-----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, KC30QfG6Wkm4rCuov9ugYOFnzhuXhdOS+DE6iQNj+531dWJXJEx00zh9UJhzp0ZI vbd0jeL88uRDK9cq9dd6mw== 0000898822-98-000471.txt : 19980507 0000898822-98-000471.hdr.sgml : 19980507 ACCESSION NUMBER: 0000898822-98-000471 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19980506 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CARRAMERICA REALTY CORP CENTRAL INDEX KEY: 0000893577 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 521796339 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-43099 FILM NUMBER: 98611719 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 U S REALTY CENTRAL INDEX KEY: 0001013705 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] 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/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 12) 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) ARIEL AMIR 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 29, 1998 ------------------------------------------------------------ (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 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 / /. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) Page 1 of 9 Pages CUSIP No. 14441K 10 3 13D Page 2 of 9 Pages - -------------------------------------------------------------------------------- 1 NAME OF PERSON SECURITY CAPITAL U.S. REALTY 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* BK, 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 28,603,417 (SEE ITEM 5) SHARES -------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY -0- EACH -------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 28,603,417 WITH -------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 28,603,417 (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) 39.9% (SEE ITEM 5) - -------------------------------------------------------------------------------- 14 TYPE OF PERSON REPORTING* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT CUSIP No. 14441K 10 3 13D Page 3 of 9 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* BK, 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 28,603,417 (SEE ITEM 5) SHARES -------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY -0- EACH -------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 28,603,417 WITH -------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 28,603,417 (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) 39.9% (SEE ITEM 5) - -------------------------------------------------------------------------------- 14 TYPE OF PERSON REPORTING* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT This Amendment No. 12 is filed by Security Capital U.S. Realty ("Security Capital U.S. Realty"), a corporation organized and existing under the laws of Luxembourg, and by Security Capital Holdings S.A. ("Holdings"), a corporation organized and existing under the laws of Luxembourg and a wholly owned subsidiary of Security Capital U.S. Realty (together with Security Capital U.S. Realty, "USRealty"), and amends the Schedule 13D originally filed on November 14, 1995 (as previously amended, the "Schedule 13D"). This Amendment No. 12 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"). Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Schedule 13D. This Amendment No. 12 is filed to report the acquisition of certain shares of Common Stock since December 31, 1997. A schedule identifying all transactions involving shares of Common Stock effected by Security Capital U.S. Realty and Holdings since December 31, 1997 is included as Annex A hereto and is hereby incorporated by reference herein. Except for (i) the purchase by Holdings of 1,285,714 shares of Common Stock on April 8, 1998, (ii) the purchase by Holdings of 192,857 shares of Common Stock on April 17, 1998 and (iii) the purchase by Holdings of 505,263 shares of Common Stock on April 29, 1998, each in an offering directly from Carr (each of which is described below), each of such transactions was executed in stock market transactions. The funds used by Security Capital U.S. Realty and Holdings to purchase such shares were obtained from drawdowns under the Facility Agreement and from cash on hand. On April 8, 1998, Holdings purchased 1,285,714 shares of Common Stock directly from Carr for an aggregate purchase price of $37,767,849.00, or $29.375 per share, pursuant to a Subscription Agreement, dated as of April 2, 1998, by and among Carr, Holdings and Security Capital U.S. Realty (the "April 2 Subscription Agreement"). Such purchase was effected concurrently with an underwritten public offering (the "April 8 Public Offering") by Carr of 3,000,000 shares of Common Stock (which, together with the 1,285,714 shares of Common Stock purchased by Holdings, resulted in a total issuance and sale by Carr of 4,285,714 shares of Common Stock). No underwriting discounts were applied to any shares of Common Stock purchased by Holdings pursuant to the April 2 Subscription Agreement. On April 17, 1998, Holdings purchased (the "April 17 Purchase") 192,857 shares of Common Stock directly from Carr for an aggregate purchase price of $5,665,174, or $29.375 per share, pursuant to an overallotment option granted to Holdings under the April 2 Subscription Agreement. Such purchase was Page 4 of 9 Pages effected substantially concurrently with an underwritten public offering by Carr of 450,000 shares of Common Stock pursuant to an overallotment option granted to the underwriters in connection with the April 8 Public Offering (which together with the 192,857 shares of Common Stock purchased by Holdings, resulted in a total issuance and sale by Carr of 642,857 shares of Common Stock). No underwriting discounts were applied to any shares of Common Stock purchased by Holdings in the April 17 Purchase. On April 29, 1998, Holdings purchased 505,263 shares of Common Stock directly from Carr for an aggregate purchase price of $14,999,995, or $29.6875 per share, pursuant to a Subscription Agreement, dated as of April 23, 1998, by and among Carr, Holdings and Security Capital U.S. Realty (the "April 23 Subscription Agreement"). Such purchase was effected concurrently with an underwritten public offering by Carr of 1,178,947 shares of Common Stock (which together with the 505,263 shares of Common Stock purchased by Holdings, resulted in a total issuance and sale by Carr of 1,684,210 shares of Common Stock). No underwriting discounts were applied to any shares of Common Stock purchased by Holdings pursuant to the April 23 Subscription Agreement. A copy of each of the April 2 Subscription Agreement and the April 23 Subscription Agreement are attached hereto as Exhibits 10 and 11, respectively. The April 2 Subscription Agreement and the April 23 Subscription Agreement are hereby incorporated herein by reference, and the descriptions herein of the such Agreements are qualified in their respective entireties by reference to such agreements. ITEM 1. SECURITY AND ISSUER. No material change. ITEM 2. IDENTITY AND BACKGROUND. No material change except as set forth above. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. No material change except as set forth above. ITEM 4. PURPOSE OF TRANSACTION. No material change except as set forth above. Page 5 of 9 Pages ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. No material change except as set forth above and below. As of May 5, 1998, Security Capital U.S. Realty and Holdings each beneficially owns 28,603,417 shares of Common Stock. As of May 5, 1998, Security Capital U.S. Realty and Holdings each beneficially owns approximately 39.9% of the outstanding Common Stock, and approximately 36.2% on a fully diluted basis, based on the number of outstanding shares of Common Stock and the number of outstanding limited partnership units that are redeemable for Common Stock or the cash equivalent thereof. Except as set forth herein and as previously reported, to the best knowledge and belief of Security Capital U.S. Realty and of Holdings, no transactions involving Common Stock have been effected during the past 60 days by Security Capital U.S. Realty or by Holdings or by their respective directors, executive officers or controlling persons. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. No material change except as described above. 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 Director of Security Capital U.S. Realty and of Security 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 Current 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 Page 6 of 9 Pages 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 Exhibit 3 Subscription Agreement, dated as of July 17, 1996, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Exhibit 4 Facility Agreement, dated June 12, 1996, by and among Security Capital U.S. Realty, Security Capital Holdings S.A., Commerzbank Aktiengesellschaft, as arranger and collateral agent, Commerzbank International S.A., as administrative agent and the financial institutions listed in Schedule 1 thereto (incorporated by reference to Exhibit 4 of the Schedule 13D, dated June 21, 1996, filed jointly by Security Capital U.S. Realty and Security Capital Holdings S.A. with respect to the common stock of Regency Realty Corporation) Exhibit 5 Subscription Agreement, dated as of November 21, 1996, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Exhibit 6 Subscription Agreement, dated as of December 19, 1996, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Exhibit 7 Subscription Agreement, dated as of January 31, 1997, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Exhibit 8 Subscription Agreement, dated as of April 14, 1997, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Exhibit 9 Subscription Agreement, dated as of December 18, 1997, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Page 7 of 9 Pages Exhibit 10 Subscription Agreement, dated as of April 2, 1998, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty Exhibit 11 Subscription Agreement, dated as of April 23, 1998, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty. Page 8 of 9 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct. SECURITY CAPITAL U.S. REALTY By: /s/ Ariel Amir Name: Ariel Amir Title: Vice President SECURITY CAPITAL HOLDINGS S.A. By: /s/ Ariel Amir Name: Ariel Amir Title: Vice President May 6, 1998 Page 9 of 9 Pages ANNEX A Recent Stock Market Transactions in the Common Stock by the Reporting Persons Except as otherwise indicated, the transactions described below were effected in stock market transactions. The price per share for such transactions includes commissions (if any). DATE OF NUMBER OF PRICE TRANSACTION SHARES PURCHASED PER SHARE 1/13/98 54,500 $30.05 1/14/98 8,500 $30.12 1/15/98 100,000 $30.25 *4/8/98 1,285,714 $29.375 *4/17/98 192,857 $29.375 **4/29/98 505,263 $29.6875 - ---------- * Direct purchase from CarrAmerica pursuant to the April 2 Subscription Agreement. ** Direct purchase from CarrAmerica pursuant to the April 23 Subscription Agreement. EXHIBIT INDEX SEQUENTIAL EXHIBIT DESCRIPTION PAGE NO. 1 Name, Business Address, and Present Principal * Occupation of Each Executive Officer and Director of Security Capital 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 Holdings S.A. (incorporated by reference to Exhibit 5.1 of Carr Realty Corporation'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 Security Capital U.S. Realty 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 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 3 Subscription Agreement, dated as of July 17, * 1996, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty - ---------- * Previously filed. 