<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration Number 333-64979
Prospectus Supplement
(To Prospectus dated October 13, 1998)
$200,000,000
Medium-Term Notes, Series B
Due Nine Months or More from Date of Issue
The following terms may apply to the Notes. The final terms of each Note will
be specified in a Pricing Supplement. For more information, see "Description of
Notes."
. Mature nine months or more from the date of issue
. Denominated and/or payable in United States dollars or a foreign currency or
currency units
. May be subject to redemption at the option of Security Capital or repurchased
at the option of the Holder
. Fixed or floating interest rate. The floating interest rate formula may be
based on:
-Commercial Paper Rate
-Prime Rate
-LIBOR
-Treasury Rate
-CD Rate
-CMT Rate
-Federal Funds Rate
-Eleventh District Cost of Funds Rate
-Any other interest rate specified in a Pricing Supplement.
. Fixed rate Notes may bear no interest when issued at a discount from the
principal amount due at maturity
. Certificated or book-entry form
. Interest paid on fixed rate Notes on March 15 and September 15
. Interest paid on floating rate Notes monthly, quarterly, semi-annually or
annually
. Minimum denominations of $1,000, increased in multiples of $1,000
Consider carefully the risk factors beginning on page S-4 of this Prospectus
Supplement and in some of the documents incorporated by reference into the
Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus Supplement or the accompanying
Prospectus. Any representation to the contrary is a criminal offense.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Agents' Discounts Proceeds to
Public and Commissions Company
--------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 100% .125%-.750% 99.875%-99.250%
--------------------------------------------------------------------
Total $200,000,000 $250,000-$1,500,000 $199,750,000-$198,500,000
--------------------------------------------------------------------
</TABLE>
Security Capital is offering the Notes on a continuous basis through the Agents
listed below acting as agent or principal. Each Agent has agreed to use its
reasonable efforts to solicit offers to purchase the Notes.
J.P. Morgan & Co.
Banc of America Securities LLC
Chase Securities Inc.
Deutsche Banc Alex. Brown
First Union Securities, Inc.
Goldman, Sachs & Co.
December 20, 2000
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in any
Pricing Supplement, this Prospectus Supplement, or the Prospectus, and, if
given or made, such information or representations must not be relied upon as
having been authorized. Any Pricing Supplement, this Prospectus Supplement, and
the Prospectus do not constitute an offer to sell or the solicitation of an
offer to buy any securities other than the securities to which they relate or
any offer to sell or the solicitation of any offer to buy such securities in
any jurisdictions in which such offer or solicitation is unlawful. Neither the
delivery of any Pricing Supplement, this Prospectus Supplement, or the
Prospectus nor any sale made hereunder or thereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of Security Capital Group Incorporated ("Security Capital") since the
date hereof or thereof or that the information contained or incorporated by
reference herein or therein is correct as of any time subsequent to the date of
such information.
FORWARD-LOOKING STATEMENTS
The statements contained in or incorporated by reference into this Prospectus
Supplement or the Prospectus that are not historical facts are forward-looking
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are based on current expectations, estimates and
projections about the industry and markets in which Security Capital operates,
management's beliefs and assumptions made by management. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," and
"estimates," and variations of such words and similar expressions are intended
to identify such forward-looking statements. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions which are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
forward-looking statements. Security Capital undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. The risk factors beginning on page S-4
set forth some of the important factors which could cause Security Capital's
actual results to differ materially from those expressed in the forward-looking
statements.
S-2
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Risk Factors............................................................. S-4
Ratio of Earnings to Combined Fixed Charges and Preferred Share
Dividends............................................................... S-7
Ratio of Earnings to Fixed Charges....................................... S-7
Description of Notes..................................................... S-8
Foreign Currency Risks................................................... S-39
United States Taxation................................................... S-40
Plan of Distribution..................................................... S-53
Experts.................................................................. S-55
Validity of Notes........................................................ S-56
Prospectus
Available Information.................................................... 2
Incorporation by Reference............................................... 2
Security Capital Group Incorporated...................................... 3
Use of Proceeds.......................................................... 3
Ratio of Earnings to Combined Fixed Charges and Preferred Share
Dividends............................................................... 4
Ratio of Earnings to Fixed Charges....................................... 4
Description of Debt Securities........................................... 4
Description of Preferred Shares.......................................... 18
Description of Common Shares............................................. 23
Description of Securities Warrants....................................... 27
Description of Rights.................................................... 30
Certain Provisions of Maryland Law and Security Capital's Charter and
Bylaws.................................................................. 30
Plan of Distribution..................................................... 33
Experts.................................................................. 34
Legal Matters............................................................ 34
</TABLE>
S-3
<PAGE>
RISK FACTORS
In addition to the other information provided herein or incorporated by
reference, prospective investors in the Notes should consider the following
factors before deciding whether to invest in the Notes. For additional risk
factors concerning our business, see our Annual Report on Form 10-K for the
year ended December 31, 1999 under the caption "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations--Risk Factors" as
well as any other risk factors that may appear in future filings which will be
incorporated by reference.
We Rely on Dividends and Other Transfers from Companies in Which We Invest
Most of our cash flow and earnings come from real estate operating companies in
which we own shares. We are dependent on dividends and the fees we receive from
these companies to meet our operating expense needs and to pay principal and
interest on our debt. Although we have influence over these real estate
operating companies because of our significant ownership interest and
contractual rights, we have a non-majority ownership interest and fewer than a
majority of the board seats in most of these companies and do not have
unilateral control. We could be adversely affected by decisions or actions of
the management of these companies.
Notes Indexed to Interest Rate, Currency or Other Indices or Formulas May Have
Risks Not Associated With a Conventional Debt Security
If you invest in Notes indexed to one or more interest rates, currency or other
indices or formulas, you will be subject to significant risks not associated
with a conventional fixed rate or floating rate debt security. These risks
include fluctuations in the particular indices or formulas and the possibility
that you will receive a lower, or no, amount of principal, premium or interest
or that you will receive principal, premium or interest at different times than
you expected. We have no control over a number of matters, including economic,
financial and political events, that are important in determining the
existence, magnitude and longevity of these risks and their results. In
addition, if an index or formula used to determine any amounts payable in
respect of the Notes contains a multiplier or leverage factor, the effect of
any change in the particular index or formula will be magnified. In recent
years, values of certain indices and formulas have been volatile and volatility
in those and other indices and formulas may be expected in the future.
In addition, governmental exchange controls could affect exchange rates and the
availability of the payment currency for foreign currency Notes on a required
payment date. Even if there are no exchange controls, it is possible that your
payment currency will not be available on a required payment date for
circumstances beyond our control. In these cases, we will be allowed to satisfy
our obligations in respect of foreign currency Notes in U.S. dollars. You
should also read "Foreign Currency Risks" in this Prospectus Supplement for
additional information concerning investing in Notes denominated in a foreign
currency.
Redemption May Adversely Affect Your Return on the Notes
If your Notes are redeemable at our option, we may choose to redeem your Notes
at times when prevailing interest rates are relatively low. In addition, if
your Notes are subject to mandatory redemption, we may be required to redeem
your Notes also at a time when prevailing interest rates are relatively low. As
a result, you may not be able to reinvest the redemption proceeds in a
comparable security at an effective interest rate as high as your Notes being
redeemed.
S-4
<PAGE>
Transactions with Affiliates have Occurred and May Occur in the Future
Several of our directors or senior officers are directors or trustees of our
affiliates, or own shares of our affiliates. Those persons may have conflicts
of interest in affiliate transactions that we engage in. We have in the past or
will in the future obtain disinterested director approval or shareholder
approval, when necessary, for transactions in which directors may have a
conflict of interest. Neither our charter nor our bylaws contain any
restriction on interested party transactions.
There May Not Be a Trading Market for Your Notes; Many Factors Affect the
Trading and Market Value of Your Notes
Your Notes will not have an established trading market. We cannot assure you a
trading market for your Notes will ever develop or be maintained if developed.
In addition to our creditworthiness, many factors affect the trading market
for, and the trading value of, your Notes. These factors include:
. the complexity and volatility of the index or formula, if any, applicable
to your Notes;
. the method of calculating the principal, premium and interest in respect
of your Notes;
. the time remaining to maturity of your Notes;
. the outstanding amount of Notes;
. any redemption features of your Notes;
. the amount of other debt securities linked to the index or formula
applicable to your Notes; and
. the level, direction and volatility of market interest rates generally.
There may be a limited number of buyers when you decide to sell your Notes.
This may affect the price you receive for your Notes or your ability to sell
your Notes at all. In addition, Notes that are designed for specific investment
objectives or strategies often experience a more limited trading market and
more price volatility than those not so designed. You should not purchase Notes
unless you understand and know you can bear all of the investment risks
associated with your Notes.
Real Estate Risks
Risk which are unique to the real estate business, which could materially
impact us, are:
. Changes in specific economic conditions or commercial patterns that
reduce demand for real estate (for example, a recession or change in
technology that reduces demand for real estate facilities or which
results in the bankruptcy of tenants).
. Changes in tax laws or market conditions that make real estate
investments less attractive relative to other investment opportunities.
Such changes would reduce the number of buyers for real estate and
adversely affect real estate values. Selling real estate assets typically
takes longer than selling other types of assets, so it is more difficult
to mitigate the effect of unfavorable changes by selling the affected
assets before the change.
. Changes in tax laws or capital markets, which result in excess capital
flowing into new real estate development and excess real estate supply.
S-5
<PAGE>
. When equity and/or debt capital is unavailable or expensive for real
estate companies, we are adversely affected, primarily because fee-
earning capital markets transaction volume suffers, the value of assets
under management, on which fees are based, is lower, and the ability to
pursue attractive investment opportunities, including new start-up
companies, is limited (and investees in the start-up phase may need to
reduce activities and incur related charges).
Charges Resulting from Changes in Business Strategy or Restructuring
During 1999, we incurred two significant charges to earnings from the sale of
our interest in Strategic Hotel Capital Incorporated and a termination of the
development program by Homestead Village Incorporated. Any changes in strategy
or market conditions that lead to similar actions in the future could result in
similar charges.
Certain Risks Relating to the Investment Company Act
We are not registered under the Investment Company Act of 1940, as amended, in
reliance on an exemption provided by Rule 3a-1 promulgated under the Investment
Company Act. We are not required to register as an investment company because
we are principally engaged in the real estate business through companies that
we primarily control. To the extent we and our affiliates do not elect to
participate in future equity offerings by our investees or those investees
issue substantial additional equity securities in a business combination to
unaffiliated parties, our ownership interest in and control over those
investees could diminish. Under these circumstances, we could potentially be
required to register as an investment company under the Investment Company Act.
We would suffer additional regulatory costs and expenses, and might be required
to discontinue certain operations or investments, if we were required to
register as an investment company under the Investment Company Act.
S-6
<PAGE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED SHARE DIVIDENDS
For the purpose of computing these ratios, (i) "earnings" consist of earnings
from operations plus fixed charges other than capitalized interest and (ii)
"fixed charges" consist of interest on borrowed funds (including capitalized
interest) and amortization of debt discount and expense.
<TABLE>
<CAPTION>
Nine Months
Ended
September
Year Ended December 31, 30,
------------------------------ ------------
1995(a) 1996 1997 1998(b) 1999 1999(c) 2000
------- ---- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined
fixed charges and preferred share
dividends........................ 0.8x 0.8x 0.8x 1.1x 0.5x 0.2x 2.1x
</TABLE>
--------
(a) Excludes a one-time non-cash expense item ($158.4 million) incurred in
acquiring a division from a related party.
(b) Excludes a one-time non-cash dividend of $19.8 million incurred in
conjunction with the exchange of Series A Preferred Shares for Series B
Preferred Shares.
(c) The earnings as adjusted were insufficient to cover fixed charges by $95.4
million. Excluding the $65.3 million Homestead special charge and the $55.2
million provision for loss on investment, the ratio of earnings to combined
fixed charges and preferred share dividends would have been 1.2x.
RATIO OF EARNINGS TO FIXED CHARGES
For the purpose of computing these ratios, (i) "earnings" consist of earnings
from operations plus fixed charges other than capitalized interest and (ii)
"fixed charges" consist of interest on borrowed funds (including capitalized
interest) and amortization of debt discount and expense.
<TABLE>
<CAPTION>
Nine Months
Ended
September
Year Ended December 31, 30,
--------------------------- ------------
1995(a) 1996 1997 1998 1999 1999(b) 2000
------- ---- ---- ---- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.... 0.8x 0.8x 0.8x 1.4x 0.5x 0.3x 2.6x
</TABLE>
--------
(a) Excludes a one-time non-cash expense item ($158.4 million) incurred in
acquiring a division from a related party.
(b) The earnings as adjusted were insufficient to cover fixed charges by $80.1
million. Excluding the $65.3 million Homestead special charge and the $55.2
million provision for loss on investment, the ratio of earnings to fixed
charges would have been 1.4x.
S-7
<PAGE>
DESCRIPTION OF NOTES
The following description of the terms of the Medium-Term Notes, Series B (the
"Notes") (referred to in the Prospectus as "Debt Securities"), supplements, and
to the extent inconsistent replaces, the description of the general terms and
provisions of Debt Securities contained in the Prospectus. The pricing
supplement (the "Pricing Supplement") for each offering of Notes will contain
the specific information and terms for that offering. The Pricing Supplement
may also add, update or change information contained in the Prospectus and this
Prospectus Supplement. It is important for you to consider the information
contained in the Prospectus, the Prospectus Supplement and the Pricing
Supplement in making your investment decision.
General
The Notes constitute a single series for purposes of the Indenture, dated as of
November 16, 1998, as supplemented by Board Resolutions, dated as of September
23, 1998 and December 1, 2000 (as so supplemented, the "Indenture"), between
Security Capital and State Street Bank and Trust Company, as trustee (the
"Trustee"). The Notes are limited in principal amount to $200,000,000. The
total price of Notes Security Capital is authorized to offer by means of this
Prospectus Supplement may be reduced due to Security Capital's sale of other
debt securities. For a description of the rights attaching to different series
of Debt Securities under the Indenture, see "Description of Debt Securities" in
the Prospectus.
Security Capital initially appointed the Trustee as the Paying Agent, with its
office (the "Paying Agent Office") currently at 2 Avenue de Lafayette, Boston,
Massachusetts 02111. The Notes may be presented or surrendered for payment and
notices, designations, or requests in respect of payments with respect to Notes
may be served at the office of the Paying Agent. Security Capital will maintain
a Paying Agent having a Paying Agent Office in Boston, Massachusetts or New
York, New York.
Unless redeemed by Security Capital or repaid at the option of the Holder, a
Note will mature on the date ("Stated Maturity") that is specified on its face
and in the applicable Pricing Supplement. The "maturity" of any Note refers to
the date on which its principal becomes due and payable, whether at Stated
Maturity, upon redemption by Security Capital, repayment at the option of the
Holder, or otherwise.
The face of each Note and the applicable Pricing Supplement will specify the
currency, currency unit or composite currency ("Specified Currency") in which
the Note is denominated. Purchasers of the Notes are required to pay for the
Notes by delivery of the requisite amount of the Specified Currency to an
Agent, unless other arrangements have been made. Unless otherwise specified in
the applicable Pricing Supplement, payments on the Notes will be made in the
Specified Currency in the country issuing the Specified Currency, provided
that, at the election of the Holder and in certain circumstances at Security
Capital's option, payments on Notes denominated in other than U.S. dollars may
be made in U.S. dollars. See "--Payment of Principal and Interest."
Each Note will be represented by either (i) a permanent global Note registered
in the name of The Depository Trust Company, as Depository (the "Depositary"),
or its nominee (each such Note represented by a permanent global Note being
referred to below as a "Book-Entry Note") or (ii) a certificate issued in
definitive registered form, without coupons, as set forth in the applicable
Pricing
S-8
<PAGE>
Supplement. Except as set forth under "Book-Entry Notes" below, Book-Entry
Notes will not be issued in certificated form. So long as the Depositary or its
nominee is the registered holder of any permanent global Note, the Depositary
or its nominee, as the case may be, will be considered the sole Holder of the
Book-Entry Note or Notes represented by such permanent global Note for all
purposes under the Indenture and the Notes. Unless otherwise specified in the
applicable Pricing Supplement, the authorized denominations of Notes
denominated in U.S. dollars will be $1,000 and any larger amount that is a
multiple of $1,000. The authorized denominations of any Note denominated in
some other Specified Currency will be the amount of the Specified Currency for
such Note equivalent, at the noon buying rate in New York City for cable
transfers for the Specified Currency (the "Exchange Rate") on the sixth
Business Day in New York City and in the country issuing such currency next
preceding the date of issue of such Note, to U.S. $1,000 (rounded to the
nearest 1,000 units of the Specified Currency) and any larger amount that is a
multiple of 1,000 units of the Specified Currency unless specified in the
applicable Pricing Supplement.
Notes will be sold in individual issues of Notes having such interest rate
and/or interest rate formula, if any, Stated Maturity, and date of original
issuance as selected by the initial purchasers and agreed to by Security
Capital. Additional Notes of any issue may be sold without the consent of the
Holder(s). Interest rates offered by Security Capital with respect to the Notes
may differ depending upon, among other things, the aggregate principal amount
of the Notes purchased in any single transaction. Notes may be issued at a
discount from the principal amount payable at maturity (a "Zero Coupon Note").
Holders of Zero Coupon Notes will not receive periodic payments of interest on
the Notes.
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
not be subject to any sinking fund. Unless Security Capital specifies an
initial date on which a Note may be redeemed by Security Capital (a "Redemption
Commencement Date") in the applicable Pricing Supplement, the Note will not be
redeemable before its maturity. See "--Optional Redemption." If Security
Capital does specify a Redemption Commencement Date for any Note, the
applicable Pricing Supplement will also specify one or more redemption prices
("Redemption Prices") and the redemption period or periods ("Redemption
Periods") during which such Redemption Prices shall apply. Unless otherwise
specified in the Pricing Supplement, any such Note shall be redeemable at
Security Capital's option at any time on or after the specified Redemption
Commencement Date at the specified Redemption Price applicable to the
Redemption Period during which the Note is to be redeemed, together with
interest accrued to the date fixed for redemption (the "Redemption Date").
The Notes (other than Book-Entry Notes) may be presented for registration of
transfer or exchange at the Paying Agent Office. With respect to transfers of
Book-Entry Notes and exchanges of permanent global Notes representing Book-
Entry Notes, see "--Book-Entry Notes."
Certain Covenants
In addition to the covenants described under the section entitled "Description
of Debt Securities--Certain Covenants" in the accompanying Prospectus, the
Indenture provides certain additional covenants for the benefit of the holders
of the Notes, as described below.
Limitations on Indebtedness
The Indenture provides that Security Capital will not, and will not permit any
of its Wholly Owned Subsidiaries to, directly or indirectly, Incur, any
Indebtedness (including Acquired Indebtedness), if,
S-9
<PAGE>
immediately after that Indebtedness is incurred, the aggregate Indebtedness of
Security Capital and its Wholly Owned Subsidiaries exceeds 50% of the Adjusted
Total Assets of Security Capital and its Wholly Owned Subsidiaries.
In addition, the Indenture provides that Security Capital will not, and will
not permit any of its Wholly Owned Subsidiaries to, directly or indirectly,
Incur any Indebtedness (including Acquired Indebtedness), if, immediately after
that Indebtedness is Incurred, the Fixed Charge Coverage Ratio for Security
Capital and its Wholly Owned Subsidiaries for the most recently ended four
fiscal quarters for which internal financial statements are available
immediately preceding the date on which that additional Indebtedness is
incurred would have been less than 1.5 to 1.0, determined on a pro forma basis
as if that Indebtedness had been incurred on the first day of that four-quarter
period.
Required Minimum Consolidated Tangible Net Worth
The Indenture provides that Security Capital will not at any time permit its
Consolidated Tangible Net Worth to be less than $1,500,000,000.
Limitations on Liens
The Indenture provides that Security Capital will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien (other than Permitted Liens) which secures obligations under
any Indebtedness of Security Capital or any of its Wholly Owned Subsidiaries on
any asset now owned or hereafter acquired by Security Capital or any of its
Subsidiaries, or any income or profits therefrom, or assign or convey any right
to receive income therefrom.
Merger, Consolidation or Sale of Assets
The Indenture provides that Security Capital will not consolidate or merge with
or into (whether or not Security Capital is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the properties or assets of Security Capital in one or
more related transactions, to another Person unless (i) the surviving Person or
the Person formed by or surviving that consolidation or merger (if other than
Security Capital) or to which that sale, assignment, transfer, lease,
conveyance or other disposition was made (the "Surviving Entity") is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the Surviving Entity assumes
all the obligations of Security Capital under the Notes and the Indenture
pursuant to a supplemental indenture in form reasonably satisfactory to the
Trustee; (iii) immediately before and after giving effect to that transaction
and treating any Indebtedness which becomes an obligation of Security Capital
as a result of that transaction as having been incurred by Security Capital at
the time of the transaction, no Event of Default and no event which, after
notice or the lapse of time, or both, would become an Event of Default has
occurred and is continuing; (iv) Security Capital or the Surviving Entity will,
at the time of that transaction and after giving pro forma effect thereto as if
that transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to Incur at least $1.00 of additional Indebtedness
pursuant to the covenants in the Indenture described under the caption
"Limitations on Indebtedness" and (v) an officer's certificate and legal
opinion covering such conditions are delivered to the Trustee.
S-10
<PAGE>
Restrictions on Lines of Business
The Indenture provides that Security Capital will not, and will not permit any
of its Subsidiaries to, make Investments in any business other than the
business conducted by Security Capital and its Subsidiaries on the Issue Date
and any other business related to, or servicing, the real estate industry
unless the aggregate amount of those Investments is less than 10% of the
Consolidated Assets of Security Capital.
Certain Definitions
Set forth below are certain defined terms used in the Indenture but not
contained in the accompanying Prospectus. Reference is made to the Indenture
for full disclosure of all of those terms, as well as any other capitalized
terms used herein for which no definition is provided.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time that other Person is
merged with or into the specified Person, including, without limitation,
Indebtedness incurred in connection with, or in contemplation of, that other
Person merging with or into the specified Person, and (ii) Indebtedness secured
by a Lien encumbering any asset acquired by the specified Person.
"Adjusted Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of the total amount of accrued or paid interest
(including, without limitation, interest expense attributable to Capitalized
Lease Obligations, but excluding amortization of original issue discount
("OID") on any Indebtedness, the interest portion of any deferred payment
obligation and non-cash interest which is payable in kind with additional
Indebtedness and dividend payments on any series of Disqualified Stock) with
regard to Indebtedness of that Person and its Wholly Owned Subsidiaries for
that period.
"Adjusted Net Income" means, with respect to any Person for any period, the
aggregate Net Income of that Person for that period, provided that (i)
amortization of OID on any Indebtedness will be excluded; (ii) the Net Income
of any Person which is not a Wholly Owned Subsidiary or which is accounted for
by the equity method of accounting will be included only to the extent of the
amount of dividends or other distributions paid in cash to that Person; (iii)
the Net Income attributable to any Person will be excluded to the extent that
the declaration or payment of dividends or similar distributions by that Person
to Security Capital is not at the date of determination permitted by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that Person or
its shareholders; and (iv) the cumulative effect of any change in accounting
principles will be excluded.
"Adjusted Total Assets" means, with respect to any Person as of any date, the
sum, without duplication, of (i) that Person's cash, (ii) the Market Value of
Publicly Traded Securities owned by that Person and (iii) the net book value of
all other assets of that Person.
"Capital Lease Obligation" means, at the time any determination thereof is to
be made, the amount of the liability in respect of a capital lease which would
at that time be required to be capitalized on a balance sheet in accordance
with GAAP.
S-11
<PAGE>
"Capital Stock" means (i) in the case of a corporation, corporate stock; (ii)
in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (iii) in the case of a partnership, partnership interests
(whether general or limited); and (iv) any other interest or participation
which confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person.
"Cash Flow" means, with respect to any Person for any period, the Adjusted Net
income of that Person for that period plus (i) provisions for taxes based on
income or profits of that Person for that period, to the extent those
provisions for taxes were included in computing Adjusted Net Income, plus (ii)
Adjusted Fixed Charges of that Person for that period, to the extent those
Adjusted Fixed Charges were deducted in computing Adjusted Net Income, plus
(iii) depreciation and amortization of that Person for that period, to the
extent that those charges were deducted in computing Adjusted Net Income.
"Consolidated Assets" means, with respect to any Person at any date, the
consolidated assets of that Person at that date determined in accordance with
GAAP.
"Consolidated Subsidiary" means, with respect to any Person, at any date, any
Subsidiary the accounts of which would be consolidated with those of that
Person in its consolidated financial statements in accordance with GAAP if
those statements were prepared as of that date.
"Consolidated Tangible Net Worth" means, with respect to any Person as of any
date, the consolidated stockholders' equity of that Person and its Consolidated
Subsidiaries less their consolidated Intangible Assets (to the extent reflected
in determining consolidated stockholders' equity), and excluding the cumulative
effect of any change in accounting principles.
"Disqualified Stock" means Capital Stock which, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, in whole or in part, on or prior to the date on
which the Notes of the relevant series mature.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"Fixed Charge Coverage Ratio" means, with respect to any Person for any period,
the ratio of the Cash Flow of that Person for that period to the Adjusted Fixed
Charges of that Person for that period. If a Person Incurs or redeems any
Indebtedness (other than revolving credit borrowings) during or after the
period for which the Fixed Charge Coverage Ratio is being calculated, but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio will be calculated giving pro forma effect to that Incurrence or
redemption, as if the same had occurred on the first day of that period. In
addition, for purposes of making the computation referred to above, (i)
acquisitions which have been made by the Person, including through mergers or
consolidations and including any related financing transactions, during or
after the period, but prior to the Calculation Date will be deemed to have
occurred on the first day of the period for which the Fixed Charge Coverage
Ratio is being
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calculated; (ii) the Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, will be excluded; (iii) the interest expense
attributable to any Indebtedness (whether existing or being incurred) bearing a
floating interest rate will be computed as if the rate in effect on the
Calculation Date had been the applicable rate for the entire period; and (iv)
the Adjusted Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, will be excluded, but only to the extent that
the obligations giving rise to those Adjusted Fixed Charges will not be
obligations of the Person following the Calculation Date.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Incurs" (including, with correlative meanings, the term "Incurrence") means,
with respect to any Indebtedness, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise, with
respect to that Indebtedness (including Acquired Indebtedness).
"Indebtedness" is defined to mean, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of that Person for
borrowed money, (ii) all obligations of that Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of that
Person in respect of letters of credit or bankers' acceptance or other similar
instruments (or reimbursement obligations with respect thereto), (iv) all
obligations of that Person to pay the deferred purchase price of property or
services, except Trade Payables, (v) all obligations of that Person as lessee
under Capital Lease Obligations, (vi) all Indebtedness of others secured by a
Lien on any asset of that Person, whether or not that Indebtedness is assumed
by that Person, provided that, for purposes of determining the amount of any
Indebtedness of the type described in this clause, if recourse with respect to
that Indebtedness is limited to the asset, the amount of that Indebtedness will
be limited to the lesser of the fair market value of that asset or the amount
of that Indebtedness, (vii) all Indebtedness of others Guaranteed by that
Person to the extent that Indebtedness is Guaranteed by that Person, (viii) all
Disqualified Stock valued at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends and (ix) to the extent
not otherwise included in this definition, all obligations of that Person under
Hedging Obligations.
"Intangible Assets" means, with respect to any Person, the intangible assets of
that Person determined in accordance with GAAP.
"Investments" means, with respect to any Person, all investments by that Person
in other Persons (including Affiliates) in the forms of direct or indirect
loans (including Guarantees of Indebtedness or other obligations), advances or
capital contributions, purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other items which
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Issue Date" means the original issue date of the Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of that asset given to
secure Indebtedness, whether or not filed,
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recorded or otherwise perfected under applicable law (including any conditional
sale or other title retention agreement, any, lease in the nature thereof, any
option or other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the Uniform Commercial
Code (the "UCC") (or equivalent statutes) of any jurisdiction with respect to
any such lien, pledge, charge or security interest).
"Market Value" means, with respect to a Publicly Traded Security and on the
date of determination thereof, (i) if that Publicly Traded Security is listed
on the NYSE, the American Stock Exchange or some other principal national
securities exchange in the United States of America, the reported last sale
price of a unit of that Publicly Traded Security regular way on a given day,
or, in case no sale takes place on that day, the average of the reported
closing bid and asked prices regular way, in each case on the NYSE Composite
Tape, the American Stock Exchange Composite Tape or the principal national
securities exchange in the United States of America on which that Publicly
Traded Security is listed or admitted to trading, as applicable, (ii) if that
Publicly Traded Security is not listed or admitted to trading on any national
securities exchange in the United States of America, but prices for that
Publicly Traded Security are disseminated by means of an automated quotation
system by the National Association of Securities Dealers, Inc., the closing
sales price, or if there is no closing sales price, the average of the closing
bid and asked prices, in the automated quotation system, or (iii) with respect
to a Publicly Traded Security listed on a principal national securities
exchange in Luxembourg, Amsterdam or other European country, the price of that
Publicly Traded Security as reported on that exchange by the most widely
recognized reporting method customarily relied on by financial institutions in
that country; and if that Publicly Traded Security is listed on more than one
such exchange, the principal securities exchange on which that Publicly Traded
Security is listed. Any determination of the "Market Value" of a Publicly
Traded Security pursuant to this definition will be based on the assumption
that offers of that Publicly Traded Security are exempt from registration under
the Securities Act.
