Exhibit 1
SECURITY CAPITAL GROUP INCORPORATED
$200,000,000
Medium-Term Notes, Series B
Due Nine Months or More from Date of Issue
DISTRIBUTION AGREEMENT
December 20, 2000
J.P. Morgan Securities Inc.
Banc of America Securities LLC
Chase Securities Inc.
Deutsche Bank Securities Inc.
First Union Securities, Inc.
Goldman, Sachs & Co.
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
Security Capital Group Incorporated, a Maryland corporation (the "Company")
confirms its agreement with each of you with respect to the issue and sale from
time to time by the Company of its Medium-Term Notes, Series B, Due Nine Months
or More from Date of Issue (the "Securities") in an aggregate initial offering
price of up to $200,000,000 (or the equivalent thereof in one or more foreign
currencies or composite currencies), as such amount shall be reduced by the
aggregate initial offering price of any other debt securities issued by the
Company, whether within or without the United States ("Other Securities")
pursuant to the registration statement referred to below, and agrees with each
of you (individually, an "Agent", and collectively, the "Agents", which term
shall include any additional agents appointed pursuant to Section 12 hereof) as
set forth in this Agreement. The Securities will be issued under the Indenture,
dated as of November 16, 1998, as supplemented by resolutions of the board of
directors of the Company dated as of September 23, 1998 and by resolutions of
the pricing committee of the board of directors of the Company dated as of
December 1, 2000 (as so supplemented, the "Indenture") between the Company and
State Street Bank and Trust Company (the "Trustee"). The Securities shall have
the maturities, interest rates, redemption provisions, if any, and other terms
set forth in the Prospectus referred to below as it may be amended or
supplemented from time to time. The Securities will be issued, and the terms and
rights thereof established, from time to time by the Company in accordance with
the Indenture.
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On the basis of the representations and warranties herein contained, but
subject to the terms and conditions stated herein and to the reservation by the
Company of the right to sell Securities directly to investors (other than
broker-dealers) on its own behalf, the Company hereby (i) appoints the Agents as
the exclusive agents of the Company for the purpose of soliciting and receiving
offers to purchase Securities from the Company by others pursuant to Section
2(a) hereof and (ii) agrees that, except as otherwise contemplated herein,
whenever it determines to sell Securities directly to any Agent as principal, it
will enter into a separate agreement (each such agreement a "Terms Agreement"),
relating to such sale in accordance with Section 2(b) hereof.
The Company has prepared and filed a registration statement on Form S-3
(No.333-64979) in respect of the Securities with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"). The Company also has
filed with, or proposes to file with, the Commission pursuant to Rule 424 under
the Securities Act supplements to the prospectus included in the Registration
Statement that will describe certain terms of the Securities. The Registration
Statement, including the exhibits thereto, as amended to the Commencement Date
(as hereinafter defined) is hereinafter referred to as the "Registration
Statement" and the prospectus in the form in which it appears in the
Registration Statement is hereinafter referred to as the "Basic Prospectus". The
Basic Prospectus as supplemented by the prospectus supplement or supplements
(each a "Prospectus Supplement") specifically relating to the Securities in the
form filed with, or transmitted for filing to, the Commission pursuant to Rule
424 under the Securities Act is hereinafter referred to as the "Prospectus". Any
reference in this Agreement to the Registration Statement, the Basic Prospectus,
any preliminary form of Prospectus (a "preliminary prospectus") previously filed
with the Commission pursuant to Rule 424 or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act which were filed under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Exchange Act") on or before the
date of this Agreement or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be; and any reference to "amend",
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, any preliminary prospectus or the Prospectus, including any
supplement to the Prospectus that sets forth only the terms of a particular
issue of the Securities (a "Pricing Supplement"), shall be deemed to refer to
and include any documents filed under the Exchange Act after the date of this
Agreement, or the date of the Basic Prospectus, any preliminary prospectus or
the Prospectus, as the case may be, which are deemed to be incorporated by
reference therein.
1. Representations. The Company represents and warrants to, and agrees
with, each Agent as of the Commencement Date, as of each date on which the
Company accepts an offer to purchase Securities (including any purchase by
an Agent as principal pursuant to a Terms Agreement or otherwise), as of
each date the Company issues and sells Securities and as of each date the
Registration Statement or the Basic Prospectus is amended or supplemented,
as follows (it being understood that such representations and warranties
shall be deemed to relate to the Registration Statement, the Basic
Prospectus and the Prospectus, each as amended or supplemented to each such
date):
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(1) the Registration Statement has been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge
of the Company, threatened by the Commission; and the Registration
Statement and Prospectus (as amended or supplemented, if applicable)
comply, or will comply, as the case may be, in all material respects
with the Securities Act and the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Trust Indenture Act"), and do not and will not, as
of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the case of
the Prospectus, in the light of the circumstances under which they
were made, not misleading, and the Prospectus, as amended or
supplemented at the Commencement Date, if applicable, will not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that
the foregoing representations and warranties shall not apply to (i)
that part of the Registration Statement which constitutes the
Statement of Eligibility (Form T-1) under the Trust Indenture Act of
the Trustee, and (ii) statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information relating to any Agent furnished to the Company in
writing by such Agent expressly for use therein;
(2) the documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents are filed with the
Commission will conform in all material respects to the requirements
of the Exchange Act, as applicable, and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(3) (i) Arthur Andersen, LLP, who have certified certain
financial statements of the Company and its subsidiaries, ProLogis
Trust ("ProLogis") and its subsidiaries and Homestead Village
Incorporated ("Homestead") and its subsidiaries, (ii) KPMG LLP, who
have certified certain financial statements of Archstone Communities
Trust ("Archstone") and its subsidiaries, CarrAmerica Realty
Corporation and its subsidiaries and Regency Realty Corporation and
its subsidiaries, (iii) PricewaterhouseCoopers S.a.r.l., who have
certified certain financial statements of Security Capital U.S. Realty
("USRealty") and its subsidiaries and Security Capital European Realty
and its subsidiaries, and (iv) PricewaterhouseCoopers LLP, who have
certified certain financial statements of Storage USA, Inc., City
Center Retail Trust and Urban Growth Property Trust, are each
independent public accountants as required by the Securities Act;
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(4) the financial statements and the related notes thereto, of
(i) the Company and its consolidated subsidiaries, (ii) Archstone,
(iii) ProLogis and (iv) USRealty included or incorporated by reference
in the Registration Statement and the Prospectus, present fairly the
consolidated financial position of each such entity as of the dates
indicated and the results of their respective operations and the
changes in their respective consolidated cash flows for the period
specified; the said financial statements have been prepared in
conformity with United States generally accepted accounting
principles, and with respect to USRealty, Luxembourg regulatory
requirements, applied on a consistent basis, and the supporting
schedules included or incorporated by reference in the Registration
Statement or the Prospectus present fairly the information required to
be stated therein; the financial information and statistical data
included or incorporated by reference in the Registration Statement or
the Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with the financial statements
presented therein; and the pro forma financial information, and the
related notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus has been prepared in
accordance with the applicable requirements of the Securities Act and
the Exchange Act, as applicable;
(5) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been
(i) any change in the capital stock (except for non-material changes
due to (i) the grant or exercise of stock options and warrants and the
conversion of shares of Class A Common Stock into shares of Class B
Common Stock in the ordinary course or (ii) repurchases pursuant to
the Company's announced stock buyback program as such may be amended
or supplemented) or increase in the long-term debt of the Company,
(ii) except for a sale of 3,750,000 common shares of Archstone which
closed on December 1, 2000, any material change in the percentage
amount of capital stock or voting power owned or controlled by the
Company in Archstone, Homestead, ProLogis, USRealty, SC Capital
Incorporated or SC Realty Incorporated (to the extent the Company
continues to own at least 25% of the capital stock of the entity, each
such entity shall be a "Principal Affiliate" and, collectively, shall
be the "Principal Affiliates"), (iii) any change in the long-term debt
of any Principal Affiliate which is material to the Company and its
direct or indirect interests in the Principal Affiliates, taken as a
whole (the "SCGI Group") or (iv) any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the business, prospects, financial position, shareholders'
equity or results of operations (a "Material Adverse Change") of the
SCGI Group, in each case, otherwise than as set forth or contemplated
in the Prospectus; and except as set forth or contemplated in the
Prospectus neither the Company nor any of its Principal Affiliates has
entered into any transaction or agreement (whether or not in the
ordinary course of business) material to the SCGI Group;
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(6) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Maryland, with power and authority (corporate or other) to own its
properties and conduct its business as described in the Prospectus,
and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, other than where
the failure to be so qualified or in good standing would not
reasonably be expected to have a material adverse effect on or affect
the business, prospects, financial position, shareholders' equity or
results of operations (a "Material Adverse Effect") on the SCGI Group;
(7) each of the Company's direct or indirect subsidiaries or
affiliated entities identified in Schedule I hereto (each a "Specified
Affiliate") has been duly organized and is validly existing as a
corporation or real estate investment trust, as the case may be, under
the laws of its jurisdiction of organization, with power and authority
(corporate, trust and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified
for the transaction of business and is in good standing under the laws
of each jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
reasonably be expected to have a Material Adverse Effect on the SCGI
Group; and all the outstanding shares of stock or common shares of
each Principal Affiliate owned directly or indirectly by the Company
have been duly authorized and validly issued, are fully paid and, with
respect to Principal Affiliates that are corporations, non-assessable,
and are owned directly or indirectly by the Company free and clear of
all liens, encumbrances, security interests and claims, except as set
forth in the Prospectus;
(8) the Company has the equity interest in Archstone, Homestead,
ProLogis and USRealty in the percentage amounts set forth in the
Prospectus, except for non-material changes due to the grant or
exercise of stock options in the ordinary course;
(9) each of this Agreement and any other applicable Terms
Agreement has been duly authorized, executed and delivered by the
Company and constitutes the valid and binding agreement of the
Company, 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, and except as rights to indemnity and
contribution may be limited by applicable law;
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(10) the Securities have been duly authorized, and, when issued,
authenticated and delivered under the Indenture and delivered to and
paid for by the purchasers thereof in accordance with this Agreement
and any applicable Terms Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and
binding obligations of the Company entitled to the benefits provided
by the Indenture enforceable against the Company 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; the Indenture has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding
agreement enforceable against the Company in accordance with its
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; the Indenture has been duly qualified under the
Trust Indenture Act; and the Securities of any particular issuance of
Securities and the Indenture will conform to the descriptions thereof
in the Prospectus as amended or supplemented to relate to such
issuance of Securities, in all material respects;
(11) none of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a violation of Section 7
of the Exchange Act, or any regulation promulgated thereunder,
including, without limitation, Regulations G, T and X of the Board of
Governors of the Federal Reserve System;
(12) except as set forth in the Prospectus, neither the Company
nor any of its Specified Affiliates is, or with the giving of notice
or lapse of time or both would be, in violation of or in default
under, its charter, declaration of trust, or by-laws, as applicable,
or any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its Specified
Affiliates is a party or by which it or any of them or any of their
respective properties is bound, except for violations and defaults
which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the SCGI Group; the
issue and sale of the Securities and the performance by the Company of
its obligations under the Securities, the Indenture, this Agreement
and any Terms Agreement and the consummation of the transactions
contemplated herein and therein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its Specified
Affiliates is a party or by which the Company or any of its Specified
Affiliates is bound or to which any of the property or assets of the
Company or any of its Specified Affiliates is subject except for such
conflicts, breaches or defaults that would not reasonably be expected
to have a Material Adverse Effect on the SCGI Group, nor will any such
action result in any violation of any applicable law or statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, its Specified Affiliates or any
of their respective properties except for such violations that would
not reasonably be expected to have a Material Adverse Effect on the
SCGI Group, nor will any such action result in any violation of the
provisions of the charter (the "Charter") or the by-laws of the
Company; and no consent, approval, authorization, order, license,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement, any applicable Terms Agreement or the
Indenture, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection, with the purchase and
distribution of the Securities by any Agent;
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(13) the Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" or
an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(14) other than as described in or contemplated by the
Prospectus, there are no legal or governmental investigations,
actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
Specified Affiliates or any of their respective properties or to which
the Company or any of its Specified Affiliates is or may be a party or
to which any property of the Company or any of its Specified
Affiliates is or may be subject which, if determined adversely to the
Company or any of its Specified Affiliates, could individually or in
the aggregate have, or reasonably be expected to have, a Material
Adverse Effect on the SCGI Group, and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others, and there are no
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in
the Registration Statement or the Prospectus which are not filed or
described as required;
(15) the Company's authorized, issued and outstanding
capitalization is as set forth in the Prospectus; and all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable;
(16) the Company and its Specified Affiliates have directly or
indirectly good and marketable title in fee simple or in leasehold
interest, as the case may be, to all items of real property and good
and marketable title to all personal property owned by them except
where the failure to have such good and marketable title would not be
expected to have a Material Adverse Effect on the SCGI Group, in each
case free and clear of all liens, encumbrances and defects except such
as have been established or permitted to remain pursuant to financing
arrangements entered into in the ordinary course of business or such
as do not materially affect the value of such property and do not
interfere with the use made or proposed to be made of such property by
such entity; and any real property and buildings held under lease by
the Company and its Specified Affiliates are held by them under valid,
existing and enforceable leases with such exceptions as are not
material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company or its Specified
Affiliates;
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(17) the SCGI Group carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties;
(18) except as would not have a Material Adverse Effect on the
SCGI Group, (i) each of the Company and its Specified Affiliates owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof, and (ii) neither the Company nor any
Specified Affiliate has received any actual notice of any proceeding
relating to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization; and each
of the Company and its Specified Affiliates is in compliance with all
laws and regulations relating to the conduct of its business as
conducted as of the date hereof except such as would not reasonably be
expected to have a Material Adverse Effect on the SCGI Group;
(19) there are no existing or, to the best knowledge of the
Company, threatened employment or labor disputes with the employees of
the Company or any of its Principal Affiliates which are reasonably
likely to have a Material Adverse Effect on the SCGI Group;
(20) the Company and its Principal Affiliates have filed all
federal, state, local and foreign tax returns which have been required
to be filed and have paid all taxes shown thereon and all assessments
received by them or any of them to the extent that such taxes have
become due and are not being contested in good faith; and there is no
tax deficiency which has been or might reasonably be expected to be
asserted or threatened against the Company or any Principal Affiliate
except such asserted or threatened deficiencies that would not
reasonably be expected to have a Material Adverse Effect on the SCGI
Group;
(21) the Company and its Specified Affiliates (i) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a Material Adverse Effect on
the SCGI Group;
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(22) there are no costs or liabilities associated with
Environmental Laws that are expected, individually or in the
aggregate, to have a Material Adverse Effect on the SCGI Group;
(23) except as described in or contemplated by the Prospectus,
the Company and its Specified Affiliates own or possess all material
licenses, inventions, copyrights, know-how (including trade secrets
and other proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names and other
intellectual property rights ("Intellectual Property") currently
employed by them in connection with the business now operated by them,
and neither the Company nor any Specified Affiliate has received any
notice of infringement of or conflict with asserted rights of others
with respect to the Intellectual Property which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect on the SCGI Group;
(24) each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), that is maintained, administered or contributed to
by the Company or any of its Principal Affiliates for employees or
former employees of the Company and its Principal Affiliates has been
maintained in substantial compliance with its terms and the
requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"); to the best knowledge
of the Company, no prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code has occurred with
respect to any such plan, excluding transactions effected pursuant to
a statutory or administrative exemption; and for each such plan which
is subject to the funding rules of Section 412 of the Code or Section
302 of ERISA, no "accumulated funding deficiency" as defined in
Section 412 of the Code has been incurred, whether or not waived;
(25) USRealty is not a "passive foreign investment company"
within the meaning of Section 1296(a) of the Code or subject to the
accumulated earnings tax for United States income tax purposes;
(26) on the date hereof, each of Archstone and ProLogis continues
to satisfy the requirements for qualification as a real estate
investment trust under Sections 856 through 860 of the Code and the
rules and regulations thereunder and the Company reasonably expects
that each of such entity's current method of operation will enable it
to meet the requirements for taxation as a real estate investment
trust under the Code for the fiscal year ending December 31, 2000;
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(27) the Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Securities, and the Company has not distributed and has
agreed not to distribute any prospectus or other offering material in
connection with the offering and sale of the Securities other than the
Prospectus, any preliminary prospectus filed with the Commission or
other material permitted by the Securities Act; and
(28) immediately after any sale of Securities by the Company
hereunder or under any applicable Terms Agreement, the aggregate
amount of Securities which shall have been issued and sold by the
Company hereunder or under any Terms Agreement and of any debt
securities of the Company (other than the Securities) that shall have
been issued and sold pursuant to the Registration Statement will not
exceed the amount of debt securities registered under the Registration
Statement.