4 Facility Agreement, dated June 12, 1996, by and * among Security Capital U.S. Realty, Security Capital Holdings S.A., Commerzbank Aktiengesellschaft, as arranger and collateral agent, Commerzbank International S.A., as administrative agent and the financial institutions listed in Schedule 1 thereto (incorporated by reference to Exhibit 4 of the Schedule 13D, dated June 21, 1996, filed jointly by Security Capital U.S. Realty and Security Capital Holdings S.A. with respect to the common stock of Regency Realty Corporation) 5 Subscription Agreement, dated as of November * 21, 1996, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty 6 Subscription Agreement, dated as of December * 19, 1996, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty 7 Subscription Agreement, dated as of January 31, * 1997, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty 8 Subscription Agreement, dated as of April 14, * 1997, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty 9 Subscription Agreement, dated as of December 18, * 1997, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty - ---------- * Previously filed. 10 Subscription Agreement, dated as of April 2, 1998, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty 11 Subscription Agreement, dated as of April 23, 1998, by and among CarrAmerica Realty Corporation, Security Capital Holdings S.A. and Security Capital U.S. Realty EX-10 2 EXHIBIT 10 - SUBSCRIPTION AGREEMENT FOR 4/2/98 Exhibit 10 SUBSCRIPTION AGREEMENT by and among CARRAMERICA REALTY CORPORATION SECURITY CAPITAL HOLDINGS S.A. and SECURITY CAPITAL U.S. REALTY dated as of April 2, 1998 TABLE OF CONTENTS Page 1. SUBSCRIPTION; CLOSING.............................................2 1.1. Subscription for Company Common Stock........................2 1.2. Acceptance of Subscription...................................2 1.3. Purchase Price...............................................2 1.4. Closing......................................................2 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................3 2.1. Organization and Qualification...............................3 2.2. Authority Relative to the Agreement; Board Approval..........3 2.3. Capital Stock................................................4 2.4. No Conflicts; No Defaults; Required Filings and Consents.....4 2.5. Securities Law Matters; Material Changes; Corporate Action Covenants...................................................5 2.6. Litigation; Compliance With Law..............................7 2.7. Tax Matters; REIT and Partnership Status.....................7 2.8. Compliance with Organizational Documents.....................7 2.9. Maryland Takeover Law........................................8 2.10. Brokers or Finders..........................................8 3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER AND THE ADVANCING PARTY..............................................................8 3.1. Organization and Standing....................................8 3.2. Due Authorization............................................8 3.3. Conflicting Agreements and Other Matters.....................9 3.4. Source of Funds..............................................9 3.5. Brokers or Finders...........................................9 3.6. REIT Qualification Matters...................................9 3.7. Investment Company Matters...................................9 4. CONDITIONS TO CLOSING.............................................10 4.1. Conditions to Obligations of Subscriber.....................10 4.2. Conditions to Obligations of the Company....................11 5. SURVIVAL; INDEMNIFICATION.........................................12 5.1. Survival....................................................12 5.2. Indemnification by Subscriber or the Company................12 5.3. Third-Party Claims..........................................13 6. MISCELLANEOUS.....................................................13 6.1. Counterparts................................................13 6.2. Governing Law...............................................14 6.3. Entire Agreement............................................14 6.4. Notices.....................................................14 6.5. Successors and Assigns......................................15 6.6. Headings....................................................15 6.7. Amendments and Waivers......................................16 6.8. Expenses....................................................16 6.9. Severability................................................16 6.10. Further Assurances.........................................16 6.11. Joint and Several Liability; Guaranty......................16 -i- SUBSCRIPTION AGREEMENT THIS SUBSCRIPTION AGREEMENT (this "Agreement") is entered into as of April 2, 1998 by and among CarrAmerica 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 ("Subscriber"). Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Stockholders Agreement (as hereinafter defined). WHEREAS, in connection with the Company's issuance and sale to Subscriber on April 30, 1996 of 11,627,907 shares of the Company's common stock, par value $0.01 per share (the "Company Common Stock"), the Company, Carr Realty, L.P., a Delaware limited partnership ("Carr Realty, L.P."), the Advancing Party and Subscriber entered into a Stockholders Agreement on such date (the "Stockholders Agreement"); WHEREAS, pursuant to the terms of the Stockholders Agreement, in the event that the Company issues or sells shares of capital stock of the Company, Investor is, during a specified term, entitled (except in certain limited circumstances) to a participation right to purchase, or subscribe for, a total number of shares generally equal to up to 30% of the total number of shares of capital stock proposed to be issued by the Company (the "Participation Rights"); WHEREAS, the Company currently intends to issue and to offer and sell in a public offering (the "Public Offering") up to 3,450,000 shares (the "Public Shares") of Company Common Stock; WHEREAS, in connection with the Public Shares proposed to be issued by the Company in the Public Offering, Investor is entitled to, and has indicated to the Company that it desires to, exercise its Participation Rights; and WHEREAS, in accordance with Investor's desire to exercise its Participation Rights, the Company desires to issue and sell to Subscriber shares of Company Common Stock in an offering (the "Concurrent Purchase") from the Company to Subscriber to be consummated concurrently with the Public Offering. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows: 1. SUBSCRIPTION; CLOSING 1.1. SUBSCRIPTION FOR COMPANY COMMON STOCK (a) Subject to the terms and conditions hereof, Subscriber hereby subscribes (the "Subscription") to purchase that number of shares of Company Common Stock (the "Concurrent Shares") equal to the lesser of (i) 1,478,571 shares of Company Common Stock, or (ii) that number (the "Reduced Number") of shares of Company Common Stock which is equal to thirty percent (30%) of the sum of the number of Public Shares sold in the Public Offering (including thirty percent (30%) of any Public Shares sold as a result of the exercise of the underwriters' over-allotment option in connection with the Public Offering) and the Reduced Number. (b) Investor hereby agrees that the Subscription represents the complete and exclusive exercise of its Participation Rights with regard to the Public Offering, provided that the number of Public Shares to be sold in the Public Offering does not exceed 3,450,000 (including 450,000 Public Shares that may be sold as a result of the exercise of the underwriters' over-allotment option in connection with the Public Offering). The Company reserves the right to terminate the Public Offering for any reason or for no reason, to sell less than all of the Public Shares in the Public Offering or to increase the number of Public Shares sold in the Public Offering. 1.2. ACCEPTANCE OF SUBSCRIPTION Subject to the terms and conditions hereof, the Company hereby accepts the Subscription. 1.3. PURCHASE PRICE The per share purchase price (the "Per Share Purchase Price") for the Concurrent Shares shall equal the per share public offering price of the Company Common Stock in the Public Offering ($29.375). The aggregate purchase price (the "Purchase Price") shall be equal to the Per Share Purchase Price multiplied by the number of Concurrent Shares. 1.4. CLOSING Subject to the terms and conditions hereof, the closing of the Concurrent Purchase (the "Closing") shall occur concurrently with the closing of the Public Offering. The closing, if any, of the purchase of Concurrent Shares by Subscriber as a result of the sale of Public Shares pursuant to the exercise of the underwriters' over-allotment option (the "Option Closing") shall occur concurrently with the closing of the sale of the Public Shares subject to the underwriter's -2- over-allotment option, if any. At the Closing or the Option Closing, as the case may be, the Company will sell, convey, assign, transfer and deliver, and Subscriber will purchase and acquire (and the Advancing Party shall advance to the Subscriber sufficient funds for such purchase) from the Company, the Concurrent Shares, and Subscriber will pay to the Company the Purchase Price by wire transfer of immediately available funds in U.S. dollars to the account or accounts specified by the Company. 