"Net Income" of any Person for any period means the net income (loss) of that
Person for that period, determined in accordance with GAAP, excluding (i) any
gain or loss, together with any related provision for taxes on that gain or
loss, realized in connection with (a) any sale, lease, conveyance or other
disposition of any Strategic Investments (including, without limitation,
dispositions pursuant to sale and leaseback transactions) by that Person, (b)
the disposition of any securities (other than Portfolio Securities) by that
Person or (c) the extinguishment of any Indebtedness of that Person; (ii) any
extraordinary or nonrecurring gain or loss, together with any related provision
for taxes on that extraordinary or nonrecurring gain or loss; and (iii) any
unrealized gain or loss caused by the increase or decrease in the Market Value
of any Publicly Traded Security held, directly or indirectly, by that Person.
In addition, for the calculation of Net Income for any Person for any period,
(i) capital management fees based on assets under management accruing to that
Person for that period shall be calculated as if the fees accruing and assets
under management on the last day of that period (or the closest practicable
date of determination) were the fees accruing and assets under management as of
the beginning of that period; (ii) capital market fees accruing to that Person
for that period shall be calculated as if the amount of those fees accrued
during that period was equal to the amount of those fees accrued during the six
month period immediately preceding the last day of that period (or the closest
practicable date of determination), adjusted for the duration of that period;
and (iii) the dividend rates and interest rates in effect with respect to
payments accruing to that Person from its
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investees as of the last day of that period (or the closest practicable date of
determination) shall be deemed to have been in effect as of the beginning of
that period.
"Non-Recourse" to a Person as applied to any indebtedness (or portion thereof)
means that the Person is not directly or indirectly liable to make any payments
with respect to that Indebtedness (or portion thereof) and that no Guarantee of
that Indebtedness (or portion thereof) has been made by that Person.
"Permitted Liens" means (i) Liens on real property securing Indebtedness which
is Non-Recourse to Security Capital or any of its Subsidiaries; or (ii) Liens
on any asset securing Indebtedness (other than Indebtedness referred to in
clause (i) above), provided that, after giving effect to the Incurrence of that
Indebtedness (a) the aggregate principal amount of Indebtedness secured
pursuant to this clause (ii) is less than 10% of the Total Capitalization of
Security Capital and its Consolidated Subsidiaries and (b) the aggregate net
book value of the assets of Security Capital and its Subsidiaries securing that
Indebtedness will not be greater than 200% of the principal amount of that
secured Indebtedness. For purposes of the definition of Permitted Lien, the
aggregate principal amount of Indebtedness will mean the principal amount of
that Indebtedness at maturity.
"Portfolio Securities" means Securities (a) issued by a fund or company (an
"Investment Company") either (i) registered under the Investment Company Act,
or (ii) which makes passive investments in companies or funds in which the
Investment Company does not have representation on the board of directors or
similar body or participate on a regular basis in the management ("Portfolio
Investees") and which is exempt from registration under the Investment Company
Act or (b) issued by Portfolio Investees.
"Publicly Traded Security" means a Security which is listed on the NYSE, the
American Stock Exchange or any other principal national securities exchange in
the United States, Luxembourg, Amsterdam or other European country or whose
prices are disseminated by means of an automated quotation system by the
National Association of Securities Dealers, Inc.
"Security" has the meaning given that term in Article 8 of the UCC.
"Strategic Investment" of any specified Person means any other Person in which
an Investment has been made by the specified Person, other than Portfolio
Securities, where either (i) the undepreciated book value or (ii) if the
Strategic Investment is a Publicly Traded Security, the Market Value of the
Investment exceeds $100 million.
"Total Capitalization" means, with respect to any Person as of any date, the
consolidated long-term Indebtedness and consolidated stockholders' equity of
that Person and its Consolidated Subsidiaries less their consolidated
Intangible Assets (to the extent reflected in determining consolidated
stockholders' equity), all determined as of that date in accordance with GAAP,
and excluding the cumulative effect of a change in accounting principles.
"Trade Payables" means, with respect to any Person, (i) any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by that Person arising in the ordinary course of business
in connection with the acquisition of goods or services, (ii) obligations
incurred in the ordinary course to pay the purchase price of securities so long
as those
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obligations are paid within customary settlement periods and (iii) obligations
to purchase securities pursuant to subscription or stock purchase agreements in
the ordinary course of business. Notwithstanding the foregoing, for purposes of
calculating Security Capital's compliance with the covenants in the Indenture
described in the first paragraph under the caption "Limitations on
Indebtedness" above, accounts payables (other than deferred compensation) of
Security Capital in excess of 3.0% of the undepreciated book value (determined
in accordance with GAAP) of the assets of Security Capital at any time
outstanding will be treated as Indebtedness to the extent of that excess.
"Wholly Owned Subsidiary" means a Subsidiary of any Person all of the
outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares or minimal interests issued to other Persons to
satisfy legal requirements) are at the time owned by that Person or by one
or more Wholly Owned Subsidiaries of that Person or by that Person and one or
more Wholly Owned Subsidiaries of that Person.
The Indenture provisions relating to satisfaction and discharge and legal and
covenant defeasance which are described in the accompanying Prospectus under
"Description of Debt Securities-- Discharge, Defeasance and Covenant
Defeasance" will apply to the Notes.
Fixed Rate Notes
Each Note bearing interest at a fixed rate (a "Fixed Rate Note") will bear
interest from the date it is originally issued at the annual rate stated on its
face and in the applicable Pricing Supplement until the principal amount is
paid or made available for payment.
The applicable Pricing Supplement relating to a Fixed Rate Note will designate
an annual fixed rate of interest payable on such Fixed Rate Note, the Interest
Payment Dates, the Regular Record Dates, and, if applicable, the Redemption
Commencement Date, Redemption Price and Redemption Periods relating to such
Fixed Rate Note.
Floating Rate Notes
Each Note bearing interest at a variable rate (a "Floating Rate Note") will
bear interest from the date it is originally issued at the annual rate
determined pursuant to the interest rate formula stated on its face and in the
applicable Pricing Supplement until the principal amount is paid or made
available for payment. The variable interest rate will be determined as
follows:
(i) Unless the Floating Rate Note is designated as a Floating Rate/Fixed
Rate Note, an Inverse Floating Rate Note or as having an Addendum (as
defined below) attached, the Floating Rate Note will be designated a
"Regular Floating Rate Note" and, except as described below or in an
applicable Pricing Supplement, will bear interest at the rate determined by
reference to the applicable Interest Rate Basis (as defined below) (i) plus
or minus the applicable Spread (as defined below), if any, and/or (ii)
multiplied by the applicable Spread Multiplier (as defined below), if any.
(ii) If the Floating Rate Note is designated as a "Floating Rate/Fixed Rate
Note," then, except as described below or in an applicable Pricing
Supplement, the Floating Rate Note will initially
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bear interest at the rate determined by reference to the applicable
Interest Rate Basis (i) plus or minus the applicable Spread, if any, and/or
(ii) multiplied by the applicable Spread Multiplier, if any. The interest
rate in effect commencing on, and including, the date for interest to begin
accruing at the Fixed Interest Rate (the "Fixed Rate Commencement Date") to
the Maturity Date shall be the Fixed Interest Rate, if such rate is
specified in the applicable Pricing Supplement, or if no Fixed Interest
Rate is specified and the Floating Rate/Fixed Rate Note is still
outstanding on such day, the interest rate in effect thereon on the day
immediately preceding the Fixed Rate Commencement Date.
(iii) If the Floating Rate Note is designated as an "Inverse Floating Rate
Note," then, except as described below or in an applicable Pricing
Supplement, the Floating Rate Note will bear interest equal to the Fixed
Interest Rate specified in the related Pricing Supplement minus the rate
determined by reference to the Interest Rate Basis (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
Multiplier, if any; provided, however, unless otherwise specified in the
applicable Pricing Supplement, the interest rate thereon will not be less
than zero.
A Floating Rate Note may also have either or both:
(a) a maximum, or ceiling, on the rate of interest that may accrue during
any interest period (a "Maximum Rate"); and
(b) a minimum, or floor, on the rate of interest that may accrue during any
interest period (a "Minimum Rate").
The "Spread" is the number of basis points specified in the applicable Pricing
Supplement as applying to the Interest Rate Basis (as defined below) for such
Note. The "Spread Multiplier" is the percentage specified in the applicable
Pricing Supplement as applying to the Interest Rate Basis for such Note.
"Market Day" means:
(a) with respect to any Note, any Business Day in New York City and Boston;
and
(b) with respect to any LIBOR Note, any Business Day in New York City and
Boston which is also a day on which dealings in deposits in U.S. dollars
are transacted in the London interbank market (a "London Business Day").
"Business Day" for any particular location means each Monday, Tuesday,
Wednesday, Thursday and Friday that is not a day on which banking
institutions in such location are authorized or obligated by law or
executive order to close.
"Index Maturity" means, for a Floating Rate Note, the period to maturity of the
interest or obligation on which the interest rate formula is based, as
specified in the applicable Pricing Supplement.
"H.15(519)" means the weekly statistical release designated as H.15(519), or
any successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through the
world-wide-web site of the Board of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
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Unless otherwise provided in the applicable Pricing Supplement, the Trustee
will be the calculation agent (the "Calculation Agent") for Floating Rate
Notes.
The applicable Pricing Supplement relating to a Floating Rate Note will
designate as an interest rate basis (the "Interest Rate Basis") one or more of
the following:
(a) the Commercial Paper Rate for "Commercial Paper Rate Notes";
(b) the Prime Rate for "Prime Rate Notes";
(c) LIBOR for "LIBOR Notes";
(d) the Treasury Rate for "Treasury Rate Notes";
(e) the CD Rate for "CD Rate Notes";
(f) the CMT Rate for "CMT Rate Notes";
(g) the Federal Funds Rate for "Federal Funds Rate Notes";
(h) the Eleventh District Cost of Funds Rate for "Eleventh District Cost of
Funds Rate Notes"; or
(i) such other interest rate formula as such Pricing Supplement sets forth.
The applicable Pricing Supplement for a Floating Rate Note will specify the
Interest Rate Basis and, if applicable, the Calculation Agent, the Index
Maturity, the Spread and/or Spread Multiplier, the Maximum Rate, the Minimum
Rate, the Initial Interest Rate, the Interest Payment Dates, the Regular Record
Dates, the Calculation Date, the Interest Determination Date, and the Interest
Reset Date for such Note.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually, annually, or otherwise (such period being
the "Interest Reset Period" for such Floating Rate Note, and the first day of
each Interest Reset Period being an "Interest Reset Date" ), as specified in
the applicable Pricing Supplement. The Interest Reset Date will be:
(a) for Floating Rate Notes that reset daily, each Business Day;
(b) for Floating Rate Notes (other than Treasury Rate Notes) that reset
weekly, the Wednesday of each week;
(c) for Treasury Rate Notes that reset weekly, the Tuesday of each week,
except as provided below;
(d) for Floating Rate Notes that reset monthly, the third Wednesday of each
month;
(e) for Floating Rate Notes that reset quarterly, the third Wednesday of
March, June, September and December;
(f) for Floating Rate Notes that reset semi-annually, the third Wednesday
of two months of each year as specified in the applicable Pricing
Supplement;
(g) for Floating Rate Notes that reset annually, the third Wednesday of one
month of each year as specified in the applicable Pricing Supplement; and
(h) for Floating Rate Notes that reset at intervals other than those
described above, the days specified in the applicable Pricing Supplement;
provided, however, that the interest rate in effect from the date of issue to
the first Interest Reset Date for a Floating Rate Note will be the Initial
Interest Rate (as set forth in the applicable Pricing Supplement).
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If any Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Market Day for such Floating Rate Note, the Interest Reset Date
will be the next day that is a Market Day (except that for a LIBOR Note, if
such Market Day is in the following calendar month, the Interest Reset Date
will be the immediately preceding Market Day). In addition, if the Treasury
Rate is an applicable Base Rate and the Interest Determination Date would
otherwise fall on an Interest Reset Date, then the Interest Reset Date will be
the following Business Day.
The Interest Determination Date pertaining to an Interest Reset Date for a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), for a Prime Rate Note (the "Prime Rate Interest Determination Date"),
for a CD Rate Note (the "CD Rate Interest Determination Date"), for a CMT Rate
Note (the "CMT Rate Interest Determination Date"), for a Federal Funds Rate
Note (the "Federal Funds Rate Interest Determination Date") and for an Eleventh
District Cost of Funds Rate Note (the "Eleventh District Cost of Funds Interest
Determination Date") will be the second Market Day preceding the Interest Reset
Date. The Interest Determination Date pertaining to an Interest Reset Date for
a LIBOR Note (the "LIBOR Interest Determination Date") will be the second
London Business Day preceding the Interest Reset Date. The Interest
Determination Date pertaining to an Interest Reset Date for a Treasury Rate
Note (the "Treasury Interest Determination Date") will be the day of the week
in which the Interest Reset Date falls on which Treasury bills would normally
be auctioned. Treasury bills are usually sold at auction on the Monday of each
week, unless that day is a legal holiday, in which case the auction is usually
held on the following Tuesday, except that such auction may be held on the
preceding Friday. If, as the result of a legal holiday, an auction is held on
the preceding Friday, that Friday will be the Treasury Interest Determination
Date pertaining to the Interest Reset Date occurring in the following week. If
an auction date falls on any Interest Reset Date for a Treasury Rate Note, then
such Interest Reset Date will be the first Market Day immediately following the
auction date.
All percentages resulting from any calculations referred to in this Prospectus
Supplement will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point with five one-millionths of a percentage point rounded
upward (e.g., 9.876546% or .09876546 being rounded to 9.87655% or .0987655),
and all U.S. dollar amounts used in or resulting from such calculations will be
rounded to the nearest cent (with one-half cent being rounded upwards).
In addition to any maximum interest rate that may apply to a Floating Rate Note
under the above provisions, the interest rate on the Floating Rate Notes will
in no event be higher than the maximum rate permitted by New York law, as the
same may be modified by United States law of general application.
Upon the request of the Holder of any Floating Rate Note, the Calculation Agent
will provide the interest rate then in effect, and, if determined, the interest
rate that will become effective on the next Interest Reset Date for such
Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the
following Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Stated Maturity, as the case may be.
The Calculation Agent's determination of any interest rate will be final and
binding in the absence of manifest error.
References below to information services include any successor information
services.
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Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at a specified rate that will be
reset periodically based on the Commercial Paper Rate and any Spread and/or
Spread Multiplier.
"Commercial Paper Rate" means, for any Interest Determination Date, the Money
Market Yield of the annual rate, quoted on a bank discount basis, for the
relevant Commercial Paper Interest Determination Date for commercial paper
having the specified Index Maturity as published by the Board of Governors of
the Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates" under the heading "Commercial Paper--Nonfinancial."
The following procedures will apply if the rate cannot be set as described
above:
. If the rate is not published before 3:00 p.m., New York City time, on the
Calculation Date, then the Commercial Paper Rate will be the Money Market
Yield of such rate on the Commercial Paper Interest Determination Date
for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement as published in H.15 Daily Update or such
other recognized electronic source used for the purpose of displaying
such rate under the caption "Commercial Paper--Nonfinancial."
. If by 3:00 p.m., New York City time, on the Calculation Date the rate is
not published in either H.15(519) or H.15 Daily Update or another
recognized electronic source, the Commercial Paper Rate will be
calculated by the Calculation Agent and will be the Money Market Yield of
the arithmetic mean of the offered rates as of 11:00 a.m., New York City
time, on the Commercial Paper Interest Determination Date, of three
leading dealers of commercial paper in New York City (which may include
any of the Agents or their affiliates) selected by the Calculation Agent
for commercial paper of the specified Index Maturity placed for a
nonfinancial issuer whose bond rating is "Aa," or the equivalent, from a
nationally recognized rating agency.
. If fewer than three dealers selected by the Calculation Agent are
providing quotes, the rate will be the same as the rate used in the prior
interest period.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Money Market Yield = 100 x 360 x D
360 - (D x M)
where "D" refers to the annual rate for commercial paper quoted on a bank
discount basis and expressed as a decimal and "M" refers to the actual number
of days in the period from the Interest Reset Date to but excluding the day
that numerically corresponds to such Interest Rate Date (or, if there is not a
numerically corresponding day, the last day) in the calendar month that is the
number of months corresponding to the specified Index Maturity after the month
in which such Interest Reset Date falls.
Prime Rate Notes
Prime Rate Notes will bear interest at a specified rate that will be reset
periodically based on the Prime Rate and any Spread and/or Spread Multiplier.
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"Prime Rate" means, for any Interest Determination Date, the rate set forth for
the relevant Prime Rate Interest Determination Date in H.15(519) under the
heading "Bank Prime Loan."
The following procedures will apply if the rate cannot be set as described
above:
. If the rate is not published before 3:00 p.m., New York City time, on the
Calculation Date, then the Prime Rate will be the rate on such Prime Rate
Interest Determination Date as published in H.15 Daily Update, or such
other recognized electronic source used for the purpose of displaying
such rate, under the caption "Bank Prime Loan." If such rate is not yet
published in H.15(519), H.15 Daily Update or another recognized
electronic source by 3:00 p.m., New York City time, on the related
Calculation Date, then the Prime Rate shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the
display designated as page "USPRIME1" on the Reuters Monitor Money Rates
Service ("Reuters Screen USPRIME1 Page") or any successor service as the
bank's prime rate or base lending rate as in effect for the Prime Rate
Interest Determination Date as quoted on the Reuters Screen USPRIME1 Page
on the Prime Rate Interest Determination Date.
. If fewer than four rates appear on the Reuters Screen USPRIME1 Page on
the Prime Rate Interest Determination Date, the Prime Rate will be the
arithmetic mean of the prime rates or base lending rates (quoted on the
basis of the actual number of days in the year divided by a 360-day year)
as of the close of business on the Prime Rate Interest Determination Date
by four major banks in New York City selected by the Calculation Agent.
. If fewer than four banks are providing quotes, the rate will be the same
rate as used for the prior interest period.
LIBOR Notes
LIBOR Notes will bear interest at the rate(s), calculated with reference to
LIBOR and the Spread and/or any Spread Multiplier, if any, specified in the
applicable LIBOR Notes and in any applicable Pricing Supplement.
LIBOR means:
. if "LIBOR Telerate" is specified in the applicable Pricing Supplement or
if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, the
rate for deposits in the Designated LIBOR Currency having the Index
Maturity specified in the applicable Pricing Supplement, commencing on
the applicable Interest Reset Date that appears on the Designated LlBOR
Page as of 11:00 a.m., London time, on the applicable Interest
Determination Date;
. if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
arithmetic mean of the offered rates for deposits in the Designated LIBOR
Currency having the Index Maturity specified in the applicable Pricing
Supplement, commencing on the applicable Interest Reset Date, that appear
on the Designated LIBOR Page specified in the applicable Pricing
Supplement as of 11:00 a.m., London time, on the applicable Interest
Determination Date; provided, that, if the Designated LIBOR Page by its
terms provides only for a single rate, then the single rate will be used;
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. with respect to a LIBOR Interest Determination Date on which fewer than
two offered rates appear, or no rate appears, as the case may be, on the
Designated LIBOR Page as specified in the preceding two clauses, the rate
calculated by the Calculation Agent as the arithmetic mean of at least
two quotations obtained by the Calculation Agent after requesting the
principal London offices of each of four major reference banks (which may
include affiliates of any Agent) in the London interbank market to
provide the Calculation Agent with its offered quotation for deposits in
the Designated LIBOR Currency for the period of the Index Maturity
specified in the applicable Pricing Supplement, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 a.m., London time, on the applicable
Interest Determination Date and in a principal amount that is
representative for a single transaction in the Designated LIBOR Currency
in that market at that time;
. if fewer than two quotations referred to in the preceding clause are so
provided, the rate on the applicable Interest Determination Date
calculated by the Calculation Agent as the arithmetic mean of the rates
quoted at approximately 11:00 a.m., in the applicable Principal Financial
Center on the applicable Interest Determination Date by three major banks
in such Principal Financial Center selected by the Calculation Agent
(which may include affiliates of any Agent) for loans in the Designated
LIBOR Currency to leading European banks, having the Index Maturity
designated in the applicable Pricing Supplement and in a principal amount
that is representative for a single transaction in that market at that
time; or
. if the banks so selected by the Calculation Agent are not quoting as
mentioned in the preceding clause, LIBOR in effect on the applicable
Interest Determination Date.
"Designated LIBOR Currency" means the currency specified in the applicable
Pricing Supplement as to which LIBOR shall be calculated or, if no such
currency is specified in the applicable Pricing Supplement, United States
dollars.
"Designated LIBOR Page" means either:
. if "LIBOR Telerate" is designated in the applicable Pricing Supplement or
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, the
display on Bridge Telerate, Inc. or any successor service on the page
specified in such Pricing Supplement or any page as may replace the
specified page on that service for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR Currency; or
. if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
display on the Reuter Monitor Money Rates Service or any successor
service on the page specified in the applicable Pricing Supplement or any
other page as may replace the specified page on that service for the
purpose of displaying the London interbank rates of major banks for the
Designated LIBOR Currency.
"Principal Financial Center" means the capital city of the country to which the
Designated LIBOR Currency relates, except that with respect to United States
dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders,
Italian lire, Portuguese escudos, South African rand and Swiss francs, the
"Principal Financial Center" shall be The City of New York, Sydney, Toronto,
Frankfurt, Amsterdam, Milan, London, Johannesburg and Zurich, respectively.
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Treasury Rate Notes
Treasury Rate Notes will bear interest at a specified rate that will be reset
periodically based on the Treasury Rate and any Spread and/or Spread
Multiplier.
"Treasury Rate" means, for any Interest Determination Date, the rate for the
auction on the relevant Treasury Interest Determination Date Treasury bills
having the specified Index Maturity specified in the applicable Pricing
Supplement under the caption "INVESTMENT RATE" on the display on the Bridge
Telerate, Inc. or any successor service on page 56, or any other page as may
replace that page on such service ("Telerate Page 56"), or page 57, or any
other page as may replace that page on such service ("Telerate Page 57").
The following procedures will apply if the rate cannot be set as described
above:
. If the rate is not published by 3:00 p.m., New York City time, on the
relevant Calculation Date, then the Treasury Rate will be the Bond
Equivalent Yield of the rate for such Treasury bills as published in H.15
Daily Update, or another recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High" or, if not so published by 3:00
p.m., New York City time, on the related Calculation Date, the Bond
Equivalent Yield of the auction rate of such Treasury bills as announced
by the United States Department of the Treasury.
. If the auction rate of Treasury bills having the Index Maturity specified
in the applicable Pricing Supplement is not so announced by the United
States Department of the Treasury, or if no such auction is held, then
the Treasury Rate will be the Bond Equivalent Yield of the rate on such
Treasury Interest Determination Date of Treasury bills having the Index
Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market" or, if not yet published by 3:00 p.m., New York
City time, on the related Calculation Date, the rate on such Treasury
Interest Determination Date of such Treasury bills as published in H.15
Daily Update, or another recognized electronic source used for the
purpose of displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market."
. If such rate is not yet published in H.15(519), H.15 Daily update or
another recognized electronic source, then the Treasury Rate will be
calculated by the Calculation Agent and will be the Bond Equivalent Yield
of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 p.m., New York City time, on such Treasury Interest
Determination Date, of three primary United States government securities
dealers (which may include any of the Agents or their affiliates)
selected by the Calculation Agent, for the issue of Treasury bills with a
remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate determined as of such Treasury Interest
Determination Date will be the Treasury Rate in effect on such Treasury
Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
Bond Equivalent Yield = 100 x D x N
360 -
(D x M)
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where "D" refers to the applicable per annum rate for Treasury bills quoted on
a bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the interest reset period.
CD Rate Notes
CD Rate Notes will bear interest at a specified rate that will be reset
periodically based on the CD Rate and any Spread and/or Spread Multiplier.
"CD Rate" means, for any Interest Determination Date, the rate for negotiable
United States dollar certificates of deposit having the specified Index
Maturity as published in H.15(519) under the heading "CDs (secondary market)."
The following procedures will apply if the rate cannot be set as described
above:
. If the rate is not published before 3:00 p.m., New York City time, on the
relevant Calculation Date, then the CD Rate on the CD Rate Interest
Determination Date will be the rate for negotiable United States dollar
certificates of deposit having the specified Index Maturity as published
in H.15 Daily Update or such other recognized electronic source used for
the purpose of displaying such rate, under the caption "CDs (secondary
market)."
. If by 3:00 p.m., New York City time, on the Calculation Date, the rate is
not published in H.15(519), H.15 Daily Update or another recognized
electronic source, the CD Rate on the CD Rate Interest Determination Date
will be calculated by the Calculation Agent and will be the arithmetic
mean of the secondary market offered rates, as of 10:00 a.m., New York
City time, of three leading non-bank dealers of negotiable United States
dollar certificates of deposit in New York City (which may include any of
the Agents or their affiliates) selected by the Calculation Agent for
negotiable United States dollar certificates of deposit of major United
States money market banks in the market for negotiable United States
dollar certificates of deposit with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement in an
amount that is representative for a single transaction in that market at
that time.
. If fewer than three dealers selected by the Calculation Agent are quoting
rates, the rate will be the same rate used for the prior interest period.
CMT Rate Notes
CMT Rate Notes will bear interest at a specified rate that will be reset
periodically based on the CMT Rate and any Spread and/or Spread Multiplier.
"CMT Rate" means, with respect to any CMT Rate Interest Determination Date, the
rate displayed on the Designated CMT Telerate Page under the caption ". . .
Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . .
Mondays Approximately 3:45 p.m.," under the column for the Designated CMT
Maturity Index for:
. if the Designated CMT Telerate Page is 7051, the rate on the related CMT
Rate Interest Determination Date; or
. if the Designated CMT Telerate Page is 7052, the weekly or monthly
average, as specified in the applicable Pricing Supplement, for the week
or the month, as applicable, ended immediately preceding the week in
which the related CMT Rate Interest Determination Date occurs.
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. If the rate is no longer displayed on the relevant page or is not
displayed by 3:00 p.m., New York City time, on the related Calculation
Date, then the CMT Rate for the CMT Rate Interest Determination Date will
be the treasury constant maturity rate for the Designated CMT Maturity
Index as published in the relevant H.15(519).
. If the rate is no longer published in H.15(519) or is not published by
3:00 p.m., New York City time, on the Calculation Date, then the CMT Rate
on the CMT Rate Interest Determination Date will be the treasury constant
maturity rate for the Designated CMT Maturity Index (or other United
States Treasury rate for the Designated CMT Maturity Index) for the CMT
Rate Interest Determination Date with respect to the Interest Reset Date
as published by either the Board of Governors of the Federal Reserve
System or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate formerly
displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519).
. If that information is not provided by 3:00 p.m., New York City time, on
the Calculation Date, then the CMT Rate on the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will
be a yield to maturity, based on the arithmetic mean of the secondary
market bid prices as of approximately 3:30 p.m., New York City time, on
the CMT Rate Interest Determination Date reported, according to their
written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in New York City (which
may include any of the Agents or their affiliates) selected by the
Calculation Agent (from five Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event
of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Designated CMT
Maturity Index and a remaining term to maturity of not less than the
Designated CMT Maturity Index minus one year.
. If the Calculation Agent is unable to obtain three Treasury Note
quotations, the CMT Rate on the CMT Rate Interest Determination Date will
be calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market bid prices as of
approximately 3:30 p.m., New York City time, on the CMT Rate Interest
Determination Date of three Reference Dealers in New York City (which may
include any of the Agents or their affiliates) selected by the
Calculation Agent (from five of the Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event
of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for Treasury Notes with an
original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to
the Designated CMT Maturity Index and in an amount of at least U.S. $100
million. If three or four (and not five) of such Reference Dealers are
providing quotes, then the CMT Rate will be based on the arithmetic mean
of the offer prices obtained and neither the highest nor the lowest of
such quotes will be eliminated. If two Treasury Notes with an original
maturity have remaining terms to maturity equally close to the Designated
CMT Maturity Index, the Calculation Agent will obtain from five Reference
Dealers quotations for the Treasury Note with the shorter remaining term
to maturity and will use those quotations to calculate the CMT Rate as
described above.
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"Designated CMT Telerate Page" means the display on the Bridge Telerate, Inc.
or any successor service on the page specified in the applicable Pricing
Supplement or any other page as may replace the specified page on such service,
for the purpose of displaying "Treasury Constant Maturities" as reported in
H.15(519). If a page is not specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page will be 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (1, 2, 3, 5, 7, 10, 20 or 30 years) specified in the
applicable Pricing Supplement with respect to which the CMT Rate will be
calculated. If no maturity is specified in the applicable Pricing Supplement,
the Designated CMT Maturity Index will be 2 years.
Federal Funds Rate Notes
Federal Funds Rates Notes will bear interest at a specified rate that will be
reset periodically based on the Federal Funds Rate and any Spread and/or Spread
Multiplier.
"Federal Funds Rate" means, for any Interest Determination Date, the rate on
the relevant Federal Funds Interest Determination Date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)", as such
rate is displayed on Bridge Telerate, Inc. or any successor service on page
120, or any other page as may replace that page on such service ("Telerate Page
120").
The following procedures will apply if the rate cannot be set as described
above:
. If the rate is not published before 3:00 p.m., New York City time, or
does not appear on Telerate Page 120 on the Calculation Date, then the
Federal Funds Rate for the Interest Determination Date will be the rate
on the Federal Funds Interest Determination Date as published in H.15
Daily Update, or another recognized electronic source used for the
purpose of displaying such rate, under the caption "Federal Funds
(Effective)."
. If by 3:00 p.m., New York City time, on the Calculation Date the rate
does not appear on Telerate Page 120 or is not yet published in
H.15(519), H.15 Daily Update or another recognized electronic source, the
Federal Funds Rate for the Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the rates, as
of 9:00 a.m., New York City time, on the Federal Funds Interest
Determination Date, for the last transaction in overnight Federal Funds
arranged by three leading brokers of Federal Funds transactions in New
York City (which may include any of the Agents or their affiliates)
selected by the Calculation Agent prior to 9:00 a.m., New York City time.
