7E\#`P'!P<'U]?8N+BV=G9T!`0).3DS`P,.7EY5-34^KJZD5%19"0D/GY
M^:6EI;V]O?O[^R/CXQ<7%[Z^OO7U]>GIZ>[N[F%A
M82`@(%U=71`0$'EY>7-S(B8J+C(V.CY"1DI.4E9:7F)F8(Q+QPK
M)8:BFJ6FIZAC/4=C8F,?AAP)J;2UMHU)'T*@DV'S8C-A<7/;?'R+8\%RLQ
M'#$V/#PQO;/)U]B9"2N>'"]C)1\K+PD)QMGHZ8\<*CTCKQ\+___H/$;2%!0#%@%$U:*)ZC$"%@CWG&`Q8'4H1)'."C<"`FC"D$79%53
MP2,!AW>*GEGDR!+1B!#R,]P$B2HT,&96@1@B`V[=P_]U^
MG7O(+10M!;98L"#!BU^_7\0(%J/@RY>;7AC(I=)*&(.%EZ8888*B.#@=!E<)^*+)9IX8H8+
M%+`B7=45^**(/\2XX(SO@7$C5"WN:.0`^['W(_^0WM6((PHA&KECDMLMR>1S
M"G@QY$8`6"#EE]I9:.65SUW`H4\`-/#EE^J)2>:5"X314@8!K+DFE;J-^:9S
M"A3`40;'V?DE@@GJN6=O66Z)#Y2"KDEAH8>2J25!*.C8J)0D\F=HI+U-ND^E
M:QXP@*52NLGIE9XN2NJ+`51P@&4&7FA'!`'4&<(`#
M,`3@Q0!T>F&!FL@A>2NNJ.IJ"Z]V#F``H%Y4($$`!00`P!??>B%!M]CAB=JF
MT/*6ZC4`U"EH!0[,VJU?W7X;KA?D9O=LNDSZB0T`0JQJ9`0'5-!J`^99]VVR
M^+IK6)M5\GMEG^Q>`8;_!`*_Z("HAHWZQ<8!#"!R`,(&BIRY"DH,YYG'A`'&
MR\9=*C.ARZ&K,FL\2)M)"`V\_#(58,C9I])7^I@(PTTPW0.N+($I@6`4#0%E!`Q80>ZS)V"FY-9,"L'R*
M`6"#C7#&R"UL&`PP=(O"`0<86X"+^=FJ]=Q`7J"S)`"DD'?>!,"=7P$'?&M8
M`%X"<$`!7P!>`>+8.;LXXS,R<,K7D^=-PA(B$FX`6&H2PC
MZAC6;0K>K4_NM(3=JFE``RB@$(!YH(OJ!0P"A\D=\$"N\'@C2A??NM@A#H
M_\@!X!=H@5>GMQYSV`/9]24%>%_\WD*_Z+O-[0L&+B8\R^\]";RKGV%H=J[\
MI0X30O"?_$@0-0&>K4(%-&"&!+`]1/1/@=Z3G`/1D[7V2/!$7K!$`C$H/Q&,
MS8&G^^!_*$B)"Y+0>PT@`-\$I3@/JA!#(9S$"%_H/P!NT'0VO.%_%E!!#_6,
MAPIDX`;-A3\5JBX2\4,B!C4H0.NE3(@,FD`1(R=%$J:@=O6#V!6Q^!\Y/8)X
M7<1@`T@P0R/AJ8DJ!`,DI)!&'II':`3L#QD9Q$+N';&.)/3AI8BFFCTRZ'V*
M<`(@D;@TF77P=X;LS0H<0)36`"8$"`"3R`23"XP/\%@/SBI2(8R>_H+$VM
MF\`3P``!\"S@90@`C_R^(#^QM3%Q02REPVQF`29(
M9@`F8`(PF.`+`1`#`OR'L6HE"8XW7$HB&%`\!"P``A,`CQA<((!8!B`(7UC`
M!!80RPF@$PQBP,[C1&7?:&B(KH7NLT&818PC.6_E3``!002Q,@(``+>((+
MQ.`!#`)M35:TC#V]8S=#`,![$!B`.H.P4&)^(0@>6(`+=N#)+XC,!!#P0!`&
MX$41L&E]$IVHJG!_B"!`4(4:
M0.P0TJ@JW!(7Y>"N*B_C,!>$)*
MRZN6TP1UTN0"%E#511Y/1(64J7-R:`A?=E.6AH%E.07@@B=\8:0[R.HBP20-+$?!&`6]":B%6.TL%O'8'.^#L`"#P!0\(
MTP3`,%V5^2T";NL`8,71*"`"8B@
M`&(0P3*[!5PR#6EIX\WORQA[LICRZV4!4,`K`2"&!V!```P@JUGQJ]_\QE!'