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Subscriber as follows: 2.1. ORGANIZATION AND QUALIFICATION (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Maryland. The Company has all requisite corporate power and authority to own, operate, lease and encumber its properties and carry on its business as described in the Company Prospectus (as hereinafter defined), and to enter into this Agreement and to perform its obligations hereunder. (b) Each of the Significant Subsidiaries of the Company is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, and has the corporate or partnership power and authority to own its properties and carry on its business as it is now being conducted. (c) Each of the Company and its Significant Subsidiaries is duly qualified to do business and in good standing in each jurisdiction in which the ownership of its property or the conduct of its business requires such qualification, except for any failures to be so qualified or to be in good standing as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (d) The issue and sale of the Concurrent Shares hereunder will not give any stockholder of the Company the right to demand payment for his shares under the Maryland General Corporation Law. 2.2. AUTHORITY RELATIVE TO THE AGREEMENT; BOARD APPROVAL (a) The execution, delivery and performance of this Agreement by the Company have been duly and validly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by the Company for itself and constitutes the valid and legally binding obligation of the Company, -3- enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights or general principles of equity. (b) The Board of Directors of the Company has, as of the date hereof, approved the transactions contemplated hereby. (c) The Concurrent Shares have been duly authorized for issuance, and upon issuance and receipt by the Company of the Purchase Price, will be duly and validly issued, fully paid and nonassessable. 2.3. CAPITAL STOCK The capital stock of the Company as of the date specified in the Company Prospectus is as set forth therein under the caption entitled "Capitalization". All of the issued and outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights (excluding any preemptive rights that Investor may have under the Stockholders Agreement). 2.4. NO CONFLICTS; NO DEFAULTS; REQUIRED FILINGS AND CONSENTS Neither the execution and delivery by the Company of this Agreement nor the consummation by the Company of the transactions contemplated hereby in accordance with the terms hereof, will: (a) conflict with or result in a breach of any provisions of the Company Charter or By-laws of the Company; (b) result in a breach or violation of, a default under, or the triggering of any payment or other obligations pursuant to, or accelerate vesting under, any of the Company stock option plans or Partnership (as defined below) Unit (as defined below) option plans or similar compensation plan or any grant or award made under any of the foregoing, except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; (c) violate or conflict with any statute, regulation, judgment, order, writ, decree or injunction applicable to the Company, except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; (d) violate or conflict with or result in a breach of any provision of, or constitute a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or in a right of termination or cancellation of, or accelerate the performance required by, or result -4- in the creation of any Lien upon any of the properties of the Company under, or result in being declared void, voidable or without further binding effect, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust or any license, franchise, permit, lease, contract, agreement or other instrument, commitment or obligation to which the Company is a party, or by which the Company or any of its properties is bound or affected, except for any of the foregoing matters which would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect; or (e) require any consent, approval or authorization of, or declaration, filing or registration with any Governmental Authority, other than any filings required under the Securities Act, the Exchange Act, Blue Sky Laws and any filings required to be made with any national securities exchange on which the Company Common Stock is listed, except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (f) For purposes hereof, the terms listed below shall have the following meanings: "Partnerships" shall mean, collectively, Carr Realty, L.P. and CarrAmerica Realty, L.P., Delaware limited partnerships. "Units" shall mean units of partnership interest in the Partnerships. 2.5. SECURITIES LAW MATTERS; MATERIAL CHANGES; CORPORATE ACTION COVENANTS (a) As of the date hereof and as of the date of the Closing and the Option Closing, if any, the Company Prospectus does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) The documents incorporated or deemed to be incorporated by reference in the Company Prospectus pursuant to Item 12 of Form S-3 under the Securities Act, at the time they were or hereafter are filed with the SEC, complied and will comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC under the Exchange Act, and, when read together with the other information in the Company Prospectus, as of the date hereof and as of the date of the Closing and the Option Closing, if any, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. -5- (c) Since the respective dates as of which information is given in the Company Prospectus, except as otherwise stated therein, (A) there has been no change in the condition, financial or otherwise, or in the earnings, assets or business affairs of the Company and the Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, except as would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect, (B) no casualty loss or condemnation or other event with respect to any of the interests held directly or indirectly in any of the real properties owned, directly or indirectly, by the Company or any entity wholly or partially owned by the Company has occurred, except as would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect, (C) except for regular quarterly dividends on the Common Stock and the Preferred Stock and regular quarterly distributions on the Units, all in amounts per share that are consistent with past practice, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock or by either of the Partnerships with respect to its Units, and (D) with the exception of transactions in connection with stock options and in connection with dividend reinvestment plans, the issuance of shares of Common Stock upon the exchange of Units of the Partnerships and the issuance of Units of the Partnerships in connection with the acquisition of real or personal property, there has been no change in the capital stock or in the partnership interests or member interests, as the case may be, of the Company or any Subsidiary, and no increase in the indebtedness of the Company or any Subsidiary, that is material to such entities considered as one enterprise. (d) The financial statements (including the notes thereto) included in, or incorporated by reference into, the Company Prospectus present fairly the financial position of the respective entity or entities presented therein at the respective dates indicated (if such financial position is presented) and the results of their operations for the respective periods specified and, except as otherwise stated in the Company Prospectus, said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis. (e) As of the date hereof, the Company and its Controlled Subsidiaries have complied in all material respects with the Corporate Action Covenants set forth in Section 6.1 of the Stockholders Agreement. (f) For purposes hereof, "Company Prospectus" shall mean, collectively, the Prospectus dated April 2, 1998 and the Prospectus Supplement dated April 2, 1998 relating to the shares of Company Common Stock to be offered to the Subscriber, a copy of which is attached hereto as Exhibit A. -6- 2.6. LITIGATION; COMPLIANCE WITH LAW (a) There are no Actions pending or, to the Company's knowledge, threatened against the Company or any of its Significant Subsidiaries that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, or which question the validity of this Agreement or any action taken or to be taken in connection herewith. There are no continuing orders, injunctions or decrees of any Government Authority to which the Company or any of its Significant Subsidiaries is a party or by which any of its properties or assets are bound. (b) None of the Company or its Significant Subsidiaries is in violation of any statute, rule, regulation, order, writ, decree or injunction of any Government Authority or any body having jurisdiction over them or any of their respective properties which, if enforced, would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. 2.7. TAX MATTERS; REIT AND PARTNERSHIP STATUS (a) The Company (i) was eligible to and did validly elect to be taxed as a REIT under Sections 856 through 860 of the Code effective as of its taxable year ended December 31, 1993, and does not intend, in its federal income tax return for the tax year ended December 31, 1997 or in its federal income tax return for the tax year that will end on December 31, 1998, to revoke such election, (ii) has not, to its knowledge, taken or omitted to take any action that would reasonably be expected to result in a termination of or challenge to its status as a REIT, (iii) is not aware that any such challenge is pending or threatened, (iv) intends to continue to operate in such a manner as to qualify as a REIT for 1998, and (v) to the Company's knowledge, and assuming the accuracy of Subscriber's representation in Section 3.7, will not be rendered unable to qualify as a REIT for federal income tax purposes as a consequence of the transactions contemplated hereby. (b) Each Partnership and each subsidiary of the Company organized as a partnership (and any other subsidiary of the Company that files tax returns as a partnership for federal income tax purposes) was and continues to be classified as a partnership for federal income tax purposes. (c) For purposes of this Section 2.7, no representation set forth in Section 2.7 shall be deemed to be untrue unless such untruths would, individually or in the aggregate, be reasonably expected to result in a Material Adverse Effect. 