. If fewer than three brokers selected by the Calculation Agent are
providing quotes, the rate will be the same as the rate used in the prior
interest period.
Eleventh District Cost of Funds Rate Notes
Eleventh District Cost of Funds Rate Notes will bear interest at a specified
rate that will be reset periodically based on the Eleventh District Cost of
Funds Rate and any Spread and/or Spread Multiplier.
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"Eleventh District Cost of Funds Rate" means, for any Interest Determination
Date, the rate on the relevant Eleventh District Cost of Funds Rate Interest
Determination Date equal to the monthly weighted average cost of funds for the
calendar month immediately preceding the month in which the Eleventh District
Cost of Funds Rate Interest Determination Date falls, as set forth under the
caption "11th District" on Bridge Telerate, Inc. or any successor service on
Page 7058, or any other page as may replace that page on such service
("Telerate Page 7058") as of 11:00 A.M., San Francisco time, on the Eleventh
District Cost of Funds Rate Interest Determination Date.
The following procedures will apply if the rate cannot be set as described
above:
. If the rate does not appear on Telerate Page 7058 on the Eleventh
District Cost of Funds Rate Interest Determination Date, then the
Eleventh District Cost of Funds Rate on the Eleventh District Cost of
Funds Rate Interest Determination Date will be the monthly weighted
average cost of funds paid by member institutions of the Eleventh Federal
Home Loan Bank District that was most recently announced (the "Index") by
the Federal Home Loan Bank ("FHLB") of San Francisco, as the cost of
funds for the calendar month immediately preceding the Eleventh District
Cost of Funds Rate Interest Determination Date.
. If the FHLB of San Francisco fails to announce the Index on or prior to
the Eleventh District Cost of Funds Rate Interest Determination Date for
the calendar month immediately preceding the Eleventh District Cost of
Funds Rate Interest Determination Date, the rate will be the same as the
rate used in the prior interest period.
Renewable Notes
Security Capital may issue from time to time renewable Floating Rate Notes
("Renewable Notes") that will bear interest at the interest rate (calculated
with reference to an Interest Rate Basis and any Spread and/or Spread
Multiplier, and subject to any minimum interest rate and maximum interest rate)
specified in the Renewable Notes and in the applicable Pricing Supplement.
Renewable Notes will mature on an Interest Payment Date as specified in the
applicable Pricing Supplement (the "Initial Maturity Date"), unless the
maturity of all or any portion of the principal amount thereof is extended in
accordance with the procedures described below. On the Interest Payment Dates
in each year specified in the applicable Pricing Supplement (each such Interest
Payment Date, an "Election Date"), the maturity of the Renewable Notes will be
extended to the Interest Payment Date occurring twelve months after the
Election Date (or to such other date as is specified in the applicable Pricing
Supplement), unless the Holder of the Renewable Notes elects to terminate the
automatic extension of the maturity of the Renewable Notes or of any portion
thereof having a principal amount of U.S. $1,000 or any larger amount that is a
multiple of U.S. $1,000 by delivering a notice of that election to the Paying
Agent not less than nor more than the number of days specified in the
applicable Pricing Supplement prior to the Election Date. This option may be
exercised with respect to less than the entire principal amount of the
Renewable Notes so long as the principal amount for which the option is not
exercised is at least U.S. $1,000 or any larger amount that is a multiple of
US, $1,000. The maturity of the Renewable Notes may not, however, be extended
beyond the Final Maturity Date as specified in the applicable Pricing
Supplement (the "Final Maturity Date"). If the Holder elects to terminate the
automatic extension of the maturity of any portion of the principal amount of
the Renewable Notes and that election is not revoked as
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described below, that portion will become due and payable on the Interest
Payment Date falling six months (unless another period is specified in the
applicable Pricing Supplement) after the Election Date prior to which the
Holder made the election.
An election to terminate the automatic extension of maturity may be revoked as
to any portion of the Renewable Notes having a principal amount of U.S. $1,000
or any larger amount that is a multiple of U.S. $1,000 by delivering a notice
of the revocation to the Paying Agent on any day following the effective date
of the election to terminate the automatic extension of maturity and prior to
the fifteenth calendar day before the date on which that portion would
otherwise mature. Such a revocation may be made for less than the entire
principal amount of the Renewable Notes for which the automatic extension of
maturity has been terminated; provided, however, that the principal amount of
the Renewable Notes for which the automatic extension of maturity has been
terminated and for which such a revocation has not been made is at least U.S.
$1,000 or any larger amount that is a multiple of U.S. $1,000. A revocation may
not, however, be made during the period from and including a Regular Record
Date to but excluding the immediately succeeding Interest Payment Date.
An election to terminate the automatic extension of the maturity of the
Renewable Notes, if not revoked as described in the preceding paragraph, will
be binding upon subsequent Holders.
Renewable Notes may be redeemed in whole or in part at the option of Security
Capital on the Interest Payment Dates in each year specified in the applicable
Pricing Supplement, commencing with the Interest Payment Date specified in the
applicable Pricing Supplement, at a redemption price of 100% of the principal
amount of the Renewable Notes to be redeemed, together with accrued and unpaid
interest to the date of redemption. Notice of redemption will be sent to each
Holder by first class mail, postage prepaid, at least 30 and not more than 60
calendar days prior to the date fixed for redemption.
Renewable Notes may also be issued, from time to time, with the Spread and/or
Spread Multiplier to be reset by a remarketing agent in remarketing procedures
to be specified in the Renewable Notes and in the applicable Pricing
Supplement.
Extension of Maturity
The Pricing Supplement relating to each Fixed Rate Note (other than an
Amortizing Note) will indicate whether Security Capital has the option to
extend the maturity of the Fixed Rate Note for one or more periods of one or
more whole years (each an "Extension Period") up to but not beyond the date
(the "Final Maturity Date") set forth in the Pricing Supplement. If Security
Capital has this option with respect to any Fixed Rate Note (an "Extendible
Note"), the following procedures will apply, unless modified in the applicable
Pricing Supplement.
Security Capital may exercise the option with respect to an Extendible Note by
notifying the Paying Agent of the exercise at least 45 but not more than 60
calendar days prior to the stated maturity date originally in effect with
respect to the Note (the "Original Maturity Date") or, if the stated maturity
date of the Note has already been extended, prior to the stated maturity date
then in effect (an "Extended Maturity Date"). No later than 40 calendar days
prior to the Original Maturity Date or an Extended Maturity Date, as the case
may be (each, a "Maturity Date"), the Paying Agent will mail to the Holder of
the Extendible Note a notice (the "Extension Notice") relating to such
Extension
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Period, first class mail, postage prepaid, setting forth: (a) the election of
Security Capital to extend the maturity of the Extendible Note; (b) the new
Extended Maturity Date; (c) the interest rate applicable to the Extension
Period; and (d) the provisions, if any, for redemption during the Extension
Period, including the date or dates on which, the period or periods during
which and the price or prices at which the redemption may occur during the
Extension Period. Upon the mailing by the Paying Agent of an Extension Notice
to the Holder of an Extendible Note, the maturity of the Note shall be extended
automatically, and, except as modified by the Extension Notice and as described
in the next paragraph, the Note will have the same terms it had prior to the
mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 10:00 a.m., New York City time,
on the twentieth calendar day prior to the Maturity Date then in effect for an
Extendible Note (or, if such day is not a Business Day, not later than 10:00
a.m., New York City time, on the immediately succeeding Business Day), Security
Capital may, at its option, revoke the interest rate provided for in the
Extension Notice and establish a higher interest rate for the Extension Period
by causing the Paying Agent to send notice of the higher interest rate to the
Holder of the Note by first class mail, postage prepaid, or by such other means
as agreed between Security Capital and the Paying Agent. Such notice shall be
irrevocable. All Extendible Notes with respect to which the Maturity Date is
extended in accordance with an Extension Notice will bear the higher interest
rate for the Extension Period, whether or not tendered for repayment.
If Security Capital elects to extend the maturity of an Extendible Note, the
Holder of the Note will have the option to require Security Capital to repay
the Note on the Maturity Date then in effect at a price equal to the principal
amount thereof plus all accrued and unpaid interest to the Maturity Date. In
order for an Extendible Note to be repaid on the Maturity Date, the Holder
thereof must follow the procedures set forth below under "Repayment at the
Option of the Holder" for optional repayment, except that the period for
delivery of the Note or notification to the Paying Agent will be at least 25
but not more than 35 calendar days prior to the Maturity Date then in effect
and except that a Holder who has tendered an Extendible Note for repayment
pursuant to an Extension Notice may, by written notice to the Paying Agent,
revoke any such tender for repayment until 3:00 p.m., New York City time, on
the twentieth calendar day prior to the Maturity Date then in effect (or, if
such day is not a Business Day, until 3:00 p.m., New York City time, on the
immediately succeeding Business Day).
Original Issue Discount Notes
Original Issue Discount Notes are Notes issued at a discount from the principal
amount payable at maturity (including any Zero Coupon Note) and which are
considered to be issued with original issue discount which must be included in
income for United States federal income tax purposes at a constant rate
("Original Issue Discount Notes"). See "United States Taxation." Certain
additional considerations relating to Original Issue Discount Notes may be
described in the Pricing Supplement relating thereto.
Amortizing Notes
Security Capital may offer Notes for which payments of principal and interest
are made over the life of the Notes ("Amortizing Notes"). Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing
Note will be computed on the basis of a 360-day year of twelve 30-day
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months. Payments with respect to Amortizing Notes will be applied first to
interest due and payable on the Note and then to the reduction of the unpaid
principal amount of the Note. Further information concerning additional terms
and provisions of Amortizing Notes will be specified in the applicable Pricing
Supplement, including a table setting forth repayment information for the
Amortizing Notes.
Indexed Notes
Security Capital may issue Notes with the amount of principal, premium and/or
interest payable to be determined with reference to the price or prices of
specific commodities or stocks, to the exchange rate of one or more designated
currencies (including a composite currency) relative to an indexed currency or
to such other prices) or exchange rate(s) ("Indexed Notes"), as specified in
the applicable Pricing Supplement. In certain cases, Holders of Indexed Notes
may receive a principal payment on the Maturity Date that is greater than or
less than the principal amount of such Indexed Notes depending upon the
relative value on the Maturity Date of the specified indexed item. Information
as to the method for determining the amount of principal, premium, if any,
and/or interest payable in respect of Indexed Notes, certain historical
information with respect to the specified indexed item and certain tax
considerations associated with an investment in Indexed Notes will be specified
in the applicable Pricing Supplement.
Other Provisions, Addenda
Any provisions with respect to the Notes, may be modified by the terms
specified under "Other Provisions" on the face of the Note or in an addendum
(an "Addendum") relating thereto, if so specified on the face of the Note and
in the applicable Pricing Supplement.
Payment of Principal and Interest
Unless otherwise specified in the applicable Pricing Supplement, payments of
principal of (and premium, if any) and interest on all Notes will be made in
the applicable Specified Currency; provided, however, that payments of
principal (and premium, if any) and interest on Notes denominated in a currency
other than U.S. dollars will nevertheless be made in U.S. dollars:
(a) at the option of the Holders of such Notes under the procedures
described in the two following paragraphs; and
(b) at Security Capital's option in the case of imposition of exchange
controls or other circumstances beyond Security Capital's control as
described in the last paragraph under this heading.
Unless otherwise specified in the applicable Pricing Supplement, and except as
provided in the next paragraph, payments of interest and principal (and
premium, if any) for any Note denominated in a currency other than U.S. dollars
will be made in U.S. dollars if the registered Holder of such Note on the
relevant Regular Record Date, or at maturity, as the case may be, has requested
in writing to the Paying Agent on or before such Regular Record Date, or the
date 15 days before maturity, as the case may be, that payments be made in U.S.
dollars. Such request may be in writing (mailed or hand delivered) or by cable
or other form of facsimile transmission. Any such request made for any Note by
a registered Holder will remain in effect for any further payments of interest
and principal (and
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premium, if any) on such Note payable to the Holder, unless such request is
revoked on or before the relevant Regular Record Date or the date 15 days
before maturity, as the case may be. Holders of Notes denominated in a currency
other than U.S. dollars whose Notes are registered in the name of a broker or
nominee should contact the broker or nominee to determine whether and how to
elect to receive payments in U.S. dollars.
The U.S. dollar amount to be received by a Holder of a Note denominated in a
currency other than U.S. dollars who elects to receive payment in U.S. dollars
will be determined by the exchange rate agent (the "Exchange Rate Agent"), at
approximately 11:00 a.m., New York City time, on the second Business Day
preceding the applicable Payment Date, by selecting the indicative quotations
for the Specified Currency appearing at that time on the bank composite or
multi-contributor pages of the Quoting Source (as defined below) for the first
three banks, in descending order of their appearance on a list of banks to be
agreed to by Security Capital and the Exchange Rate Agent prior to such second
Business Day, which are offering quotes on the Quoting Source. The Exchange
Rate Agent will select from among the selected quotations the one which will
yield the largest number of U.S. dollars upon conversion from the Specified
Currency. "Quoting Source" means Reuters Monitor Foreign Exchange Service, or
if the Exchange Rate Agent determines that that service is not available,
Telerate Monitor Foreign Exchange Service. If the Exchange Rate Agent
determines that neither Service is available, Security Capital and the Exchange
Rate Agent shall agree on a comparable display or other comparable manner of
obtaining quotations and that display or manner will become the Quoting Source.
In the case of a Specified Currency other than Euros, if (i) fewer than three
bid quotations are available at the time a determination is to be made by the
Exchange Rate Agent pursuant to the preceding paragraph, or (ii) the Exchange
Rate Agent received no later than 12:00 noon, New York City time, on the second
Business Day preceding the applicable Payment Date notice from Security Capital
that there exist exchange controls or other circumstances beyond Security
Capital's control rendering the Specified Currency unavailable, then the
Exchange Rate Agent will, prior to such Payment Date, notify Security Capital
and the Trustee of the noon buying rate in New York City for cable transfers,
in the Specified Currency indicated in such notice, as certified for customs
purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate")
as of such second Business Day. If the Market Exchange Rate for that date is
not available, the Exchange Rate Agent shall immediately notify Security
Capital and the Trustee of the most recently available Market Exchange Rate for
the Specified Currency. In the case of Euros, if: (i) fewer than three bid
quotations are available at the time a determination is to be made by the
Exchange Rate Agent pursuant to the preceding paragraph, or (ii) the Exchange
Rate Agent received no later than 12:00 noon, New York City time, on the second
Business Day preceding the applicable Payment Date notice from Security Capital
that (A) there exist exchange controls or other circumstances beyond Security
Capital's control, rendering Euros unavailable or (B) Euros are no longer used
in the European Monetary System, rendering Euros unavailable, then the Exchange
Rate Agent will, prior to such Payment Date, notify Security Capital and the
Trustee of the rate of conversion for Euros into U.S. dollars, determined as of
the second Business Day on the following basis: The component currencies of the
Euros for this purpose (the "Components") shall be the currency amounts that
were components of the Euros as of the last date on which Euros were used in
the European Monetary System. The equivalent of Euros in U.S. dollars shall be
calculated by aggregating the U.S. dollar equivalent of
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the Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Exchange Rate Agent on the basis of the most recently
available Market Exchange Rate for the Components, or as otherwise specified to
the Exchange Rate Agent by Security Capital.
Interest will be payable to the person in whose name a Note is registered at
the close of business on the Regular Record Date immediately before each
Interest Payment Date; provided, however, that interest payable at maturity
will be payable to the person to whom principal shall be payable. The first
payment of interest on any Note originally issued between a Regular Record Date
and an Interest Payment Date will be made on the second Interest Payment Date
following its date of issue to the registered owner on the Regular Record Date
relating to the second Interest Payment Date. Unless otherwise indicated in the
applicable Pricing Supplement, the "Regular Record Date" for any Floating Rate
Note will be the date 15 calendar days before each Interest Payment Date,
whether or not that date is a Business Day, and the "Regular Record Date" for
any Fixed Rate Note will be the March 1 and September 1 immediately preceding
the March 15 and September 15 Interest Payment Dates unless otherwise indicated
in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement and except as
provided below, interest will be payable:
(a) for Floating Rate Notes that reset daily, on the third Wednesday of
each month or on the third Wednesday of March, June, September and December
of each year (as indicated in the applicable Pricing Supplement);
(b) for Floating Rate Notes that reset weekly, on the third Wednesday of
each month or on the third Wednesday of March, June, September and December
of each year (as indicated in the applicable Pricing Supplement);
(c) for Floating Rate Notes that reset monthly, on the third Wednesday of
each month or on the third Wednesday of March, June, September and December
of each year (as indicated in the applicable Pricing Supplement);
(d) for Floating Rate Notes that reset quarterly, on the third Wednesday of
March, June, September and December of each year;
(e) for Floating Rate Notes that reset semi-annually, on the third
Wednesday of the two months of each year specified in the applicable
Pricing Supplement;
(f) for Floating Rate Notes that reset annually, on the third Wednesday of
the month specified in the applicable Pricing Supplement; and .
(g) for Floating Rate Notes that reset at intervals other than those
described above, on the days specified in the applicable Pricing
Supplement,
each an "Interest Payment Date," and in each case, at maturity. If an Interest
Payment Date (other than at Stated Maturity, a Redemption Date or an Optional
Repayment Date (as defined below under "Repayment at the Option of the
Holder")) with respect to any Floating Rate Note would otherwise fall on a day
that is not a Market Day with respect to that Note (and for any Note
denominated in a currency other than U.S. dollars, a Business Day in the
country issuing the Specified Currency (or, for Euros, a day on which the
Trans-European Automated Real-Time Gross Settlement Express Transfer System is
open and for a Note as to which LIBOR is an applicable Specified Currency, a
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day on which commercial banks are open for business (including dealings in
LIBOR) in London)), the Interest Payment Date will be on the following Market
Day (with interest accruing to but excluding the next following Market Day)
(or, in the case of a LIBOR Note, if such day falls in the next calendar month,
the immediately preceding Market Day (with interest accruing to but excluding
the immediately preceding Market Day)). If the Stated Maturity, Redemption Date
or Optional Repayment Date of a Floating Rate Note falls on a day that is not a
Market Day (and for any Note denominated in a currency other than U.S. dollars,
a Business Day in the country issuing the Specified Currency (or, for Euros, a
day on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer System is open and for a Note as to which LIBOR is an applicable
Specified Currency, a day on which commercial banks are open for business
(including dealings in LIBOR) in London)), the required payment of principal,
premium, if any, and interest will be made on the following Market Day as if
made on the date the payment was due, and no interest will accrue on the
payment for the period from and after the Stated Maturity, Redemption Date or
Optional Repayment Date, as the case may be, to the date of the payment on the
following Market Day.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments in respect of Fixed Rate Notes and Floating Rate Notes will equal the
amount of interest accrued from and including the immediately preceding
Interest Payment Date in respect of which interest has been paid or duly made
available for payment (or from and including the date of issue, if no interest
has been paid or duly made available for payment) to but excluding the
applicable interest Payment Date or the Stated Maturity, as the case may be.
For a Floating Rate Note, accrued interest from (and including) the date of
issue or from (and including) the last date to which interest has been paid is
calculated by multiplying the face amount of such Floating Rate Note by an
accrued interest factor. The accrued interest factor is computed by adding the
interest factor calculated for each day from (and including) the date of issue,
or from (and including) the last date to which interest has been paid, but
excluding the date for which accrued interest is being calculated. The interest
factor (expressed as a decimal) for each such day is computed by dividing the
interest rate (expressed as a decimal) applicable to such date by 360 for
Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, CD Rate Notes,
Federal Funds Rate Notes, or Eleventh District Cost of Funds Rate Notes or by
the actual number of days in the year for Treasury Rate Notes or CMT Rate
Notes. Interest on Fixed Rate Notes will be computed on the basis of a 360-day
year of twelve 30-day months.
A payment on any Fixed Rate Note due on any day that is not a Market Day (and,
for any Note denominated in a currency other than U.S. dollars, a Business Day
in the country issuing the Specified Currency (or, for Euros, a day on which
the Trans-European Automated Real-Time Gross Settlement Express Transfer System
is open and for a Note as to which LIBOR is an applicable Specified Currency, a
day on which commercial banks are open for business (including dealings in
LIBOR) in London)) need not be made on such a day, but may be made on the
following Market Day with the same force and effect as if made on the due date,
and no interest shall accrue for the period from and after such date.
Payment of the principal of (and premium, if any) and any interest due with
respect to any Note (ether than a Book-Entry Note) at maturity will be made in
immediately available funds upon surrender of such Note at the Paying Agent
Office, provided that the Note is presented to the Paying Agent in time
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for the Paying Agent to make the payments in such funds in accordance with its
normal procedures. Payments of interest an any Note (other than any Book-Entry
Note) other than at maturity will be made by check mailed to the address of the
Person entitled thereto as it appears in the Security Register or by wire
transfer to such account as may have been appropriately designated by such
Person. Payments in respect of Book-Entry Notes are discussed under "--Book-
Entry Notes."
If the principal of (and premium, if any) or interest on any Note is payable in
a currency other than U.S. dollars and such Specified Currency is not available
due to the imposition of exchange controls or other circumstances beyond the
control of Security Capital, Security Capital will be entitled to satisfy its
obligations to Holders of the Notes by making payment in U.S. dollars on the
basis of the mast recently available Exchange Rate. Any payment made under such
circumstances in U.S. dollars where the required payment is in a currency other
than U.S. dollars will not constitute an Event of Default under the Indenture.
Repayment at the Option of the Holder
The Notes will be repayable by Security Capital at the option of the Holders
thereof prior to Stated Maturity only if one or more optional repayment dates
are specified on the face of the Note and in the applicable Pricing Supplement
("Optional Repayment Dates"). If so specified, the Notes will be subject to
repayment at the option of the Holders thereof on any Optional Repayment Date
in whole or in part in increments of U.S. $1,000 or such other minimum
denomination specified in the applicable Pricing Supplement (provided that any
remaining principal amount thereof shall be at least U.S. $1,000 or such other
minimum denomination), at a repayment price equal to 100% of the unpaid
principal amount to be repaid (or, if this Note is an Original Issue Discount
Note, such lesser amount as provided therein), together with unpaid interest
accrued to the date of repayment. For any Note to be repaid, the Note must be
received, together with the form thereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its Corporate Trust Office (or such other
address of which Security Capital shall from time to time notify the Holders)
not more than 60 nor less than 30 calendar days prior to the date of repayment.
Exercise of such repayment option by the Holder will be irrevocable.
Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, holders of beneficial
interests ("Beneficial Owners") of a permanent global Note that desire to have
all or any portion of the Book-Entry Notes represented by such permanent global
Note repaid must instruct the participant through which they own their interest
to direct the Depositary to exercise the repayment option on their behalf by
delivering the related permanent global Note and duly completed election form
to the Trustee as aforesaid. In order to ensure that the permanent global Note
and election form are received by the Trustee on a particular day, the
applicable Beneficial Owner must so instruct the participant through which it
owns its interest before such participant's deadline for accepting instructions
for that day. Different firms may have different deadlines for accepting
instructions from their customers. Accordingly, Beneficial Owners should
consult the participants through which they own their interest for the
respective deadlines for such participants. All instructions given to
participants from Beneficial Owners of permanent global Notes relating to the
option to elect repayment shall be irrevocable. In addition, at the time such
instructions are given, each such Beneficial Owner shall cause the participant
through which it owns its interest to transfer such Beneficial Owner's interest
in the permanent global Note or
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Notes representing the related Book-Entry Notes, on the Depositary's records,
to the Trustee. See "--Book-Entry Notes."
If applicable, Security Capital will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
any other securities laws or regulations in connection with any such repayment.
Security Capital may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by Security Capital may, at the
discretion of Security Capital, be held, resold or surrendered to the Trustee
for cancellation.
Optional Redemption
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
not be redeemable prior to their Stated Maturity. If so specified in the
applicable Pricing Supplement, the Notes will be redeemable at Security
Capital's option at any time after the date or dates specified therein. If one
or more dates are so specified with respect to any Note, the applicable Pricing
Supplement will also specify one or more redemption prices (expressed as a
percentage of the principal amount of such Note) ("Redemption Prices") and the
redemption period or periods ("Redemption Periods") during which such
Redemption Prices apply. Unless otherwise specified in the Pricing Supplement,
any such Note shall be redeemable at the option of Security Capital at the
specified Redemption Price applicable to the Redemption Period during which the
Note is to be redeemed, together with interest accrued to the Redemption Date.
If so specified in the applicable Pricing Supplement, the Notes will be
redeemable at Security Capital's option, as a whole or from time to time in
part in increments of U.S. $1,000 or such other minimum denomination specified
in the applicable Pricing Supplement (provided that any remaining principal
amount thereof shall be at least U.S. $1,000 or such other minimum
denomination), on any date prior to their Stated Maturity at a Redemption Price
equal to 100% of the principal amount thereof plus accrued interest to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date), plus a Make-Whole Premium, if any.
The "Make-Whole Premium" in respect of any Note is intended to be the amount,
if any, which, when added to the then outstanding principal amount of such
Note, would, if invested on the Redemption Date of such Note in U.S. Treasury
securities with maturities equal to the Remaining Life of the Notes, have a
yield to maturity equal to the original yield to maturity of the Notes, based
on the initial public offering price of the Notes set forth in the applicable
Pricing Supplement. The amount of the Make-Whole Premium in respect of the
principal amount of any Note to be redeemed will be calculated by Security
Capital and will be the excess, if any, of (i) the sum of the present values,
as of the Redemption Date of such Note, of (A) the respective interest payments
(exclusive of the amount of accrued interest to the Redemption Date) on such
Note that, but for such redemption, would have been payable on their respective
Interest Payment Dates after such Redemption Date, and (B) the payment of such
principal amount that, but for such redemption, would have been payable on the
Stated Maturity over (ii) the amount of such principal to be redeemed. Such
present values will be determined in accordance with generally accepted
principles of financial analysis by discounting the amounts of such payments of
interest and principal from their respective Stated Maturities to such
Redemption Date at a discount rate equal to the Treasury Yield.
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The "Treasury Yield" in respect of any Note to be redeemed shall be determined
as of the date on which notice of redemption of such Note is sent to the Holder
thereof by reference to the most recent Federal Reserve Statistical Release
H.15(519) (or successor publication) which has become publicly available not
more than two Business Days prior to such date (or, if such Statistical Release
(or successor publication) is no longer published or no longer contains the
applicable data, to the most recently published issue of The Wall Street
Journal (Eastern Edition) published not more than two Business Days prior to
such date that contains such data or, if The Wall Street Journal (Eastern
Edition) is no longer published or no longer contains such data, to any
publicly available source of similar market data), and shall be the most recent
weekly average yield on actively traded U.S. Treasury securities adjusted to a
constant maturity equal to the Remaining Life of the Notes and, if applicable,
converted to a bond equivalent yield basis as described below. The "Remaining
Life of the Notes" shall equal the number of years from the Redemption Date to
the Stated Maturity of the Notes; provided that if the Remaining Life of the
Notes being redeemed is not equal to the constant maturity of a U.S. Treasury
security for which a weekly average yield is specified in the applicable
source, then the Remaining Life of the Notes shall be rounded to the nearest
one-twelfth of one year and the Treasury Yield shall be obtained by linear
interpolation (computed to the fifth decimal place (one thousandth of a
percentage point) and then rounded to the fourth decimal place (one hundredth
of a percentage point)), after rounding to the nearest one-twelfth of one year,
from the weekly average yields of (a) the actively traded U.S. Treasury
security with a maturity closest to and less than the Remaining Life of the
Notes and (b) the actively traded U.S. Treasury security with a maturity
closest to and greater than the Remaining Life of the Notes, except that if the
Remaining Life of the Notes is less than three months, the weekly average yield
on actively traded U.S. Treasury securities adjusted to a constant maturity of
three months shall be used. The Treasury Yield shall, if expressed on a yield
basis other than that equivalent to a bond equivalent yield basis, be converted
to a bond equivalent yield basis and shall be computed to the fifth decimal
place (one thousandth of a percentage point) and then rounded to the fourth
decimal place (one hundredth of a percentage point).
Notice of redemption will be provided by mailing a notice of such redemption to
each Holder by first class mail, postage prepaid, at least 30 days and not more
than 60 days prior to the date fixed for redemption to the respective address
of each Holder as that address appears in the Security Register.
Security Capital may purchase Notes at any price in the open market or
otherwise. Notes purchased by Security Capital may, at the discretion of
Security Capital, be held or resold or surrendered to the Trustee for
cancellation.
Book-Entry Notes
Upon issuance, all Book-Entry Notes having the same terms and date of issue
will be represented by a single permanent global Note. Each permanent global
Note representing Book-Entry Notes will be deposited with, or on behalf of, The
Depository Trust Company, as Depositary (the "Depositary"), located in the
Borough of Manhattan, The City of New York, and will be registered in the name
of the Depositary or a nominee of the Depositary. Currently, the Depositary
will accept the deposit of only permanent global Notes denominated in U.S.
dollars.
Ownership of beneficial interests in a permanent global Note representing Book-
Entry Notes will be limited to institutions that have accounts with the
Depositary or its nominee ("participants") or persons that may hold interests
through participants. In addition, ownership of beneficial interests by
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participants in such a permanent global Note will be evidenced only by, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such permanent global Note.
Ownership of beneficial interests in such a permanent global Note by persons
that hold through participants will be evidenced only by, and the transfer of
that ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to transfer beneficial
interests in such a permanent global Note.
Security Capital has been advised by the Depositary that upon the issuance of a
permanent global Note representing Book-Entry Notes, and the deposit of such
permanent global Note with the Depositary, the Depositary will immediately
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Book-Entry Notes represented by such permanent global
Note to the accounts of participants. The accounts to be credited shall be
designated by the soliciting Agent or, to the extent that the Book-Entry Notes
are .offered and sold directly, by Security Capital.