M"$)O_V9>%D\P:-&X&`!#@@7PIB>V17(-;K`@*21AS`!8O@'`P#0!"LP.6S3$
M,%;B%W)08M1YV$,PAK$&_:M7WD1V#&C-<8--^(,:,^['01:R?AN0X'051@SJ
MK*\TQ0!8`5-9RB="LI*[F(*_$&`O>[%"`<;L!`,80`GIHK`7Q(`!P1!1#%_`
M@`@0L+1R7DG+6YY,$\!L`0J,N0!E-K,!@!"&0AOZT(CV`+00#,\'9'(P!.8P
M`MB<22QG^<5IU#.?_3QF*`C:`!M`M*A'3>I1DP!:68WO`]8L&`(39LWJA.8$
MF(1D$?A,TV#F=`$\+>A0E_K7P`XVJ=N,JPD`!@Q$5`!P7?\]3?UAD@%,HJDA
MIM!K85O[VM@&-@J@I0`,8"!+F"09[L1`,L',>IE,NO$@#)#M=KO;W0;HL7/4
M+0AVO_O>^"ZU##@L[];0>PP/R+?`!UYH(V]M2`$GN,+?C81^MV9(0UBXQ+.M
M:(>[9D@AF+C&A=T`BV/F"X@`P,9'7FIB>UP,/[6HKTG.\D)#^^3Q382]6\[R
M>,/\WX)(.,U);O.3*RKB.R?Y!@PN,7PB0@=!9SG1^>641`"`T$G?.)H]SE=$
MT"#J&Z^XQ.GMG@?$W&"KT_CYE8/:%;]OBTEY$"=JN\)[W
MNZ)'ISO!]^UP+7*/[7H7^-)/577_N4L\`@1(/`5VWO"[/P+I$A=#&(Q`@)UK
M7:^.>P0`B!!Y"B2>!00(``58T`$*(-[S+&@!!2C0@0CR;<&^T3';LCGKYPR8/`][K'?1@(`($PB('Z
MU+]^`.[]//78W)$"440=03``@B8;T.G5UPG"?D7
M>/&22>970@!CH;E.G2PI0@9-P@?G&>C40?TQ0?84V`RP``A'``J)'>JR7
M;Y<720MX_PE>EV_E1S*A)W_8-P,!((,R"`$=('!A5TKVEPD``'CX%@$%V`&A
M5VA0V`$%*`8U,'J49X#'9T_?IPD9EV\M`(,#6("%U@$L4`.IQP4L@'A"&(#O
M]G:19'1,F`7X1@$U,(3J%P41`'\ST`(=D(4!T`)N&`!P"&^Z)'N48(+N%@$^
M&`&M%P8M,'V51P&`&`:NYW_YQG>&I#VH0'L?*&P:SWAPD`<'6A*&R-1T:*
M>`DG`'6I^&LW&$=%)`DW$(O`!GM"1(>T,!JX6')8-(+(<(J_.&K=YT3LXH3%
M6&CT9T`J@@VON(R&UHSMPX'8<`/Z]XL3*$$YHP[8*(UA,(JML?\`I9@,W[B,
M(8@]Y*@/Y_B+LS@WZ[@/[1B+28@Z\<@/\QB*R+`#`$*TES-4DF7Q`@'7("
M$YET1,`I`A`<'=(6.M"0.X>0)[)=,#D7`+"40;>-3+)=()F40$:5-(=-`B`"
M6:F5'B*4L+AQ53`C7Q"18LD]0S"2&E>2O"$`*P"4:SD)`'`"&>"6"E>/O2&7
MTE&7IHB7-%"6^-:3^I,`-@*8O7@#&4`W`P:9;5W@&U_0&8NAF,?@%B&0`0]@
D9MB&!5^P`IU!EY:)D6YQ`B%PFJB9FCKP%J/9FJ[YFK80"``[
`
end
GRAPHIC
29
y85445y8544521.gif
GRAPHIC
begin 644 y85445y8544521.gif
M1TE&.#EA_0#=`-4@`,#`P$!`0/___X"`@/#P\!`0$&!@8*"@H.#@X-#0T"`@
M(#`P,)"0D'!P<+"PL%!04+^_OS\_/R\O+^_O[Y^?GW]_?Q\?'U]?7P\/#\_/
MSV]O;Z^OK]_?WX^/CT]/3P```/___P``````````````````````````````
M````````````````````````````````````````````````````````````
M`````````````````````````````````"'Y!`$``"``+`````#]`-T```;_
M0)!P2"P:C\BDI=ZP>$PNF\]','K-;KO?7#5\
M3J_;S_*[?L_O(_-^@8*#;("$AXB)7U.*C8Z/?XR0DY2(AI68F767FIV>>)*?