2.8. COMPLIANCE WITH ORGANIZATIONAL DOCUMENTS Neither the Company nor any of its Significant Subsidiaries is in default under or in violation of any provision of the Company Charter or the By- 7 laws of the Company or the Partnership Agreement (or equivalent documents), except for such defaults or violations which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. 2.9. MARYLAND TAKEOVER LAW The terms of Section 3-602 and Subtitle 7 of Title 3 of the Maryland General Corporation Law will not apply to Subscriber, the Subscription or any other transaction contemplated hereby. 2.10. BROKERS OR FINDERS No agent, broker, investment banker or other firm or person, including any of the foregoing that is an Affiliate of the Company, is or will be entitled to any broker's or finder's fee or any other commission or similar fee from the Company in connection with this Agreement or any of the transactions contemplated hereby for which Subscriber will be responsible. 3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER AND THE ADVANCING PARTY Subscriber and the Advancing Party hereby jointly and severally represent and warrant to the Company as follows: 3.1. ORGANIZATION AND STANDING Each of Subscriber and the Advancing Party is a corporation duly incorporated, validly existing and in good standing under the laws of Luxembourg. Subscriber has all requisite corporate power and authority to own, operate, lease and encumber its properties and carry on its business as now conducted, and to enter into this Agreement and to perform its obligations hereunder. 3.2. DUE AUTHORIZATION The execution, delivery and performance of this Agreement have been duly and validly authorized by all necessary corporate action on the part of Subscriber and the Advancing Party. This Agreement has been duly executed and delivered by each of Subscriber and the Advancing Party for itself and constitutes the valid and legally binding obligations of Subscriber and the Advancing Party, enforceable against Subscriber or the Advancing Party, as the case may be, in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights or general principles of equity. -8- 3.3. CONFLICTING AGREEMENTS AND OTHER MATTERS Neither the execution and delivery of this Agreement nor the performance by Subscriber or the Advancing Party, as the case may be, of its obligations hereunder will conflict with, result in a breach of the terms, conditions or provisions of, constitute a default under, result in the creation of any mortgage, security interest, encumbrance, lien or charge of any kind upon any of the properties or assets of Subscriber or the Advancing Party, as the case may be, pursuant to, or require any consent, approval or other action by or any notice to or filing with any Government Authority pursuant to, the organizational documents or agreements of Subscriber or the Advancing Party, as the case may be, or any agreement, instrument, order, judgment, decree, statute, law, rule or regulation by which Subscriber or the Advancing Party, as the case may be, is bound, except for filings after any Closing under Section 13(d) of the Exchange Act. 3.4. SOURCE OF FUNDS At the Closing, the Advancing Party shall have available and shall advance to Subscriber all of the funds necessary to satisfy Subscriber's obligations hereunder and to pay any related fees and expenses in connection with the foregoing. 3.5. BROKERS OR FINDERS No agent, broker, investment banker or other firm or person, including any of the foregoing that is an Affiliate of Subscriber or the Advancing Party, is or will be entitled to any broker's or finder's fee or any other commission or similar fee from Subscriber or the Advancing Party in connection with this Agreement or the transactions contemplated hereby for which the Company will be responsible. 3.6. REIT QUALIFICATION MATTERS To Subscriber's knowledge, no person which would be treated as an "individual" for purposes of Section 542(a)(2) of the Code (as modified by Section 856(h) of the Code) owns or would be considered to own (taking into account the ownership attribution rules under Section 544 of the Code, as modified by Section 856(h) of the Code) in excess of 9.8% of the value of the outstanding equity interest in Subscriber or the Advancing Party. 3.7. INVESTMENT COMPANY MATTERS Neither the Advancing Party nor Subscriber is, and after giving effect to the purchase of the Concurrent Shares, neither will be, an "investment company" -9- or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. 4. CONDITIONS TO CLOSING 4.1. CONDITIONS TO OBLIGATIONS OF SUBSCRIBER The obligations of Subscriber to purchase and pay for the Concurrent Shares at the Closing and the Option Closing, if any, are subject to satisfaction or waiver of each of the following conditions precedent: (a) All conditions to the closing of the Public Offering as set forth in the underwriting agreement between the Company and the underwriters for the Public Offering, other than conditions relating to the transactions contemplated by this Agreement (if any), shall have been satisfied or waived, and the Company shall have delivered to Subscriber at the Closing and the Option Closing, if any, a certificate of an appropriate officer in form and substance reasonably satisfactory to Subscriber dated the date of the Closing or the Option Closing, as the case may be, to such effect. (b) The representations and warranties of the Company contained herein shall have been true and correct in all respects on and as of the date hereof, and shall be true and correct in all respects on and as of the Closing and the Option Closing, if any, with the same effect as though such representations and warranties had been made on and as of the date of the Closing and the Option Closing, if any (except for representations and warranties that speak as of a specific date or time other than the date of the Closing or the Option Closing, as the case may be (which need only be true and correct in all respects as of such date or time)), other than, in all such cases, such failures to be true and/or correct as would not in the aggregate reasonably be expected to have a Material Adverse Effect; provided, however, that if any of the representations and warranties is already qualified in any respect by materiality or as to Material Adverse Effect, for purposes of this Section 4.1(b) such materiality or Material Adverse Effect qualification will be in all respects ignored (but subject to the overall standard as to Material Adverse Effect set forth immediately prior to this proviso). The Company shall have delivered to Subscriber at the Closing and the Option Closing, if any, a certificate of an appropriate officer in form and substance reasonably satisfactory to Subscriber dated the date of the Closing or the Option Closing, as the case may be, to such effect. In making any determination as to Material Adverse Effect under this Section 4.1(b), the matters set forth in each such Section shall be aggregated and considered together. -10- (c) There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the transactions contemplated hereby and there shall be no pending Actions which would reasonably be expected to have a material adverse effect on the ability of the Company to consummate the transactions contemplated hereby or to issue the Concurrent Shares. (d) The Company shall not have taken any action or have failed to take any action which would reasonably be expected to, alone or in conjunction with any other factors, result in the loss of its status as a REIT for federal income tax purposes. 4.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY The obligations of the Company to issue and sell the Concurrent Shares at the Closing and the Option Closing, if any, are subject to satisfaction or waiver of each of the following conditions precedent: (a) All conditions to the closing of the Public Offering as set forth in the underwriting agreement between the Company and the underwriters for the Public Offering, other than conditions relating to the transactions contemplated by this Agreement (if any), shall have been satisfied or waived. (b) The representations and warranties of Subscriber and the Advancing Party contained herein shall have been true and correct in all respects on and as of the date hereof, and shall be true and correct in all respects on and as of the Closing and the Option Closing, if any, with the same effect as though such representations and warranties had been made on and as of the date of the Closing or the Option Closing, as the case may be (except for representations and warranties that speak as of a specific date or time other than the date of the Closing or the Option Closing, as the case may be (which need only be true and correct in all respects as of such date or time)), other than, in all such cases, such failures to be true and/or correct as would not in the aggregate reasonably be expected to have a Material Adverse Effect. Subscriber shall have delivered to the Company at the Closing and the Option Closing, if any, a certificate of an appropriate officer in form and substance reasonably satisfactory to the Company dated the date of the Closing or the Option Closing, as the case may be, to such effect. (c) There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the transactions contemplated hereby and there shall be no pending Actions which would reasonably be expected to have a material adverse effect on the ability of the Company to consummate the transactions contemplated hereby or to issue the Concurrent Shares. -11- 5. SURVIVAL; INDEMNIFICATION 5.1. SURVIVAL All representations, warranties, covenants and agreements of the parties contained herein, including indemnity or indemnification agreements contained herein, shall survive the Closing and the Option Closing, if any, until the first anniversary of the Closing. No Action or proceeding may be brought with respect to any of the representations, warranties, covenants or agreements unless written notice thereof, setting forth in reasonable detail the claimed misrepresentation or breach of warranty or breach of covenant or agreement, shall have been delivered to the party alleged to have breached such representation or warranty or such covenant or agreement prior to the first anniversary of the Closing. Those covenants or agreements that contemplate or may involve actions to be taken or obligations in effect after the Closing shall survive in accordance with their terms. 