-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JSq543eobCBIMScO4ilNUEhVColbld17O1ABTatxn4a5qIkagtyZ0ya3SnDP2/IM 2FwdmzMYLkMJmwix5pv8Dw== 0000898822-96-000163.txt : 19960508 0000898822-96-000163.hdr.sgml : 19960508 ACCESSION NUMBER: 0000898822-96-000163 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19960507 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CARRAMERICA REALTY CORP CENTRAL INDEX KEY: 0000893577 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 521796339 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43099 FILM NUMBER: 96557506 BUSINESS ADDRESS: STREET 1: 1700 PENNSYLVANIA AVE N W CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2026247500 MAIL ADDRESS: STREET 1: 1700 PENNSYLVANIA AVENUE STREET 2: SUITE 700 CITY: WASHINGTON STATE: DC ZIP: 20006 FORMER COMPANY: FORMER CONFORMED NAME: CARR REALTY CORP DATE OF NAME CHANGE: 19940218 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SECURITY CAPITAL HOLDINGS S A CENTRAL INDEX KEY: 0001013704 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 69 ROUTE D ESCH STREET 2: L 1470 CITY: LUXEMBOURG SC 13D/A 1 SCHEDULE 13D (AMENDMENT NO. 1) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (AMENDMENT No. 1) CarrAmerica Realty Corporation (formerly named Carr Realty Corporation) (Name of Issuer) Common Stock, $0.01 Par Value (Title of Class of Securities) 14441K 10 3 (CUSIP Number) Paul E. Szurek SECURITY CAPITAL U.S. REALTY 69, route d'Esch L-1470 Luxembourg (352) 48 78 78 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 30, 1996 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Sche- dule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d- 1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with this state- ment / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial own- ership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. (Continued on following pages) Page 1 of 11 Pages CUSIP No. 14441K 10 3 13D Page 2 of 11 Pages 1 NAME OF PERSON Security Capital Holdings S.A. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ 3 SEC USE ONLY 4 SOURCE OF FUNDS* OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Luxembourg 7 SOLE VOTING POWER NUMBER OF 11,627,907 (See Item 5) SHARES BENEFICIALLY 8 SHARED VOTING POWER OWNED BY -0- EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON 11,627,907 WITH 10 SHARED DISPOSITIVE POWER -0- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,627,907 (See Item 5) 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 46.5% (See Item 5) 14 TYPE OF PERSON REPORTING* CO *SEE INSTRUCTIONS BEFORE FILLING OUT Item 1. Security and Issuer. This Amendment relates to shares of common stock, par value $0.01 per share ("Common Stock"), of CarrAmerica Realty Corporation, a Maryland corporation formerly named Carr Realty Corporation ("Carr"). The principal executive offices of Carr are located at 1700 Pennsylvania Avenue, N.W., Washington, D.C. 20006. Item 2. Identity and Background. This Amendment is filed by Security Capital Holdings S.A. ("Holdings"), a corporation organized and existing under the laws of Luxembourg and a wholly owned subsidiary of Secu- rity Capital U.S. Realty, a corporation organized and existing under the laws of Luxembourg ("Security Capital U.S. Realty" and, together with Holdings, "USRealty"). The business objec- tive of USRealty is to become Europe's preeminent publicly-held real estate operating company with strategic investments in leading "value-added" real estate operating companies in the United States. USRealty intends to acquire 25% to 45% of the common stock of a limited number of U.S. real estate operating companies with specific market niches and the potential to be leaders in their respective peer groups. USRealty intends to maximize shareholder returns in these companies by investing sufficient capital and, by obtaining representation on the boards of directors and committees thereof, participating with managements in developing and implementing strategies for long- term growth in per share operating results. The principal of- fices of USRealty are located at 69, route d'Esch, L-1470, Lux- embourg. During the last five years, to the best of USRealty's knowledge, neither USRealty nor any of its executive officers or directors has been convicted in a criminal proceeding (ex- cluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as result of which USRealty or such person was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or man- dating activities subject to, federal or state securities laws, or finding any violation with respect to such laws. Each executive officer and each director of USRealty is a citizen of the United States but, with the exception of one director, all executive officers and directors are residents of various European countries. The name, business address, and present principal occupation (including the name, principal business and address of the corporation or organization in which such employment is conducted) of each executive officer Page 3 of 11 Pages and director is set forth in Exhibit 1 to this Amendment and is specifically incorporated herein by reference. USRealty previously filed a Schedule 13D with respect to its investment in Carr, in which it disclosed that USRealty may be deemed to beneficially own up to 11,627,907 shares of Common Stock because of its right to acquire such 11,627,907 shares of Common Stock. Item 3. Source and Amount of Funds or Other Consideration. Pursuant to a Stock Purchase Agreement, dated as of November 5, 1995, by and among Carr, Security Capital U.S. Re- alty and Holdings (the "Stock Purchase Agreement"), subject to the terms and conditions thereof, Carr agreed to sell and USRe- alty agreed to purchase up to 11,627,907 shares of Common Stock or, under certain circumstances, Series A Convertible Preferred Stock, par value $0.01 per share (the "Preferred Stock") of Carr, convertible into Common Stock upon the availability of a sufficient number of authorized but unissued shares of Common Stock (such Preferred Stock, collectively with such Common Stock, the "Shares"). Security Capital U.S. Realty agreed to advance the funds to Holdings necessary to purchase the Shares as required by the Stock Purchase Agreement, and guaranteed the performance by Holdings of its obligations thereunder. On April 29, 1996, Carr Holdings and Security Capital U.S. Realty entered into Amendment No. 1 to the Amended Stock Purchase Agreement (the "Amendment No. 1"), a copy of which Amendment is filed herewith as Exhibit 2.1. The Stock Purchase Agreement, as amended by Amendment No. 1, is herein referred to as the Amended Stock Purchase Agreement. On April 30, 1996, pursuant to the Amended Stock Pur- chase Agreement, USRealty purchased all 11,627,907 shares of Common Stock. The aggregate purchase price paid to Carr for the Shares was $249,613,870. Security Capital U.S. Realty ad- vanced Holdings the funds necessary to purchase such shares as required by the Amended Stock Purchase Agreement. These funds have been obtained by USRealty from equity subscriptions which have been received by USRealty from various international in- vestors. A copy of the Stock Purchase Agreement, and the vari- ous Exhibits thereto, is attached to the previously filed Schedule 13D as Exhibit 2 thereto and is specifically incorpo- rated herein by reference, and a copy of Amendment No. 1 is attached hereto as Exhibit 2.1 and is specifically incorporated herein by reference. The description herein of such agreements Page 4 of 11 Pages and the Exhibits thereto is qualified in its entirety by refer- ence to such agreements and Exhibits. Item 4. Purpose of Transaction. The purchase of the Shares is for the purpose of own- ership and not with a view to or for sale in connection with any distribution thereof. USRealty has no present intention or plan to effect any distribution of the Shares. The Amended Stock Purchase Agreement provided for USRealty's purchase of 6,634,000 shares of Common Stock at a price of $21.467 per share at an initial closing under the Stock Purchase Agreement. The Amended Stock Purchase Agreement provided that, from time to time thereafter, at the election of Carr, USRealty would purchase additional Shares at a price of $21.467 per share, in minimum increments of $25 million, until an aggregate of $249,613,870 (the "Total Equity Commitment") is invested. If Carr did not elect to sell all 11,627,907 Shares to USRealty by January 1, 1997, USRealty could elect to make a single purchase of additional Shares from Carr at a price of $21.467 per share to the extent that the Total Equity Commit- ment was not yet been invested. The Amended Stock Purchase Agreement provided that after the record date for the meeting of Carr's stockholders regarding the transactions contemplated by the Amended Stock Purchase Agreement, USRealty would have the right, from time to time and subject to certain limitations, to use up to $50 mil- lion of its Total Equity Commitment to purchase shares of Com- mon Stock from third parties in one or more public market or private transactions. However, USRealty would not be permitted to purchase more than 650,000 shares from third parties prior to its initial purchase of 6,634,000 shares of Common Stock from Carr. If USRealty made any such public market or private transaction purchases, Carr would have the right to require US- Realty to invest a like amount in Shares in addition to the Total Equity Commitment. All such additional investments would be made at Carr's request either on the same terms as other investors in future offerings at or above $21.467 per share or at $21.467 per share if not concurrent with a future offering. The Amended Stock Purchase Agreement also provided that Carr would submit to a vote of its stockholders for their approval (i) a proposed amendment to Carr's articles of incor- poration amending the ownership limitations therein to permit USRealty to acquire the Shares and to make certain other modi- fications to facilitate Carr's continued qualification as a real estate investment trust for federal income tax purposes (a Page 5 of 11 Pages "REIT") and (ii) a separate and independent proposal to in- crease the number of shares of Common Stock authorized by the articles of incorporation to 90,000,000 shares. If Carr's stockholders approved the transactions contemplated by the Stock Purchase Agreement but did not approve the proposed in- crease in Carr's authorized capital stock, Carr would sell to USRealty shares of Common Stock to the extent of the remaining shares of unauthorized, unissued and unreserved Common Stock, and thereafter, if necessary, shares of Preferred Stock. The initial closing was subject to various condi- tions, including (i) approval by Carr's stockholders of the transaction contemplated by the Stock Purchase Agreement, (ii) approval by Carr's stockholders of the proposed amendment to Carr's articles of incorporation to amend the ownership limita- tions to permit USRealty to acquire the Shares and to make cer- tain other modifications to facilitate Carr's continued quali- fication as a REIT, (iii) approval by the partners of Carr Re- alty, L.P., the entity through which Carr currently conducts its business, of certain amendments to the partnership agree- ment of Carr Realty, L.P., (iv) the continued treatment of Carr as a REIT, (v) the consummation of the initial closing by April 30, 1996 (subject to extension by either party to June 30, 1996), (vi) the absence of any unsolicited superior proposal for an alternative transaction that, if required by the fidu- ciary duty of Carr's board of directors, results in Carr's ter- mination of the Stock Purchase Agreement, and payment of a fee to USRealty thereunder, (vii) completion of certain operational changes (including Carr's acquisition of the development divi- sion of The Oliver Carr Company), and (viii) satisfaction of various customary conditions. Subsequent closings also were subject to certain conditions. The Amended Stock Purchase Agreement contemplated that the parties would enter into a Stockholders Agreement and a Registration Rights Agreement at the initial closing. The agreements as executed are attached hereto as Exhibits 2.2 and 2.3, respectively, are specifically incorporated herein by ref- erence and the description herein of such agreements is quali- fied in its entirety by reference to such agreements. Pursuant to the Stockholders Agreement, USRealty is entitled to certain rights and is subject to certain restrictions, including the following: (i) as long as USRealty owns 25% by value of the outstanding capital stock on a fully diluted basis, USRealty has the right to nominate its proportionate share of Carr's board of directors (but not more than 40% rounded down to the nearest whole number), to obtain certain operating and finan- cial information and to participate in Carr's future equity offerings by purchasing up to 30% of the securities offered therein; (ii) during a standstill period of five years (which Page 6 of 11 Pages period shall be automatically extended for one-year increments unless USRealty gives Carr 270 days' notice cancelling such extensions or unless sooner terminated upon certain events), USRealty is subject to certain limitations and restrictions relating to voting of its Shares, acquisitions of additional Shares (generally limited to 45%, or 48% initially, of the out- standing shares of Common Stock and to 40% of the outstanding shares on a fully diluted basis), transfers of its Shares and various other matters; and (iii) as long as USRealty owns 25% by value of the outstanding capital stock on a fully diluted basis and as long as the standstill period (including exten- sions) is in effect, Carr may not take certain specified corpo- rate actions relating to incurrence of indebtedness, third party property management, investments outside the office prop- erty segment, REIT termination and reduction of its interest in Carr Realty, L.P. Pursuant to the Registration Rights Agree- ment, Carr has granted USRealty certain registration rights to facilitate the resale of its Shares under certain conditions and certain tag-along rights to sell a portion of its Shares in connection with certain extraordinary issuances of stock by Carr. Early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the Notification and Report Form pre- viously filed by USRealty was granted on December 11, 1995. On February 26, 1996, Carr's stockholders approved the transactions contemplated by the Stock Purchase Agreement and the increase in Carr's authorized capital stock. On April 29, 1996, Carr Holdings and Security Capital U.S. Realty entered into Amendment No. 1, a copy of which Amendment is filed herewith as Exhibit 2.1. On April 30, 1996, pursuant to the Stock Purchase Agreement, USRealty purchased all 11,627,907 shares of Common Stock subject to the Amended Stock Purchase Agreement. The aggregate purchase price paid to Carr for the Shares was $249,613,870. Security Capital U.S. Realty advanced Holdings the funds neces- sary to purchase such shares as required by the Amended Stock Purchase Agreement. The conditions to closing described above were all either satisfied or waived. The provisions of the Amended Stock Purchase Agreement relating to the Preferred Stock and USRealty's right to purchase shares of Common Stock from third parties in public market or private transactions are no longer applicable. Except as set forth in this Item 4, USRealty present- ly has no plans or proposals that relate to or would result in Page 7 of 11 Pages any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. As of April 30, 1996, USRealty beneficially owns up to 11,627,907 shares of Common Stock because of USRealty's pur- chase of such shares of Common Stock on April 30, 1996. USRe- alty owns approximately 46.5% of the outstanding Common Stock, and approximately 39.0% on a fully diluted basis, based on the number of outstanding shares of Common Stock and the number of outstanding limited partnership units of Carr Realty, L.P. that are redeemable for Common Stock or the cash equivalent thereof. Security Capital Group Incorporated is the largest holder of the outstanding interests in Security Capital U.S. Realty (al- though such ownership is less than 40%) and may be deemed to control Security Capital U.S. Realty. Security Capital Group Incorporated disclaims beneficial ownership of the Shares to be acquired by USRealty. Except as set forth in this Item 5, to the best knowledge and belief of USRealty, no transactions involving Common Stock have been effected during the past 60 days by US- Realty or by its directors, executive officers or controlling persons. Item 6. Contracts, Arrangements, Understanding or Relation- ships with Respect to Securities of the Issuer. As described above in Item 4, the Amended Stock Pur- chase Agreement, the Stockholders Agreement and the Registra- tion Rights Agreement among Carr, Security Capital U.S. Realty and Holdings provide for various rights and restrictions with respect to Carr's Common Stock and Preferred Stock. A copy of the Stock Purchase Agreement, and the vari- ous Exhibits thereto (including the forms of the Stockholders Agreement and the Registration Rights Agreement), is attached to the previously filed Schedule 13D as Exhibit 2 thereto and copies of Amendment No. 1 to the Stock Purchase Agreement, the Stockholders Agreement and the Registration Rights Agreement, as executed are attached hereto as Exhibits 2.1, 2.2 and 2.3, respectively, and all such Exhibits are specifically incorpo- rated herein by reference, and the description herein of such agreements and the Exhibits thereto are qualified in their en- tirety by reference to such agreements and Exhibits. Page 8 of 11 Pages Item 7. Material to be filed as Exhibits. The following Exhibits are filed as part of this Schedule 13D: Exhibit 1 Name, Business Address, and Present Principal Occupation of Each Executive Officer and Direc- tor of Security Capital U.S. Realty and of Secu- rity Capital Holdings S.A. Exhibit 2 Stock Purchase Agreement, dated as of November 5, 1995, by and among Carr Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty (incorporated by reference to Exhibit 5.1 of Carr Realty Corporation's Cur- rent Report on Form 8-K dated November 6, 1995) Exhibit 2.1 Amendment No. 1 to the Stock Purchase Agreement, dated as of April 29, 1996, by and among Carr Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Exhibit 2.2 Stockholders Agreement, dated as of April 30, 1996, by and among Carr Realty Corporation, Carr Realty, L.P., Security Capital Holdings S.A. and Security Capital U.S. Realty Exhibit 2.3 Registration Rights Agreement, dated as of April 30, 1996, by and among Carr Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Page 9 of 11 Pages SIGNATURE After reasonable inquiry and to the best of my knowl- edge and belief, I certify that the information set forth in this statement is true, complete, and correct. SECURITY CAPITAL HOLDINGS S.A. By: /s/ Paul E. Szurek Name: Paul E. Szurek Title: Managing Director May 7, 1996 Page 10 of 11 Pages EXHIBIT INDEX Sequential Exhibit Description Page No. 1 Name, Business Address, and Present Principal Occupation of Each Executive Officer and Director of Security Capi- tal U.S. Realty and of Security Capital Holdings S.A. 2 Stock Purchase Agreement, dated as of November 5, 1995, by and among Carr Realty Corporation, Security Capital U.S. Realty and Security Capital Hold- ings S.A. (incorporated by reference to Exhibit 5.1 of Carr Realty Corpora- tion's Current Report on Form 8-K dated November 6, 1995) 2.1 Amendment No. 1 to the Stock Purchase Agreement, dated as of April 29, 1996, by and among Carr Realty Corporation, Security Capital Holdings S.A. and Se- curity Capital U.S. Realty 2.2 Stockholders Agreement, dated as of April 30, 1996, by and among Carr Re- alty Corporation, Carr Realty, L.P., Security Capital Holdings S.A. and Se- curity Capital U.S. Realty 2.3 Registration Rights Agreement, dated as of April 30, 1996, by and among Carr Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty EX-99.1 2 EXHIBIT 1 EXHIBIT 1 NAME, PRINCIPAL BUSINESS, AND ADDRESS OF THE DIRECTORS AND EXECUTIVE OFFICERS OF SECURITY CAPITAL U.S. REALTY AND OF SECURITY CAPITAL HOLDINGS S.A. The identity and background of the executive officers and directors of Security Capital U.S. Realty and Security Capital Holdings S.A. are as follows: SECURITY CAPITAL U.S. REALTY: 1 W. Joseph Houlihan is a Director of Security Capital U.S. Realty. Mr. Houlihan's present principal occupa- tion is as Executive Vice President and Director of the Insti- tutional Management Group of GIM Algemeen Vermogensbeheer which provides investment management and advisory services. GIM Al- gemeen Vermogensbeheer's business address is Fellenoord 35, Postbus 365, 5600 AJ Eindhoven, The Netherlands. 