EXHIBIT 1
SECURITY CAPITAL GROUP INCORPORATED
$200,000,000
Medium-Term Notes, Series A
Due Nine Months or More from Date of Issue
DISTRIBUTION AGREEMENT
November 18, 1998
X.X. Xxxxxx Securities Inc.
Xxxxxxx, Sachs & Co.
Chase Securities Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx
and Xxxxx Incorporated
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Security Capital Group Incorporated, a Maryland corporation (the
"COMPANY"), confirms its agreement with each of you with respect to the issue
and sale from time to time by the Company of its Medium-Term Notes, Series A Due
Nine Months or More from Date of Issue (the "SECURITIES") in an aggregate
initial offering price of up to $200,000,000 (or the equivalent thereof in one
or more foreign currencies or composite currencies), as such amount shall be
reduced by the aggregate initial offering price of any other debt securities
issued by the Company, whether within or without the United States ("OTHER
SECURITIES") pursuant to the registration statement referred to below, and
agrees with each of you (individually, an "AGENT", and collectively, the
"AGENTS", which term shall include any additional agents appointed pursuant to
Section 12 hereof) as set forth in this Agreement. The Securities will be issued
under the Indenture, dated as of November 16, 1998, as supplemented by
resolutions of the Board of Directors of the Company, dated as of November 16,
1998 (as so supplemented, the "INDENTURE") between the Company and State Street
Bank and Trust Company (the "TRUSTEE"). The Securities shall have the
maturities, interest rates, redemption provisions, if any, and other terms set
forth in the Prospectus referred
to below as it may be amended or supplemented from time to time. The Securities
will be issued, and the terms and rights thereof established, from time to time
by the Company in accordance with the Indenture.
On the basis of the representations and warranties herein contained, but
subject to the terms and conditions stated herein and to the reservation by the
Company of the right to sell Securities directly to investors (other than
broker-dealers) on its own behalf, the Company hereby (i) appoints the Agents
as the exclusive agents of the Company for the purpose of soliciting and
receiving offers to purchase Securities from the Company by others pursuant to
Section 2(a) hereof and (ii) agrees that, except as otherwise contemplated
herein, whenever it determines to sell Securities directly to any Agent as
principal, it will enter into a separate agreement (each such agreement a "TERMS
AGREEMENT"), relating to such sale in accordance with Section 2(b) hereof.
The Company has prepared and filed a registration statement on Form S-3
(No.333-64979) in respect of the Securities with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"). The Company also has
filed with, or proposes to file with, the Commission pursuant to Rule 424 under
the Securities Act supplements to the prospectus included in the Registration
Statement that will describe certain terms of the Securities. The Registration
Statement, including the exhibits thereto, as amended to the Commencement Date
(as hereinafter defined) is hereinafter referred to as the "REGISTRATION
STATEMENT" and the prospectus in the form in which it appears in the
Registration Statement is hereinafter referred to as the "BASIC PROSPECTUS". The
Basic Prospectus as supplemented by the prospectus supplement or supplements
(each a "PROSPECTUS SUPPLEMENT") specifically relating to the Securities in the
form filed with, or transmitted for filing to, the Commission pursuant to Rule
424 under the Securities Act is hereinafter referred to as the "PROSPECTUS". Any
reference in this Agreement to the Registration Statement, the Basic Prospectus,
any preliminary form of Prospectus (a "PRELIMINARY PROSPECTUS") previously filed
with the Commission pursuant to Rule 424 or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act which were filed under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "EXCHANGE ACT") on or before the
date of this Agreement or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be; and any reference to "amend",
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, any preliminary prospectus or the Prospectus, including any
supplement to the Prospectus that sets forth only the terms of a
2
particular issue of the Securities (a "PRICING SUPPLEMENT"), shall be deemed to
refer to and include any documents filed under the Exchange Act after the date
of this Agreement, or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be, which are deemed to be
incorporated by reference therein.
1. REPRESENTATIONS. The Company represents and warrants to, and agrees
with, each Agent as of the Commencement Date, as of each date on which the
Company accepts an offer to purchase Securities (including any purchase by an
Agent as principal pursuant to a Terms Agreement or otherwise), as of each date
the Company issues and sells Securities and as of each date the Registration
Statement or the Basic Prospectus is amended or supplemented, as follows (it
being understood that such representations and warranties shall be deemed to
relate to the Registration Statement, the Basic Prospectus and the Prospectus,
each as amended or supplemented to each such date):
(a) the Registration Statement has been declared effective by the
Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of the
Company, threatened by the Commission; and the Registration Statement and
Prospectus (as amended or supplemented, if applicable) comply, or will
comply, as the case may be, in all material respects with the Securities
Act and the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "TRUST
INDENTURE ACT"), and do not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto and as of
the date of the Prospectus and any amendment or supplement thereto, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the case of the Prospectus, in the light of the circumstances under
which they were made, not misleading, and the Prospectus, as amended or
supplemented at the Commencement Date, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that the foregoing
representations and warranties shall not apply to (i) that part of the
Registration Statement which constitutes the Statement of Eligibility (Form
T-1) under the Trust Indenture Act of the Trustee, and (ii) statements or
omissions in the Registration Statement or the Prospectus made in reliance
upon and in conformity with information relating to any Agent furnished to
the Company in writing by such Agent expressly for use therein;
3
(b) the documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects to
the requirements of the Exchange Act, and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when such documents
are filed with the Commission will conform in all material respects to the
requirements of the Exchange Act, as applicable, and will not contain an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(c) (i) Xxxxxx Xxxxxxxx, LLP, who have certified certain financial
statements of the Company and its subsidiaries, ProLogis Trust ("PROLOGIS")
and its subsidiaries and Homestead Village Incorporated ("HOMESTEAD") and
its subsidiaries, (ii) Ernst & Young LLP and KPMG Peat Warwick LLP, who
have certified certain financial statements of Archstone Communities Trust
("ARCHSTONE") and its subsidiaries and (iii) Price Xxxxxxxxxx X.X., who
have certified certain financial statements of Security Capital U.S. Realty
("USREALTY") and its subsidiaries, are each independent public accountants
as required by the Securities Act;
(d) the financial statements and the related notes thereto, of (i) the
Company and its consolidated subsidiaries, (ii) Archstone, (iii) ProLogis
and (iv) USRealty included or incorporated by reference in the Registration
Statement and the Prospectus, present fairly the consolidated financial
position of each such entity as of the dates indicated and the results of
their respective operations and the changes in their respective
consolidated cash flows for the period specified; the said financial
statements have been prepared in conformity with United States generally
accepted accounting principles, and with respect to USRealty, Luxembourg
regulatory requirements, applied on a consistent basis, and the supporting
schedules included or incorporated by reference in the Registration
Statement or the Prospectus present fairly the information required to be
stated therein; the financial information and statistical data included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with the financial statements presented therein; and the
pro forma financial information, and the related notes thereto, included or
incorporated by reference in the Registration
4
Statement and the Prospectus has been prepared in accordance with the
applicable requirements of the Securities Act and the Exchange Act, as
applicable;
(e) the compound annual return percentages for investments in
Archstone, ProLogis, USRealty and Homestead included in the Annual Report
on Form 10-K incorporated by reference in the Registration Statement and
the Prospectus have been calculated as described in the Annual Report on
Form 10-K and present fairly on the basis described the compound annual
return for investments in each relevant entity for the periods indicated;
(f) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been (i) any
change in the capital stock (except for non-material changes due to the
grant or exercise of stock options and warrants and the conversion of
shares of Class A Common Stock into shares of Class B Common Stock in the
ordinary course) or increase in the long-term debt of the Company, (ii) any
material change in the percentage amount of capital stock or voting power
owned or controlled by the Company in Archstone, Homestead, ProLogis,
USRealty or SC Realty Incorporated (each a "PRINCIPAL AFFILIATE" and,
collectively, the "PRINCIPAL AFFILIATES"), (iii) any change in the long-
term debt of any Principal Affiliate which is material to the Company and
its direct or indirect interests in the Principal Affiliates, taken as a
whole (the "SCGI GROUP") or (iv) any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the business, prospects, financial position, shareholders' equity
or results of operations (a "MATERIAL ADVERSE CHANGE") of the SCGI Group,
in each case, otherwise than as set forth or contemplated in the
Prospectus; and except as set forth or contemplated in the Prospectus
neither the Company nor any of its Principal Affiliates has entered into
any transaction or agreement (whether or not in the ordinary course of
business) material to the SCGI Group;
(g) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Maryland,
with power and authority (corporate or other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing would not reasonably be expected to have a material adverse
5
effect on or affect the business, prospects, financial position,
shareholders' equity or results of operations (a "MATERIAL ADVERSE EFFECT")
on the SCGI Group;
(h) each of the Company's direct or indirect subsidiaries or
affiliated entities identified in Schedule I hereto (each a "SPECIFIED
AFFILIATE") has been duly organized and is validly existing as a
corporation or real estate investment trust, as the case may be, under the
laws of its jurisdiction of organization, with power and authority
(corporate, trust and other) to own its properties and conduct its business
as described in the Prospectus, and has been duly qualified for the
transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure
to be so qualified or in good standing would not reasonably be expected to
have a Material Adverse Effect on the SCGI Group; and all the outstanding
shares of stock or common shares of each Principal Affiliate owned directly
or indirectly by the Company have been duly authorized and validly issued,
are fully paid and, with respect to Principal Affiliates that are
corporations, non-assessable, and are owned directly or indirectly by the
Company free and clear of all liens, encumbrances, security interests and
claims, except as set forth in the Prospectus;
(i) the Company has the equity interest in Archstone, Homestead,
ProLogis and USRealty in the percentage amounts set forth in the
Prospectus, except for non-material changes due to the grant or exercise of
stock options in the ordinary course;
(j) each of this Agreement and any other applicable Terms Agreement
has been duly authorized, executed and delivered by the Company and
constitutes the valid and binding agreement of the Company, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and the effect of general principles of equity, and except as rights
to indemnity and contribution may be limited by applicable law;
(k) the Securities have been duly authorized, and, when issued,
authenticated and delivered under the Indenture and delivered to and paid
for by the purchasers thereof in accordance with this Agreement and any
applicable Terms Agreement, will have been duly executed, authenticated,
issued and delivered and will constitute valid and binding obligations of
the Company entitled to the benefits provided by the Indenture enforceable
6
against the Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and the effect of general principles of equity; the Indenture has been duly
authorized, executed and delivered by the Company and constitutes a valid
and binding agreement enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and the effect of general
principles of equity; the Indenture has been duly qualified under the Trust
Indenture Act; and the Securities of any particular issuance of Securities
and the Indenture will conform to the descriptions thereof in the
Prospectus as amended or supplemented to relate to such issuance of
Securities, in all material respects;
(l) none of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations G, T and X of the Board of Governors of the Federal
Reserve System;
(m) except as set forth in the Prospectus, neither the Company nor any
of its Specified Affiliates is, or with the giving of notice or lapse of
time or both would be, in violation of or in default under, its charter,
declaration of trust, or by-laws, as applicable, or any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its Specified Affiliates is a party or by which
it or any of them or any of their respective properties is bound, except
for violations and defaults which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect on the SCGI
Group; the issue and sale of the Securities and the performance by the
Company of its obligations under the Securities, the Indenture, this
Agreement and any Terms Agreement and the consummation of the transactions
contemplated herein and therein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its Specified Affiliates is a
party or by which the Company or any of its Specified Affiliates is bound
or to which any of the property or assets of the Company or any of its
Specified Affiliates is subject except for such conflicts, breaches or
defaults that would not reasonably be expected to have a Material Adverse
Effect on the SCGI Group, nor will any such
7
action result in any violation of any applicable law or statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, its Specified Affiliates or any of
their respective properties except for such violations that would not
reasonably be expected to have a Material Adverse Effect on the SCGI Group,
nor will any such action result in any violation of the provisions of the
charter (the "CHARTER") or the by-laws of the Company; and no consent,
approval, authorization, order, license, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement, any applicable Terms Agreement
or the Indenture, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by any Agent;
(n) the Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY
ACT");
(o) other than as described in or contemplated by the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Specified Affiliates or any of their
respective properties or to which the Company or any of its Specified
Affiliates is or may be a party or to which any property of the Company or
any of its Specified Affiliates is or may be subject which, if determined
adversely to the Company or any of its Specified Affiliates, could
individually or in the aggregate have, or reasonably be expected to have, a
Material Adverse Effect on the SCGI Group, and, to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others, and there are no
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or described
as required;
(p) the Company's authorized, issued and outstanding capitalization is
as set forth in the Prospectus; and all of the issued shares
8
of capital stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable;
(q) the Company and its Specified Affiliates have directly or
indirectly good and marketable title in fee simple or in leasehold
interest, as the case may be, to all items of real property and good and
marketable title to all personal property owned by them except where the
failure to have such good and marketable title would not be expected to
have a Material Adverse Effect on the SCGI Group, in each case free and
clear of all liens, encumbrances and defects except such as have been
established or permitted to remain pursuant to financing arrangements
entered into in the ordinary course of business or such as do not
materially affect the value of such property and do not interfere with the
use made or proposed to be made of such property by such entity; and any
real property and buildings held under lease by the Company and its
Specified Affiliates are held by them under valid, existing and enforceable
leases with such exceptions as are not material and do not interfere with
the use made or proposed to be made of such property and buildings by the
Company or its Specified Affiliates;
(r) the SCGI Group carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties;
(s) except as would not have a Material Adverse Effect on the SCGI
Group, (i) each of the Company and its Specified Affiliates owns, possesses
or has obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
or lease, as the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, and (ii) neither the
Company nor any Specified Affiliate has received any actual notice of any
proceeding relating to revocation or modification of any such license,
permit, certificate, consent, order, approval or other authorization; and
each of the Company and its Specified Affiliates is in compliance with all
laws and regulations relating to the conduct of its business as conducted
as of the date hereof except such as would not reasonably be expected to
have a Material Adverse Effect on the SCGI Group;
9
(t) there are no existing or, to the best knowledge of the Company,
threatened employment or labor disputes with the employees of the Company
or any of its Principal Affiliates which are reasonably likely to have a
Material Adverse Effect on the SCGI Group;
(u) the Company and its Principal Affiliates have filed all federal,
state, local and foreign tax returns which have been required to be filed
and have paid all taxes shown thereon and all assessments received by them
or any of them to the extent that such taxes have become due and are not
being contested in good faith; and there is no tax deficiency which has
been or might reasonably be expected to be asserted or threatened against
the Company or any Principal Affiliate except such asserted or threatened
deficiencies that would not reasonably be expected to have a Material
Adverse Effect on the SCGI Group;
(v) the Company and its Specified Affiliates (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a Material Adverse Effect on the
SCGI Group;
(w) there are no costs or liabilities associated with Environmental
Laws that are expected, individually or in the aggregate, to have a
Material Adverse Effect on the SCGI Group;
(x) except as described in or contemplated by the Prospectus, the
Company and its Specified Affiliates own or possess all material licenses,
inventions, copyrights, know-how (including trade secrets and other
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names and other intellectual property
rights ("INTELLECTUAL PROPERTY") currently employed by them in connection
with the business now operated by them, and neither the Company nor any
Specified Affiliate has received any notice of infringement of or conflict
with asserted rights of others with respect to the Intellectual Property
which, individually or in the aggregate, if the
10
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect on the SCGI Group;
(y) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
that is maintained, administered or contributed to by the Company or any of
its Principal Affiliates for employees or former employees of the Company
and its Principal Affiliates has been maintained in substantial compliance
with its terms and the requirements of any applicable statutes, orders,
rules and regulations, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the "CODE"); to the best knowledge of the
Company, no prohibited transaction, within the meaning of Section 406 of
ERISA or Section 4975 of the Code has occurred with respect to any such
plan, excluding transactions effected pursuant to a statutory or
administrative exemption; and for each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA, no
"accumulated funding deficiency" as defined in Section 412 of the Code has
been incurred, whether or not waived;
(z) USRealty is not a "passive foreign investment company" within the
meaning of Section 1296(a) of the Code or subject to the accumulated
earnings tax for United States income tax purposes;
(aa) on the date hereof, each of Archstone and ProLogis continues to
satisfy the requirements for qualification as a real estate investment
trust under Sections 856 through 860 of the Code and the rules and
regulations thereunder and the Company reasonably expects that each of such
entity's current method of operation will enable it to meet the
requirements for taxation as a real estate investment trust under the Code
for the fiscal year ending December 31, 1998 ;
(bb) the Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities, and the Company has not distributed and has agreed not to
distribute any prospectus or other offering material in connection with the
offering and sale of the Securities other than the Prospectus, any
preliminary prospectus filed with the Commission or other material
permitted by the Securities Act; and
(cc) immediately after any sale of Securities by the Company hereunder
or under any applicable Terms Agreement, the aggregate
11
amount of Securities which shall have been issued and sold by the
Company hereunder or under any Terms Agreement and of any debt
securities of the Company (other than the Securities) that shall have
been issued and sold pursuant to the Registration Statement will not
exceed the amount of debt securities registered under the Registration
Statement.
2. SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL.
(a) Solicitations as Agent. On the basis of the representations
and warranties herein contained, but subject to the terms and
conditions herein set forth, each of the Agents hereby severally and
not jointly agrees, as agent of the Company, to use its reasonable
efforts to solicit offers to purchase the Securities from the Company
upon the terms and conditions set forth in the Prospectus as amended
or supplemented from time to time. The Company may from time to time
offer Notes for sale otherwise than through the Agents; provided,
however, that so long as this Agreement shall be in effect the Company
shall not solicit or accept offers to purchase, or sell, Securities or
any other debt securities with a maturity at the time of original
issuance of nine (9) months or more except pursuant to this Agreement
and any Terms Agreement, or except pursuant to a private placement not
constituting a public offering under the Securities Act or except in
connection with a firm commitment underwriting pursuant to an
underwriting agreement that does not provide for a continuous offering
of medium-term debt securities through any other agents without
amending this Agreement to appoint such agents as additional Agents
hereunder on the same terms and conditions as provided herein for the
Agents and without giving the Agents prior notice of such appointment.
The consent of the then current Agents shall not be necessary for such
purpose. In the absence of such an amendment, the Company may accept
offers to purchase Notes from or through an agent other than the
Agents, provided that (i) the Company shall not have solicited such
offers, (ii) the Company and such agent shall have executed an
agreement with respect to such purchases having terms and conditions
(including, without limitation, commission rates) with respect to such
purchases substantially the same as the terms and conditions that
would apply to such purchases under this Agreement as if such agent
was an Agent (which may be accomplished by incorporating by reference
in such agreement the terms and conditions of this Agreement), and
(iii) the Company shall provide the Agents with a copy of such
agreement following the execution thereof. However, the Company
reserves the right to sell, and may solicit and accept offers to
purchase, Securities directly on its own behalf to investors (other
than broker-dealers).
12
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase Securities. Upon
receipt of at least one business day's prior notice from the Company,
each Agent will suspend solicitation of offers to purchase Securities
from the Company until such time as the Company has advised such Agent
or Agents that such solicitation may be resumed. During the period of
time that such solicitation is suspended, the Company shall not be
required to deliver any opinions, letters or certificates in
accordance with Sections 4(l), 4(m) and 4(n); provided that if the
Registration Statement or Prospectus is amended or supplemented during
the period of suspension (other than by an amendment or supplement
providing solely for a change in the interest rates, redemption
provisions, amortization schedules or maturities offered for the
Securities or for a change that the Agents deem to be immaterial),
including an amendment or supplement including or incorporating
amended or supplemented financial information, no Agent shall be
required to resume soliciting offers to purchase Securities until the
Company has delivered such opinions, letters and certificates as such
Agent may reasonably request.
The Company agrees to pay each Agent, as consideration for the
sale of each Security resulting from a solicitation made or an offer
to purchase received by such Agent, a commission in the form of a
discount from the purchase price of such Security in an amount equal
to the following applicable percentage of the principal amount of such
Security sold:
RANGE OF MATURITIES COMMISSION PERCENTAGE OF
AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES SOLD
From 9 months to less than 1 year................ .125%
From 1 year to less than 18 months............... .150%
From 18 months to less than 2 years.............. .200%
From 2 years to less than 3 years................ .250%
From 3 years to less than 4 years................ .350%
From 4 years to less than 5 years................ .450%
From 5 years to less than 6 years................ .500%
From 6 years to less than 7 years................ .550%
From 7 years to less than 10 years............... .600%
From 10 years to less than 15 years.............. .625%
From 15 years to less than 20 years.............. .675%
From 20 years to 30 years........................ .750%
13
RANGE OF MATURITIES COMMISSION PERCENTAGE OF
AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES SOLD
Greater than 30 years............................ *
*As agreed to by the Company and the applicable Agent at the time of sale.
The Agents are authorized to solicit offers to purchase
Securities only in the principal amount of $1,000 (or, in the case of
Securities not denominated in U.S. dollars, the equivalent thereof in
the applicable foreign currency or composite currency, rounded down to
the nearest 1,000 units of such foreign currency or composite
currency) or any amount in excess thereof which is an integral
multiple of $1,000 (or, in the case of Securities not denominated in
U.S. dollars, 1,000 units of such foreign currency or composite
currency). Each Agent shall communicate to the Company, orally or in
writing, each offer to purchase Securities received by such Agent as
agent that in its judgment should be considered by the Company. The
Company shall have the sole right to accept offers to purchase the
Securities and may reject any such offer in whole or in part. Each
Agent shall have the right, in its sole discretion, to reject any
offer to purchase Securities, as a whole or in part, that it considers
to be unacceptable and any such rejection shall not be deemed a breach
of its agreements herein contained. The procedural details relating
to the issue and delivery of Securities sold by an Agent as agent and
the payment therefor are set forth in the Administrative Procedures
(as hereinafter defined).
(b) Purchase as Principal. Each sale of Securities to any
Agent as principal shall be made in accordance with the terms of this
Agreement and (unless such Agent shall otherwise agree) a Terms
Agreement which will provide for the sale of such Securities to, and
the purchase thereof by, such Agent. A Terms Agreement will be
substantially in the form of Exhibit A hereto but may take the form of
an exchange of any standard form of written communication between an
Agent and the Company and may also specify certain provisions relating
to the reoffering of such Securities by such Agent. The commitment of
any Agent to purchase Securities as principal, whether pursuant to any
Terms Agreement or otherwise, shall be deemed to have been made on the
basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein and
in the applicable Terms Agreement set forth. Each agreement by an
Agent to purchase Securities as principal (pursuant to a Terms
Agreement or otherwise) shall specify the principal amount of
Securities to be purchased by such Agent pursuant
14
thereto, the price to be paid to the Company for such Securities, the
maturity date of such Securities, the interest rate or interest rate
basis, if any, applicable to such Securities, any other terms of such
Securities, the time and date and place of delivery of and payment for
such Securities (the time and date of any and each such delivery and
payment, the "Time of Delivery"), any provisions relating to rights
of, and default by, underwriters acting together with such Agent in
the reoffering of Securities, and shall also specify any requirements
for opinions of counsel, accountants' letters and officers'
certificates pursuant to Section 4 hereof. Unless otherwise specified
in a Terms Agreement, the procedural details relating to the issue and
delivery of Securities purchased by an Agent as principal and the
payment therefor shall be as set forth in the Administrative
Procedures.
(c) Obligations Several. The Company acknowledges that the
obligations of the Agents are several and not joint and, subject to
the provisions of this Section 2, each Agent shall have complete
discretion as to the manner in which it solicits purchasers for the
Securities and as to the identity thereof.
(d) Administrative Procedures. The Agents and the Company
agree to perform their respective duties and obligations specifically
provided to be performed in the Medium-Term Notes Administrative
Procedures (the "Administrative Procedures") attached hereto as
Exhibit B, as the same may be amended from time to time. The
Administrative Procedures may be amended only by written agreement of
the Company and the Agents.
(e) Other Securities. The Company agrees to notify each
Agent of sales by the Company of Other Securities.
3. COMMENCEMENT DATE. The documents required to be delivered
pursuant to Section 6 hereof on the Commencement Date shall be delivered to
the Agents at the offices of Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, at 11:00 a.m., New York City time, on the date of this
Agreement, which date and time of delivery may be postponed by agreement
between the Agents and the Company but in no event shall be later than the
day prior to the date on which solicitation of offers to purchase
Securities is commenced or the first date on which the Company accepts an
offer by any Agent to purchase Securities as principal (such time and date
being referred to herein as the "Commencement Date").
15
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
each Agent:
(a) to cause each Prospectus Supplement to be filed with or
transmitted for filing to the Commission in accordance with Rule
424(b) under the Securities Act and to prepare, with respect to any
Securities to be sold through or to such Agent pursuant to this
Agreement, a Pricing Supplement with respect to such Securities in a
form previously approved by such Agent and to file such Pricing
Supplement in accordance with Rule 424(b) under the Securities Act;
(b) to deliver to the Agents and counsel for the Agents, at the
expense of the Company, a signed copy of the Registration Statement
(as originally filed) and each amendment thereto, in each case
including exhibits and documents incorporated by reference therein
and, during the period mentioned in paragraph (e) below, to the Agents
as many copies of the Prospectus (including all amendments and
supplements thereto) and documents incorporated by reference therein
as the Agents may reasonably request;
(c) from the date hereof and prior to the termination of the
offering of the Securities pursuant to this Agreement or any Terms
Agreement, to furnish to the Agents a copy of any proposed amendment
or supplement to the Registration Statement or the Prospectus, for
review by the Agents, and not to file any such proposed amendment or
supplement to which the Agents reasonably object;
(d) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required
in connection with the offering or sale of the Securities, and during
such same period, to advise the Agents promptly, and to confirm such
advice in writing, (i) when any amendment to the Registration
Statement shall have become effective, (ii) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation or threatening of any proceeding for that purpose, and (iv)
of the receipt by the Company of any notification with respect to any
suspension of the qualification of the Securities for offer and sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and to use its best efforts to prevent the
16
issuance of any such stop order or notification and, if issued, to
obtain as soon as possible the withdrawal thereof. If the Basic
Prospectus is amended or supplemented as a result of the filing under
the Exchange Act of any document incorporated by reference in the
Prospectus, no Agent shall be obligated to solicit offers to purchase
Securities so long as it is not reasonably satisfied with such
document;
(e) if at any time when a prospectus relating to the Securities
is required to be delivered under the Securities Act, any event shall
occur as a result of which the Prospectus, as then amended or
supplemented, would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances when such
Prospectus is delivered to a purchaser, not misleading, or, if in the
opinion of the Agents or the Company, it is necessary at any time to
amend or supplement the Prospectus to comply with law, to immediately
notify the Agents by telephone (with confirmation in writing) and
request each Agent (i) in its capacity as agent of the Company, to
suspend solicitation of offers to purchase Securities from the Company
(and, if so notified, such Agent shall cease such solicitations and
cease using the Prospectus as soon as practicable, but in any event
not later than one business day later); and (ii) to cease sales of any
Securities such Agent may then own as principal. If the Company shall
decide to amend or supplement the Registration Statement or the
Prospectus, as then amended or supplemented, it shall so advise each
Agent promptly by telephone (with confirmation in writing) and, at its
expense, shall prepare and cause to be filed promptly with the
Commission an amendment or supplement to the Registration Statement or
the Prospectus, as then amended or supplemented, that will correct
such statement or omission or effect such compliance and will supply
such amended or supplemented Prospectus to the Agents in such
quantities as they may reasonably request. If any such amendment or
supplement and any documents, opinions, letters and certificates
furnished to the Agents pursuant to Sections 4(h), 4(l), 4(m) and 4(n)
in connection with the preparation and filing of such amendment or
supplement are satisfactory in all respects to the Agents, upon the
filing with the Commission of such amendment or supplement to the
Prospectus or upon the effectiveness of an amendment to the
Registration Statement, the Agents will resume the solicitation of
offers to purchase Securities hereunder. Notwithstanding any other
provision of this Section 4(e), until the distribution of any
Securities any Agent may own as principal has been completed or in the
event such Agent, in the opinion of its counsel, is otherwise required
to deliver a prospectus in respect of a transaction in the Securities,