Payment of principal of and any premium and interest on Book-Entry Notes
represented by any permanent global Note registered in the name of or held by
the Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the registered owner and Holder of the permanent global
Note representing such Book-Entry Notes. Neither Security Capital, the Trustee,
nor any agent of Security Capital or the Trustee will have any responsibility
or liability for any aspect of the Depositary's records or any participant's
records relating to or payments made on account of beneficial ownership
interests in a permanent global Note representing such Book-Entry Notes or for
maintaining, supervising or reviewing any of the Depositary's records or any
participant's records relating to such beneficial ownership interests.
Security Capital has been advised by the Depositary that upon receipt of any
payment of principal of or any premium or interest in respect of a permanent
global Note, the Depositary will immediately credit, on its book-entry
registration and transfer system, accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such permanent global Note as shown on the records of the Depositary.
Payments by participants to owners of beneficial interests in a permanent
global Note held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the sole
responsibility of such participants.
No permanent global Note described above may be transferred except as a whole
by the Depositary for such permanent global Note to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary.
A permanent global Note representing Book-Entry Notes is exchangeable for
definitive Notes registered in the name of, and a transfer of a permanent
global Note may be registered to, any Person other than the Depositary or its
nominee, only if:
(a) the Depositary notifies Security Capital that it is unwilling or unable
to continue as Depositary for such permanent global Note or if at any time
the Depositary ceases to be a clearing agency registered under the Exchange
Act;
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(b) Security Capital in its sole discretion determines that such permanent
global Note shall be exchangeable for definitive Notes in registered form;
or
(c) any event shall have happened and be continuing that constitutes or,
after notice or lapse of time, or both, would constitute an Event of
Default with respect to the Notes.
Any permanent global Note that is exchangeable pursuant to the preceding
sentence shall be exchangeable in whole for definitive Notes in registered
form, of like tenor and of an equal aggregate principal amount, in
denominations of U.S. $1,000 and integral multiples of U.S. $1,000 in excess
thereof. Such definitive Notes shall be registered in the name or names of such
person or persons as the Depositary shall instruct the Trustee. It is expected
that such instructions may be based upon directions received by the Depositary
from its participants with respect to ownership of beneficial interests in such
permanent global Note.
Except as provided above, owners of beneficial interests in such permanent
global Note will not be entitled to receive physical delivery of Notes in
definitive form and will not be considered the Holders thereof for any purpose
under the indenture, and no permanent global Note representing Book-Entry Notes
shall be exchangeable, except for another permanent global Note of like
denomination and tenor to be registered in the name of the Depositary or its
nominee. Accordingly, each person owning a beneficial interest in such
permanent global Note must rely on the procedures of the Depositary and, if
such person is not a participant, on the procedures of the participant through
which such person owns its interest, to exercise any rights of a Holder under
the Indenture.
The Indenture provides that the Depositary, as a Holder, may appoint agents and
otherwise authorize participants to give or take any request, demand,
authorization, direction, notice, consent, waiver, or other action which a
Holder is entitled to give or take under the Indenture. Security Capital
understands that, under existing industry practices, in the event that Security
Capital requests any action of Holders or an owner of a beneficial interest in
such permanent global Note desires to give or take any action that a Holder is
entitled to give or take under the Indenture, the Depositary would authorize
the participants holding the relevant beneficial interests to give or take such
action, and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners awning through them.
The Depositary has advised Security Capital that the Depositary is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the Exchange Act. The Depositary was created to hold
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Agents), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
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FOREIGN CURRENCY RISKS
Exchange Rates and Exchange Controls
An investment in a Note denominated in a currency other than U.S. dollars
entails significant risks. These risks include the possibility of significant
changes in rates of exchange between the U.S. dollar and other currencies and
the possibility of the imposition or modification of foreign exchange controls
by either the United States or foreign governments. These risks generally
depend on factors over which Security Capital has no control, including
economic and political events and the supply of and demand for the relevant
currencies. In recent years, rates of exchange between the U.S. dollar and
certain currencies have been highly volatile, and prospective purchasers should
be aware that volatility may occur in the future. Fluctuations in any
particular exchange rate that have occurred in the past, however, are not
necessarily indicative of fluctuations in the rate that may occur during the
term of any Note. Depreciation of the specified currency for a Note against the
U.S. dollar would result in a decrease in the effective yield of such Note (on
a U.S. dollar basis) below its coupon rate and, in certain circumstances, could
result in a loss to prospective purchasers on a U.S. dollar basis.
Except as set forth below, if payment in respect of a Note is required to be
made in a currency other than U.S. dollars and such currency is unavailable to
Security Capital due to the imposition of exchange controls or other
circumstances beyond Security Capital's control or is no longer used by the
government of the relevant country or for the settlement of transactions by
public institutions of or within the international banking community, then all
payments in respect of such Note will be made in U.S. dollars until such
currency is again available to Security Capital or so used. The amounts payable
on any date in such currency will be converted into U.S. dollars on the basis
of the most recently available market exchange rate for such currency or as
otherwise indicated in the applicable pricing supplement. Any payment in
respect of such Note so made in U.S. dollars will not constitute an event of
default under the Indenture. But, if a specified currency is unavailable to
Security Capital solely because the country of issue has replaced its currency
with Euro or other currency of the European Union pursuant to the Treaty
establishing the European Community, the amounts payable will, beginning with
the date the replacement becomes effective, be made in Euro or such other
currency. The amounts payable on any date will be converted into Euro or such
other currency on the basis of the conversion rate officially in effect in the
European Union on the effective date of the replacement.
If payment is required to be made in Euro and Euro are unavailable to Security
Capital due to the imposition of exchange controls or other circumstances
beyond Security Capital's control or are no longer used in the European
Monetary System, then all payments will be made in U.S. dollars until Euro are
again available to Security Capital or so used. The amount of each payment in
U.S. dollars will be computed on the basis of the equivalent of Euro in U.S.
dollars, determined as described below, as of the second Business Day prior to
the date on which such payment is due.
The paying agent will make all determinations referred to above at its sole
discretion. All determinations will, in the absence of clear error, be binding
on holders of the Notes.
The information set forth in this prospectus supplement is directed to
prospective purchasers of Notes who are U.S. residents. We disclaim any
responsibility to advise any other prospective purchasers with respect to any
matters that may affect the purchase, sale or holding of Notes. These persons
should consult their own legal and financial advisors with regard to such
matters.
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Any pricing supplement relating to Notes having a specified currency other than
U.S. dollars will contain information concerning historical exchange rates for
that currency against the U.S. dollar and a brief description of any relevant
exchange controls.
Foreign Currency Judgments
The Notes will be governed by and construed in accordance with the internal
laws of the State of New York. Courts in the United States customarily have not
rendered judgments for money damages denominated in any currency other than the
U.S. dollar.
UNITED STATES TAXATION
The following discussion is a summary of the principal United States federal
income tax consequences of ownership and disposition of Notes. It deals only
with Notes held as capital assets by initial purchasers and not with special
classes of holders, such as dealers in securities or currencies, banks, tax-
exempt organizations, life insurance companies, persons that hold Notes that
are a hedge or that are hedged against currency risks or that are part of a
straddle, conversion or other integrated transaction or persons whose
functional currency (as defined in Code Section 985) is not the U.S. dollar.
Moreover, the summary deals only with Notes that are due to mature 30 years or
less from the date on which they are issued. The United States federal income
tax consequences of ownership of Notes that are due to mature more than 30
years from their date of issue will be discussed in an applicable Pricing
Supplement. The summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), its legislative history, final, temporary and proposed
regulations thereunder, administrative rulings and court decisions, all as
currently in effect and all subject to change at any time, perhaps with
retroactive effect.
Prospective purchasers of Notes should consult their own tax advisors
concerning the consequences, in their particular circumstances, under the Code
and the laws of any other taxing jurisdiction, of the ownership and disposition
of Notes.
United States Holders
Payments of Interest
Payments of "qualified stated interest" (as defined below under "Original Issue
Discount--General") on a Note, whether payable in U.S. dollars or a currency,
composite currency or basket of currencies other than U.S. dollars (a "foreign
currency"), generally will be taxable to a United States Holder as ordinary
income at the time it is received or accrued, depending on the holder's method
of accounting for tax purposes. A United States Holder is a beneficial owner of
a Note who or that is (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity, other than a partnership that is not
treated as a U.S. person under applicable Treasury regulations, created or
organized in the United States or organized under the laws of the United States
or of any State thereof, (iii) an estate the income of which is subject to
United States federal income taxation regardless of its source, (iv) a trust
described in Section 7701(a)(30) of the Code (taking into account changes
thereto and associated effective dates, elections and transition rules) or (v)
otherwise subject to United States federal income taxation on a net income
basis in respect of a Note. The term "United States Holder" also includes
certain former citizens and residents of the United States
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whose income and gain on the Notes will be subject to United States taxation.
As used herein, the term "United States Alien Holder" means a Holder of a Note
who or that is not a United States Holder.
If an interest payment is denominated in, or determined by reference to, a
foreign currency, the amount of income recognized by a cash basis United States
Holder will be the U.S. dollar value of the interest payment, based on the
exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact received in or converted into U.S. dollars.
An accrual basis United States Holder may determine the amount of income
recognized with respect to an interest payment denominated in, or determined by
reference to, a foreign currency in accordance with either of two methods.
Under the first method, the amount of income accrued by a United States Holder
will be based on the average exchange rate in effect during the interest
accrual period (or, with respect to an accrual period that spans two taxable
years, the part of the period within the taxable year). Under the second
method, the United States Holder may elect to determine the amount of income
accrued on the basis of the exchange rate in effect on the last day of the
accrual period or, in the case of an accrual period that spans two taxable
years, the exchange rate in effect on the last day of the part of the period
within the taxable year. Additionally, if a payment of interest is actually
received within five business days of the last day of the accrual period or
taxable year, an electing accrual basis United States Holder may instead
translate such accrued interest into U.S. dollars at the exchange rate in
effect on the day of actual receipt. Any such election will apply to all debt
instruments held by the United States Holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the United
States Holder, and will be irrevocable without the consent of the Internal
Revenue Service (the "Service").
Upon receipt of the interest payment (including a payment attributable to
accrued but unpaid interest upon the sale or retirement of a Note) denominated
in, or determined by reference to, a foreign currency, the accrual-basis United
States Holder thereof will recognize ordinary income or loss measured by the
difference between (x) the average exchange rate used to accrue interest
income, or the exchange rate as determined under the second method described
above if the United States Holder elects that method, and (y) the exchange rate
in effect on the date of receipt, regardless of whether the payment is in fact
converted into U.S. dollars.
Original Issue Discount
General. A Note, other than a Note with a term of one year or less (a "short-
term Note"), will be treated as issued at an original issue discount (an
"Original Issue Discount Note") if the excess of the Note's "stated redemption
price at maturity" over its issue price is more than a "de minimis amount" (as
defined below). Generally, the issue price of a Note will be the first price at
which a substantial amount of Notes included in the issue of which the Note is
a part is sold to the public (excluding bond houses, brokers, or similar
persons or organizations acting in the capacity of underwriters, placement
agents, or wholesalers). The stated redemption price at maturity of a Note is
the total of all payments provided by the Note that are not payments of
"qualified stated interest." Qualified stated interest is generally stated
interest that is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually at a single fixed rate (with
certain
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exceptions for lower rates paid during some periods). Special rules for
"Variable Rate Notes" (as defined below under "Original Issue Discount--
Variable Rate Notes") are described below under "Original Issue Discount--
Variable Rate Notes."
In general, if the excess of a Note's stated redemption price at maturity over
its issue price is less than 1/4 of 1 percent of the Note's stated redemption
price at maturity multiplied by the number of complete years to its maturity,
or in the case of Amortizing Notes (which for purposes hereof, includes any
Note that provides for the payment of any amount other than qualified stated
interest prior to maturity), the weighted average maturity as determined under
the applicable regulations (the "de minimis amount"), then such excess, if any,
constitutes "de minimis original issue discount" and the Note is not an
Original Issue Discount Note. Unless the election described below under
"Election to Treat All Interest as Original Issue Discount" is made, a United
States Holder of a Note with de minimis original issue discount must include
such de minimis original issue discount in income as capital gain as stated
principal payments on the Note are made. The includible amount with respect to
each such payment will equal the product of the total amount of the Note's de
minimis original issue discount and a fraction, the numerator of which is the
amount of the principal payment made and the denominator of which is the stated
principal amount of the Note.
United States Holders of Original Issue Discount Notes having a maturity of
more than one year from their date of issue, whether a holder uses the cash or
accrual method of accounting must, generally, include in ordinary gross income,
before the receipt of cash attributable to such income, original issue discount
("OID") calculated on a constant-yield method. The amount of OID includible in
income by a United States Holder of an Original Issue Discount Note is the sum
of the daily portions of OID with respect to the Original Issue Discount Note
for each day during the taxable year or portion of the taxable year on which
the United States Holder holds such Original Issue Discount Note ("accrued
OID"). The daily portion is determined by allocating to each day in any
"accrual period" a pro rata portion of the OID allocable to that accrual
period. Accrual periods with respect to a Note may be of any length selected by
the United States Holder and may vary in length over the term of the Note as
long as (i) no accrual period is longer than one year and (ii) each scheduled
payment of interest or principal on the Note occurs on either the final or
first day of an accrual period. In the case of an initial holder, the amount of
OID allocable to an accrual period equals the excess of (a) the product of the
Original Issue Discount Note's "adjusted issue price" at the beginning of the
accrual period and such Note's yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for the
length of the accrual period) over (b) the sum of the qualified stated interest
payments, if any, payable (or treated as payable) on the Note during the
accrual period. The "adjusted issue price" of an Original Issue Discount Note
at the beginning of any accrual period is the issue price of the Note increased
by (x) the amount of accrued OID for each prior accrual period and decreased by
(y) the amount of any payments previously made on the Note that were not
qualified stated interest payments. For purposes of determining the amount of
OID allocable to an accrual period, if an interval between payments of
qualified stated interest on the Note contains more than one accrual period,
the amount of qualified stated interest payable at the end of the interval
(including any qualified stated interest that is payable on the first day of
the accrual period immediately following the interval) is allocated on a pro
rata basis to each accrual period in the interval, and the adjusted issue price
at the beginning of each accrual period in the interval must be increased by
the amount of any qualified stated interest that has
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accrued prior to the first day of the accrual period but that is not payable
until the end of the interval. The amount of OID allocable to an initial short
accrual period may be computed using any reasonable method if all other accrual
periods other than a final short accrual period are of equal length. The amount
of OID allocable to the final accrual period is the difference between (x) the
amount payable at the maturity of the Note (other than any payment of qualified
stated interest) and (y) the Note's adjusted issue price as of the beginning of
the final accrual period.
Acquisition Premium. A United States Holder that purchases a Note for an amount
less than or equal to the sum of all amounts payable on the Note after the
purchase date other than payments of qualified stated interest but in excess of
the Note's adjusted issue price (as determined above under "Original Issue
Discount--General") (any such excess being "acquisition premium") and that does
not make the election described below under "Election to Treat All Interest as
Original Issue Discount" is permitted to reduce each daily portion of OID by a
fraction thereof, the numerator of which fraction is the excess of the United
States Holder's adjusted basis in the Note immediately after its purchase by
such holder over the adjusted issue price of the Note, and the denominator of
which is the excess of the sum of all amounts payable on the Note after the
purchase date, other than payments of qualified stated interest, over the
Note's adjusted issue price.
Market Discount. A Note, other than a short-term Note, will be treated as
purchased at a market discount (a "Market Discount Note") if (i) the amount for
which a United States Holder purchased the Note is less than the Note's issue
price (as determined above under "Original Issue Discount--General") and (ii)
the Note's stated redemption price at maturity or, in the case of an Original
Issue Discount Note, the Note's "revised issue price," exceeds the amount for
which the United States Holder purchased the Note by at least 1/4 of 1 percent
of such Note's stated redemption price at maturity or revised issue price,
respectively, multiplied by the number of complete years to the Note's
maturity. If such excess is not sufficient to cause the Note to be a Market
Discount Note, then such excess constitutes "de minimis market discount" and
such Note is not subject to the rules discussed in the following paragraphs.
The Code provides that, for these purposes, the "revised issue price" of a Note
generally equals its issue price, increased by the amount of any OID that has
accrued on the Note.
Any gain recognized on the maturity or disposition of a Market Discount Note
will be treated as ordinary income to the extent that such gain does not exceed
the accrued market discount on such Note. Any principal payment (or, in the
case of an Original Issue Discount Note, any payment that is not a payment of
qualified stated interest) on a Market Discount Note will be treated as
ordinary income to the extent of the market discount that has not been
previously included in income and is treated as having accrued at the time of
such payment. Alternatively, a United States Holder of a Market Discount Note
may elect to include market discount in income currently as it accrues over the
life of the Note. Such an election shall apply to all debt instruments with
market discount acquired by the electing United States Holder on or after the
first day of the first taxable year to which the election applies. This
election may not be revoked without the consent of the Service. A United States
Holder's tax basis in a Market Discount Note is increased by the amount of
market discount included in such holder's income under such an election.
Market discount on a Market Discount Note will accrue on a straight-line basis
unless the United States Holder elects to accrue such market discount on a
constant-yield method. Such an election
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shall apply only to the Note with respect to which it is made and may not be
revoked. A United States Holder of a Market Discount Note that does not elect
to include market discount in income currently generally will be required to
defer deductions for net direct interest expense related to such Note in an
amount not exceeding the accrued market discount on such Note until the
maturity or disposition of such Note.
Pre-Issuance Accrued Interest. If (i) a portion of the initial purchase price
of a Note is attributable to pre-issuance accrued interest, (ii) the first
stated interest payment on the Note is to be made within one year of the Note's
issue date and (iii) the payment will equal or exceed the amount of pre-
issuance accrued interest, then the United States Holder may elect to decrease
the issue price of the Note by the amount of pre-issuance accrued interest. In
that event, a portion of the first stated interest payment will be treated as a
return of the excluded pre-issuance accrued interest and not as an amount
payable on the Note.
Notes Subject to Contingencies Including Optional Redemption. In general, if a
Note provides for an alternative payment schedule or schedules applicable upon
the occurrence of a contingency or contingencies (other than a remote or
incidental contingency), the timing and amounts of the payments that comprise
each payment schedule are known as of the issue date and one of such schedules
is significantly more likely than not to occur, the yield and maturity of the
Note are determined by assuming that the payments will be made according to
that payment schedule. If there is no single payment schedule that is
significantly more likely than not to occur (other than because of a mandatory
sinking fund), the Notes will be subject to special rules governing contingent
payment obligations that will be discussed in the applicable Pricing
Supplement.
Notwithstanding the general rules for determining yield and maturity in the
case of Notes subject to contingencies, if Security Capital or the Holder has
an unconditional option or options, exercisable on one or more dates during the
term of such Note, that, if exercised, would require payments to be made on the
Note under an alternative payment schedule or schedules, then (i) in the case
of an option or options of Security Capital, Security Capital will be deemed to
exercise or not exercise an option or combination of options in the manner that
minimizes the yield on the Note and (ii) in the case of an option or options of
the Holder, the Holder will be deemed to exercise or not exercise an option or
combination of options in the manner that maximizes the yield on the Note. If
both Security Capital and the Holder have options described in the preceding
sentence, those rules apply to such options in the order in which they may be
exercised. For purposes of those calculations, the yield on the Note is
determined by using any date on which the Note may be redeemed or repurchased
as the maturity date and the amount payable on such date in accordance with the
terms of the Note as the principal amount payable at maturity.
If a contingency (including the exercise of an option) actually occurs or does
not occur contrary to an assumption made according to the above rules (a
"change in circumstances") then, except to the extent that a portion of the
Note is repaid as a result of the change in circumstances and solely for
purposes of determining the amount and accrual of OID, the yield and maturity
of the Note are redetermined by treating the Note as having been retired and
reissued on the date of the change in circumstances for an amount equal to the
Note's adjusted issue price on that date.
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Election to Treat All Interest as Original Issue Discount. A United States
Holder may elect to include in gross income all interest that accrues on a Note
using the constant-yield method described above under the heading "Original
Issue Discount--General," with the modifications described below. For purposes
of this election, interest includes stated interest, OID, de minimis original
issue discount, market discount, de minimis market discount and unstated
interest, as adjusted by any amortizable bond premium (described below under
"Notes Purchased at a Premium") or acquisition premium. A United States
Holder's tax basis in a Note is increased by each accrual of the amounts
treated as interest under the constant yield election described in this
paragraph.
In applying the constant yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal its cost to the
electing United States Holder immediately after its acquisition thereby, the
issue date of the Note will be the date of its acquisition by the electing
United States Holder, and no payments on the Note will be treated as payments
of qualified stated interest. This election will generally apply only to the
Note with respect to which it is made and may not be revoked without the
consent of the Service. If this election is made with respect to a Note with
amortizable bond premium, then the electing United States Holder will be deemed
to have elected to apply amortizable bond premium against interest with respect
to all debt instruments with amortizable bond premium (other than debt
instruments the interest on which is excludible from gross income) held by the
electing United States Holder as of the beginning of the taxable year in which
the Note with respect to which the election is made is acquired or thereafter
acquired. The deemed election with respect to amortizable bond premium may not
be revoked without the consent of the Service.
If the election to apply the constant-yield method to all interest on a Note is
made with respect to a Market Discount Note, the electing United States Holder
will be treated as having made the election discussed above under "Original
Issue Discount--Market Discount" to include market discount in income currently
over the life of all debt instruments held or thereafter acquired by such
United States Holder.
Variable Rate Notes. A "Variable Rate Note" is a Note that: (i) has an issue
price that does not exceed the total noncontingent principal payments by more
than an amount equal to the lesser of (1) the product of (x) the total
noncontingent principal payments, (y) the number of complete years to maturity
(or weighted average maturity in the case of Amortizing Notes) from the issue
date and (z) .015, and (2) 15 percent of the total noncontingent principal
payments, and (ii) provides for stated interest (compounded or paid at least
annually) at the current value of (1) one or more "qualified floating rates,"
(2) a single fixed rate and one or more qualified floating rates; (3) a single
"objective rate" or (4) a single fixed rate and a single objective rate that is
a "qualified inverse floating rate." A "current value" of a qualified floating
rate or objective rate is the value of the rate on any day that is no earlier
than 3 months prior to the first day on which that value is in effect and no
later than 1 year following that first day. Finally, a Variable Rate Note must
not provide for any contingent principal payments, except as otherwise provided
in this paragraph.
A variable rate is a "qualified floating rate" if (i) variations in the value
of the rate can reasonably be expected to measure contemporaneous variations in
the cost of newly borrowed funds in the currency in which the Note is
denominated or (ii) it is equal to the product of such a rate and either (a) a
fixed multiple that is greater than 0.65 but not more than 1.35, or (b) a fixed
multiple greater
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than or equal to 0.65 but not more than 1.35, increased or decreased by a fixed
rate. If a Note provides for two or more qualified floating rates that (i) are
within 0.25 percent of each other on the issue date or (ii) can reasonably be
expected to have approximately the same values throughout the term of the Note,
the qualified floating rates together constitute a single qualified floating
rate. A rate is not a qualified floating rate, however, if the rate is subject
to certain restrictions (including caps, floors, governors, or other similar
restrictions) unless such restrictions are fixed throughout the term of the
Note or are not reasonably expected to significantly affect the yield on the
Note.
An "objective rate" is a rate, other than a qualified floating rate, that is
determined using a single, fixed formula and that is based on objective
financial or economic information that is not within the control of or unique
to the circumstances of the issuer or a related party. A variable rate is not
an objective rate, however, if it is reasonably expected that the average value
of the rate during the first half of the Note's term will be either
significantly less than or significantly greater than the average value of the
rate during the final half of the Note's term. An objective rate is a
"qualified inverse floating rate" if (i) the rate is equal to a fixed rate
minus a qualified floating rate, and (ii) the variations in the rate can
reasonably be expected to inversely reflect contemporaneous variations in the
cost of newly borrowed funds.
If interest on a Note is stated at a fixed rate for an initial period of one
year or less followed by a variable rate that is either a qualified floating
rate or an objective rate for a subsequent period and (i) the fixed rate and
the qualified floating rate or objective rate have values on the issue date of
the Note that do not differ by more than 0.25 percent or (ii) the value of the
qualified floating rate or objective rate is intended to approximate the fixed
rate, the fixed rate and the qualified floating rate or the objective rate
constitute a single qualified floating rate or objective rate. Under these
rules, it is expected that Commercial Paper Rate Notes, Prime Rate Notes, LIBOR
Notes, Treasury Rate Notes, CD Rate Notes, CMT Rate Notes, Federal Funds Rate
Notes and Eleventh District Cost of Funds Rate Notes will generally be treated
as Variable Rate Notes.
In general, if a Variable Rate Note provides for stated interest at a single
qualified floating rate or an objective rate and the interest is generally
unconditionally payable in cash or property (other than debt instruments of
Security Capital) at least annually, all stated interest on the Note is
qualified stated interest and the amount of OID, if any, is determined as
described in "Original Issue Discount--General" by using, in the case of a
qualified floating rate or qualified inverse floating rate, the value as of the
issue date of the qualified floating rate or qualified inverse floating rate,
or, in the case of any other objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield reasonably expected for
the Note.
If a Variable Rate Note does not provide for stated interest at a single
qualified floating rate or an objective rate and also does not provide for
interest payable at a fixed rate (other than at a single fixed rate for an
initial period), the amount of interest and OID accruals on the Note are
generally determined by (i) determining a fixed rate substitute for each
variable rate provided under the Variable Rate Note (generally, the value of
each variable rate as of the issue date or, in the case of an objective rate
that is not a qualified inverse floating rate, a rate, that reflects the
reasonably expected yield on the Note), (ii) constructing the equivalent fixed
rate debt instrument (using the fixed rate substitutes described above), (iii)
determining the amount of qualified stated interest and OID with respect to the
equivalent fixed rate debt instrument, and (iv) making the appropriate
adjustments for actual variable rates during the applicable accrual period.
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If a Variable Rate Note provides for stated interest either at one or more
qualified floating rates or at a qualified inverse floating rate, and in
addition provides for stated interest at a single fixed rate (other than at a
single fixed rate for an initial period), the amount of interest and OID
accruals are determined as in the immediately preceding paragraph with the
modification that the Variable Rate Note is treated, for purposes of the first
three steps of the determination, as if it provided for a qualified floating
rate (or a qualified inverse floating rate, as the case may be) rather than the
fixed rate. The qualified floating rate (or qualified inverse floating rate)
replacing the fixed rate must be such that the fair market value of the
Variable Rate Note as of the issue date would be approximately the same as the
fair market value of as otherwise identical debt instrument that provides for
the qualified floating rate (or qualified inverse floating rate) rather than
the fixed rate.
Short-Term Notes. In general, an individual or other cash basis United States
Holder of a short-term Note is not required to accrue Acquisition Discount (as
defined below for the purposes of this paragraph) for United States federal
income tax purposes unless it elects to do so (but may be required to include
any stated interest in income as the interest is received). Accrual basis
United States Holders and certain other United States Holders, including banks,
regulated investment companies, dealers in securities, common trust funds,
United States Holders who hold Notes as part of certain identified hedging
transactions, certain pass-through entities and cash basis United States
Holders who so elect, are required to accrue acquisition discount on short-term
Notes on either a straight-line basis or, at the election of the United States
Holder, under the constant-yield method (based on daily compounding). In the
case of a United States Holder not required and not electing to include
acquisition discount in income currently, any gain realized on the sale or
retirement of the short-term Note will be ordinary income to the extent of the
acquisition discount accrued on a straight-line basis (unless an election is
made to accrue the acquisition discount under the constant-yield method)
through the date of sale or retirement. United States Holders who are not
required and do not elect to accrue acquisition discount on short-term Notes
will be required to defer deductions for net direct interest expense related to
short-term Notes in an amount not exceeding the deferred income until the
deferred income is realized.
"Acquisition Discount" is the excess of the stated redemption price at maturity
over the taxpayer's basis in the Note. For purposes of determining the amount
of acquisition discount subject to these rules, no interest on a short-term
Note is treated as qualified stated interest; thus, all interest is included in
acquisition discount and no de minimis rule applies.
Foreign Currency Original Issue Discount Notes. OID for any accrual period on
an Original Issue Discount Note that is denominated in, or determined by
reference to, a foreign currency will be determined in the foreign currency and
then translated into U.S. dollars in the same manner as stated interest accrued
by an accrual basis United States Holder, as described under "Payments of
Interest." Upon receipt of an amount attributable to OID (whether in connection
with a payment of interest or the sale or retirement of a Note), a United
States Holder may recognize exchange gain or loss which will be ordinary gain
or loss, measured by the difference between the amount received (translated
into U.S. dollars at the exchange rate on the date of receipt) and the amount
previously accrued (as translated into U.S. dollars).
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Notes Purchased at a Premium
A United States Holder that purchases a Note for an amount in excess of its
principal amount may elect to treat such excess as "amortizable bond premium,"
in which case the amount required to be included in the United States Holder's
income each year with respect to interest on the Note will be reduced by the
amount of amortizable bond premium allocable (based on the Note's yield to
maturity) to such year. Under new regulations in effect for Notes acquired on
or after March 2, 1998, if the amortizable bond premium allocable to an accrual
period exceeds the amount of interest allocable to such accrual period, such
excess would be allowed as a deduction for such accrual period, but only to the
extent of the U.S. Holder's prior interest inclusions on the Note; any excess
is generally carried forward and allocable to the next accrual period. In the
case of a Note that is denominated in, or determined by reference to, a foreign
currency, amortizable bond premium will be computed in units of foreign
currency, and amortizable bond premium will reduce interest income in units of
the foreign currency. At the time amortized bond premium offsets interest
income, exchange gain or loss (taxable as ordinary income or lass) is realized
measured by the difference between exchange rates at that time and at the time
of the acquisition of the Notes. Any election to amortize bond premium shall
apply to all bonds (other than bonds the interest on which is excludible from
gross income) held by the United States Holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the United
States Holder, and is irrevocable without the consent of the Service. The new
regulations provide a restrictive automatic consent for a U.S. Holder to change
its method of accounting for eligible bond premium in certain circumstances, if
the change is made for the first taxable year for which the U.S. Holder must
account for the Note under the new regulations. See also "Original Issue
Discount--Election to Treat All Interest as Original Issue Discount."