MHJ-BG*2GJ$^FJ:RM1:NNL:FPLK6BM+:Y@P0`O;T$::&ZPXE2'\`,'$S,7(
MQ\I&N,W4<,;(T:_"U=QVU]#+W>+>S\GAX^AOW^;2V^GO9>O91-/P]HO/\U'N
M]_U:\N?\"?Q73I^0>@,3!LL74*%#)P#;/9P(L6!#BABU,928L:-&;!<]8HRH
M3:1)DO3XF72(";%8R*;?0QV`60&!O1*L!H2KP,#'@2X
M33OW@`$.?+GVY$Z0Y
ML1U]'Q3P`'X(6M%:5@'H5O]%A%4DP(`!ZW6(789+.%"A`0[H]^%I-ZG4V!4(
M'$!BA0\8B"(2O,0!HRDS:M':`[TYN0`9GJY!%,,#*`E;7322=P'!N!7&98-
M0!?``2YZF8!S`]ZI0&P&E,-`FZ@-$>9YZWVP0*0-AC?>&@XD6H`!7?8VYH#1
M60I`FYOQ0FAW6W;X(!D$,`#=`@>LIF!6WR'7:4I4]F?E?T3P,B*M`9@!@*9L
M.J9@B0VL6E&NG^T:V9L',(`&`0-`9T"@6R4P`(,=[LG$DGTR$`A,%0#$8?B:WITQ!RUTG;")YVUO!"2ZP-%/\!+]8Z9`1QU`;M54`?%7GIF(?''R,D,].18VVSU9`
M6+S'S**PL6.%K_/&XUG5`:4?\^?O7CPO1FO339^3`_$7T`#J]3N-B)(AIE\$
MR0ST@XGU9@.K-[3F-0O4G-IH5C,`BB9I,#.`]ZXP*`&A:C:Y28XOF,(/`)",
M@BW[V#.^(ZH$$B8!R\.-!:M0.Y*!9P#X(>'VVD4QI@"G4-ZQ#X8L0P"S&6"&
MJF``Z6K#.(/9CW8`X,YZ%!`>FP$F`1M#XK=:=HRY#7$)3U1"[=:S`+IIT20#
MD-\&D[`[VQ7NC&%T@M.Z\\:S!/]`6EIH%8-R=,;.*8R')>."B-S((A=:1@K8
M\]$.$Q;(,(@H*PN8%WQVISW/#2\^F7)2`]:8KSB*05O32>38'`>.1_6"3`5,
MP`'7@+\5Y>J!G$R(5G29H.6
MJ80X=C""M)F;_IQ',)69)*$QHZ(DEY5.KZP/"=OAVO7.=S]-#?0>&+T>'ZU@
M$U5V+PO_98.9*+W0&HSH$9Y'FM)'+[F%1\H42HX9%LQ6JLB=JK.1WK31.R4E
M3K:4CS8YZB84;+*$56HA<[39U$D[0JUW1E*JZZ*8$JS*!0>@C$Y_(HKJ8NB_
M>TX51E4U*A>^22<%#`"L`L$@;=(:L>W%5:Q\8NNU/-+5XFRUJ(#]'!WH6@X%
MB`0!XBN6->`Z5KG&`YU_,TD#D%&`NVZ"LB_5P[X*4`"\WH,`I/4L.?Q:V<2Z
M@0"']8<5[T#5UB)UE'JH;6AQ*PC=*I:WO07M;X'K!]_RE+A\,.Y1#XI!SPZL(Y9*7$.8]_V]PQZM>]$ZW
MO8)0I=MB"]_ZVO>^^,VO?O?+W_[Z][\`#K"`!TS@`AOXP`A.L((7S.`&.SA)
M\J4O+QK'#8L^Q1C>&U;BOCH*E`6+"?!SPC5'XEH0J%*FR/O$`8X!0)1-U`B0
M_8"%D7);(3C`4"@,7X-,NXMC-&`),?ZP$M+X`1Z+`\,IBHY!"BLI(P/$0(J7E)!A#S$U(HY"'<67_E%F,T)DQ
M)F[S`#.OD'Z:RH*:VX)48RQ`0LP5Q&:+C`1-#1J/1[B-EZ^P9V:TV0AG#70F
ML)A9(Q#@&->Z392-L.(/T)<(C9Z+6/_EUPPG':'3O)&EG$&`LC_KN4%\WM,Z
MRSJ@F1T(.&TR3S2TA1Q.U[I#]^0%N8AL$'#BC-1DF_4KTC,S[``G&A-6FB]H
MQP"U134--FL5#G\W[2*$*8$;BDW60B>>5XQ*"-YURJ.+<(Q/$R$!Y43>5.9!