2. Solicitations as Agent; Purchases as Principal.
(1) Solicitations as Agent. On the basis of the representations
and warranties herein contained, but subject to the terms and
conditions herein set forth, each of the Agents hereby severally and
not jointly agrees, as agent of the Company, to use its reasonable
efforts to solicit offers to purchase the Securities from the Company
upon the terms and conditions set forth in the Prospectus as amended
or supplemented from time to time. The Company may from time to time
offer Notes for sale otherwise than through the Agents; provided,
however, that so long as this Agreement shall be in effect the Company
shall not solicit or accept offers to purchase, or sell, Securities or
any other debt securities with a maturity at the time of original
issuance of nine (9) months or more except pursuant to this Agreement
and any Terms Agreement, or except pursuant to a private placement not
constituting a public offering under the Securities Act or except in
connection with a firm commitment underwriting pursuant to an
underwriting agreement that does not provide for a continuous offering
of medium-term debt securities through any other agents without
amending this Agreement to appoint such agents as additional Agents
hereunder on the same terms and conditions as provided herein for the
Agents and without giving the Agents prior notice of such appointment.
The consent of the then current Agents shall not be necessary for such
purpose. In the absence of such an amendment, the Company may accept
offers to purchase Notes from or through an agent other than the
Agents, provided that (i) the Company shall not have solicited such
offers, (ii) the Company and such agent shall have executed an
agreement with respect to such purchases having terms and conditions
(including, without limitation, commission rates) with respect to such
purchases substantially the same as the terms and conditions that
would apply to such purchases under this Agreement as if such agent
was an Agent (which may be accomplished by incorporating by reference
in such agreement the terms and conditions of this Agreement), and
(iii) the Company shall provide the Agents with a copy of such
agreement following the execution thereof. However, the Company
reserves the right to sell, and may solicit and accept offers to
purchase, Securities directly on its own behalf to investors (other
than broker-dealers).
1
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The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase Securities. Upon
receipt of at least one business day's prior notice from the Company,
each Agent will suspend solicitation of offers to purchase Securities
from the Company until such time as the Company has advised such Agent
or Agents that such solicitation may be resumed. During the period of
time that such solicitation is suspended, the Company shall not be
required to deliver any opinions, letters or certificates in
accordance with Sections 4(l), 4(m) and 4(n); provided that if the
Registration Statement or Prospectus is amended or supplemented during
the period of suspension (other than by an amendment or supplement
providing solely for a change in the interest rates, redemption
provisions, amortization schedules or maturities offered for the
Securities or for a change that the Agents deem to be immaterial),
including an amendment or supplement including or incorporating
amended or supplemented financial information, no Agent shall be
required to resume soliciting offers to purchase Securities until the
Company has delivered such opinions, letters and certificates as such
Agent may reasonably request.
The Company agrees to pay each Agent, as consideration for the
sale of each Security resulting from a solicitation made or an offer
to purchase received by such Agent, a commission in the form of a
discount from the purchase price of such Security in an amount equal
to the following applicable percentage of the principal amount of such
Security sold:
Commission percentage of
Range of Maturities aggregate principal amount of
Securities sold
From 9 months to less than 1 year...... .125%
From 1 year to less than 18 months..... .150%
From 18 months to less than 2 years.... .200%
From 2 years to less than 3 years...... .250%
From 3 years to less than 4 years...... .350%
From 4 years to less than 5 years...... .450%
From 5 years to less than 6 years...... .500%
From 6 years to less than 7 years...... .550%
From 7 years to less than 10 years..... .600%
From 10 years to less than 15 years.... .625%
From 15 years to less than 20 years.... .675%
From 20 years to 30 years.............. .750%
Greater than 30 years.................. *
*As agreed to by the Company and the applicable Agent at the time
of sale.
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The Agents are authorized to solicit offers to purchase
Securities only in the principal amount of $1,000 (or, in the case of
Securities not denominated in U.S. dollars, the equivalent thereof in
the applicable foreign currency or composite currency, rounded down to
the nearest 1,000 units of such foreign currency or composite
currency) or any amount in excess thereof which is an integral
multiple of $1,000 (or, in the case of Securities not denominated in
U.S. dollars, 1,000 units of such foreign currency or composite
currency). Each Agent shall communicate to the Company, orally or in
writing, each offer to purchase Securities received by such Agent as
agent that in its judgment should be considered by the Company. The
Company shall have the sole right to accept offers to purchase the
Securities and may reject any such offer in whole or in part. Each
Agent shall have the right, in its sole discretion, to reject any
offer to purchase Securities, as a whole or in part, that it considers
to be unacceptable and any such rejection shall not be deemed a breach
of its agreements herein contained. The procedural details relating to
the issue and delivery of Securities sold by an Agent as agent and the
payment therefor are set forth in the Administrative Procedures (as
hereinafter defined).
(2)....Purchase as Principal. Each sale of Securities to any
Agent as principal shall be made in accordance with the terms of this
Agreement and (unless such Agent shall otherwise agree) a Terms
Agreement which will provide for the sale of such Securities to, and
the purchase thereof by, such Agent. A Terms Agreement will be
substantially in the form of Exhibit A hereto but may take the form of
any exchange of any standard form of written communication between an
Agent and the Company and may also specify certain provisions relating
to the reoffering of such Securities by such Agent. The commitment of
any Agent to purchase Securities as principal, whether pursuant to any
Terms Agreement or otherwise, shall be deemed to have been made on the
basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein and
in the applicable Terms Agreement set forth. Each agreement by an
Agent to purchase Securities as principal (pursuant to a Terms
Agreement or otherwise) shall specify the principal amount of
Securities to be purchased by such Agent pursuant thereto, the price
to be paid to the Company for such Securities, the maturity date of
such Securities, the interest rate or interest rate basis, if any,
applicable to such Securities, any other terms of such Securities, the
time and date and place of delivery of and payment for such Securities
(the time and date of any and each such delivery and payment, the
"Time of Delivery"), any provisions relating to rights of, and default
by, underwriters acting together with such Agent in the reoffering of
Securities, and shall also specify any requirements for opinions of
counsel, accountants' letters and officers' certificates pursuant to
Section 4 hereof. Unless otherwise specified in a Terms Agreement, the
procedural details relating to the issue and delivery of Securities
purchased by an Agent as principal and the payment therefor shall be
as set forth in the Administrative Procedures.
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<PAGE>
(3)....Obligations Several. The Company acknowledges that the
obligations of the Agents are several and not joint and, subject to
the provisions of this Section 2, each Agent shall have complete
discretion as to the manner in which it solicits purchasers for the
Securities and as to the identity thereof.
(4)....Administrative Procedures. The Agents and the Company
agree to perform their respective duties and obligations specifically
provided to be performed in the Medium-Term Notes Administrative
Procedures (the "Administrative Procedures") attached hereto as
Exhibit B, as the same may be amended from time to time. The
Administrative Procedures may be amended only by written agreement of
the Company and the Agents.
(5)....Other Securities. The Company agrees to notify each
Agent of sales by the Company of Other Securities.
3..Commencement Date. The documents required to be delivered
pursuant to Section 6 hereof on the Commencement Date shall be delivered to
the Agents at the offices of Davis Polk & Wardwell, 450 Lexington Avenue,
New York, New York, at 11:00 a.m., New York City time, on the date of this
Agreement, which date and time of delivery may be postponed by agreement
between the Agents and the Company but in no event shall be later than the
day prior to the date on which solicitation of offers to purchase
Securities is commenced or the first date on which the Company accepts an
offer by any Agent to purchase Securities as principal (such time and date
being referred to herein as the "Commencement Date").
4..Covenants of the Company. The Company covenants and agrees with
each Agent:
(1)....to cause each Prospectus Supplement to be filed with or
transmitted for filing to the Commission in accordance with Rule
424(b) under the Securities Act and to prepare, with respect to any
Securities to be sold through or to such Agent pursuant to this
Agreement, a Pricing Supplement with respect to such Securities in a
form previously approved by such Agent and to file such Pricing
Supplement in accordance with Rule 424(b) under the Securities Act;
(2)....to deliver to the Agents and counsel for the Agents, at
the expense of the Company, a signed copy of the Registration
Statement (as originally filed) and each amendment thereto, in each
case including exhibits and documents incorporated by reference
therein and, during the period mentioned in paragraph (e) below, to
the Agents as many copies of the Prospectus (including all amendments
and supplements thereto) and documents incorporated by reference
therein as the Agents may reasonably request;
(3)....from the date hereof and prior to the termination of the
offering of the Securities pursuant to this Agreement or any Terms
Agreement, to furnish to the Agents a copy of any proposed amendment
or supplement to the Registration Statement or the Prospectus, for
review by the Agents, and not to file any such proposed amendment or
supplement to which the Agents reasonably object;
1050966.2 10201 1256C 91920694
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<PAGE>
(4)....to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required
in connection with the offering or sale of the Securities, and during
such same period, to advise the Agents promptly, and to confirm such
advice in writing, (i) when any amendment to the Registration
Statement shall have become effective, (ii) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation or threatening of any proceeding for that purpose, and (iv)
of the receipt by the Company of any notification with respect to any
suspension of the qualification of the Securities for offer and sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and to use its best efforts to prevent the issuance
of any such stop order or notification and, if issued, to obtain as
soon as possible the withdrawal thereof. If the Basic Prospectus is
amended or supplemented as a result of the filing under the Exchange
Act of any document incorporated by reference in the Prospectus, no
Agent shall be obligated to solicit offers to purchase Securities so
long as it is not reasonably satisfied with such document;
(5)....if at any time when a prospectus relating to the
Securities is required to be delivered under the Securities Act, any
event shall occur as a result of which the Prospectus, as then amended
or supplemented, would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances when such
Prospectus is delivered to a purchaser, not misleading, or, if in the
opinion of the Agents or the Company, it is necessary at any time to
amend or supplement the Prospectus to comply with law, to immediately
notify the Agents by telephone (with confirmation in writing) and
request each Agent (i) in its capacity as agent of the Company, to
suspend solicitation of offers to purchase Securities from the Company
(and, if so notified, such Agent shall cease such solicitations and
cease using the Prospectus as soon as practicable, but in any event
not later than one business day later); and (ii) to cease sales of any
Securities such Agent may then own as principal. If the Company shall
decide to amend or supplement the Registration Statement or the
Prospectus, as then amended or supplemented, it shall so advise each
Agent promptly by telephone (with confirmation in writing) and, at its
expense, shall prepare and cause to be filed promptly with the
Commission an amendment or supplement to the Registration Statement or
the Prospectus, as then amended or supplemented, that will correct
such statement or omission or effect such compliance and will supply
such amended or supplemented Prospectus to the Agents in such
quantities as they may reasonably request. If any such amendment or
supplement and any documents, opinions, letters and certificates
furnished to the Agents pursuant to Sections 4(h), 4(l), 4(m) and 4(n)
in connection with the preparation and filing of such amendment or
supplement are satisfactory in all respects to the Agents, upon the
filing with the Commission of such amendment or supplement to the
Prospectus or upon the effectiveness of an amendment to the
Registration Statement, the Agents will resume the solicitation of
offers to purchase Securities hereunder. Notwithstanding any other
provision of this Section 4(e), until the distribution of any
Securities any Agent may own as principal has been completed or in the
event such Agent, in the opinion of its counsel, is otherwise required
to deliver a prospectus in respect of a transaction in the Securities,
if any event described in this Section 4(e) occurs the Company will,
at its own expense, promptly prepare and file with the Commission an
amendment or supplement, reasonably satisfactory in all respects to
such Agent, that will correct such statement or omission or effect
such compliance, will supply such amended or supplemented Prospectus
to such Agent in such quantities as such Agent may reasonably request
and shall furnish to such Agent pursuant Sections 4(h), 4(1), 4(m) and
4(n) such documents, certificates, opinions and letters as it may
request in connection with the preparation and filing of such
amendment or supplement;
1050966.2 10201 1256C 91920694
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<PAGE>
(6)....to make generally available to its security holders and
to the Agents as soon as practicable earning statements covering
periods of at least twelve months beginning, in each case, with the
first fiscal quarter of the Company occurring after the effective date
of the Registration Statement with respect to each sale of Securities,
which shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 of the Commission promulgated thereunder;
(7)....so long as any Securities are outstanding, to furnish to
the Agents copies of all reports or other communications (financial or
other) furnished to holders of Securities, and copies of any reports
and financial statements furnished to or filed with the Commission or
any national securities exchange;
(8)....to furnish to the Agents during the term of this
Agreement such relevant documents and certificates of officers of the
Company relating to the business, operations and affairs of the
Company, the Registration Statement, the Basic Prospectus, any
amendments or supplements thereto, the Indenture, the Securities, this
Agreement, the Administrative Procedures, any applicable Terms
Agreement and the performance by the Company of its obligations
hereunder or thereunder as the Agents may from time to time reasonably
request and shall notify the Agents promptly in writing of any
downgrading, or on its receipt of any notice of (i) any intended or
potential downgrading or (ii) any review or possible change that does
not indicate an improvement in the rating accorded any of securities
of, or guaranteed by, the Company by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(9)....that, from the date of any applicable Terms Agreement
with such Agent or other agreement by such Agent to purchase
Securities as principal and continuing to and including the business
day following the related Time of Delivery, not to offer, sell,
contract to sell or otherwise dispose of any debt securities of or
guaranteed by the Company which are substantially similar to the
Securities, without the prior written consent of such Agent;
1050966.2 10201 1256C 91920694
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<PAGE>
(10)...to use the net proceeds of each offering of Securities
in the manner specified in the Prospectus under "Use of Proceeds;"
(11)...as long as any Securities are outstanding, not to be or
become an open-end investment trust, unit investment trust, closed-end
investment company or face-amount certificate company that is or is
required to be registered under the Investment Company Act;
(12)...that (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the interest
rates, redemption provisions, amortization schedules or maturities
offered on the Securities or for a change the Agents deem to be
immaterial), including an amendment or supplement including or
incorporating amended or supplemented financial information and (ii)
each time the Company sells Securities to such Agent as principal
pursuant to a Terms Agreement or other agreement and such Terms
Agreement or other agreement specifies the delivery of an opinion
under this Section 4(l) as a condition to the purchase of Securities
pursuant to such Terms Agreement or other agreement, the Company shall
furnish or cause to be furnished forthwith to such Agent a written
opinion of (y) counsel for the Company reasonably satisfactory to such
Agent and (z) the General Counsel of the Company, each dated the date
of such amendment or supplement, or the related Time of Delivery
relating to such sale, as the case may be, in form reasonably
satisfactory to such Agent, of the same tenor as the opinions referred
to in Sections 6(c), 6(d) and 6(e) hereof, respectively, but modified
to relate to the Registration Statement and the Prospectus as amended
and supplemented to the date of such opinions, or, in lieu of such
opinions, counsel and the General Counsel last furnishing such
opinions, may furnish to the Agents a letter to the effect that such
Agent may rely on the opinion of such counsel and such General Counsel
which was last furnished to such Agent to the same extent as though it
were dated the date of such letter (except that the statements in such
last opinion shall be deemed to relate to the Registration Statement
and the Prospectus as amended or supplemented to date of delivery of
such letter);
1050966.2 10201 1256C 91920694
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<PAGE>
(13)...that (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented to include or incorporate
amended or supplemented financial information and (ii) each time the
Company sells Securities to such Agent as principal pursuant to a
Terms Agreement or other agreement and such Terms Agreement or other
agreement specifies the delivery of a letter under this Section 4(m)
as a condition to the purchase of Securities pursuant to such Terms
Agreement or other agreement, the Company shall cause the independent
certified public accountants who have certified the financial
statements of the Company and its consolidated subsidiaries,
Archstone, ProLogis and USRealty included or incorporated by reference
in the Registration Statement forthwith to furnish such Agent a
letter, dated the date of such amendment or supplement or the related
Time of Delivery relating to such sale, as the case may be, in form
satisfactory to such Agent, of the same tenor as the letter referred
to in Section 6(f) hereof but modified to relate to the Registration
Statement and the Prospectus as amended or supplemented to the date of
such letter with such changes as may be necessary to reflect such
amended or supplemented financial information included or incorporated
by reference in the Registration Statement or the Prospectus as
amended or supplemented, provided, however, that, with respect to any
financial information or other matter, such letter may reconfirm as
true and correct at such date, as though made at and as of such date,
rather than repeat, statements with respect to such financial
information or other matter made in the letter referred to in Section
6(e) hereof which was last furnished to such Agent; and
