AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1998
REGISTRATION NO. 333-53751
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO.1
TO
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ON
FORM S-3/A
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CARRAMERICA REALTY CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MARYLAND 52-1796339
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(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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CARRAMERICA REALTY, L.P.
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(EXACT NAME OF ADDITIONAL REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 52-1976308
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(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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1850 K STREET, N.W., SUITE 500
WASHINGTON, D.C. 20006
(202) 729-7500
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(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------
BRIAN K. FIELDS
CHIEF FINANCIAL OFFICER
1850 K STREET, N.W., SUITE 500
WASHINGTON, D.C. 20006
(202) 729-7500
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(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE FOR REGISTRANTS)
------------------------
Copies to:
J. WARREN GORRELL, JR., ESQ.
DAVID W. BONSER, ESQ.
HOGAN & HARTSON L.L.P.
COLUMBIA SQUARE
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
(202) 637-5600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after the effective date of this Registration Statement and from time
to time as determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
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AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE PROPOSED MAXIMUM REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED(2) PRICE PER SECURITY(2) AGGREGATE OFFERING PRICE(2) FEE
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Debt Securities.....................
Guarantees of Debt Securities.......
Preferred Stock..................... $1,000,000,000 (3) $1,000,000,000 $295,000(4)
Common Stock........................
Warrants............................
Depositary Shares...................
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(1) This Registration Statement covers Debt Securities, shares of Preferred
Stock and shares of Common Stock that may be issued from time to time at
indeterminate prices hereunder as well as Debt Securities issuable upon the
exercise of Debt Warrants so issued, shares of Preferred Stock distributable
upon the termination of the deposit arrangement for Depositary Shares so
issued, and shares of Common Stock issuable upon the exchange or conversion
of Debt Securities or shares of Preferred Stock so issued that are
exchangeable for or convertible into shares of Common Stock or upon the
exercise of Common Stock Warrants so issued. This Registration Statement
also covers contracts that may be issued by the Registrant under which the
counterparty may be required to purchase Debt Securities, Guarantees of Debt
Securities, Preferred Stock, Common Stock, Warrants or Depositary Shares.
Such contracts would be issued with the Debt Securities, Guarantees of Debt
Securities, Preferred Stock, Common Stock, Warrants and/or Depositary Shares
covered hereby. In addition, securities registered hereunder may be sold
separately, together or as units with other securities registered hereunder.
No separate consideration will be received for Guarantees of Debt Securities
or for securities that are issued upon conversion or exchange of Debt
Securities or Preferred Stock, distributed upon termination of a deposit
arrangement for Depositary Shares, or issued upon exercise of Warrants
registered hereunder, as the case may be.
(2) The aggregate maximum offering price of all securities issued pursuant to
this Registration Statement will not exceed $1,000,000,000.
(3) Omitted pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
(4) Previously paid.
===============================================================================
The Registrant and Additional Registrant hereby amend the Registration
Statement on such date or dates as may be necessary to delay its effective date
until they 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.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted before the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful before
registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 15, 1998
PROSPECTUS
$1,000,000,000
CARRAMERICA REALTY CORPORATION
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
COMMON STOCK WARRANTS, DEBT WARRANTS AND DEPOSITARY SHARES
CarrAmerica Realty Corporation (the "Company") may from time to time offer
in one or more series its (i) unsecured debt securities ("Debt Securities"),
(ii) preferred stock, par value $0.01 per share ("Preferred Stock"), (iii)
common stock, par value $0.01 per share ("Common Stock"), (iv) warrants
exercisable for Common Stock ("Common Stock Warrants"), (v) warrants exercisable
for Debt Securities ("Debt Warrants" and, together with Common Stock Warrants,
"Warrants") and (vi) shares of Preferred Stock represented by depositary shares
("Depositary Shares") with an aggregate initial public offering price of up to
$1,000,000,000 (or its equivalent based on the exchange rate at the time of
sale) in amounts, at prices and on terms to be determined at the time of
offering. The Debt Securities may be guaranteed by CarrAmerica Realty, L.P., a
Delaware limited partnership (the "Guarantor"). The Debt Securities, Preferred
Stock, Common Stock, Warrants and Depositary Shares (collectively, the
"Securities") may be offered, separately or together, in separate series, in
amounts, at prices and on terms to be described in one or more supplements to
this Prospectus (each a "Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Debt Securities, the specific
title, aggregate principal amount, currency, form (which may be registered or
bearer, or certificated or global), authorized denominations, maturity, rate (or
manner of calculation thereof) and time of payment of interest, terms of any
guarantee, any terms for redemption at the option of the Company or repayment at
the option of the holder, any terms for any sinking fund payments, any terms for
conversion into Preferred Stock or Common Stock of the Company, covenants and
public offering price; (ii) in the case of Preferred Stock, the specific title
and stated value, any dividend, liquidation, redemption, conversion, voting and
other rights, and public offering price; (iii) in the case of Common Stock, the
public offering price; (iv) in the case of Warrants, the securities to which
they relate, duration, detachability, exercise price and public offering price;
and (v) in the case of Depositary Shares, the fractional shares of Preferred
Stock represented by each such Depositary Share and public offering price. In
addition, such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of the Securities, in each case as may be
appropriate to preserve the status of the Company as a real estate investment
trust for federal income tax purposes.
This Prospectus also may be used by certain holders of Securities to effect
resales of the Securities. See "Plan of Distribution--Resales."
The applicable Prospectus Supplement also will contain information, where
applicable, about certain U.S. federal income tax considerations relating to,
and any listing on a securities exchange of, the Securities covered by such
Prospectus Supplement.
The Securities may be offered directly, through agents designated from time
to time by the Company or the selling security holders, or to or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of any of the Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement with, between or among them, will be set
forth, or will be calculable from the information set forth, in an accompanying
Prospectus Supplement. See "Plan of Distribution." No Securities may be sold
without delivery of a Prospectus Supplement describing the method and terms of
the offering of such Securities.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR CERTAIN FACTORS RELATING TO AN
INVESTMENT IN THE SECURITIES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
THE DATE OF THIS PROSPECTUS IS JULY __, 1998.
<PAGE>
THE COMPANY
The Company is a fully integrated, self-administered and self-managed
publicly traded real estate investment trust (a "REIT") that focuses primarily
on the acquisition, development, ownership and operation of office properties in
select suburban growth markets across the United States. The Company was
organized as a Maryland corporation on July 9, 1992.
If so specified in an applicable Prospectus Supplement, Debt Securities
offered by means of this Prospectus will be guaranteed by the Guarantor, a
Delaware limited partnership organized by the Company in March 1996. The
Guarantor is managed indirectly by the Company, which indirectly serves as the
sole general partner of the Guarantor and owned, as of March 31, 1998,
approximately 87% of the partnership interests in the Guarantor.
Both the Company and the Guarantor are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and file
reports and other information with the Securities and Exchange Commission. See
"Available Information."
The principal executive offices of both the Company and the Guarantor are
located at 1850 K Street, N.W., Suite 500, Washington, D.C. 20006, and their
telephone number is (202) 729-7500.
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
matters described below.
REAL ESTATE INVESTMENT RISKS
General. Investments in real property are subject to varying degrees of
risk. The yields available from equity investments in real estate and the
Company's ability to service debt will depend in large part on the amount of
income generated, expenses incurred and capital expenditures required by its
real property investments. The Company's income from office properties may be
adversely affected by a number of factors, including the general economic
climate and local real estate conditions, an over-supply of, or a reduction in
demand for, office space in the areas where its properties are located and the
attractiveness of the properties to tenants. Income from properties and real
estate values also are affected by such factors as the cost of compliance with
government regulation, including zoning and tax laws and the potential for
liability under applicable laws. Certain significant expenditures associated
with each equity investment by the Company in a property (such as operating
expenses and capital expenditures costs) may not be reduced when circumstances
cause a reduction in income from the property.
Renewal of Leases and Reletting of Space. The Company is subject to the
risks that upon expiration of leases for space located at its properties, the
space may not be relet or, if relet, the terms of the renewal or reletting
(including the cost of required renovations or concessions to tenants) may be
less favorable than current lease terms. Although the Company has established an
annual budget for renovation and reletting costs that it believes is reasonable
in light of each property's situation, no assurance can be given that this
budget will be sufficient to cover these costs. If the Company is unable
promptly to relet or renew leases for all or substantially all of the space at
its properties, if the rental rates upon such renewal or reletting are
significantly lower than expected, or if the Company's reserves for these
purposes prove inadequate, then the Company's cash provided by operating
activities and ability to make expected distributions to stockholders or debt
service payments may be adversely affected.
Possible Environmental Liabilities. Under various federal, state and local
laws, ordinances and regulations, a current or previous owner or operator of
real estate may be required to investigate and clean up certain hazardous
substances released at the property, and may be held liable to a governmental
entity or to third parties for property damage and for investigation and cleanup
costs incurred by such parties in connection with the contamination. In
addition, some environmental laws create a lien on the contaminated site in
favor of the government for damages and costs it incurs in connection with the
contamination. The presence of contamination or the failure to remediate
contamination may adversely affect the owner's ability to sell or lease real
estate or to borrow using the real estate as collateral. The owner or operator
of a site may be liable under common law to third parties for damages and
injuries resulting from environmental contamination emanating from the site. The
Company has not been notified by any governmental authority of any material
non-compliance, liability or other claim in connection with any of its
properties, and the Company is not aware of any other material environmental
condition with respect to any of its properties. No assurance, however, can be
given that no prior owner created any material environmental condition not known
to the Company, that no material environmental condition with respect to any
property has occurred during the Company's ownership thereof, or that future
uses or conditions (including, without limitation, changes in applicable
environmental laws and regulations) will not result in imposition of
environmental liability against the Company.
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REAL ESTATE FINANCING RISKS
Debt Financing. The Company is subject to the risks associated with debt
financing, including the risk that the cash provided by the Company's operating
activities will be insufficient to meet required payments of principal and
interest, the risk of rising interest rates on the Company's floating rate debt
that is not hedged, the risk that the Company will not be able to repay or
refinance existing indebtedness (which generally will not have been fully
amortized at maturity) or that the terms of such refinancing will not be as
favorable as the terms of existing indebtedness. In the event the Company is
unable to secure refinancing of such indebtedness on acceptable terms, the
Company might be forced to dispose of properties upon disadvantageous terms,
which might result in losses to the Company, or to obtain financing at
unfavorable terms, either of which might adversely affect the cash flow
available for distribution to stockholders or meet debt service obligations. In
addition, if a property or properties are mortgaged to secure payment of
indebtedness and the Company is unable to meet required mortgage payments, the
mortgage securing the property could be foreclosed upon by, or the property
could be otherwise transferred to, the mortgagee with a consequent loss of
income and asset value to the Company.
Degree of Leverage. At March 31, 1998, on a consolidated basis, the
Company's total indebtedness was approximately $1.310 billion and the ratio of
its total indebtedness to total assets (excluding intangibles) was 41.3%. The
degree to which the Company is leveraged could have important consequences to
holders of the Securities, including affecting the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, development or other general corporate purposes and making the
Company more vulnerable to a downturn in its business or the economy generally.
ACQUISITION AND DEVELOPMENT RISKS
The Company intends to continue acquiring and developing office properties
in markets where it believes that such acquisition or development is consistent
with the business strategies of the Company. Acquisitions entail risks that
investments will fail to perform in accordance with expectations and that
judgments with respect to the costs of improvements to bring an acquired
property up to standards established for the market position intended for that
property will prove inaccurate, as well as general investment risks associated
with any new real estate investment. See "--Real Estate Investment Risks" above.
New office development also is subject to a number of risks, including, but not
limited to, construction delays or cost overruns that may increase project
costs, financing risks as described above, the failure to meet anticipated
occupancy or rent levels, failure to receive required zoning, occupancy and
other governmental permits and authorizations and changes in applicable zoning
and land use laws, which may result in the incurrence of development costs in
connection with projects that are not pursued to completion. In addition,
because the Company must distribute 95% of its taxable income in order to
maintain its qualification as a REIT, the Company anticipates that new
acquisitions and developments will be financed primarily through periodic equity
and debt offerings, lines of credit or other forms of secured or unsecured
financing. If permanent debt or equity financing is not available on acceptable
terms, further acquisitions or development activities may be curtailed or cash
available for distribution to stockholders or to meet debt service obligations
may be adversely affected.
CHANGE IN BUSINESS STRATEGY; RISKS ASSOCIATED WITH THE ACQUISITION OF
SUBSTANTIAL NEW PROPERTIES
In November 1995, the Company shifted its emphasis from downtown
Washington, D.C. properties toward a more national business strategy, focusing
primarily on office properties in suburban growth markets across the United
States. This change represented a significant shift in the business strategy of
the Company. Although the Company's Board of Directors (the "Board") believes
that such a shift in strategy was warranted in light of the opportunities
available to the Company, there is no assurance that the Company's efforts to
implement its national business strategy will continue to be successful.
Consistent with the Company's strategy of acquiring office properties in
suburban growth markets, the Company has significantly expanded its portfolio of
office properties since November 1995. These
3
<PAGE>
properties have a relatively short operating history under the Company's
management and they may have characteristics or deficiencies unknown to the
Company affecting their valuation or revenue potential.
SUBSTANTIAL OWNERSHIP OF COMMON STOCK
As of April 30, 1998, Security Capital Holdings S.A., a wholly owned
subsidiary of Security Capital U.S. Realty (together with Security Capital U.S.
Realty, "SC-USREALTY"), owned approximately 39.9% of the outstanding shares of
the Company's Common Stock (36.2% of the Common Stock on a fully diluted basis),
and SC-USREALTY has the right to nominate a proportionate number of the
directors of the Board based upon its ownership of stock on a fully-diluted
basis, rounded down to the nearest whole number (but in no event more than 40%
of the directors). As a result, SC-USREALTY is the largest single stockholder of
the Company, while no other stockholder is permitted to own more than 5% of the
Company's Common Stock, subject to certain exceptions set forth in the Articles
of Incorporation or approved by the Board. Although certain standstill
provisions preclude SC-USREALTY from increasing its percentage interest in the
Company above 45% until at least April 30, 2001 (subject to certain exceptions)
and the Articles of Incorporation preclude it from increasing such percentage
interest thereafter, and SC-USREALTY agreed to certain limitations on its voting
rights with respect to its shares of Common Stock, SC-USREALTY nonetheless has a
substantial influence over the affairs of the Company. This concentration of
ownership in one stockholder could potentially be disadvantageous to other
stockholders' interests. In addition, so long as SC-USREALTY owns at least 25%
of the outstanding Common Stock of the Company on a fully diluted basis,
SC-USREALTY will be entitled (except in certain limited circumstances), upon
compliance with certain specified conditions, to a participation right to
purchase or subscribe for, either as part of such issuance or in a concurrent
issuance, a total number of shares of Common Stock or Preferred Stock, as the
case may be, equal to up to 30% (or 35% in certain circumstances) of the total
number of shares or of Common Stock or Preferred Stock, as applicable, proposed
to be issued by the Company.
LIMITATIONS ON CORPORATE ACTIONS
In conjunction with the transaction in which SC-USREALTY acquired its
initial interest in the Company (the "SC-USREALTY Transaction"), the Company
agreed to certain limitations on its operations, including restrictions relating
to incurrence of additional indebtedness, retention of third-party managers for
the Company's properties, investments in properties other than office buildings,
issuances of limited partnership interests ("CRLP Units") of Carr Realty, L.P.,
a partnership that owns certain of the Company's properties, and certain other
matters. The Company may take actions relating to these matters only with the
consent of SC-USREALTY. In addition, the Company is contractually obligated to
abide by certain limitations on the amount of assets that it owns indirectly
through other entities and the manner in which it conducts its business
(including the types of assets that it can acquire and own and the manner in
which such assets are operated). The Company also is obligated to use reasonable
efforts to effect all dispositions of assets in transactions that are tax-free
exchanges and do not generate "capital gain dividends" to stockholders of the
Company. These limitations (which generally were designed to address special
U.S. tax considerations applicable to foreign corporations such as SC-USREALTY
under the Internal Revenue Code) limit the flexibility of the Company to
structure transactions that might otherwise be advantageous to the Company, and
may impair the Company's ability to conduct its business in the future.
In addition, in connection with the acquisition of certain properties by
CarrAmerica Realty, L.P. and Carr Realty, L.P., the Company is restricted in its
ability to dispose of such properties in taxable transactions or to refinance
such properties.
CONFLICTS OF INTEREST
Certain members of the Board and officers of the Company own CRLP Units
and, thus, may have interests that conflict with stockholders with respect to
business decisions affecting the Company and Carr Realty, L.P. In particular, a
holder of CRLP Units may suffer different and/or more adverse tax consequences
than the Company upon the sale or refinancing of some of the properties owned by
Carr
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Realty, L.P. as a result of unrealized gain attributable to certain properties.
These CRLP Unit holders and the Company, therefore, may have different
objectives regarding the appropriate pricing and timing of a sale or refinancing
of properties. Although the Company, as the sole general partner of Carr Realty,
L.P., has the exclusive authority to determine whether and on what terms to sell
or refinance an individual property, these CRLP Unit holders might seek to
influence the Company not to sell or refinance a property, even though such sale
might otherwise be financially advantageous to the Company, or may seek to
influence the Company to refinance a property with a higher level of debt than
would be in the best interests of the Company.
MANAGEMENT, LEASING AND BROKERAGE RISKS
The Company is subject to the risks associated with the property
management, leasing and brokerage businesses. These risks include the risk that
management contracts or service agreements with third-party owners will be lost
to competitors, that a property will be sold and the Company will lose the
contract, that contracts will not be renewed upon expiration or will not be
renewed on terms consistent with current terms and that leasing and brokerage
activity generally may decline. Each of these developments could adversely
affect the ability of the Company to make expected distributions to stockholders
or debt service payments.
LACK OF VOTING CONTROL OF OPERATING SUBSIDIARIES; OTHER SPECIAL CONSIDERATIONS
RELATED TO OMNIOFFICES
Lack of Voting Control. The Company does not have voting control of Carr
Real Estate Services, Inc. ("Carr Services, Inc."), CarrAmerica Development,
Inc. ("CarrAmerica Development"), OmniOffices, Inc. ("OmniOffices") or
OmniOffices (UK) Limited ("Omni UK"), and may acquire economic interests in
similarly structured companies in the future (collectively, the "Operating
Subsidiaries"). (Certain provisions in the Code prohibit the Company from owning
a significant portion of the voting stock of an Operating Subsidiary, as
described in "--Administration's Proposed Changes to REIT Asset Test" below.)
Carr Services, Inc., which conducts primarily fee-based management and leasing,
has capital stock which is divided into two classes: voting common stock,
approximately 92% and 8% of which is held by The Oliver Carr Company ("OCCO")
and Carr Realty, L.P., respectively; and nonvoting common stock, approximately
96% and 4% of which is held by Carr Realty, L.P. and OCCO, respectively. OCCO,
as the holder of 92% of the voting common stock, has the ability to elect the
board of directors of Carr Services, Inc. CarrAmerica Development, which
conducts primarily fee-based development, has capital stock which is divided
into two classes: voting common stock, 96% and 4% of which is held by OCCO and
the Company, respectively; and nonvoting common stock, 100% of which is held by
the Company. OCCO, as the holder of 96% of the voting common stock, has the
ability to elect the board of directors of CarrAmerica Development. Oliver T.
Carr, Jr., who is Chairman of the Board of the Company and a significant
stockholder of the Company, beneficially owns a majority of the voting stock of
OCCO, which controls the election of directors of Carr Services, Inc. and
CarrAmerica Development. OmniOffices, which provides executive office suites to
U.S. commercial customers, has capital stock which is divided into two classes:
voting common stock and nonvoting common stock. The voting stock is owned 17% by
OCCO, 35% by SC-USREALTY and 48% by an entity owned by the Company's six current
executive officers. The nonvoting common stock is owned entirely by the Company.
The holders of the voting common stock control the ability to elect the board of
directors of OmniOffices. Omni UK, which provides executive office suites to
international commercial customers, has capital stock which is divided into two
classes: voting common stock and nonvoting common stock. The voting stock is
owned by OmniOffices and two individuals and the nonvoting stock is owned by the
Company. OmniOffices, as the holder of a majority of the voting stock, controls
the ability to elect the members of the board of directors of Omni UK.
Although neither the right of Carr Realty, L.P. or the Company, as
applicable, to receive distributions with respect to its equity interest in each
Operating Subsidiary nor the terms of the promissory notes made by such
Operating Subsidiary and held by Carr Realty, L.P. or the Company, as
applicable, can be changed by the holder of the majority of the voting common
stock of such Operating Subsidiary, the Company will not be able to elect
directors of any Operating Subsidiary, and its ability to influence the
day-to-day decisions of each Operating Subsidiary is limited. As a result, the
board of directors and management of each Operating Subsidiary may implement
business policies or decisions that might not have been implemented by persons
elected by the Company and that are adverse to the interests of the Company or
that lead to adverse financial results, which could adversely impact the
Company's operating income and funds from operations.
5
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Lack of Liquidity for Stock. None of the Operating Subsidiaries is a
public company, and there is no market for the equity securities held by the
Company or Carr Realty, L.P. in any Operating Subsidiary. Consequently, neither
the Company nor Carr Realty, L.P. has ready ability to liquidate its holdings in
any Operating Subsidiary.
Constraints on Growth of OmniOffices. Certain provisions in the Code
prohibit the Company from having an investment in any Operating Subsidiary that
has a value in excess of 5% of the value of the Company's gross assets. These
provisions will limit the ability of OmniOffices to grow its business without
jeopardizing the Company's REIT qualification or, alternatively, incurring third
party debt (which may have to be guaranteed by the Company) or bringing into
OmniOffices additional investors. As of March 31, 1998, the Company's investment
in OmniOffices was such that the Company currently is precluded from making
substantial additional investments (either in the form of equity or a loan) in
OmniOffices. There can be no assurance that OmniOffices will be able to obtain
such third-party financing (or obtain it on attractive terms) or that suitable
additional investors can be identified. Limitations on the Company's ability to
fund additional growth of OmniOffices may preclude (or delay) OmniOffices from
pursuing growth opportunities that might otherwise be in its best interest.
It is possible that the Company could elect in the future to dispose of
part or all of its equity interest in OmniOffices, including through a
distribution of the stock of OmniOffices to the Company's stockholders; however,
the Company is subject to certain contractual restrictions with SC-USREALTY that
could preclude or restrict such a distribution or other disposition. In
addition, the income from such a disposition would not qualify for purposes of
the 75% gross income test applicable to REITs, which could limit the ability of
the Company to dispose of all of its interest in OmniOffices (through a
distribution to stockholders or otherwise) in a single transaction. (For a more
detailed description of the income tests applicable to REITs, see "Federal
Income Tax Considerations--Taxation of the Company.") Finally, because of
tax-related considerations specific to SC-USREALTY and SC-USREALTY's indirect
interest in OmniOffices through the Company, OmniOffices has agreed to conduct
its business subject to certain constraints, even though these constraints may
have the effect of precluding OmniOffices from undertaking transactions that
would be in the best interests of its other stockholders, including the Company.
Any reduction by the Company of its investment in OmniOffices would
correspondingly reduce the Company's right to receive distributions from
OmniOffices.
Administration's Proposed Changes to REIT Asset Test. In order for the
Company to qualify as a REIT, the Company, at the close of each quarter of its
taxable year, must not own more than 10% of the outstanding voting securities of
any issuer, other than a qualified REIT subsidiary (a "QRS") or another REIT
(for a more detailed discussion of this and other REIT qualification
requirements, see "Federal Income Tax Considerations--Taxation of the Company").
The Clinton Administration's February 1998 budget proposal includes a proposal
to amend the 10% voting securities test by prohibiting a REIT from owning more
than 10% of the vote or value of all classes of stock of any corporation (other
than a QRS or another REIT). Stock owned by the Company in corporations prior to
the effective date of the proposal generally would be "grandfathered" (i.e.,
with respect to such grandfathered stock, the REIT would be subject only to the
existing 10% voting securities test described above). However, if the
corporation in which such grandfathered stock is held were to engage in a new
trade or business or acquire substantial new assets, the grandfathered status
would terminate with respect to such stock.
Because the Company owns the majority of the nonvoting stock of each of the
Operating Subsidiaries, the Company would not satisfy the proposed 10% value
limitation with respect to its stock interests in the Operating Subsidiaries.
However, as the Clinton Administration's proposal is currently drafted, stock
currently held by the Company in the Operating Subsidiaries should be
grandfathered. If any of the Operating Subsidiaries, however, were to engage in
new trades or businesses or acquire substantial new assets (or the Company were
to make a significant additional equity investment in an Operating Subsidiary),
then the stock held by the Company in such Operating Subsidiary would lose its
grandfathered status and the Company would fail to qualify as a REIT. Moreover,
the Company would not be able to own more than 10% of the vote or value of any
corporation (other than a QRS or another REIT) formed after the effective date
of the proposal. Thus, if enacted as currently drafted, the proposal would
materially impede the ability of the Company to engage in new activities or to
expand substantially its
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current activities, such as the executive office suites business and the
property development and management businesses.
CHANGES IN POLICIES
The major policies of the Company, including its policies with respect to
development, acquisitions, financing, growth, operations, debt capitalization
and distributions, are determined by its Board. The Board may amend or revise
these and other policies from time to time without a vote of the stockholders of
the Company. A change in these policies could adversely affect the Company's
financial condition, results of operations, funds available for distributions to
stockholders, debt service or the market price of the Securities. The Company
cannot change its policy of seeking to maintain its qualification as a REIT
without the approval of the holders of a majority of the Common Stock.
CERTAIN TAX RISKS
Tax Liabilities as a Consequence of the Failure to Qualify as a REIT. The
Company believes that it has been organized and has operated so as to qualify
for taxation as a REIT under the Internal Revenue Code of 1986, as amended (the
"Code"), commencing with its taxable year ended December 31, 1993, and intends
to continue to so operate. No assurance, however, can be given that the Company
has qualified for taxation as a REIT or will be able to remain so qualified.
Qualification as a REIT involves the application of highly technical and complex
Code provisions as to which there are only limited judicial and administrative
interpretations. Certain facts and circumstances that may be wholly or partially
beyond the Company's control may affect its ability to qualify or to continue to
qualify as a REIT. In addition, no assurance can be given that new legislation,
Treasury Regulations, administrative interpretations or court decisions will not
significantly change the tax laws with respect to the Company's qualification as
a REIT or the federal income consequences of such qualification to the Company.
If the Company fails to qualify as a REIT, it will be subject to federal income
tax (including any applicable alternative minimum tax) on its taxable income at
regular corporate rates and it will not be entitled to a deduction for dividends
paid to its stockholders. In addition, unless entitled to relief under certain
statutory provisions, the Company would be disqualified from taxation as a REIT
for the four taxable years following the year during which qualification is
lost. The additional tax incurred in such event would significantly reduce the
cash flow available for distribution to shareholders and to meet debt service
obligations. See "Federal Income Tax Considerations--Taxation of the Company."
REIT Distribution Requirements and Potential Impact of Borrowings. To
obtain the favorable tax treatment associated with qualifying as a REIT under
the Code, the Company generally is required each year to distribute to its
shareholders at least 95% of its real estate investment trust taxable income.
See "Federal Income Tax Considerations--Taxation of the Company (Annual
Distribution Requirements)." In addition, the Company will be subject to a 4%
nondeductible excise tax on the amount, if any, by which certain distributions
paid by it with respect to any calendar year are less than the sum of 85% of its
ordinary income, 95% of its capital gain net income and 100% of its real estate
investment trust taxable income from prior years that is not deemed to have been
distributed under the Code. Differences in timing between the receipt of income,
the payment of expenses and the inclusion of such income and the deduction of
such expenses in arriving at taxable income (of the Company or its
subsidiaries), or the effect of nondeductible capital expenditures, the creation
of reserves or required debt or amortization payments, could require the
Company, directly or through its subsidiaries, to borrow funds on a short-term
basis to meet the distribution requirements that are necessary to achieve the
tax benefits associated with qualifying as a REIT. In such instances, the
Company might need to borrow funds in order to avoid adverse tax consequences
even if management believed that the prevailing market conditions were not
otherwise favorable for such borrowings.
Other Tax Liabilities. Even if the Company qualifies as a REIT, the Company
and certain of its subsidiaries will be subject to certain federal, state, local
and foreign taxes on its income and property. See "Federal Income Tax
Considerations--Taxation of the Company and Other Tax Considerations."
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SPECIAL CONSIDERATIONS FOR FOREIGN INVESTORS
In order to assist the Company in qualifying as a "domestically controlled
REIT," the Company's Articles of Incorporation, as amended (the "Articles of
Incorporation"), contain certain provisions generally preventing foreign
investors (other than SC-USREALTY and its affiliates) from acquiring additional
shares of the Company's capital stock if, as a result of such acquisition, the
Company would fail to qualify as a "domestically controlled REIT." See "Federal
Income Tax Considerations--Taxation of Holders of Common Stock--Taxation of
Non-U.S. Shareholders." Accordingly, an acquisition of the Company's capital
stock would not likely be a suitable investment for non-U.S. shareholders other
than SC-USREALTY. See "Description of Common Stock--Restrictions on Transfer."
PRICE FLUCTUATIONS OF THE COMMON STOCK AND TRADING VOLUME;
SHARES AVAILABLE FOR FUTURE SALE
A number of factors may adversely influence the price of the Company's
Common Stock in the public markets, many of which are beyond the control of the
Company. These factors include possible increases in market interest rates,
which may lead purchasers of Common Stock to demand a higher annual yield from
distributions by the Company in relation to the price paid for Common Stock, the
relatively low daily trading volume of REITs in general, including the Common
Stock, and any inability of the Company to invest the proceeds of a future
offering of Securities in a manner that will increase earnings per share. Sales
of a substantial number of shares of Common Stock, or the perception that such
sales could occur, could adversely affect prevailing market prices for shares.
The Company also may issue shares of Common Stock upon redemption of Units
issued in connection with the formation of the Company and subsequent
acquisitions. In addition, as of May 31, 1998, 8,736,900 shares of Common
Stock of the Company were reserved for issuance pursuant to stock and unit
options, and more shares may be reserved for such purpose in the future. These
shares will be available for sale in the public markets from time to time
pursuant to exemptions from registration requirements or upon registration. In
connection with the SC-USREALTY Transaction, the Company granted SC-USREALTY the
right to require the Company to file, at any time requested by SC-USREALTY, a
registration statement under the Securities Act of 1933 covering all or any of
the shares of Common Stock acquired by SC-USREALTY. In addition, in connection
with a forward equity sale transaction which the Company consummated, as well as
any such transaction which the Company may consummate in the future, the Company
may issue additional shares of Common Stock, and/or the purchasers of such
shares of Common Stock may sell shares issued to them. No prediction can be made
about the effect that future sales of Common Stock will have on the market
prices of shares.
POSSIBLE ADVERSE CONSEQUENCES OF LIMITS ON OWNERSHIP OF SHARES
In order to assist the Company in maintaining its qualification as a REIT,
the Articles of Incorporation contain certain provisions generally limiting the
ownership of shares of capital stock by any single shareholder to 5% of the
outstanding Common Stock and/or 5% of any class or series of Preferred Stock
(with exceptions for persons who received more than 5% of the equity of the
Company pursuant to the contribution of assets to the Company in connection with
the initial public offering of the Company and SC-USREALTY and its affiliates).
The Board could waive this restriction if it were satisfied that ownership in
excess of the above ownership limit would not jeopardize the Company's status as
a REIT and the Board otherwise decided such action would be in the best
interests of the Company. Capital stock acquired or transferred in breach of the
limitation will be automatically transferred to a trust for the benefit of a
designated charitable beneficiary. See "Description of Common
Stock--Restrictions on Transfer" for additional information regarding the limits
on ownership of shares of capital stock.
RESTRICTIONS ON ACQUISITION AND CHANGE IN CONTROL
Various provisions of the Articles of Incorporation restrict the
possibility for acquisition or change in control of the Company, even if such
acquisition or change in control were in the stockholders' interest, including
the Ownership Limits (as defined herein), the staggered terms of the Company's
directors and the ability of the Board to authorize the issuance of preferred
stock without stockholder approval.
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USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used for the acquisition of
additional office properties or executive office suite centers or the
development of office properties, as suitable opportunities arise, for the
repayment of certain outstanding indebtedness at such time, for capital
improvements to property and for working capital and other general corporate
purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's ratios of earnings to fixed charges for the period from
February 16, 1993 (commencement of operations) to December 31, 1993, for the
years ended December 31, 1994, 1995, 1996 and 1997 and for the three months
ended March 31, 1998 were 1.91x, 1.81x, 1.75x, 1.74x, 2.01x and 1.91x,
respectively.
The Guarantor's ratios of earnings to fixed charges for the period from
March 6, 1996 (commencement of operations) to December 31, 1996, for the year
ended December 31, 1997 and for the three months ended March 31, 1998 were
1.59x, 1.90x and 2.56x, respectively.
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income (loss) before
gains from sales of property and extraordinary items plus fixed charges
(excluding interest cost capitalized). Fixed charges consist of interest expense
(including interest costs capitalized), the amortization of debt issuance costs
and rental expense deemed to represent interest expense.
The Company issued preferred stock in 1996 and in August, November and
December 1997. Accordingly, the Company's ratios of earnings to combined fixed
charges and preferred stock dividends for the years ended December 31, 1996 and
1997 and for the three months ended March 31, 1998 were 1.71x, 1.73x and 1.40x,
respectively.
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DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which this Prospectus and any applicable Prospectus
Supplement may relate. The particular terms of the Debt Securities being offered
and the extent to which such general provisions may apply will be set forth in
the applicable indenture or in one or more indentures supplemental thereto and
described in a Prospectus Supplement relating to such Debt Securities.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company
and may be either senior Debt Securities ("Senior Securities") or subordinated
Debt Securities ("Subordinated Securities"). The Debt Securities will be issued
under one or more indentures (the "Indentures"). Senior Securities and
Subordinated Securities will be issued pursuant to separate indentures
(respectively, a "Senior Indenture" and a "Subordinated Indenture"), in each
case between the Company and a trustee (a "Trustee"). The Indentures will be
subject to and governed by the Trust Indenture Act of 1939, as amended (the
"TIA"). The statements made under this heading relating to the Debt Securities
and the Indentures are summaries of the anticipated provisions thereof, do not
purport to be complete and are qualified in their entirety by reference to the
Indentures and such Debt Securities. All section references appearing herein are
to sections of each Indenture unless otherwise indicated and capitalized terms
used but not defined under this heading shall have the respective meanings set
forth in each Indenture.
The indebtedness represented by Subordinated Securities will be
subordinated in right of payment to the prior payment in full of the Senior Debt
of the Company as described below under "--Ranking."
If so provided in an applicable Prospectus Supplement, the Debt Securities
will have the benefit of a guarantee from the Guarantor. See "--Guarantee"
below. The Guarantor is a separate and distinct legal entity from the Company
and has no obligation, contingent or otherwise, to pay any amounts due pursuant
to the Debt Securities or to make any funds available therefor, whether by
dividends, loans or other payments, other than as expressly provided in a
guarantee. The payment of dividends or the making of loans and advances to the
Company by the Guarantor may be subject to contractual, statutory or regulatory
restrictions, which, if material, would be disclosed in the applicable
Prospectus Supplement. Moreover, the payment of dividends and making of loans
and advances would be contingent upon the earnings of the Guarantor. Any right
of the Company to receive assets of the Guarantor upon liquidation or
recapitalization of the Guarantor (and the consequent right of the holders of
Debt Securities to participate in those assets) will be subject to the claims of
the Guarantor's creditors. In the event that the Company is recognized as a
creditor of the Guarantor, the Company's claims would still be subject to any
security interest in the assets of the Guarantor and any indebtedness of the
Guarantor senior to that of the Debt Securities, and would be dependent
primarily upon the receipt of funds from the Guarantor.
Except as set forth in the applicable Indenture or in one or more
indentures supplemental thereto and described in a Prospectus Supplement
relating thereto, the Debt Securities may be issued without limit as to
aggregate principal amount, in one or more series, in each case as established
from time to time in or pursuant to authority granted by a resolution of the
Board of the Company or as established in the applicable Indenture or in one or
more indentures supplemental to such Indenture. All Debt Securities of one
series need not be issued at the same time and, unless otherwise provided, a
series may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series.
It is anticipated that each Indenture will provide that there may be more
than one Trustee thereunder, each with respect to one or more series of Debt
Securities. Any Trustee under an Indenture may resign or be removed with respect
to one or more series of Debt Securities, and a successor Trustee may be
appointed to act with respect to such series. In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a director of a trust under the
applicable Indenture separate and apart from the trust administered by any other
Trustee, and, except as otherwise indicated herein, any action described herein
to be taken by each Trustee may be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Debt Securities for which it
is Trustee under the applicable Indenture.
The Prospectus Supplement relating to any series of Debt Securities being
offered will contain the specific terms thereof, including, without limitation:
(1) The title of such Debt Securities and whether such Debt Securities
are Senior Securities or Subordinated Securities;
(2) The aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) The percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount thereof,
the portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof;
(4) If convertible in whole or in part into Common Stock or Preferred
Stock, the terms on which such Debt Securities are convertible, including
the initial conversion price or rate (or method for determining the same),
the portion that is convertible and the conversion period, and any
applicable limitations on the ownership or transferability of the Common
Stock or Preferred Stock receivable on conversion;
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(5) The date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be payable;
(6) The rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(7) The date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the dates on which any
such interest will be payable, the regular record dates for such interest
payment dates, or the method by which such dates shall be determined, the
persons to whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day year of twelve
30-day months;
(8) The place or places where the principal of (and premium, if any)
and interest, if any, on such Debt Securities will be payable, where such
Debt Securities may be surrendered for conversion or registration of
transfer or exchange and where notices or demands to or upon the Company in
respect of such Debt Securities and the applicable Indenture may be served;
(9) The period or periods within which, the price or prices at which
and the other terms and conditions upon which such Debt Securities may be
redeemed, in whole or in part, at the option of the Company, if the Company
is to have such an option;
(10) The obligation, if any, of the Company to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or periods
within which or the date and dates on which the price or prices at which
and the other terms and conditions upon which such Debt Securities will be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(11) If other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(12) Whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency unit
or units or composite currency or currencies) and the manner in which such
amounts shall be determined;
(13) Any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to Events of Default or covenants set
forth in the applicable Indenture;
(14) Whether such Debt Securities will be issued in certificate or
book-entry form;
(15) Whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the denominations
thereof and terms and conditions relating thereto;
(16) The applicability, if any, of the defeasance and covenant
defeasance provisions of Article Fourteen of the applicable Indenture;
(17) Whether and under what circumstances the Company will pay any
additional amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities in lieu of making such payment;
(18) If such Debt Securities are to be issued upon the exercise of
Debt Warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
(19) Whether and the extent to which such Debt Securities are
guaranteed by the Guarantor and the form of any such Guarantee; and
(20) Any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture (Section 301).
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special federal income tax, accounting
and other considerations applicable to Original Issue Discount Securities will
be described in the applicable Prospectus Supplement.
Except as set forth in the applicable Indenture or in one or more
indentures supplemental thereto, the applicable Indenture will not contain any
provisions that would limit the ability of the Company to
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incur indebtedness or that would afford Holders of Debt Securities protection in
the event of a highly leveraged or similar transaction involving the Company or
in the event of a change of control. Restrictions on ownership and transfers of
the Company's Common Stock and Preferred Stock are designed to preserve its
status as a REIT and, therefore, may act to prevent or hinder a change of
control. See "Description of Preferred Stock--Restrictions on Ownership" and
"Description of Common Stock--Restrictions on Transfer." Reference is made to
the applicable Prospectus Supplement for information with respect to any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company that are described below, including any addition of a
covenant or other provision providing event risk or similar protection.
DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the Trustee, the
address of which will be stated in the applicable Prospectus Supplement;
provided that, at the option of the Company, payment of interest may be made by
check mailed to the address of the person entitled thereto as it appears in the
applicable register for such Debt Securities or by wire transfer of funds to
such person at an account maintained within the United States (Sections 301,
305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than ten days prior to such Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture
(Section 307).
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Trustee referred
to above. In addition, subject to certain limitations imposed upon Debt
Securities issued in book-entry form, the Debt Securities of any series may be
surrendered for conversion or registration of transfer or exchange thereof at
the corporate trust office of the applicable Trustee. Every Debt Security
surrendered for conversion, registration of transfer or exchange must be duly
endorsed or accompanied by a written instrument of transfer. No service charge
will be made for any registration of transfer or exchange of any Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. If the
applicable Prospectus Supplement refers to any transfer agent (in addition to
the applicable Trustee) initially designated by the Company with respect to any
series of Debt Securities, the Company may at any time rescind the designation
of any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Company will be required to maintain a
transfer agent in each place of payment for such series. The Company may at any
time designate additional transfer agents with respect to any series of Debt
Securities (Section 1002).
Neither the Company nor any Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
that has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid (Section 305).
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MERGER, CONSOLIDATION OR SALE
The Company and the Guarantor (if the Debt Securities are guaranteed)
will be permitted to consolidate with or merge with or into, or sell, lease or
convey all or substantially all of their respective assets to, or merge with or
into, any other entity provided that (1) either the Company or the Guarantor, as
applicable, shall be the continuing entity, or the successor entity (if other
than the Company or the Guarantor) formed by or resulting from any such
consolidation or merger or the entity which shall have received the transfer of
such assets, in the case of the Company, shall expressly assume payment of the
principal of (and premium, if any) and interest on all of the Debt Securities
and the due and punctual performance and observance of all of the covenants and
conditions contained in each Indenture and, in the case of the Guarantor, shall
expressly assume the Guarantor's obligation under the guarantee; (2) immediately
after giving effect to such transaction and treating any indebtedness that
becomes an obligation of the Company or any Subsidiary (as defined below) as a
result thereof as having been incurred by the Company or Subsidiary at the time
of such transaction, no Event of Default under the Indentures, and no event
which, after notice or the lapse of time, or both, would become such an Event of
Default, shall have occurred and be continuing; and (3) an officer's certificate
and legal opinion covering such conditions shall be delivered to each Trustee
(Sections 801 and 803).
CERTAIN COVENANTS
Existence. Except as described under "--Merger, Consolidation or Sale"
above, the Company will be required to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(by articles of incorporation, by-laws and statute) and franchises; provided,
however, that the Company shall not be required to preserve any right or
franchise if it determines that the preservation thereof is no longer desirable
in the conduct of its business and that the loss thereof is not disadvantageous
in any material respect to the Holders of the Debt Securities.
Maintenance of Properties. The Company will be required to cause all of its
material properties used or useful in the conduct of its business or the
business of any Subsidiary (as defined below) to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times (Section 1007); provided,
however, that the Company shall not be prevented from selling or otherwise
disposing for value its properties in the ordinary course of business.
Insurance. The Company will be required to, and will be required to cause
each of its Subsidiaries to keep all of its insurable properties insured against
loss or damage at least equal to their then full insurable value with insurers
of recognized responsibility and, if described in the applicable Prospectus
Supplement, having a specified rating from a recognized insurance rating service
(Section 1008).