Purchase, Sale and Retirement of the Notes
A United States Holder's tax basis in a Note will generally be its U.S. dollar
cost (as defined below), increased by the amount of any OID or market discount
included in the United States Holder's income with respect to the Note and the
amount, if any, of income attributable to de minimis original issue discount
and de minimis market discount included in the United States Holder's income
with respect to the Note, and reduced by (i) the amount of any payments that
are not qualified stated interest payments, and (ii) the amount of any
amortizable bond premium applied to reduce interest on the Note. The U.S.
dollar cost of a Note purchased with a foreign currency will generally be the
U.S. dollar value of the purchase price on the date of purchase or, in the case
of Notes traded on an established securities market, as defined in the
applicable Treasury Regulations, that are purchased by a cash basis United
States Holder (or an accrual basis United States Holder that so elects), on the
settlement date for the purchase.
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Note equal to the difference between the amount realized on the
sale or retirement and the tax basis of the Note. The amount realized on a sale
or retirement for an amount in foreign currency will be the U.S. dollar value
of such amount on (i) the date payment is received in the case of a cash basis
United States Holder, (ii) the date of disposition in the case of an accrual
basis United States Holder or (iii) in the case of Notes traded on an
established securities market, as defined in the applicable Treasury
Regulations, sold by a cash basis United States Holder (or an accrual basis
United States Holder that
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so elects), on the settlement date for the sale. Except to the extent described
above under "Original Issue Discount--Short-Term Notes" or "Original Issue
Discount--Market Discount" or described in the next succeeding paragraph or
attributable to accrued but unpaid interest or with respect to certain
contingent payment obligations, gain or loss recognized on the sale or
retirement of a Note will be capital gain or loss and will be long-term capital
gain or loss if the Note was held for more than one year.
Gain or loss recognized by a United States Holder on the sale or retirement of
a Note that is attributable to changes in exchange rates will be treated as
ordinary income or loss. However, exchange gain or loss is taken into account
only to the extent of total gain or loss realized on the transaction.
Exchange of Amounts in Other Than U.S. Dollars
Foreign currency received as interest on (or OID with respect to) a Note or on
the sale or retirement of a Note will have a tax basis equal to its U.S. dollar
value at the time such interest is received or at the time of such sale or
retirement. Foreign currency that is purchased will generally have a tax basis
equal to the U.S. dollar value of the foreign currency on the date of purchase.
Any gain or loss recognized on a sale or other disposition of a foreign
currency (including its use to purchase Notes or upon exchange for U.S.
dollars) will be ordinary income or loss.
Indexed Notes, Other Notes Subject to the Contingent Payment Rules and
Amortizing Notes
The applicable Pricing Supplement will contain a discussion of any special
United States federal income tax rules with respect to Notes that are not
subject to the rules governing Variable Rate Notes, payments on which are
determined by reference to any index, and with respect to other notes subject
to the contingent payment rules and any Amortizing Notes.
United States Alien Holders
This discussion assumes that the Note is not subject to the rules of Section
871(h)(4)(A) of the Code (relating to interest payments that are determined by
reference to the income, profits, changes in the value of property or other
attributes of the debtor or a related party).
Under present United States federal income and estate tax law, and subject to
the discussion of backup withholding below:
(i) payments of principal, premium (if any) and interest, including OID, by
Security Capital or any of its paying agents to any United States Alien
Holder will not be subject to United States federal withholding tax if, in
the case of interest or OID, (a) such holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of Security Capital entitled to vote, (b) such holder is
not, for federal income tax purposes, a controlled foreign corporation that
is related (directly or indirectly) to Security Capital through stock
ownership, and (c) either (A) the beneficial owner of the Note certifies to
Security Capital or its agent, under penalties of perjury, that it is not a
United States Holder and provides its name and address or (B) a securities
clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"financial
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institution") and holds the Note certifies to Security Capital or its agent
under penalties of perjury that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof;
(ii) a United States Alien Holder of a Note will not be subject to United
States federal income tax on any gain realized on the sale or exchange of a
Note unless (a) such gain is effectively connected with a trade or business
in the United States of the United States Alien Holder or (b) in the case
of a United States Alien Holder who is an individual, the United States
Alien Holder is present in the United States for 183 days or more in the
taxable year of such sale or exchange and either (A) such individual has a
"tax home" (as defined in Section 911(d)(3) of the Code) in the United
States (unless such gain is attributable to a fixed place of business in a
foreign country maintained by such individual and has been subject to
foreign tax of at least 10%) or (B) the gain is attributable to an office
or other fixed place of business maintained by such individual in the
United States; and
(iii) a Note held by an individual who at death is not a citizen or
resident of the United States will not be includible in the individual's
gross estate for purposes of the United States federal estate tax as a
result of the individuals death if (a) the individual did not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of Security Capital entitled to vote and (b) the income on
the Note would not have been effectively connected with a United States
trade or business of the individual at the individual's death.
On October 6, 1997, the U.S. Treasury Department issued final Treasury
regulations (the "Withholding Regulations") that generally provide alternative
methods for satisfying the certification requirement described in clause (i)(c)
above. The Withholding Regulations also would require, in the case of Notes
held by a foreign partnership, that (x) the certification described in clause
(i)(c) above be provided by the partners rather than by the foreign partnership
and (y) the partnership provide certain information, including a United States
taxpayer identification number. A look-through rule would apply in the case of
tiered partnerships. The Withholding Regulations are effective for payments
made after December 31, 2000. The Withholding Regulations would alter the
procedures far claiming the benefit of an income tax treaty and may change the
certification procedures relating to the receipt by intermediaries of payments
on behalf of a beneficial owner of a Note. Prospective investors should consult
their tax advisors concerning the effect, if any, of such Withholding
Regulations on an investment in the Notes. The U.S. Treasury Department
recently promulgated transitional relief rules for 2001 with respect to certain
aspects of the Withholding Regulations, particularly with respect to the
"qualified intermediaries."
If a United States Alien Holder of a Note is engaged in a trade or business in
the United States, and if interest (including OID) on the Note, or gain
recognized on the sale, exchange, redemption, retirement or other disposition
of a Note, is effectively connected with the conduct of such trade or business,
the United States Alien Holder, although exempt from withholding of United
States federal income tax, will generally be subject to regular United States
federal income tax on such interest (including OID) or gain in the same manner
as if it were a United States Holder. See "United States Holders" above. In
lieu of the certificate described above, such Holder must provide to the
withholding agent two properly executed copies of IRS Form 4224 (or successor
form, i.e., IRS Form W-8 BEN) in order to claim an exemption from withholding
tax. In addition, if such United
S-50
<PAGE>
States Alien Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% (or such lower rate provided by an applicable treaty)
of its effectively connected earnings and profits for the taxable year, subject
to certain adjustments. For purposes of the branch profits tax, interest
(including OID) on, and any gain recognized on the sale, exchange, redemption,
retirement or other disposition of, a Note will be included in the effectively
connected earnings and profits of such United States Alien Holder if such
interest (including OID) or gain is effectively connected with the conduct by
the United States Alien Holder of a trade or business in the United States.
United States Alien Holders should consult their own tax advisors with respect
to their particular circumstances.
Backup Withholding and Information Reporting
United States Holders
In general, information reporting requirements will apply to payments of
principal, any premium and interest on a Note and the proceeds of the sale of a
Note before maturity within the United States to, and to the accrual of OID on
an Original Issue Discount Note with respect to, non-corporate United States
Holders, and "backup withholding" at a rate of 31% will apply to such payments
and to payments of OID if the United States Holder fails to provide an accurate
taxpayer identification number or is notified by the Service that it has failed
to report all interest and dividends required to be shown on its federal income
tax returns.
United States Alien Holders
Under current law, information reporting on Internal Revenue Service Form 1099
and backup withholding will not apply to payments of principal, premium (if
any) and interest (including OID) made by Security Capital or a paying agent to
a United States Alien Holder on a Note; provided, the certification described
in clause (i)(c) under "United States Alien Holders" above is received; and
provided further that the payor does not have actual knowledge that the holder
is a United States person. Security Capital or a paying agent, however, may
report (on Internal Revenue Service Form 1042S) payments of interest (including
OID) on Notes.
If payments on a Note are made to or through a foreign office of a custodian,
nominee, broker or other agent acting on behalf of a beneficial owner of a
Note, such custodian, nominee or other agent will not be required to apply
backup withholding or information reporting to such payments made to such
beneficial owner. If, however, such nominee, custodian, agent or broker is, for
United States federal income tax purposes, a United States person, a controlled
foreign corporation or a foreign person 50% or more of whose gross income is
effectively connected with the conduct of a United States trade or business for
a specified three-year period, such payments will not be subject to backup
withholding but will be subject to information reporting, unless (1) such
custodian nominee, agent or broker has documentary evidence in its records that
the beneficial owner is not a United States person and certain other conditions
are met or (2) the beneficial owner otherwise establishes an exemption. Under
the Withholding Regulations, backup withholding will not apply to such payments
absent actual knowledge that the payee is a United States person.
S-51
<PAGE>
Payments of the proceeds from the sale by a United States Alien Holder of a
Note made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a
United States person, a controlled foreign corporation for United States tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting (but not backup withholding) may apply to such
payments, unless (a) such broker has documentary evidence in its records that
the beneficial owner is not a U.S. person and certain other conditions are met
or (b) the beneficial owner otherwise establishes an exemption. Under the
Withholding Regulations, backup withholding will not apply to such payments
absent actual knowledge that the payee is a United States person. Payments of
the proceeds from the sale of a Note to or through the United States office of
a broker is subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
The recently issued Withholding Regulations substantially revise the procedures
that withholding agents and payees must follow to comply with, or establish an
exemption from, these information reporting and backup withholding provisions
for payments of income after December 31, 1999. Each Holder of Notes should
consult such Holder's own tax advisor regarding the tax consequences to such
Holder of the Withholding Regulations.
Backup withholding tax is not an additional tax. Rather, any amounts withheld
from a payment to a holder under the backup withholding rules are allowed as a
refund or a credit against such holder's United States federal income tax,
provided that the required information is furnished to the Service.
S-52
<PAGE>
PLAN OF DISTRIBUTION
Under the terms of the Distribution Agreement, dated December 20, 2000 (the
"Distribution Agreement"), Security Capital is offering the Notes on a
continuous basis through 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. (the "Agents"). The Agents have
agreed to use their reasonable best efforts to solicit orders. Security Capital
will pay an Agent a commission ranging from .125% to .750% of the principal
amount of each Note, depending on its maturity, sold through that Agent. The
exact commission paid will be determined by the stated maturity of the Notes
sold. Commissions with respect to Notes with stated maturities of over 30 years
will be negotiated at the time of sale. The following table describes the
potential proceeds Security Capital will receive, but does not include expenses
payable by Security Capital in connection with the offering of the Notes, which
are estimated to be $100,000.
<TABLE>
<CAPTION>
Price to Agents' Commissions
Public and Discounts Proceeds to the Company
------------ ---------------------- ----------------------------
<S> <C> <C> <C>
Per Note...... 100% .125% to .750% 99.875% to 99.250%
Total......... $200,000,000 $250,000 to $1,500,000 $199,750,000 to $198,500,000
</TABLE>
Security Capital may arrange for Notes to be sold through any other agent or
may sell Notes directly to investors (other than broker-dealers) in those
jurisdictions in which Security Capital is permitted to do so. If Security
Capital sells Notes directly to investors, no commission or discount will be
paid.
Security Capital also may sell Notes to any Agent as principal for the Agent's
account at a price agreed upon at the time of sale. Such Notes may be resold by
the Agent to investors at prevailing market prices, or at a related price, as
determined by the Agent, or if specified in the applicable Pricing Supplement,
at a fixed public offering price. Unless otherwise specified in the pricing
supplement, any Note sold to an Agent as principal will be purchased at a price
equal to 100% of the principal amount minus a discount equal to the commission
that would be paid on an agency sale of a Note of identical maturity.
The Agents may sell Notes purchased from Security Capital as principal to other
dealers for resale to investors and other purchasers and may provide any
portion of the discount received in connection with their purchase from
Security Capital to such dealers. After the initial public offering of the
Notes, the public offering price and other selling terms may be changed.
The Notes will not have an established trading market when issued. Also, the
Notes will not be listed on any securities exchange. The Agents may make a
market in the Notes, as permitted by applicable laws and regulations but are
not obligated to do so and may discontinue any market-making at any time
without notice. There can be no assurance of a secondary market for any Notes,
or that any purchaser of Notes will be able to sell Notes in the future.
Each purchaser of a Note will arrange for payment as instructed by the
applicable Agent. The Agents are required to deliver the proceeds of the Notes
to Security Capital in immediately available funds, to a bank designated by
Security Capital in accordance with the terms of the Distribution Agreement, on
the date of settlement.
S-53
<PAGE>
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act. Security Capital has agreed to indemnify the agents against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that they may be required to make in connection with
such indemnification.
Security Capital reserves the right to withdraw, cancel or modify the offer
made hereby without notice.
In connection with the purchase of Notes by one or more Agents, as principal,
for resale at a fixed public offering price, the Agents may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Notes. Such transactions may consist of bids or purchases of Notes for the
purpose of pegging, fixing or maintaining the price of the Notes. Specifically,
the Agents may overallot in connection with such offering, creating a syndicate
short position. In addition, the Agents may bid for and purchase the Notes in
the open market to cover a syndicate short position or to stabilize, maintain
or otherwise affect the price of the Notes. Finally, the syndicate may reclaim
selling concessions allowed for distributing Notes in the offering, if the
syndicate repurchases previously distributed Notes in the market to cover
overallotments or to stabilize the price of the Notes. Any of these activities
may stabilize or maintain the market price of the Notes above independent
market level. The Agents are not required to engage in any of these activities,
and may end any of them at any time.
Concurrently with the offering of the Notes through the Agents, Security
Capital may issue other Debt Securities as described under "Description of Debt
Securities" in the accompanying Prospectus.
In the ordinary course of their respective businesses, the Agents and their
affiliates have engaged and may in the future engage in investment banking
and/or commercial banking transactions with Security Capital and its
affiliates. H. Laurance Fuller, a director of Security Capital, is a director
of The Chase Manhattan Bank and The Chase Manhattan Corporation, affiliates of
Chase Securities Inc. Certain of the Agents and their affiliates have invested,
and may in the future invest, capital in Security Capital and its affiliates.
S-54
<PAGE>
EXPERTS
The consolidated financial statements and related schedules of Security Capital
and ProLogis Trust incorporated herein by reference, as included in Security
Capital annual report on Form 10-K, have been audited by Arthur Andersen LLP,
independent accountants, as indicated in their reports with respect thereto,
and are incorporated herein in reliance upon the authority of such firm as
experts in giving such reports.
The financial statements and schedule of Archstone Communities Trust as of
December 31, 1999 and 1998, and for each of the years in the three-year period
ended December 31, 1999, as included in Security Capital's annual report on
Form 10-K, have been incorporated by reference herein and in the registration
statement in reliance upon the reports of KPMG LLP, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
The consolidated financial statements of Frigoscandia Holding AB and
subsidiaries as of December 31, 1999, for the year then ended, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of CS Integrated LLC and subsidiaries as
of December 31, 1999 and 1998, and for the years then ended have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Security Capital U.S. Realty as of
December 31, 1999 and 1998 and for the years then ended incorporated by
reference in this prospectus have been so incorporated in reliance on the
report of PricewaterhouseCoopers Sarl, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The audited financial statements of Security Capital (EU) Management Holdings
S.A. incorporated in this prospectus by reference to the annual report on Form
10-K of Security Capital for the year ended December 31, 1999, have been so
incorporated in reliance on the report of PricewaterhouseCoopers Sarl,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of City Center Retail Trust as of
December 31, 1999 and 1998 and for the years then ended incorporated by
reference in this prospectus have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of CWS Communities Trust as of December
31, 1999 and 1998 and for the years then ended incorporated by reference in
this prospectus have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
S-55
<PAGE>
The consolidated financial statements of Urban Growth Property Trust as of
December 31, 1999 and 1998 and for the years then ended incorporated by
reference in this prospectus have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements and schedule of CarrAmerica Realty
Corporation and subsidiaries as of December 31, 1999 and 1998 and for each of
the years in the three-year period ended December 31, 1999 have been
incorporated by reference herein and in the registration statement in reliance
upon the reports of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements and schedule of Regency Realty
Corporation and subsidiaries as of December 31, 1999 and 1998, and for each of
the years in the three-year period ended December 31, 1999, have been
incorporated by reference herein and in the registration statement in reliance
upon the reports of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The financial statements incorporated in this prospectus by reference to the
annual report on Form 10-K of Storage USA, Inc. for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
VALIDITY OF NOTES
The validity of the Notes and certain other matters will be passed upon for
Security Capital by Mayer, Brown & Platt, Chicago, Illinois and certain matters
will be passed upon for the Agents by Davis Polk & Wardwell, New York, New
York. The opinions of Mayer, Brown & Platt and Davis Polk & Wardwell will be
based upon, and subject to, certain assumptions as to future actions required
to be taken in connection with the issuance and sale of the Notes and as to
other events that may affect the validity of the Notes but that cannot be
ascertained on the date of such opinions.
S-56
<PAGE>
PROSPECTUS
$1,000,000,000
Security Capital Group Incorporated
Debt Securities, Preferred Shares, Common Shares, Securities Warrants and
Rights
Security Capital Group Incorporated ("Security Capital") may from time to
time offer and sell in one or more series (i) its unsecured debt securities
("Debt Securities"), which may be senior debt securities ("Senior Debt
Securities") or subordinated debt securities ("Subordinated Debt Securities");
(ii) shares of its preferred stock, par value $.01 per share ("Preferred
Shares"); (iii) shares of its Class A Common Stock, par value $.01 per share
(the "Class A Shares"), and Class B Common Stock, par value $.01 per share
(the "Class B Shares"; and together with the Class A Shares, the "Common
Shares"); and (iv) warrants to purchase Debt Securities (the "Debt Securities
Warrants"), warrants to purchase Preferred Shares (the "Preferred Shares
Warrants") and warrants to purchase Common Shares (the "Common Shares
Warrants"), with an aggregate public offering price of up to $1,000,000,000,
on terms to be determined by market conditions at the time of offering. In
addition, Security Capital may issue in the form of a dividend, shareholder
purchase rights entitling owners of Common Shares to subscribe for and
purchase Common Shares (the "Rights"). The Debt Securities Warrants, the
Preferred Shares Warrants and the Common Shares Warrants shall be referred to
herein collectively as the "Securities Warrants." The Debt Securities,
Preferred Shares, Common Shares, Securities Warrants and Rights (collectively,
the "Offered Securities") may be offered separately or together, in separate
series, in amounts, at prices and on terms to be set forth in a supplement to
this Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, if applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, ranking as Senior
Debt Securities or as Subordinated Debt Securities, currency, form (which may
be registered or bearer, or certificated or global), authorized denominations,
maturity, rate (or manner of calculation thereof) and time of payment of
interest, terms for redemption at the option of Security Capital or repayment
at the option of the holder, terms of any sinking fund payments, and the
initial public offering price, along with any other relevant specific terms;
(ii) in the case of Preferred Shares, the designation, any liquidation,
dividend, redemption, conversion, voting and other rights, and the initial
public offering price, along with any other relevant specific terms; (iii) in
the case of Common Shares, the initial public offering price; and (iv) in the
case of Securities Warrants, the duration, offering price, exercise price and
detachability, along with any other relevant specific terms. In addition, such
specific terms may include limitations on direct or beneficial ownership and
restrictions on transfer of the Offered Securities, in each case in accordance
with the terms of the Articles of Amendment and Restatement of Security
Capital (the "Charter").
The applicable Prospectus Supplement will also contain information, if
applicable, about certain U.S. Federal income tax considerations relating to,
and any listing on a securities exchange of, the Offered Securities covered by
such Prospectus Supplement.
The Offered Securities may be offered directly by Security Capital, through
agents designated from time to time by Security Capital or to or through
underwriters or dealers. If any agents or underwriters are involved in the
sale of any of the Offered Securities, their names, and any applicable
purchase price, fee, commission or discount arrangement between or among them,
will be set forth, or will be calculable from the information set forth, in
the applicable Prospectus Supplement. See "Plan of Distribution." No Offered
Securities may be sold without delivery of the applicable Prospectus
Supplement describing the method and terms of the offering of such Offered
Securities.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------
The date of this Prospectus is October 13, 1998
<PAGE>
AVAILABLE INFORMATION
Security Capital is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy and information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy and information statements and other information
filed by Security Capital can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at its regional offices at Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661 and Seven World Trade Center, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission maintains a Web site which contains such
reports, proxy and information statements and other information at
http://www.sec.gov. Security Capital's outstanding Class A Shares and Class B
Shares are listed on the NYSE under the symbols "SCZ.A" and "SCZ.B",
respectively, and all reports, proxy and information statements and other
information concerning Security Capital may be inspected at the offices of the
NYSE at 20 Broad Street, New York, New York 10005.
Security Capital has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") under the Securities Act, with respect to the securities offered
hereby. This prospectus ("Prospectus"), which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted as permitted by the
rules and regulations of the Commission. Statements made in this Prospectus as
to the content of any contract, agreement or other document referred to are
not necessarily complete. With respect to each such contract, agreement or
other document which is filed or incorporated by reference as an exhibit to
the Registration Statement, reference is made to the exhibit for a more
complete description, and each such statement will be deemed qualified in its
entirety by such reference.
INCORPORATION BY REFERENCE
The following documents filed by Security Capital with the Commission (File
No. 1-13355) pursuant to the Exchange Act are incorporated by reference in
this Prospectus:
(1) Security Capital's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) Security Capital's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998;
(3) The description of the Common Shares included in Security Capital's
Registration Statement on Form 8-A; and
(4) The description of Security Capital's preferred share purchase rights
included in Security Capital's Registration Statement on Form 8-A.
All documents subsequently filed by Security Capital pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering made hereby will be deemed to be incorporated by reference in this
Prospectus from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
will be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein, or in any subsequently filed
document which is incorporated or deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any such statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Security Capital will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information which has
been incorporated by reference herein (not including exhibits to such
information unless such exhibits are specifically incorporated by reference in
such information). Requests should be directed to Security Capital Group
Incorporated, 125 Lincoln Avenue, Santa Fe, New Mexico 87501 Attention:
Secretary, telephone (505) 982-9292.
2
<PAGE>
SECURITY CAPITAL GROUP INCORPORATED
Security Capital, a Maryland corporation, is a global real estate research,
investment and operating management company. Security Capital operates its
businesses through two divisions. The Capital Division generates EBDADT
(earnings before depreciation, amortization and deferred taxes) principally
from its pro rata ownership of public and private strategic real estate
operating company investments. The Services Division derives EBDADT through
service fees from the Real Estate Research Group, Global Capital Management
Group and Financial Services Group.
The Capital Division's Global Strategic Group ("GSG") provides business
strategy and operating and capital deployment oversight to the companies in
which Security Capital has direct and indirect strategic ownership positions.
Since its inception, GSG has directed significant expenditures, both in the
U.S. and internationally, in research and development to create new, fully
integrated, value-added operating companies with proprietary customer-delivery
systems. GSG works closely with the management of affiliated public and
private start-up investees to ensure their long-term sustainable cash flow
growth. GSG oversees strategic investments in public and private real estate
operating companies focused on international distribution, multifamily
communities, neighborhood infill shopping centers, urban infill retail,
parking, corporate office, self-storage, hotels, corporate extended-stay
lodging, assisted-living residential communities, manufactured housing
communities and residential properties. GSG also oversees several new niche
businesses that are currently at various stages of research and development.
The Services Division's Real Estate Research Group ("RERG") conducts
proprietary real estate research and provides analysis of long-term market
conditions and short-term trends to Security Capital's direct and indirect
investees. The Global Capital Management Group ("GCMG") manages capital
invested in real estate securities with both short to intermediate-term and
long-term investment objectives. The Financial Services Group ("FSG") provides
administrative and capital markets services to various affiliated operating
companies and investment entities.
Management believes the global real estate industry is experiencing a
transition from ownership in "passive hands" to becoming a securitized
industry with a focus on capital allocation and operating management. As
public real estate investment enterprises become more prevalent, a greater
percentage of the industry's new capital is moving to publicly traded, fully
integrated, value-added operating companies. Securitized holdings offer
significant benefits to institutional and retail investors, including enhanced
liquidity, real-time pricing and the opportunity for optimal growth and
sustainable competitive rates of return. Security Capital's strategy is to
create the optimal organization to lead and profit from real estate
securitization.
The principal offices of Security Capital and its directly owned affiliates
are in Atlanta, Brussels, Chicago, Denver, El Paso, London, Luxembourg, New
York, San Francisco and Santa Fe. Security Capital's executive offices are
located at 125 Lincoln Avenue, Santa Fe, New Mexico 87501, and its telephone
number is (505) 982-9292. Security Capital is a Maryland corporation.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, Security
Capital intends to use the net proceeds from the sale of the Offered
Securities for the allocation of capital to new businesses, for the repayment
of certain outstanding indebtedness at such time and for general corporate
purposes.
3
<PAGE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED SHARE DIVIDENDS
For the purpose of computing these ratios, (i) "earnings" consist of
earnings from operations plus fixed charges other than capitalized interest
and (ii) "fixed charges" consist of interest on borrowed funds (including
capitalized interest) and amortization of debt discount and expense.
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended December 31, June 30,
--------------------------- ------------
1993 1994 1995(a) 1996 1997 1997 1998(b)
---- ---- ------- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined
fixed charges and Preferred
Share dividends................ 3.1 1.2 0.8 0.8 0.8 0.4 1.7
</TABLE>
--------
(a) Excludes a one-time non-cash expense item ($158.4 million) incurred in
acquiring the Services Division from a related party.
(b) Excludes a one-time non-cash dividend of $19.8 million incurred in
conjunction with the exchange by the holder thereof of Security Capital's
Series A Preferred Shares for its Series B Preferred Shares.
RATIO OF EARNINGS TO FIXED CHARGES
For the purpose of computing these ratios, (i) "earnings" consist of
earnings from operations plus fixed charges other than capitalized interest
and (ii) "fixed charges" consist of interest on borrowed funds (including
capitalized interest) and amortization of debt discount and expense.
<TABLE>
<CAPTION>
Six
Months
Ended
Year Ended December 31, June 30,
--------------------------- ---------
1993 1994 1995(a) 1996 1997 1997 1998
---- ---- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges... 3.1 1.2 0.8 0.8 0.8 0.5 2.0
</TABLE>
--------
(a) Excludes a one-time non-cash expense item ($158.4 million) incurred in
acquiring the Services Division from a related party.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which this Prospectus and any applicable Prospectus
Supplement may relate. The Senior Debt Securities will be issued under an
Indenture, as amended or supplemented from time to time (the "Senior
Indenture"), between Security Capital and State Street Bank and Trust Company,
as trustee (the "Trustee"). The Subordinated Debt Securities will be issued
under an Indenture, as amended or supplemented from time to time (the
"Subordinated Indenture"), between Security Capital and the Trustee. The
Senior Indenture and the Subordinated Indenture are sometimes referred to
herein collectively as the "Indentures" and each individually as an
"Indenture". The forms of Indentures have been filed as exhibits to the
Registration Statement of which this Prospectus is a part and are available at
the corporate trust office of the Trustee at Two International Place, Boston,
Massachusetts 02110 or as described above under "Available Information." The
Indentures are subject to, and governed by, the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"). The statements made hereunder relating
to the Indentures and the Debt Securities to be issued thereunder are
summaries of certain provisions thereof, do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all
provisions of the Indentures and such Debt Securities. All section references
appearing herein are to sections of the applicable Indenture, and capitalized
terms used but not defined herein have the respective meanings set forth in
the applicable Indenture.
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General
The Debt Securities will be direct, unsecured obligations of Security
Capital and will constitute Senior Debt Securities and/or Subordinated Debt
Securities. The Debt Securities effectively will be subordinated to the
secured indebtedness of Security Capital and the indebtedness and other
liabilities of Security Capital's subsidiaries and companies in which Security
Capital has a direct or indirect investment to the extent of the assets of
those subsidiaries and companies. Security Capital and its subsidiaries may
incur additional indebtedness, subject to provisions limiting the incurrence
of additional indebtedness contained in specific Debt Securities, as described
in any applicable Prospectus Supplement.
The Indentures provide that the Debt Securities may be issued without limit
as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of Security Capital (the "Board") or as
established in one or more indentures supplemental to the Indentures.
