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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 22, 1997
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Date of Report
(Date of earliest event reported)
SHURGARD STORAGE CENTERS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-23466 91-1080141
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(State or other (Commission File (IRS Employer
jurisdiction of No.) Identification No.)
incorporation)
1201 Third Avenue, Suite 2200
Seattle, Washington 98101
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(Address of principal executive offices, including zip code)
(206) 624-8100
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(Registrant's telephone number, including area code)
Exhibit Index on Page 4
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ITEM 5. OTHER EVENTS
Shurgard Storage Centers, Inc. (the "Company") is filing this Current
Report on Form 8-K in connection with the issuance of $50,000,000 principal
amount of 7 1/2% notes due 2004 and $50,000,000 principal amount of 7 5/8% notes
due 2007 under the Company's shelf registration statement on Form S-3 (File No.
333-21273), effective February 20, 1997 (the "Registration Statement"). The
exhibits listed below are being filed herewith in lieu of filing them as an
exhibit to the Registration Statement, and, since this Form 8-K filing is
incorporated by reference in the Registration Statement, such exhibits are set
forth in full in the Registration Statement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit No. Description
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1.1 Purchase Agreement, dated April 22, 1997, between Merrill
Lynch & Co., BancAmerica Securities, Inc. and J.P. Morgan &
Co., as representatives of the underwriters, and the Company
4.1 Form of 7 1/2% Notes due 2004
4.2 Form of 7 5/8% Notes due 2007
5.1 Opinion of Perkins Coie
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Perkins Coie (contained in the opinion filed as
Exhibit 5.1 hereto)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHURGARD STORAGE CENTERS, INC.
Dated: April 22, 1997
By /s/ KRISTIN H. STRED
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Kristin H. Stred, Senior Vice President,
Secretary and General Counsel
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Purchase Agreement, dated April 22, 1997, between Merrill
Lynch & Co., BancAmerica Securities, Inc. and J.P. Morgan &
Co., as representatives of the underwriters, and the Company
4.1 Form of 7 1/2% Notes due 2004
4.2 Form of 7 5/8% Notes due 2007
5.1 Opinion of Perkins Coie
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Perkins Coie (contained in the opinion filed as
Exhibit 5.1 hereto)
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Exhibit 1.1
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SHURGARD STORAGE CENTERS, INC.
(a Delaware corporation)
$50,000,000 7 1/2% Notes due 2004
$50,000,000 7 5/8% Notes due 2007
PURCHASE AGREEMENT
Dated: April 22, 1997
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SHURGARD STORAGE CENTERS, INC.
(a Delaware corporation)
$50,000,000 7 1/2% Notes due 2004
$50,000,000 7 5/8% Notes due 2007
PURCHASE AGREEMENT
April 22, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BANCAMERICA SECURITIES, INC.
J.P. MORGAN & CO.
J.P. Morgan Securities Inc.
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Shurgard Storage Centers, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), BancAmerica Securities, Inc.
("BancAmerica"), J.P. Morgan & Co. and J.P. Morgan Securities Inc. ("J.P.
Morgan," and together with Merrill Lynch and BancAmerica, the "Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), with respect to the issue and sale by the
Company and the purchase by the Underwriters, acting severally and not jointly,
of the respective principal amounts set forth in Schedule A hereto of
$50,000,000 aggregate principal amount of the Company's 7 1/2% Notes due 2004
(the "2004 Notes") and $50,000,000 aggregate principal amount of the Company's
7 5/8% Notes due 2007 (the "2007 Notes," and together with the 2004 Notes, the
"Securities"). The Securities are to be issued pursuant to an indenture to be
dated as of April 25, 1997 (the "Indenture") between the Company and LaSalle
National Bank, as trustee (the "Trustee"). The term "Indenture," as used herein,
includes the Officer's Certificate (as defined in the Indenture) establishing
the form and terms of the Securities pursuant to Sections 2.01 and 3.01 of the
Indenture.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
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The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-21273) relating to
the offering from time to time of debt securities, common stock or preferred
stock in accordance with Rule 415 under the Securities Act of 1933, as amended
(the "1933 Act"), and will file such additional amendments and supplements
thereto as may be required. Such registration statement has been declared
effective by the Commission and the Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"). Such registration statement
and the prospectus constituting a part thereof and each prospectus supplement
relating to the offering of the Securities, including in each case all documents
incorporated or deemed to be incorporated therein by reference, and the
information, if any, deemed to be part thereof pursuant to Rule 434 of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"), as from time to time amended or supplemented pursuant to the 1933
Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), or
otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus," respectively, except that if any revised prospectus shall be
provided to the Underwriters by the Company for use in connection with the
offering of the Securities which differs from the Prospectus on file (whether or
not such revised prospectus is required to be filed by the Company pursuant to
Rule 424(b) of the 1933 Act Regulations), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided to the
Underwriters for such use. If the Company elects to rely on Rule 434 under the
1933 Act Regulations, all references to the Prospectus shall be deemed to
include, without limitation, the form of final or preliminary prospectus and the
term sheet, taken together, provided to the Underwriters by the Company in
reliance on Rule 434 under the 1933 Act (the "Rule 434 Prospectus"). If the
Company files a registration statement to register a portion of the Securities
and relies on Rule 462(b) for such registration statement to become effective
upon filing with the Commission (the "Rule 462 Registration Statement"), then
any reference to "Registration Statement" herein shall be deemed to be to both
the registration statement referred to above (No. 333-21273) and the Rule 462
Registration Statement, as each such registration statement may be amended
pursuant to the 1933 Act. For purposes of this Agreement, references to the
Registration Statement, the Prospectus, any preliminary prospectus or any term
sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis, and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (or other references of like import)
shall be deemed to mean and include all such financial statements and schedules
and other information which is incorporated by reference in the Registration
Statement, the Prospectus or any preliminary prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to the
Registration Statement, the Prospectus or any preliminary prospectus shall be
deemed to mean and include the filing of any document under the 1934 Act which
is or is deemed to be incorporated by reference in the Registration Statement,
Prospectus or any preliminary prospectus, as the case may be.
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SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof and as of the
Closing Time referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:
(i) Compliance with Registration Requirements. The Company
meets the requirements for use of Form S-3 under the 1933 Act. Each of
the Registration Statement, any Rule 462 Registration Statement and any
post-effective amendments thereof has become effective under the 1933
Act and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462 Registration Statement has been issued under
the 1933 Act and no proceedings for that purpose have been instituted
or are pending or, to the knowledge of the Company, are contemplated by
the Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Registration Statement, any Rule
462 Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time, the Registration Statement,
the Rule 462 Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the 1939
Act and the rules and regulations of the Commission under the 1939 Act
(the "1939 Act Regulations"), and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectus (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriter by the Company for use in connection with the offering of
the Securities which differs from the Prospectus on file at the
Commission at the time the Registration Statement first becomes
effective, in which case at the time it is first provided to the
Underwriter for such use) nor any amendments or supplements thereto, at
the time the Prospectus or any such amendment or supplement was issued
and at the Closing Time, included or will include an untrue statement
of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Company will comply with the requirements of Rule 434.
Each preliminary prospectus and the Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied
when so filed in all material respects with the 1933 Regulations and,
if applicable, each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by the Underwriter
expressly for use in the Registration Statement or Prospectus.
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(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with
the requirements of the 1933 Act and the 1934 Act, as applicable, and
the rules and regulations of the Commission thereunder, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement
or Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by the Underwriter expressly for
use in the Registration Statement or Prospectus.
(iii) Independent Accountants. The accountants who
certified the financial statements and supporting schedules included or
incorporated by reference in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iv) Financial Statements. The financial statements
included or incorporated by reference, except as otherwise described
therein, in the Registration Statement and the Prospectus, together
with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries for the
periods specified, and except as otherwise stated in the Registration
Statement, said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules, if any, included or incorporated by reference in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data
and the summary financial information included in the Prospectus
present fairly the information shown therein and, except as otherwise
described therein, have been compiled on a basis consistent with that
of the audited financial statements included in the Registration
Statement. The pro forma financial information included in the
Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, assets, business affairs or business
prospects of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there
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have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, (C) there has been no casualty, loss or
condemnation or other adverse event with respect to any Property (as
defined herein) that would result in a Material Adverse Effect and (D)
except for dividends or distributions paid or made solely to the
Company by its corporate subsidiaries and except for regular quarterly
dividends on the Class A Common Stock, par value $.001 per share, of
the Company (the "Class A Common Stock") and the Class B Common Stock,
par value $.001 per share, of the Company (the "Class B Common Stock,"
and together with the Class A Common Stock, the "Common Stock") in
amounts per share that are consistent with past practice, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware and has corporate
power and authority to own, lease and operate its properties and to
conduct its business in which it is engaged or proposes to engage as
described in the Prospectus and to enter into and perform its
obligations under this Agreement. The Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or to be in
good standing would not result in a Material Adverse Effect.
(vii) Good Standing of Corporate Subsidiaries. Each
corporate Subsidiary (as defined below) of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its state of incorporation with corporate power and
authority to own, lease and operate its properties and to conduct the
business in which it is engaged or proposes to engage as described in
the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify or to be in good standing would not result in a
Material Adverse Effect. All of the issued and outstanding shares of
capital stock of each corporate Subsidiary have been duly authorized
and validly issued, are fully paid and nonassessable and are owned by
the Company, directly or through Subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity. For purpose of this Agreement, the term "Subsidiary" shall have
the definition set forth in the Prospectus under the heading
"Description of the Notes--Additional Covenants of the Company."
(viii) Good Standing of Limited Partnerships. Each limited
partnership Subsidiary of the Company has been duly formed and is
validly existing as a limited partnership under the laws of the state
of its formation with partnership power and authority to own, lease and
operate its properties and to conduct the business in which it is
engaged or proposes to engage as described in the Prospectus and is
duly qualified as a foreign partnership to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing
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of property or the conduct of business, except where the failure to so
qualify or to be in good standing would not result in a Material
Adverse Effect. All of the limited partner interests in each of the
limited partnership Subsidiaries in which the Company or a corporate
Subsidiary is a general partner have been validly issued. All of the
limited partner interests in the limited partnership Subsidiaries which
are owned by the Company, directly or through Subsidiaries, have been
validly issued and all required capital contributions with respect
thereto have been made. All of the general partner and limited partner
interests in the limited partnership Subsidiaries which are owned by
the Company, directly or through Subsidiaries, are owned free and clear
of any security interest, mortgage, pledge, lien or encumbrance, and of
any claim or equity, except for claims and equities which would not
result in a Material Adverse Effect.
(ix) Good Standing of Other Subsidiaries. Each Subsidiary
of the Company which is not a corporate or limited partnership
Subsidiary (collectively, the "Other Subsidiaries"), is validly
existing under the laws of the state or jurisdiction of its formation
with all necessary power and authority to own, lease and operate its
properties and to conduct the business in which it is engaged or
proposes to engage as described in the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify or to be in good standing would not
result in a Material Adverse Effect. All interests owned or held by the
Company, directly or through Subsidiaries, in each of the Other
Subsidiaries are free and clear of any security interest, mortgage,
pledge, lien or encumbrance, except for those granted pursuant to the
joint venture agreements relating to the formation of certain of the
Other Subsidiaries to secure the performance by the Company or
applicable Subsidiary of its obligations thereunder, and are free and
clear of any claim or equity, except for claims and equities which
would not result in a Material Adverse Effect. As used in this
Agreement, the term "Other Subsidiaries" includes SSC Benelux & Co.,
SCS, a Belgium societe en commandite ("Benelux").
(x) Authorization of Partnership/Joint Venture
Agreements. Each of the partnership and joint venture agreements to
which the Company or any of its Subsidiaries is a party, including the
agreements or documents pursuant to which Benelux was formed, has been
duly authorized, executed and delivered by such applicable party and
constitutes the valid and binding agreement thereof, and the execution,
delivery and performance of any of such agreements did not, at the time
of execution and delivery, and does not constitute a breach of, or
default under, the charter, bylaws, partnership agreement or similar
organizational document of such party or any material contract, lease
or other instrument to which such party is a party or by which its
properties may be bound or any law, administrative regulation or
administrative or court decree.
(xi) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Prospectus in the "Shareholders' equity" section under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
this Agreement, pursuant to the underwritten public offering of up to
2,300,000 shares of 8.80% Series B Cumulative Redeemable Preferred
Stock of the Company, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or
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pursuant to the exercise of convertible securities or options referred
to in the Prospectus). The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive
or other similar rights of any security holder of the Company.
(xii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company and, assuming
due authorization, execution and delivery by the Underwriters, is a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law).
(xiii) Authorization of the Indenture. The Indenture has
been duly authorized by the Company and duly qualified under the 1939
Act and, when duly executed and delivered by the Company and the
Trustee, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xiv) Authorization of Guarantee. The Guarantee dated as of
April 22, 1997 by and between SSC Acquisitions, Inc., a Delaware
corporation and wholly owned subsidiary of the Company ("SSC
Acquisitions"), and the Company (the "Guarantee") has been duly
authorized, executed and delivered by SSC Acquisitions and the Company
and is a valid and binding agreement of SSC Acquisitions and the
Company, enforceable against each of them in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xv) Authorization of the Securities. The Securities have
been duly authorized and, at the Closing Time, will have been duly
executed by the Company and, when authenticated, issued and delivered
in the manner provided for in the Indenture and delivered against
payment of the purchase price therefor as provided in this Agreement,
will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general
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principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture.
(xvi) Description of the Securities and the Indenture. The
Securities and the Indenture will conform in all material respects to
the respective statements relating thereto contained in the Prospectus
and will be in substantially the respective forms filed or incorporated
by reference, as the case may be, as exhibits to the Registration
Statement.
(xvii) Absence of Defaults and Conflicts. Neither the
Company nor any of its Subsidiaries is in violation of its charter,
bylaws, partnership agreement, joint venture agreement or other similar
governing document or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any
Subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement,
the Indenture and the Securities and the consummation of the
transactions contemplated herein, therein and in the Registration
Statement (including the issuance and sale of the Securities and the
use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder and under the Indenture and the
Securities have been duly authorized by all necessary corporate action
and do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not, either
singly or in the aggregate, result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter, bylaws, partnership agreement, joint venture agreement or
other similar governing document of the Company or any Subsidiary or
any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any Subsidiary or
any of their assets, properties or operations, except for such
violations of any such applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court that would not, either singly or in the
aggregate, result in a Material Adverse Effect. As used herein, a
"Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any Subsidiary.
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(xviii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any Subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xix) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any Subsidiary, or of which any of their respective
properties or assets is subject, which is required to be disclosed in
the Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect
the consummation of the transactions contemplated in this Agreement or
the performance by the Company of its obligations under this Agreement,
the Indenture or the Securities; the aggregate of all pending legal or
governmental proceedings to which the Company or any Subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xx) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement, the Prospectus or the documents incorporated by reference
therein or to be filed as exhibits thereto by the 1933 Act, the 1933
Act Regulations, the 1934 Act or the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations") which have
not been so described and filed as required.
(xxi) Possession of Intellectual Property. Neither the
Company nor any of its Subsidiaries is required to own or possess any
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") in order to carry on the
business now operated by them, and neither the Company nor any of its
Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect
the interest of the Company or any of its subsidiaries therein, and
which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in
the aggregate, would result in a Material Adverse Effect.
(xxii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations under this Agreement, the Indenture or the Securities,
in
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connection with the offering, issuance or sale of the Securities
hereunder or the consummation of the transactions contemplated by this
Agreement, the Indenture or the Securities, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations or state securities laws and except for the
qualification of the Indenture under the 1939 Act.
(xxiii) Possession of Licenses and Permits. Each of the
Company and its Subsidiaries possess such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct its business as now
operated, except for those the failure to possess would not, either
singly or in the aggregate, result in a Material Adverse Effect. The
Company and its Subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect. All of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not result in a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has received
any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result
in a Material Adverse Effect.
(xxiv) Investment Company Act. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxv) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its Subsidiaries is in violation of any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its Subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be
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expected to form the basis of an order for clean-up or remediation, or
an action, suit or proceeding by any private party or governmental body
or agency, against or affecting the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(xxvi) Title to Property. Except as described in the
Prospectus, (A) at the Closing Time, the Company or a Subsidiary, as
the case may be, will have good and marketable fee simple title (except
as set forth in clause (B) below and except for the Solana Beach, CA,
West Chester, PA and Hillcroft--Houston, TX properties which are held
by the Company under long-term leases (the "Leased Properties")) to the
land and improvements thereon of the properties that are listed in the
Company's Annual Report on Form 10-K in the table set forth under Item
2--Properties (collectively, the "Shurgard Properties") (in each case
with title insurance thereon or binding commitment for title insurance
in full force and effect, except where the failure to have such title
insurance would not, singly or in the aggregate, result in a Material
Adverse Effect) and all other assets that are required for the
effective operation of the Shurgard Properties in the manner in which
they are currently operated, (B) the leases under which the Company or
any Subsidiary holds any of the Leased Properties are in full force and
effect, and neither the Company nor any Subsidiary, as the case may be,
is in violation of or default with respect to any of the terms or
conditions of such leases, except for such violations or defaults which
would not, singly or in the aggregate, result in a Material Adverse
Effect, (C) except for a mortgage securing a mortgage loan on the
Company's property located in Bellingham, Washington, all liens,
charges or encumbrances, including without limitation any mortgage
financing, on or affecting any of the Shurgard Properties or the other
property and assets of the Company or any of its Subsidiaries which are
required to be disclosed in the Prospectus are described therein, (D)
the Company or a Subsidiary will be the lessor of all tenant leases at
each of the Shurgard Properties, and neither the Company nor any of its
Subsidiaries has notice of any default by any tenants under such leases
which, singly or in the aggregate, would result in a Material Adverse
Effect, (E) each of the Shurgard Properties, and to the best knowledge
of the Company, each of the real properties owned, occupied, operated
or managed by the Company or any of its Subsidiaries (collectively, the
"Properties") other than the Shurgard Properties, complies in all
material respects with all applicable federal, state and local codes,
laws and regulations (including, without limitation, building and
zoning codes, laws and regulations, and laws relating to handicapped
access to the Properties), except for such instances of noncompliance
that, singly or in the aggregate, would not result in a Material
Adverse Effect, (F) there are in effect for the Shurgard Properties and
other properties and assets of the Company and its Subsidiaries, and to
the best knowledge of the Company, for the Properties other than the
Shurgard Properties, insurance policies covering risks and in amounts
that are commercially reasonable for the types of assets owned by them,
and neither the Company nor any of its Subsidiaries has received from
any insurance company notice of any material defects or deficiencies
affecting the insurability of any such assets or any notices of
cancellation or intent to cancel any such policies, except for such
notices of cancellation received in the ordinary course of business in
connection with the annual renewal of such policies, and (G) neither
the Company nor any of its Subsidiaries has knowledge of any pending or
threatened condemnation proceedings, zoning change, or other proceeding
or action that will have
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a material adverse effect on the size of, use of, improvements on,
construction on or access to any of the Properties and, singly or in
the aggregate, result in a Material Adverse Effect.
(xxvii) Tax Matters. The Company and each of its Subsidiaries
have timely filed all federal, state, local and foreign income,
franchise, sales and other tax returns which have been required to be
filed, or have applied for an extension to file such tax returns, and
all such returns are complete and accurate in all material respects,
except for any failures to so file and complete such returns or to so
apply for such extensions with respect thereto that, singly or in the
aggregate, would result in a Material Adverse Effect. The Company and
each of its Subsidiaries have paid all taxes required to be paid and
any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except for any such tax,
assessment, fine or penalty which the Company or its Subsidiary is
contesting in good faith through appropriate proceedings and as to
which appropriate reserves have been established, and except for any
failures to pay any such tax, other assessment, fine or penalty that,
singly or in the aggregate, would not result in a Material Adverse
Effect.
(xxviii) Regulation M. None of the Company, any of its
Subsidiaries or any of their respective directors, officers or
controlling persons, has taken, directly or indirectly, any action
resulting in a violation of Regulation M under the 1934 Act or designed
to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Securities.
(xxix) No Broker's Fees. Neither the Company nor any of its
Subsidiaries has incurred any liability for finder's or broker's fees
or agent's commissions (other than those payable to the Underwriters)
in connection with the execution and delivery of this Agreement, the
offer and sale of the Securities or the transactions contemplated
thereby.
(xxx) System of Internal Accounting Controls. The Company
and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxxi) Distribution of Registration Statement and
Prospectus. The Company has not distributed and, prior to the later to
occur of (i) the Closing Time and (ii) completion of the distribution
of the Securities, will not distribute any prospectus (as such term is
defined in the 1933 Act and the 1933 Act Regulations) in connection
with the offering and sale of the Securities other than the
Registration Statement, any preliminary prospectus, the Prospectus or
other materials, if any, permitted by the 1933 Act or by the 1933 Act
Regulations and approved by the Underwriters.
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(xxxii) REIT Status.The Company has been and is organized in
conformity with the requirements for qualification and taxation as a
real estate investment trust ("REIT") under the Internal Revenue Code
of 1986, as amended (the "Code"), and its method of operation has at
all times enabled, and its proposed method of operation will enable
(until the Company's Board of Directors determines that is in the best
interests of the Company's stockholders not to so qualify), the Company
to qualify as a REIT under the Code
(xxxiii) Investment Grade Rating. The Company has received an
investment grade rating for its senior unsecured note offerings of Baa2
from Moody's Investor's Service Inc. ("Moody's") and BBB by each of
Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc.
(Standard & Poor's"), and Duff & Phelps Credit Rating Co. ("Duff &
Phelps").
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Underwriters or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price set forth in Schedule B, the aggregate principal amount of Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional principal amount of Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof. The
initial public offering price and the purchase price to be paid by the
Underwriters for the Securities, and the interest rate on the Securities are set
forth on Schedule B hereto and a prospectus supplement will be filed in
accordance with Rule 424(b) of the 1933 Act Regulations.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Perkins Coie,
1201 Third Avenue, 40th Floor, Seattle, Washington 98101, or at such other place
as shall be agreed upon by the Underwriters and the Company, at 7:00 A.M.
(pacific daylight saving time) on the third business day (fourth, if the pricing
occurs after 1:30 P.M. (pacific daylight saving time) on any given day) after
the date hereof, or such other time not later than ten business days after such
date as shall be agreed upon by the Underwriters and the Company (such time and
date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Underwriters for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Underwriters, for its account, to accept delivery
of, receipt for, and make payment of the purchase price for, the Securities
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the
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Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Securities to be purchased by any Underwriter whose funds have not
been received by the Closing Time, but such payment shall not relieve such
Underwriter from its obligations hereunder.
(c) Denominations; Registration. Certificates for the Securities shall
be in such denominations ($1,000 or integral multiples thereof) and registered
in such names as the Underwriters may request in writing at least one full
business day before the Closing Time. The Securities will be made available for
examination and packaging by the Underwriters in The City of New York not later
than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Prospectus Supplement. Promptly following the execution of this
Agreement, the Company will prepare a prospectus supplement setting forth the
terms of such Securities not otherwise specified in the Prospectus or the
Indenture, the price at which the Securities are to be purchased by the
Underwriters from the Company, the initial public offering price, the selling
concession and reallowances, if any, and such other information as the
Underwriters and the Company deem appropriate in connection with the offering of
the Securities. The Company will promptly transmit copies of the prospectus
supplement to the Commission for filing pursuant to Rule 424(b) of the 1933 Act
Regulations and will furnish to the Underwriters as many copies of the
Prospectus and such prospectus supplement as the Underwriters shall reasonably
request.
(b) Compliance with Securities Regulations and Commission Requests. The
Company will notify the Underwriters immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus supplement, or of
the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or of the initiation or threatening of any proceedings for any
of such purposes. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment. If the Company elects to rely
on Rule 434, the Company will provide the Underwriters with copies of the form
of Rule 434 Prospectus, in such number as the Underwriters may reasonably
request, and file or transmit for filing with the Commission the form of
Prospectus complying with Rule 434(c)(2) of the 1933 Act in accordance with Rule
424(b) of the 1933 Act by the close of business in New York on the business day
immediately succeeding the date of this Agreement.
(c) Filing of Amendments. The Company will give the Underwriters notice
of its intention to file or prepare any post-effective amendment to the
Registration Statement or any amendment or supplement to the Prospectus
(including any revised prospectus or prospectus
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supplement which the Company proposes for use by the Underwriters in connection
with the offering of the Securities which differs from the prospectus or
prospectus supplement on file at the Commission, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations or any term sheet prepared in reliance on Rule 434 of the 1933 Act
Regulations), will furnish the Underwriters with copies of any such amendment or
supplement within a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file any such amendment or supplement or
use any such Prospectus to which the Underwriters or counsel for the
Underwriters shall reasonably object.
(d) Delivery of Registration Statements. The Company has furnished or
will deliver to the Underwriters and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Underwriters, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(e) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, from time to time during the period
when the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Prospectus (as amended or supplemented) as
such Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(f) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(c), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
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<PAGE> 17
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(g) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
as the Underwriters may designate; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to qualify as
a foreign corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462 Registration Statement. The Company will also supply the Underwriters with
such information as is necessary for the determination of the legality of the
Securities for investment under the laws of such jurisdictions as the
Underwriters may request.
(h) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its security
holders as soon as practicable an earnings statement for the purposes of, and to
provide the benefits contemplated by, the last paragraph of Section 11(a) of the
1933 Act.
(i) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds".
(j) Restriction on Sale of Securities. Prior to the Closing Time, the
Company will not, without the prior written consent of Merrill Lynch, directly
or indirectly, issue, sell, offer or contract to sell, grant any option for the
sale of, or otherwise transfer or dispose of, any debt securities of the
Company.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(l) Qualification as a REIT. The Company will use its best efforts to
meet the requirements to qualify as a REIT under the Code, unless the Company's
Board of Directors determines that it is in the best interest of the Company's
stockholders not to so qualify.
(m) Delivery of Reports. During the period from the Closing Time until
five years after the Closing Time, the Company will deliver to the Underwriters,
(i) promptly upon their becoming available, copies of all current, regular and
periodic reports of the Company mailed to its stockholders or filed with any
securities exchange or with the Commission or any governmental authority
succeeding to any of the Commission's functions, and (ii) such other information
concerning the Company or any of its Subsidiaries as the Underwriters may
reasonably request.
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(n) Accuracy of Representations and Warranties. Prior to the Closing
Time, the Company will notify the Underwriters in writing immediately if any
event occurs that renders any of the representations and warranties of the
Company contained herein inaccurate or incomplete in any material respect.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters, the Indenture
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(g) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectus and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, (ix) any fees payable in
connection with the rating of the Securities and (x) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review, if any, by the National Association of Securities
Dealers, Inc. (the "NASD") of the terms of the sale of the Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement; Qualification of
Indenture. The Registration Statement, including any Rule 462 Registration
Statement, has become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus supplement shall have been transmitted to the
Commission for filing in accordance with Rule 424(b) of the 1933 Act Regulations
within the prescribed time period and prior to
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Closing Time the Company shall have provided evidence satisfactory to the
Underwriters of such timely filing, or a post-effective amendment providing such
information shall have been promptly filed and declared effective in accordance
with the requirements of the 1933 Act Regulations. The Indenture shall have been
qualified under the 1939 Act.
(b) Opinion of Counsel for Company. At Closing Time, the Underwriters
shall have received the favorable opinion, dated as of Closing Time, of Perkins
Coie, counsel for the Company, in form and substance satisfactory to counsel for
the Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters to the effect set forth in Exhibit A hereto and
to such further effect as counsel to the Underwriters may reasonably request.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Latham & Watkins, counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters with respect
to the matters set forth in clauses (i), (viii) to (xi), inclusive, (xvi),
(xvii), (xxi) and the penultimate paragraph of Exhibit A hereto. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York, the federal law of
the United States and the General Corporation Law of the State of Delaware, upon
the opinions of counsel satisfactory to the Underwriters. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company and
its Subsidiaries and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriters shall have
received a certificate of the President or a Vice President of the Company and
of the Chief Financial Officer of the Company, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of Closing Time,
(iii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time, (iv) no
action, suit or proceedings at law or in equity shall be pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries before or by any court or governmental agency wherein an
unfavorable decision, ruling or finding might result in any such material
adverse change and (v) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the knowledge of the Company, no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Underwriters shall have received from Deloitte & Touche LLP a
letter dated such date, in form and substance satisfactory to the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial
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statements and certain financial information contained in the Registration
Statement and the Prospectus or incorporated therein by reference.
(f) Bring-down Comfort Letter. At Closing Time, the Underwriters
shall have received from Deloitte & Touche LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(g) Maintenance of Rating. At the Closing Time, the Securities
shall be rated at least Baa2 by Moody's and BBB by each of Standard & Poor's and
Duff & Phelps, and the Company shall have delivered to the Underwriters a letter
dated the Closing Time, from each such rating agency, or other evidence
satisfactory to the Underwriters, confirming that the Securities have such
ratings; and since the date of this Agreement, there shall not have occurred a
downgrading in the rating assigned to the Securities or any of the Company's
other securities by any "nationally recognized statistical rating agency," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
1933 Act, and no such organization shall have publicly announced that it has
under surveillance or review its rating of the Securities or any of the
Company's other securities.
(h) Additional Documents. At Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as they
may require for the purpose of enabling them to pass upon the issuance and sale
of the Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Underwriters and counsel for
the Underwriters.
(i) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Underwriters by notice to the Company at any
time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
information deemed to be part of the Registration Statement pursuant to
Rule 434 of the 1933 Act Regulations, if applicable, or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not
19
<PAGE> 21
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to the fourth sentence of 6(c) below, the fees and
disbursements of counsel chosen by Merrill Lynch), reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto). The foregoing
indemnification with respect to any untrue statement contained in or omission
from a preliminary prospectus shall not inure to the benefit of any Underwriter
(or any person controlling any such Underwriter) from whom the person asserting
any such loss, liability, claim, damage or expense purchased any of the
Securities which are the subject thereof if such person was not sent or given,
if so required by law, a copy of the Prospectus (or the Prospectus as amended or
supplemented) (in each case exclusive of the documents from which information is
incorporated by reference) at or prior to the written confirmation of the sale
if such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented) and if the Prospectus (as so amended or
supplemented, if applicable) would have corrected the defect giving rise to such
loss, liability, claim, damage or expense; provided, however, that the Company
shall have complied with its Prospectus delivery obligations under Section 3(e)
hereof.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto)
20
<PAGE> 22
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch and shall
be reasonably satisfactory to the Company, and, in the case of parties
indemnified pursuant to Section 6(b) above, counsel to the indemnified parties
shall be selected by the Company and shall be reasonably satisfactory to Merrill
Lynch. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. If it so elects within a reasonable time after receipt of
such notice, an indemnifying party, jointly with any other indemnifying party(s)
receiving such notice, may assume the defense of such action with counsel chosen
by it and approved by the indemnified parties defendant in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them which are different from or in
addition to those available to such indemnifying party. If an indemnifying party
assumes the defense of such action, the indemnifying parties shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying
21
<PAGE> 23
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) For purposes of this Section 6, all references to the Registration
Statement, any preliminary prospectus or the Prospectus, or any amendment or
supplement to any of the foregoing, shall be deemed to include, without
limitation, any electronically transmitted copies thereof, including, without
limitation, any copies filed with the Commission pursuant to EDGAR.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
22
<PAGE> 24
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Underwriters may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or elsewhere, any outbreak
of hostilities or escalation thereof or other calamity or crisis or any change
or development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Underwriters, impracticable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the New York Stock Exchange, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, (iv) if a banking moratorium has been declared by either
Federal or New York authorities or (v) if since the date of this Agreement,
23
<PAGE> 25
there has occurred a downgrading in the rating assigned to the Securities or any
of the Company's other debt securities by any nationally recognized securities
rating agency, or such securities rating agency has publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of the Securities or any of the Company's other debt securities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time to purchase the Securities which
it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Underwriters shall have the right, within 24 hours thereafter,
to make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Underwriters shall not have completed such arrangements
within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased hereunder, each of
the non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Underwriters or the Company shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Underwriters at Merrill Lynch & Co., 10900
Wilshire Boulevard, Suite 900, Los Angeles, California 90024, attention Paul M.
Meurer, and notices to the Company shall be directed to it at 1201 Third Avenue,
Suite 2200, Seattle, Washington 98101, attention of Charles K. Barbo, Chairman
of the Board and Chief Executive Officer.
24
<PAGE> 26
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
25
<PAGE> 27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
SHURGARD STORAGE CENTERS,
INC.
By: HARRELL BECK
------------------------------
Name: Harrell Beck
------------------------------
Title: CFO
------------------------------
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BANCAMERICA SECURITIES, INC.
J.P. MORGAN & CO.
J.P. Morgan Securities Inc.
By: Merrill Lynch, Pierce, Fenner &
Smith Incorporated
By: PAUL M. MEURER
------------------------------
Name: Paul M. Meurer
------------------------------
Title: Vice President
------------------------------
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
26
<PAGE> 28
SCHEDULE A
$50,000,000 7-1/2% Notes Due 2004
<TABLE>
<CAPTION>
Principal
Amount of
Name of Underwriter Securities
------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner &
Smith Incorporated............................................... $35,000,000
BancAmerica Securities, Inc....................................... 7,500,000
J.P. Morgan Securities Inc........................................ 7,500,000
-----------
Total............................................................. $50,000,000
===========
</TABLE>
$50,000,000 7-5/8% Notes Due 2007
<TABLE>
<CAPTION>
Principal
Amount of
Name of Underwriter Securities
------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner &
Smith Incorporated.............................................. $35,000,000
BancAmerica Securities, Inc........................................ 7,500,000
J.P. Morgan Securities Inc......................................... 7,500,000
-----------
Total.............................................................. $50,000,000
===========
</TABLE>
1
<PAGE> 29
SCHEDULE B
SHURGARD STORAGE CENTERS, INC.
$50,000,000 7-1/2% Notes Due 2004
1. The initial public offering price of the Securities shall be 99.828%
of the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. Underwriting discounts and commissions for the Securities shall be
.7% of the principal amount thereof. The purchase price to be paid by the
Underwriters for the Securities shall be 99.128% of the principal amount
thereof.
3. The interest rate on the Securities shall be 7.5% per annum.
$50,000,000 7-5/8% Notes Due 2007
1. The initial public offering price of the Securities shall be 99.8%
of the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. Underwriting discounts and commissions for the Securities shall be
.75% of the principal amount thereof. The purchase price to be paid by the
Underwriters for the Securities shall be 99.05% of the principal amount thereof.
3. The interest rate on the Securities shall be 7.625% per annum.
1
<PAGE> 1
Exhibit 4.1
- --------------------------------------------------------------------------------
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 55 WATER STREET, NEW
YORK, NEW YORK TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND SUCH SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
DTC TO A NOMINEE THEREOF OR BY AS NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF
DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH
SUCCESSOR.
- --------------------------------------------------------------------------------
REGISTERED NO.: PRINCIPAL AMOUNT
CUSIP NO.: 82567D AB 0 $
SHURGARD STORAGE CENTERS, INC.
7 1/2% NOTE DUE 2004
Shurgard Storage Centers, Inc., a Delaware corporation (the "Company,"
which term shall include any successor under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ____________________, or
registered assigns, upon presentation, the principal sum of ____________________
Dollars on April 25, 2004, and to pay interest thereon from April 25, 1997, or
from the most recent Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, semiannually in arrears on April 25 and
October 25 of each year (each, an "Interest Payment Date"), commencing October
25, 1997, at the rate of 7 1/2% per annum, until the entire principal amount
hereof is paid or made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture (as defined herein), be paid to the Holder in whose
name this Note (or one or more predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest, which shall be the 15th
calendar day preceding the applicable Interest Payment Date (whether or not a
Business Day, as defined below). Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be paid to the Holder in whose name this
Note (or one or more predecessor Notes) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Notes of this series
not less than 10 days prior to such Special Record Date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Payment of the principal of, and interest on, this Note will be made at
the office or agency of the Trustee (as defined herein) maintained for that
purpose at 135 South LaSalle Street, Suite 1825, Chicago, Illinois 60603, or
elsewhere as provided in the Indenture, in United States Dollars; provided,
however, that at the option of the Company payment of interest may be made by
(i) check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register kept for the Notes pursuant to Section 305
of the Indenture (the "Note Register") or (ii) wire transfer to an account of
the Person entitled thereto located
<PAGE> 2
inside the United States. Payments of principal, premium, if any, and interest
in respect of this Note will be made by the Company in immediately available
funds.
This Note is one of a duly authorized issue of securities of the
Company (herein called the "Notes"), issued as a series of securities under an
indenture dated as of April 25, 1997 (the "Indenture"), between the Company and
LaSalle National Bank, as trustee (the "Trustee," which term includes any
successor trustee under the Indenture with respect to the Notes), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Notes and of the
terms upon which the Notes are, and are to be, authenticated and delivered. This
Note is one of the duly authorized series designated as the "7 1/2% Senior Notes
due 2004," limited in aggregate principal amount to $50,000,000. All terms used
in this Note which are defined in the Indenture shall have the meanings assigned
to them in the Indenture.
The Notes may be redeemed at any time at the option of the Company, in
whole or from time to time in part, at a redemption price equal to the sum of
(i) the principal amount (or any portion thereof) of the Notes being redeemed
plus accrued interest thereon to the redemption date and (ii) the Make-Whole
Amount (as defined below) if any, with respect to such Notes (or any portion
thereof) (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes (or any portion thereof) called for redemption shall
have been made available on the redemption date referred to in such notice, such
Notes (or any portion thereof) will cease to bear interest on the date fixed for
such redemption specified in such notice and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price.
Notice of any redemption of any Notes (or any portion thereof) will be
given to Holders at their addresses, as shown in the security register for the
Notes, not more than 60 nor less than 30 days prior to the date fixed for
redemption. The notice of redemption will specify, among other items, the
Redemption Price and the principal amount of the Notes held by such Holder to be
redeemed.
If less than all the Notes are to be redeemed, the Company will notify
the Trustee at least 45 days prior to giving notice of redemption (or such
shorter period as is satisfactory to the Trustee) of the aggregate principal
amount of Notes to be redeemed and their redemption date. The Trustee shall
select, in such manner as it shall deem fair and appropriate, Notes to be
redeemed in whole or in part.
As used herein, the following terms will have the meanings set forth
below:
"Make-Whole Amount" means, in connection with any optional redemption
of any Notes, the excess, if any, of (i) the aggregate present value as of the
date of such redemption of each dollar of principal being redeemed or paid and
the amount of interest (exclusive of interest accrued to the date of redemption)
that would have been payable in respect of each such dollar if such redemption
had not been made, determined by discounting, on a semiannual basis, such
principal and interest at the Reinvestment Rate (as defined below) (determined
on the third Business Day preceding the date such notice of redemption is given)
from the respective dates on which such principal and interest would have been
payable if such redemption had not been made to the date of redemption, over
(ii) the aggregate principal amount of the Notes being redeemed.
-2-
<PAGE> 3
"Reinvestment Rate" means .25% plus the arithmetic mean of the yields
under the heading "Week Ending" published in the most recent Statistical Release
(as defined below) under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For the purposes
of calculating the Reinvestment Rate, the most recent Statistical Release
published prior to the date of determination of the Make-Whole Amount shall be
used.
"Statistical Release" means the statistical release designed
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which reports yields on actively traded U.S.
government securities adjusted to constant maturities, or, if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonable comparable index which shall be designated by the
Company.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related defaults and Events of Default applicable to the
Company, in each case, upon compliance by the Company with certain conditions
set forth in the Indenture, which provisions apply to this Note.
In addition to the covenants of the Company contained in the Indenture,
the Company makes the following covenants with respect to, and for the benefit
of the Holders of, the Notes:
Limitations on Incurrence of Total Debt. The Company will not, and will
not permit any Subsidiary to, incur any Debt (as defined below), other than
Intercompany Debt (as defined below), if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds
therefrom, the aggregate principal amount of all outstanding Debt of the Company
and its Subsidiaries on a consolidated basis determined in accordance with GAAP
is greater than 60% of the sum of (i) the Company's Total Assets (as defined
below) as of the end of the fiscal quarter covered in the Company's Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most
recently filed with the Commission (or, if such filing is not required under the
Exchange Act, with the Trustee) prior to the incurrence of such additional Debt
and (ii) the increase in Total Assets from the end of such quarter, including,
without limitation, any increase in Total Assets caused by the incurrence of
such additional Debt (such increase together with the Company's Total Assets is
referred to as the "Adjusted Total Assets").
Limitation on Incurrence of Secured Debt. The Company will not, and
will not permit any Subsidiary to, incur any Secured Debt (as defined below) if,
immediately after giving effect to the incurrence of such additional Secured
Debt, the aggregate principal amount of all outstanding Secured Debt of the
Company and its Subsidiaries on a consolidated basis determined in accordance
with GAAP is greater than 40% of the Company's Adjusted Total Assets.
Debt Service Coverage. The Company will not, and will not permit any
Subsidiary to, incur any Debt, other than Intercompany Debt, if the ratio of
Consolidated Income Available for Debt Service (as defined below) to Annual Debt
Service Charge (as defined below) for the four consecutive fiscal quarters most
recently ended prior to the date on which such additional Debt is to be incurred
is less than 1.5 to 1.0 on a pro forma basis after giving effect to the
incurrence of such Debt and the application of the proceeds therefrom, and
calculated on the assumption that (i) such Debt and any other Debt incurred
since the first
-3-
<PAGE> 4
day of such four-quarter period and the application of the proceeds therefrom,
including to refinance other Debt since the first day of such four-quarter
period, had been repaid or retired at the beginning of such period (except that,
in making such computation, the amount of Debt under any revolving credit
facility shall be computed based upon the average daily balance of such Debt
during such period) and (ii) in the case of any increase or decrease in Total
Assets, or any other acquisition or disposition by the Company or any Subsidiary
of any asset or group of assets, since the first day of such four-quarter
period, including, without limitation, by merger, stock purchase or sale, or
asset purchase or sale, such increase, decrease or other acquisition or
disposition had occurred at the beginning of such period with the appropriate
adjustments to net income and Debt levels with respect to such increase,
decrease or other acquisition or disposition being included in such pro forma
calculation. For purposes of the adjustments referred to in clause (ii) of the
preceding sentence, any income earned (or loss incurred) as a result of any such
increase, decrease or other acquisition or disposition referred to in clause
(ii) for a period less than such four-quarter period shall be annualized for
such four-quarter period.
Maintenance of Total Unencumbered Assets. The Company will maintain at
all times Total Unencumbered Assets (as defined below) of not less than 150% of
the aggregate outstanding principal amount of the Unsecured Debt (as defined
below) of the Company and its Subsidiaries.
As used herein, the following terms will have the meanings set forth
below:
"Annual Debt Service Charge" as of any date means the amount which is
expended in any 12-month period for interest on Debt of the Company and its
Subsidiaries.
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) plus amounts which have been deducted
in determining Consolidated Net Income during such period for (i) Consolidated
Interest Expense (as defined below), (ii) provision for taxes of the Company and
its Subsidiaries based on income, (iii) amortization (other than amortization of
debt discount) and depreciation, (iv) provisions for losses from sales or joint
ventures, (v) increases in deferred taxes and other noncash charges, (vi)
charges resulting from a change in accounting principles and (vii) charges for
early extinguishment of debt, and less amounts which have been added in
determining Consolidated Net Income during such period for (a) provisions for
gains from sales or joint ventures and (b) decreases in deferred taxes and other
noncash items.
"Consolidated Interest Expense" for any period, and without
duplication, means all interest (including the interest component of rentals on
capitalized leases, letter of credit fees, commitment fees and other like
financial charges) and all amortization of debt discount on all Debt (including,
without limitation, payment-in-kind, zero coupon and other like securities) but
excluding legal fees, title insurance charges, other out-of-pocket fees and
expenses incurred in connection with the issuance of Debt and the amortization
of any such debt issuance costs that are capitalized, all determined in
accordance with GAAP.
"Consolidated Net Income" for any period means the amount of
consolidated net income (or loss) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
"Debt" means any indebtedness of the Company or any Subsidiary, whether
or not contingent, in respect of (i) money borrowed or evidenced by bonds,
notes, debentures or similar instruments, (ii) indebtedness secured by any
mortgage, pledge, lien, charge, encumbrance or any security interest existing on
property owned by the Company or any Subsidiary, (iii) letters of credit or
amounts representing the balance deferred and unpaid of the purchase price of
any property except any such balance
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<PAGE> 5
that constitutes an accrued expense or trade payable or (iv) any lease of
property by the Company or any Subsidiary as lessee that is reflected on the
Company's consolidated balance sheet as a capitalized lease in accordance with
GAAP, in the case of items of indebtedness under (i) through (iii) above to the
extent that any such items (other than letters of credit) would appear as
liabilities on the Company's consolidated balance sheet in accordance with GAAP,
and also includes, to the extent not otherwise included, any obligation by the
Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), indebtedness of another person (other than the Company or any
Subsidiary) (it being understood that Debt shall be deemed to be incurred by the
Company or any Subsidiary whenever the Company or such Subsidiary shall create,
assume, guarantee or otherwise become liable in respect thereof).
"Intercompany Debt" means indebtedness owed by the Company or any
Subsidiary solely to the Company or any Subsidiary.
"Secured Debt" means Debt secure by any mortgage, lien, charge,
encumbrance, trust deed, deed of trust, deed to secure debt, security agreement,
pledge, conditional sale or other title retention agreement, capitalized lease
or other security interest or agreement granting or conveying security title to
or a security interest in real property or other tangible assets.
"Senior Executive Group" means, collectively, those individuals holding
the offices of Chairman, President, Chief Executive Officer, Chief Operating
Officer or any Senior Vice President or Executive Vice President of the Company.
"Subsidiary" means (i) any corporation, partnership, joint venture,
limited liability company or other entity the majority of the shares of the
non-voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Company, and the majority of the shares of the voting capital stock
or other equivalent ownership of which (except for disqualifying shares) are at
the time directly or indirectly owned by the Company, any Subsidiary and/or one
or more individuals of the Senior Executive Group (or, in the event of death or
disability of any of such individuals, his/her respective legal
representative(s)), or such individuals' successors in office as an officer of
the Company, and (ii) any other entity the accounts of which are consolidated
with the accounts of the Company.
"Total Assets" as of any date means the sum of (i) Undepreciated Real
Estate Assets (as defined below) and (ii) all other assets of the Company and
its Subsidiaries determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Total Unencumbered Assets" means Total Assets minus the value of any
properties of the Company and its Subsidiaries that are encumbered by any
mortgage, charge, pledge, lien, security interest or other encumbrance of any
kind, including the value of any stock of any Subsidiary that is so encumbered.
For purposes of this definition, the value of each property shall be equal to
the purchase price or cost of each such property and the value of any stock
subject to any encumbrance shall be determined by reference to the value of the
properties owned by the issuer of such stock as aforesaid.
"Undepreciated Real Estate Assets" as of any date means the amount of
real estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization determined on a consolidated basis in accordance
with GAAP.
"Unsecured Debt" means Debt of the Company or any Subsidiary that is
not Secured Debt.
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<PAGE> 6
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Note shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of not less than a
majority in principal amount of the Notes at the time Outstanding, on behalf of
the Holders of all Notes, to waive compliance by the Company with certain
provisions of the Indenture and, in certain circumstances, certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest on, this Note
at the times, places and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in any Place of Payment where the principal of, and interest on,
this Note are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar for
the Notes duly executed by, the Holder hereof or his or her attorney duly
authorized in writing, and thereupon one or more new Notes of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, Notes of this series are exchangeable for a like aggregate principal
amount of Notes of this series of different authorized denominations, as
requested by the Holder surrendering the same.
The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
-6-
<PAGE> 7
Prior to due presentment of the Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and nether the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or the interest on this Note, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supplemental thereto, against any past, present or future stockholder,
employee, officer or director, as such, of the Company or of any successor,
either directly or through the Company or any successor, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the correctness or accuracy of such CUSIP numbers
as printed on the Notes, and reliance may be placed only on the other
identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature of one of its authorized signatures, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal this 25th day of April, 1997.
SHURGARD STORAGE CENTERS, INC.
By:__________________________________________
Name: Harrell L. Beck
Title: Senior Vice President, Chief Financial Officer
and Treasurer
Attest:
By:__________________________________________
Name: Kristin H. Stred
Title: Senior Vice President, General Counsel
and Secretary
[SEAL]
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<PAGE> 8
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Notes of the series designated "7 1/2% Notes due
2004" pursuant to the within-mentioned Indenture.
LaSALLE NATIONAL BANK, as Trustee
By:_________________________________
Authorized Signatory
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<PAGE> 9
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note of Shurgard Storage Centers, Inc., and does hereby irrevocably
constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said Note on the books of the within named Corporation with full
power of substitution in the premises.
Dated
--------------------------
X
------------------------------------------
--------------------------------------------
X
------------------------------------------
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NOTICE: The signature to this assignment
must correspond with the name as it
appears on the first page of the
within Note in every particular,
without alteration or enlargement
or any change whatever.
-9-
<PAGE> 1
Exhibit 4.2
- --------------------------------------------------------------------------------
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 55 WATER STREET, NEW
YORK, NEW YORK TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND SUCH SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
DTC TO A NOMINEE THEREOF OR BY AS NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF
DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH
SUCCESSOR.