Payment of Taxes and Other Claims. The Company will be required to pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or property of the
Company or any Subsidiary, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings (Section 1009).
Provision of Financial Information. Whether or not the Company is subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company will be required, to the extent permitted under the
Exchange Act, to file with the U.S. Securities and Exchange Commission (the
"Commission" or the "SEC") the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to such Sections 13 or 15(d) if the Company were so subject (the
"Financial Information"), such documents to be filed with the Commission on or
prior to the respective dates (the "Required Filing Dates") by which the Company
would have been required so to file such documents if the Company were so
subject. The Company also will in any event (x) within 15 days of each Required
Filing Date (i) transmit by mail to all Holders of Debt Securities, as their
names and addresses appear in the Security Register, without cost to such
Holders, copies of the Financial Information and (ii) file with the Trustee
copies of the Financial Information, and (y) if filing such documents by the
Company with the Commission is not permitted
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under the Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such documents to
all Holders of Debt Securities, as their names and addresses appear on the
Security Register and to any prospective Holder (Section 1010). The Guarantor
may be subject to similar requirements to provide financial information, if the
Debt Securities are guaranteed.
ADDITIONAL COVENANTS AND/OR MODIFICATIONS TO THE COVENANTS DESCRIBED ABOVE
Any additional covenants of the Company and/or modifications to the
covenants described above with respect to any Debt Securities or series thereof,
including any covenants relating to limitations on incurrence of indebtedness or
other financial covenants, will be set forth in the applicable Indenture or an
indenture supplemental thereto and described in the Prospectus Supplement
relating thereto.
GUARANTEE
In order to enable the Company to obtain more favorable interest rates and
other terms and conditions with respect to Debt Securities, payment of the
principal of (and any premium) and interest on offered Debt Securities may (if
so specified in the applicable Prospectus Supplement) be guaranteed by the
Guarantor. The guarantee will be an unsecured obligation of the Guarantor. The
ranking of any guarantee of the Debt Securities and the terms of the
subordination, if any, will be set forth in the applicable Prospectus
Supplement.
The Indenture will provide that, in the event any guarantee of the Debt
Securities by the Guarantor would constitute or result in a violation of any
applicable fraudulent conveyance or similar law of any relevant jurisdiction,
the liability of the Guarantor under such guarantee will be reduced to the
maximum amount, after giving effect to all other contingent and fixed
liabilities of such Guarantor, permissible under the applicable fraudulent
conveyance or similar law.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (i)
default in the payment of any installment of interest on any Debt Security of
such series and continuance of such default for 30 days; (ii) default in the
payment of principal of (or premium, if any, on) any Debt Security of such
series when due and payable; (iii) making any sinking fund payment as required
for any Debt Security of such default in the performance, or breach, of any
other covenant or warranty on the part of the Company or a Guarantor contained
in the applicable Indenture (other than a covenant added to the Indenture solely
for the benefit of a series of Debt Securities issued thereunder other than such
series), continued for 60 days after written notice as provided in the
applicable Indenture; (iv) default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company, any Guarantor or any
Subsidiary (including obligations under leases required to be capitalized on the
balance sheet of the lessee under GAAP) representing recourse indebtedness or
indebtedness guaranteed by such party in an aggregate principal amount in excess
of $5,000,000, or under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company or any of its Subsidiaries (including the leases)
representing recourse indebtedness or indebtedness guaranteed by such party in
an aggregate principal amount in excess of $5,000,000, whether the indebtedness
now exists or shall hereafter be created, which default shall have resulted in
the indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, or the obligations being
accelerated, without the acceleration having been rescinded or annulled; (v)
certain events of bankruptcy, insolvency or reorganization, or court appointment
of a receiver, liquidator or trustee of the Company, a Guarantor or any
Significant Subsidiary (as defined in the Indenture and discussed below) for all
or substantially all of the property of the Company, a Guarantor or any
Significant Subsidiary; and (vi) any other Event of Default provided with
respect to a particular series of Debt Securities (Section 501).
"Significant Subsidiary" means any Subsidiary that is a "significant
subsidiary" (within the meaning of Regulation S-X promulgated under the
Securities Act) of the Company or a Guarantor.
"Subsidiary" means a corporation, partnership or other entity a majority of
the voting power of the voting equity securities or the outstanding equity
interests of which are owned, directly or indirectly, by the Company, a
Guarantor or by one or more other Subsidiaries of the Company or a Guarantor.
For the purposes of this definition, "voting equity securities" means equity
securities having voting power for the election of directors, whether at all
times or only so long as no senior class of security has such voting power by
reason of any contingency. The term "Subsidiary" does not include Carr Services,
Inc., CarrAmerica Development, OmniOffices or Omni UK, as the Company does not
own or control a majority of the outstanding voting stock of such entities.
If an Event of Default under any Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every
such case the applicable Trustee or the Holders of not less than 25% of the
principal amount of the Outstanding Debt Securities of that series will have the
right to declare the principal amount (or, if the Debt Securities of that series
are Original Issue Discount Securities or indexed securities, such portion of
the principal amount as may be specified in the terms thereof) of all the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Company (and to the applicable Trustee if given by the Holders).
However, at any time after such a declaration of acceleration with respect to
Debt Securities of such series (or of all Debt Securities then Outstanding under
any Indenture, as the case may be) has been made, but before a judgment or
decree for payment of the money due has been obtained by the applicable Trustee,
the
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Holders of not less than a majority in principal amount of Outstanding Debt
Securities of such series (or of all Debt Securities then Outstanding under the
applicable Indenture, as the case may be) may rescind and annul such declaration
and its consequences if (a) the Company shall have deposited with the applicable
Trustee all required payments of the principal of (and premium, if any) and
interest on the Debt Securities of such series (or of all Debt Securities then
Outstanding under the applicable Indenture, as the case may be), plus certain
fees, expenses, disbursements and advances of the applicable Trustee and (b) all
events of default, other than the non-payment of accelerated principal (or
specified portion thereof), with respect to Debt Securities of such series (or
of all Debt Securities then Outstanding under the applicable Indenture, as the
case may be) have been cured or waived as provided in such Indenture (Section
502). Each Indenture also will provide that the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of any series
(or of all Debt Securities then Outstanding under the applicable Indenture, as
the case may be) may waive any past default with respect to such series and its
consequences, except a default (x) in the payment of the principal of (or
premium, if any) or interest on any Debt Security of such series or (y) in
respect of a covenant or provision contained in the applicable Indenture that
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security affected thereby (Section 513).
Each Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the applicable Indenture unless
such default shall have been cured or waived; provided, however, that such
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if specified responsible officers of such Trustee
consider such withholding to be in the interest of such Holders (Section 601).
Each Indenture will provide that no Holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the cases of failure of
the applicable Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an Event of Default from the
Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507). This provision will not prevent, however, any
Holder of Debt Securities from instituting suit for the enforcement of payment
of the principal of (and premium, if any) and interest on such Debt Securities
at the respective due dates thereof (Section 508).
Subject to provisions in each Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights
or powers under an Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under such Indenture, unless such
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity (Section 602). The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series (or of all Debt
Securities then Outstanding under an Indenture, as the case may be) shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the applicable Trustee, or of exercising any trust or
power conferred upon such Trustee. However, a Trustee may refuse to follow any
direction which is in conflict with any law or the applicable Indenture, which
may involve such Trustee in personal liability or which may be unduly
prejudicial to the Holders of Debt Securities of such series not joining therein
(Section 512).
Within 120 days after the close of each fiscal year, the Company will be
required to deliver to each Trustee a certificate, signed by one of several
specified officers, stating whether or not such officer has knowledge of any
default under the applicable Indenture and, if so, specifying each such default
and the nature and status thereof (Section 1011).
MODIFICATION OF THE INDENTURES
Modifications and amendments of an Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities issued under such Indenture which are
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each such
Debt Security affected
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thereby, (1) change the stated maturity of the principal of, or any installment
of interest (or premium, if any) on, any such Debt Security; (2) reduce the
principal amount of, or the rate or amount of interest on, or any premium
payable on redemption of, any such Debt Security, or reduce the amount of
principal of an Original Issue Discount Security that would be due and payable
upon declaration of acceleration of the maturity thereof or would be provable in
bankruptcy, or adversely affect any right of repayment of the Holder of any such
Debt Security; (3) change the place of payment, or the coin or currency, for
payment of the principal of (or premium, if any) or interest on any such Debt
Security; (4) impair the right to institute suit for the enforcement of any
payment on or with respect to any such Debt Security; (5) reduce the
above-stated percentage of Outstanding Debt Securities of any series necessary
to modify or amend the applicable Indenture, to waive compliance with certain
provisions thereof or certain defaults and consequences thereunder or to reduce
the quorum or voting requirements set forth in the applicable Indenture; or (6)
modify any of the foregoing provisions or any of the provisions relating to the
waiver of certain past defaults or certain covenants, except to increase the
required percentage to effect such action or to provide that certain other
provisions may not be modified or waived without the consent of the Holder of
such Debt Security (Section 902).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities of each series affected thereby will have the right to waive
compliance by the Company with certain covenants in such Indenture (Section
1013).
Modifications and amendments of an Indenture will be permitted to be made
by the Company and the respective Trustee thereunder without the consent of any
Holder of Debt Securities for any of the following purposes: (1) to evidence the
succession of another person to the Company as obligor under such Indenture;
(2) to add to the covenants of the Company for the benefit of the Holders of
all or any series of Debt Securities or to surrender any right or power
conferred upon the Company in the Indenture; (3) to add Events of Default for
the benefit of the Holders of all or any series of Debt Securities; (4) to add
or change any provisions of an Indenture to facilitate the issuance of, or to
liberalize certain terms of, Debt Securities in bearer form, or to permit or
facilitate the issuance of Debt Securities in uncertificated form, provided that
such action shall not adversely affect the interests of the Holders of the Debt
Securities of any series in any material respect; (5) to change or eliminate any
provisions of an Indenture, provided that any such change or elimination shall
become effective only when there are no Debt Securities Outstanding of any
series created prior thereto which are entitled to the benefit of such
provision; (6) to secure the Debt Securities; (7) to establish the form or
terms of Debt Securities of any series, including the provisions and procedures,
if applicable, for the conversion of such Debt Securities into Common Stock or
Preferred Stock of the Company; (8) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration of the
trusts under an Indenture by more than one Trustee; (9) to cure any ambiguity,
defect or inconsistency in an Indenture, provided that such action shall not
adversely affect the interests of Holders of Debt Securities of any series
issued under such Indenture in any material respect; or (10) to supplement any
of the provisions of an Indenture to the extent necessary to permit or
facilitate defeasance and discharge of any series of such Debt Securities,
provided that such action shall not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect
(Section 901).
Each Indenture will provide that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (1) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (2) the principal amount
of any Debt Security denominated in a foreign currency that shall be deemed
Outstanding shall be the U.S. dollar equivalent, determined on the issue date
for such Debt Security, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent on the issue date of such
Debt Security of the amount determined as provided in (1) above), (3) the
principal amount of an indexed security that shall be deemed Outstanding shall
be the principal face amount of such indexed security at original issuance,
unless otherwise provided with respect to such indexed security pursuant to the
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applicable Indenture, and (4) Debt Securities owned by the Company or any other
obligor under the Debt Securities or any affiliate of the Company or of such
other obligor shall be disregarded.
Each Indenture will contain provisions for convening meetings of the
Holders of Debt Securities of a series (Section 501). A meeting will be
permitted to be called at any time by the applicable Trustee, and also, upon
request, by the Company or the Holders of at least 10% in principal amount of
the Outstanding Debt Securities of such series, in any such case upon notice
given as provided in the Indenture. Except for any consent that must be given by
the Holder of each Debt Security affected by certain modifications and
amendments of an Indenture, any resolution presented at a meeting or adjourned
meeting duly reconvened at which a quorum is present may be adopted by the
affirmative vote of the Holders of a majority in principal amount of the
Outstanding Debt Securities of that series; provided, however, that, except as
referred to above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting or adjourned meeting
duly reconvened at which a quorum is present by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding Debt
Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance with
an Indenture will be binding on all Holders of Debt Securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be persons holding or representing a majority in principal amount
of the Outstanding Debt Securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver which
may be given by the Holders of not less than a specified percentage in principal
amount of the Outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum.
Notwithstanding the foregoing provisions, each Indenture will provide that
if any action is to be taken at a meeting of Holders of Debt Securities of any
series with respect to any request, demand, authorization, direction, notice,
consent, waiver and other action that such Indenture expressly provides may be
made, given or taken by the Holders of a specified percentage in principal
amount of all Outstanding Debt Securities affected thereby, or the Holders of
such series and one or more additional series: (i) there shall be no minimum
quorum requirement for such meeting, and (ii) the principal amount of the
Outstanding Debt Securities of such series that vote in favor of such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been made,
given or taken under such Indenture.
RANKING
The terms and conditions, if any, upon which the Debt Securities and any
guarantee of the Debt Securities are subordinated to other indebtedness of the
Company and the Guarantor will be set forth in the applicable Prospectus
Supplement relating thereto. Such terms will include a description of the
indebtedness ranking senior to the Debt Securities and any guarantee, the
restrictions on payments to the Holders of such Debt Securities and guarantees
while a default with respect to such senior indebtedness in continuing, the
restrictions, if any, on payments to the Holders of such Debt Securities
following an Event of Default, and provisions requiring Holders of such Debt
Securities to remit certain payments to holders of senior indebtedness.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may be permitted under the applicable Indenture to discharge
certain obligations to Holders of any series of Debt Securities issued
thereunder that have not already been delivered to the applicable Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the
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date of such deposit (if such Debt Securities have become due and payable) or to
the stated maturity or redemption date, as the case may be.
Each Indenture will provide that, if the provisions of Article Fourteen are
made applicable to the Debt Securities of or within any series pursuant to
Section 301 of such Indenture, the Company may elect either (a) to defease and
be discharged from any and all obligations with respect to such Debt Securities
(except for the obligation to pay additional amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities, and the obligations to register the
transfer or exchange of such Debt Securities, to replace temporary or mutilated,
destroyed, lost or stolen Debt Securities, to maintain an office or agency in
respect of such Debt Securities and to hold moneys for payment in trust)
("defeasance") (Section 1402) or (b) to be released from its obligations with
respect to such Debt Securities under certain specified sections of Article Ten
of such Indenture as specified in the applicable Prospectus Supplement and any
omission to comply with such obligations shall not constitute an Event of
Default with respect to such Debt Securities ("covenant defeasance") (Section
1403), in either case upon the irrevocable deposit by the Company with the
applicable Trustee, in trust, of an amount, in such currency or currencies,
currency unit or units or composite currency or currencies in which such Debt
Securities are payable at stated maturity, or Government Obligations (as defined
below), or both, applicable to such Debt Securities which through the scheduled
payment of principal and interest in accordance with their terms will provide
money in an amount sufficient without reinvestment to pay the principal of (and
premium, if any) and interest on such Debt Securities, and any mandatory sinking
fund or analogous payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Company has delivered to the applicable Trustee an opinion of
counsel (as specified in the applicable Indenture) to the effect that the
Holders of such Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
or covenant defeasance had not occurred, and such opinion of counsel, in the
case of defeasance, will be required to refer to and be based upon a ruling of
the Internal Revenue Service or a change in applicable U.S. federal income tax
law occurring after the date of the Indenture (Section 1404).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the foreign
currency in which the Debt Securities of such series are payable, the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation of the United States of America or such government, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligation held by such
custodian for the account of the Holder of a depository receipt, provided that
(except as required by applicable law) such custodian is not authorized to make
any deduction from the amount payable to the Holder of such depository receipt
from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the Government
Obligation evidenced by such depository receipt (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the applicable Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security will be deemed to have been, and
will be, fully discharged and satisfied
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through the payment of the principal of (and premium, if any) and interest on
such Debt Security as they become due out of the proceeds yielded by converting
the amount so deposited in respect of such Debt Security into the currency,
currency unit or composite currency in which such Debt Security becomes payable
as a result of such election or such cessation of usage based on the applicable
market exchange rate. "Conversion Event" means the cessation of use of (i) a
currency, currency unit or composite currency both by the government of the
country which issued such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a foreign currency
that ceases to be used by its government of issuance shall be made in U.S.
dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the Event of Default described
in clause (iv) under "--Events of Default, Notice and Waiver" above with respect
to certain specified sections of Article Ten of each Indenture (which sections
would no longer be applicable to such Debt Securities as a result of such
covenant defeasance) or described in clause (vii) under "--Events of Default,
Notice and Waiver" above with respect to any other covenant as to which there
has been covenant defeasance, the amount in such currency, currency unit or
composite currency in which such Debt Securities are payable, and Government
Obligations on deposit with the applicable Trustee, will be sufficient to pay
amounts due on such Debt Securities at the time of their stated maturity but may
not be sufficient to pay amounts due on such Debt Securities at the time of the
acceleration resulting from such Default. However, the Company would remain
liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Stock or Preferred Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Common Stock or Preferred
Stock, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the Holders
or the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities and any restrictions on conversion, including restrictions directed
at maintaining the Company's REIT status.
REDEMPTION OF SECURITIES
The Indenture provides that the Debt Securities may be redeemed at any time
at the option of the Company, in whole or in part, at the redemption price,
except as may otherwise be provided in connection with any Debt Securities or
series thereof.
From and after notice has been given as provided in the Indenture, if funds
for the redemption of any Debt Securities called for redemption shall have been
made available on such redemption date, such Debt Securities will cease to bear
interest on the date fixed for such redemption specified in such notice, and the
only right of the Holders of the Debt Securities will be to receive payment of
the redemption price.
Notice of any optional redemption of any Debt Securities will be given to
Holders at their addresses, as shown in the Company's books and records, not
more than 60 nor less than 30 days prior to the date fixed for redemption. The
notice of redemption will specify, among other items, the redemption price and
the principal amount of the Debt Securities held by such Holder to be redeemed.
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If the Company elects to redeem Debt Securities, it will notify the Trustee
at least 45 days prior to the redemption date (or such shorter period as
satisfactory to the Trustee) of the aggregate principal amount of Debt
Securities to be redeemed and the redemption date. If less than all of the Debt
Securities are to be redeemed, the Trustee shall select the Debt Securities to
be redeemed pro rata, by lot or in such manner as it shall deem fair and
appropriate.
DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue 35,000,000 shares of Preferred Stock. As
of May 31, 1998, there were 780,000 shares of Series A Cumulative Convertible
Redeemable Preferred Stock issued and outstanding (1,740,000 were issued
originally) and 8,000,000 shares of Series B Cumulative Redeemable Preferred
Stock. There were also 600,000 shares of Series C Cumulative Redeemable
Preferred Stock issued and outstanding and underlying 6,000,000 depositary
shares, which are traded publicly, and 200,000 shares of Series D Cumulative
Redeemable Preferred Stock issued and outstanding and underlying 2,000,000
depositary shares which are traded publicly.
Under the Company's Articles of Incorporation, the Board may from time to
time establish and issue one or more series of Preferred Stock. The Board may
classify or reclassify any unissued Preferred Stock by setting or changing the
number, designation, preference, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption of such series (a "Designating Amendment").
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's Articles of Incorporation and the
Company's bylaws (the "Bylaws").
GENERAL
The Board is empowered by the Company's Articles of Incorporation to
designate and issue from time to time one or more series of Preferred Stock
without stockholder approval. The Board may determine the relative rights,
preferences and privileges of each series of Preferred Stock so issued. Because
the Board has the power to establish the preferences and rights of each series
of Preferred Stock, it may afford the holders of any series of Preferred Stock
preferences, powers and rights, voting or otherwise, senior to the rights of
holders of Common Stock. The Preferred Stock will, when issued, be fully paid
and nonassessable.
The Prospectus Supplement relating to any Preferred Stock offered thereby
will contain the specific terms thereof, including, without limitation:
(1) The title and stated value of such Preferred Stock;
(2) The number of such shares of Preferred Stock offered, the
liquidation preference per share and the offering price of such Preferred
Stock;
(3) The dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock;
(4) The date from which dividends on such Preferred Stock will
accumulate, if applicable;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) The provision for a sinking fund, if any, for such Preferred
Stock;
(7) The provision for redemption, if applicable, of such Preferred
Stock;
(8) Any listing of such Preferred Stock on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock of the Company, including the
conversion price (or manner of calculation thereof);
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(10) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock;
(11) A discussion of federal income tax considerations applicable to
such Preferred Stock;
(12) The relative ranking and preferences of such Preferred Stock as
to dividend rights and rights upon liquidation, dissolution or winding up
of the affairs of the Company;
(13) Any limitations on issuance of any series of Preferred Stock
ranking senior to or on a parity with such series of Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company; and
(14) Any limitations on direct or beneficial ownership and
restrictions on transfer, in each case as may be appropriate to preserve
the status of the Company as a REIT.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company, rank (i) senior to all classes or
series of Common Stock of the Company, and to all equity securities ranking
junior to such Preferred Stock, (ii) on a parity with all equity securities
issued by the Company the terms of which specifically provide that such equity
securities rank on a parity with the Preferred Stock, and (iii) junior to all
equity securities issued by the Company the terms of which specifically provide
that such equity securities rank senior to the Preferred Stock. The term "equity
securities" does not include convertible debt securities.
DIVIDENDS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board, out of assets of the Company legally
available for payment, cash dividends (or dividends in kind or in other property
if expressly permitted and described in the applicable Prospectus Supplement) at
such rates and on such dates as will be set forth in the applicable Prospectus
Supplement. Each such dividend will be payable to holders of record as they
appear on the stock transfer books of the Company on such record dates as are
fixed by the Board.
Dividends on any series of Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board fails to declare a dividend
payable on a dividend payment date on any series of the Preferred Stock for
which dividends are non-cumulative, then the holders of such series of the
Preferred Stock will have no right to receive a dividend in respect of the
dividend period ending on such dividend payment date, and the Company will have
no obligation to pay the dividend accrued for such period, whether or not
dividends on such series are declared payable on any future dividend payment
date.
Unless otherwise specified in the Prospectus Supplement, if any shares of
Preferred Stock of any series are outstanding, no full dividends will be
declared or paid or set apart for payment on any capital stock of the Company of
any other series ranking, as to dividends, on a parity with or junior to the
Preferred Stock of such series for any period unless (i) if such series of
Preferred Stock has a cumulative dividend, full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Preferred Stock of such
series for all past dividend periods and the then current dividend period or
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Preferred Stock of such series. When dividends
are not paid in full (or a sum sufficient for such full payment is not so set
apart) upon Preferred Stock of any series and the shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Preferred Stock of
such series, all dividends declared upon Preferred Stock of such series and any
other series of Preferred Stock ranking on a parity as to dividends with such
Preferred Stock will be declared pro rata so that the amount of dividends
declared per share of Preferred Stock of such series and such other series of
Preferred Stock
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will in all cases bear to each other the same ratio that accrued dividends per
share on the Preferred Stock of such series (which will not include any
accumulation in respect of unpaid dividends for prior dividend periods if such
Preferred Stock do not have a cumulative dividend) and such other series of
Preferred Stock bear to each other. No interest, or sum of money in lieu of
interest, will be payable in respect of any dividend payment or payments on
Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past dividend periods and the then current
dividend period, and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period, no dividends (other than in Common Stock or other capital stock ranking
junior to the Preferred Stock of such series as to dividends and upon
liquidation) will be declared or paid or set aside for payment or other
distribution upon the Common Stock, or any other capital stock of the Company
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends or upon liquidation, nor will any Common Stock, or any other capital
stock of the Company ranking junior to or on a parity with the Preferred Stock
of such series as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such stock) by the
Company (except by conversion into or exchange for other capital stock of the
Company ranking junior to the Preferred Stock of such series as to dividends and
upon liquidation).
If for any taxable year, the Company elects to designate as "capital gains
dividends" (as defined in Section 857 of the Code) any portion (the "Capital
Gains Amount") of the dividends (within the meaning of the Code) paid or made
available for the year to holders of all classes of capital stock (the "Total
Dividends"), then the portion of the Capital Gains Amount that will be allocable
to the holders of shares of Preferred Stock will be the Capital Gains Amount
multiplied by a fraction, the numerator of which shall be the total dividends
(within the meaning of the Code) paid or made available to the holders of shares
of Preferred Stock for the year and the denominator of which shall be the Total
Dividends.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of the
Company, in whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that will be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
will not, if such Preferred Stock does not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of capital stock of the Company, the terms of such
Preferred Stock may provide that, if no such capital stock shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Stock will
automatically and mandatorily be converted into the applicable capital stock of
the Company pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all Preferred Stock of
any series shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the current dividend period and (ii) if such
series of Preferred Stock does not have a cumulative dividend, full dividends of
the Preferred Stock of any series have been or
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contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for payment for the then current dividend period, no
Preferred Stock of any series shall be redeemed unless all outstanding Preferred
Stock of such series are simultaneously redeemed; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Preferred Stock of
such series to preserve the REIT status of the Company or pursuant to a purchase
or exchange offer made on the same terms to holders of all outstanding Preferred
Stock of such series. In addition, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all outstanding shares
of any series of Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividends periods and the then current dividend period, and
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, the Company will not
purchase or otherwise acquire directly or indirectly any Preferred Stock of such
series (except by conversion into or exchange for capital stock of the Company
ranking junior to the Preferred Stock of such series as to dividends and upon
liquidation); provided, however, that the foregoing will not prevent the
purchase or acquisition of Preferred Stock of such series to preserve the REIT
status of the Company or pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding Preferred Stock of such series.
If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
or for which redemption is requested by such holder (with adjustments to avoid
redemption of fractional shares) or by lot in a manner determined by the
Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice will state: (i) the redemption date; (ii) the number of
shares and series of Preferred Stock to be redeemed; (iii) the redemption price;
(iv) the place or places where certificates for such Preferred Stock are to be
surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; and (vi) the
date upon which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all of the Preferred Stock of any series are to be
redeemed, the notice mailed to each such holder thereof will also specify the
number of shares of Preferred Stock to be redeemed from each such holder. If
notice of redemption of any Preferred Stock has been given and if the funds
necessary for such redemption have been set aside by the Company in trust for
the benefit of the holders of any Preferred Stock so called for redemption, then
from and after the redemption date dividends will cease to accrue on such
Preferred Stock, and all rights of the holders of such shares will terminate,
except the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment is made to
the holders of any Common Stock or any other class or series of capital stock of
the Company ranking junior to the Preferred Stock in the distribution of assets
upon any liquidation, dissolution or winding up of the Company, the holders of
each series of Preferred Stock shall be entitled to receive out of assets of the
Company legally available for distribution to stockholders liquidating
distributions in the amount of the liquidation preference per share (set forth
in the applicable Prospectus Supplement), plus an amount equal to all dividends
accrued and unpaid thereon (which will not include any accumulation in respect
of unpaid dividends for prior dividend periods if such Preferred Stock does not
have a cumulative dividend). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Preferred Stock will
have no right or claim to any of the remaining assets of the Company. In the
event that, upon any such voluntary or involuntary liquidation, dissolution or
winding up, the available assets of the Company are insufficient to pay the
amount of the liquidating distributions on all outstanding Preferred Stock and
the corresponding amounts payable on all shares of other classes or series of
capital stock of the Company ranking on a
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parity with the Preferred Stock in the distribution of assets, then the holders
of the Preferred Stock and all other such classes or series of capital stock
shall share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of the Company will be distributed among
the holders of any other classes or series of capital stock ranking junior to
the Preferred Stock upon liquidation, dissolution or winding up, according to
their respective rights and preferences and in each case according to their
respective number of shares. For such purposes, the consolidation or merger of
the Company with or into any other corporation, trust or entity, or the sale,
lease or conveyance of all or substantially all of the property or business of
the Company, will not be deemed to constitute a liquidation, dissolution or
winding up of the Company.
VOTING RIGHTS
Holders of Preferred Stock will not have any voting rights, except as set
forth below or as otherwise from time to time required by law or as indicated in
the applicable Prospectus Supplement.
Whenever dividends on any Preferred Stock shall be in arrears for six or
more consecutive quarterly periods, the holders of such Preferred Stock (voting
separately as a class with all other series of Preferred Stock upon which like
voting rights have been conferred and are exercisable) will be entitled to vote
for the election of two additional directors of the Company at a special meeting
called by the holders of record of at least ten percent (10%) of any series of
Preferred Stock so in arrears (unless such request is received less than 90 days
before the date fixed for the next annual or special meeting of the
shareholders) or at the next annual meeting of stockholders, and at each
subsequent annual meeting until (i) if such series of Preferred Stock has a
cumulative dividend, all dividends accumulated on such shares of Preferred Stock
for the past dividend periods and the then current dividend period shall have
been fully paid or declared and a sum sufficient for the payment thereof set
aside for payment or (ii) if such series of Preferred Stock do not have a
cumulative dividend, four consecutive quarterly dividends shall have been fully
paid or declared and a sum sufficient for the payment thereof set aside for
payment. In such case, the entire Board will be increased by two directors.
Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company will not, without the
affirmative vote or consent of the holders of at least two-thirds of each series
of shares of Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting (such series voting separately as a
class), (i) authorize or create, or increase the authorized or issued amount of,
any class or series of capital stock ranking prior to such series of Preferred
Stock with respect to the payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up or reclassify any authorized capital
stock of the Company into such shares, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
such shares, or (ii) amend, alter or repeal the provisions of the Company's
Articles of Incorporation or the Designating Amendment for such series of
Preferred Stock, whether by merger, consolidation or otherwise (an "Event"), so
as to materially and adversely affect any right, preference, privilege or voting
power of such series of Preferred Stock or the holders thereof; provided,
however, with respect to the occurrence of any of the Events set forth in clause
(ii) above, so long as the shares of Preferred Stock remain outstanding with the
terms thereof materially unchanged, taking into account that upon the occurrence
of an Event the Company may not be the surviving entity, the occurrence of any
such Event will not be deemed to materially and adversely affect such rights,
preferences, privileges or voting power of holders of Preferred Stock and
provided further that (x) any increase in the amount of the authorized Preferred
Stock or the creation or issuance of any other series of Preferred Stock, or (y)
any increase in the amount of authorized shares of such series or any other
series of Preferred Stock, in each case ranking on a parity with or junior to
the Preferred Stock of such series with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, will not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Preferred Stock
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of such series shall have been redeemed or called for redemption and sufficient
funds shall have been deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into Common Stock will be set forth in the applicable Prospectus
Supplement relating thereto. Such terms will include the number of shares of
Common Stock into which the Preferred Stock are convertible, the conversion
price (or manner of calculation thereof), the conversion period, provisions as
to whether conversion will be at the option of the holders of the Preferred
Stock or the Company, the events requiring an adjustment of the conversion price
and provisions affecting conversion in the event of the redemption of such
series of Preferred Stock.
RESTRICTIONS ON OWNERSHIP
As discussed below under "Description of Common Stock--Restrictions on
Transfer--Ownership Limits," for the Company to qualify as a REIT under the
Code, no more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer "individuals" (as defined in the Code
to include certain entities) during the last half of a taxable year (other than
the first year) or during a proportionate part of a shorter taxable year. To
assist the Company in meeting this requirement, the Articles of Incorporation
provide that no holder of Preferred Stock may own, or be deemed to own by virtue
of certain attribution provisions of the Code, more than 5% of any class or
series of Preferred Stock and/or more than 5% of the issued and outstanding
shares of Common Stock, subject to certain exceptions specified in the Articles
of Incorporation. See "Description of Common Stock--Restrictions on
Transfer--Ownership Limits."
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
GENERAL
The Company is authorized to issue 180,000,000 shares of Common Stock. The
outstanding Common Stock entitles the holder to one vote on all matters
presented to stockholders for a vote. Holders of Common Stock have no preemptive
rights. At May 31, 1998, there were 71,620,019 shares of Common Stock
outstanding.
Shares of Common Stock currently outstanding are listed for trading on the
New York Stock Exchange (the "NYSE"). The Company will apply to the NYSE to list
the additional Common Stock to be sold pursuant to any Prospectus Supplement,
and the Company anticipates that such shares will be so listed.
Subject to such preferential rights as may be granted by the Board in
connection with the future issuance of Preferred Stock, holders of Common Stock
are entitled to one vote per share on all matters to be voted on by stockholders
and are entitled to receive ratably such dividends as may be declared on the
Common Stock by the Board in its discretion from funds legally available
therefor. In the event of the liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of all debts and other liabilities and any liquidation
preference of the holders of Preferred Stock. Holders of Common Stock have no
subscription, redemption, conversion or preemptive rights. Matters submitted for
stockholder approval generally require a majority vote of the shares present and
voting thereon.
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ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS
The Bylaws of the Company provide that, with respect to an annual meeting
of stockholders, the proposal of business to be considered by stockholders may
be made only (i) by or at the direction of the Board or (ii) by a stockholder
who is entitled to vote at the meeting and who has complied with the advance
notice procedures set forth in the Bylaws. In addition, with respect to any
meeting of stockholders, nominations of persons for election to the Board may be
made only (i) by or at the direction of the Board or (ii) by any stockholder of
the Company who is entitled to vote at the meeting and has complied with the
advance notice provisions set forth in the Bylaws.
RESTRICTIONS ON TRANSFER
Ownership Limits. The Company's Articles of Incorporation contain certain
restrictions on the number of shares of Common Stock that individual
shareholders may own. For the Company to qualify as a REIT under the Code, no
more than 50% in value of its outstanding capital stock may be owned, directly
or indirectly, by five or fewer "individuals" (as defined in the Code to include
certain entities) during the last half of a taxable year (other than the first
year) or during a proportionate part of a shorter taxable year. The capital
stock also must be beneficially owned by 100 or more persons during at least 335
days of a taxable year or during a proportionate part of a shorter taxable year.
Because the Company intends to maintain its qualification as a REIT, the
Company's Articles of Incorporation contain certain restrictions on the
ownership and transfer of capital stock, including Common Stock, intended to
ensure compliance with these requirements.
Subject to certain exceptions specified in the Articles of Incorporation,
no holder may own, or be deemed to own by virtue of certain attribution
provisions of the Code, more than (A) 5% of the issued and outstanding shares of
Common Stock (the "Common Stock Ownership Limit") and/or (B) more than 5% of any
class or series of Preferred Stock. (This limit, in addition to the Existing
Holder Limit, the Special Shareholder Limit, and the Non U.S. Shareholder Limit,
all as defined below, are referred to collectively herein as the "Ownership
Limits.") Existing Holders, including Clark Enterprises Inc., The Oliver Carr
Company, Oliver T. Carr, Jr., and A. James Clark, are not subject to the Common
Stock Ownership Limit, but they are subject to special ownership limitations
(the "Existing Holder Limit"). Furthermore, SC-USREALTY and its affiliates are
not subject to the Common Stock Ownership Limit, but are subject to a special
ownership limit of 45% of the outstanding shares of Common Stock and 45% of the
outstanding shares of each class or series of preferred stock of the Company
(the "Special Shareholder Limit"). Furthermore, all holders are prohibited from
acquiring any capital stock if such acquisition would cause five beneficial
owners of capital stock to beneficially own in the aggregate more than 50% in
value of the outstanding capital stock.
In addition to the above restrictions on ownership of shares of capital
stock of the Company, in order to assist the Company in qualifying as a
"domestically controlled REIT," the Articles of Incorporation contain certain
provisions preventing any Non-U.S. Shareholder (as defined below) (other than
SC-USREALTY and its affiliates) from acquiring additional shares of the
Company's capital stock if, as a result of such acquisition, the Company would
fail to qualify as a "domestically controlled REIT" (computed assuming that
SC-USREALTY owns the maximum percentage of the Company's capital stock that it
is permitted to own under the Special Shareholder Limit) (the "Non-U.S.
Shareholder Limit"). A Non-U.S. Shareholder is a nonresident alien individual,
foreign corporation, foreign partnership and any other foreign shareholder. For
a discussion of the taxation of a Non-U.S. Shareholder and the requirements for
the Company to qualify as a "domestically controlled REIT," see "Federal Income
Tax Considerations--Taxation of Holders of Common Stock--Taxation of Non-U.S.
Shareholders." The Company is unlikely to be able to advise a prospective
Non-U.S. Shareholder that its purchase of any shares of the Company's capital
stock would not violate this prohibition, thereby subjecting such prospective
Non-U.S. Shareholder to the adverse consequences described under "--Violation of
Ownership Limits" below. Accordingly, an acquisition of the Company's capital
stock would not likely be a suitable investment for Non-U.S. Shareholders other
than SC-USREALTY.
The Board may increase the Ownership Limits from time to time, but may not
do so to the extent that, after giving effect to such increase, five beneficial
owners of shares of capital stock could beneficially
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own in the aggregate more than 49.5% of the value of the Company's outstanding
shares of capital stock. The Board, in its sole discretion, may waive the
Ownership Limits with respect to a holder if such holder's ownership will not
then or in the future jeopardize the Company's status as a REIT.
Violation of Ownership Limits. The Articles of Incorporation provide that,
if any holder of capital stock of the Company purports to transfer shares to a
person or there is a change in the capital structure of the Company and either
the transfer or the change in capital structure would result in the Company
failing to qualify as a REIT, or such transfer or the change in capital
structure would cause the transferee to hold shares in excess of the applicable
Ownership Limit (including the Non-U.S. Shareholder Limit), then the capital
stock being transferred (or in the case of an event other than a transfer, the
capital stock beneficially owned) that would cause one or more of the
restrictions on ownership or transfer to be violated will be automatically
transferred to a trust for the benefit of a designated charitable beneficiary.
The purported transferee of such shares shall have no right to receive dividends
or other distributions with respect to such shares and shall have no right to
vote such shares. Any dividends or other distributions paid to such purported
transferee prior to the discovery by the Company that the shares have been
transferred to a trust shall be paid upon demand to the trustee of the trust for
the benefit of the charitable beneficiary. The trustee of the trust will have
all rights to dividends with respect to the shares of capital stock held in
trust, which rights will be exercised for the exclusive benefit of the
charitable beneficiary. Any dividends or distributions paid over to the trustee
will be held in trust for the charitable beneficiary. The trustee shall
designate a transferee of such stock so long as such shares of stock would not
violate the Ownership Limitations in the hands of such designated transferee.
Upon the sale of such shares, the purported transferee shall receive the lesser
of (A) (i) the price per share such purported transferee paid for the capital
stock in the purported transfer that resulted in the transfer of shares of
capital stock to the trust, or (ii) if the transfer or other event that resulted
in the transfer of shares of capital stock to the trust was not a transaction in
which the purported record transferee of shares of capital stock gave full value
for such shares, a price per share equal to the market price on the date of the
purported transfer or other event that resulted in the transfer of the shares to
the trust, and (B) the price per share received by the trustee from the sale or
disposition of the shares held in the trust.
All certificates representing Common Stock will bear a legend referring to
the restrictions described above.
Every owner of more than 5% (or such lower percentage as required by the
Code or regulations thereunder) of the issued and outstanding shares of Common
Stock must file a written notice with the Company containing the information
specified in the Articles of Incorporation no later than December 31 of each
year. In addition, each stockholder shall upon demand be required to disclose to
the Company in writing such information as the Company may request in good faith
in order to determine the Company's status as a REIT.
REGISTRAR AND TRANSFER AGENT
The Registrar and Transfer Agent for the Common Stock is BankBoston, N.A.
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DESCRIPTION OF WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Stock and Debt Warrants for the purchase of Debt Securities. Such Warrants may
be issued separately or together with other Securities offered by a Prospectus
Supplement and may be attached to or detached from such Securities. Each series
of Warrants will be issued under a separate warrant agreement (each, a "Warrant
Agreement") to be entered into between the Company and a warrant agent specified
in the applicable Prospectus Supplement (the "Warrant Agent"). The following
sets forth certain general terms and provisions of the Warrants offered hereby.
Further terms of the Warrants and the applicable Warrant Agreements will be set
forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the
Warrants in respect of which this Prospectus is being delivered, including,
where applicable, the following: (1) the title; (2) the currencies in which the
Warrants are being offered; (3) the offering price or prices; (4) the number of
Warrants offered, (5) the Securities underlying the Warrants; (6) the date, if
any, on and after which the Warrants and any related Securities will be
separately transferable; (7) the price at which each of the Securities
purchasable upon exercise of the Warrants may be purchased; (8) the date on
which the right to exercise the Warrants shall commence and the date on which
such right shall expire; (9) the minimum or maximum number of Warrants that may
be exercised at any one time; (10) the procedures for exercise of the Warrants
and the circumstances, if any, that will cause the Warrants to be deemed to be
exercised automatically; (11) a discussion of certain federal income tax
considerations; and (12) any other terms of the Warrants.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable Prospectus
Supplement. Shares of Preferred Stock of each series represented by Depositary
Shares will be deposited under a separate deposit agreement (each, a "Deposit
Agreement") among the Company, the depositary named therein (a "Preferred Stock
Depositary") and the holders from time to time of the Depositary Receipts.
Subject to the terms of the applicable Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest of
a share of a particular series of Preferred Stock represented by the Depositary
Shares evidenced by such Depositary Receipt, to all the rights and preferences
of the Preferred Stock represented by such Depositary Shares (including
dividend, voting, conversion, redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Stock by the Company to a Preferred Stock
Depositary, the Company will cause such Preferred Stock Depositary to issue, on
behalf of the Company, the Depositary Receipts. Copies of the applicable form of
Deposit Agreement and Depositary Receipt may be obtained from the Company upon
request, and the statements made hereunder relating to Deposit Agreements and
the Depositary Receipts to be issued thereunder are summaries of certain
anticipated provisions thereof and do not purport to be complete and are subject
to,
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and qualified in their entirety by reference to, all of the provisions of the
applicable Deposit Agreement and related Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
A Preferred Stock Depositary will be required to distribute all cash
dividends or other cash distributions received in respect of the applicable
Preferred Stock to the record holders of Depositary Receipts evidencing the
related Depositary Shares in proportion to the number of such Depositary
Receipts owned by such holders, subject to certain obligations of holders to
file proofs, certificates and other information and to pay certain charges and
expenses to such Preferred Stock Depositary.
In the event of a distribution other than in cash, a Preferred Stock
Depositary will be required to distribute property received by it to the record
holders of Depositary Receipts entitled thereto, subject to certain obligations
of holders to file proofs, certificates and other information and to pay certain
charges and expenses to such Preferred Stock Depositary, unless such Preferred
Stock Depositary determines that it is not feasible to make such distribution,
in which case such Preferred Stock Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock which has been converted or
exchanged before the record date for such distribution.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the applicable Preferred Stock Depositary (unless the related Depositary Shares
have previously been called for redemption or converted), the holders thereof
will be entitled to delivery at such office, to or upon each such holder's
order, of the number of whole or fractional shares of the applicable Preferred
Stock and any money or other property represented by the Depositary Shares
evidenced by such Depositary Receipts. Holders of Depositary Receipts will be
entitled to receive whole or fractional shares of the related Preferred Stock on
the basis of the proportion of Preferred Stock represented by each Depositary
Share as specified in the applicable Prospectus Supplement, but holders of such
shares of Preferred Stock will not thereafter be entitled to receive Depositary
Shares therefor. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of shares of Preferred Stock to be withdrawn, the
applicable Preferred Stock Depositary will be required to deliver to such holder
at the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by a Preferred
Stock Depositary, such Preferred Stock Depositary will be required to redeem as
of the same redemption date the number of Depositary Shares representing shares
of the Preferred Stock so redeemed, provided the Company shall have paid in full
to such Preferred Stock Depositary the redemption price of the Preferred Stock
to be redeemed plus an amount equal to any accrued and unpaid dividends thereon
to the date fixed for redemption. The redemption price per Depositary Share will
be equal to the redemption price and any other amounts per share payable with
respect to the Preferred Stock. If fewer than all the Depositary Shares are to
be redeemed, the Depositary Shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional Depositary Shares) or
by any other equitable method determined by the Company that preserves the REIT
status of the Company.