(14)...that (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the interest
rates, redemption provisions, amortization schedules or maturities
offered on the Securities or for a change the Agents deem to be
immaterial), including an amendment or supplement including or
incorporating amended or supplemented financial information and (ii)
each time the Company sells Securities to such Agent as principal and
the applicable Terms Agreement or other agreement specific the
delivery of a certificate under this Section 4(n) as a condition to
the purchase of Securities pursuant to such Terms Agreement or other
agreement, the Company shall furnish or cause to be furnished
forthwith to such Agent a certificate signed by an executive officer
of the Company, dated the date of such amendment or supplement or the
related Time of Delivery relating to such sale, as the case may be, in
form satisfactory to such Agent, of the same tenor as the certificates
referred to in Section 6(b) but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to the date
of delivery of such certificate or to the effect that the statements
contained in the certificate referred to in Section 6(b) hereof which
was last furnished to such Agent are true and correct at such date as
though made at and as of such date (except that such statements shall
be deemed to relate to the Registration Statement and the Prospectus
as amended or supplemented to such date).
5....Cost and Expenses. The Company covenants and agrees with each
Agent that the Company will, whether or not any sale of Securities is
consummated, pay all costs and expenses incident to the performance of the
Company's obligations hereunder and under any applicable Terms Agreement,
including without limiting the generality of the foregoing, all reasonable
costs, expenses, fees and disbursements (i) incident to the preparation,
issuance, execution, authentication and delivery of the Securities, including
any expenses of the Trustee and of the Agents' counsel, (ii) incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement, the Prospectus and any preliminary prospectus (including in each case
all exhibits, amendments and supplements thereto), including any fees,
disbursements and expenses of the Agents' counsel, (iii) incurred in connection
with the registration or qualification and determination of eligibility for
investment of the Securities under the laws of such jurisdictions as the Agents
(or in connection with any Terms Agreement, the applicable Agent) may designate
(including reasonable fees of counsel for the Agents (or such Agent) and their
disbursements), (iv) in connection with the listing of the Securities on any
stock exchange, (v) related to any filing with National Association of
Securities Dealers, Inc. in respect of the Securities, (vi) in connection with
the preparation (including word processing and duplication costs) and delivery
of this Agreement, the Indenture, the Preliminary and Supplemental Blue Sky
Memoranda and any Legal Investment Survey and the furnishing to the Agents and
dealers of copies of the Registration Statement and the Prospectus, including
mailing and shipping, as herein provided and (vii) payable to rating agencies in
connection with the rating of the Securities.
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6....Conditions. The obligation of any Agent, as agent of the Company,
at any time ("Solicitation Time") to solicit offers to purchase the Securities,
the obligation of any Agent to purchase Securities as principal pursuant to any
Terms Agreement or otherwise, and the obligation of any other purchaser to
purchase Securities shall in each case be subject (1) to the condition that all
representations and warranties of the Company herein and all statements of
officers of the Company made in any certificate furnished pursuant to the
provisions hereof are true and correct (i) in the case of an Agent's obligation
to solicit offers to purchase Securities, at and as of such Solicitation Time
and (ii) in the case of any Agent's or any other purchaser's obligation to
purchase Securities, at and as of the time the Company accepts the offer to
purchase such Securities and, as the case may be, at and as of the related Time
of Delivery or time of purchase; (2) to the condition that at or prior to such
Solicitation Time, time of acceptance, Time of Delivery or time of purchase, as
the case may be, the Company shall have complied with all its agreements and all
conditions on its part to be performed or satisfied hereunder; and (3) to the
following additional conditions when and as specified:
(1)....Prior to such Solicitation Time or corresponding Time of
Delivery or time of purchase, as the case may be:
(1)....the Prospectus as amended or supplemented (including, if
applicable, the Pricing Supplement) with respect to such Securities
shall have been filed with the Commission pursuant to Rule 424(b)
under the Securities Act within the applicable time period prescribed
for such filing by the rules and regulations under the Securities Act;
no stop order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceedings for such purpose
shall be pending before or threatened by the Commission; and all
requests for additional information on the part of the Commission
shall have been complied with to the reasonable satisfaction of the
Agents;
(2)....there shall not have occurred any downgrading, nor shall
any notice have been given of (A) any intended or potential
downgrading or (B) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of or
guaranteed by the Company by any "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;
1050966.2 10201 1256C 91920694
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<PAGE>
(3)....since the respective dates as of which information is
given in the Prospectus, there shall not have been (i) any change in
the capital stock (except for non-material changes due to the grant or
exercise of stock options and warrants and the conversion of shares of
Class A Common Stock into shares of Class B Common Stock in the
ordinary course) or increase in the long-term debt of the Company,
(ii) any material change in the percentage amount of capital stack or
voting power owned or controlled by the Company in any Principal
Affiliate, (iii) any change in the long term debt of any Principal
Affiliate which is material to the SCGI Group or (iv) any Material
Adverse Change in the SCGI Group, in each case, otherwise than as set
forth or contemplated in the Prospectus, as amended or supplemented to
such Solicitation Time or at the time such offer to purchase was made,
the effect of which in the judgment of the applicable Agents makes it
impracticable or inadvisable to market the Securities on the terms and
in the manner contemplated in the Prospectus, as so amended or
supplemented; and neither the Company nor any of its Principal
Affiliates shall have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute, or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus and except any
such loss or interference that would not reasonably be expected to
have a Material Adverse Effect on the SCGI Group;
(4)....(A) trading generally shall not have been suspended or
materially limited on or by, as the case may be, any of the New York
Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade, (B) trading
of any securities of or guaranteed by the Company shall not have been
suspended on any exchange or in any over-the-counter market, (C) a
general moratorium on commercial banking activities in New York shall
not have been declared by either Federal or New York State
authorities, or (D) there shall not have occurred any outbreak or
escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of such Agent or Agents or of
such other purchaser, is material and adverse and which in the
judgment of such Agent or Agents or of other purchaser makes it
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus as amended or supplemented at the
Solicitation Time or at the time such offer to purchase was made.
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<PAGE>
(2)....On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, the relevant Agent or
Agents shall have received a certificate of an executive officer of the
Company satisfactory to the Agents, dated the Commencement Date or Time of
Delivery, as the case may be, to the effect set forth in subsections (a)(i)
and (ii) of this Section and to the further effect that (1) the
representations and warranties of the Company contained herein are true and
correct on and as of the Commencement Date or Time of Delivery, as the case
may be, as if made on and as of such date, (2) the Company has complied
with all agreements and all conditions on its part to be performed or
satisfied hereunder or under the applicable Terms Agreement or other
agreement at or prior to the Commencement Date or Time of Delivery, as the
case may be, and (3) there has not occurred any Material Adverse Change in
the SCGI Group from that set forth or contemplated in the Registration
Statement or Prospectus;
(3)....On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, counsel for the Company
satisfactory to such Agent shall have furnished to the relevant Agent or
Agents their written opinion(s), dated the Commencement Date or Time of
Delivery, as the case may be, in form and substance satisfactory to such
Agent or Agents, to the effect that:
(1)......the Company has been duly incorporated and is validly
existing as a corporation under the laws of Maryland and in good
standing with the State Department of Assessments and Taxation of
Maryland, with corporate power to own its properties and conduct its
business substantially as described in the Prospectus as then amended
or supplemented, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not
have a Material Adverse Effect on the SCGI Group;
(2)......each Principal Affiliate has been duly incorporated or
organized, as the case may be, and is validly existing as a
corporation or real estate investment trust, as the case may be, under
the laws of its jurisdiction of incorporation or organization and the
Principal Affiliates whose businesses are described in the Prospectus
have the power and authority (corporate or other, as the case may be )
to own its properties and conduct its business substantially as
described in the Prospectus; and all of the outstanding shares of
stock or common shares of each Principal Affiliate owned directly or
indirectly by the Company have been duly authorized and validly
issued, are fully paid and, with respect to Principal Affiliates that
are corporations, non-assessable, and are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities or
claims, except as set forth in the Prospectus;
1050966.2 10201 1256C 91920694
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<PAGE>
(3)......other than as described in or contemplated by the
Prospectus, and to the best of such counsel's knowledge, there are no
legal or governmental investigations, actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
Principal Affiliates or any of their respective properties or to which
the Company or any of its Principal Affiliates is or may be a party or
to which any property of the Company or its Principal Affiliates is or
may be subject which, if determined adversely to the Company or any of
its Principal Affiliates, could individually or in the aggregate have,
or reasonably be expected to have, a Material Adverse Effect on the
SCGI Group and, other than as described in or contemplated by the
Prospectus and to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others, and such counsel does not know of any
amendment to the Registration Statement required to be filed or of any
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be incorporated
by reference into the Prospectus or required to be described in the
Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required;
(4)......each of this Agreement and any applicable Terms
Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) and
except as rights to indemnity and contribution hereunder may be
limited by applicable law;
(5)......the Securities have been duly authorized by the Company
and, when duly executed and delivered by the Company and authenticated
in accordance with the terms of the Indenture and delivered to and
paid for by any purchaser of Securities sold through an Agent as agent
or any Agent as principal pursuant to any Terms Agreement or other
agreement, will constitute valid and binding obligations of the
Company entitled to the benefits provided by the Indenture enforceable
against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity);
(6)......the Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company enforceable against the Company in accordance with its
terms, except to the extent enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity); and
the Indenture has been duly qualified under the Trust Indenture Act;
1050966.2 10201 1256C 91920694
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<PAGE>
(7)..... the Indenture and the Securities conform in all material
respects to the descriptions thereof in the Registration Statement and
the Prospectus;
(8)......neither the Company nor any of its Principal Affiliates
is, or with the giving of notice or lapse of time or both would be, in
violation of or in default under, its charter, declaration of trust or
by-laws or, to such counsel's knowledge, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known to
such counsel to which the Company or any of its Principal Affiliates
is a party or by which it or any of them or any of their respective
properties is bound, except for violations and defaults which
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect on the SCGI Group; the issue and sale
of the Securities and the performance by the Company of its
obligations under the Securities, the Indenture, this Agreement and
any applicable Terms Agreement or other agreement pursuant to which an
Agent purchases Securities as principal and the consummation of the
transactions contemplated herein and therein will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to
which the Company or any of its Principal Affiliates is a party or by
which the Company or any of its Principal Affiliates is bound or to
which any of the property or assets of the Company or any of its
Principal Affiliates is subject, nor will any such action result in
any violation of any applicable law or statute or any order, rule or
regulation of any court or governmental agency or body known to such
counsel having jurisdiction over the Company, its Principal Affiliates
or any of their respective properties except for conflicts, breaches,
defaults or violations which would not reasonably be expected to have
a Material Adverse Effect on the SCGI Group or on the consummation of
the transactions contemplated by this Agreement, any applicable Terms
Agreement or other agreement pursuant to which an Agent purchases
Securities as principal or the Indenture or on the validity and
enforceability of the Securities and the Indenture, nor will any such
action result in any violation of the provisions of the Charter or
by-laws of the Company;
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(9)......no consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body
is required for the issue and sale of the Securities or the
consummation of the other transactions contemplated by this Agreement,
any applicable Terms Agreement or other agreement pursuant to which an
Agent purchases Securities as principal, or the Indenture, except such
consents, approvals, authorizations, registrations or qualifications
as have been obtained under the Securities Act and the Trust Indenture
Act and as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Agents or consents, the failure of which to be obtained would not have
a Material Adverse Effect on the SCGI Group or on the consummation of
the transactions contemplated by this Agreement, any applicable Terms
Agreement or other agreement pursuant to which an Agent purchases
Securities as principal, or the Indenture or on the validity and
enforceability of the Securities and the Indenture;
(10).....the statements in (A) the Basic Prospectus under
"Description of Debt Securities" and "Plan of Distribution" and in the
Prospectus Supplement specifically relating to the Securities under
"Description of Notes," "Plan of Distribution" and "United States
Taxation", (B) the Company's Annual Report on Form 10-K for the year
ended December 31, 1999 under the caption "Item 1. Business-The
Capital Division" and (C) the Company's Proxy Statement for its 2000
annual meeting of shareholders under the captions "Election of
Directors-Outside Directors Plan", "Executive Compensation- 1998
Long-Term Incentive Plan", "Executive Compensation-1995 Option Plan",
"Executive Compensation-Other Option Plans", and "Certain
Relationships and Transactions" (or the statements in comparable
sections as they may be renamed in future filings made with the
Commission by the Company), insofar as such statements constitute a
summary of the legal matters, documents or proceedings referred to
therein, fairly present in all material respects such legal matters,
documents or proceedings;
(11).....the Registration Statement is effective under the
Securities Act and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act or
proceeding therefor initiated or threatened by the Commission; and
(12).....such counsel (A) is of the opinion that each document
incorporated by reference in the Registration Statement and the
Prospectus (except for the financial statements and related schedules
and other financial and statistical data included therein, as to which
such counsel need express no opinion) when filed with the Commission
complied as to form in all material respects with the Exchange Act,
(B) believes that (except for the financial statements and related
schedules and other financial and statistical data included therein,
as to which such counsel need express no belief) the Registration
Statement (including the documents incorporated by reference therein)
filed with the Commission pursuant to the Securities Act relating to
the Securities, when such part became effective, did not and, as of
the date such opinion is delivered, does not, contain an untrue
statement of a material fact or omit to state a material fact required
1050966.2 10201 1256C 91920694
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<PAGE>
to be stated therein or necessary to make the statements therein not
misleading, (C) is of the opinion that the Registration Statement and
the Prospectus and any amendments and supplements thereto (except for
the financial statements and related schedules and other financial and
statistical data included therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Securities Act and the Trust Indenture Act and
(D) believes that (except for the financial statements and related
schedules and other financial and statistical data included therein,
as to which such counsel need express no belief) the Prospectus, as
amended or supplemented, if applicable, as of the date such opinion is
delivered, does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances
under which they were made, not misleading; provided that in the case
of an opinion delivered on the Commencement Date or pursuant to
Section 4(l)(i), the opinion and belief set forth in clauses (C) and
(D) above shall be deemed not to cover information concerning an
offering of particular Securities to the extent such information will
be set forth in a supplement to the Prospectus.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the State of New York to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to Agents' counsel) of other counsel
reasonably acceptable to the Agents' counsel, familiar with the applicable laws;
and (B) as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and its Principal Affiliates
and certificates or other written statements of officials of jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company and its Principal Affiliates. The opinion of such counsel for the
Company shall state that the opinion of any such other counsel upon which they
relied or such certificates is in form satisfactory to such counsel and, in such
counsel's opinion, the Agents and they are reasonably justified in relying
thereon. With respect to the matters to be covered in subparagraph (xii) above
such counsel may state their opinion and belief is based upon their
participation in the preparation of the Registration Statement and the
Prospectus and any amendment or supplement thereto and review and discussion of
the contents thereof but is without independent check or verification except as
specified. In rendering the opinion contained in paragraph (xii) (insofar as
said opinion refers to information in the Prospectus under "Federal Income Tax
Considerations") such opinion may be based upon (a) the Internal Revenue Code,
as amended, and the rules and regulations promulgated thereunder, (b) Maryland
law existing and applicable to the Company, (c) facts and other matters set
forth in the Prospectus, and (d) certain statements and representations made by
the Company to counsel for the Company, provided that such statements and
representations are also set forth in a certificate to the Agents.