2 James T. Mauck is a Director of Security Capital U.S. Realty. Mr. Mauck's present principal occupation is as Managing Director for Continental Europe of R.R. Donnelley & Sons Company which provides printing and related services. R.R. Donnelley & Sons Company's European business address is Overschiestraat 59a, 1062XD Amsterdam, The Netherlands. 3 William D. Sanders is a Director of Security Capital U.S. Realty. Mr. Sanders' present principal occupation is as Chairman of the Board of Directors and Chief Executive Officer of Security Capital Group Incorporated which controls and operates a group of highly focused, fully integrated real estate operating companies. Security Capital Group Incorpo- rated's business address is 125 Lincoln Avenue, Santa Fe, New Mexico 87501. 4 Paul E. Szurek is a Managing Director of Secu- rity Capital U.S. Realty. Mr. Szurek's present principal oc- cupation is as Managing Director of Security Capital U.S. Re- alty and as Managing Director of Security Capital (EU) Manage- ment S.A. Security Capital U.S. Realty's and Security Capital (EU) Management S.A.'s business address is 69, route d'Esch, L- 1470 Luxembourg. 5 Albert D. Adriani is a Vice President of Secu- rity Capital U.S. Realty. Mr. Adriani's present principal oc- cupation is as Vice President of Security Capital U.S. Realty and as Vice President of Security Capital (EU) Management S.A. Security Capital U.S. Realty's and Security Capital (EU) Man- agement S.A.'s business address is 69, route d'Esch, L-1470 Luxembourg. SECURITY CAPITAL HOLDINGS S.A.: 1. W. Joseph Houlihan is a Director of Security Capital Holdings S.A. Mr. Houlihan's present principal occupa- tion is as Executive Vice President and Director of the Insti- tutional Management Group of GIM Algemeen Vermogensbeheer which provides investment management and advisory services. GIM Al- gemeen Vermogensbeheer's business address is Fellenoord 35, Postbus 365, 5600 AJ Eindhoven, The Netherlands. 2. James T. Mauck is a Director of Security Capital Holdings S.A. Mr. Mauck's present principal occupation is as Managing Director for Continental Europe of R.R. Donnelley & Sons Company which provides printing and related services. R.R. Donnelley & Sons Company's European business address is Overschiestraat 59a, 1062XD Amsterdam, The Netherlands. 3. Paul E. Szurek is a Managing Director of Secu- rity Capital Holdings S.A. Mr. Szurek's present principal oc- cupation is as Managing Director of Security Capital U.S. Re- alty and as Managing Director of Security Capital (EU) Manage- ment S.A. Security Capital U.S. Realty's and Security Capital (EU) Management S.A.'s business address is 69, route d'Esch, L- 1470 Luxembourg. 4. Albert D. Adriani is a Vice President of Secu- rity Capital U.S. Realty. Mr. Adriani's present principal oc- cupation is as Vice President of Security Capital U.S. Realty and as Vice President of Security Capital (EU) Management S.A. Security Capital U.S. Realty's and Security Capital (EU) Man- agement S.A.'s business address is 69, route d'Esch, L-1470 Luxembourg. EX-99.2 3 EXHIBIT 2.1 EXHIBIT 2.1 AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT THIS AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT (this "Amendment") is made and entered into as of April 29, 1996 by and among CARR REALTY CORPORATION, a Maryland corporation (the "Company"), SECURITY CAPITAL U.S. REALTY, a Luxembourg corporation (the "Advancing Party"), and SECURITY CAPITAL HOLDINGS S.A., a Luxembourg corporation and a wholly-owned subsidiary of the Advancing Party ("Buyer"). WHEREAS, the parties hereto entered into a Stock Purchase Agreement, dated as of November 5, 1995 (the "Agreement"), pursuant to which Buyer agreed to purchase from the Company, and the Company agreed to sell to the Buyer up to an aggregate of 11,627,907 shares of Company Stock at an aggregate price of $250,000,000.50, or $21.50 per share; WHEREAS, the parties hereto previously agreed that the Initial Closing would occur on April 22, 1996, and that Buyer would purchase the entire 11,627,907 shares of Company Common Stock to be purchased pursuant to the Agreement at the Initial Closing; WHEREAS, the Company desires to defer the Initial Closing until April 30, 1996; and WHEREAS, in consideration for Buyer agreeing to defer the Initial Closing, the Company has agreed to reduce the Purchase Price for the Purchased Shares and to revise the form of Stockholders Agreement, all as set forth below; NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: 1. Definitions. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. 2. Closing Date of Initial Closing; Full Funding of Total Equity Commitment at Initial Closing. Subject to the terms and conditions of the Agreement, (i) the Initial Closing shall be held on Tuesday, April 30, 1996 at 10:00 a.m. local time at the offices of Hogan & Hartson L.L.P, Columbia Square, 555 Thirteenth Street, N.W., Washington, D.C. 20004, and (ii) at the Initial Closing, the Company will sell, convey, assign, transfer, and deliver, and Buyer will purchase and acquire from the Company, an aggregate of 11,627,907 shares of Company Common Stock, which shall satisfy the Total Equity Commitment in full and shall reduce the Remaining Equity Commitment to zero. 3. Adjustment to Purchase Price. The aggregate Purchase Price for the 11,627,907 Purchased Shares shall be equal to $249,613,870.00 (which results in a Per Share Purchase Price of approximately $21.467). 4. Amendments to Exhibit C. a. Section 1.41 of Exhibit C to the Agreement hereby is amended by deleting such Section 1.41 in its entirety and replacing it with the following: Section 1.41 "25% Termination Date" shall mean the first date, if any, following the date on which the Remaining Equity Commitment shall have been reduced to zero and on which Investor's ownership of Company Stock shall have been below 25% by value of the outstanding shares of Company Stock, on a fully diluted basis, for a continuous period of 180 days; provided, that, if Investor's ownership of Company Stock shall, following the date on which the Remaining Equity Commitment shall have been reduced to zero, have fallen below 25% by value of the outstanding shares of Company Stock, on a fully diluted basis, as a result of the redemption of limited partnership or other interests in partnerships or other entities other than the Operating Partnership for shares of Company Common Stock, then the 25% Termination Date shall mean the first date, if any, following the date on which Investor's ownership of Company Stock shall have been below 25% by value of the outstanding shares of Company Stock, on a fully diluted basis, for a continuous period of 450 days; provided, however, that if Investor's ownership of Company Stock shall, following the date on which the Remaining Equity Commitment shall have been reduced to zero, have fallen below 25% by value of the outstanding shares of Company Stock, on a fully diluted basis, as a result of a Transfer by Investor of Company Stock, or as a result of a failure of Investor to exercise its rights under Section 4.2 during the sixty days immediately prior to the expiration of such 180-day period or 450-day period, as applicable, if any such rights are exercisable during such pe- riod, to the extent necessary to (and provided that it shall be possible by such exercise to) raise its ownership of the outstanding Company Common Stock, on a fully diluted basis, above such 25% threshold, then the 25% Termination Date shall occur immediately upon such Transfer or failure to exercise its rights under Section 4.2, as the case may be. b. Section 2.1(a) of Exhibit C to the Agreement hereby is amended by deleting the third sentence of such Section 2.1(a) in its entirety and replacing it with the following: Thereafter and until the 25% Termination Date, at each annual or special meeting of stockholders of the Company at, or the taking of action by written consent of stockholders of the Company with respect to, which any Directors are to be elected, Investor shall have the right (but not the obligation) to nominate for election to the Board that number of Directors which, when added to the number of Directors who are then Investor Nominees and who will continue to serve as Directors without regard to the outcome of the election at such meeting or by such consent, represent the same proportion of the total number of Directors (but in no event more -2- than 40% thereof) as is represented by the number of shares of Company Stock which Investor then owns, as of the applicable record date for such meeting (or, in the case of the first annual meeting of stockholders of the Company following the Initial Closing, if the record date for such annual meeting is prior to the date of the Initial Closing, then as of the date of the Initial Closing), relative to the number of shares of outstanding Company Stock as of such date, on a fully diluted basis (such Directors also, "Investor Nominees"), provided, that if Investor nominates for election to the Board less than the number of Directors which Investor is entitled, pursuant to this Section 2.1(a), to nominate for election to the Board, at the first annual meeting of stockholders of the Company following the Initial Closing, Investor shall have the right (but not the obligation), at any time and from time to time until 300 days following the first annual meeting of stockholders of the Company following the Initial Closing, to designate for placement on the Board, subject to the terms and conditions hereof, that number of additional Directors which, when added to the number of Directors who are Investor Nominees at such time, equals the number of Directors that Investor was entitled to nominate for election to the Board at the first annual meeting of stockholders of the Company following the Initial Closing, and the Company shall, as soon as reasonably practicable, cause each additional Director so designated by Investor to become a member of the Board in accordance with the second sentence hereof. 5. No Effect on Consistent Terms. All terms of the Agreement not inconsistent with this Amendment shall remain in place and in full force and effect and shall be unaffected by this Amendment. 6. Headings. The headings contained in this Amendment are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Amendment. -3- IN WITNESS WHEREOF, this Amendment has been signed by or on behalf of each of the parties hereto as of the day first above written. CARR REALTY CORPORATION By: /s/ Brian K. Fields Name: Brian K. Fields Title: Chief Financial Officer SECURITY CAPITAL HOLDINGS S.A. By: /s/ Paul E. Szurek Name: Paul E. Szurek Title: Managing Director SECURITY CAPITAL U.S. REALTY By: /s/ Paul E. Szurek Name: Paul E. Szurek Title: Managing Director -4- EX-99.3 4 EXHIBIT 2.2 Exhibit 2.2 STOCKHOLDERS AGREEMENT by and among CARR REALTY CORPORATION CARR REALTY, L.P. SECURITY CAPITAL HOLDINGS S.A. and SECURITY CAPITAL U.S. REALTY dated as of April 30, 1996 TABLE OF CONTENTS Page ARTICLE 1 Definitions Section 1.1 "Affiliate"............................... 1 Section 1.2 "Agreement"............................... 1 Section 1.3 "Beneficially Own"........................ 1 Section 1.4 "Board"................................... 2 Section 1.5 "Buyer"................................... 2 Section 1.6 "Code".................................... 2 Section 1.7 "Company"................................. 2 Section 1.8 "Company Common Stock".................... 2 Section 1.9 "Conflict of Interest Policies"........... 2 Section 1.10 "Corporate Action Covenants".............. 2 Section 1.11 "Covered Transaction"..................... 2 Section 1.12 "Director"................................ 2 Section 1.13 "Early Termination Event"................. 2 Section 1.14 "Exercise Notice"......................... 2 Section 1.15 "Extraordinary Transaction"............... 2 Section 1.16 "fully diluted"........................... 2 Section 1.17 "Government Authority".................... 3 Section 1.18 "Group"................................... 3 Section 1.19 "Investor"................................ 3 Section 1.20 "Investor Nominees"....................... 3 Section 1.21 "Investor Restricted Person".............. 3 Section 1.22 "Key Committees".......................... 3 Section 1.23 "Large Controlled Subsidiary"............. 3 Section 1.24 "1933 Act"................................ 3 Section 1.25 "1934 Act"................................ 3 Section 1.26 "Office Property"......................... 3 Section 1.27 "Office Property Company"................. 3 Section 1.28 "Operating Partnership"................... 3 Section 1.29 "Participation Notice".................... 3 Section 1.30 "Passive Assets Percentage"............... 3 Section 1.31 "Passive Income Percentage"............... 3 Section 1.32 "person".................................. 4 Section 1.33 "SCGI".................................... 4 Section 1.34 "SCGI Restricted Person".................. 4 Section 1.35 "Securities Filings"...................... 4 Section 1.36 "Standstill Extension Term"............... 4 Section 1.37 "Standstill Period"....................... 4 Section 1.38 "Stock Purchase Agreement"................ 4 Section 1.39 "13D Group"............................... 4 Section 1.40 "Transfer"................................ 4 Section 1.41 "25% Termination Date".................... 4 Section 1.42 "USREALTY"................................ 5 Section 1.43 "Voting Securities"....................... 5 ARTICLE 2 Board of Directors Section 2.1 Investor Nominees......................... 5 Section 2.2 Committee Representation; Subsidiary Boards....................... 6 Section 2.3 Vacancies................................. 7 ARTICLE 3 Information Rights Section 3.1 Operating Statements; Public Company Status.......................... 7 Section 3.2 Advice of Actions......................... 7 ARTICLE 4 Voting and Participation Rights Section 4.1 Voting Rights............................. 8 Section 4.2 Participation Rights...................... 9 ARTICLE 5 Standstill Provisions Section 5.1 Standstill Period......................... 11 Section 5.2 Restrictions During Standstill Period and Standstill Extension Term................................... 13 Section 5.3 Investments in Office Properties and Purchases of Interests in Office Property Companies..................... 15 Section 5.4 Compliance with Insider Trading Policy.... 16 Section 5.5 Compliance with Article V of the Amended Company Charter................ 16 Section 5.6 Investment Company Matters................ 17 ARTICLE 6 Limitations on Corporate Actions, Etc. Section 6.1 Limitations on Corporate Actions.......... 17 Section 6.2 Provision of Information.................. 19 Section 6.3 Compliance with Conflicts of Interest Policy........................ 19 Section 6.4 Sales of Assets........................... 20 -ii- ARTICLE 7 Miscellaneous Section 7.1 Counterparts.............................. 20 Section 7.2 Governing Law............................. 20 Section 7.3 Entire Agreement.......................... 20 Section 7.4 Expenses.................................. 20 Section 7.5 Notices................................... 20 Section 7.6 Successors and Assigns.................... 21 Section 7.7 Headings.................................. 21 Section 7.8 Amendments and Waivers.................... 21 Section 7.9 Interpretation; Absence of Presumption.... 22 Section 7.10 Severability.............................. 22 Section 7.11 Further Assurances........................ 22 Section 7.12 Specific Performance...................... 22 Section 7.13 Investor Breach........................... 22 Section 7.14 Confidentiality........................... 