From and after the date fixed for redemption, all dividends in respect of
the shares of Preferred Stock so called for redemption will cease to accrue, the
Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts evidencing
the Depositary Shares so called for redemption will cease, except the right to
receive any moneys payable upon such redemption and any money or other property
to which the holders of such Depositary Receipts
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were entitled upon such redemption upon surrender thereof to the applicable
Preferred Stock Depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
applicable Preferred Stock are entitled to vote, a Preferred Stock Depositary
will be required to mail the information contained in such notice of meeting to
the record holders of the Depositary Receipts evidencing the Depositary Shares
which represent such Preferred Stock. Each record holder of Depositary Receipts
evidencing Depositary Shares on the record date (which will be the same date as
the record date for the Preferred Stock) will be entitled to instruct such
Preferred Stock Depositary as to the exercise of the voting rights pertaining to
the amount of Preferred Stock represented by such holder's Depositary Shares.
Such Preferred Stock Depositary will be required to vote the amount of Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all reasonable action which may
be deemed necessary by such Preferred Stock Depositary in order to enable such
Preferred Stock Depositary to do so. Such Preferred Stock Depositary will be
required to abstain from voting the amount of Preferred Stock represented by
such Depositary Shares to the extent it does not receive specific instructions
from the holders of Depositary Receipts evidencing such Depositary Shares. A
Preferred Stock Depositary will not be responsible for any failure to carry out
any instruction to vote, or for the manner or effect of any such vote made, as
long as any such action or non-action is in good faith and does not result from
negligence or willful misconduct of such Preferred Stock Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the Depositary Share evidenced by such Depositary
Receipt, as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, will not be convertible into Common Stock
or any other securities or property of the Company. Nevertheless, if so
specified in the applicable Prospectus Supplement relating to an offering of
Depositary Shares, the Depositary Receipts may be surrendered by holders thereof
to the applicable Preferred Stock Depositary with written instructions to such
Preferred Stock Depositary to instruct the Company to cause conversion of the
Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipts into whole shares of Common Stock, other shares of Preferred
Stock of the Company or other shares of stock, and the Company will agree that
upon receipt of such instructions and any amounts payable in respect thereof, it
will cause the conversion thereof utilizing the same procedures as those
provided for delivery of Preferred Stock to effect such conversion. If the
Depositary Shares evidenced by a Depositary Receipt are to be converted in part
only, a new Depositary Receipt or Receipts will be issued for any Depositary
Shares not to be converted. No fractional shares of Common Stock will be issued
upon conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Stock on the last
business day prior to the conversion.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
Any form of Depositary Receipt evidencing Depositary Shares which will
represent Preferred Stock and any provision of a Deposit Agreement will be
permitted at any time to be amended by agreement between the Company and the
applicable Preferred Stock Depositary. However, any amendment that materially
and adversely alters the rights of the holders of Depositary Receipts or that
would be materially and adversely inconsistent with the rights granted to the
holders of the related Preferred Stock will not be effective unless such
amendment has been approved by the existing holders of at least two-thirds of
the applicable Depositary Shares evidenced by the applicable Depositary Receipts
then outstanding. No amendment shall impair the right, subject to certain
anticipated exceptions in the Deposit Agreements, of any holders of Depositary
Receipts to surrender any Depositary Receipt with instructions to deliver to the
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holder the related Preferred Stock and all money and other property, if any,
represented thereby, except in order to comply with law. Every holder of an
outstanding Depositary Receipt at the time any such amendment becomes effective
shall be deemed, by continuing to hold such Depositary Receipt, to consent and
agree to such amendment and to be bound by the applicable Deposit Agreement as
amended thereby.
A Deposit Agreement will be permitted to be terminated by the Company upon
not less than 30 days' prior written notice to the applicable Preferred Stock
Depositary if (i) such termination is necessary to preserve the Company's status
as a REIT or (ii) a majority of each series of Preferred Stock affected by such
termination consents to such termination, whereupon such Preferred Stock
Depositary will be required to deliver or make available to each holder of
Depositary Receipts, upon surrender of the Depositary Receipts held by such
holder, such number of whole or fractional shares of Preferred Stock as are
represented by the Depositary Shares evidenced by such Depositary Receipts
together with any other property held by such Preferred Stock Depositary with
respect to such Depositary Receipts. The Company will agree that if a Deposit
Agreement is terminated to preserve the Company's status as a REIT, then the
Company will use its best efforts to list the Preferred Stock issued upon
surrender of the related Depositary Shares on a national securities exchange. In
addition, a Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares thereunder shall have been redeemed, (ii) there
shall have been a final distribution in respect of the related Preferred Stock
in connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such Preferred Stock or
(iii) each share of the related Preferred Stock shall have been converted into
stock of the Company not so represented by Depositary Shares.
CHARGES OF THE PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement under which the
Depositary Shares are issued. In addition, the Company will pay the fees and
expenses of the Preferred Stock Depositary in connection with the performance of
its duties under the Deposit Agreement. However, holders of Depositary Receipts
will pay the fees and expenses of the Preferred Stock Depositary for any duties
requested by such holders to be performed which are outside of those expressly
provided for in the applicable Deposit Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary will be permitted to resign at any time by
delivering to the Company notice of its election to do so, and the Company will
be permitted at any time to remove the Preferred Stock Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Preferred Stock Depositary. A successor Preferred Stock Depositary will be
required to be appointed within 60 days after delivery of the notice of
resignation or removal and will be required to be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will be required to forward to holders of
Depositary Receipts any reports and communications from the Company which are
received by such Preferred Stock Depositary with respect to the related
Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under a Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under a Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence (in the case of any action or inaction in the voting of Preferred
Stock represented by the applicable Depositary Shares), gross negligence or
willful misconduct, and neither the Company nor the Preferred Stock Depositary
will be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Receipts, Depositary Shares or shares of Preferred Stock represented
thereby unless satisfactory indemnity is furnished. The Company and the
Preferred Stock Depositary will be permitted to rely on
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written advice of counsel or accountants, or information provided by persons
presenting shares of Preferred Stock represented thereby for deposit, holders of
Depositary Receipts or other persons believed in good faith to be competent to
give such information, and on documents believed in good faith to be genuine and
signed by a proper party.
In the event the Preferred Stock Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on the
one hand, and the Company on the other hand, such Preferred Stock Depositary
shall be entitled to act on such claims, requests or instructions received from
the Company.
BOOK-ENTRY SECURITIES
The Securities may be issued in whole or in part in book-entry form,
meaning that beneficial owners of the Securities will not receive certificates
representing their ownership interests in the Securities, except in the event
the book-entry system for the Securities is discontinued. If the Securities are
issued in book-entry form, they will be issued, the form of one or more global
securities (the "Global Securities"), which will be deposited with, or on behalf
of, a depositary identified in the applicable Prospectus Supplement relating to
such series. Global Securities may be issued in either registered or bearer form
and in either temporary or permanent form. The specific terms of the depositary
arrangement with respect to a class or series of Securities issued in book-entry
form will be described in the applicable Prospectus Supplement relating to such
class or series.
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FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following discussion summarizes the material federal income tax
considerations to a prospective holder of Common Stock. The following discussion
is for general information only, is not exhaustive of all possible tax
considerations and is not intended to be and should not be construed as tax
advice. For example, this summary does not give a detailed discussion of any
state, local or foreign tax considerations. In addition, this discussion is
intended to address only those federal income tax considerations that are
generally applicable for all Security holders in the Company. It does not
discuss all of the aspects of federal income taxation that may be relevant to a
prospective Security holder in light of his or her particular circumstances or
to certain types of Security holders who are subject to special treatment under
the federal income tax laws including, without limitation, insurance companies,
tax-exempt entities, financial institutions or broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States.
If the Company offers one or more series of Preferred Stock, Depositary Shares,
Common Stock Warrants or Debt Securities, then there may be tax consequences for
the holders of such Securities not discussed herein. For a discussion of any
such additional consequences, see the applicable Prospectus Supplement.
The information in this section is based on the Code (including the
provisions of the Taxpayer Relief Act of 1997 (the "1997 Act"), several of which
are described herein), current, temporary and proposed Treasury Regulations, the
legislative history of the Code, current administrative interpretations and
practices of the IRS (including its practices and policies as endorsed in
private letter rulings, which are not binding on the IRS except with respect to
the taxpayer that receives such a ruling), and court decisions, all as of the
date hereof. No assurance can be given that future legislation, Treasury
Regulations, administrative interpretations and court decisions will not
significantly change current law or adversely affect existing interpretations of
current law. Any such change could apply retroactively to transactions preceding
the date of the change. Except as described below in "--Requirements for
Qualification--Income Tests," the Company has not received any rulings from the
IRS concerning the tax treatment of the Company. Thus no assurance can be
provided that the statements set forth herein (which do not bind the IRS or the
courts) will not be challenged by the IRS or will be sustained by a court if so
challenged.
As used under this heading, the term "Company" refers solely to CarrAmerica
Realty Corporation.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE,
OWNERSHIP AND SALE OF SECURITIES OF AN ENTITY ELECTING TO BE TAXED AS A REIT,
INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH
PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL CHANGES IN APPLICABLE
TAX LAWS.
TAXATION OF THE COMPANY
General. The Company has elected to be taxed as a REIT under Sections 856
through 860 of the Code commencing with its taxable year ended December 31,
1993. The Company believes that it was organized and has operated in a manner so
as to qualify for taxation as a REIT under the Code, and the Company intends to
continue to operate in such a manner. No assurance, however, can be given that
the Company has operated in a manner so as to qualify as a REIT or that it will
continue to operate in such a manner in the future. Qualification and taxation
as a REIT depends upon the Company's ability to meet on a continuing basis
(through actual annual operating results, distribution levels and diversity of
stock ownership) the various qualification tests imposed under the Code on
REITs, some of which are summarized below. While the Company intends to operate
so that it qualifies as a RElT, given the highly complex nature of the rules
governing REITs, the ongoing importance of factual determinations, and the
possibility of future changes in circumstances of the Company, no assurance can
be given that the Company has satisfied or will continue to satisfy such tests.
See "--Failure to Qualify" below.
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The following is a general summary of the Code provisions that govern the
federal income tax treatment of a REIT and its shareholders. These provisions of
the Code are highly technical and complex. This summary is qualified in its
entirety by the applicable Code provisions, Treasury Regulations and
administrative and judicial interpretations thereof, all of which are subject to
change prospectively or retroactively.
In any year in which the Company qualifies for taxation as a REIT, it
generally will not be subject to federal corporate income taxes on net income
that it distributes currently to shareholders. However, the Company will be
subject to federal income tax in the following circumstances. First, the Company
will be taxed at regular corporate rates on any undistributed REIT taxable
income, including undistributed net capital gains. Second, under certain
circumstances, the Company may be subject to the "alternative minimum tax" on
any items of tax preference. Third, if the Company has (i) net income from the
sale or other disposition of certain "foreclosure property" that is held
primarily for sale to customers in the ordinary course of business or (ii) other
nonqualifying income from foreclosure property, it will be subject to tax at the
highest corporate rate on such income. Fourth, if the Company has net income
from prohibited transactions (which are, in general, certain sales or other
dispositions of property (other than foreclosure property) held primarily for
sale to customers in the ordinary course of business), such income will be
subject to a 100% tax. Fifth, if the Company should fail to satisfy the 75%
gross income test or the 95% gross income test (discussed below), and
nonetheless should maintain its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on the net income
attributable to the greater of either the amount by which it fails the 75% gross
income test or the amount by which it fails the 95% gross income test. Sixth, if
the Company should fail to distribute during each calendar year at least the sum
of (i) 85% of its REIT ordinary income for such year, (ii) 95% of its REIT
capital gain net income for such year, and (iii) any undistributed taxable
income from prior periods, it would be subject to a 4% excise tax on the excess
of such required distribution over the amounts actually distributed. Seventh, if
the Company acquires or has acquired any asset from a C corporation (i.e., a
corporation generally subject to full corporate-level tax) in a transaction in
which the basis of the asset in the acquiror's hands is determined by reference
to the basis of the asset (or any other asset) in the hands of the C corporation
and the acquiror recognizes gain on the disposition of such asset during the 10
year period beginning on the date on which such asset was acquired by it, then
to the extent of such asset's "Built-In Gain" (i.e.,the excess of (a) the fair
market value of such asset at the time of the acquisition by the Company over
(b) the adjusted basis in such asset, determined as of the time of such
acquisition), such gain will be subject to tax at the highest regular corporate
rate applicable, pursuant to anticipated Treasury Regulations that have not yet
been promulgated. This result with respect to the recognition of Built-In Gain
assumes that the Company will make an election pursuant to IRS Notice 88-19 with
respect to any such acquisition.
Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) that is managed by one or more trustees or directors,
(2) the beneficial ownership of which is evidenced by transferable shares of
stock, or by transferable certificates of beneficial interest, (3) that would be
taxable as a domestic corporation, but for Sections 856 through 859 of the Code,
(4) that is neither a financial institution nor an insurance company subject to
certain provisions of the Code, (5) the beneficial ownership of which is held by
100 or more persons, (6) that during the last half of each taxable year not more
than 50% in value of the outstanding stock of which is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities), and (7) that meets certain other tests, described below,
regarding the nature of its income and assets. The Code provides that conditions
(1) through (4), inclusive, must be met during the entire taxable year and that
condition (5) must be met during at least 335 days of a taxable year of 12
months, or during a proportionate part of a taxable year of less than 12 months.
The Company's Articles of Incorporation contain restrictions regarding the
transfer of its capital stock that are intended to assist the Company in
continuing to satisfy the stock ownership requirements described in conditions
(5) and (6). See "Description of Common Stock--Restrictions on Transfer."
Moreover, pursuant to the 1997 Act, for the Company's taxable years commencing
on or after January 1, 1998, if the Company complies with regulatory rules
pursuant to which it is required to send annual letters to holders of its
capital stock requesting information regarding the actual ownership of the
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capital stock, and the Company does not know, or exercising reasonable diligence
would not have known, whether it failed to meet requirement (6) above, the
Company will be treated as having met the requirement.
Income Tests. In order to maintain qualification as a REIT, the Company
must satisfy certain gross income requirements, which are applied on an annual
basis. First, at least 75% of the Company's gross income (excluding gross income
from prohibited transactions) for each taxable year must be derived directly or
indirectly from investments relating to real property or mortgages on real
property (including "rents from real property" and, in certain circumstances,
interest) or from certain types of temporary investments. Second, at least 95%
of the Company's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from the same items which
qualify under the 75% income test, and from dividends, interest and gain from
the sale or disposition of stock or securities, or from any combination of the
foregoing. For its taxable years ending on or before December 31, 1997, the
Company was subject to a third gross income test which required that short-term
gain from the sale or other disposition of stock or securities, gain from
prohibited transactions and gain on the sale or other disposition of real
property held for less than four years (apart from involuntary conversions and
sales of foreclosure property) must have represented less than 30% of the
Company's gross income (including gross income from prohibited transactions).
Pursuant to the 1997 Act, the Company will not have to meet the 30% test for its
taxable years commencing on or after January 1, 1998.
Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions (related to the identity of the tenant, the computation of
the rent payable, and the nature of the property leased) are met. The Company
does not anticipate receiving rents that fail to meet these conditions in an
amount that reasonably could be expected to cause it to fail to meet the 75% and
95% gross income tests. In addition, for rents received to qualify as "rents
from real property," the Company generally must not operate or manage the
property or furnish or render services to tenants, other than through an
"independent contractor" from whom the Company derives no revenue. The
"independent contractor" requirement, however, does not apply to the extent the
services are "usually or customarily rendered" in connection with the rental
space for occupancy only and are not otherwise considered "rendered to the
occupant" ("Permissible Services"). The Company will provide certain services
with respect to the properties through entities that do not satisfy the
"independent contractor" requirements described above. The Company has received
a ruling from the IRS that the provision of certain services will not cause the
rents received with respect to the properties to fail to qualify as "rents from
real property." Based upon the IRS ruling and its experience in the office
rental markets in which the Company's properties are located, the Company
believes that all services provided to tenants will be considered "usually or
customarily rendered" in connection with the rental of office space for
occupancy only, although there can be no assurance that the IRS will not contend
otherwise. If the Company contemplates providing services, either directly or
through another entity, in the future that reasonably might be expected not to
meet the "usual or customary" standard, it will arrange to have such services
provided by an independent contractor from which the Company will receive no
income.
Pursuant to the 1997 Act, for the Company's taxable years commencing on or
after January 1, 1998, rents received generally will qualify as rents from real
property notwithstanding the fact that the Company provides services that are
not Permissible Services so long as the amount received for such services meets
a de minimis standard. The amount received for "impermissible services" with
respect to a property will be de minimis so long as such amount does not exceed
one percent of all amounts received, directly or indirectly, by the Company with
respect to such property. The amount that the Company will be deemed to have
received for performing "impermissible services" will be the greater of the
actual amount so received or 150% of the direct cost to the Company of providing
such "impermissible services."
The Company may receive fees in consideration of the performance of
management and administrative services with respect to properties that are not
owned entirely by the Company. A portion of such management and administrative
fees (corresponding to that portion of a property owned by a third party)
generally will not qualify under the 75% or 95% gross income tests. The Company
also may
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receive other types of income with respect to the properties that it owns that
will not qualify for the 75% or 95% gross income tests. The Company believes,
however, that the aggregate amount of such fees and other non-qualifying income
in any taxable year will not cause the Company to exceed the limits on
non-qualifying income under the 75% and 95% gross income tests.
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. It is not
possible, however, to state whether in all circumstances the Company would be
entitled to the benefit of these relief provisions. Even if these relief
provisions were to apply, however, a 100% tax would be imposed with respect to
the "excess net income" attributable to the failure to satisfy the 75% and 95%
gross income tests.
Asset Tests. At the close of each quarter of its taxable year, the Company
also must satisfy the following three tests relating to the nature of its
assets: (i) at least 75% of the value of the Company's total assets must be
represented by "real estate assets," cash, cash items and government securities;
(ii) not more than 25% of the Company's total assets may be represented by
securities other than those in the 75% asset class; and (iii) of the investments
included in the 25% asset class, the value of any one issuer's securities (other
than an interest in a partnership, shares of a "qualified REIT subsidiary" or
another REIT, but including any unsecured debt of Carr Realty, L.P. or
CarrAmerica Realty, L.P.) owned by the Company may not exceed 5% of the value of
the Company's total assets, and the Company may not own more than 10% of any one
issuer's outstanding voting securities (other than an interest in a partnership,
shares of a "qualified REIT subsidiary" or another REIT). The 5% value
requirement must be satisfied not only on the date the Company acquired
securities of the Non-qualified REIT Subsidiaries, but also each time the
Company increases its ownership of securities of the Non-qualified REIT
subsidiaries.
The Company owns directly all of the non-voting stock, representing 95% of
the equity, of Omni UK, OmniOffices and CarrAmerica Development. By virtue of
its ownership of CRLP Units, the Company will be considered to own its pro rata
share of the assets of Carr Realty, L.P., including the securities of Carr
Services, Inc. (Carr Services, Inc., OmniOffices, Omni UK and CarrAmerica
Development are referred to collectively herein as the "Non-qualified REIT
Subsidiaries.") Neither Carr Realty, L.P., CarrAmerica Realty, L.P., nor the
Company will own more than 10% of the voting securities of any Non-qualified
REIT Subsidiary. There can be no assurance, however, that the IRS might not
contend that the arrangements between the Company and the Non-qualified REIT
Subsidiaries are such that the Company should be considered to own more than 10%
of the voting securities of one or both of these entities. In addition, the
Company and its senior management believe that the Company's pro rata share of
the value of the securities of each such Non-qualified REIT Subsidiary and of
any unsecured debt of Carr Realty, L.P. and CarrAmerica Realty, L.P. owned by
the Company will not exceed 5% of the total value of the Company's assets. In
this regard, if OmniOffices and Omni UK were to be viewed for federal income tax
purposes as a single corporation, the Company might not satisfy the 5%
limitation with respect to that corporation. The Company has represented that
OmniOffices and Omni UK will be operated as separate entities. There can be no
assurance, however, that the IRS might not contend either that the value of the
securities of one or more of the Non-qualified REIT Subsidiaries exceeds the 5%
value limitation or that all or some of the Non-qualified REIT subsidiaries
shall be viewed as a single corporation for purposes of the 5% value limitation
and that the value of that corporation exceeds the 5% value limitation. Although
the Company plans to take steps to ensure that it continues to satisfy the 5%
test for any quarter with respect to which retesting is to occur, there can be
no assurance that such steps will be successful or will not require a reduction
in the Company's overall interest in one or more of the Non-qualified REIT
Subsidiaries.
Annual Distribution Requirements. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its shareholders in an amount at least equal to (i) the sum of (a) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Company's net capital gain) and (b) 95% of the net income
(after tax), if any, from foreclosure property, minus (ii) the sum of certain
items of noncash income. In addition, if the Company disposes of any Built-In
Gain Asset during its Recognition Period, the Company will be required, pursuant
to Treasury Regulations which have not yet been promulgated, to distribute at
least 95% of the Built-In Gain (after tax), if any, recognized on the
disposition of such asset. See "--General" above for a discussion of "Built-In
Gain Assets." Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before the Company timely
files its tax return for such year and if paid on or before the first regular
dividend payment date after such declaration.
To the extent that the Company does not distribute all of its net capital
gain or distributes at least 95%, but less than 100%, of its "REIT taxable
income," as adjusted, it will be subject to tax thereon at regular ordinary and
capital gain corporate tax rates. The Company may elect to require the
shareholders to include the Company's undistributed net capital gains in their
income by designating, in a written
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notice to shareholders, those amounts as undistributed capital gains in respect
of its shareholders' shares. If the Company makes such an election, the
shareholders will (i) include in their income as capital gains their
proportionate share of such undistributed capital gains and (ii) be deemed to
have paid their proportionate share of the tax paid by the Company on such
undistributed capital gains and thereby receive a credit or refund for such
amount. A shareholder will increase the basis in its Common Shares by the
difference between the amount of capital gain included in its income and the
amount of the tax that the Company is deemed to have paid on the shareholder's
behalf. The earnings and profits of the Company will be adjusted appropriately.
For a more detailed description of the tax consequences to a shareholder of such
a designation, see "--Taxation of Holders of Common or Preferred Stock."
In addition, if the Company should fail to distribute during each calendar
year at least the sum of (i) 85% of its REIT ordinary income for such year, (ii)
95% of its REIT capital gain income for such year, and (iii) any undistributed
taxable income from prior periods, the Company would be subject to a 4% excise
tax on the excess of such required distribution over the sum of amounts actually
distributed during the calendar year by the REIT and the amount, if any, on
which the REIT paid income tax for such year.
The Company intends to make timely distributions sufficient to satisfy its
annual distribution requirements. It is expected that the Company's REIT taxable
income will be less than its cash flow due to the allowance of depreciation and
other noncash charges in computing REIT taxable income. Accordingly, the Company
anticipates that it will generally have sufficient cash or liquid assets to
enable it to satisfy the distribution requirements described above. It is
possible, however, that the Company, from time to time, may not have sufficient
cash or other liquid assets to meet these distribution requirements due to
timing differences between (i) the actual receipt of income and actual payment
of deductible expenses and (ii) the inclusion of such income and deduction of
such expenses in arriving at taxable income of the Company. If such timing
differences occur, in order to meet the distribution requirements, the Company
may find it necessary to arrange for short-term, or possibly long-term,
borrowings or to pay dividends in the form of taxable stock dividends.
Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement for a year by paying "deficiency dividends"
to shareholders in a later year, which may be included in the Company's
deduction for dividends paid for the earlier year. Thus, the Company may be able
to avoid being taxed on amounts distributed as deficiency dividends; however,
the Company will be required to pay interest based upon the amount of any
deduction taken for deficiency dividends.
Failure to Qualify. If the Company fails to qualify for taxation as a REIT
in any taxable year, the Company will be subject to tax (including any
applicable alternative minimum tax) on its taxable income at regular corporate
rates. Distributions to shareholders in a year in which the Company fails to
qualify as a REIT will not be deductible and will not be required to be made. In
addition, if the Company fails to qualify as a REIT, all distributions to
shareholders will be taxable as ordinary income, to the extent of the Company's
current and accumulated earnings and profits, and, subject to certain
limitations of the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific statutory
provisions, the Company also will be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances the Company would be
entitled to such statutory relief.
TAXATION OF HOLDERS OF COMMON STOCK
Taxation of Taxable U.S. Shareholders. As used herein, the term "U.S.
shareholder" means a holder of Common Stock who (for United States federal
income tax purposes) (i) is a citizen or resident of the United States, (ii) is
a corporation, partnership, or other entity treated as a corporation or
partnership for federal income tax purposes created or organized in or under the
laws of the United States or of any political subdivision thereof, (iii) is an
estate the income of which is subject to United States federal income taxation
regardless of its source or (iv) a trust whose administration is subject to the
primary supervision of a United States court and which has one or more United
States persons who have the authority to control all substantial decisions of
the trust.
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As long as the Company qualifies as a REIT, distributions made to the
Company's taxable U.S. shareholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends) will be taken into
account by them as ordinary income, and corporate shareholders will not be
eligible for the dividends received deduction as to such amounts. For purposes
of determining whether distributions on the shares of Common Stock are out of
current or accumulated earnings and profits, the earnings and profits of the
Company will be allocated first to shares of Preferred Stock and second to the
shares of Common Stock. There can be no assurance that the Company will have
sufficient earnings and profits to cover distributions on any shares of
Preferred Stock.
Distributions that are designated as capital gain dividends will be taxed
as gains from the sale or exchange of a capital asset held for more than one
year (to the extent they do not exceed the Company's actual net capital gain for
the taxable year) without regard to the period for which the shareholder has
held its stock. Corporate shareholders, however, may be required to treat up to
20% of certain capital gain dividends as ordinary income.
As described below in "--Recent Legislation," the 1997 Act changed
significantly the taxation of capital gains by taxpayers who are individuals,
estates, or trusts. On November 10, 1997, the IRS issued IRS Notice 97-64, which
provides generally that the Company may classify portions of its designated
capital gain dividend as (i) a 20% rate gain distribution (which would be taxed
as long-term capital gain in the 20% group), (ii) an unrecaptured Section 1250
gain distribution (which would be taxed as long-term capital gain in the 25%
group), or (iii) a 28% rate gain distribution (which would be taxed as long-term
capital gain in the 28% group). (If no designation is made, the entire
designated capital gain dividend will be treated as a 28% rate gain
distribution.) IRS Notice 97-64 provides that a REIT must determine the maximum
amounts that it may designate as 20% and 25% rate capital gain dividends by
performing the computation required by the Code as if the REIT were an
individual whose ordinary income were subject to a marginal tax rate of at least
28%. The Notice further provides that designations made by the REIT will be
effective only to the extent that they comply with Revenue Ruling 89-81, which
requires that distributions made to different classes of shares not be composed
disproportionately of dividends of a particular type.
Distributions in excess of current or accumulated earnings and profits will
not be taxable to a U.S. shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's shares of Common Stock, but rather will
reduce the adjusted basis of such shares of Common Stock. To the extent that
such distributions exceed the adjusted basis of a U.S. shareholder's shares of
Common Stock, they will be included in income as capital gains, assuming the
shares of Common Stock are a capital asset in the hands of the U.S. shareholder.
In general, a U.S. shareholder will realize capital gain or loss on the
disposition of shares of Common Stock equal to the difference between (i) the
amount of cash and the fair market value of any property received on such
disposition and (ii) the shareholder's adjusted basis of such shares of Common
Stock. With respect to dispositions occurring after July 28, 1997, in the case
of a taxable U.S. shareholder who is an individual or an estate or trust, such
gain or loss will be long-term capital gain or loss, subject to a 28% tax rate,
if such shares have been held for more than one year but not more than 18 months
and long-term capital gain or loss, subject to a 20% tax rate, if such shares
have been held for more than 18 months. In the case of a taxable U.S.
shareholder that is a corporation, such gain or loss will be long-term capital
gain or loss if such shares have been held for more than one year. Loss upon a
sale or exchange of shares of Common Stock by a shareholder who has held such
shares of Common Stock for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such shareholder as
long-term capital gain.
Pursuant to the 1997 Act, for the Company's taxable years commencing on or
after January 1, 1998, the Company may elect to require the holders of Common
Stock to include the Company's undistributed net long-term capital gains in
their income. If the Company makes such an election, the holders of Common Stock
will (i) include in their income as long-term capital gains their proportionate
share of such undistributed capital gains and (ii) be deemed to have paid their
proportionate share of the tax paid by
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the Company on such undistributed capital gains and thereby receive a credit or
refund for such amount. A holder of Common Stock will increase the basis in its
Common Stock by the difference between the amount of capital gain included in
its income and the amount of the tax it is deemed to have paid. The earnings and
profits of the Company will be adjusted appropriately. As described below in
"--Recent Legislation," with respect to such long-term capital gain of a taxable
domestic shareholder that is an individual or an estate or trust, the IRS has
authority to issue regulations that could apply the special tax rate applicable
to sales of depreciable real property by an individual or an estate or trust to
the portion of the long-term capital gains of an individual or an estate or
trust attributable to deductions for depreciation taken with respect to
depreciable real property.
Backup Withholding. The Company will report to its U.S. shareholders
and the IRS the amount of dividends paid during each calendar year, and the
amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a shareholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless such holder (a) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number and
certifies as to no loss of exemption from backup withholding. Amounts withheld
as backup withholding will be creditable against the stockholder's income tax
liability. In addition, the Company may be required to withhold a portion of
capital gain distributions made to any shareholders who fail to certify their
non-foreign status to the Company. See "--Taxation of Non-U.S. Shareholders"
below.
Taxation of Tax-Exempt Shareholders. As a general rule, amounts distributed
to a tax-exempt entity do not constitute "unrelated business taxable income"
("UBTI"), and thus distributions by the Company to a stockholder that is a
tax-exempt entity should also not constitute UBTI, provided that the tax-exempt
entity has not financed the acquisition of its shares of Common Stock with
"acquisition indebtedness" within the meaning of the Code and the shares of
Common Stock are not otherwise used in an unrelated trade or business of the
tax-exempt entity. However, distributions by a REIT to a tax-exempt employee's
pension trust that owns more than 10% of the REIT will be treated as UBTI in an
amount equal to the percentage of gross income of the REIT that is derived from
an "unrelated trade or business" (determined as if the REIT were a pension
trust) divided by the gross income of the REIT for the year in which the
dividends are paid. This rule only applies, however, if (i) the percentage of
gross income of the REIT that is derived from an unrelated trade or business for
the year in which the dividends are paid is at least 5%, (ii) the REIT qualifies
as a REIT only because the pension trust is not treated as a single individual
for purposes of the "five-or-fewer rule" (see "--Taxation of the
Company-Requirements for Qualification" above), and (iii) (A) one pension trust
owns more than 25 percent of the value of the REIT or, (B) a group of pension
trusts individually holding more than 10 percent of the value of the REIT
collectively own more than 50 percent of the value of the REIT. The Company
currently does not expect that this rule will apply.
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Taxation of Non-U.S. Shareholders. The rules governing U.S. federal income
taxation of the ownership and disposition of Common Stock by persons that are,
for purposes of such taxation, nonresident alien individuals, foreign
corporations, foreign partnerships, or foreign estates or trusts (collectively,
"Non-U.S. Shareholders") are complex, and no attempt will be made herein to
provide more than a limited summary of such rules. Prospective Non-U.S.
Shareholders should consult with their own tax advisors to determine the impact
of U.S. federal, state and local income tax laws with regard to an investment in
Common Stock, including any reporting requirements.
Distributions that are not attributable to gain from sales or exchanges by
the Company of U.S. real property interests and not designated by the Company as
capital gain dividends will be treated as dividends of ordinary income to the
extent that they are made out of current or accumulated earnings and profits of
the Company. Such distributions, ordinarily, will be subject to a withholding
tax equal to 30% of the gross amount of the distribution unless an applicable
tax treaty reduces that tax. Distributions in excess of current and accumulated
earnings and profits of the Company will not be taxable to a Non-U.S.
Shareholder to the extent that they do not exceed the adjusted basis of the
shareholder's Common Stock, but rather will reduce the adjusted basis of such
Common Stock. To the extent that such distributions exceed the adjusted basis of
a Non-U.S. Shareholder's Common Stock, they will give rise to tax liability if
the Non-U.S. Shareholder would otherwise be subject to tax on any gain from the
sale or disposition of its Common Stock as described below. For withholding tax
purposes, the Company is currently required to treat all distributions as if
made out of its current or accumulated earnings and profits and thus intends to
withhold at the rate of 30% (or a reduced treaty rate if applicable) on the
amount of any distribution (other than distributions designed as capital gain
dividends) made to a Non-U.S. Shareholder. Under the final regulations
(discussed above), generally effective for distributions on or after January 1,
2000, the Company would not be required to withhold at the 30% rate on
distributions it reasonably estimates to be in excess of the Company's current
and accumulated earnings and profits. If it cannot be determined at the time a
distribution is made whether such distribution will be in excess of current and
accumulated earnings and profits, the distribution will be subject to
withholding at the rate applicable to ordinary dividends. As a result of a
legislative change made by the Small Business Job Protection Act of 1996, it
appears that the Company will be required to withhold 10% of any distribution in
excess of the Company's current and accumulated earnings and profits.
Consequently, although the Company intends to withhold at a rate of 30% on the
entire amount of any distribution (or a lower applicable treaty rate), to the
extent that the Company does not do so, any portion of a distribution not
subject to withholding at a rate of 30% (or a lower applicable treaty rate) will
be subject to withholding at a rate of 10%. However, the Non-U.S. Shareholder
may seek from the IRS a refund of such amounts from the IRS if it is
subsequently determined that such distribution was, in fact, in excess of
current or accumulated earnings and profits of the Company, and the amount
withheld exceeded the Non-U.S. Shareholder's United States tax liability, if
any.
For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real
property interests (whether or not designated as a capital gain dividend) will
be taxable to a Non-U.S. Shareholder under the provisions of the Foreign
Investment in Real Property Tax Act of 1980 ("FIRPTA") at the normal capital
gain rates applicable to domestic shareholders (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals). Also, distributions subject to FIRPTA may be
subject to a 30% branch profits tax in the hands of a corporate Non-U.S.
Shareholder not entitled to treaty relief or exemption. The Company is required
by applicable Treasury Regulations to withhold 35% of any distribution that is
or could be designated by the Company as a capital gain dividend. The amount
withheld is creditable against the Non-U.S. Shareholder's FIRPTA tax liability.
Pursuant to IRS Notice 97-64, amounts designated by the Company pursuant to
the 1997 Act as undistributed capital gains in respect of shares of Common Stock
(see "Taxation of Shareholders--Taxation of Taxable Domestic Shareholders"
above) would be treated with respect to Non-U.S. Shareholders in the manner
outlined in the preceding paragraph for actual distributions by the Company of
capital gain dividends. Under that approach, the Non-U.S. Shareholders would be
able to offset as a credit against their United States federal income tax
liability resulting
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therefrom their proportionate share of the tax paid by the Company on such
undistributed capital gains (and to receive from the IRS a refund to the extent
their proportionate share of such tax paid by the Company were to exceed their
actual United States federal income tax liability).
Gain recognized by a Non-U.S. Shareholder upon a sale or exchange of Common
Stock generally will not be subject to United States taxation unless such Common
Stock constitutes a "United States real property interest" under FIRPTA. Common
Stock will not constitute a "United States real property interest" so long as
the Company is a "domestically controlled REIT," defined generally as a REIT in
which at all times during a specified testing period less than 50% in value of
the stock was held directly or indirectly by foreign persons. As of April 30,
1998, SC-USREALTY held approximately 39.9% in value of the outstanding Common
Stock of the Company. In the event that SC-USREALTY and other stockholders of
the Company who are Non-U.S. Shareholders own collectively 50% or more, in
value, of the outstanding stock of the Company, the Company would cease to be a
"domestically controlled REIT."
If the Company does not qualify as a "domestically controlled REIT," a
Non-U.S. Shareholder's sale of securities of the Company generally still will
not be subject to U.S. tax under FIRPTA as a sale of a U.S. real property
interest, provided that (i) the securities are "regularly traded" (as defined by
the applicable Treasury Regulations) on an established securities market, and
(ii) the selling Non-U.S. Shareholder held 5% or less of the value of the
outstanding class or series of the securities being sold at all times during a
specified testing period. The Company believes that the Common Stock would be
considered to be "regularly traded" for this purpose, and the Company has no
actual knowledge of any Non-U.S. Shareholder (other than SC-USREALTY) that holds
in excess of 5% of the Company's Common Stock. In order to assist the Company in
qualifying as a "domestically controlled REIT," the Articles of Incorporation
contain certain provisions preventing any Non-U.S. Shareholder (other than
SC-USREALTY and its affiliates) from acquiring additional shares of the
Company's capital stock if, as a result of such acquisition, the Company would
fail to qualify as a "domestically controlled REIT" (computed assuming that
SC-USREALTY owns the maximum percentage of the Company's capital stock that
SC-USREALTY is permitted to own under the Special Shareholder Limit). The
Company is unlikely to be able to advise a prospective Non-U.S. Shareholder that
its purchase of any shares of the Company's capital stock would not violate this
prohibition, thereby subjecting such prospective Non-U.S. Shareholder to the
adverse consequences described under "Description of Common Stock--Restrictions
on Transfer--Violation of Ownership Limits." Accordingly, an acquisition of the
Company's capital stock would not likely be a suitable investment for Non-U.S.
Shareholders other than SC-USREALTY.
If the gain on the sale of Common Stock were to be subject to tax under
FIRPTA, the Non-U.S. Shareholder would be subject to the same treatment as
U.S. shareholders with respect to such gain (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals), and the purchaser of the Common Stock would be
required to withhold and remit to the IRS 10% of the purchase price.
Backup Withholding Tax and Information Reporting. Backup withholding tax
(which generally is a withholding tax imposed at the rate of 31% on certain
payments to persons that fail to furnish certain information under the United
States information reporting requirements) and information reporting will
generally not apply to distributions paid to Non-U.S. Shareholders outside the
United States that are treated as (i) dividends subject to the 30% (or lower
treaty rate) withholding tax discussed above, (ii) capital gains dividends or
(iii) distributions attributable to gain from the sale or exchange by the
Company of United States real property interests. As a general matter, backup
withholding and information reporting will not apply to a payment of the
proceeds of a sale of Common Stock by or through a foreign office of a foreign
broker. Information reporting (but not backup withholding) will apply, however,
to a payment of the proceeds of a sale of Common Stock by a foreign office of a
broker that (a) is a United States person, (b) derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States or (c) is a "controlled foreign corporation" (generally, a foreign
corporation controlled by United States shareholders) for United States tax
purposes, unless the broker has documentary evidence in its records that the
holder is a Non-U.S. Shareholder and certain other conditions are met, or the
shareholder otherwise establishes an exemption. Payment to or through a United
States office of a broker of the proceeds of a sale of Common Stock is subject
to both backup withholding and information reporting unless the shareholder
certifies under penalty of perjury that the shareholder is a Non-U.S.
Shareholder, or otherwise establishes an exemption. A Non-U.S. Shareholder may
obtain a refund of any amounts withheld under the backup withholding rules by
filing the appropriate claim for refund with the IRS.
The United States Treasury has recently finalized regulations regarding the
withholding and information reporting rules discussed above. In general, these
regulations do not alter the substantive withholding and information reporting
requirements but unify certification procedures and forms and clarify and modify
reliance standards. Pursuant to IRS Notice 98-16, these regulations generally
will be effective for payments made after December 31, 1999, subject to certain
transition rules. Valid withholding certificates that are held on December 31,
1999, will remain valid until the earlier of December 31, 2000 or the date of
expiration of the certificate under rules currently in effect (unless otherwise
invalidated due to changes in the circumstances of the person whose name is on
such certificate). A Non-U.S. Shareholder should consult its own advisor
regarding the effect of the new Treasury Regulations.
RECENT LEGISLATION
As described above, 1997 Act contains certain changes to the REIT
qualification requirements and to the taxation of REITs. The 1997 Act also
contains certain changes to the taxation of capital gains of individuals, trusts
and estates.
Capital Gain Rates. Subject to certain exceptions, for individuals, trusts
and estates the maximum rate of tax on the net capital gain from a sale or
exchange occurring after July 28, 1997 of a capital asset held for more than 18
months has been reduced from 28% to 20%. The maximum rate has been reduced to
18% for capital assets acquired after December 21, 2000 and held for more than
five years. The maximum rate for capital assets held for more than one year but
not more than 18 months remains at 28%. The maximum rate for net capital gains
attributable to the sale of depreciable real property held for more than 18
months in 25% to the extent of the prior deductions for "unrecaptured Section
1250 gain" (i.e., depreciation deductions not otherwise recaptured as ordinary
income under the existing depreciation recapture rules). Capital gain from the
sale of depreciable real property held for more than 18 months allocated by the
Company to a non-corporate shareholder will be subject to the 25% rate to the
extent that the capital gain on the real property sold by the Company does not
exceed prior depreciation deductions with respect to such property. The 1997 Act
provides the IRS with authority to issue
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regulations that could, among other things, apply these rates on a look-through
basis in the case of "pass-through" entities such as the Company. The taxation
of capital gains of corporations was not changed by the 1997 Act.
REIT Provisions. In addition to the provisions discussed above, the 1997
Act contains a number of technical provisions that either (i) reduce the risk
that the Company will inadvertently cease to qualify as a REIT, or (ii) provide
additional flexibility with which the Company can meet the REIT qualification
requirements. These provisions are effective for the Company's taxable years
commencing on or after January 1, 1998.
OTHER TAX CONSIDERATIONS
Entity Classification. A significant number of the Company's investments
are through Carr Realty, L.P. and CarrAmerica Realty, L.P. If either Carr
Realty, L.P. or CarrAmerica Realty, L.P. were treated as an association, the
entity would be taxable as a corporation and therefore would be subject to an
entity level tax on its income. In such a situation, the character of the
Company's assets and items of gross income would change and would preclude the
Company from qualifying as a REIT (see "Taxation of the Company--Income Tests"
and "--Asset Tests").
Prior to January 1, 1997, an organization formed as a partnership or a
limited liability company was treated as a partnership for federal income tax
purposes rather than as a corporation only if it had no more than two of the
four corporate characteristics that the Treasury Regulations in effect at that
time used to distinguish a partnership from a corporation for tax purposes.
These four characteristics were (i) continuity of life, (ii) centralization of
management, (iii) limited liability and (iv) free transferability of interests.
Under final Treasury Regulations which became effective January 1, 1997, the
four factor test has been eliminated and an entity formed as a partnership or as
a limited liability company will be taxed as a partnership for federal income
tax purposes, unless it specifically elects otherwise. The Regulations provide
that the IRS will not challenge the classification of an existing partnership or
limited liability company for tax periods prior to January 1, 1997, so long as
(1) the entity had a reasonable basis for its claimed classification, (2) the
entity and all of its members recognized the federal income tax consequences of
any changes in the entity's classification within the 60 months prior to January
1, 1997, and (3) neither the entity nor any member of the entity had been
notified in writing on or before May 8, 1996, that the classification of the
entity was under examination by the IRS.
The Company believes that Carr Realty, L.P. and CarrAmerica Realty, L.P.
each will be treated as a partnership for federal income tax purposes (and not
as an association taxable as a corporation).
Tax Allocations with Respect to the Properties. When property is
contributed to a partnership in exchange for an interest in the partnership, the
partnership generally takes a carryover basis in that property for tax purposes
equal to the adjusted basis of the contributing partner in the property, rather
than a basis equal to the fair market value of the property at the time of
contribution (this difference is referred to as "Book-Tax Difference"). The
partnership agreements of each of Carr Realty, L.P. and CarrAmerica Realty, L.P.
require that allocations of income, gain, loss and deduction with respect to
each property contributed to those partnerships be made in a manner consistent
with the special rules in 704(c) of the Code and the regulations thereunder,
which will tend to eliminate the Book-Tax Differences with respect to such
contributed properties over the life of the partnership. However, because of
certain technical limitations, the special allocation rules of Section 704(c)
may not always entirely eliminate the Book-Tax Difference on an annual basis or
with respect to a specific taxable transaction such as a sale. Thus, the
carryover basis of such contributed properties in the hands of Carr Realty, L.P.
or CarrAmerica Realty, L.P., as applicable could cause the Company to be
allocated lower amounts of depreciation and other deductions for tax purposes
than would be allocated to the Company if all such contributed properties were
to have a tax basis equal to their fair market values at the time such
properties were contributed to Carr Realty, L.P. or CarrAmerica Realty, L.P., as
applicable. The foregoing rules also apply for purposes of determining the
Company's earnings and profits. The application of such rules over time could
result in a higher portion of distributions to shareholders being taxed as
dividends. See "--Taxation of Holders of Common Stock."
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Non-qualified REIT Subsidiaries. The Non-qualified REIT Subsidiaries do not
qualify as REITs and each Non-qualified REIT Subsidiary (except for Omni UK) is
subject to federal, state and local income taxation (including District of
Columbia franchise tax) on its net income at normal corporate rates. Omni UK is
subject to income taxation by the United Kingdom and any other country in which
it engages in business on its net income and dividends paid to the Company by
Omni UK will be subject to the applicable withholding tax imposed by the United
Kingdom. (Unlike a regular "C" corporation, the Company will be unable to take
advantage of any credit for U.S. income tax purposes for foreign taxes paid by a
Non-qualified REIT Subsidiary.) To the extent the Non-qualified REIT
Subsidiaries are required to pay federal, state and local income or any foreign
taxes, the cash available for distribution to stockholders will be reduced
accordingly.
State and Local Taxes; District of Columbia Unincorporated Business Tax.
The Company and its stockholders may be subject to state or local taxation in
various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of the Company
and its stockholders may not conform to the federal income tax consequences
discussed above. In this regard, the District of Columbia imposes an
unincorporated business income tax, at the rate of 9.975%, on the "District of
Columbia taxable income" of partnerships doing business in the District of
Columbia. Because many of the properties owned by Carr Realty, L.P. are located
in the District of Columbia, the Company's share of the "District of Columbia
taxable income" of Carr Realty, L.P. will be subject to this tax. Carr Realty,
L.P. has taken steps to attempt to reduce the amount of income that is
considered "District of Columbia taxable income," but it is likely that at least
some portion of the income attributable to Carr Realty, L.P.'s properties
located in the District of Columbia will be subject to the District of Columbia
tax. To the extent Carr Realty, L.P. is required to pay the District of Columbia
unincorporated business income tax, the cash available for distribution to the
Company and, therefore, to its stockholders as dividends will be reduced
accordingly. This tax would not apply if the Company were to own and operate its
assets directly, rather than through Carr Realty, L.P.; however, the Company's
ability to eliminate Carr Realty, L.P. and thus own directly the assets
currently owned by Carr Realty, L.P. is severely limited.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell Securities in or through underwriters for public offer
and sale by them, and also may sell Securities offered hereby to investors
directly or through agents. Any such underwriter or agent involved in the offer
and sale of the Securities will be named in the applicable Prospectus
Supplement.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell
Securities upon terms and conditions set forth in the applicable Prospectus
Supplement. In connection with the sale of the Securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Securities may be deemed to
be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements with the Company, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase
43
<PAGE>
Securities from the Company at the public offering price set forth in such
Prospectus Supplement pursuant to delayed delivery contracts ("Contracts")
providing for payment and delivery on the date or dates stated in such
Prospectus Supplement. Each Contract will be for an amount not less than, and
the aggregate principal amount of Securities sold pursuant to Contracts shall be
neither less nor more than, the respective amounts stated in the applicable
Prospectus Supplement. Institutions with whom Contracts, when authorized, may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions, but will in all cases be subject to the approval of the Company.
Contracts will not be subject to any conditions except (i) the purchase by an
institution of the Securities covered by its Contracts shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject, and (ii) if the Securities are being sold
to underwriters, the Company shall have sold to such underwriters the total
principal amount of the Securities less the principal amount thereof covered by
Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
Subsidiaries in the ordinary course of business.
PARTICIPATION RIGHTS
In conjunction with the SC-USREALTY Transaction, so long as SC-USREALTY
owns at least 25% of the outstanding Common Stock of the Company on a fully
diluted basis, SC-USREALTY will be entitled (except in certain limited
circumstances), upon compliance with certain specified conditions, to a
participation right to purchase or subscribe for, either as part of such
issuance or in a concurrent issuance, a total number of shares of Common Stock
or Preferred Stock, as the case may be, equal to up to 30% (or 35% in certain
circumstances) of the total number of shares or of Common Stock or Preferred
Stock, as applicable, proposed to be issued by the Company. All purchases
pursuant to such participation rights will be at the same price and on the same
terms and conditions as are applicable to other purchasers hereunder.
RESALES
If set forth in the applicable Prospectus Supplement, this Prospectus may
be used in connection with resales or redistributions of Securities by a selling
securityholder. The selling securityholder may be a person who acquired the
Securities from the Company or such a person's pledgees, transferees or other
successors in interest. The Securities may be resold or redistributed from time
to time at varying prices determined at the time of sale, such as market prices
prevailing at the time of sale and prices related to prevailing market prices,
and at negotiated prices. Such a resale or redistribution may be effected
directly or indirectly through brokers or dealers or in a distribution by one or
more underwriters on a firm commitment or best efforts basis, on the NYSE, in
the over-the-counter market, on any other national securities exchange on which
shares of the Securities being resold or redistributed are listed or traded, in
privately negotiated transactions or otherwise. Such resales or redistributions
also may be effected through block trades (which may involve cross trades) in
which the broker or dealer engaged will attempt to sell the Securities as agent
but may position and resell a portion of the block as principal to facilitate
the transaction; purchases by a broker or dealer as principal and resale by such
broker or dealer for its account; exchange distributions and/or secondary
distributions in accordance with the rules of the NYSE; ordinary brokerage
transactions and transactions in which the broker solicits purchasers; an
offering at other than a fixed price on or through the facilities of the NYSE or
to or through a market maker otherwise than on the NYSE; sales to a dividend
reinvestment plan established by the Company, or to any agent acting on behalf
of such plan, for sale to participants in the plan; pledges to lenders as
collateral to secure loans, credit or other financing arrangements and any
subsequent foreclosure thereunder; and any other legally available means. In
effecting sales, brokers or dealers engaged by the selling securityholder may
arrange for other brokers or dealers to participate. Any public offering price
and any discount or concessions allowed or reallowed or paid to dealers may be
changed from time to time. The selling securityholder may from time to time
deliver all or a portion of the Securities covered by a particular Prospectus
Supplement to cover a short sale or sales or upon the exercise, settlement or
closing of a call equivalent position or a put equivalent position. The
broker-dealers participating in such a resale or redistribution may be deemed
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of the Securities and any commissions received by any such broker-dealers
may be regarded as underwriting commissions under the Securities Act. Selling
securityholders, underwriters, dealers and agents may be entitled, under
agreements with the Company, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act.
The Company will pay all expenses in connection with the registration of
such resales and redistributions. The selling securityholder will pay any
brokerage or underwriting commissions and taxes of any kind (including, without
limitation, transfer taxes).
44
<PAGE>
In connection with resales and redistributions, the following information
will, to the extent then required, be provided in the applicable Prospectus
Supplement: the number of shares to be sold, the purchase price, the public
offering price, if applicable, the name of any underwriter, agent or
broker-dealer, and any applicable commissions, discounts or other items
constituting compensation to underwriters, agents or broker-dealers with respect
to the particular sale or distribution.
The rules of the SEC permit an underwriter to engage in certain
transactions that stabilize the price of shares of the Company's Common Stock in
connection with resales or redistributions of the Company's comomon shares. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the market price of the shares being sold.
If an underwriter creates a short position in shares of the Company's
Common Stock in connection with a resale or redistribution, i.e., if it sells
more shares than are set forth on the cover page of the applicable Prospectus
Supplement, the underwriter may reduce that short position by purchasing shares
of the Company's Common Stock in the open market.
In the case of an underwritten resale of shares, the managing underwriter
may also impose a penalty bid on certain underwriters and selling group members.
This means that, if the managing underwriter purchases shares in the open market
to reduce any underwriter's short position, or to stabilize the price of the
Company's common shares, the managing underwriter may reclaim the amount of the
selling concession from any such underwriters and selling group members who sold
those shares.
In general, purchases of a security for the purpose of stablization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it
discourages resales of the security.
LEGAL MATTERS
The legality of the Securities offered hereby has been passed upon for the
Company by Hogan & Hartson L.L.P., Washington, D.C. Certain federal income tax
matters have been passed upon for the Company by Hogan & Hartson L.L.P.,
Washington, D.C.
EXPERTS
The consolidated financial statements and schedule of CarrAmerica Realty
Corporation and subsidiaries as of December 31, 1997 and 1996 and for each of
the years in the three-year period ended December 31, 1997 and the consolidated
financial statements and schedule of CarrAmerica Realty, L.P. as of December 31,
1997 and 1996 and for the year ended December 31, 1997 and the period from March
6, 1996 (date of inception) to December 31, 1996 have been incorporated herein
by reference in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The Historical Summary of Revenue and Direct Operating Expenses of Golden
Gateway Commons, incorporated by reference in this prospectus, to the extent and
for the period indicated in their report, has been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P. (PricewaterhouseCoopers LLP
after June 30, 1998), independent accountants, given on authority of that firm
as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company and the Guarantor are both subject to the informational
requirements of the Securities Exchange Act of 1934, and, in accordance
therewith, file reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information can be inspected and copied
at the Public Reference Section maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following regional offices
of the Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such material also can be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon receipt
of the fees prescribed by the rules and regulations of the Commission. Such
material also may be accessed electronically by means of the Commission's web
site on the Internet at "http://www.sec.gov". The Company's Common Stock and
certain classes of its Preferred Stock and Depositary Preferred Shares are
listed on the New York Stock Exchange, and reports, proxy statements and other
information concerning the Company can be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
45
<PAGE>
The Company and the Guarantor have filed with the Commission a registration
statement on Form S-3 (the "Registration Statement"), of which this Prospectus
is a part, under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain portions
of which have been omitted as permitted by the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference and the exhibits and schedules thereto. For further
information regarding the Company, the Guarantor and the Securities, reference
is hereby made to the Registration Statement and such exhibits and schedules
which may be obtained from the Commission at its principal office in Washington,
D.C. upon receipt of the fees prescribed by the rules and regulations of the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed under the Exchange Act with the
Commission by the Company or the Guarantor and are incorporated herein by
reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
3. The Company's Current Reports on Form 8-K/A filed on January 7,
1998 and on Form 8-K filed on February 5, 1998 (and an amendment thereto on
Form 8-K/A filed on February 11, 1998), February 18, 1998 (two reports),
April 3, 1998, April 8, 1998, April 16, 1998, April 28, 1998, May 7, 1998
and July 1, 1998 (and an amendment thereto on Form 8-K/A filed on July 8,
1998).
4. The Guarantor's Annual Report on Form 10-K for the year ended
December 31, 1997.
5. The Guarantor's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
6. The Guarantor's Current Reports on Form 8-K filed on January 15,
1998, February 18, 1998 (two reports), February 19, 1998, and February 23,
1998.
All documents filed by the Company and the Guarantor after the date of this
Prospectus under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and
before termination of the offering of all Securities to which this Prospectus
relates shall be deemed to be incorporated by reference in this Prospectus and
shall be part hereof from the respective dates of filing of each such document.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of Securities
or in any other subsequently filed document that is also incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or any
accompanying Prospectus Supplement. Subject to the foregoing, all information
appearing in this Prospectus and each accompanying Prospectus Supplement is
qualified in its entirety by the information appearing in the documents
incorporated by reference.
The Company and the Guarantor will provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon their written or oral request, a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference in such documents).
Written requests for such copies should be addressed to Secretary, CarrAmerica
Realty Corporation, 1850 K Street, N.W., Suite 500, Washington, D.C. 20006
(telephone number (202) 729-7500).
46
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses payable by
the Company in connection with the issuance and distribution of the securities
being registered:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee................................................................ $295,000
Printing and Duplicating Expenses................................................... 50,000
Legal Fees and Expenses............................................................. 50,000
Accounting Fees and Expenses........................................................ 50,000
Blue Sky Fees and Expenses.......................................................... 10,000
Miscellaneous....................................................................... 45,000
--------
Total........................................................................ $500,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's officers and directors are and will be indemnified under
Maryland law and under the charter and by-laws of the Company.
Under Maryland law, a corporation formed in Maryland, as the Company is, is
permitted to limit, by provision in its charter, the liability of directors and
officers so that no director or officer of the company is liable to the company
or to any stockholder for money damages except to the extent that (i) the
director or officer actually received an improper benefit in money, property or
services, for the amount of the benefit or profit in money, property or services
actually received, or (ii) a judgment or other final adjudication adverse to the
director or officer is entered in a proceeding based on a finding in a
proceeding that the director's or officer's action was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated in the
proceeding.
The charter and by-laws of the Company require the Company, to the fullest
extent permitted by Section 2-418 of the Maryland General Corporation Law (the
"MGCL") as in effect from time to time, to indemnify any person who is or was,
or is the personal representative of a deceased person who was, a director or
officer of the Company against any judgments, penalties, fines, settlements and
reasonable expenses and any other liabilities; provided, that, unless applicable
law otherwise requires, indemnification shall be contingent upon a
determination, by the Board by a majority vote of a quorum consisting of
directors not, at the time, parties to the proceeding, or, if such a quorum
cannot be obtained, then by a majority vote of a committee of the Board
consisting solely of two or more directors not, at the time, parties to such
proceeding and who were duly designated to act in the matter by a majority vote
of the full Board in which the designated directors who are parties may
participate or by special legal counsel selected by and if directed by the Board
as set forth above, that indemnification is proper in the circumstances because
such director, officer, employee, or agent has met the applicable standard of
conduct prescribed by Section 2-418(b) of the MGCL.
In addition, the partnership agreement of the Guarantor in general provides
for indemnification of each Indemnitee (as hereinafter defined) against any
losses, claims, damages, liabilities, expenses (including legal fees),
judgments, fines, settlements, and other amounts that relate to the operations
of the Guarantor in which such Indemnitee may be involved, or is threatened to
be involved, as a party or otherwise, unless it is established that: (i) the act
or omission of the Indemnitee was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an improper
personal benefit in money, property or services; or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to believe that the act
or omission was unlawful. Under certain circumstances, reasonable expenses
incurred by an Indemnitee who is a party to a proceeding may be paid or
reimbursed by the Guarantor in advance of the final disposition of the
proceeding. In general, an "Indemnitee" is (i) any
II-1
<PAGE>
person made a party to a proceeding by reason of his status as (A) a general
partner of the Guarantor (currently, CarrAmerica Realty GP Holdings, Inc., a
Delaware corporation ("GP Holdings"), and wholly owned subsidiary of the
Company) or an affiliate of the general partner (e.g., the Company), (B) a
limited partner of the Guarantor, and (C) a director or officer of an entity
described in (A), and (ii) such other persons (including affiliates of the
general partner or the Guarantor) as the general partner may designate from time
to time (whether before or after the event giving rise to potential liability)
in its sole and absolute discretion.
Under Delaware law, a corporation formed in Delaware, as GP Holdings is, is
permitted to limit, by provision in its bylaws, the liability of directors and
officers so that no director or officer of the corporation will be liable to the
corporation or to any shareholder for money damages except liability (a) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under Section 174 of the Delaware
General Corporation Law (the "DGCL"), or (d) for any transaction from which the
director or officer derived an improper personal benefit.
GP Holdings' officers and directors are and will be indemnified under
Delaware law and the charter and bylaws of GP Holdings. The charter and bylaws
of GP Holdings require GP Holdings, to the fullest extent authorized by the DGCL
as in effect from time to time, to indemnify any person who is or was, or is the
legal representative a person who was, a director or officer of GP Holdings
against any expenses, liabilities and losses, as long as the person seeking
indemnification in connection with a proceeding was authorized by the board of
directors of GP Holdings.
In addition, the Company's officers and directors are and will be
indemnified under the partnership agreement of Carr Realty, L.P. The
indemnification provisions of this partnership agreement are substantially
equivalent to the indemnification provisions in the partnership agreement of the
Guarantor discussed above.
ITEM 16. EXHIBITS
The exhibits to this registration statement are listed in the Exhibit
Index, which appears after the Signature Page and is incorporated in this Item
16 by reference.
ITEM 17. UNDERTAKINGS
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales of their
respective securities are being made under this registration statement, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule
II-2
<PAGE>
424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(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 this registration
statement;
provided, however, that subparagraphs (i) and (ii) above do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the registrant or registrants pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
The undersigned registrants hereby undertake that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of an
annual report of the respective registrant pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to existing provisions or otherwise, the registrants have
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 a 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, each registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
CarrAmerica Realty Corporation, and the Additional Registrant, CarrAmerica
Realty, L.P., certify that they have reasonable grounds to believe that they
meet all of the requirements for filing on Form S-3 and have duly caused this
Amendment to be signed on their respective behalfs by the undersigned, thereunto
duly authorized, in Washington, D.C., on July 15, 1998.
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ BRIAN K. FIELDS
----------------------------------
Brian K. Fields
Chief Financial Officer
CARRAMERICA REALTY, L.P.,
a Delaware limited partnership
By: CarrAmerica Realty GP Holdings,
Inc., its general partner
By: /s/ BRIAN K. FIELDS
----------------------------------
Brian K. Fields
Chief Financial Officer
Pursuant to the requirements of the Securities Act, this Amendment has been
signed by the following persons in the capacities indicated below on July 15,
1998:
<TABLE>
<CAPTION>
NAME CAPACITY
---- --------
<S> <C>
* Chairman of the Board and Director
- --------------------------------------------------- of the Company
Oliver T. Carr, Jr.
* President, Chief Executive Officer and
- --------------------------------------------------- Director of the Company; President and Director of
Thomas A. Carr GP Holdings
/s/ BRIAN K. FIELDS Chief Financial Officer of the Company;
- --------------------------------------------------- Chief Financial Officer, Treasurer, Vice President
Brian K. Fields and Director of GP Holdings
* Director of the Company
- ---------------------------------------------------
Andrew F. Brimmer
</TABLE>
II-4
<PAGE>
* Director of the Company
- ---------------------------------------------------
A. James Clark
* Director of the Company
- ---------------------------------------------------
Todd W. Mansfield
* Director of the Company
- ---------------------------------------------------
Caroline S. McBride
* Director of the Company
- ---------------------------------------------------
William D. Sanders
* Director of the Company
- ---------------------------------------------------
Wesley S. Williams
* Director of GP Holdings
- ---------------------------------------------------
Philip L. Hawkins
*By: /s/ BRIAN K. FIELDS
----------------------------------------------
Brian K. Fields
As Attorney-in-Fact
(See Exhibit 24.1)
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Articles of Amendment and Restatement of Incorporation of the Company
(incorporated by reference to the same numbered exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996)
3.2 Articles of Amendment to Articles of Amendment and Restatement of
Articles of Incorporation of the Company (incorporated by reference
to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on
July 1, 1998)
3.3 Second Amendment and Restatement of By-laws of the Company
(incorporated by reference to Exhibit 3.1 to the Company's Current
Report on Form 8-K filed on February 12, 1997)
3.4 Articles Supplementary relating to Series A Cumulative Convertible
Redeemable Preferred Stock of the Company (incorporated by reference
to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996)
3.5 Articles Supplementary relating to Series B Cumulative Redeemable
Preferred Stock of the Company (incorporated by reference to Exhibit
3.1 to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997)
3.6 Articles Supplementary relating to Series C Cumulative Redeemable
Preferred Stock of the Company (incorporated by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K dated and filed on
November 6, 1997)
3.7 Articles Supplementary relating to Series D Cumulative Redeemable
Preferred Stock of the Company (incorporated by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K dated December 16,
1997 and filed on December 19, 1997)
3.8 Second Amended and Restated Agreement of Limited Partnership of the
Guarantor, dated May 9, 1997 (incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997)
3.9 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of the Guarantor, dated October 6, 1997 (incorporated by
reference to Exhibit 10.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997)
3.10 Second Amendment to Second Amended and Restated Agreement of Limited
Partnership of the Guarantor, dated October 6, 1997 (incorporated by
reference to Exhibit 10.3 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997)
3.11 Third Amendment to Second Amended and Restated Agreement of Limited
Partnership of the Guarantor, dated October 6, 1997 (incorporated by
reference to Exhibit 10.3 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997)
4.1 * Form of Senior Indenture among the Company, as Primary Obligor,
CarrAmerica Realty, L.P., as Guarantor, and the Trustee
4.2 * Form of Subordinate Indenture among the Company, as Primary Obligor,
CarrAmerica Realty, L.P., as Guarantor, and the Trustee
4.3 ** Form of Common Stock Warrant Agreement
4.4 ** Form of Debt Warrant Agreement
4.5 ** Form of Deposit Agreement
5.1 ** Opinion of Hogan & Hartson L.L.P.
8.1 ** Opinion of Hogan & Hartson L.L.P. regarding certain tax matters
12.1 ** Computation of Ratios of Earnings to Fixed Charges
23.1 ** Consent of KPMG Peat Marwick LLP
23.2 ** Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
23.3 ** Consent of Hogan & Hartson L.L.P. (included in Exhibit 8.1)
23.4 ** Consent of PricewaterhouseCoopers LLP
24.1 * Powers of Attorney
25.1 *** Statement of Eligibility of Trustee on Form T-1
<PAGE>
99.1 Certificate of Incorporation of CarrAmerica GP Holdings, Inc.
(incorporated by reference to Exhibit 99.1 to the Guarantor's
Registration Statement on Form 10/A filed on October 1, 1997)
99.2 Bylaws of CarrAmerica GP Holdings, Inc. (incorporated by reference to
Exhibit 99.2 to the Partnership's Registration Statement on Form 10/A
filed on October 1, 1997)
- -----------------
* Previously filed.
** Filed herewith.
*** To be filed by amendment or incorporated by reference.
Exhibit 4.3
CARRAMERICA REALTY CORPORATION
AND
______________________________, AS WARRANT AGENT
[FORM OF] COMMON STOCK WARRANT AGREEMENT
DATED AS OF ______________, ____
<PAGE>
TABLE OF CONTENTS
PAGE
PARTIES 1
RECITALS 1
SECTION 1. Appointment of Warrant Agent 1
SECTION 2. Form of Warrant 1
SECTION 3. Countersignature and Registration 2
SECTION 4. Transfers and Exchanges 2
SECTION 5. Exercise of Warrants 2
SECTION 6. Payment of Taxes 3
SECTION 7. Mutilated or Missing Warrants 3
SECTION 8. Reservation of Shares, etc. 3
SECTION 9. Warrant Price; Adjustments 4
SECTION 10. Notice to Warrantholders 9
SECTION 11. Certain Covenants of the Company 9
SECTION 12. Disposition of Proceeds, etc. 10
SECTION 13. Merger or Consolidation or Change of Name of
Warrant Agent 10
SECTION 14. Duties of Warrant Agent 10
SECTION 15. Change of Warrant Agent 12
SECTION 16. Identity of Transfer Agent 12
SECTION 17. Notices 12
SECTION 18. Supplements and Amendments 13
SECTION 19. Successors 13
SECTION 20. Governing Law 13
SECTION 21. Benefits of This Agreement 13
SECTION 22. Counterparts 13
[SECTION 23. Acceleration of Warrants by the Company 13]
TESTIMONIUM 14
SIGNATURES 14
EXHIBIT A: Form of Warrant. A-1
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COMMON STOCK WARRANT AGREEMENT
COMMON STOCK WARRANT AGREEMENT, dated as of _______________ ___, ____,
between CarrAmerica Realty Corporation, a Maryland corporation (hereinafter
called the "Company"), and ____________________, having a corporate trust office
in __________________, as warrant agent (hereinafter called the "Warrant
Agent").
WHEREAS, the Company proposes to issue [Class __] Purchase Warrants
(hereinafter called the "Warrants") entitling the holders thereof to purchase an
aggregate of ______ shares of Common Stock of the Company (par value $.01 per
share) (hereinafter called the "Shares") at an initial cash purchase price of
$_____ per Share at any time [after __________ and] before [____] p.m., [City]
time, on ________, ____ (hereinafter called the "Expiration Date") (unless
extended as provided in Section 9A hereof); and
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES, INSERT -
WHEREAS, the Warrants will be offered in Units, each of which consists
of ________________ and Warrants to purchase _______ Shares; and]
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange and exercise of Warrants to be issued
from time to time by the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter in this Agreement set forth, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. FORM OF WARRANT. The text of the Warrants and the form of
election to purchase Shares to be set forth on the reverse thereof shall be
substantially as set forth in Exhibit A attached hereto. Each Warrant shall,
subject to the terms of this Warrant Agreement, entitle the registered holder
thereof to initially purchase the number of Shares specified therein at an
initial exercise price of $_____ per Share; provided, however, that the Warrant
Exercise Price and the number of Shares issuable upon exercise of Warrants are
subject to adjustment upon the occurrence of certain events, all as hereinafter
provided. The Warrants shall be executed on behalf of the Company by the manual
or facsimile signature of the present or any future Chairman of the Board,
President or Vice President of the Company, under its seal, affixed or in
facsimile, and by the manual or facsimile signature of the present or any future
Secretary or Assistant Secretary of the Company.
The Company shall promptly notify the Warrant Agent from time to time
in writing of the number of Warrants to be issued and furnish written
instructions in connection therewith signed by an executive officer of the
Company; such notification and instructions may, but need not be, in the form of
a general or continuing authorization to the Warrant Agent.
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The Warrants shall be dated by the Warrant Agent as of the date of each
initial issuance, and as of the date of issuance thereof upon any transfer or
exchange thereof.
SECTION 3. COUNTERSIGNATURE AND REGISTRATION. The Warrant Agent shall
maintain books for the transfer and registration of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register the
Warrants in the names of the respective registered holders thereof. The Warrants
shall be countersigned by the Warrant Agent (or by any successor to the Warrant
Agent then acting as warrant agent under this Agreement) and shall not be valid
for any purpose unless so countersigned. Such Warrants may be so countersigned,
however, by the Warrant Agent (or by its successor as warrant agent) and be
delivered by the Warrant Agent, notwithstanding that the persons whose manual or
facsimile signatures appear thereon as proper officers of the Company shall have
ceased to be such officers at the time of such countersignature or delivery.
Upon issuance of any Warrant, the Company will present the same, or cause the
same to be presented, to the Warrant Agent for countersignature of such Warrant.
SECTION 4. TRANSFERS AND EXCHANGES. The Warrant Agent shall transfer,
from time to time, any outstanding Warrants upon the books to be maintained by
the Warrant Agent for that purpose, upon the surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for transfer. Upon
any such transfer, a new Warrant of like tenor shall be issued to the transferee
and the surrendered Warrant shall be canceled by the Warrant Agent. All such
Warrants so canceled shall be delivered by the Warrant Agent to the Company from
time to time. The Warrants may be exchanged at the option of the holder thereof,
when surrendered at the office in ____________________ of the Warrant Agent, for
another Warrant, or other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Shares. The
Warrant Agent is hereby irrevocably authorized to countersign and deliver, in
accordance with the provisions of this Section and Section 3 of this Agreement,
such new Warrants required pursuant to the provisions of this Section, and the
Company, whenever required by the Warrant Agent, will supply the Warrant Agent
with Warrants duly executed on behalf of the Company for such purpose.
[IF THE WARRANTS ARE ATTACHED TO OTHER SECURITIES, INSERT -
Notwithstanding the foregoing, until ________________________, the
Warrants shall not be transferable apart from the _______________________ to
which they are attached, any transfer of the _____________________________ shall
be deemed a transfer of the Warrants attached thereto, and any attempt to
transfer the Warrants apart from the _________ shall be void and of no effect.
Each Warrant shall contain a legend to the foregoing effect.]
SECTION 5. EXERCISE OF WARRANTS. The registered holder of each Warrant
shall have the right, which may be exercised as in such Warrant expressed, to
purchase from the Company (and the Company shall issue and sell to such
registered holder) the number of Shares specified in such Warrant, upon
surrender to the Company, at the office in ________________________________ of
the Warrant Agent of such Warrant, with the form of election to purchase on the
reverse thereof duly filled in and signed, and upon payment to the Warrant Agent
for the account of the Company of the Warrant Exercise Price, determined in
accordance with the provisions of Section 9 of this Agreement, for the number of
Shares in respect of which such Warrant is then exercised. Payment of such
Warrant Exercise Price may be made in cash, or by certified check or bank draft
or postal or express money order, payable in United States dollars, to the order
of the Warrant Agent. No adjustment shall be made for any dividends on any
Shares issuable upon exercise of any Warrant. Subject to Section 6, upon such
surrender of Warrants, and payment of the Warrant Exercise Price as aforesaid,
the Company shall issue and cause to
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be delivered with all reasonable dispatch to or upon the written order of the
registered holder of such Warrants, and in such name or names as such registered
holder may designate, a certificate or certificates for the number of full
Shares so purchased upon the exercise of such Warrants, together with cash, as
provided in Section 9 of this Agreement, in respect of any fraction of a Share
otherwise issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Shares as of the date
of the surrender of such Warrants and payment of the Warrant Exercise Price as
aforesaid; provided, however, that if, at the date of surrender of such Warrants
and payment of such Warrant Exercise Price, the transfer books for the Shares
purchasable upon the exercise of such Warrants shall be closed, no such
surrender of such Warrants and no such payment of such Warrant Exercise Price
shall be effective to constitute the person so designated to be named therein as
the holder of record of such Shares on such date, but shall be effective to
constitute such person as the holder of record of such Shares for all purposes
at the opening of business on the next succeeding day on which the transfer
books for the Shares purchasable upon the exercise of such Warrants shall be
opened, and the certificates for the Shares in respect of which such Warrants
are then exercised shall be issuable as of the date on which such books shall
next be opened, and until such date the Company shall be under no duty to
deliver any certificate for such Shares. The rights of purchase represented by
the Warrants shall be exercisable, at the election of the registered holders
thereof, either as an entirety or from time to time for part only of the Shares
specified therein and, in the event that any Warrant is exercised in respect of
less than all of the Shares specified therein at any time before the Expiration
Date of the Warrants, a new Warrant or Warrants of like tenor will be issued for
the remaining number of Shares specified in the Warrant so surrendered, and the
Warrant Agent is hereby irrevocably authorized to countersign and to deliver the
required new Warrants pursuant to the provisions of this Section and of Section
3 of this Agreement, and the Company, whenever required by the Warrant Agent,
will supply the Warrant Agent with Warrants duly executed on behalf of the
Company for such purpose.
SECTION 6. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Shares issuable upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue or delivery of any certificates for Shares in a name other than that of
the registered holder of Warrants in respect of which such Shares are issued and
the Company shall not be required to issue and deliver the certificates for such
Shares unless and until the holder has paid to the Company the amount of any tax
which may be payable in respect of any transfer involved in such issuance or
shall establish to the satisfaction of the Company that such tax has been paid.
SECTION 7. MUTILATED OR MISSING WARRANTS. In case any of the Warrants
shall be mutilated, lost, stolen or destroyed, the Company will issue and the
Warrant Agent will countersign and deliver in exchange and substitution for and
upon cancellation of the mutilated Warrant, or in lieu of and substitution for
the Warrant mutilated, lost, stolen or destroyed, a new Warrant of like tenor
and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company and the Warrant Agent of the mutilation,
loss, theft or destruction of such Warrants and indemnity, if requested, also
satisfactory to them. Applicants for such substitute Warrants shall also comply
with such other reasonable regulations and pay such other reasonable charges as
the Company or the Warrant Agent may prescribe. Any such new Warrant shall
constitute an original contractual obligation of the Company whether or not the
allegedly mutilated, lost, stolen or destroyed Warrant shall be at any time
enforceable by anyone.
SECTION 8. RESERVATION OF SHARES, ETC. Before the issuance of any
Warrants there shall have been reserved, and the Company shall at all times
through the Expiration Date keep reserved,
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out of its authorized and unissued Common Stock, a number of Shares sufficient
to provide for the exercise of the rights of purchase represented by the
Warrants, and the Transfer Agent for the Shares and every subsequent Transfer
Agent for the Shares issuable upon the exercise of any of the rights of purchase
aforesaid are hereby irrevocably authorized and directed at all times to reserve
such number of authorized and unissued Shares as shall be requisite for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent for the Shares and with every subsequent Transfer Agent for the
Shares issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent certificates required to honor outstanding
Warrants that have been exercised. The Company will supply such Transfer Agent
with duly executed certificates for such purpose and will itself provide or
otherwise make available any cash which may be issuable as provided in Section 9
of this Agreement. All Warrants surrendered in the exercise of the rights
thereby evidenced or surrendered for transfer, exchange or partial exercise
shall be canceled by the Warrant Agent and shall thereafter be delivered to the
Company.
SECTION 9. WARRANT PRICE; ADJUSTMENTS. A. The warrant price per share
at which Shares shall be purchasable upon exercise of Warrants (herein called
the "Warrant Exercise Price") to and including the Expiration Date (unless the
Expiration Date is extended as provided below in this Section 9A) shall be $____
per share, or, if adjusted as provided in this Section, shall be such price as
so adjusted. The Warrants will not be exercisable before [the close of business
on the date of any initial issuance thereof] [_________________] and will expire
at [_______] p.m., [City] time, on the Expiration Date; provided, however, that
the Company reserves the right to, and may, in its sole discretion, at any time
and from time to time, at such time or times as the Company so determines,
extend the Expiration Date of the Warrants for such periods of time as it
chooses; further provided that in no case may the Expiration Date of the
Warrants (as extended) be extended beyond five years from the Expiration Date
set forth above. Whenever the Expiration Date of the Warrants is so extended,
the Company shall at least 20 days before the then Expiration Date cause to be
mailed to the Warrant Agent and the registered holders of the Warrants in
accordance with the provisions of Section 17 hereof a notice stating that the
Expiration Date has been extended and setting forth the new Expiration Date.
B. The above provision is, however, subject to the following:
(1) The Warrant Exercise Price, the number of Shares
purchasable upon exercise of each Warrant and the number of Warrants
outstanding shall be subject to adjustment as follows:
(a) In case the Company shall at any time after the date of
this Agreement (i) pay a dividend, or make a distribution, on
the Common Stock which is payable in shares of its capital
stock (whether Shares of Common Stock or of capital stock of
any other class), (ii) subdivide or reclassify its outstanding
Shares of Common Stock into a greater number of securities
(including Shares of Common Stock), or (iii) combine or
reclassify its outstanding Shares of Common Stock into a
smaller number of shares (including Shares of Common Stock),
the number of Shares purchasable upon exercise of each Warrant
immediately before the occurrence of such event shall be
adjusted so that the holder of each Warrant shall be entitled
to receive upon payment of the Warrant Exercise Price the
aggregate number of shares of the Company which, if such
Warrant had been exercised immediately before the occurrence
of such event, such holder would have owned or have been
entitled to receive immediately after the occurrence of such
event. An adjustment made pursuant to this subparagraph (a)
shall become effective immediately after the record date in
the case of a dividend and shall become effective immediately
after the effective
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<PAGE>
date in the case of a subdivision or combination. If, as a
result of an adjustment made pursuant to this subparagraph
(a), the holder of any Warrant thereafter exercised shall
become entitled to receive shares of two or more classes of
capital stock of the Company, the Board of Directors of the
Company (whose determination shall be conclusive) shall
determine the allocation between or among shares of such
classes of capital stock. In the event that at any time, as a
result of an adjustment made pursuant to this subparagraph
(a), the holder of any Warrant thereafter exercised shall
become entitled to receive any shares or other securities of
the Company other than Shares of Common Stock, thereafter the
number of such other shares so received upon exercise of any
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Shares of Common Stock
contained in this paragraph, and the other provisions of this
paragraph 9B(1) with respect to the Shares of Common Stock
shall apply on like terms to any such other shares or other
securities.
(b) In case the Company shall fix a record date for
the issuance of rights or warrants to all holders of its
Common Stock entitling them (for a period expiring within 45
days after such record date) to subscribe for or purchase
Common Stock at a price per share less than the current market
price per share of Common Stock (as defined in subparagraph
(e) below) at such record date, the Warrant Exercise Price
shall be determined by multiplying the Warrant Exercise Price
in effect immediately before such record date by a fraction,
the numerator of which shall be the number of Shares of Common
Stock outstanding on such record date plus the number of
Shares of Common Stock which the aggregate offering price of
the total number of Shares so offered would purchase at such
current market price, and the denominator of which shall be
the number of Shares of Common Stock outstanding on such
record date plus the number of additional Shares of Common
Stock offered for subscription or purchase. Such adjustment
shall be made successively whenever such a record date is
fixed, and shall become effective immediately after such
record date. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase Shares of
Common Stock at less than such current market price, and in
determining the aggregate offering price of such Shares, there
shall be taken into account any consideration received by the
Company for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the
Board of Directors of the Company. Common Stock owned by or
held for the account of the Company or any majority owned
subsidiary shall not be deemed outstanding for the purpose of
any adjustment required under this subparagraph (b).
(c) In case the Company shall fix a record date for
making a distribution to all holders of its Common Stock of
evidences of its indebtedness or assets (excluding regular
quarterly or other periodic or recurring cash dividends or
distributions and cash dividends or distributions paid from
retained earnings or referred to in subparagraph (a) above) or
rights or warrants to subscribe or warrants to purchase
(excluding those referred to in subparagraph (b) above), then
in each such case the Warrant Exercise Price shall be
determined by multiplying the Warrant Exercise Price in effect
immediately before such record date by a fraction (x) the
numerator of which shall be such current market price (as
defined in subparagraph (e) below) per Share of Common Stock
on such record date, less the then fair market value (as
determined in good faith by the Board of Directors, whose
determination shall be conclusive) of the portion of the
assets or evidences of indebtedness so distributed or of such
subscription rights or warrants applicable
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<PAGE>
to one share of the Common Stock and (y) the denominator of
which shall be the current market price per share of the
Common Stock on such record date. Such adjustment shall be
made successively whenever such a record date is fixed and
shall become effective immediately after such record date.
Notwithstanding the foregoing, in the event that the Company
shall distribute any rights or warrants to acquire capital
stock ("Rights") pursuant to this subparagraph (c), the
distribution of separate certificates representing such Rights
after their initial distribution (whether or not such
distribution shall have occurred before the date of the
issuance of such Warrants) shall be deemed to be the
distribution of such Rights for purposes of this subparagraph
(c), provided, however, that the Company may, in lieu of
making any adjustment pursuant to this subparagraph (c) upon a
distribution of separate certificates representing such
Rights, make proper provision so that each holder of such
Warrants who exercises such Warrants (or any portion thereof)
(A) before the record date for such distribution of separate
certificates shall be entitled to receive upon such exercise
Shares of Common Stock issued with Rights and (B) after such
record date and before the expiration, redemption or
termination of such Rights shall be entitled to receive upon
such exercise, in addition to the Shares of Common Stock
issuable upon such exercise, the same number of such Rights as
would a holder of the number of Shares of Common Stock that
such Warrants so exercised would have entitled the holder
thereof to purchase in accordance with the terms and
provisions of and applicable to the Rights if such Warrants
were exercised immediately before the record date for such
distribution. Common Stock owned by or held for the account of
the Company or any majority owned subsidiary shall not be
deemed outstanding for the purpose of any adjustment required
under this subparagraph (c).
(d) After each adjustment of the number of Shares
purchasable upon exercise of each Warrant pursuant to
subparagraph 9B(1)(a), the Warrant Exercise Price shall be
adjusted by multiplying such Warrant Exercise Price
immediately before such adjustment by a fraction of which the
numerator shall be the number of Shares purchasable upon
exercise of each Warrant immediately before such adjustment,
and the denominator of which shall be the number of Shares so
purchasable immediately thereafter. After each adjustment of
the Warrant Exercise Price pursuant to subparagraph 9B(1)(b)
or (c), the total number of Shares or fractional part thereof
purchasable upon the exercise of each Warrant shall be
proportionately adjusted to such number of Shares or
fractional parts thereof as the aggregate Warrant Exercise
Price of the number of Shares or fractional part thereof
purchasable immediately before such adjustment will buy at the
adjusted Warrant Exercise Price.
(e) For the purpose of any computation under
subparagraphs 9B(1)(b) and (c) above, the current market price
per Share of Common Stock at any date shall be deemed to be
the average of the daily closing prices for the 30 consecutive
trading days commencing 45 trading days before the day in
question. The closing price for each day shall be (i) if the
Common Stock is listed or admitted for trading on the New York
Stock Exchange, the last sale price (regular way), or the
average of the closing bid and ask prices (regular way), if no
sale occurred, of Common Stock, in either case as reported on
the New York Stock Exchange Composite Tape or, if the Common
Stock is not listed or admitted to trading on the New York
Stock Exchange, on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or,
if not listed or admitted to trading on any national
securities exchange, on the National Market System of the
National Association of Securities Dealers, Inc. Automated
Quotations
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<PAGE>
System ("NASDAQ") or, (ii) if not listed or quoted as
described in (i), the mean between the closing high bid and
low asked quotations of Common Stock reported by NASDAQ, or
any similar system for automated dissemination of quotations
of securities prices then in common use, if so quoted, or
(iii) if not quoted as described in clause (ii), the mean
between the high bid and low asked quotations for Common Stock
as reported by the National Quotation Bureau Incorporated if
at least two securities dealers have inserted both bid and
asked quotations for Common Stock on at least 5 of the 10
preceding trading days. If none of the conditions set forth
above is met, the closing price of Common Stock on any day or
the average of such closing prices for any period shall be the
fair market value of Common Stock as determined by a member
firm of the New York Stock Exchange selected by the Company.