if any event described in this Section 4(e) occurs the Company will,
at its own
17
expense, promptly prepare and file with the Commission an amendment or
supplement, reasonably satisfactory in all respects to such Agent,
that will correct such statement or omission or effect such
compliance, will supply such amended or supplemented Prospectus to
such Agent in such quantities as such Agent may reasonably request and
shall furnish to such Agent pursuant to Sections 4(h), 4(l), 4(m) and
4(n) such documents, certificates, opinions and letters as it may
request in connection with the preparation and filing of such
amendment or supplement;
(f) to make generally available to its security holders and to
the Agents as soon as practicable earning statements covering periods
of at least twelve months beginning, in each case, with the first
fiscal quarter of the Company occurring after the effective date of
the Registration Statement with respect to each sale of Securities,
which shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 of the Commission promulgated thereunder;
(g) so long as any Securities are outstanding, to furnish to the
Agents copies of all reports or other communications (financial or
other) furnished to holders of Securities, and copies of any reports
and financial statements furnished to or filed with the Commission or
any national securities exchange;
(h) to furnish to the Agents during the term of this Agreement
such relevant documents and certificates of officers of the Company
relating to the business, operations and affairs of the Company, the
Registration Statement, the Basic Prospectus, any amendments or
supplements thereto, the Indenture, the Securities, this Agreement,
the Administrative Procedures, any applicable Terms Agreement and the
performance by the Company of its obligations hereunder or thereunder
as the Agents may from time to time reasonably request and shall
notify the Agents promptly in writing of any downgrading, or on its
receipt of any notice of (i) any intended or potential downgrading or
(ii) any review or possible change that does not indicate an
improvement in the rating accorded any of securities of, or guaranteed
by, the Company by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(i) that, from the date of any applicable Terms Agreement with
such Agent or other agreement by such Agent to purchase Securities as
principal and continuing to and including the business day following
the related Time of Delivery, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of or guaranteed by the
Company which are
18
substantially similar to the Securities, without the prior written
consent of such Agent;
(j) to use the net proceeds of each offering of Securities in the
manner specified in the Prospectus under "Use of Proceeds;"
(k) as long as any Securities are outstanding, not to be or
become an open-end investment trust, unit investment trust, closed-end
investment company or face-amount certificate company that is or is
required to be registered under the Investment Company Act;
(l) that (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the interest
rates, redemption provisions, amortization schedules or maturities
offered on the Securities or for a change the Agents deem to be
immaterial), including an amendment or supplement including or
incorporating amended or supplemented financial information and (ii)
each time the Company sells Securities to such Agent as principal
pursuant to a Terms Agreement or other agreement and such Terms
Agreement or other agreement specifies the delivery of an opinion
under this Section 4(l) as a condition to the purchase of Securities
pursuant to such Terms Agreement or other agreement, the Company shall
furnish or cause to be furnished forthwith to such Agent a written
opinion of (y) counsel for the Company reasonably satisfactory to such
Agent and (z) the General Counsel of the Company, each dated the date
of such amendment or supplement, or the related Time of Delivery
relating to such sale, as the case may be, in form reasonably
satisfactory to such Agent, of the same tenor as the opinions referred
to in Sections 6(c), 6(d) and 6(e) hereof, respectively, but modified
to relate to the Registration Statement and the Prospectus as amended
and supplemented to the date of such opinions, or, in lieu of such
opinions, counsel and the General Counsel last furnishing such
opinions, may furnish to the Agents a letter to the effect that such
Agent may rely on the opinion of such counsel and such General Counsel
which was last furnished to such Agent to the same extent as though it
were dated the date of such letter (except that the statements in such
last opinion shall be deemed to relate to the Registration Statement
and the Prospectus as amended or supplemented to date of delivery of
such letter);
(m) that (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented to include or incorporate
amended or supplemented financial information and (ii) each time the
Company sells Securities to such Agent as principal pursuant to a
Terms
19
Agreement or other agreement and such Terms Agreement or other
agreement specifies the delivery of a letter under this Section 4(m)
as a condition to the purchase of Securities pursuant to such Terms
Agreement or other agreement, the Company shall cause the independent
certified public accountants who have certified the financial
statements of the Company and its consolidated subsidiaries,
Archstone, ProLogis and USRealty included or incorporated by reference
in the Registration Statement forthwith to furnish such Agent a
letter, dated the date of such amendment or supplement or the related
Time of Delivery relating to such sale, as the case may be, in form
satisfactory to such Agent, of the same tenor as the letter referred
to in Section 6(f) hereof but modified to relate to the Registration
Statement and the Prospectus as amended or supplemented to the date of
such letter with such changes as may be necessary to reflect such
amended or supplemented financial information included or incorporated
by reference in the Registration Statement or the Prospectus as
amended or supplemented, provided, however, that, with respect to any
financial information or other matter, such letter may reconfirm as
true and correct at such date, as though made at and as of such date,
rather than repeat, statements with respect to such financial
information or other matter made in the letter referred to in Section
6(e) hereof which was last furnished to such Agent; and
(n) that (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the interest
rates, redemption provisions, amortization schedules or maturities
offered on the Securities or for a change the Agents deem to be
immaterial), including an amendment or supplement including or
incorporating amended or supplemented financial information and (ii)
each time the Company sells Securities to such Agent as principal and
the applicable Terms Agreement or other agreement specifies the
delivery of a certificate under this Section 4(n) as a condition to
the purchase of Securities pursuant to such Terms Agreement or other
agreement, the Company shall furnish or cause to be furnished
forthwith to such Agent a certificate signed by an executive officer
of the Company, dated the date of such amendment or supplement or the
related Time of Delivery relating to such sale, as the case may be, in
form satisfactory to such Agent, of the same tenor as the certificates
referred to in Section 6(b) but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to the date
of delivery of such certificate or to the effect that the statements
contained in the certificate referred to in Section 6(b) hereof which
was last furnished to such Agent are true and correct at such date as
though made at and as of such date (except that such statements shall
be
20
deemed to relate to the Registration Statement and the Prospectus as
amended or supplemented to such date).
5. COST AND EXPENSES. The Company covenants and agrees with each
Agent that the Company will, whether or not any sale of Securities is
consummated, pay all costs and expenses incident to the performance of the
Company's obligations hereunder and under any applicable Terms Agreement,
including without limiting the generality of the foregoing, all costs,
expenses, fees and disbursements (i) incident to the preparation, issuance,
execution, authentication and delivery of the Securities, including any
expenses of the Trustee and of the Agents' counsel, (ii) incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement, the Prospectus and any preliminary prospectus
(including in each case all exhibits, amendments and supplements thereto),
including any fees, disbursements and expenses of the Agents' counsel,
(iii) incurred in connection with the registration or qualification and
determination of eligibility for investment of the Securities under the
laws of such jurisdictions as the Agents (or in connection with any Terms
Agreement, the applicable Agent) may designate (including reasonable fees
of counsel for the Agents (or such Agent) and their disbursements), (iv) in
connection with the listing of the Securities on any stock exchange, (v)
related to any filing with National Association of Securities Dealers, Inc.
in respect of the Securities, (vi) in connection with the printing
(including word processing and duplication costs) and delivery of this
Agreement, the Indenture, the Preliminary and Supplemental Blue Sky
Memoranda and any Legal Investment Survey and the furnishing to the Agents
and dealers of copies of the Registration Statement and the Prospectus,
including mailing and shipping, as herein provided and (vii) payable to
rating agencies in connection with the rating of the Securities.
6. CONDITIONS. The obligation of any Agent, as agent of the Company,
at any time ("Solicitation Time") to solicit offers to purchase the
Securities, the obligation of any Agent to purchase Securities as principal
pursuant to any Terms Agreement or otherwise, and the obligation of any
other purchaser to purchase Securities shall in each case be subject (1) to
the condition that all representations and warranties of the Company herein
and all statements of officers of the Company made in any certificate
furnished pursuant to the provisions hereof are true and correct (i) in the
case of an Agent's obligation to solicit offers to purchase Securities, at
and as of such Solicitation Time and (ii) in the case of any Agent's or any
other purchaser's obligation to purchase Securities, at and as of the time
the Company accepts the offer to purchase such Securities and, as the case
may be, at and as of the related Time of Delivery or time of purchase; (2)
to the condition that at or prior to such Solicitation Time, time of
acceptance, Time of Delivery or time of purchase, as the case may be, the
Company shall have complied with all its agreements and all conditions on
its part to be performed or
21
satisfied hereunder; and (3) to the following additional conditions when
and as specified:
(a) Prior to such Solicitation Time or corresponding Time of
Delivery or time of purchase, as the case may be:
(i) the Prospectus as amended or supplemented (including,
if applicable, the Pricing Supplement) with respect to such
Securities shall have been filed with the Commission pursuant to
Rule 424(b) under the Securities Act within the applicable time
period prescribed for such filing by the rules and regulations
under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement shall be in effect,
and no proceedings for such purpose shall be pending before or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been
complied with to the reasonable satisfaction of the Agents;
(ii) there shall not have occurred any downgrading, nor
shall any notice have been given of (A) any intended or potential
downgrading or (B) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of
or guaranteed by the Company by any "nationally recognized
statistical rating organization", as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act;
(iii) since the respective dates as of which
information is given in the Prospectus, there shall not have been
(i) any change in the capital stock (except for non-material
changes due to the grant or exercise of stock options and
warrants and the conversion of shares of Class A Common Stock
into shares of Class B Common Stock in the ordinary course) or
increase in the long-term debt of the Company, (ii) any material
change in the percentage amount of capital stock or voting power
owned or controlled by the Company in any Principal Affiliate,
(iii) any change in the long term debt of any Principal Affiliate
which is material to the SCGI Group or (iv) any Material Adverse
Change in the SCGI Group, in each case, otherwise than as set
forth or contemplated in the Prospectus, as amended or
supplemented to such Solicitation Time or at the time such offer
to purchase was made, the effect of which in the judgment of the
applicable Agents makes it impracticable or inadvisable to market
the Securities on the terms and in the manner contemplated in the
Prospectus, as so amended or supplemented;
22
and neither the Company nor any of its Principal Affiliates shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute,
or court or governmental action, order or decree, otherwise than
as set forth or contemplated in the Prospectus and except any
such loss or interference that would not reasonably be expected
to have a Material Adverse Effect on the SCGI Group;
(iv) (A) trading generally shall not have been suspended or
materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board
Options Exchange, the Chicago Mercantile Exchange or the Chicago
Board of Trade, (B) trading of any securities of or guaranteed by
the Company shall not have been suspended on any exchange or in
any over-the-counter market, (C) a general moratorium on
commercial banking activities in New York shall not have been
declared by either Federal or New York State authorities, or (D)
there shall not have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or
crisis that, in the judgment of such Agent or Agents or of such
other purchaser, is material and adverse and which in the
judgment of such Agent or Agents or of other purchaser makes it
impracticable to market the Securities on the terms and in the
manner contemplated in the Prospectus as amended or supplemented
at the Solicitation Time or at the time such offer to purchase
was made.