23 -iii- THIS STOCKHOLDERS AGREEMENT (the "Agreement"), dated as of April 30, 1996, is made by and among Carr Realty Corporation, a Maryland corporation (the "Company"), Carr Realty, L.P., a Delaware limited partnership (the "Operating Partnership"), Security Capital U.S. Realty, a Luxembourg corporation ("USREALTY"), and Security Capital Holdings S.A., a Luxembourg corporation and a wholly owned subsidiary of USREALTY ("Buyer"). Capitalized terms not otherwise defined herein have the meaning ascribed to them in the Stock Purchase Agreement (as hereinafter defined). RECITALS: WHEREAS, the Company, USREALTY and Buyer have entered into a Stock Purchase Agreement, dated as of November 5, 1995 (the "Stock Purchase Agreement"), pursuant to which the Company is selling, conveying, assigning and transferring, and Buyer is purchasing, certain shares of the common stock, par value $.01 per share, of the Company (the "Company Common Stock") on the date hereof, and pursuant to which the Company has agreed to sell, and Buyer has agreed to purchase, certain additional shares of Company Stock, upon the terms and subject to the conditions set forth therein; and WHEREAS, it is a condition to the transactions contemplated by the Stock Purchase Agreement and the parties believe it to be in their best interests that they enter into this Agreement and provide for certain rights and restrictions with respect to the investment by Investor (as hereinafter defined) in the Company and the corporate governance of the Company; NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE 1 Definitions As used in this Agreement, the following terms shall have the following respective meanings: Section 1.1 "Affiliate" shall have the meaning ascribed thereto in Rule 12b-2 promulgated under the 1934 Act, and as in effect on the date hereof. Section 1.2 "Agreement" shall have the meaning set forth in the first paragraph hereof. Section 1.3 "Beneficially Own" shall mean, with respect to any security, having direct or indirect (including through any Subsidiary or Affiliate) "beneficial ownership" of such security, as determined pursuant to Rule 13d-3 under the 1934 Act, including pursuant to any agreement, arrangement or understanding, whether or not in writing. Section 1.4 "Board" shall mean the board of directors of the Company. Section 1.5 "Buyer" shall have the meaning set forth in the first paragraph hereof. Section 1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended, and any successor thereto, including all of the rules and regulations promulgated thereunder. Section 1.7 "Company" shall have the meaning set forth in the first paragraph hereof. Section 1.8 "Company Common Stock" shall have the meaning set forth in the second paragraph hereof. Section 1.9 "Conflict of Interest Policies" shall have the meaning set forth in Section 6.3. Section 1.10 "Corporate Action Covenants" shall have the meaning set forth in Section 6.1. Section 1.11 "Covered Transaction" shall have the meaning set forth in Section 5.1(a)(iv). Section 1.12 "Director" shall mean a member of the Board. Section 1.13 "Early Termination Event" shall have the meaning set forth in Section 5.1(a). Section 1.4 "Exercise Notice" shall have the meaning set forth in Section 4.2(b). Section 1.5 "Extraordinary Transaction" shall mean (a) any merger, consolidation, sale of assets (or group of assets), recapitalization, other business combination, liquidation, or other similar action out of the ordinary course of business of the Company, or (b) any issuance of securities to any person or Group requiring shareholder approval in accordance with the guidelines of the New York Stock Exchange as to such matters, as in effect as of the date of the Stock Purchase Agreement. Section 1.6 "fully diluted" shall mean, with respect to the Company Stock, the total number of outstanding shares of Company Stock (for such purposes, treating the number of shares of Company Preferred Stock as that number of shares of Company Common Stock into which such shares of Company Preferred Stock are then convertible), plus the sum of (a) all Operating Partnership Units outstanding as of the applicable time and held by limited partners of the Operating Partnership other than the Company, and (b) all Operating Partnership Units issuable upon the exercise of options or warrants to purchase and securities convertible into (or exchangeable or redeemable for) Operating Partnership Units outstanding as of the applicable time, such sum not to exceed 5,758,989 for purposes of this definition. -2- Section 1.17 "Government Authority" shall mean any government or state (or any subdivision thereof) of or in the United States, or any agency, authority, bureau, commission, department or similar body or instrumentality thereof, or any governmental court or tribunal. Section 1.18 "Group" shall mean a "group" as such term is used in Section 13(d)(3) of the 1934 Act. Section 1.19 "Investor" shall mean, collectively, as the context may require, USREALTY and Buyer, and shall also include any Affiliate of USREALTY or Buyer of which USREALTY and/or Buyer collectively, directly or indirectly, Beneficially Own 98% or more of the voting power and economic interests, or any BONA FIDE financial institution to which any Investor has Transferred (including upon foreclosure of a pledge) shares of Company Stock for the purpose of securing BONA FIDE indebtedness of any Investor and which has agreed to be bound by this Agreement. Section 1.20 "Investor Nominees" shall have the meaning set forth in Section 2.1(a). Section 1.21 "Investor Restricted Person" shall have the meaning set forth in Section 5.3(a). Section 1.22 "Key Committees" shall have the meaning set forth in Section 2.2(a). Section 1.23 "Large Controlled Subsidiary" shall mean a Controlled Subsidiary having assets in excess of $200,000,000. Section 1.24 "1933 Act" shall mean the Securities Act of 1933, as amended. Section 1.25 "1934 Act" shall mean the Securities Exchange Act of 1934, as amended. Section 1.26 "Office Property" shall have the meaning set forth in Section 5.3(a). Section 1.27 "Office Property Company" shall have the meaning set forth in Section 5.3(b). Section 1.28 "Operating Partnership" shall have the meaning set forth in the first paragraph hereof. Section 1.29 "Participation Notice" shall have the meaning set forth in Section 4.2(b). Section 1.30 "Passive Assets Percentage" shall have the meaning set forth in Section 6.1(c). Section 1.31 "Passive Income Percentage" shall have the meaning set forth in Section 6.1(c). -3- Section 1.32 "person" shall mean any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization, other form of business or legal entity or Government Authority. Section 1.33 "SCGI" shall have the meaning set forth in Section 5.3. Section 1.34 "SCGI Restricted Person" shall have the meaning set forth in Section 5.3(a). Section 1.35 "Securities Filings" shall have the meaning set forth in Section 3.1(a)(ii). Section 1.36 "Standstill Extension Term" shall have the meaning set forth in Section 5.1(b). Section 1.37 "Standstill Period" shall have the meaning set forth in Section 5.1(a). Section 1.38 "Stock Purchase Agreement" shall have the meaning set forth in the second paragraph hereof. Section 1.39 "13D Group" shall mean any group of persons acquiring, holding, voting or disposing of Voting Securities which would be required under Section 13(d) of the 1934 Act and the rules and regulations thereunder (as in effect, and based on legal interpretations thereof existing, on the date hereof) to file a statement on Schedule 13D with the Securities and Exchange Commission as a "person" within the meaning of Section 13(d)(3) of the 1934 Act if such group beneficially owned Voting Securities representing more than 5% of any class of Voting Securities then outstanding. Section 1.40 "Transfer" shall have the meaning set forth in Section 5.2(a)(ii). Section 1.41 "25% Termination Date" shall mean the first date, if any, following the date on which the Remaining Equity Commitment shall have been reduced to zero and on which Investor's ownership of Company Stock shall have been below 25% by value of the outstanding shares of Company Stock, on a fully diluted basis, for a continuous period of 180 days; provided, that, if Investor's ownership of Company Stock shall, following the date on which the Remaining Equity Commitment shall have been reduced to zero, have fallen below 25% by value of the outstanding shares of Company Stock, on a fully diluted basis, as a result of the redemption of limited partnership or other interests in partnerships or other entities other than the Operating Partnership for shares of Company Common Stock, then the 25% Termination Date shall mean the first date, if any, following the date on which Investor's ownership of Company Stock shall have been below 25% by value of the outstanding shares of Company Stock, on a fully diluted basis, for a continuous period of 450 days; provided, however, that if Investor's ownership of Company Stock shall, following the date on which the Remaining Equity Commitment shall have been reduced to zero, have fallen below 25% by value of the outstanding shares of Company Stock, on a fully diluted basis, as a result of a Transfer by Investor of Company Stock, or as a result of a failure of Investor to exercise its rights under Section 4.2 during the sixty days immediately prior to the expiration of such 180-day period or 450-day period, as -4- applicable, if any such rights are exercisable during such period, to the extent necessary to (and provided that it shall be possible by such exercise to) raise its ownership of the outstanding Company Common Stock, on a fully diluted basis, above such 25% threshold, then the 25% Termination Date shall occur immediately upon such Transfer or failure to exercise its rights under Section 4.2, as the case may be. Section 1.42 "USREALTY" shall have the meaning set forth in the first paragraph hereof. Section 1.43 "Voting Securities" shall mean at any time shares of any class of capital stock of the Company which are then entitled to vote generally in the election of Directors. ARTICLE 2 Board of Directors Section 2.1 Investor Nominees. (a) From and after the Initial Closing and until the next annual or special meeting of stockholders of the Company at, or the next taking of action by written consent of stockholders of the Company with respect to, which any Directors are to be elected, the Investor shall have the right (but not the obligation) to have on the Board two Directors (such Directors, the "Investor Nominees"), and the Company shall cause such Investor Nominees to become members of the Board. To effectuate the placement of such Investor Nominees on the Board, the Company shall, at its sole option, (i) expand the size of the Board or (ii) solicit the resignations of the appropriate number of Directors, in either case, to the extent necessary to permit the Investor Nominees to serve. Thereafter and until the 25% Termination Date, at each annual or special meeting of stockholders of the Company at, or the taking of action by written consent of stockholders of the Company with respect to, which any Directors are to be elected, Investor shall have the right (but not the obligation) to nominate for election to the Board that number of Directors which, when added to the number of Directors who are then Investor Nominees and who will continue to serve as Directors without regard to the outcome of the election at such meeting or by such consent, represent the same proportion of the total number of Directors (but in no event more than 40% thereof) as is represented by the number of shares of Company Stock which Investor then owns, as of the applicable record date for such meeting (or, in the case of the first annual meeting of stockholders of the Company following the Initial Closing, if the record date for such annual meeting is prior to the date of the Initial Closing, then as of the date of the Initial Closing), relative to the number of shares of outstanding Company Stock as of such date, on a fully diluted basis (such Directors also, "Investor Nominees"), provided, that if Investor nominates for election to the Board less than the number of Directors which Investor is entitled, pursuant to this Section 2.1(a), to nominate for election to the Board, at the first annual meeting of stockholders of the Company following the Initial Closing, Investor shall have the right (but not the obligation), at any time and from time to time until 300 days following the first annual meeting of stockholders of the Company following the Initial Closing, to designate for placement on the Board, subject to the terms and conditions hereof, that number of additional Directors which, when added to the number of Directors who are Investor Nominees at such time, equals the number of Directors that Investor was entitled to nominate for election to the Board at the first annual meeting of stockholders of the -5- Company following the Initial Closing, and the Company shall, as soon as reasonably practicable, cause each additional Director so designated by Investor to become a member of the Board in accordance with the second sentence hereof. In computing the number of Investor Nominees, any fraction is to be rounded down to the nearest whole number. (b) Investor will not name any person as an Investor Nominee if (i) such person is not reasonably experienced in business, financial or real estate matters; (ii) such person has been convicted of, or has pled NOLO CONTENDERE to, a felony; (iii) the election of such person would violate any law; or (iv) any event required to be disclosed pursuant to Item 401(f) of Regulation S-K of the 1934 Act has occurred with respect to such person. (c) The Company will support the nomination of, and the Company's nominating committee (or any other committee exercising a similar function) shall recommend to the Board, the election of each Investor Nominee to the Board, and the Company will exercise all authority under applicable law to cause each Investor Nominee to be elected to the Board. Without limiting the generality of the foregoing, with respect to each meeting of stockholders of the Company at which Directors are to be elected, the Company shall use its reasonable efforts to solicit from the stockholders of the Company eligible to vote in the election of Directors proxies in favor of any Investor Nominees. Section 2.2 Committee Representation; Subsidiary Boards. (a) During such time as Investor is entitled pursuant to Section 2.1(a) to have at least one Investor Nominee on the Board, unless Investor chooses not to exercise its rights under this Section 2.2(a), at least one Director who is an Investor Nominee shall serve on each of the audit committee, the nominating committee, the executive compensation committee, the executive committee, any special committee(s) of the Board, and any other committees which shall be charged with exercising substantial authority on behalf of the Board (the foregoing, the "Key Committees"). Notwithstanding the foregoing, if none of the Directors who are Investor Nominees would be considered "independent" of the Company or "disinterested" (i) for purposes of any applicable rule of the New York Stock Exchange or any other securities exchange or other self- regulating organization (such as the National Association of Securities Dealers) requiring that members of the audit committee of the Board be independent of the Company, (ii) for purposes of any law or regulation that requires, in order to obtain or maintain favorable tax, securities, corporate law or other material legal benefits with respect to any plan or arrangement for employee compensation or benefits, that the members of the committee of the Board charged with responsibility for such plan or arrangement be "independent" of the Company or "disinterested", or (iii) for purposes of any special committee formed in connection with any transaction or potential transaction involving the Company and any of Investor, its Affiliates or any Group of which Investor is a member or such other transaction or potential transaction which would involve an actual or potential conflict of interest on the part of the Directors who are Investor Nominees, then a Director who is an Investor Nominee shall not be required to be appointed to any such committee; provided, however, that the committees of the Board shall be organized such that, to the extent practicable, the only items to be considered by a Key Committee on which no Director who is an Investor Nominee may serve will be those items which prevent the Director who is an Investor Nominee from serving on such Key Committee. Any members of any Key Committee who are Investor Nominees shall, in the event of any vacancy in such membership, be replaced by a Director who is an Investor Nominee elected by a majority of the Directors who are Investor Nominees. -6- (b) During such time as Investor is entitled pursuant to Section 2.1(a) to have at least one Investor Nominee on the Board, unless Investor chooses not to exercise its rights under this Section 2.2(b), one individual designated by Investor shall serve as a member of the board of directors or comparable governing body of each Controlled Subsidiary of the Company, if any, that is a corporation or other person with a board of directors or board of trustees. Section 2.3 Vacancies. In the event that any Investor Nominee shall cease to serve as a Director for any reason other than the fact that Investor no longer has a right to nominate a Director, as provided in Section 2.1(a), the vacancy resulting thereby shall be filled by an Investor Nominee designated by Investor; provided, however, that any Investor Nominee so designated shall satisfy the qualification requirements set forth in Section 2.1(b). ARTICLE 3 Information Rights Section 3.1 Operating Statements; Public Company Status. (a) From and after the date hereof, until the 25% Termination Date, if any, the Company will: (i) deliver to Investor, as soon as practicable after the end of each month, an operating and financial statement and management report of the Company, the Operating Partnership and each Subsidiary not consolidated with the Company or the Operating Partnership as at and for the end of such month, all in such form as may be prepared by the Company and the Operating Partnership for internal use by management; (ii) deliver to Investor, as promptly as practicable following filing, a copy of each report, schedule or other document filed by the Company pursuant to the requirements of any federal or state securities laws (collectively, the "Securities Filings"); and (iii) continue to comply in all material respects with the reporting requirements of Section 13 or 15(d) of the 1934 Act. (b) The Company will afford Investor a reasonable opportunity to review any Securities Filing which refers to, describes or mentions Investor prior to the time that such Securities Filing is filed with or sent to the applicable Government Authority. Section 3.2 Advice of Actions. From and after the date hereof, until the 25% Termination Date, if any, without first having consulted with the representative of Investor designated by Investor in writing, the Company will not seek approval by the Board of any proposal relating to: (a) the acquisition, whether by merger, consolidation, purchase of stock or assets (or group of assets) or other business combination, of any business or assets (or group of assets) having a value in excess of $25,000,000; -7- (b) the sale or disposal of any assets (or group of assets), whether by merger, consolidation, sale of stock or assets (or group of assets) or other business combination having a value in excess of $25,000,000; (c) the incurrence or issuance of indebtedness, the entering into a guaranty, or the engagement in any other financing arrangement in excess of $25,000,000; (d) the annual operating budget for the Company; (e) a material change in the executive management of the Company; (f) any new material agreements or arrangements with any members of the executive management of the Company; or (g) the issuance by the Company of capital stock of the Company, by the Operating Partnership of Operating Partnership Units, or by a Controlled Subsidiary of any equity interests, other than, (i) to the Company or a wholly owned Subsidiary thereof, (ii) to limited partners of the Operating Partnership upon redemptions of Operating Partnership Units, (iii) to employees of the Company or a Significant Subsidiary in connection with any employee benefit plan approved by the stockholders of the Company, (iv) the issuance of Class A Units (as defined in the Partnership Agreement) automatically upon conversion of Class B Units (as defined in the Partnership Agreement) pursuant to the Partnership Agreement, and (v) the issuance of 40,909 Class C Units (as defined in the Partnership Agreement) (or warrants to purchase 40,909 shares of Company Common Stock) pursuant to the Contribution Agreement, dated as of January 20, 1995, between Carr Realty, L.P. and The Evans Company. Notwithstanding the foregoing, the Company shall have no obligation to accept or comply with any advice offered by Investor or its designated representative in any consultation referred to in this Section 3.2. The designated representative of Investor, for purposes of this Section 3.2, initially shall be Paul Szurek. ARTICLE 4 Voting and Participation Rights Section 4.1 Voting Rights. Subject to the provisions of this Section 4.1, Investor may vote the shares of Company Stock which it owns in its sole and absolute discretion. During the Standstill Period and any Standstill Extension Term, Investor will vote all shares of Company Stock which it owns in one of the following two manners, at its option: (a) in accordance with the recommendation of the Board, or (b) proportionally in accordance with the votes of the other holders of Company Stock; provided, however, that Investor may vote (i) all of the shares of Company Stock that it owns, in its sole and absolute discretion, with regard to (x) the election of the Investor Nominee(s) to the Board and (y) any amendment to the Amended Company Charter or the By- laws of the Company which would reasonably be expected to materially adversely affect Investor, and (ii) the shares of Company Stock that it owns representing ownership of up to 28% of the then -8- outstanding shares of Company Stock, in its sole and absolute discretion, with regard to any Extraordinary Transaction submitted to a vote of the stockholders