(f) (A) Nothing contained herein shall be construed
to require an adjustment as a result of the issuance of Common
Stock pursuant to, or the granting or exercise of any rights
under, the Company's [LIST EMPLOYEE AND STOCKHOLDER PLANS, IF
ANY, THAT MIGHT OTHERWISE RESULT IN ADJUSTMENTS]; and (B) in
addition, no adjustment in the Warrant Exercise Price shall be
required unless and until the earlier of the following shall
have occurred: (x) such adjustment would require an increase
or decrease of at least 1% in the Warrant Exercise Price or
(y) a period of three years shall have elapsed from the date
of the occurrence of any event requiring any such adjustment
pursuant to subparagraphs 9B(1)(a), (b) or (c) above. All
adjustments shall be made to the nearest one hundredth of a
share and the nearest cent, and any adjustments which by
reason of this subparagraph (f) are not required to be made
shall be carried forward cumulatively and taken into account
in any subsequent adjustment which (including such
carryforward) is required to be made under this subparagraph
(f).
(g) In any case in which this subparagraph 9B(1)
shall require that an adjustment be made retroactively
immediately following a record date, the Company may elect to
defer (but only until five business days following the mailing
of the notice described in subparagraph 9B(5) below) issuing
to the holder of any Warrant exercised after such record date
the Shares issuable upon such exercise over and above the
Shares issuable upon such exercise only on the basis of the
Warrant Exercise Price before adjustment.
(h) The Company may, at its option, at any time until
the Expiration Date, reduce the then current Warrant Exercise
Price to any amount deemed appropriate by the Board of
Directors of the Company for any period not exceeding 20
consecutive days (as evidenced in a resolution adopted by such
Board of Directors), but only upon giving the notices required
by subparagraph 9B(5) 20 days before taking such action.
(i) Except as herein otherwise expressly provided, no
adjustment in the Warrant Exercise Price shall be made by
reason of the issuance of Shares, or securities convertible
into or exchangeable for Shares, or securities carrying the
right to purchase any of the foregoing or for any other reason
whatsoever.
(j) Irrespective of any of the adjustments in the
Warrant Exercise Price or the number of Shares, Warrant
Certificates theretofore issued may continue to express the
same prices and number of Shares as are stated in a similar
Warrant Certificate issuable
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<PAGE>
initially, or at some subsequent time, pursuant to this
Agreement and such number of Shares specified therein shall be
deemed to have been so adjusted.
(2) No fractional Shares of Common Stock shall be issued upon
the exercise of Warrants. If more than one Warrant shall be exercised
at one time by the same holder, the number of full Shares which shall
be issuable upon such exercise shall be computed on the basis of the
aggregate number of Shares purchased pursuant to the Warrants so
exercised. Instead of any fractional Share of Common Stock which would
otherwise be issuable upon exercise of any Warrant, the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to
the same fraction of the last sales price (or bid price if there were
no sales) per Share of Common Stock, in either case as reported on the
New York Stock Exchange Composite Tape on the trading day which next
precedes the day of exercise or, if the Common Stock is not then listed
or admitted to trading on the New York Stock Exchange, an amount equal
to the same fraction of the market price per share of Common Stock (as
determined in a manner described by the Board of Directors of the
Company) at the close of business on the trading day which next
precedes the day of exercise.
(3) In case any of the following shall occur while any
Warrants are outstanding: (a) any reclassification or change of the
outstanding Shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value);
or (b) any consolidation or merger to which the Company is a party
(other than a consolidation or a merger in which the Company is the
continuing entity and which does not result in any reclassification of,
or change in, the outstanding Shares issuable upon exercise of the
Warrants); or (c) any sale or conveyance of the property of the Company
as an entirety or substantially as an entirety; then the Company, or
such successor or purchaser, as the case may be, shall make appropriate
provision by amendment of this Agreement or otherwise so that the
holders of the Warrants then outstanding shall have the right at any
time thereafter, upon exercise of such Warrants, to purchase the kind
and amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger,
sale or conveyance as would be received by a holder of the number of
Shares of Common Stock issuable upon exercise of such Warrant
immediately before such reclassification, change, consolidation,
merger, sale or conveyance. Such provision shall provide for
adjustments which shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 9. The above provisions
of this subparagraph 9B(3) shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales or
conveyances.
(4) Before taking any action which would cause an adjustment
decreasing the Warrant Exercise Price so that the Warrant Exercise
Price is below the then par value of the Shares of Common Stock, the
Company will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Shares of Common Stock at the
Warrant Exercise Price as so adjusted.
(5) Whenever the Warrant Exercise Price then in effect is
adjusted as herein provided, the Company shall mail to each holder of
the Warrants at such holder's address as it shall appear on the books
of the Company a statement setting forth the adjusted Warrant Exercise
Price then and thereafter effective under the provisions hereof,
together with the facts, in reasonable detail, upon which such
adjustment is based.
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<PAGE>
(6) In case (i) the Company shall declare a dividend (or any
other distribution) on its Common Stock payable otherwise than in cash
out of its current or retained earnings, or (ii) the Company shall
authorize the granting to the holders of its Common Stock of rights to
subscribe for or purchase any shares of capital stock of any class or
of any other rights, or (iii) there is to be any reclassification of
the Common Stock of the Company (other than a subdivision or
combination of its outstanding Shares of Common Stock), or any
consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or (iv) any
distribution is to be made on or in respect of the Common Stock in
connection with the dissolution, liquidation or winding up of the
Company, then the Company shall mail to each holder of Warrants at such
holder's address as it shall appear on the books of the Company, at
least 20 days (or 10 days in any case specified in clause (i) or (ii)
above) before the applicable record date hereinafter specified, a
notice stating (x) the record date for such dividend, distribution or
rights, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (y) the date on which
such reclassification, consolidation, merger, dissolution, liquidation
or winding up is expected to become effective, and the date as of which
it is expected that holders of Common Stock of record shall be entitled
to exchange their Shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger,
dissolution, liquidation or winding up. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect any such
transaction or any adjustment in the Warrant Exercise Price required by
this Section 9.
SECTION 10. NOTICE TO WARRANTHOLDERS. Nothing contained in this
Agreement or in any of the Warrants shall be construed as conferring upon the
holders thereof the right to vote or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
SECTION 11. CERTAIN COVENANTS OF THE COMPANY.
A. So long as any unexpired Warrants remain outstanding and if required
in order to comply with the Securities Act of 1933, as amended (the "Act"), the
Company covenants and agrees that it will file such post-effective amendments to
the registration statement filed pursuant to the Act with respect to the
Warrants (File No. 333-53751) (or such other registration statements or
post-effective amendments or supplements) as may be necessary to permit the
Company to deliver to each person exercising a Warrant a prospectus meeting the
requirements of Section 10(a)(3) of the Act and otherwise complying therewith,
and will deliver such a prospectus to each such person. The Company further
covenants and agrees that it will obtain and keep effective all permits,
consents and approvals of governmental agencies and authorities, and will use
its best efforts to take all action which may be necessary to qualify the Shares
for sale under the securities laws of such of the United States, as may be
necessary to permit the free exercise of the Warrants, and the issuance, sale,
transfer and delivery of the Shares issued upon exercise of the Warrants, and to
maintain such qualifications during the entire period in which the Warrants are
exercisable.
B. The Company covenants and agrees that it shall take all such action
as may be necessary to ensure that all Shares will at the time of delivery of
certificates for such Shares (subject to payment of the Warrant Exercise Price)
be duly and validly authorized and issued and fully paid and nonassessable
Shares, free from any preemptive rights and taxes, liens, charges and security
interests created by or imposed upon the Company.
- 9 -
<PAGE>
C. The Company covenants and agrees that it will take all action which
may be necessary to cause the Shares to be duly listed on the New York Stock
Exchange or another securities exchange or the interdealer quotation system on
which the other Shares of Common Stock of the Company are listed at the dates of
exercise of the Warrants.
SECTION 12. DISPOSITION OF PROCEEDS, ETC.
A. The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently pay to the Company all moneys received by
the Warrant Agent for the purchase of Shares through the exercise of such
Warrants.
B. The Warrant Agent shall keep copies of this Agreement available for
inspection by holders of Warrants during normal business hours at its principal
office in the City of __________________, ____________.
SECTION 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
Any entity into which the Warrant Agent may be merged or with which it may be
consolidated, or any entity resulting from any merger or consolidation to which
the Warrant Agent shall be a party, or any entity succeeding to the corporate
trust business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such entity would be eligible
for appointment as a successor Warrant Agent under the provisions of Section 15
of this Agreement. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement, and if any of the Warrants
shall have been countersigned but not delivered, any such successor to the
Warrant Agent may adopt the countersignature of the original Warrant Agent and
deliver such Warrants so countersigned; and in case at that time any of the
Warrants shall not have been countersigned, any successor to the Warrant Agent
may countersign such Warrants either in the name of the predecessor Warrant
Agent or in the name of the successor Warrant Agent; and in all such cases such
Warrant shall have the full force provided in the Warrants and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrants so countersigned; and in case at that time any of the
Warrants shall not have been countersigned, the Warrant Agent may countersign
such Warrants either in its prior name or in its changed name; and in all such
cases such Warrants shall have the full force provided in the Warrants and in
this Agreement.
SECTION 14. DUTIES OF WARRANT AGENT. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
A. The statements contained herein and in the Warrants shall be taken
as statements of the Company, and the Warrant Agent assumes no responsibility
for the correctness of any of the same except such as describe the Warrant Agent
or action taken or to be taken by it. The Warrant Agent assumes no
responsibility with respect to the distribution of the Warrants except as herein
otherwise provided.
B. The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.
- 10 -
<PAGE>
C. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees or for any loss to the Company resulting
from such neglect or misconduct, provided reasonable care shall have been
exercised in the selection and continued employment thereof.
D. The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company), and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel.
E. The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
F. The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the performance
of this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the performance of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant Agent in the
performance of this Agreement except as a result of the Warrant Agent's gross
negligence or bad faith.
G. The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable benefit
of the registered holders of the Warrants, as their respective rights or
interests may appear.
H. The Warrant Agent and any stockholder, director, officer or employee
of the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
I. The Warrant Agent shall act hereunder solely as agent and not in a
ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own gross negligence or bad faith.
- 11 -
<PAGE>
SECTION 15. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and
be discharged from its duties under this Agreement by giving to the Company
notice in writing, and to the holders of the Warrants notice by publication, of
such resignation, specifying a date when such resignation shall take effect,
which notice shall be published at the expense of the Company at least once a
week for two consecutive weeks in a newspaper of general circulation in the City
of New York before the date so specified. The Warrant Agent may be removed by
the Company by like notice from the Company to the Warrant Agent and the holders
of Warrants at the expense of the Company. If the Warrant Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by the registered holder of a Warrant (who shall,
with such notice, submit his Warrant for inspection by the Company), then, at
the expense of the Company, the Warrant Agent or the registered holder of any
Warrant may apply to any court of competent jurisdiction for the appointment of
a successor to the Warrant Agent. Any successor Warrant Agent, whether appointed
by the Company or by such a court, shall be a bank or trust company, in good
standing, incorporated under the laws of any State or of the United States of
America, having at the time of its appointment as Warrant Agent a combined
capital and surplus of at least $100,000,000. After appointment the successor
Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer to
the successor Warrant Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to file or publish any notice provided for in this Section,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
Warrant Agent, as the case may be.
SECTION 16. IDENTITY OF TRANSFER AGENT. Forthwith upon the appointment
of any Transfer Agent for the Shares or of any subsequent Transfer Agent for
Shares issuable upon the exercise of the rights of purchase represented by the
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such Transfer Agent.
SECTION 17. NOTICES. Any notice pursuant to this Agreement to be given
or made by the Warrant Agent or by the registered holder of any Warrant to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent) as follows:
CarrAmerica Realty Corporation
1850 K Street, N.W., Suite 500
Washington, D.C. 20006
Att'n: Corporate Secretary
Any notice pursuant to this Agreement to be given or made by the Company or by
the registered holder of any Warrant to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:
- 12 -
<PAGE>
Any notice pursuant to this Agreement to be given or made by the Company or the
Warrant Agent to the registered holder of any Warrant shall be sufficiently
given or made (unless otherwise specifically provided for herein) if sent by
first-class mail, postage prepaid, addressed to said registered holder at his
address appearing on the Warrant register.
SECTION 18. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrants in order to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which will not materially
adversely affect the interest of the registered holders of the Warrants.
SECTION 19. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 20. GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be governed by and construed in accordance with the laws
of the State of New York.
SECTION 21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or entity other than the Company and the
Warrant Agent and the holders of Warrants any legal or equitable right, remedy
or claim under this Agreement, but this Agreement shall be for the sole and
exclusive benefit of the Company and the Warrant Agent and the holders of
Warrants.
SECTION 22. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[IF THE WARRANTS ARE SUBJECT TO ACCELERATION BY THE COMPANY, INSERT -
SECTION 23. ACCELERATION OF WARRANTS BY THE COMPANY.
A. At any time on or after ____________________, the Company
shall have the right to accelerate any or all Warrants at any time by causing
them to expire at the close of business on the day next preceding a specified
date (the "Acceleration Date"), if the Market Price (as hereinafter defined) of
the Common Stock equals or exceeds _________ percent (____%) of the then
effective Warrant Exercise Price, adjusted as if no changes in such Warrant
Exercise Price had been made pursuant to subsection 9B, on any 20 Trading Days
(as hereinafter defined) within a period of 30 consecutive Trading Days ending
no more than five Trading Days before the date on which the Company gives notice
to the Warrant Agent of its election to accelerate the Warrants.
B. "Market Price" for each Trading Day shall be, if the Common
Stock is listed or admitted for trading on the New York Stock Exchange, the last
reported sale price, regular way (or, if no such price is reported, the average
of the reported closing bid and asked prices, regular way) of Common Stock, in
either case as reported on the New York Stock Exchange Composite Tape or, if the
Common Stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which Common Stock is
not listed or admitted to trading or, if not listed or admitted to trading on
any national securities exchange, on the National Market System of NASDAQ or, if
not
- 13 -
<PAGE>
listed or admitted to trading on any national securities exchange or quoted on
the National Market System of NASDAQ, the average of the closing high bid and
low asked prices in the over-the-counter market, as reported by NASDAQ, or such
other system then in use, or if on any such date the Shares of Common Stock are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by any New York Stock Exchange firm selected from time to
time by the Company for that purpose. "Trading Day" shall be each Monday through
Friday, other than any day on which securities are not traded in the system or
on the exchange that is the principal market for the Common Stock, as determined
by the Board of Directors of the Company.
C. In the event of an acceleration of less than all of the
Warrants, the Warrant Agent shall select the Warrants to be accelerated by lot,
pro rata or in such other manner as it deems, in its discretion, to be fair and
appropriate.
D. Notice of an acceleration specifying the Acceleration Date
shall be sent by mailing first class, postage prepaid, to each registered holder
of a Warrant Certificate representing a Warrant accelerated at such holder's
address appearing on the Warrant register not more than 60 days nor less than 30
days before the Acceleration Date. Such notice of an acceleration also shall be
given no more than 20 days, and no less than 10 days, before the mailing of
notice to registered holders of Warrants pursuant to this Section, by
publication at least once in a newspaper of general circulation in the City of
New York.
E. Any Warrant accelerated may be exercised until [_______]
p.m., [City] time, on the business day next preceding the Acceleration Date. The
Warrant Exercise Price shall be payable as provided in Section 5.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
CARRAMERICA REALTY CORPORATION
By _________________________
Its _____________________
Attest:
____________________________, as Warrant Agent
By __________________________
Its _____________________
Attest:
- 14 -
<PAGE>
Exhibit A
FORM OF WARRANT CERTIFICATE
[Face of Warrant Certificate]
[IF WARRANTS ARE ATTACHED TO Before _______________, this
OTHER SECURITIES AND ARE NOT Warrant Certificate cannot be
IMMEDIATELY DETACHABLE. transferred or exchanged unless
attached to a [Title of Other
Securities].]
[FORM OF LEGEND IF WARRANTS ARE Before _______________,
NOT IMMEDIATELY EXERCISABLE. Warrants evidenced by this
Warrant Certificate cannot be
exercised.]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT
AGENT AS PROVIDED HEREIN
VOID AFTER [______] P.M., [CITY] TIME, ON ____________, 19__
CARRAMERICA REALTY CORPORATION
Warrants to Purchase
Warrant Certificate Representing
[Title of Warrant Securities]
No. __________ ____________
Warrants
This certifies that ____________________________ or registered assigns
is the registered owner of the above indicated number of Warrants, each Warrant
entitling such owner [IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT
IMMEDIATELY DETACHABLE - , subject to the registered owner qualifying as a
"Holder" of this Warrant Certificate, as hereinafter defined) to purchase, at
any time [after [___] p.m., [City] time, on _______________ and] on or before
[___] p.m., [City] time, on ____________________, ____________ shares of [Title
of Warrant Securities] (the "Warrant Securities"), of CarrAmerica Realty
Corporation (the "Company") on the following basis: during the period from
_______________, through and including ______________, the exercise price of
each Warrant will be ___________; during the period from ________, through and
including ________, the exercise price of each warrant will be ________ (the
"Warrant Price"). No adjustment shall be made for any dividends on any Warrant
Securities issuable upon exercise of any Warrant. The Holder may exercise the
Warrants evidenced hereby by providing certain information set forth on the back
hereof and by paying in full [in lawful money of the United States of America]
[in cash or by certified check or official bank check or by bank wire transfer,
in each case,] [by bank wire transfer] in immediately available funds, the
Warrant Price for each Warrant exercised to the Warrant Agent (as hereinafter
defined) and by surrendering this Warrant Certificate, with the purchase form on
the back hereof duly executed, at the
A-1
<PAGE>
corporate trust office of [name of Warrant Agent], or its successor as warrant
agent (the "Warrant Agent"), [or ________________________], which is, on the
date hereof, at the address specified on the reverse hereof, and upon compliance
with and subject to the conditions set forth herein and in the Warrant Agreement
(as hereinafter defined).
The term "Holder" as used herein shall mean [IF WARRANTS ARE ATTACHED
TO OTHER SECURITIES AND ARE NOT IMMEDIATELY DETACHABLE - before ___________, __
(the "Detachable Date"), the registered owner of the Company's [title of Other
Securities] to which this Warrant Certificate was initially attached, and after
such Detachable Date,] the person in whose name at the time this Warrant
Certificate shall be registered upon the books to be maintained by the Warrant
Agent for that purpose pursuant to Section 4 of the Warrant Agreement.
Any whole number of Warrants evidenced by this Warrant Certificate may
be exercised to purchase Warrant Securities in registered form. Upon any
exercise of fewer than all of the Warrants evidenced by this Warrant
Certificate, there shall be issued to the Holder hereof a new Warrant
Certificate evidencing the number of Warrants remaining unexercised.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement dated as of __________ __, ____ (the "Warrant Agreement")
between the Company and the Warrant Agent and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which terms and
provisions the Holder of this Warrant Certificate consents by acceptance hereof.
Copies of the Warrant Agreement are on file at the above-mentioned office of the
Warrant Agent [and at _________________].
[IF WARRANTS ARE ATTACHED TO OTHER SECURITIES AND ARE NOT IMMEDIATELY
DETACHABLE - Before the Detachable Date, this Warrant Certificate may be
exchanged or transferred only together with the [Title of Other Securities] (the
"Other Securities") to which this Warrant Certificate was initially attached,
and only for the purpose of effecting, or in conjunction with, an exchange or
transfer of such Offered Security. Additionally, on or before the Detachable
Date, each transfer of such Other Securities or register of transfer of the
Other Securities shall operate also to transfer or register the transfer of this
Warrant Certificate. After such date, transfer of this] [IF WARRANTS ARE
ATTACHED TO OTHER SECURITIES AND ARE NOT IMMEDIATELY DETACHABLE - Transfer of
this] Warrant Certificate may be registered when this Warrant Certificate is
surrendered at the corporate trust office of the Warrant Agent [or
_________________________] by the registered owner or such owner's assigns, in
person or by an attorney duly authorized in writing, in the manner and subject
to the limitations provided in the Warrant Agreement.
[IF OTHER SECURITIES WITH WARRANTS WHICH ARE NOT IMMEDIATELY DETACHABLE
- - Except as provided in the immediately preceding paragraph, after] [IF OTHER
SECURITIES WITH WARRANTS WHICH ARE IMMEDIATELY DETACHABLE OR WARRANT ALONE -
After] countersignature by the Warrant Agent and before the expiration of this
Warrant Certificate, this Warrant Certificate may be exchanged at the corporate
trust office of the Warrant Agent [or ____________] for Warrant Certificates
representing the same aggregate number of Warrants.
This Warrant Certificate shall not entitle the Holder hereof to any of
the rights of a holder of the Warrant Securities, including, without limitation,
the right to receive payments of dividends or distributions, if any, on the
Warrant Securities or to exercise any voting rights.
This Warrant Certificate shall not be valid or obligatory for any
purpose until countersigned by the Warrant Agent.
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its name and on its behalf by the facsimile signatures of its duly authorized
officers.
Dated: ______________ ___, ________ CARRAMERICA REALTY CORPORATION
By ____________________________
Its ____________________________
ATTEST:
Countersigned: _______________________
As Warrant Agent
By _____________________________ Authorized Signature
A-3
<PAGE>
[Reverse of Warrant Certificate]
The Warrants evidenced hereby and the Warrant Securities are subject to
the provisions of the Charter and Bylaws of the Company, including provisions
that set forth restrictions on transfer and ownership for the purpose of
maintaining the Company's status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"). No Person may (1)
Beneficially Own shares of Common Stock in excess of 5 percent (or such greater
percentage as may be determined by the Board of Directors of the Company) of the
outstanding Common Stock of the Company (unless such Person is an Existing
Holder or a Special Shareholder), (2) Beneficially Own shares of any class or
series of Preferred Stock in excess of 5 percent (or such greater percentage as
may be determined by the Board of Directors of the Company) of the outstanding
shares of such class or series of Preferred Stock of the Company (unless such
Person is an Existing Holder or Special Shareholder), (3) Beneficially Own
capital stock that would result in the Company's being "closely held" (within
the meaning of Section 856(h) of the Code) or Acquire capital stock that would
result in the Company having fewer than 100 shareholders (as determined for
purposes of Section 856(a)(5) of the Code), or (4) unless such Person is a
Special Shareholder, Acquire shares of capital stock if, as a result of such
Acquisition, the Company would fail to qualify as a "domestically controlled
REIT" (within the meaning of Section 897(h)(4) of the Code) (determined assuming
that the Special Shareholders are Non-U.S. Persons and own a percentage (by
value) of the Company's capital stock corresponding to the Special Shareholders'
Percentage). Separate restrictions set forth in Article V of the Company's
Charter apply to Existing Holders and Special Shareholders. Any Person who
attempts to Beneficially Own shares of capital stock in excess of these
limitations must immediately notify the Company. If any of the restrictions on
transfer or ownership set forth in Article V of the Charter are violated, the
Warrants represented hereby will automatically be transferred to the Trustee of
a Trust for the benefit of a Charitable Beneficiary pursuant to the terms of
Article V of the Company's Charter. In addition, attempted transfers of capital
stock or interests in capital stock in violation of these limitations (as
modified or expanded upon in Article V of the Company's Charter), may be void ab
initio. A Person who attempts to Beneficially Own shares of capital stock in
violation of the ownership limitations set forth in Section 5.2 of the Company's
Charter shall have no claim, cause of action, or any other recourse whatsoever
against a transferor of such shares. Capitalized terms in the foregoing
sentences of this paragraph not otherwise defined in this Warrant Certificate
that are defined in the Company's Charter have the meanings ascribed to them in
the Charter.
(Instructions for Exercise of Warrant)
To exercise the Warrants evidenced hereby, the Holder must pay [in
United States dollars] [in cash or by certified check or official bank check or
by bank wire transfer, in each case] [by bank wire transfer in immediately
available funds], the Warrant Price in full for Warrants exercised, to [Warrant
Agent] [address of Warrant Agent], Att'n: __________________, which payment must
specify the name of the Holder and the number of Warrants exercised by such
Holder. In addition, the Holder must complete the information required below and
present this Warrant Certificate in person or by mail (certified or registered
mail is recommended) to the Warrant Agent at the appropriate address set forth
below. This Warrant Certificate, completed and duly executed, must be received
by the Warrant Agent within five business days of the payment.
To Be Executed Upon Exercise of Warrant
The undersigned hereby irrevocably elects to exercise ______ Warrants,
evidenced by this Warrant Certificate, to purchase ______ shares of the [Title
of Warrant Securities] (the "Warrant Securities") of CarrAmerica Realty
Corporation and represents that he or she has tendered payment for such Warrant
A-4
<PAGE>
Securities [in Dollars] [in cash or by certified check or official bank check or
by bank wire transfer, in each case] [by bank wire transfer in immediately
available funds] to the order of CarrAmerica Realty Corporation, c/o [insert
name and address of Warrant Agent], in the amount of ________ in accordance with
the terms hereof. The undersigned requests that said principal amount of Warrant
Securities be in fully registered form in the authorized denominations,
registered in such names and delivered all as specified in accordance with the
instructions set forth below.
If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered to
the undersigned unless otherwise specified in the instructions below.
Dated: ___________________________ Name __________________________________
(Please Print)
_________________________________ Address _______________________________
(Insert Social Security or Other
Identifying Number of Holder) _______________________________________
Signature Guaranteed
______________________________ Signature _____________________________
[FOR REGISTERED WARRANTS -- Signature must
conform in all respects to name of holder
as specified on the face of this Warrant
Certificate and must bear a signature
guarantee by a bank, trust company or
member broker of the New York, Midwest or
Pacific Stock Exchange]
This Warrant may be exercised at the following addresses:
By hand at __________________________________________
By hand at __________________________________________
[Instructions as to form and delivery of Warrant Securities and, if applicable,
Warrant Certificates evidencing unexercised Warrants - complete as appropriate.]
ASSIGNMENT
(Form of assignment to be executed if
Warrant Holder desires to transfer Warrant)
FOR VALUE RECEIVED, _________________________ hereby sells, assigns and
transfers unto
_____________________________________
Print or Type Name
A-5
<PAGE>
_____________________________________
Street Address
_______________________________ _________ __________
City State Zip Code
____________________________________________
Social Security or other Identifying Number
the right represented by the within Warrant to purchase ___________________
Shares of Common Stock ($.01 par value) of CarrAmerica Realty Corporation to
which the within Warrant relates and appoints _________________________________
attorney to transfer such right on the books of the Warrant Agent with full
power of substitution in the premises.
Dated: _________________________ ________________________________________
Signature (Signature must conform in all
respects to name of holder as specified
on the face of the Warrant)
Signature Guaranteed
_____________________________________
A-6
Exhibit 4.4
CARRAMERICA REALTY CORPORATION
AND
[NAME OF DEBT WARRANT AGENT],
Debt Warrant Agent
[FORM OF] DEBT WARRANT AGREEMENT
Dated as of _____________ , 19__
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE I. ISSUANCE OF DEBT WARRANTS AND EXECUTION AND
DELIVERY OF DEBT WARRANT CERTIFICATES....................................................2
SECTION 1.1. ISSUANCE OF DEBT WARRANTS................................................................2
SECTION 1.2. EXECUTION AND DELIVERY OF DEBT WARRANT
CERTIFICATES.............................................................................2
SECTION 1.3. ISSUANCE OF DEBT WARRANT CERTIFICATES....................................................3
SECTION 1.4. TEMPORARY DEBT WARRANT CERTIFICATES......................................................3
SECTION 1.5. DEFINITION OF HOLDER.....................................................................4
ARTICLE II. DEBT WARRANT PRICE, DURATION AND EXERCISE OF
DEBT WARRANTS............................................................................4
SECTION 2.1. DEBT WARRANT PRICE.......................................................................4
SECTION 2.2. DURATION OF DEBT WARRANTS................................................................5
SECTION 2.3. EXERCISE OF DEBT WARRANTS................................................................5
ARTICLE III. OTHER PROVISIONS RELATING TO RIGHTS OF
HOLDERS OF DEBT WARRANT CERTIFICATES.....................................................6
SECTION 3.1. NO RIGHTS AS A HOLDER OF DEBT WARRANT NOTES
CONFERRED BY DEBT WARRANTS OR DEBT WARRANT
CERTIFICATES.............................................................................6
SECTION 3.2. LOST, STOLEN, MUTILATED OR DESTROYED DEBT
WARRANT CERTIFICATES.....................................................................6
SECTION 3.3. HOLDER OF DEBT WARRANT CERTIFICATE MAY
ENFORCE RIGHTS...........................................................................7
ARTICLE IV. [REGISTRATION], EXCHANGE AND TRANSFER
OF DEBT WARRANT CERTIFICATES.............................................................7
SECTION 4.1. EXCHANGE AND TRANSFER OF DEBT
WARRANT CERTIFICATES.....................................................................7
SECTION 4.2. TREATMENT OF HOLDERS OF DEBT WARRANT
CERTIFICATES.............................................................................8
SECTION 4.3. PERSONS DEEMED OWNERS....................................................................9
SECTION 4.4. CANCELLATION OF DEBT WARRANT
CERTIFICATES.............................................................................9
</TABLE>
- --------
(1) This Table of Contents shall not, for any purpose, be deemed to be part of
this Warrant Agreement.
i
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS (1)
Page
----
<S> <C> <C>
ARTICLE V. CONCERNING THE DEBT WARRANT AGENT........................................................10
SECTION 5.1. DEBT WARRANT AGENT.......................................................................10
SECTION 5.2. CONDITIONS OF DEBT WARRANT AGENT'S
OBLIGATIONS..............................................................................10
SECTION 5.3. RESIGNATION AND APPOINTMENT OF SUCCESSOR.................................................12
SECTION 5.4. COMPLIANCE WITH APPLICABLE LAWS..........................................................14
ARTICLE VI. MISCELLANEOUS............................................................................14
SECTION 6.1. MODIFICATION, SUPPLEMENTATION OR
AMENDMENT................................................................................14
SECTION 6.2. CONSOLIDATIONS AND MERGERS OF THE COMPANY
AND SALES, LEASES AND CONVEYANCES PERMITTED
SUBJECT TO CERTAIN CONDITIONS............................................................15
SECTION 6.3. RIGHTS AND DUTIES OF SUCCESSOR
CORPORATION..............................................................................15
SECTION 6.4. NOTICES AND DEMANDS TO THE COMPANY AND DEBT
WARRANT AGENT............................................................................15
SECTION 6.5. ADDRESSES................................................................................15
SECTION 6.6. NOTICES TO HOLDERS OF DEBT WARRANTS......................................................16
SECTION 6.7. APPLICABLE LAW...........................................................................16
SECTION 6.8. DELIVERY OF PROSPECTUS...................................................................16
SECTION 6.9. OBTAINING OF GOVERNMENTAL APPROVALS......................................................16
SECTION 6.10. PERSONS HAVING RIGHTS UNDER DEBT WARRANT
AGREEMENT................................................................................17
SECTION 6.11. HEADINGS.................................................................................17
SECTION 6.12. COUNTERPARTS.............................................................................17
SECTION 6.13. INSPECTION OF AGREEMENT..................................................................17
EXHIBIT A [Form of Debt Warrant Certificate]
EXHIBIT B Form of Certificate for Delivery of Bearer Debt Warrant Notes
</TABLE>
ii
<PAGE>
FORM OF DEBT WARRANT AGREEMENT(2)
DEBT WARRANT AGREEMENT dated as of _________________, 199__
between CarrAmerica Realty Corporation, a Maryland corporation (hereinafter
called the "Company," [which term includes any successor corporation under the
Indenture hereinafter referred to]) and __________________, as Debt Warrant
Agent (herein called the "Debt Warrant Agent").
[WHEREAS, the Company has entered into an Indenture dated as
of _______ __, 19___ (the "Indenture"), with [____________________], a
corporation organized under the laws of the [_______________] (the "Trustee,"
which term includes any successor trustee under the Indenture), providing for
the issuance from time to time of its unsecured debentures, notes or other
evidences of indebtedness (the "Notes"), to be issued in one or more series;
and]
[WHEREAS, the Company proposes to sell [title of Notes being
offered] (the "Offered Notes") with warrant certificates evidencing one or more
warrants (the "Debt Warrants" or, individually a "Debt Warrant") representing
the right to purchase up to an aggregate principal amount of ________________ of
[title of Notes purchasable through exercise of Debt Warrants] (the "Debt
Warrant Notes"), such warrant certificates and other warrant certificates issued
pursuant to this Agreement being herein called the "Debt Warrant Certificates"
(3); and]
WHEREAS, the Company desires the Debt Warrant Agent to act on
behalf of the Company in connection with the issuance, exchange, exercise and
replacement of the Debt Warrant Certificates, and in this Agreement wishes to
set forth, among other things, the form and provisions of the Debt Warrant
Certificates and the terms and conditions on which they may be issued,
exchanged, exercised and replaced;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:
- --------
(2) The provisions of this form will be completed or modified as appropriate to
reflect the terms of the Warrants, any contemporaneously offered Debt Securities
and Debt Warrant Notes and the designation of the Debt Warrant Agent. Monetary
amounts may be in U.S. dollars, in another currency or currencies or in units
based on or relating to currencies (including Euros).
(3) If the Warrants are to be uncertificated, the provisions of this form will
be modified as appropriate to reflect the terms of exercise and transfer of
uncertificated Warrants and other matters relating to the use of the specified
system for uncertificated Warrants.
<PAGE>
ARTICLE I.
ISSUANCE OF DEBT WARRANTS AND EXECUTION AND
DELIVERY OF DEBT WARRANT CERTIFICATES.
SECTION 1.1. ISSUANCE OF DEBT WARRANTS. Debt Warrants shall be
initially issued in connection with the issuance of the Offered Notes [but shall
be separately transferable on and after _____________, 19__ (the "Detachable
Date")] (and shall not be separately transferable] and each Debt Warrant
Certificate shall evidence one or more Debt Warrants. Each Debt Warrant
evidenced thereby shall represent the right, subject to the provisions contained
herein and therein, to purchase a Debt Warrant Note in the principal amount of
$____________. Debt Warrant Certificates shall be issued initially in units with
the Offered Notes and each Debt Warrant Certificate included in such a unit
shall evidence ______ Debt Warrants for each $___________ principal amount of
Offered Notes included in such unit.
SECTION 1.2. EXECUTION AND DELIVERY OF DEBT WARRANT
CERTIFICATES. Debt Warrant Certificates, whenever issued, shall be in [bearer]
[or] [registered] form [or both] substantially in the form set forth in Exhibit
A hereto, shall be dated by the Debt Warrant Agent the date of its
countersignature and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as the officers of the Company executing the
same may approve (execution thereof to be conclusive evidence of such approval)
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Debt
Warrants may be listed, or to conform to usage. The Debt Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board of
Directors, its President, one of its Vice Presidents or its Treasurer under its
corporate seal reproduced thereon and attested by its Secretary or one of its
Assistant Secretaries. Such signatures may be manual or facsimile signatures of
such authorized officers and may be imprinted or otherwise reproduced on the
Debt Warrant Certificates. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Debt Warrant Certificates. [Typographical and other minor
errors or defects in any such reproduction of the seal or any such signature
shall not affect the validity or enforceability of the Debt Warrant Certificate
that has been duly executed by the Company and countersigned by the Debt Warrant
Agent.]
No Debt Warrant Certificate shall be valid for any purpose,
and no Debt Warrant evidenced thereby shall be exercisable, until such Debt
Warrant Certificate has been countersigned by the manual signature of the Debt
Warrant Agent. Such signature by the Debt Warrant Agent upon any Debt Warrant
Certifi-
2
<PAGE>
cate executed by the Company shall be conclusive evidence that the Debt Warrant
Certificate so countersigned has been duly issued hereunder.
In case any officer of the Company who shall have signed any
of the Debt Warrant Certificates shall cease to be such officer before the Debt
Warrant Certificates so signed shall have been countersigned and delivered by
the Debt Warrant Agent, such Debt Warrant Certificates may be countersigned and
delivered notwithstanding that the person who signed such Debt Warrant
Certificates ceased to be such officer of the Company; and any Debt Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of the execution of such Debt Warrant Certificate, shall be the
proper officers of the Company, although at the date of the execution of this
Agreement any such person was not such officer.
SECTION 1.3. ISSUANCE OF DEBT WARRANT CERTIFICATES. Debt
Warrant Certificates evidencing the right to purchase an aggregate principal
amount not exceeding $___________ of Debt Warrant Notes (except as provided in
Sections 2.3(C), 3.2 and 4.1) may be executed by the Company and delivered to
the Debt Warrant Agent upon the execution of this Debt Warrant Agreement or from
time to time thereafter. The Debt Warrant Agent shall, upon receipt of Debt
Warrant Certificates duly executed on behalf of the Company, countersign Debt
Warrant Certificates evidencing Debt Warrants representing the right to purchase
up to $__________ aggregate principal amount of Debt Warrant Notes and shall
deliver such Debt Warrant Certificates to or upon the order of the Company.
Subsequent to such original issuance of the Debt Warrant Certificates, the Debt
Warrant Agent shall countersign a Debt Warrant Certificate only if the Debt
Warrant Certificate is issued in exchange or substitution for one or more
previously countersigned Debt Warrant Certificates [If registered Debt
Warrants--or in connection with their transfer], as hereinafter provided or as
provided in Sections 2.3(C), 3.2 or 4.1.
SECTION 1.4. TEMPORARY DEBT WARRANT CERTIFICATES. Pending the
preparation of definitive Debt Warrant Certificates, the Company may execute,
and upon the order of the Company the Debt Warrant Agent shall countersign and
deliver, temporary Debt Warrant Certificates which are printed, lithographed,
typewritten, mimeographed or otherwise produced substantially of the tenor of
the definitive Debt Warrant Certificates in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Debt Warrant Certificates may determine, as
evidenced by their execution of such Debt Warrant Certificates.
If temporary Debt Warrant Certificates are issued, the Company
will cause definitive Debt Warrant Certificates to be prepared without
unreasonable delay. After the preparation of definitive Debt Warrant
Certificates, the temporary Debt Warrant Certificates shall be exchangeable for
definitive Debt Warrant Certificates upon surrender of the temporary Debt
Warrant Certificates at the corpo-
3
<PAGE>
rate trust office of the Debt Warrant Agent [or ________________], without
charge to the holder (as defined below). Upon surrender for cancellation of any
one or more temporary Debt Warrant Certificates the Company shall execute and
the Debt Warrant Agent shall countersign and deliver in exchange therefor
definitive Debt Warrant Certificates representing the same aggregate number of
Debt Warrants. Until so exchanged, the temporary Debt Warrant Certificates shall
in all respects be entitled to the same benefits under this Agreement as
definitive Debt Warrant Certificates.
SECTION 1.5. DEFINITION OF HOLDER. [If bearer Debt Warrants --
The term "holder" or "holder of a Debt Warrant Certificate" as used herein shall
mean [If Offered Notes with Debt Warrants which are not immediately detachable
- -- prior to the Detachable Date, the registered owner of the offered Note to
which such Debt Warrant Certificate was initially attached (or the bearer if the
Offered Note is a bearer Note), and after such Detachable Date] the bearer of
such Debt Warrant Certificate.]
[If registered Debt Warrants -- The term "holder" or "holder
of a Debt Warrant Certificate" as used herein shall mean any person in whose
name at the time any Debt Warrant Certificate shall be registered upon the books
to be maintained by the Debt Warrant Agent for that purpose [If Offered Notes
with Debt Warrants which are not immediately detachable -- or, prior to the
Detachable Date, upon the register of the Offered Notes. The Company will, or
will cause the registrar of the Offered Notes to, make available at all times to
the Debt Warrant Agent such information as to holders of the Offered Notes with
Debt Warrants as may be necessary to keep the Debt Warrant Agent's records up to
date].]
ARTICLE II.
DEBT WARRANT PRICE, DURATION AND EXERCISE OF DEBT WARRANTS.
SECTION 2.1. DEBT WARRANT PRICE. During the period from and
including _________________, 19__ to and including ___________, 19__ the
exercise price of each Debt Warrant will be [ % of the principal amount of the
Debt Warrant Notes] [$__________] plus [accrued amortization of the original
issue discount] [accrued interest] from the most recent preceding
___________________. [During the period from _____________________, 19__, to and
including ___________, 19__, the exercise price of each Debt Warrant will be
[__% of the principal amount of the Debt Warrant Notes] [$_________] plus
[accrued amortization of the original issue discount] [accrued interest] from
the most recently preceding ___________]. [In each case, the original issue
discount will be amortized at a _____ % annual rate, computed on an annual basis
using a 360-day year consisting of twelve 30-day months.] Such purchase price of
Debt Warrant Notes is referred to in this Agreement as the
4
<PAGE>
"Debt Warrant Price." [The original issue discount for each $ _______ principal
amount of Debt Warrant Notes is $_______.]
SECTION 2.2. DURATION OF DEBT WARRANTS. Each Debt Warrant may
be exercised in whole at any time, as specified herein, on or after [the date
thereof] [_________, 19__] and at or before 5:00 p.m. New York time on
_______________, 19__, or such later date as may be selected by the Company, in
a written statement to the Debt Warrant Agent and with notice to the holders of
Debt Warrants (such date of expiration is herein referred to as the "Expiration
Date"). Each Debt Warrant not exercised at or before 5:00 p.m. New York time on
the Expiration Date shall become void, and all rights of the holder of the Debt
Warrant Certificate evidencing such Debt Warrant under this Agreement shall
cease.
SECTION 2.3. EXERCISE OF DEBT WARRANTS. (a) During the period
specified in Section 2.2 any whole number of Debt Warrants may be exercised
[,subject to Section 2.3(c),] by delivery to the Debt Warrant Agent of the Debt
Warrant Certificate evidencing such Debt Warrant, with the form of election to
purchase Debt Warrant Notes set forth on the reverse side of the Debt Warrant
Certificate properly completed and duly executed, and by paying in full, [in
lawful money of the United States of America,] [in cash or by certified check or
official bank check or by bank wire transfer, in each case,] [by bank wire
transfer] [in immediately available funds], the Debt Warrant Price for each Debt
Warrant exercised to the Debt Warrant Agent, such delivery and payment to be
made at the corporate trust office of the Debt Warrant Agent [or at __________].
The date on which the duly completed and executed Debt Warrant Certificate and
payment in full of the Debt Warrant Price is received by the Debt Warrant Agent
shall be deemed to be the date on which the Debt Warrant is exercised. The Debt
Warrant Agent shall deposit all funds received by it in payment of the Debt
Warrant Price in an account of the Company maintained with it and shall advise
the Company by telephone at the end of each day on which a [payment] [wire
transfer] for the exercise of Debt Warrants is received of the amount so
deposited to its account. The Debt Warrant Agent shall promptly confirm such
telephone advice to the Company in writing.
(b) The Debt Warrant Agent shall, from time to time, as
promptly as practicable, advise the Company and the Trustee of (i) the number of
Debt Warrants exercised, (ii) the instructions of each holder of the Debt
Warrant Certificates evidencing such Debt Warrants with respect to delivery of
the Debt Warrant Notes to which such holder is entitled upon such exercise,
(iii) delivery of Debt Warrant Certificates evidencing the balance, if any, of
the Debt Warrants remaining after such exercise, and (iv) such other information
as the Company or the Trustee shall reasonably require.