(b) On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, the relevant Agent
or Agents shall have received a certificate of an executive officer of
the Company satisfactory to the Agents, dated the Commencement Date or
Time of Delivery, as the case may be, to the effect set forth in
subsections (a)(i) and (ii) of this Section and to the further effect
that (1) the representations and warranties of the Company contained
herein are true and correct on and as of the Commencement Date or Time
of Delivery, as the case may be, as if made on and as of such date,
(2) the Company has complied with all agreements and all conditions on
its part to be performed or satisfied hereunder or under the
applicable Terms Agreement or other agreement at or prior to the
Commencement Date or Time of
23
Delivery, as the case may be, and (3) there has not occurred any
Material Adverse Change in the SCGI Group from that set forth or
contemplated in the Registration Statement or Prospectus;
(c) On the Commencement Date, and in the case of a purchase
of Securities by an Agent as principal pursuant to a Terms Agreement
or otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, counsel for the
Company satisfactory to such Agent shall have furnished to the
relevant Agent or Agents their written opinion, dated the Commencement
Date or Time of Delivery, as the case may be, in form and substance
satisfactory to such Agent or Agents, to the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation under the laws of Maryland and
in good standing with the State Department of Assessments and
Taxation of Maryland, with corporate power to own its properties
and conduct its business substantially as described in the
Prospectus as then amended or supplemented, and has been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would
not have a Material Adverse Effect on the SCGI Group;
(ii) each Principal Affiliate has been duly organized
and is validly existing as a corporation or real estate
investment trust, as the case may be, under the laws of its
jurisdiction of organization with power and authority (corporate
or other, as the case may be) to own its properties and conduct
its business substantially as described in the Prospectus; and
all of the outstanding shares of stock or common shares of each
Principal Affiliate owned directly or indirectly by the Company
have been duly authorized and validly issued, are fully paid and,
with respect to Principal Affiliates that are corporations, non-
assessable, and are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims,
except as set forth in the Prospectus;
(iii) other than as described in or contemplated by the
Prospectus, and to the best of such counsel's knowledge, there
are no legal or governmental investigations, actions, suits or
24
proceedings pending or threatened against or affecting the
Company or any of its Principal Affiliates or any of their
respective properties or to which the Company or any of its
Principal Affiliates is or may be a party or to which any
property of the Company or its Principal Affiliates is or may be
subject which, if determined adversely to the Company or any of
its Principal Affiliates, could individually or in the aggregate
have, or reasonably be expected to have, a Material Adverse
Effect on the SCGI Group and, other than as described in or
contemplated by the Prospectus and to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others, and such
counsel does not know of any amendment to the Registration
Statement required to be filed or of any contracts or other
documents of a character required to be filed as an exhibit to
the Registration Statement or required to be incorporated by
reference into the Prospectus or required to be described in the
Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required;
(iv) each of this Agreement and any applicable Terms
Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium and
similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a
proceeding at law or in equity) and except as rights to indemnity
and contribution hereunder may be limited by applicable law;
(v) the Securities have been duly authorized by the
Company and, when duly executed and delivered by the Company and
authenticated in accordance with the terms of the Indenture and
delivered to and paid for by any purchaser of Securities sold
through an Agent as agent or any Agent as principal pursuant to
any Terms Agreement or other agreement, will constitute valid and
binding obligations of the Company entitled to the benefits
provided by the Indenture enforceable against the Company in
accordance with their terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws now or hereafter in
25
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity);
(vi) the Indenture has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms, except to the extent enforcement
thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); and the
Indenture has been duly qualified under the Trust Indenture Act;
(vii) the Indenture and the Securities conform in all
material respects to the descriptions thereof in the Registration
Statement and the Prospectus;
(viii) neither the Company nor any of its Principal
Affiliates is, or with the giving of notice or lapse of time or
both would be, in violation of or in default under, its charter,
declaration of trust or by-laws or, to such counsel's knowledge,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Company or any of its Principal Affiliates is a party or by which
it or any of them or any of their respective properties is bound,
except for violations and defaults which individually or in the
aggregate would not reasonably be expected to have a Material
Adverse Effect on the SCGI Group; the issue and sale of the
Securities and the performance by the Company of its obligations
under the Securities, the Indenture, this Agreement and any
applicable Terms Agreement or other agreement pursuant to which
an Agent purchases Securities as principal and the consummation
of the transactions contemplated herein and therein will not
conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of
its Principal Affiliates is a party or by which the Company or
any of its Principal Affiliates is bound or to which any of the
property or assets of the Company or any of its Principal
Affiliates is subject, nor will any such action result in any
violation of any applicable law or statute or any order,
26
rule or regulation of any court or governmental agency or body
known to such counsel having jurisdiction over the Company, its
Principal Affiliates or any of their respective properties except
for conflicts, breaches, defaults or violations which would not
reasonably be expected to have a Material Adverse Effect on the
SCGI Group or on the consummation of the transactions
contemplated by this Agreement, any applicable Terms Agreement or
other agreement pursuant to which an Agent purchases Securities
as principal or the Indenture or on the validity and
enforceability of the securities and the Indenture, nor will any
such action result in any violation of the provisions of the
Charter or by-laws of the Company;
(ix) no consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the issue and sale of
the Securities or the consummation of the other transactions
contemplated by this Agreement, any applicable Terms Agreement or
other agreement pursuant to which an Agent purchases Securities
as principal, or the Indenture, except such consents, approvals,
authorizations, registrations or qualifications as have been
obtained under the Securities Act and the Trust Indenture Act and
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities
by the Agents or consents, the failure of which to be obtained
would not have a Material Adverse Effect on the SCGI Group or on
the consummation of the transactions contemplated by this
Agreement, any applicable Terms Agreement or other agreement
pursuant to which an Agent purchases Securities as principal, or
the Indenture or on the validity and enforceability of the
Securities and the Indenture;
(x) the statements in (A) the Basic Prospectus under
"Description of Debt Securities" and "Plan of Distribution" and
in the Prospectus Supplement specifically relating to the
Securities under "Description of Notes," "Plan of Distribution"
and "United States Taxation", (B) the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 under the caption
"Item 1. Business--Relationship with Operating Companies" and (C)
the Company's Proxy Statement for its 1998 annual meeting of
shareholders under the captions "Election of Directors--Outside
Directors Plan", "Adoption of 1998 Long-Term Incentive Plan",
"Executive Compensation--1995 Option Plan", "Executive
27
Compensation--Other Option Plans", and "Certain Relationships and
Transactions", insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to therein,
fairly present in all material respects such legal matters,
documents or proceedings;
(xi) the Registration Statement is effective under the
Securities Act and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act
or proceeding therefor initiated or threatened by the Commission;
and
(xii) such counsel (A) is of the opinion that each document
incorporated by reference in the Registration Statement and the
Prospectus (except for the financial statements and related
schedules and other financial and statistical data included
therein, as to which such counsel need express no opinion) when
filed with the Commission complied as to form in all material
respects with the Exchange Act, (B) believes that (except for the
financial statements and related schedules and other financial
and statistical data included therein, as to which such counsel
need express no belief) the Registration Statement (including the
documents incorporated by reference therein) filed with the
Commission pursuant to the Securities Act relating to the
Securities, when such part became effective, did not and, as of
the date such opinion is delivered, does not, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, (C) is of the opinion that the
Registration Statement and the Prospectus and any amendments and
supplements thereto (except for the financial statements and
related schedules and other financial and statistical data
included therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Trust Indenture Act
and (D) believes that (except for the financial statements and
related schedules and other financial and statistical data
included therein, as to which such counsel need express no
belief) the Prospectus, as amended or supplemented, if
applicable, as of the date such opinion is delivered, does not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances under
which they were made, not misleading; provided that in the case
of an opinion delivered on the
28
Commencement Date or pursuant to Section 4(l)(i), the opinion and
belief set forth in clauses (C) and (D) above shall be deemed not
to cover information concerning an offering of particular
Securities to the extent such information will be set forth in a
supplement to the Prospectus.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the State of New York to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to Agents' counsel) of other counsel
reasonably acceptable to the Agents' counsel, familiar with the applicable laws;
and (B) as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and its Principal Affiliates
and certificates or other written statements of officials of jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company and its Principal Affiliates. The opinion of such counsel for the
Company shall state that the opinion of any such other counsel upon which they
relied or such certificates is in form satisfactory to such counsel and, in such
counsel's opinion, the Agents and they are reasonably justified in relying
thereon. With respect to the matters to be covered in subparagraph (xii) above
such counsel may state their opinion and belief is based upon their
participation in the preparation of the Registration Statement and the
Prospectus and any amendment or supplement thereto and review and discussion of
the contents thereof but is without independent check or verification except as
specified. In rendering the opinion contained in paragraph (xi) (insofar as said
opinion refers to information in the Prospectus under "Federal Income Tax
Considerations") such opinion may be based upon (a) the Internal Revenue Code,
as amended, and the rules and regulations promulgated thereunder, (b) Maryland
law existing and applicable to the Company, (c) facts and other matters set
forth in the Prospectus, and (d) certain statements and representations made by
the Company to counsel for the Company, provided that such statements and
representations are also set forth in a certificate to the Agents.
(d) On the Commencement Date, and in the case of a purchase
of Securities by an Agent as principal pursuant to a Terms Agreement
or other agreement, at the corresponding Time of Delivery, counsel for
the Company satisfactory to such Agent, shall have furnished to the
Agents their written opinion, in form and substance reasonably
satisfactory to the Agents, to the effect that the Company is not, and
after giving effect to the offering and sale of the Securities will
not be, an "investment company" as such term is defined in the
Investment Company Act.
29
(e) On the Commencement Date, and in the case of a purchase
of Securities by an Agent as principal pursuant to a Terms Agreement
or otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, the General Counsel
of the Company shall have furnished to the Agents his written opinion,
dated the Commencement Date or Time of Delivery, as the case may be,
in form and substance satisfactory to the Agents, to the effect that:
(i) other than as set forth or contemplated in the
Prospectus and to the best of such counsel's knowledge, there are
no legal or governmental investigations, actions, suits or
proceedings pending or threatened against or affecting the
Company or any of its Principal Affiliates or any of their
respective properties or to which the Company or any of its
Principal Affiliates is or may be a party or to which any
property of the Company or its Principal Affiliates is or may be
the subject which, if determined adversely to the Company or any
of its Principal Affiliates, could individually or in the
aggregate have, or reasonably be expected to have, a Material
Adverse Effect on the SCGI Group; and to the best of such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(ii) such counsel believes that (other than the
financial statements and related schedules and other financial
and statistical data included therein, as to which such counsel
need express no belief) the Prospectus did not, as of its date of
issuance, and does not, as amended or supplemented, if
applicable, as of the Time of Delivery, contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(iii) neither the Company nor any of its Principal
Affiliates is, or with the giving of notice or lapse of time or
both would be, in violation of or in default under its charter,
declaration of trust or by-laws or any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its Principal
Affiliates is a party or by which it or any of them or any of
their respective properties is bound, except for violations and
defaults which individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the
SCGI Group; the issue and sale of the
30
Securities being delivered at the Time of Delivery and the
performance by the Company of its obligations under the
Securities, the Indenture, this Agreement and any applicable
Terms Agreement or other agreement pursuant to which an Agent
purchases Securities as principal and the consummation of the
transactions contemplated herein and therein will not conflict
with or result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to
such counsel to which the Company or any of its Principal
Affiliates is a party or by which the Company or any of its
Principal Affiliates is bound or to which any of the property or
assets of the Company or any of its Principal Affiliates is
subject, nor will any such action result in any violation of any
applicable law or statute or any order, rule or regulation of any
court or governmental agency or body known to such counsel having
jurisdiction over the Company, its Principal Affiliates or any of
their respective properties except for such conflicts, breaches,
defaults or violations which would not reasonably be expected to
have a Material Adverse Effect on the SCGI Group nor will any
such action result in any violation of the provisions of the
Charter or by-laws of the Company;
(iv) to the best of such counsel's knowledge based on
reasonable inquiry, the Company and each Principal Affiliate
owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings
with, all federal, state, local and other governmental
authorities (including foreign regulatory agencies), all self-
regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may
be, and to operate its properties and to carry on its business as
conducted as of the date hereof except for such licenses,
permits, certificates, consents, orders, approvals and other
authorizations, declarations and filings as would not reasonably
be expected to have a Material Adverse Effect on the SCGI Group
and neither the Company nor, to the best of such counsel's
knowledge based on reasonable inquiry, any Principal Affiliate
has received any actual notice of any proceeding relating to
revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization,
and, to the best of such counsel's knowledge based on reasonable
inquiry, each of the Company and its Principal Affiliates is in
compliance with all laws and regulations relating to the conduct
of its business as conducted
31
as of the date of issuance of the Prospectus except for such laws
and regulations as would not reasonably be expected to have a
Material Adverse Effect on the SCGI Group; and
(v) to the best of such counsel's knowledge based on
reasonable inquiry, the Company and its Principal Affiliates (A)
are in compliance with any and all applicable Environmental Laws,
(B) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct
their respective businesses and (C) are in compliance with all
terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the SCGI Group.
(f) On the Commencement Date, and in the case of a purchase
of Securities by an Agent as principal pursuant to a Terms Agreement
or otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, the independent
certified public accountants who have certified the financial
statements of the Company and its Principal Affiliates included or
incorporated by reference in the Registration Statement and
Prospectus, as then amended or supplemented, shall have furnished to
the relevant Agent or Agents a letter, dated the Commencement Date or
Time of Delivery, as the case may be, in form and substance reasonably
satisfactory to such Agent or Agents, containing statements and
information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information relating to the Company contained in or
incorporated by reference in the Registration Statement and the
Prospectus, as then amended or supplemented;
(g) On the Commencement Date, and in the case of a purchase of
Securities by an Agent as principal pursuant to a Terms Agreement or
otherwise, if called for by the applicable Terms Agreement or other
agreement, at the corresponding Time of Delivery, counsel to the
Agents shall have furnished to the relevant Agent or Agents such
opinion or opinions, dated the Commencement Date or Time of Delivery,
as the case may be, with respect to the validity of the Indenture, the
Securities, the Registration Statement, the Prospectus as amended or
supplemented and other related matters as such Agent or Agents may
reasonably request, and in each case such counsel shall have received
such papers and information
32
as they may reasonably request to enable them to pass upon such
matters and, in rendering such opinion, such counsel may rely as to
matters involving the application of the laws of the State of Maryland
on the opinion of other counsel reasonably acceptable to counsel to
the Agent; and
(h) On the Commencement Date and at each Time of Delivery,
the Company shall have furnished to the relevant Agent or Agents such
further certificates and documents as such Agent or Agents shall
reasonably request.
7. INDEMNIFICATION AND CONTRIBUTION. The Company agrees to
indemnify and hold harmless each Agent and each person, if any, who controls
such Agent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including without limitation the reasonable legal fees
and other expenses incurred in connection with any suit, action or proceeding or
any claim asserted) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the case of the Prospectus or
any preliminary prospectus, in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Agent furnished to the Company in writing by such Agent
expressly for use therein; provided, that the foregoing indemnity with respect
to any preliminary prospectus shall not inure to the benefit of any Agent (or to
the benefit of the person controlling any Agent) from whom the person asserting
any such losses, claims, damages or liabilities purchased Securities if such
untrue statement or omission or alleged untrue statement or omission made in
such preliminary prospectus is eliminated or remedied in the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) and, if required by law, a copy of the Prospectus (as so
amended or supplemented) shall not have been furnished to such person at or
prior to the written confirmation of the sale of such Securities to such person.
Each Agent agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act, to the same
33
extent as the foregoing indemnity from the Company to each Agent, but only with
reference to information relating to such Agent furnished to the Company in
writing by such Agent expressly for use in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person jointly with any other
Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
proceeding and shall pay the reasonable fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and in the reasonable
opinion of counsel to the Indemnified Person representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Person shall not,
in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for all Indemnified Persons,
and that all such fees and expenses shall be reimbursed as they are incurred.
Any such separate firm shall be reasonably satisfactory to the Indemnifying
Person, and any such firm for the Agents and such control persons of the Agents
shall be designated in writing by a majority in interest of the Agents who are
Indemnified Parties and any such separate firm for the Company, its directors,
its officers who sign the Registration Statement and such control persons of the
Company or authorized representatives shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Person
shall, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity
34
could have been sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to herein in
connection with any offering of Securities, then each Indemnifying Person under
such paragraph, in lieu of indemnifying such Indemnified Person thereunder,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and each Agent on the other hand from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and each Agent on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and each Agent on the
other in connection with the offering of such Securities shall be deemed to be
in the same respective proportions as the net proceeds from the offering of such
Securities (before deducting expenses) received by the Company and the total
discounts and commissions received by each Agent in respect thereof bear to the
aggregate public offering price of such Securities. The relative fault of the
Company on the one hand and of each Agent on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or such Agent and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and each Agent agrees that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if all Agents were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall an Agent be required to
contribute any amount in excess of the amount by which the total price at which
the
35
Securities referred to in the immediately preceding paragraph that were sold by
or through such Agent exceeds the amount of any damages that such Agent has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligation of each Agent to contribute
pursuant to this Section 7 is several (in the proportion that the principal
amount of the Securities the sale of which by or through such Agent gave rise to
such losses, claims, damages or liabilities bears to the aggregate principal
amount of the Securities the sale of which by or through any Agent gave rise to
such losses, claims, damages or liabilities) and is not joint.
The indemnity and contribution agreements contained in this Section 7 are
in addition to any liability which the Indemnifying Persons may otherwise have
to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of an
Agent or any person controlling any Agent or by or on behalf of the Company, its
officers or directors or any other person controlling the Company and (iii)
acceptance of and payment for any of the Securities.
8. TERMINATION.
(a) This Agreement may be terminated at any time (i) by the Company
with respect to any or all of the Agents or (ii) by any Agent with respect
to itself only, in each case upon the giving of written notice of such
termination to each other party hereto. Any Terms Agreement shall be
subject to termination in the absolute discretion of the Agent or Agents
that are parties thereto on the terms set forth or incorporated by
reference therein. The termination of this Agreement shall not require
termination of any agreement by an Agent to purchase Securities as
principal (whether pursuant to a Terms Agreement or otherwise) and the
termination of such an agreement shall not require termination of this
Agreement. In the event this Agreement is terminated with respect to any
Agent, (x) this Agreement shall remain in full force and effect with
respect to any Agent as to which such termination has not occurred, (y)
this Agreement shall remain in full force and effect with respect to the
rights and obligations of any party which have previously accrued or which
relate to Securities which are already issued, agreed to be issued or the
subject of a pending
36
offer at the time of such termination and (z) in any event, the provisions
of the fourth paragraph of Section 2(a), Section 2(c), the last sentence of
Section 4(e) and Sections 4(g), 4(k), 5, 7, 9, 11 and 14 shall survive;
provided that if at the time of termination an offer to purchase Securities
has been accepted by the Company but the time of delivery to the purchaser
or its agent of such Securities has not yet occurred, the provisions of
Sections 2(b), 2(d), 4(a) through 4(f), 4(j), 4(l) through 4(n) and 6 shall
also survive. If any Terms Agreement is terminated, the provisions of the
last sentence of Section 4(e) and Sections 2(b), 2(d), 4(a), 4(c), 4(d),
4(f), 4(g), 4(i), 4(k), 4(l) through 4(n), 5, 6, 7, 9, 11 and 14 (which
shall have been incorporated by reference in such Terms Agreement) shall
survive.