Reference is made to the Prospectus Supplement relating to the Debt
Securities offered thereby for the specific terms of such Debt Securities,
including:
(1) the title of such Debt Securities;
(2) any limit on the aggregate principal amount of such Debt Securities;
(3) the date or dates, or the method for determining such date or dates, on
which the principal of such Debt Securities will be payable and the
amount of principal payable thereon;
(4) the rate or rates, or the method by which such rate or rates will be
determined, at which such Debt Securities will bear interest, if any,
and the date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the Interest Payment
Dates (as defined) on which any such interest will be payable, the
Regular Record Dates (as defined), if any, for such Interest Payment
Dates, or the method by which such dates will be determined, and the
basis on which interest will be calculated if other than a 360-day year
comprised of twelve 30-day months;
(5) the place or places where the principal of (and premium or Make-Whole
Amount (as defined), if any, on) and interest and Additional Amounts
(as defined), if any, on such Debt Securities will be payable, where
such Debt Securities may be surrendered for registration of transfer or
exchange and where notices or demands to or on Security Capital in
respect of such Debt Securities and the Indentures may be served;
(6) the period or periods within which, the price or prices (including the
premium or Make-Whole Amount, if any) at which, the currency or
currencies, currency unit or units or composite currency or currencies
in which, and the other terms and conditions on which, such Debt
Securities may be redeemed, in whole or in part, at the option of
Security Capital, if Security Capital is to have such an option;
(7) the obligation, if any, of Security Capital to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or
periods within which, the date or dates on which, the price or prices
at which, the currency or currencies, currency unit or units or
composite currency or currencies in which, and the other terms and
conditions on which, such Debt Securities will be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denomination in which such Debt Securities will be
issuable;
(9) if other than the Trustee, the identity of the Security Registrar (as
defined) and Paying Agent (as defined);
(10) the percentage of the principal amount at which such Debt Securities
will be issued and, if other than the full principal amount thereof,
the portion of the principal amount thereof payable upon declaration
of acceleration of the maturity thereof, or the method for determining
such portion;
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(11) if other than U.S. dollars, the currency or currencies in which the
principal of (and premium or Make-Whole Amount, if any, on) or
interest or Additional Amounts, if any, on such Debt Securities are
denominated and payable;
(12) whether the amount of payments of the principal of (and premium or
Make-Whole Amount, if any, on) or interest or Additional Amounts, if
any, on such Debt Securities may be determined with reference to an
index, formula or other method (which index, formula or method may be
based, without limitation, on one or more currencies, currency units,
composite currency or currencies, commodities, equity indices or other
indices) and the manner in or which such amounts will be determined;
(13) if such Debt Securities are to be issued upon the exercise of Debt
Securities Warrants, the time, manner and place for such Debt
Securities to be authenticated and delivered;
(14) the terms, if any, upon which Debt Securities may be convertible into
Common Shares, Preferred Shares or Debt Securities of another series
of Security Capital and the terms and conditions upon which such
conversion will be effected, including, without limitation, the
initial conversion price or rate and the conversion period;
(15) whether the principal of (and premium or Make-Whole Amount, if any,
on) or interest or Additional Amounts, if any, on such Debt Securities
are to be payable, at the election of Security Capital or a Holder, in
a currency or currencies, currency unit or units or composite currency
or currencies, other than that in which such Debt Securities are
denominated or stated to be payable, the period or periods within
which, and the terms and conditions on which, such election may be
made, and the time and manner of, and identity of the exchange rate
agent with responsibility for, determining the exchange rate between
the currency or currencies in which such Debt Securities are
denominated or stated to be payable and the currency or currencies,
currency unit or units or composite currency or currencies in which
such Debt Securities are to be so payable;
(16) provisions, if any, granting special rights to the Holders of such
Debt Securities upon the occurrence of such events as may be
specified;
(17) any deletions from, modifications of or additions to the terms of such
Debt Securities with respect to the Events of Default or covenants set
forth in the Indentures;
(18) whether such Debt Securities are to be issuable in permanent global
form, and, if so, whether beneficial owners of interests in any such
permanent Global Security (as defined) may exchange such interests for
Debt Securities of such series and of like tenor of any authorized
form and denomination and the circumstances under which any such
exchanges may occur, and the identity of the Depository (as defined)
for such series;
(19) the Person to whom any interest on any Debt Security is payable, if
other than the Person in whose name such Debt Security is registered
at the close of business on the Regular Record Date for such interest;
(20) the applicability, if any, of the defeasance and covenant defeasance
provisions of Article Fourteen of the Indentures to such Debt
Securities and any provisions in modification thereof, in addition
thereto or in lieu thereof;
(21) if such Debt Securities are to be issuable in definitive form only
upon receipt of certificates, documents or conditions, the form and
terms of such certificates, documents or conditions;
(22) whether and under what circumstances Security Capital will pay
Additional Amounts as contemplated in the Indentures on such Debt
Securities to any Holder who is not a U.S. person in respect of any
tax, assessment or governmental charge and, if so, whether Security
Capital will have the option to redeem such Debt Securities rather
than pay such Additional Amounts (and the terms of any such option);
(23) the ranking of such Debt Securities as Senior Debt Securities or
Subordinated Debt Securities; and
(24) any other terms of such Debt Securities not inconsistent with the
provisions of the Indentures (Section 301), including financial
covenants, if any.
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The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
or bear no interest or bear interest at a rate which at the time of issuance
is below market rates ("Original Issue Discount Securities"). Special U.S.
Federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities will be described in the applicable Prospectus
Supplement.
Under the Indentures, Security Capital will have the ability, in addition to
the ability to issue Debt Securities with terms different from those of Debt
Securities previously issued, without the consent of the Holders, to reopen a
previous issue of a series of Debt Securities and issue additional Debt
Securities of such series (Section 301).
Except as described in any applicable Prospectus Supplement, the Indentures
do not contain any other provisions which would limit the ability of Security
Capital to incur indebtedness or which would afford Holders of Debt Securities
protection in the event of (i) a highly leveraged or similar transaction
involving Security Capital, the management of Security Capital, or any
affiliate of any such party, (ii) a change of control or (iii) a
reorganization, restructuring, merger or similar transaction involving
Security Capital which may adversely affect the Holders of the Debt
Securities. However, Security Capital's Charter limits beneficial ownership of
the Common Shares, by a single holder or a group of holders, to 9.8% of the
number of Common Shares or value of Common Shares, with certain exceptions.
See "Description of Common Shares--Restriction on Size of Holdings of Shares."
Reference is made to the applicable Prospectus Supplement for information with
respect to any deletions from, modifications of or additions to the Events of
Default or covenants of Security Capital which are described below, including
any addition of a covenant or other provision providing event risk or similar
protection.
Denominations
Unless otherwise described in the applicable Prospectus Supplement, the Debt
Securities of any series issued in registered form, other than Debt Securities
issued in global form (which may be in any denomination), will be issued only
in denominations of $1,000 and integral multiples thereof (Section 302).
Principal and Interest
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium or Make-Whole Amount, if any, on) and interest on
any series of Debt Securities will be payable at the corporate trust office of
the Trustee, initially located at Two International Place, Boston,
Massachusetts 02110; provided that, at the option of Security Capital, payment
of interest may be made by check mailed to the address of the Person entitled
thereto as it appears in the Security Register or by wire transfer of funds to
such Person at an account maintained within the U.S. (Sections 301, 305, 306,
307 and 1002).
If any Interest Payment Date, Principal Payment Date or the Maturity Date
(as such terms are defined) falls on a day which is not a Business Day, the
required payment will be made on the next Business Day as if it were made on
the date such payment was due and no interest will accrue on the amount so
payable for the period from and after such Interest Payment Date or Principal
Payment Date, as the case may be, through and including such next Business Day
(Section 113). "Business Day" means any day, other than a Saturday or Sunday,
on which banks in Boston, Massachusetts are not required or authorized by law
or executive order to close. Any interest not punctually paid or duly provided
for on any Interest Payment Date with respect to a Debt Security ("Defaulted
Interest") will forthwith cease to be payable to the Holder on the applicable
Regular Record Date and either may be paid to the person in whose name such
Debt Security is registered at the close of business on a special record date
(the "Special Record Date") for the payment of such Defaulted Interest to be
fixed by the Trustee, notice of which will be given to the Holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner, all as more completely described
in the Indentures (Section 307).
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Merger, Consolidation or Sale of Assets
The Indentures provide that Security Capital will not consolidate or merge
with or into (whether or not Security Capital is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the properties or assets of Security Capital in one or
more related transactions, to another Person unless (i) the surviving Person
or the Person formed by or surviving that consolidation or merger (if other
than Security Capital) or to which that sale, assignment, transfer, lease,
conveyance or other disposition was made (the "Surviving Entity") is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the Surviving Entity assumes
all the obligations of Security Capital under the Debt Securities and the
Indentures pursuant to supplemental indentures in form reasonably satisfactory
to the Trustee; and (iii) immediately before and after giving effect to that
transaction and treating any indebtedness which becomes an obligation of
Security Capital as a result of that transaction as having been incurred by
Security Capital at the time of the transaction, no Event of Default and no
event which, after notice or the lapse of time, or both, would become an Event
of Default has occurred and is continuing; and (iv) an officer's certificate
and legal opinion covering such conditions are delivered to the Trustee
(Sections 801 and 803).
Certain Covenants
Existence. Except as permitted under "Merger, Consolidation or Sale of
Assets," Security Capital will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights (Charter and
statutory) and franchises; provided, however, that Security Capital will not
be required to preserve any right or franchise if it determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities (Section 1004).
Maintenance of Properties. Security Capital will cause all of its properties
used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of Security Capital may be necessary so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that Security
Capital and its Subsidiaries are not prevented from selling or otherwise
disposing of their properties for value in the ordinary course of business
(Section 1005).
Insurance. Security Capital will, and will cause each of its Subsidiaries
to, keep all of its insurable properties insured against loss or damage at
least equal to their full insurable value with financially sound and reputable
insurance companies (Section 1006).
Payment of Taxes and Other Claims. Security Capital will pay or discharge or
cause to be paid or discharged, before the same becomes delinquent, (i) all
taxes, assessments and governmental charges levied or imposed on it or any
Subsidiary or on the income, profits or property of Security Capital or any
Subsidiary and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien on the property of Security Capital or
any Subsidiary; provided, however, that Security Capital will not be required
to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings (Section 1007).
Reports. The Indentures provide that, whether or not required by the rules
and regulations of the Securities and Exchange Commission (the "Commission"),
so long as any of the Debt Securities are outstanding, Security Capital will
furnish to Holders of such Debt Securities (i) all quarterly and financial
information which would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if Security Capital were required to file
those Forms, including "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by Security Capital's independent public
accountants and (ii) all current reports which would be required to be filed
with the
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Commission on Form 8-K if Security Capital were required to file those
reports. In addition, whether or not required by the rules and regulations of
the Commission, Security Capital will file a copy of all such information and
reports with the Commission for public availability and make such information
available to securities analysts and prospective investors upon request.
Security Capital's obligations to provide financial information and reports
will be deemed satisfied to the extent Security Capital provides the Trustee
with a sufficient number of reports for the Trustee to provide or make
available such reports to the Holders. The Trustee, at Security Capital's
expense and written direction, shall promptly mail copies or otherwise make
available to the Holders all such reports (1008).
Additional Covenants and/or Modifications to the Covenants Described Above
Any additional covenants of Security Capital and/or modifications to the
covenants described above with respect to any Debt Securities or series
thereof will be set forth in a supplement to the applicable Indenture and
described in the Prospectus Supplement relating thereto.
Events of Default, Notice and Waiver
The Indentures provide that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder: (i) default
which continues for 30 days in the payment of any installment of interest or
Additional Amounts payable on any Debt Security of such series; (ii) default
in the payment of the principal of (or premium or Make-Whole Amount, if any,
on) any Debt Security of such series at its Maturity; (iii) default in making
any sinking fund payment as required for any Debt Security of such series;
(iv) default in the performance, or breach, of any other covenant or warranty
of Security Capital contained in the applicable Indenture (other than a
covenant added to the Indenture solely for the benefit of a series of Debt
Securities issued thereunder other than such series), continued for 60 days
after written notice as provided in such Indenture; (v) any default occurs
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money borrowed
by Security Capital or any Significant Subsidiary of Security Capital (or the
payment of which is guaranteed by Security Capital or any Significant
Subsidiary of Security Capital), whether that indebtedness or guarantee exists
on the date of the applicable Indenture or is thereafter created, which
default after the termination of any applicable grace or cure period, (a)
constitutes a Payment Default or (b) results in the acceleration of that
indebtedness prior to its express maturity and, in each case, the principal
amount of any indebtedness, together with the principal amount of any other
such indebtedness under which there has been a Payment Default or which has
been so accelerated, aggregates $25 million or more; provided that, in
calculating the aggregate principal amount of any such Indebtedness, the
Hedging Obligations of any Person under which there has been a Payment Default
or which has been so accelerated shall not be netted against any other Hedging
Obligation of that Person; (vi) failure by Security Capital or any Significant
Subsidiary of Security Capital to pay final judgments aggregating in excess of
$25 million, which judgments are not paid, discharged or stayed for a period
of 60 days; (vii) certain events of bankruptcy or insolvency with respect to
Security Capital or any Significant Subsidiary of Security Capital; and (viii)
any other Event of Default provided with respect to a particular series of
Debt Securities (Section 501). The term "Significant Subsidiary" means a
Subsidiary which otherwise meets the tests ascribed to the term in Regulation
S-X promulgated by the Commission under the Securities Act, except that the
tests therein shall be based on 20% of total assets or income instead of 10%
unless Security Capital owns or controls, directly or indirectly, at least 75%
of the voting power of the Subsidiary's shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof (with that percentage to be
calculated on a fully diluted basis) in which case the tests shall be based on
10% of total assets or income.
If an Event of Default under either of the Indentures with respect to Debt
Securities of any series at the time Outstanding occurs and is continuing,
then in every such case, unless the principal of all of the Outstanding Debt
Securities of such series has already become due and payable, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of such series may declare the principal (or, if the
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Debt Securities of such series are Original Issue Discount Securities or
Indexed Securities, such portion of the principal as may be specified in the
terms thereof) of, and the Make-Whole Amount, if any, on, all of the Debt
Securities of such series to be due and payable immediately by written notice
thereof to Security Capital and to the Trustee (if given by the Holders);
provided, that in the case of an Event of Default described in clause (vii) at
the preceding paragraph, acceleration is automatic. However, at any time after
such a declaration of acceleration with respect to Debt Securities of such
series has been made, but before a judgment or decree for payment of the money
due has been obtained by the Trustee, the Holders of a majority in principal
amount of the Outstanding Debt Securities of such series may rescind and annul
such declaration and its consequences if (i) Security Capital has paid or
deposited with the Trustee all required payments of the principal of (and
premium or Make-Whole Amount, if any, on) and interest and Additional Amounts,
if any, on the Debt Securities of such series, plus reasonable compensation,
expenses, disbursements and advances of the Trustee and (ii) all Events of
Default, other than the nonpayment of accelerated principal (or premium or
Make-Whole Amount, if any) or interest or Additional Amounts, if any, with
respect to Debt Securities of such series have been cured or waived as
provided in the applicable Indenture (Section 502). Each of the Indentures
also provides that the Holders of not less than a majority in principal amount
of the Outstanding Debt Securities of any series may waive any past default
with respect to such series and its consequences, except a default (i) in the
payment of the principal of (or premium or Make-Whole Amount, if any, on) or
interest or Additional Amounts, if any, on any Debt Security of such series or
(ii) in respect of a covenant or provision contained in the applicable
Indenture which cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security affected thereby (Section 513).
The Trustee is required to give notice to the Holders of Debt Securities
within 90 days of a default under the applicable Indenture; provided, however,
that the Trustee may withhold notice to the Holders of any series of Debt
Securities of any default with respect to such series (except a default in the
payment of the principal of (or premium or Make-Whole Amount, if any, on) or
interest or Additional Amounts, if any, on any Debt Security of such series or
in the payment of any sinking fund installment in respect of any Debt Security
of such series) if a Responsible Officer of the Trustee considers such
withholding to be in the interest of such Holders (Section 601).
The Indentures provide that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the
Indentures or for any remedy thereunder, except in the case of failure of the
Trustee, for 60 days, to act after it has received a written request to
institute proceedings in respect of an Event of Default from the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of
such series, as well as an offer of reasonable indemnity (Section 507). This
provision will not prevent, however, any Holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium or Make-Whole Amount, if any, on) and interest and Additional Amounts,
if any, on such Debt Securities on or after the respective due dates thereof
(Section 508).
Subject to provisions in the Indentures relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indentures at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indentures, unless such
Holders have offered to the Trustee reasonable security or indemnity (Section
602). The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee, or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction which is in conflict
with any law or the Indentures, which may involve the Trustee in personal
liability or which may be unduly prejudicial to the Holders of Debt Securities
of such series not joining therein (Section 512).
Within 135 days after the end of each fiscal year, Security Capital must
deliver to the Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default
under the Indentures and, if so, specifying each such default and the nature
and status thereof (Section 1009).
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Modification of the Indentures
Modifications of and amendments to the Indentures may be made with the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities which are affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the Holder of each such Debt Security affected thereby,
(i) change the Stated Maturity of the principal of (or premium or Make-Whole
Amount, if any, on), or any installment of principal of or interest or
Additional Amounts, if any, on, any such Debt Security; (ii) reduce the
principal amount of, or the rate or amount of interest on, or any premium or
Make-Whole Amount payable upon redemption of, or any Additional Amounts
payable with respect to, any such Debt Security, or reduce the amount of
principal of an Original Issue Discount Security or Make-Whole Amount, if any,
which would be due and payable upon declaration of acceleration of the
maturity thereof or would be provable in bankruptcy, or adversely affect any
right of repayment of the Holder of any such Debt Security; (iii) change the
Place of Payment, or the currency, for payment of the principal of (or premium
or Make-Whole Amount, if any, on) or interest or Additional Amounts, if any,
on any such Debt Security; (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to any such Debt Security; (v)
reduce the above-stated percentage of Outstanding Debt Securities of any
series necessary to modify or amend the applicable Indenture, to waive
compliance with certain provisions thereof or certain defaults and
consequences thereunder or to reduce the quorum or voting requirements set
forth in the applicable Indenture; or (vi) modify any of the foregoing
provisions or any of the provisions relating to the waiver of certain past
defaults or certain covenants, except to increase the required percentage to
effect such action or to provide that certain other provisions may not be
modified or waived without the consent of the Holder of such Debt Security
(Section 902).
The Holders of at least a majority in principal amount of each series of
Outstanding Debt Securities have the right to waive compliance by Security
Capital with certain covenants in the Indentures (Section 1011).
Modifications of and amendments to the Indentures may be made by Security
Capital and the Trustee without the consent of any Holder of Debt Securities
for any of the following purposes: (i) to evidence the succession of another
Person to Security Capital as obligor under the applicable Indenture; (ii) to
add to the covenants of Security Capital for the benefit of the Holders of all
or any series of Debt Securities or to surrender any right or power conferred
on Security Capital in the applicable Indenture; (iii) to add Events of
Default for the benefit of the Holders of all or any series of Debt
Securities; (iv) to add or change any provisions of the applicable Indenture
to facilitate the issuance of, or to liberalize certain terms of, Debt
Securities in bearer form, or to permit or facilitate the issuance of Debt
Securities in uncertificated form, provided that such action may not adversely
affect the interests of the Holders of the Debt Securities of any series in
any material respect; (v) to change or eliminate any provisions of the
applicable Indenture, provided that any such change or elimination will become
effective only when there are no Debt Securities Outstanding of any series
created prior thereto which are entitled to the benefit of such provision;
(vi) to secure the Debt Securities; (vii) to establish the form or terms of
Debt Securities of any series; (viii) to provide for the acceptance of
appointment by a successor Trustee or facilitate the administration of the
trusts under the applicable Indenture by more than one Trustee; (ix) to cure
any ambiguity in the applicable Indenture, correct or supplement any provision
in the applicable Indenture which may be defective or inconsistent or make any
other changes with respect to matters or questions arising under the
Indenture, provided that such action may not adversely affect the interests of
Holders of Debt Securities of any series in any material respect; (x) to close
the applicable Indenture with respect to the authentication and delivery of
additional series of Debt Securities or to qualify, or maintain qualification
of, the applicable Indenture under the Trust Indenture Act; or (xi) to
supplement any of the provisions of the applicable Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of
such Debt Securities, provided that such action may not adversely affect the
interests of the Holders of the Debt Securities of any series in any material
respect (Section 901).
The Indentures provide that, in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series have
concurred in any request, demand, authorization, direction, notice, consent or
waiver thereunder or whether a quorum is present at a meeting of Holders of
Debt Securities, (i) the
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principal amount of an Original Issue Discount Security which is deemed
Outstanding is the amount of the principal thereof which would be due and
payable as of the date of such determination upon declaration of acceleration
of the maturity thereof; (ii) the principal amount of a Debt Security
denominated in a Foreign Currency which is deemed Outstanding is the U.S.
dollar equivalent, determined on the issue date for such Debt Security, of the
principal amount (or, in the case of an Original Issue Discount Security, the
U.S. dollar equivalent on the issue date of such Debt Security of the amount
determined as provided in clause (i) above); (iii) the principal amount of an
Indexed Security which is deemed Outstanding is the principal face amount of
such Indexed Security at original issuance, unless otherwise provided with
respect to such Indexed Security pursuant to Section 301 of the applicable
Indenture; and (iv) Debt Securities owned by Security Capital or any other
obligor on the Debt Securities or any Affiliate of Security Capital or of such
other obligor are disregarded (Section 101).
The Indentures contain provisions for convening meetings of the Holders of
Debt Securities of a series (Section 1501). A meeting may be called at any
time by the Trustee, and also, upon request, by Security Capital or the
Holders of at least 10% in principal amount of the Outstanding Debt Securities
of such series, in any such case upon notice given as provided in the
applicable Indenture (Section 1502). Except for any consent which must be
given by the Holder of each Debt Security affected by certain modifications of
and amendments to the applicable Indenture, any resolution presented at a
meeting or adjourned meeting duly reconvened at which a quorum is present may
be adopted by the affirmative vote of the Holders of a majority in principal
amount of the Outstanding Debt Securities of such series; provided, however,
that, except as referred to above, any resolution with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action
which may be made, given or taken by the Holders of a specified percentage,
which is less than a majority, in principal amount of the Outstanding Debt
Securities of a series may be adopted at a meeting duly called or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote
of the Holders of such specified percentage in principal amount of the
Outstanding Debt Securities of such series. Any resolution passed or decision
taken at any meeting of Holders of Debt Securities of any series duly held in
accordance with the applicable Indenture will be binding on all Holders of
Debt Securities of such series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be Persons holding or
representing a majority in principal amount of the Outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the Holders
of not less than a specified percentage in principal amount of the Outstanding
Debt Securities of a series, the Persons holding or representing such
specified percentage in principal amount of the Outstanding Debt Securities of
such series will constitute a quorum (Section 1504).
Notwithstanding the foregoing provisions, if any action is to be taken at a
meeting of Holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action which the applicable Indenture expressly provides may be made, given or
taken by the Holders of a specified percentage in principal amount of all
Outstanding Debt Securities affected thereby, or of the Holders of such series
and one or more additional series: (i) there will be no minimum quorum
requirement for such meeting; and (ii) the principal amount of the Outstanding
Debt Securities of such series which vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action will be
taken into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or
taken under the applicable Indenture (Section 1504).
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by the applicable Indenture to be given or taken by a
specified percentage in principal amount of the Holders of any or all series
of Debt Securities may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such specified percentage of Holders
in person or by agent duly appointed in writing; and, except as otherwise
expressly provided in the applicable Indenture, such action will become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
will be sufficient for any purpose of the applicable Indenture and (subject to
Article Six of the Indentures) conclusive in favor of the Trustee and Security
Capital, if made in the manner specified above (Section 1507).
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Discharge, Defeasance and Covenant Defeasance
Security Capital may discharge certain obligations to Holders of any series
of Debt Securities which have not already been delivered to the Trustee for
cancellation by irrevocably depositing with the Trustee, in trust, funds in
such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient
to pay the entire indebtedness on such Debt Securities in respect of principal
(and premium or Make-Whole Amount, if any) and interest and Additional
Amounts, if any, payable to the date of such deposit (if such Debt Securities
have become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be (Sections 1401, 1402, 1403 and 1404).
The Indentures provide that, if the provisions of Article Fourteen are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of the Indentures, Security Capital may elect either (i) to defease and
discharge itself from any and all obligations with respect to such Debt
Securities (except for the obligation to pay Additional Amounts, if any, upon
the occurrence of certain events of tax, assessment or governmental charge
with respect to payments on such Debt Securities and the obligations to
register the transfer or exchange of such Debt Securities, to replace
temporary or mutilated, destroyed, lost or stolen Debt Securities, to maintain
an office or agency in respect of such Debt Securities and to hold moneys for
payment in trust) ("defeasance") (Section 1402) or (ii) to release itself from
its obligations with respect to such Debt Securities under Sections 1004 to
1009, inclusive, of the applicable Indenture (being the restrictions described
under "--Certain Covenants") and, if provided pursuant to Section 301 of the
applicable Indenture, their obligations with respect to any other covenant,
and any omission to comply with such obligations will not constitute a default
or an Event of Default with respect to such Debt Securities ("covenant
defeasance") (Section 1403), in either case upon the irrevocable deposit by
Security Capital with the Trustee, in trust, of an amount, in such currency or
currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are payable at Stated Maturity, or Governmental
Obligations (as defined below), or both, applicable to such Debt Securities
which through the scheduled payment of principal and interest in accordance
with their terms will provide money in an amount sufficient to pay the
principal of (and premium or Make-Whole Amount, if any, on) and interest and
Additional Amounts, if any, on such Debt Securities, and any mandatory sinking
fund or analogous payments thereon, on the scheduled due dates therefor
(Section 1404).
Such a trust may only be established if, among other things, Security
Capital has delivered to the Trustee an Opinion of Counsel (as specified in
the applicable Indenture) to the effect that the Holders of such Debt
Securities will not recognize income, gain or loss for U.S. Federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based on a ruling of the Internal Revenue
Service (the "IRS") or a change in applicable U.S. Federal income tax law
occurring after the date of the applicable Indenture (Section 1404).
Unless otherwise provided in the applicable Prospectus Supplement, if after
Security Capital has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (i) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to Section 301 of the applicable Indenture or the terms
of such Debt Security to receive payment in a currency, currency unit or
composite currency other than that in which such deposit has been made in
respect of such Debt Security or (ii) a Conversion Event (as defined below)
occurs in respect of the currency, currency unit or composite currency in
which such deposit has been made, the indebtedness represented by such Debt
Security will be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium or Make-Whole
Amount, if any, on) and interest and Additional Amounts, if any, on such Debt
Security as they become due out of the proceeds yielded by converting the
amount so deposited in respect of such Debt Security into the currency,
currency unit or composite currency in which such Debt Security becomes
payable as a result of such election or Conversion Event based on the
applicable market exchange rate (Section 1405). "Conversion Event" means the
cessation of use of (i) a currency (other than the ECU or other currency unit)
both by the government of the country which issued such currency and for the
settlement of transactions by a
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central bank or other public institutions of or within the international
banking community, (ii) the ECU both within the European Monetary System and
for the settlement of transactions by public institutions of or within the
European Communities or (iii) any currency unit or composite currency other
than the ECU for the purposes for which it was established (Section 101).
If Security Capital effects covenant defeasance with respect to any Debt
Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the Event of Default
described in clause (iv) under "--Events of Default, Notice and Waiver" with
respect to Sections 1004 through 1009, inclusive, of the applicable Indenture
(which Sections would no longer be applicable to such Debt Securities) as to
which there has been covenant defeasance, the amount in such currency,
currency unit or composite currency in which such Debt Securities are payable,
plus Government Obligations on deposit with the Trustee, will be sufficient to
pay amounts due on such Debt Securities at the time of their Stated Maturity
but may not be sufficient to pay amounts due on such Debt Securities at the
time of the acceleration resulting from such Event of Default. However,
Security Capital would remain liable to make payment of such amounts due at
the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
Registration and Transfer
Subject to certain limitations imposed on Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount
and tenor of different authorized denominations upon surrender of such Debt
Securities at the corporate trust office of the Trustee. In addition, subject
to certain limitations imposed on Debt Securities issued in book-entry form,
the Debt Securities of any series may be surrendered for conversion or
registration of transfer thereof at the corporate trust office of the Trustee.
Every Debt Security surrendered for registration of transfer or exchange must
be duly endorsed or accompanied by a written instrument of transfer. No
service charge will be made for any registration of transfer or exchange of
any Debt Securities, but Security Capital may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith (Section 305). Security Capital may at any time designate one or
more offices or agencies where Debt Securities of any series may be presented
or surrendered for payment or surrendered for registration of transfer or
exchange. If Security Capital has designated such an office or agency,
Security Capital may at any time rescind the designation or approve a change
in the location of such office or agency, except that Security Capital will be
required to maintain such an office or agency in each Place of Payment for
such Debt Securities (Section 1002).
Neither Security Capital nor the Trustee will be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of the business 15 days before any selection
of Debt Securities of such series to be redeemed and ending at the close of
business on the day of mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Debt Security
being redeemed in part; or (iii) issue, register the transfer of or exchange
any Debt Security which has been surrendered for repayment at the option of
the Holder, except the portion, if any, of such Debt Security not to be so
repaid (Section 305).
Subordination of Subordinated Debt Securities
The Senior Debt Securities will constitute part of the Senior Indebtedness
(as defined below) of Security Capital and will rank pari passu with all
outstanding senior debt. Except as set forth in the Prospectus Supplement, the
Subordinated Debt Securities will be subordinated, in right of payment, to the
prior payment in full of the Senior Indebtedness (as defined below), including
the Senior Debt Securities, whether outstanding at the date of the
Subordinated Indenture or thereafter incurred, assumed or guaranteed. The term
"Senior Indebtedness" means (1) the principal of and premium, if any, and
unpaid interest on indebtedness for money
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borrowed, (2) purchase money and similar obligations, (3) obligations under
capital leases, (4) guarantees, assumptions or purchase commitments relating
to, or other transactions as a result of which Security Capital is responsible
for the payment of, such indebtedness of others, (5) renewals, extensions and
refunding of any such indebtedness, (6) interest or obligations in respect of
any such indebtedness accruing after the commencement of any insolvency or
bankruptcy proceedings and (7) obligations associated with derivative products
such as interest rate and currency exchange contracts, foreign exchange
contracts, commodity contracts, and similar arrangements, unless, in each
case, the instrument by which Security Capital incurred, assumed or guaranteed
the indebtedness or obligations described in clauses (1) through (7) hereof
expressly provides that such indebtedness or obligation is not senior in right
of payment to the Subordinated Debt Securities.