(c) As soon as practicable after the exercise of any Debt
Warrant, the Company shall issue, pursuant to the Indenture, in authorized
denominations to or upon the order of the holder of the Debt Warrant Certificate
evidencing such Debt
5
<PAGE>
Warrant, the Debt Warrant Notes to which such holder is entitled, [in fully
registered form, registered in such name or names] [or] [in bearer form] as may
be directed by such holder [; PROVIDED, HOWEVER, the Company shall deliver Debt
Warrant Notes in bearer form only outside the United States and only upon
delivery from the person entitled to physical delivery of such Debt Warrant
Notes of an executed certification substantially in the form of Exhibit B
hereto.] If less than all of the Debt Warrants evidenced by such Debt Warrant
Certificate are exercised, the Company shall execute, and an authorized officer
of the Debt Warrant Agent shall manually countersign and deliver, a new Debt
Warrant Certificate evidencing the number of such Debt Warrants remaining
unexercised.
(d) The Company shall not be required to pay any stamp or
other tax or other governmental charge required to be paid in connection with
any transfer involved in the issuance of the Debt Warrant Notes and the Company
shall not be required to issue or deliver any Debt Warrant Note unless or until
the person requesting the issuance thereof shall have paid to the Company the
amount of such tax or governmental charge or shall have established to the
satisfaction of the Company that such tax or other governmental charge has been
paid or that no such tax or other governmental charge is payable.
ARTICLE III.
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS
OF DEBT WARRANT CERTIFICATES.
SECTION 3.1. NO RIGHTS AS A HOLDER OF DEBT WARRANT NOTES
CONFERRED BY DEBT WARRANTS OR DEBT WARRANT CERTIFICATES. No Debt Warrant
Certificate or Debt Warrant evidenced thereby shall entitle the holder thereof
to any of the rights of a holder of Debt Warrant Notes, including, without
limitation, the right to receive the payment of principal of, premium, if any,
or interest on Debt Warrant Notes or to enforce any of the covenants in the
Indenture.
SECTION 3.2. LOST, STOLEN, MUTILATED OR DESTROYED DEBT WARRANT
CERTIFICATES. Upon receipt by the Debt Warrant Agent of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Debt Warrant Certificate and of indemnity reasonably
satisfactory to it and, in the case of mutilation, upon surrender of such Debt
Warrant Certificate to the Debt Warrant Agent for cancellation, then, in the
absence of notice to the Company or the Debt Warrant Agent that such Debt
Warrant Certificate has been acquired by a bona fide purchaser or holder in due
course, the Company may (or, in the case of mutilation, shall) execute, and in
such event an authorized officer of the Debt Warrant Agent shall manually
countersign and deliver, in exchange for or in lieu of the lost, stolen,
destroyed or mutilated Debt Warrant Certificate, a new Debt Warrant Certificate
of the same tenor and evidencing a
6
<PAGE>
like number of Debt Warrants. Upon the issuance of any new Debt Warrant
Certificate under this Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Debt Warrant Agent) in connection therewith. Every substitute Debt Warrant
Certificate executed and delivered pursuant to this Section in lieu of any lost,
stolen or destroyed Debt Warrant Certificate shall represent an additional
contractual obligation of the Company, whether or not the lost, stolen or
destroyed Debt Warrant Certificate shall be at any time enforceable by anyone,
and shall be entitled to the benefits of this Agreement equally and
proportionately with any and all other Debt Warrant Certificates duly executed
and delivered hereunder. The provisions of this Section are exclusive and shall
preclude (to the extent lawful) any and all other rights and remedies
notwithstanding any law or statute existing or hereinafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments or
other securities without their surrender.
SECTION 3.3. HOLDER OF DEBT WARRANT CERTIFICATE MAY ENFORCE
RIGHTS. Notwithstanding any of the provisions of this Agreement, any holder or
beneficial owner of a Debt Warrant Certificate, without the consent of the Debt
Warrant Agent, the Trustee, the holder of any Debt Warrant Notes or the holder
of any other Debt Warrant Certificate, may, in his own behalf, enforce by
appropriate legal action, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce or otherwise in respect of,
his right to exercise the Debt Warrants and to receive Debt Warrant Notes
evidenced by his Debt Warrant Certificate in the manner provided in his Debt
Warrant Certificate and in this Agreement.
ARTICLE IV.
[REGISTRATION], EXCHANGE AND TRANSFER
OF DEBT WARRANT CERTIFICATES.
SECTION 4.1. EXCHANGE AND TRANSFER OF DEBT WARRANT
CERTIFICATES. [If Offered Notes with Debt Warrants which are immediately
detachable -- Upon] [If Offered Notes with Debt Warrants which are not
immediately detachable -- Prior to the Detachable Date a Debt Warrant
Certificate may be exchanged or transferred only together with the Offered Note
to which the Debt Warrant Certificate was initially attached, and only for the
purpose of effecting or in conjunction with an exchange or transfer of such
Offered Note. Prior to the Detachable Date, each transfer of the Offered Note
[on the register of the Offered Notes] shall operate also to transfer the
related Debt Warrant Certificates. After the Detachable Date upon] surrender at
the corporate trust office of the Debt Warrant Agent [or __________________ ],
Debt Warrant Certificates evidencing Debt Warrants may be exchanged for Debt
Warrant Certificates in other denominations evidencing such Debt Warrants [If
registered Debt Warrants -- or the transfer may be
7
<PAGE>
registered in whole or in part]; provided that such other Debt Warrant
Certificates evidence a like number of Debt Warrants as the Debt Warrant
Certificates so surrendered. [If registered and bearer Debt Warrants (subject to
any limitations imposed with respect to such exchanges) -- [After the Detachable
Date, upon] [Upon] surrender at the corporate trust office of the Debt Warrant
Agent [or ______ ], Debt Warrant Certificates in bearer form may be exchanged
for Debt Warrant Certificates in registered form evidencing a like number of
Debt Warrants.] [If registered Debt Warrants -- The Debt Warrant Agent shall
keep, at its corporate trust office [and at _______], books in which, subject to
such reasonable regulations as it may prescribe, it shall register Debt Warrant
Certificates and exchanges and transfers of outstanding Debt Warrant
Certificates, upon surrender of the Debt Warrant Certificates to the Debt
Warrant Agent at its corporate trust office [or __________] for exchange [or
registration of transfer], properly endorsed or accompanied by appropriate
instruments of registration of transfer and written instructions for transfer,
all in form satisfactory to the Company and the Debt Warrant Agent. No service
charge shall be made for any exchange [or registration of transfer] of Debt
Warrant Certificates, but the Company may require payment of a sum sufficient to
cover any stamp or other tax or other governmental charge that may be imposed in
connection with any such exchange [or registration of transfer]. Whenever any
Debt Warrant Certificates are so surrendered for exchange [or registration of
transfer], an authorized officer of the Debt Warrant Agent shall manually
countersign and deliver to the person or persons entitled thereto a Debt Warrant
Certificate or Debt Warrant Certificates duly authorized and executed by the
Company, as so requested. The Debt Warrant Agent shall not be required to effect
any exchange [or registration of transfer] which will result in the issuance of
a Debt Warrant Certificate evidencing a fraction of a Debt Warrant [or a number
of full Debt Warrants and a fraction of a Debt Warrant]. All Debt Warrant
Certificates issued upon any exchange [or registration of transfer] of Debt
Warrant Certificates shall be the valid obligations of the Company, evidencing
the same obligations, and entitled to the same benefits under this Agreement, as
the Debt Warrant Certificates surrendered for such exchange [or registration of
transfer].
SECTION 4.2. TREATMENT OF HOLDERS OF DEBT WARRANT
CERTIFICATES. [If Offered Notes with bearer Debt Warrants which are not
immediately detachable -- Subject to Section 4.1, each] [If Offered Notes with
bearer Debt Warrants which are immediately detachable -- Each] Debt Warrant
Certificate shall be transferable by delivery and shall be deemed negotiable and
the bearer of each Debt Warrant Certificate may be treated by the Company, the
Debt Warrant Agent and all other persons dealing with such bearer as the
absolute owner thereof for any purpose and as the person entitled to exercise
the rights represented by the Debt Warrants evidenced thereby, any notice to the
contrary notwithstanding.] [If registered Debt Warrant -- Every holder of a Debt
Warrant Certificate, by accepting the same, consents and agrees with the
Company, the Debt Warrant Agent and with every subsequent holder of such Debt
Warrant Certificate that until the transfer of the Debt Warrant Certificate is
registered on the books of the Debt Warrant Agent [or the register of the
Offered Notes prior to the Detachable Date], the Company and the Debt Warrant
8
<PAGE>
Agent [or the registrar of the Offered Notes prior to the Detachable Date] may
treat such registered holder as the absolute owner thereof for any purpose and
as the person entitled to exercise the rights represented by the Debt Warrants
evidenced thereby, any notice to the contrary notwithstanding.]
SECTION 4.3. PERSONS DEEMED OWNERS. [If Offered Notes and Debt
Warrants which are not immediately detachable -- Prior to the Detachable Date,
the Company, the Debt Warrant Agent and any agent of the Company or the Debt
Warrant Agent may treat the registered owner of any Offered Note as the owner of
the Debt Warrant Certificates initially attached thereto for any purpose and as
the person entitled to exercise the rights represented by the Debt Warrants
evidenced by such Debt Warrant Certificates, any notice to the contrary
notwithstanding. After the Detachable Date] [If registered Debt Warrants -- and
prior to due presentment of a Debt Warrant Certificate for registration of
transfer, the] [If Offered Notes and Debt Warrants which are immediately
detachable or Debt Warrants alone -- The] Company, the Debt Warrant Agent and
any agent of the Company or the Debt Warrant Agent may treat the holder as the
owner thereof for any purpose and as the person entitled to exercise the rights
represented by the Debt Warrants evidenced thereby, any notice to the contrary
notwithstanding.
SECTION 4.4. CANCELLATION OF DEBT WARRANT CERTIFICATES. Any
Debt Warrant Certificate surrendered for exchange [, registration of transfer]
or exercise of the Debt Warrants evidenced thereby shall, if surrendered to the
Company, be delivered to the Debt Warrant Agent and all Debt Warrant
Certificates surrendered or so delivered to the Debt Warrant Agent shall be
promptly cancelled by the Debt Warrant Agent and shall not be reissued and,
except as expressly permitted by this Agreement, no Debt Warrant Certificate
shall be issued hereunder in exchange or in lieu thereof. The Debt Warrant Agent
shall deliver to the Company from time to time or otherwise dispose of cancelled
Debt Warrant Certificates in a manner satisfactory to the Company. [If Debt
Warrant Certificates are issued in bearer form -- Debt Warrant Certificates
delivered to the Debt Warrant Agent in exchange for Debt Warrant Certificates of
other denominations may be retained by the Debt Warrant Agent for reissue as
authorized hereunder.] The Company may at any time deliver to the Debt Warrant
Agent for cancellation any Debt Warrant Certificates previously issued hereunder
which the Company may have acquired in any manner whatsoever, and all Debt
Warrant Certificates so delivered shall be promptly cancelled by the Debt
Warrant Agent. All cancelled Debt Warrant Certificates held by the Debt Warrant
Agent shall be disposed of as instructed by the Company, subject to applicable
law.
9
<PAGE>
ARTICLE V.
CONCERNING THE DEBT WARRANT AGENT.
SECTION 5.1. DEBT WARRANT AGENT. The Company hereby appoints
________________________ as Debt Warrant Agent of the Company in respect of the
Debt Warrants and the Debt Warrant Certificates upon the terms and subject to
the conditions herein set forth; and hereby accepts such appointment. The Debt
Warrant Agent shall have the powers and authority granted to and conferred upon
it in the Debt Warrant Certificates and hereby and such further powers and
authority to act on behalf of the Company as the Company may hereafter grant to
or confer upon it. All of the terms and provisions with respect to such powers
and authority contained in the Debt Warrant Certificates are subject to and
governed by the terms and provisions hereof.
SECTION 5.2. CONDITIONS OF DEBT WARRANT AGENT'S OBLIGATIONS.
The Debt Warrant Agent accepts its obligations herein set forth upon the terms
and conditions hereof, including the following, to all of which the Company
agrees and to all of which the rights hereunder of the holders from time to time
of the Debt Warrant Certificates shall be subject:
(a) COMPENSATION AND INDEMNIFICATION. The Company agrees
promptly to pay the Debt Warrant Agent the compensation to be
agreed upon with the Company for all services rendered by the
Debt Warrant Agent and to reimburse the Debt Warrant Agent for
reasonable out-of-pocket expenses (including counsel fees)
incurred by the Debt Warrant Agent without negligence, bad
faith or breach of this Agreement on its part in connection
with the services rendered hereunder by the Debt Warrant
Agent. The Company also agrees to indemnify the Debt Warrant
Agent for, and to hold it harmless against, any loss,
liability or expense incurred without negligence, bad faith or
breach of this Agreement on the part of the Debt Warrant
Agent, arising out of or in connection with its acting as Debt
Warrant Agent hereunder, as well as the costs and expenses of
defending against any claim of such liability. The obligations
of the Company under this subsection (a) shall survive the
exercise of the Debt Warrant Certificates and the resignation
or removal of the Debt Warrant Agent.
(b) AGENT FOR THE COMPANY. In acting under this Debt Warrant
Agreement and in connection with the issuance and exercise of
the Debt Warrant Certificates, the Debt Warrant Agent is
acting solely as an agent of the Company and does not assume
any obligation or relationship of agency or trust for or with
any owner of a beneficial interest in any Debt Warrant or with
the holder thereof.
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<PAGE>
(c) COUNSEL. The Debt Warrant Agent may consult with counsel
satisfactory to it, and the advice of such counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the advice of such counsel.
(d) DOCUMENTS. The Debt Warrant Agent shall be protected and
shall incur no liability for or in respect of any action taken
or thing suffered by it in reliance upon any Debt Warrant
Certificate, notice, direction, consent, certificate,
affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or
signed by the proper parties.
(e) CERTAIN TRANSACTIONS. The Debt Warrant Agent, and its
officers, directors and employees, may become the owner of, or
acquire any interest in, Debt Warrants, with the same rights
that it or they would have if it were not the Debt Warrant
Agent hereunder, and, to the extent permitted by applicable
law, it or they may engage or be interested in any financial
or other transaction with the Company and may act on, or as
depositary, trustee or agent for, any committee or body of
holders of Debt Warrant Notes or other obligations of the
Company as freely as if it were not the Debt Warrant Agent
hereunder. Nothing in this Debt Warrant Agreement shall be
deemed to prevent the Debt Warrant Agent from acting as
Trustee under the Indenture.
(f) NO LIABILITY FOR INVALIDITY. The Debt Warrant Agent shall
have no liability with respect to any invalidity of this
Agreement or any of the Debt Warrant Certificates.
(g) NO LIABILITY FOR INTEREST. The Debt Warrant Agent shall
have no liability for interest on any monies at any time
received by it pursuant to any of the provisions of this
Agreement or of the Debt Warrant.
(h) NO RESPONSIBILITY FOR REPRESENTATIONS. The Debt Warrant
Agent shall not be responsible for any of the recitals or
representations herein or in the Debt Warrant Certificates
(except as to the Debt Warrant Agent's countersignature
thereon), all of which are made solely by the Company.
(i) NO IMPLIED OBLIGATIONS. The Debt Warrant Agent shall be
obligated to perform only such duties as are herein and in the
Debt Warrant Certificates specifically set forth and no
implied duties or obligations shall be read into this
Agreement or the Debt Warrant Cer-
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tificates against the Debt Warrant Agent. The Debt Warrant
Agent shall not be under any obligation to take any action
hereunder which may tend to involve it in any expense or
liability, the payment of which within a reasonable time is
not, in its reasonable opinion, assured to it. The Debt
Warrant Agent shall not be accountable or under any duty or
responsibility for the use by the Company of any of the Debt
Warrant Certificates countersigned by the Debt Warrant Agent
and delivered by it to the Company pursuant to this Agreement
or for the application by the Company of the proceeds of the
Debt Warrant Certificates. The Debt Warrant Agent shall have
no duty or responsibility in case of any default by the
Company in the performance of its covenants, agreements or
other obligations contained herein or in the Debt Warrant
Certificates or in the case of the receipt of any written
demand from a holder of a Debt Warrant Certificate with
respect to such default, including, without limiting the
generality of the foregoing, any duty or responsibility to
initiate or attempt to initiate any proceedings at law or
otherwise or, except as provided in Section 6.4 hereof, to
make any demand upon the Company.
SECTION 5.3. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a) The
Company agrees, for the benefit of the holders from time to time of the Debt
Warrant Certificates, that there shall at all times be a Debt Warrant Agent
hereunder until all the Debt Warrant Certificates are no longer exercisable.
(b) The Debt Warrant Agent may at any time resign as such
agent by giving written notice to the Company of such
intention on its part, specifying the date on which its
desired resignation shall become effective; provided that such
date shall not be less than three months after the date on
which such notice is given unless the Company otherwise
agrees. The Debt Warrant Agent hereunder may be removed at any
time by the filing with it of an instrument in writing signed
by or on behalf of the Company and specifying such removal and
the date when it shall become effective. Such resignation or
removal shall take effect upon the appointment by the Company,
as hereinafter provided, of a successor Debt Warrant Agent
(which shall be a bank or trust company authorized under the
laws of the jurisdiction of its organization to exercise
corporate trust powers) and the acceptance of such appointment
by such successor Debt Warrant Agent. The obligation of the
Company under Section 5.2(a) shall continue to the extent set
forth therein notwithstanding the resignation or removal of
the Debt Warrant Agent.
(c) In case at any time the Debt Warrant Agent shall resign,
or shall be removed, or shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or shall file a
petition seeking relief under the
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Federal Bankruptcy Code, as now constituted or hereafter
amended, or under any other applicable Federal or State
bankruptcy law or similar law or make an assignment for the
benefit of its creditors or consent to the appointment of a
receiver or custodian of all or any substantial part of its
property, or shall admit in writing its inability to pay or
meet its debts as they mature, or if a receiver or custodian
of it or of all or any substantial part of its property shall
be appointed, or if an order of any court shall be entered for
relief against it under the provisions of the Federal
Bankruptcy Code, as now constituted or hereafter amended, or
under any other applicable Federal or State bankruptcy or
similar law, or if any public officer shall have taken charge
or control of the Debt Warrant Agent or of its property or
affairs, for the purpose of rehabilitation, conservation or
liquidation, a successor Debt Warrant Agent, qualified as
aforesaid, shall be appointed by the Company by an instrument
in writing, filed with the successor Debt Warrant Agent. Upon
the appointment as aforesaid of a successor Debt Warrant Agent
and acceptance by the successor Debt Warrant Agent of such
appointment, the Debt Warrant Agent shall cease to be Debt
Warrant Agent hereunder.
(d) Any successor Debt Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the
Company an instrument accepting such appointment hereunder,
and thereupon such successor Debt Warrant Agent, without any
further act, deed or conveyance, shall become vested with all
the authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if
originally named as Debt Warrant Agent hereunder, and such
predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer,
deliver and pay over, and such successor Debt Warrant Agent
shall be entitled to receive, all monies, securities and other
property on deposit with or held by such predecessor, as Debt
Warrant Agent hereunder.
(e) Any corporation into which the Debt Warrant Agent
hereunder may be merged or converted or any corporation with
which the Debt Warrant Agent may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Debt Warrant Agent shall be a
party, or any corporation to which the Debt Warrant Agent
shall sell or otherwise transfer all or substantially all the
assets and business of the Debt Warrant Agent, provided that
it shall be qualified as aforesaid, shall be the successor
Debt Warrant Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any
of the parties hereto.
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(f) The Company may designate agencies for the surrender for
exercise of Debt Warrant Certificates at such place or places
as the Company may determine, and the Company shall keep the
Debt Warrant Agent advised of the names and locations of such
agencies, if any are so designated. The Debt Warrant Agent
shall arrange directly with such agencies for the delivery of
Debt Warrant Notes upon exercise of Debt Warrant Certificates
surrendered for exercise at such agencies. The Debt Warrant
Agent shall be in no way responsible or accountable for the
action or failure to act of any agencies designated pursuant
to this Section 5.3(f).
SECTION 5.4. COMPLIANCE WITH APPLICABLE LAWS. The Debt Warrant
Agent agrees to comply with all applicable federal and state laws in respect of
the services rendered by it under this Debt Warrant Agreement and in connection
with the Debt Warrants, including (but not limited to) the provisions of United
States federal income tax laws regarding information reporting and backup
withholding. The Debt Warrant Agent expressly assumes all liability for failure
to comply with such laws, including (but not limited to) any liability for
failure to comply with any applicable provisions of United States federal income
tax laws regarding information reporting and backup withholding.
ARTICLE VI.
MISCELLANEOUS.
SECTION 6.1. MODIFICATION, SUPPLEMENTATION OR AMENDMENT. (a)
This Agreement and the Debt Warrant Certificate may be amended by the Company
and the Debt Warrant Agent, without the consent of the beneficial owners or the
registered holders of any Debt Warrant Certificate, for the purpose of curing
any ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein, or in any other manner which the
Company or the Debt Warrant Agent may deem necessary or desirable and which will
not adversely affect the interests of the beneficial owners of the outstanding
unexercised Debt Warrants in any material respect.
(b) The Company and the Debt Warrant Agent may also modify or
amend this Agreement and the Debt Warrant Certificate, with
the consent of the beneficial owners of not less than a
majority in number of the then outstanding unexercised Debt
Warrants affected by such modification or amendment, for any
purpose; PROVIDED, HOWEVER, that no such modification or
amendment that increases the exercise price or otherwise
reduces the amount of Debt Warrant Notes receivable upon
exercise, cancellation or expiration, or that shortens the
period of time during which the Debt Warrants may be
exercised, or otherwise materially and adversely affects the
exercise rights of the bene-
14
<PAGE>
ficial owners or reduces the number of outstanding Debt
Warrants the consent of the beneficial owners of which is
required for modification, supplementation or amendment of
this Agreement or the Debt Warrant Certificate, may be made
without the consent of each holder affected thereby.
SECTION 6.2. CONSOLIDATIONS AND MERGERS OF THE COMPANY AND
SALES, LEASES AND CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS. To the
extent permitted in the Indenture, the Company may consolidate with, or sell or
convey all or substantially all of its assets to, or merge with or into any
other corporation.
SECTION 6.3. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In
case of any such consolidation, merger, sale or conveyance and upon any
assumption by the successor corporation of the obligations of the Company under
the Indenture, such successor corporation shall succeed to and be substituted
for the Company, with the same effect as if it had been named herein, and the
predecessor corporation, shall be relieved of any further obligation under this
Agreement and the Debt Warrants. Such successor corporation thereupon may cause
to be signed, and may issue either in its own name or in the name of the
Company, any or all of the Debt Warrant Notes issuable pursuant to the terms
hereof. All the Debt Warrant Notes so issued shall in all respects have the same
legal rank and benefit under the Indenture as the Debt Warrant Notes theretofore
or thereafter issued in accordance with the terms of this Agreement and the
Indenture.
In case of any such consolidation, merger, sale or conveyance,
such changes in phraseology and form (but not in substance) may be made in the
Debt Warrant Notes thereafter to be issued as may be appropriate.
SECTION 6.4. NOTICES AND DEMANDS TO THE COMPANY AND DEBT
WARRANT AGENT. If the Debt Warrant Agent shall receive any notice or demand
addressed to the Company by the holder of a Debt Warrant Certificate pursuant to
the provisions of the Debt Warrant Certificates, the Debt Warrant Agent shall
promptly forward such notice or demand to the Company.
SECTION 6.5. ADDRESSES. Any communication from the Company to
the Debt Warrant Agent with respect to this Agreement shall be addressed to
________________, Attention: ________________ and any communication from the
Debt Warrant Agent to the Company with respect to this Agreement shall be
addressed to CarrAmerica Realty Corporation, 1850 K Street, N.W., Suite 500,
Washington, D.C. 20006, Attention: Corporate Secretary (or such other address as
shall be specified in writing by the Debt Warrant Agent or by the Company).
SECTION 6.6. NOTICES TO HOLDERS OF DEBT WARRANTS. Any notice
to holders of Debt Warrants which by any provisions of this Debt War-
15
<PAGE>
rant Agreement is required or permitted to be given shall be given [If
registered Debt Warrants -- by first class mail postage prepaid at such holder's
address as appears on the books of the Debt Warrant Agent [or on the register of
the Offered Notes prior to the Detachable Date]] [If bearer Debt Warrants -- by
publication in an Authorized Newspaper in New York City and London [, and so
long as the Debt Warrants are listed on the Luxembourg Stock Exchange and the
Luxembourg Stock Exchange so requires, in Luxembourg]. As used herein, the term
"Authorized Newspaper" means a newspaper customarily published on each business
day in morning editions, whether or not it shall be published in Saturday,
Sunday or holiday editions, such as THE WALL STREET JOURNAL (Eastern edition) in
New York City, the FINANCIAL TIMES (London edition) in London and the
LUXEMBURGER WORT in Luxembourg. If by reason of the temporary or permanent
suspension of publication of any newspaper or by reason of any other cause, it
shall be impossible to make publication of such notices in an Authorized
Newspaper as herein required, then such publication or other notice in lieu
thereof as shall be made by the Debt Warrant Agent shall constitute sufficient
publication of such notice, if such publication or other notice shall, so far as
may be possible, approximate the terms and conditions of the publication in lieu
of which it is given. The Debt Warrant Agent shall promptly furnish to the
Company a copy of each notice so published].
SECTION 6.7. APPLICABLE LAW. The validity, interpretation and
performance of this Agreement and each Debt Warrant Certificate issued hereunder
and of the respective terms and provisions thereof shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
agreements made and to be performed therein.
SECTION 6.8. DELIVERY OF PROSPECTUS. The Company will furnish
to the Debt Warrant Agent sufficient copies of a prospectus with an accompanying
prospectus supplement relating to the Debt Warrant Notes, and the Debt Warrant
Agent agrees that upon the exercise of any Debt Warrant, the Debt Warrant Agent
will deliver to the holder of the Debt Warrant Certificate evidencing such Debt
Warrant, prior to or concurrently with the delivery of the Debt Warrant Notes
issued upon such exercise, a copy of such prospectus and prospectus supplement.
SECTION 6.9. OBTAINING OF GOVERNMENTAL APPROVALS. The Company
will from time to time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities and securities acts filings under United States Federal and
State laws (including without limitation a registration statement in respect of
the Debt Warrants and Debt Warrant Note under the Securities Act of 1933), which
may be or become requisite in connection with the issuance, sale, transfer, and
delivery of the Debt Warrant Certificates, the exercise of
16
<PAGE>
the Debt Warrants, the issuance, sale, transfer and delivery of the Debt Warrant
Notes issued upon exercise of the Debt Warrants or upon the expiration of the
period during which the Debt Warrants are exercisable.
SECTION 6.10. PERSONS HAVING RIGHTS UNDER DEBT WARRANT
AGREEMENT. Nothing in this Agreement shall give to any person other than the
Company, the Debt Warrant Agent (and, subject to this Agreement, their
successors and assigns) and the holders of the Debt Warrant Certificates any
right, remedy or claim under or by reason of this Agreement; and all covenants,
conditions, stipulations, promises and agreements in this Agreement contained
shall be for the sole and exclusive benefit of the Company and the Debt Warrant
Agent and their successors and of the holders of the Debt Warrant Certificates.
SECTION 6.11. HEADINGS. The descriptive headings of the
several Articles and Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 6.12. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which as so executed shall be deemed to be
an original, but such counterparts shall together constitute but one and the
same instrument.
SECTION 6.13. INSPECTION OF AGREEMENT. A copy of this
Agreement shall be available at all reasonable times at the principal corporate
trust office of the Debt Warrant Agent for inspection by the holder of any Debt
Warrant Certificate. The Debt Warrant Agent may require such holder to submit
his Debt Warrant Certificate for inspection by it.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by one of their respective authorized officers as of the
day and year first above written.
CARRAMERICA REALTY CORPORATION
By: ____________________________
Title:
[NAME OF DEBT WARRANT AGENT], as
Debt Warrant Agent
By: __________________________
Title
17
<PAGE>
EXHIBIT A
[FORM OF DEBT WARRANT CERTIFICATE]
[Face of Debt Warrant Certificate]
[Form of Legend if Notes with Debt Warrants which are not
immediately detachable: Prior to _____________, 19__, this Debt Warrant
Certificate cannot be transferred or exchanged unless attached to a [Title of
Offered Notes].]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE DEBT WARRANT
AGENT AS PROVIDED HEREIN
CARRAMERICA REALTY CORPORATION
DEBT WARRANTS TO PURCHASE
[Title of Debt Warrant Notes]
VOID AFTER 5:00 P.M. NEW YORK TIME ON ___________, 19__
No.
This certifies that [the bearer is the] [____________________
or registered assigns is the registered] owner of the above indicated number of
Debt Warrants, each Debt Warrant entitling such [bearer] [registered owner] to
purchase, at any time [after 5:00 p.m. New York time on _______________, 19__
and] on or before 5:00 p.m. New York time on ____________, 19__ (or such later
date as may be selected by the Company with notice to the holder thereof as
provided in the Debt Warrant Agreement (as hereinafter defined)), $____________
principal amount of [Title of Debt Warrant Notes] (the "Debt Warrant Notes"), of
CarrAmerica Realty corporation, a Maryland corporation (CarrAmerica Realty
corporation and any successor corporation under the Indenture hereinafter
defined being hereinafter referred to as the "Company"), to be issued under the
Indenture (as hereinafter defined) on the following basis: during the period
from and including ____________, 19__, to and including ______________, 19__,
the exercise price of each Debt Warrant will be [___% of the principal amount of
the Debt Warrant Notes] [$________] plus [accrued amortization of the original
issue discount] [accrued interest] from the most recently preceding
________________; during the period from ____________, 19__, to and including
___________, 19__, the exercise price of each Debt Warrant will be [__% of the
principal amount of the Debt Warrant Notes] [$______] plus [accrued amortization
of the original issue discount] [accrued interest] from the most recently
preceding ________; [in each case, the original issue discount will be amortized
at a _____% annual rate, computed on an annual basis, using a 360-day
A-1
<PAGE>
year consisting of twelve 30-day months] (the "Debt Warrant Price"). [The
original issue discount for each $1,000 principal amount of Debt Warrant Notes
is $______ .] The holder may exercise the Debt Warrants evidenced hereby by
delivery to the Debt Warrant Agent (as hereinafter defined) of this Debt Warrant
Certificate, with the form of election to purchase on the reverse hereof
properly completed and duly executed and by paying in full, [in lawful money of
the United States of America,] [in cash or by certified check or official bank
check or by bank wire transfer, in each case,] [by bank wire transfer] [in
immediately available funds,] the Debt Warrant Price for each Debt Warrant
exercised to the Debt Warrant Agent, such delivery and payment to be made at the
corporate trust office of [name of Debt Warrant Agent], or its successor as
warrant agent (the "Debt Warrant Agent"), [or __________ ] currently at the
address specified on the reverse hereof, and upon compliance with and subject to
the conditions set forth herein and in the Debt Warrant Agreement (as
hereinafter defined). This Debt Warrant Certificate may be exercised only for
the purchase of Debt Warrant Notes in the principal amount of [$1,000] or any
integral multiple thereof.
[If bearer Debt Warrants -- The term "holder" as used herein
shall mean [If Offered Notes with Debt Warrants which are not immediately
detachable -- prior to the Detachable Date, the registered owner of the Offered
Note to which such Debt Warrant Certificate was initially attached (or the
bearer if the Offered Note is a bearer Note), and after such Detachable Date]
the bearer of such Debt Warrant Certificate.]
[If registered Debt Warrants -- The term "holder" as used
herein shall mean any person in whose name at the time any Debt Warrant
Certificate shall be registered upon the books to be maintained by the Debt
Warrant Agent for that purpose [If Offered Notes with Debt Warrants which are
not immediately detachable -- or, prior to the Detachable Date, upon the
register of the Offered Notes. The Company will, or will cause the registrar of
the Offered Notes to, make available at all times to the Debt Warrant Agent such
information as to holders of the Offered Notes with Debt Warrants as may be
necessary to keep the Debt Warrant Agent's records up to date].]
Any whole number of Debt Warrants evidenced by this Debt
Warrant Certificate may be exercised to purchase Debt Warrant Notes [in
registered form in denominations of $_________ and any integral multiples
thereof] [in bearer form in the denomination of $______] [or both]. Upon any
exercise of less than all of the Debt Warrants evidenced by this Debt Warrant
Certificate, there shall be issued to the holder hereof a new Debt Warrant
Certificate evidencing the number of Debt Warrants remaining unexercised.
This Debt Warrant Certificate is issued under and in
accordance with the Debt Warrant Agreement dated as of __________, 19__ (the
"Debt Warrant Agreement") between the Company and the Debt Warrant Agent and is
subject to
A-2
<PAGE>
the terms and provisions contained in the Debt Warrant Agreement, to all of
which terms and provisions the holder of this Debt Warrant Certificate consents
by acceptance hereof. Copies of the Debt Warrant Agreement are on file at the
above-mentioned office of the Debt Warrant Agent [and at _______ ].
The Debt Warrant Notes to be issued and delivered upon the
exercise of the Debt Warrants evidenced by this Debt Warrant Certificate will be
issued under and in accordance with an Indenture dated as of April 1, 1998, as
amended (the "Indenture"), between the Company and The Chase Manhattan Bank, as
Trustee (The Chase Manhattan Bank and any successor to such Trustee being
hereinafter referred to as the "Trustee"), and will be subject to the terms and
provisions contained in the Indenture. Copies of the Indenture and the form of
the Debt Warrant Notes are on file at the corporate trust office of the Trustee
[and at __________].
[If Offered Notes with bearer Debt Warrants which are not
immediately detachable -- Prior to ________, 19__, this Debt Warrant Certificate
may be exchanged or transferred only together with the [Title of Offered Notes]
(the "Offered Notes") to which this Debt Warrant Certificate was initially
attached, and only for the purpose of effecting, or in conjunction with, an
exchange or transfer of such Offered Notes. After such date, this] [If Offered
Notes with bearer Debt Warrants which are immediately detachable -- This] Debt
Warrant Certificate, and all rights hereunder, may be transferred by delivery
and the Company and the Debt Warrant Agent may treat the bearer hereof as the
owner for all purposes.]
[If Offered Notes with registered Debt Warrants which are not
immediately detachable -- Prior to __________________, 19__, this Debt Warrant
Certificate may be exchanged or transferred only together with the [Title of
Offered Notes] (the "Offered Notes") to which this Debt Warrant Certificate was
initially attached, and only for the purpose of effecting, or in conjunction
with, an exchange or transfer of such Offered Notes. After such date, this] [If
Offered Notes with registered Debt Warrants which are immediately detachable --
Transfer of this] Debt Warrant Certificate may be registered when this Debt
Warrant Certificate is surrendered at the corporate trust office of the Debt
Warrant Agent [or ______________ by the registered owner or his assigns, in
person or by an attorney duly authorized in writing, in the manner and subject
to the limitations provided in the Debt Warrant Agreement.]
[If Offered Notes with Debt Warrants which are not immediately
detachable -- Except as provided in the immediately preceding paragraph, after]
[If Offered Notes with bearer Debt Warrants which are immediately detachable --
After] counter-signature by the Debt Warrant Agent and prior to the expiration
of this Debt Warrant Certificate, this Debt Warrant Certificate may be exchanged
at the corporate trust office of the Debt Warrant Agent for Debt Warrant
Certificates, representing the same aggregate number of Debt Warrants, [in
registered form] [in bearer form] [in either registered or bearer form].
A-3
<PAGE>
This Debt Warrant Certificate shall not entitle the holder
hereof to any of the rights of a holder of the Debt Warrant Notes, including,
without limitation, the right to receive payments of principal of, or premium,
if any, or interest, if any, on the Debt Warrant Notes or to enforce any of the
covenants of the Indenture.
This Debt Warrant Certificate shall not be valid or obligatory
for any purpose until countersigned by the Debt Warrant Agent.
Dated as of ___________, 19__.
CARRAMERICA REALTY CORPORATION
By: _________________________
Title:
[Name of Debt Warrant Agent]
By: __________________________
Title
A-4
<PAGE>
[REVERSE OF DEBT WARRANT CERTIFICATE]
The Debt Warrants evidenced hereby and the Debt Warrant Notes
to be issued upon the exercise of the Debt Warrants evidenced hereby are subject
to the provisions of the Charter and Bylaws of the Company, including provisions
that set forth restrictions on transfer and ownership of securities for the
purpose of maintaining the Company's status as a real estate investment trust
under the Internal Revenue Code of 1986, as amended (the "Code"). No Person may
(1) Beneficially Own shares of Common Stock in excess of 5 percent (or such
greater percentage as may be determined by the Board of Directors of the
Company) of the outstanding Common Stock of the Company (unless such Person is
an Existing Holder or a Special Shareholder), (2) Beneficially Own shares of any
class or series of Preferred Stock in excess of 5 percent (or such greater
percentage as may be determined by the Board of Directors of the Company) of the
outstanding shares of such class or series of Preferred Stock of the Company
(unless such Person is an Existing Holder or Special Shareholder), (3)
Beneficially Own capital stock that would result in the Company's being "closely
held" (within the meaning of Section 856(h) of the Code) or Acquire capital
stock that would result in the Company having fewer than 100 shareholders (as
determined for purposes of Section 856(a)(5) of the Code), or (4) unless such
Person is a Special Shareholder, Acquire shares of capital stock if, as a result
of such Acquisition, the Company would fail to qualify as a "domestically
controlled REIT" (within the meaning of Section 897(h)(4) of the Code)
(determined assuming that the Special Shareholders are Non-U.S. Persons and own
a percentage (by value) of the Company's capital stock corresponding to the
Special Shareholders' Percentage). Separate restrictions set forth in Article V
of the Company's Charter apply to Existing Holders and Special Shareholders. Any
Person who attempts to Beneficially Own shares of capital stock in excess of
these limitations must immediately notify the Company. If any of the
restrictions on transfer or ownership set forth in Article V of the Charter are
violated, the Debt Warrants represented hereby will automatically be transferred
to the Trustee of a Trust for the benefit of a Charitable Beneficiary pursuant
to the terms of Article V of the Company's Charter. In addition, attempted
transfers of capital stock or interests in capital stock in violation of these
limitations (as modified or expanded upon in Article V of the Company's
Charter), may be void ab initio. A Person who attempts to Beneficially Own
shares of capital stock in violation of the ownership limitations set forth in
Section 5.2 of the Company's Charter shall have no claim, cause of action, or
any other recourse whatsoever against a transferor of such shares. Capitalized
terms in the foregoing sentences of this paragraph not otherwise defined in this
Debt Warrant Certificate that are defined in the Company's Charter have the
meanings ascribed to them in the Charter.
A-5
<PAGE>
INSTRUCTIONS FOR EXERCISE OF DEBT WARRANT
To exercise the Debt Warrants evidenced hereby, the holder
must pay [in cash or by certified check or official bank check or by bank wire
transfer] [by bank wire transfer] [in immediately available funds] the Debt
Warrant Price in full for Debt Warrants exercised to [insert name of Debt
Warrant Agent] Corporate Trust Department, [insert address of Debt Warrant
Agent], Attn. _________________ [or __________ ] which [payment] [wire transfer]
must specify the name of the holder and the number of Debt Warrants exercised by
such holder. In addition, the holder must complete the information required
below and present this Debt Warrant Certificate in person or by mail (registered
mail is recommended) to the Debt Warrant Agent at the addresses set forth below.
This Debt Warrant Certificate, completed and duly executed, must be received by
the Debt Warrant Agent together with such [payment] [wire transfer]. [If the
undersigned is requesting delivery of Debt Warrant Notes in bearer form, the
person entitled to physical delivery of such Debt Warrant Notes will be required
to deliver a certificate (copies of which may be obtained from the Debt Warrant
Agent [or ____________]) certifying that such Debt Warrant Notes are not being
acquired by or on behalf of a U.S. person or for resale to a U.S. person unless
such U.S. person is a qualified financial institution as defined under United
States tax laws and regulations.]
TO BE EXECUTED UPON EXERCISE OF DEBT WARRANT
The undersigned hereby irrevocably elects to exercise Debt
Warrants, evidenced by this Debt Warrant Certificate, to purchase
$_______________ principal amount of the [Title of Debt Warrant Notes] (the
"Debt Warrant Notes") of CarrAmerica Realty Corporation and represents that he
or she has tendered payment for such Debt Warrant Notes [in cash or by certified
check or official bank check or by bank wire transfer, in each case,] [by bank
wire transfer] [in immediately available funds] to the order of CarrAmerica
Realty corporation c/o [insert name and address of Debt Warrant Agent], in the
amount of $___________ in accordance with the terms hereof. The undersigned
requests that said principal amount of Debt Warrant Notes be in [bearer form in
the authorized denominations] [fully registered form in the authorized
denominations, registered in such names and delivered] all as specified in
accordance with the instructions set forth below.
If the number of Debt Warrants exercised is less than all of
the Debt Warrants evidenced hereby, the undersigned requests that a new Debt
Warrant Certificate representing the remaining Debt Warrants evidenced hereby be
issued and delivered to the undersigned unless otherwise specified in the
instructions below.
Dated: ___________________ Name __________________________
(Please Print)
_________________________ Address _______________________
(Insert Social Security or
Other Identifying Number
of Holder)
Signature _____________________
A-6
<PAGE>
The Debt Warrants evidenced hereby may be exercised at the following addresses:
By hand at ________________________________________
By mail at ________________________________________
[Instructions as to form and delivery of Debt Warrant Notes and, if applicable,
Debt Warrant Certificates evidencing unexercised Debt Warrants -- complete as
appropriate.]
[If Registered Debt Warrant]
Assignment
(Form of Assignment To Be Executed If Holder Desires To
Transfer Debt Warrants Evidenced Hereby)
FOR VALUE RECEIVED ____________________________ hereby sells, assigns and
transfers unto
(Please print name and (Please insert social security or
address including zip code) other identifying number)
__________________ of the Debt Warrants represented by the within Debt Warrant
Certificate and does hereby irrevocably constitute and appoint
__________________ Attorney, to transfer said Debt Warrant Certificate on the
books of the Debt Warrant Agent with full power of substitution in the premises.
Dated:
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Debt Warrant Certificate and must
bear a signature guarantee by a
bank, trust company or member
broker of the New York, Midwest
or Pacific Stock Exchange.)
Signature Guaranteed:
A-7
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE FOR DELIVERY OF BEARER
DEBT WARRANT NOTES
CARRAMERICA REALTY CORPORATION
[Title of Debt Warrant Notes]
To: CARRAMERICA REALTY CORPORATION
c/o [________________],
as Trustee
This certificate is submitted in connection with the
undersigned's request that you deliver to us $__________________ principal
amount of [Title of Debt Warrant Notes] (the "Debt Warrant Notes") in bearer
form upon exercise of Debt Warrants.