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<PAGE>
(4).....On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or other
agreement, at the corresponding Time of Delivery, counsel for the Company
satisfactory to such Agent, shall have finished to the Agents their written
opinion, in form and substance reasonably satisfactory to the Agents, to
the effect that the Company is not, and after giving effect to the offering
and sale of the Securities will not be, an "investment company" as such
term is defined in the Investment Company Act.
(5).....On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, the General Counsel of
the Company shall have furnished to the Agents his written opinion, dated
the Commencement Date or Time of Delivery, as the case may be, in form and
substance satisfactory to the Agents, to the effect that:
(1)....other than as set forth or contemplated in the
Prospectus and to the best of such counsel's knowledge, there are no
legal or governmental investigations, actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
Principal Affiliates or any of their respective properties or to which
the Company or any of its Principal Affiliates is or may be a party or
to which any property of the Company or its Principal Affiliates is or
may be the subject which, if determined adversely to the Company or
any of its Principal Affiliates, could individually or in the
aggregate have, or reasonably be expected to have, a Material Adverse
Effect on the SCGI Group; and to the best of such counsel's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(2)....such counsel believes that (other than the financial
statements and related schedules and other financial and statistical
data included therein, as to which such counsel need express no
belief) the Prospectus did not, as of its date of issuance, and does
not, as amended or supplemented, if applicable, as of the Time of
Delivery, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(3)....neither the Company nor any of its Principal Affiliates
is, or with the giving of notice or lapse of time or both would be, in
violation of or in default under its charter, declaration of trust or
by-laws or any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which the
Company or any of its Principal Affiliates is a party or by which it
or any of them or any of their respective properties is bound, except
for violations and defaults which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on
the SCGI Group; the issue and sale of the Securities being delivered
at the Time of Delivery and the performance by the Company of its
obligations under the Securities, the Indenture, this Agreement and
any applicable Terms Agreement or other agreement pursuant to which an
1050966.2 10201 1256C 91920694
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<PAGE>
Agent purchases Securities as principal and the consummation of the
transactions contemplated herein and therein will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to
which the Company or any of its Principal Affiliates is a party or by
which the Company or any of its Principal Affiliates is bound or to
which any of the property or assets of the Company or any of its
Principal Affiliates is subject, nor will any such action result in
any violation of any applicable law or statute or any order, rule or
regulation of any court or governmental agency or body known to such
counsel having jurisdiction over the Company, its Principal Affiliates
or any of their respective properties except for such conflicts,
breaches, defaults or violations which would not reasonably be
expected to have a Material Adverse Effect on the SCGI Group nor will
any such action result in any violation of the provisions of the
Charter or by-laws of the Company;
(4)....to the best of such counsel's knowledge based on
reasonable inquiry, the Company and each Principal Affiliate owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof except for such licenses, permits,
certificates, consents, orders, approvals and other authorizations,
declarations and filings as would not reasonably be expected to have a
Material Adverse Effect on the SCGI Group and neither the Company nor,
to the best of such counsel's knowledge based on reasonable inquiry,
any Principal Affiliate has received any actual notice of any
proceeding relating to revocation or modification of any such license,
permit, certificate, consent, order, approval or other authorization,
and, to the best of such counsel's knowledge based on reasonable
inquiry, each of the Company and its Principal Affiliates is in
compliance with all laws and regulations relating to the conduct of
its business as conducted as of the date of issuance of the Prospectus
except for such laws and regulations as would not reasonably be
expected to have a Material Adverse Effect on the SCGI Group; and
(5)....to the best of such counsel's knowledge based on
reasonable inquiry, the Company and its Principal Affiliates (A) are
in compliance with any and all applicable Environmental Laws, (B) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (C) are in compliance with all terms and conditions of
any such permit, license or approval, except where such noncompliance
with Environmental Laws, failure to receive required permits, licenses
or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, individually or in
the aggregate, have a Material Adverse Effect on the SCGI Group.
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<PAGE>
(6)....On the Commencement Date, and in the case of a purchase
of Securities by an Agent as principal pursuant to a Terms Agreement
or otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, the independent
certified public accountants who have certified the financial
statements of the Company and its Principal Affiliates included or
incorporated by reference in the Registration Statement and
Prospectus, as then amended or supplemented, shall have furnished to
the relevant Agent or Agents a letter, dated the Commencement Date or
Time of Delivery, as the case may be, in form and substance reasonably
satisfactory to such Agent or Agents, containing statements and
information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information relating to the Company contained in or
incorporated by reference in the Registration Statement and the
Prospectus, as then amended or supplemented;
(7)....On the Commencement Date, and in the case of a purchase
of Securities by an Agent as principal pursuant to a Terms Agreement
or otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, counsel to the
Agents shall have furnished to the relevant Agent or Agents such
opinion or opinions, dated the Commencement Date or Time of Delivery,
as the case may be, with respect to the validity of the Indenture, the
Securities, the Registration Statement, the Prospectus as amended or
supplemented and other related matters as such Agent or Agents may
reasonably request, and in each case such counsel shall have received
such papers and information as they may reasonably request to enable
them to pass upon such matters and, in rendering such opinion, such
counsel may rely as to matters involving the application of the laws
of the State of Maryland on the opinion of other counsel reasonably
acceptable to counsel to the Agent; and
(8)....On the Commencement Date and at each Time of Delivery,
the Company shall have furnished to the relevant Agent or Agents such
further certificates and documents as such Agent or Agents shall
reasonably request.
7..... Indemnification and Contribution. The Company agrees to
indemnify and hold harmless each Agent and each person, if any, who
controls such Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, 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) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
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<PAGE>
make the statements therein, in the case of the Prospectus or any
preliminary prospectus, in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information relating to any Agent furnished to the Company in writing by
such Agent expressly for use therein; provided, that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Agent (or to the benefit of the person controlling any
Agent) from whom the person asserting any such losses, claims, damages or
liabilities purchased Securities if such untrue statement or omission or
alleged untrue statement or omission made in such preliminary prospectus is
eliminated or remedied in the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) and, if
required by law, a copy of the Prospectus (as so amended or supplemented)
shall not have been furnished to such person at or prior to the written
confirmation of the sale of such Securities to such person.
Each Agent agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each Agent, but
only with reference to information relating to such Agent furnished to the
Company in writing by such Agent expressly for use in the Registration
Statement the Prospectus, any amendment or supplement thereto, or any
preliminary prospectus.
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 the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel)
for all Indemnified Persons, and that all such fees and expenses shall be
reimbursed as they are incurred. Any such separate firm shall be reasonably
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<PAGE>
satisfactory to the Indemnifying Person, and any such firm for the Agents
and such control persons of the Agents shall be designated in writing by a
majority in interest of the Agents who are Indemnified Parties and any such
separate firm for the Company, its directors, its officers who sign the
Registration Statement and such control persons of the Company or
authorized representatives 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.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to an Indemnified Person or insufficient
in respect of any losses, claims, damages or liabilities referred to herein
in connection with any offering of Securities, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified
Person thereunder, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on
the other hand from the offering of the Securities to which such loss,
claim, damage or liability relates or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand
and each Agent on the other 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 benefits received
by the Company on the one hand and each Agent on the other in connection
with the offering of such Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of such
Securities (before deducting expenses) received by the Company and the
total discounts and commissions received by each Agent in respect thereof
bear to the aggregate public offering price of such Securities. The
relative fault of the Company on the one hand and of each Agent on the
other 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 or such Agent and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission.
<PAGE>
The Company and each Agent agrees that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if all Agents 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 the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result
of the losses, claims, damages and liabilities referred to in the
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<PAGE>
immediately preceding paragraph 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 7, in no event shall an Agent be required to contribute any amount
in excess of the amount by which the total price at which the Securities
referred to in the immediately preceding paragraph that were sold by or
through such Agent exceeds the amount of any damages that such Agent 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 Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The obligation of each Agent to
contribute pursuant to this Section 7 is several (in the proportion that
the principal amount of the Securities the sale of which by or through such
Agent gave rise to such losses, claims, damages or liabilities bears to the
aggregate principal amount of the Securities the sale of which by or
through any Agent gave rise to such losses, claims, damages or liabilities)
and is not joint.
The indemnity and contribution agreements contained in this Section 7
are in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section 7
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 termination of this Agreement, (ii) any investigation made by or on
behalf of an Agent or any person controlling any Agent or by or on behalf
of the Company, its officers or directors or any other person controlling
the Company and (iii) acceptance of and payment for any of the Securities.
8....Termination.
(1)..This Agreement may be terminated at any time (i) by the
Company with respect to any or all of the Agents or (ii) by any Agent
with respect to itself only, in each case upon the giving of written
notice of such termination to each other party hereto. Any Terms
Agreement shall be subject to termination in the absolute discretion
of the Agent or Agents that are parties thereto on the terms set forth
or incorporated by reference therein. The termination of this
Agreement shall not require termination of any agreement by an Agent
to purchase Securities as principal (whether pursuant to a Terms
Agreement or otherwise) and the termination of such an agreement shall
not require termination of this Agreement. In the event this Agreement
is terminated with respect to any Agent, (x) this Agreement shall
remain in full force and effect with respect to any Agent as to which
such termination has not occurred, (y) this Agreement shall remain in
full force and effect with respect to the rights and obligations of
any party which have previously accrued or which relate to Securities
which are already issued, agreed to be issued or the subject of a
pending offer at the time of such termination and (z) in any event,
the provisions of the fourth paragraph of Section 2(a), Section 2(c),
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<PAGE>
the last sentence of Section 4(e) and Sections 4(f), 4(g), 4(k), 5, 7,
9, 11 and 14 shall survive; provided that if at the time of
termination an offer to purchase Securities has been accepted by the
Company but the time of delivery to the purchaser or its agent of such
Securities has not yet occurred, the provisions of Sections 2(b),
2(d), 4(a) through 4(f), 4(j), 4(l) through 4(n) and 6 shall also
survive. If any Terms Agreement is terminated, the provisions of the
last sentence of Section 4(e) and Sections 2(b), 2(d), 4(a), 4(c),
4(d), 4(f), 4(g), 4(i), 4(k), 4(l) through 4(n), 5, 6, 7, 9, 11 and 14
(which shall have been incorporated by reference in such Terms
Agreement) shall survive.
(2)..If this Agreement or any Terms Agreement shall be
terminated by an Agent or Agents because of any failure or refusal on
the part of the Company to comply with the terms or to fulfill any of
the conditions of this Agreement or any Terms Agreement or if for any
reason the Company shall be unable to perform its obligations under
this Agreement or any Terms Agreement or any condition of any Agent's
obligations cannot be fulfilled, the Company agrees to reimburse each
Agent or such Agents as have so terminated this Agreement with respect
to themselves, severally, for all out-of-pocket expenses (including
the reasonable fees and expenses of their counsel) reasonably incurred
by such Agent or Agents in connection with this Agreement or the
offering of Securities.