of the Company (unless (A) the Amended Company Charter shall be amended to require the affirmative vote of less than the holders of two-thirds of all shares entitled to vote on such Extraordinary Transaction or (B) such Extraordinary Transaction is otherwise subject to the approval of less than two-thirds of all shares entitled to vote thereon, in either of which case Investor may vote all of the shares of Company Stock it owns, in its sole and absolute discretion, with regard to any such Extraordinary Transaction). During the Standstill Period and any Standstill Extension Term, with regard to any Extraordinary Transaction submitted to a vote of the stockholders of the Company, Investor will vote all shares of Company Stock owned by it that represent ownership of in excess of 28% of the outstanding shares of Company Stock, in one of the following two manners, at its option: (x) in accordance with the recommendation of the Board, or (y) proportionally in accordance with the votes of the other holders of Company Stock (provided that, as set forth in the immediately preceding sentence, in any case described in subpart (A) or (B) of the parenthetical clause set forth in the immediately preceding sentence, Investor may vote all of the shares of Company Stock it owns in its sole and absolute discretion). Section 4.2 Participation Rights. (a) Right to Participate. From and after the date hereof, until the 25% Termination Date, if any, Investor shall be entitled to a participation right to purchase or subscribe for up to 30% (or up to 35% if necessary in order for Investor to retain ownership of such percentage amount of the outstanding Company Stock, on a fully diluted basis, as is necessary for the product of such ownership percentage and the Company's fully diluted ownership percentage of the Operating Partnership to be at least equal to 25%) of the total number of any additional shares of capital stock or Operating Partnership Units, as the case may be, to be issued or sold by the Company or a Large Controlled Subsidiary (to the extent permitted by the governing documents of such Large Controlled Subsidiary and subject to the rights of the shareholders, partners, or other owners, as the case may be, of such Large Controlled Subsidiary), in the event that the Company or such Large Controlled Subsidiary issues or sells any of its capital stock or Operating Partnership Units (other than any such shares or Operating Partnership Units issued to the Company or any of its Controlled Subsidiaries or pursuant to options, rights or warrants or other commitments or securities in effect or outstanding on the date of the Stock Purchase Agreement, including redemption rights relating to Operating Partnership Units, and other than any such shares or Operating Partnership Units issued pursuant to employee benefit plans approved by the Company's stockholders, including upon the exercise of stock options granted to management). (b) Notice. In the event the Company or a Large Controlled Subsidiary proposes to issue or sell any shares of capital stock or Operating Partnership Units in a transaction giving rise to the participation rights provided for in this Section, the Company shall send a written notice (the "Participation Notice") to Investor setting forth the number of shares of such capital stock of the Company or a Large Controlled Subsidiary, as the case may be, or of Operating Partnership Units which the Company or a Large Controlled Subsidiary, as the case may be, proposes to sell or issue, the price (before any commission or discount) at which such shares are proposed to be issued (or, in the case of an underwritten or privately placed offering in which the price is not known at the time the Participation Notice is given, the method of determining such price and an estimate thereof), and all other relevant information as to such proposed transaction as may be necessary for Investor -9- to determine whether or not to exercise the rights granted in this Section. At any time within 30 days after its receipt of the Participation Notice, Investor may exercise its participation rights to purchase or subscribe for shares of such shares of capital stock or Operating Partnership Units, as provided for in this Section, by so informing the Company in writing (an "Exercise Notice"). Each Exercise Notice shall state the percentage of the proposed sale or issuance that the Investor elects to purchase. Each Exercise Notice shall be irrevocable, subject to the conditions to the closing of the transaction giving rise to the participation right provided for in this Section. (c) Abandonment of Sale or Issuance. The Company or a Large Controlled Subsidiary, as the case may be, shall have the right, in its sole discretion, at all times prior to consummation of any proposed sale or issuance giving rise to the participation right granted by this Section, to abandon, rescind, annul, withdraw or otherwise terminate such sale or issuance, whereupon all participation rights in respect of such proposed sale or issuance pursuant to this Section shall become null and void, and neither the Company nor any of its Large Controlled Subsidiaries shall have any liability or obligation to Investor or any Affiliate thereof who has acquired shares of Company Stock pursuant to the Stock Purchase Agreement or from Investor with respect thereto by virtue of such abandonment, rescission, annulment, withdrawal or termination. (d) Terms of Sale. The purchase or subscription by Investor or an Affiliate thereof, as the case may be, pursuant to this Section shall be on the same price and other terms and conditions, including the date of sale or issuance, as are applicable to the purchasers or subscribers of the additional shares of capital stock of the Company or a Large Controlled Subsidiary or Operating Partnership Units, as the case may be, whose purchases or subscriptions give rise to the participation rights, which price and other terms and conditions shall be substantially as stated in the relevant Participation Notice (which standard shall be satisfied if the price, in the case of a negotiated transaction, is not greater than 110% of the estimated price set forth in the relevant Participation Notice or, in the case of an underwritten or privately placed offering, is not greater than the greater of (i) 110% of the estimated price set forth in the relevant Participation Notice or (ii) the most recent closing price on or prior to the date of the pricing of the offering); provided, however, that in the event the consideration to be received by the Company or a Large Controlled Subsidiary, as the case may be, in connection with the issuance of shares of capital stock or Operating Partnership Units giving rise to participation rights hereunder is other than cash or cash equivalents, the price per share or Operating Partnership Unit at which the participation rights may be exercised shall be the price per share or Operating Partnership Unit set forth in the Participation Notice or determined in the manner set forth in the Participation Notice (which shall in either event be the price as set forth in the agreement pursuant to which such shares or Operating Partnership Units are to be issued, provided that the consideration to be received therefor is valued based upon the fair market value thereof); provided, further, however, that in the event the consideration to be received by the Company or a Large Controlled Subsidiary, as the case may be, in connection with the issuance of shares of capital stock or Operating Partnership Units giving rise to participation rights hereunder is other than cash or cash equivalents, and the fair market value of the consideration to be received is not determinable, the price per share or Operating Partnership Unit at which the participation rights may be exercised shall, (i) in the event that shares of capital stock with an established trading market are being issued or sold, be the average ten-day trailing market price of such shares as of the date of receipt of the Participation Notice, and (ii) in the event any other shares of capital stock are being issued or sold, be determined by -10- reference to the amount set forth above, adjusted as may be appropriate to reflect the relationship between those shares of capital stock with an established trading market and those shares of capital stock to be issued in the relevant transaction; provided, finally, that in the event the purchases or subscriptions giving rise to the participation rights are effected by an offering of securities registered under the 1933 Act and in which offering it is not legally permissible for the securities to be purchased by Investor to be included, such securities to be purchased by Investor will be purchased in a concurrent private placement. (e) Timing of Sale. If, with respect to any Participation Notice, Investor fails to deliver an Exercise Notice within the requisite time period, the Company or a Large Controlled Subsidiary, as the case may be, shall have 120 days after the expiration of the time in which the Exercise Notice is required to be delivered in which to sell or issue not more than the number of shares of capital stock of the Company or a Large Controlled Subsidiary or Operating Partnership Units, as the case may be, described in the Participation Notice on terms not more favorable to the Company or a Large Controlled Subsidiary, as the case may be, than were set forth in the Participation Notice. If, at the end of 120 days following the expiration of the time in which the Exercise Notice is required to be delivered, the Company or a Large Controlled Subsidiary, as the case may be, has not completed the sale or issuance of capital stock of the Company or a Large Controlled Subsidiary or Operating Partnership Units, as the case may be, in accordance with the terms described in the Participation Notice (or at a price which is at least 90% of the estimated price set forth in the Participation Notice), the Company or a Large Controlled Subsidiary, as the case may be, shall again be obligated to comply with the provisions of this Section with respect to, and provide the opportunity to participate in, any proposed sale or issuance of shares of capital stock of the Company or a Large Controlled Subsidiary or Operating Partnership Units, as the case may be; provided, however, that notwithstanding the foregoing, if the price at which such capital stock or Operating Partnership Units is to be sold in an underwritten offering (or a privately placed offering in which the price is not less than 97% of the most recent closing price at the time of the pricing of the offering) is not at least 90% of the estimated price set forth in the Participation Notice, the Company may inform Investor of such fact and Investor shall be entitled to elect, by written notice delivered within two Business Days following such notice from the Company, to participate in such offering in accordance with the provisions of this Section 4.2. ARTICLE 5 Standstill Provisions Section 5.1 Standstill Period. (a) Subject to the provisions of the following sentence, the "Standstill Period" shall be the period commencing on the date hereof and ending on the fifth anniversary of the date hereof. Prior to the 25% Termination Date, if any, the Standstill Period shall also be terminated on the earliest of: (i) the occurrence of any event of default on the part of the Company or any Subsidiary under any debt agreements, instruments, or arrangements which event of default would reasonably be expected to result in a Material Adverse Effect; -11- (ii) the acquisition by any person or Group other than Investor or any Affiliate thereof of Beneficial Ownership of 15% or more of the outstanding shares of Company Stock, on a fully diluted basis; (iii) any person or Group having a number of Directors on the Board, or having the right or power to elect a number of Directors on the Board, equal to or greater than the number of Directors to which Investor is entitled; (iv) the authorization by the Company or the Board or any committee thereof (with all Investor Nominees abstaining or voting against) of the solicitation of offers or proposals or indications of interest with respect to any merger, consolidation, other business combination, liquidation, sale of the Company or all or substantially all of the assets of the Company or any other change of control of the Company or similar extraordinary transaction, but excluding any merger, consolidation or other business combination in which the Company is the surviving and acquiring corporation and in which the businesses or assets so acquired do not, or would not reasonably be expected to, have a value greater than 50% of the assets of the Company prior to such merger, consolidation or other business combination (any of the foregoing, a "Covered Transaction"); (v) the written submission by any person or Group other than Investor or any Affiliate thereof of a proposal to the Company (including to the Board or any agent, representative or Affiliate of the Company) with respect to, or otherwise expressing an interest in pursuing, a Covered Transaction; provided, however, that the Standstill Period shall not terminate pursuant to this Section 5.1(a)(v) if, as soon as practicable after receipt of any such proposal, the Board determines that such proposal is not in the best interest of the Company and its stockholders and for so long as the Board continues to reject such proposal as a result of such determination; (vi) in connection with any actual or proposed Covered Transaction, the removal of any rights plan, provisions of the Amended Company Charter relating to staggered terms of office for directors, provisions of the Amended Company Charter or the By-laws of the Company relating to supermajority voting of the Company's stockholders, "excess share" provisions of the Amended Company Charter or the By-laws of the Company, or any other similar arrangements, agreements, commitments or provisions in the Amended Company Charter or the By-laws of the Company which would reasonably be expected to impede the consummation of such actual or proposed Covered Transaction by action of any Government Authority, the Board, the stockholders of the Company or otherwise, or, whether or not in connection with any actual or proposed Covered Transaction, any modification, amendment, waiver or repeal of the ownership restrictions in Section 5.2 of the Amended Company Charter (except as may be necessary to allow any acquisition of Company Stock that would not constitute an Early Termination Event under Section 5.1(a)(ii)); (vii) any breach by the Company of the Stock Purchase Agreement which is neither cured nor desisted from within 30 days of receipt of written notice of such breach and which would reasonably be expected to materially adversely affect Investor or cause a Material Adverse Effect; -12- (viii) any breach of this Agreement by the Company or the Operating Partnership which is neither cured nor desisted from within 30 days of receipt of written notice of such breach and which would reasonably be expected to materially adversely affect Investor or cause a Material Adverse Effect; or (ix) any violation of any Corporate Action Covenant. Any event set forth in subsection (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) or (ix) of this Section 5.1(a) shall be an "Early Termination Event." (b) If the Standstill Period shall not have been terminated prior to the fifth anniversary of the date hereof, the Standstill Period and any Standstill Extension Term shall automatically be extended for successive one- year periods (each such period, a "Standstill Extension Term"), unless, in the case of each Standstill Extension Term, Investor provides to the Company written notice at least 270 days prior to the commencement of such Standstill Extension Term, that such Standstill Extension Term and all further Standstill Extension Terms are cancelled. Any Standstill Extension Term will be terminated upon the earlier of (i) the first anniversary thereof or (ii) the occurrence of an Early Termination Event. Section 5.2 Restrictions During Standstill Period and Standstill Extension Term. (a) During the Standstill Period and any Standstill Extension Term, Investor will not, will cause each of its controlled Affiliates not to, and will use its reasonable best efforts to cause each of its other Affiliates not to, directly or indirectly: (i) act in concert with any other person or Group by becoming a member of a 13D Group, other than any 13D Group comprised exclusively of Investor and one or more of its Affiliates; (ii) sell, transfer, pledge or otherwise dispose of (collectively, "Transfer") any shares of Company Stock except for: (v) Transfers made in compliance with the requirements of Rule 144 of the 1933 Act, (w) Transfers pursuant to negotiated transactions with third parties, (x) Transfers pursuant to or in accordance with the Registration Rights Agreement, (y) Transfers to one or more Affiliates of Investor who agree to be bound by the terms and conditions of this Agreement and who satisfy the ownership criteria in the definition of "Investor", and (z) Transfers to a BONA FIDE financial institution for the purpose of securing BONA FIDE indebtedness of any Investor; provided, further, that no Transfers pursuant to this Section 5.2 shall be made in violation of Article V of the Amended Company Charter; (iii) purchase or otherwise acquire shares of Company Stock as a result of which, after giving effect to such purchase or acquisition, Investor and its Affiliates will Beneficially Own (A) more than 45% (or, for purchases pursuant to Sections 2.4 or 2.5 of the Stock Purchase Agreement, up to 48% if and to the extent such ownership would not violate Article V of the Amended Company Charter) of the outstanding shares of Company Stock, or (B) more than 40% of the outstanding shares of Company Stock, on a fully diluted basis; (iv) solicit or propose to effect or negotiate any Covered Transaction other than pursuant to the Stock Purchase Agreement; -13- (v) solicit, initiate or participate in any "solicitation" of "proxies" or become a "participant" in any "election contest" (as such terms are defined or used in Regulation 14A under the 1934 Act, disregarding clause (iv) of Rule 14a-1(l)(2) and including an exempt solicitation pursuant to Rule 14a-2(b)(1)); call, or in any way participate in a call for, any special meeting of stockholders of the Company (or take any action with respect to acting by written consent of the stockholders of the Company); request, or take any action to obtain or retain any list of holders of any securities of the Company; or initiate or propose any stockholder proposal or participate in the making of, or solicit stockholders of the Company for the approval of, one or more stockholder proposals; provided, however, that Investor shall not be prohibited from communicating with a securityholder who is engaged in any "solicitation" of "proxies" or who is a "participant" in any "election contest"; (vi) seek representation on the Board or a change in the composition or size of the Board other than as permitted by Section 2; (vii) Transfer any capital stock of Buyer or any capital stock of any Affiliate of Buyer that owns Company Stock, or cause Buyer or any such Affiliate thereof to Transfer any options, warrants, convertible securities or other similar rights to acquire any capital stock of Buyer or any such Affiliate thereof; provided, however, that no such Transfer shall be prohibited if after giving effect thereto the Beneficial Owner of such shares of Company Stock satisfies the ownership criteria in the definition of "Investor"; and