The undersigned hereby certifies that as of the date hereof
(the date of delivery to the undersigned of the Debt Warrant Notes), the Debt
Warrant Notes which are to be delivered to the undersigned in bearer form are
not being acquired, directly or indirectly, by or on behalf of a U.S. person, or
for offer to resell or for resale to a U.S. person or any person inside the
United States or, if any beneficial owner of the Debt Warrant Notes is a U.S.
person, such U.S. person is a financial institution (as defined below) or
acquiring through a financial institution. If the undersigned is a clearing
organization, the undersigned represents that this certificate is based on
statements provided to it by its member organizations. If the undersigned is a
dealer, the undersigned agrees to obtain a similar certificate from each person
entitled to delivery of any of the Debt Warrant Notes in bearer form purchased
from it. Notwithstanding the foregoing, if the undersigned has actual knowledge
that the information contained in such certificate is false, the undersigned
will not deliver a Debt Warrant Note in bearer form to the person who signed
such certificate notwithstanding the delivery of such certificate to the
undersigned. The undersigned will be deemed to have actual knowledge that the
beneficial owner is a U.S. person for this purpose if the undersigned has a
United States address for the beneficial owner of the Security and does not have
documentary evidence that the beneficial owner is not a U.S. person. As used
herein, "United States" means the United States of America (including the States
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction; "U.S. person" means any citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
or an estate or trust the income of which is subject to United States federal
income taxation regardless of its source; "financial institution" means a branch
located outside the United States of a
B-1
<PAGE>
financial institution as defined in Section 1.165-12(c)(1)(v) of the Treasury
Department Regulations purchasing for its own account or for the account of a
customer that agrees in writing to comply with Section 165(j)(3)(A), (B) or (C)
of the Internal Revenue Code of 1986 and the regulations thereunder and that is
not purchasing for offer to resell or for resale in the United States; and a
"clearing organization" means an entity which is in the business of holding
obligations for member organizations and transferring obligations among such
members by credit or debit to the account of a member without the necessity of
physical delivery of the obligation.
We understand that this certificate is required in connection
with United States tax laws and regulations. We irrevocably authorize you to
produce this certificate or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the matters covered by this
certificate.
(Signature)
Dated:
(Please print name)
Address:
B-2
Exhibit 4.5
CARRAMERICA REALTY CORPORATION
__________________, AS DEPOSITARY
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
RELATING TO SERIES _ _____________________ PREFERRED STOCK
_______________________
[FORM OF] DEPOSIT AGREEMENT
_______________________
Dated as of ________ __, ____
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
ARTICLE II
Form of Receipts; Deposit of Stock;
Execution and Delivery, Transfer,
Surrender and Redemption of Receipts
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SECTION 2.1 Form and Transfer of Receipts...............................................................2
SECTION 2.2 Deposits of Stock; Execution and Delivery of Receipts in Respect
Thereof.................................................................................3
SECTION 2.3 Registration of Transfer of Receipts........................................................4
SECTION 2.4 Split-ups and Combinations of Receipts; Surrender of Receipts and
Withdrawal of Stock.....................................................................4
SECTION 2.5 Limitations on Execution and Delivery, Transfer, Surrender and
Exchange of Receipts....................................................................5
SECTION 2.6 Lost Receipts, etc..........................................................................5
SECTION 2.7 Cancellation and Destruction of Surrendered Receipts........................................6
SECTION 2.8 Redemption of Stock.........................................................................6
ARTICLE III
Certain Obligations of
Holders of Receipts and of the Company
SECTION 3.1 Filing Proofs, Certificates and Other Information...........................................7
SECTION 3.2 Payment of Taxes or Other Governmental Charges..............................................7
SECTION 3.3 Warranty as to Stock........................................................................8
ARTICLE IV
The Deposited Securities; Notices
SECTION 4.1 Cash Distributions..........................................................................8
SECTION 4.2 Distributions Other than Cash, Rights, Preferences or Privileges............................8
</TABLE>
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<PAGE>
<TABLE>
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SECTION 4.3 Subscription Rights, Preferences or Privileges..............................................9
SECTION 4.4 Notice of Dividends, etc.; Fixing Record Date for Holders of Receipts......................10
SECTION 4.5 Voting Rights..............................................................................10
SECTION 4.6 Changes Affecting Deposited Securities and Reclassifications,
Recapitalizations, etc.................................................................10
SECTION 4.7 Delivery of Reports........................................................................11
SECTION 4.8 List of Receipt Holders....................................................................11
ARTICLE V
The Depositary, the Depositary's Agents,
the Registrar and the Company
SECTION 5.1 Maintenance of Office, Agencies and Transfer Books by the Depositary;
Registrar..............................................................................11
SECTION 5.2 Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company......................................12
SECTION 5.3 Obligations of the Depositary, the Depositary's Agents, the Registrar
and the Company........................................................................12
SECTION 5.4 Resignation and Removal of the Depositary; Appointment of Successor
Depositary.............................................................................14
SECTION 5.5 Corporate Notices and Reports..............................................................15
SECTION 5.6 Indemnification by the Company.............................................................15
SECTION 5.7 Charges and Expenses.......................................................................15
SECTION 5.8 Tax Compliance.............................................................................15
ARTICLE VI
Amendment and Termination
SECTION 6.1 Amendment..................................................................................16
SECTION 6.2 Termination................................................................................16
</TABLE>
- ii -
<PAGE>
<TABLE>
ARTICLE VII
Miscellaneous
Page
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<S> <C> <C>
SECTION 7.1 Counterparts...............................................................................17
SECTION 7.2 Exclusive Benefit of Parties...............................................................17
SECTION 7.3 Invalidity of Provisions...................................................................17
SECTION 7.4 Notices....................................................................................17
SECTION 7.5 Appointment of Registrar...................................................................18
SECTION 7.6 Holders of Receipts are Parties............................................................18
SECTION 7.7 Governing Law..............................................................................18
SECTION 7.8 Inspection of Deposit Agreement............................................................19
SECTION 7.9 Headings...................................................................................19
Form of Depositary Shares
Form of Face of Receipt...................................................................................A-1
Form of Reverse of Receipt................................................................................A-3
</TABLE>
- iii -
<PAGE>
DEPOSIT AGREEMENT, dated as of ________ __, ____, among CARRAMERICA
REALTY CORPORATION, a Maryland corporation (the "Company"), ___________________,
a national banking association (the "Depositary"), and the holders from time to
time of the Receipts described herein.
WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of _.___% Series _ _________
Preferred Stock of the Company with the Depositary for the purposes set forth in
this Deposit Agreement and for the issuance hereunder of Receipts evidencing
Depositary Shares in respect of the Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the promises contained herein, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
Definitions
The following definitions shall, for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement:
"Certificate" shall mean the Articles Supplementary filed with the
Department of Assessments and Taxation of the State of Maryland establishing the
Stock as a series of preferred stock of the Company.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time.
"Depositary" shall mean ______________. and any successor as Depositary
hereunder.
"Depositary Shares" shall mean Depositary Shares, each representing
____th of a share of Stock and evidenced by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 5.1 and shall include the Registrar if such Registrar is not
the Depositary.
"Depositary's Office" shall mean the principal office of the Depositary
at which at any particular time its depositary receipt business shall be
administered.
1
<PAGE>
"Receipt" shall mean one of the Depositary Receipts, substantially in
the form set forth as Exhibit A hereto, issued hereunder, whether in definitive
or temporary form and evidencing the number of Depositary Shares held of record
by the record holder of such Depositary Shares.
"record holder" or "holder" as applied to a Receipt shall mean the
person in whose name a Receipt is registered on the books of the Depositary
maintained for such purpose.
"Registrar" shall mean the Depositary or such other bank or trust
company which shall be appointed to register ownership and transfers of Receipts
as herein provided.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean shares of the Company's _.___% Series _ _________
Preferred Stock, $.01 par value per share.
ARTICLE II
Form of Receipts; Deposit of Stock;
Execution and Delivery, Transfer,
Surrender and Redemption of Receipts
SECTION 2.1 Form and Transfer of Receipts. Definitive Receipts shall
be engraved or printed or lithographed on steel-engraved borders, with
appropriate insertions, modifications and omissions, as hereinafter provided, if
and to the extent required by any securities exchange on which the Receipts are
listed. Pending the preparation of definitive Receipts or if definitive Receipts
are not required by any securities exchange on which the Receipts are listed,
the Depositary, upon the written order of the Company or any holder of Stock, as
the case may be, delivered in compliance with Section 2.2, shall execute and
deliver temporary Receipts which are printed, lithographed, typewritten,
mimeographed or otherwise substantially of the tenor of the definitive Receipts
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the persons executing such
Receipts may determine, as evidenced by their execution of such Receipts. If
temporary Receipts are issued, the Company and the Depositary will cause
definitive Receipts to be prepared without unreasonable delay. After the
preparation of definitive Receipts, the temporary Receipts shall be exchangeable
for definitive Receipts upon surrender of the temporary Receipts at the
Depositary's Office or at such other place or places as the Depositary shall
determine, without charge to the holder. Upon surrender of cancellation of any
one or more temporary Receipts, the Depositary shall execute and deliver in
exchange therefor definitive Receipts representing the same number of Depositary
Shares as represented by the surrendered temporary Receipt or Receipts. Such
exchange shall be made at the Company's expense and without any charge to the
holder therefor. Until so exchanged, the temporary Receipts shall in all
respects be entitled to the same benefits under this Agreement, and with respect
to the Stock, as definitive Receipts.
2
<PAGE>
Receipts shall be executed by the Depositary by the manual and/or
facsimile signature of a duly authorized officer of the Depositary. No Receipt
shall be entitled to any benefits under this Deposit Agreement or be valid or
obligatory for any purpose unless it shall have been executed in accordance with
the foregoing sentence. The Depositary shall record on its books each Receipt so
signed and delivered as hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares. The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary to
perform its obligations under this Deposit Agreement.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange upon which the Stock, the Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt, which is properly
endorsed or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.3, the
Depositary may, notwithstanding any notice to the contrary, treat the record
holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions or to any notice provided for in this Deposit Agreement and for
all other purposes.
SECTION 2.2 Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
the Company or, subject to Section 2.4, any holder of Stock may from time to
time deposit shares of Stock under this Deposit Agreement by delivery to the
Depositary of a certificate or certificates for the Stock to be deposited,
properly endorsed or accompanied, if required by the Depositary, by a duly
executed instrument of transfer or endorsement, in form satisfactory to the
Depositary, together with all such certifications as may be required by the
Depositary in accordance with the provisions of this Deposit Agreement, and
together with a written order of the Company or such holder, as the case may be,
directing the Depositary to execute and deliver to, or upon the written order
of, the person or persons stated in such order a Receipt or Receipts for the
number of Depositary Shares representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary's
Office or at such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates for
Stock deposited in accordance with the provisions of this Section, together with
3
<PAGE>
the other documents required as above specified, and upon recordation of the
Stock on the books of the Company in the name of the Depositary or its nominee,
the Depositary, subject to the terms and conditions of this Deposit Agreement,
shall execute and deliver, to or upon the order of the person or persons named
in the written order delivered to the Depositary referred to in the first
paragraph of this Section, a Receipt or Receipts for the whole number of
Depositary Shares representing, in the aggregate, the Stock so deposited and
registered in such name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt or Receipts at the
Depositary's Office or such other offices, if any, as the Depositary may
designate. Delivery at other offices shall be at the risk and expense of the
person requesting such delivery.
SECTION 2.3 Registration of Transfer of Receipts. Subject to the terms
and conditions of this Deposit Agreement, the Depositary shall register on its
books from time to time transfers of Receipts upon any surrender thereof by the
holder in person or by a duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer. Thereupon, the
Depositary shall execute a new Receipt or Receipts evidencing the same aggregate
number of Depositary Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or upon the order of the
person entitled thereto.
SECTION 2.4 Split-ups and Combinations of Receipts; Surrender of
Receipts and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at
the Depositary's Office or at such other offices as it may designate for the
purpose of effecting a split-up or combination of such Receipt or Receipts, and
subject to the terms and conditions of this Deposit Agreement, the Depositary
shall execute and deliver a new Receipt or Receipts in the authorized
denomination or denominations requested, evidencing the aggregate number of
Depositary Shares evidenced by the Receipt or Receipts surrendered; provided,
however, that the Depositary shall not issue any Receipt evidencing a fractional
Depositary Share.
Any holder of a Receipt or Receipts representing any number of whole
shares of Stock may (unless the related Depositary Shares have previously been
called for redemption) withdraw the Stock and all money and other property, if
any, represented thereby by surrendering such Receipt or Receipts at the
Depositary's Office or as such other offices as the Depositary may designate for
such withdrawals and paying any unpaid amount due the Depositary. Thereafter,
without unreasonable delay, the Depositar shall deliver to such holder or to the
person or persons designated by such holder as hereinafter provided, the number
of whole shares of Stock and all money and other property, if any, represented
by the Receipt or Receipts so surrendered for withdrawal, but holders of such
whole shares of Stock will not thereafter be entitled to deposit such Stock
hereunder or to receive Depositary Shares therefor. If a Receipt delivered by
the holder to the Depositary in connection with such withdrawal shall evidence
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of whole shares of Stock to be so withdrawn, the
Depositary shall at the same time, in addition to such number of whole shares of
Stock and such money and other property, if any, to be so withdrawn, deliver to
such holder, or upon his order, a new Receipt evidencing such excess number of
Depositary Shares, provided, however, that the Depositary shall not issue any
4
<PAGE>
Receipt evidencing a fractional Depositary Share. Delivery of the Stock and
money and other property being withdrawn may be made by the delivery of such
certificates, documents of title and other instruments as the Depositary may
deem appropriate which, if required by the Depositary, shall be properly
endorsed or accompanied by proper instruments of transfer.
If the Stock and the money and other property being withdrawn are to be
delivered to a person or persons other than the record holder of the Receipt or
Receipts being surrendered for withdrawal of Stock, such holders shall execute
and deliver to the Depositary a written order so directing the Depositary and
the Depositary may require that the Receipt or Receipts surrendered by such
holder for withdrawal of such shares of Stock be properly endorsed in blank or
accompanied by a properly executed instrument of transfer in blank.
Delivery of the Stock and the money and other property, if any,
represented by Receipts surrendered for withdrawal shall be made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the holder surrendering such Receipt or Receipts and for the account
of the holder thereof, such delivery may be made at such other place as may be
designated by such holder.
SECTION 2.5 Limitations on Execution and Delivery, Transfer, Surrender
and Exchange of Receipts. As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination, surrender or exchange
of any Receipt, the Depositary, any of the Depositary's Agents or the Company
may require payment to it of a sum sufficient for the payment (or, in the event
that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Sections 3.2 and 5.7, may require the production of evidence
satisfactory to it as to the identity and genuineness of any signature, and may
also require compliance with such regulations, if any, as the Depositary or the
Company may establish consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against
Stock may be suspended, the registration of transfer of Receipts may be refused
and the registration of transfer, surrender or exchange of outstanding Receipts
may be suspended (i) during any period when the register of stockholders of the
Company is closed, or (ii) if any such action is deemed necessary or advisable
by the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission or under any provision of this Deposit
Agreement.
SECTION 2.6 Lost Receipts, etc. In case any receipts shall be
mutilated, destroyed, lost or stolen, the Depositary in its reasonable
discretion may execute and deliver a Receipt of like form and tenor in exchange
and substitution for such mutilated Receipt, or in lieu of and in substitution
for such destroyed, lost or stolen Receipts, upon (i) the filing by the holder
thereof with the Depositary of evidence reasonably satisfactory to the
Depositary of such destruction or loss or theft of such Receipt, of the
authenticity thereof and of his or her ownership thereof, (ii) the furnishing of
the Depositary with indemnification reasonably satisfactory to it and the
Company and (iii) the payment of any reasonable expense (including reasonable
fees, charges and expenses of the Depositary) in connection with such execution
and delivery.
5
<PAGE>
SECTION 2.7 Cancellation and Destruction of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Company is authorized to destroy all Receipts so cancelled.
SECTION 2.8 Redemption of Stock. Whenever the Company shall be
permitted and shall elect to redeem shares of Stock in accordance with the
provisions of the Certificate, it shall (unless otherwise agreed to in writing
with the Depositary) give or cause to be given to the Depositary not less than
60 days' notice of the date of such proposed redemption or exchange of Stock and
of the number of such shares held by the Depositary to be so redeemed and the
applicable redemption price, as set forth in the Certificate, which notice shall
be accompanied by a certificate from the Company stating that such redemption of
Stock is in accordance with the provisions of the Certificate. Notice of
redemption of Stock will also be given by the Company by publication in a
newspaper of general circulation in the City of New York, such publication to be
made once a week for two successive weeks commencing not less than 30 nor more
than 90 days prior to the redemption date, and the Depositary will publish a
notice of redemption of the Depositary Shares containing the same type of
information and in the same manner as the Company's notice of redemption. On the
date of such redemption, provided that the Company shall then have paid or
caused to be paid in full to the Depositary the redemption price of the Stock to
be redeemed, plus an amount equal to any accrued and unpaid dividends thereon to
the date fixed for redemption, in accordance with the provisions of the
Certificate, the Depositary shall redeem the number of Depositary Shares
representing such Stock. The Depositary shall mail notice of the Company's
redemption of Stock and the proposed simultaneous redemption of the number of
Depositary Shares representing the Stock to be redeemed by first-class mail,
postage prepaid, not less than 30 and not more than 60 days prior to the date
fixed for redemption of such Stock and Depositary Shares (the "Redemption Date")
to the record holders of the Receipts evidencing the Depositary Shares to be so
redeemed, at the address of such holders as they appear on the records of the
Depositary; but neither failure to mail any such notice of redemption of
Depositary Shares to one or more such holders nor any defect in any notice of
redemption of Depositary Shares to one or more such holders shall affect the
sufficiency of the proceedings for redemption as to the other holders. The
Company will provide the Depositary with the information necessary for the
Depositary to prepare such notice and each such notice shall state: (i) the
Redemption Date; (ii) the number of Depositary Shares to be redeemed and, if
less than all the Depositary Shares held by any such holder are to be redeemed,
the number of such Depositary Shares held by such holder to be so redeemed;
(iii) the redemption price per Depositary Share; (iv) the place or places where
Receipts evidencing Depositary Shares are to be surrendered for payment of the
redemption price; and (v) that dividends in respect of the Stock represented by
the Depositary Shares to be redeemed will cease to accrue on such Redemption
Date. In case less than all the outstanding Depositary Shares are to be
redeemed, the Depositary Shares to be so redeemed shall be determined pro rata
or by lot in a manner determined by the Board of Directors.
Notice having been mailed by the Depositary as aforesaid, from and
after the Redemption Date (unless the Company shall have failed to provide the
6
<PAGE>
funds necessary to redeem the Stock evidenced by the Depositary Shares called
for redemption) (i) dividends on the shares of Stock so called for redemption
shall cease to accrue from and after such date, (ii) the Depositary Shares being
redeemed from such proceeds shall be deemed no longer to be outstanding, (iii)
all rights of the holders of Receipts evidencing such Depositary Shares (except
the right to receive the redemption price) shall, to the extent of such
Depositary Shares, cease and terminate, and (iv) upon surrender in accordance
with such redemption notice of the Receipts evidencing any such Depositary
Shares called for redemption (properly endorsed or assigned for transfer, if the
Depositary or applicable law shall so require), such Depositary Shares shall be
redeemed by the Depositary at a redemption price per Depositary Share equal to
the same fraction of the redemption price per share paid with respect to the
shares to Stock as the fraction each Depositary Share represents of a share of
Stock plus the same fraction of all money and other property, if any,
represented by such Depositary Shares, including all amounts paid by the Company
in respect of dividends which on the Redemption Date have accumulated on the
shares of Stock to be so redeemed and have not theretofore been paid. Any funds
deposited by the Company with the Depositary for any Depositary Shares that the
holders thereof fail to redeem will be returned to the Company after a period of
five years from the date such funds are so deposited.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with the redemption payment, a
new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption, provided, however, that the Depositary shall not
issue any Receipt evidencing a fractional Depositary Share.
ARTICLE III
Certain Obligations of
Holders of Receipts and of the Company
SECTION 3.1 Filing Proofs, Certificates and Other Information. Any
holder of a Receipt may be required from time to time to file such proof of
residence, or other matters or other information, to execute such certificates
and to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper or otherwise reasonably request. The
Depositary or the Company may withhold the delivery, or delay the registration
of transfer, redemption or exchange, of any Receipt or the withdrawal or
conversion of the Stock represented by the Depositary Shares evidenced by any
Receipt or the distribution of any dividend or other distribution or the sale of
any rights or of the proceeds thereof until such proof or other information is
filed or such certificates are executed or such representations and warranties
are made.
SECTION 3.2 Payment of Taxes or Other Governmental Charges. Holders of
Receipts shall be obligated to make payments to the Depositary of certain
charges and expenses, as provided in Section 5.7. Registration of transfer of
any Receipt or any withdrawal of Stock and all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends, interest payments or
other distributions may be withheld or any part of or all the Stock or other
7
<PAGE>
property represented by the Depositary Shares evidenced by such Receipt and not
theretofore sold may be sold for the account of the holder thereof (after
attempting by reasonable means to notify such holder prior to such sale), and
such dividends, interest payments or other distributions or the proceeds of any
such sale may be applied to any payment of such charges or expenses, the holder
of such Receipt remaining liable for any deficiency.
SECTION 3.3 Warranty as to Stock. The Company hereby represents and
warrants that the Stock, when issued, will be duly authorized, validly issued,
fully paid and nonassessable. Such representation and warranty shall survive the
deposit of the Stock and the issuance of Receipts.
ARTICLE IV
The Deposited Securities; Notices
SECTION 4.1 Cash Distributions. Whenever the Depositary shall receive
any cash dividend or other cash distribution on Stock, the Depositary shall,
subject to Sections 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of such dividend or
distribution as are, as nearly as practicable, in proportion to the respective
numbers of Depositary Shares evidenced by the Receipts held by such holders;
provided, however, that in case the Company or the Depositary shall be required
to withhold and shall withhold from any cash dividend or other cash distribution
in respect of the Stock an amount on account of taxes or as otherwise required
by law, regulation or court process, the amount made available for distribution
or distributed in respect of Depositary Shares shall be reduced accordingly. In
the event that the calculation of any such cash dividend or other cash
distribution to be paid to any record holder on the aggregate number of
Depositary Receipts held by such holder results in an amount which is a fraction
of a cent, the amount the Depositary shall distribute to such record holder
shall be rounded to the next highest whole cent if such fraction of a cent is
equal to or greater than $.005, otherwise such fractional interest shall be
disregarded; and upon request of the Depositary, the Company shall pay the
additional amount to the Depositary for distribution.
SECTION 4.2 Distributions Other than Cash, Rights, Preferences or
Privileges. Whenever the Depositary shall receive any distribution other than
cash, rights, preferences or privileges upon Stock, the Depositary shall,
subject to Sections 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of the securities or
property received by it as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders, in any manner that the Depositary may deem equitable and practicable
for accomplishing such distribution. If in the opinion of the Depositary such
distribution cannot be made proportionately among such record holders, or if for
any other reason (including any requirement that the Company or the Depositary
withhold an amount on account of taxes) the Depositary deems such distribution
not to be feasible, the Depositary may, with the approval of the Company, adopt
such method as it deems equitable and practicable for the purpose of effecting
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such distribution, including the sale (at public or private sale) of the
securities or property thus received, or any part thereof, at such place or
places and upon such terms as it may deem equitable and appropriate. The net
proceeds of any such sale shall, subject to Sections 3.1 and 3.2, be distributed
or made available for distribution, as the case may be, by the Depositary to
record holders of Receipts as provided by Section 4.1 in the case of a
distribution received in cash.
SECTION 4.3 Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts in such manner as the Depositary may determine,
either by the issue to such record holders of warrants representing such rights,
preferences or privileges or by such other method as may be approved by the
Depositary in its discretion with the approval of the Company; provided,
however, the (i) if at the time of issue or offer of any such rights,
preferences or privileges the Depositary determines that it is not lawful or
(after consultation with the Company) not feasible to make such rights,
preferences or privileges available to holders or Receipts by the issue of
warrants or otherwise, or (ii) if and to the extent so instructed to holders of
Receipts who do not desire to execute such rights, preferences or privileges,
then the Depositary, in its discretion (either approval of the Company, in any
case where the Depositary has determined that it is not feasible to make such
rights, preferences or privileges available), may, if applicable laws or the
terms of such rights, preferences or privileges permit such transfer, sell such
rights, preferences or privileges at public or private sale, at such place or
places and upon such terms as it may deem proper. The net proceeds of any such
sale shall, subject to Sections 3.1 and 3.2, be distributed by the Depositary to
the record holders of Receipts entitled thereto as provided by Section 4.1 in
the case of a distribution received in cash.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company will file promptly a registration statement
pursuant to the Securities Act with respect to such rights, preferences or
privileges and securities and use its best efforts and take all steps available
to it to cause such registration statement to become effective sufficiently in
advance of the expiration of such rights, preferences or privileges to enable
such holders to exercise such rights, preferences or privileges. In no event
shall the Depositary make available to the holders of Receipts any right,
preference or privilege to subscribe for or to purchase any securities unless
and until it has received written notice from the Company that such registration
statement shall have become effective, or that the offering and sale of such
securities to such holders are exempt from registration under the provisions of
the Securities Act and the Company shall have provided to the Depositary an
opinion of counsel reasonably satisfactory to the Depositary to such effect.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to holders
of Receipts, the Company will use its reasonable best efforts to take such
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action or obtain such authorization, consent or permit sufficiently in advance
of the expiration of such rights, preferences or privileges to enable such
holders to exercise such rights, preferences or privileges.
SECTION 4.4 Notice of Dividends, etc.; Fixing Record Date for Holders
of Receipts. Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or if rights,
preferences or privileges shall at any time be offered, with respect to Stock,
or whenever the Depositary shall receive notice of any meeting at which holders
of Stock are entitled to vote or of which holders of Stock are entitled to
notice, or whenever the Depositary and the Company shall decide it is
appropriate, the Depositary shall in each such instance fix a record date (which
shall be the same date as the record date fixed by the Company with respect to
or otherwise in accordance with the terms of the Stock) for the determination of
the holders of Receipts who shall be entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, or to give instructions for the exercise of voting rights at any such
meeting, or who shall be entitled to notice of such meeting or for any other
appropriate reasons.
SECTION 4.5 Voting Rights. Upon receipt of notice of any meeting at
which the holders of Stock are entitled to vote, the Depositary shall, as soon
as practicable thereafter, mail to the record holders of Receipts a notice which
shall contain (i) such information as is contained in such notice of meeting and
(ii) a statement that the holders may, subject to any applicable restrictions,
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Stock represented by their respective Depositary Shares (including
an express indication that Instructions may be given to the Depositary to give a
discretionary proxy to a person designated by the Company) and a brief statement
as to the manner in which such instructions may be given. Upon the written
request of the holders of Receipts on the relevant record date, the Depositary
shall use its best efforts to vote or cause to be voted, in accordance with the
instructions set forth in such requests, the maximum number of whole shares of
Stock represented by the Depositary Shares evidenced by all Receipts as to which
any particular voting instructions are received. The Company hereby agrees to
take all action which may be deemed necessary by the Depositary in order to
enable the Depositary to vote such Stock or cause such Stock to be voted. In the
absence of specific instructions from the holder of a Receipt, the Depositary
will not vote (but, at its discretion, may appear at any meeting with respect to
such Stock unless directed to the contrary by the holders of all the Receipts)
to the extent of the Stock represented by the Depositary Shares evidenced by
such Receipt.
SECTION 4.6 Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations, etc. Upon any change in par value or
liquidation preference, split-up, combination or any other reclassification of
the Stock, or upon any recapitalization, reorganization, merger or consolidation
affecting the Company or to which it is a party, the Depositary may in its
discretion with the approval (not to be g unreasonably withheld) of, and shall
upon the instructions of, the Company and (in either case) in such manner as the
Depositary may deem equitable, (i) make such adjustments in the fraction of an
interest in one share of Stock represented by one Depositary Share as may be
necessary (as certified by the Company) fully to reflect the efforts of such
change in par value or liquidation preference, split-up, combination or other
reclassification of Stock, or of such recapitalization, reorganization, merger
of consolidation and (ii) treat any securities which shall be received by the
Depositary in exchange for or upon conversion of or in respect of the Stock as
new deposited securities so received in exchange for or upon conversion or in
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respect of such Stock. In any such case, the Depositary may in its discretion,
with the approval of the Company, execute and deliver additional Receipts or may
call for the surrender of all outstanding Receipts to be exchanged for new
Receipts specifically describing such new deposited securities. Anything to the
contrary herein notwithstanding, holders of Receipts shall have the right from
and after the effective date of any such change in par value or liquidation
preference, split-up, combination or other reclassification of the Stock or any
such recapitalization, reorganization, merger or consolidation to surrender such
Receipts to the Depositary with instructions to convert, exchange or surrender
the Stock represented thereby only into or for, as the case may be, the kind and
amount of shares of stock and other securities and property and cash into which
the Stock represented by such Receipts would have been converted or for which
such Stock would have been exchanged or surrendered had such Receipt been
surrendered immediately prior to the effective date of such transaction.
SECTION 4.7 Delivery of Reports. The Depositary shall furnish to
holders of Receipts any reports and communications received from the Company
which are received by the Depositary as the holder of Stock.
SECTION 4.8 List of Receipt Holders. Promptly upon request from time
to time by the Company, the Depositary shall furnish to it a list, as of the
most recent practicable date, of the names, addresses and holdings of Depositary
Shares of all record holders of Receipts. The Company shall be entitled to
receive such list four times annually without charge.
ARTICLE V
The Depositary, the Depositary's
Agents, the Registrar and the Company
SECTION 5.1 Maintenance of Office, Agencies and Transfer Books by the
Depositary; Registrar. Upon execution of this Deposit Agreement, the Depositary
shall maintain, at the Depositary's Office, facilities for the execution and
delivery, registration and registration of transfer, surrender and exchange of
Receipts, and at the offices of the Depositary's Agents, if any, facilities for
the delivery, registration of transfer, surrender and exchange of Receipts, all
in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, which books during normal
business hours shall be open for inspection by the record holders of Receipts;
provided that any such holder requesting to exercise such right shall certify to
the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
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The Depositary may close such books, at any time or from time to time,
when deemed expedient by it in connection with the performance of its duties
hereunder.
The Depositary may, with the approval of the Company, appoint a
Registrar for registration of the Receipts or the Depositary Shares evidence
thereby. If the Receipts or the Depositary Shares evidenced thereby or the Stock
represented by such Depositary Shares shall be listed on one or more national
securities exchanges, the Depositary will appoint a Registrar (acceptable to the
Company) for registration of such Receipts or Depositary Shares in accordance
with any requirements of such exchange. Such Registrar (which may be the
Depositary if so permitted by the requirements of any such exchange) may be
removed and a substitute registrar appointed by the Depositary upon the request
or with the approval of the Company. If the Receipts, such Depositary Shares or
such Stock are listed on one or more other stock exchanges, the Depositary will,
at the request and the expense of the Company, arrange such facilities for the
delivery, registration, registration of transfer, surrender and exchange of such
Receipts, such Depositary Share or such Stock as may be required by law or
applicable securities exchange regulation.
The Depositary may from time to time appoint Depositary's Agents to act
in any respect for the Depositary for the purposes of this Deposit Agreement and
may at any time appoint additional Depositary's Agents and vary or terminate the
appointment of such Depositary's Agents. The Depositary will notify the Company
of any such action.
SECTION 5.2 Prevention of or Delay in Performance by the Depositary,
the Depositary's Agents, the Registrar or the Company. Neither the Depositary
nor any Depositary's Agent nor the Registrar nor the Company shall incur any
liability to any holder of any Receipt if by reason of any provision of any
present or future law, or regulation thereunder, of the United States of America
or of any other governmental authority or, in the case of the Depositary, the
Depositary's Agent or the Registrar, by reason of any provision, present or
future, of the Company's Articles of Incorporation or by reason of any act of
God or war or other circumstance beyond the control of the relevant party, the
Depositary, the Depositary's Agent, the Registrar or the Company shall be
prevented, delayed or forbidden from, or subjected to any penalty on account of,
doing or performing any act or thing which the terms o this Deposit Agreement
provide shall be done or performed; nor shall the Depositary, any Depositary's
Agent, the Registrar or the Company incur liability to any holder of a Receipt
(i) by reason of any nonperformance or delay, caused as aforesaid, in the
performance of any act or thing which the terms of this Deposit Agreement
provide shall or may be done or performed, or (ii) by reason of any exercise of,
or failure to exercise, any discretion provided for in this Deposit Agreement
except, in the case of any such exercise or failure to exercise discretion not
caused as aforesaid, if caused by the gross negligence or willful misconduct of
the party charged with such exercise or failure to exercise.
SECTION 5.3 Obligations of the Depositary, the Depositary's Agents, the
Registrar and the Company. Neither the Depositary nor any Depositary's Agent
nor the Registrar nor the Company assumes any obligation or shall be subject to
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any liability under this Deposit Agreement or any Receipt to holders of Receipts
other than for its gross negligence, willful misconduct or bad faith.
Neither the Depositary nor any Depositary's Agent nor the Registrar nor
the Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding in respect of the Stock, the Depositary Shares
or the Receipts which in its reasonable opinion may involve it in expense or
liability unless indemnity reasonably satisfactory to it against expense and
liability be furnished as often as may be reasonably required.
Neither the Depositary nor any Depositary's Agent nor the Registrar nor
the Company shall be liable for any action or any failure to act by it in
reliance upon the written advice of legal counsel or accountants, or information
from any person presenting Stock for deposit, any holder of a Receipt or any
other person believed by it in good faith to be competent to give such
information. The Depositary, any Depositary's Agent, the Registrar and the
Company may each rely and shall each be protected in acting upon any written
notice, request, direction or other document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties.
The Depositary shall not be responsible for any failure to carry out
any instruction to vote any of the shares of Stock or for the manner or effect
of any such vote made, as long as any such action or non-action is in good
faith. The Depositary will indemnify the Company and hold it harmless from any
loss, liability or expense (including the reasonable costs and expenses of
defending itself) which may arise out of acts performed or omitted by the
Depositary, including when such Depositary acts as Registrar, or the
Depositary's Agents in connection with this Agreement due to its or their gross
negligence, willful misconduct or bad faith. The indemnification obligations of
the Depositary set forth in this Section 5.3 shall survive any termination of
this Agreement and any succession of any Depositary.
The Depositary, its parent, affiliates or subsidiaries, the
Depositary's Agents and the Registrar may own, buy, sell and deal in any class
of securities of the Company and its affiliates and in Receipts or Depositary
Shares or become pecuniarily interested in any transaction in which the Company
or its affiliates may be interested or contract with or lend money to or
otherwise act as fully or as freely as if it were not the Depositary, parent,
affiliate or subsidiary or Depositary's Agent or Registrar hereunder. The
Depositary may also act as trustee, transfer agent or registrar of any of the
securities of the Company and its affiliates.
It is intended that neither the Depositary nor any Depositary's Agent
nor the Registrar, acting as the Depositary, Depositary's Agent or Registrar, as
the case may be, shall be deemed to be an "issuer" of the securities under the
federal securities laws or applicable state securities laws, it being expressly
understood and agreed that the Depositary, any Depositary's Agent and the
Registrar are acting only in a ministerial capacity as Depositary, Depositary
Agent or Registrar for the Stock.
Neither the Depositary (or its officers, directors, employees or
agents) nor any Depositary's Agent nor the Registrar makes any representation or
has any responsibility as to the validity of the registration statement pursuant
to which the Depositary Shares are registered under the Securities Act, the
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Stock, the Depositary Shares or the Receipts (except for its counter-signatures
thereon) or any instruments referred to therein or herein, or as to the
correctness of any statement made therein or herein.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity or genuineness of any
Stock at any time deposited with the Depositary hereunder or of the Depositary
Shares, as to the validity or sufficiency of this Deposit Agreement, as to the
value of the Depositary Shares or as to any right, title or interest of the
record holders of Receipts in and to the Depositary Shares. The Depositary shall
not be accountable for the use or application by the Company of the Depositary
Shares or the Receipts or the proceeds thereof.
SECTION 5.4 Resignation and Removal of the Depositary; Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by delivering notice of its election to do so to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$150,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 60 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock and any moneys or property held hereunder to
such successor, and shall deliver to such successor a list of the record holders
of all outstanding Receipts and suc records, books and other information in its
possession relating thereto. Any successor Depositary shall promptly mail notice
of its appointment to the record holders of Receipts.
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Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act, and notice thereof shall
not be required hereunder. Such successor Depositary may authenticate the
Receipts in the name of the predecessor Depositary or in the name of the
successor Depositary.
SECTION 5.5 Corporate Notices and Reports. The Company agrees that it
will deliver to the Depositary, and the Depositary will, promptly after receipt
thereof, transmit to the record holders of Receipts, in each case at the
addresses recorded in the Depositary's books, copies of all notices and reports
(including, without limitation, financial statements) required by law or by the
rules of any national securities exchange upon which the Stock, the Depositary h
Shares or the Receipts are listed, to be furnished to the record holders of
Receipts. Such transmission will be at the Company's expense and the Company
will provide the Depositary with such number of copies of such documents as the
Depositary may reasonably request.
SECTION 5.6 Indemnification by the Company. The Company shall
indemnify the Depositary, any Depositary's Agent and the Registrar against, and
hold each of them harmless from, any loss, liability or expense (including the
reasonable costs and expenses of defending itself) which may arise out of acts
performed or omitted in connection with this Deposit Agreement and the Receipts
by the Depositary, any Registrar or any of their respective agents (including
any Depositary's Agent), except for any liability arising out of gross
negligence, willful misconduct or bad faith on the respective parts of any such
person or persons. The obligations of the Company set forth in this Section 5.6
shall survive any succession of any Depositary, Depositary's Agent or Registrar.
SECTION 5.7 Charges and Expenses. The Company shall pay all transfer
and other taxes and governmental charges arising solely from the existence of
the depositary arrangements. The Company shall pay charges of the Depositary in
connection with the initial deposit of the Stock and the initial issuance of the
Depositary Shares, all withdrawals of shares of the Stock by owners of
Depositary Shares, and any redemption of the Stock at the option of the Company.
All other transfer and other taxes and governmental charges shall be at the
expense of holders of Depositary Shares. If, at the request of a holder of
Receipts, the Depositary incurs charges or expenses for which it is not
otherwise liable hereunder, such holder will be liable for such charges and
expenses. All other charges and expenses of the Depositary and any Depositary's
Agent hereunder (including, in each case, reasonable fees and expenses of
counsel) incident to the performance of their respective obligations hereunder
will be paid upon consultation and agreement between the Depositary and the
Company as to the amount and nature of such charges and expenses. The Depositary
shall present its statement for charges and expenses to the Company at such
intervals as the Company and the Depositary may agree.
SECTION 5.8 Tax Compliance. The Depositary, on its own behalf and on
behalf of the Company, will comply with all applicable certification,
information reporting and withholding (including "backup" withholding)
requirements imposed by applicable tax laws, regulations or administrative
practice with respect to (i) any payments made with respect to the Depositary
Shares or (ii) the issuance, delivery, holding, transfer, redemption or exercise
of rights under the Depositary Receipts or the Depositary Shares. Such
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compliance shall include, without limitation, the preparation and the timely
filing of required returns and the timely payment of all amounts required to be
withheld to the appropriate taxing authority or its designated agent.
The Depositary shall comply with any direction received from the
Company with respect to the application of any such requirements to particular
payments or holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 5.3 hereof.
The Depositary shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available on
request to the Company or to its authorized representatives.
ARTICLE VI
Amendment and Termination
SECTION 6.1 Amendment. The form of the Receipts and any provisions of
this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; provided, however, that no such amendment (other
than any change in the fees of any Depositary or Registrar, which shall go into
effect not sooner than three months after notice thereof to the holders of the
Receipts) which shall materially adversely alter the rights of the holders of
Receipts shall be effective unless such amendment shall have been approved by
the holders of at least a majority of the Depositary Shares then outstanding.
Every holder of an outstanding Receipt at the time any such amendment becomes
effective shall be deemed, by continuing to hold such Receipt, to be bound by
the Deposit Agreement as amended thereby. Notwithstanding the foregoing, in no
event may any amendment impair the right of any holder of any Depositary Shares,
upon surrender of the Receipts evidencing such Depositary Shares and subject to
any conditions specified in this Deposit Agreement, to receive shares of Stock
and any money or other property represented thereby, except in order to comply
with mandatory provisions of applicable law.
SECTION 6.2 Termination. This Deposit Agreement may be terminated by
the Company at any time upon not less than 60 days' prior written notice to the
Depositary, in which case, on a date that is not later than 30 days after the
date of such notice, the Depositary shall deliver or make available for delivery
to holders of Depositary Shares, upon surrender of Receipts evidencing such
Depositary Shares, such number of whole or fractional shares of Stock as are r
represented by such Depositary Shares. This Deposit Agreement will automatically
terminate after (i) all outstanding Depositary Shares have been redeemed
pursuant to Section 2.8 or (ii) there shall have been made a final distribution
in respect of the Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution shall have been distributed to
the holders of Depositary Receipts pursuant to Section 4.1 or 4.2, as
applicable.
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Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, the Registrar and any Depositary's Agent under
Sections 5.6 and 5.7.
ARTICLE VII
Miscellaneous
SECTION 7.1 Counterparts. This Deposit Agreement may be executed in
any number of counterparts, and by each of the parties hereto on separated
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 7.2 Exclusive Benefit of Parties. This Deposit Agreement is
for the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.
SECTION 7.3 Invalidity of Provisions. In case one or more of the
provisions contained in the Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
SECTION 7.4 Notices. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to the Company at:
CarrAmerica Realty Corporation
1850 K Street, N.W., Suite 500
Washington, D.C. 20006
Attention: Corporate Secretary
Facsimile No.: (202) 729-1080
or at any other address of which the Company shall have notified the Depositary
in writing.
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Any and all notices to be given to the Depositary hereunder or under
the Receipts shall be in writing and be deemed to have been duly given if
personally delivered or sent by mail or by telegram or facsimile transmission
confirmed by letter, addressed to the Depositary at the Depositary's Office, at:
Attention:
Facsimile No.: (___) ___-____
or at any other address of which the Depositary shall have notified the Company
in writing.
Any and all notices to be given to any record holder of a Receipt
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to such record holder at
the address of such record holder as it appears on the books of the Depositary,
or if such holder shall have filed with the Depositary a written request that
notices intended for such holder be mailed to some o ther address, at the
address designated in such request.
Delivery of a notice sent by mail or by telegram or facsimile
transmission shall be deemed to be effected by the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a telegram
or facsimile transmission) is deposited for mailing by first class mail, postage
prepaid. The Depositary or the Company may, however, act upon any telegram or
facsimile transmission received by it from the other or from any holder of a
Receipt, notwithstanding that such telegram or facsim ile transmission shall not
subsequently be confirmed by letter or as aforesaid.
SECTION 7.5 Appointment of Registrar. The Company hereby also appoints
the Depositary as Registrar in respect of the Receipts and the Depositary hereby
accepts such appointment.
SECTION 7.6 Holders of Receipts are Parties. The holders of Receipts
from time to time shall be parties to this Deposit Agreement and shall be bound
by all of the terms and conditions hereof and of the Receipts by acceptance of
delivery thereof.