9....Position of the Agents. Each Agent, in soliciting offers to
purchase Securities from the Company and in performing the other
obligations of such Agent hereunder (other than in respect of any purchase
by an Agent as principal, pursuant to a Terms Agreement or otherwise), is
acting solely as agent for the Company and not as principal and does not
assume any obligation towards or relationship of agency or trust with any
purchaser of Securities. Each Agent will make reasonable efforts to assist
the Company in obtaining performance by each purchaser whose offer to
purchase Securities from the Company was solicited by such Agent and has
been accepted by the Company, but such Agent shall not have any liability
to the Company in the event such purchase is not consummated for any
reason. If the Company shall default on its obligation to deliver
Securities to a purchaser whose offer it has accepted, the Company shall
(i) hold the relevant Agent harmless against any loss, claim, damage or
liability arising from or as a result of such default by the Company and
(ii) notwithstanding such default, pay to the Agent that solicited such
offer any commission to which it would be entitled in connection with such
sale.
10...Notices. Except as otherwise specifically provided herein or
in the Administrative Procedures, all notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given
if mailed or transmitted by any standard form of telecommunication. Notices
to the Agents will be sent, in the case of J.P. Morgan Securities Inc., to
60 Wall Street, 5th Floor, New York, New York 10260 (Telecopy: (212)
648-5151) Attention: Transaction Execution Group; in the case of Banc of
America Securities LLC, to 100 North Tryon Street, 7th Floor, Charlotte,
North Carolina 28255 (Telecopy: (704) 388-9939) Attention: Lynn T.
McConnell; in the case of Chase Securities Inc., to 270 Park Avenue, 8th
Floor, New York, New York 10017 (Telecopy: (212) 834-6081) Attention:
Medium-Term Note Desk; in the case of Deutsche Bank Securities Inc., to 130
Liberty Street - 25th Floor, New York, New York 10006 (Telecopy: (212)
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<PAGE>
669-0738) Attention: Edward Carey; in the case of First Union Securities,
Inc., to 301 South College Street, 8th Floor, Charlotte, North Carolina
28288-0602 (Telecopy: (704) 383-9165) Attention: Keith Mauney - Corporate
Syndicate Desk; in the case of Goldman, Sachs & Co., to 85 Broad Street,
29th Floor, New York, New York 10004 (Telecopy: (212) 902-0658) Attention:
Ben Smilchensky - Medium-Term Note Trading; and, if sent to the Company, to
it at SCGroup Incorporated, at 125 Lincoln Avenue, Santa Fe, New Mexico
87501 (facsimile number: (505) 988-8920); Attention: Jeffrey A. Klopf,
Senior Vice President.
11...Successors. This Agreement and any Terms Agreement shall be
binding upon, and inure solely to the benefit of, each Agent and the
Company, and their respective successors and the officers, directors and
controlling persons referred to herein and (to the extent expressly
provided in Section 6) the purchasers of Securities, and no other person
shall acquire or have any right or obligation under or by virtue of this
Agreement or any Terms Agreement.
12...Amendments. This Agreement may be amended or supplemented if,
but only if, such amendment or supplement is in writing and is signed by
the Company and each Agent; provided that the Company may from time to
time, without the consent of any Agent, amend this Agreement to add or
remove as a party hereto one or more additional firms registered under the
Exchange Act, whereupon each such firm shall become an Agent hereunder on
the same terms and conditions as the other Agents that are parties hereto
and the Company shall provide the Agents with a copy of such agreement
following the execution thereof.
13...Business Day. Time shall be of the essence in this Agreement
and any Terms Agreement. As used herein, the term "business day" shall mean
any day which is not a Saturday or Sunday or legal holiday or a day on
which banks in New York City are required or authorized by law or executive
order to close.
14...Applicable Law. This Agreement and any Terms Agreement shall
be governed by, and construed in accordance with, the laws of the State of
New York, without giving effect to the conflict of laws provisions thereof.
15...Counterparts. This Agreement and any Terms Agreement may be
signed in counterparts, each of which shall be an original, and all of
which together shall constitute one and the same instrument.
16...Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
1050966.2 10201 1256C 91920694
32
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, whereupon this letter and the
acceptance by each of you thereof shall constitute a binding agreement between
the Company and each of you in accordance with its terms.
Very truly yours,
SECURITY CAPITAL GROUP
INCORPORATED
By: /s/ Jeffrey A. Klopf
---------------------------
Name: Jeffrey A. Klopf
Title: Senior Vice President
Accepted in New York, New York,
as of the date first above written:
J.P. Morgan Securities Inc.
By: /s/ Maria Sramek
---------------------------------
Name: Maria Sramek
Title: Vice President
Banc of America Securities LLC
By: /s/ Lily Chang
---------------------------------
Name: Lily Chang
Title: Principal
Chase Securities Inc.
By: /s/ Huw Richards
---------------------------------
Name: Huw Richards
Title: Vice President
1050966.2 10201 1256C 91920694
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<PAGE>
Deutsche Bank Securities Inc.
By: /s/ Dan Benton /s/ Christopher Whitman
--------------------------------- ----------------------------
Name: Dan Benton Name: Christopher Whitman
Title: Managing Director Title: Managing Director
First Union Securities, Inc.
By: /s/ William Ingram
---------------------------------
Name: William Ingram
Title: Managing Director
Goldman, Sachs & Co.
By: /s/ Goldman, Sachs & Co.
---------------------------------
Name:
Title:
1050966.2 10201 1256C 91920694
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<PAGE>
Exhibit A
SECURITY CAPITAL GROUP INCORPORATED
MEDIUM TERM NOTES, SERIES B
TERMS AGREEMENT
________________, 200_
Security Capital Group Incorporated
c/o SCGroup Incorporated
7777 Market Center Avenue
El Paso, Texas 79912
Attention:
---------------------------------
Re: Distribution Agreement dated as of December 20, 2000
(the "Distribution Agreement"
-------------------------------------------------------
The undersigned agrees to purchase your Medium-Term Notes, Series B
having the following terms:
Specified Currency:
-------------------------------------------
Principal Amount:
-------------------------------------------
Original Issue Date:
-------------------------------------------
Settlement Date, Time and Place:
---------------------------------
Maturity Date:
---------------------------------------
Purchase Price: _______% of Principal Amount, plus accrued interest,
if any, from Settlement Date
Price to Public: _______% of Principal Amount, plus accrued interest,
if any, from Settlement Date
Redemption Date (Dates): , commencing
1050966.2 10201 1256C 91920694
<PAGE>
Initial Redemption Price:
Annual Redemption Price decrease:
Repayment Date (Dates):
Repayment Price:
Initial accrual period OID:
Original Yield to Maturity:
(For Fixed Rate Notes)
Interest Rate:
---------------------------------------
Applicability of modified payment upon acceleration:
If yes, state issue price:
Amortization schedule:
(For Floating Rate Notes)
Initial Interest Rate:
-------------------------------
Interest Rate Basis (Commercial Paper, LIBOR,
Treasury, ):
----------------- ----------------------
Index Maturity (30, 60, 90 days, 6 months, 1 year, other):
Interest Reset Period (monthly, quarterly, semiannually, annually):
Interest Payment Period (monthly, quarterly, semiannually, annually):
Spread: points (+/-)
-----------------------------------
1050966.2 10201 1256C 91920694
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<PAGE>
Spread Multiplier: %
-------------------------------------------
Maximum Interest Rate: %
------------------------------
Minimum Interest Rate: %
------------------------------
Initial Interest Reset Date:
---------------------------------
Interest Reset Dates:
----------------------------------------
Interest Determination Dates:
-----------------------
Interest Payment Dates:
-----------------------------
Calculation Agent:
-------------------------------------------
Other terms of Securities:
For purposes of Section l(a) and Section 7 of the Distribution
Agreement, it is agreed that the only written information furnished by the Agent
to the Company expressly for use in the Registration Statement and the
Prospectus is (a) the information in the last paragraph on the cover page of the
prospectus supplement specifically relating to the Securities, (b) the
information regarding stabilization in the first paragraph on the inside front
cover page of the prospectus supplement specifically relating to the Securities
and (c) under the caption "Plan of Distribution" in the prospectus supplement
specifically relating to the Securities, the information in (i) the third and
fourth sentences of the second paragraph and (ii) the first sentence of the
eighth paragraph.
Provisions relating to Agent default, if any:
The provisions of Sections 1, 2(b) and 2(d) and 4 through 7, 10, 11 and
14 of the Distribution Agreement and the related definitions are incorporated by
reference herein and shall be deemed to have the same force and effect as if set
forth in full herein.
This Agreement is subject to termination in our absolute discretion on
the terms incorporated by reference herein. If this Agreement is so terminated,
the provisions set forth in the last sentence of Section 8 of the Distribution
Agreement shall survive for the purposes of this Agreement.
1050966.2 10201 1256C 91920694
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<PAGE>
The certificate referred to in Section 4(n) of the Distribution
Agreement, the opinions referred to in Section 4(l) of the Distribution
Agreement and the accountants' letter referred to in Section 4(m) of the
Distribution Agreement will be required.
[Agent]
By:
---------------------------
(Title)
Accepted:
Security Capital Group Incorporated
By:
-----------------------------------------
(Title)
1050966.2 10201 1256C 91920694
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<PAGE>
Exhibit B
SECURITY CAPITAL GROUP INCORPORATED
MEDIUM-TERM NOTES, SERIES B
ADMINISTRATIVE PROCEDURES
The Medium-Term Notes, Series B, Due Nine Months or More from Date of
Issuance (the "Notes"), are to be offered on a continuous basis by Security
Capital Group Incorporated (the "Company"). Each of J.P. Morgan Securities Inc.,
Banc of America Securities LLC, Chase Securities Inc., Deutsche Bank Securities
Inc., First Union Securities, Inc. and Goldman, Sachs & Co. (each an "Agent")
has agreed to solicit offers to purchase the Notes in registered form. The Notes
are being sold pursuant to a Distribution Agreement dated as of December 20,
2000 (the "Agreement") between the Company and the Agents. In the Agreement,
each Agent has agreed to use reasonable efforts to solicit purchases of the
Notes. Each Agent, as principal, may purchase Notes for its own account and, if
such Agent so elects, the Company and such Agent will enter into a Terms
Agreement, as contemplated by the Agreement. The Company may also solicit offers
to purchase and may sell Notes directly on its own behalf to investors (other
than broker-dealers).
The Notes will be issued under an Indenture (the "Indenture"), dated as of
November 16, 1998, between the Company and State Street Bank and Trust Company,
as trustee (the "Trustee"). The Trustee will be the Registrar, Calculation
Agent, Authenticating Agent and Paying Agent for the Notes, and will perform the
duties specified herein. Notes will bear interest at a fixed rate (the "Fixed
Rate Notes"), which may be zero in the case of certain original issue discount
notes (the "OID Notes"), or at floating rates (the "Floating Rate Notes"). Fixed
Rate Notes may pay a level amount in respect of both interest and principal
amortized over the life of the Notes ("Amortizing Notes"). Each Note will be
represented by either a Global Security (as defined below) delivered to the
Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in the
book-entry system maintained by DTC (a "Book-Entry Note") or a certificate
delivered to the holder thereof or a person designated by such holder (a
"Certificated Note"). Except in limited circumstances, an owner of a Book-Entry
Note will not be entitled to receive a Certificated Note.
Book-Entry Notes, which may be payable solely in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC's
operating procedures, and Certificated Notes will be issued in accordance with
the administrative procedures set forth in Part II hereof. Unless otherwise
defined herein, terms defined in the Agreement, the Prospectus (as defined in
the Agreement), the Indenture or the Notes shall be used herein as therein
defined.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
1050966.2 10201 1256C 91920694
<PAGE>
accordance with its respective obligations under a Letter of Representation from
the Company and the Trustee to DTC, dated as of the date hereof (the "Letter of
Representation"), and a Medium-Term Note Certificate Agreement between the
Trustee and DTC, dated as of September 27, 1989, and its obligations as a
participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance:
On any date of Settlement (as defined under "Settlement"
below) for one or more Book-Entry Notes, the Company will
issue a single global security in fully registered form
without coupons (a "Global Security") representing up to
U.S. $200,000,000 principal amount of all such Notes that
have the same Maturity Date, redemption or repayment
provisions, Interest Payment Dates, Original Issue Date,
original issue discount provisions (if any), and, in the
case of Fixed Rate Notes, Interest Rate, amortization
schedule (if any) or, in the case of Floating Rate Notes,
Initial Interest Rate, Interest Payment Dates, Interest
Payment Period, Calculation Agent, Base Rate, Index
Maturity, Interest Reset Period, Interest Reset Dates,
Spread or Spread Multiplier (if any), Minimum Interest Rate
(if any) and Maximum Interest Rate (if any) and, in each
case, any other relevant terms (collectively "Terms"). Each
Global Security will be dated and issued as of the date of
its authentication by the Trustee. Each Global Security will
bear an "Interest Accrual Date," which will be (i) with
respect to an original Global Security (or any portion
thereof), its original issuance date and (ii) with respect
to any Global Security (or any portion thereof) issued
subsequently upon exchange of a Global Security, or in lieu
of a destroyed, lost or stolen Global Security, the most
recent Interest Payment Date to which interest has been paid
or duly provided for on the predecessor Global Security or
Securities (or if no such payment or provision has been
made, the original issuance date of the predecessor Global
Security), regardless of the date of authentication of such
subsequently issued Global Security. Book-Entry Notes may
only be denominated and payable in U.S. dollars. No Global
Security will represent (i) both Fixed Rate and Floating
Rate Book-Entry Notes or (ii) any Certificated Note. No Note
issued between a Regular Record Date and the related
Interest Payment Date shall be issued as a Global Security
within the meaning of the Indenture.
Identification
Numbers:
The Company has arranged with the CUSIP Service Bureau of
Standard & Poor's Corporation (the "CUSIP Service Bureau")
for the reservation of a series of approximately 900 CUSIP
numbers (including tranche numbers) for assignment to the
Global Securities representing the Book-Entry Notes. The
Company has obtained from the CUSIP Service Bureau a written
list of such series of reserved CUSIP numbers and has
1050966.2 10201 1256C 91920694
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<PAGE>
delivered to the Trustee and DTC the written list of 900
CUSIP numbers of such series. The Trustee will assign CUSIP
numbers to Global Securities as described below under
Settlement Procedure "B". DTC will notify the CUSIP Service
Bureau periodically of the CUSIP numbers that the Trustee
has assigned to Global Securities. At any time when fewer
than 100 of the reserved CUSIP numbers remain unassigned to
Global Securities, the Trustee shall so advise the Company
and, if it deems necessary, the Company will reserve
additional CUSIP numbers for assignment to Global Securities
representing Book-Entry Notes. Upon obtaining such
additional CUSIP numbers, the Company shall deliver a list
of such additional CUSIP numbers to the Trustee and DTC.