provided, further, that no Transfers to a BONA FIDE financial institution for the purpose of securing BONA FIDE indebtedness of any Investor shall be prohibited hereby; (viii) request the Company or any of its directors, officers, employees or agents to amend or waive any provisions of this Section 5.2 or Article V of the Amended Company Charter or seek to challenge the legality or effect thereof; or (ix) assist, advise, encourage or act in concert with any person with respect to, or seek to do, any of the foregoing. (b) In the event any BONA FIDE financial institution to which Company Stock shall have been transferred in accordance with the provisions hereof shall foreclose upon such Company Stock, such financial institution shall, at least ten Business Days prior to effecting any further Transfer of such Company Stock (other than to an Affiliate and other than by pledge or hypothecation to another BONA FIDE financial institution, in each of which case the transferee shall agree to be bound by this Agreement) provide the Company with written notice of its intention to effect such a Transfer. The Company shall have ten Business Days from the date of such notice to elect to purchase all, but not less than all, of the shares of Company Stock subject to such notice, at a price equal to the higher of (x) the average ten-day trailing market price of such shares as of the date of receipt of such notice, or (y) the average ten-day trailing market price of such shares as of the date the Company irrevocably informs such financial institution of its election to purchase such shares of Company Stock. If the Company so elects to purchase such shares of Company Stock, the closing of such purchase shall be within 10 Business Days of the Company's notice to such effect. -14- Section 5.3 Investments in Office Properties and Purchases of Interests in Office Property Companies. (a) Subject to the provisions of the following sentence, and excluding transactions which are the subject of paragraph (b) of this Section, from and after the date hereof until the 25% Termination Date, if any, Investor and any other person of which Investor is the direct or indirect general partner or as to which Investor has the direct or indirect right or power to elect a majority of the board of directors or other governing body or otherwise controls (but subject, in the case of any person other than Investor, to the fiduciary duties of such person or its general partner, board of directors or other governing body) (any such person, an "Investor Restricted Person") shall not, and Investor shall use its reasonable best efforts to cause Security Capital Group Incorporated ("SCGI") and any person of which SCGI is the direct or indirect general partner or as to which SCGI has the direct or indirect right or power to elect a majority of the board of directors or other governing body or otherwise controls (but subject, in the case of any person other than Investor, to the fiduciary duties of such person or its general partner, board of directors or other governing body) (SCGI and any such person, an "SCGI Restricted Person") not to, directly or indirectly, own, purchase, develop or otherwise acquire, directly or indirectly, any office property in the United States (an "Office Property"). Notwithstanding the foregoing, Investor, any Investor Restricted Person or any SCGI Restricted Person may own, purchase, or otherwise acquire, directly or indirectly, any Office Properties if the investment in the Office Properties is incidental to an investment made by Investor, such Investor Restricted Person or such SCGI Restricted Person which investment is not primarily related to Office Properties; it being understood and agreed that any acquisition of real estate properties in which Office Properties constitute 30% or less of the purchase price of all of the real estate properties acquired shall be considered an investment in which the Office Properties acquired are incidental to an investment which is not primarily related to Office Properties; provided, however, that if Investor, any Investor Restricted Person or any SCGI Restricted Person determines to make such a permitted investment, Investor, such Investor Restricted Person or such SCGI Restricted Person shall afford the Company a period of ten Business Days after receipt of written notice from Investor describing the material terms of the proposed investment, in which to provide Investor, such Investor Restricted Person or such SCGI Restricted Person, as applicable, written notice that it elects to purchase the Office Properties constituting a part of such investment (subject to customary due diligence and other closing conditions); in the event Investor, such Investor Restricted Person or such SCGI Restricted Person thereafter makes such investment and the price and other terms are not less favorable to the Company than those set forth in the notice of material terms delivered to the Company, the Company shall promptly acquire the Office Properties included therein, at the price allocated to such Office Properties in the purchase agreement entered into by Investor, the Investor Restricted Person or the SCGI Restricted Person, as the case may be, in respect of such acquisition and otherwise on terms substantially similar to the terms of Investor's, the Investor Restricted Person's or SCGI Restricted Person's acquisition of such properties; provided, further, that if Investor, an Investor Restricted Person or an SCGI Restricted Person shall have made such a purchase, including the Office Properties therein, and if Investor, an Investor Restricted or an SCGI Restricted Person should thereafter, but prior to the 25% Termination Date, determine to sell any Office Properties so purchased, Investor, such Investor Restricted Person or such SCGI Restricted Person shall inform the Company of such fact, and the Company shall have ten Business Days in which to give Investor, such Investor Restricted Person or such SCGI Restricted Person written notice that it desires to purchase such Office Properties; such notice shall set forth the terms -15- on which the Company is prepared to effect such purchase; Investor, such Investor Restricted Person or such SCGI Restricted Person shall be free to accept such offer, or to otherwise dispose of such Office Properties, but shall in no event dispose of such Office Properties on terms materially less favorable to Investor, such Investor Restricted Person or such SCGI Restricted Person without first again affording the Company the opportunity to purchase such Office Properties. (b) From and after the date hereof until the 25% Termination Date, if any, Investor and any Investor Restricted Person shall not, and Investor shall use its reasonable best efforts to cause all SCGI Restricted Persons not to, purchase or otherwise acquire equity securities, or options, warrants, calls, purchase rights, subscription rights, conversion rights, exchange rights or similar rights to purchase or otherwise acquire equity securities, representing 9% or more of the equity interest of any person, other than the Company, if (i) such person's principal business activity is the acquisition, development or ownership for rental purposes of Office Properties, (ii) more than 25% of such person's assets are Office Properties (but not including as Office Property assets for such purpose any indebtedness secured directly or indirectly by Office Properties), or (iii) more than 25% of such person's revenues are derived from the purchase, development or ownership of Office Properties (any such person, an "Office Property Company"); provided, however, that Investor, any Investor Restricted Person or any SCGI Restricted Person shall be entitled to purchase or otherwise acquire less than 9% of the equity interest of an Office Property Company only if no Investor, Investor Restricted Person or SCGI Restricted Person shall be represented on (or have the right to nominate representatives to) the board of directors or similar governing body or shall participate in the management, of such Office Property Company. (c) The provisions of this Section 5.3 shall not restrict Investor, any Investor Restricted Person or any SCGI Restricted Person from, directly or indirectly, (x) providing debt financing for Office Properties or investing in, owning or acquiring a mortgage REIT or other person substantially all of whose business consists of making mortgage loans on Office Properties and other real estate assets, (y) in connection with the activities described in clause (x), acquiring or owning any Office Properties through foreclosure on mortgages or similar instruments or other realization on security or (z) the ownership of any REIT convertible debt which is passively held and unaccompanied by representation on the board of directors or participation in management and which is held by a person of which none of Investor, any Investor Restricted Person or any SCGI Restricted Person directly or indirectly Beneficially Owns 20% or more of the outstanding economic or voting interest. Section 5.4 Compliance with Insider Trading Policy. For as long as Investor Beneficially Owns any shares of Company Stock, Investor will, and will use its commercially reasonable efforts to cause its directors, officers, employees, agents, and representatives to, comply with the written policy of the Company reasonably designed to prevent violations of insider trading and similar laws. Section 5.5 Compliance with Article V of the Amended Company Charter. For as long as Investor Beneficially Owns any shares of Company Stock (unless the Standstill Period or any Standstill Extension Term is terminated by any of the actions set forth in Section 5.1(a)(iv), (v) or (vi) (or unless any such action occurs following the termination of the Standstill Period or any Standstill Extension Term) or by any other willful action by the -16- Company which constitutes an Early Termination Event (or would constitute an Early Termination Event during the Standstill Period or any Standstill Extension Term)), Investor, each Investor Restricted Person and any BONA FIDE financial institution or other transferee described in Section 5.2(b) will, and Investor will use its reasonable best efforts to cause the SCGI Restricted Persons to, comply with Article V of the Amended Company Charter and will not seek to challenge the legality or effect thereof. Section 5.6 Investment Company Matters. From and after the date hereof until the 25% Termination Date, if any, Investor shall use its reasonable best efforts to not be or become 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. ARTICLE 6 Limitations on Corporate Actions, Etc. Section 6.1 Limitations on Corporate Actions. The Company agrees that (a) from and after the date hereof, until the earlier of (i) the termination of the Standstill Period or any Standstill Extension Term or (ii) the 25% Termination Date, if any, it will not, and will not permit any of its Controlled Subsidiaries to: (A) incur total consolidated indebtedness in an amount in excess of 65% of the sum of (x) (i) the market value of the Company's outstanding shares, on a fully diluted basis, as of the date of the Stock Purchase Agreement, and computed using the Per Share Purchase Price, plus (ii) consolidated indebtedness of the Company for money borrowed secured by real property or improvements, as of the date of the Stock Purchase Agreement, plus (y) the acquisition cost (defined as gross purchase price plus transaction costs, before depreciation) to the Company or its Controlled Subsidiaries of properties acquired after the date of the Stock Purchase Agreement, minus (z) gross receipts from the Company's disposition of any property from and after the date of the Stock Purchase Agreement to the extent such gross receipts are distributed to the Company's stockholders, unless the violation of such ratio is cured within 30 days of its occurrence; (B) retain any third party (other than any Significant Subsidiary) to manage more than 10% of the real estate assets (excluding raw land and parking facilities) of the Company, unless such retention is desisted prior to the fifth day immediately preceding the end of the calendar quarter in which it arises; (C) have at any time more than 10%, at cost, of its consolidated assets in property types other than office buildings or land suitable and intended for development of office properties, unless such ratio is reduced below such 10% level within thirty days; -17- (D) in the case of the Company, (1) terminate its eligibility for treatment as a real estate investment trust, as defined in the Code, or (2) take any action or fail to take any action which would reasonably be expected to, alone or in conjunction with any other factors, result in the loss of such eligibility, unless in the case of a failure to take action, such action is taken within thirty days; or (E) except as permitted or required by any agreements or commitments existing as of the date of the Stock Purchase Agreement and disclosed to Investor pursuant thereto, cause or permit the Operating Partnership to issue or grant (i) any additional Operating Partnership Units, (ii) any securities convertible into any Operating Partnership Units, or (iii) any options, warrants, calls, purchase rights, subscription rights, conversion rights, exchange rights or any other contractual commitments or agreements by which the holder thereof or the party thereto may purchase or otherwise acquire Operating Partnership Units if, as a result of any of the actions described in the foregoing clauses (i), (ii) or (iii) of this paragraph (E), the Company will own or hold less than 70% of the Operating Partnership Units, on a fully diluted basis, unless any such issuances or grants are revoked to the extent necessary prior to the fifth day immediately preceding the end of the calendar quarter in which they are made; (b) at any time during which any shares of Company Preferred Stock are outstanding, the Company will not issue any shares of Company Preferred Stock to any person other than Investor without the express written consent of Investor; or (c) from and after the date hereof until the first date, if any, following the date on which the Remaining Equity Commitment shall have been reduced to zero on which Investor's ownership of Company Stock shall have been below 25% of the actually outstanding shares of Company Stock for a continuous period of 180 days (or if Investor's ownership of Company Stock shall, following the date on which the Remaining Equity Commitment shall have been reduced to zero, have fallen below 25% by value of the actually outstanding shares of Company Stock as a result of a Transfer by Investor of Company Stock or a failure of Investor to exercise its rights under Section 4.2 during the sixty days immediately prior to the expiration of such 180-day period, if any such rights are exercisable during such period, to the extent necessary to (and provided that it shall be possible by such exercise to) raise its ownership of the actually outstanding Company Common Stock above such 25% threshold, then until such Transfer or failure to exercise its rights under Section 4.2, as the case may be), the Company (i) will not, without the prior written consent of Investor, either take any action that would cause, or fail to take any action which failure would cause, (A) the percentage of the Company's consolidated gross income that is considered "passive income" (within the meaning of Section 1296(a)(1) of the Code and computed using the assumptions and conventions set forth in Schedule 6.1(c), together with such modifications thereto as Investor shall advise the Company in writing are necessary as a result of the promulgation of regulations, rulings, or other formal or informal administrative guidance clarifying existing law or a change in existing law or interpretations thereof) (the "Passive Income Percentage") to exceed 45%, or (B) the average percentage of the Company's assets (by value, computed as of the end of every calendar quarter) held during any taxable year which produce passive income or which are held for the production -18- of passive income (as such terms are used in Section 1296(a)(2) of the Code and computed using the assumptions and conventions set forth in Schedule 6.1(c), together with such modifications thereto as Investor shall advise the Company in writing are necessary as a result of the promulgation of regulations, rulings, or other formal or informal administrative guidance clarifying existing law or a change in existing law or interpretations thereof) (the "Passive Assets Percentage") to exceed the lesser of (x) 45% or (y) the greater of (1) 30% or (2) the average Passive Assets Percentage for the prior two taxable years (assuming for this purpose that the Passive Assets Percentage was 45% for all periods prior to and including the period ending December 31, 1995); provided, however, that if the Board determines in good faith that the Company's failure to take such action or the taking of such action, as the case may be, would have a material adverse effect on the Company's net earnings, cash flow, funds from operations or business, or would reasonably be expected to cause the Company to fail to qualify as a REIT, the Company will negotiate with Investor in good faith with a view toward reaching a reasonable accommodation that would satisfy the interests of the Company in such matters and the interests of Investor in the Company's not being classified as a "passive foreign investment company" under the Code; provided, further, however, that if the Company and Investor are unable to reach such a reasonable accommodation after good faith negotiations, the requirements of this paragraph (c) shall not apply to the action or failure to act at issue, and (ii) will otherwise consider in good faith suggestions made by Investor as to the structure of the Company's operations in order to permit Investor to avoid being classified as a "passive foreign investment company" under the Code. The Company may cure any breach of this Section 6.1(c) prior to the fifth day immediately preceding the end of the calendar quarter in which such breach arises. The agreements of the Company set forth in subsections (a), (b) and (c) of this Section 6.1 shall be the "Corporate Action Covenants." Section 6.2 Provision of Information. For as long as Investor Beneficially Owns any shares of Company Stock, the Company will provide to Investor all information and documentation requested by Investor, and will cooperate with Investor as requested, as may be necessary for Investor to perform the calculations to be made in connection with and to meet the documentation requirements pursuant to Sections 1291 through 1297 of the Code, as may be amended from time to time, and any successor provisions thereto, and as may otherwise be reasonably necessary in connection with any other record keeping or reporting laws, rules or regulations (including all such information, documentation and cooperation as is necessary to enable Investor to (1) file any Tax Returns it is required to file and (2) to determine and document its status, income, asset mix and other relevant items with respect to the Passive Foreign Investment Company provisions in the Code). Section 6.3 Compliance with Conflicts of Interest Policy. From and after the date hereof until the 25% Termination Date, the Company will, and will cause its Controlled Subsidiaries to, comply with and enforce the policies and agreements of the Company, as in effect as of the date of the Stock Purchase Agreement and previously disclosed to Investor, relating to transactions with affiliates and potential conflicts of interest, including such policies relating to and agreements with The Oliver Carr Company and certain related parties, as such policies and agreements may be modified or amended from time to time with the consent of Investor (such policies and agreements, the "Conflict of Interest Policies"). From and after the date hereof until the 25% Termination Date, Investor will comply with the Conflict of Interest Policies; provided, however, that the provisions of this Agreement, the Stock Purchase Agreement and the Registration Rights Agreement and the -19- transactions contemplated hereby and thereby shall not be limited, amended or modified in any way by, and shall govern in the event of a conflict with, the Conflict of Interest Policies. Section 6.4 Sales of Assets. From and after the date hereof until the 25% Termination Date, the Company will, and will cause its Controlled Subsidiaries to, use its reasonable efforts, consistent with prudent management of the Company's properties and assets in the interest of the Company's stockholders, to dispose of properties or assets through tax deferred exchanges which exchanges will defer any capital gains distributions to stockholders of the Company. In the event it is expected that any capital gains distributions are to be made, the Company will endeavor to provide Investor with such advance notice thereof as may be practicable. ARTICLE 7 Miscellaneous Section 7.1 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section, provided receipt of copies of such counterparts is confirmed. Section 7.