Under any distribution of assets of Security Capital in connection with any
dissolution, winding up, liquidation or reorganization of Security Capital,
whether in a bankruptcy, insolvency, reorganization or receivership proceeding
or upon an assignment for the benefit of creditors or any other marshalling of
the assets and liabilities of Security Capital or otherwise, except a
distribution in connection with a merger or consolidation or a conveyance or
transfer of all or substantially all of the properties of Security Capital in
accordance with the Subordinated Indenture, the holders of all Senior
Indebtedness shall first be entitled to receive payment of the full amount due
thereon, or provision shall be made for such payment in money or money's
worth, before the holders of any of the Subordinated Debt Securities are
entitled to receive any payment in respect of the Subordinated Debt
Securities. In the event that a payment default shall have occurred and be
continuing with respect to the Senior Indebtedness, the holders of all Senior
Indebtedness shall first be entitled to receive payment of the full amount due
thereon, or provision shall be made for such payment in money or money's
worth, before the holders of any of the Subordinated Debt Securities are
entitled to receive any payment in respect of the Subordinated Debt
Securities. In the event that the principal of the Subordinated Debt
Securities of any series shall have been declared due and payable pursuant to
the Subordinated Indenture and such declaration shall not have been rescinded
and annulled, the holders of all Senior Indebtedness outstanding at the time
of such declaration shall first be entitled to receive payment of the full
amount due thereon, or provision shall be made for such payment in money or
money's worth, before the holders of any of the Subordinated Debt Securities
are entitled to receive any payment in respect of the Subordinated Debt
Securities.
This subordination will not prevent the occurrence of any event of default
with respect to the Subordinated Debt Securities. There is no limitation on
the issuance of additional Senior Indebtedness in the Subordinated Indenture.
Payment
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and applicable premium or Make-Whole Amount, if any) and
interest on any series of Debt Securities will be payable at the corporate
trust office of the Trustee, the address of which will be stated in the
applicable Prospectus Supplement; provided that, at the option of the Company,
payment of interest may be made by check mailed to the address of the person
entitled thereto as it appears in the applicable register for such Debt
Securities or by wire transfer of funds to such person at an account
maintained within the United States.
All moneys paid by the Company to a paying agent or a Trustee for the
payment of the principal of or any premium or interest on any Debt Security
which remain unclaimed at the end of two years after such principal, premium
or interest has become due and payable will be repaid to the Company, and the
Holder of such Debt Security thereafter may look only to the Company for
payment thereof.
Book-Entry Securities
Unless otherwise provided in the applicable Prospectus Supplement, the Debt
Securities of each series will be represented by one or more certificates (the
"Global Securities"). The Global Security representing Debt Securities will be
deposited with, or on behalf of, The Depository Trust Company ("DTC"), or
another successor depository appointed by Security Capital (DTC or such other
depository being the "Depository") and
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registered in the name of the Depository or its nominee. Unless otherwise
provided in the applicable Prospectus Supplement, Debt Securities will not be
issued in definitive form. If the aggregate principal amount of any issue
exceeds $200 million, one certificate will be issued with respect to each $200
million of principal amount and an additional certificate will be issued with
respect to any remaining principal amount of such issue.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities which its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc. (the "NYSE"), the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and
trust companies which clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the
Commission.
Upon issuance by Security Capital of Debt Securities represented by a Global
Security, purchases of Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual purchaser
of each Debt Security ("Beneficial Owner") will in turn be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Debt Securities will be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Debt Securities, except if use of
the book-entry system for the Debt Securities is discontinued. The laws of
some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to own, pledge or transfer beneficial interests in a Global
Security.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indentures. Except as provided below, owners of beneficial interests in Debt
Securities represented by a Global Security will not be entitled to have Debt
Securities represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indentures.
To facilitate subsequent transfers, all Debt Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Debt Securities with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Debt Securities; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Debt Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers. Conveyance of notices and other
communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
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Neither DTC nor Cede & Co. will consent or vote with respect to Debt
Securities. Under its usual procedures, DTC will mail an omnibus proxy to
Security Capital as soon as possible after the record date. The omnibus proxy
will assign Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Debt Securities are credited on the record
date (identified in a listing attached to the omnibus proxy).
Payments of principal of (and premium and Make-Whole Amount, if any, on) and
interest and Additional Amounts, if any, on the Debt Securities represented by
a Global Security registered in the name of DTC or its nominee will be made by
Security Capital through the Trustee under the Indentures or a paying agent
(the "Paying Agent"), which may also be the Trustee under the Indentures, to
DTC or its nominee, as the case may be, as the registered owner of such Global
Security. None of Security Capital, the Trustee, the Paying Agent or the
Security Registrar for such Global Security will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in such Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Security Capital has been advised that DTC, upon receipt of any payment of
principal, premium, Make-Whole Amount or interest in respect of a Global
Security, will credit Direct Participants' accounts on the payable date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on the payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Paying
Agent or Security Capital, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of principal, premium and
interest to DTC is the responsibility of the Paying Agent or Security Capital,
as the case may be, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
If the Depository with respect to a Global Security is at any time unwilling
or unable to continue as Depository and a successor Depository is not
appointed by Security Capital within 90 days, Security Capital will issue
certificated notes in exchange for the Debt Securities represented by such
Global Security.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources which Security
Capital believes to be reliable, but Security Capital takes no responsibility
for the accuracy thereof.
No Personal Liability of Shareholders, Officer or Directors
The Indentures provide that no recourse may be had against any past, present
or future stockholder, officer or director of Security Capital, or any
successor entity under or upon any obligation, covenant or agreement contained
in the Indentures or in any Offered Security, or because of any indebtedness
evidenced thereby (Section 111).
Trustee
The Indentures provide that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indentures may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect
to such series (Section 608). If two or more Persons are acting as Trustee
with respect to different series of Debt Securities, each such Trustee will be
a Trustee of a trust under the applicable Indenture separate and apart from
the trust administered by any other Trustee, and, except as otherwise
indicated herein, any action described herein to be taken by the Trustee may
be taken by each such Trustee with respect to, and only with respect to, the
one or more series of Debt Securities for which it is Trustee under the
applicable Indenture (Sections 101 and 609).
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Certain Definitions
"Capital Stock" means (i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (iii) in the case of a partnership, partnership interests
(whether general or limited); and (iv) any other interest or participation
which confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person.
"Government Obligations" means securities which are (i) direct obligations
of the United States of America, for the payment of which its full faith and
credit is pledged, or (ii) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States of America,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America which, in either case, are not
callable or redeemable at the option of the issuer thereof, and also includes
a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt (Section 101).
"Hedging Obligations" means, with respect to any Person, the greater of (a)
the net obligations of that Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, (ii) foreign
exchange contracts or currency swap agreements and (iii) other agreements or
arrangements designed to protect that Person against fluctuations in interest
rates or currency values or (b) zero.
"Payment Default" means any failure to pay any scheduled installment of
principal of, premium, if any, or interest on any indebtedness within the
grace period provided for that payment in the documentation governing that
indebtedness.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
equity capital and more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person (or a combination thereof) and
(ii) any partnership (a) the sole general partner or the managing general
partner of which is that Person or a Subsidiary of that Person or (b) the only
general partners of which are that Person or one or more Subsidiaries of that
Person (or any combination thereof).
DESCRIPTION OF PREFERRED SHARES
General
The Board is authorized, without the approval of the holders of Common
Shares, to cause Preferred Shares to be issued in one or more series, to
determine the number of Preferred Shares of each series and to set the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms or conditions of
redemption of each series, which may be senior to the rights of Common Shares.
On May 15, 1998, Security Capital had 257,642 Series B Preferred Shares
outstanding, all of which were held of record by one shareholder.
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The following description sets forth certain general terms and provisions of
the Preferred Shares to which any Prospectus Supplement may relate. The
following description of the general terms of the Preferred Shares does not
purport to be complete and is subject to and qualified in its entirety by
reference to Security Capital's Charter and Bylaws. Reference is made to the
Prospectus Supplement relating to the Preferred Shares offered thereby for the
specific terms of such Preferred Shares, including:
(1) The designation of such Preferred Shares;
(2) The number of shares offered, the liquidation preference per share and
the initial public offering price per share;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to such Preferred Shares;
(4) The date from which dividends on such Preferred Shares will cumulate,
if applicable;
(5) The procedures for the auction and remarketing, if any, for such
Preferred Shares;
(6) The provisions for a sinking fund, if any, for such Preferred Shares;
(7) The terms and conditions of redemption, if applicable, of such
Preferred Shares;
(8) Any listing of such Preferred Shares on any securities exchange;
(9) The terms and conditions on which such Preferred Shares will be
convertible into Common Shares, if applicable, including the conversion
price (or manner of calculation thereof);
(10) Whether interests in such Preferred Shares will be represented by
global securities;
(11) A discussion of Federal income tax considerations applicable to such
Preferred Shares;
(12) The relative ranking and preferences of such Preferred Shares as to
dividends and in the distribution of assets;
(13) Any limitations on issuance of any series of Preferred Shares ranking
senior to or on a parity with such Preferred Shares as to dividends
and in the distribution of assets;
(14) Any limitations on direct or beneficial ownership and restrictions on
transfer of such Preferred Shares, in each case in accordance with the
terms of the Charter; and
(15) Any other specific preferences, rights, voting powers, restrictions,
limitations as to dividends or qualifications of such Preferred
Shares.
Ranking
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Preferred Shares will, as to dividends and in the distribution of
assets, rank (i) senior to all classes or series of Common Shares and to all
other equity securities ranking junior to such series of Preferred Shares;
(ii) on a parity with all equity securities issued by Security Capital the
terms of which specifically provide that such equity securities rank on a
parity with such series of Preferred Shares; and (iii) junior to all equity
securities issued by Security Capital the terms of which specifically provide
that such equity securities rank senior to such series of Preferred Shares.
The term "equity securities" does not include convertible debt securities. The
rights of the holders of each series of Preferred Shares will be subordinate
to those of Security Capital's general creditors.
Dividends
The holders of each series of Preferred Shares will be entitled to receive,
when, as and if declared by the Board, out of funds legally available for that
purpose, cash dividends at such rates and on such dates as will be set forth
in the applicable Prospectus Supplement. Such rates may be fixed or variable
or both. Dividends will be payable to holders of record as they appear in the
stock records of Security Capital on such record dates as are fixed by the
Board.
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Dividends on any series of Preferred Shares may be cumulative or non-
cumulative, as provided in the applicable Prospectus Supplement. Dividends, if
cumulative, will begin to accrue and will be fully cumulative from the date
set forth in the applicable Prospectus Supplement. If the Board fails to
declare a dividend payable on a dividend payment date on any series of
Preferred Shares for which dividends are non-cumulative, then the holders of
such Preferred Shares will have no right to receive a dividend in respect of
the dividend period ending on such dividend payment date, and Security Capital
will have no obligation to pay the dividend accrued for such period, whether
or not dividends on such Preferred Shares are declared payable on any future
dividend payment date. No interest, or sum of money in lieu of interest, will
be payable in respect of any dividend payment or payments on any series of
Preferred Shares which may be in arrears.
So long as any Preferred Shares of a series are outstanding, no full
dividends may be declared or paid or set apart for payment on any shares of
any other stock of Security Capital ranking on a parity with such series of
Preferred Shares as to dividends ("Dividend Parity Shares") for any period
unless (i) if such series of Preferred Shares has a cumulative dividend, full
cumulative dividends have been or contemporaneously are paid or declared and a
sum sufficient for the payment thereof set apart for such payments for all
past dividend periods and the then current dividend period with respect to
such series of Preferred Shares or (ii) if such series of Preferred Shares
does not have a cumulative dividend, full dividends have been or
contemporaneously are paid or declared and a sum sufficient for the payment
thereof set apart for such payments for the then current dividend period with
respect to such series of Preferred Shares. When dividends are not paid in
full, or a sum sufficient for the payment thereof is not set apart for
payment, on any series of Preferred Shares and any Dividend Parity Shares, all
dividends declared on such series of Preferred Shares and such Dividend Parity
Shares will be declared ratably in proportion to the amount of dividends
accrued and unpaid on such series of Preferred Shares (which will not include
any cumulation in respect of unpaid dividends for past dividend periods if
such series of Preferred Shares does not have a cumulative dividend) and on
such Dividend Parity Shares.
So long as any Preferred Shares of a series are outstanding, except as
provided in the immediately preceding paragraph, no dividends (other than in
Common Shares or other shares of stock of Security Capital ranking junior to
such series of Preferred Shares as to dividends and in the distribution of
assets ("Fully Junior Shares")) may be declared or paid or set apart for
payment or other distribution may be declared or made on the Common Shares or
any other shares of stock of Security Capital ranking junior to such series of
Preferred Shares as to dividends or in the distribution of assets ("Junior
Shares"), nor may any Junior Shares be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for
a sinking fund for the redemption of any Junior Shares) by Security Capital
(except by conversion into or exchange for Fully Junior Shares) unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends have been or contemporaneously are paid or declared and a sum
sufficient for the payment thereof set apart for such payments for all past
dividend periods and the then current dividend period with respect to such
series of Preferred Shares or (ii) if such series of Preferred Shares does not
have a cumulative dividend, full dividends have been or contemporaneously are
paid or declared and a sum sufficient for the payment thereof set apart for
such payments for the then current dividend period with respect to such series
of Preferred Shares.
Any dividend payment made on a series of Preferred Shares will first be
credited against the earliest accrued but unpaid dividend due with respect to
such series of Preferred Shares which remains payable.
Redemption
If so provided in the applicable Prospectus Supplement, a series of
Preferred Shares will be subject to mandatory redemption or redemption at the
option of Security Capital, in whole or in part, in each case on the terms, at
the times and at the redemption prices set forth in such Prospectus
Supplement.
The Prospectus Supplement relating to a series of Preferred Shares which is
subject to mandatory redemption will specify the number of Preferred Shares of
such series which will be redeemed by Security Capital in each year commencing
after a specified date, and the redemption price per share which will include
all dividends thereon accrued and unpaid, if any, to the date fixed for
redemption, without interest (which will
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not include any cumulation in respect of unpaid dividends for past dividend
periods if such series of Preferred Shares does not have a cumulative
dividend). The redemption price may be payable in cash or other property, as
specified in the applicable Prospectus Supplement. If the redemption price for
any series of Preferred Shares is payable solely out of the sale proceeds of
stock of Security Capital, the terms of such series of Preferred Shares may
provide that, if no such stock has been issued or to the extent the sale
proceeds from such stock are insufficient to pay in full the aggregate
redemption price then due, Preferred Shares of such series will automatically
and mandatorily be converted into shares of the applicable stock of Security
Capital pursuant to conversion provisions specified in the applicable
Prospectus Supplement. If fewer than all the outstanding Preferred Shares of
any series are to be redeemed, the shares to be redeemed will be selected by
Security Capital by lot or pro rata or by any other method determined by
Security Capital.
Notwithstanding the foregoing, unless (i) if such series of Preferred Shares
has a cumulative dividend, full cumulative dividends have been or
contemporaneously are paid or declared and a sum sufficient for the payment
thereof set apart for such payments for all past dividend periods and the then
current dividend period with respect to such series of Preferred Shares and
any shares of any other stock of Security Capital ranking on a parity with
such series of Preferred Shares as to distributions and in the distribution of
assets ("Parity Shares") or (ii) if such series of Preferred Shares does not
have a cumulative dividend, full dividends have been or contemporaneously are
paid or declared and a sum sufficient for the payment thereof set apart for
such payments for the then current dividend period with respect to such series
of Preferred Shares and any Parity Shares, the Preferred Shares of such series
may not be redeemed and Security Capital may not purchase or otherwise acquire
any Preferred Shares of such series, except pursuant to a purchase or exchange
offer made on the same terms to all holders of outstanding Preferred Shares of
such series or by conversion into or exchange for Fully Junior Shares.
Notice of the redemption of any Preferred Shares of any series will be
mailed not less than 30 days nor more than 90 days prior to the redemption
date to each holder of record of such series of Preferred Shares at the
address of such holder as shown on Security Capital's stock records. Each
notice will state: (i) the redemption date; (ii) the number of Preferred
Shares of such series to be redeemed; (iii) the redemption price; (iv) the
place or places at which certificates representing such Preferred Shares are
to be surrendered; (v) that dividends on such Preferred Shares will cease to
accrue on such redemption date; and (vi) the date on which the holder's
conversion rights, if any, as to such Preferred Shares will terminate. If
fewer than all the Preferred Shares of any series are to be redeemed, the
notice mailed to each such holder will also specify the number of Preferred
Shares of such series to be redeemed from such holder. If notice of redemption
of any Preferred Shares has been mailed and if Security Capital has deposited
the funds necessary for such redemption in trust, for the benefit of the
holders of the Preferred Shares so called for redemption, then from and after
the redemption date, dividends will cease to accrue on such Preferred Shares,
such Preferred Shares will no longer be deemed outstanding and all rights of
the holders of such Preferred Shares will terminate, except the right to
receive the redemption price.
Liquidation Preference
Upon any liquidation, dissolution or winding up of Security Capital, whether
voluntary or involuntary, before any payment or distribution is made to or set
apart for the holders of any Common Shares or any shares of any other stock of
Security Capital ranking junior to such series of Preferred Shares in the
distribution of assets ("Liquidation Junior Shares"), the holders of each
series of Preferred Shares will be entitled to receive out of assets of
Security Capital legally available for that purpose, liquidating distributions
in the amount of the liquidation preference per share (as specified in the
applicable Prospectus Supplement), plus an amount equal to all dividends
(whether or not earned or declared) thereon accrued and unpaid, if any (which
will not include any cumulation in respect of unpaid dividends for past
dividend periods if such series of Preferred Shares does not have a cumulative
dividend); but the holders of such series of Preferred Shares will not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of Security Capital, the assets of Security Capital are
insufficient to pay in full such preferential amount with respect to such
series of Preferred Shares and the corresponding amounts with respect to all
other stock of Security Capital ranking on a parity with such series of
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Preferred Shares in the distribution of assets ("Liquidation Parity Shares"),
then such assets will be distributed among the holders of such series of
Preferred Shares and such Liquidation Parity Shares in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
Subject to the rights of the holders of any class or series of stock of
Security Capital ranking on a parity with or senior to such series of
Preferred Shares in the distribution of assets, upon any liquidation,
dissolution or winding up of Security Capital, whether voluntary or
involuntary, after payment has been made in full to all holders of a series of
Preferred Shares, the remaining assets of Security Capital will be distributed
among the holders of any Liquidation Junior Shares, according to their
respective rights and preferences and in each case according to their
respective number of shares.
For the above purposes, a consolidation or merger of Security Capital with
or into any other entity, a sale, transfer, lease or conveyance of all or
substantially all of Security Capital's assets, property or business or a
statutory share exchange will not be deemed to be a liquidation, dissolution
or winding up of Security Capital.
Voting Rights
Holders of each series of Preferred Shares will not have any voting rights,
except as set forth below or in the applicable Prospectus Supplement or as
otherwise required by applicable law. The following is a summary of the voting
rights that, unless provided otherwise in the applicable Prospectus
Supplement, will apply to each series of Preferred Shares.
If and whenever six quarterly dividends (whether or not consecutive) payable
on any series of Preferred Shares or any Parity Shares are in arrears, whether
or not earned or declared, the number of directors then constituting the Board
will be increased by two, and the holders of such series of Preferred Shares,
together with the holders of any such Parity Shares, voting as a single class,
will have the right to elect two additional directors to serve on the Board at
the next annual meeting of shareholders or a special meeting of the holders of
such series of Preferred Shares and such Parity Shares and at each subsequent
annual meeting of shareholders until all such dividends in arrears have been
paid and a sum sufficient for the payment thereof has been set apart for
payment of the distribution for the current distribution period with respect
to such series of Preferred Shares and such Parity Shares. The term of office
of all directors so elected will terminate with the termination of such voting
rights. For so long as Security Capital and certain of its affiliates
beneficially own in excess of 10% of the outstanding Common Shares, in any
such vote by holders of such series of Preferred Shares and such Parity
Shares, any Preferred Shares of such series and Parity Shares beneficially
owned by Security Capital and such affiliates will be voted in the same
percentages as Preferred Shares of such series and Parity Shares which are not
beneficially owned by Security Capital and such affiliates.
The approval of two-thirds of the outstanding Preferred Shares of any series
and all series of Parity Shares similarly affected, voting as a single class,
will be necessary in order to (i) amend Security Capital's Charter to
materially and adversely affect the voting powers, rights or preferences of
the holders of such series of Preferred Shares, (ii) enter into a share
exchange which affects such series of Preferred Shares, consolidate with or
merge into another entity, or permit another entity to consolidate with or
merge into Security Capital, unless in each such case, each Preferred Share of
such series remains outstanding without a material and adverse change to its
terms and rights or is converted into or exchanged for preferred stock of the
surviving entity having preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption identical to those of a Preferred Share of such
series (except for changes which do not materially and adversely affect the
holders of such series of Preferred Shares) or (iii) authorize, reclassify,
create or increase the authorized amount of any class of stock ranking senior
to such series of Preferred Shares in the payment of dividends or in the
distribution of assets. However, Security Capital may create additional
classes and series of Parity Shares, Junior Shares and Fully Junior Shares,
increase the authorized number of shares of such stock and issue additional
series of such stock without the consent of any holder of such series of
Preferred Shares.
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Except as provided above and as required by law, the holders of each series
of Preferred Shares will not be entitled to vote on any merger or
consolidation involving Security Capital or a sale of all or substantially all
of the assets of Security Capital.
Conversion Rights
The terms and conditions, if any, on which any series of Preferred Shares is
convertible into Common Shares will be set forth in the applicable Prospectus
Supplement. Such terms will include the number of shares of Common Shares into
which each share of such series of Preferred Shares is convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of
such series of Preferred Shares or Security Capital, the events requiring an
adjustment of the conversion price and provisions affecting conversion upon
the redemption of such series of Preferred Shares.
DESCRIPTION OF COMMON SHARES
The following description sets forth certain general terms and provisions of
the Common Shares to which any Prospects Supplement may relate, including a
Prospectus Supplement which provides for Common Shares issuable pursuant to
subscription offerings or rights offerings, upon conversion or exchange of
Preferred Shares or Debt Securities or upon the exercise of Common Shares
Warrants. The following description of the terms of the Common Shares does not
purport to be complete and is subject to and qualified in its entirety by
reference to Maryland law and to Security Capital's Charter and Bylaws.
The authorized stock of Security Capital consists of 250,000,000 shares,
consisting of 20,000,000 Class A Shares, 229,742,358 Class B Shares and
257,642 shares of Series B Preferred Stock. The Board may, by articles
supplementary, classify or reclassify any unissued shares of stock from time
to time by setting or changing the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications or terms or conditions of redemption of such
stock. No holder of any class of stock of Security Capital will have any
preemptive right to subscribe for any securities of Security Capital except as
may be granted by the Board pursuant to an agreement between Security Capital
and a shareholder. Under Maryland law, shareholders are generally not liable
for Security Capital's debts or obligations. For a description of certain
provisions that could have the effect of delaying, deferring or preventing a
change in control, see "Certain Provisions of Maryland Law and of Security
Capital's Charter and Bylaws."
The holders of outstanding Class A Shares are entitled to one vote, and the
holders of outstanding Class B Shares are entitled to one two-hundredth (
1/200th) of a vote, for each share held of record on all matters submitted to
a vote of shareholders. Unless otherwise required by Maryland law, the Class A
Shares and the Class B Shares will vote as a single class with respect to all
matters submitted to a vote of shareholders of Security Capital, including the
election of directors. Shareholders do not have the right to cumulate their
votes in the election of directors, which means that the holders of a majority
of the outstanding Class A Shares can elect all of the directors then standing
for election.
Each Class A Share may be converted into 50 Class B Shares at the holder's
option at any time. Class B Shares are not convertible into Class A Shares or
any other security.
Holders of Class A Shares are entitled to receive ratably such dividends as
may be authorized by the Board out of funds legally available therefor.
Holders of Class B Shares are entitled to dividends equal to one-fiftieth (
1/50th) of the amount per share declared by the Board for each Class A Share.
Dividends with respect to the Class B Shares will be paid in the same form and
at the same time as dividends with respect to the Class A Shares, except that,
in the event of a stock split or stock dividend, holders of Class A Shares
will receive Class A Shares and holders of Class B Shares will receive Class B
Shares, unless otherwise specifically designated by resolution of the Board.
Security Capital has no present intention to pay a dividend on Class B Shares
or Class A Shares (which would necessitate a one-fiftieth ( 1/50th) equivalent
dividend on Class B Shares) in the future.
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In the event of the liquidation, dissolution or winding-up of Security
Capital, holders of Class A Shares and Class B Shares are entitled to share
ratably in all assets remaining after the payment of liabilities, with holders
of Class B Shares entitled to receive per share one-fiftieth ( 1/50th) of any
amount per share received by holders of Class A Shares. Neither holders of
Class A Shares or Class B Shares shall have preemptive rights to subscribe for
additional shares of either class. All outstanding Class A Shares are, and all
Class B Shares to be outstanding upon completion of the Offering will be,
fully paid and non-assessable.
The transfer agent and registrar for the Class A Shares and Class B Shares
is BankBoston, N.A., 150 Royall Street, Canton, Massachusetts 02021.
Purchase Rights
On April 21, 1997, the Board declared a dividend of one Purchase Right for
each Share outstanding at the close of business on April 21, 1997 (the "Rights
Record Date") to the holders of Class A Shares and Class B Shares of record as
of the Rights Record Date. The dividend was paid on the Rights Record Date.
The holders of any additional Class A Shares or Class B Shares issued after
the Rights Record Date and before the redemption or expiration of the Purchase
Rights will also be entitled to one Purchase Right for each such additional
Share. Each Purchase Right entitles the registered holder, under certain
circumstances, to purchase from Security Capital, in the event the underlying
share is a Class A Share, one one-hundredth of a Participating Preferred Share
of Security Capital at a price of $6,000 per one one-hundredth of a
Participating Preferred Share (the "Purchase Price"), subject to adjustment.
In the event the underlying share is a Class B Share, the Purchase Right
entitles the registered holder under certain circumstances to purchase from
Security Capital one five-thousandth of a Participating Preferred Share of
Security Capital at a price of $120 per one five-thousandth of a Participating
Preferred Share. The description and terms of the Purchase Rights are set
forth in the Rights Agreement dated as of April 21, 1997 between Security
Capital and The First National Bank of Boston, as rights agent (the "Rights
Agreement").
The Purchase Rights will be exercisable and will be evidenced by separate
certificates only after the earlier to occur of: (1) 10 days following a
public announcement that a person or group of affiliated or associated
persons, other than Security Capital U. S. Realty ("SC-USREALTY") and certain
affiliates of Security Capital, has acquired beneficial ownership of 20% or
more of the voting power of the voting equity securities of Security Capital
(thereby becoming an "Acquiring Person") or (2) 15 business days (or such
later date as may be determined by action of the Board prior to such time as
any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of persons of 25% or more of the
voting power of the voting equity securities of Security Capital (the first to
occur of such dates being called the "Rights Distribution Date"). With respect
to any of the Class A Share or Class B Share certificates outstanding as of
the Rights Record Date, until the Rights Distribution Date the Purchase Rights
will be evidenced by such certificate. Until the Rights Distribution Date (or
earlier redemption or expiration of the Purchase Rights), new certificates
issued after the Rights Record Date upon transfer or new issuance of Class A
Shares or Class B Shares will contain a notation incorporating the Rights
Agreement by reference. Notwithstanding the foregoing, if the Board in good
faith determines that a person who would otherwise be an Acquiring Person
under the Rights Agreement has become such inadvertently, and such person
divests as promptly as practicable a sufficient number of Class A Shares or
Class B Shares so that such person would no longer be an Acquiring Person,
then such person shall not be deemed to be an Acquiring Person for purposes of
the Rights Agreement.
The Purchase Rights will expire on April 21, 2007 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by Security Capital, in each case as described
below.
The Purchase Price payable, and the number of Participating Preferred Shares
or other securities or property issuable, upon exercise of the Purchase Rights
are subject to adjustment under certain circumstances from time to time to
prevent dilution. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at
least 1% in such Purchase Price.
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Participating Preferred Shares purchasable upon exercise of the Purchase
Rights will not be redeemable. Each Participating Preferred Share will be
entitled to a minimum preferential quarterly distribution payment of $1 per
share but will be entitled to an aggregate distribution of 100 times the
distribution declared per Class A Share, or if no Class A Shares are
outstanding, 2 times the distribution declared per Class B Share. Each
Participating Preferred Share will have 100 votes, voting together with the
Class A Shares and Class B Shares. In the event of liquidation, the holders of
the Participating Preferred Shares will be entitled to a minimum preferential
liquidation payment of $1 per share but will be entitled to an aggregate
payment of 100 times the payment made per Class A Share, or if no Class A
Shares are outstanding, 2 times the payment made per Class B Share. In the
event of any merger, consolidation or other transaction in which Class A
Shares or Class B Shares are exchanged, each Participating Preferred Share
will be entitled to receive 100 times the amount received per Class A Share or
Class B Share, as the case may be. In the event of issuance of Participating
Preferred Shares upon exercise of the Purchase Rights, in order to facilitate
trading, a depositary receipt may be issued for each one one-hundredth or one
five-thousandth of a Participating Preferred Share. The Purchase Rights will
be protected by customary antidilution provisions.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision will be made so that each holder
of a Purchase Right, other than Purchase Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the
right to receive upon exercise a number of Class A Shares or Class B Shares,
as the case may be, having a market value (determined in accordance with the
Rights Agreement) of twice the Purchase Price. In lieu of the issuance of
Class A Shares or Class B Shares, as the case may be, upon exercise of
Purchase Rights, the Board may under certain circumstances, and if there is an
insufficient number of Class A Shares or Class B Shares, as the case may be,
authorized but unissued or held as treasury Class A Shares or Class B Shares
to permit the exercise in full of the Purchase Rights, the Board is required
to, take such action as may be necessary to cause Security Capital to issue or
pay upon the exercise of Purchase Rights, cash (including by way of a
reduction of purchase price), property, other securities or any combination of
the foregoing having an aggregate value equal to that of the Class A Shares or
Class B Shares, as the case may be, which otherwise would have been issuable
upon the exercise of Purchase Rights.