Registration: Each Global Security will be registered in the
name of Cede & Co., as nominee for DTC, on the security
register maintained under the Indenture. The beneficial
owner of a Book-Entry Note (or one or more participants in
DTC designated by such owner) will designate one or more
participants in DTC with respect to such Note (the
"Participants") to act as agent or agents for such owner in
connection with the book-entry system maintained by DTC and
DTC will record in book-entry form, in accordance with
instructions provided by such Participants, a credit balance
with respect to such beneficial owner in such Note in the
account of such Participants. The ownership interest of such
beneficial owner in such Note will be recorded through the
records of such Participants or through the separate records
of such Participants and one or more indirect participants
in DTC.
Transfers:
Transfers of a Book-Entry Note will be accompanied by book
entries made by DTC and, in turn, by Participants (and in
certain cases, one or more indirect participants in DTC)
acting on behalf of beneficial transferors and transferees
of such Note.
Exchanges:
The Trustee may deliver to DTC and the CUSIP Service Bureau
at any time a written notice of consolidation specifying (i)
the CUSIP numbers of two or more outstanding Global
Securities that represent Book-Entry Notes having the same
Terms and for which interest has been paid to the same date,
(ii) a date, occurring at least thirty days after such
written notice is delivered and at least thirty days before
the next Interest Payment Date for such Book-Entry Notes, on
which such Global Securities shall be exchanged for a single
replacement Global Security and (iii) a new CUSIP number to
1050966.2 10201 1256C 91920694
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<PAGE>
be assigned to such replacement Global Security. Upon
receipt of such a notice, DTC will send to its Participants
(including the Trustee) a written reorganization notice to
the effect that such exchange will occur on such date. Prior
to the specified exchange date, the Trustee will deliver to
the CUSIP Service Bureau a written notice setting forth such
exchange date and the new CUSIP number and stating that, as
of such exchange date, the CUSIP numbers of the Global
Securities to be exchanged will no longer be valid. On the
specified exchange date, the Trustee will exchange such
Global Securities for a single Global Security bearing the
new CUSIP number and a new Interest Accrual Date, and the
CUSIP numbers of the exchanged Global Securities will, in
accordance with CUSIP Service Bureau procedures, be
cancelled and not immediately reassigned. Notwithstanding
the foregoing, if the Global Securities to be exchanged
exceed $200,000,000 in aggregate principal amount, one
Global Security will be authenticated and issued to
represent each $200,000,000 principal amount of the
exchanged Global Security and an additional Global Security
will be authenticated and issued to represent any remaining
principal amount of such Global Securities (see
"Denominations" below).
Maturities:
Each Book-Entry Note will mature on a date nine months or
more from its date of issue.
Notice of Redemption
and the Repayment
Dates:
The Trustee will give notice to DTC prior to each Redemption
Date or Repayment Date (as specified in the Note), if any,
at a time and in the manner set forth in the Letter of
Representation.
Denominations:
Book-Entry Notes will be issued in principal amounts of
$1,000 and integral multiples thereof. Global Securities
will be denominated in principal amounts not in excess of
$200,000,000. If one or more Book-Entry Notes having an
aggregate principal amount in excess of $200,000,000 would,
but for the preceding sentence, be represented by a single
Global Security, then one Global Security will be issued to
represent each $200,000,000 principal amount of such
Book-Entry Note or Notes and an additional Global Security
will be issued to represent any remaining principal amount
of such Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry Note or
Notes shall be assigned the same CUSIP number.
1050966.2 10201 1256C 91920694
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<PAGE>
Interest:
General. Interest on each Book-Entry Note will accrue from
the Interest Accrual Date of the Global Security
representing such Note. Unless otherwise specified therein,
each payment of interest on a Book-Entry Note will include
interest accrued to but excluding the Interest Payment Date;
provided that in the case of Floating Rate Notes with
respect to which the Interest Reset Period is daily or
weekly, interest payable on any Interest Payment Date (other
than interest payable on any date on which principal thereof
is payable, and, if the Note is a Book Entry Gap Note (as
defined below), other than interest payable on the first
Interest Payment Date after the Original Issue Date thereof)
will include interest accrued through and including the
Regular Record Date immediately preceding the Interest
Payment Date, except that at maturity or earlier redemption
or repayment, the interest payable will include interest
accrued to, but excluding, the Maturity Date or the date of
redemption or repayment, as the case may be. Interest
payable at the maturity or upon redemption or repayment of a
Book-Entry Note will be payable to the person to whom the
principal of such Note is payable. Standard & Poor's
Corporation will use the information received in the pending
deposit message described under Settlement Procedure "C"
below in order to include the amount of any interest payable
and certain other information regarding the related Global
Security in the appropriate weekly bond report published by
Standard & Poor's Corporation.
Regular Record Dates. The Regular Record Date with respect
to any Interest Payment Date shall be the date fifteen
calendar days immediately preceding such Interest Payment
Date.
Fixed Rate Book-Entry Notes. Unless otherwise specified
pursuant to Settlement Procedure "A" below, interest
payments on Fixed Rate Book-Entry Notes, other than
Amortizing Notes, will be made semiannually on March 15 and
September 15 of each year, and at maturity or upon any
earlier redemption or repayment and principal and interest
payments on Book-Entry Amortizing Notes will be made
semiannually on April 1 and October 1 of each year or
quarterly on January 1, April 1, July 1 and October 1 of
each year, and at maturity (or any redemption or repayment
date); provided, however, that in the case of a Fixed Rate
Book-Entry Note issued between a Regular Record Date and an
Interest Payment Date or an Interest Payment Date, the first
interest payment will be made on the Interest Payment Date
following the next succeeding Regular Record Date. If any
Interest Payment Date for a Fixed Rate Book-Entry Note is
1050966.2 10201 1256C 91920694
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<PAGE>
not a Business Day, the payment due on such day shall be
made on the next succeeding Business Day and no interest
shall accrue on such payment for the period from and after
such Interest Payment Date.
Floating Rate Book-Entry Notes. Interest payments will be
made on Floating Rate Book-Entry Notes monthly, quarterly,
semiannually or annually. Unless otherwise specified
pursuant to Settlement Procedure "A" below, interest will be
payable, in the case of Floating Rate Book-Entry Notes with
a daily, weekly or monthly Interest Reset Date, on the third
Wednesday of each month or on the third Wednesday of March,
June, September and December, as specified pursuant to
Settlement Procedure "A" below; in the case of Floating Rate
Book-Entry Notes with a quarterly Interest Reset Date, on
the third Wednesday of March, June, September and December
of each year; in the case of Floating Rate Book-Entry Notes
with a semiannual Interest Reset Date, on the third
Wednesday of the two months specified pursuant to Settlement
Procedure "A" below; and in the case of Floating Rate
Book-Entry Notes with an annual Interest Reset Date, on the
third Wednesday of the month specified pursuant to
Settlement Procedure "A" below; provided, however, that if
an Interest Payment Date for Floating Rate Book-Entry Notes
would otherwise be a day that is not a Business Day with
respect to such Floating Rate Book-Entry Notes, such
Interest Payment Date will be the next succeeding Business
Day with respect to such Floating Rate Book-Entry Notes,
except in the case of a LIBOR Note if such Business Day is
in the next succeeding calendar month, such Interest Payment
Date will be the immediately preceding Business Day; and
provided, further, that in the case of a Floating Rate
Book-Entry Note issued between a Regular Record Date and the
related Interest Payment Date (a "Book-Entry Gap Note"), the
first interest payment will be made on the Interest Payment
Date following the next succeeding Regular Record Date, and
in such case, notwithstanding the fact that an Interest
Reset Date may occur prior to such Interest Payment Date,
the Initial Interest Rate shall remain in effect until the
first Interest Reset Date occurring on or subsequent to such
Interest Payment Date.
Notice of Interest Payment and Regular Record Dates. On the
first Business Day of March, June, September and December of
each year, the Trustee will deliver to the Company and DTC a
written list of Interest Payment Dates that will occur with
respect to Book-Entry Notes during the six-month period
beginning on such first Business Day. Promptly after each
1050966.2 10201 1256C 91920694
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<PAGE>
date upon which interest is determined for Floating Rate
Notes issued in book-entry form, the Calculation Agent will
notify the Company, the Trustee and Standard & Poor's
Corporation of the interest rates determined on such dates.
Calculation of
Interest:
Fixed Rate Book-Entry Notes. Interest on Fixed Rate
Book-Entry Notes (including interest for partial periods)
will be calculated on the basis of a year of twelve
thirty-day months.
Floating Rate Book-Entry Notes. Interest rates on Floating
Rate Book-Entry Notes will be determined as set forth in the
form of such Notes. Interest on Floating Rate Book-Entry
Notes will be calculated on the basis of actual days elapsed
and a year of 360 days, except that, in the case of Treasury
Rate Notes, interest will be calculated on the basis of the
actual number of days in the year.
Payments of
Principal and
Interest:
Payments of Interest Only. Promptly after each Regular
Record Date, the Trustee will deliver to DTC and upon
request, the Company, a written notice specifying by CUSIP
number the amount of interest to be paid on each Global
Security other than an Amortizing Note on the following
Interest Payment Date (other than an Interest Payment Date
coinciding with maturity or any earlier redemption or
repayment date) and the total of such amounts. DTC will
confirm the amount payable on each such Global Security on
such Interest Payment Date by reference to the daily bond
reports published by Standard & Poor's Corporation. In the
case of Amortizing Notes, the Trustee will provide separate
written notice to the Company and to DTC prior to each
Interest Payment Date at the time and in the manner set
forth in the Letter of Representation. The Trustee will
provide notice to the Company of the aggregate amount of
interest to be paid on all Global Securities (other than
Amortizing Notes) promptly after each Regular Record Date.
The Company will pay to the Trustee, as paying agent, the
total amount of interest due on such Interest Payment Date
(and, in the case of an Amortizing Note, principal and
interest) (other than at maturity), and the Trustee will pay
such amount to DTC at the times and in the manner set forth
below under "Manner of Payment."
Payments at Maturity or Upon Redemption or Repayment. On or
about the 15th business day preceding the Maturity Date or
redemption or repayment date of a Global Security, the
Trustee will deliver to the Company and DTC a written list
1050966.2 10201 1256C 91920694
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<PAGE>
of principal and interest to be paid on each Global Security
other than an Amortizing Note maturing either at maturity or
on a redemption or repayment date in the following month.
The Company and DTC will confirm the amounts of such
principal and interest payments with respect to each such
Global Security on or about the fifth Business Day preceding
the Maturity Date or redemption or repayment date of such
Global Security. In the case of Amortizing Notes, the
Trustee will provide separate written notice to the Company
and to DTC prior to the Maturity Date and any redemption or
repayment date, as the case may be, at the times and in the
manner set forth in the Letter of Representation. The
Company will pay to the Trustee, as the paying agent, the
principal amount of such Global Security, together with
interest due at such Maturity Date or redemption or
repayment date. The Trustee will pay such amounts to DTC at
the times and in the manner set forth below under "Manner of
Payment."
Payments Not on Business Days. If any Interest Payment Date
or the Maturity Date or redemption or repayment date of a
Global Security representing Fixed Rate Book-Entry Notes is
not a Business Day, the payment due on such day shall be
made on the next succeeding Business Day and no interest
shall accrue on such payment for the period from and after
such Interest Payment Date, Maturity Date or redemption or
repayment date, as the case may be. If any Interest Payment
Date or the Maturity Date or redemption or repayment date of
a Global Security representing a Floating Rate Book-Entry
Note would otherwise fall on a day that is not a Business
Day, the payment due on such day shall be made on the next
succeeding day that is a Business Day with respect to such
Notes with the same effect as if such Business Day were the
Interest Payment Date, Maturity Date or date of redemption
or repayment, as the case may be, except that, in the case
of Book-Entry LIBOR Notes, if such Business Day is in the
next succeeding calendar month, such Interest Payment Date
or redemption or repayment date shall be the immediately
preceding day that is a Business Day with respect to such
Book-Entry LIBOR Notes. Promptly after payment to DTC of the
principal and interest due on the Maturity Date or
redemption or repayment date of such Global Security, the
Trustee will cancel such Global Security in accordance with
the terms of the Indenture and deliver it to the Company
with a certificate of cancellation. Upon request, the
Trustee will deliver to the Company a written statement
1050966.2 10201 1256C 91920694
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<PAGE>
indicating the total principal amount of outstanding
Book-Entry Notes as of the immediately preceding Business
Day.
Manner of Payment. The total amount of any principal and
interest due on Global Securities on any Interest Payment
Date or at maturity or upon redemption or repayment shall be
paid by the Company to the Trustee in funds available far
immediate use by the Trustee as of 9:30 a.m. (New York City
time) on such date. The Company will make such payment on
such Global Securities by wire transfer to the Trustee or by
instructing the Trustee to withdraw funds from an account
maintained by the Company at the Trustee. The Company will
confirm such instructions in writing to the Trustee. Prior
to 10 a.m. (New York City time) on each Maturity Date or
redemption or repayment date or, if either such date is not
a Business Day, as soon as possible thereafter, following
receipt of such funds from the Company the Trustee will pay
by separate wire transfer (using Fedwire message entry
instructions in a form previously specified by DTC) to an
account at the Federal Reserve Bank of New York previously
specified by DTC, in funds available for immediate use by
DTC, each payment of principal (together with interest
thereon) due on Global Securities on any Maturity Date or
redemption or repayment date. On each Interest Payment Date
or, if any such date is not a Business Day, as soon as
possible thereafter, interest payments and, in the case of
Amortizing Notes, interest and principal payments shall be
made to DTC in same day funds in accordance with existing
arrangements between the Trustee and DTC. Thereafter on each
such date, DTC will pay, in accordance with its SDFS
operating procedures then in effect, such amounts in funds
available for immediate use to the respective Participants
in whose names the Book-Entry Notes represented by such
Global Securities are recorded in the book-entry system
maintained by DTC. Neither the Company nor the Trustee shall
have any responsibility or liability for the payment by DTC
to such Participants of the principal of and interest on the
Book-Entry Notes.
Withholding Taxes. The amount of any taxes required under
applicable law to be withheld from any interest payment on a
Book-Entry Note will be determined and withheld by the
Participant, indirect participant in DTC or other person
responsible for forwarding payments directly to the
beneficial owner of such Note.