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF. Section 7.3 Entire Agreement. This Agreement (including agreements incorporated herein) and the Schedules and Exhibits hereto contain the entire agreement between the parties with respect to the subject matter hereof and there are no agreements, understandings, representations or warranties between the parties other than those set forth or referred to herein. This Agreement is not intended to confer upon any person not a party hereto (and their successors and assigns) any rights or remedies hereunder. Section 7.4 Expenses. Except as set forth in the Stock Purchase Agreement, all legal and other costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses. Section 7.5 Notices. All notices and other communications hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax or other electronic transmission service to the appropriate address or number as set forth below. Notices to the Company shall be addressed to: -20- Carr Realty Corporation 1700 Pennsylvania Avenue, N.W. Washington, D.C. 20006 Attention: Thomas A. Carr Telecopy Number: (202) 638-0102 with a copy to: Hogan & Hartson L.L.P. Columbia Square 555 Thirteenth Street, N.W. Washington, D.C. 20004-1109 Attention: J. Warren Gorrell, Jr., Esq. Telecopy Number: (202) 637-5910 or at such other address and to the attention of such other person as the Company may designate by written notice to Investor. Notices to Investor shall be addressed to: Security Capital Holdings S.A. 69, route d'Esch L-2953 Luxembourg Attention: Managing Director Telecopy Number: (352) 4590-3331 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Adam O. Emmerich, Esq. Telecopy Number: (212) 403-2000 Section 7.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors. Neither party shall be permitted to assign any of its rights hereunder to any third party, except that any Investor shall be permitted to assign its rights hereunder to any other person who would satisfy the criteria in the definition of "Investor" which agrees to be bound by this Agreement. Section 7.7 Headings. The Section, Article and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. All references to Sections or Articles contained herein mean Sections or Articles of this Agreement unless otherwise stated. Section 7.8 Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought. Either party hereto may, only by an instrument in writing, waive compliance by the other party hereto with any term or provision hereof on the part of such other party hereto to be performed or -21- complied with. The waiver by any party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach. Section 7.9 Interpretation; Absence of Presumption. (a) For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms "hereof", "herein", and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto) and not to any particular provision of this Agreement, and Article, Section, paragraph, Schedule and Exhibit references are to the Articles, Sections, paragraphs, Schedules and Exhibits to this Agreement unless otherwise specified, (iii) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified, (iv) the word "or" shall not be exclusive, and (v) provisions shall apply, when appropriate, to successive events and transactions. (b) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. (c) All references herein to the number of shares of Company Stock outstanding, or to any percentage of the shares of Company Stock, or any similar reference, shall, in each case, be determined and computed without reference to any distinction between Company Common Stock and Company Preferred Stock, but counting each share of Company Preferred Stock outstanding as the equivalent of that number of shares of Company Common Stock into which each share of Company Preferred Stock is then convertible. Section 7.10 Severability. Any provision hereof which is invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability, without affecting in any way the remaining provisions hereof. Section 7.11 Further Assurances. The Company and Investor agree that, from time to time, each of them will, and will cause their respective Affiliates to, execute and deliver such further instruments and take such other action as may be necessary to carry out the purposes and intents hereof. Section 7.12 Specific Performance. The Company and Investor each acknowledge that, in view of the uniqueness of arrangements contemplated by this Agreement, the parties hereto would not have an adequate remedy at law for money damages in the event that this Agreement were not performed in accordance with its terms, and therefore agree that the parties hereto shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which the parties hereto may be entitled at law or in equity. Section 7.13 Investor Breach. In the event Investor shall have breached (i) its obligation to effect a purchase of Company Stock pursuant to the Stock Purchase Agreement which breach is neither cured nor desisted from within 30 days of receipt of written notice of such breach, or (ii) any of its obligations under this Agreement which breach is neither cured nor desisted from within 30 days of receipt of written notice of such breach -22- and which would reasonably be expected to materially adversely affect the Company, the Company shall no longer be required to perform any of its obligations hereunder. Section 7.14 Confidentiality. Investor agrees that all information provided to Investor or any of its representatives pursuant to this Agreement shall be kept confidential, and Investor shall not disclose such information to any persons other than the directors, officers, employees, financial advisors, legal advisors, accountants, consultants and affiliates of Investor who reasonably need to have access to the confidential information and who are advised of the confidential nature of such information; provided, however, the foregoing obligation of Investor shall not (a) relate to any information that (i) is or becomes generally available other than as a result of unauthorized disclosure by Investor or by persons to whom Investor has made such information available, (ii) is or becomes available to Investor on a non-confidential basis from a third party that is not, to Investor's knowledge, bound by any other confidentiality agreement with the Company, or (b) prohibit disclosure of any information if required by law, rule, regulation, court order or other legal or governmental process. -23- IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the parties hereto as of the day first above written. CARR REALTY CORPORATION By: /s/ Brian K. Fields Name: Brian K. Fields Title: Chief Financial Officer CARR REALTY, L.P. By: /s/ Brian K. Fields Name: Brian K. Fields Title: Chief Financial Officer of Carr Realty Corporation, its general partner SECURITY CAPITAL HOLDINGS S.A. By: /s/ Paul E. Szurek Name: Paul E. Szurek Title: Managing Director SECURITY CAPITAL U.S. REALTY By:/s/ Paul E. Szurek Name: Paul E. Szurek Title: Managing Director -24- EX-99.4 5 EXHIBIT 2.3 Exhibit 2.3 REGISTRATION RIGHTS AGREEMENT by and among CARR REALTY CORPORATION SECURITY CAPITAL HOLDINGS S.A. and SECURITY CAPITAL U.S. REALTY dated as of April 30, 1996 TABLE OF CONTENTS Page Section 1. Definitions............................................... 1 (a) "Agreement".......................................... 1 (b) "Buyer".............................................. 1 (c) "Company"............................................ 1 (d) "Company Registration Expenses"...................... 1 (e) "Commission"......................................... 1 (f) "Exchange Act"....................................... 2 (g) "Exercise Notice".................................... 2 (h) "Extraordinary Transaction".......................... 2 (i) "Extraordinary Transaction Shares"................... 2 (j) "Holdings"........................................... 2 (k) "NASD"............................................... 2 (l) "Registrable Securities"............................. 2 (m) "Registration Expenses".............................. 2 (n) "Registration Suspension Period"........................................... 2 (o) "Securities Act"..................................... 2 (p) "Shelf Registration"................................. 3 (q) "Stock Purchase Agreement"........................... 3 (r) "Suspension Notice".................................. 3 (s) "Tag-Along Notice"................................... 3 (t) "Tag-Along Shares"................................... 3 (u) "Third Party"........................................ 3 (v) "Underwritten/Placed Offering"....................... 3 (w) "USREALTY"........................................... 3 Section 2. Shelf Registration........................................ 3 (a) Obligation to File and Maintain...................... 3 (b) Black-Out Periods of Buyer........................... 4 (c) Black-Out Periods of the Company..................... 4 (d) Number of Shelf Registrations........................ 5 (e) Size of Shelf Registration........................... 5 (f) Notice............................................... 6 (g) Expenses............................................. 6 (h) Selection of Underwriters............................ 6 (i) Company Right to Purchase............................ 6 Section 3. Incidental Registrations.................................. 6 (a) Notification and Inclusion........................... 6 -i- (b) Cut-back Provisions.................................. 7 (c) Expenses............................................. 7 (d) Duration of Effectiveness............................ 7 Section 4. Registration Procedures................................... 7 Section 5. Requested Underwritten Offerings.......................... 10 Section 6. Preparation; Reasonable Investigation..................... 10 Section 7. Tag-Along Rights.......................................... 11 (a) Rights and Notice.................................... 11 (b) Number of Shares to be Included...................... 11 (c) Abandonment of Sale.................................. 12 (d) Terms of Sale........................................ 12 (e) Timing of Sale....................................... 12 Section 8. Indemnification........................................... 12 (a) Indemnification by the Company....................... 12 (b) Indemnification by Buyer............................. 13 (c) Notices of Claims, etc............................... 13 (d) Other Indemnification................................ 14 (e) Indemnification Payments............................. 14 (f) Contribution......................................... 14 Section 9. Covenants Relating to Rule 144............................ 14 Section 10. Miscellaneous............................................. 15 (a) Counterparts......................................... 15 (b) Governing Law........................................ 15 (c) Entire Agreement..................................... 15 (d) Notices.............................................. 15 (e) Successors and Assigns............................... 16 (f) Headings............................................. 16 (g) Amendments and Waivers............................... 16 (h) Interpretation; Absence of Presumption....................................... 16 (i) Severability......................................... 17 -ii- REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of April 30, 1996, by and among Carr Realty Corporation, a Maryland corporation (the "Company"), Security Capital U.S. Realty, a Luxembourg corporation ("USRE- ALTY"), and Security Capital Holdings S.A., a Luxembourg corporation ("Holdings") and a wholly owned subsidiary of USREALTY. Capitalized terms not otherwise defined herein have the meaning ascribed to them in the Stock Purchase Agreement (as hereinafter defined). WHEREAS, the Company, Holdings and USREALTY have entered into a Stock Purchase Agreement, dated as of November 5, 1995 (the "Stock Purchase Agree- ment"), that provides for the purchase by Holdings and sale by the Company to Holdings of shares of Company Common Stock and Company Preferred Stock; and WHEREAS, in order to induce Buyer to enter into the Stock Purchase Agreement, the Company has agreed to provide the registration rights set forth herein; NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: Section 1. Definitions. As used herein, the following terms shall have the following meanings: (a) "Agreement": shall have the meaning set forth in the first paragraph hereof. (b) "Buyer": shall mean, collectively, as the context may require, USREALTY and Holdings, and shall also include any Affiliate of USREALTY or Holdings of which USREALTY and/or Holdings collectively, directly or indi- rectly, Beneficially Own 98% or more of the voting power and of the economic interests, or any bona fide financial institution to which any Buyer has Transferred (including upon foreclosure of a pledge) shares of Company Stock for the purpose of securing bona fide indebtedness of any Buyer. (Capitalized terms used in this definition and not defined herein shall have the meanings ascribed to them in the Stockholders Agreement.) (c) "Company": shall have the meaning set forth in the first paragraph hereof. (d) "Company Registration Expenses": the fees and disbursements of counsel and independent public accountants for the Company incurred in connection with the Company's performance of or compliance with this Agreement, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, and any premiums and other costs of policies of insurance obtained by the Company against liabilities arising out of the sale of any securities. (e) "Commission": the Securities and Exchange Commission, and any successor thereto. (f) "Exchange Act": the Securities Exchange Act of 1934, as amended, and any successor thereto, and the rules and regulations thereunder. (g) "Exercise Notice": shall have the meaning set forth in Section 7(a). (h) "Extraordinary Transaction": (i) any merger, consolidation, sale or acquisition of assets, recapitalization, other business combination, liquidation, or other action out of the ordinary course of business of the Com- pany, or (ii) any issuance of securities, in either case involving the sale, issuance or other disposition of capital stock of the Company representing, in the aggregate, at least 30% of the capital stock of the Company on a fully diluted basis. (i) "Extraordinary Transaction Shares": shall have the meaning set forth in Section 7(a). (j) "Holdings": shall have the meaning set forth in the first paragraph hereof. (k) "NASD": the National Association of Securities Dealers, Inc. (l) "Registrable Securities": (i) any and all shares of Company Stock acquired by Buyer pursuant to the Stock Purchase Agreement, (ii) any and all shares of Company Stock acquired by Buyer pursuant to Section 2.5(b) of the Stock Purchase Agreement, (iii) any and all securities acquired by Buyer pursuant to Section 4.2 of the Stockholders Agreement, and (iv) any securities issued or issuable with respect to any Company Stock or other securities re- ferred to in clause (i), (ii) or (iii) by way of conversion, exchange, stock dividend or stock split or in connection with a combination of shares, re- capitalization, merger, consolidation or other reorganization or otherwise. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (A) a registration statement with re- spect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, or (B) such securities shall have been sold in accordance with Rule 144 (or any successor provision) under the Securities Act. (m) "Registration Expenses": all registration, filing and stock ex- change or NASD fees, all fees and expenses of complying with securities or blue sky laws, all printing expenses, messenger and delivery expenses, any fees and disbursements of any separate counsel retained by Buyer, any fees and disburse- ments of underwriters customarily paid by sellers of securities who are not the issuers of such securities and all underwriting discounts and commissions and transfer taxes, if any, and any premiums and other costs of policies of insurance obtained by Buyer against liabilities arising out of the public offering of securities. (n) "Registration Suspension Period": shall have the meaning set forth in Section 2(b). (o) "Securities Act": the Securities Act of 1933, as amended, and any successor thereto, and the rules and regulations thereunder. -2- (p) "Shelf Registration": shall have the meaning set forth in Section 2(a). (q) "Stock Purchase Agreement": shall have the meaning set forth in the second paragraph hereof. (r) "Suspension Notice": shall have the meaning set forth in Section 2(b). (s) "Tag-Along Notice": shall have the meaning set forth in Section 7(a). (t) "Tag-Along Shares": shall have the meaning set forth in Section 7(a). (u) "Third Party": shall have the meaning set forth in Section 7(a). (v) "Underwritten/Placed Offering": a sale of securities of the Company to an underwriter or underwriters for reoffering to the public or on behalf of a person other than the Company through an agent for sale to the public. (w) "USREALTY": shall have the meaning set forth in the first para- graph hereof. Section 2. Shelf Registration. (a) Obligation to File and Maintain. At any time following the date on which the Remaining Equity Commitment equals zero, promptly upon the written request of Buyer, the Company will use its best efforts to file with the Commission a registration statement under the Securities Act for the offering on a continuous or delayed basis in the future of all of the Registrable Securities (the "Shelf Registration"). The Shelf Registration shall be on an appropriate form and the Shelf Registration and any form of prospectus included therein or prospectus supplement relating thereto shall reflect such plan of distribution or method of sale as Buyer may from time to time notify the Company, including the sale of some or all of the Registrable Securities in a public offering or, if re- quested by Buyer, subject to receipt by the Company of such information (including information relating to purchasers) as the Company reasonably may require, (iii) in a transaction constituting an offering outside the United States which is exempt from the registration requirements of the Securities Act in which the Company undertakes to effect registration of such shares as soon as possible after the completion of such offering in order to permit such shares to be freely tradeable in the United States, (iv) in a transaction con- stituting a private placement under Section 4(2) of the Securities Act in con- nection with which the Company undertakes to register such shares after the conclusion of such placement to permit such shares to be freely tradeable by the purchasers thereof, or (v) in a transaction under Rule 144A of the Securities Act in connection with which the Company undertakes to register such shares after the conclusion of such transaction to permit such shares to be freely tradeable by the purchasers thereof. The Company shall use its best efforts to keep the Shelf Registration continuously effective for the period beginning on the date on which the Shelf Registration is declared effective and ending on the first date that there are no Registrable Securities (provided that the Company may terminate the effectiveness of a Shelf Registration on the second anniversary of the date of effectiveness thereof plus a number of days equal to the number of days in all Registration Suspension Periods relating to such Shelf Registration). During the period during which the Shelf Registra- tion is effective, the Company shall supplement or make amendments to the Shelf Registration, if required by -3- the Securities Act or if reasonably requested by Buyer or an underwriter of Registrable Securities, including to reflect any specific plan of distribution or method of sale, and shall use its reasonable best efforts to have such supplements and amendments declared effective, if required, as soon as prac- ticable after filing. (b) Black-Out Periods of Buyer. Notwithstanding anything herein to the contrary, (i) the Company shall have the right from time to time to require Buyer not to sell under the Shelf Registration or to suspend the effectiveness thereof during the period starting with the date 30 days prior to the Company's good faith estimate, as certified in writing by an executive officer of the Company to Buyer, of the proposed date of filing of a registration statement or a preliminary prospectus supplement relating to an existing shelf registration statement, in either case, pertaining to an underwritten public offering of equity securities of the Company for the account of the Company, and ending on the date 90 days following the effective date of such registration statement or the date of filing of such prospectus supplement, and (ii) the Company shall be entitled to postpone or suspend (but not for a period exceeding 90 days) the filing or effectiveness of a registration statement otherwise required to be prepared and filed by it pursuant to this Section 2 if the Company determines, in its good faith judgment, that such registration and offering or continued effectiveness would interfere with any material financing, acquisition, disposition, corporate reorganization or other material transaction involving the Company or any of its subsidiaries or public disclosure thereof would be required prior to the time such disclosure might otherwise be required, or when the Company is in possession of material information that it deems advisable not to disclose in a registration statement. Once any registration statement filed pursuant to this Section 2 or in which Registrable Securities are included pursuant to Section 3 has been de- clared effective, any period during which the Company fails to keep such registration statement effective and usable for resale of Registrable Secu- rities for the period required by Section 4(b) shall be referred to as a "Registration Suspension Period". A Registration Suspension Period shall com- mence on and include the date that the Company gives written notice to Buyer of its determination that such registration statement is no longer effective or usable for resale of Registrable Securities (the "Suspension Notice") to and including the date when the Company notifies Buyer that the use of the pro- spectus included in such registration statement may be resumed for the disposi- tion of Registrable Securities. (c) Black-Out Periods of the Company. Subject to the conditions of this Section 2(c), Buyer shall have the right, exercisable on not more than two occasions, to require the Company not to sell any common equity securities of the Company or any securities convertible into common equity securities of the Company under any registration statement or prospectus supplement relating to an existing shelf registration statement (other than sales of shares of Common Stock upon the redemption of Operating Partnership Units, or limited partnership units of any other Subsidiary of the Company and sales of equity securities issued or granted pursuant to any employee benefit or similar plan or any dividend reinvestment plan), or to suspend the effectiveness thereof, during the period starting with the date 15 days prior to Buyer's good faith estimate, as certified in writing by an executive officer of Buyer to the Com- pany, of the proposed date of filing of a preliminary prospectus supplement re- lating to a Shelf Registration filed pursuant to Section 2(a), pertaining to an underwritten public offering of Registrable Securities, and ending on the date 60 days following the date of -4- filing of the final prospectus supplement, but in no event on a date later than 75 days following the date of filing of the preliminary prospectus supplement. The Company's obligations under this Section 2(c) are subject to the continuing satisfaction of the following conditions: (a) the Registrable Securities to be offered by Buyer in such underwritten public offering shall represent (i) in the case of Buyer's first exercise of its rights under this Section 2(c), the greater of (A) at least 20% of the then outstanding shares of Company Common Stock and (B) at least that number of shares of Registrable Securities having a market value, based on the most recent closing price, of $150 million, in each case determined at the time Buyer exercises its rights under this Section 2(c); and (ii) in the case of Buyer's second exercise of its rights under this Section 2(c), the greater of (A) at least 40% of the total number of shares of Registrable Securities then Beneficially Owned by Buyer and its Affiliates and (B) at least that number of shares of Registrable Securities having a market value, based on the most recent closing price, of $200 million, in each case determined at the time Buyer exercises its rights under this Section 2(c); (b) no black-out period pursuant to Section 2(b)(i) shall be in effect at the time of Buyer's exercise of its rights under this Section 2(c); (c) the Company shall not have suspended sales of Registrable Securities pursuant to Section 2(b)(ii); (d) the Company shall not have delivered to Buyer a written notice to the effect that the Board of Directors has determined in good faith that compliance with this Section 2(c) would reasonably be expected to have a Material Adverse Effect on the Company; and (e) Buyer shall not be in default of any of its material obligations under the Stock Purchase Agreement, the Stockholders Agreement or this Agreement. In no event may the Company include in any preliminary prospectus supplement under which Buyer is offering Regis- trable Securities covered by this Section 2(c) any equity securities of the Company or any securities convertible into equity securities of the Company. (d) Number of Shelf Registrations. The Company shall be obligated to effect no more than five Shelf Registrations under this Section 2, plus an additional Shelf Registration for each $200,000,000 in aggregate purchase price of shares of Company Stock purchased by Buyer from the Company in excess of the Total Equity Commitment (but not including any shares of Company Stock purchased pursuant to Section 2.5(b) of the Stock Purchase Agreement). A Shelf Registration shall not be deemed to have been effected, nor shall it be suf- ficient to reduce the number of Shelf Registrations available to Buyer under this Section 2, unless such registration becomes effective pursuant to the Securities Act and is kept continuously effective for a period of at least two years (other than any periods during such period of effectiveness which are Registration Suspension Periods, and provided that no such Registration Sus- pension Periods shall count towards such two-year period); provided, however, that no Shelf Registration shall be deemed to have been effected, nor shall it reduce the number of Shelf Registrations available under this Section 2, if such registration cannot be used by Buyer for more than 60 days as a result of any stop order, injunction or other order of the Commission or other Government Authority for any reason other than an act or omission of Buyer. (e) Size of Shelf Registration. The Company shall not be required to effect a Shelf Registration of fewer than 1,000,000 shares or other units of Registrable Securities (as adjusted for any stock splits, reverse stock splits or similar events which occur after the date hereof), except that if there are less than 1,000,000 (as adjusted for any stock splits, reverse stock splits or similar events which occur after the date hereof) shares of Registrable Securities outstanding, then the Company shall be required to effect -5- a Shelf Registration of all of the remaining shares or other units of Registrable Securities outstanding. (f) Notice. The Company shall give Buyer prompt notice in the event that the Company has suspended sales of Registrable Securities under Section 2(b). (g) Expenses. All Company Registration Expenses incurred in connec- tion with any Shelf Registration which may be requested under this Section 2 shall be borne by the Company, and all Registration Expenses incurred in con- nection with any such Shelf Registration shall be borne by Buyer. (h) Selection of Underwriters. Any and all underwriters or other agents involved in any sale of Registrable Securities pursuant to a registration statement contemplated by this Section 2 shall include such underwriter(s) or other agent(s) as selected by Buyer and approved of by the Company, which approval shall not be unreasonably withheld; provided that Security Capital Markets Group Incorporated or any other Affiliate of Buyer shall in all events be approved by the Company. (i) Company Right to Purchase. If Buyer proposes to offer any Registrable Securities in an underwritten offering under a Shelf Registration statement filed by the Company pursuant to Section 2(a), Buyer shall give the Company prior written notice of the proposed offering, setting forth the number of Registrable Securities that Buyer proposes to offer, the expected timing of the proposed offering, and the expected gross selling price of such offering. The Company shall have the right, if it irrevocably so notifies Buyer within 10 Business Days after its receipt of Buyer's notice, to purchase all of the Registrable Securities that Buyer proposes to offer, at the gross selling price set forth in Buyer's notice to the Company. In the event the Company shall so notify Buyer, it shall effect such purchase within 10 Business Days. Section 3. Incidental Registrations. (a) Notification and Inclusion. If the Company proposes to register for its own account any common equity securities of the Company or any securities convertible into common eq- uity securities of the Company under the Securities Act (other than a regis- tration relating solely to the sale of securities to participants in a dividend reinvestment plan, a registration on Form S-4 relating to a business com- bination or similar transaction permitted to be registered on such Form S-4, a registration on Form S-8 relating solely to the sale of securities to par- ticipants in a stock or employee benefit plan, or a registration permitted under Rule 462 under the Securities Act registering additional securities of the same class as were included in an earlier registration statement for the same offering and declared effective), the Company shall, at each such time, promptly give written notice of such registration to Buyer. Upon the written request of Buyer given within 10 days after receipt of such notice by Buyer, the Company shall seek to include in such proposed registration such Regis- trable Securities as Buyer shall request be so included and shall use its best efforts to cause a registration statement covering all of the Registrable Se- curities that Buyer has requested to be registered to become effective under the Securities Act. The Company shall be under no obligation to complete any offering of securities it proposes to make under this Section 3 and shall incur no liability to Buyer for its failure to do so. If, at any time -6- after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to Buyer and, thereupon, (i) in the case of a determination not to register, the Company shall be re- lieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Ex- penses incurred in connection therewith) and (ii) in the case of a de- termination to delay registering, the Company shall be permitted to delay reg- istering any Registrable Securities for the same period as the delay in regis- tering such other securities. (b) Cut-back Provisions. If a registration pursuant to this Section 3 involves an Underwritten/Placed Offering of the securities so being registered, whether or not solely for sale for the account of the Company, which securities are to be distributed by or through one or more underwriters of recognized standing under underwriting terms customary for such transaction, and the underwriter or the managing underwriter, as the case may be, of such Underwritten/Placed Offering shall inform the Company of its belief that the amount of securities requested to be included in such registration or offering exceeds the amount which can be sold in (or during the time of) such offering without delaying or jeopardizing the success of the offering (including the price per share of the securities to be sold), then the Company will include in such registration (i) first, all the securities of the Company which the Company proposes to sell for its own account or the account of others (other than Buyer) requesting inclusion in such registration pursuant to rights to registration on request, and (b) second, to the extent of the amount which the Company is so advised can be sold in (or during the time of) such offering, Registrable Securities and other securities requested to be included in such registration, pro rata among Buyer and others exercising incidental registra- tion rights, on the basis of the shares of Company Stock requested to be included by all such persons. (c) Expenses. The Company shall bear and pay all Company Registra- tion Expenses incurred in connection with any registration of Registrable Securities pursuant to this Section 3 for Buyer, and all Registration Expenses incurred in connection with any registration of any other securities referred to in the first sentence of Section 3(a), and Buyer shall bear and pay all Registration Expenses incurred in connection with any registration of Regis- trable Securities pursuant to this Section 3 for Buyer. (d) Duration of Effectiveness. At the request of Buyer, the Company shall, subject to Section 2(b), use its best efforts to keep any registration statement for which Registrable Securities are included under this Section 3 effective and usable for up to 90 days (subject to extension for the length of any Registration Suspension Period), unless the distribution of securities reg- istered thereunder has been earlier completed; provided, however, that in no event will the Company be required to prepare or file audited financial statements with respect to any fiscal year by a date prior to the date on which the Company would be so required to prepare and file such audited financial statements if such registration statement were no longer effective and usable. Section 4. Registration Procedures. In connection with the filing of any registration statement as provided in Section 2 or 3, the Company shall use its best efforts to, as expeditiously as reasonably practicable: -7- (a) prepare and file with the Commission the requisite registration statement (including a prospectus therein) to effect such registration and use its best efforts to cause such registration statement to become effec- tive, provided that before filing such registration statement or any amendments or supplements thereto, the Company will furnish to the counsel selected by Buyer copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel before any such filing is made, and the Company will comply with any reasonable request made by such counsel to make changes in any information contained in such documents relating to Buyer; (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in con- nection therewith as may be necessary to maintain the effectiveness of such registration and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until, in the case of Section 2, the termination of the period during which the Shelf Registration is required to be kept effective, or, in the case of Section 3, the earlier of such time as all of such securities have been disposed of and the date which is 90 days af- ter the date of initial effectiveness of such registration statement; (c) furnish to Buyer such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the pro- spectus contained in such registration statements (including each complete prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the require- ments of the Securities Act, and such other documents, including documents incorporated by reference, as Buyer may reasonably request; (d) register or qualify all Registrable Securities under such other securities or blue sky laws of such jurisdictions as Buyer shall rea- sonably request, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and take any other action which may be reasonably necessary or advisable to enable Buyer to consummate the disposition in such jurisdictions of the secur- ities owned by Buyer, except that the Company shall not for any such pur- pose be required to qualify generally to do business as a foreign corpora- tion in any jurisdiction wherein it would not but for the requirements of this paragraph be obligated to be so qualified, or to consent to general service of process in any such jurisdiction, or to subject the Company to any material tax in any such jurisdiction where it is not then so subject; (e) cause all Registrable Securities covered by such registration statement to be registered with or approved by such other Government Authority as may be reasonably necessary to enable Buyer to consummate the disposition of such Registrable Securities; -8- (f) furnish to Buyer a signed counterpart, addressed to Buyer (and the underwriters, if any), of (i) an opinion of counsel for the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), reasonably satisfactory in form and substance to Buyer, and (ii) to the extent permitted by then applicable rules of professional conduct, a "comfort" letter, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the independent public accountants who have certified the Company's financial statements included in such registration statement; covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of the accountants' letter, with respect to events subsequent to the date of