5.2. INDEMNIFICATION BY SUBSCRIBER OR THE COMPANY (a) Subject to Section 5.1, from and after the Closing, Subscriber shall indemnify and hold harmless the Company, its successors and assigns, from and against any and all Loss and Expenses suffered, directly or indirectly, by the Company by reason of, or arising out of, (i) any breach as of the date made or deemed made or required to be true of any representation or warranty made by Subscriber in or pursuant to this Agreement, or (ii) any failure by Subscriber to perform or fulfill any of its covenants or agreements set forth herein. Notwithstanding any other provision of this Agreement to the contrary, in no event shall Loss and Expenses include a party's incidental or consequential damages. (b) Subject to Section 5.1, from and after the Closing, the Company shall indemnify and hold harmless Subscriber, its successors and assigns, from and against any and all Loss and Expenses, suffered, directly or indirectly, by Subscriber by reason of, or arising out of, (i) any breach as of the date made or deemed made or required to be true of any representation or warranty made by the Company in or pursuant to this Agreement and any statements made in any certificate delivered pursuant to this Agreement, or (ii) any failure by the Company to perform or fulfill any of its covenants or agreements set forth herein. Notwithstanding any other provision of this Agreement to the contrary, in no event shall Loss and Expenses include a party's incidental or consequential damages. (c) Notwithstanding the foregoing, (i) neither Subscriber nor the Company shall be responsible for any Loss and Expenses as provided by paragraphs (a) and (b), respectively, of this Section 5.2, until the cumulative aggregate amount of such Loss and Expenses suffered by Subscriber or the Company, as the case may be, exceeds $500,000, in which case Subscriber or the Company, as the case may be, -12- shall then be liable for all such Loss and Expenses, and (ii) the cumulative aggregate indemnity obligation of each of Subscriber and the Company under this Section 5.2 shall in no event exceed the Purchase Price. Except with respect to third-party claims being defended in good faith or claims for indemnification with respect to which there exists a good faith dispute, the indemnifying party shall satisfy its obligations hereunder within 30 days of receipt of a notice of claim under this Section 5. 5.3. THIRD-PARTY CLAIMS If a claim by a third party is made against Subscriber or the Advancing Party or the Company (each, an "Indemnified Party") and if such Indemnified Party intends to seek indemnity with respect thereto under this Section 5, such Indemnified Party shall promptly notify the indemnifying party in writing of such claims setting forth such claims in reasonable detail. The indemnifying party shall have 20 days after receipt of such notice to undertake, through counsel of its own choosing and at its own expense, the settlement or defense thereof, and the Indemnified Party shall cooperate with it in connection therewith; provided, however, that the Indemnified Party may participate in such settlement or defense through counsel chosen by such Indemnified Party, provided that the fees and expenses of such counsel shall be borne by such Indemnified Party. The Indemnified Party shall not pay or settle any claim which the indemnifying party is contesting. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such claim, provided that in such event it shall waive any right to indemnity therefor by the indemnifying party. If the indemnifying party does not notify the Indemnified Party within 20 days after the receipt of the Indemnified Party's notice of a claim of indemnity hereunder that it elects to undertake the defense thereof, the Indemnified Party shall have the right to contest, settle or compromise the claim but shall not thereby waive any right to indemnity therefor pursuant to this Agreement. 6. MISCELLANEOUS 6.1. COUNTERPARTS This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall be effective when one or more counterparts have been signed by each party hereto 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. -13- 6.2. 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. 6.3. ENTIRE AGREEMENT This Agreement contains the entire agreement between the parties hereto 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. 6.4. 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: -14- CarrAmerica Realty Corporation 1700 Pennsylvania Avenue, N.W. Washington, DC 20006 Attention: Thomas A. Carr, President Telecopy Number: (202) 638-0102 with a copy (which shall not constitute notice) to: Hogan & Hartson L.L.P. 555 Thirteenth Street, N.W. Washington, DC 20004-1109 Attention: J. Warren Gorrell, Jr., Esq. Telecopy Number: (202) 637-5910 Notices to Subscriber or the Advancing Party shall be addressed to: Security Capital Holdings S.A. 69, route d'Esch L-2953 Luxembourg Attention: Jeffrey A. Cozad, Managing Director Telecopy Number: (352) 4590-3331 with a copy (which shall not constitute notice) to: Wachtell, Lipton, Rosen & Katz 51 W. 52nd Street New York, New York 10019 Attention: Adam O. Emmerich, Esq. Telecopy Number: (212) 403-2000 6.5. SUCCESSORS AND ASSIGNS This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors. Neither Subscriber nor the Advancing Party shall be permitted to assign any of its rights hereunder to any third party; provided, however, that Subscriber and the Advancing Party may assign all (but not less than all) of their rights hereunder to any other Investor so long as such other Investor agrees in writing, in a form reasonably acceptable to the Company, to be bound by all the terms and conditions of this Agreement. 6.6. HEADINGS The Section and other headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. -15- 6.7. 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. Any party hereto may, only by an instrument in writing, waive compliance by the other parties 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. 6.8. EXPENSES Except as set forth in this Agreement, whether or not the Closing is consummated, 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. 6.9. 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. 6.10. FURTHER ASSURANCES The Company, Subscriber and the Advancing Party agree that, from time to time, whether before, at or after the Closing, each of them will execute and deliver such further instruments of conveyance and transfer and take such other action as may be necessary to carry out the purposes and intents hereof. 6.11. JOINT AND SEVERAL LIABILITY; GUARANTY The obligations and liability of Subscriber and the Advancing Party under or in connection with this Agreement are joint and several. The Advancing Party hereby unconditionally and irrevocably guarantees and agrees to be responsible for the payment and performance of all of Subscriber's obligations hereunder. -16- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the day and year first above written. CARRAMERICA REALTY CORPORATION By: /s/ Brian K. Fields Name: Brian K. Fields Title: Chief Financial Officer SECURITY CAPITAL HOLDINGS S.A. By: /s/ Ariel Amir Name: Ariel Amir Title: Vice President SECURITY CAPITAL U.S. REALTY By: /s/ Ariel Amir Name: Ariel Amir Title: Vice President -17- EX-10 3 EXHIBIT 11- SUBSCRIPTION AGREEMENT FOR 4/23/98 Exhibit 11 SUBSCRIPTION AGREEMENT by and among CARRAMERICA REALTY CORPORATION SECURITY CAPITAL HOLDINGS S.A. and SECURITY CAPITAL U.S. REALTY dated as of April 23, 1998 TABLE OF CONTENTS Page 1. SUBSCRIPTION; CLOSING.............................................2 1.1. Subscription for Company Common Stock.......................2 1.2. Acceptance of Subscription..................................2 1.3. Purchase Price..............................................2 1.4. Closing.....................................................2 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................3 2.1. Organization and Qualification..............................3 2.2. Authority Relative to the Agreement; Board Approval.........3 2.3. Capital Stock...............................................4 2.4. No Conflicts; No Defaults; Required Filings and Consents....4 2.5. Securities Law Matters; Material Changes; Corporate Action Covenants..................................................5 2.6. Litigation; Compliance With Law.............................6 2.7. Tax Matters; REIT and Partnership Status....................7 2.8. Compliance with Organizational Documents....................7 2.9. Maryland Takeover Law.......................................8 2.10. Brokers or Finders.........................................8 3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER AND THE ADVANCING PARTY............................................................8 3.1. Organization and Standing...................................8 3.2. Due Authorization...........................................8 3.3. Conflicting Agreements and Other Matters....................8 3.4. Source of Funds.............................................9 3.5. Brokers or Finders..........................................9 3.6. REIT Qualification Matters..................................9 3.7. Investment Company Matters..................................9 4. CONDITIONS TO CLOSING.............................................10 4.1. Conditions to Obligations of Subscriber.....................10 4.2. Conditions to Obligations of the Company....................11 5. SURVIVAL; INDEMNIFICATION.........................................11 5.1. Survival....................................................11 5.2. Indemnification by Subscriber or the Company................12 5.3. Third-Party Claims..........................................13 6. MISCELLANEOUS.....................................................13 6.1. Counterparts................................................13 6.2. Governing Law...............................................13 6.3. Entire Agreement............................................14 6.4. Notices.....................................................14 6.5. Successors and Assigns......................................15 6.6. Headings....................................................15 6.7. Amendments and Waivers......................................15 6.8. Expenses....................................................15 6.9. Severability................................................15 6.10.Further Assurances..........................................15 6.11.Joint and Several Liability; Guaranty.......................16 -i- SUBSCRIPTION AGREEMENT THIS SUBSCRIPTION AGREEMENT (this "Agreement") is entered into as of April 23, 1998 by and among CarrAmerica 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 ("Subscriber"). Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Stockholders Agreement (as hereinafter defined). WHEREAS, in connection with the Company's issuance and sale to Subscriber on April 30, 1996 of 11,627,907 shares of the Company's common stock, par value $0.01 per share (the "Company Common Stock"), the Company, Carr Realty, L.P., a Delaware limited partnership ("Carr Realty, L.P."), the Advancing Party and Subscriber entered into a Stockholders Agreement on such date (the "Stockholders Agreement"); WHEREAS, pursuant to the terms of the Stockholders Agreement, in the event that the Company issues or sells shares of capital stock of the Company, Investor is, during a specified term, entitled (except in certain limited circumstances) to a participation right to purchase, or subscribe for, a total number of shares generally equal to up to 30% of the total number of shares of capital stock proposed to be issued by the Company (the "Participation Rights"); WHEREAS, the Company currently intends to issue and to offer and sell in a public offering (the "Public Offering") up to 1,178,947 shares (the "Public Shares") of Company Common Stock; WHEREAS, in connection with the Public Shares proposed to be issued by the Company in the Public Offering, Investor is entitled to, and has indicated to the Company that it desires to, exercise its Participation Rights; and WHEREAS, in accordance with Investor's desire to exercise its Participation Rights, the Company desires to issue and sell to Subscriber shares of Company Common Stock in an offering (the "Concurrent Purchase") from the Company to Subscriber to be consummated concurrently with the Public Offering. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows: 1. SUBSCRIPTION; CLOSING 1.1. SUBSCRIPTION FOR COMPANY COMMON STOCK (a) Subject to the terms and conditions hereof, Subscriber hereby subscribes (the "Subscription") to purchase that number of shares of Company Common Stock (the "Concurrent Shares") equal to the lesser of (i) 505,263 shares of Company Common Stock, or (ii) that number (the "Reduced Number") of shares of Company Common Stock which is equal to thirty percent (30%) of the sum of the number of Public Shares sold in the Public Offering and the Reduced Number. (b) Investor hereby agrees that the Subscription represents the complete and exclusive exercise of its Participation Rights with regard to the Public Offering, provided that the number of Public Shares to be sold in the Public Offering does not exceed 1,178,947. The Company reserves the right to terminate the Public Offering for any reason or for no reason, to sell less than all of the Public Shares in the Public Offering or to increase the number of Public Shares sold in the Public Offering. 1.2. ACCEPTANCE OF SUBSCRIPTION Subject to the terms and conditions hereof, the Company hereby accepts the Subscription. 1.3. PURCHASE PRICE The per share purchase price (the "Per Share Purchase Price") for the Concurrent Shares shall equal the per share public offering price of the Company Common Stock in the Public Offering ($29.6875). The aggregate purchase price (the "Purchase Price") shall be equal to the Per Share Purchase Price multiplied by the number of Concurrent Shares. 1.4. CLOSING Subject to the terms and conditions hereof, the closing of the Concurrent Purchase (the "Closing") shall occur concurrently with the closing of the Public Offering. At the Closing, the Company will sell, convey, assign, transfer and deliver, and Subscriber will purchase and acquire (and the Advancing Party shall advance to the Subscriber sufficient funds for such purchase) from the Company, the Concurrent Shares, and Subscriber will pay to the Company the Purchase Price by wire transfer of immediately available funds in U.S. dollars to the account or accounts specified by the Company. -2- 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Subscriber as follows: 2.1. ORGANIZATION AND QUALIFICATION (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Maryland. The Company has all requisite corporate power and authority to own, operate, lease and encumber its properties and carry on its business as described in the Company Prospectus (as hereinafter defined), and to enter into this Agreement and to perform its obligations hereunder. (b) Each of the Significant Subsidiaries of the Company is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, and has the corporate or partnership power and authority to own its properties and carry on its business as it is now being conducted. (c) Each of the Company and its Significant Subsidiaries is duly qualified to do business and in good standing in each jurisdiction in which the ownership of its property or the conduct of its business requires such qualification, except for any failures to be so qualified or to be in good standing as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (d) The issue and sale of the Concurrent Shares hereunder will not give any stockholder of the Company the right to demand payment for his shares under the Maryland General Corporation Law. 2.2. AUTHORITY RELATIVE TO THE AGREEMENT; BOARD APPROVAL (a) The execution, delivery and performance of this Agreement by the Company have been duly and validly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by the Company for itself and constitutes the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights or general principles of equity. (b) The Board of Directors of the Company has, as of the date hereof, approved the transactions contemplated hereby. -3- (c) The Concurrent Shares have been duly authorized for issuance, and upon issuance and receipt by the Company of the Purchase Price, will be duly and validly issued, fully paid and nonassessable. 2.3. CAPITAL STOCK The capital stock of the Company as of the date specified in the Company Prospectus is as set forth therein under the caption entitled "Capitalization". All of the issued and outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights (excluding any preemptive rights that Investor may have under the Stockholders Agreement). 2.4. NO CONFLICTS; NO DEFAULTS; REQUIRED FILINGS AND CONSENTS Neither the execution and delivery by the Company of this Agreement nor the consummation by the Company of the transactions contemplated hereby in accordance with the terms hereof, will: (a) conflict with or result in a breach of any provisions of the Company Charter or By-laws of the Company; (b) result in a breach or violation of, a default under, or the triggering of any payment or other obligations pursuant to, or accelerate vesting under, any of the Company stock option plans or Partnership (as defined below) Unit (as defined below) option plans or similar compensation plan or any grant or award made under any of the foregoing, except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; (c) violate or conflict with any statute, regulation, judgment, order, writ, decree or injunction applicable to the Company, except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect; (d) violate or conflict with or result in a breach of any provision of, or constitute a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or in a right of termination or cancellation of, or accelerate the performance required by, or result in the creation of any Lien upon any of the properties of the Company under, or result in being declared void, voidable or without further binding effect, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust or any license, franchise, permit, lease, contract, agreement or other instrument, commitment or obligation to which the Company is a party, or by which the Company or any of its properties is bound or affected, except for any of the -4- foregoing matters which would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect; or (e) require any consent, approval or authorization of, or declaration, filing or registration with any Governmental Authority, other than any filings required under the Securities Act, the Exchange Act, Blue Sky Laws and any filings required to be made with any national securities exchange on which the Company Common Stock is listed, except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (f) For purposes hereof, the terms listed below shall have the following meanings: "Partnerships" shall mean, collectively, Carr Realty, L.P. and CarrAmerica Realty, L.P., Delaware limited partnerships. "Units" shall mean units of partnership interest in the Partnerships. 2.5. SECURITIES LAW MATTERS; MATERIAL CHANGES; CORPORATE ACTION COVENANTS (a) As of the date hereof and as of the date of the Closing, the Company Prospectus does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) The documents incorporated or deemed to be incorporated by reference in the Company Prospectus pursuant to Item 12 of Form S-3 under the Securities Act, at the time they were or hereafter are filed with the SEC, complied and will comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC under the Exchange Act, and, when read together with the other information in the Company Prospectus, as of the date hereof and as of the date of the Closing, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) Since the respective dates as of which information is given in the Company Prospectus, except as otherwise stated therein, (A) there has been no change in the condition, financial or otherwise, or in the earnings, assets or business affairs of the Company and the Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, except as would not reasonably be expected to, individually or in the aggregate, result in a Material -5- Adverse Effect, (B) no casualty loss or condemnation or other event with respect to any of the interests held directly or indirectly in any of the real properties owned, directly or indirectly, by the Company or any entity wholly or partially owned by the Company has occurred, except as would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect, (C) except for regular quarterly dividends on the Common Stock and the Preferred Stock and regular quarterly distributions on the Units, all in amounts per share that are consistent with past practice, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock or by either of the Partnerships with respect to its Units, and (D) with the exception of transactions in connection with stock options and in connection with dividend reinvestment plans, the issuance of shares of Common Stock upon the exchange of Units of