1050966.2 10201 1256C 91920694
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<PAGE>
Preparation of
Pricing Supplement:
If any order to purchase a Certified Note is accepted by or
on behalf of the Company, the Company will prepare a pricing
supplement ("Pricing Supplement") reflecting the terms of
such Note and will arrange to file the appropriate number of
copies of such Pricing Supplement with the Commission in
accordance with the applicable paragraph of Rule 424(b)
under the Act and will deliver the number of copies of such
Pricing Supplement to the relevant Agent as such Agent shall
request by the close of business on the following Business
Day and shall deliver a copy of such Pricing Supplement to
the Trustee. The relevant Agent will cause such Pricing
Supplement to be delivered to the purchaser of the Note.
In each instance that a Pricing Supplement is prepared, the
Agent receiving such Pricing Supplement will affix the
Pricing Supplement to Prospectuses prior to their use.
Outdated Pricing Supplements, and the Prospectuses to which
they are attached (other than those retained for files),
will be destroyed.
Settlement:
The receipt by the Company of immediately available funds in
payment for a Book-Entry Note and the authentication and
issuance of the Global Security representing such Note shall
constitute "settlement" with respect to such Note. All
orders accepted by the Company will be settled on the third
Business Day following such acceptance pursuant to the
timetable for settlement set forth below unless the Company
and the purchaser agree to settlement on another day, which
shall be no earlier than the next Business Day.
Settlement
Procedures:
Settlement Procedures with regard to each Book-Entry Note
sold by the Company to or through an Agent shall be as
follows (unless otherwise specified pursuant to a Terms
Agreement):
A. The relevant Agent will advise the Company by facsimile
transmission or other acceptable means that such Note
is a Book-Entry Note and of the following settlement
information:
1. Principal amount.
2. Maturity Date.
1050966.2 10201 1256C 91920694
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<PAGE>
3. In the case of a Fixed Rate Note, the Interest
Rate whether such Note will pay interest annually
or semi-annually and whether such Note is an
Amortizing Note and, if so, the Amortization
Schedule, or, in the case of a Floating Rate
Book-Entry Note, the Initial Interest Rate (if
known at such time), Interest Payment Date(s),
including the Initial Interest Payment Date,
Interest Payment Period, Calculation Agent, Base
Rate, Index Maturity, Interest Reset Period,
Initial Interest Reset Date, Interest Reset Dates,
Spread or Spread Multiplier (if any), the Minimum
Interest Rate (if any) and the Maximum Interest
Rate (if any).
4. Redemption or repayment provisions, if any.
5. Settlement date and time.
6. Price.
7. Agent's or Agents' commission, if any, determined
as provided in the Agreement.
8. Net proceeds to the Company.
9. Whether the Note is an OID Note, and if it is an
OID Note, the total amount of OID, the yield to
maturity, the initial accrual period OID.
10. Any other applicable Terms.
B. The Company will advise the Trustee by facsimile
transmission or other acceptable means of the
information set forth in Settlement Procedure "A"
above. The Trustee will then assign a CUSIP number to
the Global Security representing such Note and will
notify the Company and the Agent of such CUSIP number
by telephone or electronic transmission (confirmed in
writing) as soon as practicable.
C. Based on information provided to it by the Company, the
Trustee will enter a pending deposit message through
DTC's Participant Terminal System, providing the
following settlement information to DTC, the relevant
Agent and Standard & Poor's Corporation:
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<PAGE>
1. The information set forth in Settlement Procedure
"A".
2. The Initial Interest Payment Date for such Note,
the number of days by which such date succeeds the
related DTC Record Date (which in the case of
Floating Rate Notes which reset daily or weekly,
shall be the date five calendar days immediately
preceding the applicable Interest Payment Date
and, in the case of all other Notes, shall be the
Regular Record Date as defined in the Note) and,
if known, the amount of interest payable on such
Initial Interest Payment Date.
3. The CUSIP number of the Global Security
representing such Note.
4. Whether such Global Security will represent any
other Book-Entry Note (to the extent known at such
time) and whether such Note is an Amortizing Note
(by an appropriate notation in the comments field
of DTC's Participant Terminal System).
5. The DTC participant number of the institution
through which the Company will hold the Book-Entry
Note.
D. The Company will complete the Global Security
representing such Note and deliver it to the
Trustee.
E. The Trustee will authenticate the Global Security
representing such Note in accordance with the
terms of the written order of the Company then in
effect.
F. DTC will credit such Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such Note
to the relevant Agent's participant account and
(ii) debit such Agent's settlement account and
credit the Trustee's settlement account for an
amount equal to the price of such Note less such
Agent's commission, if any. The entry of such a
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deliver order shall constitute a representation
and warranty by the Trustee to DTC that (a) the
Global Security representing such Book-Entry Note
has been issued and authenticated and (b) the
Trustee is holding such Global Security pursuant
to the Medium-Term Note Certificate Agreement
between the Trustee and DTC.
H. Unless the relevant Agent purchased such Note as
principal, such Agent will enter an SDFS deliver
order through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to such
Agent's participant account and credit such Note
to the participant accounts of the Participants
with respect to such Note and (ii) to debit the
settlement account of such Participants and credit
the settlement account of such Agent for an amount
equal to the price of such Note.
I. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "G" and
"H" will be settled in accordance with SDFS
operating procedures in effect on the settlement
date.
J. The Trustee, upon confirming receipt of such
funds, will credit to the U.S. dollar account of
the Company maintained at a bank in New York City,
notified to the Trustee from time to time, in
funds available for immediate use in the amount
transferred to the Trustee, in accordance with
Settlement Procedure "G".
K. Unless the relevant Agent purchased such Note as
principal, such Agent will confirm the purchase of
such Note to the purchaser either by transmitting
to the Participants with respect to such Note a
confirmation order or orders through DTC's
institutional delivery system or by mailing a
written confirmation to such purchaser.
L. Upon request, the Trustee will send to the Company
a statement setting forth the principal amount of
Notes outstanding as of that date under the
Indenture and setting forth a brief description of
any sales of which the Company has advised the
Trustee but which have not yet been settled.
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Settlement:
For sales by the Company of Book-Entry Notes to or through
an Agent (unless otherwise specified pursuant to a Terms
Agreement), Settlement Procedures "A" through "K" set forth
above shall be completed as soon as possible but not later
than the respective times (New York City time) set forth
below:
Settlement
Procedure Time
---------- ----
A 11:00 a.m.on the first business day after the
sale date
B 12:00 noon on the first business day after the
sale date
C 2:00 p.m. on the first business day after the
sale date
D 2:00 p.m.on the day before the settlement date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
G-H 2:00 p.m. on settlement date
I 4:45 p.m. on settlement date
J-K 5:00 p.m. on settlement date
If the Initial Interest Rate for a Floating Rate Book-Entry
Note has not been determined at the time that Settlement
Procedure "A" is completed, Settlement Procedures "B" and
"C" shall be completed as soon as such rate has been
determined but no later than 12 noon and 2:00 p.m.,
respectively, on the second Business Day before the
settlement date. Settlement Procedure "I" is subject to
extension in accordance with any extension of Fedwire
closing deadlines and in the other events specified in the
SDFS operating procedures in effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled or
cancelled, the Trustee, after receiving notice from the
Company or the Agent, will deliver to DTC, through DTC's
Participant Terminal System, a cancellation message to such
effect by no later than 2:00 p.m. on the Business Day
immediately preceding the scheduled settlement date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with
with respect to a Book-Entry Note pursuant to Settlement
Procedure "G", the Trustee may deliver to DTC, through
DTC's Participant Terminal System, as soon as practicable
a withdrawal message instructing DTC to debit such Note to
the Trustee's participant account, provided that the
Trustee's participant account contains a principal amount
of the Global Security representing such Note that is
1050966.2 10201 1256C 91920694
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<PAGE>
at least equal to the principal amount to be debited. If a
withdrawal message is processed with respect to all the
Book-Entry Notes represented by a Global Security, the
Trustee will mark such Global Security "cancelled," make
appropriate entries in the Trustee's records and send such
cancelled Global Security to the Company. The CUSIP number
assigned to such Global Security shall, in accordance with
CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned. If a withdrawal message is processed
with respect to one or more, but not all, of the Book-Entry
Notes represented by a Global Security, the Trustee will
exchange such Global Security for two Global Securities, one
of which shall represent such Book-Entry Note or Notes and
shall be cancelled immediately after issuance and the other
of which shall represent the remaining Book-Entry Notes
previously represented by the surrendered Global Security
and shall bear the CUSIP number of the surrendered Global
Security.
If the purchase price for any Book-Entry Note is not timely
paid to the Participants with respect to such Note by the
beneficial purchaser thereof (or a person, including an
indirect participant in DTC, acting on behalf of such
purchaser), such Participants and, in turn, the relevant
Agent may enter SDFS deliver orders through DTC's
Participant Terminal System reversing the orders entered
pursuant to Settlement Procedures "G" and "H", respectively.
Thereafter, the Trustee will deliver the withdrawal message
and take the related actions described in the preceding
paragraph.
Notwithstanding the foregoing, upon any failure to settle
with respect to a Book-Entry Note, DTC may take any action
in accordance with its SDFS operating procedures then in
effect.
In the event of a failure to settle with respect to one or
more, but not all, of the Book-Entry Notes to have been
represented by a Global Security, the Trustee will provide,
in accordance with Settlement Procedures "E" and "G", for
the authentication and issuance of a Global Security
representing the Book-Entry Notes to be represented by such
Global Security and will make appropriate entries in its
records.
Posting Rates by
Company:
The Company and the Agents will discuss from time to time
the rates of interest per annum to be borne by and the
maturity of Securities that may be sold as a result of the
solicitation of offers by an Agent. The Company may
establish a fixed set of interest rates and maturities
1050966.2 10201 1256C 91920694
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<PAGE>
for an offering period ("posting"). If the Company
decides to change already posted rates, it will
promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the
Agent.
Trustee Not To
Risk Funds:
Nothing herein shall be deemed to require the Trustee 1 to
risk or expend its own funds in connection with any payments
to the Company, the Agents, DTC or any holders of Notes, it
being understood by all parties that payments made by the
Trustee to the Company, the Agents, DTC or any holders of
Notes shall be made only to the extent that funds are
provided to the Trustee for such purpose.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as registrar in connection with the Certificated Notes.
Issuance:
Each Certificated Note will be dated and issued as of the
date of its authentication by the Trustee. Each Certificated
Note will bear an Original Issue Date, which will be (i)
with respect to an original Certificated Note (or any
portion thereof), its original issuance date (which will be
the settlement date) and (ii) with respect to any
Certificated Note (or any portion thereof) issued
subsequently upon exchange of a Certificated Note, or in
lieu of a destroyed, lost or stolen Certificated Note, the
original issuance date of the predecessor Certificated Note,
regardless of the date of authentication of such
subsequently issued Certificated Note. No Note issued
between a Regular Record Date and the related Interest
Payment Date shall be issued as a Certificated Note within
the meaning of the Indenture.
Registration: Certificated Notes will be issued only in fully registered
form without coupons.
Transfers and
Exchanges:
A Certificated Note may be presented for transfer or
exchange at the principal corporate trust office of the
Trustee. Certificated Notes will be exchangeable for other
Certificated Notes having identical terms but different
authorized denominations without service charge.
Certificated Notes will not be exchangeable for Book-Entry
Notes.
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Maturities:
Each Certificated Note will mature on a date nine months or
more from its date of issue.
Currency:
The currency denomination with respect to any Certificated
Note and the currency of payment of interest and principal
with respect to any such Certificated Note shall be as set
forth therein and in the applicable pricing supplement.
Denominations:
Unless otherwise provided in a Prospectus Supplement, the
denomination of any Certificated Note will be a minimum of
$1,000 (or in the case of Notes not denominated in U.S.
dollars, the equivalent thereof in the applicable foreign
currency or composite currency, rounded down to the nearest
1,000 units of such foreign currency or composite currency)
and integral multiples of $1,000 (or in the case of Notes
not denominated in U.S. dollars, 1,000 units of such foreign
currency or composite currency).
Interest:
General. Interest on each Certificated Note will accrue from
the Original Issue Date of such Note for the first interest
period and from the most recent date to which interest has
been paid for all subsequent interest periods. Unless
otherwise specified therein, each payment of interest on a
Certificated Note will include interest accrued to but
excluding the Interest Payment Date; provided that in the
case of Floating Rate Notes with respect to which the
Interest Reset Period is daily or weekly, interest payable
on any Interest Payment Date (other than interest payable on
any date on which principal thereof is payable, and, if the
Note is a Certificated Gap Note (as defined below), other
than interest payable on the first Interest Payment Date
after the Original Issue Date thereof) will include interest
accrued through and including the Regular Record Date
immediately preceding the Interest Payment Date, except that
at maturity or earlier redemption or repayment, the interest
payable will include interest accrued to, but excluding, the
Maturity Date or the date of redemption or repayment, as the
case may be.
Regular Record Dates. The Regular Record Date with respect
to any Interest Payment Date in respect of a Certificated
Note shall be the date fifteen calendar days immediately
preceding such Interest Payment Date.
Fixed Rate Certificated Notes. Unless otherwise specified
pursuant to Settlement Procedure "A" below, interest
payments on Fixed Rate Certificated Notes, other than
Amortizing Notes, will be made semiannually on April 1 and
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<PAGE>
October 1 of each year (or, if so indicated in such Note,
annually on April 1 of each year), and at maturity or upon
any earlier redemption or repayment and principal and
interest payments on Certificated Amortizing Notes will be
made semiannually on April 1 and October 1 of each year or
quarterly on January 1, April 1, July 1 and October 1 of
each year, and at maturity (or any redemption or repayment
date); provided, however that in the case of a Fixed Rate
Certificated Note issued between a Regular Record Date and
an Interest Payment Date or on an Interest Payment Date, the
first interest payment will be made on the Interest Payment
Date following the next succeeding Regular Record Date.
Floating Rate Certificated Notes. Interest payments will be
made on Floating Rate Certificated Notes monthly, quarterly,
semiannually or annually. Unless otherwise specified
pursuant to Settlement Procedure "A" below, interest will be
payable, in the case of Floating Rate Certificated Notes
with a daily, weekly or monthly Interest Reset Date, on the
third Wednesday of each month or on the third Wednesday of
March, June, September and December, as specified pursuant
to Settlement Procedure "A(Degree)" below; in the case of
Floating Rate Certificated Notes with a quarterly Interest
Reset Date, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate
Certificated Notes with a semiannual Interest Reset Date, on
the third Wednesday of the two months specified pursuant to
Settlement Procedure "A" below; and in the case of Floating
Rate Certificated Notes with an annual Interest Reset Date,
on the third Wednesday of the month specified pursuant to
Settlement Procedure "A" below; provided, however, that if
an Interest Payment Date for Floating Rate Certificated
Notes would otherwise be a day that is not a Business Day
with respect to such Floating Rate Certificated Notes, such
Interest Payment Date will be the next succeeding Business
Day with respect to such Floating Rate Certificated Notes,
except in the case of a LIBOR Note if such Business Day is
in the next succeeding calendar month, such Interest Payment
Date will be the immediately preceding Business Day; and
provided, further, that in the case of a Floating Rate
Certificated Note issued between a Regular Record Date and
the related Interest Payment Date (a "Certificated Gap
Note"), the first interest payment will be made on the
Interest Payment Date following the next succeeding Regular
Record Date, and in such case, notwithstanding the fact that
an Interest Reset Date may occur prior to such Interest
Payment Date, the Initial Interest Rate shall remain in
effect until the first Interest Reset Date occurring on or
subsequent to such Interest Payment Date.