(b) If this Agreement or any Terms Agreement shall be terminated by
an Agent or Agents because of any failure or refusal on the part of the
Company to comply with the terms or to fulfill any of the conditions of
this Agreement or any Terms Agreement or if for any reason the Company
shall be unable to perform its obligations under this Agreement or any
Terms Agreement or any condition of any Agent's obligations cannot be
fulfilled, the Company agrees to reimburse each Agent or such Agents as
have so terminated this Agreement with respect to themselves, severally,
for all out-of-pocket expenses (including the reasonable fees and expenses
of their counsel) reasonably incurred by such Agent or Agents in connection
with this Agreement or the offering of Securities.
9. POSITION OF THE AGENTS. Each Agent, in soliciting offers to purchase
Securities from the Company and in performing the other obligations of such
Agent hereunder (other than in respect of any purchase by an Agent as principal,
pursuant to a Terms Agreement or otherwise), is acting solely as agent for the
Company and not as principal and does not assume any obligation towards or
relationship of agency or trust with any purchaser of Securities. Each Agent
will make reasonable efforts to assist the Company in obtaining performance by
each purchaser whose offer to purchase Securities from the Company was solicited
by such Agent and has been accepted by the Company, but such Agent shall not
have any liability to the Company in the event such purchase is not consummated
for any reason. If the Company shall default on its obligation to deliver
Securities to a purchaser whose offer it has accepted, the Company shall (i)
hold the relevant Agent harmless against any loss, claim, damage or liability
arising from or as a result of such default by the Company and (ii)
notwithstanding such default, pay to the Agent that solicited such offer any
commission to which it would be entitled in connection with such sale.
37
10. NOTICES. Except as otherwise specifically provided herein or in the
Administrative Procedures, all notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Agents
will be sent, in the case of X.X. Xxxxxx Securities Inc., to 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (Telecopy: (000) 000-0000) Attention: Medium-Term Note
Desk, in the case of Xxxxxxx, Sachs & Co., to 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (Telecopy: (000) 000-0000) Attention: Xxxxx Xxxxxxxxx, in the case of
Chase Securities Inc., to 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Telecopy:
(000) 000-0000) Attention: Medium-Term Note Desk, in the case of Xxxxxxx Lynch,
Pierce, Xxxxxx and Xxxxx Incorporated, to World Financial Center, North Tower,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Telecopy: (000) 000-0000) Attention:
MTN Product Management and, if sent to the Company, to it at SC Group
Incorporated, at 0000 Xxxxxx Xxxxxx Xxxxxx, Xx Xxxx, Xxxxx 00000 (facsimile
number: (000) 000-0000); Attention: Xxxxxxx X. Xxxxx, Senior Vice President.
11. SUCCESSORS. This Agreement and any Terms Agreement shall be binding
upon, and inure solely to the benefit of, each Agent and the Company, and their
respective successors and the officers, directors and controlling persons
referred to herein and (to the extent expressly provided in Section 6) the
purchasers of Securities, and no other person shall acquire or have any right or
obligation under or by virtue of this Agreement or any Terms Agreement.
12. AMENDMENTS. This Agreement may be amended or supplemented if, but
only if, such amendment or supplement is in writing and is signed by the Company
and each Agent; provided that the Company may from time to time, without the
consent of any Agent, amend this Agreement to add or remove as a party hereto
one or more additional firms registered under the Exchange Act, whereupon each
such firm shall become an Agent hereunder on the same terms and conditions as
the other Agents that are parties hereto and the Company shall provide the
Agents with a copy of such agreement following the execution thereof.
13. BUSINESS DAY. Time shall be of the essence in this Agreement and any
Terms Agreement. As used herein, the term "business day" shall mean any day
which is not a Saturday or Sunday or legal holiday or a day on which banks in
New York City are required or authorized by law or executive order to close.
14. APPLICABLE LAW. This Agreement and any Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to the conflict of laws provisions thereof.
38
15. COUNTERPARTS. This Agreement and any Terms Agreement may be signed in
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same instrument.
16. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
39
If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, whereupon this letter and the acceptance
by each of you thereof shall constitute a binding agreement between the Company
and each of you in accordance with its terms.
Very truly yours,
SECURITY CAPITAL GROUP
INCORPORATED
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
and Secretary
Accepted in New York, New York,
as of the date first above written:
X.X. Xxxxxx Securities Inc.
By: /s/ Xxxxxx Xxxx
----------------------------------
Name: Xxxxxx Xxxx
Title:
Xxxxxxx, Xxxxx & Co.
By: /s/ Xxxxxxx, Sachs & Co.
----------------------------------
Name: Xxxxxxx, Xxxxx & Co.
Title:
Xxxxxxx Lynch, Pierce, Xxxxxx and Xxxxx
Incorporated
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title:
40
Chase Securities Inc.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title:
41
Exhibit A
SECURITY CAPITAL GROUP INCORPORATED
MEDIUM TERM NOTES, SERIES A
TERMS AGREEMENT
_______________, 1998
Security Capital Group Incorporated
c/o SC Group Incorporated
0000 Xxxxxx Xxxxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention: ____________
Re: Distribution Agreement dated as of September , 1998
(the "Distribution Agreement")
The undersigned agrees to purchase your Medium-Term Notes, Series A having
the following terms:
Specified Currency: _______________________________
Principal Amount: _______________________________
Original Issue Date: _______________________________
Settlement Date, Time and Place: ___________________
Maturity Date: ______________________________________
Purchase Price: _________% of Principal Amount, plus accrued interest,
if any, from Settlement Date
Price to Public: __________% of Principal Amount, plus accrued
interest, if any, from Settlement Date
Redemption Date (Dates): , commencing
Initial Redemption Price:
Annual Redemption Price decrease:
Repayment Date (Dates):
Repayment Price:
Initial accrual period OID:
Original Yield to Maturity:
(For Fixed Rate Notes)
Interest Rate: _________________________
Applicability of modified payment
upon acceleration:
If yes, state issue price:
Amortization schedule:
(For Floating Rate Notes)
Initial Interest Rate: ___________________
Interest Rate Basis (Commercial Paper, LIBOR,
Treasury, ___________): _____________________
Index Maturity (30, 60, 90 days, 6 months, 1 year,
other): _____________________________________
Interest Reset Period (monthly, quarterly,
semiannually, annually): __________________
Interest Payment Period (monthly, quarterly,
semiannually, annually): __________________
Spread: __________________ points (+/-)
2
Spread Multiplier: ___________________________%
Maximum Interest Rate: _______________________%
Minimum Interest Rate: _______________________%
Initial Interest Reset Date: _________________
Interest Reset Dates: _______________________
Interest Determination Dates: ________________
Interest Payment Dates: _____________________
Calculation Agent: ___________________________
Other terms of Securities:
For purposes of Section 1(a) and Section 7 of the Distribution Agreement,
it is agreed that the only written information furnished by the Agent to the
Company expressly for use in the Registration Statement and the Prospectus is
(a) the information in the last paragraph on the cover page of the prospectus
supplement specifically relating to the Securities, (b) the information
regarding stabilization in the first paragraph on the inside front cover page of
the prospectus supplement specifically relating to the Securities and (c) under
the caption "Plan of Distribution" in the prospectus supplement specifically
relating to the Securities, the information in (i) the third and fourth
sentences of the second paragraph and (ii) the first sentence of the eighth
paragraph.
Provisions relating to Agent default, if any:
The provisions of Sections 1, 2(b) and 2(d) and 4 through 7, 10, 11 and 14
of the Distribution Agreement and the related definitions are incorporated by
reference herein and shall be deemed to have the same force and effect as if set
forth in full herein.
This Agreement is subject to termination in our absolute discretion on the
terms incorporated by reference herein. If this Agreement is so terminated, the
provisions set forth in the last sentence of Section 8 of the Distribution
Agreement shall survive for the purposes of this Agreement.
3
The certificate referred to in Section 4(n) of the Distribution Agreement,
the opinions referred to in Section 4(l) of the Distribution Agreement and the
accountants' letter referred to in Section 4(m) of the Distribution Agreement
will be required.
[Agent]
By: ___________________________________
(Title)
Accepted:
Security Capital Group Incorporated
By: _______________________________
(Title)
4
Exhibit B
SECURITY CAPITAL GROUP INCORPORATED
MEDIUM-TERM NOTES, SERIES A
ADMINISTRATIVE PROCEDURES
The Medium-Term Notes, Series A, Due Nine Months or More from Date of
Issuance (the "Notes"), are to be offered on a continuous basis by Security
Capital Group Incorporated (the "Company"). Each of X.X. Xxxxxx Securities Inc.,
Xxxxxxx, Sachs & Co., Chase Securities Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx
and Xxxxx Incorporated (each an "Agent") has agreed to solicit offers to
purchase the Notes in registered form. The Notes are being sold pursuant to a
Distribution Agreement dated as of November 18, 1998 (the "Agreement") between
the Company and the Agents. In the Agreement, each Agent has agreed to use
reasonable efforts to solicit purchases of the Notes. Each Agent, as principal,
may purchase Notes for its own account and, if such Agent so elects, the Company
and such Agent will enter into a Terms Agreement, as contemplated by the
Agreement. The Company may also solicit offers to purchase and may sell Notes
directly on its own behalf to investors (other than broker-dealers).
The Notes will be issued under an Indenture (the "Indenture"), dated as of
November 16, 1998, between the Company and State Street Bank and Trust Company,
as trustee (the "Trustee"). The Trustee will be the Registrar, Calculation
Agent, Authenticating Agent and Paying Agent for the Notes, and will perform the
duties specified herein. Notes will bear interest at a fixed rate (the "Fixed
Rate Notes"), which may be zero in the case of certain original issue discount
notes (the "OID Notes"), or at floating rates (the "Floating Rate Notes"). Fixed
Rate Notes may pay a level amount in respect of both interest and principal
amortized over the life of the Notes ("Amortizing Notes"). Each Note will be
represented by either a Global Security (as defined below) delivered to the
Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in the
book-entry system maintained by DTC (a "Book-Entry Note") or a certificate
delivered to the holder thereof or a person designated by such holder (a
"Certificated Note"). Except in limited circumstances, an owner of a Book-Entry
Note will not be entitled to receive a Certificated Note.
Book-Entry Notes, which may be payable solely in U.S. dollars, will be
issued in accordance with the administrative procedures set forth in Part I
hereof as they may subsequently be amended as the result of changes in DTC's
operating procedures, and Certificated Notes will be issued in accordance with
the administrative procedures set forth in Part II hereof. Unless otherwise
defined
herein, terms defined in the Agreement, the Prospectus (as defined in the
Agreement), the Indenture or the Notes shall be used herein as therein defined.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representation from
the Company and the Trustee to DTC, dated as of the date hereof (the "Letter of
Representation"), and a Medium-Term Note Certificate Agreement between the
Trustee and DTC, dated as of September 27, 1989, and its obligations as a
participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: On any date of Settlement (as defined under "Settlement" below) for
one or more Book-Entry Notes, the Company will issue a single global
security in fully registered form without coupons (a "Global
Security") representing up to U.S. $200,000,000 principal amount of
all such Notes that have the same Maturity Date, redemption or
repayment provisions, Interest Payment Dates, Original Issue Date,
original issue discount provisions (if any), and, in the case of
Fixed Rate Notes, Interest Rate, amortization schedule (if any) or,
in the case of Floating Rate Notes, Initial Interest Rate, Interest
Payment Dates, Interest Payment Period, Calculation Agent, Base Rate,
Index Maturity, Interest Reset Period, Interest Reset Dates, Spread
or Spread Multiplier (if any), Minimum Interest Rate (if any) and
Maximum Interest Rate (if any) and, in each case, any other relevant
terms (collectively "Terms"). Each Global Security will be dated and
issued as of the date of its authentication by the Trustee. Each
Global Security will bear an "Interest Accrual Date," which will be
(i) with respect to an original Global Security (or any portion
thereof), its original issuance date and (ii) with respect to any
Global Security (or any portion thereof) issued subsequently upon
exchange of a Global Security, or in lieu of a destroyed, lost or
stolen Global Security, the most recent Interest Payment Date to
which interest has been paid or duly provided for on the predecessor
Global Security or Securities (or if no such
2
payment or provision has been made, the original
issuance date of the predecessor Global Security),
regardless of the date of authentication of such
subsequently issued Global Security. Book-Entry Notes
may only be denominated and payable in U.S. dollars. No
Global Security will represent (i) both Fixed Rate and
Floating Rate Book-Entry Notes or (ii) any Certificated
Note. No Note issued between a Regular Record Date and
the related Interest Payment Date shall be issued as a
Global Security within the meaning of the Indenture.
Identification Numbers: The Company has arranged with the CUSIP Service Bureau
of Standard & Poor's Corporation (the "CUSIP Service
Bureau") for the reservation of a series of
approximately 900 CUSIP numbers (including tranche
numbers) for assignment to the Global Securities
representing the Book-Entry Notes. The Company has
obtained from the CUSIP Service Bureau a written list
of such series of reserved CUSIP numbers and has
delivered to the Trustee and DTC the written list of
900 CUSIP numbers of such series. The Trustee will
assign CUSIP numbers to Global Securities as described
below under Settlement Procedure "B". DTC will notify
the CUSIP Service Bureau periodically of the CUSIP
numbers that the Trustee has assigned to Global
Securities. At any time when fewer than 100 of the
reserved CUSIP numbers remain unassigned to Global
Securities, the Trustee shall so advise the Company
and, if it deems necessary, the Company will reserve
additional CUSIP numbers for assignment to Global
Securities representing Book-Entry Notes. Upon
obtaining such additional CUSIP numbers, the Company
shall deliver a list of such additional CUSIP numbers
to the Trustee and DTC.