M9!`,VGU#X#)M4BP$(K_Y(W*.\;]-K&Q6M[L(KB'T$`@`T08P_`,I7@`-QW/`@R/<8$-
M0&`#%\``GN8-ZMH`Y((#1$KE"7IO+R(LCR
M>.CDCH1.6_B915B/?BAMX>E@(`.,7_P$/(`,?O<;UD1`0)%@/NS&33O,,?/*"Z'P5DBC!290?-5;@#^1
M[Q*JCP#E?$^Y"(.V_1$N+:DA=%H?G>;W9H./[@^YS?_`A@+G20G!XV8!:'U`!\"<`%(!L0X`,5*<1^7$;SO=\"F<%_[=!`0%'2BS=$.@:2G8@2``'09X@!R0P&X
M=IU7(;?'?D:P@;>'@B"0*(CF&A9P@0*@=WV'=,MG0I*7?&@&1A\PA$1X??2F
M,"E70+X`,H[R?>U7(0G4:3\68ZXW!$06*V!V(C%&?1?X>&%8?QAFA>?1?RC'
M@LEG$%.Q:&(X@GKQ`<1W@0EXA"<7>*&$<7+X!*X1`418A)%1;S`V-`V8AQVX
M'F&8:#A(9`839#^X)2DA`8=8`7CX>FL6>3&3#3*(!-"'77*61OP&'1!`A!E`
M@Q(8B3*!#)W2=-%7@(>H`8E8BK&(3;R8=O^!]P'O<0V&I&H.DP2R9`PC)P6&
M2(2P&"/*QVFC2`5IY`&'
MJ'=3Z`XQ5@4,HF5GI7D+L1YH1FGK02H?L(P7V(PS^(G?N`2CY@X\-X/\=AO=
M"(/?6(X:`8*61AR@(R#J]H2'^'CK2(J>1@6=E@Q:R`21XH,>I8!"0&F'R'K.
MN&92X)%)$)!6DHUX.!46>($;D)"=B"M1Q(/^YQVOE'!41WX'67TQF(O\@#+R
M*`1VA2TO,Y1'<&]V>`3_)V?0\9+P-P$Z5Y*]0C$`H`#3HY+JPY+\5HA$>`$R
M&8Y(UFF:)TL%,'+_O7)68)$H^EA]K`>4D7"11K!^V)*12,@P&YD$7X&
MU8>+,UE_E^AJM#-BVRAK`EDRVGAL'[`!!]B*81F7T<"0EB6&G@O$?AZ`-@K=]*(36"82^`:\GAX$N"7C'=\"@D"@LF9#T![H=0F
M6NE17-ES&-"3BY9"Y$-LK24]A8T%V<$8&8!%$!]$T`!CR<=<,DC678`
M13>(=UABPB=C38!:E3%SSJEX$[`!>D>=5%D$8I8*VD$BSD$LG0!
MJ"<`&0"8B7*$8LD?JF8$]%17:$D/,72;`TF:6]9P2@!F?\@$LO<$J^8H_V83
M``^7GD6@<>50`!.UFV2AF#-YB>*3',29A+W"(*OF-!US`,S4*EE!1=&`:Q07
M&TPP'VKC+TH0:5;@;IU'*^/V;*]0;N-G(XC25&01`/0BHW-II)S&5Z_`-48"
M#/LR8[$1H?LB60O7,:=@B0_F!I>WI<'415[:!O\9IF@08RA)IF$PIFA:!C&F
M@VLZ!E%$86\ZIW1:IW9ZIWB:IWK:4.%X!`-*F]XR,#!&4DD@,L?Q!)ER(5+%
M;&[C!/OR`%7D!!/$`*@]`-[F01D]0FL_7IS$R8YOE0K3A!)NE`.`T4!'$
M!`2P61*@`1KP>!3*!*\A1],Q*=J9"IKJ!.ZY@/^>VH(GMRFRVJND^&$`<):P
M,SL!\)NIEP$2L`"B&@$54`$Z%Z'J66G.!%Z0D*M-((MJUZNN828KQDP?NJT-
MJ$52`#HK=I^I)Y5(^7POR(\@%F8+9PO:*JL+$H'C6I6+!G3;*JS\H01\'CBQP0)`!T.EZE`T:TF5@#.BG+"*@6Q,@!NFI*S`04,>O!"BV9UL%(T($DR*W;Z*'U9>`>]L@LC>QWXFIQ_:V
MF@"XN1>&:NL$B>(]>"(F:88G!$`M'X"<=C8[*^8!]\D!N-BN>4N;4CNUF:5O
K#>L(FKN#D1@>$H*W.[BS37!O80M6(`L1UH.5V_IATS%0#^<=/QL&00``.S\_
`
end
-----END PRIVACY-ENHANCED MESSAGE-----