1050966.2 10201 1256C 91920694
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<PAGE>
Notice of Interest Payment and Regular Record Dates. On the
first Business Day of March, June, September and December of
each year, but only upon the request of the Company, the
Trustee will deliver to the Company a written list of
Regular Record Dates and Interest Payment Dates that will
occur with respect to Certificated Notes during the
six-month period beginning on such first Business Day.
Promptly after each date upon which interest is determined
for Floating Rate Notes issued in certificated form, the
Calculation Agent will notify the Company and the Trustee of
the interest rates determined on such dates.
Calculation of
Interest:
Fixed Rate Certificated Notes. Interest on Fixed Rate
Certificated Notes (including interest for partial periods)
will be calculated on the basis of a year of twelve
thirty-day months.
Floating Rate Certificated Notes. Interest rates on Floating
Rate Certificated Notes will be determined as set forth in
the form of such Notes. Interest on Floating Rate
Certificated Notes will be calculated on the basis of actual
days elapsed and a year of 360 days, except that, in the
case of Treasury Rate Notes, interest will be calculated on
the basis of the actual number of days in the year.
Payments of Principal
and Interest:
The Company will pay the Trustee, as Paying Agent, the
principal amount of each Certificated Note (other than an
Amortizing Note), together with interest due thereon, at its
Maturity Date or upon redemption or repayment of such Note
in funds available for immediate use by the Trustee. In the
case of an Amortizing Note, the Company will pay the
Trustee, as Paying Agent, the principal amount due on such
Note on such date, together with interest due thereon, at
its Maturity Date or upon redemption or repayment of such
Note on such date, together with interest due thereon, at
its Maturity Date or upon redemption or repayment of such
Note in funds available for immediate use by the Trustee.
The Trustee will pay such amount to the holder of such Note
at its Maturity Date or upon redemption or repayment of such
Note upon presentation and surrender of such Note to the
Trustee. Such payment, together with payment of interest due
at maturity or upon redemption or repayment, will be made in
funds available for immediate use by the holder of such
Note. Promptly after such presentation and surrender, the
Trustee will cancel such Certificated Note in accordance
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<PAGE>
with the terms of the Indenture and deliver it to the
Company with a certificate of cancellation. Unless otherwise
specified in the applicable Pricing Supplement, all interest
payments on a Certificated Note or, in the case of a
Certificated Amortizing Note, payments of principal and
interest (other than interest (or interest and principal)
due at maturity or upon redemption or repayment) will be
made by check drawn on the Trustee (or another person
appointed by the Trustee) and mailed by the Trustee to the
person entitled thereto as provided in such Note and the
Indenture; provided, however, that (i) the holder of
$1,000,000 or more of Notes having the same Interest Payment
Date will be entitled to receive payment by wire transfer of
immediately available funds and (ii) unless otherwise
specified in the applicable Pricing Supplement or unless
alternative arrangements are made, payments on Notes in a
currency other than U.S. dollars will be made by wire
transfer of immediately available funds to an account
maintained by the payee with a bank located outside the
United States and, with respect to clauses (i) and (ii)
above, the holder of such Notes will provide the Trustee
with appropriate and timely wire transfer instructions.
Promptly after each Regular Record Date, the Trustee will
deliver to the Company a written notice specifying the
aggregate amount of interest to be paid on all Notes other
than an Amortizing Note on the following Interest Payment
Date (other than an Interest Payment Date coinciding with
maturity or any earlier redemption or repayment date) and
the total of such amounts. In the case of Amortizing Notes,
the Trustee will provide written notice to the Company
specifying the amount of interest and principal to be paid
on each Amortizing Note on the following Interest Payment
Date (other than an Interest Payment Date coinciding with
maturity or any earlier redemption or repayment date) and
the total of such amounts. Interest at maturity or upon
redemption or repayment will be payable to the person to
whom the payment of principal is payable. On or about the
first Business Day of each month, if applicable, the Trustee
will deliver to the Company a written list of principal and
interest, to the extent ascertainable, to be paid on all
Notes including Amortizing Notes maturing or to be redeemed
or repaid in the following month, if any. The Trustee, if it
is acting as Paying Agent, will be responsible for
withholding taxes on interest paid on Certificated Notes as
required by applicable law.
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<PAGE>
If any Interest Payment Date or the Maturity Date or
redemption or repayment date of a Fixed Rate Certificated
Note is not a Business Day, the payment due on such day
shall be made on the next succeeding Business Day and no
interest shall accrue on such payment for the period from
and after such Interest Payment Date, Maturity Date or
redemption or repayment date, as the case may be. If any
Interest Payment Date or the Maturity Date or redemption or
repayment date of a Floating Rate Certificated Note would
otherwise fall on a day that is not a Business Day with
respect to such Note, the payment due on such day shall be
made on the next succeeding day that is a Business Day with
respect to such Note with the same effect as if such
Business Day were the stated Interest Payment Date, Maturity
Date or date of redemption or repayment, as the case may be,
except that, in the case of Certificated LIBOR Notes, if
such Business Day is in the next succeeding calendar month,
such Interest Payment Date, Maturity Date or redemption or
repayment date shall be the immediately preceding day that
is a Business Day with respect to such Certificated LIBOR
Notes.
Preparation of
Pricing Supplement:
If any order to purchase a Certificated Note is accepted by
or on behalf of the Company, the Company will prepare a
Pricing Supplement reflecting the terms of such Note and
will arrange to file the appropriate number of copies of
such Pricing Supplement with the Commission in accordance
with the applicable paragraph of Rule 424(b) under the Act
and will deliver the number of copies of such Pricing
Supplement to the relevant Agent as such Agent shall request
by the close of business on the following Business Day. The
relevant Agent will cause such Pricing Supplement to be
delivered to the purchaser of the Note.
In each instance that a Pricing Supplement is prepared, the
Agent receiving such Pricing Supplement will affix the
Pricing Supplement to Prospectuses prior to their use.
Outdated Pricing Supplements, and the Prospectuses to which
they are attached (other than those retained for files),
will be destroyed.
Settlement:
The receipt by the Company of immediately available funds in
payment for an authenticated Certificated Note delivered to
the relevant Agent and such Agent's delivery of such Note
against receipt of immediately available funds shall
constitute "settlement" with respect to such Note. All
orders accepted by the Company will be settled on the third
Business Day following such acceptance pursuant to the
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<PAGE>
timetable for settlement set forth below unless the Company
and the purchaser agree to settlement on another day, which
shall be no earlier than the second Business Day following
such acceptance.
Settlement
Procedures:
Settlement Procedures with regard to each Certificated Note
sold by the Company to or through an Agent shall be as
follows (unless otherwise specified pursuant to a Terms
Agreement):
A. The relevant Agent will advise the Company by facsimile
transmission or other acceptable means that such Note
is a Certificated Note and of the following settlement
information:
1. Name in which such Note is to be registered
("Registered Owner").
2. Address of the Registered Owner and address for
payment of principal and interest.
3. Taxpayer identification number of the Registered
Owner (if available).
4. Currency or currency unit, principal amount and,
if different, currency in which payments of
principal and interest may be made.
5. Maturity Date.
6. In the case of a Fixed Rate Certificated Note, the
Interest Rate, whether such Note will pay interest
annually or semi-annually and whether such Note is
an Amortizing Note and, if so, the Amortization
Schedule, or, in the case of a Floating Rate
Certificated Note, the Initial Interest Rate (if
known at such time), Interest Payment Date(s),
Interest Payment Period, Calculation Agent, Base
Rate, Index Maturity, Interest Reset Period,
Initial Interest Reset Date, Interest Reset Dates,
Spread or Spread Multiplier (if any), the Minimum
Interest Rate (if any) and the Maximum Interest
Rate (if any).
7. Redemption or repayment provisions, if any.
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8. Settlement date and time.
9. Price.
10. Agent's or Agents' commission, if any, determined
as provided in the Agreement.
11. Denominations.
12. Net proceeds to the Company.
13. Whether the Note is an OID Note, and if it is an
OID Note, the total amount of OID, the yield to
maturity, the initial accrual period OID.
14. Any other applicable Terms.
B. The Company will advise the Trustee by facsimile
transmission or other acceptable means of the
information set forth in Settlement Procedure "A"
above.
C. The Company will have delivered to the Trustee a
pre-printed four-ply packet for such Note, which packet
will contain the following documents in forms that have
been approved by the Company, the relevant Agent and
the Trustee:
1. Note with customer confirmation.
2. Stub One - For the Trustee.
3. Stub Two - For the relevant Agent.
4. Stub Three - For the Company.
D. The Trustee will complete such Note and authenticate
such Note and deliver it (with the confirmation) and
Stubs One and Two to the relevant Agent, and such Agent
will acknowledge receipt of the Note by stamping or
otherwise marking Stub One and returning it to the
Trustee. Such delivery will be made only against such
acknowledgment of receipt and evidence (supplied by the
Company) that instructions have been given by such
Agent for payment to the account of the Company
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<PAGE>
maintained at the Trustee, Boston, Massachusetts (or,
with respect to Notes payable in a Specified Currency
other than U.S. dollars, to an account maintained at a
bank selected by the Company notified to the relevant
Agent from time to time in writing) in funds available
for immediate use, of an amount equal to the price of
such Note less such Agent's commission, if any. In the
event that the instructions given by such Agent for
payment to the account of the Company are revoked, the
Company will as promptly as possible wire transfer to
the account of such Agent an amount of immediately
available funds equal to the amount of such payment
made.
E. Unless the relevant Agent purchased such Note as
principal, such Agent will deliver such Note (with
confirmation) to the customer against payment in
immediately available funds. Such Agent will obtain the
acknowledgment of receipt of such Note by retaining
Stub Two.
F. The Trustee will send Stub Three to the Company by
first-class mail. Periodically, upon the reasonable
request of the Company, the Trustee will also send to
the Company a statement setting forth the principal
amount of the Notes outstanding as of that date under
the Indenture and setting forth a brief description of
any sales of which the Company has advised the Trustee
but which have not yet been settled.
Settlement Procedures
Timetables:
For sales by the Company of Certificated Notes to or through
an Agent (unless otherwise specified pursuant to a Terms
Agreement), Settlement Procedures "A" through "F" set forth
above shall be completed on or before the respective times
(New York City time) set forth below:
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Settlement
Procedure Time
--------- ----
A 2:00 p.m. on day before settlement date
B 3:00 p.m. on day before settlement date
C-D 2:15 p.m. on settlement date
E 3:00 p.m. on settlement date
F 5:00 p.m. on settlement date
Failure to Settle:
If a purchaser fails to accept delivery of and make payment
for any Certificated Note, the relevant Agent will notify
the Company and the Trustee by telephone and return such
Note to the Trustee. Upon receipt of such notice, the
Company will immediately wire transfer to the account of
such Agent an amount equal to the amount previously credited
thereto in respect of such Note. Such wire transfer will be
made on the settlement date, if possible, and in any event
not later than the Business Day following the settlement
date. If the failure shall have occurred for any reason
other than a default by such Agent in the performance of its
obligations hereunder and under the Agreement, then the
Company will reimburse such Agent or the Trustee, as
appropriate, on an equitable basis for its loss of the use
of the funds during the period when they were credited to
the account of the Company (such reimbursement for loss of
the use of such funds to be based on the federal funds
effective rate then in effect). Immediately upon receipt of
the Certificated Note in respect of which such failure
occurred, the Trustee will mark such Note "cancelled", make
appropriate entries in the Trustee's records and send such
Note to the Company.
Posting Rates
by Company:
The Company and the Agents will from time to time post the
rates of interest per annum to be borne by and the maturity
of Securities that may be sold as a result of the
solicitation of offers by an Agent. The Company may
establish a fixed set of interest rates and maturities for
an offering period ("posting"). If the Company decides to
change already posted rates, it will promptly advise the
Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
Trustee Not to
Risk Funds:
Nothing herein shall be deemed to require the Trustee or the
Paying Agent to risk or expend its own funds in connection
with any payments to the Company, the Agents or any holders
of Notes, it being understood by all parties that payments
made by the Trustee or the Paying Agent to the Company, the
Agents or any holders of Notes shall be made only to the
extent that funds are provided to the Trustee or the Paying
Agent for such purpose.
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Schedule I
Specified Affiliates
Jurisdiction of
Name Formation
BelmontCorp Maryland
Capital Division Incorporated Maryland
Real Estate Protection Mutual Limited Bermuda
SC Group Incorporated Texas
SC Capital Incorporated Nevada
SC Transaction Corporation Maryland
SC Realty Incorporated Nevada
SC Realty Shares Limited Bermuda
Security Capital BVI Holdings Incorporated Maryland
Security Capital Financial Services Group Incorporated Delaware
Security Capital Global Capital Management Group Delaware
Incorporated
Security Capital Investment Research Incorporated Delaware
Security Capital Markets Group Incorporated Delaware
Security Capital Real Estate Mutual Funds Incorporated Maryland
Security Capital Real Estate Research Group Incorporated Maryland
Security Capital Financial Holdings L.L.C. California
Security
Capital (EU)
Management
Holdings S.A.
Luxembourg
Security Capital Markets Group Limited United Kingdom
Security Capital (UK) Management Limited United Kingdom
Security Capital U.S. Realty Management S.A. Luxembourg
Security Capital European Services S.A. Luxembourg
Archstone Communities Trust Maryland
Homestead Village Incorporated Maryland
ProLogis Trust Maryland
Security Capital Preferred Growth Incorporated Maryland
Security Capital U.S. Realty Luxembourg
Security Capital Holdings S.A. Luxembourg
CarrAmerica Realty Corporation Maryland
City Center Retail Trust Maryland
CWS Communities Trust Maryland
Urban Growth Property Trust Maryland
Storage USA, Inc. Tennessee
Regency Realty Corporation Florida
Security Capital European Realty Luxembourg
Access Self Storage Holdings S.A. Luxembourg
Akeler Holdings S.A. Luxembourg
B. C. Holdings S.A. Luxembourg
Interparking Holdings S.A. Luxembourg
City & West End Property Holdings S.A. Luxembourg
London and Henley Holdings S.A. Luxembourg
Millers Storage Holdings S.A. Luxembourg
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