SECTION 7.7 Governing Law. THIS DEPOSIT AGREEMENT AND THE RECEIPTS AND
ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS APPLICABLE TO CONTRACTS
MADE IN AND TO BE PERFORMED IN THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
18
<PAGE>
SECTION 7.8 Inspection of Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agent and
shall be open to inspection during business hours at the Depositary's Office or
respective offices of the Depositary's Agent, if any, by any holder of a
Receipt.
SECTION 7.9 Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or the Receipts or to have any bearing upon the meaning
or interpretation of any provision contained herein or in the Receipts.
IN WITNESS WHEREOF, the Company and the Depositary have duly executed
this Agreement as of the day and year first above set forth, and all holders of
Receipts shall become parties hereof by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
Attested by: CARRAMERICA REALTY CORPORATION
Name: Name:
-------------------- --------------------
Title: Title:
-------------------- --------------------
Attested by: [DEPOSITARY]
--------------------
Name: Name:
-------------------- --------------------
Title: Title:
-------------------- --------------------
19
<PAGE>
ANNEX A
[Form of Face of Receipt]
[TEMPORARY RECEIPT EXCHANGEABLE FOR DEFINITIVE
ENGRAVED RECEIPT WHEN READY FOR DELIVERY]
_______ DEPOSITARY SHARES THIS DEPOSITARY RECEIPT
IS TRANSFERABLE IN _______,
__ OR NEW YORK, NY
CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS
DEPOSITARY RECEIPT FOR DEPOSITARY
SHARES, EACH REPRESENTING ___TH OF A SHARE OF
_.___% SERIES _ _________ PREFERRED STOCK,
OF
CARRAMERICA REALTY CORPORATION
INCORPORATED UNDER THE
LAWS OF THE STATE OF MARYLAND
__________________, as Depositary (the "Depositary"), hereby certifies that
is the registered owner of ________________________ DEPOSITARY SHARES
("Depositary Shares"), each Depositary Share representing a ____th interest in
one share of _.___% Series _ _________Preferred Stock (the "Stock"), of
CarrAmerica Realty Corporation, a Maryland corporation (the "Corporation"), on
deposit with the Depositary, subject to the terms and entitled to the benefits
of the Deposit Agreement dated as of ________ __, ____ (the "Deposit
Agreement"), between the Corporation and the Depositary. By accepting this
Depositary Receipt, the holder hereof becomes a party to and agrees to be bound
by all the terms and conditions of the Deposit Agreement. This Depositary
Receipt shall not be valid or obligatory for any purpose or be entitled to any
benefits under the Deposit Agreement unless it shall have been executed by the
Depositary by the manual and/or facsimile signature of a duly authorized officer
or, if executed in facsimile by the Depositary, countersigned by a Registrar in
respect of the Depositary Receipts by a duly authorized officer.
A-1
<PAGE>
The Corporation is authorized to issue Common Stock, one or more series of
Preferred Stock and Depositary Shares. The Corporation will furnish without
charge to each receiptholder, who so requests in writing, a statement of the
rights, preferences, privileges and restrictions granted to or imposed upon the
respective classes and series of capital stock of the Corporation and the
holders thereof, a copy of the Corporation's Articles of Incorporation, the
Articles Supplementary relating to the Stock, the Corporation's Bylaws and the
Deposit Agreement. Any such request shall be made to the Corporation at its
principal office at 1850 K Street, N.W., Suite 500, Washington, D.C. 20006,
Attention: Corporate Secretary.
This Depositary Receipt is continued on the reverse hereof and the additional
provisions set forth therein (including, without limitation, those relating to
redemption) for all purposes have the same effect as if set forth at this place.
Dated:
Countersigned
[DEPOSITARY]
Depositary, Transfer Agent and
Registrar
By:___________________________
Authorized Officer
A-2
<PAGE>
[Form of Reverse of Receipt]
The Shares represented by this Depositary Receipt are subject to the
provisions of the Articles and Bylaws, including but not limited to (1) Section
_ of the Articles Supplementary relating to the Stock, which confers upon the
Board the right, on or after _________ __, ____ to call for redemption the
Stock, and (2) provisions of the Articles and Bylaws that set forth restrictions
on ownership and transfer for the purpose of maintaining the Company's status as
a real estate investment trust under the Code. No Person may (1) Beneficially
Own shares of Common Stock in excess of 5 percent (or such greater percentage as
may be determined by the Board of Directors of the Company) of the outstanding
Common Stock of the Company (unless such Person is an Existing Holder or a
Special Shareholder), (2) Beneficially Own shares of any class or series of
Preferred Stock in excess of 5 percent (or such greater percentage as may be
determined by the Board of Directors of the Company) of the outstanding shares
of such class or series of Preferred Stock of the Company (unless such Person is
an Existing Holder or Special Shareholder), (3) Beneficially Own capital stock
that would result in the Company's being "closely held" (within the meaning of
Section 856(h) of the Code) or Acquire capital stock that would result in the
Company having fewer than 100 shareholders (as determined for purposes of
Section 856(a)(5) of the Code), or (4) unless such Person is a Special
Shareholder, Acquire shares of capital stock if, as a result of such
Acquisition, the Company would fail to qualify as a "domestically controlled
REIT" (within the meaning of Section 897(h)(4) of the Code) (determined assuming
that the Special Shareholders are Non-U.S. Persons and own a percentage (by
value) of the Company's capital stock corresponding to the Special Shareholders'
Percentage). Separate restrictions set forth in Article V of the Articles of
Incorporation apply to Existing Holders and Special Shareholders. Any Person who
attempts to Beneficially Own shares of capital stock in excess of these
limitations must immediately notify the Company. If any of the restrictions on
transfer or ownership set forth in Article V of the Articles of Incorporation
are violated, the interest in Stock represented hereby will automatically be
transferred to the Trustee of a Trust for the benefit of a Charitable
Beneficiary pursuant to the terms of Article V of the Articles of Incorporation.
In addition, attempted transfers of capital stock or interests in capital stock
in violation of these limitations (as modified or expanded upon in Article V of
the Company's Articles of Incorporation), may be void ab initio. A Person who
attempts to Beneficially Own shares of capital stock in violation of the
ownership limitations set forth in Section 5.2 of the Articles of Incorporation
shall have no claim, cause of action, or any other recourse whatsoever against a
transferor of such shares. The foregoing has been modified in part by the
Company's Articles Supplementary relating to the Stock, which modifications
provide certain limited exceptions to the foregoing with respect to a Person who
attempts to Beneficially Own in excess of 5 percent of the shares of Stock
(subject to certain representations and warranties which are deemed made by such
Person). Except for the term "Stock," all capitalized terms in the foregoing
sentences of this paragraph have the meanings defined in the Company's Articles
of Incorporation.
A-3
<PAGE>
1. The Deposit Agreement. Depositary Receipts, of which this Depositary
Receipt is one, are made available upon the terms and conditions set forth in
the Deposit Agreement, dated as of ________ __, ____ (the "Deposit Agreement")
among the Company, the Depositary and all holders from time to time of
Depositary Receipts. The Deposit Agreement (copies of which are on file at the
principal office maintained by the Depositary which at the time of the execution
of the Deposit Agreement was located at ____________ (the "Depositary's Office")
and at the office of any agent of the Depositary) sets forth the rights of
holders of Depositary Receipts and the rights and duties of the Depositary. The
statements made on the face and the reverse of this Depositary Receipt are
summaries of certain provisions of the Deposit Agreement and are subject to the
detailed provisions thereof, to which reference is hereby made. In the event of
any conflict between the provisions of this Depositary Receipt and the
provisions of the Deposit Agreement, the provisions of the Deposit Agreement
will govern.
2. Definitions. Unless otherwise expressly herein provided, all defined
terms used in this summary of the Deposit Agreement shall have the meanings
ascribed thereto in the Deposit Agreement.
3. Redemption of Stock. Whenever the Company shall elect to redeem
shares of Stock, it shall (unless otherwise agreed in writing with the
Depositary) give the Depositary not less than 60 days' notice of the date of
such proposed redemption and of the number of such shares of Stock held by the
Depositary to be so redeemed and the applicable redemption price. The Depositary
shall mail, first-class postage prepaid, notice of the redemption of Stock, and
the proposed simultaneous redemption of Depositary Shares representing the Stock
to be redeemed, not less than 30 and not more than 60 days prior to the date
fixed for redemption of such Stock and Depositary Shares, to the record holders
or the Depositary Receipts evidencing the Depositary Shares to be so redeemed,
at the addresses of such holders as the same appear on the records of the
Depositary. Any such notice shall also be published in the same manner as
notices of redemption of the Stock are required to be published by the Company.
On the date of such redemption, the Depositary shall redeem the number of
Depositary Shares representing such redeemed Stock, provided, that the Company
shall then have paid or caused to be paid in full to the Depositary the
redemption price of the Stock to be redeemed, plus any accrued and unpaid
dividends payable with respect thereto to the date of any such redemption. In
case fewer than all the outstanding Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed shall be determined pro rata or by lot in a
manner determined by the Board of Directors. Notice having been mailed as
aforesaid, from and after the Redemption Date (unless the Company shall have
failed to provide the funds necessary to redeem the shares of Stock evidenced by
the Depositary Shares called for redemption), dividends on the shares of Stock
so called for redemption shall cease to accrue, the Depositary Shares called for
redemption shall be deemed no longer to be outstanding and all rights of the
holders of Depositary Receipts evidencing such Depositary Shares (except the
right to receive the redemption price) shall, to the extent of such Depositary
Shares, cease and terminate. Upon surrender in accordance with said notice of
the Depositary Receipt evidencing such Depositary Shares (properly endorsed or
assigned for transfer, if the Depositary or applicable law shall so require),
such Depositary Shares shall be redeemed at a redemption price per Depositary
Share equal to the same fraction of the redemption price per share paid with
respect to the shares of Stock as the fraction each Depositary Share represents
of a share of Stock plus the same fraction of all money and other property, if
any, represented by such Depositary Shares, including all amounts paid by the
Company in respect of dividends which on the Redemption Date have accumulated on
A-4
<PAGE>
the shares of Stock to be so redeemed and have not theretofore been paid. The
foregoing is subject further to the terms and conditions of the Articles
Supplementary. If fewer than all of the Depositary Shares evidenced by this
Depositary Receipt are called for redemption, the Depositary will deliver to the
holder of this Depositary Receipt upon its surrender to the Depositary, together
with the redemption payment, a new Depositary Receipt evidencing the Depositary
Shares evidenced by such prior Depositary Receipt and not called for redemption.
4. Surrender of Depositary Receipts and Withdrawal of Stock. Upon
surrender of this Depositary Receipt to the Depositary at the Depositary's
Office or at such other offices as the Depositary may designate, and subject to
the provisions of the Deposit Agreement, the holder hereof is entitled to
withdraw, and to obtain delivery, without unreasonable delay, to or upon the
order of such holder, any or all of the Stock (but only in whole shares of
Stock) and all money and other property, if any, at the time represented by the
Depositary Shares evidenced by this Depositary Receipt; provided, however, that,
in the event this Depositary Receipt shall evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the whole
number of shares of Stock to be withdrawn, the Depositary shall, in addition to
such whole number of shares of Stock and such money and other property, if any,
to be withdrawn, deliver, to or upon the order of such holder, a new Depositary
Receipt or Depositary Receipts evidencing such excess number of whole Depositary
Shares.
5. Transfers, Split-ups, Combinations. Subject to the Deposit
Agreement, this Depositary Receipt is transferable on the books of the
Depositary upon surrender of this Depositary Receipt to the Depositary, properly
endorsed or accompanied by a properly executed instrument of transfer, and upon
such transfer the Depositary shall sign and deliver a Depositary Receipt or
Depositary Receipts to or upon the order of the person entitled thereto, all as
provided in and subject to the Deposit Agreement. This Depositary Receipt may be
split into other Depositary Receipts or combined with other Depositary Receipts
into one Depositary Receipt evidencing the same aggregate number of Depositary
Shares evidenced by the Depositary Receipt or Depositary Receipts surrendered;
provided, however, that the Depositary shall not issue any Depositary Receipt
evidencing a fractional Depositary Share.
6. Conditions to Signing and Delivery, Transfer, etc., of Depositary
Receipts. Prior to the execution and delivery, registration of transfer,
split-up, combination, surrender or exchange of this Depositary Receipt, the
Depositary, any of the Depositary's Agents or the Company may require any or all
of the following: (i) payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any tax or other governmental charge with respect
thereto; (ii) production of proof satisfactory to it as to the identity and
genuineness of any signature; and (iii) compliance with such reasonable
regulations, if any, as the Depositary or the Company may establish not
inconsistent with the Deposit Agreement.
A-5
<PAGE>
7. Suspension of Delivery, Transfer, etc. The deposit of Stock may be
refused, the delivery of this Depositary Receipt against Stock may be suspended,
the registration of transfer of Depositary Receipts may be refused and the
registration of transfer, surrender or exchange of this Depositary Receipt may
be suspended (i) during any period when the register of stockholders of the
Company is closed or (ii) if any such action is deemed necessary or advisable by
the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission, or under any provision of the Deposit
Agreement.
8. Amendment. The form of the Depositary Receipts and any provision of
the Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable; provided, however, that no such amendment (other
than any changes in the fees of any Depositary or Registrar which shall go into
effect not sooner than three months after Notice thereof to the holders of the
Depositary Receipts) which shall materially adversely alter the rights of
holders of Depositary Receipts shall be effective unless such amendment shall
have been approved by at least a majority of the Depositary Shares then
outstanding. The holder of this Depositary Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold this
Depositary Receipt, to be bound by the Deposit Agreement as amended thereby. In
no event shall any amendment impair the right of the owner of the Depositary
Shares evidenced by this Depositary Receipt to surrender this Depositary Receipt
with instructions to the Depositary to deliver to the holder the Stock and all
money and other property, if any, represented hereby, except in order to comply
with mandatory provisions of applicable law.
9. Charges and Expenses. The Company will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangement, except such charges as are expressly provided in the
Deposit Agreement to be at the expense of holders of Depositary Receipts.
10. Title to Depositary Receipts. Title to this Depositary Receipt,
when properly endorsed or accompanied by a properly executed instrument of
transfer, is transferable by delivery with the same effect as in the case of a
negotiable instrument; provided, however, that the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the person
entitled to distribution of dividends or other distributions or to any notice
provided for in the Deposit Agreement and for all other purposes.
11. Dividends and Distributions. Whenever the Depositary shall receive
any cash dividend or other cash distribution on the Stock, the Depositary shall,
subject to the provisions of the Deposit Agreement, distribute to record holders
of Depositary Receipts such amounts of such sums as are, as nearly as
practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Depositary Receipts held by such holders; provided, however,
that in case the Company or the Depositary shall be required by law to withhold
and does withhold from any cash dividend or other cash distribution in respect
of the Stock an amount on account of taxes or as otherwise required by law,
regulation or court process, the amount made available for distribution or
A-6
<PAGE>
distributed in respect of Depositary Shares shall be reduced accordingly. In the
event that the calculation of any such cash dividend or other cash distribution
to be paid to any record holder on the aggregate number of Depositary Receipts
held by such holder results in an amount which is a fraction of a cent, the
amount the Depositary shall distribute to such record holder shall be rounded to
the next highest whole cent; and upon request of the Depositary, the Company
shall pay the additional amount to the Depositary for distribution.
12. Subscription Rights, Preferences or Privileges. If the Company
shall at any time offer or cause to be offered to the persons in whose name
Stock is registered on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance, subject to the provisions of the Deposit
Agreement, be made available by the Depositary to the record holder of
Depositary Receipts in such manner as the Depositary shall determine.
13. Notice of Dividends, Fixing of Record Date. Whenever (i) any cash
dividend or other cash distribution shall become payable, or any distribution
other than cash shall be made, or any rights, preferences or privileges shall at
the time be offered, with respect to the Stock, or (ii) the Depositary shall
receive notice of any meeting at which holders of Stock are entitled to vote or
of which holders of Stock are entitled to notice or whenever the Depositary and
the Company shall decide it is appropriate, the Depositary shall in each such
instance fix a record date (which shall be the same date as the record date
fixed by the Company with respect to the Stock) for the determination of the
holders of Depositary Receipts (x) who shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or the net proceeds of
the sale thereof, or (y) who shall be entitled to give instructions for the
exercise of voting rights at any such meeting or to receive notice of such
meeting or for any other appropriate reasons.
14. Voting Rights. Upon receipt of notice of any meeting at which the
holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the record holders of Depositary Receipts a
notice, which shall contain (i) such information as is contained in such notice
of meeting, (ii) a statement that the holders may, subject to any applicable
restrictions, instruct the Depositary as to the exercise of the voting rights
pertaining to the Stock represented by their respective Depositary Shares, and
(iii) a brief statement as to the manner in which such instructions may be
given. Upon the written request of a holder of this Depositary Receipt on such
record date the Depositary shall use its best efforts to vote or cause to be
voted the Stock represented by the Depositary Shares evidenced by this
Depositary Receipt in accordance with the instructions set forth in such
request. The Company hereby agrees to take all action that may be deemed
necessary by the Depositary in order to enable the Depositary to vote such Stock
or cause such Stock to be voted. In the absence of specific instructions from
the holder of the Depositary Receipt, the Depositary will abstain from voting to
the extent of the Stock represented by the Depositary Shares evidenced by the
Depositary Receipt.
A-7
<PAGE>
15. Reports, Inspection of Transfer Books. The Depositary shall
transmit to the record holders of Depositary Receipts copies of all reports and
communications received from the Company that are received by the Depositary as
the holder of Stock. The Depositary shall keep books at the Corporate Office for
the registration and transfer of Depositary Receipts, which books at all
reasonable times will be open for inspection by the record holders of Depositary
Receipts; provided that any such holder requesting to exercise such right shall
certify to the Depositary that such inspection shall be for a proper purpose
reasonably related to such person's interest as an owner of Depositary Shares.
16. Liability of the Depositary, the Depositary's Agents, the Registrar
and the Company. Neither the Depositary nor any Depositary's Agent nor the
Registrar nor the Company shall incur any liability to any holder of this
Depositary Receipt, if by reason of any provision of any present or future law
or regulation thereunder or any governmental authority or, in the case of the
Depositary, any Depositary's Agent or the Registrar, by reason of any provision
present or future, of the Articles of Incorporation or by reason of any act of
God or war or other circumstances beyond the control of the relevant party, the
Depositary, any Depositary's Agent, the Registrar or the Company shall be
prevented or forbidden from doing or performing any act or thing that the terms
of the Deposit Agreement provide shall be done or performed; nor shall the
Depositary, any Depositary's Agent, the Registrar or the Company incur any
liability to any holder of this Depositary Receipt (i) by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing that the terms of the Deposit Agreement provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to exercise, any
discretion provided for in the Deposit Agreement except if such exercise or
failure to exercise discretion is caused by its gross negligence or willful
misconduct.
17. Obligations of the Depositary, the Depositary's Agents, the
Registrar and the Company. Neither the Depositary nor any Depositary's Agent nor
the Registrar nor the Company assumes any obligation or shall be subject to any
liability under the Deposit Agreement or this Depositary Receipt to the holder
hereof or other persons, other than for its gross negligence, willful misconduct
or bad faith.
Neither the Depositary nor any Depositary's Agent nor the
Registrar nor the Company shall be under any obligation to appear in, prosecute
or defend any action, suit or other proceeding with respect to Stock, Depositary
Shares or Depositary Receipts or Common Stock that in its opinion may involve it
in expense or liability, unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor the
Registrar nor the Company will be liable for any action or failure to act by it
in reliance upon the advice of or information from legal counsel, accountants,
any person presenting Stock for deposit, any holder of this Depositary Receipt
or any other person believed by it in good faith to be competent to give such
advice or information.
A-8
<PAGE>
18. Termination of Deposit Agreement. Whenever so directed by the
Company upon not less than 60 days' prior written notice, the Depositary will
terminate the Deposit Agreement by mailing notice of such termination to the
recordholders of all Depositary Receipts then outstanding not more than 30 days
after the date of such notice. Upon the termination of the Deposit Agreement,
the Company shall be discharged from all obligations thereunder except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Sections 5.6 and 5.7 of the Deposit Agreement.
19. Governing Law. The Deposit Agreement and this Depositary Receipt
and all rights thereunder and hereunder and provisions thereof and hereof shall
be governed by, and construed in accordance with, the law of the State of New
York without giving effect to principles of conflict of laws.
The following abbreviations, when used in the inscription on the face
of this Depositary Receipt, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN CON - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - ___________ Custodian ____________
(cust) (minor)
under Uniform Gifts to Minors Act
-----------
(State)
UNIF TRF MIN ACT - ___________ Custodian (until age ___)
(cust)
____________ under Uniform Transfers to
(minor)
to Minors Act ___________
(State)
Additional abbreviations may also be used though not in the above list.
A-9
<PAGE>
For Value Received, _____________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
____________________________________
____________________________________
____________________________________
____________________________________
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
___________________________ Depositary Shares represented by the within
Depositary Receipt, and do hereby irrevocably constitute and appoint
_______________________________ Attorney to transfer the said Depositary Shares
on the books of the within named Depositary with full power of substitution in
the premises.
Dated ____________________ Signed
------------------------------------
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF
THIS DEPOSITARY RECEIPT IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED
By: ______________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
A-10
Exhibit 5.1
HOGAN & HARTSON L.L.P
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
(202) 637-5600
(202) 637-5910
July 15, 1998
Boards of Directors,
CarrAmerica Realty Corporation
CarrAmerica Realty GP Holdings, Inc.,
as general partner of CarrAmerica Realty, L.P.
1850 K Street, N.W., Suite 500
Washington, D.C. 20006
Ladies and Gentlemen:
We are acting as counsel to CarrAmerica Realty Corporation, a
Maryland corporation (the "Company"), and CarrAmerica Realty, L.P., a Delaware
limited partnership ("CARLP"), in connection with Registration Statement No.
333-53751 on Form S-3 of the Company and CARLP filed with the U.S. Securities
and Exchange Commission (the "SEC") on May 27, 1998 (the "Original Registration
Statement") and Amendment No. 1 thereto being filed with the SEC on the date
hereof (the "Amendment" and, together with the Original Registration Statement
the "Registration Statement"), relating to the following securities of the
Company with an aggregate initial public offering price of up to $1,000,000,000
(or the equivalent thereof in one or more currencies or composite currencies
based on the exchange rate at the time of sale): (i) unsecured debt securities
(the "Debt Securities"), (ii) shares of preferred stock, $.01 par value per
share (the "Preferred Shares"), (iii) shares of common stock, $.01 par value per
share (the "Common Shares"), (iv) warrants to purchase Common Shares (the
"Common Stock Warrants"), (v) warrants to purchase Debt Securities (the "Debt
Warrants") and (vi) Preferred Shares represented by depositary receipts (the
"Depositary Shares"), and also relating to the public offering of guarantees of
the Debt Securities by CARLP (the "Debt Guarantees" and, together with the Debt
Securities, Preferred Shares, Common Shares, Common Stock Warrants, Debt
Warrants and Depositary Shares, the "Securities"), all of which may be sold from
time to time and on a delayed or continuous basis, as set forth in the
prospectus which forms a part of the Registration Statement, and as to be set
forth in one or more supplements to the prospectus.
<PAGE>
Boards of Directors,
CarrAmerica Realty Corporation
CarrAmerica Realty GP Holdings, Inc.,
as general partner of CarrAmerica Realty, L.P.
July 15, 1998
Page 2
This opinion letter is furnished at your request to enable you to fulfill the
requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. ss. 229.601(b)(5),
in connection with the Registration Statement.
For purposes of this opinion letter, we have examined copies
of the following documents:
1. The Original Registration Statement.
2. The Amendment.
3. The charter of the Company, as certified by the Department
of Assessments and Taxation of the State of Maryland on
June 16, 1998 and by an Assistant Secretary of the Company
on the date hereof as being complete, accurate and in
effect.
4. The bylaws of the Company, as certified by an Assistant
Secretary of the Company on the date hereof as being
complete, accurate and in effect.
5. The certificate of limited partnership of CARLP, as
certified by the Secretary of State of Delaware on June
15, 1998 and by an Assistant Secretary of CarrAmerica
Realty GP Holdings, Inc., a Delaware corporation ("GP
Holdings"), the general partner of CARLP, on the date
hereof as being complete, accurate and in effect.
6. The limited partnership agreement of CARLP, as certified
by an Assistant Secretary of GP Holdings on the date
hereof as being complete, accurate and in effect.
7. Resolutions of the Board of Directors of the Company, as
certified by an Assistant Secretary of the Company on the
date hereof as having been adopted at a meeting by
unanimous written consent on April 15, 1998, and as being
complete, accurate and in effect, relating to the filing
of the Registration Statement and related matters.
8. Resolutions of the Board of Directors of GP Holdings, as
certified by an Assistant Secretary of GP Holdings on the
date hereof as having been adopted by unanimous written
consent on May 7,
<PAGE>
Boards of Directors,
CarrAmerica Realty Corporation
CarrAmerica Realty GP Holdings, Inc.,
as general partner of CarrAmerica Realty, L.P.
July 15, 1998
Page 3
1998, and as being complete, accurate and in effect,
relating to the filing of the Registration Statement and
related matters.
In our examination of these documents, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy and completeness of the documents and the conformity to
originals of documents submitted to us as copies (including telecopies). This
opinion letter is provided, and all statements herein are made, in the context
of the foregoing.
For purposes of this opinion letter, we have assumed that (i)
the issuance of any Securities of the Company will have been duly authorized and
the terms of any Debt Securities, Preferred Shares, Common Stock Warrants, Debt
Warrants or Depositary Shares will have been duly determined and fixed by proper
action of the board of directors of the Company or a duly authorized committee
of such board consistent with the procedures and terms described in the
Registration Statement and in accordance with the Company's charter and bylaws
and applicable Maryland corporate law, in a manner that does not violate any
law, government or court-imposed order or restriction or agreement or instrument
then binding on the company or otherwise impair the legal or binding nature of
the obligations represented by the applicable Securities; (ii) the issuance of
any Debt Guarantees will have been duly authorized and the terms of such Debt
Guarantees will have been duly determined and fixed by proper action of the
board of directors of GP Holdings or a duly authorized committee of such board
consistent with the procedures and terms described in the Registration Statement
and in accordance with GP Holdings' articles of incorporation and bylaws and
applicable Delaware corporate law, in a manner that does not violate any law,
government or court-imposed order or restriction or agreement or instrument then
binding on CARLP or otherwise impair the legal or binding nature of the
obligations represented by such Debt Guarantees; (iii) the Registration
Statement will have been declared effective under the Securities Act of 1933, as
amended, and no stop order suspending its effectiveness will have been issued
and remain in effect; (iv) any senior Debt Securities will be issued pursuant to
an indenture for senior Debt Securities and any subordinated Debt Securities
will be issued pursuant to an indenture for subordinated Debt Securities, each
substantially in the form of such indenture filed as Exhibit 4.1 and Exhibit
4.2, respectively, to the Registration Statement, with items shown in such
exhibit as subject to completion completed in a satisfactory manner; (v) the
indenture under which any Debt Securities and Debt Guarantees are issued will be
qualified under the Trust Indenture Act of 1939, as amended; (vi) any Common
Stock Warrants will be issued under one or more common stock warrant agreements
between the Company and a financial institution identified therein as warrant
agent substantially in the form of
<PAGE>
Boards of Directors,
CarrAmerica Realty Corporation
CarrAmerica Realty GP Holdings, Inc.,
as general partner of CarrAmerica Realty, L.P.
July 15, 1998
Page 4
common stock warrant agreement filed as Exhibit 4.3 to the Registration
Statement, with items shown in such exhibit as subject to completion completed
in a satisfactory manner; (vii) any Debt Warrants will be issued under one or
more debt warrant agreements between the Company and a financial institution
identified therein as warrant agent substantially in the form of debt warrant
agreement filed as Exhibit 4.4 to the Registration Statement, with items shown
in such exhibit as subject to completion completed in a satisfactory manner;
(viii) before the issuance of any Preferred Shares or Depositary Shares,
appropriate articles supplementary will be accepted for record by the Department
of Assessments and Taxation of the State of Maryland; (ix) any Depositary Shares
will be issued by a financial institution identified as depositary in and under
a deposit agreement between the Company and the depositary in substantially the
form of deposit agreement filed as Exhibit 4.5 to the Registration Statement,
with items shown in such exhibit as subject to completion completed in a
satisfactory manner; (x) if being sold by the issuer thereof, the Securities
will be delivered against payment of valid consideration therefor and in
accordance with the terms of the action of the board of directors or duly
authorized committee thereof authorizing such sale and any applicable
underwriting agreement or purchase agreement and as contemplated by the
Registration Statement; (xi) the Company will remain a Maryland corporation,
CARLP will remain a Delaware limited partnership and GP Holdings will remain a
Delaware corporation; and (xii) GP Holdings will remain as the sole general
partner of CARLP.
To the extent that the obligations of the Company or CARLP
with respect to the Securities may be dependent upon such matters, we assume for
purposes of this opinion that the other party under the indenture for any Debt
Securities or Debt Guarantees, under the warrant agreement for any Common Stock
Warrants or Debt Warrants and under the deposit agreement for any Depositary
Shares, namely, the trustee, the warrant agent or the depositary, respectively,
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization; that such other party is duly qualified to engage
in the activities contemplated by such indenture, warrant agreement or deposit
agreement, as applicable; that such indenture, warrant agreement or deposit
agreement, as applicable, has been duly authorized, executed and delivered by
the other party and constitutes the legal, valid and binding obligation of the
other party enforceable against the other party in accordance with its terms;
that such other party is in compliance with respect to performance of its
obligations under such indenture, warrant agreement or deposit agreement, as
applicable, with all applicable laws and regulations; and that such other party
has the requisite organizational and legal power and authority to perform its
obligations under such indenture, warrant agreement or deposit agreement, as
applicable.
<PAGE>
Boards of Directors,
CarrAmerica Realty Corporation
CarrAmerica Realty GP Holdings, Inc.,
as general partner of CarrAmerica Realty, L.P.
July 15, 1998
Page 5
This opinion letter is based as to matters of law solely on
(i) the General Corporation Law of the State of Maryland, (ii) the Delaware
Revised Uniform Limited Partnership Act and (ii) New York contract law (but not
including any statutes, ordinances, administrative decisions, rules or
regulations of any political subdivision of the State of New York), and we
express no opinion herein as to any other laws, statutes, ordinances, rules or
regulations.
Based upon, subject to and limited by the foregoing, we are of
the opinion that:
1. The Debt Securities (including any Debt Securities duly
issued upon the exercise of Debt Warrants), upon due execution and
authentication in accordance with the indenture relating thereto and
delivery on behalf of the Company, will constitute valid and binding
obligations of the Company enforceable in accordance with their terms
and entitled to the benefits of such indenture.
2. The Preferred Shares (including any Preferred Shares
represented by Depositary Shares), upon due execution of certificates
therefor and delivery on behalf of the Company, will be validly
issued, fully paid and non-assessable.
3. The Common Shares (including any Common Shares duly issued
upon the exchange or conversion of Debt Securities or Preferred Shares
that are exchangeable for or convertible into Common Shares or upon the
exercise of Common Stock Warrants), upon due execution of certificates
therefor and delivery on behalf of the Company, will be validly
issued, fully paid and non-assessable.
4. The Common Stock Warrants, upon due execution and delivery
of a common stock warrant agreement relating thereto, and upon due
execution and delivery thereof on behalf of the Company and
countersignature by the warrant agent, will constitute valid and
binding obligations of the Company, enforceable in accordance with
their terms.
5. The Debt Warrants, upon due execution and delivery of a
debt warrant agreement relating thereto, and upon due execution and
delivery thereof on behalf of the Company and countersignature by the
warrant agent, will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms.
6. The depositary receipts evidencing the Depositary Shares,
upon due countersignature thereof and issuance against a deposit of
Preferred Shares
<PAGE>
Boards of Directors,
CarrAmerica Realty Corporation
CarrAmerica Realty GP Holdings, Inc.,
as general partner of CarrAmerica Realty, L.P.
July 15, 1998
Page 6
in accordance with the deposit agreement relating thereto, will
entitle the holders thereof to the rights specified in such depositary
receipts and deposit agreement.
7. The Debt Guarantees, upon due execution thereof and
delivery on behalf of CARLP, will constitute valid and binding
obligations of CARLP enforceable in accordance with their terms.
The opinions expressed in Paragraphs (1), (4), (5), (6) and
(7) above with respect to the enforceability of obligations may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights (including, without limitation, the effect of statutory and
other law regarding fraudulent conveyances, fraudulent transfers and
preferential transfers) and by the exercise of judicial discretion and the
application of principles of equity, including, without limitation, requirements
of good faith, fair dealing, conscionability and materiality (regardless of
whether the Securities are considered in a proceeding in equity or at law). Such
opinions shall be understood to mean only that if there is a default in
performance of an obligation, (i) if a failure to pay or other damage can be
shown and (ii) if the defaulting party can be brought into a court which will
hear the case and apply the governing law, then, subject to the availability of
defenses and to the exceptions set forth in the previous sentence, the court
will provide a money damage (or perhaps injunctive or specific performance)
remedy.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion letter. This opinion letter
has been prepared solely for your use in connection with the filing of the
Registration Statement on the date of this opinion letter and should not be
quoted in whole or in part or otherwise be referred to, nor filed with or
furnished to any governmental agency or other person or entity, without the
prior written consent of this firm.
We hereby consent to the filing of this opinion letter as an
exhibit to the Registration Statement and to the reference to this firm under
the caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement.
In giving this consent, we do not thereby admit that we are
an "expert" within the meaning of the Act.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.
Exhibit 8.1
HOGAN & HARTSON L.L.P
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
(202) 637-5600
(202) 637-5910
July 15, 1998
CarrAmerica Realty Corporation
1850 K Street, N.W., Suite 500
Washington, DC 20006
Ladies and Gentlemen:
We have acted as counsel to CarrAmerica Realty Corporation, a
Maryland corporation (the "Company"), in connection with the registration of
unsecured debt securities ("Debt Securities"), preferred stock, $.01 par value
("Preferred Stock"), common stock, $.01 par value ("Common Stock"), warrants
exercisable for Common Stock ("Common Stock Warrants"), warrants exercisable for
Debt Securities ("Debt Warrants") and shares of Preferred Stock represented by
depositary shares ("Depositary Shares") of the Company, with an aggregate
initial public offering price of up to $1,000,000,000 (or the equivalent thereof
in one or more currencies or composite currencies based on the exchange rate at
the time of sale), as more fully described in Amendment No. 1 to the Company's
Registration Statement filed with the Securities and Exchange Commission on or
about the date hereof ("Registration Statement," which includes the
"Prospectus"). In connection with such registration, we have been asked to
provide you with an opinion regarding certain federal income tax matters related
to the Company. Capitalized terms used in this letter and not otherwise defined
herein have the meaning set forth in the Prospectus.
Basis for Opinion
The opinion set forth in this letter is based on relevant
provisions of the Code, Treasury Regulations thereunder (including proposed and
temporary Regulations), and interpretations of the foregoing as expressed in
court decisions, the legislative history, and existing administrative rulings
and practices of the Internal Revenue Service ("IRS") (including its practices
and policies in issuing private letter rulings, which are not binding on the IRS
except with respect to a taxpayer that receives such a ruling), all as of the
date hereof. These provisions and interpretations are subject to change, which
may or may not be retroactive in effect, that might result in modifications of
our opinion.
<PAGE>
CarrAmerica Realty Corporation
July 15, 1998
Page 2
In rendering our opinion, we have examined the following
documents: (1) the Prospectus; (2) the Proxy Statement filed with the Securities
and Exchange Commission on November 6, 1995 (the "Proxy Statement"); (3) the
Stock Purchase Agreement dated as of November 5, 1995 among the Company,
Security Capital U.S. Realty, a Luxembourg corporation ("SC-USREALTY"), Security
Capital Holdings S.A., a Luxembourg corporation and a wholly-owned subsidiary of
SC-USREALTY ("Holdings"), as amended as of April 29, 1996 (the "Stock Purchase
Agreement"); (4) the Stockholders Agreement dated as of April 30, 1996 among the
Company, Carr Realty, L.P., SC-USREALTY, and Holdings (the "Stockholders
Agreement"); (5) the Registration Rights Agreement dated as of April 30, 1996
among the Company, SC-USREALTY and Holdings (the "Registration Rights
Agreement"); (6) the articles of incorporation and stock ownership records or
partnership agreement (as applicable) of each of the Company, Carr Realty, L.P.,
CarrAmerica Development, Inc. (the "Development Company"), Carr Real Estate
Services, Inc. ("Carr Services, Inc."), CarrAmerica Realty Services, Inc.
("CarrAmerica Services, Inc."), Carr Redmond Corporation, Carr Real Estate
Services Partnership ("Carr Services, L.P."), CarrAmerica Realty L.P., Carr
Parkway North I Corporation ("Carr Parkway North"), CarrAmerica Realty GP
Holdings, Inc. ("Carr GP Holdings"), CarrAmerica Realty LP Holdings, Inc. ("Carr
LP Holdings"), OmniOffices, Inc. ("OmniOffices"), OmniOffices (UK) Limited
("Omni UK") and CarrAmerica Realty Properties, Inc. ("Carr Properties").
(Collectively, the above-referenced entities are sometimes referred to herein as
the "Company Group Entities.") The opinion set forth in this letter also is
premised on certain written representations of the Company contained in a letter
dated on or about the date hereof (the "Management Representation Letter").
We have made such factual and legal inquiries, including
examination of the documents set forth above, as we have deemed necessary or
appropriate for purposes of our opinion. For purposes of rendering our opinion,
however, we have not made an independent investigation or audit of the facts set
forth in the above referenced documents, including the Prospectus and the
Management Representation Letter. We consequently have relied upon the
representations in the Management Representation Letter that the information
presented in such documents or otherwise furnished to us is accurate and assumed
that the information presented in such documents or otherwise furnished to us is
accurate and complete in all material facts relevant to our opinion.
In our review, we have assumed that all of the representations
and statements set forth in the documents (including, without limitation, the
Management Representation Letter) we reviewed are true and correct, and all of
the obligations imposed by any such documents on the parties thereto, including
obligations imposed under the Company Articles of Incorporation, have been and
will be performed or satisfied in accordance with their terms. We also have
assumed the genuineness of all signatures, the proper execution of all
documents, the authenticity of all documents submitted to us as originals, the
conformity to originals of documents submitted to us as copies, and the
authentic-
<PAGE>
CarrAmerica Realty Corporation
July 15, 1998
Page 3
ity of the originals from which any copies were made. Moreover, we have assumed
that each of the Company Group Entities has been and will continue to be
operated in the manner described in the relevant partnership agreement, articles
(or certificate) of incorporation or other organizational documents and in the
Prospectus and the Prospectus Supplement and that, as represented by the
Company, (i) there are no agreements or understandings between the Company or
Carr Realty, L.P., on the one hand, and The Oliver Carr Company ("OCCO") and/or
its shareholders, on the other, that are inconsistent with OCCO being considered
to be both the record and beneficial owner of more than 90% of the outstanding
voting stock of each of the Development Company and Carr Services, Inc. and (ii)
there are no agreements or understandings between the Company on the one hand,
and any of (x) SC-USREALTY, (y) OCCO and/or its shareholders, or (z) Strategic
Omni Investors, LLC or the owners thereof, on the other, that are inconsistent
with (x) SC-USREALTY, (y) OCCO and (z) Strategic Omni Investors LLC being
considered to be both the record and beneficial owner of all of the outstanding
voting stock of OmniOffices and Omni UK.
We assume for the purposes of this opinion that the Company is
a validly organized and duly incorporated corporation under the laws of the
State of Maryland, that the Development Company, Carr Services, Inc.,
CarrAmerica Services, Inc., Carr Redmond Corporation, Carr Parkway North, Carr
GP Holdings, Carr LP Holdings, OmniOffices, Omni UK and Carr Properties are
validly organized and duly incorporated corporations under the laws of the State
of Delaware, and that Carr Realty, L.P., Carr Services, L.P., and CarrAmerica
Realty, L.P. are duly organized and validly existing partnerships under the
applicable laws of the State of Delaware.
Opinion
Based upon, subject to, and limited by the assumptions and
qualifications set forth herein, we are of the opinion that:
1. The Company was organized and has operated in conformity
with the requirements for qualification and taxation as a real estate investment
trust ("REIT") under the Code for its taxable years ended December 31, 1993,
December 31, 1994, December 31, 1995, December 31, 1996, and December 31, 1997
and the Company's current organization and method of operation should enable it
to continue to meet the requirements for qualification and taxation as a REIT.
2. The discussion in the Prospectus under the headings
"Federal Income Tax Considerations," to the extent that it describes matters of
federal income tax law, is correct in all material respects.
<PAGE>
CarrAmerica Realty Corporation
July 15, 1998
Page 4
We assume no obligation to advise you of any changes in our
opinion subsequent to the delivery of this opinion letter. The Company's
qualification and taxation as a REIT depends upon the Company's ability to meet
on a continuing basis, through actual annual operating and other results, the
various requirements under the Code with regard to, among other things, the
sources of its gross income, the composition of its assets, the level of its
distributions to stockholders, and the diversity of its stock ownership. We will
not review the Company's compliance with these requirements on a continuing
basis. Accordingly, no assurance can be given that the actual results of the
operations of the Company, Carr Realty, L.P., CarrAmerica Realty, L.P. and the
other Company Group Entities, the sources of their income, the nature of their
assets, the level of the Company's distributions to its stockholders and the
diversity of the Company's stock ownership for any given taxable year will
satisfy the requirements under the Code for qualification and taxation as a
REIT.
An opinion of counsel merely represents counsel's best
judgment with respect to the probable outcome on the merits and is not binding
on the IRS or the courts. There can be no assurance that positions contrary to
our opinion will not be taken by the IRS or that a court considering the issues
would not hold contrary to such opinion.
This opinion letter has been prepared solely for your benefit
in connection with the filing of the Registration Statement. This opinion may
not be used or relied upon by any other person or for any other purpose and may
not be disclosed, quoted, or filed with a governmental agency or otherwise
referred to without our prior written consent. We hereby consent to the filing
of this opinion letter as Exhibit 8.1 to the Registration Statement and to the
reference to this firm under the caption "Legal Matters" in the Prospectus. In
giving this consent, we do not thereby admit that we are an "expert" within the
meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.
Accountants' Consent
--------------------
The Board of Directors
CarrAmerica Realty Corporation
The Partners
CarrAmerica Realty, L.P.:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the registration statement
on Form S-3.
KPMG Peat Marwick LLP
Washington, D.C.
July 15, 1998
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
CarrAmerica Realty Corporation on Form S-3/A (File No. 333-53751) of our report
dated June 9, 1998, on our audit of the Historical Summary of Revenue and Direct
Operating Expenses of Golden Gateway Commons for the year ended December 31,
1997, which report is included in the Company's Current Report on Form 8-K
filed July 1, 1998. We also consent to the reference to our firm under the
caption "Experts."
PricewaterhouseCoopers LLP
San Francisco, California
July 15, 1998