the Partnerships and the issuance of Units of the Partnerships in connection with the acquisition of real or personal property, there has been no change in the capital stock or in the partnership interests or member interests, as the case may be, of the Company or any Subsidiary, and no increase in the indebtedness of the Company or any Subsidiary, that is material to such entities considered as one enterprise. (d) The financial statements (including the notes thereto) included in, or incorporated by reference into, the Company Prospectus present fairly the financial position of the respective entity or entities presented therein at the respective dates indicated (if such financial position is presented) and the results of their operations for the respective periods specified and, except as otherwise stated in the Company Prospectus, said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis. (e) As of the date hereof, the Company and its Controlled Subsidiaries have complied in all material respects with the Corporate Action Covenants set forth in Section 6.1 of the Stockholders Agreement. (f) For purposes hereof, "Company Prospectus" shall mean, collectively, the Prospectus dated April 2, 1998 and the Prospectus Supplement dated April 23, 1998 relating to the shares of Company Common Stock to be offered to the Subscriber, a copy of which is attached hereto as Exhibit A. 2.6. LITIGATION; COMPLIANCE WITH LAW (a) There are no Actions pending or, to the Company's knowledge, threatened against the Company or any of its Significant Subsidiaries that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, or which question the validity of this Agreement or any action taken or to be taken in connection herewith. There are no continuing orders, injunctions or decrees of any Government Authority to which the Company or any of its -6- Significant Subsidiaries is a party or by which any of its properties or assets are bound. (b) None of the Company or its Significant Subsidiaries is in violation of any statute, rule, regulation, order, writ, decree or injunction of any Government Authority or any body having jurisdiction over them or any of their respective properties which, if enforced, would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. 2.7. TAX MATTERS; REIT AND PARTNERSHIP STATUS (a) The Company (i) was eligible to and did validly elect to be taxed as a REIT under Sections 856 through 860 of the Code effective as of its taxable year ended December 31, 1993, and does not intend, in its federal income tax return for the tax year ended December 31, 1997 or in its federal income tax return for the tax year that will end on December 31, 1998, to revoke such election, (ii) has not, to its knowledge, taken or omitted to take any action that would reasonably be expected to result in a termination of or challenge to its status as a REIT, (iii) is not aware that any such challenge is pending or threatened, (iv) intends to continue to operate in such a manner as to qualify as a REIT for 1998, and (v) to the Company's knowledge, and assuming the accuracy of Subscriber's representation in Section 3.7, will not be rendered unable to qualify as a REIT for federal income tax purposes as a consequence of the transactions contemplated hereby. (b) Each Partnership and each subsidiary of the Company organized as a partnership (and any other subsidiary of the Company that files tax returns as a partnership for federal income tax purposes) was and continues to be classified as a partnership for federal income tax purposes. (c) For purposes of this Section 2.7, no representation set forth in Section 2.7 shall be deemed to be untrue unless such untruths would, individually or in the aggregate, be reasonably expected to result in a Material Adverse Effect. 2.8. COMPLIANCE WITH ORGANIZATIONAL DOCUMENTS Neither the Company nor any of its Significant Subsidiaries is in default under or in violation of any provision of the Company Charter or the By-laws of the Company or the Partnership Agreement (or equivalent documents), except for such defaults or violations which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. -7- 2.9. MARYLAND TAKEOVER LAW The terms of Section 3-602 and Subtitle 7 of Title 3 of the Maryland General Corporation Law will not apply to Subscriber, the Subscription or any other transaction contemplated hereby. 2.10. BROKERS OR FINDERS No agent, broker, investment banker or other firm or person, including any of the foregoing that is an Affiliate of the Company, is or will be entitled to any broker's or finder's fee or any other commission or similar fee from the Company in connection with this Agreement or any of the transactions contemplated hereby for which Subscriber will be responsible. 3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER AND THE ADVANCING PARTY Subscriber and the Advancing Party hereby jointly and severally represent and warrant to the Company as follows: 3.1. ORGANIZATION AND STANDING Each of Subscriber and the Advancing Party is a corporation duly incorporated, validly existing and in good standing under the laws of Luxembourg. Subscriber has all requisite corporate power and authority to own, operate, lease and encumber its properties and carry on its business as now conducted, and to enter into this Agreement and to perform its obligations hereunder. 3.2. DUE AUTHORIZATION The execution, delivery and performance of this Agreement have been duly and validly authorized by all necessary corporate action on the part of Subscriber and the Advancing Party. This Agreement has been duly executed and delivered by each of Subscriber and the Advancing Party for itself and constitutes the valid and legally binding obligations of Subscriber and the Advancing Party, enforceable against Subscriber or the Advancing Party, as the case may be, in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights or general principles of equity. 3.3. CONFLICTING AGREEMENTS AND OTHER MATTERS Neither the execution and delivery of this Agreement nor the performance by Subscriber or the Advancing Party, as the case may be, of its obligations hereunder will conflict with, result in a breach of the terms, conditions -8- or provisions of, constitute a default under, result in the creation of any mortgage, security interest, encumbrance, lien or charge of any kind upon any of the properties or assets of Subscriber or the Advancing Party, as the case may be, pursuant to, or require any consent, approval or other action by or any notice to or filing with any Government Authority pursuant to, the organizational documents or agreements of Subscriber or the Advancing Party, as the case may be, or any agreement, instrument, order, judgment, decree, statute, law, rule or regulation by which Subscriber or the Advancing Party, as the case may be, is bound, except for filings after any Closing under Section 13(d) of the Exchange Act. 3.4. SOURCE OF FUNDS At the Closing, the Advancing Party shall have available and shall advance to Subscriber all of the funds necessary to satisfy Subscriber's obligations hereunder and to pay any related fees and expenses in connection with the foregoing. 3.5. BROKERS OR FINDERS No agent, broker, investment banker or other firm or person, including any of the foregoing that is an Affiliate of Subscriber or the Advancing Party, is or will be entitled to any broker's or finder's fee or any other commission or similar fee from Subscriber or the Advancing Party in connection with this Agreement or the transactions contemplated hereby for which the Company will be responsible. 3.6. REIT QUALIFICATION MATTERS To Subscriber's knowledge, no person which would be treated as an "individual" for purposes of Section 542(a)(2) of the Code (as modified by Section 856(h) of the Code) owns or would be considered to own (taking into account the ownership attribution rules under Section 544 of the Code, as modified by Section 856(h) of the Code) in excess of 9.8% of the value of the outstanding equity interest in Subscriber or the Advancing Party. 3.7. INVESTMENT COMPANY MATTERS Neither the Advancing Party nor Subscriber is, and after giving effect to the purchase of the Concurrent Shares, neither will be, an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. -9- 4. CONDITIONS TO CLOSING 4.1. CONDITIONS TO OBLIGATIONS OF SUBSCRIBER The obligations of Subscriber to purchase and pay for the Concurrent Shares at the Closing, are subject to satisfaction or waiver of each of the following conditions precedent: (a) All conditions to the closing of the Public Offering as set forth in the underwriting agreement between the Company and the underwriters for the Public Offering, other than conditions relating to the transactions contemplated by this Agreement (if any), shall have been satisfied or waived, and the Company shall have delivered to Subscriber at the Closing, a certificate of an appropriate officer in form and substance reasonably satisfactory to Subscriber dated the date of the Closing to such effect. (b) The representations and warranties of the Company contained herein shall have been true and correct in all respects on and as of the date hereof, and shall be true and correct in all respects on and as of the Closing, with the same effect as though such representations and warranties had been made on and as of the date of the Closing (except for representations and warranties that speak as of a specific date or time other than the date of the Closing (which need only be true and correct in all respects as of such date or time)), other than, in all such cases, such failures to be true and/or correct as would not in the aggregate reasonably be expected to have a Material Adverse Effect; provided, however, that if any of the representations and warranties is already qualified in any respect by materiality or as to Material Adverse Effect, for purposes of this Section 4.1(b) such materiality or Material Adverse Effect qualification will be in all respects ignored (but subject to the overall standard as to Material Adverse Effect set forth immediately prior to this proviso). The Company shall have delivered to Subscriber at the Closing, a certificate of an appropriate officer in form and substance reasonably satisfactory to Subscriber dated the date of the Closing to such effect. In making any determination as to Material Adverse Effect under this Section 4.1(b), the matters set forth in each such Section shall be aggregated and considered together. (c) There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the transactions contemplated hereby and there shall be no pending Actions which would reasonably be expected to have a material adverse effect on the ability of the Company to consummate the transactions contemplated hereby or to issue the Concurrent Shares. -10- (d) The Company shall not have taken any action or have failed to take any action which would reasonably be expected to, alone or in conjunction with any other factors, result in the loss of its status as a REIT for federal income tax purposes. 