In the event that, after any person or group becomes an Acquiring Person,
Security Capital is acquired in a merger or other business combination
transaction of 50% or more of its consolidated assets or earning power are
sold, proper provision will be made so that each holder of a Purchase Right
will thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price, a number of shares of common stock of the
acquiring company having a market value (determined in accordance with the
Rights Agreement) of twice the Purchase Price.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by that person or group of 50% or more of the outstanding
Class A Shares or Class B Shares, the Board may exchange the Purchase Rights
(other than Purchase Rights owned by that person or group which will have
become void), in whole or in part, at an exchange ratio of one Class A Share
or Class B Share, as the case may be (or one one-hundredth or one five-
thousandth of a Participating Preferred Share as the case may be), per
Purchase Right (subject to adjustment).
As soon as practicable after a Rights Distribution Date, Security Capital is
obligated to use its best efforts to file a registration statement under the
Securities Act relating to the securities issuable upon exercise of Purchase
Rights and to cause such registration statement to become effective as soon as
practicable.
At any time prior to the time a person or group of persons becomes an
Acquiring Person, the Board may redeem the Purchase Rights in whole, but not
in part, at a price of $.01 per Purchase Right (the "Redemption Price")
payable in cash, Class A Shares or Class B Shares or any other form of
consideration deemed appropriate by the Board. The redemption of the Purchase
Rights may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish. Immediately upon
the effectiveness of any redemption of the Purchase Rights, the right to
exercise the Purchase Rights will terminate and the only right of the holders
of Purchase Rights will be to receive the Redemption Price.
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The terms of the Purchase Rights may be amended by the Board without the
consent of the holders of the Purchase Rights, except that from and after the
time any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Purchase Rights and in no event shall any such amendment change
the 20% threshold at which a person acquiring beneficial ownership of Class A
Shares or Class B Shares becomes an Acquiring Person.
The Purchase Rights have certain anti-takeover effects. The Purchase Rights
will cause substantial dilution to a person or group that attempts to acquire
Security Capital on terms not approved by its Board, except pursuant to an
offer conditioned on a substantial number of Purchase Rights being acquired.
The Purchase Rights should not interfere with any merger or other business
combination approved by the Board since the Purchase Rights may be redeemed by
Security Capital at the Redemption Price prior to the time that a person or
group has acquired beneficial ownership of 20% or more of the voting power of
the voting equity securities of Security Capital. The form of Rights Agreement
specifying the terms of the Purchase Rights has been incorporated by reference
into the registration statement of which this Prospectus forms a part and is
incorporated herein by reference. The foregoing description of the Purchase
Rights does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Rights Agreement, including the definitions
therein of certain terms.
Restriction on Size of Holdings of Class A Shares and Class B Shares
The Charter contains certain restrictions on the number of Class A Shares
and Class B Shares that individual shareholders may own. For the operating
companies to qualify as REITs under the Code, no more than 50% of the value of
their shares (after taking into account options to acquire shares) may be
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities and constructive ownership among specified
family members) during the last half of a taxable year (other than the first
taxable year), or by 100 or more persons during at least 335 days of a taxable
year or during a proportionate part of a shorter taxable year. Because certain
of the operating companies are REITs, their respective charters and Security
Capital's Charter contain restrictions on the acquisition of shares intended
to ensure compliance with these requirements.
Subject to certain exceptions specified in the Charter, no holder may own,
or be deemed to own by virtue of the attribution provisions of the Code, more
than 9.8% (the "Ownership Limit") of the number or value of the issued and
outstanding shares of Security Capital's stock. The Board, upon receipt of a
ruling from the IRS or an opinion of counsel or other evidence satisfactory to
the Board and upon such other conditions as the Board may direct, may also
exempt a proposed transferee from the Ownership Limit. As a condition of such
exemption, the proposed transferee must give written notice to Security
Capital of the proposed transfer no later than the fifteenth day prior to any
transfer which, if consummated, would result in the intended transferee owning
shares of Security Capital's stock in excess of the Ownership Limit. The Board
may require such opinions of counsel, affidavits, undertakings or agreements
as it may deem necessary or advisable in order to determine or ensure the
operating companies' status as REITs. Any transfer of Class A Shares or Class
B Shares that would (i) create a direct or indirect ownership of shares of
Security Capital's stock in excess of the Ownership Limit or (ii) result in a
Security Capital investee being "closely held" within the meaning of Section
856(h) of the Code, shall be null and void ab initio, and the intended
transferee will acquire no rights to the shares of Security Capital's stock.
The foregoing restrictions on transferability and ownership will not apply if
the Board determines, which determination must be approved by the
shareholders, that it is no longer in the best interests of Security Capital
to attempt to, or to continue to, assist Security Capital's operating
companies in qualifying as REITs. The Charter excludes SC-USREALTY (and its
transferees) from the Ownership Limit.
Any shares of Security Capital's stock, the purported transfer of which
would result in a person owning Class A Shares or Class B Shares in excess of
the Ownership Limit or cause any or all of the operating companies to become
"closely held" under Section 856(h) of the Code, that is not otherwise
permitted as provided above will constitute excess shares ("Excess Shares"),
which will be transferred pursuant to the Charter to a party not affiliated
with Security Capital designated by Security Capital as the trustee of a trust
for the exclusive benefit of an organization or organizations described in
Sections 170(b)(1)(A) and 170(c) of the
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Code and identified by the Board as the beneficiary or beneficiaries of the
trust (the "Charitable Beneficiary"), until such time as the Excess Shares are
transferred to a person whose ownership will not violate the restrictions on
ownership. While these Excess Shares are held in trust, they will be entitled
to share in any distributions which will be paid to the trust for the benefit
of the Charitable Beneficiary and may only be voted by the trustee for the
benefit of the Charitable Beneficiary. Subject to the Ownership Limit, the
Excess Shares shall be transferred by the trustee at the direction of Security
Capital to any person (if the Excess Shares would not be Excess Shares in the
hands of such person). The purported transferee will receive the lesser of (i)
the price paid by the purported transferee for the Excess Shares (or, if no
consideration was paid, fair market value on the day of the event causing the
Excess Shares to be held in trust) and (ii) the price received from the sale
or other disposition of the Excess Shares held in trust. Any proceeds in
excess of the amount payable to the purported transferee will be paid to the
Charitable Beneficiary. In addition, such Excess Shares held in trust are
subject to purchase by Security Capital for a 90-day period at a purchase
price equal to the lesser of (i) the price paid for the Excess Shares by the
purported transferee (or, if no consideration was paid, fair market value at
the time of the event causing the Class A Shares or Class B Shares to be held
in trust) and (ii) the fair market value of the Excess Shares on the date
Security Capital elects to purchase. Fair market value, for these purposes,
means the last reported sales price reported on the NYSE on the trading day
immediately preceding the relevant date, or if not then traded on the NYSE,
the last reported sales price on the trading day immediately preceding the
relevant date as reported on any exchange or quotation system over or through
which the relevant class of shares of stock may be traded, or if not then
traded over or through any exchange or quotation system, then the market price
on the relevant date as determined in good faith by the Board.
From and after the purported transfer to the purported transferee of the
Excess Shares, the purported transferee shall cease to be entitled to
distributions, voting rights and other benefits with respect to the Excess
Shares except the right to payment on the transfer of the Excess Shares as
described above. Any distribution paid to a purported transferee on Excess
Shares prior to the discovery by Security Capital that such Excess Shares have
been transferred in violation of the provisions of the Charter shall be
repaid, upon demand, to Security Capital, which shall pay any such amounts to
the trust for the benefit of the Charitable Beneficiary. If the foregoing
transfer restrictions are determined to be void, invalid or unenforceable by
any court of competent jurisdiction, then the purported transferee of any
Excess Shares may be deemed, at the option of Security Capital, to have acted
as an agent on behalf of Security Capital in acquiring such Excess Shares and
to hold such Excess Shares on behalf of Security Capital.
All certificates representing Class A Shares and Class B Shares will bear a
legend referring to the restrictions described above.
Each shareholder shall upon demand be required to disclose to Security
Capital in writing such information with respect to the direct, indirect and
constructive ownership of Class A Shares and Class B Shares as the Board deems
reasonably necessary to assist its operating companies in complying with the
provisions of the Code applicable to REITs, to determine Security Capital's
operating companies status as REITs, to comply with the requirements of any
taxing authority or governmental agency or to determine any such compliance.
These ownership limitations could have the effect of discouraging a takeover
or other transaction in which holders of some, or a majority, of the Class A
Shares or Class B Shares might receive a premium for their Class A Shares or
Class B Shares over the then prevailing market price or which such holders
might believe to be otherwise in their best interest.
DESCRIPTION OF SECURITIES WARRANTS
Security Capital may issue Securities Warrants for the purchase of Debt
Securities, Preferred Shares or Common Shares. Securities Warrants may be
issued independently or together with any other Offered Securities offered by
any Prospectus Supplement and may be attached to or separate from such Offered
Securities. Each series of Securities Warrants will be issued under a separate
warrant agreement (each, a "Warrant Agreement") to be entered into between
Security Capital and a warrant agent specified in the applicable Prospectus
Supplement (the "Warrant Agent"). The Warrant Agent will act solely as an
agent of Security Capital in
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connection with the Securities Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Securities Warrants. The following summaries of certain
provisions of the Securities Warrant Agreement and the Securities Warrants do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Securities Warrant
Agreement and the Securities Warrant certificates relating to each series of
Securities Warrants which will be filed with the Commission at or prior to the
time of the issuance of such series of Securities Warrants.
If Securities Warrants are offered, the applicable Prospectus Supplement
will describe the terms of such Securities Warrants, including, in the case of
Securities Warrants for the purchase of Debt Securities, the following where
applicable: (i) the offering price; (ii) the denominations and terms of the
series of Debt Securities purchasable upon exercise of such Securities
Warrants; (iii) the designation and terms of any series of Debt Securities
with which such Securities Warrants are being offered and the number of such
Securities Warrants being offered with such Debt Securities; (iv) the date, if
any, on and after which such Securities Warrants and the related series of
Debt Securities will be transferable separately; (v) the principal amount of
the series of Debt Securities purchasable upon exercise of each such
Securities Warrant and the price at which such principal amount of Debt
Securities of such series may be purchased upon such exercise; (vi) the date
on which the right to exercise such Securities Warrants shall commence and the
date on which such right shall expire (the "Expiration Date"); (vii) the
terms, if any, on which Security Capital may accelerate the date by which the
Securities Warrants must be exercised; and (viii) any other material terms of
such Securities Warrants.
In the case of Securities Warrants for the purchase of Preferred Shares or
Common Shares, the applicable Prospectus Supplement will describe the terms of
such Securities Warrants, including the following where applicable: (i) the
offering price; (ii) the aggregate number of shares purchasable upon exercise
of such Securities Warrants, the exercise price, and in the case of Securities
Warrants for Preferred Shares, the designation, aggregate number and terms of
the series of Preferred Shares purchasable upon exercise of such Securities
Warrants; (iii) the designation and terms of any series of Preferred Shares
with which such Securities Warrants are being offered and the number of such
Securities Warrants being offered with such Preferred Shares; (iv) the date,
if any, on and after which such Securities Warrants and the related series of
Preferred Shares or Common Shares will be transferable separately; (v) the
date on which the right to exercise such Securities Warrants shall commence
and the Expiration Date; and (vi) any other material terms of such Securities
Warrants.
Securities Warrant certificates may be exchanged for new Securities Warrant
certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrant to purchase Debt Securities, holders of such Securities Warrants will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal, premium,
if any, or interest, if any, on such Debt Securities or to enforce covenants
in the applicable indenture. Prior to the exercise of any Securities Warrants
to purchase Preferred Shares or Common Shares, holders of such Securities
Warrants will not have any rights of holders of such Preferred Shares or
Common Shares, including the right to receive payments of dividends, if any,
on such Preferred Shares or Common Shares, or to exercise any applicable right
to vote.
Exercise of Securities Warrants
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or number of Preferred Shares or Common
Shares, as the case may be, at such exercise price as shall in each case be
set forth in, or calculable from, the Prospectus Supplement relating to the
offered Securities Warrants. After the close of business on the Expiration
Date (or such later date to which such Expiration Date may be extended by
Security Capital), unexercised Securities Warrants will become void.
Securities Warrants may be exercised by delivering to the Securities Warrant
Agent payment as provided in the applicable Prospectus Supplement of the
amount required to purchase the Debt Securities, Preferred Shares or Common
Shares, as the case may be, purchasable upon such exercise together with
certain information set
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forth on the reverse side of the Securities Warrant certificate. Securities
Warrants will be deemed to have been exercised upon receipt of payment of the
exercise price, subject to the receipt within five (5) business days, of the
Securities Warrant certificate evidencing such Securities Warrants. Upon
receipt of such payment and the Securities Warrant certificate properly
completed and duly executed at the corporate trust office of the Securities
Warrant Agent or any other office indicated in the applicable Prospectus
Supplement, Security Capital will, as soon as practicable, issue and deliver
the Debt Securities, Preferred Shares or Common Shares, as the case may be,
purchasable upon such exercise. If fewer than all of the Securities Warrants
represented by such Securities Warrant certificate are exercised, a new
Securities Warrant certificate will be issued for the remaining amount of
Securities Warrants.
Amendments and Supplements to Warrant Agreement
The Warrant Agreements may be amended or supplemented without the consent of
the holders of the Securities Warrants issued thereunder to effect changes
that are not inconsistent with the provisions of the Securities Warrants and
that do not adversely affect the interests of the holders of the Securities
Warrants.
Adjustments
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of Common Shares covered by, a Common Shares
Warrant is subject to adjustment in certain events, including (i) payment of a
dividend on the Common Shares payable in Common Shares and share splits,
combinations or reclassification of the Common Shares; (ii) issuance to all
holders of Common Shares of rights or warrants to subscribe for or purchase
Common Shares at less than their current market price (as defined in the
Warrant Agreement for such series of Common Shares Warrants); and (iii)
certain distributions of evidences of indebtedness or assets (including
securities but excluding cash dividends or distributions paid out of
consolidated earnings or retained earnings or dividends payable in Common
Shares) or of subscription rights and warrants (excluding those referred to
above).
No adjustment in the exercise price of, and the number of Common Shares
covered by, a Common Shares Warrant will be made for regular quarterly or
other periodic or recurring cash dividends or distributions or for cash
dividends or distributions to the extent paid from consolidated earnings or
retained earnings. No adjustment will be required unless such adjustment would
require a change of at least 1% in the exercise price then in effect. Except
as stated above, the exercise price of, and the number of Common Shares
covered by, a Common Shares Warrant will not be adjusted for the issuance of
Common Shares or any securities convertible into or exchangeable for Common
Shares, or carrying the right or option to purchase or otherwise acquire the
foregoing, in exchange for cash, other property or services.
In the event of any (i) consolidation or merger of Security Capital with or
into any entity (other than a consolidation or a merger that does not result
in any reclassification, conversion, exchange or cancellation of outstanding
Common Shares); (ii) sale, transfer, lease or conveyance of all or
substantially all of the assets of Security Capital; or (iii)
reclassification, capital reorganization or change of the Common Shares (other
than solely a change in par value or from par value to no par value), then any
holder of a Common Shares Warrant will be entitled, on or after the occurrence
of any such event, to receive on exercise of such Common Shares Warrant the
kind and amount of shares of beneficial interest or other securities, cash or
other property (or any combination thereof) that the holder would have
received had such holder exercised such holder's Common Shares Warrant
immediately prior to the occurrence of such event. If the consideration to be
received upon exercise of the Common Shares Warrant following any such event
consists of common shares of the surviving entity, then from and after the
occurrence of such event, the exercise price of such Common Shares Warrant
will be subject to the same anti-dilution and other adjustments described in
the second preceding paragraph, applied as if such common shares were Common
Shares.
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DESCRIPTION OF RIGHTS
As described under "Plan of Distribution," Security Capital may sell the
Offered Securities to investors directly through Rights. If Offered Securities
are to be sold through Rights, such Rights will be distributed as a dividend
to Security Capital's shareholders for which such shareholders will pay no
separate consideration. The Prospectus Supplement with respect to the Rights
offering will set forth the relevant terms of the Rights, including (i) the
kind and number of Offered Securities which will be offered pursuant to the
Rights, (ii) the period during which and the price at which the Rights will be
exercisable, (iii) the number of Rights to be issued, (iv) any provisions for
changes to or adjustments in the exercise price of the Rights and (v) any
other material terms of the Rights. See "Plan of Distribution."
CERTAIN PROVISIONS OF MARYLAND LAW AND OF SECURITY CAPITAL'S
CHARTER AND BYLAWS
The following paragraphs summarize certain provisions of Maryland law and
the Charter and Bylaws. The summary does not purport to be complete and is
subject to and qualified in its entirety by reference to Maryland law and to
the Charter and Bylaws.
Classification of the Board
The Bylaws provide that the number of directors may be established by the
Board but may not be fewer than three nor more than fifteen. Any vacancy will
be filled, at any regular meeting or at any special meeting called for that
purpose, by a majority of the remaining directors, except that a vacancy
resulting from an increase in the number of directors will be filled by a
majority vote of the entire Board. Pursuant to the terms of the Charter, the
directors are divided into three classes. One class holds office for a term
expiring at the annual meeting of shareholders to be held in 1999, another
class holds office for a term expiring at the annual meeting of shareholders
to be held in 2000 and another class holds office for a term expiring at the
annual meeting of shareholders to be held in 2001. As the term of each class
expires, directors in that class will be elected for a term of three years and
until their successors are duly elected and qualify. Security Capital believes
that classification of the Board will help to assure the continuity and
stability of Security Capital's business strategies and policies as determined
by the Board.
The classified director provision could have the effect of making the
removal of incumbent directors more time-consuming and difficult, which could
discourage a third party from making a tender offer or otherwise attempting to
obtain control of Security Capital, even though such an attempt might be
beneficial to Security Capital and its shareholders. At least two annual
meetings of shareholders, instead of one, will generally be required to effect
a change in a majority of the Board. Thus, the classified board provision
could increase the likelihood that incumbent directors will retain their
positions.
Director Liability Limitation and Indemnification
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Charter contains
such a provision which limits such liability to the maximum extent permitted
by Maryland law.
The Bylaws provide that Security Capital will, to the maximum extent
permitted by Maryland law in effect from time to time, indemnify and pay or
reimburse reasonable expenses in advance of final disposition of a proceeding
to (a) any individual who is a present or former director or officer of
Security Capital or (b) any individual who, while a director of Security
Capital and at the request of Security Capital, serves or has served
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another corporation, partnership, joint venture, trust, employee benefit plan
or any other enterprise as a director, officer, partner or trustee of such
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise and who is made a party to the proceeding by reason of his or her
service in that capacity. Security Capital has the power, with the approval of
the Board, to provide such indemnification and advancement of expenses to a
person who has served a predecessor of Security Capital in any of the
capacities described in (a) or (b) above and to any employee or agent of
Security Capital or its predecessors.
Maryland law requires a corporation (unless its charter requires otherwise,
which the Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she is made a party by reason of his or her service in that
capacity. Maryland law permits a corporation to indemnify its present and
former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made party by reason of
their service in those or other capacities unless it is established that (a)
the act or omission of the director or officer was material to the matter
giving rise to the proceeding and (i) was committed in bad faith or (ii) was
the result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or services
or (c) in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful. However, a
Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis
that personal benefit was improperly received, unless in either case a court
orders indemnification and then only for expenses. In addition, Maryland law
permits a corporation to advance reasonable expenses to a director or officer
upon the corporation's receipt of (a) a written affirmation by the director or
officer of his or her good faith belief that he or she has met the standard of
conduct necessary for indemnification by the corporation and (b) a written
undertaking by him or her or on his or her behalf to repay the amount paid or
reimbursed by the corporation if it shall ultimately be determined that the
standard of conduct was not met.
Additionally, Security Capital has entered into indemnity agreements with
each of its officers and directors which provide for reimbursement of all
expenses and liabilities of such officer or director, arising out of any
lawsuit or claim against that officer or director due to the fact that he or
she was or is serving as an officer or director, except for such liabilities
and expenses (a) the payment of which is judicially determined to be unlawful,
(b) relating to claims under Section 16(b) of the Exchange Act or (c) relating
to judicially determined criminal violations.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Security
Capital pursuant to the foregoing provisions, Security Capital has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
Business Combinations
Under Maryland law, certain "business combinations" (including a merger,
consolidation, share exchange, or, in certain circumstances, an asset transfer
or issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns 10% or more of the voting
power of the corporation's shares or an affiliate of the corporation who, at
any time within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then-outstanding
voting stock of the corporation (an "Interested Stockholder") or an affiliate
of an Interested Stockholder are prohibited for five years after the most
recent date on which the Interested Stockholder becomes an Interested
Stockholder. Thereafter, any such business combination must be recommended by
the board of directors of the corporation and approved by the affirmative vote
of at least (a) 80% of the votes entitled to be cast by holders of outstanding
voting shares of the corporation and (b) two-thirds of the votes entitled to
be cast by holders of outstanding voting shares of the corporation other than
shares held by the Interested Stockholder with whom (or with whose affiliate)
the business combination is to be effected, unless, among other conditions,
the corporation's stockholders receive a minimum price (as defined under
Maryland law) for their shares and the consideration is
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received in cash or in the same form as previously paid by the Interested
Stockholder for its shares. These provisions of Maryland law do not apply,
however, to business combinations that are approved or exempted by the board
of directors of the corporation prior to the time that the Interested
Stockholder becomes an Interested Stockholder.
Security Capital's Charter exempts from these provisions of Maryland law any
business combination with SC-USREALTY and its affiliates and successors. As a
result, SC-USREALTY and its affiliates and successors may be able to enter
into business combinations with Security Capital that may not be in the best
interests of its stockholders without compliance by Security Capital with the
supermajority vote requirements and other provisions of the statute.
Control Share Acquisitions
Maryland law provides that "Control Shares" of a Maryland corporation
acquired in a "Control Share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on
the matter, excluding shares of stock owned by the acquiror or by officers or
directors who are employees of the corporation. "Control Shares" are voting
shares of stock which, if aggregated with all other such shares of stock
previously acquired by the acquiror, or in respect of which the acquiror is
able to exercise or direct the exercise of voting power (except solely by
virtue of a revocable proxy), would entitle the acquiror to exercise voting
power in electing directors within one of the following ranges of voting
power: (i) one-fifth or more but less than one-third, (ii) one-third or more
but less than a majority, or (iii) a majority of all voting power. Control
Shares do not include shares the acquiring person is then entitled to vote as
a result of having previously obtained stockholder approval. A "Control Share
acquisition" means the acquisition of Control Shares, subject to certain
exceptions.
A person who has made or proposes to make a Control Share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of directors to call a special meeting of stockholders to
be held within 50 days of demand to consider the voting rights of the shares.
If no request for a meeting is made, the corporation may itself present the
question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute,
then, subject to certain conditions and limitations, the corporation may
redeem any or all of the Control Shares (except those for which voting rights
have previously been approved) for fair value determined, without regard to
the absence of voting rights for the Control Shares, as of the date of the
last Control Share acquisition by the acquiror or of any meeting of
stockholders at which the voting rights of such shares are considered and not
approved. If voting rights for Control Shares are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The
fair value of the shares as determined for purposes of such appraisal rights
may not be less than the highest price per share paid by the acquiror in the
Control Share acquisition.
The Control Share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the charter or bylaws
of the corporation.
Security Capital's Bylaws contain a provision exempting SC-USREALTY and its
affiliates and successors from the provisions of the Control Share acquisition
statute.
Advance Notice of Director Nominations and New Business
For nominations or other business to be properly brought before an annual
meeting of shareholders by a stockholder, the Bylaws require such shareholder
to deliver a notice to the Secretary, absent specified circumstances, not less
than 60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting setting forth: (i) as to each person whom the
shareholder proposes to nominate for election or
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reelection as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for the election of
directors, pursuant to Regulation 14A of the Exchange Act; (ii) as to any
other business that the shareholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any material
interest in such business of such shareholder and of the beneficial owner, if
any, on whose behalf the proposal is made; and (iii) as to the shareholder
giving notice and the beneficial owner, if any, on whose behalf the nomination
or proposal is made, (x) the name and address of such shareholder as they
appear on Security Capital's books, and of such beneficial owner and (y) the
number of Class A Shares or Class B Shares which are owned beneficially and of
record by such shareholder and such beneficial owner, if any.
PLAN OF DISTRIBUTION
The Offered Securities may be offered directly by Security Capital, through
agents designated from time to time by Security Capital, to or through
underwriters or dealers. Direct sales to investors may be accomplished through
subscription offerings or through Rights distributed to Security Capital's
shareholders. In connection with subscription offerings or the distribution of
Rights to shareholders, if all of the underlying Offered Securities are not
subscribed for, Security Capital may sell such unsubscribed Offered Securities
to third parties directly or through underwriters or agents and, in addition,
whether or not all of the underlying Offered Securities are subscribed for,
Security Capital may concurrently offer additional Offered Securities to third
parties directly or through underwriters or agents. Any such underwriter,
dealer or agent involved in the offer and sale of the Offered Securities will
be named in the applicable Prospectus Supplement.
The distribution of the Offered Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
or at prices related to the prevailing market prices at the time of sale or at
negotiated prices (any of which may represent a discount from the prevailing
market prices). Security Capital also may, from time to time, authorize
underwriters acting as Security Capital's agents to offer and sell the Offered
Securities on such terms and conditions as are set forth in the applicable
Prospectus Supplement. In connection with the sale of Offered Securities,
underwriters may be deemed to have received compensation from Security Capital
in the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Offered Securities for whom they may act as
agent. Underwriters may sell Offered Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Any underwriting compensation paid by Security Capital to underwriters or
agents in connection with the offering of Offered Securities, and any
discounts, concessions or commissions allowed by underwriters to participating
dealers, will be set forth in the applicable Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Offered Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions,
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements entered into with Security Capital, to indemnification
against and contribution toward certain civil liabilities, including
liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, Security Capital
will authorize dealers acting as Security Capital's agents to solicit offers
by certain institutions to purchase Offered Securities from Security Capital
at the public offering price set forth in such Prospectus Supplement pursuant
to delayed delivery contracts ("Contracts") providing for payment and delivery
on the date or dates stated in such Prospectus Supplement. Each Contract will
be for an amount not less than, and the aggregate principal amount of Offered
Securities sold pursuant to Contracts will be not less nor more than, the
respective amounts stated in the applicable Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and other institutions but
will in all cases be subject to the approval of Security Capital. Contracts
will not be subject to any conditions except (i) the purchase by an
institution of the Offered Securities covered by its Contracts may not at the
time of delivery be prohibited under the laws of any jurisdiction in the U.S.
to which such institution
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is subject and (ii) if the Offered Securities are being sold to underwriters,
Security Capital must have sold to such underwriters the total principal
amount of the Offered Securities less the principal amount thereof covered by
Contracts.
Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for Security Capital and its
subsidiaries in the ordinary course of business.
EXPERTS
The consolidated financial statements and related schedules of Security
Capital and ProLogis Trust (formerly known as Security Capital Industrial
Trust) incorporated herein by reference, as included in Security Capital's
annual report on Form 10-K, and the financial statements and related schedules
of Homestead Village Incorporated as of December 31, 1997, consolidated into
the financial statements of Security Capital, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated herein in reliance upon the
authority of such firm as experts in giving such reports.
The financial statements of Security Capital Pacific Trust as of December
31, 1997 and 1996, and for each of the years in the three-year period ended
December 31, 1997, as included in Security Capital's annual report on Form 10-
K, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
The financial statements and related schedules of Security Capital Atlantic
Incorporated as of December 31, 1996 and December 31, 1995 and for the three
years then ended and the financial statements and related schedules of
Homestead Village Incorporated as of December 31, 1996 and for the year then
ended consolidated into the financial statements of Security Capital
incorporated herein by reference have been audited by Ernst & Young LLP,
independent auditors, to the extent indicated in their reports thereon also
incorporated herein by reference. Those financial statements have been
consolidated in reliance on those reports given on the authority of that firm
as experts in accounting and auditing.
The financial statements of SC-USREALTY, incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Security Capital for the year
ended December 31, 1997, have been audited by Price Waterhouse Sarl,
independent accountants, as indicated in their reports thereon, also
incorporated by reference. Such financial statements, to the extent they have
been included in the consolidated financial statements of Security Capital,
have been so included in reliance on their reports given on the authority of
such firm as experts in auditing and accounting.
With respect to the unaudited condensed interim financial statements of
Security Capital for the quarters ended March 31 and June 30, 1998,
incorporated herein by reference, Arthur Andersen LLP has applied limited
procedures in accordance with professional standards for a review of that
information. However, their separate report thereon states that they did not
audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on that
information should be restricted in light of the limited nature of the review
procedures applied. In addition, the accountants are not subject to the
liability provisions of Section 11 of the Securities Act for their report on
the unaudited interim financial information because their report is not a
"report" or a "part" of the Registration Statement prepared or certified by
the accountants within the meaning of Sections 7 and 11 of the Securities Act.
LEGAL MATTERS
Certain legal matters in respect of the validity of the issuance of the
Offered Securities will be passed upon for Security Capital by Mayer, Brown &
Platt, Chicago, Illinois. Mayer, Brown & Platt has in the past represented and
is currently representing Security Capital and certain of its affiliates.
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