Registration: Each Global Security will be registered in the name of
Cede & Co., as nominee for DTC, on the security
register maintained under the Indenture. The beneficial
owner of a Book-Entry Note (or one or more participants
in DTC designated by such owner) will designate one or
more participants in DTC with respect to such Note (the
"Participants") to act as agent or
3
agents for such owner in connection with the book-entry
system maintained by DTC and DTC will record in book-
entry form, in accordance with instructions provided by
such Participants, a credit balance with respect to
such beneficial owner in such Note in the account of
such Participants. The ownership interest of such
beneficial owner in such Note will be recorded through
the records of such Participants or through the
separate records of such Participants and one or more
indirect participants in DTC.
Transfers: Transfers of a Book-Entry Note will be accompanied by
book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect
participants in DTC) acting on behalf of beneficial
transferors and transferees of such Note.
Exchanges: The Trustee may deliver to DTC and the CUSIP Service
Bureau at any time a written notice of consolidation
specifying (i) the CUSIP numbers of two or more
outstanding Global Securities that represent Book-Entry
Notes having the same Terms and for which interest has
been paid to the same date, (ii) a date, occurring at
least thirty days after such written notice is
delivered and at least thirty days before the next
Interest Payment Date for such Book-Entry Notes, on
which such Global Securities shall be exchanged for a
single replacement Global Security and (iii) a new
CUSIP number to be assigned to such replacement Global
Security. Upon receipt of such a notice, DTC will send
to its Participants (including the Trustee) a written
reorganization notice to the effect that such exchange
will occur on such date. Prior to the specified
exchange date, the Trustee will deliver to the CUSIP
Service Bureau a written notice setting forth such
exchange date and the new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of
the Global Securities to be exchanged will no longer be
valid. On the specified exchange date, the Trustee will
exchange such Global Securities for a single Global
Security bearing the new CUSIP number and a new
Interest Accrual Date, and the CUSIP numbers of the
exchanged Global Securities will, in accordance with
4
CUSIP Service Bureau procedures, be cancelled and not
immediately reassigned. Notwithstanding the foregoing,
if the Global Securities to be exchanged exceed
$200,000,000 in aggregate principal amount, one Global
Security will be authenticated and issued to represent
each $200,000,000 principal amount of the exchanged
Global Security and an additional Global Security will
be authenticated and issued to represent any remaining
principal amount of such Global Securities (see
"Denominations" below).
Maturities: Each Book-Entry Note will mature on a date
nine months or more from its date of issue.
Notice of Redemption
and the Repayment
Dates: The Trustee will give notice to DTC prior to each
Redemption Date or Repayment Date (as specified in the
Note), if any, at a time and in the manner set forth in
the Letter of Representation.
Denominations: Book-Entry Notes will be issued in principal amounts of
$1,000 and integral multiples thereof. Global
Securities will be denominated in principal amounts not
in excess of $200,000,000. If one or more Book-Entry
Notes having an aggregate principal amount in excess of
$200,000,000 would, but for the preceding sentence, be
represented by a single Global Security, then one
Global Security will be issued to represent each
$200,000,000 principal amount of such Book-Entry Note
or Notes and an additional Global Security will be
issued to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a case, each of
the Global Securities representing such Book-Entry Note
or Notes shall be assigned the same CUSIP number.
Interest: GENERAL. Interest on each Book-Entry Note will accrue
from the Interest Accrual Date of the Global Security
representing such Note. Unless otherwise specified
therein, each payment of interest on a Book-Entry Note
will include interest accrued to but excluding the
Interest Payment Date; provided that in the case of
5
Floating Rate Notes with respect to which the Interest
Reset Period is daily or weekly, interest payable on
any Interest Payment Date (other than interest payable
on any date on which principal thereof is payable, and,
if the Note is a Book Entry Gap Note (as defined
below), other than interest payable on the first
Interest Payment Date after the Original Issue Date
thereof) will include interest accrued through and
including the Regular Record Date immediately preceding
the Interest Payment Date, except that at maturity or
earlier redemption or repayment, the interest payable
will include interest accrued to, but excluding, the
Maturity Date or the date of redemption or repayment,
as the case may be. Interest payable at the maturity or
upon redemption or repayment of a Book-Entry Note will
be payable to the person to whom the principal of such
Note is payable. Standard & Poor's Corporation will use
the information received in the pending deposit message
described under Settlement Procedure "C" below in order
to include the amount of any interest payable and
certain other information regarding the related Global
Security in the appropriate weekly bond report
published by Standard & Poor's Corporation.
REGULAR RECORD DATES. The Regular Record Date with
respect to any Interest Payment Date shall be the date
fifteen calendar days immediately preceding such
Interest Payment Date.
FIXED RATE BOOK-ENTRY NOTES. Unless otherwise
specified pursuant to Settlement Procedure "A" below,
interest payments on Fixed Rate Book-Entry Notes, other
than Amortizing Notes, will be made semiannually on
March 15 and September 15 of each year, and at maturity
or upon any earlier redemption or repayment and
principal and interest payments on Book-Entry
Amortizing Notes will be made semiannually on April 1
and October 1 of each year or quarterly on January 1,
April 1, July 1 and October 1 of each year, and at
maturity (or any redemption or repayment date);
provided, however, that in the case of a Fixed Rate
Book-Entry Note issued between a Regular Record Date
and an Interest Payment Date or
6
on an Interest Payment Date, the first interest payment
will be made on the Interest Payment Date following the
next succeeding Regular Record Date. If any Interest
Payment Date for a Fixed Rate Book-Entry Note is not a
Business Day, the payment due on such day shall be made
on the next succeeding Business Day and no interest
shall accrue on such payment for the period from and
after such Interest Payment Date.
FLOATING RATE BOOK-ENTRY NOTES. Interest payments will
be made on Floating Rate Book-Entry Notes monthly,
quarterly, semiannually or annually. Unless otherwise
specified pursuant to Settlement Procedure "A" below,
interest will be payable, in the case of Floating Rate
Book-Entry Notes with a daily, weekly or monthly
Interest Reset Date, on the third Wednesday of each
month or on the third Wednesday of March, June,
September and December, as specified pursuant to
Settlement Procedure A" below; in the case of Floating
Rate Book-Entry Notes with a quarterly Interest Reset
Date, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate
Book-Entry Notes with a semiannual Interest Reset Date,
on the third Wednesday of the two months specified
pursuant to Settlement Procedure "A" below; and in the
case of Floating Rate Book-Entry Notes with an annual
Interest Reset Date, on the third Wednesday of the
month specified pursuant to Settlement Procedure "A"
below; provided, however, that if an Interest Payment
Date for Floating Rate Book-Entry Notes would otherwise
be a day that is not a Business Day with respect to
such Floating Rate Book-Entry Notes, such Interest
Payment Date will be the next succeeding Business Day
with respect to such Floating Rate Book-Entry Notes,
except in the case of a LIBOR Note if such Business Day
is in the next succeeding calendar month, such Interest
Payment Date will be the immediately preceding Business
Day; and provided, further, that in the case of a
Floating Rate Book-Entry Note issued between a Regular
Record Date and the related Interest Payment Date (a
"Book-Entry Gap Note"), the first interest payment will
be made on the Interest Payment Date following the next
7
succeeding Regular Record Date, and in such case,
notwithstanding the fact that an Interest Reset Date
may occur prior to such Interest Payment Date, the
Initial Interest Rate shall remain in effect until the
first Interest Reset Date occurring on or subsequent to
such Interest Payment Date.
NOTICE OF INTEREST PAYMENT AND REGULAR RECORD DATES. On
the first Business Day of March, June, September and
December of each year, the Trustee will deliver to the
Company and DTC a written list of Interest Payment
Dates that will occur with respect to Book-Entry Notes
during the six-month period beginning on such first
Business Day. Promptly after each date upon which
interest is determined for Floating Rate Notes issued
in book-entry form, the Calculation Agent will notify
the Company, the Trustee and Standard & Poor's
Corporation of the interest rates determined on such
dates.
Calculation of Interest: FIXED RATE BOOK-ENTRY NOTES. Interest on Fixed Rate
Book-Entry Notes (including interest for partial
periods) will be calculated on the basis of a year of
twelve thirty-day months.
FLOATING RATE BOOK-ENTRY NOTES. Interest rates on
Floating Rate Book-Entry Notes will be determined as
set forth in the form of such Notes. Interest on
Floating Rate Book-Entry Notes will be calculated on
the basis of actual days elapsed and a year of 360
days, except that, in the case of Treasury Rate Notes,
interest will be calculated on the basis of the actual
number of days in the year.
Payments of Principal
and Interest: PAYMENTS OF INTEREST ONLY. Promptly after each Regular
Record Date, the Trustee will deliver to DTC and upon
request, the Company, a written notice specifying by
CUSIP number the amount of interest to be paid on each
Global Security other than an Amortizing Note on the
following Interest Payment Date (other than an Interest
Payment Date coinciding with maturity or any earlier
redemption or repayment
8
date) and the total of such amounts. DTC will confirm
the amount payable on each such Global Security on such
Interest Payment Date by reference to the daily bond
reports published by Standard & Poor's Corporation. In
the case of Amortizing Notes, the Trustee will provide
separate written notice to the Company and to DTC prior
to each Interest Payment Date at the time and in the
manner set forth in the Letter of Representation. The
Trustee will provide notice to the Company of the
aggregate amount of interest to be paid on all Global
Securities (other than Amortizing Notes) promptly after
each Regular Record Date. The Company will pay to the
Trustee, as paying agent, the total amount of interest
due on such Interest Payment Date (and, in the case of
an Amortizing Note, principal and interest) (other than
at maturity), and the Trustee will pay such amount to
DTC at the times and in the manner set forth below
under "Manner of Payment."
PAYMENTS AT MATURITY OR UPON REDEMPTION OR REPAYMENT.
On or about the 15th business day preceding the
Maturity Date or redemption or repayment date of a
Global Security, the Trustee will deliver to the
Company and DTC a written list of principal and
interest to be paid on each Global Security other than
an Amortizing Note maturing either at maturity or on a
redemption or repayment date in the following month.
The Company and DTC will confirm the amounts of such
principal and interest payments with respect to each
such Global Security on or about the fifth Business Day
preceding the Maturity Date or redemption or repayment
date of such Global Security. In the case of Amortizing
Notes, the Trustee will provide separate written notice
to the Company and to DTC prior to the Maturity Date
and any redemption or repayment date, as the case may
be, at the times and in the manner set forth in the
Letter of Representation. The Company will pay to the
Trustee, as the paying agent, the principal amount of
such Global Security, together with interest due at
such Maturity Date or redemption or repayment date. The
Trustee will pay such amounts to DTC at the times and
in the manner set forth below under "Manner of
Payment."
9
PAYMENTS NOT ON BUSINESS DAYS. If any Interest Payment
Date or the Maturity Date or redemption or repayment
date of a Global Security representing Fixed Rate Book-
Entry Notes is not a Business Day, the payment due on
such day shall be made on the next succeeding Business
Day and no interest shall accrue on such payment for
the period from and after such Interest Payment Date,
Maturity Date or redemption or repayment date, as the
case may be. If any Interest Payment Date or the
Maturity Date or redemption or repayment date of a
Global Security representing a Floating Rate Book-Entry
Note would otherwise fall on a day that is not a
Business Day, the payment due on such day shall be made
on the next succeeding day that is a Business Day with
respect to such Notes with the same effect as if such
Business Day were the Interest Payment Date, Maturity
Date or date of redemption or repayment, as the case
may be, except that, in the case of Book-Entry LIBOR
Notes, if such Business Day is in the next succeeding
calendar month, such Interest Payment Date or
redemption or repayment date shall be the immediately
preceding day that is a Business Day with respect to
such Book-Entry LIBOR Notes. Promptly after payment to
DTC of the principal and interest due on the Maturity
Date or redemption or repayment date of such Global
Security, the Trustee will cancel such Global Security
in accordance with the terms of the Indenture and
deliver it to the Company with a certificate of
cancellation. Upon request, the Trustee will deliver to
the Company a written statement indicating the total
principal amount of outstanding Book-Entry Notes as of
the immediately preceding Business Day.
MANNER OR PAYMENT. The total amount of any principal
and interest due on Global Securities on any Interest
Payment Date or at maturity or upon redemption or
repayment shall be paid by the Company to the Trustee
in funds available for immediate use by the Trustee as
of 9:30 a.m. (New York City time) on such date. The
Company will make such payment on such Global
Securities by wire transfer to the Trustee or by
instructing the Trustee to withdraw funds from an
10
account maintained by the Company at the Trustee.
The Company will confirm such instructions in
writing to the Trustee. Prior to 10 a.m. (New York
City time) on each Maturity Date or redemption or
repayment date or, if either such date is not a
Business Day, as soon as possible thereafter,
following receipt of such funds from the Company
the Trustee will pay by separate wire transfer
(using Fedwire message entry instructions in a
form previously specified by DTC) to an account at
the Federal Reserve Bank of New York previously
specified by DTC, in funds available for immediate
use by DTC, each payment of principal (together
with interest thereon) due on Global Securities on
any Maturity Date or redemption or repayment date.
On each Interest Payment Date or, if any such date
is not a Business Day, as soon as possible
thereafter, interest payments and, in the case of
Amortizing Notes, interest and principal payments
shall be made to DTC in same day funds in
accordance with existing arrangements between the
Trustee and DTC. Thereafter on each such date, DTC
will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds
available for immediate use to the respective
Participants in whose names the Book-Entry Notes
represented by such Global Securities are recorded
in the book-entry system maintained by DTC.
Neither the Company nor the Trustee shall have any
responsibility or liability for the payment by DTC
to such Participants of the principal of and
interest on the Book-Entry Notes.
WITHHOLDING TAXES. The amount of any taxes
required under applicable law to be withheld from
any interest payment on a Book-Entry Note will be
determined and withheld by the Participant,
indirect participant in DTC or other person
responsible for forwarding payments directly to
the beneficial owner of such Note.
Preparation of Pricing
Supplement: If any order to purchase a Certified Note is
accepted by or on behalf of the Company, the
Company will prepare a pricing supplement
("Pricing Supplement") reflecting the terms of
such Note and will arrange to file the
11
appropriate number of copies of such Pricing
Supplement with the Commission in accordance with
the applicable paragraph of Rule 424(b) under the
Act and will deliver the number of copies of such
Pricing Supplement to the relevant Agent as such
Agent shall request by the close of business on
the following Business Day and shall deliver a
copy of such Pricing Supplement to the Trustee.
The relevant Agent will cause such Pricing
Supplement to be delivered to the purchaser of the
Note.
