Exhibit 14.2
[Security Capital Group Incorporated Letterhead]
July 28, 2000
Mr. Thomas A. Carr
President and Chief Executive Officer
CarrAmerica Realty Corporation
1850 K Street, N.W.
Washington, D.C. 20006
Dear Tom:
Reference is made to the Stockholders Agreement, dated as of April 30,
1996, by and among Carr Realty Corporation (now known as CarrAmerica Realty
Corporation), Carr Realty, L.P., Security Capital Holdings S.A. and Security
Capital U.S. Realty (as amended through the date hereof, the "Stockholders
Agreement"). Capitalized terms used but not defined herein have the meanings
ascribed to such terms in the Stockholders Agreement.
This letter is to confirm our mutual understanding and agreement as
follows:
1. In the event Security Capital Group Incorporated ("Group") or any
Affiliate of Group (collectively, "SCZ", but excluding USREALTY and Buyer and
any person already included within the definition of Investor in the
Stockholders Agreement) should directly or indirectly purchase or otherwise
acquire all or a portion of or any interest in the Company Common Stock now
owned by Buyer (an "Acquisition"), then
(i) such Acquisition will not constitute a Transfer prohibited or
restricted by the Stockholders Agreement (including, without
limitation, by Section 5.2(a)(ii) or 5.2(a)(vii) of the Stockholders
Agreement), but shall instead be permitted as if SCZ were (and SCZ
shall, from and after such Acquisition, for all purposes of the
Stockholders Agreement be considered to be) an "Investor" under the
provisions of the Stockholders Agreement;
(ii) SCZ will from and after such Acquisition be bound by the terms and
conditions of the Stockholders Agreement (and under all other
agreements between the Company or any of its Affiliates, on the one
hand, and Buyer or USREALTY, on the other hand) to the same extent as
Investor is bound hereunder (and SCZ does hereby agree to be so
bound), will be entitled to the same benefits and rights thereunder
(and under all other agreements
<PAGE>
Mr. Thomas A. Carr
July 28, 2000
Page 2
between the Company or any of its Affiliates, on the one hand, and
Buyer or USREALTY, on the other hand), and will for all purposes be an
"Investor" thereunder;
(iii) the provisions of Sections 6.1(a)(E), 6.1(c) and 6.2 of the
Stockholders Agreement will no longer be applicable from and after
such Acquisition;
(iv) the Company has granted SCZ an Exempted Holder exception to the
Ownership Limit with respect to the Acquisition on terms and
conditions in all material respects the same as if SCZ were USREALTY,
and accordingly the beneficiary as such of the Special Shareholder
Limit, and accordingly, from and after an Acquisition, the Special
Shareholder Limit and such Exempted Holder exception to the Ownership
Limit will be treated and applied together as if they were a single
limitation, provided that such Exempted Holder exception to the
Ownership Limit shall become applicable only upon agreement by
USREALTY and Buyer to the application of such Exempted Holder
exception and the Special Shareholder Limit as a single limitation;
(v) following such Acquisition, SCZ will permit the Company to submit to
the shareholders of the Company for their consideration a proposal to
(A) eliminate Sections 5.1(m), 5.1(hh) and 5.2(vi) of the Amended and
Restated Articles of Incorporation of the Company, as amended as of
the date hereof (the "Articles"), (B) modify the definition of
"Stockholders Agreement" in Section 5.1(bb) to make clear that the
Stockholders Agreement referred to therein includes the amendments
contemplated by this letter, and (C) modify accordingly the legend
contained in Section 5.11 of the Articles, and SCZ will vote or cause
to be voted all shares of Company Common Stock Beneficially Owned by
it in favor of such proposal; and
(vi) following such Acquisition, Section 5.1(a) and Section 5.1(b) of the
Stockholders Agreement shall be modified to replace all occurrences of
the words "the fifth anniversary of the date hereof" therein with the
words "April 30, 2003".
2. From and after an Acquisition, any prior breaches of Section 6.1(a)(E),
6.1(c) or 6.2 of the Stockholders Agreement (and of Section 6.4 to the extent
the same shall have arisen on or prior to the date hereof, or shall have been
approved in the manner described below by the Investor Nominees) shall be waived
and of no further relevance and the Company shall have no further liability in
connection therewith. In addition, from and after an Acquisition, any
transaction that would otherwise constitute a breach of
<PAGE>
Mr. Thomas A. Carr
July 28, 2000
Page 3
Section 6.4 of the Stockholders Agreement, but that shall have been approved by
the Board or by either any committee thereof or any management committee in
which board committee or management committee at least one Investor Nominee is a
member (with at least one Investor Nominee voting in favor of such transaction),
shall not constitute such a breach and the Company shall have no liability in
connection therewith.
3. Each of the parties to this letter agree that, from time to time, each
of them will take such actions as may be necessary or reasonably requested by
another party to carry out the purposes and intents hereof. This letter may be
amended, modified, superseded, cancelled, renewed or extended only by a written
instrument signed by the party to be charged therewith.
If the foregoing correctly reflects our understanding, please sign below to
so indicate your understanding regarding this matter.
Sincerely,
SECURITY CAPITAL GROUP
INCORPORATED
/s/ C. Ronald Blankenship
C. Ronald Blankenship
Vice Chairman
Acknowledged:
CARRAMERICA REALTY CORPORATION
By: /s/ Thomas A Carr
Name:
Title:
CARR REALTY, L.P.
By: /s/ Thomas A. Carr
Name:
Title:
