<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1998
NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SECURITY CAPITAL GROUP INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 6719 36-3692698
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL IDENTIFICATION
OF INCORPORATION OR CLASSIFICATION CODE NUMBER)
ORGANIZATION) NUMBER)
125 LINCOLN AVENUE
SANTA FE, NEW MEXICO 87501
(505) 982-9292
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JEFFREY A. KLOPF, SECRETARY
SECURITY CAPITAL GROUP INCORPORATED
125 LINCOLN AVENUE
SANTA FE, NEW MEXICO 87501
(505) 982-9292
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
EDWARD J. SCHNEIDMAN
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(312) 782-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]_________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]_________
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6.95% Exchange Notes due 2005...... $200,000,000 100% $ 200,000,000 --
- -------------------------------------------------------------------------------------------
7.15% Exchange Notes due 2007...... $100,000,000 100% $ 100,000,000 --
- -------------------------------------------------------------------------------------------
7.70% Exchange Notes due 2028...... $200,000,000 100% $ 200,000,000 --
- -------------------------------------------------------------------------------------------
Total.............................. -- -- $ 500,000,000 $147,500
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated based on the book value of the securities to be received by the
registrant in the exchange in accordance with Rule 457(f) under the
Securities Act of 1933.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED AUGUST 13, 1998
[LOGO OF SECURITY CAPITAL GROUP APPEARS HERE]
OFFER TO EXCHANGE
6.95% EXCHANGE NOTES DUE 2005 FOR OUTSTANDING 6.95% NOTES DUE 2005,
7.15% EXCHANGE NOTES DUE 2007 FOR OUTSTANDING 7.15% NOTES DUE 2007
AND
7.70% EXCHANGE NOTES DUE 2028 FOR OUTSTANDING 7.70% NOTES DUE 2028
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998, UNLESS EXTENDED.
-----------
Security Capital Group Incorporated, a Maryland corporation ("Security
Capital"), hereby offers (the "Exchange Offer"), upon the terms and subject to
the conditions set forth in this Prospectus and the accompanying Letter of
Transmittal, to exchange (i) $1,000 principal amount of Security Capital's
6.95% Exchange Notes due 2005 (the "New 2005 Notes") for each $1,000 principal
amount of Security Capital's outstanding 6.95% Notes due 2005 (the "Old 2005
Notes" and, together with the New 2005 Notes, the "2005 Notes"); (ii) $1,000
principal amount of Security Capital's 7.15% Exchange Notes due 2007 (the "New
2007 Notes") for each $1,000 principal amount of Security Capital's outstanding
7.15% Notes due 2007 (the "Old 2007 Notes" and, together with the New 2007
Notes, the "2007 Notes"); and (iii) $1,000 principal amount of Security
Capital's 7.70% Exchange Notes due 2028 (the "New 2028 Notes") for each $1,000
principal amount of Security Capital's outstanding 7.70% Notes due 2028 (the
"Old 2028 Notes" and, together with the New 2028 Notes, the "2028 Notes"). See
"The Exchange Offer." As of the date of this Prospectus, there were outstanding
$200,000,000 principal amount of Old 2005 Notes, $100,000,000 principal amount
of Old 2007 Notes and $200,000,000 principal amount of Old 2028 Notes
(collectively, the "Old Notes"). The New 2005 Notes, the New 2007 Notes and the
New 2028 Notes (collectively, the "New Notes" and, together with the Old Notes,
the "Notes") will evidence the same debt as the Old Notes and will be issued
and entitled to the same benefits under the Indenture (as hereinafter defined)
relating to the Old Notes. The terms of the New Notes are identical in all
material respects to the Old Notes, except that the New Notes will have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and therefore will not be subject to certain transfer restrictions and will not
have certain registration rights and related terms providing for an increased
interest rate which are applicable to the Old Notes. See "The Exchange Offer--
Purpose of the Exchange Offer" and "Description of Notes--General."
Interest on the Notes is payable semiannually on December 15 and June 15 of
each year, commencing December 15, 1998. Holders who exchange their Old Notes
for New Notes in the Exchange Offer will receive interest accrued on their Old
Notes from June 23, 1998, the date of issuance of the Old Notes, to the
Exchange
(Cover continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY HOLDERS BEFORE DECIDING WHETHER OR NOT TO TENDER
THEIR OLD NOTES IN THE EXCHANGE OFFER.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CON-
TRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1998
<PAGE>
(Cover continued from previous page)
Date (as hereinafter defined), together with interest accrued on their New
Notes from the Exchange Date, in the first interest payment on the New Notes,
payable on December 15, 1998. See "Description of Notes--Principal, Maturity
and Interest." The Notes of each series may be redeemed at any time at the
option of Security Capital, in whole or in part, at a redemption price equal
to the sum of (i) the principal amount of the Notes being redeemed plus
accrued interest thereon to the redemption date and (ii) the Make-Whole Amount
(as hereinafter defined), if any. See "Description of Notes--Optional
Redemption." The Notes of each series are senior unsecured obligations of
Security Capital and rank equally with each other and with Security Capital's
other unsecured and unsubordinated indebtedness. The Notes are effectively
subordinated to any secured indebtedness of Security Capital as well as to
indebtedness and other liabilities of Security Capital's subsidiaries. See
"Risk Factors--Ranking of Notes" and "Description of Notes--Principal,
Maturity and Interest."
The Old Notes originally were issued and sold on June 23, 1998 (the "Old
Note Offering") in a transaction not registered under the Securities Act in
reliance on the exemptions provided in Section 4(2) of, and Rule 144A under,
the Securities Act. Security Capital is making the Exchange Offer to satisfy
its obligations under the Registration Rights Agreement dated June 23, 1998
(the "Registration Rights Agreement") among Security Capital and J.P. Morgan
Securities Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner and Smith
Incorporated and Chase Securities Inc., as the initial purchasers of the Old
Notes (the "Initial Purchasers"), in reliance on positions of the staff of the
U.S. Securities and Exchange Commission (the "Commission") set forth in
certain no-action letters issued to other parties in other transactions.
Security Capital has not sought its own no-action letter, however, and there
can be no assurance that the Commission staff would make a similar
determination with respect to the Exchange Offer. Based on those positions of
the Commission staff, Security Capital believes that New Notes issued in the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by each holder thereof (other than a holder which is (i)
a broker-dealer, as set forth below, (ii) an Initial Purchaser of Old Notes
which acquired Old Notes directly from Security Capital in order to resell
pursuant to Rule 144A under the Securities Act or any other available
exemption under the Securities Act or (iii) an "affiliate" of Security Capital
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery requirements of the Securities
Act, provided that those New Notes are acquired in the ordinary course of that
holder's business and that holder is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, the distribution of those New Notes within the meaning of the
Securities Act or resale of those New Notes in violation of the Securities
Act. Each holder of Old Notes which receives New Notes in the Exchange Offer
must represent to Security Capital in the Letter of Transmittal that those
conditions have been met. Each broker-dealer which receives New Notes in the
Exchange Offer must represent to Security Capital in the Letter of Transmittal
that it will receive those New Notes for its own account in exchange for Old
Notes which were acquired by it as a result of market-making or other trading
activities and that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of those New Notes. The
Letter of Transmittal states that by so representing and so delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of New Notes received in exchange for Old
Notes which were acquired by the broker-dealer as a result of market-making or
other trading activities. Security Capital has agreed to make this Prospectus
available to any such broker-dealer for use in connection with any such resale
for such period of time as broker-dealers must deliver a prospectus, up to 180
days after the Expiration Date (as hereinafter defined). See "The Exchange
Offer--Resale of New Notes" and "Plan of Distribution."
Security Capital will accept for exchange any and all Old Notes which are
validly tendered and not withdrawn before 5:00 p.m., New York City time, on
the date the Exchange Offer expires, which will be , 1998 (the
"Expiration Date"), unless the Exchange Offer is extended by Security Capital
in its sole discretion, in which case the term "Expiration Date" will mean the
latest date to which the Exchange Offer is extended. See "The Exchange Offer--
Terms of the Exchange Offer," "--Expiration Date" and
<PAGE>
(Cover continued from previous page)
"--Acceptance of Old Notes for Exchange." Tenders of Old Notes may be
withdrawn at any time before 5:00 p.m., New York City time, on the Expiration
Date. See "The Exchange Offer--Withdrawal Rights." Tenders of Old Notes will
be accepted only in denominations of $1,000 and integral multiples thereof.
See "The Exchange Offer--Terms of the Exchange Offer." Only a registered
holder of Old Notes may tender those Old Notes for exchange in the Exchange
Offer. See "The Exchange Offer--Procedures for Tendering Old Notes." The
Exchange Offer is not conditioned on any minimum amount of Old Notes being
tendered for exchange, but the Exchange Offer is subject to certain conditions
which may be waived by Security Capital and to certain other terms and
conditions. See "The Exchange Offer--Conditions to the Exchange Offer."
Any Old Notes not tendered and accepted in the Exchange Offer will remain
subject to the existing restrictions on transfer of the Old Notes, and
Security Capital will have no further obligations to the holders (other than
to the Initial Purchasers) of those Old Notes to provide for their
registration under the Securities Act. See "Risk Factors--Consequences of
Failure to Exchange" and "The Exchange Offer--Effect on Holders of Old Notes."
The Notes of each series will be evidenced by one or more Global Securities
(as hereinafter defined) registered in the name of The Depository Trust
Company ("DTC") or its nominee. Interests in the Global Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as provided herein, Notes in
definitive form will not be issued. See "Description of Notes--Global
Securities." Security Capital does not intend to apply for listing of the New
Notes on any securities exchange or for quotation of the New Notes on any
interdealer quotation system. See "Risk Factors--Market for New Notes."
Security Capital will not receive any proceeds from the issuance of New
Notes in the Exchange Offer. See "Use of Proceeds." Security Capital has
agreed to pay the expenses of the Exchange Offer. See "The Exchange Offer--
Fees and Expenses." No underwriter is being used in connection with the
Exchange Offer. See "Plan of Distribution."
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL ARE BEING FIRST SENT TO ALL
REGISTERED HOLDERS OF OLD NOTES ON OR ABOUT , 1998.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NEW NOTES OF ANY
SERIES. SPECIFICALLY, THE INITIAL PURCHASERS MAY BID FOR AND PURCHASE THE NEW
NOTES IN THE OPEN MARKET. FOR A DESCRIPTION OF THOSE ACTIVITIES, SEE "PLAN OF
DISTRIBUTION."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, THAT
INFORMATION OR THOSE REPRESENTATIONS MUST NOT BE RELIED ON AS HAVING BEEN
AUTHORIZED BY SECURITY CAPITAL. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE NEW NOTES BY ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR THAT PERSON TO MAKE
SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SECURITY CAPITAL SINCE THE
DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
JEFFREY A. KLOPF, SECRETARY, SECURITY CAPITAL GROUP INCORPORATED, 125 LINCOLN
AVENUE, SANTA FE, NEW MEXICO 87501, TELEPHONE
<PAGE>
(Cover continued from previous page)
NUMBER: (505) 982-9292. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY , 1998 (FIVE BUSINESS DAYS PRIOR TO
THE EXPIRATION DATE).
FORWARD-LOOKING STATEMENTS
THE STATEMENTS CONTAINED IN THIS PROSPECTUS AND IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE WHICH ARE NOT HISTORICAL FACTS ARE FORWARD-
LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-
LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, MANAGEMENT'S BELIEFS,
AND ASSUMPTIONS MADE BY MANAGEMENT. WORDS SUCH AS "EXPECTS," "ANTICIPATES,"
"INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES," VARIATIONS OF THOSE
WORDS AND SIMILAR EXPRESSIONS ARE NOT INTENDED TO IDENTIFY THOSE FORWARD-
LOOKING STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE
AND INVOLVE CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS WHICH ARE DIFFICULT
TO PREDICT. THEREFORE, ACTUAL OUTCOMES AND RESULTS MAY DIFFER MATERIALLY FROM
WHAT IS EXPRESSED OR FORECASTED IN THOSE FORWARD-LOOKING STATEMENTS. SECURITY
CAPITAL UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE. SECURITY CAPITAL'S FINANCIAL PERFORMANCE DEPENDS ON THE OPERATING
RESULTS OF ITS CAPITAL DIVISION INVESTEES AND ITS SERVICES DIVISION. AMONG THE
IMPORTANT FACTORS WHICH COULD CAUSE SECURITY CAPITAL'S ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS ARE
(I) CHANGES IN GENERAL ECONOMIC CONDITIONS WHICH WOULD AFFECT THE OPERATING
RESULTS OF THE CAPITAL DIVISION INVESTEES OR THE REVENUES EARNED BY THE
SERVICES DIVISION; (II) CHANGES IN FINANCIAL MARKETS AND INTEREST RATES WHICH
COULD ADVERSELY AFFECT SECURITY CAPITAL'S AND THE CAPITAL DIVISION'S
INVESTEES' COSTS OF CAPITAL AND THEIR ABILITY TO MEET THEIR FINANCING NEEDS
AND OBLIGATIONS; (III) INCREASED OR UNEXPECTED COMPETITION FOR THE CAPITAL
DIVISION'S INVESTEES; (IV) CHANGES IN CAPITAL MARKETS GENERALLY OR THE MARKET
FOR REAL ESTATE SECURITIES SPECIFICALLY WHICH COULD AFFECT THE REVENUES EARNED
BY THE SERVICES DIVISION; (V) IMPACT OF RAPID GROWTH ON SECURITY CAPITAL,
INCLUDING MANAGEMENT AND STAFFING; AND (VI) CHANGES IN TAX LAWS WHICH COULD
AFFECT THE CAPITAL DIVISION'S INVESTEES WHICH OPERATE AS REITS.
<PAGE>
TABLE OF CONTENTS
PAGE
----
Prospectus Summary......................................................... 1
Risk Factors............................................................... 14
Use of Proceeds............................................................ 22
Capitalization............................................................. 23
The Exchange Offer......................................................... 25
Description of Notes....................................................... 30
Certain Federal Income Tax Consequences.................................... 41
Plan of Distribution....................................................... 41
Experts.................................................................... 42
Legal Matters.............................................................. 43
Available Information...................................................... 43
Incorporation by Reference................................................. 44
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere in this Prospectus or incorporated herein by reference.
Unless the context indicates or requires otherwise, references in this
Prospectus and the documents incorporated herein by reference to "Security
Capital" are to Security Capital Group Incorporated and its subsidiaries.
THE COMPANY
SECURITY CAPITAL, a Maryland corporation, is a global real estate research,
investment and operating management company. Security Capital operates its
businesses through two divisions. The Capital Division generates EBDADT
(earnings before depreciation, amortization and deferred taxes) principally
from its pro rata ownership of private and public strategic real estate
operating company investments. The Services Division derives EBDADT through
service fees from the Real Estate Research Group, Global Capital Management
Group and Financial Services Group. In 1997, the Capital Division accounted for
91.9% and the Services Division accounted for 8.1% of Security Capital's
$214.28 million of reported EBDADT for 1997, and for the period from January 1,
1998 to March 31, 1998, the Capital Division accounted for 92.1% and the
Services Division accounted for 7.9% of Security Capital's $70.2 million of
reported EBDADT for that period. At May 31, 1998, Security Capital's equity
market capitalization, based on shares outstanding, was $3.4 billion.
The CAPITAL DIVISION'S Global Strategic Group ("GSG") provides business
strategy and operating and capital deployment oversight to the companies in
which Security Capital has direct and indirect strategic ownership positions.
Since its inception, GSG has directed significant expenditures, both in the
U.S. and internationally, in research and development to create new, fully
integrated, value-added operating companies with proprietary customer-delivery
systems. GSG works closely with the management of affiliated public and private
start-up and public investees to ensure their long-term sustainable cash flow
growth. At May 31, 1998, GSG oversaw strategic investments in 16 public and
private real estate operating companies focused in international distribution,
multifamily communities, neighborhood infill shopping centers, city center
retail, parking, corporate office, self-storage, hotels, corporate extended-
stay lodging, assisted-living residential communities and manufactured housing
communities. GSG also oversees several new niche businesses that are currently
at various stages of research and development. These operating companies had a
combined total equity market capitalization, based on shares outstanding, of
$14.4 billion at May 31, 1998. See "--Security Capital Ownership and Market
Capitalization of Significant Investees."
The SERVICES DIVISION'S Real Estate Research Group ("RERG") conducts
proprietary real estate research and provides analysis of long-term market
conditions and short-term trends to Security Capital's direct and indirect
investees. The Global Capital Management Group ("GCMG") manages capital
invested in real estate securities with both short to intermediate-term and
long-term investment objectives. At May 31, 1998, GCMG provided real estate
securities management for five entities affiliated with Security Capital with
total assets under management of $4.1 billion. The Financial Services Group
("FSG") provides administrative and capital markets services to various
affiliated operating companies and investment entities.
1
<PAGE>
[LOGO OF SECURITY CAPITAL GROUP APPEARS HERE]
SECURITY CAPITAL GROUP
Incorporated
Real Estate Research, Investment and
Operating Management
<TABLE>
<CAPTION>
CAPITAL DIVISION SERVICES DIVISION
- -------------------------------- -----------------------------------------------------------------------------
<S> <C> <C> <C>
GLOBAL STRATEGIC GROUP REAL ESTATE GLOBAL CAPITAL FINANCIAL SERVICES
Incorporated RESEARCH GROUP MANAGEMENT GROUP GROUP
(GSG) Incorporated Incorporated (FSG)
Business Strategy, Operating (RERG) (GCMG)
and Capital Deployment Administrative and
Oversight of Private and Public Real Estate Research Real Estate Securities Capital Markets Services
Strategic Investments Management
</TABLE>
As of May 31, 1998, Security Capital employed 505 people at the corporate
level, and its affiliated operating companies employed 10,856 people. The
principal offices of Security Capital and its directly owned affiliates are in
Atlanta, Brussels, Chicago, Denver, El Paso, London, Luxembourg, New York, San
Francisco and Santa Fe. Security Capital's principal executive offices are
located at 125 Lincoln Avenue, Santa Fe, New Mexico 87501, telephone number
(505) 982-9292.
Security Capital's operating strategy is intended to maximize EBDADT* as
follows:
Key Business Operating Characteristics
[FLOW CHART APPEARS HERE]
High Sustainable EBDADT Growth
- -- Superior Management Teams/Succession Plans
- -- Continuous Commitment to Research & Development
- -- Highly Focused Business Strategy
- -- Fully Integrated Operating/Development Company
- -- Franchise Value Creation Through Proprietary Costumer Delivery Systems
- -- Research Based Capital Allocation/Retraction
* EBDADT represents earnings before depreciation, amortization and deferred
taxes. EBDADT should not be considered as a substitute for net earnings
computed in accordance with GAAP (as hereinafter defined) in evaluating
operating results or as a substitute for cash flows from operating,
investing or financing activities in evaluating liquidity.
2
<PAGE>
Through May 31, 1998, Security Capital had invested an aggregate of
approximately $2.6 billion in the common shares of Archstone Communities Trust
(formerly known as Security Capital Pacific Trust and into which Security
Capital Atlantic Incorporated ("ATLANTIC") was merged on July 7, 1998)
("Archstone"), ProLogis Trust (formerly known as Security Capital Industrial
Trust) ("ProLogis"), ATLANTIC (which merged with and into Archstone on July 7,
1998), Homestead Village Incorporated ("Homestead"), Security Capital U.S.
Realty ("SC-USREALTY") and Security Capital Global Realty ("SC-GR"). Those
securities had an aggregate market value of approximately $3.8 billion (based
on the closing prices of those securities on the principal exchanges on which
the securities are listed on May 31, 1998).
BUSINESS STRATEGY SUMMARY
Management believes the global real estate industry is in the early stages of
a dramatic transition from ownership in "passive hands" to becoming a
securitized industry with a focus on capital allocation and operating
management. As public real estate investment enterprises become more prevalent,
a greater percentage of the industry's new capital is moving to publicly
traded, fully integrated, value-added operating companies. Securitized holdings
offer significant benefits to institutional and retail investors, including
enhanced liquidity, real-time pricing and the opportunity for optimal growth
and sustainable competitive rates of return.
Security Capital's strategy is to create the optimal organization to lead and
profit from real estate securitization. Security Capital will implement this
strategy by:
. Providing leadership in real estate research conducted on a global basis.
Security Capital's proprietary research, which is available to Security
Capital's affiliates, provides a strong foundation for its capital
deployment and operating strategies.
. Continuing to invest its capital in fully integrated, value-added
operating companies that have strong prospects for sustained growth.
Security Capital plans to utilize the results of its research to identify
opportunities in which it can invest its capital in the start-up of
focused, private operating companies with the objective of becoming
publicly traded and having the prospect of dominating their respective
niches. Security Capital currently is considering several new business
initiatives, both domestically and globally, in which it has recently
made or has agreed to make investments. While none of the new business
initiatives is material at present to Security Capital's results of
operations or financial condition, these initiatives are expected to be
an important component of Security Capital's future growth. In addition,
Security Capital will continue to make investments in public companies in
which it can provide strategic and operating guidance and capital and
thereby enable the companies to pursue an attractive growth strategy.
. Creating a global real estate securities management business.
Security Capital intends to deploy its capital (both its corporate and third-
party managed capital) in enterprises that emulate the operating
characteristics of the leading value-added operating companies in other highly
competitive global industries. As the shift toward securitization of real
estate ownership leads to a more focused system for deploying capital, Security
Capital believes leading real estate companies will commit significant
investment and effort to research and development to create value-added
operating systems for application in target markets. Security Capital believes
leading real estate companies will devote significant capital and energy to
management development programs, creating a strong corporate culture with
succession plans in place. Security Capital also believes leading real estate
companies will consider capital as a precious resource to be deployed utilizing
evaluation processes based on Economic Value-Added (EVA) or similar strategies.
The shift toward securitization creates opportunities for Security Capital and
its operating companies. By building talented management teams, creating fully
integrated operating systems and implementing focused strategies, Security
Capital believes leading real estate companies can achieve sustainable
annualized rates of return which are competitive with other growth industries.
3
<PAGE>
SECURITY CAPITAL OWNERSHIP AND MARKET CAPITALIZATION OF INVESTEES
<TABLE>
<CAPTION>
DIRECT/INDIRECT EQUITY MARKET
INVESTEES OWNERSHIP(1)(2) CAPITALIZATION(1)(2)
- --------- --------------- --------------------
(IN MILLIONS)
<S> <C> <C>
Archstone Communities Trust(3)............ 35% $3,469
ProLogis Trust(4)......................... 35% $3,477
Homestead Village Incorporated(5)......... 39% $1,033
Strategic Hotel Capital Incorporated...... 24% $1,687
BelmontCorp............................... 100% $ 18
SC-USREALTY(6)............................ 30% $2,678
CarrAmerica Realty Corporation(7)....... 35% $2,305
Storage USA, Inc.(7).................... 37% $1,161
Regency Realty Corporation(7)........... 39% $ 750
Pacific Retail Trust(7)................. 69% $ 885
Parking Services International,
Incorporated(7)........................ 9% $ 36
Urban Growth Properties Trust(7)........ 97% $ 300
City Center Retail Trust(7)............. 100% $ 300
CWS Communities Trust(7)................ 77% $ 352
Security Capital Global Realty(8)......... 35% $1,500
City and West End Properties S.A.(9).... 96% $ 277
Akeler S.A.(9)(10)...................... 62% $ 272
Bernheim-Comofi S.A.(9)(11)............. 80% $ 252
</TABLE>
- --------
(1) Ownership and equity market capitalization are as of May 31, 1998 (except
for Archstone, which is as of July 7, 1998) and assume contractual equity
commitments by investors have been funded, convertible instruments have
been converted into common shares, and options and warrants for common
shares have been exercised. The resulting number of common shares is
multiplied by the closing price of the common shares on that date for those
companies listed on an exchange or, in the case of Strategic Hotel Capital
Incorporated ("SHC"), BelmontCorp, Pacific Retail Trust ("PACIFIC RETAIL"),
Parking Services International, Incorporated, Urban Growth Properties
Trust, City Center Retail Trust, CWS Communities Trust ("CWS"), SC-GR, City
and West End Properties S.A. ("City and West End"), Akeler S.A. ("Akeler")
and Bernheim-Comofi S.A. ("Bernheim-Comofi"), the last private equity
offering price.
(2) As of May 31, 1998, Security Capital's percentage ownerships of its
investees, based on common shares outstanding on that date, were 38% of
Archstone (as of July 7, 1998), 41% of ProLogis, 70% of Homestead, 31% of
SHC, 100% of BelmontCorp, 34% of SC-USREALTY and 35% of SC-GR. Equity
market capitalization, as of May 31, 1998, based on common shares
outstanding, was $3.2 billion for Archstone (as of July 7, 1998), $3.0
billion for ProLogis, $574 million for Homestead, $737 million for SHC,
$100,000 for BelmontCorp (total investment in BelmontCorp was $18.1
million, $18.0 million of which was convertible debt), $2.4 billion for SC-
USREALTY and $323 million for SC-GR. The combined total equity market
capitalization of the 16 operating companies (including ATLANTIC, but
excluding SC-USREALTY and SC-GR) at May 31, 1998, based on shares
outstanding and calculated as described in footnote 1 above, was $14.4
billion.
(3) Effective on July 7, 1998, ATLANTIC merged with and into Security Capital
Pacific Trust, which changed its name to Archstone. See "--Recent
Developments."
(4) On June 30, 1998, the shareholders of Security Capital Industrial Trust
approved a name change to ProLogis Trust.
(5) Ownership of Homestead assumes that all convertible mortgage notes have
been funded and converted into Homestead common shares. Ownership of
Homestead does not include any ownership Security Capital
4
<PAGE>
may obtain in Homestead upon conversion of convertible mortgage notes owned
by Archstone through a funding commitment agreement. On April 24, 1998,
Homestead renewed its existing revolving line of credit facility for a one-
year term with an increase in total borrowing capacity to $150 million,
subject to collateral requirements, and entered into a separate $50 million
line of credit. In addition on June 15, 1998, Homestead entered into a
third credit facility with a term of eight months and a maximum available
principal amount of $200 million. In connection with the third line of
credit, Security Capital committed, during the eight month term of the
third line of credit, to retain its ownership of Homestead common shares
and to purchase up to $200 million in subordinated convertible debentures
of Homestead under certain circumstances (which amount may be reduced if
Security Capital purchases other Homestead securities). Homestead has
pledged this investment obligation of Security Capital as security under
Homestead's third line of credit. On July 7, 1998, ATLANTIC sold $98
million principal amount of convertible mortgage notes of Homestead which
effectively changed Security Capital's ownership percentage to 44%.
(6) The European management and Board of Directors of SC-USREALTY receive
operating and investment advice from Security Capital (EU) Management
S.A., which subcontracts certain research and advisory activities from its
affiliates GCMG and GSG.
(7) This company is an investee of SC-USREALTY through its subsidiary and is
not directly advised by Security Capital. The ownership percentage
reflected is that of SC-USREALTY.
(8) The European management and Board of Directors of SC-GR receive operating
and investment advice from Security Capital Global Management S.A., which
subcontracts certain research and advisory activities from its affiliates
GCMG and GSG.
(9) This company is an investee of SC-GR through its subsidiary and is not
directly advised by Security Capital. The ownership percentage reflected
is that of SC-GR.
(10) Ownership and equity market capitalization information is as of June 15,
1998.
(11) Ownership and equity market capitalization information is as of June 15,
1998, as SC-GR acquired Bernheim-Comofi on June 10, 1998.
RECENT DEVELOPMENTS
For the three months ended June 30, 1998, Security Capital generated EBDADT
of $71.0 million (unaudited), compared to $47.8 million (unaudited) for the
same period in 1997. For the six months ended June 30, 1998, total EBDADT was
$141.2 million (unaudited), compared to $93.5 million (unaudited) for the same
period in 1997. For the three months ended June 30, 1998, Security Capital's
net loss was $42.1 million (unaudited), compared to a net loss of $1.0 million
(unaudited) for the same period in 1997. For the six months ended June 30,
1998, the net loss was $38.0 million (unaudited), compared to net earnings of
$2.4 million (unaudited) for the same period in 1997. The significant
reconciling items between EBDADT and net earnings consist of real estate
depreciation and unrealized gains or losses on investments. The primary reason
for the net loss in 1998 is the decrease in unrealized appreciation on
investments incurred by Security Capital and its equity method investees.
EBDADT should not be considered as a substitute for net earnings in evaluating
operating results. The foregoing information for the three months and six
months ended June 30, 1998 has been derived from Security Capital's
preliminary unaudited results of operations.
Effective on July 7, 1998, ATLANTIC merged with and into Security Capital
Pacific Trust, which survived the merger and changed its name to Archstone as
part of the merger. In consideration therefor, each outstanding share of
ATLANTIC common stock was converted into the right to receive one Archstone
common share and each share of ATLANTIC Series A Cumulative Redeemable
Preferred Stock was converted into the right to receive one Archstone Series C
Cumulative Redeemable Preferred Share. In addition, Archstone assumed all of
ATLANTIC's outstanding debt ($697 million as of June 30, 1998) and other
liabilities upon the closing of the merger. As a result of the merger,
Security Capital owned approximately 38% of the outstanding common shares of
Archstone at July 7, 1998. The merger was approved by Archstone's and
ATLANTIC's shareholders at annual meetings on June 29, 1998.
5
<PAGE>
On July 6, 1998, Homestead entered into a mortgage loan purchase agreement
with ATLANTIC and Merrill Lynch Mortgage Capital Inc. ("MLMC") whereby the $98
million of Homestead convertible mortgage notes held by ATLANTIC were modified
to, among other things, eliminate their convertibility feature in exchange for
a payment of $21.4 million from Homestead to ATLANTIC. Homestead funded the
payment with the proceeds received from the sale of 7.5% convertible
subordinated debentures. Also pursuant to the mortgage loan purchase agreement
ATLANTIC sold such amended notes to MLMC for $98 million. On August 7, 1998,
Homestead converted the $98 million of mortgage notes and $24 million of 7.5%
convertible subordinated debentures into a $122 million mortgage of a newly
formed special purpose subsidiary of Homestead. The $122 million mortgage
expires June 30, 1999, unless extended.
On March 30, 1998, SC-GR received commitments for $1.5 billion in its initial
offering of securities. Of this amount, Security Capital has committed to
invest up to $518 million in SC-GR. SC-GR is a new, European based company
which intends to own strategic control positions in real estate operating
companies outside the United States. As of May 31, 1998, $322.6 million of the
commitments had been funded, of which $111.4 million was funded by Security
Capital (representing a 34.5% ownership interest in SC-GR). Through June 15,
1998, SC-GR had invested approximately $500 million in its first three
investments. These three investments are in private companies, which SC-GR
ultimately plans to take public. Akeler is currently a developer of suburban
office properties and business parks in multiple markets in the United Kingdom.
Its strategy is to serve its multinational customers with suburban office space
on a Pan-European basis. City and West End is a developer of high-end office
infill properties in London's West End. Bernheim-Comofi is an owner and
operator of car parking facilities, self-storage facilities and certain other
real estate businesses.
In May 1998, SC-USREALTY issued $450,000,000 of its 2% Senior Unsecured
Convertible Notes due 2003. The net proceeds of the offering (approximately
$352 million) were used to repay borrowings under SC-USREALTY's line of credit.
On May 19, 1998, Security Capital announced an initial commitment of $175
million to BelmontCorp, a senior assisted living company which will build, own
and operate assisted living residential communities throughout the United
States.
Effective on July 1, 1998, Security Capital Industrial Trust changed its name
to ProLogis.
On April 1, 1998, the shares of common stock of Homestead became listed on
the New York Stock Exchange (the "NYSE"). Prior thereto, the shares were listed
on the American Stock Exchange.
On June 3, 1998, Security Capital announced that C. Ronald Blankenship had
been appointed to the newly created position of Vice Chairman of the Board of
Directors of Security Capital (the "Board") and Chief Operating Officer of
Security Capital.
SUMMARY OF FINANCIAL STRATEGY OF SECURITY CAPITAL AND RECENT FINANCING ACTIVITY
Security Capital's objectives are to maximize its return on investment and
its operating cash flows after tax from its Capital Division and Services
Division and to follow a conservative financial policy. In order to achieve its
financial objectives, Security Capital plans to balance its investments between
growth-oriented companies which do not pay a dividend and dividend-paying real
estate entities and in so doing intends to maintain a strong balance sheet.
Security Capital targets a conservative cash flow to fixed charge coverage
ratio of 2.5-3.0 to 1.0 and commits investment capital to companies which also
have financial policies committed to maintaining strong balance sheets with
similar coverage ratios. Financial exposure from any of Security Capital's
investments is limited to committed capital. Security Capital seeks to
prudently use unsecured, fixed rate, long-term debt which is derived from
public debt markets, with staggered maturity dates. Security Capital's current
policy is to use its earnings to meet its financial obligations and fund
investments and to refrain from paying dividends.
6
<PAGE>
In June 1998, Security Capital converted the secured line of credit of SC
Realty Incorporated ("SC Realty"), a wholly owned subsidiary of Security
Capital which holds Security Capital's shares of Archstone, ProLogis,
Homestead, SHC, BelmontCorp, SC-USREALTY, SC-GR, Security Capital U.S. Real
Estate Shares, Security Capital European Real Estate Shares and Security
Capital Preferred Growth Incorporated, into a $650 million revolving unsecured
line of credit (the "Unsecured Line of Credit") between Security Capital, as
borrower, and Wells Fargo Bank, National Association ("Wells Fargo") and The
Chase Bank of Texas, National Association ("Chase"), as agents for a syndicate
of lenders. SC Realty has guaranteed Security Capital's obligations under the
Unsecured Line of Credit. The Unsecured Line of Credit has an initial term
through April 2000 (which may be extended for one-year periods with the consent
of the lenders). The proceeds from the initial borrowing under the Unsecured
Line of Credit were used to pay off and discharge all obligations, including
principal, interest, fees and expenses, owed under the SC Realty secured line
of credit. Security Capital used the net proceeds received from the issuance of
the Old Notes to repay amounts outstanding under the Unsecured Line of Credit.
As of June 30, 1998, there were approximately $123 million of borrowings
outstanding under the Unsecured Line of Credit.
Borrowings under the Unsecured Line of Credit bear interest, at Security
Capital's option, at either (i) LIBOR plus a margin ranging from 0.7% to 1.5%
(depending on Security Capital's senior unsecured long-term debt ratings, but
not less than LIBOR plus 1.0% until April 1999), or (ii) the higher of the
federal funds rate plus a margin of 0.5% or Wells Fargo's prime rate, with
interest payable monthly in arrears. Security Capital will pay a commitment fee
ranging from 0.125% to 0.20% per annum based on the average unfunded amount.
The Unsecured Line of Credit contains several financial covenants restricting
Security Capital, including covenants: requiring a minimum shareholders'
equity; restricting the ratio of total liabilities to market value net worth;
limiting distributions; requiring a minimum ratio of cash flow to fixed
charges; limiting the amount of secured debt; requiring a minimum ratio of
unsecured liabilities to the value of a pool of investments held by Security
Capital and its consolidated subsidiaries; prohibiting the pledging of the
capital stock of SC Realty; requiring the maintenance of Security Capital's
corporate existence and listing of its common shares on the NYSE; and regarding
change of control matters. SC Realty's guarantee of the Unsecured Line of
Credit also limits the ability of SC Realty to incur liabilities and transfer
SC Realty's assets. The ability of Security Capital and SC Realty to comply
with the foregoing provisions may be affected by events beyond Security
Capital's control. Failure to comply with any of these covenants could result
in a default under the Unsecured Line of Credit. At March 31, 1998, on a pro
forma basis, after giving effect to the conversion to the Unsecured Line of
Credit, the Old Note Offering and the Exchange Offer, Security Capital and SC
Realty would have been in compliance with the covenants under the Unsecured
Line of Credit.
7
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer.............. Security Capital is offering to exchange
$1,000 principal amount of New 2005 Notes for
each $1,000 principal amount of outstanding
Old 2005 Notes, $1,000 principal amount of
New 2007 Notes for each $1,000 principal
amount of outstanding Old 2007 Notes and
$1,000 principal amount of New 2028 Notes for
each $1,000 principal amount of outstanding
Old 2028 Notes. Security Capital is making
the Exchange Offer to satisfy its obligations
under the Registration Rights Agreement. See
"The Exchange Offer--Purpose of the Exchange
Offer" and "--Terms of the Exchange Offer."
Procedures for Tendering Old
Notes........................... To validly tender Old Notes in the Exchange
Offer, the holder must tender the Old Notes
pursuant to the procedures for book-entry
transfer and a book-entry confirmation must
be received by the Exchange Agent before 5:00
p.m., New York City time, on the Expiration
Date, unless the guaranteed delivery
procedures are complied with. See "The
Exchange Offer--Procedures for Tendering Old
Notes," "--Book-Entry Transfer" and "--
Guaranteed Delivery Procedures."
Conditions...................... The Exchange Offer is not conditioned on any
minimum amount of Old Notes being tendered
for exchange, but the Exchange Offer is
subject to certain conditions which may be
waived by Security Capital and to certain
other terms and conditions. See "The Exchange
Offer--Conditions to the Exchange Offer."
Expiration Date................. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1998,
unless the Exchange Offer is extended by
Security Capital in its sole discretion. See
"The Exchange Offer--Expiration Date."
Withdrawal Rights............... Tenders of Old Notes may be withdrawn at any
time before 5:00 p.m., New York City time, on
the Expiration Date. See "The Exchange
Offer--Withdrawal Rights."
Federal Income Tax
Consequences.................... The exchange of an Old Note for a New Note in
the Exchange Offer will not be taxable to an
exchanging holder for Federal income tax
purposes. See "Certain Federal Income Tax
Consequences."
Use of Proceeds................. Security Capital will not receive any
proceeds from the issuance of New Notes in
the Exchange Offer. See "Use of Proceeds."
Exchange Agent.................. State Street Bank and Trust Company is
serving as exchange agent (the "Exchange
Agent") in connection with the Exchange
Offer. See "The Exchange Offer--Exchange
Agent."
Effect on Holders of Old Notes.. Holders of Old Notes not tendered and
accepted in the Exchange Offer will continue
to be entitled to all the rights
8
<PAGE>
applicable thereto under the Indenture, dated
as of June 18, 1998 (the "Indenture"), from
Security Capital to State Street Bank and
Trust Company, as trustee (the "Trustee"),
which relates to both the Old Notes and the
New Notes, and any such Old Notes will remain
outstanding and continue to accrue interest
according to their terms. Any Old Notes not
tendered and accepted in the Exchange Offer
will remain subject to the existing
restrictions on transfer of Old Notes
provided in the Old Notes and in the
Indenture, and Security Capital will have no
further obligations to the holders (other
than to the Initial Purchasers) of those Old
Notes to provide for their registration under
the Securities Act. In addition, the tender
of Old Notes pursuant to the Exchange Offer
will reduce the principal amount of Old Notes
outstanding, which may have an adverse effect
on, and increase the volatility of, the
market prices of Old Notes due to a reduction
of liquidity. See "Risk Factors--Consequences
of Failure to Exchange" and "The Exchange
Offer--Effect on Holders of Old Notes."
Resale of New Notes............. Security Capital believes that, based on
positions taken by the Commission staff, New
Notes issued in the Exchange Offer in
exchange for Old Notes may be offered for
resale, resold and otherwise transferred by
each holder thereof (other than a holder
which is (i) a broker-dealer, as set forth
below, (ii) an Initial Purchaser of Old Notes
which acquired Old Notes directly from
Security Capital in order to resell pursuant
to Rule 144A under the Securities Act or any
other available exemption under the
Securities Act or (iii) an "affiliate" of
Security Capital within the meaning of Rule
405 under the Securities Act) without
compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that those New Notes
are acquired in the ordinary course of that
holder's business and that holder is not
engaged in, and does not intend to engage in,
and has no arrangement or understanding with
any person to participate in, the
distribution of those New Notes within the
meaning of the Securities Act or resale of
those New Notes in violation of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time,
may be used by a broker-dealer in connection
with resales of New Notes received in
exchange for Old Notes which were acquired by
the broker-dealer as a result of market-
making or other trading activities. Security
Capital has agreed to make this Prospectus
available to any such broker-dealer for use
in connection with any such resale for such
period of time as broker-dealers must deliver
a prospectus, up to 180 days after the
Expiration Date. See "The Exchange Offer--
Resale of New Notes" and "Plan of
Distribution."
9
<PAGE>
DESCRIPTION OF NOTES
The New Notes will evidence the same debt as the Old Notes and will be issued
and entitled to the same benefits under the Indenture relating to the Old
Notes. The terms of the New Notes are identical in all material respects
(including principal amount, interest rate, maturity and ranking) to the terms
of the Old Notes for which they will be exchanged, except that the New Notes
will have been registered under the Securities Act and therefore will not be
subject to certain transfer restrictions and will not have certain registration
rights and related terms providing for an increased interest rate which are
applicable to the Old Notes. See "The Exchange Offer--Purpose of The Exchange
Offer" and "Description of Notes--General."
Issuer.......................... Security Capital Group Incorporated.
Securities Offered.............. Up to $200,000,000 aggregate principal amount
of 6.95% Exchange Notes due 2005, up to
$100,000,000 aggregate principal amount of
7.15% Exchange Notes due 2007 and up to
$200,000,000 aggregate principal amount of
7.70% Exchange Notes due 2028.
Maturity Dates.................. The 2005 Notes will mature on June 15, 2005,
the 2007 Notes will mature on June 15, 2007
and the 2028 Notes will mature on June 15,
2028. See "Description of Notes--Principal,
Maturity and Interest."
Interest Payment Dates.......... December 15 and June 15 of each year,
commencing December 15, 1998. Holders who
exchange their Old Notes for New Notes in the
Exchange Offer will receive interest accrued
on their Old Notes from June 23, 1998, the
date of issuance of the Old Notes, to the
consummation of the Exchange Offer (the
"Exchange Date"), together with interest
accrued on their New Notes from the Exchange
Date, in the first interest payment on the
New Notes, payable on December 15, 1998. See
"Description of Notes--Principal, Maturity
and Interest."
Ranking......................... The Notes of each series are senior unsecured
obligations of Security Capital and rank
equally with each other and with Security
Capital's other unsecured and unsubordinated
indebtedness. See "Description of Notes--
Principal, Maturity and Interest." The Notes
are effectively subordinated to any secured
indebtedness of Security Capital as well as
to indebtedness and other liabilities of
Security Capital's subsidiaries and companies
in which Security Capital has a direct or
indirect investment to the extent of the
assets of those subsidiaries and companies.
As of March 31, 1998, the secured
indebtedness of Security Capital and its
Wholly Owned Subsidiaries (as hereinafter
defined) aggregated approximately $367
million (with no secured indebtedness on a
pro forma basis, after giving effect to the
conversion to the Unsecured Line of Credit,
the Old Note Offering and the Exchange Offer
and the application of the proceeds
therefrom). See "Risk Factors--Ranking of
Notes" and "Capitalization."
Optional Redemption............. The Notes of each series may be redeemed at
any time at the option of Security Capital,
in whole or in part, at a redemption
10
<PAGE>
price equal to the sum of (i) the principal
amount of the Notes being redeemed plus
accrued interest to the redemption date and
(ii) the Make-Whole Amount, if any. See
"Description of Notes--Optional Redemption."
Certain Covenants............... The Indenture contains certain covenants,
including, but not limited to, covenants: (i)
limiting the incurrence by Security Capital
and its wholly owned subsidiaries of
additional indebtedness; (ii) requiring
Security Capital to maintain a minimum
consolidated tangible net worth; (iii)
limiting the creation of liens securing
indebtedness; (iv) limiting Security
Capital's ability to consolidate or merge
with or into, or to transfer all or
substantially all of its assets to, another
person; and (v) limiting the ability of
Security Capital and its subsidiaries to
enter into and engage in certain lines of
business. See "Description of Notes--Certain
Covenants."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors which should be
considered by holders before deciding whether or not to tender their Old Notes
in the Exchange Offer.
11
<PAGE>
SUMMARY SELECTED FINANCIAL INFORMATION
The following table sets forth selected financial information for Security
Capital as of and for the years ended December 31, 1997, 1996, 1995, 1994 and
1993 and as of March 31, 1998 and for the three-month periods ended March 31,
1998 and 1997 (in thousands, except per share data). Security Capital's
consolidated financial information included below has been derived from
Security Capital's consolidated financial statements, which are incorporated
herein by reference. The following selected financial information should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Security Capital's most recent annual
report on Form 10-K and quarterly report on Form 10-Q incorporated herein by
reference.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
--------------- ----------------------------------------------
1998 1997 1997(1) 1996 1995(2) 1994 1993
------- ------- -------- -------- --------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Equity in earnings...... $15,649 $44,822 $170,576 $168,473 $ 45,685 $ 8,812 $ 6,032
Rental revenues......... 27,171 10,952 58,397 145,907 103,634 55,071 10,916
Services Division
revenues(3)............ 17,787 27,279 105,941 77,512 49,404 -- --
Total revenues.......... 66,431 84,170 367,704 398,122 200,534 156,855 17,503
Rental expenses......... 12,253 5,902 25,089 58,259 40,534 23,052 1,428
Services Division
expenses(3)............ 12,347 21,324 87,190 79,296 56,317 -- --
General, administrative
and other(3)........... 11,560 11,179 54,940 32,617 20,197 6,172 2,555
Costs incurred in
acquiring Services
Division(3)............ -- -- -- -- 158,444 -- --
Gain on sale of
management companies... -- -- 93,395 -- -- -- --
Interest expense:
Security Capital:
Convertible
debentures/notes(4)... 5,249 26,665 94,749 93,912 78,785 29,647 1,616
Line of credit......... 4,580 1,412 7,631 6,256 5,977 6,424 1,808
Majority-owned
subsidiaries(5)....... 2,970 -- 2,054 17,056 19,042 8,057 362
------- ------- -------- -------- --------- -------- -------
Total interest
expense............. 12,799 28,077 104,434 117,224 103,804 44,128 3,786
Net earnings (loss)
attributable to Class B
Shares................. $ 4,027 $ 3,349 $106,154 $ 32,067 $(201,634) $ (7,685) $ 5,155
PER SHARE DATA:
Series A Preferred Stock
dividends.............. $ 18.75 $ 18.75 $ 75.00 $ 56.25 -- -- --
Net earnings (loss) per
Class B Share:
Basic.................. 0.03 0.05 1.39 0.61 $ (4.50) $ (0.33) $ 0.81
Diluted................ $ 0.03 $ 0.05 $ 1.28 $ 0.57 $ (4.50) (0.33) 0.78
Class A Share
distributions paid(6).. -- -- -- -- -- $ 33.50 $ 60.00
Weighted average Class B
Shares outstanding:
Basic.................. 123,402 61,290 76,577 52,950 44,834 22,947 6,386
Diluted................ 126,813 66,278 93,054 56,686 44,834 22,947 6,589
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH
31, AS OF DECEMBER 31,
----------- ----------------------------------------------------
1998 1997(1) 1996 1995(2)(3) 1994 1993
----------- ---------- ---------- ---------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Investments, at equity.. $2,745,056 $2,658,748 $1,438,937 $ 930,043 $ 230,756 $161,270
Real estate, net of
accumulated
depreciation........... 831,526 709,229 1,365,373 865,367 2,005,957 478,630
Total assets............ 3,935,819 3,614,239 2,929,284 1,855,056 2,300,613 673,019
Long-term debt:
Security Capital(4).... 323,024 323,024 940,197 718,611 514,383 48,970
Majority-owned
subsidiaries(5)....... 306,058 301,606 257,099 118,524 301,787 47,988
Minority interests...... 135,097 107,135 394,537 159,339 554,752 157,545
Total shareholders'
equity................. $2,553,570 $2,548,873 $ 918,702 $ 528,539 $ 359,859 $293,823
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
--------------- -------------------------------------------
1998 1997 1997(1) 1996 1995(2)(3) 1994 1993
------- ------- -------- -------- ---------- ------- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
EBDADT(7).......... $70,220 $45,681 $214,276 $137,078 $94,244 $57,533 $5,909
</TABLE>
- --------
(1) Prior to 1997, Security Capital consolidated the accounts of ATLANTIC.
During 1997, Security Capital's ownership of ATLANTIC decreased to less
than 50%. Accordingly, ATLANTIC was deconsolidated effective January 1,
1997.
(2) Prior to 1995, Security Capital consolidated the accounts of ProLogis and
Security Capital Pacific Incorporated ("PACIFIC"). During 1995, Security
Capital's ownership of ProLogis decreased to less than 50% and PACIFIC was
merged into Archstone. Accordingly, these entities were deconsolidated
effective January 1, 1995.
(3) Security Capital resulted from the January 1, 1995 merger of two
affiliated, but not commonly controlled, entities, Security Capital Group
Incorporated, a Delaware corporation, and Security Capital Realty
Incorporated, a Maryland corporation which survived the merger and later
changed its name to Security Capital Group Incorporated.
(4) During 1994, Security Capital made a $757.50 per share of Class A Common
Stock, par value $.01 per share (the "Class A Shares"), distribution of the
Convertible Subordinated Debentures due June 30, 2014 (the "2014
Convertible Debentures") resulting in a total increase of $417.2 million in
outstanding 2014 Convertible Debentures. The 2014 Convertible Debentures
were converted into Class A Shares prior to December 1997.
(5) Security Capital does not guarantee the debt of any of its consolidated or
unconsolidated operating companies.
(6) For the years ended December 31, 1994 and 1993, Security Capital elected to
be taxed as a real estate investment trust ("REIT") and made cash
distributions to its shareholders.
(7) EBDADT represents earnings before depreciation, amortization and deferred
taxes. Security Capital presents EBDADT as a measure of operating
performance. EBDADT should not be considered as a substitute for net
earnings computed in accordance with GAAP in evaluating operating results
or as a substitute for cash flows from operating, investing or financing
activities in evaluating liquidity. EBDADT is presented on a fully
converted basis which assumes conversion of all convertible debentures and
all other securities which are not anti-dilutive. Interest expense
associated with the convertible debentures is not deducted in arriving at
fully converted EBDADT. EBDADT, as calculated above, may not be comparable
to other similarly titled measures of other companies. EBDADT data assumes
the exchange of Security Capital's REIT management and property management
companies for common shares of ProLogis, Archstone and ATLANTIC as of
January 1, 1993. Those merger transactions were completed on September 9,
1997.
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered by holders before deciding whether or not to
tender their Old Notes in the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Any Old Notes not tendered and accepted in the Exchange Offer will remain
subject to the existing restrictions on transfer of Old Notes provided in the
Old Notes and in the Indenture, and Security Capital will have no further
obligations to the holders (other than to the Initial Purchasers) of those Old
Notes to provide for their registration under the Securities Act, as those Old
Notes will not retain any rights under the Registration Rights Agreement
(other than Old Notes which represent an unsold allotment for the Old Note
Offering). In general, the Old Notes may not be offered or sold except
pursuant to an exemption from, in a transaction not subject to, or in a
transaction in compliance with the registration requirements of the Securities
Act. Security Capital does not intend to register the Old Notes under the
Securities Act. In addition, the tender of Old Notes pursuant to the Exchange
Offer will reduce the principal amount of Old Notes outstanding, which may
have an adverse effect on, and increase the volatility of, the market prices
of Old Notes due to a reduction of liquidity. See "The Exchange Offer--Effect
on Holders of Old Notes."
RESALE OF NEW NOTES
Security Capital believes that, based on positions taken by the Commission
staff, New Notes issued in the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by each holder thereof
(other than a holder which is (i) a broker-dealer, as set forth below, (ii) an
Initial Purchaser of Old Notes which acquired Old Notes directly from Security
Capital in order to resell pursuant to Rule 144A under the Securities Act or
any other available exemption under the Securities Act or (iii) an "affiliate"
of Security Capital within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery requirements
of the Securities Act, provided that those New Notes are acquired in the
ordinary course of that holder's business and that holder is not engaged in,
and does not intend to engage in, and has no arrangement or understanding with
any person to participate in, the distribution of those New Notes within the
meaning of the Securities Act or resale of those New Notes in violation of the
Securities Act. Each holder of Old Notes which receives New Notes in the
Exchange Offer must represent to Security Capital in the Letter of Transmittal
that those conditions have been met. Each broker-dealer which receives New
Notes in the Exchange Offer must represent to Security Capital in the Letter
of Transmittal that it will receive those New Notes for its own account in
exchange for Old Notes which were acquired by it as a result of market-making
or other trading activities and that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of those New
Notes. The Letter of Transmittal states that by so representing and so
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes which were acquired by the broker-dealer as a result of market-
making or other trading activities. Security Capital has agreed to make this
Prospectus available to any such broker-dealer for use in connection with any
such resale for such period of time as broker-dealers must deliver a
prospectus, up to 180 days after the Expiration Date. To comply with any
applicable securities laws of certain jurisdictions, however, New Notes may
not be offered or sold unless they have been registered or qualified for sale
in those jurisdictions or an exemption from registration or qualification is
available and is complied with. Security Capital currently does not intend to
take any action to register or qualify New Notes for resale in any
jurisdictions. See "The Exchange Offer--Resale of New Notes" and "Plan of
Distribution."
RELIANCE ON DIVIDENDS AND TRANSFERS FROM INVESTEES
Security Capital conducts all of its operations through service businesses
and real estate operating companies in which Security Capital has direct and
indirect ownership positions. As such, Security Capital is
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dependent on dividends and fees from those entities to meet its operating
expense needs and to pay principal and interest on debt, including borrowings
under the Unsecured Line of Credit and the Notes. Although many of the
companies in which Security Capital has direct and indirect ownership
positions are REITs, others are not and Security Capital's ability to obtain
dividends, fees or other funds from those companies depends on the economic
performance of those companies, the prior claims of creditors or holders of
preferred stock of those companies and Security Capital's ability to control
or cause those companies to make distributions or other payments. Although
Security Capital has a significant ownership interest in, and contractual
rights which provide meaningful influence over, many of its real estate
investees, Security Capital has a non-majority interest in many of the
companies in which it has direct and indirect ownership positions; therefore,
Security Capital's ability to control or cause those companies to make
distributions or other payments may be limited.
DEPENDENCE ON KEY PERSONNEL
Security Capital's success depends on attracting and retaining the services
of executive officers, including C. Ronald Blankenship, William D. Sanders and
Thomas G. Wattles, who are members of the Operating Committee, as well as
several senior officers, consisting of the following Managing Directors:
Steven F. Dichter, John H. Gardner, C. Robert Heaton, W. Joseph Houlihan, Jeff
A. Jacobson, Gordon S. Kerr, Anthony R. Manno, Jr., Todd W. Mansfield,
Caroline S. McBride, Daniel F. Miranda, Jeremy J. Plummer, Mary Lou Rogers,
Donald E. Suter, Paul E. Szurek and Robert S. Underhill. Security Capital has
experienced individuals who manage the companies in which Security Capital has
direct and indirect ownership positions, including R. Scot Sellers and
Constance B. Moore, Co-Chairmen of Archstone, K. Dane Brooksher and Irving F.
Lyons, III, Co-Chairmen of ProLogis, Michael D. Cryan and David C. Dressler,
Jr., Co-Chairmen of Homestead, Jeffrey A. Cozad, Managing Director of SC-
USREALTY, and Laurence S. Geller, Chairman of SHC. Security Capital's success
will depend, among other things, on its ability to retain each of the
foregoing individuals. Security Capital's success also depends on the ability
of Security Capital's investees, and any new entities Security Capital
creates, to continue to recruit experienced management. There is substantial
competition for qualified personnel in the real estate and capital management
industries. Security Capital believes it has an effective succession plan in
place and that several of its officers could serve as Security Capital's
senior executive officers and continue Security Capital's performance. The
loss of any of these key personnel could have an adverse effect on Security
Capital.
RANKING OF NOTES
The Notes of each series are direct, senior unsecured obligations of
Security Capital and rank equally with each other and with all other unsecured
and unsubordinated indebtedness of Security Capital from time to time
outstanding. However, the Notes are effectively subordinated to any secured
indebtedness of Security Capital (of which none was outstanding as of March
31, 1998 on a pro forma basis, after giving effect to the conversion to the
Unsecured Line of Credit, the Old Note Offering and the application of the
proceeds therefrom and the Exchange Offer) and to the indebtedness and other
liabilities of Security Capital's subsidiaries and companies in which Security
Capital has direct or indirect ownership positions to the extent of the assets
of those subsidiaries and companies. Subject to limitations on incurring
indebtedness, unless certain financial ratios are satisfied, and on incurring
secured indebtedness, Security Capital may incur additional indebtedness. See
"Description of Notes--Certain Covenants--Limitations on Indebtedness" and "--
Limitations on Liens."
LEVERAGE
Security Capital has debt outstanding and will continue to have debt
outstanding after the Exchange Offer. As of March 31, 1998, Security Capital
had approximately $629.1 million of consolidated outstanding long-term
indebtedness (of which $306.1 million represented indebtedness of Security
Capital's consolidated investee companies) and $438.2 million of consolidated
outstanding short-term indebtedness (of which $71.2 million represented
indebtedness of Security Capital's consolidated investee companies). On a pro
forma basis, after giving effect to the Old Note Offering, Security Capital's
long-term debt-to-equity ratio (excluding the indebtedness of Security
Capital's consolidated investees, for which Security Capital is not
responsible, and
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including all outstanding Convertible Subordinated Debentures due March 29,
2016 (the "Convertible Debentures") as debt) at that date would have been 0.32
to 1.0. If all the Convertible Debentures outstanding on that date were
converted into Class A Shares (at a conversion price of $1,153.90 principal
amount of Convertible Debentures per Class A Share), that long-term debt-to-
equity ratio would have been 0.17 to 1.0 on a pro forma basis after giving
effect to the Old Note Offering. Of the $629.1 million of consolidated
outstanding long-term indebtedness, approximately $323.0 million consisted of
the Convertible Debentures. The current conversion price for the Convertible
Debentures is below the market price of the Class A Shares. If the Convertible
Debentures were converted, the outstanding long-term indebtedness would be
reduced to approximately $306.1 million, all of which would be indebtedness of
Security Capital's consolidated investee companies. Security Capital does not
guarantee the debt of any of the companies in which Security Capital has a
direct or indirect investment. In addition, the companies in which Security
Capital has a direct or indirect investment have a substantial amount of
indebtedness and, in certain cases, have issued preferred stock to third
parties.
In June 1998, Security Capital converted the secured line of credit of SC
Realty, a wholly owned subsidiary of Security Capital, into the $650 million
revolving Unsecured Line of Credit between Security Capital, as borrower, and
Wells Fargo and Chase, as agents for a syndicate of lenders. SC Realty has
guaranteed Security Capital's obligations under the Unsecured Line of Credit.
The proceeds from the initial borrowing under the Unsecured Line of Credit
were used to pay off and discharge all obligations, including principal,
interest, fees and expenses, owed under the SC Realty secured line of credit.
As of June 30, 1998, there were approximately $123 million of borrowings
outstanding under the Unsecured Line of Credit. See "Summary--Recent
Developments."
Based on Security Capital's current level of operations and anticipated
growth as a result of new business initiatives, Security Capital expects that
cash flow from operations, the proceeds of the Old Note Offering and funds
available under the Unsecured Line of Credit will be sufficient to enable
Security Capital to satisfy its anticipated cash requirements for operating
and investing activities for existing businesses for the next twelve months.
Security Capital intends to finance its long-term business activities
(including investments in new business initiatives) through the proceeds of
the Old Note Offering, borrowings under the Unsecured Line of Credit and
exercises of the outstanding warrants (the "Warrants") to purchase shares of
Class B Common Stock, par value $.01 per share (the "Class B Shares"). The
Warrants are exercisable at $28.00 per share through September 18, 1998. As of
August 11, 1998, the closing price of the Class B Shares was $22 3/8 per
share. No assurance can be given that any of the Warrants will be exercised.
In addition, Security Capital anticipates that its operating companies will
separately finance their activities through cash flow from operations, sales
of equity and debt securities and the incurrence of mortgage debt or line of
credit borrowings. The degree to which Security Capital is leveraged and to
which it is able to meet its financial obligations could affect its ability to
obtain additional financing in the future for refinancing indebtedness,
working capital, capital expenditures, acquisitions, investments in new
businesses, general corporate purposes or other purposes.
On a historical basis, the Fixed Charge Coverage Ratios (as defined in
"Description of Notes--Certain Definitions--Fixed Charge Coverage Ratio") for
the three-month period ended March 31, 1998, and for each of the years ended
December 31, 1997, 1996, 1995, 1994 and 1993 were 4.15, 1.21, 1.16, 1.09, 1.44
and 3.28, respectively. Prior to December 1997, Security Capital shareholders
also owned $715.8 million of 2014 Convertible Debentures, which were reflected
in this ratio. These 2014 Convertible Debentures were converted into Class A
Shares prior to December 1997. On a pro forma basis, after giving effect to
the Old Note Offering and the application of the proceeds therefrom and the
Exchange Offer, and after giving effect to the exchange of shares of Series A
Preferred Stock and Class B Shares for shares of Series B Preferred Stock (see
"Capitalization"), the Fixed Charge Coverage Ratios for the three-month period
ended March 31, 1998 and the year ended December 31, 1997 would have been 3.5
and 3.4, respectively.
On a historical basis, the ratios of earnings to fixed charges, including
interest on the 2014 Convertible Debentures which were converted, for Security
Capital and its consolidated subsidiaries for the three-month period ended
March 31, 1998, and for each of the years ended December 31, 1997, 1996, 1995,
1994 and 1993 were 2.4, 0.8, 0.8, 0.8, 1.2 and 3.1, respectively. For this
purpose, earnings consist of income (loss) from
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continuing operations reduced by equity in earnings of investees and increased
by dividend income from investees; for the year ended December 31, 1995,
earnings exclude a one-time non-cash expense of $158.4 million incurred in
acquiring the Services Division from a related party. Fixed charges consist of
interest expense, the amortization of debt issuance costs and capitalized
interest. On a pro forma basis, after giving effect to the conversion to the
Unsecured Line of Credit, the Old Note Offering and the application of the
proceeds therefrom and the Exchange Offer, and after giving effect to the
exchange of shares of Series A Preferred Stock and Class B Shares for shares
of Series B Preferred Stock (see "Capitalization"), the ratios of earnings to
fixed charges for the three-month period ended March 31, 1998 and the year
ended December 31, 1997 would have been 2.3 and 1.1, respectively.
BORROWING RISKS
Debt Financing Risks
To the extent Security Capital or its subsidiaries incur debt, such as the
Notes, Security Capital will be subject to the risks associated with debt
financing, including the risks that Security Capital's cash flow from
operations will be insufficient to meet required payments of principal and
interest, that Security Capital will be unable to refinance the Unsecured Line
of Credit or current or future indebtedness, including indebtedness
represented by the Notes, that the terms of any refinancing will not be as
favorable as the terms of existing indebtedness and that Security Capital will
be unable to make necessary investments in new business initiatives due to
lack of available funds. If securities of the companies in which Security
Capital has direct and indirect investments are used to secure Security
Capital's indebtedness and Security Capital is unable to make required
payments on that indebtedness, the securities could be transferred to the
lender with a consequent loss of income and asset value to Security Capital.
Security Capital's policy will be generally to arrange unsecured, fixed rate
long-term debt, such as the Notes.
Variable Interest Rate Risk
Increases in interest rates could increase Security Capital's interest
expense, which would adversely affect Security Capital's net earnings and cash
available for payment of obligations, including indebtedness represented by
the Notes. At March 31, 1998, Security Capital and its Wholly Owned
Subsidiaries had $367.0 million of variable interest rate debt outstanding,
all of which was under the Unsecured Line of Credit. See "Summary--Summary of
Financial Strategy of Security Capital and Recent Financing Activity."
CONFLICTS OF INTEREST
Allocation of New Business Opportunities
Security Capital will deploy its capital (both its corporate and third-party
managed capital) through the direct and indirect ownership of public and
private companies with highly focused business strategies which are engaged in
real estate related activities. The allocation of new business opportunities
may present conflicts between Security Capital and its direct and indirect
investees. New opportunities in existing property types within the United
States, for example, multifamily communities or distribution space, will be
presented to existing direct or indirect investees which are engaged in owning
and operating those types of properties. Long-term strategic investment
opportunities in equity oriented REITs located in the United States, which are
not engaged in operating property types in which Security Capital currently
owns a strategic position, generally will be allocated to SC-USREALTY. All
other investment opportunities in unrelated real estate operating companies
located in the United States are expected to be allocated to Security Capital,
which may form new entities to develop those opportunities. These new business
initiatives, to the extent they are developed into new businesses, may be
subject to a greater risk of failure as a new business initiative than
generally would be associated with a mature business. As a result, there can
be no assurance that these new business initiatives will be completed, or if
completed, will prove to be successful or viable. While none of the new
business initiatives is material at present to Security Capital's results of
operations or financial condition, these initiatives are expected to be an
important component of Security Capital's future growth.
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Interests of Certain Directors and Officers of Security Capital in Direct and
Indirect Investees
Several directors and officers of Security Capital are directors or officers
of direct or indirect investees of Security Capital and own shares of Security
Capital and direct and indirect investees of Security Capital. As of March 12,
1998, directors and executive officers of Security Capital as a group
beneficially owned 138,621 Class A Shares and 7,536,674 Class B Shares,
representing approximately 7.66% of the Class A Shares and 17.36% of the Class
B Shares, assuming exercise of warrants and options to purchase 40,305
additional Class A Shares held by such group. At that same date, those
directors and officers as a group beneficially owned 39,380 common shares of
ATLANTIC (less than 1%), 346,828 common shares of Homestead (less than 1%),
798,767 common shares of Archstone (less than 1%), 634,787 common shares of
ProLogis (less than 1%) and 3,042,221 common shares of SC-USREALTY (less than
2%). William D. Sanders is Chairman, Chief Executive Officer and a director of
Security Capital, a director of CarrAmerica Realty Corporation, SC-USREALTY,
SC-GR, Storage USA and SHC and an advisory director of REGENCY. C. Ronald
Blankenship is Vice Chairman, Chief Operating Officer and a director of
Security Capital, a director of SHC and Storage USA and an advisory director
of Homestead. John T. Kelley, III is a director of Security Capital, a trustee
of Archstone, an advisory trustee of ProLogis and Chairman of PACIFIC RETAIL.
John P. Frazee, Jr. is a director of Security Capital and a director of
Homestead. Thomas G. Wattles is a Managing Director of Security Capital, a
director of SHC and a trustee of ProLogis and CWS. Caroline S. McBride is a
Managing Director of GSG, a director of CarrAmerica Realty Corporation and
Storage USA, Inc. and a trustee of CWS. Jeffrey A. Klopf is Senior Vice
President and Secretary of Security Capital and holds similar positions in
ProLogis, Archstone and Homestead.
Each of Messrs. Blankenship, Wattles, Frazee and Kelley hold their
directorships in direct investees of Security Capital as nominees of Security
Capital pursuant to Investor Agreements between Security Capital and the
respective investee. Mr. Sanders, Mr. Wattles and Ms. McBride hold their
directorships in indirect investees of Security Capital as nominees of SC-
USREALTY under agreements between SC-USREALTY and the respective indirect
investee.
From time to time there may be transactions between Security Capital and its
direct investees, or among its direct and indirect investees, or between
Security Capital and its indirect investees. The interests of the foregoing
persons may differ from the interests of shareholders of Security Capital as a
result of their positions in the direct or indirect investees or their
ownership of securities of the direct or indirect investees and, as a result,
those persons may have an incentive to place the interests of the direct or
indirect investees over those of Security Capital.
Principal Transactions with Officers, Directors and Direct and Indirect
Investees
Security Capital has engaged in principal transactions with certain officers
and directors or companies in which a director may have a material interest.
Security Capital will not borrow from or make loans to affiliates, other than
loans to officers or loans to affiliates in which Security Capital owns a
substantial economic interest, or where the Board believes that the loans are
in the best long-term interests of Security Capital and its shareholders. In
those cases where Security Capital engages in these types of transactions, it
has obtained or will obtain, after appropriate disclosure of all material
interests, Board approval for officer transactions, disinterested director
approval for interested director transactions and, where appropriate under
Maryland law or required by its charter (the "Charter") or bylaws (the
"Bylaws"), shareholder approval.
Neither Security Capital's Charter nor its Bylaws contain any restrictions
on interested party transactions with directors and officers. Under the laws
of Maryland (where Security Capital is organized), each director is obligated
to offer to Security Capital any opportunity (with certain limited exceptions)
which comes to him and which Security Capital could reasonably be expected to
have an interest in developing. In addition, under Maryland law, any contract
or other transaction between Security Capital and any director or any entity
in which
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the director has a material financial interest is voidable unless (i) it is
approved, after disclosure of the interest, by the affirmative vote of a
majority of disinterested directors or by the affirmative vote of a majority
of the votes cast by disinterested shareholders or (ii) it is fair and
reasonable to Security Capital.
Transactions with direct investees have been and will be considered, after
appropriate disclosure of all material interests, by the entire Board.
Security Capital owns substantial positions in its direct investees which,
together with certain investor agreements, advisory agreements, board
representation or other control rights, allow Security Capital to exert
significant influence over the operations of each of these entities. SC-
USREALTY generally has investor agreements and board representation for
indirect investees of Security Capital.
CERTAIN RISKS RELATING TO THE INVESTMENT COMPANY ACT
Security Capital is not registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), in reliance on an exemption
provided by Rule 3a-1 promulgated under the Investment Company Act. Security
Capital is not required to register as an investment company because it is
principally engaged in the real estate business through companies which it
primarily controls. As of May 31, 1998, Security Capital owned approximately
38% of Archstone (as of July 7, 1998), 41% of ProLogis, 70% of Homestead (as
of July 7, 1998), 31% of SHC, 34% of SC-USREALTY and 35% of SC-GR (based in
each case on outstanding common shares at that date) which, together with
certain investor agreements, advisory agreements, board representation or
other control rights, allows Security Capital to exert significant influence
over the operations of each of these entities. Security Capital currently
intends to exert similar influence over any other operating company in which
it makes future investments. However, to the extent Security Capital and its
affiliates do not elect to participate in future equity offerings by the
companies in which Security Capital has a direct or indirect investment, its
ownership interest in and control over those companies could diminish, and
Security Capital could potentially be required to register as an investment
company under the Investment Company Act. Security Capital would be materially
adversely affected if it were required to register as an investment company
under the Investment Company Act.
MARKET FOR NEW NOTES
There is currently no public market for the New Notes and there can be no
assurance that an active public market for the New Notes will develop.
Security Capital does not intend to apply for listing of the New Notes on any
securities exchange or for quotation on any interdealer quotation system. If
the New Notes are traded after their initial issuance, they may trade at a
discount, depending on prevailing interest rates, the market for similar
securities and other factors. Accordingly, no assurance can be given that a
holder of New Notes will be able to sell the New Notes in the future or that
any sale will be at a price equal to or higher than their principal amount.
Although the Initial Purchasers have advised Security Capital that they
currently intend to make a market in the New Notes of each series after the
Exchange Offer, they are not obligated to do so and may discontinue their
market-making at any time without notice. In addition, their market-making
activity will be subject to the limits imposed by the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly,
there can be no assurance as to the development or liquidity of any market for
the New Notes.
REAL ESTATE INVESTMENT RISKS AFFECTING SECURITY CAPITAL
General
Although Security Capital owns no real estate, the companies in which
Security Capital has a direct or indirect investment own real estate. The
return which Security Capital achieves from the companies in which
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Security Capital has a direct or indirect investment is dependent on the
performance of the real property investments held by those companies, which
are subject to varying degrees of risk. Real estate cash flows and values are
affected by a number of factors, including changes in the general economic
climate, local, regional or national conditions (such as an oversupply of
properties or a reduction in rental demand in a specific area), the quality
and philosophy of management, competition from other available properties and
the ability to provide adequate maintenance and insurance and to control
operating costs. Although Security Capital seeks to minimize these risks
through its market research and asset and property management capabilities,
these risks cannot be eliminated entirely. Real estate cash flows and values
are also affected by such factors as government regulations, including zoning,
usage and tax laws, interest rate levels, the availability of financing, the
possibility of bankruptcies of tenants and potential liability under, and
changes in, environmental and other laws. Since a significant portion of the
income from Security Capital's direct and indirect REIT investees is derived
from rental income and other payments from real property, their respective
income and distributable cash flow, and accordingly Security Capital's, would
be adversely affected if a significant number of tenants were unable to meet
their obligations, or if those companies were unable to lease properties on
economically favorable terms.
Debt Financing
To the extent Security Capital or one of the companies in which Security
Capital has a direct or indirect investment incurs debt, that company will be
subject to the risks associated with debt financing, including the risks that
cash flow from operations will be insufficient to meet required payments of
principal and interest, that the company will be unable to refinance any
revolving line of credit or any current or future indebtedness on its
properties, that the terms of any refinancings may not be as favorable as the
terms of existing indebtedness and that, due to a lack of funds, the company
may be unable to make necessary capital expenditures for purposes such as
renovations or re-leasing properties. If a property owned by one of the
companies in which Security Capital has a direct or indirect investment is
mortgaged to secure indebtedness and the company is unable to make its
required payments on that indebtedness, the property would be transferred to
the mortgagee with a consequent loss of income and asset value to that
company.
Risks of Real Estate Development
Certain companies in which Security Capital has a direct or indirect
investment have developed or commenced development on properties (e.g.,
international distribution facilities, multifamily communities, neighborhood
infill shopping centers, city center retail facilities, parking facilities,
corporate office space, self-storage facilities, hotels, extended-stay lodging
facilities, assisted-living residential communities and manufactured housing
communities) and expect to develop additional properties in the future. Real
estate development involves significant risks in addition to those involved in
the ownership and operation of established properties, including the risks
that financing, if needed, may not be available on favorable terms for
development projects, that construction may not be completed on schedule
(resulting in increased debt service expense and construction costs), that
estimates of the costs of construction may prove to be inaccurate and that
properties may not be leased or rented on profitable terms and therefore will
fail to perform in accordance with expectations. Timely construction may be
affected by local weather conditions, local or national strikes and by local
or national shortages in materials, insulation, building supplies and energy
and fuel for equipment.
Renewal of Leases and Re-leasing of Space
Certain of the companies in which Security Capital has a direct or indirect
investment, particularly those which invest in multifamily communities and
distribution facilities, are subject to the risks that leases may not be
renewed, space may not be re-leased or the terms of the renewal or re-leasing
may be less favorable than current lease terms. If those companies were unable
to promptly renew leases or re-lease or if the rental rates upon the renewal
or re-lease were significantly lower than expected, their cash flow, and
accordingly Security Capital's cash flow, may be adversely affected.
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Illiquidity of Real Estate Investments
Equity real estate investments are relatively illiquid and therefore may
tend to limit the ability of the companies in which Security Capital has a
direct or indirect investment to react promptly to changes in economic or
other conditions. In addition, certain significant expenditures associated
with equity investments (such as mortgage payments, real estate taxes and
operating and maintenance costs) are generally not reduced when circumstances
cause a reduction in income from the investments. Further, the companies in
which Security Capital has a direct or indirect investment which are REITs
must comply with safe harbor rules which enable a REIT to avoid punitive
taxation. Thus, the ability of those companies which are REITs to sell assets
to change their asset base is restricted by tax rules which impose holding
periods for assets and potential disqualification as a REIT upon certain asset
sales.
Regulation
Governmental authorities at the federal, state and local levels are actively
involved in the issuance and enforcement of regulations relating to land use
and zoning restrictions. Regulations may be issued which could have the effect
of restricting or curtailing certain uses of existing structures or requiring
that the structures be renovated or altered in some fashion. The issuance of
any such regulations could have the effect of increasing the expenses and
lowering the profitability of any of the properties affected thereby. Security
Capital does not believe that any of these regulations will have a material
impact on Security Capital or its direct or indirect investees.
Changes in Laws
Increased costs resulting from increases in real estate, income or transfer
taxes or other governmental requirements generally may not be passed through
directly to residents, tenants or lessees, inhibiting the ability of the
companies in which Security Capital has a direct or indirect investment to
recover those costs. Substantial increases in rents, as a result of those
increased costs, may affect the ability of a resident, tenant or lessee to pay
rent, causing increased vacancy. Changes in laws increasing potential
liability for environmental conditions or increasing the restrictions on
discharges or other conditions may result in significant unanticipated
expenditures. No assurance can be given that new legislation, regulations,
administrative interpretations or court decisions will not significantly
change the laws with respect to the qualification of certain of Security
Capital's direct and indirect investees as REITs or the federal income tax
consequences of that qualification to those investees.
Uninsured Loss
The companies in which Security Capital has a direct or indirect investment
carry comprehensive liability, fire, flood, earthquake, extended coverage and
rental loss insurance with respect to their properties with policy
specifications and insured limits customarily carried for similar properties
and which the operating companies believe are appropriate under the
circumstances. There are, however, certain types of losses (such as from wars)
which may be uninsurable or not economically insurable. Should an uninsured
loss or a loss in excess of insured limits occur, the operating company could
lose both its capital invested in and anticipated profits from one or more
properties.
HIGHLY COMPETITIVE BUSINESSES
There are numerous commercial developers, real estate companies and other
owners of real estate, including those which operate in the regions in which
the properties of Security Capital's direct and indirect investees are
located, which compete with the companies in which Security Capital has a
direct or indirect investment in seeking land for development, properties for
acquisition and disposition and tenants for properties. The companies in which
Security Capital has a direct or indirect investment compete on a regional,
national and global basis with no single market being material to Security
Capital as a whole.
All of the properties of the companies in which Security Capital has a
direct or indirect investment are located in developed areas which include
other similar properties. The number of competitive properties in a
21
<PAGE>
particular area could have a material adverse effect on those companies'
ability to lease units and on the rents charged. In addition, other forms of
properties provide alternatives to tenants of those companies' properties (for
example, single family residential housing may be an alternative to
multifamily housing).
From December 31, 1995 to May 31, 1998, Security Capital's equity market
capitalization, based on shares outstanding, grew from $1.0 billion to $3.4
billion. The global real estate securities management business of Security
Capital competes for capital and investment opportunities with a large number
of investment management firms as well as certain insurance companies,
commercial banks and other financial institutions, some of which may have
greater access to capital and other resources and which may offer a wider
range of services than Security Capital. Real estate investment management
firms can be formed with relatively small amounts of capital and depend most
significantly on the continued involvement of their professional staff.
Security Capital believes that competition among real estate investment
management firms is affected principally by investment performance,
development and implementation of investment strategies, information
technologies and databases and client service performance.
IMPACT OF ENVIRONMENTAL REGULATIONS
Security Capital, through certain of its direct and indirect investees, is
subject to environmental and health and safety laws and regulations related to
the ownership, operation, development and acquisition of real estate. Under
those laws and regulations, Security Capital may be liable for, among other
things, the costs of removal or remediation of certain hazardous substances,
including asbestos-related liability. Those laws and regulations often impose
liability without regard to fault.
As part of their due diligence procedures, Security Capital's direct and
indirect investees have conducted Phase I environmental assessments on each of
their respective properties prior to their acquisition; however, there can be
no assurance that those assessments have revealed all potential environmental
liabilities. Security Capital is not aware of any environmental condition on
any of its direct and indirect investees' properties which is likely to have a
material adverse effect on Security Capital's financial position or results of
operations; however, there can be no assurance that any such condition does
not exist or may not arise in the future.
USE OF PROCEEDS
Security Capital will not receive any proceeds from the issuance of New
Notes in the Exchange Offer.
22
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Security Capital and
its Wholly Owned Subsidiaries as of March 31, 1998 and as adjusted to give
effect to the Exchange Offer (assuming all Old Notes are exchanged for New
Notes), the Old Note Offering ($495 million in net proceeds) and the
application of the proceeds therefrom, and the exchange of Series A Preferred
Stock and Class B Shares for Series B Preferred Stock as described below (in
thousands, except share data). The table should be read in conjunction with
Security Capital's consolidated financial statements and notes thereto
incorporated herein by reference.
<TABLE>
<CAPTION>
MARCH 31, 1998
-------------------------
AS
HISTORICAL(1) ADJUSTED(1)
------------- -----------
(UNAUDITED)
<S> <C> <C>
Long-term debt:
6.95% Exchange Notes due 2005...................... $ -- $ 200,000
Original issue discount on 6.95% Notes........... -- (214)
7.15% Exchange Notes due 2007...................... -- 100,000
Original issue discount on 7.15% Notes........... -- (187)
7.70% Exchange Notes due 2028...................... -- 200,000
2016 Convertible Debentures(2)..................... 323,024 323,024
---------- ----------
Total long-term debt........................... 323,024 822,623
---------- ----------
Minority interests................................... 4,240 4,240
Shareholders' equity:
Series A Preferred Stock, par value $.01 per share;
139,000 shares issued and outstanding historical;
0 shares issued and outstanding as adjusted;
stated liquidation preference of $1,000 per share. 139,000 --
Series B Preferred Stock, par value $.01 per share;
0 shares issued and outstanding historical;
257,642 shares issued and outstanding as adjusted;
stated liquidation preference of $1,000 per
share(3).......................................... -- 257,642
Class A Shares, par value $.01 per share;
20,000,000 shares authorized; 1,741,042 shares
issued and outstanding(4)......................... 17 17
Class B Shares, par value $.01 per share;
229,861,000 shares authorized historical;
229,742,358 shares authorized as adjusted;
37,889,536 shares issued and outstanding
historical; 34,596,248 shares issued and
outstanding as adjusted(5)........................ 379 346
Additional paid-in capital......................... 2,509,695 2,410,929
Accumulated deficit................................ (91,027) (110,870)
---------- ----------
Total shareholders' equity..................... 2,558,064 2,558,064
---------- ----------
Total capitalization........................... $2,885,328 $3,384,927
========== ==========
</TABLE>
- --------
(1) As of March 31, 1998, there were $367 million of borrowings outstanding
under SC Realty's secured line of credit, and as of June 30, 1998, there
were $123 million of borrowings outstanding under the Unsecured Line of
Credit. This table assumes that Homestead is accounted for on the equity
method of accounting and does not include any balances for Homestead, a
70%-owned subsidiary of Security Capital as of March 31, 1998, as Security
Capital does not guarantee the debt of any of its consolidated or
unconsolidated investees in which it has a direct or indirect investment.
As of March 31, 1998, Homestead had $71.2 million of borrowings
outstanding under its line of credit and $306.1 million of mortgage notes
payable outstanding. On June 15, 1998, Homestead entered into a third
credit facility which is secured by a subscription agreement entered into
between Homestead and Security Capital, which obligates Security Capital
to invest up to $200 million in subordinated convertible debentures of
Homestead under certain circumstances (which amount may be reduced if
Security Capital purchases other Homestead securities). In addition,
Security
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<PAGE>
Capital committed, during the eight-month term of the third line of credit,
to retain its ownership of Homestead common shares. Homestead has pledged
this investment obligation of Security Capital as security under Homestead's
third line of credit.
(2) Convertible into 279,941 Class A Shares.
(3) Convertible into 6,606,205 Class B Shares.
(4) Does not include an aggregate of 490,324 Class A Shares reserved for
issuance upon exercise of outstanding options or warrants or upon
conversion of the Convertible Debentures.
(5) Does not include 87,052,100 Class B Shares reserved for issuance upon
conversion of Class A Shares, 8,842,457 Class B Shares reserved for
issuance upon exercise of Warrants or 6,606,205 Class B Shares reserved
for issuance upon conversion of the Series B Preferred Stock.
On May 12, 1998, Security Capital issued 257,642 shares of Series B
Preferred Stock in exchange for 139,000 shares of Series A Preferred Stock and
3,293,288 Class B Shares held by an investor. The exchange of the Series A
Preferred Stock and the Class B Shares for the Series B Preferred Stock was
structured as a tax free recapitalization. The exchange of the Series B
Preferred Stock (which is initially convertible into 6,606,205 Class B Shares)
for the Series A Preferred Stock (which was convertible into 5,294,800 Class B
Shares), and the 3,293,288 Class B Shares resulted in 1,981,883 fewer Class B
Shares outstanding on a fully converted basis. The exchange of the Series A
Preferred Stock and the Class B Shares for the Series B Preferred Stock was
based on the fair value of these securities at the date of the Exchange
Agreement. For financial accounting purposes, the fair value of the Series B
Preferred Stock issued ($257,642,000) less the sum of (a) the carrying value of
the Series A Preferred Stock ($139,000,000) and (b) the fair value of the Class
B Shares ($98,799,000) exchanged will be recorded as a dividend ($19,843,000) in
Security Capital's second quarter financial statements.
24
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Notes, Security Capital entered into
the Registration Rights Agreement with the Initial Purchasers. Security
Capital is making the Exchange Offer to satisfy its obligations under the
Registration Rights Agreement. Pursuant to the Registration Rights Agreement,
Security Capital agreed that it would use its best efforts to cause the
registration statement (of which this Prospectus forms a part) (the
"Registration Statement") to be filed on or prior to September 21, 1998, to
have the Registration Statement declared effective by the Commission on or
prior to December 20, 1998 and to remain effective until the closing of the
Exchange Offer and to consummate the Exchange Offer on or prior to January 19,
1999. If Security Capital defaults in any of those obligations, then (unless
Security Capital files a shelf registration statement providing for resales of
the Old Notes), the Old Notes provide that additional interest will accrue on
the Old Notes following each such default at a rate of 0.50% per annum. The
additional interest would cease accruing with respect to any such default when
that default is cured. The above summary of certain provisions of the
Registration Rights Agreement does not purport to be complete and is qualified
in its entirety by reference to the Registration Rights Agreement, which has
been filed as an exhibit to the Registration Statement.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, Security Capital is offering to
exchange $1,000 principal amount of New 2005 Notes for each $1,000 principal
amount of outstanding Old 2005 Notes, $1,000 principal amount of New 2007
Notes for each $1,000 principal amount of outstanding Old 2007 Notes and
$1,000 principal amount of New 2028 Notes for each $1,000 principal amount of
outstanding Old 2028 Notes. Security Capital will accept for exchange any and
all Old Notes which are validly tendered before 5:00 p.m., New York City time,
on the Expiration Date and not withdrawn as permitted below. Tenders of Old
Notes will be accepted only in denominations of $1,000 and integral multiples
thereof. Security Capital's obligation to accept Old Notes for exchange in the
Exchange Offer is subject to certain conditions as described under "--
Conditions to the Exchange Offer" below.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Maryland General Corporation Law or the Indenture in connection with the
Exchange Offer. Security Capital intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations of the Commission thereunder.
EXPIRATION DATE
As used herein, the term "Expiration Date" means , 1998,
unless the Exchange Offer is extended by Security Capital in its sole
discretion, in which case the term "Expiration Date" will mean the latest date
to which the Exchange Offer is extended. Security Capital expressly reserves
the right, at any time or from time to time, to extend the period of time
during which the Exchange Offer is open, and thereby to delay accepting any
Old Notes for exchange, by giving oral or written notice of the extension to
the Exchange Agent and notice of the extension to the holders by means of a
press release or other public announcement before 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
During any such extension, all Old Notes previously tendered will remain
subject to the Exchange Offer and may be accepted for exchange by Security
Capital.
PROCEDURES FOR TENDERING OLD NOTES
To validly tender Old Notes in the Exchange Offer, the holder must tender
those Old Notes pursuant to the procedures for book-entry transfer described
below and a book-entry confirmation, including an Agent's Message (as
hereinafter defined) must be received by the Exchange Agent before 5:00 p.m.
New York City time, on the Expiration Date, unless the guaranteed delivery
procedures described below are complied with. See "--Book-Entry Transfer" and
"--Guaranteed Delivery Procedures."
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<PAGE>
Only a registered holder of Old Notes may tender those Old Notes in the
Exchange Offer. Any beneficial holder of Old Notes whose Old Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender those Old Notes in the Exchange Offer
should contact that registered holder promptly and instruct that registered
holder to tender those Old Notes. If the beneficial holder wishes to tender
directly, the beneficial holder must, prior to tendering Old Notes, make
appropriate arrangements to register ownership of those Old Notes in the
beneficial holder's name.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be
determined by Security Capital in its sole discretion, which determinations
shall be final and binding on all parties. Security Capital reserves the
absolute right to reject any or all tenders of Old Notes which are not in
proper form or the acceptance of which might, in the judgment of Security
Capital or its counsel, be unlawful. Security Capital also reserves the
absolute right in its sole discretion to waive any defects, irregularities or
conditions of the Exchange Offer with respect to any Old Notes, either before
or after the Expiration Date (including the right to waive the ineligibility
of any holder which seeks to tender Old Notes in the Exchange Offer). Security
Capital's interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Notes for exchange must be cured within such
period of time as Security Capital determines. Neither Security Capital, the
Exchange Agent nor any other person is under any duty to give notification of
any defect or irregularity in connection with tenders of Old Notes for
exchange or will incur any liability for failure to give any such
notification.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account at DTC for
purposes of the Exchange Offer promptly after the date of this Prospectus. All
tenders of Old Notes must be made by book-entry transfer to the Exchange
Agent's DTC account. Any holder of Old Notes which is a DTC participant may
use DTC's Automated Tender Offer Program ("ATOP") to tender Old Notes by
causing DTC to transfer those Old Notes into the Exchange Agent's account in
accordance with DTC's procedures. The Old Notes will be deemed tendered only
after the Exchange Agent receives confirmation of the book-entry transfer of
the Old Notes into the Exchange Agent's account (including an Agent's
Message).
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the tendering participant that the participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that Security Capital
may enforce the Letter of Transmittal against the participant.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of Old Notes wishes to tender those Old Notes and the
procedures for book-entry transfer cannot be completed before the Expiration
Date, a tender may be effected if (i) the tender is made through an "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Exchange Act,
including (as those terms are defined therein): (a) a bank; (b) a broker,
dealer, municipal securities broker or dealer or government securities broker
or dealer; (c) a credit union; (d) a national securities exchange, registered
securities association or clearing agency; or (e) a savings association which
is a participant in a Securities Transfer Association (an "Eligible
Institution"); (ii) before 5:00 p.m., New York City time, on the Expiration
Date, the Exchange Agent receives from that Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form provided by Security Capital (by mail, courier, hand delivery or
facsimile), setting forth the name and address of the holder of the Old Notes
and the principal amount of Old Notes being tendered, stating that the Old
Notes are being tendered thereby and guaranteeing that within three NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery,
a book-entry confirmation will be received by the Exchange Agent; and (iii) a
book-entry confirmation (including an Agent's Message) is received by the
Exchange Agent within three NYSE trading days after the date of execution of
the Notice of Guaranteed Delivery.
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<PAGE>
If the Notice of Guaranteed Delivery or any other documents are signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
that person should so indicate when signing and, unless waived by Security
Capital, submit proper evidence satisfactory to Security Capital of that
person's authority to so act.
THE METHOD OF DELIVERY OF THE NOTICE OF GUARANTEED DELIVERY IS AT THE
ELECTION AND RISK OF EACH HOLDER. DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. THE NOTICE OF GUARANTEED
DELIVERY SHOULD NOT BE SENT TO SECURITY CAPITAL.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time before 5:00 p.m., New York
City time, on the Expiration Date. For a withdrawal to be effective, a written
notice of withdrawal must be received by the Exchange Agent by telegram,
telex, facsimile or letter at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the name of the
holder which tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of the Old Notes), include a
statement that the holder is withdrawing its election to have those Old Notes
exchanged, and must be signed by the registered holder of the Old Notes or be
accompanied by evidence satisfactory to Security Capital that the person
withdrawing the tender has succeeded to the registered ownership of those Old
Notes. Any notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawn Old Notes and must otherwise
comply with the procedures of DTC. All questions as to the validity, form and
eligibility (including time of receipt) of notices of withdrawal will be
determined by Security Capital, which determinations will be final and binding
on all parties. Any Old Notes properly withdrawn will thereafter be deemed not
to have been validly tendered for exchange for purposes of the Exchange Offer.
Properly withdrawn Old Notes may be tendered again by following the procedures
described under "--Procedures for Tendering" above at any time before 5:00
p.m., New York City time, on the Expiration Date.
DELIVERY OF NEW NOTES AND RETURN OF OLD NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
Security Capital will accept, as soon as practicable after the Expiration
Date, all Old Notes validly tendered and not withdrawn and will issue the New
Notes as soon as practicable after acceptance of the Old Notes. See "--
Conditions to the Exchange Offer" below. Security Capital will be deemed to
have accepted validly tendered Old Notes for exchange if and when Security
Capital gives oral or written notice of that acceptance to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders for purposes of
receiving New Notes from Security Capital. In all cases, delivery of New Notes
in exchange for Old Notes which are tendered and accepted for exchange in the
Exchange Offer will be made only after the Exchange Agent receives a
confirmation of a book-entry transfer of Old Notes into the Exchange Agent's
account at DTC (including an Agent's Message). If any tendered Old Notes are
withdrawn or are not accepted for any reason, those Old Notes will be returned
without expense to the tendering holder by book-entry transfer to that
holder's DTC account as soon as practicable after the expiration or
termination of the Exchange Offer.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, Security Capital
will not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer by means of a
press release or other public announcement, if at any time before the
acceptance of Old Notes for exchange or the issuance of New Notes in exchange
for those Old Notes, Security Capital determines that the acceptance or
issuance would violate applicable law or any interpretation of the Commission
staff. If the Exchange Offer is amended in a manner determined by Security
Capital to constitute a material change, Security Capital will promptly
disclose the amendment in a supplement to this Prospectus which will be
distributed to the
27
<PAGE>
registered holders of Old Notes, and Security Capital will extend the
Expiration Date for a period of five to ten business days, depending on the
significance of the amendment and the method of delivery to the registered
holders, if the Exchange Offer would otherwise expire during that period. The
foregoing condition is for the sole benefit of Security Capital and may be
asserted by Security Capital regardless of the circumstances giving rise to
the condition or may be waived by Security Capital in whole or in part at any
time and from time to time in its sole discretion. The failure by Security
Capital at any time to assert its rights shall not be deemed a waiver of its
rights.
In addition, Security Capital will not accept for exchange, or issue New
Notes in exchange for, any Old Notes if at that time any stop order is
threatened or in effect with respect to the Registration Statement or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as the Exchange Agent
for the Exchange Offer. All executed Notices of Guaranteed Delivery and
notices of withdrawal should be delivered to the Exchange Agent as indicated
below. Questions and requests for assistance or for additional copies of this
Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent at
.
Deliver to: State Street Bank and Trust Company, the Exchange Agent for the
Exchange Offer:
By Mail: By Overnight Courier or Hand:
State Street Bank and Trust Company State Street Bank and Trust Company
P.O. Box 778 Two International Place
Boston, MA 02102-0078 Boston, MA 02110
Attn: Kelly Mullen Attn: Kelly Mullen
(registered or certified mail
recommended)
By Facsimile for Eligible Institutions:
(617) 664-5395
(Confirm by Telephone: (617) 664-5587)
DELIVERY OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
Security Capital has agreed to pay the expenses of the Exchange Offer. The
principal solicitation of tenders of Old Notes for exchange in the Exchange
Offer is being made by mail; however, additional solicitations may be made by
telegraph, telephone or in person by officers and employees of Security
Capital and their affiliates. No additional compensation will be paid to any
such officers and employees who engage in soliciting tenders. Security Capital
will not make any payment to brokers, dealers or others soliciting tenders.
Security Capital will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for reasonable and necessary costs and
expenses incurred by them in forwarding the Prospectus and the related
documents to the beneficial owners of Old Notes held by them as nominee or in
a fiduciary capacity. Also, Security Capital will pay the Exchange Agent
reasonable and customary fees for its services and will reimburse it for
reasonable and necessary costs and expenses incurred by it in connection
therewith.
TRANSFER TAXES
Security Capital will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, a transfer
tax is imposed for any reason other than the exchange of Old Notes
28
<PAGE>
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of those taxes or an
exemption therefrom is not submitted, the amount of those transfer taxes will
be billed directly to the tendering holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same book value as the Old Notes on
Security Capital's records on the date of exchange. Accordingly, no gain or
loss for accounting purposes will be recognized by Security Capital due to the
Exchange Offer. The expenses of the Exchange Offer which are paid by Security
Capital will be amortized by Security Capital over the term of the New Notes
in accordance with GAAP.
EFFECT ON HOLDERS OF OLD NOTES
Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to be entitled to all the rights applicable thereto under the
Indenture, which relates to both the Old Notes and the New Notes, and any such
Old Notes will remain outstanding and continue to accrue interest according to
their terms. Any Old Notes not tendered and accepted in the Exchange Offer
will remain subject to the existing restrictions on transfer of Old Notes
provided in the Old Notes and in the Indenture, and Security Capital will have
no further obligations to the holders (other than to the Initial Purchasers)
of those Old Notes to provide for their registration under the Securities Act,
as those Old Notes will not retain any rights under the Registration Rights
Agreement (other than Old Notes which represent an unsold allotment for the
Old Note Offering). In general, the Old Notes may not be offered or sold
except pursuant to an exemption from, in a transaction not subject to or in a
transaction in compliance with the registration requirements of the Securities
Act. Security Capital does not intend to register the Old Notes under the
Securities Act. In addition, the tender of Old Notes pursuant to the Exchange
Offer will reduce the principal amount of Old Notes outstanding, which may
have an adverse effect on, and increase the volatility of, the market prices
of Old Notes due to a reduction of liquidity.
RESALE OF NEW NOTES
Security Capital believes that, based on positions taken by the Commission
staff, New Notes issued in the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by each holder thereof
(other than a holder which is (i) a broker-dealer, as set forth below, (ii) an
Initial Purchaser of Old Notes which acquired Old Notes directly from Security
Capital in order to resell pursuant to Rule 144A under the Securities Act or
any other available exemption under the Securities Act or (iii) an "affiliate"
of Security Capital within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery requirements
of the Securities Act, provided that those New Notes are acquired in the
ordinary course of that holder's business and that holder is not engaged in,
and does not intend to engage in, and has no arrangement or understanding with
any person to participate in, the distribution of those New Notes within the
meaning of the Securities Act or resale of those New Notes in violation of the
Securities Act. Each holder of Old Notes which receives New Notes in the
Exchange Offer must represent to Security Capital in the Letter of Transmittal
that those conditions have been met. Each broker-dealer which receives New
Notes in the Exchange Offer must represent to Security Capital in the Letter
of Transmittal that it will receive those New Notes for its own account in
exchange for Old Notes which were acquired by it as a result of market-making
or other trading activities and that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of those New
Notes. The Letter of Transmittal states that by so representing and so
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes which were acquired by the broker-dealer as a result of market-
making or other trading activities. Security Capital has agreed to make this
Prospectus available to any such broker-dealer for use in connection with any
such resale for such period of time as broker-dealers must deliver a
prospectus, up to 180 days after the Expiration Date. To comply with any
29
<PAGE>
applicable securities laws of certain jurisdictions, however, New Notes may
not be offered or sold unless they have been registered or qualified for sale
in those jurisdictions or an exemption from registration or qualification is
available and is complied with. Security Capital currently does not intend to
take any action to register or qualify New Notes for resale in any
jurisdictions. See "Plan of Distribution."
DESCRIPTION OF NOTES
GENERAL
The Old Notes have been issued, and the New Notes will be issued, pursuant
to the Indenture. The New Notes will evidence the same debt as the Old Notes
and will be issued and entitled to the same benefits under the Indenture
relating to the Old Notes. The terms of the New Notes are identical in all
material respects (including principal amount, interest rate, maturity and
ranking) to the terms of the Old Notes for which they are exchanged, except
that the New Notes will have been registered under the Securities Act and
therefore will not be subject to the existing restrictions on transfer of the
Old Notes described under "The Exchange Offer--Effect on Holders of Notes,"
but will be freely transferable by their holders, except as described under
"The Exchange Offer--Resale of New Notes." In addition, the New Notes will not
have the registration rights and related terms providing for an increased
interest rate if Security Capital defaults in its registration obligations
which are applicable to the Old Notes. See "The Exchange Offer--Purpose of the
Exchange Offer."
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act. The Notes are
subject to all of those terms, and holders of Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. A copy of the
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. See "Available Information." The statements under
this caption relating to the Notes and the Indenture are summaries and do not
purport to be complete, and where reference is made to particular provisions
of the Indenture, those provisions, including the definitions of certain
terms, are qualified in their entirety by that reference. The definitions of
certain terms used in the following summary are set forth below under "Certain
Definitions."
PRINCIPAL, MATURITY AND INTEREST
The Notes of each series are senior unsecured obligations of Security
Capital and rank pari passu in priority of payment and in all other respects
among themselves and with Security Capital's other unsecured and
unsubordinated indebtedness. The 2005 Notes are limited to $200 million, the
2007 Notes are limited to $100 million and the 2028 Notes are limited to $200
million of their respective aggregate principal amounts. The 2005 Notes mature
on June 15, 2005, the 2007 Notes mature on June 15, 2007 and the 2028 Notes
mature on June 15, 2028, each at 100% of their principal amount. Each Note
bears interest at the rate per annum shown on the front cover of this
Prospectus from June 23, 1998 or from the most recent Interest Payment Date to
which interest has been paid or provided for, payable semiannually (to holders
of record at the close of business on the December 1 or June 1 immediately
preceding the Interest Payment Date) on December 15 and June 15 of each year,
commencing December 15, 1998. Holders who exchange their Old Notes for New
Notes in the Exchange Offer will receive interest accrued on their Old Notes
from June 23, 1998, the date of issuance of the Old Notes, to the Exchange
Date, together with interest accrued on their New Notes from the Exchange
Date, in the first interest payment on the New Notes. Consequently, holders
who exchange their Old Notes for New Notes will receive the same interest
payment on December 15, 1998 (the first Interest Payment Date for the Old
Notes and the New Notes) which they would have received had they not accepted
the Exchange Offer. Old Notes tendered and accepted for exchange will cease to
accrue interest from and after the Exchange Date.
Interest on the Notes is computed on the basis of a 360-day year comprised
of twelve 30-day months. Principal of, premium, if any, and interest on the
Notes are payable at the principal corporate trust office of the Trustee
presently maintained in Boston, Massachusetts. The Notes may be presented for
payment, transfer or exchange at the office or agency of Security Capital
maintained for that purpose within the city of Boston,
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Massachusetts. At the option of Security Capital, payment of interest may be
made by check mailed to holders of Notes at their respective addresses set
forth in the register of holders of Notes; provided that all payments with
respect to Global Notes, the holders of which have given wire transfer
instructions on or prior to the relevant record date to the paying agent, will
be required to be made by wire transfer of immediately available funds to the
accounts specified by those holders. Until otherwise designated by Security
Capital, Security Capital's office or agency in New York will be the office of
an affiliate of the Trustee maintained for that purpose. The Notes of each
series are issuable in denominations of $1,000 and integral multiples thereof.
CERTAIN COVENANTS
Limitations on Indebtedness
The Indenture provides that Security Capital will not, and will not permit
any of its Wholly Owned Subsidiaries to, directly or indirectly, Incur, any
Indebtedness (including Acquired Indebtedness), if, immediately after that
Indebtedness is incurred, the total aggregate Indebtedness of Security Capital
and its Wholly Owned Subsidiaries exceeds 50% of the Adjusted Total Assets of
Security Capital and its Wholly Owned Subsidiaries.
At March 31, 1998, on a pro forma basis, after giving effect to the Old Note
Offering, the Indebtedness of Security Capital and its Wholly Owned
Subsidiaries would have aggregated $828 million and the Adjusted Total Assets
of Security Capital and its Wholly Owned Subsidiaries would have aggregated
$4.3 billion.
In addition, the Indenture provides that Security Capital will not, and will
not permit any of its Wholly Owned Subsidiaries to, directly or indirectly,
Incur any Indebtedness (including Acquired Indebtedness), if, immediately
after that Indebtedness is Incurred, the Fixed Charge Coverage Ratio for
Security Capital and its Wholly Owned Subsidiaries for the most recently ended
four fiscal quarters for which internal financial statements are available
immediately preceding the date on which that additional Indebtedness is
incurred would have been less than 1.5 to 1.0, determined on a pro forma basis
as if that Indebtedness had been incurred on the first day of that four-
quarter period.
At March 31, 1998, on a pro forma basis, after giving effect to the Old Note
Offering, the Fixed Charge Coverage Ratio for Security Capital and its Wholly
Owned Subsidiaries would have been 3.3 to 1.0.
Required Minimum Consolidated Tangible Net Worth
The Indenture provides that Security Capital will not at any time permit its
Consolidated Tangible Net Worth to be less than $1,500,000,000.
Limitations on Liens
The Indenture provides that Security Capital will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien (other than Permitted Liens) which secures
obligations under any Indebtedness of Security Capital or any of its Wholly
Owned Subsidiaries on any asset now owned or hereafter acquired by Security
Capital or any of its Subsidiaries, or any income or profits therefrom, or
assign or convey any right to receive income therefrom.
Merger, Consolidation or Sale of Assets
The Indenture provides that Security Capital will not consolidate or merge
with or into (whether or not Security Capital is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the properties or assets of Security Capital in one or
more related transactions, to another Person unless (i) the surviving Person
or the Person formed by or surviving that consolidation or merger (if other
than Security Capital) or to which that sale, assignment, transfer, lease,
conveyance or other disposition was made (the "Surviving Entity") is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the Surviving Entity assumes
all the obligations of Security Capital
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under the Notes and the Indenture pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee; (iii) immediately before and after
giving effect to that transaction and treating any Indebtedness which becomes
an obligation of Security Capital as a result of that transaction as having
been incurred by Security Capital at the time of the transaction, no Default
or Event of Default has occurred and is continuing; and (iv) Security Capital
or the Surviving Entity will, at the time of that transaction and after giving
pro forma effect thereto as if that transaction had occurred at the beginning
of the applicable four-quarter period, be permitted to Incur at least $1.00 of
additional Indebtedness pursuant to the covenants in the Indenture described
under the caption "Limitations on Indebtedness" above.
The sale, assignment, transfer, lease, conveyance or other disposition by
Security Capital of all or substantially all of its property or assets to one
or more of its Subsidiaries will not relieve Security Capital from its
obligations under the Indenture and the Notes.
Restrictions on Lines of Business
The Indenture provides that Security Capital will not, and will not permit
any of its Subsidiaries to, make Investments in any business other than the
business conducted by Security Capital and its Subsidiaries on the Issue Date
and any other business related to, or servicing, the real estate industry
unless the aggregate amount of those Investments is less than 10% of the
Consolidated Assets of Security Capital.
OPTIONAL REDEMPTION
Each series of the Notes may be redeemed at any time at the option of
Security Capital, in whole or in part, at a redemption price equal to the sum
of (i) the principal amount of the Notes being redeemed plus accrued interest
thereon to the redemption date and (ii) the Make-Whole Amount, if any, with
respect to those Notes (the "Redemption Price").
If notice has been given as provided in the Indenture and funds for the
redemption of any Notes called for redemption have been made available on the
redemption date referred to in the notice, the Notes being redeemed will cease
to bear interest on the date fixed for the redemption specified in the notice
and the only right of the holders of the Notes being redeemed will be to
receive payment of the Redemption Price.
Notice of any optional redemption of Notes of any series will be given to
holders thereof at their addresses, as shown in the Security Register, not
more than 60 nor less than 45 days prior to the date fixed for redemption. The
notice of redemption is required to specify, among other items, the Redemption
Price and the principal amount of the Notes to be redeemed held by the holder.
If less than all of the Notes of any series are to be redeemed at the option
of Security Capital, Security Capital will notify the Trustee at least 45 days
prior to the giving of the notice of redemption to the holders of the Notes of
that series (or such shorter period as is satisfactory to the Trustee) of the
aggregate principal amount of Notes of that series to be redeemed and their
redemption date. The Trustee is required to select, in such manner as it deems
fair and appropriate, Notes of that series to be redeemed in part. Each series
of the Notes may be redeemed, in part, in the minimum authorized denomination
for Notes of that series or in any integral multiple of $1,000 in excess
thereof.
As used herein, and in the Indenture:
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Notes of any series, the excess, if any, of (i) the
aggregate present value as of the date of the redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of interest accrued to the date of redemption or
accelerated payment) which would have been payable in respect of the dollar of
principal if the redemption or accelerated payment had not been made,
determined by discounting, on a semi-annual basis, the principal and interest
at the Reinvestment Rate (determined on the third Business Day preceding the
date the notice of redemption is given or declaration of acceleration is made)
from the
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respective dates on which the principal and interest would have been payable
if the redemption or accelerated payment had not been made, over (ii) the
aggregate principal amount of the Notes of that series being redeemed or paid.
"Reinvestment Rate" means with respect to each series of Notes, 0.25%
(twenty-five one hundredths of one percent), plus the arithmetic mean of the
yields under the respective headings "This Week" and "Last Week" published in
the Statistical Release under the caption "Treasury Constant Maturities" for
the maturity (rounded to the nearest month) corresponding to the remaining
life to maturity of the Notes of the relevant series, as of the payment date
of the principal being redeemed or paid. If no maturity exactly corresponds to
that maturity, yields for the two published maturities most closely
corresponding to that maturity will be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate will be interpolated or
extrapolated from those yields on a straight-line basis, rounding in each of
the relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount is to be used.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States
government securities adjusted to constant maturities or, if the statistical
release is not published at the time of any determination as described herein,
then such other reasonably comparable index which shall be designated by
Security Capital.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes of any series are
outstanding, Security Capital will furnish to holders of Notes of that series
(i) all quarterly and annual financial information which would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if
Security Capital were required to file those Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by Security
Capital's certified independent accountants and (ii) all current reports which
would be required to be filed with the Commission on Form 8-K if Security
Capital were required to file those reports. In addition, whether or not
required by the rules and regulations of the Commission, Security Capital will
file a copy of all of those information and reports with the Commission for
public availability and make that information available to securities analysts
and prospective investors upon request.
GLOBAL SECURITIES
The Notes of each series may be issued in fully-registered form only.
Each series of the New Notes will be evidenced by one or more global Notes
(the "Global Securities"), which will be deposited with, or on behalf of, DTC
and registered in the name of Cede & Co. ("Cede"), as DTC's nominee.
Holders of the New Notes may hold their interests in any of the Global
Securities directly through DTC, or indirectly through organizations which are
participants in DTC ("Participants"). Transfers between Participants will be
effected in the ordinary way in accordance with DTC rules and will be settled
in immediately available funds.
Holders of the New Notes who are not Participants may beneficially own
interests in a Global Security held by DTC only through Participants,
including certain banks, brokers, dealers, trust companies and other parties
which clear through or maintain a custodial relationship with a Participant,
either directly or indirectly, and have indirect access to the DTC system
("Indirect Participants"). So long as Cede, as the nominee of DTC, is the
registered owner of any Global Security, Cede for all purposes will be
considered the sole holder of that Global Security. Except as provided below,
owners of beneficial interests in a Global Security will not be entitled to
have certificates registered in their names, will not receive or be entitled
to receive physical delivery of certificates in definitive form, and will not
be considered the holder thereof.
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Neither Security Capital nor the Trustee (nor any registrar or paying agent)
will have any responsibility for the performance by DTC or its Participants or
Indirect Participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised Security Capital that
it will take any action permitted to be taken by a holder of Notes only at the
direction of one or more Participants whose accounts are credited with DTC
interests in a Global Security.
DTC has advised Security Capital as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions, such as transfers and pledges, among Participants
in deposited securities through electronic book-entry changes to accounts of
its Participants, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
Certain of those Participants (or their representatives), together with other
entities, own DTC. The rules applicable to DTC and its Participants are on
file with the Commission.
Purchases of Notes under the DTC system must be made by or through
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of each Note (a "Beneficial
Owner") is in turn to be recorded on the Participants' and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Participant or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Notes are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Notes, except if use of the book-entry system for the
Notes is discontinued.
The deposit of Notes with DTC and their registration in the name of Cede
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect only the identity of the
Participants to whose accounts those Notes are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Those laws may impair
the ability to transfer beneficial interests in the Global Security.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements which may be in effect
from time to time.
Principal and interest payments on the Notes will be made to DTC by wire
transfer of immediately available funds. DTC's practice is to credit
Participants' accounts on the payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the payable date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers
in bearer form or registered in "street name" and will be the responsibility
of that Participant and not of DTC or Security Capital, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of Security
Capital, disbursement of those payments to Participants is the responsibility
of DTC, and disbursement of those payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants. Neither Security
Capital nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Securities or for maintaining, supervising
or reviewing any records relating to those beneficial ownership interests.
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DTC may discontinue providing its services as securities depositary with
respect to the Notes at any time by giving reasonable notice to Security
Capital. If DTC notifies Security Capital that it is unwilling or unable to
continue as depositary for any Global Security or if at any time DTC ceases to
be a clearing agency registered as such under the Exchange Act when DTC is
required to be so registered to act as that depositary and no successor
depositary has been appointed within 90 days of that notification or of
Security Capital becoming aware of DTC's ceasing to be so registered, as the
case may be, certificates for the relevant Notes will be printed and delivered
in exchange for interests in that Global Security. Any Global Security which
is exchangeable pursuant to the preceding sentence will be exchangeable for
relevant Notes registered in such names as DTC directs. It is expected that
those instructions will be based on directions received by DTC from its
Participants with respect to ownership of beneficial interests in that Global
Security.
Security Capital may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
or if the book-entry system is no longer available for the Notes of any
series, certificates representing the Notes of that series will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources which Security Capital believes to be reliable,
but Security Capital does not take responsibility for the accuracy thereof.
EVENTS OF DEFAULT
The Indenture provides that the following events are "Events of Default"
with respect to the Notes of any series: (i) default for 30 days in the
payment of any interest due and payable on any Notes of that series; (ii)
default in the payment of the principal of any Notes of that series when due
and payable; (iii) default in the performance, or breach, of any other
covenant or warranty of Security Capital contained in the Indenture with
respect to the Notes of that series, which continues for 60 days after written
notice as provided in the Indenture; (iv) any default occurs under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by
Security Capital or any Significant Subsidiary of Security Capital (or the
payment of which is Guaranteed by Security Capital or any Significant
Subsidiary of Security Capital), whether that Indebtedness or Guarantee exists
on the date of the Indenture or is thereafter created, which default after the
termination of any applicable grace or cure period, (a) constitutes a Payment
Default or (b) results in the acceleration of that Indebtedness prior to its
express maturity and, in each case, the principal amount of any Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or which has been so accelerated, aggregates
$15 million or more; provided that, in calculating the aggregate principal
amount of any such Indebtedness, the Hedging Obligations of any Person under
which there has been a Payment Default or which has been so accelerated shall
not be netted against any other Hedging Obligation of that Person; (v) failure
by Security Capital or any Significant Subsidiary of Security Capital to pay
final judgments aggregating in excess of $15 million, which judgments are not
paid, discharged or stayed for a period of 60 days; and (vi) certain events of
bankruptcy or insolvency with respect to Security Capital or any Significant
Subsidiary of Security Capital. The term "Significant Subsidiary" means a
Subsidiary which otherwise meets the tests ascribed to the term in Regulation
S-X promulgated by the Commission under the Securities Act, except that the
tests therein shall be based on 20% of total assets or income instead of 10%,
unless Security Capital owns or controls, directly or indirectly, at least 75%
of the total voting power of the Subsidiary's shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof (with that percentage to be
calculated on a fully diluted basis), in which case the tests shall be based
on 10% of total assets or income.
If an Event of Default specified in clause (vi) above relating to Security
Capital or any Significant Subsidiary occurs, the principal amount of all
outstanding Notes of each series will become due and payable without any
declaration or other act on the part of the Trustee or the holders.
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Security Capital may discharge any and all of its obligations to holders of
any series of the Notes, at any time ("defeasance"), but may not thereby avoid
its duty to register the transfer or exchange of the Notes, to replace any
temporary, mutilated, destroyed, lost or stolen Notes or to maintain an office
or agency in respect of the Notes. Security Capital may instead be released
from the obligations imposed by certain provisions of the Indenture (which
contain the covenants described above limiting incurrence of Indebtedness and
other matters) and omit to comply with those provisions without creating an
Event of Default ("covenant defeasance"). Defeasance or covenant defeasance
may be effected only if, among other things: (i) Security Capital irrevocably
deposits with the Trustee cash or Government Obligations, as trust funds, in
an amount certified to be sufficient to pay at maturity (or upon redemption)
the principal, premium, if any, and interest on the outstanding Notes of the
series being defeased; and (ii) Security Capital delivers to the Trustee an
opinion of counsel to the effect that the holders of the Notes of that series
will not recognize income, gain or loss for United States federal income tax
purposes as a result of the defeasance or covenant defeasance and that the
defeasance or the covenant defeasance will not otherwise alter the holders'
United States federal income tax treatment of principal, premium and interest
payments on the Notes of the relevant series. In the case of a defeasance,
that opinion must be based on a ruling of the Internal Revenue Service or a
change in United States federal income tax law occurring after the date of the
Indenture, since such a result would not occur under current tax law.
NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICERS OR DIRECTORS
The Indenture provides that no recourse may be had against any past, present
or future stockholder, officer or director of Security Capital, or any
successor entity under or on any obligation, covenant or agreement contained
in the Indenture or in any Note of any series, or because of any Indebtedness
evidenced thereby.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for full disclosure of all of those terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Adjusted Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of the total amount of accrued or paid interest
(including, without limitation, interest expense attributable to Capitalized
Lease Obligations, but excluding amortization of original issue discount
("OID") on any Indebtedness, the interest portion of any deferred payment
obligation and non-cash interest which is payable in kind with additional
Indebtedness and dividend payments on any series of Disqualified Stock) with
regard to Indebtedness of that Person and its Wholly Owned Subsidiaries for
that period.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time that other Person is
merged with or into the specified Person, including, without limitation,
Indebtedness incurred in connection with, or in contemplation of, that other
Person merging with or into the specified Person, and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by the specified Person.
"Adjusted Net Income" means, with respect to any Person for any period, the
aggregate Net Income of that Person for that period, provided that (i)
amortization of OID on any Indebtedness will be excluded; (ii) the Net Income
of any Person which is not a Wholly Owned Subsidiary or which is accounted for
by the equity method of accounting will be included only to the extent of the
amount of dividends or other distributions paid in cash to that Person; (iii)
the Net Income attributable to any Person will be excluded to the extent that
the declaration or payment of dividends or similar distributions by that
Person to Security Capital is not at the date of determination permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Person or its shareholders; and (iv) the cumulative effect of any change in
accounting principles will be excluded.
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"Adjusted Total Assets" means, with respect to any Person as of any date,
the sum, without duplication, of (i) that Person's cash, (ii) the Market Value
of Publicly Traded Securities owned by that Person and (iii) the net book
value of all other assets of that Person.
"Adjusted Total Tangible Assets" means, with respect to any Person as of any
date, Adjusted Total Assets less Intangible Assets.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling" "controlled by"
and "under common control with"), as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of that Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person will
be deemed to be control.
"Board of Directors" means, with respect to any Person, the Board of
Directors of that Person, or any authorized committee of the Board of
Directors of that Person.
"Business Day" means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York or Boston, Massachusetts are authorized
by law to close.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease which
would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (iii) in the case of a partnership, partnership interests
(whether general or limited); and (iv) any other interest or participation
which confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person.
"Cash Flow" means, with respect to any Person for any period, the Adjusted
Net Income of that Person for that period plus (i) provisions for taxes based
on income or profits of that Person for that period, to the extent those
provisions for taxes were included in computing Adjusted Net Income, plus (ii)
Adjusted Fixed Charges of that Person for that period, to the extent those
Adjusted Fixed Charges were deducted in computing Adjusted Net Income, plus
(iii) depreciation and amortization of that Person for that period, to the
extent that those charges were deducted in computing Adjusted Net Income.
"Consolidated Assets" means, with respect to any Person at any date, the
consolidated assets of that Person at that date determined in accordance with
GAAP.
"Consolidated Subsidiary" means, with respect to any Person, at any date,
any Subsidiary the accounts of which would be consolidated with those of that
Person in its consolidated financial statements in accordance with GAAP if
those statements were prepared as of that date.
"Consolidated Tangible Net Worth" means, with respect to any Person as of
any date, the consolidated stockholders' equity of that Person and its
Consolidated Subsidiaries less their consolidated Intangible Assets (to the
extent reflected in determining consolidated stockholders' equity), and
excluding the cumulative effect of any change in accounting principles.
"Default" means any event which is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
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redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the date on which the Notes of the relevant series mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Cash Flow of that Person for that period to the
Adjusted Fixed Charges of that Person for that period. If a Person Incurs or
redeems any Indebtedness (other than revolving credit borrowings) during or
after the period for which the Fixed Charge Coverage Ratio is being
calculated, but prior to the date on which the event for which the calculation
of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the
Fixed Charge Coverage Ratio will be calculated giving pro forma effect to that
Incurrence or redemption, as if the same had occurred on the first day of that
period. In addition, for purposes of making the computation referred to above,
(i) acquisitions which have been made by the Person, including through mergers
or consolidations and including any related financing transactions, during or
after the period, but prior to the Calculation Date will be deemed to have
occurred on the first day of the period for which the Fixed Charge Coverage
Ratio is being calculated; (ii) the Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, will be excluded; (iii)
the interest expense attributable to any Indebtedness (whether existing or
being incurred) bearing a floating interest rate will be computed as if the
rate in effect on the Calculation Date had been the applicable rate for the
entire period; and (iv) the Adjusted Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, will be excluded, but
only to the extent that the obligations giving rise to those Adjusted Fixed
Charges will not be obligations of the Person following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entities as have been approved by a significant segment of the
accounting profession, as in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the greater of (a)
the net obligations of that Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, (ii) foreign
exchange contracts or currency swap agreements and (iii) other agreements or
arrangements designed to protect that Person against fluctuations in interest
rates or currency values or (b) zero.
"Incurs" (including, with correlative meanings, the term "Incurrence")
means, with respect to any Indebtedness, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to that Indebtedness (including Acquired
Indebtedness).
"Indebtedness" is defined to mean, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of that Person for
borrowed money, (ii) all obligations of that Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of that
Person in respect of letters of credit or bankers' acceptance or other similar
instruments (or reimbursement obligations with respect thereto), (iv) all
obligations of that Person to pay the deferred purchase price of property or
services, except Trade Payables, (v) all obligations of that Person as lessee
under Capital Lease Obligations, (vi) all Indebtedness of others secured by a
Lien on any asset of that Person, whether or not that Indebtedness is assumed
by that Person, provided that, for purposes of determining the amount of any
Indebtedness of the type described in this clause, if recourse with respect to
that Indebtedness is limited to the asset, the amount of that Indebtedness
will be limited to the lesser of the fair market value of that asset or the
amount of that Indebtedness, (vii) all Indebtedness of
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others Guaranteed by that Person to the extent that Indebtedness is Guaranteed
by that Person, (viii) all Disqualified Stock valued at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends and (ix) to the extent not otherwise included in this definition,
all obligations of that Person under Hedging Obligations.
"Intangible Assets" means, with respect to any Person, the intangible assets
of that Person determined in accordance with GAAP.
"Investments" means, with respect to any Person, all investments by that
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions, purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities and all
other items which are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Issue Date" means the original issue date of the Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of that asset given to
secure Indebtedness, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (the "UCC") (or
equivalent statutes) of any jurisdiction with respect to any such lien,
pledge, charge or security interest).
"Market Value" means, with respect to a Publicly Traded Security and on the
date of determination thereof, (i) if that Publicly Traded Security is listed
on the NYSE, the American Stock Exchange or some other principal national
securities exchange in the United States of America, the reported last sale
price of a unit of that Publicly Traded Security regular way on a given day,
or, in case no sale takes place on that day, the average of the reported
closing bid and asked prices regular way, in each case on the NYSE Composite
Tape, the American Stock Exchange Composite Tape or the principal national
securities exchange in the United States of America on which that Publicly
Traded Security is listed or admitted to trading, as applicable, (ii) if that
Publicly Traded Security is not listed or admitted to trading on any national
securities exchange in the United States of America, but prices for that
Publicly Traded Security are disseminated by means of an automated quotation
system by the National Association of Securities Dealers, Inc., the closing
sales price, or if there is no closing sales price, the average of the closing
bid and asked prices, in the automated quotation system, or (iii) with respect
to a Publicly Traded Security listed on a principal national securities
exchange in Luxembourg, Amsterdam or other European country, the price of that
Publicly Traded Security as reported on that exchange by the most widely
recognized reporting method customarily relied on by financial institutions in
that country and if that Publicly Traded Security is listed on more than one
such exchange, the principal securities exchange on which that Publicly Traded
Security is listed. Any determination of the "Market Value" of a Publicly
Traded Security pursuant to this definition will be based on the assumption
that offers of that Publicly Traded Security are exempt from registration
under the Securities Act.
"Net Income" of any Person for any period means the net income (loss) of
that Person for that period, determined in accordance with GAAP, excluding (i)
any gain or loss, together with any related provision for taxes on that gain
or loss, realized in connection with (a) any sale, lease, conveyance or other
disposition of any Strategic Investments (including, without limitation,
dispositions pursuant to sale and leaseback transactions) by that Person, (b)
the disposition of any securities (other than Portfolio Securities) by that
Person or (c) the extinguishment of any Indebtedness of that Person; (ii) any
extraordinary or nonrecurring gain or loss, together with any related
provision for taxes on that extraordinary or nonrecurring gain or loss; and
(iii) any unrealized gain or loss caused by the increase or decrease in the
Market Value of any Publicly Traded Security held, directly or indirectly, by
that Person. In addition, for the calculation of Net Income for any Person for
any period, (i) capital management fees based on assets under management
accruing to that Person for that period shall be calculated as if the fees
accruing and assets under management on the last day of that period (or the
closest
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practicable date of determination) were the fees accruing and assets under
management as of the beginning of that period; (ii) capital market fees
accruing to that Person for that period shall be calculated as if the amount
of those fees accrued during that period was equal to the amount of those fees
accrued during the six month period immediately preceding the last day of that
period (or the closest practicable date of determination), adjusted for the
duration of that period; and (iii) the dividend rates and interest rates in
effect with respect to payments accruing to that Person from its investees as
of the last day of that period (or the closest practicable date of
determination) shall be deemed to have been in effect as of the beginning of
that period.
"Non-Recourse" to a Person as applied to any Indebtedness (or portion
thereof) means that the Person is not directly or indirectly liable to make
any payments with respect to that Indebtedness (or portion thereof) and that
no Guarantee of that Indebtedness (or portion thereof) has been made by that
Person.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Payment Default" means any failure to pay any scheduled installment of
principal of, premium, if any, or interest on any Indebtedness within the
grace period provided for that payment in the documentation governing that
Indebtedness.
"Permitted Liens" means (i) Liens on real property securing Indebtedness
which is Non-Recourse to Security Capital or any of its Subsidiaries; or (ii)
Liens on any asset securing Indebtedness (other than Indebtedness referred to
in clause (i) above), provided that, after giving effect to the Incurrence of
that Indebtedness (a) the aggregate principal amount of Indebtedness secured
pursuant to this clause (ii) is less than 10% of the Total Capitalization of
Security Capital and its Consolidated Subsidiaries and (b) the aggregate net
book value of the assets of Security Capital and its Subsidiaries securing
that Indebtedness will not be greater than 200% of the principal amount of
that secured Indebtedness. For purposes of the definition of Permitted Lien,
the aggregate principal amount of Indebtedness will mean the principal amount
of that Indebtedness at maturity.
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Portfolio Securities" means Securities (a) issued by a fund or company (an
"Investment Company") either (i) registered under the Investment Company Act,
or (ii) which makes passive investments in companies or funds in which the
Investment Company does not have representation on the board of directors or
similar body or participate on a regular basis in the management ("Portfolio
Investees") and which is exempt from registration under the Investment Company
Act or (b) issued by Portfolio Investees.
"Publicly Traded Security" means a Security which is listed on the NYSE, the
American Stock Exchange or any other principal national securities exchange in
the United States, Luxembourg, Amsterdam or other European country or whose
prices are disseminated by means of an automated quotation system by the
National Association of Securities Dealers, Inc.
"Security" has the meaning given that term in Article 8 of the UCC.
"Strategic Investment" of any specified Person means any other Person in
which an Investment has been made by the specified Person, other than
Portfolio Securities, where either (i) the undepreciated book value or (ii) if
the Strategic Investment is a Publicly Traded Security, the Market Value of
the Investment exceeds $100 million.
"Subordinated Debt" means any Indebtedness (whether outstanding on the Issue
Date or hereafter Incurred) which is by its terms expressly subordinate or
junior in right of payment to the Notes.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time
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owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person (or a combination thereof) and (ii) any
partnership (a) the sole general partner or the managing general partner of
which is that Person or a Subsidiary of that Person or (b) the only general
partners of which are that Person or one or more Subsidiaries of that Person
(or any combination thereof).
"Total Capitalization" means, with respect to any Person as of any date, the
consolidated long-term Indebtedness and consolidated stockholders' equity of
that Person and its Consolidated Subsidiaries less their consolidated
Intangible Assets (to the extent reflected in determining consolidated
stockholders' equity), all determined as of that date in accordance with GAAP,
and excluding the cumulative effect of a change in accounting principles.
"Trade Payables" means, with respect to any Person, (i) any accounts payable
or any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by that Person arising in the ordinary course of
business in connection with the acquisition of goods or services, (ii)
obligations incurred in the ordinary course to pay the purchase price of
securities so long as those obligations are paid within customary settlement
periods and (iii) obligations to purchase securities pursuant to subscription
or stock purchase agreements in the ordinary course of business.
Notwithstanding the foregoing, for purposes of calculating Security Capital's
compliance with the covenants in the Indenture described in the first
paragraph under the caption "Limitations on Indebtedness" above, accounts
payables (other than deferred compensation) of Security Capital in excess of
3.0% of the undepreciated book value (determined in accordance with GAAP) of
the assets of Security Capital at any time outstanding will be treated as
Indebtedness to the extent of that excess.
"Wholly Owned Subsidiary" means a Subsidiary of any Person all of the
outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares or minimal interests issued to other Persons to
satisfy legal requirements) are at the time owned by that Person or by one or
more Wholly Owned Subsidiaries of that Person or by that Person and one or
more Wholly Owned Subsidiaries of that Person.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based on the Internal Revenue Code of 1986, as
amended, the Treasury regulations thereunder, its legislative history,
administrative pronouncements, and judicial decisions, all of which are
subject to change, which change may be retroactive. Potential holders should
consult their own tax advisors to determine the state, local and non-U.S.
consequences of the Exchange Offer.
The exchange of an Old Note for a New Note in the Exchange Offer will not be
taxable to an exchanging holder for Federal income tax purposes. As a result
(i) an exchanging holder will not recognize any gain or loss on the exchange,
(ii) the holding period for the New Note will include the holding period for
the Old Note and (iii) the basis of the New Note will be the same as the basis
for the Old Note. The Exchange Offer will result in no Federal income tax
consequences to a nonexchanging holder of Old Notes.
PLAN OF DISTRIBUTION
Each broker-dealer which receives New Notes in the Exchange Offer must
represent to Security Capital in the Letter of Transmittal that it will
receive those New Notes for its own account in exchange for Old Notes which
were acquired by it as a result of market-making or other trading activities
and that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of those New Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes which were acquired by the broker-dealer as a result of
market-making or other trading activities. Security Capital has agreed to make
this Prospectus available to any such broker-dealer for use in connection with
any such resale for such period of time as broker-dealers must deliver a
prospectus, up to 180 days after the Expiration Date.
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Security Capital will not receive any proceeds from resales of New Notes by
broker-dealers. New Notes received by broker-dealers for their own accounts
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or in a combination of those
methods of resale, at market prices prevailing at the time of resale, at
prices related to the prevailing market prices or at negotiated prices. Any
such resales may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such New Notes. Any
broker-dealer which resells New Notes which were received by it for its own
account in the Exchange Offer and any broker or dealer which participates in a
distribution of those New Notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any resale of those New
Notes and any commissions or concessions received by those persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by representing that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For such period of time as broker-dealers must deliver a prospectus, up to
180 days after the Expiration Date, Security Capital will provide additional
copies of this Prospectus and any amendment or supplement to this Prospectus
to any broker-dealer which requests those documents in the Letter of
Transmittal.
Although the Initial Purchasers have advised Security Capital that they
currently intend to make a market in the New Notes of each series after the
Exchange Offer, they are not obligated to do so and may discontinue their
market-making at any time without notice. In addition, their market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act. Accordingly, there can be no assurance as to the development or
liquidity of any market for the New Notes.
Security Capital has agreed in the Registration Rights Agreement to
indemnify each broker-dealer reselling New Notes pursuant to this Prospectus,
and their officers, directors and controlling persons, against certain
liabilities in connection with the offer and sale of New Notes, including
liabilities under the Securities Act, or to contribute to payments that those
persons may be required to make in respect thereof.
EXPERTS
The consolidated financial statements and related schedules of Security
Capital and ProLogis (formerly known as Security Capital Industrial Trust)
incorporated herein by reference, as included in Security Capital's annual
report on Form 10-K, and the financial statements and related schedules of
Homestead as of December 31, 1997, consolidated into the financial statements
of Security Capital, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and
are incorporated herein in reliance upon the authority of such firm as experts
in giving such reports.
The financial statements of Security Capital Pacific Trust as December 31,
1997 and 1996, and for each of the years in the three-year period ended
December 31, 1997, and the related schedule incorporated by reference into the
accompanying Prospectus, have been incorporated by reference into the
accompanying Prospectus and in the Registration Statement of which the
accompanying Prospectus forms a part in reliance upon the KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference in
the accompanying Prospectus and upon the authority of such firm as experts in
accounting and auditing.
The financial statements and related schedules of ATLANTIC as of December
31, 1996 and December 31, 1995 and Homestead as of December 31, 1996 and for
the years then ended consolidated into the financial statements of Security
Capital incorporated herein by reference have been audited by Ernst & Young
LLP, independent auditors, to the extent indicated in their reports thereon
also incorporated herein by reference. Those financial statements have been
consolidated in reliance on those reports given on the authority of that firm
as experts in accounting and auditing.
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The financial statements of SC-USREALTY, incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Security Capital for the year
ended December 31, 1997, have been audited by Price Waterhouse Sarl,
independent accountants, as indicated in their reports thereon, also
incorporated by reference. Such financial statements, to the extent they have
been included in the consolidated financial statements of Security Capital,
have been so included in reliance on their reports given on the authority of
such firm as experts in auditing and accounting.
With respect to the unaudited condensed interim financial statements of
Security Capital for the quarters ended March 31, 1998 and 1997, incorporated
herein by reference, Arthur Andersen LLP has applied limited procedures in
accordance with professional standards for a review of that information.
However, their separate report thereon states that they did not audit and they
do not express an opinion on that interim financial information. Accordingly,
the degree of reliance on their report on that information should be
restricted in light of the limited nature of the review procedures applied. In
addition, the accountants are not subject to the liability provisions of
Section 11 of the Securities Act for their report on the unaudited interim
financial information because their report is not a "report" or a "part" of
the Registration Statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
LEGAL MATTERS
Certain legal matters in respect of the validity of the issuance of the New
Notes offered hereby will be passed on for Security Capital by Mayer, Brown &
Platt, Chicago, Illinois. Mayer, Brown & Platt has in the past represented and
is currently representing Security Capital and certain of its affiliates. As
to certain matters of Maryland law, Mayer, Brown & Platt may rely on the
opinion of Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.
AVAILABLE INFORMATION
Security Capital is subject to the informational requirements of the
Exchange Act, and, in accordance therewith, files reports, proxy statements
and other information with the Commission. Those reports, proxy statements and
other information filed by Security Capital with the Commission can be
inspected and copied at the Commission's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549, or at the public reference facilities of
the Commission's regional offices in New York and Chicago. The addresses of
these regional offices are as follows: 7 World Trade Center, Suite 1300, New
York, NY 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of that material also can be obtained by mail from the Public
Reference Room of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, upon receipt of the fees prescribed by the rules and regulations of the
Commission. That material may also be accessed electronically by means of the
Commission's web site on the Internet at http://www.sec.gov. Reports, proxy
statements and other information concerning Security Capital may also be
inspected at the offices of the NYSE at 20 Broad Street, New York, New York
10005. Security Capital's Class A Shares, Class B Shares and Warrants are
listed on the NYSE.
Security Capital has filed with the Commission the Registration Statement
under the Securities Act with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements contained
in this Prospectus as to the content of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of
that contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respect by that
reference and the exhibits and schedules hereto. For further information
regarding Security Capital and the New Notes offered hereby, reference is
hereby made to the Registration Statement and those exhibits and schedules.
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INCORPORATION BY REFERENCE
The documents listed below have been filed by Security Capital with the
Commission pursuant to the Exchange Act and are hereby incorporated herein by
reference:
1. Security Capital's Annual Report on Form 10-K for the year ended
December 31, 1997 (File No. 001-13355).
2. Security Capital's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 (File No. 001-13355).
3. The information under the caption "Policies with Respect to Certain
Activities" in Security Capital's Prospectus dated September 17, 1997,
which was filed with the Commission on September 18, 1997 (File No. 333-
26037).
All documents filed by Security Capital pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the date the Exchange Offer is terminated shall be deemed to be
incorporated herein by reference and to be part hereof from the date of filing
of those documents. Any statement contained in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated herein by reference modifies or supersedes that
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Security Capital will provide without charge to each person, upon the
written or oral request of that person, a copy of any or all of the foregoing
documents incorporated herein by reference, other than exhibits to those
documents (unless those exhibits are specifically incorporated by reference
into those documents). Requests for those documents should be directed to
Jeffrey A. Klopf, Secretary, Security Capital Group Incorporated, 125 Lincoln
Avenue, Santa Fe, N.M. 87501 (telephone number (505) 982-9292).
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PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article EIGHTH of the Registrant's Charter provides as follows with respect
to the indemnification of directors and officers of the Registrant:
"The Corporation shall have the power, to the maximum extent permitted by
Maryland law in effect from time to time, to obligate itself to indemnify
and to pay or reimburse reasonable expenses in advance of final disposition
of a proceeding to (a) any individual who is a present or former director
or officer of the Corporation or (b) any individual who, while a director
or officer of the Corporation and at the request of the Corporation, serves
or has served as a director, officer, partner or trustee of another
corporation, partnership, joint venture, trust, employee benefit plan or
any other enterprise from and against any claim or liability to which such
person may become subject or which such person may incur by reason of his
or her status as a present or former director or officer of the
Corporation. The Corporation shall have the power, with the approval of the
Board of Directors, to provide such indemnification and advancement of
expenses to a person who served a predecessor of the Corporation in any of
the capacities described in (a) or (b) above and to any employee or agent
of the Corporation or a predecessor of the Corporation."
Article NINTH of the Registrant's Charter provides as follows with respect
to limitation of liability of its directors and officers:
"To the maximum extent that Maryland law in effect from time to time
permits limitation of the liability of directors and officers of a Maryland
corporation, no director or officer of the Corporation shall be liable to
the Corporation or its stockholders for money damages. Neither the
amendment nor repeal of this Article NINTH, nor the adoption or amendment
of any other provision of the charter or Bylaws of the Corporation
inconsistent with this Article NINTH, shall apply to or affect in any
respect the applicability of the preceding sentence with respect to any act
or failure to act which occurred prior to such amendment, repeal or
adoption."
Article XIII of the Registrant's Bylaws provides as follows with respect to
indemnification of its directors and officers and advances for expenses:
"To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation shall indemnify and, without requiring a preliminary
determination of the ultimate entitlement to indemnification, shall pay or
reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any individual who is a present or former director or
officer of the Corporation and who is made a party to the proceeding by
reason of his service in that capacity or (b) any individual who, while a
director of the Corporation and at the request of the Corporation, serves
or has served another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer,
partner or trustee of such corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise and who is made a party to the
proceeding by reason of his or her service in that capacity. The
Corporation may, with the approval of its Board of Directors, provide such
indemnification and advance for expenses to a person who served a
predecessor of the Corporation in any of the capacities described in (a) or
(b) above and to any employee or agent of the Corporation or a predecessor
of the Corporation."
"Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or charter of the
Corporation inconsistent with this Article, shall apply to or affect in any
respect the applicability of the preceding paragraph with respect to any
act or failure to act which occurred prior to such amendment, repeal or
adoption."
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate
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dishonesty established by a final judgment as being material to the cause of
action. The Charter contains such a provision which limits that liability to
the maximum extent permitted by Maryland law.
Maryland law requires a corporation (unless its charter requires otherwise,
which the Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she is made a party by reason of his or her service in that
capacity. Maryland law permits a corporation to indemnify its present and
former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made party by reason of
their service in those or other capacities unless it is established that (a)
the act or omission of the director or officer was material to the matter
giving rise to the proceeding and (i) was committed in bad faith or (ii) was
the result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or services
or (c) in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful. However, a
Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis
that personal benefit was improperly received, unless in either case a court
orders indemnification and then only for expenses. In addition, Maryland law
permits a corporation to advance reasonable expenses to a director or officer
upon the corporation's receipt of (a) a written affirmation by the director of
officer of his or her good faith belief that he or she has met the standard of
conduct necessary for indemnification by the corporation and (b) a written
order taking by him or her or on his or her behalf to repay the amount paid or
reimbursed by the corporation if it shall ultimately be determined that the
standard of conduct was not met.
The Registrant has entered into indemnity agreements with each of its
officers and directors which provide for reimbursement of all expenses and
liabilities of that officer or director, arising out of any lawsuit or claim
against that officer or director due to the fact that he or she was or is
serving as an officer or director, except for liabilities and expenses (a) the
payment of which is judicially determined to be unlawful, (b) relating to
claims under Section 16(b) of the Securities Exchange Act of 1934 or (c)
relating to judicially determined criminal violations.
The Registration Rights Agreement filed as an exhibit to this Registration
Statement provides for the reciprocal indemnifications by the holders of the
securities registered on this Registration Statement of the Registrant, and
its directors, officers and controlling persons, and by the Registrant of
those holders, and their respective directors, officers and controlling
persons, against certain liabilities under the Securities Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
The exhibits to this Registration Statement are listed in the Exhibit Index,
which appears immediately after the signature page and is incorporated herein
by this reference.
(b) FINANCIAL STATEMENT SCHEDULES
Not applicable.
(c) REPORTS, OPINIONS AND APPRAISALS
Not applicable.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
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(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed after the effective date of this Registration Statement through the date
of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
this Registration Statement when it became effective.
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of Security Capital Group
Incorporated, a Maryland corporation, and each of the undersigned directors
and officers of Security Capital Group Incorporated, hereby constitutes and
appoints William D. Sanders, C. Ronald Blankenship, Thomas G. Wattles, Jeffrey
A. Klopf and Mark W. Pearson its, his or her true and lawful attorneys-in-fact
and agents, for it, him or her and in its, his or her name, place and stead,
in any and all capacities, with full power to act alone, to sign any and all
amendments to this Registration Statement, to sign a registration statement
filed with the Securities and Exchange Commission pursuant to Rule 462(b)
promulgated under the Securities Act and any and all amendments thereto, and
to file each such registration statement or amendment with all exhibits
thereto, and any and all documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto such attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
any and all acts and things requisite and necessary to be done in and about
the premises, as fully and to all intents and purposes as it, he or she might
or could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SANTA FE, STATE OF NEW
MEXICO, ON THE 12TH DAY OF AUGUST, 1998.
Security Capital Group Incorporated
By: /s/ Jeffrey A. Klopf
Name: Jeffrey A. Klopf
Title: Senior Vice President and
Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
------------------ ----- ----
<S> <C> <C>
/s/ William D. Sanders Chairman, Director and August 12, 1998
- ------------------------------------ Chief Executive Officer
William D. Sanders (Principal Executive
Officer)
/s/ Paul E. Szurek Chief Financial Officer August 12, 1998
- ------------------------------------ (Principal Financial
Paul E. Szurek Officer)
/s/ James C. Swaim Vice President August 12, 1998
- ------------------------------------ (Principal Accounting
James C. Swaim Officer)
/s/ C. Ronald Blankenship Director August 12, 1998
- ------------------------------------
C. Ronald Blankenship
/s/ Samuel W. Bodman Director August 12, 1998
- ------------------------------------
Samuel W. Bodman
/s/ Hermann Buerger Director August 12, 1998
- ------------------------------------
Hermann Buerger
/s/ John P. Frazee, Jr. Director August 12, 1998
- ------------------------------------
John P. Frazee, Jr.
/s/ Cyrus F. Freidheim, Jr. Director August 12, 1998
- ------------------------------------
Cyrus F. Freidheim, Jr.
/s/ H. Laurance Fuller Director August 12, 1998
- ------------------------------------
H. Laurance Fuller
/s/ Ray L. Hunt Director August 12, 1998
- ------------------------------------
Ray L. Hunt
/s/ John T. Kelley, III Director August 12, 1998
- ------------------------------------
John T. Kelley, III
/s/ Peter S. Willmott Director August 12, 1998
- ------------------------------------
Peter S. Willmott
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT DESCRIPTION
----------- --------------------
<C> <S>
4.1 Indenture, dated June 18, 1998, from Security Capital to
State Street Bank and Trust Company, as Trustee
4.2 Form of 6.95% Exchange Notes due 2005
4.3 Form of 7.15% Exchange Notes due 2007
4.4 Form of 7.70% Exchange Notes due 2028
5 Opinion of Mayer, Brown & Platt as to the legality of
the Notes being registered
8 Opinion of Mayer, Brown & Platt as to federal income tax
consequences
10.1 Credit Agreement, dated as of June 5, 1998, among Secu-
rity Capital and Chase Bank of Texas, National Associa-
tion and Wells Fargo Bank, National Association, as
agents for the financial institutions identified therein
10.2 Registration Rights Agreement, dated June 23, 1998,
among Security Capital and J.P. Morgan Securities Inc.,
Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner and
Smith Incorporated and Chase Securities Inc.
12 Computation of Ratio of Earnings to Fixed Charges
15 Letter of Arthur Andersen LLP
21 Subsidiaries of Security Capital
23.1 Consents of Mayer, Brown & Platt (included in the opin-
ions filed as Exhibits 5 and 8)
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (in-
cluded in the opinion filed as a part of Exhibit 5)
23.3 Consent of Arthur Andersen LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of Price Waterhouse Sarl
23.6 Consent of Ernst & Young LLP
23.7 Consent of Ernst & Young LLP
24 Power of Attorney pursuant to which amendments to this
Registration Statement may be filed (included on page
II- )
25 Statement of Eligibility of Trustee on Form T-1
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
99.4 Form of Letter to Clients
*99.5 Form of Exchange Agency Agreement between Security Capi-
tal and State Street Bank and Trust Company, as Exchange
Agent
</TABLE>
- --------
* To be filed by amendment.
II-6
<PAGE>
Exhibit 4.1
================================================================================
SECURITY CAPITAL GROUP INCORPORATED
TO
STATE STREET BANK AND TRUST COMPANY, Trustee
Indenture
Dated as of June 18, 1998
__________
$200,000,000 6.95% Notes Due 2005
$100,000,000 7.15% Notes Due 2007
$200,000,000 7.70% Notes Due 2028
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE 1
Definitions
Page
----
<S> <C>
Section 1.01. Certain Terms Defined.................................................... 1
Section 1.02. Other Definitions........................................................ 13
ARTICLE 2
Issue, Execution, Form and Registration of Securities
Section 2.01. Authentication and Delivery of Securities................................ 13
Section 2.02. Execution of Securities.................................................. 14
Section 2.03. Certificate of Authentication............................................ 14
Section 2.04. Form, Denomination and Date of Securities; Payments of Interest.......... 14
Section 2.05. Restrictive Legends...................................................... 15
Section 2.06. Registration, Transfer and Exchange...................................... 17
Section 2.07. Book-Entry Provisions for Global Securities.............................. 18
Section 2.08. Special Transfer Provisions.............................................. 19
Section 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Securities................ 20
Section 2.10. Cancellation of Securities............................................... 21
Section 2.11. Temporary Securities..................................................... 21
Section 2.12. CUSIP Numbers............................................................ 22
ARTICLE 3
Covenants of the Company and the Trustee.
Section 3.01. Payment of Principal and Interest........................................ 22
Section 3.02. Offices for Payments, etc................................................ 22
Section 3.03. Appointment to Fill a Vacancy in Office of Trustee....................... 23
Section 3.04. Paying Agents............................................................ 23
Section 3.05. Certificates to Trustee.................................................. 24
Section 3.06. Securityholders' Lists................................................... 24
Section 3.07. Reports by the Trustee................................................... 24
Section 3.08. Limitations on Indebtedness.............................................. 24
Section 3.09. Required Minimum Consolidated Tangible Net Worth......................... 25
Section 3.10. Limitations on Liens..................................................... 25
Section 3.11. Restrictions on Lines of Business........................................ 25
Section 3.12. Reports.................................................................. 25
Section 3.13. Waiver of Stay, Extension or Usury Laws.................................. 26
</TABLE>
i
<PAGE>
ARTICLE 4
Remedies of the Trustee and Holders on Event of Default
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 4.01. Events of Default.................................................................... 26
Section 4.02. Acceleration......................................................................... 28
Section 4.03. Other Remedies....................................................................... 28
Section 4.04. Waiver of Past Defaults.............................................................. 28
Section 4.05. Control by Majority.................................................................. 29
Section 4.06. Limitation on Suits.................................................................. 29
Section 4.07. Rights of Holders to Receive Payment................................................. 30
Section 4.08. Collection Suit by Trustee........................................................... 30
Section 4.09. Trustee May File Proofs of Claim..................................................... 31
Section 4.10. Priorities........................................................................... 31
Section 4.11. Undertaking for Costs................................................................ 31
ARTICLE 5
Concerning the Trustee
Section 5.01. Duties and Responsibilities of the Trustee; During Default; Prior to Default......... 32
Section 5.02. Certain Rights of the Trustee........................................................ 33
Section 5.03. Trustee Not Responsible for Recitals, Disposition of Securities or
Application of Proceeds Thereof...................................................... 34
Section 5.04. Trustee and Agents May Hold Securities; Collections, etc............................. 34
Section 5.05. Moneys Held by Trustee............................................................... 34
Section 5.06. Notice of Default.................................................................... 34
Section 5.07. Compensation and Indemnification of Trustee and Its Prior Claim...................... 35
Section 5.08. Right of Trustee to Rely on Officers' Certificate, etc............................... 35
Section 5.09. Persons Eligible for Appointment as Trustee.......................................... 36
Section 5.10. Resignation and Removal; Appointment of Successor Trustee............................ 36
Section 5.11. Acceptance of Appointment by Successor Trustee....................................... 37
Section 5.12. Merger, Conversion, Consolidation or Succession to Business of Trustee............... 38
Section 5.13. Preferential Collection of Claims.................................................... 38
ARTICLE 6
Concerning the Holders
Section 6.01. Evidence of Action Taken by Holders.................................................. 38
Section 6.02. Proof of Execution of Instruments and of Holding of Securities; Record Date.......... 38
Section 6.03. Securities Owned by Company Deemed Not Outstanding................................... 38
Section 6.04. Right of Revocation of Action Taken.................................................. 40
</TABLE>
ii
<PAGE>
ARTICLE 7
Supplemental Indentures
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 7.01. Supplemental Indentures Without Consent of Holders.................................. 41
Section 7.02. With Consent of Holders............................................................. 41
Section 7.03. Effect of Supplemental Indenture.................................................... 42
Section 7.04. Documents to Be Given to Trustee; Compliance with TIA............................... 42
Section 7.05. Notation on Securities in Respect of Supplemental Indentures........................ 43
ARTICLE 8
Consolidation, Merger or Sale of Assets
Section 8.01. When Issuer May Merge, Etc.......................................................... 43
Section 8.02. Successor Corporation Substituted................................................... 43
Section 8.03. Opinion of Counsel to Trustee....................................................... 44
ARTICLE 9
Redemption of Securities
Section 9.01. Ability to Redeem; Redemption Price................................................. 44
Section 9.02. Election to Redeem; Notice to Trustee............................................... 44
Section 9.03. Selection by Trustee of Securities to Be Redeemed................................... 44
Section 9.04. Notice of Redemption................................................................ 45
Section 9.05. Payment of Securities Called for Redemption......................................... 45
Section 9.06. Exclusion of Certain Securities from Eligibility for Selection for Redemption....... 46
ARTICLE 10
Defeasance and Covenant Defeasance
Section 10.01. Company's Option to Effect Defeasance or Covenant Defeasance....................... 46
Section 10.02. Legal Defeasance and Discharge..................................................... 46
Section 10.03. Covenant Defeasance................................................................ 47
Section 10.04. Conditions to Legal or Covenant Defeasance......................................... 47
Section 10.05. Deposited Money and Government Obligations to be Held in Trust;
Other Miscellaneous Provisions..................................................... 49
Section 10.06. Repayment to Company............................................................... 49
Section 10.07. Reinstatement...................................................................... 50
</TABLE>
iii
<PAGE>
ARTICLE 11
Satisfaction and Discharge
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 11.01. Satisfaction and Discharge of Indenture............................................ 50
Section 11.02. Application of Trust Funds......................................................... 50
ARTICLE 12
Miscellaneous Provisions
Section 12.01. Incorporators, Stockholders, Officers and Directors of Company Exempt
from Individual Liability.......................................................... 51
Section 12.02. Provisions of Indenture for the Sole Benefit of Parties and Holders................ 52
Section 12.03. Successors and Assigns of Company Bound by Indenture............................... 52
Section 12.04. Notices and Demands on Company, Trustee and Holders................................ 52
Section 12.05. Officers' Certificates and Opinions of Counsel; Statements to Be
Contained Therein.................................................................. 52
Section 12.06. Payments Due on Saturdays, Sundays and Holidays.................................... 53
Section 12.07. Conflict of Any Provision of Indenture with Trust Indenture Act of 1939............ 54
Section 12.08. New York Law to Govern............................................................. 54
Section 12.09. Counterparts....................................................................... 54
Section 12.10. Effect of Headings................................................................. 54
ANNEX A Form of 6.95% Note Due 2005............................................................ A-1
ANNEX B Form of 7.15% Note Due 2007............................................................ B-1
ANNEX C Form of 7.70% Note Due 2028............................................................ C-1
</TABLE>
iv
<PAGE>
Cross-reference between
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and Indenture
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
<S> <C>
310(a)(1), (2) and (5) 5.09
310(a)(3) and (4) Not applicable
310(b) 5.10(b) and (d)
310(c) Not applicable
311 5.13
312 3.06
313(a), (c) and (d) 3.07
313(b) Not applicable
314(a)(1), (2) and (3) 3.12(a)
314(a)(4) 3.05(a)
314(b) Not applicable
314(c) and (e) 12.05
314(d) Not applicable
315(a), (c) and (d) 5.01
315(b) 5.06
315(e) 4.11
316(a) (last sentence) 6.03
316(a)(1)(A) 4.05
316(a)(1)(B) 4.04
316(a)(2) Not applicable
316(b) 5.06
316(c) 6.02
317(a)(1) 4.08
317(a)(2) 4.09
317(b) 3.04
318(a) 12.07
</TABLE>
NOTE: This cross-reference sheet shall not, for any purpose, be deemed to be a
part of the Indenture.
Reference is also made to Section 318(c) of the Trust Indenture Act,
which provides that the provisions of Sections 310 to and including 317
of the Trust Indenture Act are a part of and govern every qualified
indenture, whether or not physically contained therein.
<PAGE>
THIS INDENTURE is entered into as of June 18, 1998 from Security Capital
Group Incorporated, a Maryland corporation (the "Company"), to State Street Bank
and Trust Company, as Trustee hereunder (the "Trustee").
W I T N E S S E T H :
WHEREAS, the Company has duly authorized the issue of its 6.95% Notes Due
2005, 7.15% Notes Due 2007 and 7.70% Notes due 2028 (collectively, the
"Securities") and, to provide, among other things, for the authentication,
delivery and administration thereof, the Company has duly authorized the
execution and delivery of this Indenture;
AND WHEREAS, all things necessary to make the Securities, when executed by
the Company and authenticated and delivered by the Trustee as in the Indenture
provided, the valid, binding and legal obligations of the Company, and to
constitute these presents a valid indenture and agreement according to its
terms, have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by the
Holders thereof, the Company and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the respective Holders from time to time of
the Securities as follows:
ARTICLE 1
Definitions
Section 1.0. Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture which are defined in the Trust Indenture Act or the
definitions of which in the Securities Act are referred to in the Trust
Indenture Act (except as herein otherwise expressly provided or unless the
context otherwise clearly requires), shall have the meanings assigned to such
terms in the Trust Indenture Act and in the Securities Act as in force at the
date of this Indenture. All accounting terms used herein and not expressly
defined shall have the meanings given to them in accordance with GAAP (whether
or not such is indicated herein). The words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision. The terms defined in this
Article include the plural as well as the singular.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into such specified Person, including, without limitation,
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into such specified Person, and (ii) Indebtedness secured
by a Lien encumbering any asset acquired by such specified Person.
"Adjusted Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of the total amount of accrued or paid interest
(including, without limitation, interest expense attributable to Capitalized
Lease Obligations, but excluding amortization of original
<PAGE>
issue discount on any Indebtedness, the interest portion of any deferred payment
obligation and non-cash interest which is payable in kind with additional
Indebtedness and dividend payments on any series of Disqualified Stock) with
regard to Indebtedness of such Person and its Wholly Owned Subsidiaries for such
period.
"Adjusted Net Income" means, with respect to any Person for any period, the
aggregate Net Income of such Person for such period, provided that (i)
amortization of original issue discount on any Indebtedness shall be excluded;
(ii) the Net Income of any Person which is not a Wholly Owned Subsidiary or
which is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or other distributions paid in cash to
such Person; (iii) the Net Income attributable to any Person shall be excluded
to the extent that the declaration or payment of dividends or similar
distributions by that Person to the Company is not at the date of determination
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Person or its shareholders; and (iv) the cumulative effect of any change in
accounting principles shall be excluded.
"Adjusted Total Assets" means, with respect to any Person as of any date,
the sum, without duplication, of (i) such Person's cash, (ii) the Market Value
of Publicly Traded Securities owned by such Person and (iii) the net book value
of all other assets of such Person.
"Adjusted Total Tangible Assets" means, with respect to any Person as of
any date, Adjusted Total Assets less Intangible Assets.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent Members" has the meaning provided in Section 2.07.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person, or any authorized committee of the Board of Directors
of such Person.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York or Boston, Massachusetts are
authorized by law to close.
"Capital Management Clients" means a Person for whom the Company or any
Subsidiary provides investment management or investment advisory services
pursuant to any contract or agreement or series of contracts or agreements.
"Capital Management Fees" means, with respect to any Person and for any
period, fees accrued to such Person from such Person's Capital Management
Clients calculated in relation to the assets under management for each such
Client; provided that neither performance fees nor fees (or
2
<PAGE>
any portion thereof) which ultimately inure to the benefit of a third party
shall be included in the calculation of the Capital Management Fees.
"Capital Market Clients" means a Person for whom the Company or any
Subsidiary provides investment banking, placement agent, underwriting, financial
or strategic consulting, or similar services.
"Capital Market Fees" means, with respect to any Person and for any period,
fees accrued to such Person from such Person's Capital Market Clients for
services provided; provided that neither performance fees nor fees (or any
portion thereof) which ultimately inure to the benefit of a third party shall be
included in the calculation of the Capital Market Fees.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease which
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation which
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Flow" means, with respect to any Person for any period, the Adjusted
Net Income of such Person for such period plus (i) provisions for taxes based on
income or profits of such Person for such period, to the extent such provisions
for taxes were included in computing Adjusted Net Income, plus (ii) Adjusted
Fixed Charges of such Person for such period, to the extent such Adjusted Fixed
Charges were deducted in computing Adjusted Net Income, plus (iii) depreciation
and amortization of such Person for such period, to the extent that such charges
were deducted in computing Adjusted Net Income.
"Closing Date" means June 23, 1998.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act.
"Consolidated Assets" means, with respect to any Person at any date, the
consolidated assets of such Person at such date determined in accordance with
GAAP.
"Consolidated Subsidiary" means, with respect to any Person, at any date,
any Subsidiary the accounts of which would be consolidated with those of such
Person in its consolidated financial statements in accordance with GAAP if such
statements were prepared as of such date.
"Consolidated Tangible Net Worth" means, with respect to any Person as of
any date, the consolidated stockholders' equity of such Person and its
Consolidated Subsidiaries less their consolidated Intangible Assets (to the
extent reflected in determining consolidated stockholders' equity), and
excluding the cumulative effect of any change in accounting principles.
3
<PAGE>
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at Two International Place, Corporate Trust
Division, Boston, Massachusetts 02110.
"Default" means any event which is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depositary" means The Depository Trust Company, its nominees, and their
respective successors.
"Disqualified Stock" means Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Securities of the relevant series mature.
"Effectiveness Period" means the two-year period during which the Company
is obligated under the Registration Rights Agreement to keep the Shelf
Registration Statement continuously effective (subject to the terms of the
Registration Rights Agreement), commencing upon effectiveness of the Shelf
Registration Statement, or such shorter period that will terminate when all
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"Event of Default" means any event or condition specified as such in
Section 4.01 which shall have continued for the period of time, if any, therein
designated.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer" means the exchange offer by the Company of Exchange
Securities for Securities pursuant to the Registration Rights Agreement.
"Exchange Offer Registration Statement" means a registration statement
relating to an Exchange Offer on an appropriate form and all amendments and
supplements to such registration statement, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Exchange Securities" means, with respect to Securities of any Series, any
securities issued by the Company to be offered to Securityholders in exchange
for Securities of such series pursuant to the Exchange Offer or otherwise
pursuant to a Registration of Securities containing terms identical to the
Securities for which they are exchanged (except that (i) interest thereon shall
accrue from the last date on which interest was paid on the Securities or, if no
such interest has been paid, from the date of issuance of the Securities and
(ii) the Exchange Securities shall contain the
4
<PAGE>
alternative fourth paragraph appearing on the reverse of the Securities in the
form attached hereto as Annex A, B or C, as applicable, and shall not contain
terms with respect to transfer restrictions).
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Cash Flow of such Person for such period to the
Adjusted Fixed Charges of such Person for such period. If a Person Incurs or
redeems any Indebtedness (other than revolving credit borrowings) during or
after the period for which the Fixed Charge Coverage Ratio is being calculated,
but prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such Incurrence or
redemption, as if the same had occurred on the first day of such period. In
addition, for purposes of making the computation referred to above, (i)
acquisitions which have been made by the Person, including through mergers or
consolidations and including any related financing transactions, during or after
the period, but prior to the Calculation Date shall be deemed to have occurred
on the first day of the period for which the Fixed Charge Coverage Ratio is
being calculated, (ii) the Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, (iii) the interest expense
attributable to any Indebtedness (whether existing or being Incurred) bearing a
floating interest rate shall be computed as if the rate in effect on the
Calculation Date had been the applicable rate for the entire period, and (iv)
the Adjusted Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Adjusted Fixed Charges will not be
obligations of the Person following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entities as have been approved by a significant segment of the accounting
profession, as in effect from time to time.
"Global Securities" has the meaning provided in Section 2.04.
"Government Obligations" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the greater of (a)
the net obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, (ii) foreign
exchange contracts or currency swap agreements and (iii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency values or (b) zero.
5
<PAGE>
"Holder", "holder of Securities", "Securityholder" or other similar terms
means the registered holder of any Security.
"Incurs" (including, with correlative meanings, the term "Incurrence")
means, with respect to any Indebtedness, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to such Indebtedness (including Acquired Indebtedness).
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or bankers' acceptance or other similar
instruments (or reimbursement obligations with respect thereto), (iv) all
obligations of such Person to pay the deferred purchase price of property or
services, except Trade Payables, (v) all obligations of such Person as lessee
under Capital Lease Obligations, (vi) all Indebtedness of others secured by a
Lien on any asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided that, for purposes of determining the amount of any
Indebtedness of the type described in this clause, if recourse with respect to
such Indebtedness is limited to such asset, the amount of such Indebtedness
shall be limited to the lesser of the fair market value of such asset or the
amount of such Indebtedness, (vii) all Indebtedness of others Guaranteed by such
Person to the extent such Indebtedness is Guaranteed by such Person, (viii) all
Disqualified Stock valued at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends and (ix) to the extent
not otherwise included in this definition, all obligations of such Person under
Hedging Obligations.
"Indenture" means this instrument as originally executed and delivered or,
if amended or supplemented as herein provided, as so amended or supplemented.
"Intangible Assets" means, with respect to any Person, the intangible
assets of that Person determined in accordance with GAAP.
"Interest Payment Date" means each semiannual interest payment date on
December 15 and June 15 of each year, commencing December 15, 1998.
"Interest Record Date" for the Interest payable on any Interest Payment
Date (except a date for payment of defaulted interest) means the June 1 or
December 1 (whether or not a Business Day) as the case may be, next preceding
such Interest Payment Date.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions, purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities and all
other items which are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Issue Date" means the original issue date of the Securities.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
given to secure Indebtedness, whether or not
6
<PAGE>
filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction with respect to any
such lien, pledge, charge or security interest).
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Securities of any series, the excess, if any, of (i)
the aggregate present value as of the date of the redemption or accelerated
payment of each dollar of principal being redeemed or paid and the amount of
interest (exclusive of interest accrued to the date of redemption or accelerated
payment) which would have been payable in respect of the dollar of principal if
the redemption or accelerated payment had not been made, determined by
discounting, on a semi-annual basis, the principal and interest at the
Reinvestment Rate (determined on the third Business Day preceding the date the
notice of redemption to the Securityholder is given or declaration of
acceleration is made) from the respective dates on which the principal and
interest would have been payable if the redemption or accelerated payment had
not been made, over (ii) the aggregate principal amount of the Securities of
such series being redeemed or paid.
"Market Value" means, with respect to a Publicly Traded Security and on the
date of determination thereof, (i) if such Publicly Traded Security is listed on
the New York Stock Exchange, the American Stock Exchange, or some other
principal national securities exchange in the United States of America, the
reported last sale price of a unit of such Publicly Traded Security regular way
on a given day, or, in case no such sale takes place on such day, the average of
the reported closing bid and asked prices regular way, in each case on the New
York Stock Exchange Composite Tape, the American Stock Exchange Composite Tape
or the principal national securities exchange in the United States of America on
which such Publicly Traded Security is listed or admitted to trading, as
applicable, (ii) if such Publicly Traded Security is not listed or admitted to
trading on any national securities exchange in the United States of America, but
prices for such Publicly Traded Security are disseminated by means of an
automated quotation system by the National Association of Securities Dealers,
Inc., the closing sales price, or if there is no closing sales price, the
average of the closing bid and asked prices, in the automated quotation system,
or (iii) with respect to a Publicly Traded Security listed on a principal
national securities exchange in Luxembourg, Amsterdam or other European country,
the price of such Publicly Traded Security as reported on such exchange by the
most widely recognized reporting method customarily relied upon by financial
institutions in such country and if such Publicly Traded Security is listed on
more than one such exchange, the principal securities exchange on which such
Publicly Traded Security is listed. Any determination of the "Market Value" of a
Publicly Traded Security pursuant to this definition shall be based on the
assumption that offers of such Publicly Traded Security are exempt from
registration under the Securities Act.
"Net Income" of any Person for any period means the net income (loss) of
such Person for such period, determined in accordance with GAAP, excluding, (i)
any gain or loss, together with any related provision for taxes on such gain or
loss, realized in connection with (a) any sale, lease, conveyance or other
disposition of any Strategic Investments (including, without limitation,
dispositions pursuant to sale and leaseback transactions) by such Person, (b)
the disposition of any
7
<PAGE>
securities (other than Portfolio Securities) by such Person or (c) the
extinguishment of any Indebtedness of such Person; (ii) any extraordinary or
nonrecurring gain or loss, together with any related provision for taxes on such
extraordinary or nonrecurring gain or loss; and (iii) any unrealized gain or
loss caused by the increase or decrease in the Market Value of any Publicly
Traded Security held, directly or indirectly, by that Person. In addition, for
the calculation of Net Income for any Person for any period, (i) the Capital
Management Fees based on assets under management accruing to such Person for
such period shall be calculated as if the fees accruing and assets under
management on the last day of such period (or the closest practicable date of
determination) were the fees accruing and assets under management as of the
beginning of such period; (ii) the Capital Market Fees accruing to such Person
for such period shall be calculated as if the amount of such fees accrued during
such period was equal to the amount of such fees accrued during the six month
period immediately preceding the last day of such period (or the closest
practicable date of determination), adjusted for the duration of such period;
and (iii) the dividend rates and interest rates in effect with respect to
payments accruing to such Person from its investees as of the last day of such
period (or the closest practicable date of determination) shall be deemed to
have been in effect as of the beginning of such period.
"Non-Recourse" to a Person as applied to any Indebtedness (or portion
thereof) means that such Person is not directly or indirectly liable to make any
payments with respect to such Indebtedness (or portion thereof) and that no
Guarantee of such Indebtedness (or portion thereof) has been made by such
Person.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers' Certificate" means a certificate signed by the Chairman or a
Vice Chairman of the Board of Directors, the Chief Executive Officer, the Chief
Financial Officer, any Managing Director or any Vice President (whether or not
designated by a number or numbers or a word or words added before or after the
title "Vice President") of the Company and delivered to the Trustee. Each such
certificate shall comply with Section 314 of the Trust Indenture Act and include
the statements provided for in Section 12.05.
"Opinion of Counsel" means an opinion in writing signed by legal counsel
who may be an employee of or counsel to the Company or who may be other counsel
satisfactory to the Trustee. Each such opinion shall comply with Section 314 of
the Trust Indenture Act and include the statements provided for in Section
12.05, and such others as may reasonably be requested by the Trustee, if and to
the extent required hereby.
"Original Issue Date" of any Security (or portion thereof) means the
earlier of (i) the date of such Security or (ii) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.
"outstanding", when used with reference to Securities of any series,
subject to the provisions of Section 6.03, means, as of any particular time, all
Securities of such series authenticated and delivered by the Trustee under this
Indenture, except
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<PAGE>
(a) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption of
which moneys in the necessary amount shall have been deposited in trust
with the Trustee or with any paying agent (other than the Company) or shall
have been set aside, segregated and held in trust by the Company (if the
Company shall act as its own paying agent), provided that if such
Securities are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as herein provided, or provision
satisfactory to the Trustee shall have been made for giving such notice;
and
(c) Securities in substitution for which other Securities shall have
been authenticated and delivered, or which shall have been paid, pursuant
to the terms of Section 2.09 (unless proof satisfactory to the Trustee and
the Company is presented that any of such Securities is held by a person in
whose hands such Security is a legal, valid and binding obligation of the
Company).
"Payment Default" means any failure to pay any scheduled installment of
principal of, premium, if any, or interest on any Indebtedness within the grace
period provided for such payment in the documentation governing such
Indebtedness.
"Permitted Liens" means (i) Liens on real property securing Indebtedness
which is Non-Recourse to the Company or any of its Subsidiaries; or (ii) Liens
on any asset securing Indebtedness (other than Indebtedness referred to in
clause (i) above), provided that, after giving effect to the Incurrence of such
Indebtedness (a) the aggregate principal amount of Indebtedness secured pursuant
to this clause (ii) is less than 10% of the Total Capitalization of the Company
and its Consolidated Subsidiaries and (b) the aggregate net book value of the
assets of the Company and its Subsidiaries securing such Indebtedness shall not
be greater than 200% of the principal amount of such secured Indebtedness. For
purposes of the definition of Permitted Lien, the aggregate principal amount of
Indebtedness shall mean the principal amount of such Indebtedness at maturity.
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Portfolio Securities" means Securities (a) issued by a fund or company (an
"Investment Company") either (i) registered under the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission promulgated
thereunder (the "Investment Company Act"), or (ii) which makes passive
investments in companies or funds in which the Investment Company does not have
representation on the board of directors or similar body or participate on a
regular basis in the management ("Portfolio Investees") and which is exempt from
registration under the Investment Company Act or (b) issued by Portfolio
Investees.
"principal" wherever used with reference to the Securities or any Security
or any portion thereof, shall be deemed to include "and premium, if any".
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<PAGE>
"Private Placement Legend" means the legend initially set forth on the
Securities in the form set forth in Section 2.05(a).
"Publicly Traded Security" means a security which is listed on the New York
Stock Exchange, the American Stock Exchange or any other principal national
securities exchange in the United States, Luxembourg, Amsterdam or other
European country or whose prices are disseminated by means of an automated
quotation system by the National Association of Securities Dealers, Inc.
As used in this definition only, "security" has the meaning given that term
in Article 8 of the UCC.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registrar" has the meaning provided in Section 2.06.
"Registration" means a registered exchange offer for the Securities by the
Company or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of June 23, 1998, among the Company and the Initial Purchasers and
certain permitted assigns specified therein.
"Registration Statement" means the Registration Statement pursuant to and
as defined in the Registration Rights Agreement.
"Reinvestment Rate" means with respect to each series of Securities, 0.25%
(twenty-five one hundredths of one percent) plus the arithmetic mean of the
yields under the respective headings "This Week" and "Last Week" published in
the Statistical Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity of the Securities of the relevant series, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to that
maturity, yields for the two published maturities most closely corresponding to
that maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from those
yields on a straight-line basis, rounding in each of the relevant periods to the
nearest month. For 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.
"Responsible Officer" when used with respect to the Trustee means any vice
president (whether or not designated by numbers or words added before or after
the title "vice president"), any assistant vice president, any assistant
secretary, any assistant treasurer, or any other officer or assistant officer of
the Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Rating Group and its successors.
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<PAGE>
"Securities Act" means the Securities Act of 1933, as amended and the rules
and regulations promulgated by the Commission thereunder.
"Security" or "Securities" means any Security or Securities of each series,
as the case may be, authenticated and delivered under this Indenture. For all
purposes of this Indenture, the term "Securities" shall include any Exchange
Securities to be issued and exchanged for any Securities pursuant to the
Registration Rights Agreement and this Indenture and, for purposes of this
Indenture, all Securities of any series and Exchange Securities exchanged for
Securities of such series shall vote together as one series of Securities under
this Indenture.
"Security Register" has the meaning provided in Section 2.06.
"Shelf Registration Statement" means a Shelf Registration Statement of the
Company pursuant to and as defined in the Registration Rights Agreement.
"Significant Subsidiary" means a Subsidiary which otherwise meets the tests
ascribed to the term in Regulation S-X promulgated by the Commission under the
Securities Act, except that the tests therein shall be based on 20% of total
assets or income instead of 10%, unless the Company owns or controls, directly
or indirectly, at least 75% of the total voting power of such Subsidiary's
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
(such percentage to be calculated on a fully diluted basis), in which case the
tests shall be based on 10% of total assets or income.
"Statistical Release" means the statistical released designed "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States government
securities adjusted to constant maturities or, if the statistical release is not
published at the time of any determination of the Make-Whole Amount, then such
other reasonably comparable index which shall be designated by the Company.
"Strategic Investment" of any specified Person means any other Person in
which an Investment has been made by the specified Person, other than Portfolio
Securities, where either (a) the undepreciated book value, or (b) if the
Strategic Investment is a Publicly Traded Security, the Market Value of the
Investment exceeds $100 million.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Total Capitalization" means, with respect to any Person as of any date,
the consolidated long-term Indebtedness and consolidated stockholders' equity of
such Person and its Consolidated Subsidiaries less their consolidated Intangible
Assets (to the extent reflected in determining consolidated stockholders'
equity), all determined as of such date in accordance with GAAP, and excluding
the cumulative effect of a change in accounting principles.
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<PAGE>
"Trade Payables" means, with respect to any Person, (i) any accounts
payable or any other Indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person arising in the ordinary course of
business in connection with the acquisition of goods or services, (ii)
obligations Incurred in the ordinary course to pay the purchase price of
securities so long as such obligations are paid within customary settlement
periods and (iii) obligations to purchase securities pursuant to subscription or
stock purchase agreements in the ordinary course of business. Notwithstanding
the foregoing, for purposes of Section 3.08, accounts payables (other than
deferred compensation) of the Company in excess of 3.0% of the undepreciated
book value (determined in accordance with GAAP) of the assets of the Company at
any time outstanding shall be treated as Indebtedness to the extent of such
excess.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as
in force at the date as of which this Indenture was originally executed, and
"TIA", when used in respect of an indenture supplemental hereto, means such Act
as in force at the time such indenture supplemental hereto becomes effective.
"Trustee" means the entity identified as "Trustee" in the first paragraph
hereof and, subject to the provisions of Article Five, shall also include any
successor trustee.
"Wholly Owned Subsidiary" means a Subsidiary of any Person all of the
outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares or minimal interests issued to other Persons to
satisfy legal requirements) are at the time owned by such Person or by one or
more Wholly Owned Subsidiaries of such Person or by such Person and one or more
Wholly Owned Subsidiaries of such Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined
Term in Section
----------
<S> <C>
"Covenant Defeasance"....................... 1.003
"Legal Defeasance".......................... 1.002
"Cash transaction".......................... 5.13
"Self-liquidating paper".................... 5.13
"Redemption Price".......................... 9.01
</TABLE>
ARTICLE 2
Issue, Execution, Form and Registration of Securities
Section 2.01. Authentication and Delivery of Securities. Upon the execution
and delivery of this Indenture, or from time to time thereafter, Securities of
any series (including Exchange Securities) in an aggregate principal amount not
in excess of the amount specified in the form of Security of such series
hereinabove recited (except as otherwise provided in Section 2.09) may be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and make available for delivery said
Securities to or upon the written order of the Company, signed by the Chairman
or a Vice Chairman of the Board of Directors, the Chief
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<PAGE>
Executive Officer, the Chief Financial Officer, any Managing Director, any Vice
President (whether or not designated by a number or numbers or a word or words
added before or after the title "Vice President") or the Secretary of the
Company, without any further action by the Company.
Section 2.02. Execution of Securities. The Securities shall be signed on
behalf of the Company by the Chairman or a Vice Chairman of the Board of
Directors, the Chief Executive Officer, the Chief Financial Officer, any
Managing Director, any Vice President (whether or not designated by a number or
numbers or a word or words added before or after the title "Vice President") or
the Secretary of the Company. Such signature may be the manual or facsimile
signatures of the present or any future such officers.
In case any officer of the Company who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall be
authenticated and delivered by the Trustee or disposed of by the Company, such
Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Security had not ceased to be such officer of
the Company; and any Security may be signed on behalf of the Company by such
persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Indenture any such person was not such officer.
Section 2.03. Certificate of Authentication. Only such Securities as shall
bear thereon a certificate of authentication substantially in the form set forth
in Annex A, B or C hereto, as applicable, executed by the Trustee by manual
signature of one of its authorized signatories, shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose. Such
certificate by the Trustee upon any Security executed by the Company shall be
conclusive evidence that the Security so authenticated has been duly
authenticated and delivered hereunder and that the Holder is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Security has
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company delivers such Security to the Trustee for cancellation
as provided in Section 2.10 together with a written statement (which need not
comply with Section 12.05 and need not be accompanied by an Opinion of Counsel)
stating that such Security has never been issued or sold by the Company, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
Section 2.04. Form, Denomination and Date of Securities; Payments of
Interest. The Securities of each series and the Trustee's certificates of
authentication shall be substantially in the forms of Annex A, Annex B and Annex
C hereto; provided that Exchange Securities with respect to any series (i) shall
contain the alternative fourth paragraph appearing on the reverse of the form of
Security of such series provided in Annex A, Annex B or Annex C hereto, as the
case may be, and (ii) shall not contain terms with respect to transfer
restrictions. The Securities of each series shall be issuable in denominations
in the form of Security of such series provided in Annex A, Annex B or Annex C
hereto, as the case may be. The Securities of each series shall be numbered,
lettered or otherwise distinguished in such manner or in accordance with such
plans as the officers of the Company executing the same may determine with the
approval of the Trustee.
Any of the Securities of any series may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such legend
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<PAGE>
or legends, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, including those required by Section 2.05, or with the rules of any
securities market in which the Securities of such series are admitted to
trading, or to conform to general usage.
Each Security of each series shall be dated the date of its authentication,
shall bear interest from the applicable date and shall be payable on the dates
specified on the face of the form of Security of such series provided in Annex
A, Annex B or Annex C hereto, as the case may be.
Securities of each series offered and sold in reliance on Section 4(2) and
Rule 144A shall be issued initially in the form of one or more permanent global
Securities in registered form, substantially in the form hereinabove recited
(each a "Global Security"), deposited with the Trustee, as custodian for the
Depositary, duly executed by the Company and authenticated by the Trustee as
herein provided.
The person in whose name any Security is registered at the close of
business on any Interest Record Date with respect to any Interest Payment Date
shall be entitled to receive the interest, if any, payable on such Interest
Payment Date notwithstanding any transfer or exchange of such Security
subsequent to the Interest Record Date and prior to such Interest Payment Date,
except if and to the extent the Company shall default in the payment of the
interest due on such Interest Payment Date, in which case such defaulted
interest, plus (to the extent lawful) any interest payable on the defaulted
interest, shall be paid to the persons in whose names outstanding Securities are
registered at the close of business on a subsequent record date (which shall be
not less than five Business Days prior to the date of such payment) established
by notice given by mail by or on behalf of the Company to the holders of
Securities not less than 15 days preceding such subsequent record date.
Every permanent Global Security will provide that interest, if any, payable
on any Interest Payment Date will be paid to DTC, with respect to that portion
of such permanent Global Security held for its account by Cede & Co. for the
purpose of permitting such party to credit the interest received by it in
respect of such permanent Global Security to the accounts of the beneficial
owners thereof.
Section 2.05. Restrictive Legends. (a) Unless and until a Security of any
series is exchanged for an Exchange Security in connection with an effective
Registration pursuant to the Registration Rights Agreement, each Global
Security, and each certificated Security issued in exchange for a beneficial
interest therein pursuant to Section 2.07(b) shall bear the following legend
on the face thereof:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE
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<PAGE>
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER
THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO SECURITY CAPITAL GROUP
INCORPORATED ("SECURITY CAPITAL") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A
QUALIFIED INSTITUTIONAL BUYER ("QIB") IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT OR (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SUCH SECURITY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR
THE NOTES. IF THE PROPOSED TRANSFEREE IS NOT SECURITY CAPITAL, A SUBSIDIARY
THEREOF OR A QIB TO WHICH THIS NOTE IS BEING TRANSFERRED IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE FOR THE NOTES SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SECURITY CAPITAL OR THE TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT UNLESS THE TRANSFER HAS BEEN REGISTERED
UNDER THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT.
(b) Each Global Security, whether or not an Exchange Security, shall also
bear the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
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TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.08 OF THE INDENTURE.
Section 2.06. Registration, Transfer and Exchange. The Securities are
issuable only in registered form. The Company will keep at each office or agency
to be maintained for the purpose as provided in Section 3.02 (the "Registrar") a
register or registers (the "Security Register(s)") in which, subject to such
reasonable regulations as it may prescribe, it will register, and will register
the transfer of, Securities as in this Article provided. Such Security Register
shall be in written form in the English language or in any other form capable of
being converted into such form within a reasonable time. The Trustee, at its
Corporate Trust Office, is hereby initially appointed Registrar for the purpose
of registering registered Securities and transfers of registrar Securities on
such Security Register as herein provided. At all reasonable times such Security
Register or Security Registers shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Security of any
series at each such office or agency, the Company shall execute and the Trustee
shall authenticate and make available for delivery in the name of the transferee
or transferees a new Security or Securities of the same series in authorized
denominations for a like aggregate principal amount.
A Holder may transfer a Security only by written application to the
Registrar stating the name of the proposed transferee and otherwise complying
with the terms of this Indenture. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon, final
acceptance and registration of the transfer by the Registrar in the Security
Register. Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee and any agent of the Company shall treat the
person in whose name the Security is registered as the owner thereof for all
purposes whether or not the Security shall be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interests in such Global Security
may be effected only through a book-entry system maintained by the Holder of
such Global Security (or its agent) and that ownership of a beneficial interest
in such Global Security shall be required to be reflected in a book-entry
system. When Securities are presented to the Registrar or a co-Registrar with a
request to register the transfer or to exchange them for an equal principal
amount of Securities of other authorized denominations (including an exchange of
Securities for Exchange Securities), the Registrar shall register the transfer
or make the exchange as requested if the requirements for such transactions set
forth herein are met; provided that no exchanges of Securities for Exchange
Securities shall occur until a Registration Statement shall have been declared
effective by the Commission and that any Securities that are exchanged for
Exchange Securities shall be cancelled by the Trustee. To permit registrations
of transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's request.
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The Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities (other than any such transfer taxes or
other similar governmental charge payable upon exchanges pursuant to Section
2.11, 7.05 or 10.03). No service charge to any Holder shall be made for any such
transaction.
The Company shall not be required to exchange or register a transfer of (a)
any Securities for a period of 15 days next preceding the first mailing of
notice of redemption of Securities to be redeemed, or (b) any Securities
selected, called or being called for redemption except, in the case of any
Security where public notice has been given that such Security is to be redeemed
in part, the portion thereof not so to be redeemed.
All Securities issued upon any transfer or exchange of Securities shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Section 2.07. Book-Entry Provisions for Global Securities. (a) The Global
Security of each series initially shall (i) be registered in the name of the
Depositary for such Global Security or the nominee of such Depositary, (ii) be
delivered to the Trustee as custodian for such Depositary and (iii) bear legends
as set forth in Section 2.05.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary, or the Trustee as its custodian, or under the Global
Security, and the Depositary may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. None of the Company, the Trustee, any
paying agent or the Registrar shall have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of a Security in global form or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a holder of any
Security.
(b) Transfers of a Global Security shall be limited to transfers of such
Global Security in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in a Global Security
may be transferred in accordance with the rules and procedures of the Depositary
and the provisions of Section 2.08. In addition, certificated Securities of any
series shall be issued to all beneficial owners in exchange for their beneficial
interests in the Global Security of such series, if (i) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for such
Global Security and a successor depositary is not appointed by the Company
within 90 days of such notice or (ii) an Event of Default of which the Trustee
has actual notice has occurred and is continuing and the Registrar has received
a request from the Depositary to issue such Securities in certificated form or
(iii) the Company decides to discontinue use of the system of book-entry
transfers through the Depositary.
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(c) The registered holder of a Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
Section 2.08. Special Transfer Provisions. (a) Unless and until a Security
of any series is exchanged for an Exchange Security of such series in connection
with an effective Registration pursuant to the Registration Rights Agreement,
any proposed transfer of an interest in the Global Security may only be effected
to a QIB through the book-entry system maintained by the Depositary.
(b) Neither the Company nor any of its "affiliates" (as defined under Rule
144 under the Securities Act (or any successor provision thereto)) may hold a
beneficial interest in any Global Security, until the consummation of the
Exchange Offer in respect of the Securities of such series. If the Company or
any affiliate thereof purchases any Securities prior to the consummation of the
Exchange Offer in respect of the Securities of such series, then such Securities
shall be issued to the Company or such affiliate in a certificated form and may
not be resold unless registered under the Securities Act or resold pursuant to
an exemption from the registration requirements of the Securities Act in a
transaction which results in those Securities no longer being "restricted
securities" (as defined under Rule 144 of the Securities Act (or any successor
provision thereto)), and any Securities so purchased shall bear a legend to that
effect.
(c) Private Placement Legend. Upon the transfer, exchange or replacement
of Securities not bearing the Private Placement Legend, the Registrar shall
deliver Securities which do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Securities bearing the Private Placement
Legend, the Registrar shall deliver only Securities which bear the Private
Placement Legend unless the requested transfer is not by the Company or an
affiliate thereof and occurs after the time period referred to in Rule 144(k)
under the Securities Act (or any successor provision thereto) as in effect with
respect to such transfer, or there is delivered to the Registrar an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture. The Registrar shall not register a transfer of any Security
unless such transfer complies with the restrictions on transfer of such Security
set forth in this Indenture. In connection with any transfer of Securities, each
Holder agrees by its acceptance of the Securities to furnish the Registrar or
the Company such certifications, legal opinions or other information as either
of them may reasonably require to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act; provided that the Registrar
shall not be required to determine (but may rely on a determination made by the
Company with respect to) the sufficiency of any such certifications, legal
opinions or other information.
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The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 207(a) or this Section 208. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
Each Holder of a Security agrees to indemnify the Company and the Trustee
against any liability which may result from the transfer, exchange or assignment
of such Holder's Security in violation of any provision of this Indenture and/or
applicable United States Federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Agent Members or
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
Section 2.09. Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In
case any temporary or definitive Security shall become mutilated, defaced or be
apparently destroyed, lost or stolen, the Company in its discretion may execute,
and upon the written request of any officer of the Company, the Trustee shall
authenticate and make available for delivery, a new Security of the same series,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated or defaced Security, or in lieu of and substitution for the
Security so apparently destroyed, lost or stolen. In every case the applicant
for a substitute Security shall furnish to the Company and to the Trustee and
any agent of the Company or the Trustee such security or indemnity as any of
them may require to save each of them harmless from all risks, however remote,
and, in every case of apparent destruction, loss or theft, the applicant shall
also furnish to the Company and the Trustee and any agent of the Company or the
Trustee evidence to their satisfaction of the apparent destruction, loss or
theft of such Security and of the ownership thereof.
Upon the issuance of any substitute Security, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge which
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith. In case any Security which has
matured or is about to mature, or has been called for redemption in full, shall
become mutilated or defaced or be apparently destroyed, lost or stolen, the
Company may, instead of issuing a substitute Security, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
or defaced Security), if the applicant for such payment shall furnish to the
Company and to the Trustee and any agent of the Company or the Trustee such
security or indemnity as any of them may require to save each of them harmless
from all risks, however remote, and, in every case of apparent destruction, loss
or theft, the applicant shall also furnish to the Company and the Trustee and
any agent of the Company or the Trustee evidence to their satisfaction of the
apparent destruction, loss or theft of such Security and of the ownership
thereof.
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Every substitute Security issued pursuant to the provisions of this Section
by virtue of the fact that any Security is apparently destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the apparently destroyed, lost or stolen Security shall be at any time
enforceable by anyone and shall be entitled to all the benefits of (but shall be
subject to all the limitations of rights set forth in) this Indenture equally
and proportionately with any and all other Securities duly authenticated and
delivered hereunder. All Securities shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
Section 2.10. Cancellation of Securities. All Securities surrendered for
payment, redemption, registration of transfer or exchange, if surrendered to the
Company or any agent of the Company or the Trustee, shall be delivered to the
Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Trustee shall deliver
cancelled Securities to the Company. If the Company shall acquire any of the
Securities, such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.
Section 2.11. Temporary Securities. Pending the preparation of definitive
Securities of any series, the Company may execute and the Trustee shall
authenticate and make available for delivery temporary Securities of such series
(printed, lithographed, typewritten or otherwise reproduced, in each case in
form satisfactory to the Trustee). Temporary Securities shall be issuable as
registered Securities without coupons, of any authorized denomination, and
substantially in the form of the definitive Securities but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as
may be determined by the Company with the concurrence of the Trustee. Temporary
Securities may contain such reference to any provisions of this Indenture as may
be appropriate. Every temporary Security shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities. Without
unreasonable delay, the Company shall execute and shall furnish definitive
Securities and thereupon temporary Securities of the same series may be
surrendered in exchange therefor without charge at each office or agency to be
maintained by the Company for the purpose pursuant to Section 3.02, and the
Trustee shall authenticate and make available for delivery in exchange for such
temporary Securities a like aggregate principal amount of definitive Securities
of the same series of authorized denominations. Until so exchanged, the
temporary Securities shall be entitled to the same benefits under this Indenture
as definitive Securities.
Section 2.12. CUSIP Numbers. The Company, in issuing the Securities of each
series, may use "CUSIP" numbers, and the Trustee shall use CUSIP numbers in
notices of redemption or exchange as a convenience to Holders; provided that any
such notice shall state that no representation is made as to the correctness of
such number either as printed on the Securities of the relevant series or as
contained in any notice of redemption or exchange and that reliance may be
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placed only on the other identification numbers printed on the Securities of the
relevant series. The Company shall promptly notify the Trustee of any change in
the CUSIP number.
ARTICLE 3
Covenants of the Company and the Trustee.
Section 3.01. Payment of Principal and Interest. The Company covenants and
agrees that it will duly and punctually pay or cause to be paid the principal
of, and interest on, each of the Securities of each series at the place or
places, at the respective times and in the manner provided in the Securities of
such series (but no later than 12:00 p.m. Eastern Time on the date such payment
is due). Each installment of interest on the Securities may be paid by mailing
checks for such interest payable to or upon the written order of the holders of
Securities entitled thereto as they shall appear on the registry books of the
Registrar, or by wire transfer to such holders in immediately available funds,
to such bank or other entity in the continental United States as shall be
designated by such holders and shall have appropriate facilities for such
purpose, or in accordance with the standard operating procedures of the
Depositary.
Section 3.02. Offices for Payments, etc. So long as any of the Securities
remain outstanding, the Company will maintain in the city of Boston,
Massachusetts, the following: (a) an office or agency where the Securities may
be presented for payment, (b) an office or agency where the Securities may be
presented for registration of transfer and for exchange as in this Indenture
provided and (c) an office or agency where notices and demands to or upon the
Company in respect of the Securities or of this Indenture may be served. The
Company will give to the Trustee written notice of the location of any such
office or agency and of any change of location thereof. The Company hereby
initially designates the office of State Street Bank and Trust Company, N.A., an
affiliate of the Trustee, and the Corporate Trust Office of the Trustee as the
offices or agencies for each such purpose. In case the Company shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Corporate Trust Office.
The Company may from time to time designate one or more other offices or
agencies where the Securities of one or more series may be presented or
surrendered for any or all of such purposes, and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Securities of
any series for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. The Company hereby designates as a
Place of Payment for each series of Securities the office or agency of the
Company in the city of Boston, Massachusetts, and initially appoints the Trustee
at its Corporate Trust Office as paying agent in such city and as its agent to
receive all such presentations, surrenders, notices and demands.
Section 3.03. Appointment to Fill a Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 5.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
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Section 3.04. Paying Agents. Whenever the Company shall appoint a paying
agent other than the Trustee, it will cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Securities (whether such sums
have been paid to it by the Company or by any other obligor on the Securities)
in trust for the benefit of the holders of the Securities or of the Trustee,
(b) that it will give the Trustee notice of any failure by the Company (or
by any other obligor on the Securities) to make any payment of the principal of
or interest on the Securities when the same shall be due and payable, and
(c) pay any such sums so held in trust by it to the Trustee upon the
Trustee's written request at any time during the continuance of the failure
referred to in clause (b) above.
The Company will, prior to each due date of the principal of or interest on
the Securities, deposit with the paying agent a sum sufficient to pay such
principal or interest, and (unless such paying agent is the Trustee) the Company
will promptly notify the Trustee of any failure to take such action.
If the Company shall act as its own paying agent, it will, on or before
each due date of the principal of or interest on the Securities, set aside,
segregate and hold in trust for the benefit of the holders of the Securities a
sum sufficient to pay such principal or interest so becoming due. The Company
will promptly notify the Trustee of any failure to take such action.
Anything in this Section to the contrary notwithstanding, the Company may
at any time, for the purpose of obtaining a satisfaction and discharge of this
Indenture or for any other reason, pay or cause to be paid to the Trustee all
sums held in trust by the Company or any paying agent hereunder, as required by
this Section, such sums to be held by the Trustee upon the trusts herein
contained.
Anything in this Section to the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section is subject to the provisions of
Article 10.
Section 3.05. Certificates to Trustee. (a) The Company will deliver to the
Trustee within 135 days after the end of each fiscal year of the Company a
certificate from the principal executive, financial or accounting officer of the
Company as to his or her knowledge of the Company's compliance with all
conditions and covenants under this Indenture (such compliance to be determined
without regard to any period of grace or requirement of notice provided under
this Indenture).
(b) The Company will deliver to the Trustee, as soon as possible and in
any event within 30 days after the Company becomes aware or should reasonably
become aware of the occurrence of an Event of Default or a Default, an Officers'
Certificate setting forth the details of such Event of Default or Default, and
the action which the Company proposes to take with respect thereto.
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Section 3.06. Securityholders' Lists. If and so long as the Trustee shall
not be the Registrar, the Company will furnish or cause to be furnished to the
Trustee a list in such form as the Trustee may reasonably require of the names
and addresses of the holders of the Securities pursuant to Section 312 of the
Trust Indenture Act (a) semi-annually not more than 15 days after each Interest
Record Date as of such Interest Record Date, and (b) at such other times as the
Trustee may request in writing, within 30 days after receipt by the Company of
any such request as of a date not more than 15 days prior to the time such
information is furnished. Every holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any authenticating agent nor any paying agent nor any Registrar
shall be held accountable by reason of the disclosure of any information as to
the names and addresses of the holders of Securities in accordance with Section
312 of the Trust Indenture Act, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 312(b)
of the Trust Indenture Act.
Section 3.07. Reports by the Trustee. (a) Upon qualification of the
Indenture under the Trust Indenture Act, the Trustee shall transmit to Holders
such reports concerning the Trustee and its actions under this Indenture as may
be required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust Indenture
Act, the Trustee shall, within sixty days after each May 15 following the date
of this Indenture deliver to Holders a brief report, dated as of such May 15,
which complies with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange, if any, upon which
the Securities are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when the Securities are listed on any stock
exchange.
Section 3.08. Limitations on Indebtedness. The Company will not, and will
not permit any of its Wholly Owned Subsidiaries to, directly or indirectly,
Incur any Indebtedness (including Acquired Indebtedness), if, immediately after
such Indebtedness is Incurred (i) the total aggregate Indebtedness of the
Company and its Wholly Owned Subsidiaries exceeds 50% of the Adjusted Total
Assets of the Company and its Wholly Owned Subsidiaries; or (ii) the Fixed
Charge Coverage Ratio for the Company and its Wholly Owned Subsidiaries for the
most recently ended four fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is Incurred would have been less than 1.5 to 1.0, determined on a
pro forma basis as if such Indebtedness had been incurred on the first day of
such four-quarter period.
Section 3.09. Required Minimum Consolidated Tangible Net Worth. The Company
will not at any time permit its Consolidated Tangible Net Worth to be less than
$1,500,000,000.
Section 3.10. Limitations on Liens. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien (other than Permitted Liens) which secures
obligations under any Indebtedness of the Company or any of its Wholly Owned
Subsidiaries on any asset now owned or hereafter acquired by the Company or any
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of its Subsidiaries, or any income or profits therefrom, or assign or convey any
right to receive income therefrom.
Section 3.11. Restrictions on Lines of Business. The Company will not, and
will not permit any of its Subsidiaries to, make Investments in any business
other than the business conducted by the Company and its Subsidiaries on the
Issue Date and any other business related to, or servicing, the real estate
industry unless the aggregate amount of such Investments is less than 10% of the
Consolidated Assets of the Company.
Section 3.12. Reports. (a) So long as any Securities of any series are
outstanding, the Company will furnish to Holders of Securities of such series
within 15 days after the filing thereof with the Commission copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules and regulations
prescribe) that the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act provided that the Company's obligation
to furnish such reports will be deemed satisfied to the extent the Company
complies with Section 3.12(b) and (d). All obligors on the Securities shall
comply with the provisions of Section 314(a) of the Trust Indenture Act.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the Commission, the
Company shall file with the Commission and provide to the Trustee (i) within 105
days after the end of each fiscal year, annual reports on Form 10-K (or any
successor or comparable form) containing the information required to be
contained therein (or required in such successor or comparable form), including
a "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and a report thereon by the Company's certified public accountants;
(ii) within 60 days after the end of each of the first three fiscal quarters of
each fiscal year, reports on Form 10-Q (or any successor or comparable form)
containing the information required to be contained therein (or required in any
successor or comparable form), including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations"; and (iii) promptly from time
to time after the occurrence of an event required to be therein reported, such
other reports on Form 8-K (or any successor or comparable form) containing the
information required to be contained therein (or required in any successor or
comparable form); provided, however, that the Company shall not be in default of
the provisions of this Section 3.12(a) for any failure to file reports with the
Commission solely by the refusal of the Commission to accept the same for
filing. Each of the financial statements contained in such reports shall be
prepared in accordance with GAAP.
(b) The Trustee, at the Company's expense and written direction, shall
promptly mail copies of all such annual reports, information, documents and
other reports provided to the Trustee pursuant to Section 3.12(a) hereof to the
Holders at their addresses appearing in the Security Register.
(c) Whether or not required by the rules and regulations of the
Commission, the Company shall file a copy of all such information and reports
with the Commission for public availability and make such information available
to securities analysts and prospective investors upon request.
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(d) The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information which the Trustee may
be required to deliver to the Holders under this Section 3.12.
(e) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.13. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not (i) at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
which would prohibit or forgive the Company from paying all or any portion of
the principal of or interest on the Securities as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture and the Company will expressly
waive all benefit or advantage of any such law and (ii) hinder, delay or impede
the execution of any power granted to the Trustee under this Indenture and will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE 4
Remedies of the Trustee and Holders on Event of Default
Section 4.01. Events of Default. "Event of Default" with respect to any
series of Securities, wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest on any Security of such series
when such interest becomes due and payable, and continuance of such default for
a period of 30 days; or
(b) default in the payment of the principal of any Security of such series
when due and payable; or
(c) default in the performance, or breach, of any covenant or warranty of
the Company contained in this Indenture with respect to the Securities of such
series (other than a default in the performance, or breach of a covenant or
warranty which is specifically dealt with elsewhere in this Section), and
continuance of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Company by the Trustee or
the Company and the Trustee by the Holders of at least 25% in principal amount
of all Outstanding Securities of such series a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
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(d) any default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any Significant Subsidiary of
the Company (or the payment of which is Guaranteed by the Company, or any
Significant Subsidiary of the Company), whether such Indebtedness or Guarantee
exists on the date hereof or is thereafter created, which default, after the
termination of any applicable grace or cure period, (a) constitutes a Payment
Default or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or which has been so accelerated, aggregates
$15,000,000 or more; provided that, in calculating the aggregate principal
amount of any such Indebtedness, the Hedging Obligations of any Person under
which there has been a Payment Default or which has been so accelerated shall
not be netted against any other Hedging Obligation of such Person;
(e) final judgments or orders rendered against the Company or any
Significant Subsidiary of the Company which require the payment in money, either
individually or in an aggregate amount, in excess of $15,000,000 and such
judgments or orders remain undischarged, unstayed and unsatisfied in an
aggregate amount (excluding amounts covered by insurance) in excess of
$15,000,000 for a period of 60 consecutive days; or
(f) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company or any Significant
Subsidiary of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or (b) a decree or order adjudging the Company or any Significant
Subsidiary of the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company or any Significant Subsidiary of the Company,
under any applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or any Significant Subsidiary of the Company or of any substantial part
of their respective properties, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any such
decree or order unstayed and in effect for a period of 90 consecutive days; or
(g) the commencement by the Company or any Significant Subsidiary of the
Company of a voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent of the
Company or any Significant Subsidiary of the Company to the entry of a decree or
order for relief in respect of the Company or such Significant Subsidiary in an
involuntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by the
Company or any Significant Subsidiary of the Company of a petition or answer or
consent seeking reorganization or relief under any applicable Federal or State
law, or the consent by the Company or any Significant Subsidiary of the Company
to the filing of such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or such Significant Subsidiary or
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of any substantial part of their respective properties, or the making by it of
an assignment for the benefit of creditors, or the admission by the Company or
any Significant Subsidiary of the Company of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
or any Significant Subsidiary of the Company in furtherance of any such action.
Section 4.02. Acceleration. If any Event of Default (other than an Event of
Default specified in clause (f) or (g) of Section 4.01 hereof) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in aggregate principal amount of the then outstanding Securities of any series
affected thereby by written notice to the Company and the Trustee, may declare
the unpaid principal of, premium, if any, and any accrued and unpaid interest on
all the Securities of such series to be due and payable immediately. If an Event
of Default specified in clause (f) or (g) of Section 4.01 hereof, relating to
the Company or any Significant Subsidiary of the Company occurs, the principal
amount of all outstanding Securities of each series shall become due and payable
without any declaration or other act on the part of the Trustee or the Holders
of Securities of any series.
Section 4.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal or interest on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
Section 4.04. Waiver of Past Defaults. The Holders of not less than a
majority in aggregate principal amount of the Securities of any series then
outstanding (each such series voting as a class) by written notice to the
Trustee may on behalf of the Holders of all of the Securities of such series
waive any existing Default or Event of Default and its consequences under this
Indenture except a continuing Default or Event of Default in the payment of the
principal of, premium, if any, or interest on any Security which may be so
waived only if:
(i) the Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A) all overdue installments of interest on all outstanding
Securities of such series;
(B) the principal of and premium, if any, on any outstanding
Securities of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates borne
by or provided for in such Securities;
(C) to the extent that payment of such interest is lawful, interest
on overdue installments of interest at the rate or rates borne by or
provided for in such Securities; and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(ii) all Events of Default with respect to Securities of such series,
other than the nonpayment of the principal of or premium, if any, on or
interest, if any, on Securities of such series which have become due solely
by such declaration of acceleration, have been cured or waived as provided
above.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 4.05. Control by Majority. Holders of a majority in aggregate
principal amount of the then outstanding Securities of any series may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on it with respect to the
Securities of such series. However, the Trustee may refuse to follow any
direction which conflicts with law or this Indenture which the Trustee
determines may be unduly prejudicial to the rights of other Holders or which may
involve the Trustee in personal liability. The Trustee may take any other action
which it deems proper which is not inconsistent with any such direction.
Section 4.06. Limitation on Suits. A Holder may pursue a remedy with
respect to this Indenture or the Securities of any series only if:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of the
then outstanding Securities of such series make a written request to the
Trustee to pursue the remedy;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(v) during such 60-day period, the Holders of a majority in aggregate
principal amount of the then outstanding Securities of such series do not
give the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
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Section 4.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal, premium, if any, and interest on any Security, on or after the
respective due dates expressed in such Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
Section 4.08. Collection Suit by Trustee. If an Event of Default specified
in Section 4.01(a) or (b) hereof occurs and is continuing, then the Company
shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the
holders of the Securities of such series, the whole amount then due and payable
on such Securities for principal and premium, if any, and interest, if any, with
interest on any overdue principal and premium, if any, and, to the extent that
payment of such interest is legally enforceable, on any overdue installments of
interest, if any, at the rate or rates borne by or provided for in such
Securities, and, in addition thereto, such further amount as is sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel. If the Company fails to pay such amounts forthwith upon such
demand, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company or any other obligor for the
whole amount of principal and interest remaining unpaid on the Securities of any
series and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover amounts due the Trustee
under Section 5.07 hereof, including the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
Section 4.09. Trustee May File Proofs of Claim. The Trustee is authorized
to file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Holders allowed in any judicial
proceedings relative to the Company (or any other obligor upon the Securities),
its creditors or its property and shall be entitled and empowered to sit on a
committee of creditors and to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 5.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 5.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
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Section 4.10. Priorities. If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 5.07, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;
Second: to Holders for amounts due and unpaid on the Securities for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Securities
for principal, premium, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent jurisdiction
shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 4.10 upon five Business Days prior notice to
the Company.
Section 4.11. Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 4.07 hereof, or a
suit by Holders of more than 10% in aggregate principal amount of the then
outstanding Securities.
ARTICLE 5
Concerning the Trustee
Section 5.01. Duties and Responsibilities of the Trustee; During Default;
Prior to Default. The Trustee, prior to the occurrence of an Event of Default
and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own wilful misconduct, except that
(a) prior to the occurrence of an Event of Default of which the Trustee
has actual notice and after the curing or waiving of all such Events of Default
which may have occurred:
(i) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee shall
not be liable except for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
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(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
holders pursuant to Section 4.05 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
This Section 5.01 is in furtherance of and subject to Sections 315 and 316
of the Trust Indenture Act of 1939.
Section 5.02. Certain Rights of the Trustee. In furtherance of and subject
to the Trust Indenture Act of 1939, and subject to Section 5.01:
(a) the Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the secretary or an assistant secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any advice
or Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
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(d) the Trustee shall be under no obligation to exercise any of the trusts
or powers vested in it by this Indenture at the request, order or direction of
any of the Securityholders pursuant to the provisions of this Indenture, unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by it
in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder, of which the
Trustee has actual notice, and after the curing or waiving of all Events of
Default, the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper or document unless requested
in writing so to do by the holders of not less than a majority in aggregate
principal amount of the Securities of all series affected then outstanding;
provided that, if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities as
a condition to proceeding; the reasonable expenses of every such examination
shall be paid by the Company or, if paid by the Trustee or any predecessor
trustee, shall be repaid by the Company upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder; and
(h) The Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Trustee at the Corporate Trust Office of the Trustee, and such
notice references the Securities and this Indenture.
Section 5.03. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein and
in the Securities, except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Company of any of the Securities or of the proceeds thereof.
Section 5.04. Trustee and Agents May Hold Securities; Collections, etc.
The Trustee or any agent of the Company or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent
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and may otherwise deal with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have if it were not
the Trustee or such agent.
Section 5.05. Moneys Held by Trustee. Subject to the provisions of Section
10.06 hereof, all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Neither the Trustee nor any agent of the Company or
the Trustee shall be under any liability for interest on any moneys received by
it hereunder.
Section 5.06. Notice of Default. If any Default or any Event of Default
occurs and is continuing and if such Default or Event of Default is actually
known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Holder of Securities of any series affected in the manner and to the extent
provided in Trust Indenture Act Section 313(c) notice of the Default or Event of
Default within 45 days after it occurs, unless such Default or Event of Default
has been cured; provided, however, that, except in the case of a default in the
payment of the principal of, premium, if any, or interest on any Security, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders.
Section 5.07. Compensation and Indemnification of Trustee and Its Prior
Claim. The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation as shall be agreed in
writing between the Company and the Trustee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
and the Company covenants and agrees to pay or reimburse the Trustee and each
predecessor Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by or on behalf of it in accordance with any of
the provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Company also covenants to
indemnify the Trustee and each predecessor Trustee for, and to hold it harmless
against, any and all loss, liability, damage, claim or expense, including taxes
(other than taxes based on the income of the Trustee) incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and its
duties hereunder, including the costs and expenses of defending itself against
or investigating any claim of liability in the premises. The obligations of the
Company under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior claim to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Securities, and the Securities are hereby subordinated to such senior claim.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Sections 4.01(f) or 4.01(g), the expenses
(including the reasonable charges and expenses
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of its counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
Section 5.08. Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 5.01 and 5.02, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
Section 5.09. Persons Eligible for Appointment as Trustee. The Trustee
hereunder shall at all times be a corporation having a combined capital and
surplus of at least $50,000,000, and which is eligible in accordance with the
provisions of Section 310(a) of the Trust Indenture Act of 1939. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of a Federal, State or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
Section 5.10. Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee may at any time resign by giving written notice of resignation
to the Company. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument in duplicate,
executed by authority of the Board of Directors, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the successor
trustee. If no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the mailing of such notice of resignation, the
resigning trustee may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide holder of a Security or Securities for
at least six months may, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section
310(b) of the Trust Indenture Act of 1939, after written request therefor
by the Company or by any Securityholder who has been a bona fide holder of
a Security or Securities of such series for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 5.09 and shall fail to resign after written request
therefor by the Company or by any such Securityholder; or
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(iii) the Trustee shall become incapable of acting with respect to
the Securities, or shall be adjudged a bankrupt or insolvent, or a receiver
or liquidator of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors of the Company, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee, or,
subject to Section 315(e) of the Trust Indenture Act of 1939, any Securityholder
who has been a bona fide holder of a Security or Securities for at least six
months may on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding, voting as one series, may at any time remove
the Trustee and appoint a successor trustee by delivering to the Trustee so
removed, to the successor trustee so appointed and to the Company the evidence
provided for in Section 6.01 of the action in that regard taken by the
Securityholders.
If no successor trustee shall have been so appointed and have accepted
appointment 30 days after the mailing of such notice of removal, the trustee
being removed may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(d) Any resignation or removal of the Trustee and any appointment of a
successor trustee pursuant to any of the provisions of this Section 5.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 5.11.
Section 5.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 5.10 shall execute and
deliver to the Company and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 11.06, pay over to
the successor trustee all moneys at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any trustee ceasing to act shall, nevertheless, retain a
prior claim upon all
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property or funds held or collected by such trustee to secure any amounts then
due it pursuant to the provisions of Section 5.07.
Upon acceptance of appointment by any successor trustee as provided in this
Section 5.11, the Company shall mail notice thereof by first-class mail to the
holders of Securities at their last addresses as they shall appear in the
Security register. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 5.10.
If the Company fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.
Section 5.12. Merger, Conversion, Consolidation or Succession to Business
of Trustee. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or to which the Trustee's assets may be sold,
or any corporation resulting from any merger, conversion, consolidation or sale
to which the Trustee shall be a party or by which the Trustee's property may be
bound, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
5.09, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Securities of
such series or in this Indenture provided that the certificate of the Trustee
shall have; provided, that the right to adopt the certificate of authentication
of any predecessor Trustee or to authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
Section 5.13. Preferential Collection of Claims. Reference is made to
Section 311 of the Trust Indenture Act. For purposes of Section 311(b) (4) and
(6) of such Act, the following terms shall mean:
(a) "cash transaction" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange, acceptance
or obligation which is made, drawn, negotiated or incurred by the Company for
the purpose of financing the purchase, processing, manufacturing, shipment,
storage or sale of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the goods,
wares or
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merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing, negotiating or
incurring of the draft, bill of exchange, acceptance or obligation.
ARTICLE 6
Concerning the Holders
Section 6.01. Evidence of Action Taken by Holders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Securityholders of any series may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee. Proof of execution of any instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and (subject to
Sections 5.01 and 5.02) conclusive in favor of the Trustee and the Company, if
made in the manner provided in this Article.
Section 6.02. Proof of Execution of Instruments and of Holding of
Securities; Record Date. Subject to Sections 5.01 and 5.02, the execution of any
instrument by a Securityholder or his agent or proxy may be proved in accordance
with such reasonable rules and regulations as may be prescribed by the Trustee
or in such manner as shall be satisfactory to the Trustee. The holding of
Securities shall be proved by the Security Register or by a certificate of the
Registrar thereof. The Company may set a record date for purposes of determining
the identity of holders of Securities of any series entitled to vote or consent
to any action referred to in Section 6.01, which record date may be set at any
time or from time to time by notice to the Trustee, for any date or dates (in
the case of any adjournment or resolicitation) not more than 60 days nor less
than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, only holders of
Securities of such series of record on such record date shall be entitled to so
vote or give such consent or to withdraw such vote or consent.
Section 6.03. Securities Owned by Company Deemed Not Outstanding. In
determining whether the holders of the requisite aggregate principal amount of
Securities of any or all series have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities with respect to which such determination is
being made or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities with respect to which such determination is being made shall
be disregarded and deemed not to be outstanding for the purpose of any such
determination, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver, only
Securities which the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Securities.
In case of a dispute as to such right, the advice of counsel
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shall be full protection in respect of any decision made by the Trustee in
accordance with such advice. Upon request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing and identifying
all Securities, if any, known by the Company to be owned or held by or for the
account of any of the above-described persons; and, subject to Sections 5.01 and
5.02, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are outstanding for the purpose of any such
determination.
Section 6.04. Right of Revocation of Action Taken. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 6.01, of
the taking of any action by the holders of the percentage in aggregate principal
amount of the Securities of any or all series, as the case may be, specified in
this Indenture in connection with such action, any holder of a Security the
serial number of which is shown by the evidence to be included among the serial
numbers of the Securities the Holders of which have consented to such action
may, by filing written notice at the Corporate Trust Office and upon proof of
holding as provided in this Article, revoke such action so far as concerns such
Security. Except as aforesaid any such action taken by the holder of any
Security shall be conclusive and binding upon such holder and upon all future
holders and owners of such Security and of any Securities issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon any such Security. Any action taken by the holders of the
percentage in aggregate principal amount of the Securities of any or all series,
as the case may be, specified in this Indenture in connection with such action
shall be conclusively binding upon the Company, the Trustee and the holders of
all the Securities affected by such action.
ARTICLE 7
Supplemental Indentures
Section 7.01. Supplemental Indentures Without Consent of Holders. The
Company and the Trustee may amend or supplement this Indenture or the Securities
without the consent of any Holder:
(i) to cure any ambiguity, defect or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture or to make any other changes; provided that, in each case, such
provisions shall not adversely affect the interests of the holders of
Securities of any series in any material respect; or
(ii) to provide for uncertificated Securities of any series in
addition to or in place of certificated Securities of such series;
(iii) to provide for the assumption of the Company's obligations to
the Holders of the Securities in the case of a merger, consolidation or
sale of assets pursuant to Article 8 hereof;
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(iv) to make any change that would provide any additional rights or
benefits to the Holders of the Securities of any series or that does not
adversely affect the legal rights hereunder of any Holder of Securities of
any series;
(v) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as are necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee; or
(vi) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture
Act.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such supplemental indenture, and upon
receipt by the Trustee of the documents described in Section 7.04 hereof, the
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained,
but the Trustee shall not be obligated to enter into any such supplemental
indenture which affects its own rights, duties or immunities under this
Indenture or otherwise.
Section 7.02. With Consent of Holders. Except as provided in the next
succeeding paragraphs, this Indenture or the Securities of any series may be
amended or supplemented with the consent of the Holders of at least a majority
in aggregate principal amount of the Securities of each series affected thereby
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for such Securities), and any existing default or compliance
with any provision of this Indenture or the Securities of any series may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the then outstanding Securities of each series affected thereby
(including consents obtained in connection with a tender offer or exchange offer
for such Securities).
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders as aforesaid, and upon receipt by the Trustee of the
documents described in Section 7.04 hereof, the Trustee shall join with the
Company in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this Section
7.02 to approve the particular form of any proposed amendment or waiver, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of each series affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect
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therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture or waiver. Subject to Sections 4.04 and 4.07 hereof,
the Holders of a majority in aggregate principal amount of the Securities of
each series then outstanding may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Securities of such
series. Without the consent of each Holder of the Securities of any series
affected, however, an amendment or waiver may not (with respect to any Security
of such series held by a non-consenting Holder):
(i) reduce the principal amount of Securities of such series whose
Holders must consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Security of such series;
(iii) reduce the rate of or change the time for payment of interest
on any Security of such series;
(iv) waive a Default or Event of Default in the payment of principal
of or interest on the Securities (except a rescission of acceleration of
the Securities of any series by the Holders of at least a majority in
aggregate principal amount then outstanding of Securities of such series
and a waiver of the payment default that resulted from such acceleration);
(v) make any Security of such series payable in money other than that
stated in the Securities;
(vi) make any change in Section 4.04 or 4.07 hereof;
(vii) waive a redemption payment with respect to any Security of such
series;
(viii) modify the ranking or priority of the Securities of such
series; or
(ix) make any change in this sentence of this Section 7.02.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included for the benefit of
one or more particular series of Securities, or which modifies the rights of the
holders of Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
holders of Securities of any other series.
Section 7.03. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Securities
of each series affected thereby shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of
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any such supplemental indenture shall be and be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
Section 7.04. Documents to Be Given to Trustee; Compliance with TIA. The
Trustee, subject to the provisions of Sections 5.01 and 5.02, may receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
such supplemental indenture complies with the applicable provisions of this
Indenture. Every such supplemental indenture shall comply with the TIA.
Section 7.05. Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation approved by the Trustee for such series as to form
(but not as to substance) as to any matter provided for by such supplemental
indenture or as to any action taken at any such meeting. If the Company or the
Trustee shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Company, authenticated by the Trustee and delivered in
exchange for the Securities of such series then outstanding.
ARTICLE 8
Consolidation, Merger or Sale of Assets
Section 8.01. When Issuer May Merge, Etc. The Company will not consolidate
or merge with or into (whether or not the Company is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions, to another Person unless (i) the surviving Person or the Person
formed by or surviving such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made (the "Surviving Entity") is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; (ii) the Surviving Entity assumes all the obligations
of the Company under the Securities and the Indenture pursuant to a supplemental
Indenture in form reasonably satisfactory to the Trustee; (iii) immediately
before and after giving effect to such transaction and treating any Indebtedness
which becomes an obligation of the Company as a result of such transaction as
having been incurred by the Company at the time of the transaction, no Default
or Event of Default shall have occurred and be continuing; and (iv) the Company
or the Surviving Entity will, at the time of such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to Section 3.08 hereof.
Section 8.02. Successor Corporation Substituted. Upon any consolidation or
merger, or any sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the properties or assets of the
Company in accordance with Section 8.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition, the provisions of this Indenture referring to the
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"Company" shall refer instead to the successor corporation), and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such successor Person had been named as the Company herein, and the
predecessor entity shall be relieved of any further obligation under this
Indenture and the Securities. In case of any such consolidation, merger, sale,
lease or conveyance, such changes in phraseology and form (but not in substance)
may be made in the Securities thereafter to be issued as may be appropriate.
Notwithstanding the foregoing, (i) a consolidation or merger by the Company
with or into, or (ii) the sale, assignment, transfer, lease, conveyance or other
disposition by the Company of all or substantially all of its property or assets
to, one or more of its Subsidiaries shall not relieve the Company from its
obligations under this Indenture and the Securities.
Section 8.03. Opinion of Counsel to Trustee. The Trustee, subject to the
provisions of Sections 5.01 and 5.02, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition complies with the applicable
provisions of this Indenture.
ARTICLE 9
Redemption of Securities
Section 9.01. Ability to Redeem; Redemption Price. The Company may,
subject to the provisions of this Article 9 and the terms of the Securities,
redeem Securities of any series at any time, in whole or in part, at a
redemption price equal to the sum of (i) the principal amount of the Securities
being redeemed plus accrued interest thereon to the date fixed for redemption
and (ii) the Make-Whole Amount, if any, with respect to such Securities (the
"Redemption Price").
Section 9.02. Election to Redeem; Notice to Trustee. The election of the
Company to redeem Securities of any series, in whole or in part, shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all of the Securities of any series, the Company shall,
at least 30 days prior to the giving of the notice of redemption required by
Section 9.04 (unless a shorter period shall be satisfactory to the Trustee),
notify the Trustee of the series of Securities to be redeemed, the date fixed
for redemption and of the principal amount of Securities of such series to be
redeemed.
Section 9.03. Selection by Trustee of Securities to Be Redeemed. If less
than all of the Securities of any series are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
date fixed for redemption by the Trustee, from the outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of such series or any integral multiple of $1,000 in excess thereof)
of the principal amount of Securities of such series.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
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For purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
Section 9.04. Notice of Redemption. Notice of redemption to the holders of
Securities to be redeemed as a whole or in part shall be given by mailing notice
of such redemption by first class mail, postage prepaid, at least 45 days and
not more than 60 days prior to the date fixed for redemption to such holders of
Securities at their last addresses as they shall appear upon the registry books.
Any notice which is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives the notice.
Failure to give notice by mail, or any defect in the notice to the holder of any
Security designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Security.
The notice of redemption to each such Holder shall identify the Securities
to be redeemed (including CUSIP numbers) and shall specify the principal amount
of each Security held by such Holder to be redeemed, the date fixed for
redemption, the applicable Redemption Price, the place or places of payment,
that payment will be made upon presentation and surrender of such Securities,
that interest accrued to the date fixed for redemption will be paid as specified
in such notice and that, on and after such date, interest thereon or on the
portions thereof to be redeemed will cease to accrue. In case any Security is to
be redeemed in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that on and after
the date fixed for redemption, upon surrender of such Security, a new Security
or Securities in principal amount equal to the unredeemed portion thereof will
be issued.
The notice of redemption shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
No later than 10:00 a.m. on the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents (or, if the Company is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
3.04) an amount of money sufficient to redeem on the redemption date all the
Securities so called for redemption at the appropriate Redemption Price.
Section 9.05. Payment of Securities Called for Redemption. If notice of
redemption has been given as above provided, the Securities or portions of
Securities specified in such notice shall become due and payable on the date and
at the place stated in such notice at the applicable Redemption Price and, on
and after such date (unless the Company shall default in the payment of such
Securities at the Redemption Price), interest on the Securities or portions of
Securities so called for redemption shall cease to accrue and, except as
provided in Sections 5.05 and 11.06, such Securities shall cease from and after
the date fixed for redemption to be entitled to any benefit or security under
this Indenture, and the Holders thereof shall have no right in respect of such
Securities except the right to receive the applicable Redemption Price thereof.
On presentation and surrender of such Securities at a place of payment specified
in such notice, such Securities or the specified portions thereof shall be paid
and redeemed by the Company at the applicable Redemption Price; provided that
any semi-annual payment of interest becoming due on the date fixed for
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redemption shall be payable to the holders of such Securities registered as such
on the relevant Interest Record Date subject to the terms and provisions of
Section 2.04 hereof.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate borne by the
Security.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to or
on the order of the Holder thereof, at the expense of the Company, a new
Security or Securities, of authorized denominations, in principal amount equal
to the unredeemed portion of the Security so presented.
Section 9.06. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in a written statement signed by an authorized officer of the Company and
delivered to the Trustee at least 40 days prior to the last date on which notice
of redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated by either (a) the Company or (b) an entity specifically
identified in such written statement as directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
ARTICLE 10
Defeasance and Covenant Defeasance
Section 10.01. Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may at its option by resolution of the Board of
Directors, at any time, elect to have either Section 10.02 or Section 10.03
applied to the outstanding Securities of any series upon compliance with the
conditions set forth below in this Article 10.
Section 10.02. Legal Defeasance and Discharge. Upon the Company's exercise
under Section 10.01 hereof of the option applicable to this Section 10.02 with
respect to Securities of any series, the Company shall be deemed to have been
discharged from its Obligations with respect to any outstanding Securities of
such series on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Securities of such series, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
10.05 hereof and the other Sections of this Indenture referred to in clauses (i)
and (ii) of this Section 10.02, and to have satisfied all its other obligations
under such Securities and this Indenture (and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of outstanding
Securities to receive solely from the trust fund described in Section 10.04
hereof, and as more fully set forth in such Section, payments in respect of the
principal of and interest and the Make-Whole Amount, if any, on such Securities
when such payments are due, (ii) the Company's obligations with respect to such
Securities under Sections 2.01, 2.02, 2.05, 2.06, 2.07, 2.08, 2.09, 2.11, 3.02,
3.04 and 10.05 hereof, (iii) the rights, powers, trusts, duties and immunities
of the Trustee hereunder,
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including, without limitation, the Trustee's rights under Section 5.07 hereof,
and the Company's obligations in connection therewith and with this Article 10.
Subject to compliance with this Article 10, the Company may exercise its option
under Section 10.01 to have this Section 10.02 applied to any series of
Securities notwithstanding the prior exercise of its option under Section 10.01
to have Section 10.03 hereof applied with respect to the Securities of such
series.
Section 10.03. Covenant Defeasance. Upon the Company's exercise under
Section 10.01 hereof with respect to Securities of any series of the option
applicable to this Section 10.03, the Company shall be released from its
obligations under the covenants contained in Sections 3.08 through 3.11 and
clause (iv) of Section 8.01 hereof with respect to the outstanding Securities of
such series on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities of such series shall
thereafter be deemed not outstanding for the purposes of any direction, waiver,
consent or declaration or act of Holders (and the consequences of any thereof)
in connection with such covenants, but shall continue to be deemed outstanding
for all other purposes hereunder. For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Securities of such series, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 401 hereof, but, except as
specified above, the remainder of this Indenture and such Securities shall be
unaffected thereby.
Section 10.04. Conditions to Legal or Covenant Defeasance. The following
shall be the conditions to application of either Section 10.02 or Section 10.03
hereof to the outstanding Securities of any series:
(i) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 5.10 who shall agree to comply with the provisions of this
Article 10 applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (a)
cash in U.S. Dollars in an amount, or (b) non-callable Government
Obligations which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms will provide, not later
than one day before the due date of any payment, cash in U.S. Dollars in an
amount, or (c) a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge the principal
of, premium, if any, and interest on such outstanding Securities on the
stated maturity date of such principal or installment of principal,
premium, if any, or interest. Before such a deposit, the Company may give
to the Trustee, in accordance with Section 9.02, a notice of its election
to redeem all or any portion of such outstanding Securities at a future
date in accordance with the terms of the Securities of such series and
Article 9, which notice shall be
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<PAGE>
irrevocable. Such irrevocable redemption notice, if given, shall be given
effect in applying the foregoing.
(ii) In the case of an election to apply Section 10.02 hereof to the
Securities of such series, the Company shall have delivered to the Trustee
an Opinion of Counsel confirming that (a) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (b)
since the date hereof, there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such application of Section
10.02 hereof and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such application of Section 10.02 hereof had not occurred.
(iii) In the case of an election to apply Section 10.03 hereof to the
Securities of such series, the Company shall have delivered to the Trustee
an Opinion of Counsel confirming that the Holders of the outstanding
Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such application of Section
10.03 hereof and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such application of Section 10.03 hereof had not occurred.
(iv) No Default or Event of Default with respect to the Securities of
such series shall have occurred and be continuing on the date of such
deposit or at any time in the period ending on the 91st day after the date
of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(v) Such application of Section 10.02 hereof or Section 10.03 hereof
to the Securities of such series shall not result in a breach or violation
of, or constitute a default under any material agreement or instrument
(other than this Indenture) to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound
(other than a breach, violation or default resulting from the borrowing of
funds to be applied to such deposit).
(vi) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally.
(vii) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election to apply Section 10.02 or 10.03 hereof was not made by the Company
with the intent of preferring the Holders of the Securities of such series
over the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others.
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<PAGE>
(viii) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for effecting either the application of Section 10.02
hereof or the application of Section 10.03 hereof (as the case may be) have
been complied with as contemplated by this Section 10.04.
Section 10.05. Deposited Money and Government Obligations to be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 10.06 hereof, all
money and non-callable Government Obligations (including the proceeds thereof)
deposited with the Trustee pursuant to Section 10.04 hereof in respect of the
outstanding Securities of any series shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any paying agent
(including the Company acting as paying agent) as the Trustee may determine, to
the Holders of such Securities of all sums due and to become due thereon in
respect of principal of, and interest, but such money need not be segregated
from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Obligations deposited pursuant to Section 10.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities of such series.
Anything in this Article 10 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the Company's request
any money or non-callable Government Obligations held by it as provided in
Section 10.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
10.04(i) hereof), are in excess of the amount thereof which would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 10.06. Repayment to Company. Any money deposited with the Trustee
or any paying agent, or then held by the Company, in trust for the payment of
the principal of or interest on any Security and remaining unclaimed for two
years after such principal or interest has become due and payable shall be paid
to the Company on its written request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such paying agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such paying agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in The New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 10.07. Reinstatement. If the Trustee or paying agent is unable to
apply any U.S. Dollars or non-callable Government Obligations in accordance with
Section 10.02 or 10.03 hereof,
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<PAGE>
as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities of the relevant series shall be revived and reinstated as though no
deposit had occurred pursuant to Section 10.02 or 10.03 hereof until such time
as the Trustee or paying agent is permitted to apply all such money in
accordance with Section 10.02 or 10.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of or interest on
any Security following the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Security to receive such
payment from the money held by the Trustee or paying agent.
ARTICLE 11
Satisfaction and Discharge
Section 11.01. Satisfaction and Discharge of Indenture. This Indenture
shall upon request of the Company cease to be of further effect with respect to
any series of Securities specified in such request (except as to any surviving
rights of registration of transfer or exchange of Securities of such series
herein expressly provided for), and the Trustee, upon receipt of such request
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture as to such series
when:
(i) either:
(A) all Securities of such series theretofore authenticated and
delivered (other than (1) Securities of such series which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 2.09, and (2) Securities of such series for whose
payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Article 10) have been
delivered to the Trustee for cancellation; or
(B) all Securities of such series not theretofore delivered to
the Trustee for cancellation:
(1) have become due and payable, or
(2) will become due and payable at their stated maturity
within one year, or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of clause (1), (2) or (3) above, has
irrevocably deposited or caused to be deposited with the Trustee funds
in trust for the purpose, and in an amount sufficient to pay and
discharge the entire indebtedness on such
48
<PAGE>
Securities not theretofore delivered to the Trustee for cancellation,
for the principal and premium, if any, and interest, if any, to the
date of such deposit (in the case of Securities which have become due
and payable) or the stated maturity or redemption date, as the case
may be;
(ii) The Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(iii) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 5.07, and, if money has been deposited with and held by the Trustee
pursuant to subparagraph (B) of paragraph (i) of this Section, the obligations
of the Trustee under Section 11.02 and Section 10.06, shall survive.
Section 11.02. Application of Trust Funds. Subject to the provisions of
Section 10.06, all money deposited with the Trustee pursuant to Section 11.01
shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through
any paying agent (including the Company acting as its own paying agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal and
premium, if any, and interest, if any, for the payment of which such money has
been deposited with or received by the Trustee, but such money need not be
segregated from other funds except to the extent required by law.
ARTICLE 12
Miscellaneous Provisions
Section 12.01. Incorporators, Stockholders, Officers and Directors of
Company Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture or in any Security
of any series, or because of any Indebtedness evidenced thereby, shall be had
against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Company or of any successor,
either directly or through the Company or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities by the holders
thereof and as part of the consideration for the issue of the Securities.
Section 12.02. Provisions of Indenture for the Sole Benefit of Parties and
Holders. Nothing in this Indenture or in the Securities, expressed or implied,
shall give or be construed to give to any person, firm or corporation, other
than the parties hereto and their successors and the holders of the Securities,
any legal or equitable right, remedy or claim under this Indenture or under any
covenant or provision herein contained, all such covenants and provisions being
for the sole benefit of the parties hereto and their successors and of the
holders of the Securities.
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<PAGE>
Section 12.03. Successors and Assigns of Company Bound by Indenture. All
the covenants, stipulations, promises and agreements in this Indenture contained
by or on behalf of the Company shall bind its successors and assigns, whether so
expressed or not.
Section 12.04. Notices and Demands on Company, Trustee and Holders. Any
notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the holders of Securities
to or on the Company may be given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Company is filed by the Company with the Trustee)
to Security Capital Group Incorporated, 125 Lincoln Avenue, Suite 300, Santa Fe,
New Mexico 87501, Attention: Secretary, with a copy to the Chief Financial
Officer. Any notice, direction, request or demand by the Company or any
Securityholder to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made at the Corporate Trust Office.
Where this Indenture provides for notice to Holders, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Security Register. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. The Trustee may waive notice
to it of any provision herein, and such waiver shall be deemed to be for its
convenience and discretion. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular mail
service, it shall be impracticable to mail notice to the Company and
Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
Section 12.05. Officers' Certificates and Opinions of Counsel; Statements
to Be Contained Therein. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (c) a statement that, in the
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<PAGE>
opinion of such person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with and (d) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with.
Any certificate, statement or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters or information which is in the possession of the Company,
upon the certificate, statement or opinion of or representations by an officer
or officers of the Company, unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Company or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Trustee shall contain a statement that such firm is independent.
Section 12.06. Payments Due on Saturdays, Sundays and Holidays. If the
date of maturity of interest on or principal of the Securities or the date fixed
for redemption of any Security shall not be a Business Day, then payment of
interest or principal need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period after such date.
Section 12.07. Conflict of Any Provision of Indenture with Trust Indenture
Act of 1939. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture by
operation of Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939
(an "incorporated provision"), such incorporated provision shall control.
Section 12.08. New York Law to Govern. This Indenture and each Security
shall be deemed to be a contract under the laws of the State of New York, and
for all purposes shall be construed in accordance with the laws of such State,
except as may otherwise be required by mandatory provisions of law.
Section 12.09. Counterparts. This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
51
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Section 12.10. 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.
52
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first above written.
SECURITY CAPITAL GROUP
INCORPORATED
By: /s/ Jeffrey A. Klopf
--------------------
Title: Senior Vice President and Secretary
State Street Bank and Trust Company,
as Trustee
By: /s/ Carolina D. Altomare
------------------------
Title: Assistant Vice President
<PAGE>
ANNEX A
[FORM OF FACE OF SECURITY]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 208 OF THE INDENTURE.]/1/
[THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO
SECURITY CAPITAL GROUP INCORPORATED ("SECURITY CAPITAL") OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER ("QIB") IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE SECURITY EVIDENCED HEREBY IS
/1/ To be included in Global Security.
A-1
<PAGE>
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SUCH SECURITY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR
THE NOTES. IF THE PROPOSED TRANSFEREE IS NOT SECURITY CAPITAL, A SUBSIDIARY
THEREOF OR A QIB TO WHICH THIS NOTE IS BEING TRANSFERRED IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE FOR THE NOTES SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SECURITY CAPITAL OR THE TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT UNLESS THE TRANSFER HAS BEEN REGISTERED
UNDER THE SECURITIES ACT, THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT.]/2/
- --------------------------------
/2/ Private Placement Legend.
A-2
<PAGE>
$200,000,000
CUSIP No. 81413P AB 1
Security Capital Group Incorporated
6.95% Note Due 2005
Security Capital Group Incorporated, a Maryland corporation (the
"Company"), for value received hereby promises to pay to Cede & Co. or
registered assigns the principal sum of TWO HUNDRED MILLION U.S. Dollars at the
Company's office or agency for such purpose in the city of Boston,
Massachusetts, on June 15, 2005, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on December 15 and
June 15 (each an "Interest Payment Date") of each year, commencing with December
15, 1998, on such principal sum in like coin or currency at the rate per annum
set forth above at such office or agency from the most recent Interest Payment
Date to which interest on the Securities has been paid or duly provided for,
unless the date hereof is a date to which interest on the Securities has been
paid or duly provided for, in which case from the date of this Security, or, if
no interest on the Securities [or on the Securities for which these Securities
were exchanged pursuant to the Exchange Offer]/3/ has been paid or duly provided
for, from June 23, 1998. Notwithstanding the foregoing, if the date hereof is
after June 1 or December 1 (each an "Interest Record Date"), as the case may be,
and before the immediately following Interest Payment Date, this Security shall
bear interest from such Interest Payment Date; provided, that if the Company
shall default in the payment of interest due on such Interest Payment Date then
this Security shall bear interest from the next preceding Interest Payment Date
to which interest on the Securities has been paid or duly provided for. The
interest so payable on any Interest Payment Date will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
person in whose name this Security is registered at the close of business on the
Interest Record Date preceding such Interest Payment Date whether or not such
day is a Business Day; provided that interest may be paid, at the option of the
Company, by mailing a check therefor payable to the registered holder entitled
thereto at such holder's last address as it appears on the Security register or
by wire transfer, in immediately available funds, to such bank or other entity
in the continental United States as shall be designated in writing by such
holder prior to the relevant Interest Record Date and shall have appropriate
facilities for such purpose.
Interest, other than default interest, on the Securities will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the holders of such
Securities. No representation is made as to the
/3/ To be included in Exchange Securities.
A-3
<PAGE>
correctness or accuracy of such CUSIP numbers as printed on the Securities, and
reliance may be placed only on the other identification numbers printed hereon.
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
A-4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
under its corporate seal.
SECURITY CAPITAL GROUP INCORPORATED
By:
Name:
Title:
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:_______________________
This is one of the Securities of the series designated therein described in
the within-mentioned Indenture.
State Street Bank and Trust Company,
as Trustee
By:________________________________
Authorized Signatory
A-5
<PAGE>
[FORM OF REVERSE OF SECURITY]
Security Capital Group Incorporated
6.95% Note Due 2005
Securities of this series are one of a duly authorized issue of debt
securities of the Company (herein referred to as the "Securities"), issued
pursuant to an indenture dated as of June 18, 1998 (the "Indenture"), duly
executed and delivered by the Company to State Street Bank and Trust Company, as
Trustee (herein called the "Trustee"). Reference is hereby made to the Indenture
and all indentures supplemental thereto for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the Securities.
This Security is one of the series designated as the 6.95% Notes Due 2005
of the Company and such series is limited in aggregate principal amount to
$200,000,000.
This Security will bear interest until final maturity at a rate per annum
shown above, except as provided in the next paragraph. The Company will pay
interest on overdue principal of, premium, if any, and to the extent lawful,
interest on overdue installments of interest, at a 6.95% rate per annum based on
a year of 360 days and actual days elapsed.
[In the event that (i) the Exchange Offer Registration Statement relating
to the Exchange Offer is not filed with the Commission on or prior to the date
that is 90 days after the Issue Date (unless a Shelf Registration Statement has
been filed on or prior to such date), (ii) the Exchange Offer Registration
Statement is not declared effective on or prior to the date that is 180 days
after the Issue Date (unless a Shelf Registration Statement has been filed on or
prior to such date), (iii) the Exchange Offer is not consummated on or prior to
the date that is 210 days after the Issue Date (unless a Shelf Registration
Statement has been filed on or prior to such date), (iv) a Shelf Registration
Statement with respect to resale of the Securities is not declared effective on
or prior to the date that is 210 days after the Issue Date (unless the Exchange
Offer has been consummated by that date) or (v) the Shelf Registration Statement
ceases to be effective at any time during the Effectiveness Period (unless the
Exchange Offer has been consummated by that date or unless such cessation of
effectiveness is permitted pursuant to the Registration Rights Agreement) (each
such event referred to in clauses (i) through (v), a "Registration Default"),
then the Company will pay additional interest (in addition to the interest
otherwise due hereon) ("Additional Interest") to the holder commencing upon the
occurrence of each such Registration Default in an amount equal to 0.50% per
annum; provided that such Additional Interest shall not exceed 0.50% per annum
in the aggregate and provided, further, that any Holder that does not deliver
the information that the Company may request for inclusion in the Shelf
Registration Statement pursuant to Section 3(c) of the Registration Rights
Agreement upon such a request by the Company shall not be entitled to any such
additional interest for any day after the date that is 5 Business Days after the
date of such request. Such additional interest will cease accruing with respect
to any Registration Default when such Registration Default has been cured. The
Company shall pay amounts due in respect of Additional Interest on each Interest
Payment Date (or, if the Company shall default in the payment
A-6
<PAGE>
of interest on any Interest Payment Date, on the date such interest is otherwise
paid as provided in the Indenture).]/4/
[There shall also be payable in respect of this Security all Additional
Interest that may have accrued on the Security for which this Security was
exchanged (as defined in such Security) pursuant to the Exchange Offer, such
Additional Interest to be calculated in accordance with the terms of such
Security and payable at the same time and in the same manner as periodic
interest on this Security.]/5/
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount outstanding of the Securities of any
series then outstanding (each such series voting as a class) and that, prior to
any such declaration, the holders of the Securities of any such series may waive
any past default under the Indenture and its consequences except a default in
the payment of principal of, premium, if any, or interest on any of the
Securities, which may be so waived only upon the terms and conditions provided
in the Indenture. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Security and any
Security which may be issued in exchange or substitution herefor, whether or not
any notation thereof is made upon this Security or such other Securities.
The Indenture permits the Company and the Trustee, with the consent of the
holders of at least a majority in aggregate principal amount of each series of
Securities affected thereby at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities; provided that without the consent of each holder
affected, no such supplemental indenture shall (i) reduce the principal amount
of Securities of any series whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Security of any series or alter the provisions with respect to the
redemption of the Securities of such series, (iii) reduce the rate of or change
the time for payment of interest on any Security of any series, (iv) waive a
Default or Event of Default in the payment of principal of, premium, if any, or
interest on, the Securities of any series (except a rescission of acceleration
of the Securities of any series by the holders of at least a majority in
aggregate principal amount of the Securities of such series and a waiver of the
payment default that resulted from such acceleration), (v) make any Security of
any series payable in money other than that stated in the Securities of such
series, (vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Securities of any series to
receive payments of principal of, premium, if any, or interest on the Securities
of such series, (vii) waive a redemption payment with respect to
/4/ To be included in Securities not Exchange Securities.
/5/ To be included in Exchange Securities.
A-7
<PAGE>
any Security of any series, (viii) modify the ranking or priority of the
Securities of any series or (ix) make any change in the foregoing amendment and
waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Securities, the Company and the Trustee may (i) amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency, or
to make any other provisions with respect to matters or questions arising under
the Indenture which shall not be inconsistent with the provisions of the
Indenture or to make any other changes; provided that, in each case, such
provisions shall not adversely affect the interests of the holders of Securities
in any material respect, (ii) to provide for uncertificated Securities in
addition to or in place of certificated Securities, (iii) to provide for the
assumption of the Company's obligations to holders of Securities in the case of
a merger or consolidation, (iv) to make any change that would provide any
additional rights or benefits to the holders of Securities or that does not
adversely affect the legal rights under the Indenture of any such holder, (v) to
evidence and provide for the acceptance of appointment by a successor Trustee
with respect to the Securities and to add to or change any of the provisions of
the Indenture as are necessary to provide for or facilitate the administration
of the trusts under the Indenture by more than one Trustee, or (vi) to comply
with requirements of the Commission (as defined in the Indenture) in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act (as defined in the Indenture).
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the place, times, and rate, and in the currency,
herein prescribed.
The Securities of this series are issuable only as registered Securities
without coupons in minimum denominations of $1,000 and integral multiples of
$1,000 in excess thereof.
At the office or agency of the Company referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of the same series of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Company, a new Security or Securities of
the same series of authorized denominations, for a like aggregate principal
amount, will be issued to the transferee as provided in the Indenture. No
service charge shall be made for any such transfer, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto.
Securities of this series may be redeemed at any time at the option of the
Company, in whole or in part, upon notice of not more than 60 nor less than 45
days prior to the date fixed for redemption, at a redemption price set forth in
the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security 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.
A-8
<PAGE>
The Company, the Trustee, and any authorized agent of the Company or the
Trustee, may deem and treat the registered holder hereof as the absolute owner
of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, 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 incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, 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 is hereby incorporated by the reference and to the extent of
any variance between the provisions hereof and the Indenture, the Indenture
shall control.
All capitalized terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
This Security shall be deemed to be a contract under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of such State, except as may otherwise be required by mandatory provisions of
law.
A-9
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- --------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- --------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ____________________ attorney to transfer such Security on the
books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES]
In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of an effective registration of this
Security under the Securities Act or (ii) two years after the later of the Issue
Date or the last date on which this Security was held by the Company or an
"affiliate" (as such term is defined in Rule 144 under the Securities Act) of
the Company, the undersigned confirms that, without utilizing any general
solicitation or general advertising:
1. Applicable Exemption [Check One]
[](a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
or
[](b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
2. Affiliation with the Company [check if applicable]
[](a) The undersigned represents and warrants that it is, or at some time
during which it held this security was, an affiliate of the Company.
[](b) If 2(a) above is checked and if the undersigned was not an affiliate
of the Company at all times during which it held this Security,
indicate the most recent date as of which the undersigned was an
affiliate of the Company:____________________________________________
[](c) If 2(a) above is checked and if the transferee will not pay the full
purchase price for the transfer of this Security on or prior to the
date of transfer indicated when such purchase price will be paid:
--------------------------
If neither of the boxes under the Applicable Exemption is checked, the Trustee
or other Registrar shall not be obligated to register this Security in the name
of any Person other than the Holder hereof
A-10
<PAGE>
unless and until the conditions to any such transfer or registration set forth
herein and in Section 208 of the Indenture shall have been satisfied.
Date:___________ ____________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
The signatures to this assignment must be guaranteed by a firm that is a
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program.
MEDALLION SIGNATURE GUARANTEE
Authorized Signature:___________________
Name of Firm:___________________________
TO BE COMPLETED BY PURCHASER IF 1(a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:___________ ____________________________________
NOTICE: To be executed by an authorized officer
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 2(A) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT
NOR HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Date:___________ ____________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
A-11
<PAGE>
ANNEX B
[FORM OF FACE OF SECURITY]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 2.08 OF THE INDENTURE.]/1/
[THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO
SECURITY CAPITAL GROUP INCORPORATED ("SECURITY CAPITAL") OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER ("QIB") IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE SECURITY EVIDENCED HEREBY IS
- -------------------
/1/ To be included in Global Security.
B-1
<PAGE>
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SUCH SECURITY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR
THE NOTES. IF THE PROPOSED TRANSFEREE IS NOT SECURITY CAPITAL, A SUBSIDIARY
THEREOF OR A QIB TO WHICH THIS NOTE IS BEING TRANSFERRED IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE FOR THE NOTES SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SECURITY CAPITAL OR THE TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT UNLESS THE TRANSFER HAS BEEN REGISTERED
UNDER THE SECURITIES ACT, THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT.]/2/
- -------------------
/2/ Private Placement Legend.
B-2
<PAGE>
$100,000,000
CUSIP No. 81413P AC 9
Security Capital Group Incorporated
7.15% Note Due 2007
Security Capital Group Incorporated, a Maryland corporation (the
"Company"), for value received hereby promises to pay to Cede & Co. or
registered assigns the principal sum of ONE HUNDRED MILLION U.S. Dollars at the
Company's office or agency for such purpose in the city of Boston,
Massachusetts, on June 15, 2007, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on December 15 and
June 15 (each an "Interest Payment Date") of each year, commencing with December
15, 1998, on such principal sum in like coin or currency at the rate per annum
set forth above at such office or agency from the most recent Interest Payment
Date to which interest on the Securities has been paid or duly provided for,
unless the date hereof is a date to which interest on the Securities has been
paid or duly provided for, in which case from th e date of this Security, or, if
no interest on the Securities [or on the Securities for which these Securities
were exchanged pursuant to the Exchange Offer]/3/ has been paid or duly provided
for, from June 23, 1998. Notwithstanding the foregoing, if the date hereof is
after June 1 or December 1 (each an "Interest Record Date"), as the case may be,
and before the immediately following Interest Payment Date, this Security shall
bear interest from such Interest Payment Date; provided, that if the Company
shall default in the payment of interest due on such Interest Payment Date then
this Security shall bear interest from the next preceding Interest Payment Date
to which interest on the Securities has been paid or duly provided for. The
interest so payable on any Interest Payment Date will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
person in whose name this Security is registered at the close of business on the
Interest Record Date preceding such Interest Payment Date whether or not such
day is a Business Day; provided that interest may be paid, at the option of the
Company, by mailing a check therefor payable to the registered holder entitled
thereto at such holder's last address as it appears on the Security register or
by wire transfer, in immediately available funds, to such bank or other entity
in the continental United States as shall be designated in writing by such
holder prior to the relevant Interest Record Date and shall have appropriate
facilities for such purpose.
Interest, other than default interest, on the Securities will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the holders of such
Securities. No representation is made as to the
- -------------------
/3/ To be included in Exchange Securities.
B-3
<PAGE>
correctness or accuracy of such CUSIP numbers as printed on the Securities, and
reliance may be placed only on the other identification numbers printed hereon.
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
B-4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SECURITY CAPITAL GROUP INCORPORATED
By:_____________________________
Name:
Title:
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:______________________
This is one of the Securities of the series designated therein described in
the within-mentioned Indenture.
State Street Bank and Trust Company,
as Trustee
By:___________________________
Authorized Signatory
B-5
<PAGE>
[FORM OF REVERSE OF SECURITY]
Security Capital Group Incorporated
7.15% Note Due 2007
Securities of this series are one of a duly authorized issue of debt
securities of the Company (herein referred to as the "Securities"), issued
pursuant to an indenture dated as of June 18, 1998 (the "Indenture"), duly
executed and delivered by the Company to State Street Bank and Trust Company, as
Trustee (herein called the "Trustee"). Reference is hereby made to the Indenture
and all indentures supplemental thereto for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the Securities.
This Security is one of the series designated as the 7.15% Notes Due 2007
of the Company and such series is limited in aggregate principal amount to
$100,000,000.
This Security will bear interest until final maturity at a rate per annum
shown above, except as provided in the next paragraph. The Company will pay
interest on overdue principal of, premium, if any, and to the extent lawful,
interest on overdue installments of interest, at an 7.15% rate per annum based
on a year of 360 days and actual days elapsed.
[In the event that (i) the Exchange Offer Registration Statement relating
to the Exchange Offer is not filed with the Commission on or prior to the date
that is 90 days after the Issue Date (unless a Shelf Registration Statement has
been filed on or prior to such date), (ii) the Exchange Offer Registration
Statement is not declared effective on or prior to the date that is 180 days
after the Issue Date (unless a Shelf Registration Statement has been filed on or
prior to such date), (iii) the Exchange Offer is not consummated on or prior to
the date that is 210 days after the Issue Date (unless a Shelf Registration
Statement has been filed on or prior to such date), (iv) a Shelf Registration
Statement with respect to resale of the Securities is not declared effective on
or prior to the date that is 210 days after the Issue Date (unless the Exchange
Offer has been consummated by that date) or (v) the Shelf Registration Statement
ceases to be effective at any time during the Effectiveness Period (unless the
Exchange Offer has been consummated by that date or unless such cessation of
effectiveness is permitted pursuant to the Registration Rights Agreement) (each
such event referred to in clauses (i) through (v), a "Registration Default"),
then the Company will pay additional interest (in addition to the interest
otherwise due hereon) ("Additional Interest") to the holder commencing upon the
occurrence of each such Registration Default in an amount equal to 0.50% per
annum; provided that such Additional Interest shall not exceed 0.50% per annum
in the aggregate and provided, further, that any Holder that does not deliver
the information that the Company may request for inclusion in the Shelf
Registration Statement pursuant to Section 3(c) of the Registration Rights
Agreement upon such a request by the Company shall not be entitled to any such
additional interest for any day after the date that is 5 Business Days after the
date of such request. Such additional interest will cease accruing with respect
to any Registration Default when such Registration Default has been cured. The
Company shall pay amounts due in respect of Additional Interest on each Interest
Payment Date (or, if the Company shall default in the payment
B-6
<PAGE>
of interest on any Interest Payment Date, on the date such interest is otherwise
paid as provided in the Indenture).]/4/
[There shall also be payable in respect of this Security all Additional
Interest that may have accrued on the Security for which this Security was
exchanged (as defined in such Security) pursuant to the Exchange Offer, such
Additional Interest to be calculated in accordance with the terms of such
Security and payable at the same time and in the same manner as periodic
interest on this Security.]/5/
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount outstanding of the Securities of any
series then outstanding (each such series voting as a class) and that, prior to
any such declaration, the holders of the Securities of any such series may waive
any past default under the Indenture and its consequences except a default in
the payment of principal of, premium, if any, or interest on any of the
Securities, which may be so waived only upon the terms and conditions provided
in the Indenture. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Security and any
Security which may be issued in exchange or substitution herefor, whether or not
any notation thereof is made upon this Security or such other Securities.
The Indenture permits the Company and the Trustee, with the consent of the
holders of at least a majority in aggregate principal amount of each series of
Securities affected thereby at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities; provided that without the consent of each holder
affected, no such supplemental indenture shall (i) reduce the principal amount
of Securities of any series whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Security of any series or alter the provisions with respect to the
redemption of the Securities of such series, (iii) reduce the rate of or change
the time for payment of interest on any Security of any series, (iv) waive a
Default or Event of Default in the payment of principal of, premium, if any, or
interest on, the Securities of any series (except a rescission of acceleration
of the Securities of any series by the holders of at least a majority in
aggregate principal amount outstanding of the Securities of such series and a
waiver of the payment default that resulted from such acceleration), (v) make
any Security of any series payable in money other than that stated in the
Securities of such series, (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of holders of
Securities of any series to receive payments of principal of, premium, if any,
or interest on the Securities of such series, (vii) waive a redemption
- -----------------------
/4/To be included in Securities not Exchange Securities.
/5/To be included in Exchange Securities.
B-7
<PAGE>
payment with respect to any Security of any series, (viii) modify the ranking or
priority of the Securities of any series or (ix) make any change in the
foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Securities, the Company and the Trustee may (i) amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency, or
to make any other provisions with respect to matters or questions arising under
the Indenture which shall not be inconsistent with the provisions of the
Indenture or to make any other changes; provided that, in each case, such
provisions shall not adversely affect the interests of the holders of Securities
in any material respect, (ii) to provide for uncertificated Securities in
addition to or in place of certificated Securities, (iii) to provide for the
assumption of the Company's obligations to holders of Securities in the case of
a merger or consolidation, (iv) to make any change that would provide any
additional rights or benefits to the holders of Securities or that does not
adversely affect the legal rights under the Indenture of any such holder, (v) to
evidence and provide for the acceptance of appointment by a successor Trustee
with respect to the Securities and to add to or change any of the provisions of
the Indenture as are necessary to provide for or facilitate the administration
of the trusts under the Indenture by more than one Trustee, or (vi) to comply
with requirements of the Commission (as defined in the Indenture) in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act (as defined in the Indenture).
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the place, times, and rate, and in the currency,
herein prescribed.
The Securities of this series are issuable only as registered Securities
without coupons in minimum denominations of $1,000 and integrated multiples of
$1,000 in excess thereof.
At the office or agency of the Company referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of the same series of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Company, a new Security or Securities of
the same series of authorized denominations, for a like aggregate principal
amount, will be issued to the transferee as provided in the Indenture. No
service charge shall be made for any such transfer, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto.
Securities of this series may be redeemed at any time at the option of the
Company, in whole or in part, upon notice of not more than 60 nor less than 45
days prior to the date fixed for redemption, at a redemption price set forth in
the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security 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.
B-8
<PAGE>
The Company, the Trustee, and any authorized agent of the Company or the
Trustee, may deem and treat the registered holder hereof as the absolute owner
of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, 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 incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, 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 is hereby incorporated by the reference and to the extent of
any variance between the provisions hereof and the Indenture, the Indenture
shall control.
All capitalized terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
This Security shall be deemed to be a contract under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of such State, except as may otherwise be required by mandatory provisions of
law.
B-9
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ____________________ attorney to transfer such Security on the
books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES]
In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of an effective registration of this
Security under the Securities Act or (ii) two years after the later of the Issue
Date or the last date on which this Security was held by the Company or an
"affiliate" (as such term is defined in Rule 144 under the Securities Act) of
the Company, the undersigned confirms that, without utilizing any general
solicitation or general advertising:
1. Applicable Exemption [Check One]
[](a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
or
[](b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
2. Affiliation with the Company [check if applicable]
[](a) The undersigned represents and warrants that it is, or at some time
during which it held this security was, an affiliate of the Company.
[](b) If 2(a) above is checked and if the undersigned was not an affiliate
of the Company at all times during which it held this Security,
indicate the most recent date as of which the undersigned was an
affiliate of the Company:__________________________
[](c) If 2(a) above is checked and if the transferee will not pay the full
purchase price for the transfer of this Security on or prior to the
date of transfer indicated when such purchase price will be paid:
________________________________
If neither of the boxes under the Applicable Exemption is checked, the Trustee
or other Registrar shall not be obligated to register this Security in the name
of any Person other than the Holder hereof
B-10
<PAGE>
unless and until the conditions to any such transfer or registration set forth
herein and in Section 2.08 of the Indenture shall have been satisfied.
Date:____________ _______________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the within-mentioned instrument in every particular,
without alteration or any change whatsoever.
The signatures to this assignment must be guaranteed by a firm that is a
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program.
MEDALLION SIGNATURE GUARANTEE
Authorized Signature:__________________________
Name of Firm:__________________________________
TO BE COMPLETED BY PURCHASER IF 1(a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:___________ __________________________________________
NOTICE: To be executed by an authorized officer
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 2(A) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Date:____________ __________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the within-mentioned instrument in every particular,
without alteration or any change whatsoever.
B-11
<PAGE>
ANNEX C
[FORM OF FACE OF SECURITY]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTION 208 OF THE INDENTURE.]/1/
[THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO
SECURITY CAPITAL GROUP INCORPORATED ("SECURITY CAPITAL") OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER ("QIB") IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE SECURITY EVIDENCED HEREBY IS
- ------------------------
/1/To be included in Global Security.
C-1
<PAGE>
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SUCH SECURITY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR
THE NOTES. IF THE PROPOSED TRANSFEREE IS NOT SECURITY CAPITAL, A SUBSIDIARY
THEREOF OR A QIB TO WHICH THIS NOTE IS BEING TRANSFERRED IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE FOR THE NOTES SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SECURITY CAPITAL OR THE TRUSTEE MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT UNLESS THE TRANSFER HAS BEEN REGISTERED
UNDER THE SECURITIES ACT, THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY
UNDER RULE 144(K) UNDER THE SECURITIES ACT.]/2/
- ------------------------
/2/Private Placement Legend.
C-2
<PAGE>
$200,000,000
CUSIP No. 81413P AD 7
Security Capital Group Incorporated
7.70% Note Due 2028
Security Capital Group Incorporated, a Maryland corporation (the
"Company"), for value received hereby promises to pay to Cede & Co. or
registered assigns the principal sum of TWO HUNDRED MILLION U.S. Dollars at the
Company's office or agency for such purpose in the city of Boston,
Massachusetts, on June 15, 2028, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on December 15 and
June 15 (each an "Interest Payment Date") of each year, commencing with December
15, 1998, on such principal sum in like coin or currency at the rate per annum
set forth above at such office or agency from the most recent Interest Payment
Date to which interest on the Securities has been paid or duly provided for,
unless the date hereof is a date to which interest on the Securities has been
paid or duly provided for, in which case from the date of this Security, or, if
no interest on the Securities [or on the Securities for which these Securities
were exchanged pursuant to the Exchange Offer]/3/ has been paid or duly provided
for, from June 23, 1998. Notwithstanding the foregoing, if the date hereof is
after June 1 or December 1 (each an "Interest Record Date"), as the case may be,
and before the immediately following Interest Payment Date, this Security shall
bear interest from such Interest Payment Date; provided, that if the Company
shall default in the payment of interest due on such Interest Payment Date then
this Security shall bear interest from the next preceding Interest Payment Date
to which interest on the Securities has been paid or duly provided for. The
interest so payable on any Interest Payment Date will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
person in whose name this Security is registered at the close of business on the
Interest Record Date preceding such Interest Payment Date whether or not such
day is a Business Day; provided that interest may be paid, at the option of the
Company, by mailing a check therefor payable to the registered holder entitled
thereto at such holder's last address as it appears on the Security register or
by wire transfer, in immediately available funds, to such bank or other entity
in the continental United States as shall be designated in writing by such
holder prior to the relevant Interest Record Date and shall have appropriate
facilities for such purpose.
Interest, other than default interest, on the Securities will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the holders of such
Securities. No representation is made as to the
- --------------------
/3/To be included in Exchange Securities.
C-3
<PAGE>
correctness or accuracy of such CUSIP numbers as printed on the Securities, and
reliance may be placed only on the other identification numbers printed hereon.
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
C-4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SECURITY CAPITAL GROUP INCORPORATED
By:______________________________
Name:
Title:
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
Dated:______________________
This is one of the Securities of the series designated therein described in
the within-mentioned Indenture.
State Street Bank and Trust Company,
as Trustee
By:___________________________
Authorized Signatory
C-5
<PAGE>
[FORM OF REVERSE OF SECURITY]
Security Capital Group Incorporated
7.70% Note Due 2028
Securities of this series are one of a duly authorized issue of debt
securities of the Company (herein referred to as the "Securities"), issued
pursuant to an indenture dated as of June 18, 1998 (the "Indenture"), duly
executed and delivered by the Company to State Street Bank and Trust Company, as
Trustee (herein called the "Trustee"). Reference is hereby made to the Indenture
and all indentures supplemental thereto for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the Securities.
This Security is one of the series designated as the 7.70% Notes Due 2028
of the Company and such series is limited in aggregate principal amount to
$200,000,000.
This Security will bear interest until final maturity at a rate per annum
shown above, except as provided in the next paragraph. The Company will pay
interest on overdue principal of, premium, if any, and to the extent lawful,
interest on overdue installments of interest, at an 7.70% rate per annum based
on a year of 360 days and actual days elapsed.
[In the event that (i) the Exchange Offer Registration Statement relating
to the Exchange Offer is not filed with the Commission on or prior to the date
that is 90 days after the Issue Date (unless a Shelf Registration Statement has
been filed on or prior to such date), (ii) the Exchange Offer Registration
Statement is not declared effective on or prior to the date that is 180 days
after the Issue Date (unless a Shelf Registration Statement has been filed on or
prior to such date), (iii) the Exchange Offer is not consummated on or prior to
the date that is 210 days after the Issue Date (unless a Shelf Registration
Statement has been filed on or prior to such date), (iv) a Shelf Registration
Statement with respect to resale of the Securities is not declared effective on
or prior to the date that is 210 days after the Issue Date (unless the Exchange
Offer has been consummated by that date) or (v) the Shelf Registration Statement
ceases to be effective at any time during the Effectiveness Period (unless the
Exchange Offer has been consummated by that date or unless such cessation of
effectiveness is permitted pursuant to the Registration Rights Agreement) (each
such event referred to in clauses (i) through (v), a "Registration Default"),
then the Company will pay additional interest (in addition to the interest
otherwise due hereon) ("Additional Interest") to the holder commencing upon the
occurrence of each such Registration Default in an amount equal to 0.50% per
annum; provided that such Additional Interest shall not exceed 0.50% per annum
in the aggregate and provided, further, that any Holder that does not deliver
the information that the Company may request for inclusion in the Shelf
Registration Statement pursuant to Section 3(c) of the Registration Rights
Agreement upon such a request by the Company shall not be entitled to any such
additional interest for any day after the date that is 5 Business Days after the
date of such request. Such additional interest will cease accruing with respect
to any Registration Default when such Registration Default has been cured. The
Company shall pay amounts due in respect of Additional Interest on each Interest
Payment Date (or, if the Company shall default in the payment
C-6
<PAGE>
of interest on any Interest Payment Date, on the date such interest is otherwise
paid as provided in the Indenture).]/4/
[There shall also be payable in respect of this Security all Additional
Interest that may have accrued on the Security for which this Security was
exchanged (as defined in such Security) pursuant to the Exchange Offer, such
Additional Interest to be calculated in accordance with the terms of such
Security and payable at the same time and in the same manner as periodic
interest on this Security.]/5/
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount outstanding of the Securities of any
series then outstanding (each such series voting as a class) and that, prior to
any such declaration, the holders of the Securities of any such series may waive
any past default under the Indenture and its consequences except a default in
the payment of principal of, premium, if any, or interest on any of the
Securities, which may be so waived only upon the terms and conditions provided
in the Indenture. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Security and any
Security which may be issued in exchange or substitution herefor, whether or not
any notation thereof is made upon this Security or such other Securities.
The Indenture permits the Company and the Trustee, with the consent of the
holders of at least a majority in aggregate principal amount of each series of
Securities affected thereby at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities; provided that without the consent of each holder
affected, no such supplemental indenture shall (i) reduce the principal amount
of Securities of any series whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Security of any series or alter the provisions with respect to the
redemption of the Securities of such series, (iii) reduce the rate of or change
the time for payment of interest on any Security of any series, (iv) waive a
Default or Event of Default in the payment of principal of, premium, if any, or
interest on, the Securities of any series (except a rescission of acceleration
of the Securities of any series by the holders of at least a majority in
aggregate principal amount outstanding of the Securities of such series and a
waiver of the payment default that resulted from such acceleration), (v) make
any Security of any series payable in money other than that stated in the
Securities of such series, (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of holders of
Securities of any series to receive payments of principal of, premium, if any,
or interest on the Securities of such series, (vii) waive a redemption
- ----------------------
/4/To be included in Securities not Exchange Securities.
/5/To be included in Exchange Securities.
C-7
<PAGE>
payment with respect to any Security of any series, (viii) modify the ranking or
priority of the Securities of any series or (ix) make any change in the
foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Securities, the Company and the Trustee may (i) amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency, or
to make any other provisions with respect to matters or questions arising under
the Indenture which shall not be inconsistent with the provisions of the
Indenture or to make any other changes; provided that, in each case, such
provisions shall not adversely affect the interests of the holders of Securities
in any material respect, (ii) to provide for uncertificated Securities in
addition to or in place of certificated Securities, (iii) to provide for the
assumption of the Company's obligations to holders of Securities in the case of
a merger or consolidation, (iv) to make any change that would provide any
additional rights or benefits to the holders of Securities or that does not
adversely affect the legal rights under the Indenture of any such holder, (v) to
evidence and provide for the acceptance of appointment by a successor Trustee
with respect to the Securities and to add to or change any of the provisions of
the Indenture as are necessary to provide for or facilitate the administration
of the trusts under the Indenture by more than one Trustee, or (vi) to comply
with requirements of the Commission (as defined in the Indenture) in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act (as defined in the Indenture).
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the place, times, and rate, and in the currency,
herein prescribed.
The Securities of this series are issuable only as registered Securities
without coupons in minimum denominations of $1,000 and integral multiples of
$1,000 in excess thereof.
At the office or agency of the Company referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of the same series of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Company, a new Security or Securities of
the same series of authorized denominations, for a like aggregate principal
amount, will be issued to the transferee as provided in the Indenture. No
service charge shall be made for any such transfer, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto.
Securities of this series may be redeemed at any time at the option of the
Company, in whole or in part, upon notice of not more than 60 nor less than 45
days prior to the date fixed for redemption, at a redemption price set forth in
the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security 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.
C-8
<PAGE>
The Company, the Trustee, and any authorized agent of the Company or the
Trustee, may deem and treat the registered holder hereof as the absolute owner
of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, 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 incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, 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 is hereby incorporated by the reference and to the extent of
any variance between the provisions hereof and the Indenture, the Indenture
shall control.
All capitalized terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
This Security shall be deemed to be a contract under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of such State, except as may otherwise be required by mandatory provisions of
law.
C-9
<PAGE>
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
- -------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
- -------------------------------------------------------------------------------
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ____________________ attorney to transfer such Security on the
books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL SECURITIES OTHER THAN EXCHANGE SECURITIES]
In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of an effective registration of this
Security under the Securities Act or (ii) two years after the later of the Issue
Date or the last date on which this Security was held by the Company or an
"affiliate" (as such term is defined in Rule 144 under the Securities Act) of
the Company, the undersigned confirms that, without utilizing any general
solicitation or general advertising:
1. Applicable Exemption [Check One]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance with
(a) above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the
Indenture.
2. Affiliation with the Company [check if applicable]
[ ] (a) The undersigned represents and warrants that it is, or at some
time during which it held this security was, an affiliate of the
Company.
[ ] (b) If 2(a) above is checked and if the undersigned was not an
affiliate of the Company at all times during which it held this
Security, indicate the most recent date as of which the
undersigned was an affiliate of the Company:___________________
[ ] (c) If 2(a) above is checked and if the transferee will not pay the
full purchase price for the transfer of this Security on or prior
to the date of transfer indicated when such purchase price will
be paid:_________
If neither of the boxes under the Applicable Exemption is checked, the Trustee
or other Registrar shall not be obligated to register this Security in the name
of any Person other than the Holder hereof
C-10
<PAGE>
unless and until the conditions to any such transfer or registration set forth
herein and in Section 2.08 of the Indenture shall have been satisfied.
Date:________________ _____________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
The signatures to this assignment must be guaranteed by a firm that is a
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program.
MEDALLION SIGNATURE GUARANTEE
Authorized Signature:___________________
Name of Firm:___________________________
TO BE COMPLETED BY PURCHASER IF 1(a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_________________ ______________________________________________
NOTICE: To be executed by an authorized officer
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 2(A) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Date:__________________ ________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face of
the within-mentioned instrument in every particular,
without alteration or any change whatsoever.
C-11
<PAGE>
Exhibit 4.2
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 208 OF THE INDENTURE.
$[200,000,000]
CUSIP No. 81413P AE 5
Security Capital Group Incorporated
6.95% Exchange Note Due 2005
Security Capital Group Incorporated, a Maryland corporation (the
"Company"), for value received hereby promises to pay to Cede & Co. or
registered assigns the principal sum of [TWO HUNDRED MILLION] U.S. Dollars at
the Company's office or agency for such purpose in the city of Boston,
Massachusetts, on June 15, 2005, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on December 15 and
June 15 (each an "Interest Payment Date") of each year, commencing with December
15, 1998, on such principal sum in like coin or currency at the rate per annum
set forth above at such office or agency from the most recent Interest Payment
Date to which interest on the Securities has been paid or duly provided for,
unless the date hereof is a date to which interest on the Securities has been
paid or duly provided for, in which case from the date of this Security, or, if
no interest on the Securities or on the Securities for which these Securities
were exchanged pursuant to the Exchange Offer has been paid or duly provided
for, from June 23, 1998. Notwithstanding the foregoing, if the date hereof is
after December 1 or June 1 (each an "Interest Record Date"), as the case may be,
and before the immediately following Interest Payment Date, this Security shall
bear interest from such Interest Payment Date; provided, that if the Company
shall default in the payment of interest due on such Interest Payment Date then
this Security shall bear interest from the next preceding Interest Payment Date
to which interest on the Securities has been paid or duly provided for. The
interest so payable on any Interest Payment Date will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
<PAGE>
person in whose name this Security is registered at the close of business on the
Interest Record Date preceding such Interest Payment Date whether or not such
day is a Business Day; provided that interest may be paid, at the option of the
Company, by mailing a check therefor payable to the registered holder entitled
thereto at such holder's last address as it appears on the Security register or
by wire transfer, in immediately available funds, to such bank or other entity
in the continental United States as shall be designated in writing by such
holder prior to the relevant Interest Record Date and shall have appropriate
facilities for such purpose.
Interest, other than default interest, on the Securities will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SECURITY CAPITAL GROUP INCORPORATED
By:______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:_____________________
This is one of the Securities of the series designated therein described in
the within-mentioned Indenture.
State Street Bank and Trust Company,
as Trustee
By:________________________
Authorized Signatory
3
<PAGE>
Security Capital Group Incorporated
6.95% Exchange Note Due 2005
Securities of this series are one of a duly authorized issue of debt
securities of the Company (herein referred to as the "Securities"), issued
pursuant to an indenture dated as of June 18, 1998 (the "Indenture"), duly
executed and delivered by the Company to State Street Bank and Trust Company, as
Trustee (herein called the "Trustee"). Reference is hereby made to the Indenture
and all indentures supplemental thereto for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the Securities.
This Security is one of the series designated as the 6.95% Exchange Notes
Due 2005 of the Company and such series is limited in aggregate principal amount
to [$200,000,000].
This Security will bear interest until final maturity at a rate per annum
shown above, except as provided in the next paragraph. The Company will pay
interest on overdue principal of, premium, if any, and to the extent lawful,
interest on overdue installments of interest, at a 6.95% rate per annum based on
a year of 360 days and actual days elapsed.
There shall also be payable in respect of this Security all Additional
Interest that may have accrued on the Security for which this Security was
exchanged (as defined in such Security) pursuant to the Exchange Offer, such
Additional Interest to be calculated in accordance with the terms of such
Security and payable at the same time and in the same manner as periodic
interest on this Security.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount outstanding of the Securities of any
series then outstanding (each such series voting as a class) and that, prior to
any such declaration, the holders of the Securities of any such series may waive
any past default under the Indenture and its consequences except a default in
the payment of principal of, premium, if any, or interest on any of the
Securities, which may be so waived only upon the terms and conditions provided
in the Indenture. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Security and any
Security which may be issued in exchange or substitution herefor, whether or not
any notation thereof is made upon this Security or such other Securities.
The Indenture permits the Company and the Trustee, with the consent of the
holders of at least a majority in aggregate principal amount of each series of
Securities affected thereby at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities; provided that without the consent of each holder
affected, no such supplemental
4
<PAGE>
indenture shall (i) reduce the principal amount of Securities of any series
whose holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any Security of any series or
alter the provisions with respect to the redemption of the Securities of such
series, (iii) reduce the rate of or change the time for payment of interest on
any Security of any series, (iv) waive a Default or Event of Default in the
payment of principal of, premium, if any, or interest on, the Securities of any
series (except a rescission of acceleration of the Securities of any series by
the holders of at least a majority in aggregate principal amount of the
Securities of such series and a waiver of the payment default that resulted from
such acceleration), (v) make any Security of any series payable in money other
than that stated in the Securities of such series, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of holders of Securities of any series to receive payments of principal of,
premium, if any, or interest on the Securities of such series, (vii) waive a
redemption payment with respect to any Security of any series, (viii) modify the
ranking or priority of the Securities of any series or (ix) make any change in
the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Securities, the Company and the Trustee may amend or supplement the Indenture or
the Securities (i) to cure any ambiguity, defect or inconsistency, or to make
any other provisions with respect to matters or questions arising under the
Indenture which shall not be inconsistent with the provisions of the Indenture
or to make any other changes; provided that, in each case, such provisions shall
not adversely affect the interests of the holders of Securities in any material
respect, (ii) to provide for uncertificated Securities in addition to or in
place of certificated Securities, (iii) to provide for the assumption of the
Company's obligations to holders of Securities in the case of a merger or
consolidation, (iv) to make any change that would provide any additional rights
or benefits to the holders of Securities or that does not adversely affect the
legal rights under the Indenture of any such holder, (v) to evidence and provide
for the acceptance of appointment by a successor Trustee with respect to the
Securities and to add to or change any of the provisions of the Indenture as are
necessary to provide for or facilitate the administration of the trusts under
the Indenture by more than one Trustee, or (vi) to comply with requirements of
the Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the place, times, and rate, and in the currency,
herein prescribed.
The Securities of this series are issuable only as registered Securities
without coupons in minimum denominations of $1,000 and integral multiples of
$1,000 in excess thereof.
At the office or agency of the Company referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of the same series of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Company, a new Security or Securities of
the same series of authorized
5
<PAGE>
denominations, for a like aggregate principal amount, will be issued to the
transferee as provided in the Indenture. No service charge shall be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto.
Securities of this series may be redeemed at any time at the option of the
Company, in whole or in part, upon notice of not more than 60 nor less than 45
days prior to the date fixed for redemption, at a redemption price set forth in
the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security 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.
The Company, the Trustee, and any authorized agent of the Company or the
Trustee, may deem and treat the registered holder hereof as the absolute owner
of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, 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 incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, 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 is hereby incorporated by the reference and to the extent of
any variance between the provisions hereof and the Indenture, the Indenture
shall control.
All capitalized terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
This Security shall be deemed to be a contract under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of such State, except as may otherwise be required by mandatory provisions of
law.
6
<PAGE>
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ____________________ attorney to transfer such Security on the
books of the Company with full power of substitution in the premises.
7
<PAGE>
Exhibit 4.3
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 208 OF THE INDENTURE.
$[100,000,000]
CUSIP No. 81413P __ _
Security Capital Group Incorporated
7.15% Exchange Note Due 2007
Security Capital Group Incorporated, a Maryland corporation (the
"Company"), for value received hereby promises to pay to Cede & Co. or
registered assigns the principal sum of [ONE HUNDRED MILLION] U.S. Dollars at
the Company's office or agency for such purpose in the city of Boston,
Massachusetts, on June 15, 2007, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on December 15 and
June 15 (each an "Interest Payment Date") of each year, commencing with December
15, 1998, on such principal sum in like coin or currency at the rate per annum
set forth above at such office or agency from the most recent Interest Payment
Date to which interest on the Securities has been paid or duly provided for,
unless the date hereof is a date to which interest on the Securities has been
paid or duly provided for, in which case from the date of this Security, or, if
no interest on the Securities or on the Securities for which these Securities
were exchanged pursuant to the Exchange Offer has been paid or duly provided
for, from June 23, 1998. Notwithstanding the foregoing, if the date hereof is
after December 1 or June 1 (each an "Interest Record Date"), as the case may be,
and before the immediately following Interest Payment Date, this Security shall
bear interest from such Interest Payment Date; provided, that if the Company
shall default in the payment of interest due on such Interest Payment Date then
this Security shall bear interest from the next preceding Interest Payment Date
to which interest on the Securities has been paid or duly provided for. The
interest so payable on any Interest Payment Date will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
<PAGE>
person in whose name this Security is registered at the close of business on the
Interest Record Date preceding such Interest Payment Date whether or not such
day is a Business Day; provided that interest may be paid, at the option of the
Company, by mailing a check therefor payable to the registered holder entitled
thereto at such holder's last address as it appears on the Security register or
by wire transfer, in immediately available funds, to such bank or other entity
in the continental United States as shall be designated in writing by such
holder prior to the relevant Interest Record Date and shall have appropriate
facilities for such purpose.
Interest, other than default interest, on the Securities will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SECURITY CAPITAL GROUP INCORPORATED
By:__________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:__________________
This is one of the Securities of the series designated therein described in
the within-mentioned Indenture.
State Street Bank and Trust Company,
as Trustee
By:________________________
Authorized Signatory
3
<PAGE>
Security Capital Group Incorporated
7.15% Exchange Note Due 2007
Securities of this series are one of a duly authorized issue of debt
securities of the Company (herein referred to as the "Securities"), issued
pursuant to an indenture dated as of June 18, 1998 (the "Indenture"), duly
executed and delivered by the Company to State Street Bank and Trust Company, as
Trustee (herein called the "Trustee"). Reference is hereby made to the Indenture
and all indentures supplemental thereto for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the Securities.
This Security is one of the series designated as the 7.15% Exchange Notes
Due 2007 of the Company and such series is limited in aggregate principal amount
to [$100,000,000].
This Security will bear interest until final maturity at a rate per annum
shown above, except as provided in the next paragraph. The Company will pay
interest on overdue principal of, premium, if any, and to the extent lawful,
interest on overdue installments of interest, at an 7.15% rate per annum based
on a year of 360 days and actual days elapsed.
There shall also be payable in respect of this Security all Additional
Interest that may have accrued on the Security for which this Security was
exchanged (as defined in such Security) pursuant to the Exchange Offer, such
Additional Interest to be calculated in accordance with the terms of such
Security and payable at the same time and in the same manner as periodic
interest on this Security.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount outstanding of the Securities of any
series then outstanding (each such series voting as a class) and that, prior to
any such declaration, the holders of the Securities of any such series may waive
any past default under the Indenture and its consequences except a default in
the payment of principal of, premium, if any, or interest on any of the
Securities, which may be so waived only upon the terms and conditions provided
in the Indenture. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Security and any
Security which may be issued in exchange or substitution herefor, whether or not
any notation thereof is made upon this Security or such other Securities.
The Indenture permits the Company and the Trustee, with the consent of the
holders of at least a majority in aggregate principal amount of each series of
Securities affected thereby at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities; provided that without the consent of each holder
affected, no such supplemental
4
<PAGE>
indenture shall (i) reduce the principal amount of Securities of any series
whose holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any Security of any series or
alter the provisions with respect to the redemption of the Securities of such
series, (iii) reduce the rate of or change the time for payment of interest on
any Security of any series, (iv) waive a Default or Event of Default in the
payment of principal of, premium, if any, or interest on, the Securities of any
series (except a rescission of acceleration of the Securities of any series by
the holders of at least a majority in aggregate principal amount outstanding of
the Securities of such series and a waiver of the payment default that resulted
from such acceleration), (v) make any Security of any series payable in money
other than that stated in the Securities of such series, (vi) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of holders of Securities of any series to receive payments of principal
of, premium, if any, or interest on the Securities of such series, (vii) waive a
redemption payment with respect to any Security of any series, (viii) modify the
ranking or priority of the Securities of any series or (ix) make any change in
the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Securities, the Company and the Trustee may amend or supplement the Indenture or
the Securities (i) to cure any ambiguity, defect or inconsistency, or to make
any other provisions with respect to matters or questions arising under the
Indenture which shall not be inconsistent with the provisions of the Indenture
or to make any other changes; provided that, in each case, such provisions shall
not adversely affect the interests of the holders of Securities in any material
respect, (ii) to provide for uncertificated Securities in addition to or in
place of certificated Securities, (iii) to provide for the assumption of the
Company's obligations to holders of Securities in the case of a merger or
consolidation, (iv) to make any change that would provide any additional rights
or benefits to the holders of Securities or that does not adversely affect the
legal rights under the Indenture of any such holder, (v) to evidence and provide
for the acceptance of appointment by a successor Trustee with respect to the
Securities and to add to or change any of the provisions of the Indenture as are
necessary to provide for or facilitate the administration of the trusts under
the Indenture by more than one Trustee, or (vi) to comply with requirements of
the Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the place, times, and rate, and in the currency,
herein prescribed.
The Securities of this series are issuable only as registered Securities
without coupons in minimum denominations of $1,000 and integrated multiples of
$1,000 in excess thereof.
At the office or agency of the Company referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of the same series of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Company, a new Security or Securities of
the same series of authorized
5
<PAGE>
denominations, for a like aggregate principal amount, will be issued to the
transferee as provided in the Indenture. No service charge shall be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto.
Securities of this series may be redeemed at any time at the option of the
Company, in whole or in part, upon notice of not more than 60 nor less than 45
days prior to the date fixed for redemption, at a redemption price set forth in
the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security 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.
The Company, the Trustee, and any authorized agent of the Company or the
Trustee, may deem and treat the registered holder hereof as the absolute owner
of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, 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 incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, 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 is hereby incorporated by the reference and to the extent of
any variance between the provisions hereof and the Indenture, the Indenture
shall control.
All capitalized terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
This Security shall be deemed to be a contract under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of such State, except as may otherwise be required by mandatory provisions of
law.
6
<PAGE>
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ____________________ attorney to transfer such Security on the
books of the Company with full power of substitution in the premises.
7
<PAGE>
Exhibit 4.4
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 208 OF THE INDENTURE.
$[200,000,000]
CUSIP No. 81413P __ _
Security Capital Group Incorporated
7.70% Exchange Note Due 2028
Security Capital Group Incorporated, a Maryland corporation (the
"Company"), for value received hereby promises to pay to Cede & Co. or
registered assigns the principal sum of [TWO HUNDRED MILLION] U.S. Dollars at
the Company's office or agency for such purpose in the city of Boston,
Massachusetts, on June 15, 2028, in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on December 15 and
June 15 (each an "Interest Payment Date") of each year, commencing with December
15, 1998, on such principal sum in like coin or currency at the rate per annum
set forth above at such office or agency from the most recent Interest Payment
Date to which interest on the Securities has been paid or duly provided for,
unless the date hereof is a date to which interest on the Securities has been
paid or duly provided for, in which case from the date of this Security, or, if
no interest on the Securities or on the Securities for which these Securities
were exchanged pursuant to the Exchange Offer has been paid or duly provided
for, from June 23, 1998. Notwithstanding the foregoing, if the date hereof is
after December 1 or June 1 (each an "Interest Record Date"), as the case may be,
and before the immediately following Interest Payment Date, this Security shall
bear interest from such Interest Payment Date; provided, that if the Company
shall default in the payment of interest due on such Interest Payment Date then
this Security shall bear interest from the next preceding Interest Payment Date
to which interest on the Securities has been paid or duly provided for. The
interest so payable on any Interest Payment Date will, except as otherwise
provided in the Indenture referred to on the reverse hereof, be paid to the
<PAGE>
person in whose name this Security is registered at the close of business on the
Interest Record Date preceding such Interest Payment Date whether or not such
day is a Business Day; provided that interest may be paid, at the option of the
Company, by mailing a check therefor payable to the registered holder entitled
thereto at such holder's last address as it appears on the Security register or
by wire transfer, in immediately available funds, to such bank or other entity
in the continental United States as shall be designated in writing by such
holder prior to the relevant Interest Record Date and shall have appropriate
facilities for such purpose.
Interest, other than default interest, on the Securities will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused "CUSIP" numbers to be
printed on the Securities of this series as a convenience to the holders of such
Securities. No representation is made as to the correctness or accuracy of such
CUSIP numbers as printed on the Securities, and reliance may be placed only on
the other identification numbers printed hereon.
This Security shall not be valid or obligatory until the certificate of
authentication hereon shall have been duly signed by the Trustee acting under
the Indenture.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SECURITY CAPITAL GROUP INCORPORATED
By:____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated:______________________
This is one of the Securities of the series designated therein described in
the within-mentioned Indenture.
State Street Bank and Trust Company,
as Trustee
By:________________________
Authorized Signatory
3
<PAGE>
Security Capital Group Incorporated
7.70% Exchange Note Due 2028
Securities of this series are one of a duly authorized issue of debt
securities of the Company (herein referred to as the "Securities"), issued
pursuant to an indenture dated as of June 18, 1998 (the "Indenture"), duly
executed and delivered by the Company to State Street Bank and Trust Company, as
Trustee (herein called the "Trustee"). Reference is hereby made to the Indenture
and all indentures supplemental thereto for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the Securities.
This Security is one of the series designated as the 7.70% Exchange Notes
Due 2028 of the Company and such series is limited in aggregate principal amount
to $[200,000,000].
This Security will bear interest until final maturity at a rate per annum
shown above, except as provided in the next paragraph. The Company will pay
interest on overdue principal of, premium, if any, and to the extent lawful,
interest on overdue installments of interest, at an 7.70% rate per annum based
on a year of 360 days and actual days elapsed.
There shall also be payable in respect of this Security all Additional
Interest that may have accrued on the Security for which this Security was
exchanged (as defined in such Security) pursuant to the Exchange Offer, such
Additional Interest to be calculated in accordance with the terms of such
Security and payable at the same time and in the same manner as periodic
interest on this Security.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all the Securities may be declared
due and payable, in the manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount outstanding of the Securities of any
series then outstanding (each such series voting as a class) and that, prior to
any such declaration, the holders of the Securities of any such series may waive
any past default under the Indenture and its consequences except a default in
the payment of principal of, premium, if any, or interest on any of the
Securities, which may be so waived only upon the terms and conditions provided
in the Indenture. Any such consent or waiver by the holder of this Security
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Security and any
Security which may be issued in exchange or substitution herefor, whether or not
any notation thereof is made upon this Security or such other Securities.
The Indenture permits the Company and the Trustee, with the consent of the
holders of at least a majority in aggregate principal amount of each series of
Securities affected thereby at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities; provided that without the consent of each holder
affected, no such supplemental
4
<PAGE>
indenture shall (i) reduce the principal amount of Securities of any series
whose holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any Security of any series or
alter the provisions with respect to the redemption of the Securities of such
series, (iii) reduce the rate of or change the time for payment of interest on
any Security of any series, (iv) waive a Default or Event of Default in the
payment of principal of, premium, if any, or interest on, the Securities of any
series (except a rescission of acceleration of the Securities of any series by
the holders of at least a majority in aggregate principal amount outstanding of
the Securities of such series and a waiver of the payment default that resulted
from such acceleration), (v) make any Security of any series payable in money
other than that stated in the Securities of such series, (vi) make any change in
the provisions of the Indenture relating to waivers of past Defaults or the
rights of holders of Securities of any series to receive payments of principal
of, premium, if any, or interest on the Securities of such series, (vii) waive a
redemption payment with respect to any Security of any series, (viii) modify the
ranking or priority of the Securities of any series or (ix) make any change in
the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Securities, the Company and the Trustee may amend or supplement the Indenture or
the Securities (i) to cure any ambiguity, defect or inconsistency, or to make
any other provisions with respect to matters or questions arising under the
Indenture which shall not be inconsistent with the provisions of the Indenture
or to make any other changes; provided that, in each case, such provisions shall
not adversely affect the interests of the holders of Securities in any material
respect, (ii) to provide for uncertificated Securities in addition to or in
place of certificated Securities, (iii) to provide for the assumption of the
Company's obligations to holders of Securities in the case of a merger or
consolidation, (iv) to make any change that would provide any additional rights
or benefits to the holders of Securities or that does not adversely affect the
legal rights under the Indenture of any such holder, (v) to evidence and provide
for the acceptance of appointment by a successor Trustee with respect to the
Securities and to add to or change any of the provisions of the Indenture as are
necessary to provide for or facilitate the administration of the trusts under
the Indenture by more than one Trustee, or (vi) to comply with requirements of
the Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Security at the place, times, and rate, and in the currency,
herein prescribed.
The Securities of this series are issuable only as registered Securities
without coupons in minimum denominations of $1,000 and integral multiples of
$1,000 in excess thereof.
At the office or agency of the Company referred to on the face hereof and
in the manner and subject to the limitations provided in the Indenture,
Securities may be exchanged for a like aggregate principal amount of Securities
of the same series of other authorized denominations.
Upon due presentment for registration of transfer of this Security at the
above-mentioned office or agency of the Company, a new Security or Securities of
the same series of authorized
5
<PAGE>
denominations, for a like aggregate principal amount, will be issued to the
transferee as provided in the Indenture. No service charge shall be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto.
Securities of this series may be redeemed at any time at the option of the
Company, in whole or in part, upon notice of not more than 60 nor less than 45
days prior to the date fixed for redemption, at a redemption price set forth in
the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security 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.
The Company, the Trustee, and any authorized agent of the Company or the
Trustee, may deem and treat the registered holder hereof as the absolute owner
of this Security (whether or not this Security shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or the Trustee or any authorized agent of the Company or
the Trustee), for the purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, and, subject to the provisions on the face
hereof, interest hereon and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Security, 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 incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, 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 is hereby incorporated by the reference and to the extent of
any variance between the provisions hereof and the Indenture, the Indenture
shall control.
All capitalized terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
This Security shall be deemed to be a contract under the laws of the State
of New York, and for all purposes shall be construed in accordance with the laws
of such State, except as may otherwise be required by mandatory provisions of
law.
6
<PAGE>
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing ____________________ attorney to transfer such Security on the
books of the Company with full power of substitution in the premises.
7
<PAGE>
Exhibit 5
[LETTERHEAD OF MAYER, BROWN & PLATT]
August 13, 1998
Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel to Security Capital Group Incorporated, a Maryland
corporation ("Security Capital"), in connection with Security Capital's offer
(the "Exchange Offer") to exchange up to (i) $200,000,000 aggregate principal
amount of Security Capital's 6.95% Exchange Notes due 2005 (the "New 2005
Notes") for all outstanding 6.95% Notes due 2005 (the "Old 2005 Notes"); (ii)
$100,000,000 aggregate principal amount of Security Capital's 7.15% Exchange
Notes due 2007 (the "New 2007 Notes") for all outstanding 7.15% Notes due 2007
(the "Old 2007 Notes"); and (iii) $200,000,000 aggregate principal amount of
Security Capital's 7.70% Exchange Notes due 2028 (the "New 2028 Notes" and,
together with the New 2005 Notes and the New 2007 Notes, the "New Notes") for
all outstanding 7.70% Notes due 2028 (the "Old 2028 Notes" and, together with
the Old 2005 Notes and Old 2007 Notes, the "Old Notes"), as more fully set forth
in the registration statement on Form S-4 (the "Registration Statement")
relating to the New Notes. The New Notes will be issued under the Indenture,
dated as of June 18, 1998 (the "Indenture"), from Security Capital to State
Street Bank and Trust Company, as Trustee.
As counsel to Security Capital, we have examined originals or copies
certified to our satisfaction of Security Capital's Charter, Security Capital's
Bylaws, resolutions of Security Capital's Board of Directors and such records,
certificates and other documents and such questions of law as we considered
necessary or appropriate for the purpose of this opinion. As to certain facts
material to our opinion, we have relied, to the extent we deem such reliance
proper, upon certificates of public officials and officers of Security Capital.
In rendering such opinion, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity to authentic original documents of all documents submitted to us as
copies.
<PAGE>
Security Capital Group
Incorporated
August 13, 1998
Page 2
Based on and subject to the foregoing and to the assumptions, limitations
and qualifications set forth herein, it is our opinion that the New Notes have
been duly authorized by Security Capital and, when the New Notes are duly
executed and authenticated in accordance with the provisions of the Indenture
and delivered in exchange for the Old Notes in accordance with the terms of the
Exchange Offer, the New Notes will constitute valid and binding obligations of
Security Capital, entitled to the benefits provided by the Indenture and
enforceable against Security Capital in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and the effect of general principles of equity, whether considered in a
proceeding at law or in equity.
Insofar as the foregoing opinion involves matters governed by Maryland law,
we have relied on the opinion of the law firm of Ballard Spahr Andrews &
Ingersoll, a copy of which is attached hereto as Exhibit A, and our opinion is
subject to the assumptions, limitations and qualifications set forth therein.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the caption "Legal Matters."
We express no opinions as to matters under or involving any laws other than
the laws of the States of Illinois, Maryland and New York and the federal laws
of the United States of America.
Very truly yours,
/s/ MAYER, BROWN & PLATT
MAYER, BROWN & PLATT
<PAGE>
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP]
FILE NUMBER
868121
August 13, 1998
Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Re: Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
We have acted as Maryland counsel to Security Capital Group Incorporated, a
Maryland corporation (the "Company"), in connection with certain matters of
Maryland law arising out of the Company's offer (the "Exchange Offer") to
exchange up to (i) $200,000,000 aggregate principal amount of the Company's
6.95% Exchange Notes due 2005 (the "New 2005 Notes") for all outstanding 6.95%
Notes due 2005 (the "Old 2005 Notes"), (ii) $100,000,000 aggregate principal
amount of the Company's 7.15% Exchange Notes due 2007 (the "New 2007 Notes") for
all outstanding 7.15% Notes due 2007 (the "Old 2007 Notes"), and (iii)
$200,000,000 aggregate principal amount of the Company's 7.70% Exchange Notes
due 2028 (the "New 2028 Notes" and, together with the New 2005 Notes and the New
2007 Notes, the "New Notes") for all outstanding 7.70% Notes due 2028 (the "Old
2028 Notes" and, together with the Old 2005 Notes and Old 2007 Notes, the "Old
Notes"), as more fully set forth in the Registration Statement on Form S-4 (the
"Registration Statement") relating to the New Notes, as filed by the Company
under the Securities Act of 1933, as amended (the "1933 Act"). The New Notes
will be issued under the Indenture, dated as of June 18, 1998 (the "Indenture"),
from the Company to State Street Bank and Trust Company, as Trustee.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Registration Statement.
In connection with our representation of the Company, and as a basis for
the opinion hereinafter set forth, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (collectively, the "Documents"):
1
<PAGE>
Security Capital Group Incorporated
August 13, 1998
Page 2
1. The Registration Statement, including the related form of prospectus
included therein, in the form in which it was transmitted by the Company to the
Securities and Exchange Commission (the "Commission") under the 1933 Act;
2. The charter of the Company (the "Company's Charter"), certified as of
a recent date by the State Department of Assessments and Taxation of Maryland
(the "SDAT");
3. The Amended and Restated Bylaws of the Company, certified as of a
recent date by its Secretary;
4. A certificate as of a recent date of the SDAT as to the good standing
of the Company;
5. Resolutions adopted by the Board of Directors of the Company (the
"Resolutions") relating to the issuance of the New Notes and the exchange of the
Old Notes for the New Notes;
6. A certificate executed by the Secretary of the Company, as of the date
hereof, attached to which are copies of the specimen New Notes as approved by an
officer of the Company specified in the Resolutions;
7. A copy of the executed Indenture, certified as of the date hereof by
an officer of the Company;
8. A copy of a draft of the form of the New Notes, certified as of the
date hereof by an officer of the Company; and
9. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth in this letter, subject to the
assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed and, so far as
is known to us there are no facts inconsistent with, the following:
1. Each individual executing any of the Documents, whether on behalf of
such individual or another person, is legally competent to do so.
2. Each individual executing any of the Documents on behalf of a party
(other than the Company) is duly authorized to do so.
3. Each of the parties (other than the Company) executing any of the
Documents has duly and validly executed and delivered each of the Documents to
which such party is a
2
<PAGE>
Security Capital Group Incorporated
August 13, 1998
Page 3
signatory, and such party's obligations set forth therein are legal, valid and
binding and are enforceable in accordance with all stated terms.
4. Any Documents submitted to us as originals are authentic. The form
and content of the New Notes and the Registration Statement submitted to us as
unexecuted drafts do not differ in any respect relevant to this opinion from the
form and content of such Documents as executed and delivered. Any Documents
submitted to us as certified or photostatic copies conform to the original
documents. All signatures on all Documents are genuine. All public records
reviewed or relied upon by us or on our behalf are true and complete. All
statements and information contained in the Documents are true and complete.
There has been no oral or written modification of or amendment to any of the
Documents, and there has been no waiver of any provision of any of the
Documents, by action or omission of the parties or otherwise.
The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed legal
services in connection with the issuance of this opinion.
Based upon the foregoing, and subject to the assumptions, limitations and
qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly incorporated and existing under and
by virtue of the laws of the State of Maryland and is in good standing with the
SDAT.
2. The Company has duly authorized the issuance of the New Notes by all
necessary corporate action.
The foregoing opinion is limited to the substantive laws of the State of
Maryland and we do not express any opinion herein concerning any other law. We
note that the Indenture provides that it is governed by the laws of the State of
New York. To the extent that any matter as to which our opinion is expressed
herein would be governed by the laws of the State of New York or any other
jurisdiction (other than the State of Maryland), we do not express any opinion
on such matter. We express no opinion as to the applicability or effect of any
federal or state securities laws, including the securities laws of the State of
Maryland, or as to federal or state laws regarding fraudulent transfers.
We assume no obligation to supplement this opinion if any applicable law
changes after the date hereof or if we become aware of any fact that might
change the opinion expressed herein after the date hereof.
3
<PAGE>
Security Capital Group Incorporated
August 13, 1998
Page 4
This opinion is being furnished to you solely for submission to the
Commission as an exhibit to the Registration Statement and, accordingly, may not
be relied upon by, quoted in any manner to, or delivered to any other person or
entity (except Mayer, Brown & Platt, counsel to the Company) without, in each
instance, our prior written consent.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of the name of our firm in the section entitled "Legal
Matters" in the Registration Statement. In giving this consent, we do not admit
that we are within the category of persons whose consent is required by Section
7 of the 1933 Act.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
4
<PAGE>
Exhibit 8
[Mayer, Brown & Platt Letterhead]
August 13, 1998
Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Re: Security Capital Group Incorporated Offer to Exchange Old 2005 Notes
for New 2005 Notes, Old 2007 Notes for New 2007 Notes and Old 2028
Notes for New 2028 Notes
Dear Ladies and Gentlemen:
We have acted as counsel to Security Capital Group Incorporated ("Security
Capital") in connection with an offer to exchange (i) $1,000 principal amount of
Security Capital's 6.95% Exchange Notes due 2005 for each $1,000 principal
amount of Security Capital's outstanding 6.95% Notes due 2005; (ii) $1,000
principal amount of Security Capital's 7.15% Exchange Notes due 2007 for each
$1,000 principal amount of Security Capital's outstanding 7.15% Notes due 2007;
and (iii) $1,000 principal amount of Security Capital's 7.70% Exchange Notes due
2028 for each $1,000 principal amount of Security Capital's outstanding 7.70%
Notes due 2028. You have requested that we provide an opinion regarding the
accuracy of the tax disclosure in the prospectus (the "Prospectus") included as
part of the registration statement (the "Registration Statement") on Form S-4,
filed on August 13, 1998, by Security Capital.
In providing this opinion, we have relied on the description of the
transaction as set forth in the Prospectus included as part of the Registration
Statement and the exhibits thereto.
Based upon and subject to the foregoing, it is our opinion that the summary
of Federal income tax consequences set forth in the Prospectus under the heading
"Certain Federal Income Tax Consequences" is accurate in all material respects
as to matters of law and legal conclusions.
This opinion is based on current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the Treasury regulations promulgated thereunder,
and the interpretation of the Code and such regulations by the courts and the
Internal Revenue Service, as they are in effect and exist at the date of this
opinion. It should be noted that statutes, regulations, judicial decisions and
administrative interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A material change that is made after
the date hereof in any of the foregoing bases for our opinion could adversely
affect our conclusion.
<PAGE>
Security Capital Group Incorporated
Page -2-
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ MAYER, BROWN & PLATT
MAYER, BROWN & PLATT
WAL
<PAGE>
Exhibit 10.1
EXECUTION COPY
CREDIT AGREEMENT
dated as of
June 5, 1998
among
SECURITY CAPITAL GROUP INCORPORATED,
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO AND
THEIR ASSIGNEES UNDER SECTION 10.8. HEREOF,
as Lenders
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Documentation Agent
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. DEFINITIONS ................................................... 1
SECTION 1.1. Definitions .......................................... 1
SECTION 1.2. Accounting Terms and Determinations; Time References . 17
SECTION 1.3. Subsidiaries ......................................... 17
SECTION 1.4. Interpretation Generally ............................. 17
ARTICLE II. CREDIT FACILITY .............................................. 17
SECTION 2.1. Making of Revolving Loans ............................ 17
SECTION 2.2. Requests for Revolving Loans ......................... 18
SECTION 2.3. Funding .............................................. 18
SECTION 2.4. Continuation ......................................... 19
SECTION 2.5. Conversion ........................................... 19
SECTION 2.6. Interest Rate ........................................ 20
SECTION 2.7. Number of Interest Periods ........................... 20
SECTION 2.8. Repayment of Loans ................................... 20
SECTION 2.9. Voluntary Reductions of the Commitments .............. 22
SECTION 2.10. Extension of Revolving Credit Termination Date ....... 22
SECTION 2.11. Term Loan Conversion ................................. 23
SECTION 2.12. Inclusion of Securities in Unencumbered Pool ......... 24
SECTION 2.13. Termination of Designation as Unencumbered Pool
Security; Release of Guarantors .................... 24
SECTION 2.14. Notes ................................................ 24
SECTION 2.15. Swingline Loans ...................................... 25
SECTION 2.16. Amount Limitations ................................... 27
ARTICLE III. GENERAL LOAN PROVISIONS ..................................... 27
SECTION 3.1. Fees ................................................. 27
SECTION 3.2. Computation of Interest and Fees ..................... 28
SECTION 3.3. Pro Rata Treatment ................................... 28
SECTION 3.4. Sharing of Payments, Etc. ............................ 29
SECTION 3.5. Defaulting Lenders ................................... 29
SECTION 3.6. Purchase of Defaulting Lender's Pro Rata Share ....... 30
SECTION 3.7. Usury ................................................ 30
SECTION 3.8. Agreement Regarding Interest and Charges ............. 31
SECTION 3.9. Statements of Account ................................ 31
SECTION 3.10. Agent's Reliance ..................................... 31
SECTION 3.11. Foreign Lenders ...................................... 31
ARTICLE IV. YIELD PROTECTION, ETC. ....................................... 32
SECTION 4.1. Additional Costs; Capital Adequacy ................... 32
SECTION 4.2. Suspension of LIBOR Loans ............................ 33
SECTION 4.3. Illegality ........................................... 34
SECTION 4.4. Compensation ......................................... 34
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
SECTION 4.5. Affected Lenders ..................................... 34
SECTION 4.6. Treatment of Affected Loans .......................... 35
SECTION 4.7. Change of Lending Office ............................. 35
ARTICLE V. CONDITIONS .................................................... 36
SECTION 5.1. Initial Conditions to Loans .......................... 36
SECTION 5.2. Conditions to All Loans .............................. 37
SECTION 5.3. Conditions to Conversion to Term Loans ............... 38
SECTION 5.4. Conditions as Covenants .............................. 38
ARTICLE VI. REPRESENTATIONS AND WARRANTIES ............................... 38
SECTION 6.1. Existence and Power .................................. 38
SECTION 6.2. Ownership Structure .................................. 39
SECTION 6.3. Authorization of Agreement, Notes, Loan Documents
and Borrowings ..................................... 39
SECTION 6.4. Compliance of Agreement, Notes, Loan Documents and
Borrowing with Laws, etc. .......................... 39
SECTION 6.5. Compliance with Law; Governmental Approvals .......... 39
SECTION 6.6. Indebtedness and Guarantees .......................... 40
SECTION 6.7. Transactions with Affiliates ......................... 40
SECTION 6.8. Absence of Defaults .................................. 40
SECTION 6.9. Financial Information ................................ 40
SECTION 6.10. Litigation ........................................... 40
SECTION 6.11. ERISA ................................................ 41
SECTION 6.12. Environmental Matters ................................ 41
SECTION 6.13. Taxes ................................................ 41
SECTION 6.14. Other Related Companies .............................. 41
SECTION 6.15. Not an Investment Company ............................ 42
SECTION 6.16. Full Disclosure ...................................... 42
SECTION 6.17. Insurance ............................................ 42
SECTION 6.18. Not Plan Assets ...................................... 42
SECTION 6.19. Sole Shareholder ..................................... 42
SECTION 6.20. Unencumbered Pool Securities ......................... 42
SECTION 6.21. Solvency ............................................. 43
SECTION 6.22. Year 2000 Review ..................................... 43
ARTICLE VII. COVENANTS ................................................... 43
SECTION 7.1. Information .......................................... 43
SECTION 7.2. Payment of Obligations ............................... 45
SECTION 7.3. Maintenance of Property; Insurance ................... 45
SECTION 7.4. Conduct of Business and Maintenance of Existence ..... 46
SECTION 7.5. Compliance with Laws ................................. 46
SECTION 7.6. Inspection of Property, Books and Records ............ 46
SECTION 7.7. Financial Covenants .................................. 46
SECTION 7.8. Sales of Unencumbered Pool Securities and Securities
of Principal Companies ............................. 47
</TABLE>
-ii-
<PAGE>
<TABLE> <C>
<S>
SECTION 7.9. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries ................ 47
SECTION 7.10. Consolidations, Mergers and Sales of Assets .......... 48
SECTION 7.11. Use of Proceeds ...................................... 48
SECTION 7.12. ERISA ................................................ 49
SECTION 7.13. Negative Pledge ...................................... 49
SECTION 7.14. Restricted Payments; Agreements with Affiliates ...... 49
SECTION 7.15. Loans to Other Persons ............................... 49
SECTION 7.16. ERISA Exemptions ..................................... 50
SECTION 7.17. Exchange Listing ..................................... 50
SECTION 7.18. Subsidiary Guaranties ................................ 50
SECTION 7.19. Covenants Regarding Guarantors ....................... 50
ARTICLE VIII. DEFAULTS ................................................... 51
SECTION 8.1. Events of Default .................................... 51
SECTION 8.2. Remedies ............................................. 53
SECTION 8.3. Allocation of Proceeds ............................... 54
SECTION 8.4. Recision of Acceleration by Supermajority Lenders .... 54
ARTICLE IX. THE AGENT .................................................... 55
SECTION 9.1. Appointment and Authorization ........................ 55
SECTION 9.2. Agent and Affiliates ................................. 56
SECTION 9.3. Approvals of Lenders ................................. 56
SECTION 9.4. Consultation with Experts ............................ 56
SECTION 9.5. Liability of Agent ................................... 56
SECTION 9.6. Indemnification of Agent ............................. 57
SECTION 9.7. Credit Decision ...................................... 57
SECTION 9.8. Successor Agent ...................................... 58
SECTION 9.9. Documentation Agent .................................. 58
ARTICLE X. MISCELLANEOUS ................................................. 59
SECTION 10.1. Notices .............................................. 59
SECTION 10.2. No Waivers ........................................... 60
SECTION 10.3. Expenses ............................................. 60
SECTION 10.4. Stamp, Intangible and Recording Taxes ................ 61
SECTION 10.5. Indemnification ...................................... 61
SECTION 10.6. Setoff ............................................... 62
SECTION 10.7. Amendments ........................................... 62
SECTION 10.8. Successors and Assigns ............................... 63
SECTION 10.9. Governing Law ........................................ 65
SECTION 10.10. Litigation ........................................... 65
SECTION 10.11. Counterparts; Integration ............................ 66
SECTION 10.12. Notice of Final Agreement ............................ 66
SECTION 10.13. Invalid Provisions ................................... 66
SECTION 10.14. Additional Guarantors ................................ 66
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Exhibit A Form of Assignment and Acceptance Agreement
Exhibit B Form of Guaranty
Exhibit C Form of Notice of Borrowing
Exhibit D Form of Notice of Continuation
Exhibit E Form of Notice of Conversion
Exhibit F Form of Notice of Swingline Borrowing
Exhibit G Form of Revolving Note
Exhibit H Form of Swingline Note
Exhibit I Form of Unencumbered Pool Certificate
Exhibit J Form of Opinion of Borrower and Guarantor Counsel
Exhibit K Form of Opinion of Agent's Counsel
Schedule 2.12. Unencumbered Pool Securities
Schedule 6.2. Ownership Structure
Schedule 6.6. Indebtedness and Guarantees
Schedule 6.17. Insurance
</TABLE>
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<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") dated as of June 5, 1998 by and
among SECURITY CAPITAL GROUP INCORPORATED, a Maryland corporation ("Borrower"),
each of the financial institutions initially a signatory hereto together with
their assignees pursuant to Section 10.8. ("Lenders"), CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, as Documentation Agent (the "Documentation Agent"), and
WELLS FARGO BANK, NATIONAL ASSOCIATION, as contractual representative for
Lenders to the extent and in the manner provided in Article IX. below (in such
capacity "Agent").
WHEREAS, Lenders desire to make available to Borrower a $650,000,000
revolving credit facility, pursuant to the terms hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.1. Definitions.
The following terms, as used herein, have the following meanings:
"Accession Agreement" means an Accession Agreement substantially in the
form of Annex I to the Guaranty.
"Atlantic" means Security Capital Atlantic Incorporated, a Maryland
corporation, and its successors.
"Additional Costs" has the meaning given that term in Section 4.1.
"Affiliate" means any Person which controls, is controlled by or is under
common control with Borrower. As used herein, the term "control" means
possession, directly or indirectly, of the power to vote twenty percent (20%) or
more of any class of voting securities of a Person or to direct or otherwise
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Applicable Law" means all applicable provisions of local, state, federal
and foreign constitutions, statutes, rules, regulations, ordinances, decrees,
permits, concessions and orders of all governmental bodies and all orders and
decrees of all courts, tribunals and arbitrators.
"Applicable Margin" means the percentage per annum determined at any time
based on the range into which Borrower's Credit Rating then falls, in accordance
with the table set forth below. Any change in Borrower's Credit Rating which
would cause the Applicable Margin to be determined based on a different Level in
the table shall take effect on the date on which such change occurs.
Notwithstanding anything to the contrary in this paragraph, during any period in
which Borrower has no Credit Rating from either S&P or Moody's, the Applicable
Margin shall
<PAGE>
be percentage corresponding to Level 5 in the table. During any
period in which Borrower shall only have one Credit Rating, the Applicable
Margin shall be based on such Credit Rating. During any period that Borrower
receives only two Credit Ratings and such Credit Ratings are not equivalent, the
Applicable Margin shall be determined by the lower of such two Credit Ratings.
During any period that Borrower receives more than two Credit Ratings and such
Credit Ratings are not equivalent, the Applicable Margin shall be determined by
the lower of the two highest Credit Ratings.
<TABLE>
<CAPTION>
Borrower's Credit Rating Applicable Margin
Level (S&P/Moody's or equivalent)
- ----------------------------------------------------------------------
<C> <S> <C>
1 A/A2 or equivalent 0.7%
- ----------------------------------------------------------------------
2 A-/A3 or equivalent 0.8%
- ----------------------------------------------------------------------
3 BBB+/Baa1 or equivalent 0.9%
- ----------------------------------------------------------------------
4 BBB or BBB-/Baa2 or Baa3 (or 1.0%
equivalent)
- ----------------------------------------------------------------------
5 Lower than BBB-/Baa3 or 1.50%
equivalent
- ----------------------------------------------------------------------
</TABLE>
Notwithstanding any other provision contained in this definition, at all times
prior to April 6, 1999, the Applicable Margin shall equal one percent (1.0%).
On and after such date, the Applicable Margin shall be determined based on the
above table in accordance with the other provisions of this definition.
"Approved Issuer" means an Issuer which the Supermajority Lenders has
approved in writing as being eligible for inclusion in determinations of
Borrower's compliance with the limitation of clause (a) of the definition of
Unencumbered Pool Value. As of the date hereof the Principal Companies are the
only Approved Issuers.
"Assignee" has the meaning given that term in Section 10.8.(c).
"Assignment and Acceptance Agreement" means an Assignment and Acceptance
Agreement between a Lender and an Assignee, substantially in the form of Exhibit
A.
"Authorized Representative" means, with respect to any Person, the
President, any Managing Director, the Treasurer, any controller or any other
officer, employee or representative of such Person duly authorized by such
Person to act on behalf of such Person in connection with this Agreement and the
transactions contemplated hereby; provided that evidence of such authority shall
have been provided to Agent promptly following Agent's request therefor and such
evidence shall be satisfactory in form and substance to Agent.
"Available Loan Amount" means, at any time, the amount, if any, by which
(a) the Unencumbered Pool Value divided by 1.75, exceeds (b) all Unsecured
Liabilities (excluding the Loans) of Borrower and its Subsidiaries determined on
a consolidated basis.
"Base Rate" means the greater of (a) the rate of interest per annum
established from time to time by Agent and designated as its prime rate (which
rate of interest may not be the lowest
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<PAGE>
rate charged by Agent or any of Lenders on similar loans) and (b) the Federal
Funds Rate plus one-half of one percent (0.5%). Each change in the Base Rate
shall become effective without prior notice to Borrower or Lenders automatically
as of the opening of business on the date of such change in the Base Rate.
"Base Rate Loan" means any Revolving Loan or Term Loan hereunder with
respect to which the interest rate is calculated by reference to the Base Rate.
"Business Day" means (a) any day except a Saturday, Sunday or other day on
which commercial banks in Atlanta, Georgia or San Francisco, California are
authorized or required to close and (b) with reference to LIBOR Loans, any such
day on which dealings in Dollar deposits are carried out in the London interbank
market.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles,
and the amount of such Indebtedness shall be the capitalized amount of such
obligations determined in accordance with such principles.
"Cash Flow" means, with respect to a Person for the four fiscal quarter
period ending as of the date of determination, such Person's net income for such
period determined in accordance with generally accepted accounting principles
(excluding capital gains and losses for such period on any disposition of
Investments in any Real Estate Companies that are Strategic Investees and, to
the extent included in net income, any unrealized gains and losses), except that
cash dividends and other cash received from Investments in Consolidated
Subsidiaries, other Subsidiaries or any other Persons shall be substituted for
net income of Consolidated Subsidiaries and for equity in earnings of any such
Subsidiaries or other Persons, plus the sum of the following amounts (but only
to the extent that any of the following amounts were taken into account when
determining such net income): (a) income taxes accrued for such period, plus (b)
interest expense paid or accrued for such period (excluding interest accrued in
respect of any "zero-coupon" Indebtedness and other similar Indebtedness for
which interest is not due and payable), plus (c) depreciation and amortization
expenses for such period, plus (d) the return of the capital component of
dividends received for such period (to the extent that such component is not
reflected already in net income).
"Cash Flow Available for Distribution" means, with respect to a Person for
a given period, such Person's net income for such period determined in
accordance with generally accepted accounting principles (excluding capital
gains and losses for such period on any disposition of Investments in any Real
Estate Companies that are Strategic Investees, and to the extent included in net
income, any unrealized gains and losses), except that cash dividends and other
cash received from Investments in Consolidated Subsidiaries, other Subsidiaries
or any other Persons shall be substituted for net income of Consolidated
Subsidiaries and for equity in earnings of any such Subsidiaries or other
Persons, plus the sum of the following amounts (but only to the extent that any
of the following amounts were taken into account when determining such net
income): (a) interest expense accrued but not paid for such period, plus (b)
depreciation and amortization expenses for such period, plus (c) the return of
the capital component of dividends received for such period (to the extent that
such component is not reflected already in net income).
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<PAGE>
"Cash Flow to Interest Ratio" means, for any Person and for any given
period, the ratio of (a) the sum of each of the following of such Person during
such period: (i) net income, (ii) income taxes paid or accrued, (iii) interest
expense paid or accrued (excluding any capitalized interest and interest accrued
in respect of any "zero-coupon" Indebtedness or other similar Indebtedness for
which interest is not due and payable) and (iv) depreciation and amortization
deductions (but only to the extent, in each case, that such taxes, expenses and
deductions are reflected in the calculation of such Person's net income for such
period) to (b) interest expense paid or accrued (excluding any capitalized
interest and interest accrued in respect of any "zero-coupon" Indebtedness or
other similar Indebtedness for which interest is not due and payable) by such
Person during such period, including interest on any Indebtedness of such Person
convertible into capital stock of such Person.
"Commitment" means, as to each Lender, such Lender's obligation to make
Revolving Loans pursuant to Section 2.1. in an amount up to, but not exceeding,
the amount set forth for such Lender on its signature page hereto as such
Lender's "Commitment Amount", as the same may be reduced from time to time
pursuant to Section 2.9., or as appropriate to reflect assignments to or by such
Lender effected in accordance with Section 10.8.
"Compliance Certificate" means the certificate described in Section
7.1.(c).
"Consolidated Subsidiary" means, with respect to a Person at any date, any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements in accordance with
generally accepted accounting principles, if such statements were prepared as of
such date (other than (a) any Strategic Investee and (b) any Subsidiary that is
a preferred stock subsidiary of any Affiliate of such Person the economic
interest in which Subsidiary owned by such Person is less than 15% of the
aggregate thereof).
"Contingent Obligation" means, for any Person, any commitment, undertaking,
Guarantee or other obligation constituting a contingent liability that must be
accrued under generally accepted accounting principles.
"Continue", "Continuation" and "Continued" each refers to the continuation
of a LIBOR Loan from one Interest Period to the next Interest Period pursuant to
Section 2.4.
"Convert", "Conversion" and "Converted" each refers to the conversion of a
Loan of one Type into a Loan of another Type pursuant to Section 2.5.
"Credit Rating" means the rating assigned by a Rating Agency to the senior
unsecured long term indebtedness of Borrower.
"DCR" means Duff & Phelps Credit Rating Co.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Defaulting Lender" has the meaning given that term in Section 3.5.
-4-
<PAGE>
"Dollars" or "$" means the lawful currency of the United States of America.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 5.1.
"Eligible Assignee" means any Person who is: (i) currently a Lender; (ii) a
commercial bank, trust company, savings and loan association, savings bank,
insurance company, investment bank or pension fund organized under the laws of
the United States of America, or any state thereof, and having total assets in
excess of $5,000,000,000; or (iii) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic Cooperation
and Development ("OECD"), or a political subdivision of any such country, and
having total assets in excess of $10,000,000,000, provided that such bank is
acting through a branch or agency located in the United States of America. If
such Person is not currently a Lender, such Person's senior unsecured long term
indebtedness must be rated BBB or higher by S&P, Baa2 or higher by Moody's, or
the equivalent or higher of either such rating by another rating agency
acceptable to Agent. Notwithstanding the foregoing, if an Event of Default
shall have occurred and be continuing under Section 8.1.(a) or (b), the term
"Eligible Assignee" shall mean any Person that is not an individual.
"Environmental Laws" means any and all Applicable Laws relating to the
environment and that are applicable to Borrower and its assets or properties,
the effect of the environment on human health or to emissions, discharges or
releases of pollutants, contaminants, Hazardous Substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control that
are treated as a single employer under Section 414 of the Internal Revenue Code.
"ERISA Plan" means any employee benefit plan subject to Title I of ERISA.
"Event of Default" means the occurrence of any of the events specified in
Section 8.1., whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body; provided that any requirement for notice
or lapse of time or any other condition has been satisfied.
"Existing Credit Agreement" means that certain Second Amended and Restated
Credit Agreement dated as of April 6, 1998 by and among SC Realty Incorporated,
the financial institutions party thereto as "Lenders", and Agent.
"Extension Request" has the meaning given that term in Section 2.10.
-5-
<PAGE>
"Federal Funds Rate" means, on any day, the rate per annum (rounded upward,
if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is published on such next succeeding Business Day, the Federal Funds
Rate for such day shall be the average rate quoted to Agent on such day on such
transactions as reasonably determined by Agent.
"Fixed Charges" means, with respect to a Person for the four fiscal quarter
period ending as of the date of determination, the sum of (a) the total amount
of accrued or paid interest (including, without limitation, interest expense
attributable to Capitalized Lease Obligations but excluding interest accrued in
respect of any "zero-coupon" Indebtedness and other similar Indebtedness for
which interest is not due and payable) of such Person for such period, and in
any event shall include all accrued, paid or capitalized interest with respect
to any Indebtedness or other obligation in respect of which such Person is
wholly or partially liable, whether pursuant to any repayment, interest carry,
performance Guarantee or otherwise (excluding any such "zero-coupon"
Indebtedness and other similar Indebtedness) plus (b) regularly scheduled
principal payments on Indebtedness of such Person during such period, other than
(i) any balloon, bullet or similar principal payment payable on any Indebtedness
of such Person which spreads the final payment thereof over a period and thereby
reduces refinancing risk and repays such Indebtedness in full and (ii) in the
case of the Borrower, principal payments in respect of the Term Loans.
"Foreign Lender" means any Lender organized under the laws of any
jurisdiction other than the United States of America, any State thereof or the
District of Columbia.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any government (or any political subdivision
or jurisdiction thereof), court, bureau, agency or other governmental authority
having jurisdiction over Borrower, any Guarantor or any other Subsidiary, or any
of its or their business, operations or properties.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part),
-6-
<PAGE>
provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor" means SC Realty Incorporated, a Nevada corporation and any
other Subsidiary of Borrower that is initially or later becomes a party to the
Guaranty.
"Guaranty" means the Guaranty dated as of the date hereof executed by
Guarantors in favor of Agent and Lenders, substantially in the form of Exhibit
B.
"Hazardous Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics, which if managed, disposed of, released or
discharged would require reporting, clean-up or remediation under Environmental
Laws.
"Homestead" means Homestead Village Incorporated, a Maryland corporation,
and its successors.
"Indebtedness" of any Person means at any date, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar debt instruments,
(c) all obligations of such Person to pay the purchase price of property or
services if such obligations are payable after the receipt of such property or
rendition of such services, except (i) accounts payable arising in the ordinary
course of business, (ii) obligations incurred in the ordinary course to pay the
purchase price of Securities so long as such obligations are paid within
customary settlement periods and (iii) obligations to purchase Securities
pursuant to subscription or stock purchase agreements in the ordinary course of
business, (d) all Capitalized Lease Obligations of such Person, (e) all
reimbursement obligations of such Person under letters of credit or acceptances
in respect of drawings thereunder to the extent not reimbursed, (f) all
Indebtedness secured by a Lien on any asset of such Person, whether or not such
Indebtedness is otherwise an obligation of such Person, and (g) all Indebtedness
of others Guaranteed by such Person. Notwithstanding the foregoing, for
purposes of calculating Borrower's compliance with Section 7.7., accounts
payable (other than deferred compensation) of Borrower in excess of 3.0% of the
undepreciated book value (determined in accordance with generally accepted
accounting principles) of the assets of the Borrower, at any time outstanding
shall be treated as Indebtedness to the extent of such excess.
"Intangible Assets" means, with respect to any Person, the amount (to the
extent reflected in determining stockholders' equity of such Person) of all
items which in accordance with generally accepted accounting principles would be
properly classified as intangible assets.
"Interest Period" means with respect to any LIBOR Loan, the period
commencing on the date of the borrowing, Conversion or Continuation of such Loan
and ending on the last day of the period selected by Borrower pursuant to the
provisions below. The duration of each Interest Period shall be one, two, three
or six months, in each case as Borrower may, in an appropriate Notice of
Borrowing, Notice of Continuation or Notice of Conversion, select (except in the
case of LIBOR Loans made under Section 2.15.(e)). In no event shall an Interest
Period of a
-7-
<PAGE>
Revolving Loan extend beyond the Revolving Credit Termination Date
and in no event shall an Interest Period of any Loan extend beyond the
Termination Date. Whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; provided,
however, that if such extension would cause the last day of such Interest Period
to occur in the next following calendar month, the last day of such Interest
Period shall occur on the next preceding Business Day.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means, with respect to a Person, the legal or beneficial
ownership by such Person of any capital stock or other equity interest in
another Person, whether or not such ownership constitutes a controlling interest
in such other Person, and shall include all Consolidated Subsidiaries of such
Person.
"Issuer" means with respect to a Security, the Person issuing such
Security.
"Lending Office" means, for each Lender and for each Type of Loan, the
office of such Lender specified as such on its signature page hereto, or such
other office of such Lender as such Lender may notify Agent in writing from time
to time.
"LIBO Rate" means, with respect to each Interest Period, the average rate
of interest per annum (rounded upwards, if necessary, to the next highest 1/16th
of 1%) at which deposits in immediately available funds in Dollars are offered
to Agent (at approximately 9:00 a.m., two Business Days prior to the first day
of such Interest Period) by first class banks in the interbank Eurodollar market
where the Eurodollar operations of Agent are customarily conducted, for delivery
on the first day of such Interest Period, such deposits being for a period of
time equal or comparable to such Interest Period and in an amount equal to or
comparable to the principal amount of the LIBOR Loan to which such Interest
Period relates. Each determination of the LIBO Rate by Agent shall, in absence
of demonstrable error, be conclusive and binding.
"LIBOR Loan" means any Revolving Loan or Term Loan hereunder with respect
to which the interest rate is calculated by reference to the LIBO Rate for a
particular Interest Period.
"Lien" as applied to the property of any Person means: (a) any mortgage,
deed to secure debt, deed of trust, pledge, lien, charge or lease constituting a
Capitalized Lease Obligation, conditional sale or other title retention
agreement, or other security interest, security title or encumbrance of any kind
in respect of any property of such Person, or upon the income or profits
therefrom; (b) any arrangement, express or implied, under which any property of
such Person is transferred, sequestered or otherwise identified for the purpose
of subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to the payment of the general, unsecured creditors
of such Person; and (c) the filing of, or any agreement to give, any financing
statement under the Uniform Commercial Code or its equivalent in any
jurisdiction.
"Loan" means a Revolving Loan, a Swingline Loan or a Term Loan.
-8-
<PAGE>
"Loan Document" means this Agreement, each of the Notes, the Guaranty, any
agreement evidencing the fees referred to in Section 3.1.(d) and each other
document or instrument executed and delivered by Borrower or any Guarantor in
connection with this Agreement or any of the other foregoing documents.
"Majority Lenders" means, as of any date, Lenders whose combined Pro Rata
Shares exceed 50.0%.
"Market Value" means, with respect to a Security and on the date of
determination thereof, (a) if such Security is listed on the New York Stock
Exchange, the American Stock Exchange, or some other principal national
securities exchange in the United States of America, the reported last sale
price of a unit of such security regular way on a given day, or, in case no such
sale takes place on such day, the average of the reported closing bid and asked
prices regular way, in each case on the New York Stock Exchange Composite Tape,
the American Stock Exchange Composite Tape or the principal national securities
exchange in the United States of America on which the security is listed or
admitted to trading, as applicable, or, if such Security is not listed or
admitted to trading on any national securities exchange in the United States of
America, the closing sales price, or if there is no closing sales price, the
average of the closing bid and asked prices, in the over-the-counter market as
reported by the National Association of Securities Dealers Automated Quotation
System, (b) with respect to a Security listed on a principal national securities
exchange in Luxembourg, Amsterdam or other European country, the price of such
Security as reported on such exchange by the most widely recognized reporting
method customarily relied upon by financial institutions in such country and
which method is reasonably acceptable to Agent, or (c) if such Security is not
listed on any principal national securities exchange or not so reported, the
original cost of such Security (less any write-down as a result of any
revaluation). Any determination of the "Market Value" of a Security pursuant to
this definition shall be based on the assumption that offers of such Security
are exempt from registration under the Securities Act.
"Market Value Net Worth" means, on a given date, (a) the sum of (i) the
Market Value on and as of such date of all Real Estate Company Securities owned
by Borrower and its Consolidated Subsidiaries, (ii) the aggregate reported net
asset value of all Securities held by Borrower and its Consolidated Subsidiaries
in investment funds which invest primarily in the Securities of publicly traded
real estate companies and the net asset value of which is regularly determined
(and in any event at least every three months) and reported publicly, (iii) the
book value of all other assets of Borrower and its Consolidated Subsidiaries
(excluding all Intangible Assets) on and as of such date and (iv) all cash and
cash equivalents of Borrower and its Consolidated Subsidiaries on and as of such
date, minus (b) the total liabilities (excluding deferred taxes on unrealized
gains) of Borrower and its Consolidated Subsidiaries as of such date as
determined in accordance with generally accepted accounting principles.
"Materially Adverse Effect" means a materially adverse effect on (a) the
business, assets, liabilities, financial condition, or results of operations of
Borrower and its Consolidated Subsidiaries, or any Guarantor and its
Consolidated Subsidiaries, in each case taken as a whole, (b) the ability of
Borrower or any Guarantor to perform its obligations under any Loan Document to
which it is a party, (c) the validity or enforceability of any of such Loan
Documents, (d) the
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rights and remedies of Lenders and Agent under any of such
Loan Documents or (e) the timely payment of the principal of or interest on the
Loans or other amounts payable in connection therewith.
"Moody's" means Moody's Investors Service, Inc.
"Net Worth" means, for any Person, all amounts which would, in accordance
with generally accepted accounting principles, be included under stockholders'
equity on the balance sheet of such Person.
"Non-ERISA Plan" means any Plan subject to Section 4975 of the Internal
Revenue Code.
"Note" means either a Revolving Note or the Swingline Note.
"Notice of Borrowing" means a notice in the form of Exhibit C to be
delivered to Agent pursuant to Section 2.2. evidencing Borrower's request for a
Borrowing of Revolving Loans.
"Notice of Continuation" means a notice in the form of Exhibit D to be
delivered to Agent pursuant to Section 2.4. evidencing Borrower's request for
the Continuation of a Borrowing of Revolving Loans.
"Notice of Conversion" means a notice in the form of Exhibit E to be
delivered to Agent pursuant to Section 2.5. evidencing Borrower's request for
the Conversion of a Borrowing of Revolving Loans.
"Notice of Swingline Borrowing" means a notice in the form of Exhibit F to
be delivered to Swingline Lender pursuant to Section 2.15.(b) evidencing
Borrower's request for a Swingline Loan.
"Obligations" means, individually and collectively: (a) all Loans; (b) any
and all renewals and extensions of any of the foregoing and (c) all other
indebtedness, liabilities, obligations, covenants and duties of Borrower owing
to Agent, any Lender or Swingline Lender of every kind, nature and description,
under or in respect of this Agreement or any of the other Loan Documents,
whether direct or indirect, absolute or contingent, due or not due, contractual
or tortious, liquidated or unliquidated, and whether or not evidenced by any
promissory note.
"Organizational Documents" means with respect to a Person and to the extent
applicable, such Person's articles of incorporation, articles of organization,
partnership agreement, bylaws or other similar organization documents.
"Pacific" means Security Capital Pacific Trust, a Maryland real estate
investment trust, and its successors.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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"Permitted Liens" means (a) pledges or deposits made to secure payment of
worker's compensation (or to participate in any fund in connection with worker's
compensation insurance), unemployment insurance, pensions or social security
programs, (b) encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, provided that such items do not
materially impair the use of such property for the purposes intended and none of
which is violated in any material respect by existing or proposed structures or
land use, (c) Liens for taxes not yet due and payable, (d) Liens imposed by
mandatory provisions of Applicable Law such as for materialmen's, mechanic's,
warehousemen's and other like Liens arising in the ordinary course of business,
securing payment of Indebtedness the payment of which is not yet due, (e) Liens
for taxes, assessments and governmental charges or assessments that are being
contested in good faith by appropriate proceedings diligently conducted, and for
which reserves, if any, required under generally accepted accounting principles
have been provided, (f) Liens expressly permitted under the terms of the Loan
Documents, and (g) any extension, renewal or replacement of the foregoing to the
extent such Lien as so extended, renewed or replaced would otherwise be
permitted hereunder.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Internal Revenue Code.
"Principal Companies" means Pacific, ProLogis, Atlantic, U.S. Realty and
Homestead.
"ProLogis" means Security Capital Industrial Trust, a Maryland real estate
investment trust which has announced its intention to change its name to
ProLogis Trust, and its successors.
"Pro Rata Share" means, with respect to any Lender, the percentage obtained
by dividing (a) the amount of such Lender's Commitment by (b) the aggregate
amount of Commitments of all Lenders, or, if the Commitments shall have been
terminated, the percentage obtained by dividing (i) the aggregate unpaid
principal amount of Loans owing to such Lender by (ii) the aggregate unpaid
principal amount of all Loans.
"Public Subsidiary" means any Subsidiary whose Securities having ordinary
voting power to elect members of the board of directors or other persons
performing similar functions are listed on the New York Stock Exchange, American
Stock Exchange or some other principal national securities exchange or have
price quotations in the over-the-counter market reported by the National
Association of Securities Dealers Automated Quotation System.
"Qualifying Security" means any Security (1) which is common stock,
beneficial interest in a trust, or the equivalent thereof, (2) which is owned
by, and registered in the name of, Borrower or a Guarantor and (3) which Agent
confirms meets all of the following conditions at the time of determination
thereof:
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(a) such Security is not subject to any Lien other than Liens of the types
described in clauses (c) through (e) of the definition of Permitted Liens;
(b) all representations and warranties of Borrower in this Agreement and
the other Loan Documents relating in any way to such Security (or the Issuer
thereof) are true in all material respects (except to the extent (i) such
representations or warranties specifically relate to an earlier date or (ii)
such representations or warranties become untrue by reason of events or
conditions otherwise permitted hereunder and the other Loan Documents);
(c) the Issuer of such Security (i) is a REIT; (ii) has filed with its most
recently filed (or has announced its intention to file with its initial) federal
income tax return an election to be a REIT or has made such election for a
previous taxable year, and such election has not been terminated or revoked;
(iii) is a Real Estate Company (including any organized as a societe
d'investissement a capital fixe, a 1929 holding company, or other similar
entity); or (iv) is a fund registered under the Investment Company Act of 1940,
which has net assets of at least $15,000,000 and whose assets consist only of
Securities of the types described in the immediately preceding clauses (i)
through (iii) and temporary investments in cash or cash equivalents;
(d) the ratio of (i) such Issuer's Indebtedness to (ii) its Net Worth plus
the amount of accumulated depreciation of such Issuer, determined as of such
Issuer's fiscal quarter most recently ending and in accordance with generally
accepted accounting principles (or other method of accounting acceptable to
Agent) does not exceed 1.0 to 1.0 (or 1.75 to 1.00 solely in the case of
Homestead); and
(e) no event or condition exists which permits any holder or holders of
Indebtedness of such Issuer, any trustee or agent acting on behalf of such
holder or holders or any other Person, to accelerate the maturity of any such
Indebtedness and such Person shall not have waived its right to so accelerate
with respect to such event.
"Rating Agency" means S&P, Moody's, DCR or any other nationally recognized
securities rating agency selected by Borrower and acceptable to the Majority
Lenders.
"Real Estate Company" means any Person (a) engaged primarily in the
business of owning, acquiring, developing, selling, leasing or operating real
property and related assets or (b) who owns, directly or indirectly, other
Persons engaged in the type of business described in the immediately preceding
clause (a).
"Real Estate Company Securities" means any common stock, beneficial
interest in a trust, convertible security, preferred stock, debt instrument, or
the equivalent thereof: (a) the Issuer of which is a Real Estate Company and (b)
which either (i) is listed on the New York Stock Exchange, American Stock
Exchange or some other principal national securities exchange in the United
States of America; (ii) has price quotations in the over-the-counter market
reported by the National Association of Securities Dealers Automated Quotation
System or (iii) is listed on the principal national securities exchange in
Luxembourg, the Netherlands, the United Kingdom of Great Britain or other
European country acceptable to Agent.
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"Reduced Rate" has the meaning given that term in Section 3.11.
"Regulations T, U and X" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Regulatory Change" means, with respect to any Lender, any change effective
after the Agreement Date in Applicable Law (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks, including such Lender, of or under any Applicable
Law (whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any Governmental Authority or monetary authority
charged with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy.
"REIT" means a Person qualifying for treatment as a "real estate investment
trust" under the Internal Revenue Code.
"Related Company" means any of Borrower, any Guarantor or any of their
respective Subsidiaries.
"Restricted Payment" means (a) cash payment or other distributions of
property on, or in respect of, any class of stock of, or other equity interest
in, a Person, or other payments or transfers of property made in respect of the
redemption, repurchase or acquisition of such stock or equity interest, other
than any distribution or other payment payable solely in capital stock of such
Person and (b) any prepayment of principal of, premium, if any, or interest on,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or similar payment with respect to, any Indebtedness of Borrower or any of its
Subsidiaries that is subordinated in right of payment to the Loans and the other
Obligations, other than, so long as no Default or Event of Default shall have
occurred and be continuing or would arise therefrom, any redemption, repurchase
or other acquisition or retirement of any such Indebtedness made by exchange
for, or out of the net cash proceeds of, a substantially concurrent issue and
sale of (i) capital stock (other than any capital stock to the extent that is or
upon the happening of an event or passage of time would be, required to be
redeemed prior to the Termination Date or is redeemable at the option of the
holder thereof at any time prior to such maturity, or is convertible into or
exchangeable for debt securities at any time prior to such maturity) of Borrower
to any Person (other than to a Subsidiary) or (ii) Indebtedness of Borrower so
long as such Indebtedness (1) is subordinated to the Loans and the other
Obligations at least to the same extent as the subordinated Indebtedness so
redeemed, repurchased, retired or acquired and (2) does not have a stated
maturity earlier than the stated maturity for the Indebtedness being redeemed,
repurchased or otherwise acquired or retired.
"Revolving Credit Termination Date" means the earlier to occur of (a) April
6, 2000, or such later date to which such date may be extended in accordance
with Section 2.10. or (b) the date on which the Revolving Loans are converted
into the Term Loan pursuant to Section 2.11.
"Revolving Loan" means a loan made by a Lender to Borrower under Section
2.1.
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"Revolving Note" means a promissory note executed by Borrower, payable to
the order of a Lender, in a maximum principal amount equal to such Lender's
Commitment and substantially in the form of Exhibit G.
"Revolving Period" means the period commencing on the Effective Date and
ending on the earlier of (a) the Revolving Credit Termination Date and (b) the
date on which the Revolving Loans are converted into the Term Loan pursuant to
Section 2.11.
"S&P" means Standard & Poor's Rating Group, a division of McGraw-Hill
Companies, Inc.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations issued pursuant thereto.
"Security" has the meaning given that term in Article 8 of the UCC and
shall in any event include capital stock, shares (as defined in Md. Corps &
Ass'ns Code Ann. (S)8-101(c)), beneficial interest in real estate investment
trusts or other trusts, and other similar equity interests.
"Services Subsidiary" means a Subsidiary of Borrower that provides services
for a fee and which Subsidiary is material to the financial condition of
Borrower.
"Shareholders' Equity" means, at any date with respect to a Person, the
Tangible Net Worth of such Person less, to the extent not otherwise deducted in
the determination thereof, the aggregate amount of Contingent Obligations of
such Person, all determined as of such date.
"Strategic Investee" means, with respect to one Person, any other Person
(other than, in the case of Borrower, any of the Service Subsidiaries) of which
such first Person initially owns, directly or indirectly, more than 25% of the
outstanding securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other individuals performing
similar functions.
"Subsidiary" means any Person of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions, are at the time
directly or indirectly owned by another Person, or by one or more Subsidiaries
of such other Person or by such other Person and one or more Subsidiaries of
such other Person.
"Supermajority Lenders" means, as of any date, Lenders whose combined Pro
Rata Shares equal or exceed 66-2/3%.
"Swingline Commitment" means Swingline Lender's obligation to make
Swingline Loans pursuant to Section 2.15. in an amount up to, but not exceeding,
$50,000,000, as such amount may be reduced from time to time in accordance with
the terms hereof.
"Swingline Lender" means Wells Fargo Bank, National Association, together
with its respective successors and assigns.
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"Swingline Loan" means a loan made by Swingline Lender to Borrower pursuant
to Section 2.15.(a).
"Swingline Note" means the promissory note of Borrower payable to the order
of Swingline Lender in a principal amount equal to the amount of the Swingline
Commitment as originally in effect and otherwise duly completed, substantially
in the form of Exhibit H.
"Tangible Net Worth" means, with respect to a Person, at any date the Net
Worth of such Person less its Intangible Assets, all determined as of such date
in accordance with generally accepted accounting principles.
"Term Loan" has the meaning given that term in Section 2.11.
"Termination Date" means the date four years after the Revolving Credit
Termination Date.
"Total Liabilities" means, as to any Person, at a particular date, all
liabilities which would, in conformity with generally accepted accounting
principles, be properly classified as a liability on the balance sheet of such
Person as at such date, and in any event shall (a) include (without duplication)
(i) Indebtedness of such Person, (ii) all Contingent Obligations of such Person
and (iii) liabilities of any Affiliate of such Person that is not a Consolidated
Subsidiary of such Person, which liabilities such Person has Guaranteed or is
otherwise obligated on a recourse basis and (b) not include (i) any accounts
payable owing to a trade creditor and which is not evidenced by any instrument
and any accounts payable representing deferred compensation, (ii) accrued
expenses, (iii) deferred taxes on unrealized gains and (iv) declared but unpaid
dividends.
"Traded Security" means a Security meeting all of the following criteria:
(a) such Security (i) is listed on the New York Stock Exchange, American Stock
Exchange or some other principal national securities exchange in the United
States of America; (ii) has price quotations in the over-the-counter market
reported by the National Association of Securities Dealers Automated Quotation
System or (iii) is listed on the principal national securities exchange in
Luxembourg, the Netherlands, the United Kingdom of Great Britain or other
European country acceptable to Agent; (b) such Security is not subject to any
instrument, document or agreement which in any way prohibits the sale of such
Security for any specified period of time or otherwise (other than any agreement
between Borrower or a Guarantor and an underwriter entered into in connection
with an offering by such underwriter of Securities of the Issuer of such
Security, in which agreement Borrower agrees not to sell such Security for a
period ending no later than 180 days after such offering); and (c) the offer and
sale of such Security by Borrower would not be subject to any registration
requirements or other restrictions under the Securities Act or other Applicable
Law other than (i) volume limitations imposed under Rule 144(e) of the
Securities Act, (ii) restrictions on the manner of resale imposed under Rule
144(f) and (g) of the Securities Act, (iii) restrictions under Regulation 144A
or S of the Securities and Exchange Commission and (iv) other restrictions
related to the timing of offers and sales consented to by the Majority Lenders
in writing.
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"Type" with respect to any Revolving Loan or Term Loan, refers to whether
such Loan is a LIBOR Loan or a Base Rate Loan.
"Unencumbered Pool Certificate" means a report substantially in the form of
Exhibit I certified by an Authorized Representative of Borrower, setting forth a
detailed calculation of the Unencumbered Pool Value and including the Market
Value of the Qualifying Securities, the identity of each Issuer of such
Qualifying Securities, and reasonably detailed calculations establishing that
the applicable Issuers meet the applicable requirements contained in clauses (a)
and (b) of the definition of Unencumbered Pool Value.
"Unencumbered Pool Securities" means those Securities that have been
approved pursuant to Section 2.12. for inclusion in determinations of the
Unencumbered Pool Value.
"Unencumbered Pool Value" means, at any given time, the aggregate Market
Value of all Qualifying Securities subject, however, to the following
limitations: (a) at least 80% of the Unencumbered Pool Value shall be
attributable to Traded Securities issued by Approved Issuers each having a Cash
Flow to Interest Ratio for the period of four consecutive fiscal quarters most
recently ending of not less than 1.5 to 1.0 and (b) of the Unencumbered Pool
Value attributable to such Issuers, no more than (i) 50% of such value shall be
individually attributable to Securities issued by Pacific, ProLogis or Atlantic,
respectively, (ii) 40% of such value shall be attributable to Securities issued
by U.S. Realty, (iii) 30% of such value shall be attributable to Securities
issued by Homestead and (iv) 20% of such value shall be collectively
attributable to Securities issued by any other Persons.
"Unsecured Liabilities" means, as to any Person as of a given date, all
liabilities which would, in conformity with generally accepted accounting
principles, be properly classified as a liability on the consolidated balance
sheet of such Person that are not secured in any manner by a Lien in any
property, and shall in any event include (without duplication) the following:
(a) all unsecured Indebtedness of such Person; (b) all purchase obligations,
repurchase obligations, forward commitments and unfunded obligations (other than
any of the foregoing to the extent representing obligations owing under
subscription agreements, stock purchase agreements, equipment purchase
agreements or service purchase agreements entered into by such Person in the
ordinary course of its business); (c) all accounts payable of such Person; (d)
all Guarantees by such Person of Unsecured Liabilities of other Persons and (e)
unsecured subordinated debt.
"U.S. Realty" means Security Capital U.S. Realty, a societe
d'investissement a capital fixe formed under the laws of the Grand Duchy of
Luxembourg, and its successors.
"Wells Fargo" means Wells Fargo Bank, National Association, and its
successors and permitted assigns.
SECTION 1.2. Accounting Terms and Determinations; Time References.
Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles
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as in effect from time to time, applied on a basis consistent (except for
changes concurred in by Borrower's independent public accountants) with the most
recent audited financial statements of Borrower delivered to Lenders; provided
that, if Borrower notifies Agent that Borrower wishes to amend any covenant in
Section 7.7. or 7.14.(a) hereof to eliminate the effect of any change in
generally accepted accounting principles on the operation of such covenant (or
if Agent notifies Borrower that the Majority Lenders wish to amend any such
Section for such purpose), then the compliance by Borrower with such covenant
shall be determined on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to Borrower and the Majority
Lenders. When calculating (i) an Issuer's Cash Flow to Interest Ratio for
purposes of the definition of Unencumbered Pool Value and for Section 2.12. and
(ii) the ratio of an Issuer's Indebtedness to its Net Worth plus accumulated
depreciation for purposes of clause (d) of the definition of Qualifying Issuer
and for Section 2.12, the financial statements of such Issuer for a given fiscal
quarter may be used up to and including the date 65 days after the end of the
immediately following fiscal quarter of such Issuer. Unless otherwise indicated,
all references to time are references to San Francisco, California time.
SECTION 1.3. Subsidiaries.
Unless explicitly set forth to the contrary, a reference to "Subsidiary"
shall mean a Subsidiary of Borrower and a reference to an "Affiliate" shall mean
a reference to an Affiliate of Borrower.
SECTION 1.4. Interpretation Generally.
References in this Agreement to "Sections", "Articles", "Exhibits" and
"Schedules" are to sections, articles, exhibits and schedules herein and hereto
unless otherwise indicated. References in this Agreement or any other Loan
Document to any document, instrument or agreement (a) shall include all
exhibits, schedules and other attachments thereto, as updated from time to time,
(b) shall include all documents, instruments or agreements issued or executed in
replacement thereof, and (c) shall mean such document, instrument or agreement,
or replacement or predecessor thereto, as amended, modified or supplemented from
time to time in accordance with its terms and in effect at any given time. Terms
not otherwise defined herein and which are defined in the UCC are used herein
with the respective meanings given them in the UCC. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter.
ARTICLE II. CREDIT FACILITY
SECTION 2.1. Making of Revolving Loans.
Subject to the terms and conditions set forth in this Agreement, including,
without limitation, Section 2.16., each Lender severally agrees to make
Revolving Loans to Borrower during the period from and including the Effective
Date to but excluding the Revolving Credit
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Termination Date, in an aggregate principal amount not to exceed the lesser of
(a) such Lender's Commitment and (b) such Lender's Pro Rata Share of the
Available Loan Amount. Each borrowing of Revolving Loans hereunder shall be in
an aggregate principal amount of $1,000,000 and integral multiples of $500,000
in excess of that amount (except that any such borrowing of Revolving Loans may
be in the aggregate amount of the unused Commitments). Notwithstanding any other
provision of this Agreement or any other Loan Document, no Revolving Loan shall
be made to Borrower if Agent determines that the making of such Revolving Loan
would result in a violation of the margin requirements of Regulation U as
specified in 12 C.F.R. (S) 221.3(a)(1) (or any successor regulation). Within the
foregoing limits and subject to the other terms of this Agreement, Borrower may
borrow, repay and reborrow Revolving Loans. As provided in Section 7.11., the
initial Revolving Loans are to be used to satisfy, among other things, the
outstanding principal balance of Loans (as defined in the Existing Credit
Agreement, the "Existing Loans") owing by SC Realty Incorporated under the
Existing Credit Agreement. To avoid the repayment of the Existing Loans during
applicable existing interest periods, Borrower and Lenders agree that as of the
Effective Date the Existing Loans shall be deemed to be Revolving Loans
outstanding hereunder being of the same Types and, notwithstanding anything in
the definition of the term "Interest Period" herein to the contrary, having
initial Interest Periods of duration equal to the respective interest periods of
the Existing Loans. As of the Effective Date, such Revolving Loans shall be
allocated among Lenders in accordance with their respective Pro Rata Shares, and
each Lender agrees to make such payments to the other Lenders and any Person who
ceased to be a "Lender" under the Existing Credit Agreement upon the Effective
Date in such amounts as are necessary to effect such allocation. All such
payments shall be made to Agent for the account of the Person to be paid and
shall be made on a net basis.
SECTION 2.2. Requests for Revolving Loans.
Not later than 9:00 a.m. at least one Business Day prior to a borrowing of
Base Rate Loans and not later than 10:00 a.m. at least three Business Days prior
to a borrowing of LIBOR Loans, Borrower shall deliver to Agent a Notice of
Borrowing. Each Notice of Borrowing shall specify the aggregate principal amount
of Revolving Loans to be borrowed, the date such Revolving Loans are to be
borrowed (which must be a Business Day), the use of the proceeds of such
Revolving Loans, the Type of the requested Revolving Loans and if such Revolving
Loan is to be a LIBOR Loan, the initial Interest Period for such Revolving Loan.
Each Notice of Borrowing shall be irrevocable once given and binding on
Borrower. Prior to delivering a Notice of Borrowing, Borrower may (without
specifying whether a Revolving Loan will be a Base Rate Loan or a LIBOR Loan)
request that Agent provide Borrower with the most recent LIBO Rate available to
Agent. Agent shall provide such quoted rate to Borrower and to Lenders on the
date of such request or as soon as possible thereafter.
SECTION 2.3. Funding.
(a) Promptly after receipt of a Notice of Borrowing under Section 2.2.,
Agent shall notify each Lender by telex or telecopy, or other similar form of
transmission of the proposed borrowing. No later than 9:00 a.m. on the date
specified in the Notice of Borrowing, each Lender will make available for the
account of its applicable Lending Office to Agent at Agent's Lending Office, in
immediately available funds, the proceeds of the Revolving Loan to be made by
such
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Lender. Upon fulfillment of all applicable conditions set forth herein, Agent
shall make available to Borrower at Agent's Lending Office, not later than 11:00
a.m. on the date of the requested Revolving Loan, the proceeds of such Revolving
Loans received by Agent. The failure of any Lender to deposit the amount
described above with Agent shall not relieve any other Lender of its obligations
hereunder to make a Revolving Loan.
(b) With respect to Revolving Loans to be made after the Effective Date,
unless Agent shall have been notified by any Lender prior to the specified date
of borrowing that such Lender does not intend to make available to Agent the
Revolving Loan to be made by such Lender on such date, Agent may assume that
such Lender will make the proceeds of such Revolving Loan available to Agent on
the date of the requested borrowing as set forth in the Notice of Borrowing and
Agent may (but shall not be obligated to), in reliance upon such assumption,
make available to Borrower the amount of such Revolving Loan to be provided by
such Lender.
SECTION 2.4. Continuation.
So long as no Event of Default shall have occurred and be continuing,
Borrower may on any Business Day, with respect to any LIBOR Loan, elect to
maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a
new Interest Period for such LIBOR Loan. Each new Interest Period selected under
this Section shall commence on the last day of the immediately preceding
Interest Period. Each selection of a new Interest Period shall be made by
Borrower's giving of a Notice of Continuation not later than 12:00 noon on the
third Business Day prior to the date of any such Continuation by Borrower to
Agent. Promptly after receipt of a Notice of Continuation, Agent shall notify
each Lender by telex or telecopy, or other similar form of transmission of the
proposed Continuation. Such notice by Borrower of a Continuation shall be by
telephone or telecopy, confirmed immediately in writing if by telephone, in the
form of a Notice of Continuation, specifying (a) the date of such Continuation,
(b) the LIBOR Loan and portion thereof subject to such Continuation and (c) the
duration of the selected Interest Period, all of which shall be specified in
such manner as is necessary to comply with all limitations on Loans outstanding
hereunder. Each Notice of Continuation shall be irrevocable by and binding on
Borrower once given. If Borrower shall fail to select in a timely manner a new
Interest Period for any LIBOR Loan in accordance with this Section, such Loan
will automatically, on the last day of the current Interest Period therefore,
Convert into a Base Rate Loan notwithstanding failure of Borrower to comply with
Section 2.5.
SECTION 2.5. Conversion.
So long as no Event of Default shall have occurred and be continuing,
Borrower may on any Business Day, upon Borrower's giving of a Notice of
Conversion to Agent, Convert the entire amount of all or a portion of a Loan of
one Type into a Loan of another Type. Promptly after receipt of a Notice of
Conversion, Agent shall notify each Lender by telex or telecopy, or other
similar form of transmission of the proposed Conversion. Any Conversion of a
LIBOR Loan into a Base Rate Loan shall be made on, and only on, the last day of
an Interest Period for such LIBOR Loan. Each such Notice of Conversion shall be
given not later than 12:00 noon on the Business Day prior to the date of any
proposed Conversion into Base Rate Loans and on the third Business Day prior to
the date of any proposed Conversion into LIBOR Loans. Subject to the
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restrictions specified above, each Notice of Conversion shall be by telephone or
telecopy confirmed immediately in writing if by telephone in the form of a
Notice of Conversion specifying (a) the requested date of such Conversion, (b)
the Type of Loan to be Converted, (c) the portion of such Type of Loan to be
Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if
such Conversion is into a LIBOR Loan, the requested duration of the Interest
Period of such Loan. Each Notice of Conversion shall be irrevocable by and
binding on Borrower once given. Each Conversion from a Base Rate Loan to a LIBOR
Loan shall be in an aggregate amount for the Loans of all Lenders of not less
than $1,000,000 or integral multiples of $500,000 in excess of that amount.
SECTION 2.6. Interest Rate.
(a) All Loans. The unpaid principal of each Base Rate Loan shall bear
interest from the date of the making of such Loan to but not including the date
of repayment thereof at a rate per annum equal to the Base Rate in effect from
day to day. The unpaid principal of each LIBOR Loan shall bear interest from the
date of the making of such Loan to but not including the date of repayment
thereof at a rate per annum equal to the LIBO Rate plus the Applicable Margin.
(b) Default Rate. All past-due principal of, and to the extent permitted
by Applicable Law, interest on, the Loans shall bear interest until paid at the
Base Rate from time to time in effect plus two percent (2%).
SECTION 2.7. Number of Interest Periods.
Anything herein to the contrary notwithstanding, there may be no more than
12 different Interest Periods outstanding at the same time.
SECTION 2.8. Repayment of Loans.
(a) Payment of Interest. All accrued and unpaid interest on the unpaid
principal amount of each Loan shall be payable (i) monthly in arrears on the
first day of each month, commencing with the first full calendar month occurring
after the Effective Date, (ii) on the Revolving Credit Termination Date, (iii)
on the Termination Date and (iv) on any date on which the principal balance of
such Loan is due and payable in full.
(b) Payment of Principal of Revolving Loans. Subject to Section 2.11.,
the aggregate outstanding principal balance of all Revolving Loans shall be due
and payable in full on the Revolving Credit Termination Date.
(c) Payment of Principal of Term Loans. Borrower shall repay the
principal balance of the Term Loans in consecutive quarterly installments due on
the last day of each March, June, September and December following the Revolving
Credit Termination Date until the Term Loans have been paid in full. The amount
of such installments shall be as follows: (i) the first four installments shall
each be in the aggregate amount of 5.0% of the initial aggregate principal
balance of the Term Loans (or if the outstanding aggregate principal balance of
the Term Loans is less than such amount on the due date of any such installment,
then in the amount of such aggregate outstanding balance) and (ii) if after the
payment of such four installments any principal
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balance shall remain owing on the Term Loans, each remaining installment shall
be in the aggregate amount of 6.6675% of the initial aggregate principal balance
of the Term Loans (or if the outstanding aggregate principal balance of the Term
Loans is less than such amount on the due date of any such installment, then in
the amount of such aggregate outstanding balance). Notwithstanding the
foregoing, the entire outstanding principal balance of all Term Loans shall be
due and payable in full on the Termination Date.
(d) Optional Prepayments. Borrower may, upon at least one Business Day's
prior notice to Agent, prepay any Revolving Loan or Term Loan in whole at any
time, or from time to time in part in an amount equal to $500,000 or integral
multiples of $100,000 in excess of that amount. If Borrower shall prepay the
principal of any LIBOR Loan on any date other than the last day of the Interest
Period applicable thereto, Borrower shall pay the amounts, if any, due under
Section 4.4.
(e) Mandatory Prepayments. If at any time the aggregate principal amount
of all outstanding Revolving Loans, together with the aggregate principal amount
of all outstanding Swingline Loans, exceeds the aggregate amount of the
Commitments in effect at such time, Borrower shall promptly upon demand pay to
Agent for the accounts of the Lenders the amount of such excess. If at any time
the aggregate outstanding principal balance of Loans exceeds the Available Loan
Amount, then Borrower shall, within 10 Business Days of Borrower obtaining
actual knowledge of the occurrence of such excess, eliminate such excess. If
such excess is not eliminated within such 10 Business Day period, then the
entire outstanding principal balance of all Loans shall be immediately due and
payable in full.
(f) General Provisions as to Payments. Except to the extent otherwise
provided herein, all payments of principal, interest and other amounts to be
made by Borrower under this Agreement, the Notes or any other Loan Document
shall be made in Dollars, in immediately available funds, without setoff,
deduction or counterclaim, to Agent at its Lending Office, not later than 11:00
a.m. on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). The parties agree that if Borrower makes any payment
due hereunder after 11:00 a.m. but before 5:00 p.m. on the date such payment is
due, such late payment shall not constitute a Default under Section 8.1.(a) but
shall nevertheless for all other purposes, including but not limited to, the
calculation of interest, be deemed to have been paid as of the next succeeding
Business Day as provided in the parenthetical phrase of the preceding sentence.
Each payment received by Agent for the account of a Lender under this Agreement
or any Note shall be paid to such Lender, by wire transfer of immediately
available funds in accordance with the wiring instructions provided by such
Lender to Agent from time to time, for the account of such Lender at the
applicable Lending Office of such Lender. Each payment received by Agent for the
account of Swingline Lender under this Agreement or the Swingline Note shall be
paid to Swingline Lender by wire transfer of immediately available funds in
accordance with the wiring instructions provided by Swingline Lender to the
Agent from time to time. In the event Agent fails to pay such amounts to such
Lender or Swingline Lender, as the case may be, within one Business Day of
receipt by Agent, Agent shall pay interest on such amount at a rate per annum
equal to the Federal Funds rate from time to time in effect. If the due date of
any payment under this Agreement or any other Loan Document would otherwise fall
on a day which is not a Business
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Day such date shall be extended to the next succeeding Business Day and interest
shall be payable for the period of such extension.
SECTION 2.9. Voluntary Reductions of the Commitments.
---------------------------------------
Borrower may terminate or reduce the aggregate unused amount of the
Commitments (for which purpose use of the Commitments shall be deemed to include
the aggregate principal amount of all outstanding Swingline Loans) at any time
and from time to time without penalty or premium upon not less than three
Business Days prior notice to Agent of each such termination or reduction, which
notice shall specify the effective date thereof and the amount of any such
reduction (which in the case of any partial reduction of the Commitments shall
not be less than $1,000,000 and integral multiples of $1,000,000 in excess of
that amount) and shall be irrevocable once given and effective only upon receipt
by Agent; provided, however, that if Borrower seeks to reduce the aggregate
amount of the Commitments below $200,000,000, then all of the Commitments shall
be reduced to zero and except as otherwise provided herein, the provisions of
this Agreement shall terminate. The Commitments, once reduced pursuant to this
Section, may not be increased. Borrower shall pay all interest and fees on the
Revolving Loans accrued to the date of such reduction or termination of the
Commitments to Agent for the account of Lenders. Any reduction in the aggregate
amount of the Commitments shall result in a proportionate reduction (rounded to
the next lowest integral multiple of multiple of $100,000) in the Swingline
Commitment.
SECTION 2.10. Extension of Revolving Credit Termination Date.
----------------------------------------------
(a) Borrower may request Agent and Lenders to extend the current Revolving
Credit Termination Date by successive one-year intervals by executing and
delivering to Agent no later than January 15 (and not before January 1) of the
year one year prior to the current Revolving Credit Termination Date, a written
request for such extension (an "Extension Request"). Agent shall forward to
each Lender a copy of each Extension Request delivered to Agent promptly upon
receipt thereof. Borrower understands that this Section has been included in
this Agreement for Borrower's convenience in requesting an extension and
acknowledges that none of Lenders nor Agent has promised (either expressly or
impliedly), nor has any obligation or commitment whatsoever, to extend the
Revolving Credit Termination Date at any time. If all Lenders shall have
notified Agent on or prior to February 15 of the year one year prior to the
Revolving Credit Termination Date that they accept such Extension Request, the
Revolving Credit Termination Date shall be extended for one year. If any Lender
shall not have notified Agent on or prior to such February 15 that it accepts
such Extension Request, the Revolving Credit Termination Date shall not be
extended. Agent shall promptly notify Borrower whether the Extension Request
has been accepted or rejected as well as which Lender or Lenders rejected
Borrower's Extension Request (each such Lender a "Rejecting Lender").
(b) Notwithstanding the preceding subsection (a), if Borrower receives
notification from Agent that an Extension Request has been rejected (a "Notice
of Rejection"), and provided that the aggregate amount of Commitments of the
Rejecting Lenders does not exceed 20% of the aggregate amount of Commitments
then outstanding, Borrower may elect, with respect to each such Rejecting
Lender, by giving written notice to Agent of any such election within 30 days
after
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receipt by Borrower of a Notice of Rejection, to either (x) require such
Rejecting Lender to assign its respective Commitment to an Eligible Assignee as
contemplated in the immediately following clause (i) or (y) pay in full the
amount of Revolving Loans, interest and fees owing to such Rejecting Lender and
terminate such Rejecting Lender's Commitment as contemplated in the immediately
following clause (ii). If Borrower has made a timely election as permitted by
the preceding sentence, then Borrower shall take either of the following actions
as specified in such election: (i) demand that such Rejecting Lender, and upon
such demand such Rejecting Lender shall promptly, assign its respective
Commitment to an Eligible Assignee subject to and in accordance with the
provisions of Section 10.8.(c) for a purchase price equal to the aggregate
principal balance of Revolving Loans then outstanding and owing to such
Rejecting Lender plus any accrued but unpaid interest thereon and accrued but
unpaid fees owing to such Rejecting Lender, any such assignment to be completed
within 45 days after receipt by Borrower of a Notice of Rejection or (ii) within
45 days after receipt by Borrower of a Notice of Rejection, pay to such
Rejecting Lender the aggregate principal balance of Revolving Loans then
outstanding and owing to such Rejecting Lender plus any accrued but unpaid
interest thereon and accrued but unpaid fees owing to such Rejecting Lender,
whereupon such Rejecting Lender's Commitment shall terminate, and such Rejecting
Lender shall no longer be a party hereto or have any rights or obligations
hereunder or under any of the other Loan Documents. Agent may (but shall not be
obligated to) cooperate in effectuating the replacement of any such Rejecting
Lender under this Section, but at no time shall Agent, such Rejecting Lender, or
any other Lender be obligated in any way whatsoever to initiate any such
replacement or to assist in finding an Assignee. If all Rejecting Lenders have
either assigned their Commitments to other financial institutions as
contemplated by the preceding clause (i) or have been paid the amounts specified
in the preceding clause (ii), then the Borrower's Extension Request which was
initially rejected shall be deemed to have been granted and accordingly the
Revolving Credit Termination Date shall be extended by one year, otherwise the
Revolving Credit Termination Date shall not be extended. If the aggregate
amount of Commitments of the Rejecting Lenders exceeds 20% of the aggregate
amount of Commitments then outstanding, the Revolving Credit Termination Date
shall not be extended.
SECTION 2.11. Term Loan Conversion.
--------------------
Subject to the terms and conditions of this Agreement, if any Extension
Request of Borrower shall be denied, Borrower may then elect to convert on the
date one year prior to the current Revolving Credit Termination Date the
aggregate principal amount of Revolving Loans then owing to each Lender and
outstanding on the Revolving Credit Termination Date into a term loan owing to
such Lender (each a "Term Loan") provided (a) Borrower has given Agent not less
than 15 days' prior notice of Borrower's intention to so convert the Revolving
Loans and (b) the conditions set forth in Section 5.3. have been satisfied as of
the date one year prior to the current Revolving Credit Termination Date. Upon
the effectiveness of the conversion of the outstanding principal balance of
Revolving Loans into Term Loans as contemplated by this Section, Borrower shall
have no right to borrow, and neither Swingline Lender nor any Lender shall have
any obligation to make, any Swingline Loans or Revolving Loans, as applicable.
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SECTION 2.12. Inclusion of Securities in Unencumbered Pool.
--------------------------------------------
As of the date hereof, the Securities described in Schedule 2.12. are the
only Unencumbered Pool Securities. If Borrower desires that additional
Securities become Unencumbered Pool Securities, Borrower shall give Agent prior
written notice thereof, such notice to set forth: (a) the identity of the Issuer
of such Securities; (b) the number of such Securities to become Unencumbered
Pool Securities; (c) whether such Securities are Traded Securities; (d) the per
share Market Value of such Securities as of the most recent date available; (e)
a calculation of the ratio of such Issuer's Indebtedness to its Net Worth plus
accumulated depreciation and (f) whether such Securities are to be subject to
the limitations of clause (a) of the definition of Unencumbered Pool Value, and
if so, a calculation of the Cash Flow to Interest Ratio referred to in such
clause (a). Such notice must be accompanied by an Unencumbered Pool Certificate
setting forth on a pro forma basis the Unencumbered Pool Value assuming that
such Securities are Unencumbered Pool Securities, and if such Securities are
owned by a wholly-owned Subsidiary that is not already a Guarantor, the items
required to be delivered under Section 10.14. Promptly upon receipt of such
notice and Unencumbered Pool Certificate (but in any event within 3 Business
Days), Agent will forward copies of the same to Lenders. So long as such
Securities are Qualifying Securities, such Securities shall become Unencumbered
Pool Securities 10 Business Days following Agent's receipt of such notice,
Unencumbered Pool Certificate and the items, if any, required to be delivered
under Section 10.14.
SECTION 2.13. Termination of Designation as Unencumbered Pool Security;
---------------------------------------------------------
Release of Guarantors.
- ---------------------
(a) Generally. From time to time Borrower may request, by written notice
to Agent, that an Unencumbered Pool Security cease to be an Unencumbered Pool
Security. Together with such notice, Borrower shall deliver to Agent an
Unencumbered Pool Certificate setting forth on a pro forma basis the
Unencumbered Pool Value assuming that such Security is no longer an Unencumbered
Pool Security. Promptly upon receipt of such notice and Unencumbered Pool
Certificate (but in any event within 3 Business Days), Agent will forward copies
of the same to Lenders. So long as no Default (including any Default resulting
from a violation of Section 2.16.) or Event of Default shall have occurred and
be continuing both at the time of such request and immediately after giving
effect to such request, such Security shall cease to be an Unencumbered Pool
Security 10 Business Days following Agent's receipt of such notice and
Unencumbered Pool Certificate.
(b) Release of Guarantors. If a Guarantor no longer owns any Securities
that are Unencumbered Pool Securities, then upon the written request of Borrower
to Agent and so long as no Default or Event of Default shall have occurred and
be continuing, Agent shall release such Guarantor from the Guaranty. To
evidence such release, Agent agrees to execute and deliver, at the sole cost and
expense of Borrower, such instruments as Borrower may reasonably request.
SECTION 2.14. Notes.
-----
The obligation of Borrower to repay the Revolving Loans and the Term Loans
shall, in addition to this Agreement, be evidenced by the Revolving Notes.
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SECTION 2.15. Swingline Loans.
---------------
(a) Swingline Loans. Subject to the terms and conditions hereof, including
without limitation, Section 2.16., if necessary to meet Borrower's funding
deadline, Swingline Lender agrees to make Swingline Loans to Borrower, during
the period from the Effective Date to but excluding the Revolving Credit
Termination Date, in an aggregate principal amount at any one time outstanding
up to, but not exceeding, the amount of the Swingline Commitment. If at any
time the aggregate principal amount of the Swingline Loans outstanding at such
time exceeds the Swingline Commitment in effect at such time, Borrower shall
immediately pay to Agent for the account of Swingline Lender the amount of such
excess. Subject to the terms and conditions of this Agreement, Borrower may
borrow, repay and reborrow Swingline Loans hereunder. Except as otherwise
provided in Section 2.9., the borrowing of a Swingline Loan shall not constitute
usage of any Lender's Commitment for purposes of calculation of the fee payable
under Section 3.1.(a) or otherwise.
(b) Procedure for Borrowing Swingline Loans. Borrower shall give Agent and
Swingline Lender notice pursuant to a Notice of Swingline Borrowing delivered to
Agent and Swingline Lender no later than 9:00 a.m. on the proposed date of such
borrowing, provided that Borrower shall have given telephonic notice to Agent
and Swingline Lender no later than 9:00 a.m. on the proposed date of borrowing.
Any such telephonic notice shall include all information to be specified in a
written Notice of Swingline Borrowing. Not later than 11:00 a.m. on the date of
the requested Swingline Loan and subject to satisfaction of the applicable
conditions set forth in Article V. for such borrowing, Swingline Lender will
make the proceeds of such Swingline Loan available to Borrower in Dollars, in
immediately available funds, at the account specified by Borrower in the Notice
of Swingline Borrowing.
(c) Interest. Swingline Loans shall bear interest at a per annum rate
equal to (i) the Base Rate as in effect from time to time minus (ii) 1.60%, or
at such other rate or rates as Borrower and Swingline Lender may agree from time
to time in writing. Interest payable on Swingline Loans is solely for the
account of Swingline Lender. All accrued and unpaid interest on Swingline Loans
shall be payable on the dates and in the manner provided in Section 2.8. with
respect to interest on Base Rate Loans (except as Swingline Lender and Borrower
may otherwise agree in writing in connection with any particular Swingline
Loan).
(d) Swingline Loan Amounts, Etc. Each Swingline Loan shall be in the
minimum amount of $1,000,000 and integral multiples of $100,000 in excess
thereof, or such other minimum amounts agreed to by Swingline Lender and
Borrower. Any voluntary prepayment of a Swingline Loan must be in integral
multiples of $100,000 or the aggregate principal amount of all outstanding
Swingline Loans (or such other minimum amounts upon which Swingline Lender and
Borrower may agree) and in connection with any such prepayment, Borrower must
give Swingline Lender prior written notice thereof no later than 10:00 a.m. one
Business Day prior to the date of such prepayment. The Swingline Loans shall,
in addition to this Agreement, be evidenced by the Swingline Note.
(e) Repayment and Participations of Swingline Loans. Borrower agrees to
repay each Swingline Loan within one Business Day of demand therefor by
Swingline Lender and in any
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event, within 10 Business Days after the date such Swingline Loan was made.
Notwithstanding the foregoing, Borrower shall repay the entire outstanding
principal amount of, and all accrued but unpaid interest on, the Swingline Loans
on the Revolving Credit Termination Date (or such earlier date as Swingline
Lender and Borrower may agree in writing). In lieu of demanding repayment of any
outstanding Swingline Loan from Borrower, Swingline Lender may, on behalf of
Borrower (which hereby irrevocably directs Swingline Lender to act on its
behalf), request a borrowing of either Base Rate Loans or LIBOR Loans with a one
month Interest Period (as chosen by Agent in its sole discretion) from Lenders
in an amount equal to the principal balance of such Swingline Loan. Swingline
Lender shall give notice to Agent of any such borrowing of (x) Base Rate Loans
not later than 9:00 a.m. at least one Business Day prior to the proposed date of
such borrowing and (y) LIBOR Loans not later than 10:00 a.m. at least three
Business Days prior to the proposed date of such borrowing. Each Lender will
make available to Agent's Lending Office for the account of Swingline Lender, in
immediately available funds, the proceeds of the Loan to be made by such Lender.
Agent shall pay the proceeds of such Loans to Swingline Lender, which shall
apply such proceeds to repay such Swingline Loan. If Lenders are prohibited from
making Loans required to be made under this subsection for any reason
whatsoever, including without limitation, the occurrence of any of the Defaults
or Events of Default described in Sections 8.1.(h) or 8.1.(i), each Lender shall
purchase from Swingline Lender, without recourse or warranty, an undivided
interest and participation to the extent of such Lender's Pro Rata Share of such
Swingline Loan, by directly purchasing a participation in such Swingline Loan in
such amount and paying the proceeds thereof to Agent for the account of
Swingline Lender in Dollars and in immediately available funds. A Lender's
obligation to purchase such a participation in a Swingline Loan shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including without limitation, (i) any claim of setoff, counterclaim,
recoupment, defense or other right which such Lender or any other Person may
have or claim against Agent, the Swingline Lender or any other Person
whatsoever, (ii) the occurrence or continuation of a Default or Event of Default
(including without limitation, any of the Defaults or Events of Default
described in Sections 8.1.(h) or (i)) or the termination of any Lender's
Commitment, (iii) the existence (or alleged existence) of an event of condition
which has had or could have a Material Adverse Effect, (iv) any breach of any
Loan Document by Agent, any Lender or the Borrower or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided, however, a Lender shall not be obligated to purchase
such a participation in a Swingline Loan as provided above if, and only if, the
Swingline Lender made such Swingline Loan after having received written notice
from the Borrower or any Lender that an Event of Default had occurred and is
continuing, and in fact, such Event of Default had occurred and was continuing.
If such amount is not in fact made available to Swingline Lender by any Lender,
Swingline Lender shall be entitled to recover such amount on demand from such
Lender, together with accrued interest thereon for each day from the date of
demand thereof, at the Federal Funds Rate. If such Lender does not pay such
amount forthwith upon Swingline Lender's demand therefor, and until such time as
such Lender makes the required payment, Swingline Lender shall be deemed to
continue to have outstanding Swingline Loans in the amount of such unpaid
participation obligation for all purposes of the Loan Documents (other than
those provisions requiring the other Lenders to purchase a participation
therein). Further, such Lender shall be deemed to have assigned any and all
payments made of principal and interest on its Loans, and any other amounts due
to it hereunder, to Swingline Lender to fund Swingline Loans in the
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amount of the participation in Swingline Loans that such Lender failed to
purchase pursuant to this Section until such amount has been purchased (as a
result of such assignment or otherwise).
SECTION 2.16. Amount Limitations.
------------------
Notwithstanding any other term of this Agreement or any other Loan
Document, at no time may the aggregate principal amount of all outstanding
Revolving Loans, together with the aggregate principal amount of all outstanding
Swingline Loans, exceed the lesser of (a) the Available Loan Amount and (b) the
aggregate amount of the Commitments.
ARTICLE III. GENERAL LOAN PROVISIONS
SECTION 3.1. Fees.
----
(a) During the period from the Effective Date to but excluding the
Revolving Credit Termination Date, Borrower agrees to pay Agent for the account
of Lenders an unused facility fee equal to the portion of the daily amount by
which the aggregate amount of the Commitments exceeds the aggregate outstanding
principal balance of Revolving Loans set forth in the table below multiplied by
the corresponding per annum rate applicable to that portion:
<TABLE>
<CAPTION>
Portion of Amount by Which Commitments
Exceeds Revolving Loans Unused Fee
- --------------------------------------------------------------------------------
<S> <C>
$0 to and including $200,000,000 0.125%
- --------------------------------------------------------------------------------
Greater than $200,000,000 and less 0.15%
than or equal to $400,000,000
- --------------------------------------------------------------------------------
Greater than $400,000,000 0.20%
- --------------------------------------------------------------------------------
</TABLE>
Such fee shall be payable quarterly in arrears on the first day of each January,
April, July and October during the term of this Agreement and on the Revolving
Credit Termination Date. Borrower acknowledges that the commitment fees payable
hereunder are bona fide commitment fees and are intended as reasonable
compensation to Lenders for committing to make funds available to Borrower as
described herein and for no other purposes.
(b) If, pursuant to Section 2.10., Lenders grant an extension of the
Revolving Credit Termination Date, Borrower agrees to pay to Agent for the
account of each Lender consenting to such extension an extension fee equal to
one-tenth of one percent (0.10%) of such Lender's Commitment at such time. Such
fee shall be payable on the date on which Lenders grant such extension.
(c) If, pursuant to Section 2.11., the outstanding balance of Revolving
Loans is converted into Term Loans, Borrower agrees to pay to Agent for the
account of each Lender a conversion fee equal to two-tenths of one percent
(0.20%) per annum of the principal balance of the Term Loans outstanding on each
date such fee is payable. Such fee shall be payable on the first, second and
third anniversary dates of such conversion and shall be paid within 5 Business
Days of such anniversary date.
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(d) Borrower agrees to pay to Agent such fees for services rendered by
Agent as shall be separately agreed upon between Borrower and Agent.
SECTION 3.2. Computation of Interest and Fees.
--------------------------------
Interest on the Loans and all fees shall be computed on the basis of a year
of 360 days and paid for the actual number of days elapsed (including the first
day but excluding the last day of a period).
SECTION 3.3. Pro Rata Treatment.
------------------
Except to the extent otherwise provided herein: (a) each borrowing from
Lenders under Section 2.1. shall be made from Lenders, each payment of the fees
under Sections 3.1.(a) through 3.1.(c) shall be made for account of Lenders, and
each termination or reduction of the amount of the Commitments under Section
2.9. shall be applied to the respective Commitments of Lenders, pro rata
according to the amounts of their respective Commitments; (b) each payment or
prepayment of principal of Loans by Borrower shall be made for account of
Lenders pro rata in accordance with the respective unpaid principal amounts of
the Loans held by them, provided that if immediately prior to giving effect to
any such payment in respect of any Revolving Loans the outstanding principal
amount of the Revolving Loans shall not be held by Lenders pro rata in
accordance with their respective Commitments in effect at the time such Loans
were made, then such payment shall be applied to the Revolving Loans in such
manner as shall result, as nearly as is practicable, in the outstanding
principal amount of the Revolving Loans being held by Lenders pro rata in
accordance with their respective Commitments; (c) each payment of interest on
Loans by Borrower shall be made for account of Lenders pro rata in accordance
with the amounts of interest on such Loans then due and payable to the
respective Lenders; (d) the making, Conversion and Continuation of Revolving
Loans of a particular Type (other than Conversions provided for by Section 4.6.)
shall be made pro rata among Lenders according to the amounts of their
respective Commitments (in the case of making of Loans) or their respective
Loans (in the case of Conversions and Continuations of Loans) and the then
current Interest Period for each Lender's portion of each Loan of such Type
shall be coterminous; and (e) Lenders' participation in, and payment obligations
in respect of, Swingline Loans under Section 2.15., shall be pro rata in
accordance with their respective Commitments. All payments of principal,
interest, fees and other amounts in respect of the Swingline Loans shall be for
the account of Swingline Lender only (except to the extent any Lender shall have
acquired a participating interest in any such Swingline Loan pursuant to Section
2.15.(e)). Notwithstanding the immediately preceding clause (a), from the
Effective Date until the first date on which the amount of Wells Fargo's
Commitment first equals or is less than $77,500,000, (i) any reduction of the
aggregate unused amount of the Commitments requested by Borrower as permitted
under Section 3.3. shall be applied (x) first, to reduce the amount of Wells
Fargo's Commitment until the amount of such Commitment equals $77,500,000 and
(y) thereafter, to reduce the amounts of the Commitments of all Lenders
(including Wells Fargo) as provided in the immediately preceding clause (a); and
(ii) any prepayment or repayment of the principal balance of any Revolving Loans
made by, or required of, Borrower in connection with any such reduction shall be
applied to the Revolving Loans in such manner as shall result, as nearly as is
practicable, in the outstanding principal amount of the
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Revolving Loans being held by Lenders pro rata in accordance with their the
amount of their respective Commitments after giving effect to such reduction.
SECTION 3.4. Sharing of Payments, Etc.
------------------------
Borrower agrees that, in addition to (and without limitation of) any right
of set-off, bankers' lien or counterclaim a Lender may otherwise have, each
Lender shall be entitled, at its option, but only after having obtained the
prior written consent of Agent exercised in its sole discretion, to offset
balances held by it for the account of Borrower at any of such Lender's offices,
in Dollars or in any other currency, against any principal of, or interest on,
any of such Lender's Loans hereunder (or other Obligations owing to such Lender
hereunder) which is not paid when due after the expiration of any applicable
grace periods (regardless of whether such balances are then due to Borrower), in
which case such Lender shall promptly notify Borrower, all other Lenders and
Agent thereof; provided, however, such Lender's failure to give such notice
shall not affect the validity of such offset. If a Lender shall obtain payment
of any principal of, or interest on, any Loan under this Agreement, or shall
obtain payment on any other Obligation owing by Borrower through the exercise of
any right of set-off, banker's lien or counterclaim or similar right or
otherwise or through voluntary prepayments directly to a Lender or other
payments made by Borrower to a Lender not in accordance with the terms of this
Agreement and such payment, pursuant to the immediately preceding Section,
should be distributed pro rata to Lenders, such Lender shall promptly purchase
from the other Lenders participations in (or, if and to the extent specified by
such Lender, direct interests in) the Loans made by the other Lenders or other
Obligations owed to such other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all Lenders
shall share the benefit of such payment (net of any expenses which may be
incurred by such Lender in obtaining or preserving such benefit) in accordance
with their respective Pro Rata Shares. To such end, all Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored.
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans or other Obligations owed to such other Lenders made by
other Lenders may exercise all rights of set-off, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of Borrower.
SECTION 3.5. Defaulting Lenders.
------------------
If for any reason any Lender (a "Defaulting Lender") shall fail or refuse
to perform its obligations under this Agreement or any other Loan Document to
which it is a party within the time period specified for performance of such
obligation or, if no time period is specified, if such failure or refusal
continues for a period of ten Business Days after notice from Agent, then, in
addition to the rights and remedies that may be available to Agent or Borrower
under this Agreement or Applicable Law, such Defaulting Lender's right to
participate in the administration of the Loans, this Agreement and the other
Loan Documents, including without limitation, any right to vote in respect of,
to consent to or to direct any action or inaction of Agent or to be taken
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into account in the calculation of Majority Lenders or Supermajority Lenders,
shall be suspended during the pendency of such failure or refusal. If a Lender
is a Defaulting Lender because it has failed to make timely payment to Agent of
any amount required to be paid to Agent hereunder (without giving effect to any
notice or cure periods), in addition to other rights and remedies which Agent or
Borrower may have under the immediately preceding provisions or otherwise, Agent
shall be entitled (i) to collect interest from such Defaulting Lender on such
delinquent payment for the period from the date on which the payment was due
until the date on which the payment is made at the Federal Funds Rate, (ii) to
withhold or setoff and to apply in satisfaction of the defaulted payment and any
related interest, any amounts otherwise payable to such Lender under this
Agreement or any other Loan Document and (iii) to bring an action or suit
against such Lender in a court of competent jurisdiction to recover the
defaulted amount and any related interest. Any amounts received by Agent in
respect of a Defaulting Lender's Loans shall not be paid to such Defaulting
Lender and shall be held by Agent and either applied against the purchase price
of such Loans under Section 3.6. or paid to such Defaulting Lender upon the
Defaulting Lender's curing of its default.
SECTION 3.6. Purchase of Defaulting Lender's Pro Rata Share.
----------------------------------------------
(a) Any Lender who is not a Defaulting Lender shall have the right, but not
the obligation, in its sole discretion, to acquire all of a Defaulting Lender's
Commitment. If more than one Lender exercises such right, each such Lender
shall have the right to acquire an amount of such Defaulting Lender's Commitment
in proportion to the Commitments of the other Lenders exercising such right.
Upon any such purchase, the Defaulting Lender's interest in the Loans and its
rights hereunder (but not its liability in respect thereof or under the Loan
Documents or this Agreement to the extent the same relate to the period prior to
the effective date of the purchase) shall terminate on the date of purchase, and
the Defaulting Lender shall promptly execute all documents reasonably requested
to surrender and transfer such interest to the purchaser thereof, including an
appropriate Assignment and Acceptance Agreement and, notwithstanding Section
10.8.(c), shall pay to Agent an assignment fee in the amount of $6,000.
(b) The purchase price for the Commitment of a Defaulting Lender shall be
equal to the amount of the principal balance of the Loans outstanding and owed
by Borrower to the Defaulting Lender. Prior to payment of such purchase price
to a Defaulting Lender, Agent shall apply against such purchase price any
amounts retained by Agent pursuant to the last sentence of Section 3.5. The
Defaulting Lender shall be entitled to receive amounts owed to it by Borrower
under the Loan Documents which accrued prior to the date of the default by the
Defaulting Lender, to the extent the same are received by Agent from or on
behalf of Borrower. There shall be no recourse against any Lender or Agent for
the payment of such sums except to the extent of the receipt of payments from
any other party or in respect of the Loans.
SECTION 3.7. Usury.
-----
In no event shall the amount of interest due or payable on the Loans exceed
the maximum rate of interest allowed by Applicable Law and, in the event any
such payment is paid by Borrower or received by any Lender, then such excess sum
shall be credited as a payment of principal. It is the express intent of the
parties hereto that Borrower not pay and Lenders not
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receive, directly or indirectly, in any manner whatsoever, interest in excess of
that which may be lawfully paid by Borrower under Applicable Law.
SECTION 3.8. Agreement Regarding Interest and Charges.
----------------------------------------
THE PARTIES HERETO HEREBY AGREE AND STIPULATE THAT THE ONLY CHARGE IMPOSED
UPON BORROWER FOR THE USE OF MONEY IN CONNECTION WITH THIS AGREEMENT IS AND
SHALL BE THE INTEREST DESCRIBED IN SECTION 2.6. AND, WITH RESPECT TO SWINGLINE
LOANS, IN SECTION 2.15.(c). THE PARTIES HERETO FURTHER AGREE AND STIPULATE THAT
ALL OTHER CHARGES IMPOSED BY LENDERS AND AGENT ON BORROWER IN CONNECTION WITH
THIS AGREEMENT, INCLUDING ALL AGENCY FEES, FACILITY FEES, UNUSED FACILITY FEES,
EXTENSION FEES, UNDERWRITING FEES, DEFAULT CHARGES, LATE CHARGES, ATTORNEYS'
FEES AND REIMBURSEMENT FOR COSTS AND EXPENSES PAID BY AGENT OR ANY LENDER TO
THIRD PARTIES OR FOR DAMAGES INCURRED BY AGENT OR ANY LENDER, ARE CHARGES MADE
TO COMPENSATE AGENT OR ANY SUCH LENDER FOR UNDERWRITING OR ADMINISTRATIVE
SERVICES AND COSTS OR LOSSES PERFORMED OR INCURRED, AND TO BE PERFORMED OR
INCURRED, BY AGENT AND LENDERS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS AND SHALL UNDER NO CIRCUMSTANCES BE DEEMED TO BE CHARGES FOR THE
USE OF MONEY PURSUANT TO OFFICIAL CODE OF GEORGIA ANNOTATED SECTION 7-4-2 OR 7-
4-18. ALL CHARGES OTHER THAN CHARGES FOR THE USE OF MONEY SHALL BE FULLY EARNED
AND NONREFUNDABLE WHEN DUE.
SECTION 3.9. Statements of Account.
---------------------
Agent will account to Borrower monthly with a statement of Loans, charges
and payments made pursuant to this Agreement and the other Loan Documents, and
such account rendered by Agent shall be deemed final, binding and conclusive
upon Borrower absent demonstrable error. The failure of Agent or any Lender to
maintain or deliver such a statement of accounts shall not relieve or discharge
Borrower from its obligations hereunder.
SECTION 3.10. Agent's Reliance.
----------------
Neither Agent nor any Lender shall incur any liability to Borrower for
acting upon any telephonic notice permitted under this Agreement which Agent or
such Lender believes reasonably and in good faith to have been given by an
individual authorized to deliver a Notice of Borrowing, Notice of Conversion,
Notice of Continuation or Extension Request on behalf of Borrower.
SECTION 3.11. Foreign Lenders.
---------------
On or before the Effective Date, each Foreign Lender shall deliver to Agent
and Borrower (i) two valid, duly completed copies of IRS Form 1001 or 4224 or
successor applicable form, as the case may be, and any other required form,
certifying in each case that such Foreign Lender is
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entitled to receive payments under this Agreement and the Note payable to it
without deduction or withholding of any United States federal income taxes or
with such withholding imposed at a reduced rate (the "Reduced Rate"), and (ii)
if requested by Agent or Borrower, a valid, duly completed IRS Form W-8 or W-9
or successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each such Foreign Lender shall also
deliver to Agent and Borrower two further copies of such Form 1001 or 4224 and
W-8 or W-9, or successor applicable forms, or other manner of required
certification, as the case may be, on or before the date that any such form
previously delivered expires or becomes obsolete or otherwise is required to be
resubmitted as a condition to obtaining an exemption from a required withholding
of United States federal income tax or entitlement to having such withholding
imposed at the Reduced Rate or after the occurrence of any event requiring a
change in the most recent form previously delivered by such Foreign Lender to
Borrower and Agent, and such extensions or renewals thereof as may reasonably be
requested by Borrower and Agent, (i) in the case of a Form 1001 or 4224,
certifying that such Foreign Lender is entitled to receive payments under this
Agreement and the Note payable to it without deduction or withholding of any
United States federal income taxes, unless in any such case any change in a tax
treaty to which the United States is a party, or any change in any Applicable
Law of the United States of America or official interpretation thereof has
occurred after the Effective Date and prior to the date on which any such
delivery would otherwise be required that renders all such forms inapplicable or
that would prevent such Foreign Lender from duly completing and delivering any
such form with respect to it, and such Foreign Lender advises Borrower and Agent
that it is not capable of receiving payments without any deduction or
withholding at the Reduced Rate, or (ii) in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax.
ARTICLE IV. YIELD PROTECTION, ETC.
SECTION 4.1. Additional Costs; Capital Adequacy.
----------------------------------
(a) Additional Costs. Borrower shall promptly pay to Agent for the account
of a Lender from time to time such amounts as such Lender may reasonably
determine to be necessary to compensate such Lender for any costs incurred by
such Lender that it determines are attributable to its making or maintaining of
any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any
reduction in any amount receivable by such Lender under this Agreement or any of
the other Loan Documents in respect of any of such Loans or such obligation or
the maintenance by such Lender of capital in respect of its Loans or its
Commitment (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), in each such case resulting from any
Regulatory Change that: (i) changes the basis of taxation of any amounts
payable to such Lender under this Agreement or any of the other Loan Documents
in respect of any of such Loans or its Commitment (other than taxes imposed on
or measured by the overall net income of such Lender or of its Lending Office
for any of such Loans by the jurisdiction in which such Lender has its principal
office or such Lending Office); or (ii) imposes or modifies any reserve, special
deposit or similar requirements (including Regulation D of the Board of
Governors of the Federal Reserve System or other reserve requirement utilized in
the determination of the Adjusted Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender, or any commitment of such Lender (including,
without limitation, the Commitment of such Lender
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hereunder); or (iii) has or would have the effect of reducing the rate of return
on capital of such Lender to a level below that which such Lender could have
achieved but for such Regulatory Change (taking into consideration such Lender's
policies with respect to capital adequacy).
(b) Lender's Suspension of LIBOR Loans. Without limiting the effect of the
provisions of the immediately preceding subsection (a), if by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the interest rate on LIBOR Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets that it may hold, then, if such
Lender so elects by notice to Borrower (with a copy to Agent), the obligation of
such Lender to make or Continue, or to Convert any other Type of Loans into,
LIBOR Loans hereunder shall be suspended until such Regulatory Change ceases to
be in effect (in which case the provisions of Section 4.6. shall apply).
(c) Notification and Determination of Additional Costs. Each Lender agrees
to notify Borrower of any event occurring after the date hereof entitling such
Lender to compensation under any of the preceding subsections of this Section as
promptly as practicable; provided, however, subject to the last sentence of this
subsection, the failure of any Lender to give such notice shall not release
Borrower from any of its obligations hereunder. Such Lender agrees to furnish
to Borrower a certificate setting forth the basis and amount of each request by
such Lender for compensation under this Section. Determinations by Agent or any
Lender of the effect of any Regulatory Change shall be prima facie evidence of
the matters so certified. A Lender shall only be entitled to compensation under
the preceding subsection (a) as a result of events occurring during the 120-day
period ending on the date Borrower receives the notice described in the first
sentence of this subsection and if such Lender uses reasonable allocation and
attribution methods to determine such compensation.
SECTION 4.2. Suspension of LIBOR Loans.
-------------------------
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of LIBO Rate for any Interest Period:
(a) Agent reasonably determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the LIBO Rate
for such Interest Period, or
(b) Agent reasonably determines (which determination shall be
conclusive) that the LIBO Rate will not adequately and fairly reflect the
cost to Lenders of making or maintaining LIBOR Loans for such Interest
Period;
then Agent shall give Borrower and each Lender prompt notice thereof and,
so long as such condition remains in effect, Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Loans into LIBOR Loans and
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Borrower shall, on the last day of each current Interest Period for each
outstanding LIBOR Loan, either repay such Loan or Convert such Loan into a Base
Rate Loan.
SECTION 4.3. Illegality.
----------
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for any Lender to honor its obligation to make or maintain LIBOR Loans
hereunder, then such Lender shall promptly notify Borrower thereof (with a copy
to Agent) and such Lender's obligation to make or Continue, or to Convert Loans
of any other Type into, LIBOR Loans shall be suspended until such time as such
Lender may again make and maintain LIBOR Loans (in which case the provisions of
Section 4.6. shall be applicable).
SECTION 4.4. Compensation.
------------
Borrower shall pay to Agent for account of each Lender, upon the request of
such Lender through Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense that such Lender determines is attributable to: (a) any payment or
prepayment (whether mandatory or optional) of a LIBOR Loan, or Conversion of a
LIBOR Loan, made by such Lender for any reason (including, without limitation,
acceleration) on a date other than the last day of the Interest Period for such
Loan; or (b) any failure by Borrower for any reason (including, without
limitation, the failure of any of the applicable conditions precedent specified
in Article V. to be satisfied) to borrow a LIBOR Loan from such Lender on the
date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Loan or
Continue a LIBOR Loan on the requested date of such Conversion or Continuation.
Upon Borrower's request, any Lender requesting compensation under this Section
shall provide Borrower with a statement setting forth the basis for requesting
such compensation and the method for determining the amount thereof. Any such
statement shall be prima facie evidence of the matters stated therein.
SECTION 4.5. Affected Lenders.
----------------
If any Lender requests compensation pursuant to Section 4.1., or the
obligation of any Lender to make LIBOR Loans or to Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 4.1.(b) or
4.3., then, so long as there does not then exist any Default or Event of
Default, Borrower may (but shall not be obligated to) take either of the
following actions: (a) demand that such Lender (the "Affected Lender"), and upon
such demand the Affected Lender shall promptly, assign its Commitment to an
Eligible Assignee subject to and in accordance with the provisions of Section
10.8.(c) for a purchase price equal to the aggregate principal balance of Loans
then owing to the Affected Lender plus any accrued but unpaid interest thereon
and accrued but unpaid fees owing to the Affected Lender, or (b) pay to the
Affected Lender the aggregate principal balance of Loans then owing to the
Affected Lender plus any accrued but unpaid interest thereon and accrued but
unpaid fees owing to the Affected Lender, whereupon the Affected Lender shall no
longer be a party hereto or have any rights hereunder or under any of the other
Loan Documents. Agent and the Affected Lender may (but shall not be obligated
to) cooperate in effectuating the replacement of such Affected Lender under this
Section, but at no time shall Agent, such Affected Lender, or any other Lender
be obligated in
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any way whatsoever to initiate any such replacement or to assist in finding an
Assignee. The exercise by Borrower of its rights under this Section shall be at
Borrower's sole cost and expense and at no cost or expense to Agent, the
Affected Lender, or any of the other Lenders. The terms of this Section shall
not in any way limit Borrower's obligation to pay to any Affected Lender
compensation owing to such Affected Lender pursuant to Section 4.1.
SECTION 4.6. Treatment of Affected Loans.
---------------------------
If the obligation of any Lender to make LIBOR Loans or to Continue, or to
Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section
4.1.(b), 4.2. or 4.3., then such Lender's LIBOR Loans shall be automatically
Converted into Base Rate Loans on the last day(s) of the then current Interest
Period(s) for LIBOR Loans (or, in the case of a Conversion required by Section
4.1.(b) or 4.3., on such earlier date as such Lender may specify to Borrower
with a copy to Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Section 4.1., 4.2. or 4.3. that gave
rise to such Conversion no longer exist:
(a) to the extent that such Lender's LIBOR Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's LIBOR Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as LIBOR Loans shall be made or Continued instead as Base Rate Loans, and
all Base Rate Loans of such Lender that would otherwise be Converted into
LIBOR Loans shall remain as Base Rate Loans.
If such Lender gives notice to Borrower (with a copy to Agent) that the
circumstances specified in Section 4.1. or 4.3. that gave rise to the Conversion
of such Lender's LIBOR Loans pursuant to this Section no longer exist (which
such Lender agrees to do promptly upon such circumstances ceasing to exist) at a
time when LIBOR Loans made by other Lenders are outstanding, then such Lender's
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by Lenders
holding LIBOR Loans and by such Lender are held pro rata (as to principal
amounts, Types and Interest Periods) in accordance with their respective
Commitments.
SECTION 4.7. Change of Lending Office.
------------------------
Each Lender agrees that it will use reasonable efforts to designate an
alternate Lending Office with respect to any of its Loans affected by the
matters or circumstances described in Sections 4.1. or 4.3. to reduce the
liability of Borrower or avoid the results provided thereunder, so long as such
designation is not disadvantageous to such Lender as determined by such Lender
in its sole discretion, except that such Lender shall have no obligation to
designate a Lending Office located in the United States of America.
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ARTICLE V. CONDITIONS
SECTION 5.1. Initial Conditions to Loans.
---------------------------
The obligation of a Lender to make any Revolving Loan to Borrower, or the
Swingline Lender to make any Swingline Loan to Borrower, in each case in
accordance with the terms hereof, is subject to the condition precedent that
Borrower deliver to Agent each of the following, each of which shall be in form
and substance satisfactory to Agent:
(a) counterparts of this Agreement executed by each of the parties hereto;
(b) Revolving Notes executed by Borrower, payable to each Lender and
complying with the terms of Section 2.14., and the Swingline Note executed by
Borrower;
(c) the Guaranty executed by SC Realty Incorporated and any other wholly-
owned Subsidiary of Borrower initially to be a party thereto;
(d) an opinion of Mayer, Brown and Platt, counsel to Borrower and
Guarantors, and addressed to Agent and Lenders in substantially the form of
Exhibit J;
(e) an opinion of Alston & Bird LLP, counsel to Agent, and addressed to
Agent and Lenders in substantially the form of Exhibit K;
(f) the articles of incorporation of Borrower certified as of a recent date
by the Secretary of State of the State of Maryland;
(g) a Certificate of Good Standing with respect to Borrower issued as of a
recent date by the Secretary of State of the State of Maryland and certificates
of qualification to transact business or other comparable certificates with
respect to Borrower issued by each Secretary of State (and any state department
of taxation, as applicable) of each state in which Borrower is required to be so
qualified;
(h) a certificate of incumbency signed by the Secretary or Assistant
Secretary of Borrower with respect to each of the officers of Borrower
authorized to execute and deliver the Loan Documents to which Borrower is a
party and to execute and deliver Notices of Borrowing, Notices of Conversion,
Notices of Continuation and Notices of Swingline Borrowing;
(i) certified copies (certified by the Secretary or Assistant Secretary of
Borrower) of the by-laws of Borrower and of all corporate or other necessary
action taken by Borrower to authorize the execution, delivery and performance of
the Loan Documents to which it is a party;
(j) the Organizational Documents of each Guarantor certified as of a recent
date by the Secretary of State or other similar Governmental Authority of the
jurisdiction of its formation;
(k) a certificate of good standing or certificate of similar meaning with
respect to each Guarantor issued as of a recent date by the Secretary of State
of the State or other similar Governmental Authority of the respective
jurisdiction of its formation and certificates of
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qualification to transact business or other comparable certificates with respect
to each Guarantor issued by each Secretary of State or other similar
Governmental Authority (and any state department of taxation, as applicable) of
each state in which such Guarantor is required to be so qualified;
(l) a certificate of incumbency signed by the Secretary or Assistant
Secretary (or other individual performing similar functions) of each Guarantor
with respect to each of the officers of such Guarantor authorized to execute and
deliver the Loan Documents to which such Guarantor is a party;
(m) certified copies (certified by the Secretary or Assistant Secretary of
each Guarantor (or other individual performing similar functions)) of (i) the
by-laws of such Guarantor, if a corporation, the operating agreement, if a
limited liability company, the partnership agreement, if a limited or general
partnership, or other comparable document in the case of any other form of legal
entity and (ii) all corporate, partnership, member or other necessary action
taken by such Guarantor to authorize the execution, delivery and performance of
the Loan Documents to which it is a party;
(n) a Form FR U-1 and a Form FR G-3 executed by Borrower with respect to
all Unencumbered Pool Securities;
(o) an Unencumbered Pool Certificate calculated as of March 31, 1998; and
(p) such other documents and instruments as Agent, or any Lender through
Agent, may reasonably request.
SECTION 5.2. Conditions to All Loans.
The obligation of any Lender to make any Revolving Loan, and of Swingline
Lender to make any Swingline Loan, is subject to the condition precedent that
the following conditions be satisfied in the judgment of Agent:
(a) timely receipt by Agent of a Notice of Borrowing, or in the case of a
Swingline Loan, timely receipt by Swingline Lender of a Notice of Swingline
Borrowing;
(b) the proposed use of proceeds of such Loans set forth in the Notice of
Borrowing or Notice of Swingline Borrowing, as the case may be, is consistent
with the provisions of Section 7.11.;
(c) immediately before and after the making of such Revolving Loans or
Swingline Loan, no Default (including without limitation the existence of the
condition described in Section 2.8.(e)) or Event of Default shall have occurred
and be continuing; and
(d) the representations and warranties of Borrower and Guarantors
contained in the Loan Documents to which any is a party shall be true in all
material respects on and as of the date of such Revolving Loans or Swingline
Loan except to the extent (x) such representations or warranties specifically
relate to an earlier date or (y) such representations or warranties become
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untrue by reason of events or conditions otherwise permitted hereunder and the
other Loan Documents.
The delivery of each Notice of Borrowing and each Notice of Swingline Borrowing
and the making of each Loan shall constitute a certification by Borrower to
Agent, Swingline Lender and Lenders that the statements in the immediately
preceding clauses (b) through (d) are true.
SECTION 5.3. Conditions to Conversion to Term Loans.
The right of Borrower to convert Revolving Loans into Term Loans under
Section 2.11. is subject to the condition precedent that the following
conditions be satisfied in the judgment of Agent:
(a) timely receipt by Agent of the notice required under such Section;
(b) immediately prior to such conversion, no Default or Event of Default
shall have occurred and be continuing or would result after giving effect to
such conversion; and
(c) the representations and warranties of Borrower and Guarantors
contained in the Loan Documents to which any is a party shall be true in all
material respects on and as of the date of such conversion except to the extent
such representations or warranties specifically relate to an earlier date or
such representations or warranties become untrue by reason of events or
conditions otherwise permitted hereunder and the other Loan Documents.
The delivery of the notice required under such Section shall constitute a
certification by Borrower to Agent and Lenders that the statements in the
immediately preceding clauses (b) and (c) are true.
SECTION 5.4. Conditions as Covenants.
If Lenders make the initial Revolving Loan, or Swingline Lender makes the
initial Swingline Loan, prior to the satisfaction of all conditions precedent
set forth in Section 5.1., Borrower shall nevertheless cause such condition or
conditions to be satisfied within five Business Days after the date of the
making of such initial Revolving Loans or Swingline Loan.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and each Lender as follows:
SECTION 6.1. Existence and Power.
Each of Borrower and Guarantors is a corporation, partnership, trust or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation, and has all requisite power and
authority and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and is duly qualified and is
in good standing, and authorized to do business, in each jurisdiction in which
the character
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of its properties or the nature of its business requires such qualification or
authorization except where the failure to be so qualified or authorized would
not have a Materially Adverse Effect.
SECTION 6.2. Ownership Structure.
Schedule 6.2. correctly sets forth the corporate structure and ownership
interests of Borrower and all of its Consolidated Subsidiaries including the
correct legal name of Borrower and each such Subsidiary, and Borrower's relative
equity interest in each such Subsidiary.
SECTION 6.3. Authorization of Agreement, Notes, Loan Documents and
Borrowings.
Each of Borrower and Guarantors has the right and power, and has taken all
necessary action to authorize it, to borrow hereunder in the case of Borrower,
and to execute, deliver and perform the Loan Documents to which it is a party in
accordance with their respective terms and to consummate the transactions
contemplated hereby and thereby. Each of the Loan Documents to which Borrower or
any Guarantor is a party have been duly executed and delivered by the duly
authorized officers of Borrower or such Guarantor and each is a legal, valid and
binding obligation of Borrower or such Guarantor enforceable against Borrower or
such Guarantor in accordance with its respective terms, except as the same may
be limited by bankruptcy, insolvency, and other similar laws affecting the
rights of creditors generally and the availability of equitable remedies for the
enforcement of certain obligations (other than the payment of principal)
contained herein or therein may be limited by equitable principles generally.
SECTION 6.4. Compliance of Agreement, Notes, Loan Documents and Borrowing
with Laws, etc.
The execution, delivery and performance by Borrower or any Guarantor of the
Loan Documents to which Borrower or such Guarantor is a party in accordance with
their respective terms and the borrowing of Loans hereunder do not and will not,
by the passage of time, the giving of notice or otherwise (a) require any
Governmental Approval or violate any Applicable Law relating to Borrower or any
Guarantor the failure to possess or to comply with which would have a Materially
Adverse Effect; (b) conflict with, result in a breach of or constitute a default
under the Organizational Documents of Borrower or any Guarantor, or any
indenture, agreement or other instrument to which Borrower or any Guarantor is a
party or by which it or any of its properties may be bound and the violation of
which would have a Materially Adverse Effect; or (c) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by Borrower or any Guarantor other than Permitted
Liens.
SECTION 6.5. Compliance with Law; Governmental Approvals.
Each of Borrower and Guarantors is in compliance with each Governmental
Approval applicable to it and in compliance with all other Applicable Laws,
except for noncompliances which, and Governmental Approvals the failure to
possess which, would not, singly or in the aggregate, cause a Default or Event
of Default or have a Materially Adverse Effect and in respect of which (if
Borrower or such Guarantor, as applicable, has actual knowledge of such
Applicable
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Law or Governmental Approval) adequate reserves have been established on the
books of Borrower or such Guarantor, as applicable.
SECTION 6.6. Indebtedness and Guarantees.
Schedule 6.6. is a complete and correct listing of all Indebtedness and
Guarantees of Borrower as of the date hereof. Borrower has performed and is in
compliance with all of the terms of all Indebtedness of Borrower (including all
Guarantees of any Indebtedness) having an aggregate principal amount in excess
of $5,000,000, and all instruments and agreements relating thereto, and no
default or event of default, or event or condition which with the giving of
notice, the lapse of time or otherwise, would constitute such a default or event
of default, exists with respect to any such Indebtedness. As if the date hereof,
no Guarantor has any Indebtedness or Guarantees other than the Indebtedness
under the Guaranty and the other Loan Documents to which such Guarantor is a
party.
SECTION 6.7. Transactions with Affiliates.
Neither Borrower nor any Guarantor is a party to any transaction with any
Affiliate which is in violation of Section 7.14.(b).
SECTION 6.8. Absence of Defaults.
Neither Borrower nor any Guarantor is in default under its respective
Organizational Documents, and no event has occurred, which has not been
remedied, cured or waived (a) which constitutes a Default or an Event of
Default; or (b) which constitutes, or which with the passage of time, the giving
of notice or otherwise, would constitute, a default or event of default by
Borrower or any Guarantor under any material agreement (other than this
Agreement) or judgment, decree or order to which Borrower or any Guarantor is a
party or by which Borrower or any Guarantor or any of its properties may be
bound.
SECTION 6.9. Financial Information.
The consolidated balance sheet of Borrower as at December 31, 1997 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the fiscal year then ending, reported on by Arthur Andersen LLP,
copies of all of which have been delivered to Agent and Lenders, fairly present,
in conformity with generally accepted accounting principles, the financial
position of Borrower as of such date and its results of operations and cash
flows for such fiscal year and period. Since December 31, 1997 and with
reference to such date, there has been no material adverse change in the
financial position or results of operations of Borrower and its Consolidated
Subsidiaries taken as a whole.
SECTION 6.10. Litigation.
There is no action, suit or proceeding pending against, or to the knowledge
of Borrower threatened against or affecting, any Related Company before any
court or arbitrator or any Governmental Authority (a) which would reasonably be
expected to materially adversely affect
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the business, properties, financial position, results of operations or prospects
of Borrower or (b) which in any manner draws into question the validity of any
Loan Document.
SECTION 6.11. ERISA.
Neither Borrower nor any Guarantor maintains, nor has at any time
maintained, any Plan subject to the provisions of ERISA. Neither Borrower nor
any Guarantor is, and at no time has been, a member of any ERISA Group with any
Person that has at any time maintained any such Plan.
SECTION 6.12. Environmental Matters.
In the ordinary course of their business, the Related Companies conduct an
ongoing review of the effect of Environmental Laws on their business, operations
and properties, in the course of which they identify and evaluate associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, Borrower has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with Environmental
Laws, are unlikely to have a material adverse effect on the business, financial
condition, results of operations or prospects of Borrower and its Consolidated
Subsidiaries, considered as a whole.
SECTION 6.13. Taxes.
As of the date hereof, no United States Federal income tax returns of the
"affiliated group" (as defined in the Internal Revenue Code) of which Borrower
is a member have been examined and closed. The members of such affiliated group
have filed all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by or any of
them except for taxes being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established. The charges, accruals
and reserves on the books of Borrower in respect of taxes or other governmental
charges are, in the opinion of Borrower, adequate.
SECTION 6.14. Other Related Companies.
Each of the corporate Related Companies other than Borrower and the
Guarantors is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material Governmental Approvals required to carry on
its business as now conducted.
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SECTION 6.15. Not an Investment Company.
Neither Borrower nor any Guarantor is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 6.16. Full Disclosure.
All written information furnished by or on behalf of Borrower or any
Guarantor to Agent and Lenders for purposes of or in connection with this
Agreement and the other Loan Documents or any transaction contemplated hereby or
thereby is, and all such information (other than projections and other similar
forward-looking information) hereafter furnished by or on behalf of Borrower or
any Guarantor to Agent and Lenders will be true and accurate in all material
respects on the date as of which such information is stated or certified and
does not, and will not, fail to state any material facts necessary to make the
statements contained therein not misleading. All financial projections prepared
by or on behalf of Borrower or any Guarantor that have been or may hereafter be
made available to Agent or any Lender were or will be prepared in good faith
based on assumptions believed by management of Borrower to be reasonable.
Borrower has disclosed to Agent in writing any and all facts known to Borrower
which materially and adversely affect or may affect (to the extent Borrower can
now reasonably foresee), the business, operations or financial condition of
Borrower and its Consolidated Subsidiaries, taken as a whole, or the ability of
Borrower or any Guarantor to perform its obligations under the Loan Documents to
which it is a party.
SECTION 6.17. Insurance.
Schedule 6.17. sets forth a true and correct description of the insurance
coverage maintained by or on behalf of Borrower currently in effect.
SECTION 6.18. Not Plan Assets.
The assets of neither Borrower nor any Guarantor constitute "plan assets"
within the meaning of ERISA, the Internal Revenue Code and the respective
regulations promulgated thereunder, of any ERISA Plan or Non-ERISA Plan. The
execution, delivery and performance by Borrower and Guarantors of the Loan
Documents to which any is a party, and the borrowing and repayment of amounts
hereunder, do not and will not constitute "prohibited transactions" under ERISA
or the Internal Revenue Code.
SECTION 6.19. Sole Shareholder.
Borrower owns, directly or indirectly, all of the issued and outstanding
capital stock of each Guarantor.
SECTION 6.20. Unencumbered Pool Securities.
Each Security that is included in determinations of the Unencumbered Pool
Value satisfies all requirements of the definition of Qualifying Security that
are applicable to such Security.
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SECTION 6.21. Solvency.
(a) The fair value and the fair salable value of Borrower's assets
(excluding any Indebtedness due from any Affiliate of Borrower) are each in
excess of the fair valuation of Borrower's total liabilities (including all
contingent liabilities); and (b) Borrower is able to pay its debts or other
obligations in the ordinary course as they mature and (c) Borrower has capital
not unreasonably small to carry on its business and all business in which it
proposes to be engaged.
SECTION 6.22. Year 2000 Review.
Each of Borrower and Guarantors has reviewed its business and operations
and has developed a plan to address on a timely basis the risk that computer
applications used by it in performing date sensitive functions and involving
dates prior to December 31, 1999 and thereafter might fail to perform such
functions properly which failure would reasonably be expected to have a
Materially Adverse Effect.
ARTICLE VII. COVENANTS
Borrower agrees that, so long as Lenders have any Commitments hereunder or
any Obligation remains unpaid:
SECTION 6.23. Information.
Borrower will deliver to Agent:
(a) as soon as available and in any event within 95 days after the end of
each respective fiscal year of Borrower and any of its Subsidiaries the
financial statements of which are audited, a consolidated balance sheet of such
Person as of the end of such fiscal year and the related consolidated statements
of earnings, stockholders' equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on in a manner acceptable to Agent by independent public
accountants of nationally recognized standing (delivery by Borrower of its Form
10-K under subsection (f) below shall satisfy the requirements of this
subsection (a) to the extent such Form 10-K contains the items required to be
delivered under this subsection);
(b) as soon as available and in any event within 50 days after the end of
each of the first three fiscal quarters of each respective fiscal year of
Borrower and any of its Subsidiaries the financial statements of which are
audited, a balance sheet of such Person as of the end of such quarter and the
related statements of earnings, stockholders' equity and cash flows for such
quarter and for the portion of such Person's fiscal year ended at the end of
such quarter, setting forth in comparative form the figures for the
corresponding quarter and the corresponding portion of such Person's previous
fiscal year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, generally accepted accounting principles (subject to
absence of full footnote disclosures) and consistency by an Authorized
Representative of such Person (delivery by Borrower of its Form 10-Q under
subsection (f) below shall satisfy the requirements of this subsection (b) to
the extent such Form 10-Q contains the items required to be delivered under this
subsection);
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(c) simultaneously with the delivery of each set of financial statements
referred to in the immediately preceding clauses (a) and (b), a certificate of
an Authorized Representative of Borrower (i) setting forth in reasonable detail
the calculations required to establish whether Borrower was in compliance with
the requirements of Sections 7.7. and 7.14. on the date of such financial
statements, (ii) stating whether any Default or Event of Default exists on the
date of such certificate and, if any Default or Event of Default then exists,
setting forth the details thereof and the action which Borrower is taking or
proposes to take with respect thereto, (iii) setting forth a schedule of all
Contingent Obligations of Borrower as of the date of such financial statements,
and (iv) setting forth a schedule, in such form as may be reasonably
satisfactory to Agent, of information with respect to assets and liabilities of
Consolidated Subsidiaries of Borrower;
(d) as soon as possible and in any event within 5 days following the end of
each calendar month or promptly upon the reasonable request of Agent, an
Unencumbered Pool Certificate;
(e) within five days after any executive officer of Borrower obtains
knowledge of any Default or Event of Default, a certificate of an Authorized
Representative of Borrower setting forth the details thereof and the action
which Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent), reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and
all other periodic reports which Borrower or any of its Affiliates which it
directly or indirectly controls shall file with the Securities and Exchange
Commission (or any governmental agency substituted therefor) or any national
securities exchange;
(g) promptly upon the release thereof, copies of all press releases of
Borrower and any of its Affiliates which it directly or indirectly controls;
(h) promptly upon the mailing thereof to the shareholders of Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed;
(i) promptly upon obtaining knowledge thereof, a description in reasonable
detail of any action, suit or proceeding commenced or threatened against any of
the Related Companies which is reasonably likely to have a Materially Adverse
Effect;
(j) promptly upon the occurrence thereof, any material change in the senior
management of Borrower or any Guarantor;
(k) promptly upon the occurrence thereof, any amendment to the
Organizational Documents of Borrower or any Guarantor;
(l) promptly upon the filing thereof, the annual report of Borrower filed
with the Secretary of State of the State of Maryland;
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(m) promptly upon Agent's request, (i) amendments or other supplements to
any Form FR U-1 or Form FR G-3 delivered under this Agreement, (ii) new Forms FR
U-1 or Forms FR G-3, and (iii) such information regarding the Securities owned
by Borrower or any Guarantor as Agent may request;
(n) promptly upon any executive officer of Borrower obtaining knowledge
that an event or condition has occurred or exists which results in any
Unencumbered Pool Security ceasing to be eligible for qualification as an
Unencumbered Pool Security, notice of such event or condition; and
(o) from time to time such additional information regarding the financial
position or business of Borrower and its Subsidiaries as Agent or any Lender may
reasonably request.
Agent shall deliver to each Lender a copy of each item delivered to the Agent
under the immediately preceding subsections (a) through (n) promptly upon
receipt by Agent.
SECTION 7.2. Payment of Obligations.
Borrower will pay and discharge, and will cause each Subsidiary (other than
any Public Subsidiary) to pay and discharge, at or before maturity, all their
respective material obligations and liabilities, including, without limitation,
tax liabilities, except where the same may be contested in good faith by
appropriate proceedings unless the contest thereof would have a Materially
Adverse Effect on Borrower, and will maintain, and will cause each Subsidiary
(other than any Public Subsidiary) to maintain, in accordance with generally
accepted accounting principles, appropriate reserves for the accrual of any of
the same.
SECTION 7.3. Maintenance of Property; Insurance.
(a) Borrower will keep, and will cause each Subsidiary (other than any
Public Subsidiary) to keep, all property useful and necessary in its business in
good working order and condition, ordinary wear and tear and insured casualty
losses excepted.
(b) Borrower will maintain, and will cause each Subsidiary (other than any
Public Subsidiary) to maintain, (i) physical damage insurance on all real and
personal property on an all risks basis (including the perils of flood and
earthquake if located in designated flood and earthquake zones), covering the
repair and replacement cost of all such property and consequential loss coverage
for business interruption and extra expense (provided that the amount of such
insurance with respect to earthquakes need not exceed $15,000,000 for property
located in California), (ii) public liability insurance (including
products/completed operations liability coverage) in an amount not less than
$5,000,000 in primary coverage and $25,000,000 in umbrella coverage and (iii)
such other insurance coverage in such amounts and with respect to such risks as
is consistent with insurance maintained by businesses of comparable type and
size in the industry. All such insurance shall be provided by insurers having
an A.M. Best policyholders rating of not less than A-IX (with respect to
liability) and A-XI (with respect to property damage) or such other insurers as
Agent may approve in writing. Borrower will deliver to Agent (i) upon request
of Agent from time to time full information as to the insurance carried, (ii)
within five (5)
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days of receipt of notice from any insurer a copy of any notice of cancellation
or material change in coverage from that existing on the date of this Agreement
and (iii) forthwith, notice of any cancellation or nonrenewal of coverage by
Borrower.
(c) Except as otherwise permitted under Section 7.10., Borrower will, and
will cause each Subsidiary to, qualify and remain qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization and where
the failure to be so qualified or authorized would have a Materially Adverse
Effect on Borrower.
SECTION 7.4. Conduct of Business and Maintenance of Existence.
Except as otherwise permitted under Section 7.10., Borrower will continue,
and will cause each Subsidiary to continue, to engage in business of the same
general type as now conducted by Borrower and its Subsidiaries, and will
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect their respective
existence and their respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided that nothing in this
Section shall prohibit the dissolution of a Subsidiary (other than any
Guarantor) if (a) the Borrower's Board of Directors has determined that such
dissolution is in the best interest of Borrower, (b) such dissolution will not
be materially disadvantageous to Lenders and (c) such dissolution will not have
a Materially Adverse Effect.
SECTION 7.5. Compliance with Laws.
Borrower will comply, and cause each Subsidiary to comply, with all
Applicable Laws, including without limitation, all Environmental Laws and ERISA
and the rules and regulations thereunder, except where compliance therewith is
contested in good faith by appropriate proceedings or the failure to so comply
would not have a Materially Adverse Effect.
SECTION 7.6. Inspection of Property, Books and Records.
Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of Agent to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants in Borrower's presence prior to an
Event of Default, all at such reasonable times during business hours and as
often as may reasonably be desired and with reasonable notice so long as no
Event of Default shall have occurred and be continuing.
SECTION 7.7. Financial Covenants.
(a) Minimum Shareholders' Equity. Borrower shall not at any time permit
the Shareholders' Equity of Borrower and its Subsidiaries to be less than (i)
$1,892,924,780 plus (ii) 75% of the amount by which the Shareholders' Equity of
Borrower and its Consolidated Subsidiaries has been increased by the issuance
after December 31, 1997 of capital stock.
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(b) Ratio of Total Liabilities to Market Value Net Worth. Borrower shall
not at any time permit the ratio of (i) the Total Liabilities of Borrower and
its Consolidated Subsidiaries determined in accordance with generally accepted
accounting principles to (ii) the Market Value Net Worth of Borrower and its
Consolidated Subsidiaries to exceed 1.0 to 1.0.
(c) Ratio of Cash Flow to Fixed Charges. Borrower shall not permit the
ratio of (i) the Cash Flow of Borrower and its Consolidated Subsidiaries to (ii)
the Fixed Charges of Borrower and its Consolidated Subsidiaries to be less than
1.50 to 1.00 at the end of any fiscal quarter.
(d) Ratio of Secured Indebtedness to Market Value. Borrower shall not
permit the ratio of (i) the aggregate outstanding principal amount of
Indebtedness of Borrower and its Consolidated Subsidiaries that is secured in
any manner by any Lien on any property to (ii) the sum of the amounts in clause
(a) of the definition of Market Value Net Worth, to exceed 0.1 to 1.0 at any
time.
(e) Ratio of Unsecured Liabilities to Unencumbered Pool Value. Borrower
shall not permit the ratio of (i) the Unencumbered Pool Value to (ii) the
Unsecured Liabilities of Borrower and its Subsidiaries determined on a
consolidated basis, to be less than 1.75 to 1.00 at any time.
SECTION 7.8. Sales of Unencumbered Pool Securities and Securities of
Principal Companies.
Borrower shall not, and shall not permit any Guarantor to, sell, transfer,
convey or otherwise dispose of (a) any Unencumbered Pool Securities or (b) more
that 20% of the number of Securities of a Principal Company held by Borrower or
such Guarantor as of the date hereof (taking into account stock splits, share
dividends and other similar events effecting the number of shares of stock held
by a Person but no such Person's relative ownership position). Notwithstanding
the foregoing, Borrower and Guarantors may transfer securities of a Principal
Company and other Unencumbered Pool Securities to one another.
SECTION 7.9. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
Borrower will not, and will not cause or permit any Consolidated Subsidiary
(excluding any Strategic Investee Subsidiary) to, directly or indirectly, create
or otherwise cause or suffer to exist, or enter into any agreement with any
Person that would cause to become effective, any consensual encumbrance or
restriction of any kind, on the ability of any such Consolidated Subsidiary to
(a) pay dividends, in cash or otherwise, or make any other distribution on or in
respect of its capital stock or any other interest or participation in, or
measured by, its profits, to Borrower or any other Subsidiary, (b) pay any
Indebtedness owed to Borrower or any other Subsidiary, (c) make loans or
advances to, or guarantee any Indebtedness or other obligations of, Borrower or
any other Subsidiary or (d) transfer any of its property or assets to Borrower
or any other Subsidiary, except any encumbrance or restriction (i) existing
under any agreement governing the terms of or otherwise arising as a result of
purchase money Indebtedness for equipment or other goods acquired in the
ordinary course of business that only imposes
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encumbrances and restrictions on the goods so acquired; (ii) contained in any
agreement for the sale or disposition of the capital stock of or other equity
interest in, or assets of, any Subsidiary; provided, however, that such
encumbrances and restrictions described in this clause (ii) are only applicable
to such Subsidiary or assets, as applicable, and any such sale or disposition is
made in compliance with Section 7.10. to the extent applicable thereto; or (iii)
existing under any agreement that refinances or replaces the agreements
containing the encumbrance or restrictions in the foregoing clause (i);
provided, however, that the terms and conditions of any such restrictions
permitted under this clause (iii) are not materially less favorable to Lenders
than those under or pursuant to the agreement evidencing the Indebtedness
refinanced.
SECTION 7.10. Consolidations, Mergers and Sales of Assets.
Neither Borrower nor any of its Subsidiaries (other than any Public
Subsidiary) may (a) consolidate or merge with or into any other Person, (b)
sell, lease or otherwise transfer, directly or indirectly, and whether by one or
a series of related transactions, a substantial portion of any of its assets to
any other Person, or (c) purchase or otherwise acquire, directly or indirectly,
by one or a series of related transactions, all or substantially all of the
assets of, or outstanding capital stock of or other equity interest in, another
Person, except that (x) a Subsidiary (other than a Guarantor) may merge or
consolidate with another Person or sell, lease or otherwise transfer a
substantial portion of its assets to another Person, and (y) Borrower or a
Subsidiary may purchase or otherwise acquire, all or substantially all of the
assets of, or outstanding capital stock of or other equity interests in, another
Person, so long as (i) Borrower shall have given Agent at least 10 days prior
notice thereof, (ii) after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing, and Borrower shall have delivered to
Agent a certificate of an Authorized Representative of Borrower setting forth in
reasonable detail the calculations required to establish whether Borrower will
be in compliance with the requirements of Sections 7.7. and 7.14. after giving
pro forma effect thereto and (iii) in the case of a consolidation or merger, the
Person surviving such consolidation or merger will be a Subsidiary after giving
effect thereto.
SECTION 7.11. Use of Proceeds.
Borrower will use the proceeds of the initial borrowing of Revolving Loans
to repay or otherwise satisfy in full all principal, interest, accrued fees and
other obligations owing by SC Realty Incorporated under the Existing Credit
Agreement. Borrower will use the proceeds of all subsequent Loans made under
this Agreement only (a) to finance (i) the purchase by Borrower (directly, or
indirectly through wholly-owned Subsidiaries) of Securities issued by the
Principal Companies and by other Persons created by Borrower or specified by
Borrower consistent with the business objectives of Borrower and (ii) loans by
Borrower permitted under Section 7.15., and (b) for general corporate purposes,
in each case to the extent otherwise permitted hereunder, and for no other
purposes. Borrower will not use any proceeds of the Loans for the purpose of
purchasing or carrying any "margin stock" within the meaning of Regulations T, U
and X if such use would result in a violation by any party hereto of any of
Regulations T, U and X.
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SECTION 7.12. ERISA.
Borrower will not at any time maintain any Plan subject to the provisions
of ERISA and will not at any time be a member of any ERISA Group with any Person
that has at any time maintained any such Plan.
SECTION 7.13. Negative Pledge.
Borrower will not create, assume or suffer to exist any Lien on any of its
right, title or interest in or to (a) any capital stock of any Guarantor
(including any of Borrower's indirect ownership interest in such Guarantor) or
(b) any capital stock of or other equity interest in any of the Services
Subsidiaries.
SECTION 7.14. Restricted Payments; Agreements with Affiliates.
(a) Borrower shall not directly or indirectly declare or make, or incur any
liability to make, any Restricted Payments; provided, however, so long as no
Event of Default shall have occurred and be continuing (and would not result
from the occurrence of the following), Borrower may (i) pay cash dividends
during any periods of four consecutive fiscal quarters ending during the term of
this Agreement in an aggregate amount not to exceed 50% of Borrower's Cash Flow
Available for Distribution for such four fiscal quarter period and (ii)
notwithstanding the preceding clause (i), pay cash dividends to the holders of
the 257,642 shares of Borrower's Series B Cumulative Convertible Redeemable
Voting Preferred Stock currently issued and outstanding (the "Series B Shares"),
and any other securities into which the Series B Shares may be exchanged or
converted but only to the extent required to do so under the terms of the Series
B Shares as in effect on the date hereof; provided, further, however, if any
Event of Default other than any Event of Default described in Section 8.1.(a) or
(f) through (i) shall have occurred and be continuing, Borrower may pay cash
dividends to the holders of Series B Shares but only to the extent required to
do so under the terms of the Series B Shares as in effect on the date hereof.
(b) Borrower shall not, and shall not permit any of its Subsidiaries that
are not Public Subsidiaries to, enter into any transaction requiring such Person
to pay any amounts to or otherwise transfer property to, or pay any management
or other fees to, any Affiliate other than on terms and conditions substantially
as favorable to Borrower or such Subsidiary as would be obtainable at the time
in a comparable arm's-length transaction with a Person not an Affiliate.
SECTION 7.15. Loans to Other Persons.
Borrower shall not, and shall not permit any Guarantor to, make or permit
to be outstanding any loan or advance to any Person; provided, however, Borrower
may make loans to any Consolidated Subsidiary (excluding any Public Subsidiary)
of Borrower so long as no Default or Event of Default exists at the time of (or
would result from) the making of such loan. In addition to the foregoing,
Borrower and Guarantors may make loans and advances to employees for moving,
entertainment, travel and other similar expenses in the ordinary course of
business consistent with past practices.
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SECTION 7.16. ERISA Exemptions.
Borrower shall not permit any of its assets to become or be deemed to be
"plan assets" within the meaning of ERISA, the Internal Revenue Code and the
respective regulations promulgated thereunder, of any ERISA Plan or any Non-
ERISA Plan.
SECTION 7.17. Exchange Listing.
Borrower will maintain at least one class of common shares of Borrower
having trading privileges on the New York Stock Exchange or the American Stock
Exchange or which is listed on The NASDAQ Stock Market's National Market.
SECTION 7.18. Subsidiary Guaranties
Borrower will not cause or permit any Subsidiary, directly or indirectly,
to provide a Guarantee (an "Other Guarantee") of the payment of any Indebtedness
of Borrower or any Guarantor ("Other Indebtedness") unless such Subsidiary (a)
is a Guarantor or (b) simultaneously executes and delivers a guaranty of the
Obligations in form and substance satisfactory to Agent; provided, however, that
if such Other Indebtedness is (i) Indebtedness that is ranked pari passu in
right of payment with the Obligations or the guaranty of such Subsidiary, as the
case may be, the such guaranty of such Subsidiary shall be pari passu in right
of payment with the Other Guarantee; or (ii) Indebtedness subordinated in right
of payment to the Obligations (or any guaranty by a Subsidiary thereof), the
guaranty by such Subsidiary shall be senior in right of payment to the Other
Guarantee (which shall provide that such Other Guarantee is subordinated to the
guaranty of such Subsidiary to the same extent and in the same manner as the
Other Indebtedness is subordinated to the Obligations or the guaranty of such
Subsidiary thereof, as the case may be).
SECTION 7.19. Covenants Regarding Guarantors.
(a) Indebtedness and Accounts Payable. Borrower will not permit Guarantors
to incur, assume or suffer to exist any of the following (determined on a
collective basis): (i) accounts payable in excess of $10,000,000 in the
aggregate at any time outstanding and (ii) any Indebtedness other than:
(x) Indebtedness under the Guaranty and, subject to compliance with
Section 7.18., under Guarantees of senior unsecured long term Indebtedness
of Borrower so long as such Indebtedness so Guaranteed is of a type
described in clause (a) or (b) of the definition of Indebtedness; and
(y) Indebtedness represented by declared but unpaid dividends.
(b) Asset Transfers. Borrower will not permit any Guarantor to sell,
transfer or otherwise convey any of its assets other than:
(x) sales and transfers of Securities of Principal Companies and other
Unencumbered Pool Securities to the extent permitted under Section 7.8.;
and
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(y) transfers of assets to Borrower, any other Guarantor and any other
Subsidiaries of Borrower so long as, in the case of transfers other than to
Borrower or another Guarantor, (1) no Default or Event of Default shall
have occurred and be continuing or would result from such transfer and (2)
the Indebtedness and accounts payable of Borrower's Subsidiaries would not,
in the aggregate, exceed the limitations on Indebtedness and accounts
payable of Guarantors under the immediately preceding subsection (a) if
such limitations were applicable to all of Borrower's Subsidiaries.
(c) Independent Director. As of the date hereof, SC Realty Incorporated's
Independent Director (as defined in such Guarantor's articles of incorporation)
is James R. Wilcox. Borrower shall cause such Guarantor to pay such Independent
Director a director's fee not greater than comparable fees received by
independent directors of entities similar to such Guarantor engaging in
comparable activities with similar risks. Borrower will not permit such
Guarantor to permit such Independent Director to be a trustee in bankruptcy for
Borrower.
(d) Compliance with and Amendment of Charter or Bylaws. Borrower shall
cause each Guarantor to (a) comply with the terms of its Organizational
Documents and (b) not amend, supplement, restate or otherwise modify any of the
terms of its Organizational Documents.
ARTICLE VIII. DEFAULTS
SECTION 8.1. Events of Default.
If one or more of the following events shall have occurred and be
continuing:
(a) Borrower shall fail to pay within 1 Business Day of the due date
thereof any principal of any Obligation, or shall fail to pay within 3 Business
Days of the due date thereof any interest owing on any Obligation, or shall fail
to pay within 10 Business Days of the due date thereof any fees or other
Obligation;
(b) Borrower shall fail to observe or perform any covenant or agreement
contained in Section 7.1.(e), Section 7.10., Section 7.13. (if, in the case of
such Section 7.13., such failure was willful or intentional), Section
7.19.(a)(ii), Section 7.19.(c) or Section 7.19.(d);
(c) Borrower shall fail to observe or perform any covenant or agreement
contained in this Agreement (other than those covered by the immediately
preceding clause (a) or (b)) for a period of 30 days after written notice
thereof from Agent has been received by Borrower;
(d) An Event of Default under and as defined in any Loan Document shall
occur and be continuing or Borrower or any Guarantor shall fail to observe or
perform any covenant or agreement contained in any of the Loan Documents to
which it is a party (other than those expressly covered by any other clause of
this Section 8.1.) and such failure shall continue beyond any applicable period
of grace;
(e) any representation, warranty, certification or statement made or deemed
made (i) by or on behalf of Borrower in this Agreement or in any certificate,
financial statement or other Loan Document to which it is a party delivered
pursuant to this Agreement or any other Loan
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Document, or (ii) by or on behalf of any Guarantor in the Guaranty, or in any
certificate, financial statement or other Loan Document to which it is a party
delivered pursuant to this Agreement or any other Loan Document, shall prove to
have been incorrect or misleading in any material respect when made or deemed
made;
(f) Borrower or any Guarantor shall fail to make any payment in respect of
any of its Indebtedness (other than the Obligations) having an aggregate
outstanding principal balance in excess of $25,000,000 in the case of Borrower
or $10,000,000 in the case of a Guarantor, when due and such failure shall
continue beyond any applicable grace period;
(g) the maturity of any Indebtedness of Borrower or any Guarantor in an
aggregate principal amount in excess of $25,000,000 in the case of Borrower or
$10,000,000 in the case of a Guarantor, shall have been (i) accelerated in
accordance with the provisions of any indenture, contract or instrument
providing for the creation of or concerning such Indebtedness or (ii) required
to be prepaid in full prior to the stated maturity thereof;
(h) Borrower, any Guarantor or any Issuer of a Qualifying Security shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced against
Borrower, any Guarantor or any Issuer of a Qualifying Security seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property and such
involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered against any such
Person under the federal bankruptcy laws as now or hereafter in effect;
(j) a judgment or order for the payment of money in excess of $25,000,000
with respect to Borrower or $10,000,000 with respect to any Guarantor shall be
rendered against Borrower or a Guarantor and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 consecutive days;
(k) during any period of twelve consecutive calendar months, individuals
who were directors of Borrower or a Guarantor on the first day of such period
shall cease to constitute a majority of the board of directors of Borrower or
such Guarantor, as applicable; provided, however, that the directors of Borrower
or a Guarantor, as applicable, may include any new director that (i) is an
officer, director or employee of a Related Company or (ii) is required in order
(as a practical matter) for the composition of the board of directors of
Borrower or such
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Guarantor, as applicable, to comply with any provision of the Organizational
Documents of Borrower or such Guarantor, as applicable, regarding independent
directors;
(l) if a change in the management of Borrower or a Guarantor has occurred
there shall have occurred without the consent of Agent within 10 days of such
change any adverse change reasonably deemed material by Agent in the identity of
persons constituting management of Borrower or such Guarantor, as applicable;
(m) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person will be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is exercised immediately or only after the passage of time), directly
or indirectly, of more than 25% of the total voting power of the then
outstanding voting stock of Borrower;
(n) the assets of Borrower or any Guarantor at any time constitute assets,
within the meaning of ERISA, the Internal Revenue Code and the respective
regulations promulgated thereunder, of any ERISA Plan or Non-ERISA Plan;
(o) Any Guarantor shall, or shall attempt to, disavow, revoke or terminate
the Guaranty or its obligations thereunder; or
(p) Borrower shall cease to own, directly or indirectly, all of the issued
and outstanding capital stock of each Guarantor.
SECTION 8.2. Remedies.
Upon the occurrence of an Event of Default, and in every such event, Agent
shall, upon the direction of the Supermajority Lenders, (i) by notice to
Borrower terminate the Commitments, which shall thereupon terminate, and (ii) by
notice to Borrower declare the Loans and all other Obligations to be, and the
Loans and all other Obligations shall thereupon become, immediately due and
payable without presentment, demand, protest or notice of intention to
accelerate, all of which are hereby waived by Borrower. If Agent has exercised
any of the rights provided under the preceding sentence, Swingline Lender shall:
(x) declare the principal of, and accrued interest on, the Swingline Loans and
the Swingline Note at the time outstanding, and all of the other Obligations
owing to Swingline Lender, to be forthwith due and payable, whereupon the same
shall immediately become due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived by Borrower and (y)
terminate the Swingline Commitment and the obligation of Swingline Lender to
make Swingline Loans. Notwithstanding the foregoing, upon the occurrence of any
of the Events of Default specified in clause (h) or (i) above, without any
notice to Borrower or any other act by Agent, the Commitments and the Swingline
Commitment shall thereupon immediately and automatically terminate and the Loans
and all other Obligations shall become immediately due and payable without
presentment, demand, protest, notice of intention to accelerate or notice of
acceleration, or other notice of any kind, all of which are hereby waived by
Borrower. In addition upon the occurrence of an Event
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of Default, the Supermajority Lenders may direct Agent to, and Agent if so
directed shall, instruct Borrower to cease making Investments and upon receipt
of any such instruction Borrower shall cease to do so. Not in limitation of the
foregoing, upon the occurrence of an Event of Default, the Supermajority Lenders
may direct Agent to, and Agent if so directed shall, exercise any and all of its
rights under any and all of the other Loan Documents and under Applicable Law.
SECTION 8.3. Allocation of Proceeds.
If an Event of Default shall have occurred and be continuing and maturity
of any of the Obligations has been accelerated, all payments received by Agent
under any of the Loan Documents, in respect of any principal of or interest on
the Obligations or any other amounts payable by Borrower hereunder or
thereunder, shall be applied in the following order and priority:
(a) amounts due to Agent, and Lenders in respect of Fees and expenses due
under Sections 3.1. and 10.3., ratably in accordance with the amounts then
payable;
(b) payments of interest on Swingline Loans;
(c) payments of principal on Swingline Loans;
(d) payments of interest on Loans, to be applied for the ratable benefit of
Lenders;
(e) payments of principal of Loans, to be applied for the ratable benefit
of Lenders;
(f) amounts due to Agent and Lenders pursuant to Sections 9.6. and 10.5.;
(g) payments of all other amounts due under any of the Loan Documents, if
any, to be applied for the ratable benefit of Lenders; and
(h) any amount remaining after application as provided above, shall be paid
to Borrower or whomever else may be legally entitled thereto.
SECTION 8.4. Recision of Acceleration by Supermajority Lenders.
If at any time after acceleration of the maturity of the Obligations,
Borrower shall pay all arrears of interest and all payments on account of
principal of the Obligations which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by
Applicable Law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Defaults (other than nonpayment of principal of
and accrued interest on the Obligations due and payable solely by virtue of
acceleration) shall be remedied or waived to the satisfaction of the
Supermajority Lenders, then by written notice to Borrower, the Supermajority
Lenders may elect, in the sole discretion of such Supermajority Lenders, to
rescind and annul the acceleration and its consequences; but such action shall
not affect any subsequent Default or Event of Default or impair any right or
remedy consequent thereon. The provisions of the preceding sentence are intended
merely to bind the Lenders to a decision which may be made at the election of
the Supermajority Lenders; they are not intended to benefit Borrower and do not
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give Borrower the right to require the Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are satisfied.
ARTICLE IX. THE AGENT
SECTION 9.1. Appointment and Authorization.
Each Lender hereby appoints and authorizes Agent to take such action as
contractual representative on its behalf and to exercise such powers under the
Loan Documents as are delegated to Agent by the terms thereof, together with all
such powers as are reasonably incidental thereto. Borrower shall be entitled to
rely conclusively upon a written notice or written response from Agent as being
made pursuant to the requisite concurrence or consent of Lenders necessary to
take such action without investigation or otherwise contacting Lenders
hereunder. Nothing herein shall be construed to deem Agent a trustee for any
Lender nor to impose on Agent duties or obligations other than those expressly
provided for herein. Not in limitation of the foregoing, each Lender agrees
Agent has no fiduciary obligations to such Lender under this Agreement, any
other Loan Document or otherwise. At the request of a Lender, Agent will forward
to each Lender copies or, where appropriate, originals of the documents
delivered to Agent pursuant to Section 5.1. The Agent will also furnish to any
Lender, upon the request of such Lender, a copy of any certificate or notice
furnished to Agent by Borrower pursuant to this Agreement or any other Loan
Document not already delivered to such Lender pursuant to the terms of this
Agreement or any such other Loan Document. As to any matters not expressly
provided for by the Loan Documents (including, without limitation, enforcement
or collection of the Notes), Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, and such instructions shall be
binding upon all Lenders and all holders of Notes; provided, however, that Agent
shall not be required to take any action which exposes Agent to personal
liability or which is contrary to this Agreement or any other Loan Document or
Applicable Law. Not in limitation of the foregoing, Agent shall not exercise any
right or remedy it or Lenders may have under any Loan Document upon the
occurrence of a Default or an Event of Default unless the Supermajority Lenders
have so directed Agent to exercise such right or remedy. Agent shall not be
deemed to have knowledge or notice of the occurrence of a Default or Event of
Default unless Agent has actual knowledge of such Default or Event of Default.
In the event that Agent has actual knowledge of the occurrence of a Default or
Event of Default, Agent shall give prompt notice thereof to Lenders. Each Lender
authorizes and directs Agent to enter into the Loan Documents for the benefit of
Lenders. Each Lender hereby agrees that, except as otherwise set forth herein,
any action taken by the Majority Lenders or the Supermajority Lenders, as
applicable, in accordance with the provisions of this Agreement or the Loan
Documents, and the exercise by the Majority Lenders or the Supermajority
Lenders, as applicable, of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of Lenders.
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SECTION 9.2. Agent and Affiliates.
Wells Fargo, as a Lender, shall have the same rights and powers under this
Agreement and any other Loan Document as any other Lender and may exercise the
same as though it were not Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include Wells Fargo in each case in its
individual capacity. Wells Fargo and its affiliates and the other Lenders and
their respective affiliates may each accept deposits from, maintain deposits or
credit balances for, invest in, lend money to, act as trustee under indentures
of, and generally engage in any kind of business with Borrower, any Related
Company and any Affiliate of Borrower and any Related Company as if Wells Fargo
or such Lender were any other bank and without any duty to account therefor to
the other Lenders.
SECTION 9.3. Approvals of Lenders.
All communications from Agent to any Lender requesting such Lender's
determination, consent, approval or disapproval (a) shall be given in the form
of a written notice to such Lender, (b) shall be accompanied by a description of
the matter or thing as to which such determination, approval, consent or
disapproval is requested, or shall advise such Lender where such matter or thing
may be inspected, or shall otherwise describe the matter or issue to be
resolved, (c) shall include, if reasonably requested by such Lender and to the
extent not previously provided to such Lender, written materials and a summary
of all oral information provided to Agent by Borrower or any Guarantor in
respect of the matter or issue to be resolved, and (d) shall include Agent's
recommended course of action or determination in respect thereof. Each Lender
shall reply promptly, but in any event within fifteen Business Days (or such
lesser period as may be required under the Loan Documents for Agent to respond).
Unless a Lender shall give written notice to Agent that it objects to the
recommendation or determination of Agent (together with a written explanation of
the reasons behind such objection) within the applicable time period for reply,
such Lender shall be deemed to have conclusively approved of or consented to
such recommendation or determination.
SECTION 9.4. Consultation with Experts.
Agent may consult with legal counsel (who may be counsel for Borrower or a
Guarantor), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
SECTION 9.5. Liability of Agent.
Neither Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
not taken by Agent in connection with any of the Loan Documents in the absence
of its own gross negligence or willful misconduct. Neither Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(a) any statement, warranty or representation made in connection with any of the
Loan Documents, or any borrowing hereunder, (b) the performance or observance of
any of the covenants or agreements
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of Borrower or a Guarantor, (c) the satisfaction of any condition specified in
Article V., or (d) the validity, effectiveness or genuineness of any of the Loan
Documents or any other instrument or writing furnished in connection herewith or
therewith. Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.
SECTION 9.6. Indemnification of Agent.
Lenders agree to indemnify Agent (to the extent not reimbursed by Borrower
and without limiting the obligation of Borrower to do so) in accordance with
Lenders' respective Pro Rata Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of the Loan Documents or any action taken or omitted by Agent under
the Loan Documents; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (i) to the extent arising
from Agent's gross negligence or willful misconduct or (ii) if Agent fails to
follow the written direction of the Majority Lenders unless such failure is
pursuant to Agent's good faith reliance on the advice of counsel of which
Lenders have received notice. Without limiting the generality of the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including counsel fees) incurred by Agent in
connection with the preparation, execution, administration, or enforcement of,
or legal advice with respect to the rights or responsibilities of the parties
under, the Loan Documents, to the extent that Agent is not reimbursed for such
expenses by Borrower. The agreements in this Section shall survive the payment
of the Loans and all other amounts payable hereunder or under the other Loan
Documents and the termination of this Agreement.
SECTION 9.7. Credit Decision.
Each Lender expressly acknowledges that neither Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or other affiliates
has made any representations or warranties to such Lender and that no act by
Agent hereinafter taken, including any review of the affairs of Borrower or
Guarantors, shall be deemed to constitute any representation or warranty by
Agent to any Lender. Each Lender acknowledges that it has, independently and
without reliance upon Agent, any other Lender or counsel to Agent, and based on
the financial statements of Borrower or Guarantors and its affiliates, its
review of the Loan Documents, the legal opinions required to be delivered to it
hereunder, the advice of its own counsel and such other documents and
information as it has deemed appropriate, made its own credit and legal analysis
and decision to enter into this Agreement and the transaction contemplated
hereby. Each Lender also acknowledges that it will, independently and without
reliance upon Agent, any other Lender or counsel to Agent, and based on such
review, advice, documents and information as it shall deem appropriate at the
time, continue to make its own decisions in taking or not taking action under
the Loan Documents. Except for notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder, Agent shall have no duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property,
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financial and other condition or creditworthiness of Borrower, any Guarantor,
any other Related Company or any other Affiliate thereof which may come into
possession of Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or other affiliates.
SECTION 9.8. Successor Agent.
Agent may resign at any time by giving 30 days' prior written notice
thereof, to Lenders and Borrower. Agent may be removed as Agent under the Loan
Documents for good cause upon 30 days' prior written notice to Agent by the
Supermajority Lenders. Upon any such resignation or removal, the Supermajority
Lenders shall have the right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Supermajority Lenders, and shall have
accepted such appointment, within 30 days after the current Agent's giving of
notice of resignation or the Supermajority Lenders' removal of the current
Agent, then the current Agent may, on behalf of Lenders, appoint a successor
Agent, which shall be a Lender, if any Lender shall be willing to serve. Any
successor Agent must be a bank (a) whose debt obligations (or whose parent's
debt obligations) are rated not less than investment grade or its equivalent by
Moody's or not less than investment grade or its equivalent by S&P, (b) which
has total assets in excess of $10,000,000,000 and (c) so long as no Default or
Event of Default shall have occurred and be continuing, reasonably acceptable to
Borrower. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the current Agent, and the current
Agent shall be discharged from its duties and obligations hereunder. The current
Agent shall at the expense of Borrower execute and deliver to such successor
Agent such instruments of transfer as may be reasonably necessary to accomplish
such succession. After any current Agent's resignation hereunder as Agent, the
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent.
SECTION 9.9. Documentation Agent.
The Documentation Agent in such capacity, assumes no responsibility or
obligation hereunder, including, without limitation, for servicing, enforcement
or collection of any of the Loans, nor any duties as an agent hereunder for
Lenders. The title of "Documentation Agent" is solely honorific and implies no
fiduciary responsibility on the part of the Documentation Agent, in its capacity
as such, to Agent, Borrower or any Lender and the use of such title does not
impose on the Documentation Agent any duties or obligations greater than those
of any other Lender or entitle the Documentation Agent to any rights other than
those to which any other Lender is entitled.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. Notices.
All notices, requests and other communications to any party under the Loan
Documents shall be in writing (including bank wire, facsimile transmission or
similar writing) and shall be given to such party as follows:
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If to Borrower:
Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Attention: Jeffrey A. Klopf
Telecopier: (505) 988-8920
Telephone: (505) 982-9292
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: J. Paul Forrester
Telecopier: (312) 701-7711
Telephone: (312) 701-7366
If to a Lender or Agent:
To such Lender's or Agent's Lending Office
or as to each party at such other address as such party shall designate in a
written notice to the other parties. Each such notice, request or other
communication shall be effective (a) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (b) if given by any other means (including facsimile),
when delivered at the applicable address provided for in this Section; provided
that notices to Agent under Article II., and any notice of a change of address
for notices, shall not be effective until received. In addition to the Agent's
Lending Office, Borrower shall send copies of the information described in
Section 7.1. to the following address of Agent:
Wells Fargo Bank, National Association
Real Estate Group
Koll Center
2030 Main Street, Suite 800
Irvine, California 92714
Attention: Ms. Debra Autry
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SECTION 10.2. No Waivers.
No failure or delay by Agent or any Lender in exercising any right, power
or privilege under any Loan Document shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided in the Loan Documents shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 10.3. Expenses.
Borrower will pay on demand all present and future reasonable expenses of:
(a) Agent in connection with the negotiation, preparation, execution,
delivery and administration (including reasonable out-of-pocket costs and
expenses incurred in connection with the assignment of Commitments pursuant to
Section 10.8.) of this Agreement, the Notes and each of the other Loan
Documents, whenever the same shall be executed and delivered, including
appraisers' fees, search fees, recording fees and the reasonable fees and
disbursements of: (i) Alston & Bird LLP, counsel for Agent, and (ii) each local
counsel retained by Agent;
(b) Agent in connection with the negotiation, preparation, execution and
delivery of any waiver, amendment or consent by Agent or any Lender relating to
this Agreement, the Notes or any of the other Loan Documents or sales of
participations in any Lender's Commitment, including the reasonable fees and
disbursements of counsel to Agent;
(c) Agent and each of Lenders in connection with any restructuring,
refinancing or "workout" of the transactions contemplated by this Agreement, the
Notes and the other Loan Documents, including the reasonable fees and
disbursements of counsel to Agent actually incurred;
(d) Agent and each of Lenders, after the occurrence of a Default or Event
of Default, in connection with the collection or enforcement of the obligations
of Borrower or any Guarantor under this Agreement, the Notes or any other Loan
Document, including the reasonable fees and disbursements of counsel to Agent or
to any Lender actually incurred if such collection or enforcement is done by or
through an attorney;
(e) Subject to any limitation contained in Section 10.5., Agent and each of
Lenders in connection with prosecuting or defending any claim in any way arising
out of, related to, or connected with this Agreement, the Notes or any of the
other Loan Documents, including the reasonable fees and disbursements of counsel
to Agent or any Lender actually incurred and of experts and other consultants
retained by Agent or any Lender in connection therewith;
(f) Agent and each of Lenders, after the occurrence of a Default or Event
of Default, in connection with the exercise by Agent or any Lender of any right
or remedy granted to it under this Agreement, the Notes or any of the other Loan
Documents including the reasonable fees and disbursements of counsel to Agent or
any Lender actually incurred; and
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(g) Agent and each of Lenders, to the extent not already covered by any of
the preceding subsections, in connection with any bankruptcy or other proceeding
of the type described in Sections 8.1.(h) or (i), and the reasonable fees and
disbursements of counsel to Agent and any Lender actually incurred in connection
with the representation of Agent or such Lender in any matter relating to or
arising out of any such proceeding, including without limitation (i) any motion
for relief from any stay or similar order, (ii) the negotiation, preparation,
execution and delivery of any document relating to Agent or such Lender and
(iii) the negotiation and preparation of any plan of reorganization of Borrower
or any Guarantor, whether proposed by Borrower or such Guarantor, Lenders or any
other Person, and whether such fees and expenses are incurred prior to, during
or after the commencement of such proceeding or the confirmation or conclusion
of any such proceeding.
SECTION 10.4. Stamp, Intangible and Recording Taxes.
Borrower will pay any and all stamp, intangible, registration, recordation
and similar taxes, fees or charges and shall indemnify Agent and each Lender
against any and all liabilities with respect to or resulting from any delay in
the payment or omission to pay any such taxes, fees or charges, which may be
payable or determined to be payable in connection with the execution, delivery,
recording, performance or enforcement of this Agreement, the Notes and any of
the other Loan Documents or the perfection of any rights or Liens thereunder.
SECTION 10.5. Indemnification.
Borrower shall and hereby agrees to indemnify, defend and hold harmless
Agent and each of Lenders and their respective directors, officers, agents and
employees from and against (a) any and all losses, claims, damages, liabilities,
deficiencies, judgments or expenses incurred by any of them (except to the
extent that it results from their own gross negligence or willful misconduct)
arising out of or by reason of any litigation, investigations, claims or
proceedings which arise out of or are in any way related to: (i) this Agreement
or any of the other Loan Documents, or the transactions contemplated hereby and
thereby; (ii) the making of Loans; (iii) any actual or proposed use by Borrower
of the proceeds of the Loans; or (iv) Agent's or Lenders' entering into this
Agreement, the other Loan Documents or any other agreements and documents
relating hereto, including, without limitation, amounts paid in settlement,
court costs and the reasonable fees and disbursements of counsel incurred in
connection with any such litigation, investigation, claim or proceeding or any
advice rendered in connection with any of the foregoing and (b) any such losses,
claims, damages, liabilities, deficiencies, judgments or expenses incurred in
connection with any remedial or other similar action taken by Borrower, any
Guarantor, Agent or any of Lenders in connection with the required compliance by
Borrower, any Guarantor or any of the other Subsidiaries, or any of their
respective properties, with any federal, state or local Environmental Laws or
other material environmental rules, regulations, orders, directions, ordinances,
criteria or guidelines. If and to the extent that the obligations of Borrower
hereunder are unenforceable for any reason, Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under Applicable Law. Borrower's obligations hereunder shall
survive any termination of this Agreement and the other Loan Documents and the
payment in full of the Obligations, and are in addition to, and not in
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substitution of, any other of its other obligations set forth in this Agreement
and the other Loan Documents.
SECTION 10.6. Setoff.
In addition to any rights now or hereafter granted under Applicable Law and
not by way of limitation of any such rights, each Lender is hereby authorized by
Borrower, at any time or from time to time, without notice to Borrower or to any
other Person, any such notice being hereby expressly waived, but subject to
receipt of Agent's prior written consent exercised in its sole discretion, to
set-off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured) and any other indebtedness at any time
held or owing by such Lender or any affiliate of such Lender, to or for the
credit or the account of Borrower against and on account of any of the
Obligations then due and owing after the expiration of any applicable grace
periods. Borrower agrees, to the fullest extent it may effectively do so under
Applicable Law, that any holder of a participation in a Note, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of setoff
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of Borrower in the
amount of such participation.
SECTION 10.7. Amendments.
Any consent or approval required or permitted by this Agreement or in any
other Loan Document (other than any agreement evidencing the fees referred to in
Section 3.1.(d)) to be given by Lenders may be given, and the performance or
observance by Borrower or any Guarantor of any terms of any such Loan Document
or the continuance of any Default or Event of Default may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with, but only with, the written consent of the Majority Lenders. Any provision
of this Agreement or of any other Loan Document (other than any agreement
evidencing the fees referred to in Section 3.1.(d)) may be amended or otherwise
modified with, but only with, the written consent of Borrower or a Guarantor, as
applicable, and the Majority Lenders. Any provision of any agreement evidencing
the fees referred to in Section 3.1.(d) may be amended or otherwise modified
only in writing by Agent and Borrower, and the performance or observance by
Borrower of any terms of any such agreement may be waived only with the written
consent of Agent. Notwithstanding the foregoing, none of the following may be
amended or otherwise modified, nor may compliance by Borrower or a Guarantor, as
applicable thereunder or with respect thereto be waived, without the written
consent of all Lenders and Borrower or such Guarantor, as applicable: (a) the
principal amount of any Loan (including forgiveness of any amount of principal);
(b) the rates of interest on the Loans and the amount of any interest payable on
the Loans (including the forgiveness of any accrued but unpaid interest); (c)
the dates on which any principal or interest payable by Borrower under any Loan
Document is due; (d) the provisions of this Section; (e) the Revolving Credit
Termination Date; (f) the Termination Date; (g) the definition of Commitment,
Available Loan Amount and Unencumbered Pool Value (and the definitions used in
either such definition and the percentages and rates used in the calculation
thereof); and (h) the amount and payment date of any fees. Notwithstanding the
foregoing, none of the following may be amended or otherwise modified, nor may
compliance by Borrower or a
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Guarantor, as applicable thereunder or with respect thereto be waived, without
the written consent of the Supermajority Lenders and Borrower or such Guarantor,
as applicable: (i) the definitions of Approved Issuer, Qualifying Securities and
Supermajority Lenders; and (ii) the provisions of Section 7.7. through and
including Section 7.19. Further, no amendment, waiver or consent unless in
writing and signed by Agent, in addition to Lenders required hereinabove to take
such action, shall affect the rights or duties of Agent under this Agreement or
any of the other Loan Documents. Any amendment, waiver or consent relating to
Section 2.15. or the obligations of Swingline Lender under this Agreement or any
other Loan Document shall, in addition to Lenders required hereinabove to take
such action, require the written consent of Swingline Lender. Further, no
Guarantor shall be released from the Guaranty (except as permitted by Section
2.13.(b)), nor shall the Guaranty be terminated (except as expressly permitted
by the terms thereof), unless all of the Lenders consent thereto in writing. No
waiver shall extend to or affect any obligation not expressly waived or impair
any right consequent thereon. No course of dealing or delay or omission on the
part of any Lender or Agent in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon
Borrower shall entitle Borrower to other or further notice or demand in similar
or other circumstances.
SECTION 10.8. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of all Lenders.
(b) Any Lender may at any time grant to one or more banks or other
financial institutions which are not affiliates of, or otherwise related in any
way to, Borrower or any Guarantor (each a "Participant") participating interests
in its Commitment or the Obligations owing to such Lender; provided, however,
(i) no Lender may grant a participating interest in its Commitment, or if the
Commitments have been terminated, the aggregate outstanding principal balance of
Notes held by it, in an amount less than $10,000,000 and (ii) after giving
effect to any such participation by Agent in its capacity as a Lender, the
amount of its Commitment, or if the Commitments have been terminated, the
aggregate outstanding principal balance of Notes held by it, in which it has not
granted any participating interests must be at least $10,000,000. Except as
otherwise provided in Section 10.6., no Participant shall have any rights or
benefits under this Agreement or any other Loan Document. In the event of any
such grant by a Lender of a participating interest to a Participant, such Lender
shall remain responsible for the performance of its obligations hereunder, and
Borrower and Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement.
Any agreement pursuant to which any Lender may grant such a participating
interest shall provide that such Lender shall retain the sole right and
responsibility to enforce the obligations of Borrower hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided, however, such Lender may agree
with the Participant that it will not, without the consent of the Participant,
agree to (i) increase, or except as contemplated by Section 2.10., extend the
term or extend the time or waive any requirement for the reduction or
termination of, such Lender's Commitment, (ii) extend the date fixed for the
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payment of principal of or interest on the Loans or portions thereof owing to
such Lender, (iii) reduce the amount of any such payment of principal, or (iv)
reduce the rate at which interest is payable thereon. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).
(c) Any Lender may with the prior written consent of Agent and, so long as
no Event of Default shall have occurred and be continuing, Borrower (which
consent, in each case, shall not be unreasonably withheld) at any time assign to
one or more Eligible Assignees which are not affiliates of, or otherwise related
in any way to, Borrower or any Guarantor (each an "Assignee") all or a portion
of its rights and obligations under this Agreement and the Notes; provided,
however, (i) no such consent by Borrower or Agent shall be required in the case
of any assignment to another Lender or any affiliate of such Lender or another
Lender; (ii) any partial assignment shall be in an amount at least equal to
$10,000,000 and after giving effect to such assignment the assigning Lender
retains a Commitment, or if the Commitments have been terminated, holds Notes
having an aggregate outstanding principal balance, of at least $10,000,000; and
(iii) each such assignment shall be effected by means of an Assignment and
Acceptance Agreement. Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Lender of an amount equal to the
purchase price agreed between such transferor Lender and such Assignee, such
Assignee shall be deemed to be a Lender party to this Agreement and shall have
all the rights and obligations of a Lender with a Commitment as set forth in
such Assignment and Acceptance Agreement, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection (c), the transferor Lender, Agent
and Borrower shall make appropriate arrangements so that new Notes are issued to
the Assignee and such transferor Lender, as appropriate. In connection with any
such assignment, the transferor Lender shall pay to Agent an administrative fee
for processing such assignment in the amount of $3,000.
(d) In addition to the assignments and participations permitted under the
foregoing provisions of this Section, any Lender may assign and pledge all or
any portion of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank, and such Loans and Notes shall be fully transferable as
provided therein. No such assignment shall release the assigning Lender from
its obligations hereunder.
(e) A Lender may furnish any information concerning any Guarantor, Borrower
or any of its Subsidiaries in the possession of such Lender from time to time to
Assignees and Participants (including prospective Assignees and Participants).
(f) Anything in this Section to the contrary notwithstanding, no Lender may
assign or participate any interest in any Loan held by it hereunder to any
Guarantor, Borrower or any of their respective affiliates or Subsidiaries.
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SECTION 10.9. Governing Law.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF GEORGIA.
SECTION 10.10. Litigation.
----------
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN
OR AMONG BORROWER, AGENT OR ANY OF LENDERS WOULD BE BASED ON DIFFICULT AND
COMPLEX ISSUES OF LAW AND FACT AND THAT A TRIAL BY JURY COULD RESULT IN
SIGNIFICANT DELAY AND EXPENSE. ACCORDINGLY, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF LENDERS, AGENT AND BORROWER HEREBY WAIVES TRIAL BY JURY
IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN
WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST BORROWER ARISING OUT OF THIS
AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT OR IN CONNECTION WITH THE
COLLATERAL OR ANY LIEN OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER
BETWEEN OR AMONG BORROWER, AGENT OR ANY OF LENDERS OF ANY KIND OR NATURE.
(b) BORROWER, AGENT AND EACH LENDER EACH HEREBY AGREES THAT THE FEDERAL
DISTRICT COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF AGENT,
ANY STATE COURT LOCATED IN FULTON COUNTY, GEORGIA SHALL HAVE NON-EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG
BORROWER, AGENT OR ANY OF LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING
HEREFROM OR THEREFROM OR THE COLLATERAL. BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
IN SUCH COURTS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE
DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY AGENT OR ANY LENDER OR THE
ENFORCEMENT BY AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY
OTHER APPROPRIATE JURISDICTION. FURTHER, BORROWER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND
WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE
THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE
OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS AGREEMENT.
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SECTION 10.11. Counterparts; Integration.
-------------------------
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement, together with the other
Loan Documents, constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
SECTION 10.12. Notice of Final Agreement.
-------------------------
THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
SECTION 10.13. Invalid Provisions.
------------------
Any provision of this Agreement or any other Loan Document held by a court
of competent jurisdiction to be illegal, invalid or unenforceable shall not
invalidate the remaining provisions of such Loan Document which shall remain in
full force and effect and the effect thereof shall be confined to the provision
held invalid or illegal.
SECTION 10.14. Additional Guarantors.
---------------------
Any wholly-owned Subsidiary of Borrower may become a Guarantor by
delivering to Agent each of the following: (a) an Accession Agreement duly
executed by such Subsidiary and (b) the items that would have been delivered
under Sections 5.1.(d), (e), and (j) through (m) if such Subsidiary had been a
Guarantor on the date hereof.
[Signatures on Following Pages]
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
SECURITY CAPITAL GROUP INCORPORATED
By: Jeffrey A. Klopf
------------------------------
Name: Jeffrey A. Klopf
-------------------------
Title: Senior Vice President &
------------------------
Secretary
------------------------
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually and as Agent
By: /s/ Robert W. Belson
-----------------------------------
Name: Robert W. Belson
-----------------------------
Title: Senior Vice President
-----------------------------
Commitment Amount: $172,500,000
-----------
Lending Office (all Types of Loans):
2859 Paces Ferry Road, Suite 1805
Atlanta, Georgia 30339
Attention: Robert Belson
Telecopier: (770) 435-2262
Telephone: (770) 435-3800
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
individually and as Documentation Agent
By:/s/ Kent Kaiser
-------------------------
Name: Kent Kaiser
--------------------
Title: Sr. Vice President
-------------------
Commitment Amount: $77,500,000
Lending Office (all Types of Loans):
707 Travis, 6th Floor North
Houston, Texas 77002-8047
Attention: Kent Kaiser or Monica Bercher
Telecopier: (713) 216-7713
Telephone: (713) 216-8699 or (713) 216-5379
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Michael Carter
---------------------------
Name: Michael Carter
--------------------
Title: First Vice President
--------------------
Commitment Amount: $75,000,000
Lending Office (all Types of Loans):
1301 Avenue of the Americas
New York, New York 10019
Attention: Greg Allen or Maria DeVine
Telecopier: (212) 261-3833
Telephone: (212) 261-7820 or (212) 261-7866
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By: /s/ Robert N. Allen
-----------------------------------
Name: Robert N. Allen
------------------------------
Title: Vice President
-----------------------------
Commitment Amount: $50,000,000
Lending Office (all Types of Loans):
Unit #1313
555 South Flowers Street - 6th Floor
Los Angeles, California 90071
Attention: Robert N. Allen
Telecopier: (213) 228-5389
Telephone: (213) 228-5479
[Signatures Continued on Next Page]
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<PAGE>
[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
BANK OF MONTREAL, CHICAGO BRANCH
By: /s/ Catherine Sahagian Mousseau
---------------------------------
Name: Catherine Sahagian Mousseau
----------------------------
Title: Director
---------------------------
Commitment Amount: $50,000,000
Lending Office (all Types of Loans):
115 South LaSalle Street, 12W
Chicago, Illinois 60603
Attention: David A. Mazujian and
Catherine A. Sahagian
Telecopier: (312) 750-4352
Telephone: (312) 750-5905
Copy of Notices to go to:
Chapman & Cutler
111 West Monroe
Chicago, Illinois 60603
Attention: James R. Theiss, Esq.
Telecopier: (312) 701-2361
Telephone: (312) 845-3591
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
NATIONSBANK, N.A.
By: /s/ M. David Howard
---------------------------
Name: M. David Howard
----------------------
Title: VP
---------------------
Commitment Amount: $50,000,000
Lending Office (all Types of Loans):
901 Main Street - 51st Floor
Dallas, Texas 75202
Attention: M. David Howard
Telecopier: (214) 508-0085
Telephone: (214) 508-2089
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of June 5, 1998
with Security Capital Group Incorporated]
GUARANTY FEDERAL BANK, F.S.B.
By: /s/ Richard Thompson
--------------------------------
Name: Richard Thompson
--------------------------
Title: Vice President
-------------------------
Commitment Amount: $40,000,000
Lending Office (all Types of Loans):
8333 Douglas Avenue, Suite 1000
Dallas, Texas 75225
Attention: Roger Davis
Telecopier: (214) 360-1661
Telephone: (214) 360-2849
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN
BRANCH
By: /s/ Michael A. Seton
------------------------------
Name: Michael A. Seton
-------------------------
Title: Assistant Vice President
------------------------
By: /s/ Charles M. O'Shea
------------------------------
Name: Charles M. O'Shea
-------------------------
Title: Vice President
------------------------
Commitment Amount: $35,000,000
Lending Office (all Types of Loans):
75 Wall Street
New York, New York 10005
Attention: Johannes Boeckmann
Telecopier: (212) 429-2781
Telephone: (212) 429-2479
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
FIRST UNION NATIONAL BANK
By: /s/ John A. Schissel
------------------------------
Name: John A. Schissel
-------------------------
Title: Director
------------------------
Commitment Amount: $35,000,000
Lending Office (all Types of Loans):
301 South College Street, DC6
Charlotte, North Carolina 28288
Attention: John A. Schissel
Telecopier: (704) 383-1967
Telephone: (704) 383-6205
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
TRANSAMERICA LIFE INSURANCE AND ANNUITY CO.
By: /s/ John M. Casparian
------------------------------
Name: John M. Casparian
----------------------------
Title: Investment Officer
---------------------------
Commitment Amount: $35,000,000
Lending Office (all Types of Loans):
1150 South Olive, Suite T-27
Los Angeles, California 90015
Attention: John Casparian
Telecopier: (213) 741-7110
Telephone: (213) 742-3554
[Signatures continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
BANKBOSTON, N.A.
By: /s/ Daniel P. Stegemoeller
-----------------------------
Name: Daniel P. Stegemoeller
------------------------
Title: Vice President
-----------------------
Commitment Amount: $20,000,000
Lending Office (all Types of Loans):
115 Perimeter Center Place, Suite 660
Atlanta, Georgia 30346
Attention: Jay Johns
Telecopier: (770) 390-8434
Telephone: (770) 390-6579
[Signatures Continued on Next Page]
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[Signature Page to Credit Agreement dated as of
June 5, 1998 with Security Capital Group Incorporated]
KBC BANK N.V.
By: /s/ Robert Snauffer
----------------------------
Name: Robert Snauffer
-----------------------
Title: Vice President
----------------------
By: /s/ Authorized Signatory
----------------------------
Name: Authorized Signatory
-----------------------
Title: Vice President
----------------------
Commitment Amount: $20,000,000
Lending Office (all Types of Loans):
125 West 55th Street, 10th Floor
New York, New York 10019
Attention: Michael V. Curran or Diane M. Grimmig
Telecopier: (212) 956-5580
Telephone: (212) 541-0708 or (212) 541-0707
With a copy to:
515 South Figueroa Street, Suite 1920
Los Angeles, California 90071
Attention: Kevin P. McKenna
Telecopier: (213) 629-5801
Telephone: (213) 996-7529
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EXHIBIT B
FORM OF GUARANTY
THIS GUARANTY dated as of June 5, 1998 executed and delivered by each of
the undersigned and the other Persons from time to time party hereto pursuant to
the execution and delivery of an Accession Agreement in the form of Annex I
hereto (all of the undersigned, together with such other Persons each a
"Guarantor" and collectively, the "Guarantors"), in favor of (a) WELLS FARGO
BANK, NATIONAL ASSOCIATION, in its capacity as Agent (the 'Agent") for the
Lenders under that certain Credit Agreement dated as of the date hereof by and
among Security Capital Group Incorporated (the "Borrower"), the financial
institutions party thereto and their assignees under Section 10.8 thereof (the
"Lenders"), Chase Bank of Texas, National Association, as Documentation Agent,
and the Agent (as the same may be amended, restated, supplemented or otherwise
modified from time to time in accordance with its terms, the "Credit Agreement")
and (b) the Lenders and the Swingline Lender.
WHEREAS, pursuant to the Credit Agreement, the Lenders have made available
to the Borrower certain financial accommodations on the terms and conditions set
forth in the Credit Agreement;
WHEREAS, each Guarantor is a wholly-owned Subsidiary of the Borrower;
WHEREAS, the Borrower, each Guarantor and the other Subsidiaries of the
Borrower, though separate legal entities, are mutually dependent on each other
in the conduct of their respective businesses as an integrated operation and
have determined it to be in their mutual best interests to obtain financing
from the Agent, the Lenders and the Swingline Lender through their collective
efforts;
WHEREAS, each Guarantor acknowledges that it will receive direct and
indirect benefits from the Agent, the Lenders and the Swingline Lender making
such financial accommodations available to the Borrower under the Credit
Agreement and, accordingly, each Guarantor is willing to guarantee the
Borrower's obligations to the Agent, the Lenders and the Swingline Lender on the
terms and conditions contained herein; and
WHEREAS, each Guarantor's execution and delivery of this Guaranty is one
of the conditions precedent to the Agent, the Lenders and the Swingline Lender
making, or continuing to make, such financial accommodations to the Borrower.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor
agrees as follows:
Section 1. Guaranty. Each Guarantor hereby absolutely and unconditionally
guarantees the due and punctual payment and performance of all of the following
(collectively referred to as the "Obligations"): (a) all indebtedness and
obligations owing by the Borrower to any of the
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Lenders, the Swingline Lender and the Agent under or in connection with the
Credit Agreement and any other Loan Document, including without limitation, the
repayment of all principal of the Revolving Loans and the Term Loans made by the
Lenders to the Borrower under the Credit Agreement and the payment of all
interest, fees, charges, reasonable attorneys fees and other amounts payable to
any Lender or the Agent thereunder or in connection therewith; (b) any and all
extensions, renewals, modifications, amendments or substitutions of the
foregoing; and (c) all expenses, including, without limitation, reasonable
attorneys' fees and disbursements, that are incurred by the Lenders, the
Swingline Lender and the Agent in the enforcement of any of the foregoing or any
obligation of such Guarantor hereunder.
Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a
guaranty of payment, and not of collection, and a debt of each Guarantor for its
own account. Accordingly, the Lenders, the Swingline Lender and the Agent shall
not be obligated or required before enforcing this Guaranty against any
Guarantor: (a) to pursue any right or remedy the Lenders, the Swingline Lender
or the Agent may have against the Borrower, any other Guarantor or any other
Person or commence any suit or other proceeding against the Borrower, any other
Guarantor or any other Person in any court or other tribunal; (b) to make any
claim in a liquidation or bankruptcy of the Borrower, any other Guarantor or any
other Person; or (c) to make demand of the Borrower, any other Guarantor or any
other Person or to enforce or seek to enforce or realize upon any collateral
security held by the Lenders or the Agent which may secure any of the
Obligations. In this connection, each Guarantor hereby waives the right of such
Guarantor to require any holder of the Obligations to take action against the
Borrower as provided in Official Code of Georgia Annotated (S) 10-7-24.
Section 3. Guaranty Absolute. Each Guarantor guarantees that the
Obligations win be paid strictly in accordance with the terms of the documents
evidencing the same, regardless of any Applicable Law now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent, the
Swingline Lender or the Lenders with respect thereto. The liability of each
Guarantor under this Guaranty shall be absolute and unconditional in accordance
with its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including without limitation, the
following (whether or not such Guarantor consents thereto or has notice
thereof):
(a) (i) any change in the amount, interest rate or due date or other term
of any of the Obligations, (ii) any change in the time, place or manner of
payment of all or any portion of the Obligations, (iii) any amendment or waiver
of or consent to the departure from or other indulgence with respect to, the
Credit Agreement, any other Loan Document, or any other document or instrument
evidencing or relating to any Obligations, or (iv) any waiver, renewal,
extension, addition or supplement to, or deletion from, or any other action or
inaction under or in respect of, the Credit Agreement, any of the other Loan
Documents, or any other documents, instruments or agreements relating to the
Obligations or any other instrument or agreement referred to therein or
evidencing any Obligations or any assignment or transfer of any of the
foregoing;
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(b) any lack of validity or enforceability of the Credit Agreement, any of
the other Loan Documents, or any other document, instrument or agreement
referred to therein or evidencing any Obligations or any assignment or transfer
of any of the foregoing;
(c) any furnishing to the Agent or the Lenders of any security for the
Obligations, or any sale, exchange, release or surrender of, or realization on,
any collateral security for the Obligations;
(d) any settlement or compromise of any of the Obligations, any security
therefor, or any liability of any other party with respect to the Obligations,
or any subordination of the payment of the Obligations to the payment of any
other liability of the Borrower;
(e) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to any other
Guarantor, the Borrower or any other Person, or any action taken with respect to
this Guaranty by any trustee or receiver, or by any court, in any such
proceeding;
(f) any nonperfection of any security interest or other Lien on any of the
collateral securing any of the Obligations;
(g) any act or failure to act by the Borrower or any other Person which may
adversely affect such Guarantor's subrogation rights, if any, against the
Borrower to recover payments made under this Guaranty;
(h) any application of sums paid by the Borrower or any other Person with
respect to the liabilities of the Borrower to the Agent, the Swingline Lender or
the Lenders, regardless of what liabilities of the Borrower remain unpaid;
(i) any defect, limitation or insufficiency in the borrowing powers of the
Borrower or in the exercise thereof; or
(j) any other circumstance which might otherwise constitute a defense
available to, or discharge of, any Guarantor hereunder.
Section 4. Action with Respect to Obligations. The Lenders, the Swingline
Lender and the Agent may, at any time and from time to time, without the consent
of, or notice to, any Guarantor, and without discharging any Guarantor from its
obligations hereunder take any and all actions described in Section 3. and may
otherwise: (a) amend, modify, alter or supplement the terms of any of the
Obligations, including, but not limited to, extending or shortening the time of
payment of any of the Obligations or the interest rate that may accrue on any of
the Obligations; (b) amend, modify, alter or supplement the Credit Agreement or
any other Loan Document; (c) sell, exchange, release or otherwise deal with all,
or any part, of any collateral securing any of the Obligations; (d) release any
Person liable in any manner for the payment or collection of the Obligations;
(e) exercise, or refrain from exercising, any rights against the Borrower or any
other Person (including, without limitation, any other Guarantor); and (f) apply
any sum, by whomsoever paid or however realized, to the Obligations in such
order as the Lenders or the Swingline Lender shall elect.
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Section 5. Representations and Warranties. Each Guarantor hereby makes to
the Agent, the Lenders and the Swingline Lender all of the representations and
warranties made by the Borrower with respect to or in any way relating to such
Guarantor in the Credit Agreement and the other Loan Documents, as if the same
were set forth herein in full.
Section 6. Covenants. Each Guarantor will comply with all covenants which
the Borrower is to cause such Guarantor to comply with under the terms of the
Credit Agreement or any other Loan Documents.
Section 7. Waiver. Each Guarantor, to the fullest extent permitted by
Applicable Law, hereby waives notice of acceptance hereof or any presentment,
demand, protest or notice of any kind, and any other act or thing, or omission
or delay to do any other act or thing, which in any manner or to any extent
might vary the risk of such Guarantor or which otherwise might operate to
discharge such Guarantor from its obligations hereunder.
Section 8. Inability to Accelerate Loan. If the Agent and/or the Lenders
are prevented from demanding or accelerating payment thereof by reason of any
automatic stay or otherwise, the Agent and/or the Lenders shall be entitled to
receive from each Guarantor, upon demand therefor, the sums which otherwise
would have been due had such demand or acceleration occurred.
Section 9. Reinstatement of Obligations. Each Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be,
with respect to any Obligations if at any time payment of any such Obligations
is rescinded or otherwise must be restored by the Agent and/or the Lenders upon
the bankruptcy or reorganization of the Borrower or any Guarantor or otherwise.
Section 10. Subrogation. Until all of the Obligations shall have been
indefeasibly paid in full, no Guarantor shall have any right of subrogation and
each Guarantor hereby waives any right to enforce any remedy which the Agent
and/or the Lenders now have or may hereafter have against the Borrower, and each
Guarantor hereby waives any benefit of, and any right to participate in, any
security or collateral given to the Agent and the Lenders to secure payment or
performance of any of the Obligations.
Section 11. Payments Free and Clear. All sums payable by each Guarantor
hereunder, whether of principal, interest, fees, expenses, premiums or
otherwise, shall be paid in full, without set-off or counterclaim or any
deduction or withholding whatsoever (including any withholding tax or liability
imposed by any Governmental Authority, or any Applicable Law promulgated
thereby), and if any Guarantor is required by such Applicable Law or by such
Governmental Authority to make any such deduction or withholding, such Guarantor
shall pay to the Agent and the Lenders such additional amount as will result in
the receipt by the Agent and the Lenders of the full amount payable hereunder
had such deduction or withholding not occurred or been required.
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Section 12. Set-off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, each
Lender is hereby authorized by each Guarantor, at any time or from time to time,
without notice to any Guarantor or to any other Person, any such notice being
hereby expressly waived, but subject to receipt of Agent's prior written consent
exercised in its sole discretion, to set-off and to appropriate and to apply any
and all deposits (general or special including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any
other indebtedness at any time held or owing by such Lender or any Affiliate of
such Lender, to or for the credit or the account of each Guarantor against and
on account of any of the Obligations then due and owing after the expiration of
any applicable grace periods. Each Guarantor agrees, to the fullest extent it
may effectively do so under Applicable Law, that any holder of a participation
in a Note, whether or not acquired pursuant to the applicable provisions of the
Credit Agreement, may exercise rights of setoff or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of such Guarantor in the amount of such participation.
Section 13. Subordination. Each Guarantor hereby expressly covenants and
agrees for the benefit of the Agent and the Lenders that all obligations and
liabilities of the Borrower or any other Guarantor to such Guarantor of whatever
description, including without limitation, all intercompany receivables of such
Guarantor from the Borrower or any other Guarantor (collectively, the "Junior
Claims") shall be subordinate and junior in right of payment to all Obligations.
If an Event of Default shall have occurred and be continuing, then no Guarantor
shall accept any direct or indirect payment (in cash, property, securities by
setoff or otherwise) from the Borrower or any other Guarantor on account of or
in any manner in respect of any Junior Claim until all of the Obligations have
been indefeasibly paid in full.
Section 14. Avoidance Provisions. It is the intent of each Guarantor, the
Agent and the Lenders that in any Proceeding, such Guarantor's maximum
obligation hereunder shall equal, but not exceed, the maximum amount which would
not otherwise cause the obligations of such Guarantor hereunder (or any other
obligations of such Guarantor to the Agent and the Lenders) to be avoidable or
unenforceable against such Guarantor in such Proceeding as a result of
Applicable Law, including without limitation, (a) Section 548 of the Bankruptcy
Code of 1978, as amended (the "Bankruptcy Code") and (b) any state fraudulent
transfer or fraudulent conveyance act or statute applied in such Proceeding,
whether by virtue of Section 544 of the Bankruptcy Code or otherwise. The
Applicable Laws under which the possible avoidance or unenforceability of the
obligations of such Guarantor hereunder (or any other obligations of such
Guarantor to the Agent and the Lenders) shall be determined in any such
Proceeding are referred to as the "Avoidance Provisions". Accordingly, to the
extent that the obligations of any Guarantor hereunder would otherwise be
subject to avoidance under the Avoidance Provisions, the maximum Obligations for
which such Guarantor shall be liable hereunder shall be reduced to that amount
which, as of the time any of the Obligations are deemed to have been incurred
under the Avoidance Provisions, would not cause the obligations of any Guarantor
hereunder (or any other obligations of such Guarantor to the Agent and the
Lenders), to be subject to avoidance under the Avoidance Provisions. This
Section is intended solely to preserve the rights of the Agent and the Lenders
hereunder to the maximum extent that would not cause the obligations of any
Guarantor hereunder to be subject to avoidance under the Avoidance Provisions,
and no Guarantor nor any
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other Person shall have any right or claim under this Section as against the
Agent and the Lenders that would not otherwise be available to such Person under
the Avoidance Provisions.
Section 15. Information. Each Guarantor assumes all responsibility for
being and keeping itself informed of the financial condition of the Borrower, of
the other Guarantors and of all other circumstances bearing upon the risk of
nonpayment of any of the Obligations and the nature, scope and extent of the
risks that such Guarantor assumes and incurs hereunder, and agrees that none of
the Agent, any Lender or the Swingline Lender shall have any duty whatsoever to
advise any Guarantor of information regarding such circumstances or risks.
Section 16. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
SECTION 17. WAIVER OF JURY TRIAL/JURISDICTION. (a) EACH GUARANTOR, AND
EACH OF THE AGENT AND THE LENDERS BY ACCEPTING THE BENEFITS HEREOF, ACKNOWLEDGE
THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG ANY GUARANTOR, THE AGENT, THE
SWINGLINE LENDER OR ANY OF THE LENDERS WOULD BE BASED ON DIFFICULT AND COMPLEX
ISSUES OF LAW AND FACT AND THAT A TRIAL BY JURY COULD RESULT IN SIGNIFICANT
DELAY AND EXPENSE. ACCORDINGLY, EACH GUARANTOR, AND EACH OF THE AGENT, THE
SWINGLINE LENDER AND THE LENDERS BY ACCEPTING THE BENEFITS HEREOF, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST ANY GUARANTOR ARISING OUT OF THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT OR IN CONNECTION WITH THE COLLATERAL OR ANY LIEN OR
BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN OR AMONG ANY
GUARANTOR, THE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.
(b) EACH GUARANTOR, AND EACH OF THE AGENT, THE SWINGLINE LENDER AND THE
LENDERS BY ACCEPTING THE BENEFITS HEREOF, EACH HEREBY AGREES THAT THE FEDERAL
DISTRICT COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF THE
AGENT, ANY STATE COURT LOCATED IN FULTON COUNTY, GEORGIA SHALL HAVE NON-
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR
AMONG ANY GUARANTOR, THE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR
INDIRECTLY TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING
HEREFROM OR THEREFROM OR THE COLLATERAL. EACH GUARANTOR EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
IN SUCH COURTS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE
DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT, THE SWINGLINE LENDER
OR ANY LENDER OR THE ENFORCEMENT BY THE AGENT, THE SWINGLINE LENDER OR ANY
LENDER OF
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ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
FURTHER, EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND WITH
A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE
PAYMENT OF THE OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE
OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS GUARANTY.
Section 18. Loan Accounts. The Agent may maintain books and accounts
setting forth the amounts of principal, interest and other sums paid and payable
with respect to the Obligations, and in the case of any dispute relating to any
of the outstanding amount, payment or receipt of Obligation or otherwise, the
entries in such account shall be binding upon each Guarantor as to the
outstanding amount of such Obligations and the amounts paid and payable with
respect thereto absent manifest error. The failure of the Agent to maintain
such books and accounts shall not in any way relieve or discharge any Guarantor
of any of its obligations hereunder.
Section 19. Waiver of Remedies. No delay or failure on the part of the
Agent, the Swingline Lender or the Lenders in the exercise of any right or
remedy it may have against any Guarantor hereunder or otherwise shall operate as
a waiver thereof, and no single or partial exercise by the Agent, the Swingline
Lender or the Lenders of any such right or remedy shall preclude other or
further exercise thereof or the exercise of any other such right or remedy.
Section 20. Successors and Assigns. Each reference herein to the Agent,
the Swingline Lender or the Lenders shall be deemed to include such Person's
respective successors and assigns (including, but not limited to, any holder of
the Obligations) in whose favor the provisions of this Guaranty also shall
inure, and each reference herein to any Guarantor shall be deemed to include the
Guarantor's successors and assigns, upon whom this Guaranty also shall be
binding. The Lenders and the Swingline Lender may, in accordance with the
applicable provisions of the Credit Agreement, assign, transfer or sell any
Obligation, or grant or sell participation in any Obligations, to any Person or
entity without the consent of, or notice to, any Guarantor and without
releasing, discharging or modifying such Guarantor's obligations hereunder.
Each Guarantor hereby consents to the delivery by the Agent, the Swingline
Lender or any Lender to any assignee, transferee or participant of any financial
or other information regarding the Borrower or any Guarantor. Each Guarantor
may not assign or transfer its obligations hereunder to any Person.
SECTION 21. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF THE
GUARANTORS HEREUNDER SHALL BE JOINT AND SEVERAL, AND ACCORDINGLY, EACH GUARANTOR
CONFIRMS THAT IT IS LIABLE FOR THE FULL
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AMOUNT OF THE OBLIGATIONS AND ALL OF THE OBLIGATIONS AND LIABILITIES OF EACH OF
THE OTHER GUARANTORS HEREUNDER.
Section 22. Amendments. This Guaranty may not be amended except as
provided in Section 10.7 of the Credit Agreement.
Section 23. Payments. All payments made by any Guarantor pursuant to this
Guaranty shall be made in Dollars, in immediately available funds to the Agent
at its Lending Office, not later than 11:00 a.m., on the date one Business Day
after demand therefor.
Section 24. Notices. All notices, requests and other communications
hereunder shall be in writing (including bank wire, facsimile transmission or
similar writing) and shall be given (i) to each Guarantor at its address set
forth below its signature hereto, (ii) to the Agent, the Swingline Lender or any
Lender at its address for notices provided for in the Credit Agreement, or (iii)
as to each such party at such other address as such party shall designate in a
written notice to the other parties. Each such notice, request or other
communication shall be effective (x) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (y) if given by any other means (including facsimile),
when delivered at the applicable address provided for; provided that any notice
of a change of address for notices, shall not be effective until received.
Section 25. Severability. In case any provision of this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 26. Headings. Section headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.
Section 27. Definitions. (a) For the purposes of this Guaranty:
"Proceeding" means any of the following: (i) a voluntary or involuntary
case concerning any Guarantor shall be commenced under the Bankruptcy Code or
any other applicable bankruptcy laws; (ii) a custodian (as defined in the
Bankruptcy Code or any other applicable bankruptcy laws) is appointed for, or
takes charge of, all or any substantial part of the property of any Guarantor;
(iii) any other proceeding under any Applicable Law, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding-up or composition
for adjustment of debts, whether now or hereafter in effect, is commenced
relating to any Guarantor; (iv) any Guarantor is adjudicated insolvent or
bankrupt; (v) any order of relief or other order approving any such case or
proceeding is entered by a court of competent jurisdiction; (vi) any Guarantor
makes a general assignment for the benefit of creditors; (vii) any Guarantor
shall fail to pay, or shall state that it is unable to pay, or shall be unable
to pay, its debts generally as they become due; (viii) any Guarantor shall call
a meeting of its creditors with a view to arranging a composition or adjustment
of its debts; (ix) any Guarantor shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any of the foregoing; or (x) any
corporate action shall be taken by any Guarantor for the purpose of effecting
any of the foregoing.
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(b) Terms not otherwise defined herein are used herein with the respective
meanings given them in the Credit Agreement.
IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this
Guaranty as of the date and year first written above.
(GUARANTOR]
By: ______________________________
Name: ________________________
Title: _______________________
Address for Notices:
c/o Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Attention: Jeffrey A. Klopf
Telecopier: (505) 988-8920
Telephone: (505) 982-9292
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ANNEX I
FORM OF ACCESSION AGREEMENT
THIS ACCESSION AGREEMENT dated as of __________, ____, executed and
delivered by _________________, a _________________ (the "New Guarantor") in
favor of (a) WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as Agent
(the "Agent") for the Lenders under that certain Credit Agreement dated as of
June 5, 1998 (as the same may be amended, restated, supplemented or otherwise
modified from time to time in accordance with its terms, the "Credit
Agreement"), by and among Security Capital Group Incorporated, a Maryland
corporation (the "Borrower"), the financial institutions initially party thereto
and their assignees under Section 10.8 thereof (the "Lenders"), Chase Bank of
Texas, National Association, as Documentation Agent, and the Agent.
WHEREAS, pursuant to the Credit Agreement, the Agent, the Lenders and the
Swingline Lender have agreed to make available to the Borrower certain
financial accommodations on the terms and conditions set forth in the Credit
Agreement;
WHEREAS, the Borrower owns, directly or indirectly, all of the issued and
outstanding capital stock of, or other equity interest in, the New Guarantor;
WHEREAS, the Borrower, the New Guarantor, and the other Subsidiaries of the
Borrower, though separate legal entities, are mutually dependent on each other
in the conduct of their respective businesses as an integrated operation and
have determined it to be in their mutual best interests to obtain financing from
the Agent, the Lenders and the Swingline Lender through their collective
efforts;
WHEREAS, the New Guarantor acknowledges that it will receive direct and
indirect benefits from the Agent, the Lenders and the Swingline Lenders making
such financial accommodations available to the Borrower under the Credit
Agreement and, accordingly, the New Guarantor is willing to guarantee the
Borrower's obligations to the Agent, the Lenders and the Swingline Lenders on
the terms and conditions contained herein; and
WHEREAS, the New Guarantor's execution and delivery of this Agreement is a
condition to the Agent, the Lenders and the Swingline Lenders continuing to make
such financial accommodations to the Borrower.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the New Guarantor, the New
Guarantor agrees as follows:
Section 1. Accession to Guaranty. The New Guarantor hereby agrees that it
is a "Guarantor" under that certain Guaranty dated as of June 5, 1998 (the
"Guaranty"), made by each Subsidiary a party thereto in favor of the Agent, the
Lenders and the Swingline Lender and assumes all obligations of a "Guarantor"
thereunder, all as if the New Guarantor had been an
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original signatory to the Guaranty. Without limiting the generality of the
foregoing, the New Guarantor hereby:
(a) irrevocably and unconditionally guarantees the due and punctual payment
and performance when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations (as defined in the Guaranty);
(b) makes to the Agent, the Lenders and the Swingline Lender as of the date
hereof each of the representations and warranties contained in Section 5 of the
Guaranty and agrees to be bound by each of the covenants contained in Section 6
of the Guaranty; and
(c) consents and agrees to each provision set forth in the Guaranty.
SECTION 2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 3. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have their respective defined meanings given them in the
Credit Agreement.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the New Guarantor has caused this Accession Agreement
to be duly executed and delivered under seal by its duly authorized officers as
of the date first written above.
[NEW GUARANTOR)
By:
------------------------------
Name:
------------------------
Title:
-----------------------
ATTEST:
By:
------------------------------
Name:
------------------------
Title:
-----------------------
(CORPORATE SEAL)
Address for Notices:
----------------------------------
----------------------------------
Attention:
Telecopier:
Telephone:
Accepted:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Agent
By:
-------------------------------
Name:
-------------------------
Title:
------------------------
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EXHIBIT G
FORM OF NOTE
$______________________ Atlanta, Georgia
_________, 199_
FOR VALUE RECEIVED, the undersigned, SECURITY CAPITAL GROUP INCORPORATED, a
Maryland corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of ________________________ (the "Lender"), in care of Wells Fargo
Bank, National Association, as Agent (the "Agent"), to Wells Fargo Bank,
National Association, 111 Sutter Street, 8th Floor, San Francisco, California
94104 or at such other address as may be specified by the Agent to the Borrower,
the principal sum of ___________________ AND __/100 DOLLARS ($___________),
or such lesser amount as may be the then outstanding and unpaid balance of all
Revolving Loans or the Term Loan made by the Lender to the Borrower pursuant
to, and in accordance with the terms of, the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like money,
on the unpaid principal amount owing hereunder from time to time on the dates
and at the rates and at the times specified in the Credit Agreement.
This Note is one of the "Revolving Notes" referred to in that certain
Credit Agreement dated as of June 5, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), by and among the
Borrower, the financial institutions party thereto and their assignees under
Section 10.8 thereof (the "Lenders"), Chase Bank of Texas, National Association,
as Documentation Agent, and the Agent, and is subject to, and entitled to, all
provisions and benefits thereof. Capitalized terms used herein and not defined
herein shall have the respective meanings given to such terms in the Credit
Agreement. The Credit Agreement, among other things, (a) provides for the making
of Revolving Loans by the Lender to the Borrower from time to time in an
aggregate amount not to exceed at any time outstanding the Dollar amount first
above mentioned, (b) permits the prepayment of the Loans by the Borrower subject
to certain terms and conditions and (c) provides for the acceleration of the
Revolving Loans and the Term Loans upon the occurrence of certain specified
events.
The Borrower hereby waives presentment, demand, protest and notice of any
kind. No failure to exercise, and no delay in exercising any rights hereunder on
the part of the holder hereof shall operate as a waiver of such rights.
Time is of the essence for this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF GEORGIA.
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IN WITNESS WHEREOF, the undersigned has executed and delivered this Note
as of the date written above.
SECURITY CAPITAL GROUP INCORPORATED
By:
--------------------------
Title:
------------------------
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EXHIBIT H
FORM OF SWINGLINE NOTE
$50,000,000 June 5, 1998
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, SECURITY CAPITAL GROUP INCORPORATED, a
Maryland corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of Wells Fargo Bank, National Association (the "Swingline Lender"), in
care of Wells Fargo Bank, National Association, as Agent (the "Agent"), to Wells
Fargo Bank, National Association, 111 Sutter Street, 8th Floor, San Francisco,
California 94104 or at such other address as may be specified by the Agent to
the Borrower, the principal sum of FIFTY MILLION AND NO/100 DOLLARS
($50,000,000), or such lesser amount as may be the then outstanding and unpaid
balance of all Swingline Loans owing to the Swingline Lender pursuant to, and in
accordance with the terms of, the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like money,
on the unpaid principal amount owing hereunder from time to time on the dates
and at the rates and at the times specified in the Credit Agreement.
This Note is the "Swingline Note" referred to in that certain Credit
Agreement dated as of June 5, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), by and among the
Borrower, the financial institutions from time to time party thereto and their
assignees under Section 10.8 thereof (the "Lenders"), Chase Bank of Texas,
National Association, as Documentation Agent, and the Agent, and is subject to,
and entitled to, all provisions and benefits thereof. Capitalized terms used
herein and not defined herein shall have the respective meanings given to such
terms in the Credit Agreement. The Credit Agreement, among other things, (a)
provides for the making of Swingline Loans by the Swingline Lender to the
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the Dollar amount first above mentioned, (b) permits the prepayment
of the Swingline Loans by the Borrower subject to certain terms and conditions
and (c) provides for the acceleration of the Swingline Loans upon the occurrence
of certain specified events.
The Borrower hereby waives presentment, demand, protest and notice of any
kind. No failure to exercise, and no delay in exercising any rights hereunder on
the part of the holder hereof shall operate as a waiver of such rights.
Time is of the essence for this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF GEORGIA.
H-1
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IN WITNESS WHEREOF, the undersigned has executed and delivered this
Swingline Note as of the date written above.
SECURITY CAPITAL GROUP INCORPORATED
By:
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Title:
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H-2
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Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of June 23, 1998 by and among Security Capital Group Incorporated, a
Maryland corporation (the "Company"), and J.P. Morgan Securities Inc., Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated and Chase
Securities Inc. (the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated June 18,
1998, among the Company and the Initial Purchasers (the "Purchase Agreement"),
which provides for the sale by the Company to the Initial Purchasers of
$200,000,000 aggregate principal amount of its 6.95% Notes due 2005 (the "2005
Notes"), $100,000,000 aggregate principal amount of its 7.15% Notes due 2007
(the "2007 Notes") and $200,000,000 aggregate principal amount of its 7.70%
Notes due 2028 (the "2028 Notes" and, together with the 2005 Notes and the 2007
Notes, the "Securities"). The Securities are to be issued by the Company
pursuant to the provisions of an Indenture dated as of June 18, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Indenture")
between the Company and State Street Bank and Trust Company, as trustee (the
"Trustee").
In order to induce the Initial Purchasers to enter into the Purchase
Agreement, the Company has agreed to provide to the Initial Purchasers and their
direct and indirect transferees the registration rights with respect to the
Securities set forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time to
time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Business Day" shall mean any day other than a day on which banks are
permitted or required to be closed in New York City.
"Closing Date" shall mean the Closing Date as defined in the Purchase
Agreement.
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"Company" shall have the meaning set forth in the preamble and shall also
include the Company's successors.
"Effectiveness Period" shall have the meaning set forth in Section 2(b).
"Exchange Date" shall have the meaning set forth in Section 2(a)(i)(B).
"Exchange Offer" shall mean the exchange offer by the Company of Exchange
Securities for all Securities that are Registrable Securities pursuant to
Section 2(a).
"Exchange Offer Registration" shall mean a registration under the 1933 Act
effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean a registration statement
for the Exchange Offer on an appropriate form and all amendments and supplements
to such registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Exchange Securities" shall mean, with respect to the Securities of any
series, securities issued by the Company under the Indenture and containing
terms identical to the Securities of such series (except that (i) interest
thereon shall accrue from the last date on which interest was paid on the
Securities of such series or, if no such interest has been paid, from June 23,
1998 and (ii) the Exchange Securities will not provide for additional interest
accruing thereon following a failure to register such Exchange Securities under
the 1933 Act and will not contain terms with respect to transfer restrictions)
and to be offered to Holders of Registrable Securities of such series in
exchange for such Securities pursuant to the Exchange Offer.
"Holders" shall mean the Initial Purchasers, for so long as they own any
Registrable Securities, and each of their respective successors, assigns and
direct and indirect transferees permitted pursuant to the terms of the Purchase
Agreement who become registered owners of Registrable Securities under the
Indenture; provided that for purposes of Sections 4 and 5 of this Agreement, the
term "Holders" shall include Participating Broker-Dealers.
"Indenture" shall have the meaning set forth in the preamble.
"Initial Purchasers" shall have the meaning set forth in the preamble.
"Majority Holders" shall mean, with respect to the Registrable Securities
of any series, the Holders of a majority of the aggregate principal amount of
outstanding Registrable Securities of such series; provided that, for purposes
of Section 6(b), whenever the consent or approval of Holders of a specified
percentage of Registrable Securities of any series is required hereunder,
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Registrable Securities of such series held by the Company or any of its
affiliates (as such term is defined in Rule 405 under the 1933 Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage or amount.
"Offer Termination Date" shall have the meaning set forth in Section
2(a)(i)(D).
"Participating Broker-Dealer" shall have the meaning set forth in Section
4(a)(i).
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"Purchase Agreement" shall have the meaning set forth in the preamble.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to such prospectus, and in each case including
all material incorporated by reference therein.
"Registrable Securities" shall mean the Securities of each series;
provided, however, that the Securities of any series shall cease to be
Registrable Securities of such series when (i) a Registration Statement with
respect to such Securities shall have been declared effective under the 1933 Act
and such Securities shall have been disposed of pursuant to such Registration
Statement, (ii) such Securities shall have been sold pursuant to Rule 144 or
shall then be eligible for sale pursuant to Rule 144(k) (or, in either case, any
similar provision then in force, but not Rule 144A) under the 1933 Act, (iii)
such Securities shall have ceased to be outstanding or (iv) such Securities have
been exchanged for Exchange Securities of the relevant series upon consummation
of the Exchange Offer.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws, (iii) all expenses of any Person in preparing or assisting in
preparing, word processing, printing and distributing, at the request of the
Company, any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with this
Agreement, (iv) all fees and disbursements relating to the qualification of the
Indenture under applicable securities laws, (v) the fees and disbursements of
the Trustee and its counsel, (vi) the fees and disbursements of counsel for the
Company and for the Initial Purchasers and, in the case
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of a Shelf Registration Statement, the fees and disbursements of one counsel for
the Holders (provided that there shall be a single counsel for the Initial
Purchasers and the Holders, satisfactory to the Company, and the fees of such
counsel shall not exceed $50,000) incurred on or before the initial
effectiveness of the Shelf Registration Statement, (vii) the fees and
disbursements of the independent public accountants of the Company, including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance, but excluding underwriting
discounts, if any, and commissions and transfer taxes, if any, relating to the
sale or disposition of Registrable Securities by the Holders and (viii) the fees
and expenses of obtaining the rating for the Registrable Securities in
accordance with Section 3(a)(xv) hereof.
"Registration Statement" shall mean any registration statement of the
Company that covers any of the Exchange Securities or the Registrable Securities
pursuant to the provisions of this Agreement and all amendments and supplements
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to Section
2(b) hereof.
"Shelf Registration Statement" shall mean a registration statement for the
Shelf Registration which covers all of the Registrable Securities (except
Registrable Securities that the Holders have elected not to include in such
Shelf Registration Statement) or Securities that represent an unsold allotment
for the original offering thereof on an appropriate form under Rule 415 under
the 1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(a)(xii).
"Trustee" shall have the meaning set forth in the preamble.
"Underwriters" shall have the meaning set forth in Section 3(e)(i).
"Underwritten Offering" shall mean a registration in which Registrable
Securities are sold to an Underwriter for reoffering to the public.
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2. Registration under the 1933 Act.
(a) (i) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company shall use its best efforts
to cause to be filed an Exchange Offer Registration Statement covering the
Exchange Offer on or prior to the date that is 90 days after the Closing Date,
to have such Registration Statement declared effective by the SEC on or prior to
the date that is 180 days after the Closing Date and remain effective until the
closing of the Exchange Offer and to consummate the Exchange Offer on or prior
to the date that is 210 days after the Closing Date. For purposes hereof,
"consummate" shall mean that the Exchange Offer Registration Statement shall
have been declared effective, subject to Section 2(b), the period of the
Exchange Offer provided in accordance with clause 2(a)(i)(B) below shall have
expired and all Registrable Securities of each series validly tendered in
connection with such Exchange Offer shall have been exchanged for Exchange
Securities of the corresponding series. The Company shall commence the Exchange
Offer by mailing the related Exchange Offer Prospectus and accompanying
documents to each Holder stating, in addition to such other disclosures as are
required by applicable law:
(A) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities validly
tendered will be accepted for exchange;
(B) the dates of acceptance for exchange (which shall be a period of
at least 30 days from the date such notice is mailed) (each such date being
an "Exchange Date");
(C) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any rights
under this Agreement, other than Securities that represent an unsold
allotment for the original offering thereof;
(D) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Security, together with the enclosed letters of transmittal, to
the institution and at the address specified in the notice prior to the
close of business on the last Exchange Date (the "Offer Termination Date");
and
(E) that Holders will be entitled to withdraw their election, not
later than the close of business on the Offer Termination Date, by sending
to the institution and at the address specified in the notice a telegram,
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telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Securities of each series
delivered for exchange and a statement that such Holder is withdrawing his
election to have such Registrable Securities exchanged.
(ii) As soon as practicable after the Offer Termination Date, the Company
shall:
(A) accept for exchange Registrable Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(B) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted for
exchange by the Company and issue, and use its best efforts to cause the
Trustee to promptly authenticate and mail to each Holder, an Exchange
Security of each series equal in aggregate principal amount to the
aggregate principal amount of the Registrable Securities of the
corresponding series so accepted for exchange from such Holder.
(iii) The Company shall use its best efforts to complete the Exchange
Offer as provided above and shall comply with the applicable requirements of the
1933 Act, the 1934 Act and other applicable laws and regulations in connection
with the Exchange Offer. The Exchange Offer shall not be subject to any
conditions, other than that the Exchange Offer does not violate applicable law
or any applicable interpretation of the Staff of the SEC.
(iv) The Company may require each Holder participating in the Exchange
Offer to represent to the Company that at the time of the consummation of the
Exchange Offer (A) any Exchange Securities received by such Holder in the
Exchange Offer will be acquired in the ordinary course of its business, (B) such
Holder will have no arrangement or understanding with any Person to participate
in the distribution of the Exchange Securities within the meaning of the 1933
Act or resale of the Exchange Securities in violation of the 1933 Act, (C) if
such Holder is not a broker-dealer, that it is not engaged in and does not
intend to engage in, the distribution of the Exchange Securities, (D) if such
Holder is a broker-dealer that it will receive Exchange Securities for its own
account in exchange for Securities that were acquired as a result of market-
making or other trading activities and that it will deliver a prospectus in
connection with any resale of such Exchange Securities, and (E) if such Holder
is an affiliate of the Company, that it will comply with the registration and
prospectus delivery requirements of the 1933 Act applicable to it.
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(b) In the event that (i) the Company determines that the Exchange Offer
Registration provided for in Section 2(a) above is not available or may not be
consummated as soon as practicable after the Offer Termination Date because it
would violate applicable law or the applicable interpretations of the Staff of
the SEC, (ii) the Exchange Offer is for any other reason not consummated within
210 days after the Closing Date or (iii) in the opinion of counsel for the
Initial Purchasers, a Registration Statement must be filed and a Prospectus must
be delivered by the Initial Purchasers in connection with any offering or sale
of Registrable Securities because such Registrable Securities represent an
unsold allotment for the original offering thereof, the Company shall use its
best efforts to cause to be filed as soon as practicable after such
determination, date or notice of such opinion of counsel is given to the
Company, as the case may be, a Shelf Registration Statement providing for the
resale of such Registrable Securities and to have such Shelf Registration
Statement declared effective by the SEC within 210 days after the Closing Date.
In the event the Company is required to file a Shelf Registration Statement
solely as a result of the matters referred to in clause (iii) of the preceding
sentence, the Company shall file and have declared effective by the SEC both an
Exchange Offer Registration Statement pursuant to Section 2(a) with respect to
all Registrable Securities and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration Statement)
with respect to offers and sales of Registrable Securities held by the Initial
Purchasers after completion of the Exchange Offer. The Company agrees to use its
best efforts to keep the Shelf Registration Statement continuously effective
until two years from the effective date thereof or such shorter period that will
terminate when all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (the "Effectiveness Period"). The Company further agrees to supplement
or amend the Shelf Registration Statement if required by the rules, regulations
or instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the 1933 Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder with respect to information relating to such Holder, and to use its best
efforts to cause any such amendment to become effective and such Shelf
Registration Statement to become usable as soon as practicable thereafter. The
Company agrees to furnish to the Holders of Registrable Securities copies of any
such supplement or amendment promptly after its being used or filed with the
SEC.
(c) The Company shall pay all Registration Expenses in connection with the
registration pursuant to Section 2(a) or Section 2(b). Each Holder shall pay all
underwriting discounts, if any, and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to a Shelf Registration Statement.
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(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to be effective during the period of such interference until
the offering of Registrable Securities pursuant to such Registration Statement
may legally resume.
(e) Notwithstanding anything to the contrary contained herein, if (i) the
Board of Directors of the Company determines in good faith that it is in the
best interests of the Company not to disclose the existence of or facts
surrounding any proposed or pending material corporate transaction involving the
Company or its subsidiaries and (ii) the Company notifies the Holders within two
Business Days after the Board of Directors makes such determination, the Company
may allow the Shelf Registration Statement to fail to be effective and usable as
a result of such nondisclosure for up to 120 days during the Effectiveness
Period, but in no event for any period in excess of 30 consecutive days;
provided, however, that the Effectiveness Period shall be extended by the number
of days during which such registration statement was not effective or usable
pursuant to the foregoing provisions.
(f) In the event that (i) the Exchange Offer Registration Statement
relating to the Exchange Offer is not filed with the SEC on or prior to the date
that is 90 days after the Closing Date (unless a Shelf Registration Statement is
filed on or prior to such date), (ii) the Exchange Offer Registration Statement
is not declared effective on or prior to the date that is 180 days after the
Closing Date (unless a Shelf Registration Statement has been filed on or prior
to such date), (iii) the Exchange Offer is not consummated on or prior to the
date that is 210 days after the Closing Date (unless a Shelf Registration
Statement has been filed on or prior to such date), (iv) a Shelf Registration
Statement with respect to resale of the Securities is not declared effective on
or prior to the date that is 210 days after the Closing Date (unless the
Exchange Offer has been consummated by that date) or (v) the Shelf Registration
Statement ceases to be effective at any time during the Effectiveness Period
(unless the Exchange Offer has been consummated by that date or unless such
cessation of effectiveness is permitted pursuant to Section 2(e)) (each such
event referred to in clauses (i) through (v), a "Registration Default"), then
the Company will pay additional interest (in addition to the interest otherwise
due on the Securities) to each Holder of Securities commencing upon the
occurrence of each such Registration Default in an amount equal to 0.50% per
annum, provided that such additional interest shall not exceed 0.50% per annum
in the aggregate and provided further that any Holder
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that does not deliver the information that the Company may request for inclusion
in the Shelf Registration Statement pursuant to Section 3(c) hereof upon such a
request by the Company shall not be entitled to any such additional interest for
any day after the date that is 5 Business Days after the date of request. Such
additional interest will cease accruing on such Securities with respect to any
Registration Default when such Registration Default has been cured.
(g) Without limiting the remedies available to the Initial Purchasers and
the Holders, the Company acknowledges that any failure by the Company to comply
with its obligations under Section 2(a) and Section 2(b) hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damage for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Section 2(a) and Section
2(b) hereof.
3. Registration Procedures.
(a) In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the
Company shall reasonably promptly:
(i) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form shall (A) be selected by
the Company, (B) in the case of a Shelf Registration, be available for the
sale of the Registrable Securities by the selling Holders thereof and (C)
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to
be filed therewith, and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(ii) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as
so supplemented, to be filed pursuant to Rule 424 under the 1933 Act; and
keep each Prospectus current during the period described under Section 4(3)
of, and Rule 174 under, the 1933 Act that is applicable to transactions by
brokers or dealers with respect to the Registrable Securities or Exchange
Securities;
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(iii) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to one counsel for the Holders and for the Initial
Purchasers and to each Underwriter of an Underwritten Offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus and any amendment or
supplement thereto and such other documents as such Holder or Underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and the Company consents to the
use of such Prospectus and any amendment or supplement thereto in
accordance with applicable law by each of the selling Holders of
Registrable Securities and any such Underwriters in connection with the
offering and sale of the Registrable Securities covered by and in the
manner described in such Prospectus or any amendment or supplement thereto
in accordance with applicable law;
(iv) use its best efforts (A) to cooperate with the selling Holders
of Registrable Securities and their counsel in connection with the
registration or qualification of the Registrable Securities under all
applicable state securities or blue sky laws of such jurisdictions as any
Holder of Registrable Securities covered by a Registration Statement shall
reasonably request in writing by the time the applicable Registration
Statement is declared effective by the SEC and (B) to cooperate with such
Holders in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. and do any and all other
acts and things which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the
Company shall not be required to (x) register or qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would
not otherwise be required to register or qualify but for this Section, (y)
file any general consent to service of process or (z) subject itself to
taxation in any such jurisdiction if it is not so subject;
(v) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and for the Initial
Purchasers and, if requested by such Persons, confirm in writing, (A) when
a Registration Statement has become effective and when any post-effective
amendment thereto has been filed and becomes effective, (B) of any request
by the SEC or any state securities authority for amendments and supplements
to a Registration Statement and Prospectus or for additional information
after the Registration Statement has become effective, (C) of the issuance
by the SEC or any state securities authority of any stop order suspending
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (D) if, between the effective date of
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a Registration Statement and the closing of any sale of Registrable
Securities covered thereby, the representations and warranties of the
Company contained in any underwriting agreement, securities sales agreement
or other similar agreement, if any, relating to the offering cease to be
true and correct in all material respects or if the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of
any proceeding for such purpose, (E) of the happening of any event during
the period a Shelf Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus
untrue in any material respect or which requires the making of any changes
in such Registration Statement or Prospectus in order to make the
statements therein not misleading and (F) of any determination by the
Company that a post-effective amendment to a Registration Statement would
be appropriate;
(vi) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide prompt notice to each Holder of the
withdrawal of any such order;
(vii) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(viii) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends (unless
required by applicable securities laws) and enable such Registrable
Securities to be in such denominations (consistent with the provisions of
the Indenture) and registered in such names as the selling Holders may
reasonably request at least two Business Days prior to the closing of any
sale of Registrable Securities;
(ix) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(a)(v)(B), (C), (D), (E) or (F) hereof, use
its best efforts, if necessary, to prepare a supplement or post-effective
amendment to a Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact
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necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; the Company agrees to notify
the Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to
suspend use of the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission;
(x) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or any
amendment or supplement to a Prospectus, or, if requested by the Initial
Purchasers or the Holders and their counsel due to a prospectus delivery
requirement under the 1933 Act of such Initial Purchaser or such Holder, as
the case may be, any document which is to be incorporated by reference into
a Registration Statement or Prospectus after the initial filing of a
Registration Statement, provide copies of such document to the Initial
Purchasers or the Holders and their counsel which documents will be subject
to review and comment for a period of at least 5 Business Days and make
such of the representatives of the Company as shall be reasonably requested
by the Initial Purchasers or the Holders or their counsel available for
discussion of such document, and not at any time to file or to make any
such amendment, supplement or document, of which the Initial Purchasers or
the Holders and their counsel shall not have previously been advised and
furnished a copy of, or to which the Initial Purchasers or the Holders or
their counsel shall reasonably object; provided, however, that no
additional interest shall accrue pursuant to Section 2(f) during the period
the Company is in good faith attempting to remedy or otherwise redress the
objections of Holders, Participating Broker-Dealers, the Initial Purchasers
or their counsel, as the case may be;
(xi) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement;
(xii) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration of
the Exchange Securities or Registrable Securities, as the case may be, and
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use its best efforts
to cause the Trustee to execute, all documents as may be required to effect
such changes and all other forms and documents required to be filed with
the SEC to enable the Indenture to be so qualified in a timely manner;
12
<PAGE>
(xiii) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Securities, any Underwriter participating in any disposition pursuant to
such Shelf Registration Statement, and counsel for the Holders, at
reasonable times and in a reasonable manner, all financial and other
records, pertinent documents and properties of the Company, and cause the
respective officers, directors and employees of the Company to supply all
information reasonably requested by any such representative, Underwriter,
attorney or accountant in connection with a Shelf Registration Statement,
in each case that would customarily be reviewed or examined in connection
with "due diligence" review of the Company; the Company may, prior to
furnishing any such information, require each Holder, its counsel, each
Participating Broker-Dealer, the Underwriters and their counsel to execute
a confidentiality agreement reasonably satisfactory to the Company to keep
confidential any non-public information relating to the Company received by
such person and not to disclose such information (other than to an
affiliate or prospective purchaser who agrees to respect the
confidentiality provisions of this Section 3(a)(xiii)) until such
information has been made generally available to the public unless such
disclosure is made in connection with a court proceeding or required by
law;
(xiv) if reasonably requested by any Holder of Registrable Securities
covered by a Registration Statement, (A) promptly include in a Prospectus
supplement or post-effective amendment such information with respect to
such Holder as such Holder reasonably requests to be included therein and
(B) make all required filings of such Prospectus supplement or such post-
effective amendment as soon as the Company has received notification of the
matters to be included in such filing;
(xv) cause all Registrable Securities covered by a Registration
Statement to be rated with the appropriate rating agencies, if so requested
by the Majority Holders; and
(xvi) in the case of an Underwritten Offering pursuant to a Shelf
Registration, enter into such customary agreements and take all such other
customary actions in connection therewith (including those reasonably
requested by counsel for the Holders) in order to expedite or facilitate
the disposition of such Registrable Securities and in such connection, (A)
to the extent possible, make such representations and warranties to the
Holders and any Underwriters of such Registrable Securities with respect to
the business of the Company and its subsidiaries, the Registration
Statement, Prospectus and documents incorporated
13
<PAGE>
by reference or deemed incorporated by reference, if any, in each case, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (B) obtain opinions of counsel to the Company (which counsel and
opinions, in form, scope and substance, shall be reasonably satisfactory to
the Holders and such Underwriters and their respective counsel) addressed
to each selling Holder and Underwriter of Registrable Securities, covering
the matters customarily covered in opinions requested in underwritten
offerings, (C) obtain "cold comfort" letters from the independent certified
public accountants of the Company (and, if necessary, any other certified
public accountant of any subsidiary of the Company, or any business
acquired by the Company for which financial statements and financial data
are or are required to be included in the Registration Statement) addressed
to each selling Holder and Underwriter of Registrable Securities, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings, and (D) deliver such documents and certificates as
may be reasonably requested by counsel for the Holders to evidence the
continued validity of the representations and warranties of the Company
made pursuant to clause (A) above and to evidence compliance with any
customary conditions in an underwriting agreement. In the case of any
Underwritten Offering, the Company shall provide written notice to the
Holders of all Registrable Securities of such Underwritten Offering at
least 30 days prior to the filing of a prospectus supplement for such
Underwritten Offering. Such notice shall (x) offer each such Holder the
right to participate in such Underwritten Offering, (y) specify a date,
which shall be no earlier than 10 days following the date of such notice,
by which such Holder must inform the Company of its intent to participate
in such Underwritten Offering and (z) include the instructions such Holder
must follow in order to participate in such Underwritten Offering.
(b) Each Holder of Registrable Securities agrees, if requested (pursuant
to a timely written notice) by the managing underwriters in an underwritten
offering or by a placement agent in a private offering of the Company's debt
securities, not to effect any private sale or distribution (including a sale
pursuant to Rule 144 or Rule 144A under the 1933 Act, but excluding non-public
sales to any of its affiliates, officers, directors, employees and controlling
persons), of any of the Registrable Securities except pursuant to an Exchange
Offer, during the period beginning 10 days prior to, and ending 90 days after
the closing date of the underwritten offering.
(c) In the case of a Shelf Registration Statement, the Company may require
each Holder of Registrable Securities to promptly furnish, but not later than 5
Business Days after written request, to the Company such information regarding
the Holders and the
14
<PAGE>
proposed distribution by such Holder of such Registrable Securities as the
Company may from time to time reasonably request in writing. Notwithstanding
anything in this Agreement to the contrary, if a Holder does not provide the
information required above, then such Holder will not be included in such Shelf
Registration Statement.
(d) (i) In the case of a Shelf Registration Statement, each Holder and
each Participating Broker-Dealer agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3(a)(v) hereof, such Holder or Participating Broker-Dealer will forthwith
discontinue disposition of Registrable Securities pursuant to a Registration
Statement until such Holder's or Participating Broker-Dealer's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section
3(a)(ix) hereof, and, if so directed by the Company, such Holder or
Participating Broker-Dealer will deliver to the Company (at its expense) all
copies in its possession, other than permanent file copies then in such Holder's
or Participating Broker-Dealer's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
(ii) If the Company shall give any such notice to suspend the
disposition of Registrable Securities pursuant to a Registration Statement,
the Company shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Agreement by the number of
days during the period from and including the date of the giving of such
notice to and including the date when the Holders shall have received
copies of the supplemented or amended Prospectus necessary to resume such
dispositions.
(e) (i) The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers (the "Underwriters") that
will administer the offering will be selected by the Majority Holders and must
be reasonably acceptable to the Company.
(ii) No Holder of Registrable Securities may participate in any
Underwritten Offering hereunder unless such Holder (A) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (B) completes and executes all questionnaires,
underwriting agreements, powers of attorney, lock-up letters and other
documents reasonably required under the terms of such underwriting
arrangements.
15
<PAGE>
(ii) The Company shall not under any circumstances be liable for any
underwriting discounts or commissions or reimbursement of underwriters'
expenses in connection with an Underwritten Offering.
4. Participation of Broker-Dealers in Exchange Offer.
(a) (i) The Company understands that the Staff of the SEC has taken
the position that any broker-dealer that receives Exchange Securities for
its own account in the Exchange Offer in exchange for Securities that were
acquired by such broker-dealer as a result of market-making or other
trading activities (a "Participating Broker-Dealer") may be deemed to be an
"underwriter" within the meaning of the 1933 Act in connection with any
resale of such Exchange Securities.
(ii) The Company understands that it is the Staff's position that if
the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect
and the means by which Participating Broker-Dealers may resell the Exchange
Securities, without naming the Participating Broker-Dealers or specifying
the amount of Exchange Securities owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the 1933 Act in connection with resales of
Exchange Securities for their own accounts, so long as the Prospectus
otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of this
Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be reasonably requested by the Initial Purchasers or by one or more
Participating Broker-Dealers, in each case as provided in clause 4(b)(ii) below,
in order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(a)(ix), for a period exceeding 180
days after the Offer Termination Date (as such period may be extended
pursuant to the penultimate paragraph of Section 3) and Participating
Broker-Dealers and other persons, if any, subject to the prospectus
delivery requirements of the 1933 Act shall not be authorized by the
Company to deliver and shall not deliver such
16
<PAGE>
Prospectus after such period in connection with the resales contemplated by
this Section; and
(ii) the application of the Shelf Registration procedures set forth
in Section 3 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the 1933
Act and the rules and regulations thereunder, will be in conformity with
the reasonable request to the Company by the Initial Purchasers or with the
reasonable request in writing to the Company by one or more broker-dealers
who certify to the Initial Purchasers and the Company in writing that they
anticipate that they will be Participating Broker-Dealers; and provided
further that, in connection with such application of the Shelf Registration
procedures set forth in Section 3 to an Exchange Offer Registration, the
Company shall be obligated (A) to deal only with the entity representing
the Participating Broker-Dealers, which shall be J.P. Morgan Securities
Inc. unless it elects not to act as such representative, (B) to pay the
fees and expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Initial Purchasers and (C) to
cause to be delivered only one, if any, "cold comfort" letter with respect
to the Prospectus in the form existing on the Offer Termination Date.
5. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchasers, each Holder and each Person, if any, who controls the Initial
Purchasers or any Holder within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, or is under common control with, or is controlled
by, the Initial Purchasers or any Holder, from and against any and all losses,
claims, damages and liabilities (including without limitation the reasonable
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted) and arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference), or arising out of or
based upon any omissions or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto, including all documents incorporated therein by reference), or arising
out of or based upon any omission or alleged omission to state therein a
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or
17
<PAGE>
liabilities arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
such Initial Purchasers or Holder furnished in writing to the Company by or on
behalf of any Initial Purchaser or Holder expressly for use in connection
therewith. In connection with any Underwritten Offering permitted by Section 3
hereof, the Company will also indemnify the Underwriters, if any, their officers
and directors and each Person who controls such Underwriter within the meaning
of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same
extent as provided above with respect to the indemnification of the Holders, if
requested in connection with any Registration Statement.
(b) Each of the Initial Purchasers and Holders agree, severally and not
jointly, to indemnify and hold harmless the Company, its directors and officers,
and any Person who controls the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Initial Purchasers and Holders, but only with
respect to information relating to each Initial Purchaser or Holder furnished in
writing by or on behalf of such Initial Purchaser or Holder expressly for use in
any Registration Statement (or any amendment thereto) or any prospectus (or any
amendment or supplement thereto).
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person jointly with any other
Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
proceeding and shall pay the reasonable fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and in the reasonable
opinion of counsel to the Indemnified Person representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Person shall not,
in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for (A) the reasonable fees and expenses of more than
one separate firm (in addition to
18
<PAGE>
any local counsel) for the Initial Purchasers and all Persons, if any, who
control the Initial Purchasers within the meaning of either Section 15 of the
1933 Act or Section 20 of the 1934 Act, (B) the fees and expenses of more than
one separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and each Person, if
any, who controls the Company within the meaning of either such Section and (C)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Holders and all Persons, if any, who control any Holders within
the meaning of either such Section. Any such separate firm shall be reasonably
satisfactory to the Indemnifying Person and any such firm for the Initial
Purchasers and such control Persons of Initial Purchasers shall be designated in
writing by J.P. Morgan Securities Inc., any such separate firm for the Holders
and such Persons who control Holders shall be designated in writing by the
Majority Holders and any such separate firm for the Company, its directors, its
officers and such control Persons of the Company shall be designated in writing
by the Company. The Indemnifying Person shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Person
shall, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section is unavailable to
an Indemnified Person under paragraph (a) or (b) hereof in respect of any
losses, claims, damages or liabilities referred to therein, then an Indemnifying
Person, in lieu of indemnifying such Indemnified Person, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Initial Purchasers or
Holders on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and the Initial Purchasers or Holders on the other hand shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
by Initial Purchasers or the Holders on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
19
<PAGE>
(e) The Company, the Initial Purchasers and each Holder agree that it
would not be just or equitable if contribution pursuant to this Section were
determined by pro rata allocation (even if the Initial Purchasers and the
Holders were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph 5(d) above. The amount paid or payable by an Indemnified Person
as a result of the losses, claims, damages and liabilities referred to in
paragraph 5(d) above shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section, no Initial Purchaser or Holder
shall be required to indemnify or contribute any amount in excess of the amount
by which the total price at which Registrable Securities were sold by such
Initial Purchaser or Holder exceeds the amount of any damages that such Initial
Purchaser or Holder has otherwise been required to pay by reason of 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. The Holders' obligations to contribute
pursuant to this Section are several in proportion to the aggregate principal
amount of Registrable Securities sold by them pursuant to such Registration
Statement.
(f) Any losses, claims, damages or liabilities for which an Indemnified
Person is entitled to indemnification or contribution under this Section shall
be paid by the Indemnifying Person to the Indemnified Person as such losses,
claims, damages or liabilities are incurred. The indemnity and contribution
agreements contained in this Section and the representations and warranties of
the Company set forth in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of any
Initial Purchaser, any Holder or any Person controlling any Initial Purchaser,
any Holder, the Company's directors or officers or any Person controlling the
Company, (ii) acceptance of any Exchange Securities, (iii) any termination of
this Agreement and (iv) any sale of Registrable Securities pursuant to a Shelf
Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into, and on
or after the date of this Agreement will not enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
20
<PAGE>
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of Holders of at least
a majority in aggregate principal amount of the outstanding Registrable
Securities affected by such amendment, modification, supplement, waiver or
consent; provided, however, that no amendment, modification, supplement, waiver
or consent to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder.
(c) Notices. (i) All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(A) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section, which address initially is, with respect to the Initial Purchasers, the
address set forth in the Purchase Agreement; and (B) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section.
(ii) All such notices and communications shall be deemed to have been
duly given at the time delivered, if personally delivered; five Business
Days after being deposited in the mail, postage pre-paid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.
(iii) Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the
Trustee, at the address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment or assumption, subsequent Holders; provided that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement. If any
transferees of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement
21
<PAGE>
and such person shall be entitled to receive the benefits hereof. The
Initial Purchasers shall have no liability or obligation to the Company with
respect to any failure by a Holder to comply with, or any breach by any Holder
of, the obligations of such Holder under this Agreement.
(e) Third Party Beneficiary. Each Holder shall be a third party
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by laws of the State
of New York.
(i) Severability. In the event that one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SECURITY CAPITAL GROUP
INCORPORATED
/s/ Jeffrey A. Klopf
By _____________________________
Name:
Title:
J.P. MORGAN SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH, PIERCE, FENNER
AND SMITH INCORPORATED
CHASE SECURITIES INC.
By: J.P. MORGAN SECURITIES INC.
/s/ Robert Post
By __________________________
Name: Robert Post
Title: Managing Director
23
<PAGE>
EXHIBIT 12
SECURITY CAPITAL GROUP INCORPORATED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
---------------------- --------------------------------------------------------
1998 1997 1997 1996 1995(1) 1994 1993
------- ------- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Earnings (loss) from Operations $33,485 ($999) $ 38,241 ($9,693) ($21,274) $11,849 $ 8,333
Add:
Interest Expense 12,799 28,077 104,434 117,224 103,804 53,789 3,786
------- ------- -------- -------- -------- ------- -------
Earnings as Adjusted $46,284 $27,078 $142,675 $107,531 $ 82,530 $65,638 $12,119
======= ======= ======== ======== ======== ======= =======
Fixed Charges:
Interest Expense $12,799 $28,077 $104,434 $117,224 $103,804 $53,789 $ 3,786
Captialized Interest 6,504 43,323 69,883 11,448 4,404 3,184 98
------- ------- -------- -------- -------- ------- -------
Total Fixed Charges $19,303 $71,400 $174,317 $128,672 $108,208 $56,973 $ 3,884
======= ======= ======== ======== ======== ======= =======
Ratio of Earnings to Fixed Charges 2.4 0.4 0.8 0.8 0.8 1.2 3.1
======= ======= ======== ======== ======== ======= =======
(1) Excludes a one time non-cash expense item ($158.4 million) incurred
in acquiring the Services Division from a related party.
</TABLE>
<PAGE>
Exhibit 15
August 12, 1998
Board of Directors and Shareholders of
Security Capital Group Incorporated:
We are aware that Security Capital Group Incorporated has incorporated by
reference in its Registration Statement on Form S-4, its Form 10-Q for the
quarter ended March 31, 1998, which includes our report dated May 12, 1998
covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933 (the "Act"), that report
is not considered a part of such registration statement or a report prepared or
certified by our firm within the meaning of Sections 7 and 11 of the Act.
Very Truly Yours,
ARTHUR ANDERSEN LLP
<PAGE>
Exhibit 21
SUBSIDIARIES OF
SECURITY CAPITAL GROUP INCORPORATED
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
Belmont One Corporation................................................ Delaware
Belmont Two Corporation................................................ Delaware
Belmont Village, L.P................................................... Delaware
BelmontCorp............................................................ Maryland
Coast Services Incorporated............................................ Maryland
East Mixed-Use Realty Investors Trust.................................. Maryland
Harbor Capital Incorporated............................................ Delaware
Midwest Mixed-Use Realty Investors Trust............................... Maryland
SC Group Incorporated.................................................. Texas
SC Realty Incorporated................................................. Nevada
SCERF Incorporated..................................................... Maryland
SCPG Services Incorporated............................................. Maryland
SCPG Ventures Incorporated............................................. Maryland
Security Capital BVI Holdings Incorporated............................. Maryland
Security Capital Financial Services Group Incorporated................. Delaware
Security Capital Global Capital Management Group (Asia) Incorporated... Delaware
Security Capital Global Capital Management Group Incorporated.......... Delaware
Security Capital Global Strategic Group Incorporated................... Maryland
Security Capital Investment Research Incorporated...................... Delaware
Security Capital Management Incorporated............................... Delaware
Security Capital Markets Group Incorporated............................ Delaware
Security Capital Preferred Growth Incorporated......................... Maryland
Security Capital Real Estate Mutual Funds Incorporated................. Maryland
Security Capital Real Estate Research Group Incorporated............... Maryland
West Mixed-Use Realty Investors Trust.................................. Maryland
ARCHSTONE
Archstone Communities Incorporated..................................... Delaware
Archstone Communities Trust............................................ Maryland
Archstone Financial Services, Inc...................................... Delaware
Atlantic Alabama Multifamily Trust..................................... Alabama
Atlantic Development Services Incorporated............................. Delaware
Atlantic Multifamily Limited Partnership-I............................. Delaware
Atlantic-Alabama (1) Incorporated...................................... Maryland
Atlantic-Alabama (2) Incorporated...................................... Maryland
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
Atlantic-Alabama (3) Incorporated...................................... Delaware
Atlantic-Alabama (4) Incorporated...................................... Delaware
Atlantic-Alabama (5) Incorporated...................................... Maryland
Atlantic-Alabama (6) Incorporated...................................... Maryland
Atlantic-Tennessee Limited Partnership................................. Delaware
Las Flores Development Company......................................... Texas
PTR Development Services Incorporated.................................. Delaware
PTR Holdings (Texas) Incorporated...................................... Texas
PTR Multifamily Holdings Incorporated.................................. Delaware
PTR Multifamily Incorporated........................................... Delaware
PTR Texas Holdings (1) Incorporated.................................... Delaware
PTR-California Holdings (1) Incorporated............................... Maryland
PTR-California Holdings (2) Incorporated............................... Maryland
PTR-California Holdings (3) Incorporated............................... Delaware
PTR-Colorado (1), LLC.................................................. Colorado
PTR-New Mexico (1) Incorporated........................................ Delaware
Resident Advantage Incorporated........................................ Delaware
SCA Florida Holdings (1) Incorporated.................................. Florida
SCA Florida Holdings (2) Incorporated.................................. Delaware
SCA North Carolina Limited Partnership................................. Delaware
SCA-Alabama Multifamily Trust.......................................... Alabama
SCA-I Incorporated..................................................... Delaware
SCA-Indiana Limited Partnership........................................ Delaware
SCA-North Carolina (1) Incorporated.................................... Maryland
SCA-North Carolina (2) Incorporated.................................... Maryland
SCA-South Carolina (1) Incorporated.................................... Maryland
SCA-Tennessee (1) Incorporated......................................... Maryland
SCA-Tennessee (2) Incorporated......................................... Maryland
SCA-Tennessee (3) Incorporated......................................... Maryland
SCA-Tennessee (4) Incorporated......................................... Maryland
SCA-Tennessee Limited Partnership...................................... Delaware
SCG Realty Services Incorporated....................................... Delaware
SCI-Kansas City (1) Incorporated....................................... Delaware
SCP Nevada Holdings 1 Incorporated..................................... Nevada
SCP Utah Holdings 1 Incorporated....................................... Utah
SCP Utah Holdings 2 Incorporated....................................... Utah
SCP Utah Holdings 4 Incorporated....................................... Utah
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
SCP Utah Holdings 5 Incorporated....................................... Utah
Security Capital Atlantic Multifamily Inc.............................. Delaware
Spectrum Apartment Locators, Inc....................................... Texas
PROLOGIS
- --------
1440 Goodyear Partners................................................. Texas
CS Integrated Investment Management LLC................................ Delaware
CS Integrated Investments Southwest LLC................................ Delaware
CS Integrated LLC...................................................... Delaware
CS Integrated Retail Services LLC...................................... Delaware
CS Integrated-Texas Limited Partnership................................ Delaware
Enterprise Refrigerated Services LLC................................... Delaware
Frigoscandia SA........................................................ Luxembourg
Frigo SARL............................................................. Luxembourg
International Industrial Investments Incorporated...................... Maryland
Logistar Belgium SARL.................................................. Luxembourg
Logistar BV............................................................ Luxembourg
Logistar CR s.f.o. - Czech Republic.................................... Czech Republic
Logistar Czech Republic SARL........................................... Netherlands
Logistar France BV..................................................... Netherlands
Logistar France I SAS - France......................................... France
Logistar France SARL................................................... Netherlands
Logistar France SARL I................................................. Luxembourg
Logistar France SAS.................................................... Netherlands
Logistar Germany SARL.................................................. Luxembourg
Logistar Italy SARL.................................................... Luxembourg
Logistar Netherlands I SARL............................................ Luxembourg
Logistar Netherlands II SARL........................................... Luxembourg
Logistar Netherlands SARL.............................................. Netherlands
Logistar Poland SARL................................................... Luxembourg
Logistar SARL.......................................................... Luxembourg
Logistar Sp. zo.o - Poland............................................. Poland
Logistar Spain BV...................................................... Netherlands
Logistar Spain SARL.................................................... Luxembourg
Logistar UK SARL....................................................... Luxembourg
PLD International Incorporated......................................... Delaware
ProLogis Alabama Trust................................................. Alabama
ProLogis De Mexico SA DE CV............................................ Mexico
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
ProLogis Development Services Incorporated............................................ Delaware
ProLogis Houston Holdings, Inc........................................................ Delaware
ProLogis International Incorporated................................................... Delaware
ProLogis IV, Inc...................................................................... Delaware
ProLogis Limited Partnership-I........................................................ Delaware
ProLogis Limited Partnership-II....................................................... Delaware
ProLogis Limited Partnership-III (d/b/a SC Industrial Partners Limited Partnership)... Delaware
ProLogis Limited Partnership-IV....................................................... Delaware
ProLogis Logistics Holdings LLC....................................................... Delaware
ProLogis Logistics Services Incorporated.............................................. Delaware
ProLogis Management Incorporated...................................................... Delaware
ProLogis Management Services Incorporated............................................. Delaware
ProLogis Trust........................................................................ Maryland
ProLogis-Alabama (1) Incorporated..................................................... Maryland
ProLogis-Alabama (2) Incorporated..................................................... Maryland
ProLogis-DS Mexico Incorporated....................................................... Maryland
ProLogis-Kansas City (1) Incorporated................................................. Delaware
ProLogis-North Carolina (1) Incorporated.............................................. Maryland
ProLogis-North Carolina (2) Incorporated.............................................. Maryland
ProLogis-North Carolina Limited Partnership........................................... Delaware
Red Mountain Joint Venture............................................................ Texas
SCI Logistar Management SARL.......................................................... Luxembourg
SCI Mexico Industrial Trust........................................................... Maryland
Security Capital Logistar International Fund SCA...................................... Luxembourg
HOMESTEAD
- ---------
Atlantic Homestead Village (1) Incorporated........................................... Maryland
Atlantic Homestead Village (2) Incorporated........................................... Maryland
Atlantic Homestead Village Limited Partnership........................................ Delaware
BTW II Incorporated................................................................... Delaware
BTW III Incorporated.................................................................. Delaware
BTW Incorporated...................................................................... Delaware
BTW Limited Partnership............................................................... Delaware
Homestead Alabama Incorporated........................................................ Alabama
Homestead Village Incorporated........................................................ Maryland
Homestead Village Management Incorporated............................................. Delaware
HVI Trust............................................................................. Maryland
KC Homestead Village Redevelopment Corporation........................................ Missouri
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
Missouri Homestead Village Incorporated................................ Maryland
PTR Homestead Village (1) Incorporated................................. Maryland
PTR Homestead Village (2) Incorporated................................. Maryland
PTR Homestead Village Limited Partnership.............................. Delaware
STRATEGIC HOTEL
- ---------------
GH Inn, L.L.C.......................................................... Delaware
Inmobiliaria Nacional Mexicana, S.A. de C.V............................ Mexico
Poydras Plaza Hotel Venture............................................ Louisiana
Propamex, S.A. de C.V.................................................. Mexico
SHC Beverly Hills, L.L.C............................................... Delaware
SHC Burbank, L.L.C..................................................... Delaware
SHC Capitol L.L.C...................................................... Delaware
SHC Extended Stay Hotel, L.L.C......................................... Delaware
SHC Funding Incorporated............................................... Delaware
SHC Holdings L.L.C..................................................... Delaware
SHC Laguna Niguel, L.L.C............................................... Delaware
SHC Mexico Holdings Incorporated....................................... Delaware
SHC Mortgage Incorporated.............................................. Delaware
SHC Paris-1, L.L.C..................................................... Delaware
SHC Paris-2, L.L.C..................................................... Delaware
SHC Paris-3, L.L.C..................................................... Delaware
SHC Paris-4, L.L.C..................................................... Delaware
SHC Paris-5, L.L.C..................................................... Delaware
SHC Paris-6, L.L.C..................................................... Delaware
SHC Philadelphia L.L.C................................................. Delaware
SHC Phoenix I, L.L.C................................................... Delaware
SHC Phoenix II, L.L.C.................................................. Delaware
SHC Rancho, L.L.C...................................................... Delaware
SHC San Francisco, L.L.C............................................... Delaware
SHC Santa Clara L.L.C.................................................. Delaware
SHC St. Ermin's (Delaware), Inc........................................ Delaware
SHC Westport Inn L.L.C................................................. Delaware
SHC Westport Look L.L.C................................................ Delaware
SHC Westport Plaza L.L.C............................................... Delaware
SHCI Santa Monica Beach Hotel, L.L.C................................... Delaware
Strategic Hotel Capital Incorporated................................... Delaware
Strategic Hotel Capital Limited Partnership............................ Delaware
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
Strategic Hotel Capital Limited Partnership-II......................... Delaware
Strategic Hotel Funding, L.L.C......................................... Delaware
USREALTY
CCRT I Incorporated.................................................... Delaware
CCRT II Incorporated................................................... Delaware
CCRT McCaffery Developments L.L.C...................................... Delaware
City Center Retail Trust............................................... Maryland
City Center Retail Trust/McCaffery Developments, L.P................... Delaware
CWS Communities Incorporated........................................... Delaware
CWS Communities LP..................................................... Delaware
CWS Communities Trust.................................................. Maryland
CWS Management Services Incorporated................................... Delaware
LWP Associates LLC..................................................... Delaware
NPC-1 Incorporated..................................................... Maryland
Pacific Retail Trust................................................... Maryland
Parking Services International Incorporated............................ Maryland
PRT Sunnyside, L.L.C................................................... Delaware
Retail Property Partners Limited Partnership........................... Delaware
Security Capital Holdings S.A.......................................... Luxembourg
Security Capital U.S. Realty........................................... Luxembourg
UGP-Skypark, L.L.C..................................................... Delaware
UGPT-Skypark, Inc...................................................... Delaware
UGPT-Skypark Limited Partnership....................................... Delaware
Urban Growth Property Limited Partnership.............................. Delaware
Urban Growth Property Trust............................................ Maryland
Urban Growth Wabash Randolph Partnership............................... Delaware
Van Wells Realty Company, LLC.......................................... Illinois
STORAGE USA
441 Mini-Storage Partners, Ltd......................................... Florida
Buzzman Partners I, Ltd. Partnership................................... Pennsylvania
Buzzman Partners II, Ltd. Partnership.................................. Pennsylvania
Clarendon Storage Associates Ltd Partnership........................... Virginia
Cole/Morgan, Ltd....................................................... Texas
Dade County Mini-Storage Associates, Ltd............................... Florida
Huron Acquisition, Inc................................................. Tennessee
Parklawn Storage Partners, LP.......................................... Tennessee
Preston Self Storage, Ltd.............................................. Texas
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
Prospect Heights Self Storage, LLC..................................... Illinois
Southeast Mini-Storage Limited Partners................................ Florida
Storage Partners of Okeechobee, Ltd.................................... Florida
Storage Partners of Paoli, LP.......................................... Tennessee
Storage USA Franchise Corp............................................. Tennessee
Storage USA of Palm Beach County Ltd. Partnership...................... Maryland
Storage USA Trust...................................................... Maryland
Sunset Mini-Storage Partners, Ltd...................................... Florida
SUSA/38th Avenue, Capitola LP.......................................... California
SUSA Hackensack LP..................................................... Tennessee
SUSA Harrison LP....................................................... Tennessee
SUSA Hollywood, LP..................................................... Tennessee
SUSA Investments I, LLC................................................ Virginia
SUSA Investments II, LLC............................................... Virginia
SUSA Management, Inc................................................... Tennessee
SUSA Management, Inc................................................... Tennessee
SUSA Mesa L.P.......................................................... Tennessee
SUSA Nashville L.P..................................................... Tennessee
SUSA Orange LP......................................................... Tennessee
SUSA Partnership, L.P.................................................. Tennessee
SUSA/Poplar Partners, LP............................................... Tennessee
SUSA Secaucus LP....................................................... Tennessee
Tamiami Mini-Storage Partners, Ltd..................................... Florida
REGENCY REALTY
- --------------
Barnett Shoales, LLC................................................... Georgia
Branch/HOP Associates, L.P............................................. Georgia
Chestnut Powder LLC.................................................... Georgia
Edmunson Orange Corp................................................... Tennessee
Equiport Associates, L.P............................................... Georgia
Fieldstone Associates, L.P............................................. Georgia
Hyde Park Partners, L.P................................................ Ohio
Landcom Regency Mandarin, Ltd.......................................... Florida
Marietta Outparcel, Inc................................................ Georgia
Old Fort Associates, L.P............................................... Georgia
R&M Western Partnership, L.P........................................... Delaware
Regency Centers, L.P................................................... Delaware
Regency Ocean East Partnership Limited................................. Florida
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
Regency Office Partnership, L.P.................................... Delaware
Regency Realty Corporation......................................... Florida
Regency Realty Group, Inc.......................................... Florida
Regency Retail Centers of Ohio, Inc................................ Ohio
Regency Rosewood Temple Terrace, Ltd............................... Florida
Roswell Village, Ltd............................................... Georgia
RRC Acquisitions, Inc.............................................. Florida
RRC Acquisitions Two, Inc.......................................... Florida
RRC AL SPC, Inc.................................................... Alabama
RRC FL Five, Inc................................................... Florida
RRC FL Seven, Inc.................................................. Florida
RRC FL SPC, Inc.................................................... Florida
RRC GA SPC, Inc.................................................... Georgia
RRC General SPC, Inc............................................... Florida
RRC Lender, Inc.................................................... Florida
RRC Limited SPC, Inc............................................... Florida
RRC MS SPC, Inc.................................................... Mississippi
RRC Operating Partnership of Georgia L.P........................... Georgia
RSP IV Criterion, Ltd.............................................. Florida
Treasure Coast Investors, Ltd...................................... Florida
Village Commons Shopping Center.................................... Florida
CARRAMERICA
- -----------
1717 Pennsylvania Avenue, L.L.C.................................... Delaware
1747 Pennsylvania Avenue Associates, L.P........................... Delaware
Bond Building Limited Partnership.................................. District of Columbia
Bond Texas Limited Partnership..................................... Texas
CC-JM II Associates................................................ Virginia
Capital 50 Associates.............................................. District of Columbia
Carr Development & Construction, LP................................ Delaware
Carr Parkway North I Corporation................................... Delaware
Carr Real Estate Services, L.L.C................................... Delaware
Carr Real Estate Services Partnership.............................. District of Columbia
Carr Realty, L.P................................................... Delaware
Carr Redmond Corporation........................................... Delaware
Carr Square 225 Associates......................................... District of Columbia
CarrAmerica Real Estate Services, L.L.C............................ Delaware
CarrAmerica Realty Corporation..................................... Maryland
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- ------------- ---------------
<S> <C>
CarrAmerica Realty GP Holdings, Inc................................... Delaware
CarrAmerica Realty, L.P............................................... Delaware
CarrAmerica Realty LP Holdings, Inc................................... Delaware
CarrAmerica Realty Properties, Inc.................................... Maryland
CarrAmerica Realty Services, Inc...................................... Delaware
CarrAmerica Techmart, L.L.C........................................... Delaware
CarrAmerica U.S. West, LLC............................................ Delaware
Palomar Oaks, L.L.C................................................... Delaware
Phase I 456 Associates................................................ District of Columbia
Phase I 7th & F Associates............................................ District of Columbia
Square 24 Associates.................................................. Delaware
Square 50 Associates.................................................. District of Columbia
Willard Associates.................................................... District of Columbia
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction
Name of Entity of Organization
- -------------- ---------------
<S> <C>
GLOBAL REALTY
- -------------
Acorn Properties SARL.......................................... Luxembourg
Acorn Storage Centres (Croydon) Ltd............................ United Kingdom
Acorn Storage Centres Ltd...................................... United Kingdom
Acorn Storage Development Ltd.................................. United Kingdom
Acorn Storage Holdings S.A.R.L................................. Luxembourg
Acorn Storage Management Ltd................................... United Kingdom
Acorn Storage S.A.............................................. Luxembourg
Acorn Storage Services Ltd..................................... United Kingdom
Akeler Development Ltd......................................... United Kingdom
Akeler Glasgow Ltd............................................. United Kingdom
Akeler Management Ltd.......................................... United Kingdom
Akeler Management Ltd.......................................... United Kingdom
Akeler Property Investments S.A.R.L............................ Luxembourg
Akeler S.A..................................................... Luxembourg
Akeler Services Ltd............................................ United Kingdom
BC Holdings S.A................................................ Luxembourg
Bernheim-Comofi S.A............................................ Luxembourg
Bramerton Developments Ltd..................................... United Kingdom
City & West End Developments Ltd............................... United Kingdom
City & West End Management Ltd................................. United Kingdom
City & West End Property Investments S.A.R.L................... Luxembourg
City & West End Services Ltd................................... United Kingdom
City and West End Properties S.A............................... Luxembourg
Flexible Storage Ltd........................................... United Kingdom
Halesworth Developments Ltd.................................... United Kingdom
Halvergate Developments Ltd.................................... United Kingdom
Ormesby Developments Ltd....................................... United Kingdom
Rensmeade Ltd.................................................. United Kingdom
Security Capital Global Realty S.A............................. Luxembourg
U Stor-it-all Ltd.............................................. United Kingdom
UK Storage (Holdings) Ltd...................................... United Kingdom
UK Storage Ltd................................................. United Kingdom
Wickhampton Developments Ltd................................... United Kingdom
</TABLE>
-10-
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement on Form S-4 of our Security Capital
Group Incorporated report dated March 18, 1998, our ProLogis Trust (formerly
known as Security Capital Industrial Trust) reports dated March 13, 1998 and to
all references to our Firm included in or made a part of this registration
statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 12, 1998
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Security Capital Group Incorporated of our report dated January 31,
1998, except as to Note 13 which is as of March 6, 1998, relating to the balance
sheets of Security Capital Pacific Trust as of December 31, 1997 and 1996, the
related statements of earnings, shareholders' equity, and cash flows for each of
the years in the three-year period ended December 31, 1997, and the related
schedule as of December 31, 1997, which report appears in the December 31, 1997
annual report on Form 10-K of Security Capital Group Incorporated, and to the
reference to our firm under the heading "Experts" in the Registration Statement.
KPMG Peat Marwick LLP
Chicago, Illinois
August 12, 1998
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of our reports
dated February 28, 1997 and February 25, 1998 related to the consolidated
financial statements of Security Capital U.S. Realty, appearing in Security
Capital's Form 10-K for the year ended December 31, 1997. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE SARL
Luxembourg
August 12, 1998
<PAGE>
Exhibit 23.6
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 3, 1997 with respect to the financial
statements at December 31, 1996 and 1995 and for each of the three years in the
period ended December 31, 1996 of Security Capital Atlantic Incorporated, which
is incorporated by reference in the Registration Statement on Form S-4 of
Security Capital Group Incorporated for the registration of its Exchange Notes
due 2005, 2007 and 2028.
ERNST & YOUNG LLP
Dallas, Texas
August 10, 1998
<PAGE>
Exhibit 23.7
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 24, 1997 with respect to the financial
statements at December 31, 1996 and for the year ended December 31, 1996 of
Homestead Village Incorporated, which is incorporated by reference in the
Registration Statement on Form S-4 of Security Capital Group Incorporated for
the registration of its Exchange Notes due 2005, 2007 and 2028.
ERNST & YOUNG LLP
Dallas, Texas
August 10, 1998
<PAGE>
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
_________
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation (I.R.S. Employer
ororganization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
SECURITY CAPITAL GROUP INCORPORATED
(Exact name of obligor as specified in its charter)
MARYLAND 36-3692698
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Lincoln Avenue
Santa Fe, New Mexico 87501
(Address of principal executive offices) (Zip Code)
NOTES
(Title of indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each
such affiliation.
The obligor is not an affiliate of the trustee or of its
parent, State Street Corporation.
(See note on page 2.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit 2
to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-
17940) and is incorporated herein by reference thereto.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents
specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein
by reference thereto.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is
in default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the July 13, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Carolina D. Altomare
------------------------------------------
NAME Carolina D. Altomare
TITLE Assistant Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by SECURITY
CAPITAL GROUP INCORPORATED. of its NOTES, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Carolina D. Altomare
--------------------------------------------
NAME Carolina D. Altomare
TITLE Assistant Vice President
Dated: July 13, 1998
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.................................................. 1,144,309
Interest-bearing balances........................................................................... 9,914,704
Securities............................................................................................... 10,062,052
Federal funds sold and securities purchased under agreements to resell in domestic
offices of the bank and its Edge subsidiary......................................................... 8,073,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ........................ 6,433,627
Allowance for loan and lease losses.............................. 88,820
Allocated transfer risk reserve.................................. 0
Loans and leases, net of unearned income and allowances............................................. 6,344,807
Assets held in trading accounts.......................................................................... 1, 117,547
Premises and fixed assets................................................................................ 453,576
Other real estate owned.................................................................................. 100
Investments in unconsolidated subsidiaries............................................................... 44,985
Customers' liability to this bank on acceptances outstanding............................................. 66,149
Intangible assets........................................................................................ 263,249
Other assets............................................................................................. 1,066,572
----------
Total assets............................................................................................. 38,552,020
==========
LIABILITIES
Deposits:
In domestic offices................................................................................. 9,266,492
Noninterest-bearing......................................... 6,824,432
Interest-bearing............................................ 2,442,060
In foreign offices and Edge subsidiary.............................................................. 14,385,048
Noninterest-bearing......................................... 75,909
Interest-bearing............................................ 14,309,139
Federal funds purchased and securities sold under agreements to repurchase in domestic
offices of the bank and of its Edge subsidiary................................................. 9,949,994
Demand notes issued to the U.S. Treasury and Trading Liabilities......................................... 171,783
Trading liabilities...................................................................................... 1,078,189
Other borrowed money..................................................................................... 406,583
Subordinated notes and debentures........................................................................ 0
Bank's liability on acceptances executed and outstanding................................................. 66,149
Other liabilities........................................................................................ 878,947
Total liabilities........................................................................................ 36,203,185
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus............................................................ 0
Common stock............................................................................................. 29,931
Surplus.................................................................................................. 450,003
Undivided profits and capital reserves/Net unrealized holding gains (losses)............................. 1,857,021
Net unrealized holding gains (losses) on available-for-sale securities................................... 18,136
Cumulative foreign currency translation adjustments...................................................... (6,256)
Total equity capital..................................................................................... 2,348,835
----------
Total liabilities and equity capital..................................................................... 38,552,020
----------
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
6.95% EXCHANGE NOTES DUE 2005
FOR OUTSTANDING 6.95% NOTES DUE 2005
7.15% EXCHANGE NOTES DUE 2007
FOR OUTSTANDING 7.15% NOTES DUE 2007
7.70% EXCHANGE NOTES DUE 2028
FOR OUTSTANDING 7.70% NOTES DUE 2028
OF
SECURITY CAPITAL GROUP INCORPORATED
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
Deliver all Notices of Guaranteed Delivery and notices of withdrawal to:
State Street Bank and Trust Company, the Exchange Agent for the Exchange
Offer:
By Mail: By Overnight Courier or Hand:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Division Corporate Trust Division
P.O. Box 778 Two International Place
Boston, MA 02102-0078 Boston, MA 02110
Attn: Kelly Mullen Attn: Kelly Mullen
(registered or certified mail
recommended)
By Facsimile for Eligible Institutions:
(617) 664-5395
(Confirm by Telephone: (617) 664-5587)
DELIVERY OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
TENDERS OF OLD NOTES FOR EXCHANGE MUST COMPLY WITH THE PROCEDURES SET FORTH
HEREIN TO CONSTITUTE A VALID TENDER.
The undersigned acknowledges receipt of the Prospectus, dated
, 1998 (the "Prospectus"), of Security Capital Group Incorporated, a
Maryland corporation ("Security Capital"), which, together with this Letter of
Transmittal, as it may be amended from time to time (this "Letter"), describes
Security Capital's offer (the "Exchange Offer") to exchange (i) $1,000
principal amount of Security Capital's 6.95% Exchange Notes due 2005 (the "New
2005 Notes") for each $1,000 principal amount of Security Capital's
outstanding 6.95% Notes due 2005 (the "Old 2005 Notes"); (ii) $1,000 principal
amount of Security Capital's 7.15% Exchange Notes due 2007 (the "New 2007
Notes") for each $1,000 principal amount of Security Capital's outstanding
7.15% Notes due 2007 (the "Old 2007 Notes"); and (iii) $1,000 principal amount
of Security Capital's 7.70% Exchange Notes due 2028 (the "New 2028 Notes" and,
together with the New 2005 Notes and the New 2007 Notes, the "New Notes") for
each $1,000 principal amount of Security Capital's outstanding 7.70% Notes due
2028 (the "Old 2028 Notes" and, together with the Old 2005 Notes and the Old
2007 Notes, the "Old Notes"), upon the terms and subject to the conditions set
forth in the Prospectus and this Letter.
<PAGE>
The New Notes will evidence the same debt as the Old Notes and will be
issued and entitled to the same benefits under the Indenture, dated June 18,
1998 (the "Indenture"), from Security Capital to State Street Bank and Trust
Company, as trustee (the "Trustee"), relating to the Old Notes. The terms of
the New Notes are identical in all material respects (including principal
amount, interest rate, maturity and ranking) to the terms of the Old Notes for
which they are exchanged, except that the New Notes will have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and
therefore will not be subject to the existing restrictions on transfer of the
Old Notes, but will be freely transferable by their holders, except as
described in the Prospectus under "The Exchange Offer--Resale of New Notes."
In addition, the New Notes will not have the registration rights and related
terms providing for an increased interest rate if Security Capital defaults in
its registration obligations which are applicable to the Old Notes. See "The
Exchange Offer--Purpose of the Exchange Offer" in the Prospectus.
Holders who exchange their Old Notes for New Notes in the Exchange Offer
will receive interest accrued on their Old Notes from June 23, 1998, the date
of issuance of the Old Notes, to the date of consummation of the Exchange
Offer (the "Exchange Date"), together with interest accrued on their New Notes
from the Exchange Date, in the first interest payment on the New Notes.
Consequently, holders who exchange their Old Notes for New Notes will receive
the same interest payment on December 15, 1998 (the first interest payment
date for the Old Notes and the New Notes) which they would have received had
they not accepted the Exchange Offer. Old Notes tendered and accepted for
exchange will cease to accrue interest from and after the Exchange Date. See
"Description of Notes--Principal, Maturity and Interest" in the Prospectus.
Notwithstanding anything to the contrary in the registration rights
agreement, dated June 23, 1998 (the "Registration Rights Agreement"), among
Security Capital and the initial purchasers (the "Initial Purchasers") of Old
Notes, Security Capital will accept for exchange any and all Old Notes which
are validly tendered before 5:00 p.m., New York City time, on the Expiration
Date and not withdrawn. Tenders of Old Notes may be withdrawn at any time
before 5:00 p.m., New York City time, on the Expiration Date. See Instruction
4 below. Tenders of Old Notes will be accepted only in denominations of $1,000
and integral multiples thereof. See "The Exchange Offer--Terms of the Exchange
Offer" in the Prospectus and Instruction 5 below.
The term "Expiration Date" means , 1998, unless the Exchange
Offer is extended by Security Capital in its sole discretion, in which case
the term "Expiration Date" will mean the latest date to which the Exchange
Offer is extended. Security Capital expressly reserves the right, at any time
or from time to time, to extend the period of time during which the Exchange
Offer is open, and thereby to delay accepting any Old Notes for exchange, by
giving oral or written notice of the extension to State Street Bank and Trust
Company (the "Exchange Agent") and notice of the extension to the holders by
means of a press release or other public announcement before 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. During any such extension, all Old Notes previously tendered
will remain subject to the Exchange Offer and may be accepted for exchange by
Security Capital. See "The Exchange Offer--Expiration Date" in the Prospectus.
To validly tender Old Notes in the Exchange Offer, the holder must tender
those Old Notes pursuant to the procedures for book-entry transfer described
below in the Instructions contained in this Letter and a book-entry
confirmation, including an Agent's Message (as hereinafter defined), must be
received by the Exchange Agent before 5:00 p.m. New York City time, on the
Expiration Date, unless the guaranteed delivery procedures described below in
the Instructions contained in this Letter are complied with. See Instructions
1 and 2 below.
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
Security Capital will accept, as soon as practicable after the Expiration
Date, all Old Notes validly tendered and not withdrawn and will issue the New
Notes as soon as practicable after acceptance of the Old Notes. Security
Capital will be deemed to have accepted validly tendered Old Notes for
exchange if and when Security Capital gives oral or written notice of that
acceptance to the Exchange Agent. See Instruction 6 below. The Exchange Agent
will act as agent for the tendering holders for purposes of receiving New
Notes from Security Capital. In all cases, delivery of New Notes in exchange
for Old Notes which are tendered and accepted for exchange in the Exchange
Offer will be made
2
<PAGE>
only after the Exchange Agent receives a confirmation of a book-entry transfer
of Old Notes into the Exchange Agent's account at the Depository Trust Company
("DTC") (including an Agent's Message). See Instruction 1 below. If any
tendered Old Notes are withdrawn or are not accepted for any reason, those Old
Notes will be returned without expense to the tendering holder by book-entry
transfer to that holder's DTC account as soon as practicable after the
expiration or termination of the Exchange Offer.
Notwithstanding any other provisions of the Exchange Offer, Security Capital
will not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer by means of a
press release or other public announcement, if at any time before the
acceptance of Old Notes for exchange or the issuance of New Notes in exchange
for those Old Notes, Security Capital determines that the acceptance or
issuance would violate applicable law or any interpretation of the staff of
the Securities and Exchange Commission (the "Commission"). If the Exchange
Offer is amended in a manner determined by Security Capital to constitute a
material change, Security Capital will promptly disclose the amendment in a
supplement to the Prospectus which will be distributed to the registered
holders of Old Notes, and Security Capital will extend the Expiration Date for
a period of five to ten business days, depending on the significance of the
amendment and the method of delivery to the registered holders, if the
Exchange Offer would otherwise expire during that period. The foregoing
condition is for the sole benefit of Security Capital and may be asserted by
Security Capital regardless of the circumstances giving rise to the condition
or may be waived by Security Capital in whole or in part at any time and from
time to time in its sole discretion. The failure by Security Capital at any
time to assert its rights shall not be deemed a waiver of its rights. See "The
Exchange Offer--Conditions to the Exchange" in the Prospectus.
In addition, Security Capital will not accept for exchange, or issue New
Notes in exchange for, any Old Notes if at that time any stop order is
threatened or in effect with respect to the registration statement of which
the Prospectus forms a part or the qualification of the Indenture under the
Trust Indenture Act of 1939, as amended. See "The Exchange Offer--Conditions
to the Exchange" in the Prospectus.
Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to be entitled to all the rights applicable thereto under the
Indenture, which relates to both the Old Notes and the New Notes, and any such
Old Notes will remain outstanding and continue to accrue interest according to
their terms. Any Old Notes not tendered and accepted in the Exchange Offer
will remain subject to the existing restrictions on transfer of Old Notes
provided in the Old Notes and in the Indenture, and Security Capital will have
no further obligations to the holders (other than to the Initial Purchasers)
of those Old Notes to provide for their registration under the Securities Act,
as those Old Notes will not retain any rights under the Registration Rights
Agreement (other than Old Notes which represent an unsold allotment for the
offering, dated June 23, 1998, of the Old Notes). In general, the Old Notes
may not be offered or sold except pursuant to an exemption from, in a
transaction not subject to or in a transaction in compliance with the
registration requirements of the Securities Act. Security Capital does not
intend to register the Old Notes under the Securities Act. In addition, the
tender of Old Notes pursuant to the Exchange Offer will reduce the principal
amount of Old Notes outstanding, which may have an adverse effect on, and
increase the volatility of, the market prices of Old Notes due to a reduction
of liquidity. See "The Exchange Offer--Effect on Holders of Old Notes" in the
Prospectus.
The Instructions included with this Letter must be followed in their
entirety. Questions and requests for assistance or for additional copies of
the Prospectus, this Letter or the Notice of Guaranteed Delivery should be
directed to the Exchange Agent at .
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Security Capital the principal amount of
Old Notes indicated below under "Description of Old Notes," in accordance with
and upon the terms and subject to the conditions set forth in the Prospectus,
receipt of which is hereby acknowledged, and in this Letter, for the purpose
of exchanging each $1,000 principal amount of outstanding Old Notes held by
the undersigned and tendered hereby for $1,000 principal amount of
corresponding New Notes.
Subject to, and effective upon, the acceptance for exchange of the Old Notes
tendered hereby in accordance with the terms of the Exchange Offer, the
undersigned hereby exchanges, assigns and transfers to, or upon the order of,
Security Capital all right, title and interest in and to all such Old Notes
tendered hereby and accepted for exchange pursuant to the Exchange Offer. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent as
its true and lawful agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of Security Capital), with respect to
the Old Notes tendered hereby and accepted for exchange pursuant to the
Exchange Offer with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to deliver such
Old Notes to Security Capital (together with all accompanying evidences of
transfer and authenticity) for transfer or cancellation by Security Capital.
All authority conferred or agreed to be conferred in this Letter shall not be
affected by, and shall survive, the death, bankruptcy or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
on the heirs, executors, administrators, legal representatives, successors and
assigns of the undersigned.
The undersigned represents and warrants that it has full power and authority
to tender, exchange, assign and transfer the Old Notes tendered hereby and
that, when such Old Notes are accepted for exchange, Security Capital will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or Security Capital to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby and accepted for exchange. The undersigned has read and agrees
to all of the terms and conditions of the Exchange Offer.
The undersigned agrees that acceptance of any tendered Old Notes by Security
Capital and the issuance of New Notes in exchange therefor shall constitute
performance in full by Security Capital of its obligations under the
Registration Rights Agreement and that, upon the issuance of such New Notes,
Security Capital shall have no further obligations to the undersigned to
provide for the registration of those Old Notes under the Securities Act.
The undersigned understands that the tender of Old Notes pursuant to the
procedures described in the Prospectus under "The Exchange Offer--Procedures
for Tendering Old Notes" and "--Guaranteed Delivery Procedures" and in the
Instructions hereto shall constitute the undersigned's acceptance of all of
the terms and conditions of the Exchange Offer. Security Capital's acceptance
for exchange of Old Notes tendered hereby shall constitute a binding agreement
between the undersigned and Security Capital upon the terms and subject to the
conditions of the Exchange Offer.
The undersigned acknowledges that Security Capital is making the Exchange
Offer in reliance on positions of the Commission staff set forth in certain
no-action letters issued to other parties in other transactions. Based on
those positions of the Commission staff, Security Capital believes that New
Notes issued in the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by each holder thereof (other
than a holder which is (i) a broker-dealer, as set forth below, (ii) an
Initial Purchaser of Old Notes which acquired Old Notes directly from Security
Capital in order to resell pursuant to Rule 144A under the Securities Act or
any other available exemption under the Securities Act or (iii) an "affiliate"
of Security Capital within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery requirements
of the Securities Act, provided that those New Notes are acquired in the
4
<PAGE>
ordinary course of that holder's business and that holder is not engaged in,
and does not intend to engage in, and has no arrangement or understanding with
any person to participate in, the distribution of those New Notes within the
meaning of the Securities Act or resale of those New Notes in violation of the
Securities Act. The undersigned represents to Security Capital that the New
Notes being acquired by it in the Exchange Offer are being acquired in the
ordinary course of its business and that it is not engaged in, and does not
intend to engage in, and has no arrangement or understanding with any person
to participate in, the distribution of those New Notes within the meaning of
the Securities Act or resale of those New Notes in violation of the Securities
Act. If the undersigned is a broker-dealer, the undersigned represents that it
will receive those New Notes for its own account in exchange for Old Notes
which were acquired by it as a result of market-making or other trading
activities and that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of those New Notes; however,
by so representing and so delivering a prospectus, the undersigned is not
admitting and shall not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
5
<PAGE>
INSTRUCTIONS
1. BOOK-ENTRY TRANSFER. All tenders of Old Notes must be made by book-entry
transfer to the Exchange Agent's DTC account. Any holder of Old Notes which is
a DTC participant may use DTC's Automated Tender Offer Program ("ATOP") to
tender Old Notes by causing DTC to transfer those Old Notes into the Exchange
Agent's account in accordance with DTC's procedures. The Old Notes will be
deemed tendered only after the Exchange Agent receives confirmation of the
book-entry transfer of the Old Notes into the Exchange Agent's account
(including an Agent's Message).
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the tendering participant that the participant has received and agrees to
be bound by the terms of this Letter and that Security Capital may enforce
this Letter against the participant.
2. GUARANTEED DELIVERY PROCEDURES. If a registered holder of Old Notes
wishes to tender those Old Notes and the procedures for book-entry transfer
cannot be completed before the Expiration Date, a tender may be effected if
(i) the tender is made through an "eligible guarantor institution" as defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including (as those terms are defined therein): (a) a bank;
(b) a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer; (c) a credit union; (d) a national securities
exchange, registered securities association or clearing agency; or (e) a
savings association which is a participant in a Securities Transfer
Association (an "Eligible Institution"); (ii) before 5:00 p.m., New York City
time, on the Expiration Date, the Exchange Agent receives from that Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by Security Capital (by mail,
courier, hand delivery or facsimile), setting forth the name and address of
the holder of the Old Notes and the principal amount of Old Notes being
tendered, stating that the Old Notes are being tendered thereby and
guaranteeing that within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, a book-entry
confirmation will be received by the Exchange Agent; and (iii) a book-entry
confirmation (including an Agent's Message) are received by the Exchange Agent
within three NYSE trading days alter the date of execution of the Notice of
Guaranteed Delivery.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sian the Notice of Guaranteed Delivery.
If the Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, that person should so
indicate when signing and, unless waived by Security Capital, submit proper
evidence satisfactory to Security Capital of that person's authority to so
act.
THE METHOD OF DELIVERY OF THE NOTICE OF GUARANTEED DELIVERY IS AT THE
ELECTION AND RISK OF EACH HOLDER. DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. THE NOTICE OF GUARANTEED
DELIVERY SHOULD NOT BE SENT TO SECURITY CAPITAL.
3. BENEFICIAL HOLDERS. Only a registered holder of Old Notes may tender
those Old Notes in the Exchange Offer. Any beneficial holder of Old Notes
whose Old Notes are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender those Old Notes
in the Exchange Offer should contact that registered holder promptly and
instruct that registered holder to tender those Old Notes. If the beneficial
holder wishes to tender directly, the beneficial holder must, prior to
tendering Old Notes, make appropriate arrangements to register ownership of
those Old Notes in the beneficial holder's name.
6
<PAGE>
4. WITHDRAWAL RIGHTS. Tenders of Old Notes may be withdrawn at any time
before 5:00 p.m., New York City time, on the Expiration Date. For a withdrawal
to be effective, a written notice of withdrawal must be received by the
Exchange Agent by telegram, telex, facsimile or letter at one of the addresses
set forth on the first page of this Letter. Any such notice of withdrawal must
specify the name of the holder which tendered the Old Notes to be withdrawn,
identify the Old Notes to be withdrawn (including the principal amount of the
Old Notes), include a statement that the holder is withdrawing its election to
have those Old Notes exchanged, and must be signed by the registered holder of
the Old Notes or be accompanied by evidence satisfactory to Security Capital
that the person withdrawing the tender has succeeded to the registered
ownership of those Old Notes. Any notice of withdrawal must specify the name
and number of the account at DTC to be credited with the withdrawn Old Notes
and must otherwise comply with the procedures of DTC. All questions as to the
validity, form and eligibility (including time of receipt) of notices of
withdrawal will be determined by Security Capital, which determinations will
be final and binding on all parties. Any Old Notes properly withdrawn will
thereafter be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Properly withdrawn Old Notes may be tendered
again by following the procedures described under Instructions 1 and 2 above
at any time before 5:00 p.m., New York City time, on the Expiration Date.
5. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If less than the entire principal amount of Old Notes
delivered to the Exchange Agent is being tendered, the tendering holder must
fill in the principal amount being tendered under "Principal Amount Tendered"
below. The entire principal amount of all Old Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
6. ACCEPTANCE OF TENDERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders, by execution of
this Letter, waive any right to receive notice of acceptance of their Old
Notes for exchange.
7. TRANSFER TAXES. Security Capital will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the exchange of
Old Notes pursuant to the Exchange Offer, the amount of any such transfer
taxes (whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of those
taxes or an exemption therefrom is not submitted, the amount of those transfer
taxes will be billed directly to the tendering holder.
8. DETERMINATIONS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of Old Notes tendered
for exchange will be determined by Security Capital in its sole discretion,
which determinations shall be final and binding on all parties. Security
Capital reserves the absolute right to reject any or all tenders of Old Notes
which are not in proper form or the acceptance of which might, in the judgment
of Security Capital or its counsel, be unlawful. Security Capital also
reserves the absolute right in its sole discretion to waive any defects,
irregularities or conditions of the Exchange Offer with respect to any Old
Notes, either before or after the Expiration Date (including the right to
waive the ineligibility of any holder which seeks to tender Old Notes in the
Exchange Offer). Security Capital's interpretation of the terms and conditions
of the Exchange Offer (including this Letter and these Instructions) will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Notes for exchange must be cured within such
period of time as Security Capital determines. Neither Security Capital, the
Exchange Agent nor any other person is under any duty to give notification of
any defect or irregularity in connection with tenders of Old Notes for
exchange or will incur any liability for failure to give any such
notification.
TENDERS OF OLD NOTES OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
7
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
DESCRIPTION OF OLD NOTES
(SEE INSTRUCTIONS 1 AND 5)
The name(s) and address(es) of the registered holder(s) should be printed
below, unless a label which sets forth the correct information appears in the
appropriate box. The principal amount of Old Notes of each series to which
this Letter relates, together with the principal amount of such Old Notes
which the undersigned wishes to tender, should be indicated in the appropriate
boxes below.
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES)
OF REGISTERED HOLDER(S) OLD NOTES TENDERED
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT OF OLD
NOTES TENDERED
AGGREGATE (MUST BE
PRINCIPAL INTEGRAL
AMOUNT OF OLD MULTIPLES OF
SERIES OF NOTES NOTES $1,000)
------------------------------------------
<S> <C>
OLD 2005
NOTES
------------------------------------------
OLD 2007
NOTES
------------------------------------------
OLD 2028
NOTES
</TABLE>
Name of Tendering Institution: _____________________________________________
DTC Account Number: ________________________________________________________
Transaction Code Number: ___________________________________________________
[_]CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution Which Guaranteed Delivery: _____________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND
WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
----------------------------------------------------------------------------
8
<PAGE>
PLEASE SIGN HERE
X __________________________________________________________
X __________________________________________________________
Signature(s) of Registered Holder(s) Date
or Authorized Signatory
Area Code and Telephone Number: ___________________________________________
This box must be signed by registered holder(s) of Old Notes in exactly
the name(s) in which such Old Notes are registered on the books of the
Trustee. If this Letter is signed by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary
or representative capacity, such person must set forth his or her full
title below.
Name(s): __________________________________________________________________
---------------------------------------------------------------------------
(Please Print)
Capacity (full title): ____________________________________________________
Address(es): ______________________________________________________________
---------------------------------------------------------------------------
(Zip Code)
Tax Identification or Social Security Number(s): __________________________
---------------------------------------------------------------------------
9
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
OFFER TO EXCHANGE
6.95% EXCHANGE NOTES DUE 2005
FOR OUTSTANDING 6.95% NOTES DUE 2005
7.15% EXCHANGE NOTES DUE 2007
FOR OUTSTANDING 7.15% NOTES DUE 2007
7.70% EXCHANGE NOTES DUE 2028
FOR OUTSTANDING 7.70% NOTES DUE 2028
OF
SECURITY CAPITAL GROUP INCORPORATED
PURSUANT TO THE PROSPECTUS DATED , 1998
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) of Security
Capital Group Incorporated ("Security Capital") pursuant to the Prospectus,
dated , 1998 (the "Prospectus"), and the related Letter of
Transmittal (the "Letter of Transmittal") if the procedures for book-entry
transfer cannot be completed before 5:00 p.m., New York City time, on the
Expiration Date (as defined below). See "The Exchange Offer--Guaranteed
Delivery Procedures" in the Prospectus. The term "Old Notes" means Security
Capital's outstanding 6.95% Notes due 2005, 7.15% Notes due 2007 and 7.70%
Notes due 2028.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
Deliver to: State Street Bank and Trust Company, the Exchange Agent for the
Exchange Offer:
By Mail: By Overnight Courier or Hand:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Division Corporate Trust Division
P.O. Box 778 Two International Place
Boston, MA 02102-0078 Boston, MA 02110
Attn: Kelly Mullen Attn: Kelly Mullen
(registered or certified mail
recommended)
By Facsimile for Eligible Institutions:
(617) 664-5395
(Confirm by Telephone: (617) 664-5587)
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY OTHER THAN AS SET FORTH ABOVE
SHALL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Security Capital, in accordance with and
upon the terms and subject to the conditions set forth in the Prospectus and
the Letter of Transmittal, receipt of which are hereby acknowledged, the
principal amount of Old Notes indicated below pursuant to the guaranteed
delivery procedures described in the Prospectus under "The Exchange Offer--
Guaranteed Delivery Procedures" and in Instruction 2 to the Letter of
Transmittal.
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S) OLD NOTES TENDERED
- --------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OF OLD
NOTES TENDERED
AGGREGATE (MUST BE
PRINCIPAL INTEGRAL
AMOUNT OF OLD MULTIPLES OF
SERIES OF NOTES NOTES $1,000)
------------------------------------------------------
<S> <C> <C> <C>
OLD 2005
NOTES
------------------------------------------------------
OLD 2007
NOTES
------------------------------------------------------
OLD 2028
NOTES
------------------------------------------------------
</TABLE>
GUARANTEE
The undersigned, a firm or entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," hereby guarantees that a confirmation of a book-entry transfer
of such Old Notes into the Exchange Agent's account at the Depository Trust
Company pursuant to the procedures for book-entry transfer set forth in the
Prospectus will be received by the Exchange Agent within three New York Stock
Exchange trading days after the date of execution of this Notice of Guaranteed
Delivery.
Authorized Signature:
----------------------------------------------------------
Name:
--------------------------------------------------------------------------
Name of Firm:
------------------------------------------------------------------
Title:
-------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Area Code and Telephone Number:
------------------------------------------------
Dated:
-------------------------------------------------------------------------
2
<PAGE>
EXHIBIT 99.3
OFFER TO EXCHANGE
6.95% EXCHANGE NOTES DUE 2005
FOR OUTSTANDING 6.95% NOTES DUE 2005
7.15% EXCHANGE NOTES DUE 2007
FOR OUTSTANDING 7.15% NOTES DUE 2007
7.70% EXCHANGE NOTES DUE 2028
FOR OUTSTANDING 7.70% NOTES DUE 2028
OF
SECURITY CAPITAL GROUP INCORPORATED
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Security Capital Group Incorporated ("Security Capital") is offering, upon
the terms and subject to the conditions set forth in the enclosed Prospectus,
dated , 1998 (the "Prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal"), to exchange (the "Exchange Offer")
its 6.95% Exchange Notes due 2005 (the "New 2005 Notes") for its outstanding
6.95% Notes due 2005 (the "Old 2005 Notes"), its 7.15% Exchange Notes due 2007
(the "New 2007 Notes") for its outstanding 7.15% Notes due 2007 (the "Old 2007
Notes") and its 7.70% Exchange Notes due 2028 (the "New 2028 Notes") and,
together with the New 2005 Notes and the New 2007 Notes, the "New Notes") for
its outstanding 7.70% Notes due 2028 (the "Old 2028 Notes" and, together with
the Old 2005 Notes and the Old 2007 Notes, the "Old Notes").
Security Capital is requesting that you contact your clients for whose
accounts you hold Old Notes registered in your name or in the name of your
nominee regarding the Exchange Offer. For your information and for forwarding
to those clients, enclosed are the following documents:
1. The Prospectus dated , 1998;
2. The Letter of Transmittal;
3. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9;
4. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if the procedures for book entry transfer cannot be completed before
the Expiration Date; and
5. A form of letter which may be sent to your clients for whose accounts
you hold Old Notes registered in your name or in the name of your nominee,
with a form provided for obtaining those clients' instructions with regard
to the Exchange Offer.
Your prompt action is requested. The Exchange Offer will expire at 5:00 p.m.
New York City time, on the Expiration Date. Tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date.
To validly tender Old Notes in the Exchange Offer, the registered holder
must tender those Old Notes pursuant to the procedures for book-entry transfer
described in the Prospectus under "The Exchange Offer--Procedures for
Tendering Old Notes" and "--Book-Entry Transfer" and in the Letter of
Transmittal.
If a registered holder wishes to tender those Old Notes and the procedures
for book-entry transfer cannot be completed before the Expiration Date, a
tender may be effected if that holder follows the guaranteed delivery
<PAGE>
procedures described in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures" and in the Letter of Transmittal.
Security Capital will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Old Notes held by them as nominee or in a fiduciary
capacity. Security Capital will pay all transfer taxes, if any, applicable to
the exchange of Old Notes pursuant to the Exchange Offer, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
Questions and requests for assistance or for additional copies of the
Prospectus, the Letter of Transmittal or Notices of Guaranteed Delivery may be
directed to State Street Bank and Trust Company (the "Exchange Agent") at
.
Very truly yours,
Security Capital Group Incorporated
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF SECURITY CAPITAL OR THE EXCHANGE AGENT, OR AUTHORIZE YOU
OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF
EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS
EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99.4
OFFER TO EXCHANGE
6.95% EXCHANGE NOTES DUE 2005
FOR OUTSTANDING 6.95% NOTES DUE 2005
7.15% EXCHANGE NOTES DUE 2007
FOR OUTSTANDING 7.15% NOTES 2007
7.70% EXCHANGE NOTES DUE 2028
FOR OUTSTANDING 7.70% NOTES DUE 2028
OF
SECURITY CAPITAL GROUP INCORPORATED
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
To Our Clients:
Enclosed for your consideration are a Prospectus, dated , 1998
(the "Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), which describe the offer (the "Exchange Offer") of Security
Capital Group Incorporated ("Security Capital") to exchange its 6.95% Exchange
Notes due 2005 (the "New 2005 Notes") for its outstanding 6.95% Notes due 2005
(the "Old 2005 Notes"), its 7.15% Exchange Notes due 2007 (the "New 2007
Notes") for its outstanding 7.15% Notes due 2007 (the "Old 2007 Notes") and
its 7.70% Exchange Notes due 2028 (the "New 2028 Notes" and, together with the
New 2005 Notes and the New 2007 Notes, the "New Notes") for its outstanding
7.70% Notes due 2028 (the "Old 2028 Notes" and, together with the Old 2005
Notes and the Old 2007 Notes, the "Old Notes"), upon the terms and subject to
the conditions described in the Prospectus and the Letter of Transmittal.
This material is being forwarded to you as the beneficial owner of the Old
Notes held by us for your account but not registered in your name. A TENDER OF
THOSE OLD NOTES MAY ONLY BE MADE BY US AS THE REGISTERED HOLDER AND PURSUANT
TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Notes held by us for your account, in accordance with and
upon the terms and subject to the conditions set forth in the Prospectus and
the Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in order
to permit us to tender the Old Notes on your behalf in the Exchange Offer. The
Exchange Offer will expire at 5:00 p.m., New York City time, on the Expiration
Date. Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
If a holder of Old Notes wishes to tender those Old Notes and the procedures
for book-entry transfer cannot be completed before the Expiration Date, a
tender may be effected if that holder follows the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures" and in the Letter of Transmittal.
Your attention is directed to the following:
1. The Exchange Offer is for all outstanding Old Notes.
2. The Exchange Offer is subject to certain conditions which may be
waived by Security Capital and to certain other terms and conditions
described in the Prospectus under "The Exchange Offer--Conditions to the
Exchange Offer."
<PAGE>
3. Security Capital will pay all transfer taxes, if any, applicable to
the exchange of Old Notes pursuant to the Exchange Offer, except as
otherwise provided in Instruction 7 of the Letter of Transmittal.
4. The exchange of an Old Note for a New Note in the Exchange Offer will
not be taxable to an exchanging holder for Federal income tax purposes as
described in the Prospectus under "Certain Federal Income Tax
Consequences."
5. Holders of Old Notes not tendered and accepted in the Exchange Offer
will continue to be entitled to all the rights applicable thereto under the
Indenture, dated as of June 18, 1998 (the "Indenture"), from Security
Capital to the Exchange Agent, which relates to both the Old Notes and the
New Notes, and any such Old Notes will remain outstanding and continue to
accrue interest according to their terms.
6. Any Old Notes not tendered and accepted in the Exchange Offer will
remain subject to the existing restrictions on transfer of Old Notes
provided in the Old Notes and in the Indenture, and Security Capital will
have no further obligations to the holders (other than to the initial
purchasers) of those Old Notes to provide for their registration under the
Securities Act of 1933, as amended, as described in the Prospectus under
"The Exchange Offer--Effect on Holder of Old Notes."
If you wish us to tender on your behalf any or all of the Old Notes held by
us for your account, please so instruct us by completing, executing and
returning to us the instruction form on the back of this letter. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL PURPOSES ONLY AND MAY NOT BE
USED DIRECTLY BY YOU TO TENDER OLD NOTES HELD BY US FOR YOUR ACCOUNT AND
REGISTERED IN OUR NAME.
2
<PAGE>
BENEFICIAL OWNER INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Security
Capital with respect to the Old Notes.
The undersigned hereby instructs you to tender to Security Capital the
principal amount of Old Notes indicated below held by you for the account of
the undersigned, in accordance with and upon the terms and subject to the
conditions set forth in the Prospectus and the Letter of Transmittal.
[_]Please tender the Old Notes held by you for my account as indicated below:
<TABLE>
AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES
---------------------------------------
<S> <C>
6.95% Notes due 2005................. -------------------------------------
7.15% Notes due 2007................. -------------------------------------
7.70% Notes due 2028................. -------------------------------------
</TABLE>
[_]Please do not tender any Old Notes held by you for my account.
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
Signature(s) Date
Names(s):
----------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Print)
Address(es):
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number:
------------------------------------------------
Tax Identification or Social Security Number(s):
-------------------------------
None of the Old Notes held by us for your account will be tendered unless we
receive written instructions from you to do so. Unless a specific contrary
instruction is indicated in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for
your account.
3