such financial statements, all as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to the underwriters in underwritten public offerings of securities; (g) immediately notify Buyer at any time when the Company becomes aware that a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and at the request of Buyer promptly prepare and furnish to Buyer a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include 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 in the light of the circumstances under which they were made; (h) comply or continue to comply in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the pe- riod of at least 12 months, but not more than 18 months, beginning with the first full calendar month after the effective date of such regis- tration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, and not file any amendment or supplement to such registration statement or prospectus to which Buyer shall have reasonably objected on the grounds that such amendment or supplement -9- does not comply in all material respects with the requirements of the Securities Act, having been furnished with a copy thereof at least five Business Days prior to the filing thereof; (i) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the effective date of such registration statement; and (j) list all Company Stock covered by such registration statement on any securities exchange on which any of the Company Stock is then listed. Buyer shall furnish in writing to the Company such information regarding Buyer (and any of its affiliates), the Registrable Securities to be sold, the intended method of distribution of such Registrable Securities, and such other information requested by the Company as is necessary for inclusion in the registration statement relating to such offering pursuant to the Securities Act and the rules of the Commission thereunder. Such writing shall expressly state that it is being furnished to the Company for use in the preparation of a registration statement, preliminary prospectus, supplementary prospectus, final prospectus or amendment or supplement thereto, as the case may be. Buyer agrees by acquisition of the Registrable Securities that upon receipt of any notice from the Company of the happening of any event of the kind described in paragraph (g) of this Section 4, Buyer will forthwith discon- tinue its disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until Buyer's receipt of the copies of the supplemented or amended prospectus contemplated by paragraph (g) of this Section 4. Section 5. Requested Underwritten Offerings. If requested by the underwriters for any underwritten offerings by Buyer, under a registration re- quested pursuant to Section 2(a), the Company will enter into a customary underwriting agreement with such underwriters for such offering, to contain such representations and warranties by the Company and such other terms as are customarily contained in agreements of this type, including indemnities to the effect and to the extent provided in Section 6. Buyer shall be a party to such underwriting agreement and may, at its option, require that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of Buyer. Buyer shall not be required to make any representations or warranties to or agreement with the Company or the underwriters other than representations, war- ranties or agreements regarding Buyer and Buyer's intended method of distri- bution and any other representation or warranty required by law. Section 6. Preparation; Reasonable Investigation. In connection with the preparation and filing of the registration statement under the Securities Act, the Company will give Buyer, its underwriters, if any, and their respective counsel, the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto, and will give each of them such access to its books and records and such opportunities to discuss the business of the Company with its officers, its counsel and the independent public accountants who have certified its financial statements as shall be -10- necessary, in the opinion of Buyer's and such underwriters' respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. Section 7. Tag-Along Rights. From and after the date hereof until the earlier of (i) the date on which Buyer shall own shares of Company Stock representing less than 10% of the then outstanding shares of Company Stock on a fully diluted basis, or (ii) the date on which Buyer shall no longer be subject to the standstill restrictions set forth in Section 5.2(a) of the Stockholders Agreement (unless Buyer is not subject to such restrictions as a result of an Early Termination Event (as that term is defined in the Stockholders Agreement)), Buyer shall be entitled to the rights set forth in this Section 7. (a) Rights and Notice. The Company shall not directly or indirectly sell or otherwise dispose of shares of Company Stock to any person (a "Third Party") in connection with an Extraordinary Transaction in which the consideration for some or all of the shares of Company Stock is cash or cash equivalents (as determined under GAAP), unless the terms and conditions of such sale or other disposition shall include an offer to Buyer to include, at the option of Buyer, in such sale or other disposition the Registrable Securities owned by Buyer at the time of such sale or other disposition determined in ac- cordance with Section 7(b) (the "Tag-Along Shares"). The Company shall send a written notice (the "Tag-Along Notice") to Buyer setting forth the number of shares of Company Stock proposed to be sold or otherwise disposed of in the Extraordinary Transaction (the "Extraordinary Transaction Shares"), and the price at which such shares are proposed to be sold (or the method by which such price is proposed to be determined). At any time within 15 days after its re- ceipt of the Tag-Along Notice, Buyer may exercise its option to sell the Tag- Along Shares by furnishing written notice of such exercise (the "Exercise No- tice") to the Company. (b) Number of Shares to be Included. If the proposed sale or other disposition by the Company in connection with an Extraordinary Transaction is consummated, Buyer shall have the right to sell to the Third Party as part of such proposed sale or other disposition such number of Registrable Securities owned by Buyer equal to the product of (i) the ratio (which in no event shall exceed 30% for purposes of this Section 7) of the total number of Registrable Securities owned by Buyer at the time that Buyer receives the Tag-Along Notice to the total number of outstanding shares of Company Stock at the time that Buyer receives the Tag-Along Notice, and (ii) the number of Extraordinary Transaction Shares; provided, however, that if the number of Tag-Along Shares is greater than the number of Registrable Securities owned by Buyer at the time that Buyer receives the Tag-Along Notice, then Buyer shall have the right to sell to the Third Party as part of the proposed sale or other disposition to the Third Party by the Company in connection with an Extraordinary Transaction the total number of Registrable Securities owned by Buyer at the time that Buyer receives the Tag-Along Notice. All calculations pursuant to this paragraph shall exclude and ignore any unissued shares of Company Stock issu- able pursuant to stock options, warrants and other rights to acquire shares of Company Stock and pursuant to convertible or exchangeable securities, but shall include shares of Company Common Stock issuable upon redemption of limited partnership interests in Carr Realty, L.P. (all of which shares shall be deemed to be outstanding for purposes of this calculation). -11- (c) Abandonment of Sale. Each of the Company and the Third Party shall have the right, in its sole discretion, at all times prior to consummation of the proposed sale or other disposition giving rise to the tag- along right granted by this Section 7 to abandon, rescind, annul, withdraw or otherwise terminate such sale or other disposition, whereupon all tag-along rights in respect of such sale or other disposition pursuant to this Section 7 shall become null and void, and neither the Company nor the Third Party shall have any liability or obligation to Buyer with respect thereto by virtue of such abandonment, rescission, annulment, withdrawal or termination. (d) Terms of Sale. The purchase from Buyer pursuant to this Section 7 shall be on the same terms and conditions, including the per share price and the date of sale or other disposition, as are applicable to the Company, and which shall be consistent with the relevant Tag-Along Notice. (e) Timing of Sale. If, with respect to any Tag-Along Notice, Buyer fails to deliver an Exercise Notice within the requisite time period, the Company shall have 120 days after the expiration of the time in which the Exercise Notice is required to be delivered in which to sell or otherwise dispose of not more than the number of shares of Company Stock described in the Tag-Along Notice on terms not more favorable to the Company than were set forth in the Tag-Along Notice. If, at the end of 120 days following the receipt of the Tag-Along Notice, the Company has not completed the sale or other dis- position of Company Stock in accordance with the terms described in the Tag- Along Notice, the Company shall again be obligated to comply with the provi- sions of this Section 7 with respect to, and provide Buyer with the opportunity to participate in, any proposed sale or other disposition of shares of Company Stock in connection with an Extraordinary Transaction. Section 8. Indemnification. (a) Indemnification by the Company. In the event of any registration of any Registrable Securities of the Company under the Securities Act, the Company will, and hereby does, indemnify and hold harmless Buyer, each other person who participates as an underwriter in the offering or sale of such securities and each other person who controls any such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which Buyer or any such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which such Registrable Securities were registered under the Securities Act, any prelimi- nary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein 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, and the Company will reimburse Buyer and each such underwriter and controlling person for any reasonable legal or any other ex- penses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceedings; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or -12- proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by Buyer or any other person who participates as an underwriter in the offering or sale of such securities, in either case, specifically stating that it is for use in the preparation thereof, and provided, further, that the Company shall not be liable to any person who participates as an underwriter in the offering or sale of Registrable Securities or any other person, if any, who controls such under- writer within the meaning of the Securities Act in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of such person's failure to send or give a copy of the final prospectus or supplement to the persons asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such person if such statement or omission was corrected in such final prospectus or supplement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Buyer or any such underwriter or con- trolling person and shall survive the transfer of such securities by Buyer. (b) Indemnification by Buyer. The Company may require, as a condition to including any Registrable Securities in any registration statement pursuant to Section 2 or Section 3, that the Company shall have received an undertaking satisfactory to it from Buyer to indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a) of this Section 8) the Company, each director of the Company, each officer of the Company and each other person, if any, who controls the Company within the meaning of the Securities Act, and each other person who participates as an underwriter in the offering or sale of such securities and each other person who controls any such underwriter within the meaning of the Securities Act, with respect to any untrue statement or alleged untrue statement of a material fact in or omission or alleged omission to state a material fact from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by Buyer specifically stating that it is for use in the prepara- tion of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer, or controlling person and shall survive the transfer of such securities by Buyer. (c) Notices of Claims, etc. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in the preceding paragraphs of this Section 8, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, however, that the failure of any indem- nified party to give notice as provided herein shall not relieve the indemnify- ing party of its obligations under the preceding paragraphs of this Section 8, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified -13- and indemnifying parties may exist in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to the indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. (d) Other Indemnification. Indemnification similar to that specified in the preceding paragraphs of this Section 8 (with appropriate modifications) shall be given by the Company and Buyer with respect to any required registration or other qualification of securities under any federal or state law or regulation of Governmental Authority other than the Securities Act. (e) Indemnification Payments. The indemnification required by this Section 8 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred. (f) Contribution. If, for any reason, the foregoing indemnity is unavailable, or is insufficient to hold harmless an indemnified party, then the indemnifying party shall contribute to the amount paid or payable by the indem- nified party as a result of the expense, loss, damage or liability, (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, in the proportion as is appropriate to reflect not only the relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation. Section 9. Covenants Relating to Rule 144. The Company will file in a timely manner, information, documents and reports in compliance with the Exchange Act and will, at its expense, forthwith upon the request of Buyer, deliver to Buyer a certificate, signed by the Company's principal financial officer, stating (a) the Company's name, address and telephone number (including area code), (b) the Company's Internal Revenue Service identifica- tion number, (c) the Company's Commission file number, (d) the number of shares of Company Common Stock and the number of shares of Company Preferred Stock outstanding as shown by the most recent report or statement published by the Company, and (e) whether the Company has filed the reports required to be filed -14- under the Exchange Act for a period of at least 90 days prior to the date of such certificate and in addition has filed the most recent annual report re- quired to be filed thereunder. If at any time the Company is not required to file reports in compliance with either Section 13 or Section 15(d) of the Ex- change Act, the Company will, at its expense, forthwith upon the written request of Buyer, make available adequate current public information with re- spect to the Company within the meaning of paragraph (c)(2) of Rule 144 of the General Rules and Regulations promulgated under the Securities Act. Section 10. Miscellaneous. (a) Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 10, provided receipt of copies of such counterparts is confirmed. (b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF. (c) Entire Agreement. This Agreement (including agreements incorpo- rated herein) contains the entire agreement between the parties with respect to the subject matter hereof and there are no agreements or understandings between the parties other than those set forth or referred to herein. This Agreement is not intended to confer upon any person not a party hereto (and their succes- sors and assigns) any rights or remedies hereunder. (d) Notices. All notices and other communications hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax or other electronic transmission service to the appropriate address or number as set forth below. Notices to the Company shall be addressed to: Carr Realty Corporation 1700 Pennsylvania Avenue, N.W. Washington, D.C. 20006 Attention: Thomas A. Carr Telecopy Number: (202) 638-0102 with a copy to: Hogan & Hartson L.L.P. Columbia Square 555 Thirteenth Street, N.W. Washington, D.C. 20004-1109 Attention: J. Warren Gorrell, Jr., Esq. Telecopy Number: (202) 637-5910 -15- or at such other address and to the attention of such other person as the Company may designate by written notice to Buyer. Notices to Buyer shall be addressed to: Security Capital Holdings S.A. 69, route d'Esch L-2953 Luxembourg Attention: Managing Director Telecopy Number: (352) 4590-3331 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Adam O. Emmerich, Esq. Telecopy Number: (212) 403-2000 (e) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors. Neither party shall be permitted to assign any of its rights hereunder to any third party, except that if (i) Buyer transfers or pledges any or all Registrable Securities to a bona fide financial institution as security for any bona fide indebtedness of any Buyer and such financial institution agrees to be bound by the Stockholders Agreement, the pledgee of the Registrable Securities shall be considered an intended beneficiary hereof and may exercise all rights of Buyer hereunder, and (ii) any person included within the definition of the term Buyer shall be permitted to assign its rights hereunder to any other per- son included within such definition. (f) Headings. The Section and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. All references to Sections or other headings contained herein mean Sections or other headings of this Agreement unless otherwise stated. (g) Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought. Ei- ther party hereto may, only by an instrument in writing, waive compliance by the other party hereto with any term or provision hereof on the part of such other party hereto to be performed or complied with. The waiver by any party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach. (h) Interpretation; Absence of Presumption. For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms "hereof", "herein", and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, paragraph or other references are to the Sections, paragraphs, or other references to this Agreement unless otherwise specified, (iii) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless the context otherwise requires or unless otherwise -16- specified, (iv) the word "or" shall not be exclusive, and (v) provisions shall apply, when appropriate, to successive events and transactions. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. (i) Severability. Any provision hereof which is invalid or unen- forceable shall be ineffective to the extent of such invalidity or unenforceability, without affecting in any way the remaining provisions hereof. -17- IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the parties hereto as of the day first above written. CARR REALTY CORPORATION By: /s/ Brian K. Fields Name: Brian K. Fields Title: Chief Financial Officer SECURITY CAPITAL U.S. REALTY By: /s/ Paul E. Szurek Name: Paul E. Szurek Title: Managing Director SECURITY CAPITAL HOLDINGS S.A. By: /s/ Paul E. Szurek Name: Paul E. Szurek Title: Managing Director -18- -----END PRIVACY-ENHANCED MESSAGE-----