In each instance that a Pricing Supplement is
prepared, the Agent receiving such Pricing
Supplement will affix the Pricing Supplement to
Prospectuses prior to their use. Outdated Pricing
Supplements, and the Prospectuses to which they
are attached (other than those retained for
files), will be destroyed.
Settlement: The receipt by the Company of immediately
available funds in payment for a Book-Entry Note
and the authentication and issuance of the Global
Security representing such Note shall constitute
"settlement" with respect to such Note. All orders
accepted by the Company will be settled on the
third Business Day following such acceptance
pursuant to the timetable for settlement set forth
below unless the Company and the purchaser agree
to settlement on another day, which shall be no
earlier than the next Business Day.
Settlement Procedures: Settlement Procedures with regard to each Book-
Entry Note sold by the Company to or through an
Agent shall be as follows (unless otherwise
specified pursuant to a Terms Agreement):
A. The relevant Agent will advise the Company by
facsimile transmission or other acceptable
means that such Note is a Book-Entry Note and
of the following settlement information:
1. Principal amount.
2. Maturity Date.
12
3. In the case of a Fixed Rate Book-Entry
Note, the Interest Rate, whether such
Note will pay interest annually or semi-
annually and whether such Note is an
Amortizing Note and, if so, the
Amortization Schedule, or, in the case
of a Floating Rate Book-Entry Note, the
Initial Interest Rate (if known at such
time), Interest Payment Date(s),
including the Initial Interest Payment
Date, Interest Payment Period,
Calculation Agent, Base Rate, Index
Maturity, Interest Reset Period, Initial
Interest Reset Date, Interest Reset
Dates, Spread or Spread Multiplier (if
any), the Minimum Interest Rate (if any)
and the Maximum Interest Rate (if any).
4. Redemption or repayment provisions, if
any.
5. Settlement date and time.
6. Price.
7. Agent's or Agents' commission, if any,
determined as provided in the Agreement.
8. Net proceeds to the Company.
9. Whether the Note is an OID Note, and if
it is an OID Note, the total amount of
OID, the yield to maturity and the
initial accrual period OID.
10. Any other applicable Terms.
B. The Company will advise the Trustee by
facsimile transmission or other acceptable
means of the information set forth in
Settlement Procedure "A" above. The Trustee
will then assign a CUSIP number to the Global
Security representing such Note and will
notify the Company and the Agent of such
CUSIP number by telephone or electronic
transmission (confirmed in writing) as soon
as practicable.
13
C. Based on information provided to it by the
Company, the Trustee will enter a pending
deposit message through DTC's Participant
Terminal System, providing the following
settlement information to DTC, the relevant
Agent and Standard & Poor's Corporation:
1. The information set forth in Settlement
Procedure "A".
2. The Initial Interest Payment Date for
such Note, the number of days by which
such date succeeds the related DTC
Record Date (which in the case of
Floating Rate Notes which reset daily or
weekly, shall be the date five calendar
days immediately preceding the
applicable Interest Payment Date and, in
the case of all other Notes, shall be
the Regular Record Date as defined in
the Note) and, if known, the amount of
interest payable on such Initial
Interest Payment Date.
3. The CUSIP number of the Global Security
representing such Note.
4. Whether such Global Security will
represent any other Book-Entry Note (to
the extent known at such time) and
whether such Note is an Amortizing Note
(by an appropriate notation in the
comments field of DTC's Participant
Terminal System).
5. The DTC participant number of the
institution through which the Company
will hold the Book-Entry Note.
D. The Company will complete the Global Security
representing such Note and deliver it to the
Trustee.
E. The Trustee will authenticate the Global
Security representing such Note in accordance
with the terms of the written order of the
Company then in effect.
14
F. DTC will credit such Note to the Trustee's
participant account at DTC.
G. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such
Note to the relevant Agent's participant
account and (ii) debit such Agent's
settlement account and credit the Trustee's
settlement account for an amount equal to the
price of such Note less such Agent's
commission, if any. The entry of such a
deliver order shall constitute a
representation and warranty by the Trustee to
DTC that (a) the Global Security representing
such Book-Entry Note has been issued and
authenticated and (b) the Trustee is holding
such Global Security pursuant to the Medium-
Term Note Certificate Agreement between the
Trustee and DTC.
H. Unless the relevant Agent purchased such Note
as principal, such Agent will enter an SDFS
deliver order through DTC's Participant
Terminal System instructing DTC (i) to debit
such Note to such Agent's participant account
and credit such Note to the participant
accounts of the Participants with respect to
such Note and (ii) to debit the settlement
account of such Participants and credit the
settlement account of such Agent for an
amount equal to the price of such Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures "G" and "H" will be settled in
accordance with SDFS operating procedures in
effect on the settlement date.
J. The Trustee, upon confirming receipt of such
funds, will credit to the U.S. dollar account
of the Company maintained at a bank in New
York City, notified to the Trustee from time
to time, in funds available for immediate use
in the amount
15
transferred to the Trustee, in accordance
with Settlement Procedure "G".
K. Unless the relevant Agent purchased such Note
as principal, such Agent will confirm the
purchase of such Note to the purchaser either
by transmitting to the Participants with
respect to such Note a confirmation order or
orders through DTC's institutional delivery
system or by mailing a written confirmation
to such purchaser.
L. Upon request, the Trustee will send to the
Company a statement setting forth the
principal amount of Notes outstanding as of
that date under the Indenture and setting
forth a brief description of any sales of
which the Company has advised the Trustee but
which have not yet been settled.
Settlement: For sales by the Company of Book-Entry Notes to or
through an Agent (unless otherwise specified
pursuant to a Terms Agreement), Settlement
Procedures "A" through "K" set forth above shall
be completed as soon as possible but not later
than the respective times (New York City time) set
forth below:
Settlement
Procedure Time
---------- ----
A 11:00 a.m. on the first
business day after the sale
date
B 12:00 noon on the first
business day after the sale
date
C 2:00 p.m. on the first
business day after the sale
date
D 2:00 p.m. on the day before
the settlement date
E 9:00 a.m. on settlement date
F 10:00 a.m. on settlement date
G-H 2:00 p.m. on settlement date
I 4:45 p.m. on settlement date
J-K 5:00 p.m. on settlement date
16
If the Initial Interest Rate for a Floating Rate
Book-Entry Note has not been determined at the
time that Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be
completed as soon as such rate has been determined
but no later than 12 noon and 2:00 p.m.,
respectively, on the second Business Day before
the settlement date. Settlement Procedure "I" is
subject to extension in accordance with any
extension of Fedwire closing deadlines and in the
other events specified in the SDFS operating
procedures in effect on the settlement date. If
settlement of a Book-Entry Note is rescheduled or
cancelled, the Trustee, after receiving notice
from the Company or the Agent, will deliver to
DTC, through DTC's Participant Terminal System, a
cancellation message to such effect by no later
than 2:00 p.m. on the Business Day immediately
preceding the scheduled settlement date.
Failure to Settle: If the Trustee fails to enter an SDFS deliver
order with respect to a Book-Entry Note pursuant
to Settlement Procedure "G", the Trustee may
deliver to DTC, through DTC's Participant Terminal
System, as soon as practicable a withdrawal
message instructing DTC to debit such Note to the
Trustee's participant account, provided that the
Trustee's participant account contains a principal
amount of the Global Security representing such
Note that is at least equal to the principal
amount to be debited. If a withdrawal message is
processed with respect to all the Book-Entry Notes
represented by a Global Security, the Trustee will
xxxx such Global Security "cancelled," make
appropriate entries in the Trustee's records and
send such cancelled Global Security to the
Company. The CUSIP number assigned to such Global
Security shall, in accordance with CUSIP Service
Bureau procedures, be cancelled and not
immediately reassigned. If a withdrawal message is
processed with respect to one or more, but not
all, of the Book-Entry Notes represented by a
Global Security, the Trustee will exchange such
Global Security for two Global Securities, one of
which shall represent such Book-Entry Note or
Notes and shall be cancelled immediately after
issuance and the other of which shall represent
the remaining Book-Entry Notes previously
17
represented by the surrendered Global Security and
shall bear the CUSIP number of the surrendered
Global Security.
If the purchase price for any Book-Entry Note is
not timely paid to the Participants with respect
to such Note by the beneficial purchaser thereof
(or a person, including an indirect participant in
DTC, acting on behalf of such purchaser), such
Participants and, in turn, the relevant Agent may
enter SDFS deliver orders through DTC's
Participant Terminal System reversing the orders
entered pursuant to Settlement Procedures "G" and
"H", respectively. Thereafter, the Trustee will
deliver the withdrawal message and take the
related actions described in the preceding
paragraph.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may
take any action in accordance with its SDFS
operating procedures then in effect.
In the event of a failure to settle with respect
to one or more, but not all, of the Book-Entry
Notes to have been represented by a Global
Security, the Trustee will provide, in accordance
with Settlement Procedures "E" and "G", for the
authentication and issuance of a Global Security
representing the Book-Entry Notes to be
represented by such Global Security and will make
appropriate entries in its records.
Posting Rates by
Company: The Company and the Agents will discuss from time
to time the rates of interest per annum to be
borne by and the maturity of Securities that may
be sold as a result of the solicitation of offers
by an Agent. The Company may establish a fixed set
of interest rates and maturities for an offering
period ("posting"). If the Company decides to
change already posted rates, it will promptly
advise the Agents to suspend solicitation of
offers until the new posted rates have been
established with the Agent.
Trustee Not To Risk
18
Funds: Nothing herein shall be deemed to require the
Trustee to risk or expend its own funds in
connection with any payments to the Company, the
Agents, DTC or any holders of Notes, it being
understood by all parties that payments made by
the Trustee to the Company, the Agents, DTC or any
holders of Notes shall be made only to the extent
that funds are provided to the Trustee for such
purpose.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as registrar in connection with the
Certificated Notes.
Issuance: Each Certificated Note will be dated and issued as
of the date of its authentication by the Trustee.
Each Certificated Note will bear an Original Issue
Date, which will be (i) with respect to an
original Certificated Note (or any portion
thereof), its original issuance date (which will
be the settlement date) and (ii) with respect to
any Certificated Note (or any portion thereof)
issued subsequently upon exchange of a
Certificated Note, or in lieu of a destroyed, lost
or stolen Certificated Note, the original issuance
date of the predecessor Certificated Note,
regardless of the date of authentication of such
subsequently issued Certificated Note. No Note
issued between a Regular Record Date and the
related Interest Payment Date shall be issued as a
Certificated Note within the meaning of the
Indenture.
Registration: Certificated Notes will be issued only in fully
registered form without coupons.
Transfers and
Exchanges: A Certificated Note may be presented for transfer
or exchange at the principal corporate trust
office of the Trustee. Certificated Notes will be
exchangeable for other Certificated Notes having
identical terms but different authorized
denominations without service charge. Certificated
Notes will not be exchangeable for Book-Entry
Notes.
Maturities: Each Certificated Note will mature on a date nine
months or more from its date of issue.
19
Currency: The currency denomination with respect to any
Certificated Note and the currency of payment of
interest and principal with respect to any such
Certificated Note shall be as set forth therein
and in the applicable pricing supplement.
Denominations: Unless otherwise provided in a Prospectus
Supplement, the denomination of any Certificated
Note will be a minimum of $1,000 (or in the case
of Notes not denominated in U.S. dollars, the
equivalent thereof in the applicable foreign
currency or composite currency, rounded down to
the nearest 1,000 units of such foreign currency
or composite currency) and integral multiples of
$1,000 (or in the case of Notes not denominated in
U.S. dollars, 1,000 units of such foreign currency
or composite currency).
Interest: GENERAL. Interest on each Certificated Note will
accrue from the Original Issue Date of such Note
for the first interest period and from the most
recent date to which interest has been paid for
all subsequent interest periods. Unless otherwise
specified therein, each payment of interest on a
Certificated Note will include interest accrued to
but excluding the Interest Payment Date; provided
that in the case of Floating Rate Notes with
respect to which the Interest Reset Period is
daily or weekly, interest payable on any Interest
Payment Date (other than interest payable on any
date on which principal thereof is payable, and,
if the Note is a Certificated Gap Note (as defined
below), other than interest payable on the first
Interest Payment Date after the Original Issue
Date thereof) will include interest accrued
through and including the Regular Record Date
immediately preceding the Interest Payment Date,
except that at maturity or earlier redemption or
repayment, the interest payable will include
interest accrued to, but excluding, the Maturity
Date or the date of redemption or repayment, as
the case may be.
REGULAR RECORD DATES. The Regular Record Date with
respect to any Interest Payment Date in respect of
a Certificated Note shall be the date fifteen
calendar days immediately preceding such Interest
Payment Date.
20
FIXED RATE CERTIFICATED NOTES. Unless otherwise
specified pursuant to Settlement Procedure "A"
below, interest payments on Fixed Rate
Certificated Notes, other than Amortizing Notes,
will be made semiannually on April 1 and October 1
of each year (or, if so indicated in such Note,
annually on April 1 of each year), and at maturity
or upon any earlier redemption or repayment and
principal and interest payments on Certificated
Amortizing Notes will be made semiannually on
April 1 and October 1 of each year or quarterly on
January 1, April 1, July 1 and October 1 of each
year, and at maturity (or any redemption or
repayment date); provided, however that in the
case of a Fixed Rate Certificated Note issued
between a Regular Record Date and an Interest
Payment Date or on an Interest Payment Date, the
first interest payment will be made on the
Interest Payment Date following the next
succeeding Regular Record Date.
FLOATING RATE CERTIFICATED NOTES. Interest
payments will be made on Floating Rate
Certificated Notes monthly, quarterly,
semiannually or annually. Unless otherwise
specified pursuant to Settlement Procedure "A"
below, interest will be payable, in the case of
Floating Rate Certificated Notes with a daily,
weekly or monthly Interest Reset Date, on the
third Wednesday of each month or on the third
Wednesday of March, June, September and December,
as specified pursuant to Settlement Procedure "A"
below; in the case of Floating Rate Certificated
Notes with a quarterly Interest Reset Date, on the
third Wednesday of March, June, September and
December of each year; in the case of Floating
Rate Certificated Notes with a semiannual Interest
Reset Date, on the third Wednesday of the two
months specified pursuant to Settlement Procedure
"A" below; and in the case of Floating Rate
Certificated Notes with an annual Interest Reset
Date, on the third Wednesday of the month
specified pursuant to Settlement Procedure "A"
below; provided, however, that if an Interest
Payment Date for Floating Rate Certificated Notes
would otherwise be a day that is not a Business
Day with respect to such Floating Rate
Certificated Notes, such Interest Payment Date
will be
21
the next succeeding Business Day with respect to such
Floating Rate Certificated Notes, except in the case
of a LIBOR Note if such Business Day is in the next
succeeding calendar month, such Interest Payment Date
will be the immediately preceding Business Day; and
provided, further, that in the case of a Floating Rate
Certificated Note issued between a Regular Record Date
and the related Interest Payment Date (a "Certificated
Gap Note"), the first interest payment will be made on
the Interest Payment Date following the next
succeeding Regular Record Date, and in such case,
notwithstanding the fact that an Interest Reset Date
may occur prior to such Interest Payment Date, the
Initial Interest Rate shall remain in effect until the
first Interest Reset Date occurring on or subsequent
to such Interest Payment Date.