4.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY The obligations of the Company to issue and sell the Concurrent Shares at the Closing are subject to satisfaction or waiver of each of the following conditions precedent: (a) All conditions to the closing of the Public Offering as set forth in the underwriting agreement between the Company and the underwriters for the Public Offering, other than conditions relating to the transactions contemplated by this Agreement (if any), shall have been satisfied or waived. (b) The representations and warranties of Subscriber and the Advancing Party contained herein shall have been true and correct in all respects on and as of the date hereof, and shall be true and correct in all respects on and as of the Closing, with the same effect as though such representations and warranties had been made on and as of the date of the Closing (except for representations and warranties that speak as of a specific date or time other than the date of the Closing (which need only be true and correct in all respects as of such date or time)), other than, in all such cases, such failures to be true and/or correct as would not in the aggregate reasonably be expected to have a Material Adverse Effect. Subscriber shall have delivered to the Company at the Closing a certificate of an appropriate officer in form and substance reasonably satisfactory to the Company dated the date of the Closing to such effect. (c) There shall not be in effect any order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation of the transactions contemplated hereby and there shall be no pending Actions which would reasonably be expected to have a material adverse effect on the ability of the Company to consummate the transactions contemplated hereby or to issue the Concurrent Shares. 5. SURVIVAL; INDEMNIFICATION 5.1. SURVIVAL All representations, warranties, covenants and agreements of the parties contained herein, including indemnity or indemnification agreements contained herein, shall survive the Closing, until the first anniversary of the Closing. No Action or proceeding may be brought with respect to any of the -11- representations, warranties, covenants or agreements unless written notice thereof, setting forth in reasonable detail the claimed misrepresentation or breach of warranty or breach of covenant or agreement, shall have been delivered to the party alleged to have breached such representation or warranty or such covenant or agreement prior to the first anniversary of the Closing. Those covenants or agreements that contemplate or may involve actions to be taken or obligations in effect after the Closing shall survive in accordance with their terms. 5.2. INDEMNIFICATION BY SUBSCRIBER OR THE COMPANY (a) Subject to Section 5.1, from and after the Closing, Subscriber shall indemnify and hold harmless the Company, its successors and assigns, from and against any and all Loss and Expenses suffered, directly or indirectly, by the Company by reason of, or arising out of, (i) any breach as of the date made or deemed made or required to be true of any representation or warranty made by Subscriber in or pursuant to this Agreement, or (ii) any failure by Subscriber to perform or fulfill any of its covenants or agreements set forth herein. Notwithstanding any other provision of this Agreement to the contrary, in no event shall Loss and Expenses include a party's incidental or consequential damages. (b) Subject to Section 5.1, from and after the Closing, the Company shall indemnify and hold harmless Subscriber, its successors and assigns, from and against any and all Loss and Expenses, suffered, directly or indirectly, by Subscriber by reason of, or arising out of, (i) any breach as of the date made or deemed made or required to be true of any representation or warranty made by the Company in or pursuant to this Agreement and any statements made in any certificate delivered pursuant to this Agreement, or (ii) any failure by the Company to perform or fulfill any of its covenants or agreements set forth herein. Notwithstanding any other provision of this Agreement to the contrary, in no event shall Loss and Expenses include a party's incidental or consequential damages. (c) Notwithstanding the foregoing, (i) neither Subscriber nor the Company shall be responsible for any Loss and Expenses as provided by paragraphs (a) and (b), respectively, of this Section 5.2, until the cumulative aggregate amount of such Loss and Expenses suffered by Subscriber or the Company, as the case may be, exceeds $500,000, in which case Subscriber or the Company, as the case may be, shall then be liable for all such Loss and Expenses, and (ii) the cumulative aggregate indemnity obligation of each of Subscriber and the Company under this Section 5.2 shall in no event exceed the Purchase Price. Except with respect to third-party claims being defended in good faith or claims for indemnification with respect to which there exists a good faith dispute, the indemnifying party shall satisfy its obligations hereunder within 30 days of receipt of a notice of claim under this Section 5. -12- 5.3. THIRD-PARTY CLAIMS If a claim by a third party is made against Subscriber or the Advancing Party or the Company (each, an "Indemnified Party") and if such Indemnified Party intends to seek indemnity with respect thereto under this Section 5, such Indemnified Party shall promptly notify the indemnifying party in writing of such claims setting forth such claims in reasonable detail. The indemnifying party shall have 20 days after receipt of such notice to undertake, through counsel of its own choosing and at its own expense, the settlement or defense thereof, and the Indemnified Party shall cooperate with it in connection therewith; provided, however, that the Indemnified Party may participate in such settlement or defense through counsel chosen by such Indemnified Party, provided that the fees and expenses of such counsel shall be borne by such Indemnified Party. The Indemnified Party shall not pay or settle any claim which the indemnifying party is contesting. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such claim, provided that in such event it shall waive any right to indemnity therefor by the indemnifying party. If the indemnifying party does not notify the Indemnified Party within 20 days after the receipt of the Indemnified Party's notice of a claim of indemnity hereunder that it elects to undertake the defense thereof, the Indemnified Party shall have the right to contest, settle or compromise the claim but shall not thereby waive any right to indemnity therefor pursuant to this Agreement. 6. MISCELLANEOUS 6.1. COUNTERPARTS This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall be effective when one or more counterparts have been signed by each party hereto 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. 6.2. 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. -13- 6.3. ENTIRE AGREEMENT This Agreement contains the entire agreement between the parties hereto 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. 6.4. 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: CarrAmerica Realty Corporation 1700 Pennsylvania Avenue, N.W. Washington, DC 20006 Attention: Thomas A. Carr, President Telecopy Number: (202) 638-0102 with a copy (which shall not constitute notice) to: Hogan & Hartson L.L.P. 555 Thirteenth Street, N.W. Washington, DC 20004-1109 Attention: J. Warren Gorrell, Jr., Esq. Telecopy Number: (202) 637-5910 Notices to Subscriber or the Advancing Party shall be addressed to: Security Capital Holdings S.A. 69, route d'Esch L-2953 Luxembourg Attention: Jeffrey A. Cozad, Managing Director Telecopy Number: (352) 4590-3331 with a copy (which shall not constitute notice) to: Wachtell, Lipton, Rosen & Katz 51 W. 52nd Street New York, New York 10019 Attention: Adam O. Emmerich, Esq. Telecopy Number: (212) 403-2000 -14- 6.5. SUCCESSORS AND ASSIGNS This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors. Neither Subscriber nor the Advancing Party shall be permitted to assign any of its rights hereunder to any third party; provided, however, that Subscriber and the Advancing Party may assign all (but not less than all) of their rights hereunder to any other Investor so long as such other Investor agrees in writing, in a form reasonably acceptable to the Company, to be bound by all the terms and conditions of this Agreement. 6.6. HEADINGS The Section and other headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. 6.7. 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. Any party hereto may, only by an instrument in writing, waive compliance by the other parties 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. 6.8. EXPENSES Except as set forth in this Agreement, whether or not the Closing is consummated, 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. 6.9. 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. 6.10. FURTHER ASSURANCES The Company, Subscriber and the Advancing Party agree that, from time to time, whether before, at or after the Closing, each of them will execute and -15- deliver such further instruments of conveyance and transfer and take such other action as may be necessary to carry out the purposes and intents hereof. 6.11. JOINT AND SEVERAL LIABILITY; GUARANTY The obligations and liability of Subscriber and the Advancing Party under or in connection with this Agreement are joint and several. The Advancing Party hereby unconditionally and irrevocably guarantees and agrees to be responsible for the payment and performance of all of Subscriber's obligations hereunder. -16- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the day and year first above written. CARRAMERICA REALTY CORPORATION By: /s/ Brian K. Fields Name: Brian K. Fields Title: Chief Financial Officer SECURITY CAPITAL HOLDINGS S.A. By: /s/ Ariel Amir Name: Ariel Amir Title: Vice President SECURITY CAPITAL U.S. REALTY By: /s/ Ariel Amir Name: Ariel Amir Title: Vice President -17- -----END PRIVACY-ENHANCED MESSAGE-----