- --------------------------------------------------------------------------------
REGISTERED NO.: PRINCIPAL AMOUNT
CUSIP NO.: 82567D AC 8 $
SHURGARD STORAGE CENTERS, INC.
7 5/8% NOTE DUE 2007
Shurgard Storage Centers, Inc., a Delaware corporation (the "Company,"
which term shall include any successor under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ________________, or
registered assigns, upon presentation, the principal sum of
______________________ Dollars on April 25, 2007, and to pay interest thereon
from April 25, 1997, or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or duly provided for, semiannually in
arrears on April 25 and October 25 of each year (each, an "Interest Payment
Date"), commencing October 25, 1997, at the rate of 7 5/8% per annum, until the
entire principal amount hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture (as defined herein), be paid to
the Holder in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the 15th calendar day preceding the applicable Interest
Payment Date (whether or not a Business Day, as defined below). Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date, and may either be paid to the
Holder in whose name this Note (or one or more predecessor Notes) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Notes of this series not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture. Interest will be computed on the basis of
a 360-day year of twelve 30-day months. Payment of the principal of, and
interest on, this Note will be made at the office or agency of the Trustee (as
defined herein) maintained for that purpose at 135 South LaSalle Street, Suite
1825, Chicago, Illinois 60603, or elsewhere as provided in the Indenture, in
United States Dollars; provided, however, that at the option of the Company
payment of interest may be made by (i) check mailed to the address of the Person
entitled
<PAGE> 2
thereto as such address shall appear in the Security Register kept for the Notes
pursuant to Section 305 of the Indenture (the "Note Register") or (ii) wire
transfer to an account of the Person entitled thereto located inside the United
States. Payments of principal, premium, if any, and interest in respect of this
Note will be made by the Company in immediately available funds.
This Note is one of a duly authorized issue of securities of the
Company (herein called the "Notes"), issued as a series of securities under an
indenture dated as of April 25, 1997 (the "Indenture"), between the Company and
LaSalle National Bank, as trustee (the "Trustee," which term includes any
successor trustee under the Indenture with respect to the Notes), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Notes and of the
terms upon which the Notes are, and are to be, authenticated and delivered. This
Note is one of the duly authorized series designated as the "7 5/8% Senior Notes
due 2007," limited in aggregate principal amount to $50,000,000. All terms used
in this Note which are defined in the Indenture shall have the meanings assigned
to them in the Indenture.
The Notes may be redeemed at any time at the option of the Company, in
whole or from time to time in part, at a redemption price equal to the sum of
(i) the principal amount (or any portion thereof) of the Notes being redeemed
plus accrued interest thereon to the redemption date and (ii) the Make-Whole
Amount (as defined below) if any, with respect to such Notes (or any portion
thereof) (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes (or any portion thereof) called for redemption shall
have been made available on the redemption date referred to in such notice, such
Notes (or any portion thereof) will cease to bear interest on the date fixed for
such redemption specified in such notice and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price.
Notice of any redemption of any Notes (or any portion thereof) will be
given to Holders at their addresses, as shown in the security register for the
Notes, not more than 60 nor less than 30 days prior to the date fixed for
redemption. The notice of redemption will specify, among other items, the
Redemption Price and the principal amount of the Notes held by such Holder to be
redeemed.
If less than all the Notes are to be redeemed, the Company will notify
the Trustee at least 45 days prior to giving notice of redemption (or such
shorter period as is satisfactory to the Trustee) of the aggregate principal
amount of Notes to be redeemed and their redemption date. The Trustee shall
select, in such manner as it shall deem fair and appropriate, Notes to be
redeemed in whole or in part.
As used herein, the following terms will have the meanings set forth
below:
"Make-Whole Amount" means, in connection with any optional redemption
of any Notes, the excess, if any, of (i) the aggregate present value as of the
date of such redemption of each dollar of principal being redeemed or paid and
the amount of interest (exclusive of interest accrued to the date of redemption)
that would have been payable in respect of each such dollar if such redemption
had not been made, determined by discounting, on a semiannual basis, such
principal and interest at the Reinvestment Rate (as defined below) (determined
on the third Business Day preceding the date such notice of redemption is given)
from the respective dates on which such principal and interest would
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<PAGE> 3
have been payable if such redemption or accelerated payment had not been made to
the date of redemption, over (ii) the aggregate principal amount of the Notes
being redeemed.
"Reinvestment Rate" means .25% plus the arithmetic mean of the yields
under the heading "Week Ending" published in the most recent Statistical Release
(as defined below) under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity, as of the payment date of the principal being redeemed or paid. If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For the purposes
of calculating the Reinvestment Rate, the most recent Statistical Release
published prior to the date of determination of the Make-Whole Amount shall be
used.
"Statistical Release" means the statistical release designed
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which reports yields on actively traded U.S.
government securities adjusted to constant maturities, or, if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonable comparable index which shall be designated by the
Company.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related defaults and Events of Default applicable to the
Company, in each case, upon compliance by the Company with certain conditions
set forth in the Indenture, which provisions apply to this Note.
In addition to the covenants of the Company contained in the Indenture,
the Company makes the following covenants with respect to, and for the benefit
of the Holders of, the Notes:
Limitations on Incurrence of Total Debt. The Company will not, and will
not permit any Subsidiary to, incur any Debt (as defined below), other than
Intercompany Debt (as defined below), if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds
therefrom, the aggregate principal amount of all outstanding Debt of the Company
and its Subsidiaries on a consolidated basis determined in accordance with GAAP
is greater than 60% of the sum of (i) the Company's Total Assets (as defined
below) as of the end of the fiscal quarter covered in the Company's Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most
recently filed with the Commission (or, if such filing is not required under the
Exchange Act, with the Trustee) prior to the incurrence of such additional Debt
and (ii) the increase in Total Assets from the end of such quarter, including,
without limitation, any increase in Total Assets caused by the incurrence of
such additional Debt (such increase together with the Company's Total Assets is
referred to as the "Adjusted Total Assets").
Limitation on Incurrence of Secured Debt. The Company will not, and
will not permit any Subsidiary to, incur any Secured Debt (as defined below) if,
immediately after giving effect to the incurrence of such additional Secured
Debt, the aggregate principal amount of all outstanding Secured Debt of the
Company and its Subsidiaries on a consolidated basis determined in accordance
with GAAP is greater than 40% of the Company's Adjusted Total Assets.
Debt Service Coverage. The Company will not, and will not permit any
Subsidiary to, incur any Debt, other than Intercompany Debt, if the ratio of
Consolidated Income Available for Debt Service (as defined below) to Annual Debt
Service Charge (as defined below) for the four consecutive fiscal quarters
-3-
<PAGE> 4
most recently ended prior to the date on which such additional Debt is to be
incurred is less than 1.5 to 1.0 on a pro forma basis after giving effect to the
incurrence of such Debt and the application of the proceeds therefrom, and
calculated on the assumption that (i) such Debt and any other Debt incurred
since the first day of such four-quarter period and the application of the
proceeds therefrom, including to refinance other Debt since the first day of
such four-quarter period, had been repaid or retired at the beginning of such
period (except that, in making such computation, the amount of Debt under any
revolving credit facility shall be computed based upon the average daily balance
of such Debt during such period) and (ii) in the case of any increase or
decrease in Total Assets, or any other acquisition or disposition by the Company
or any Subsidiary of any asset or group of assets, since the first day of such
four-quarter period, including, without limitation, by merger, stock purchase or
sale, or asset purchase or sale, such increase, decrease or other acquisition or
disposition had occurred at the beginning of such period with the appropriate
adjustments to net income and Debt levels with respect to such increase,
decrease or other acquisition or disposition being included in such pro forma
calculation. For purposes of the adjustments referred to in clause (ii) of the
preceding sentence, any income earned (or loss incurred) as a result of any such
increase, decrease or other acquisition or disposition referred to in clause
(ii) for a period less than such four-quarter period shall be annualized for
such four-quarter period.
Maintenance of Total Unencumbered Assets. The Company will maintain at
all times Total Unencumbered Assets (as defined below) of not less than 150% of
the aggregate outstanding principal amount of the Unsecured Debt (as defined
below) of the Company and its Subsidiaries.
As used herein, the following terms will have the meanings set forth
below:
"Annual Debt Service Charge" as of any date means the amount which is
expended in any 12-month period for interest on Debt of the Company and its
Subsidiaries.
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) plus amounts which have been deducted
in determining Consolidated Net Income during such period for (i) Consolidated
Interest Expense (as defined below), (ii) provision for taxes of the Company and
its Subsidiaries based on income, (iii) amortization (other than amortization of
debt discount) and depreciation, (iv) provisions for losses from sales or joint
ventures, (v) increases in deferred taxes and other noncash charges, (vi)
charges resulting from a change in accounting principles and (vii) charges for
early extinguishment of debt, and less amounts which have been added in
determining Consolidated Net Income during such period for (a) provisions for
gains from sales or joint ventures and (b) decreases in deferred taxes and other
noncash items.
"Consolidated Interest Expense" for any period, and without
duplication, means all interest (including the interest component of rentals on
capitalized leases, letter of credit fees, commitment fees and other like
financial charges) and all amortization of debt discount on all Debt (including,
without limitation, payment-in-kind, zero coupon and other like securities) but
excluding legal fees, title insurance charges, other out-of-pocket fees and
expenses incurred in connection with the issuance of Debt and the amortization
of any such debt issuance costs that are capitalized, all determined in
accordance with GAAP.
"Consolidated Net Income" for any period means the amount of
consolidated net income (or loss) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
"Debt" means any indebtedness of the Company or any Subsidiary, whether
or not contingent, in respect of (i) money borrowed or evidenced by bonds,
notes, debentures or similar instruments,
-4-
<PAGE> 5
(ii) indebtedness secured by any mortgage, pledge, lien, charge, encumbrance or
any security interest existing on property owned by the Company or any
Subsidiary, (iii) letters of credit or amounts representing the balance deferred
and unpaid of the purchase price of any property except any such balance that
constitutes an accrued expense or trade payable or (iv) any lease of property by
the Company or any Subsidiary as lessee that is reflected on the Company's
consolidated balance sheet as a capitalized lease in accordance with GAAP, in
the case of items of indebtedness under (i) through (iii) above to the extent
that any such items (other than letters of credit) would appear as liabilities
on the Company's consolidated balance sheet in accordance with GAAP, and also
includes, to the extent not otherwise included, any obligation by the Company or
any Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of business),
indebtedness of another person (other than the Company or any Subsidiary) (it
being understood that Debt shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).
"Intercompany Debt" means indebtedness owed by the Company or any
Subsidiary solely to the Company or any Subsidiary.
"Secured Debt" means Debt secure by any mortgage, lien, charge,
encumbrance, trust deed, deed of trust, deed to secure debt, security agreement,
pledge, conditional sale or other title retention agreement, capitalized lease
or other security interest or agreement granting or conveying security title to
or a security interest in real property or other tangible assets.
"Senior Executive Group" means, collectively, those individuals holding
the offices of Chairman, President, Chief Executive Officer, Chief Operating
Officer or any Senior Vice President or Executive Vice President of the Company.
"Subsidiary" means (i) any corporation, partnership, joint venture,
limited liability company or other entity the majority of the shares of the
non-voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Company, and the majority of the shares of the voting capital stock
or other equivalent ownership of which (except for disqualifying shares) are at
the time directly or indirectly owned by the Company, any Subsidiary and/or one
or more individuals of the Senior Executive Group (or, in the event of death or
disability of any of such individuals, his/her respective legal
representative(s)), or such individuals' successors in office as an officer of
the Company, and (ii) any other entity the accounts of which are consolidated
with the accounts of the Company.
"Total Assets" as of any date means the sum of (i) Undepreciated Real
Estate Assets (as defined below) and (ii) all other assets of the Company and
its Subsidiaries determined in accordance with GAAP (but excluding accounts
receivable and intangibles).
"Total Unencumbered Assets" means Total Assets minus the value of any
properties of the Company and its Subsidiaries that are encumbered by any
mortgage, charge, pledge, lien, security interest or other encumbrance of any
kind, including the value of any stock of any Subsidiary that is so encumbered.
For purposes of this definition, the value of each property shall be equal to
the purchase price or cost of each such property and the value of any stock
subject to any encumbrance shall be determined by reference to the value of the
properties owned by the issuer of such stock as aforesaid.
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<PAGE> 6
"Undepreciated Real Estate Assets" as of any date means the amount of
real estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization determined on a consolidated basis in accordance
with GAAP.
"Unsecured Debt" means Debt of the Company or any Subsidiary that is
not Secured Debt.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Note shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any interest
on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of not less than a
majority in principal amount of the Notes at the time Outstanding, on behalf of
the Holders of all Notes, to waive compliance by the Company with certain
provisions of the Indenture and, in certain circumstances, certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest on, this Note
at the times, places and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in any Place of Payment where the principal of, and interest on,
this Note are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar for
the Notes duly executed by, the Holder hereof or his or her attorney duly
authorized in writing, and thereupon one or more new Notes of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, Notes of this series are exchangeable for a like aggregate principal
amount of Notes of this series of different authorized denominations, as
requested by the Holder surrendering the same.
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<PAGE> 7
The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of the Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and nether the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or the interest on this Note, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supplemental thereto, against any past, present or future stockholder,
employee, officer or director, as such, of the Company or of any successor,
either directly or through the Company or any successor, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the correctness or accuracy of such CUSIP numbers
as printed on the Notes, and reliance may be placed only on the other
identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature of one of its authorized signatures, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal this 25th day of April, 1997.
SHURGARD STORAGE CENTERS, INC.
By:______________________________________
Name: Harrell L. Beck
Title: Senior Vice President, Chief Financial
Officer and Treasurer
Attest:
By:________________________________________
Name: Kristin H. Stred
Title: Senior Vice President, General
Counsel and Secretary
[SEAL]
-8-
<PAGE> 9
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Notes of the series designated "7 5/8% Notes due
2007" pursuant to the within-mentioned Indenture.
LaSALLE NATIONAL BANK, as Trustee
By:__________________________________
Authorized Signatory
-9-
<PAGE> 10
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note of Shurgard Storage Centers, Inc., and does hereby irrevocably
constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said Note on the books of the within named Corporation with full
power of substitution in the premises.
Dated
----------------------------
X
-------------------------------------------
X
-------------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as it
appears on the first page of the
within Note in every particular,
without alteration or enlargement
or any change whatever.
-10-
<PAGE> 1
Exhibit 5.1
[Perkins Coie Letterhead]
April 22, 1997
Shurgard Storage Centers, Inc.
1201 Third Avenue, Suite 2200
Seattle, Washington 98101
Gentlemen and Ladies:
We have acted as counsel to you in connection with (i) the proceedings
for the authorization and issuance by Shurgard Storage Centers, Inc. (the
"Company") of $50,000,000 principal amount of 7 1/2% notes due 2004 and
$50,000,000 principal amount of 7 5/8% notes due 2007 (together, the "Notes")
and (ii) the preparation and filing of a prospectus supplement to the Company's
Registration Statement on Form S-3, File No. 333-21273, which was declared
effective by the Securities and Exchange Commission on February 20, 1997 (the
"Registration Statement"), which you have filed with the Securities and Exchange
Commission with respect to the Notes (the "Prospectus Supplement").
We have examined the Registration Statement, the Prospectus Supplement
and such documents and records of the Company and other documents as we have
deemed necessary for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that upon the
authorization, execution and delivery of an indenture (the "Indenture") between
the Company and LaSalle National Bank, as trustee, and the compliance with the
terms and conditions of the Indenture with respect to the creation,
authentication and delivery of the Notes, the due execution by the Company and
authentication and delivery by the Trustee under the Indenture of the Notes, and
the sale of the Notes as contemplated by the Registration Statement and the
Prospectus Supplement and in accordance with the applicable corporate and
governmental authorizations, the Notes will be duly authorized and will
constitute in the hands of the holders thereof valid and binding obligations of
the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Form 8-K, and to the reference to our firm in the Prospectus Supplement and the
Registration Statement under the headings "Legal Matters."
Very truly yours,
PERKINS COIE
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to incorporation by reference into Shurgard Storage Centers, Inc.'s
Registration Statement on Form S-3, File No. 333-21273 (the "Registration
Statement") of our report dated February 28, 1997, which is included in the
Annual Report on Form 10-K of Shurgard Storage Centers, Inc. for the year ended
December 31, 1996. We also consent to the reference to us under the heading
"Experts" in the Prospectus dated February 20, 1997 which is a part of the
Registration Statement.
DELOITTE & TOUCHE LLP
Seattle, Washington
April 22, 1997