NOTICE OF INTEREST PAYMENT AND REGULAR RECORD DATES.
On the first Business Day of March, June, September
and December of each year, but only upon the request
of the Company, the Trustee will deliver to the
Company a written list of Regular Record Dates and
Interest Payment Dates that will occur with respect to
Certificated Notes during the six-month period
beginning on such first Business Day. Promptly after
each date upon which interest is determined for
Floating Rate Notes issued in certificated form, the
Calculation Agent will notify the Company and the
Trustee of the interest rates determined on such
dates.
Calculation of Interest: FIXED RATE CERTIFICATED NOTES. Interest on Fixed Rate
Certificated Notes (including interest for partial
periods) will be calculated on the basis of a year of
twelve thirty-day months.
FLOATING RATE CERTIFICATED NOTES. Interest rates on
Floating Rate Certificated Notes will be determined as
set forth in the form of such Notes. Interest on
Floating Rate Certificated Notes will be calculated on
the basis of actual days elapsed and a year of 360
days, except that, in the case of Treasury Rate Notes,
interest will be calculated on the basis of the actual
number of days in the year.
22
Payments of Principal
and Interest: The Company will pay the Trustee, as Paying Agent, the
principal amount of each Certificated Note (other than
an Amortizing Note), together with interest due
thereon, at its Maturity Date or upon redemption or
repayment of such Note in funds available for
immediate use by the Trustee. In the case of an
Amortizing Note, the Company will pay the Trustee, as
Paying Agent, the principal amount due on such Note on
such date, together with interest due thereon, at its
Maturity Date or upon redemption or repayment of such
Note on such date, together with interest due thereon,
at its Maturity Date or upon redemption or repayment
of such Note in funds available for immediate use by
the Trustee. The Trustee will pay such amount to the
holder of such Note at its Maturity Date or upon
redemption or repayment of such Note upon presentation
and surrender of such Note to the Trustee. Such
payment, together with payment of interest due at
maturity or upon redemption or repayment, will be made
in funds available for immediate use by the holder of
such Note. Promptly after such presentation and
surrender, the Trustee will cancel such Certificated
Note in accordance with the terms of the Indenture and
deliver it to the Company with a certificate of
cancellation. Unless otherwise specified in the
applicable Pricing Supplement, all interest payments
on a Certificated Note or, in the case of a
Certificated Amortizing Note, payments of principal
and interest (other than interest (or interest and
principal) due at maturity or upon redemption or
repayment) will be made by check drawn on the Trustee
(or another person appointed by the Trustee) and
mailed by the Trustee to the person entitled thereto
as provided in such Note and the Indenture; provided,
however, that (i) the holder of $1,000,000 or more of
Notes having the same Interest Payment Date will be
entitled to receive payment by wire transfer of
immediately available funds and (ii) unless otherwise
specified in the applicable Pricing Supplement or
unless alternative arrangements are made, payments on
Notes in a currency other than U.S. dollars will be
made by wire transfer of immediately available funds
to an account maintained by the payee
23
with a bank located outside the United States and,
with respect to clauses (i) and (ii) above, the holder
of such Notes will provide the Trustee with
appropriate and timely wire transfer instructions.
Promptly after each Regular Record Date, the Trustee
will deliver to the Company a written notice
specifying the aggregate amount of interest to be paid
on all Notes other than an Amortizing Note on the
following Interest Payment Date (other than an
Interest Payment Date coinciding with maturity or any
earlier redemption or repayment date) and the total of
such amounts. In the case of Amortizing Notes, the
Trustee will provide written notice to the Company
specifying the amount of interest and principal to be
paid on each Amortizing Note on the following Interest
Payment Date (other than an Interest Payment Date
coinciding with maturity or any earlier redemption or
repayment date) and the total of such amounts.
Interest at maturity or upon redemption or repayment
will be payable to the person to whom the payment of
principal is payable. On or about the first Business
Day of each month, if applicable, the Trustee will
deliver to the Company a written list of principal and
interest, to the extent ascertainable, to be paid on
all Notes including Amortizing Notes maturing or to be
redeemed or repaid in the following month, if any. The
Trustee, if it is acting as Paying Agent, will be
responsible for withholding taxes on interest paid on
Certificated Notes as required by applicable law.
If any Interest Payment Date or the Maturity Date or
redemption or repayment date of a Fixed Rate
Certificated Note is not a Business Day, the payment
due on such day shall be made on the next succeeding
Business Day and no interest shall accrue on such
payment for the period from and after such Interest
Payment Date. Maturity Date or redemption or repayment
date, as the case may be. If any Interest Payment Date
or the Maturity Date or redemption or repayment date
of a Floating Rate Certificated Note would otherwise
fall on a day that is not a Business Day with respect
to such Note, the payment due on such day
24
shall be made on the next succeeding day that is a
Business Day with respect to such Note with the same
effect as if such Business Day were the stated
Interest Payment Date, Maturity Date or date of
redemption or repayment, as the case may be, except
that, in the case of Certificated LIBOR Notes, if such
Business Day is in the next succeeding calendar month,
such Interest Payment Date, Maturity Date or
redemption or repayment date shall be the immediately
preceding day that is a Business Day with respect to
such Certificated LIBOR Notes.
Preparation of Pricing
Supplement: If any order to purchase a Certificated Note is
accepted by or on behalf of the Company, the Company
will prepare a Pricing Supplement reflecting the terms
of such Note and will arrange to file the appropriate
number of copies of such Pricing Supplement with the
Commission in accordance with the applicable paragraph
of Rule 424(b) under the Act and will deliver the
number of copies of such Pricing Supplement to the
relevant Agent as such Agent shall request by the
close of business on the following Business Day. The
relevant Agent will cause such Pricing Supplement to
be delivered to the purchaser of the Note.
In each instance that a Pricing Supplement is
prepared, the Agent receiving such Pricing Supplement
will affix the Pricing Supplement to Prospectuses
prior to their use. Outdated Pricing Supplements, and
the Prospectuses to which they are attached (other
than those retained for files), will be destroyed.
Settlement: The receipt by the Company of immediately available
funds in payment for an authenticated Certificated
Note delivered to the relevant Agent and such Agent's
delivery of such Note against receipt of immediately
available funds shall constitute "settlement" with
respect to such Note. All orders accepted by the
Company will be settled on the third Business Day
following such acceptance pursuant to the timetable
for settlement set forth below unless the Company and
the purchaser agree to settlement on another day,
which
25
shall be no earlier than the second Business Day
following such acceptance.
Settlement Procedures: Settlement Procedures with regard to each Certificated
Note sold by the Company to or through an Agent shall
be as follows (unless otherwise specified pursuant to
a Terms Agreement):
A. The relevant Agent will advise the Company by
facsimile transmission or other acceptable means
that such Note is a Certificated Note and of the
following settlement information:
1. Name in which such Note is to be registered
("Registered Owner").
2. Address of the Registered Owner and address
for payment of principal and interest.
3. Taxpayer identification number of the
Registered Owner (if available).
4. Currency or currency unit, principal amount
and, if different, currency in which payments
of principal and interest may be made.
5. Maturity Date.
6. In the case of a Fixed Rate Certificated
Note, the Interest Rate, whether such Note
will pay interest annually or semi-annually
and whether such Note is an Amortizing Note
and, if so, the Amortization Schedule, or, in
the case of a Floating Rate Certificated
Note, the Initial Interest Rate (if known at
such time), Interest Payment Date(s),
Interest Payment Period, Calculation Agent,
Base Rate, Index Maturity, Interest Reset
Period, Initial Interest Reset Date, Interest
Reset Dates, Spread or Spread Multiplier (if
any), Minimum Interest Rate (if any) and the
Maximum Interest Rate (if any).
7. Redemption or repayment provisions, if any.
26
8. Settlement date and time.
9. Price.
10. Agent's or Agents' commission, if any,
determined as provided in the Agreement.
11. Denominations.
12. Net proceeds to the Company.
13. Whether the Note is an OID Note, and if it is
an OID Note, the total amount of OID, the
yield to maturity, the initial accrual period
OID.
14. Any other applicable Terms.
B. The Company will advise the Trustee by facsimile
transmission or other acceptable means of the
information set forth in Settlement Procedure "A"
above.
C. The Company will have delivered to the Trustee a
pre-printed four-ply packet for such Note, which
packet will contain the following documents in
forms that have been approved by the Company, the
relevant Agent and the Trustee:
1. Note with customer confirmation.
2. Stub One - For the Trustee.
3. Stub Two - For the relevant Agent.
4. Stub Three - For the Company.
D. The Trustee will complete such Note and
authenticate such Note and deliver it (with the
confirmation) and Stubs One and Two to the
relevant Agent, and such Agent will acknowledge
receipt of the Note by stamping or otherwise
marking Stub One and returning it to the Trustee.
Such delivery will be made only against such
27
acknowledgment of receipt and evidence (supplied
by the Company) that instructions have been given
by such Agent for payment to the account of the
Company maintained at the Trustee, Boston,
Massachusetts (or, with respect to Notes payable
in a Specified Currency other than U.S. dollars,
to an account maintained at a bank selected by the
Company notified to the relevant Agent from time
to time in writing) in funds available for
immediate use, of an amount equal to the price of
such Note less such Agent's commission, if any. In
the event that the instructions given by such
Agent for payment to the account of the Company
are revoked, the Company will as promptly as
possible wire transfer to the account of such
Agent an amount of immediately available funds
equal to the amount of such payment made.
E. Unless the relevant Agent purchased such Note as
principal, such Agent will deliver such Note (with
confirmation) to the customer against payment in
immediately available funds. Such Agent will
obtain the acknowledgment of receipt of such Note
by retaining Stub Two.
F. The Trustee will send Stub Three to the Company by
first-class mail. Periodically, upon the
reasonable request of the Company, the Trustee
will also send to the Company a statement setting
forth the principal amount of the Notes
outstanding as of that date under the Indenture
and setting forth a brief description of any sales
of which the Company has advised the Trustee but
which have not yet been settled.
Settlement Procedures For sales by the Company of Certificated Notes to or
Timetables: through an Agent (unless otherwise specified pursuant
to a Terms Agreement), Settlement Procedures "A"
through "F" set forth above shall be completed on or
before the respective times (New York City time) set
forth below:
Settlement
28
Procedure Time
--------- ----
A 2:00 p.m. on day before settlement date
B 3:00 p.m. on day before settlement date
C-D 2:15 p.m. on settlement date
E 3:00 p.m. on settlement date
F 5:00 p.m. on settlement date
Failure to Settle: If a purchaser fails to accept delivery of and make
payment for any Certificated Note, the relevant Agent
will notify the Company and the Trustee by telephone
and return such Note to the Trustee. Upon receipt of
such notice, the Company will immediately wire transfer
to the account of such Agent an amount equal to the
amount previously credited thereto in respect of such
Note. Such wire transfer will be made on the settlement
date, if possible, and in any event not later than the
Business Day following the settlement date. If the
failure shall have occurred for any reason other than a
default by such Agent in the performance of its
obligations hereunder and under the Agreement, then the
Company will reimburse such Agent or the Trustee, as
appropriate, on an equitable basis for its loss of the
use of the funds during the period when they were
credited to the account of the Company (such
reimbursement for loss of the use of such funds to be
based on the federal funds effective rate then in
effect). Immediately upon receipt of the Certificated
Note in respect of which such failure occurred, the
Trustee will xxxx such Note "cancelled", make
appropriate entries in the Trustee's records and send
such Note to the Company.
Posting Rates
by Company: The Company and the Agents will from time to time post
the rates of interest per annum to be borne by and the
maturity of Securities that may be sold as a result of
the solicitation of offers by an Agent. The Company may
establish a fixed set of interest rates and maturities
for an offering period ("posting"). If the Company
decides to change already posted rates, it will
promptly
29
advise the Agents to suspend solicitation of offers
until the new posted rates have been established with
the Agents.
Trustee Not to
Risk Funds: Nothing herein shall be deemed to require the Trustee
or the Paying Agent to risk or expend its own funds in
connection with any payments to the Company, the Agents
or any holders of Notes, it being understood by all
parties that payments made by the Trustee or the Paying
Agent to the Company, the Agents or any holders of
Notes shall be made only to the extent that funds are
provided to the Trustee or the Paying Agent for such
purpose.
30
Schedule I
SPECIFIED AFFILIATES
JURISDICTION OF
NAME FORMATION
---- ---------
SC Group Incorporated Texas
Security Capital Markets Group Incorporated Delaware
Security Capital Global Capital Management Group Delaware
Security Capital Global Strategic Group Incorporated Maryland
Security Capital Real Estate Research Group Maryland
Incorporated
Security Capital (EU) Management Holdings S.A. Luxembourg
Security Capital Financial Services Group Incorporated Delaware
Security Capital Investment Research Incorporated Delaware
Security Capital Global Capital Management Group (Asia) Delaware
Incorporated
BelmontCorp Maryland
Security Capital U.S. Real Estate Shares Incorporated Maryland
Security Capital Preferred Growth Incorporated Maryland
Security Capital EuroPacific Real Estate Shares Maryland
Incorporated
Security Capital Asia/Pacific Real Estate Shares Maryland
Security Capital Real Estate Arbitrage Shares Maryland
Strategic Hotel Capital Incorporated Delaware
Security Capital European Realty Luxembourg
SC Realty Incorporated Nevada
ProLogis Trust Maryland
Archstone Communities Trust Maryland
Homestead Village Incorporated Maryland
Security Capital U.S. Realty Luxembourg
Security Capital Holdings S.A. Luxembourg
CarrAmerica Realty Corporation Maryland
Regency Realty Corporation Florida
Storage USA, Inc. Tennessee
Pacific Retail Trust Maryland
U.S. Realty New Businesses:
City Center Retail Trust Maryland
Urban Growth Property Trust Maryland
31
JURISDICTION OF
NAME FORMATION
---- ---------
Parking Services International Incorporated Maryland
CWS Communities Trust Maryland
32
